SECURITIES AND EXCHANGE COMMISSION
Washington, DC
20549
FORM 10 Q
(Mark One)
( X ) Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended November 26, 1994 Commission File number 0-80.
( ) Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange
Act of 1934
For the transition period from
to
SEAWAY FOOD TOWN, INC.
(Exact name of registrant as specified in its charter)
Ohio 34-4471466
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) (Identification No.)
1020 Ford Street, Maumee, Ohio 43537
(Address of principal executive offices) (Zip Code)
419/893-9401
(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 Outstanding at January 5, 1995
Common stock, without par 2,161,873 shares
value (stated value $2.00 per share)
<PAGE>
PART I. FINANCIAL INFORMATION
Summarized Financial Information:
The following consolidated statements of income, condensed consolidated
balance sheets, and condensed consolidated statements of cash flows are
unaudited, but include all adjustments, consisting only of normal recurring
accruals, which the Company considers necessary for a fair presentation of its
financial position, results of operations and cash flows for the periods and the
dates indicated. Since the unaudited financial statements have been prepared in
accordance with instructions to Form 10-Q, they do not contain all disclosures
normally provided in annual financial statements; they should be read in
conjunction with the consolidated financial statements and notes thereto
appearing in the Company's 1994 Annual Report to Shareholders.
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION (Continued)
Consolidated Statements of Income
(Thousands of Dollars - Except
Average Share and Per-share Data)
<CAPTION>
Thirteen Weeks Ended
-------------------------------
November 26, November 27,
1994 1993
------------- -------------
<S> <C> <C>
Net Sales $136,988 $132,500
Cost of merchandise sold 102,644 99,933
------------- -------------
Gross profit 34,344 32,567
Selling, general and
administrative expenses 32,162 31,876
------------- -------------
Operating profit 2,182 691
Interest expense (1,183) (1,179)
Other income - net 819 111
------------- -------------
Income (loss) before income taxes and
cumulative effect of change in
accounting for income taxes 1,818 (377)
Provision (credit) for income taxes 709 (128)
------------- -------------
Income (loss) before cumulative effect o
change in accounting for income taxes 1,109 (249)
Cumulative effect of change in
accounting for income taxes (Note C) --- (256)
------------- -------------
Net income (loss) $1,109 $(505)
============= =============
Per common share:
Income (loss) before cumulative effect of
change in accounting for income taxes $0.50 $(0.11)
======= =======
Net income (loss) $0.50 $(0.22)
======= =======
Dividends paid $0.09 $0.09
======= =======
Ave. number of shares outstanding 2,214,887 2,336,829
========= =========
</TABLE>
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION (Continued)
Condensed Consolidated Balance Sheets
(Thousands of Dollars)
<CAPTION>
November 26, August 27,
1994 1994
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $7,919 $7,137
Income tax recoverable 600 600
Notes and accounts receivable 7,094 6,077
Less allowance for doubtful accounts (450) (450)
Merchandise inventories (Note B) 67,338 62,325
Less LIFO reserve (17,597) (17,576)
Prepaid expenses, including deferred
income taxes 5,824 5,308
------------- -------------
70,728 63,421
Other assets 6,278 6,436
Property and equipment:
Cost 179,254 184,825
Less accumulated depreciation and
amortization (97,269) (99,479)
------------- -------------
Net property and equipment 81,985 85,346
------------- -------------
$158,991 $155,203
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $39,918 $36,318
Income taxes 1,119 407
Accrued liabilities 13,655 14,418
Long-term debt due within one year 4,426 3,341
------------- -------------
Total current liabilities 59,118 54,484
Long-term debt 54,263 55,060
Deferred income taxes 5,495 5,495
Deferred other 2,283 2,579
Shareholder's equity:
Common stock 4,350 4,485
Capital in excess of stated value 417 434
Retained earnings 33,065 32,666
------------- -------------
Total shareholders' equity 37,832 37,585
------------- -------------
$158,991 $155,203
============= =============
</TABLE>
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION (Continued)
Condensed Consolidated Statements of Cash Flows
(Thousands of Dollars)
<CAPTION>
Thirteen
Weeks Ended
November 26, November 27,
1994 1993
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES-
INVESTING ACTIVITIES
Expenditures for property and equipment (1,884) (3,213)
Proceeds from sale of property and other assets 2,821 41
Other 224 216
------------- -------------
Net cash provided by(used in)investing activities 1,161 (2,956)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 980 7,600
Payments of long-term debt (929) (1,666)
Payments for acquisition of common shares (667) (331)
Dividends paid (195) (212)
Decrease in deferred other (296) (282)
------------- -------------
Net cash provided by (used in) financing activities (1,107) 5,109
------------- -------------
Increase in cash and cash equivalents 782 1,114
Cash and cash equivalents at beginning of period 7,137 7,530
------------- -------------
Cash and cash equivalents at end of period $7,919 $8,644
============= =============
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $881 $929
============= =============
Income Taxes $(2) $65
============= =============
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION (Continued)
Notes to Summarized Financial Information
Note A. Net income per common share is based on the weighted average number
of shares outstanding during the periods. Shares issuable under
outstanding stock options were not included in the per-share
computations since inclusion would not result in any significant
dilution or would be anti-dilutive.
Note B. Meat, produce and pharmacy inventories are valued at the lower of
cost using the first-in, first-out (FIFO) method, or market. All
other merchandise inventories (including store inventories which are
determined by the retail inventory method) are valued at the lower
of cost using, the last-in, first-out (LIFO) method, or market.
Note C. Effective August 29, 1993, the Company adopted the provisions of the
Financial Accounting Standards Board Statement No. 109, "Accounting
for Income Taxes" (Statement 109). As permitted by Statement 109,
prior year financial statements have not been restated to reflect
the change in accounting method. The cumulative effect as of August
27, 1994 of adopting Statement 109 decreased net income by $256,000
or $.11 per share.
<PAGE>
PART I. FINANCIAL INFORMATION (Continued)
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Net sales for the first fiscal quarter of 1995 were $136,988,000 or 3.4% higher
than the same quarter of 1994. This net increase was attributable to increased
drugstore and supermarket sales resulting from two more drugstores in operation
as of the end of the quarter as compared to the same quarter of the prior year
along with some decreased supermarket price competition in our market area.
Sales from stores in operation both this past quarter as well as the same
quarter a year ago increased 3.27% in the current year.
Gross margins, as a percent of sales, increased .49% in the first quarter of
fiscal 1995 compared to the same quarter in fiscal 1994. Gross margins have
rebounded this year after a period of reduced margins resulting from promotions
associated with the expansion of drugstores into new markets and planned
promotional activity in the supermarket area in early 1994.
As a percent of sales, selling, general and administrative expenses decreased
.58% in the first quarter. This decrease is a result of sales increasing at a
rate greater than such costs.
Interest expense remained consistent with the prior year. Higher interest rates
were offset by lower outstanding borrowings.
Other income - net increased $708,000 over the same quarter in 1994. This
increase is due primarily to a gain of $637,000 recognized on the sale of the
company's dairy operations during the current quarter, offset somewhat by losses
on sales of assets.
Income taxes as a percent of pre-tax income approximates the statutory tax rates
in effect. The company adopted the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" in the first quarter
of fiscal 1994. The cumulative effect of this standard decreased income for the
thirteen weeks ended November 26, 1994 by $256,000 or $.11 per share.
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Liquidity and Capital Resources
During the first thirteen weeks of fiscal 1995, the Company's working capital
increased $2,673,000 as compared to August 27, 1994. The working capital ratio
was 1.20 to 1 at the end of this quarter compared to 1.16 to 1 at August 27,
1994 and 1.26 to 1 at November 27, 1993. During the first thirteen weeks of
fiscal 1995, the Company generated $728,000 in cash from operations which,
along with the cash proceeds from the sale of the Company's dairy operations,
was used primarily to finance capital expenditures and to repurchase some of
the Company's common shares.
The funds required by the Company on a continuing basis for both working
capital, capital expenditures, and other needs are generated principally
through operations, long-term borrowings and capital leases, supplemented by
borrowings under revolving credit note agreements which have been arranged
primarily through institutional lenders. During the first quarter of 1995
the company borrowed against revolving credit agreements with the maximum
amount outstanding under such agreements amounting to $35,050,000.
<PAGE>
Item 4 - Results of votes of security holders
(a) The Annual Meeting of Shareholders of Seaway Food Town, Inc.
was held on January 5, 1995.
(b) The election of the Directors previously nominated and as set
forth in the Proxy Statement of December 9, 1994, which is
incorporated herein by reference, was by the following vote:
<TABLE>
Shares Shares voted
Voted FOR AUTHORITY TO VOTE
WITHHELD
<CAPTION>
<S> <C> <C>
Thomas M. O'Donnell 1,846,993 14,147
Richard K. Ransom 1,846,975 14,165
Joel A. Levine 1,841,191 19,949
</TABLE>
(c) Pursuant to the proposal set forth in the Proxy Statement of
December 9, 1994, which is incorporated herein by reference,
approval of Ernst & Young, LLP as independent auditors for the
fiscal year ending August 26, 1995 was by the following vote:
<TABLE>
<C> <S>
1,858,037 shares voted FOR
200 shares voted AUTHORITY TO VOTE WITHHELD
2,903 shares voted AGAINST
</TABLE>
<PAGE>
Item 6. - Exhibits and Reports on Form 8 K.
6(b) Reports on Form 8 K.
There were no Form 8 K reports required to be filed by the Company
during any of the months included in the most recently completed
fiscal quarter.
Signature
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SEAWAY FOOD TOWN, INC.
Registrant
Date: January 6, 1995 By /s/ Richard B. Iott
Richard B. Iott, President
Date: January 6, 1995 By /s/ Waldo E. Yeager
Waldo E. Yeager,
Chief Financial Officer,
Treasurer
<PAGE>
Article 5 of Regulation S-X
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-26-1995
<PERIOD-END> NOV-26-1994
<CASH> 7,919
<SECURITIES> 0
<RECEIVABLES> 7,094
<ALLOWANCES> 450
<INVENTORY> 49,741
<CURRENT ASSETS> 70,728
<PP&E> 179,254
<DEPRECIATION> 97,269
<TOTAL-ASSETS> 158,991
<CURRENT-LIABILITIES> 59,118
<BONDS, MORTGAGES & SIMILAR DEBT> 54,263
<COMMON> 4,350
0
0
<OTHER-SE> 33,482
<TOTAL-LIABILITY-AND-EQUITY> 158,991
<SALES> 136,988
<TOTAL-REVENUES> 136,988
<CGS> 102,644
<TOTAL-COSTS> 102,644
<OTHER-EXPENSES> 32,162
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,183
<INCOME-PRETAX> 1,818
<INCOME-TAX> 709
<INCOME-CONTINUING> 1,109
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,109
<EPS-PRIMARY> .50
<EPS-DILUTED> .50
</TABLE>
