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 February 25, 1995 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 April 6, 1995
Common stock, without par 2,193,758 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 Twenty-Six Weeks Ended
February 25, February 26, February 25, February 26,
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $143,953 $139,404 $280,941 $271,904
Cost of Merchandise sold 107,452 104,960 210,096 204,893
----------- ----------- ----------- -----------
36,501 34,444 70,845 67,011
Selling, general and
administrative expenses 33,128 32,394 65,290 64,270
----------- ----------- ----------- -----------
Operating profit 3,373 2,050 5,555 2,741
Interest expense (1,150) (1,159) (2,333) (2,338)
Other income - net 293 522 1,112 633
----------- ----------- ----------- -----------
Income before income taxes
and cumulative effect of
change in accounting
for income taxes 2,516 1,413 4,334 1,036
Provision for income taxes (982) (439) (1,691) (311)
----------- ----------- ----------- -----------
Income before cumulative
effect of change in
accounting for income
taxes 1,534 974 2,643 725
Cumulative effect of change
in accounting for income
taxes (Note C) --- --- --- (256)
----------- ----------- ----------- -----------
Net Income $1,534 $974 $2,643 $469
=========== =========== =========== ===========
Per common share:
Income before cumulative
effect of change in
accounting for income
taxes $0.70 $0.42 $1.20 $0.31
=========== =========== =========== ===========
Net income $0.70 $0.42 $1.20 $0.20
=========== =========== =========== ===========
Dividends paid $0.10 $0.09 $0.19 $0.18
=========== =========== =========== ===========
Average number of shares
outstanding 2,184,378 2,323,631 2,199,633 2,330,230
=========== =========== =========== ===========
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION (Continued)
Condensed Consolidated Balance Sheets
(Thousands of Dollars)
<CAPTION>
February 25, August 27,
1995 1994
(NOTE)
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $7,336 $7,137
Income tax recoverable --- 600
Notes and accounts receivable 7,264 6,077
Less allowance for doubtful accounts (450) (450)
Merchandise inventories (Note B) 62,863 62,325
Less LIFO reserve (17,711) (17,576)
Prepaid expenses, including deferred
income taxes 5,729 5,308
------------- -------------
65,031 63,421
Other assets 6,050 6,436
Property and equipment:
Cost 181,209 184,825
Less accumulated depreciation and
amortization (98,883) (99,479)
------------- -------------
Net property and equipment 82,326 85,346
------------- -------------
$153,407 $155,203
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $38,893 $36,318
Income taxes 1,476 407
Accrued liabilities 13,633 14,418
Long-term debt due within one year 3,526 3,341
------------- -------------
Total current liabilities 57,528 54,484
Long-term debt 49,227 55,060
Deferred income taxes 5,235 5,495
Deferred other 2,074 2,579
Shareholder's equity:
Common stock 4,388 4,485
Capital in excess of stated value 680 434
Retained earnings 34,275 32,666
------------- -------------
Total shareholders' equity 39,343 37,585
------------- -------------
$153,407 $155,203
============= =============
NOTE: The balance sheet at August 27, 1994 has been derived from the audited
financial statements at that date but does not include all of the inform-
ation and footnotes required by generally accepted accounting principles
for complete financial statements.
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION (Continued)
Condensed Consolidated Statements of Cash Flows
(Thousands of Dollars)
<CAPTION>
Twenty-Six Weeks Ended
February 25, February 26,
1995 1994
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES-net cash provided $9,815 $9,978
INVESTING ACTIVITIES
Expenditures for property and equipment (5,155) (4,663)
Proceeds from sale of property and other assets 2,913 123
Other 460 167
------------- -------------
Net cash used in investing activities (1,782) (4,373)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 1,281 7,885
Payments of long-term debt (7,391) (11,791)
Payments for acquisition of common shares (807) (729)
Dividends paid (412) (422)
Decrease in deferred other (505) (470)
------------- -------------
Net cash used in financing activities (7,834) (5,527)
------------- -------------
Increase in cash and cash equivalents 199 78
Cash and cash equivalents at beginning of period 7,137 7,530
------------- -------------
Cash and cash equivalents at end of period $7,336 $7,608
============= =============
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period for:
Interest $2,351 $2,412
============= =============
Income Taxes $283 $161
============= =============
See notes to financial statements
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION (Continued)
Notes to Financial Statements
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 the
adoption date was a reduction in net income of $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 second fiscal quarter of 1995 were $4,549,000 or 3.26%
higher than the same quarter of 1994. On a year to date basis, net sales
were $9,037,000 or 3.32% higher than 1994. Most of 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 2.43% in
the current year.
Gross margins, as a percent of sales, increased .65% in the second quarter of
fiscal 1995 compared to the same quarter in fiscal 1994. On a year to date
basis, these margins increased .57% between 1995 and 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 .23% in the second quarter, and .40% on a year to date basis as
compared to 1994. This decrease is a result of sales increasing at a rate
greater than such costs.
Interest expense remained consistent with the prior year as higher
interest rates were offset by lower outstanding borrowings.
Other income - net decreased $229,000 over the same quarter in 1994.
This decrease is due primarily to decreased gains on the sale of company
assets during this quarter compared to 1994. On a year-to-date basis there
was an increase of $479,000 due primarily to a gain recognized on the sale of
the company's dairy operations during the first quarter of fiscal 1995,
offset somewhat by losses on sales of other 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 twenty-six weeks ended February 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 twenty-six weeks of fiscal 1995, the Company's working
capital decreased $1,434,000 as compared to August 27, 1994. The working
capital ratio was 1.13 to 1 at the end of this quarter compared to 1.16
to 1 at August 27, 1994 and 1.20 to 1 at November 26, 1994. During
the first twenty-six weeks of fiscal 1995, the Company generated $9,815,000
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, repurchase some of the Company's common shares and reduce
borrowings.
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 second quarter
of 1995 the company borrowed against revolving credit agreements with the
maximum amount outstanding under such agreements amounting to $30,950,000.
<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 hereunto duly authorized.
SEAWAY FOOD TOWN, INC.
Registrant
Date: April 10, 1995 By /s/ Richard B. Iott
Richard B. Iott, President
Date: April 10, 1995 By /s/ Waldo E. Yeager
Waldo E. Yeager,
Chief Financial Officer,
Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-26-1995
<PERIOD-END> FEB-25-1995
<CASH> 7,336
<SECURITIES> 0
<RECEIVABLES> 7,264
<ALLOWANCES> 450
<INVENTORY> 45,152
<CURRENT-ASSETS> 65,031
<PP&E> 181,209
<DEPRECIATION> 98,883
<TOTAL-ASSETS> 153,407
<CURRENT-LIABILITIES> 57,528
<BONDS> 49,227
<COMMON> 4,388
0
0
<OTHER-SE> 34,955
<TOTAL-LIABILITY-AND-EQUITY> 153,407
<SALES> 143,953
<TOTAL-REVENUES> 144,246
<CGS> 107,452
<TOTAL-COSTS> 107,452
<OTHER-EXPENSES> 33,128
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,150
<INCOME-PRETAX> 2,516
<INCOME-TAX> 982
<INCOME-CONTINUING> 1,534
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,534
<EPS-PRIMARY> .70
<EPS-DILUTED> .70
