SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended April 13, 1996
Commission file number 33-92700
DOMINICK'S FINER FOODS, INC.
(Exact name of registrant as specified in charter)
Delaware 36-3168270
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
505 Railroad Avenue
Northlake, Illinois 60164
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (708) 562-1000
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 at least the past 90
days. YES [X] NO [ ].
At May 23, 1996, there were 1,000 shares of Common Stock
outstanding. As of such date, all of the outstanding shares of Common
Stock were held by DFF Supermarkets, Inc. and there was no public market
for the Common Stock.
<PAGE>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION<PAGE>
Item 1. Financial Statements
Consolidated balance sheets as of
April 13, 1996 (unaudited) and October 28, 1995 . . . . . . . . . 1
Consolidated statements of operations for the 12 weeks ended
April 13, 1996 ("Company"), the 4 weeks ended April 15, 1995
("Company"), and the 8 weeks ended March 21, 1995
("Predecessor") (unaudited) . . . . . . . . . . . . . . . . . . 2
Consolidated statements of operations for the 24 weeks ended
April 13, 1996 ("Company"), the 4 weeks ended April 15, 1995
("Company") (unaudited), and the 20 weeks ended March 21,
1995 ("Predecessor") . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated statements of cash flows for the 24 weeks ended
April 13, 1996 ("Company"), the 4 weeks ended April 15, 1995
("Company") (unaudited), and the 20 weeks ended March 21,
1995 ("Predecessor") . . . . . . . . . . . . . . . . . . . . . . 4
Notes to consolidated financial statements . . . . . . . . . . . 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . 11
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . 11
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . 11
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . 11
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
DOMINICK'S FINER FOODS, INC.
CONSOLIDATED BALANCE SHEET
(in thousands except per share data)
ASSETS
April 13, 1996 October 28,1995
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 54,926 $ 55,551
Receivables, net 17,520 25,314
Inventories 177,120 182,880
Prepaid expenses and other 12,795 10,573
Total current assets 262,361 274,318
Property and equipment, net 340,760 353,015
Other assets:
Deferred financing costs, net 21,379 22,567
Goodwill, net 426,372 419,298
Other 30,183 31,011
Total other assets 477,934 472,876
Total assets $ 1,081,055 $ 1,100,209
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 145,837 $ 171,209
Accrued payroll and related liabilities 28,743 31,579
Taxes payable 17,425 7,958
Other accrued liabilities 79,513 83,422
Current portion of long-term debt 2,103 9,771
Current portion of capital lease obligations 7,232 4,565
Total current liabilities 280,853 308,504
Long-term debt:
Term loans 274,337 281,109
Senior subordinated debt 200,000 200,000
Capital lease obligations 121,054 103,921
Deferred income taxes and other liabilities 63,511 66,976
Stockholder's equity:
Common stock - $.01 par value, 1,000 shares
authorized and issued - -
Additional paid-in capital 147,851 147,647
Accumulated deficit (6,551) (7,948)
Total stockholder's equity 141,300 139,699
Total Liabilities and Stockholder's Equity $ 1,081,055 $ 1,100,209
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
<PAGE>
<TABLE>
DOMINICK'S FINER FOODS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands)
(unaudited)
Predecessor
Company Company
12 Weeks 4 Weeks 8 Weeks
Ended Ended Ended
April 13, April 15, March 21,
1996 1995 1995
<S> <C> <C> <C>
Sales $ 556,880 $ 191,314 $ 372,799
Cost of sales 427,872 148,813 288,626
Gross profit 129,008 42,501 84,173
Selling, general and administrative
expenses 110,121 38,154 77,552
Operating income 18,887 4,347 6,621
Interest expense:
Cash 13,979 5,007 4,625
Non-cash 1,278 - -
Amortization of deferred
financing costs 559 431 27
--------- --------- -----------
15,816 5,438 4,652
SAR's termination costs - - 26,152
Income (loss) before income taxes 3,071 (1,091) (24,183)
Income tax expense (benefit) 2,343 (110) (9,419)
Net income (loss) $ 728 $ (981) $ (14,764)
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
<PAGE>
<TABLE>
DOMINICK'S FINER FOODS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands)
Predecessor
Company Company
24 Weeks 4 Weeks 20 Weeks
Ended Ended Ended
April 13, April 15, March 21,
1996 1995 1995
(unaudited) (audited)
<S> <C> <C> <C>
Sales $ 1,141,242 $ 191,314 $ 958,742
Cost of sales 880,282 148,813 747,468
Gross profit 260,960 42,501 211,274
Selling, general and administrative
expenses 222,744 38,154 192,092
Operating income 38,216 4,347 19,182
Interest expense:
Cash 28,401 5,007 11,238
Non-cash 2,558 - -
Amortization of deferred
financing costs 1,371 431 69
----------- --------- ----------
32,330 5,438 11,307
SAR's termination costs - - 26,152
Income (loss) before income taxes 5,886 (1,091) (18,277)
Income tax expense (benefit) 4,489 (110) (7,135)
Net income (loss) $ 1,397 $ (981) $ (11,142)
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
<PAGE>
<TABLE>
DOMINICK'S FINER FOODS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Predecessor
Company Company
24 Weeks 4 Weeks 20 Weeks
Ended Ended Ended
April 13, April 15, March 21,
1996 1995 1995
(unaudited) (audited)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,397 $ (981) $ (11,142)
Adjustments to reconcile net income
(loss) to net cash (used in) provided
by operating activities:
Depreciation and amortization 20,599 3,930 20,499
Amortization of deferred financing costs 1,371 431 69
SAR's termination costs - - 26,152
Deferred income taxes - - (3,890)
Loss (gain) on disposal of assets - - 1,149
Changes in operating assets and
liabilities, net of acquisition:
Receivables 7,695 (2,937) 2,546
Inventories 5,760 6,856 7,209
Prepaid expenses (2,197) 220 (1,890)
Accounts payable (25,372) (7,438) (10,217)
Accrued liabilities and taxes payable (6,656) 1,615 (10,474)
Total adjustments 1,199 2,677 31,153
Net cash provided by operating activities 2,597 1,696 20,011
Cash flows from investing activities:
Capital expenditures (7,657) (1,850) (22,423)
Proceeds from sale of assets 201 - 7,680
Business acquisition cost,
net of cash required - (442,777) -
Other - net - 170 116
Net cash used in investing activities (7,456) (444,457) (14,627)
Cash flows from financing activities:
Principal payments for long-term debt
and capital lease obligations (17,260) (90,437) (5,363)
Proceeds from debt issuances - 480,000 -
Proceeds from issuance of capital stock - 100,000 -
Proceeds from sale leaseback of assets 21,903 - -
Increase in revolving debt - (37,000) -
Deferred financing costs and other (410) - (791)
Net cash provided by (used in)
financing activities 4,234 452,563 (6,154)
Net increase (decrease) in cash and
cash equivalents (625) 9,802 (770)
Cash and cash equivalents at beginning
of period 55,551 17,324 18,094
Cash and cash equivalents at end of period $ 54,926 $ 27,126 $ 17,324
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Supplemental schedule of non-cash investing
and financing activities
Acquisition of business (including
final purchase price allocation):
Fair value of assets acquired,
net of cash acquired $ 3,238 $1,053,465 $ -
Net cash paid in acquisition - (442,777) -
Exchange of capital stock - (40,000) -
Management equity investment - (5,000) -
Liabilities assumed $ 3,238 $ 565,688 $ -
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
DOMINICK'S FINER FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Summary of Significant Accounting Policies
Basis of Presentation
The consolidated balance sheet of Dominick's Finer Foods, Inc. ("Company")
as of April 13, 1996, and the consolidated statements of operations and cash
flows for the 12 week and 24 week period ended April 13, 1996, the 4 week
period ended April 15, 1995, and the 8 weeks period ended March 21, 1995, are
unaudited, but include all adjustments (consisting of only normal recurring
accruals) which the Company considers necessary for a fair presentation of
its consolidated financial position, results of operations, and cash flows
for these periods. These interim financial statements do not include all
disclosures required by generally accepted accounting principles, and,
therefore, should be read in conjunction with the Company's financial
statements and notes thereto included in the Company's Form 10-K. Results of
operations for interim periods are not necessarily indicative of the results
for a full fiscal year.
The Company was acquired by Dominick's Supermarkets, Inc. ("Supermarkets")
on March 22, 1995 for total consideration of approximately $693 million
(excluding acquisition costs) in a transaction accounted for as a purchase
(the "Acquisition"). Supermarkets effected the Acquisition by acquiring 100%
of the capital stock of the Company's parent for $346.6 million in cash and
$40 million of Supermarkets' 15% Redeemable Exchangeable Cumulative Preferred
Stock ("Parent Preferred Stock"). The principal sources of cash to finance
the Acquisition were (i) $330 million in term loans consisting of $140
million of six-year amortizing Tranche A Loans, $60 million of seven-year
amortizing Tranche B Loans, $65 million of eight-year amortizing Tranche C
Loans and $65 million of eight and one-half year amortizing Tranche D Loans
(collectively, the "Term Loan Facilities"); (ii) a $150 million unsecured
senior subordinated credit facility; and (iii) a $105 million equity
investment in Supermarkets common stock by certain affiliates of The Yucaipa
Companies, certain other institutional and private investors and certain
members of the Company's management. On May 4, 1995, the Company used the
proceeds of an offering of $200 million of 10.875% Senior Subordinated Notes
due 2005 (the "Senior Subordinated Notes") to repay the $150 million
unsecured senior subordinated credit facility and to prepay $50 million of
the Term Loan Facilities. In addition, the Company has a $100 million
revolving credit facility (the "Revolving Credit Facility") available for
working capital and general corporate purposes (together with the Term Loan
Facilities, the "Senior Credit Facilities").
The Acquisition was accounted for as a purchase of the Company by
Supermarkets. As a result, all financial statements for periods subsequent
to March 22, 1995, the date the Acquisition was consummated, reflect the
Company's assets and liabilities at their estimated fair market values as of
March 22, 1995. The purchase price in excess of the fair market value of the
Company's assets was recorded as goodwill and is being amortized over a 40-
year period. For purposes of the financial statement presentation set forth
herein, the Predecessor Company refers to the Company prior to the
consummation of the Acquisition.
<PAGE>
The Parent Preferred Stock has been pushed down for accounting purposes to
the Company with such amount included in the Company's additional paid-in
capital. Dividends on the Parent Preferred Stock accrue cumulatively at a
rate of 15% per annum and are payable by Supermarkets when and if declared by
the Board of Directors of Supermarkets. The Company's principal debt
instruments permit the Company to distribute cash to Supermarkets, following
the sixth anniversary of the Acquisition, for the purpose of permitting
Supermarkets to pay cash dividends on the Parent Preferred Stock if certain
financial requirements are satisfied.
The Company, an indirect wholly-owned subsidiary of Supermarkets, uses a
52-53 week fiscal year ending on the Saturday closest to October 31. The
Company operates supermarkets in Chicago, Illinois and its suburbs. The
consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries.
Inventories
Inventories are stated at the lower of cost, primarily using the last-in,
first-out (LIFO) method, or market. If inventories had been valued using
replacement cost, inventories would have been higher by $3,137,000 and
$1,937,000 at April 13, 1996 and October 28, 1995, respectively, and gross
profit and operating income would have been greater by $900,000, $450,000,
$150,000, $750,000 and $300,000 for the 24 weeks and 12 weeks ended April 13,
1996, the 4 weeks ended April 15, 1995, and the 20 weeks and 8 weeks ended
March 21, 1995, respectively.
Reclassifications
Certain prior period amounts in the consolidated financial statements have
been reclassified to conform to the April 13, 1996 presentation.<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
The Company was acquired by Supermarkets on March 22, 1995, for total
consideration of approximately $693 million (excluding acquisition costs).
The Acquisition was accounted for as a purchase of the Company by
Supermarkets. The Company's final purchase price allocation resulted in a
reduction in the fair market value of its fixed assets of approximately $83
million and it recorded goodwill of approximately $438 million. The
Company's total debt also increased from approximately $250 million at March
21, 1995 to $600 million on the date of the Acquisition. As a result of
these changes, the Company anticipates that its results of operations will
reflect reduced levels of depreciation and increased levels of amortization
of intangibles and interest expense as compared to pre-Acquisition
results.
The following table sets forth the historical results of the Company for
the 12 weeks ended April 13, 1996, the combined historical operating results
of the Predecessor Company for the 8 weeks ended March 21, 1995 and the
successor Company for the 4 weeks ended April 15, 1995, the 24 weeks ended
April 13, 1996 and the combined historical operating results of the
Predecessor Company for the 20 weeks ended March 21, 1995 and the successor
Company for the 4 weeks ended April 15, 1995.
<PAGE>
</TABLE>
<TABLE>
12 Weeks Ended 24 Weeks Ended
April 13, April 15, April 13, April 15,
1996 1995 1996 1995
(dollars in millions)
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $556.9 100.0 % $564.1 100.0 % $1,141.2 100.0 % $1,150.1 100.0 %
Gross profit 129.0 23.2 % 126.7 22.5 % 261.0 22.9 % 253.8 22.1 %
Selling, general and
administrative expenses 110.1 19.8 % 115.7 20.5 % 222.7 19.5 % 230.2 20.0 %
Operating income 18.9 3.4 % 11.0 2.0 % 38.2 3.3 % 23.5 2.0 %
Interest expense, excluding
amortization of deferred
financing costs 15.3 2.7 % 9.6 1.7 % 31.0 2.7 % 16.2 1.4 %
SAR's termination costs - - % 26.2 4.6 % - - % 26.2 2.3 %
Income tax expense (benefit) 2.3 0.4 % (9.5) (1.7)% 4.5 0.4 % (7.2) (0.6)%
Net income (loss) 0.7 0.1 % (15.7) (2.8)% 1.4 0.1 % (12.1) (1.1)%
</TABLE>
Comparison of Results of Operations for the 12 Weeks Ended April 13, 1996
(Company) with the 12 Weeks Ended April 15, 1995 (Predecessor Company)
Sales: Sales decreased $7.2 million, or 1.3%, from $564.1 million in the
12 weeks ended April 15, 1995, to $556.9 million in the 12 weeks ended April
13, 1996. The decrease in sales in the fiscal 1996 period was primarily
attributable to the inclusion of the week following Easter (which is a
historically weak sales week for the Company) in the fiscal 1996 period and
its exclusion in the fiscal 1995 period and the impact of the closure of
three conventional stores during fiscal 1995, subsequent to the end of the
first quarter. Comparable store sales decreased 1.0%. Excluding the impact
of the post Easter week, comparable store sales increased 0.1%.
Gross Profit: Gross profit increased $2.3 million, or 1.8%, from $126.7
million in the 12 weeks ended April 15, 1995, to $129.0 million in the 12
weeks ended April 13, 1996. Gross profit as a percentage of sales increased
from 22.5% in the 12 weeks ended April 15, 1995, to 23.2% in the 12 weeks
ended April 13, 1996, due primarily to the reduction of product costs
resulting from purchasing improvements and reduced depreciation expense.
Selling, General and Administrative Expense: Selling, general and
administrative expense ("SG&A") decreased $5.6 million, or 4.8%, from $115.7
million in the 12 weeks ended April 15, 1995 to $110.1 million in the 12
weeks ended April 13, 1996. SG&A decreased from 20.5% of sales in the 12
weeks ended April 15, 1995, to 19.8% of sales in the 12 weeks ended April 13,
1996. The decrease in SG&A reflects the Company's reduced overhead costs,
better management of store-level labor costs and the inclusion in the fiscal
1995 period of certain non-recurring costs related to the 1995 acquisition of
the company.
Operating Income: Operating income for the 12 weeks ended April 13, 1996
increased $7.9 million, or 71.8%, from $11.0 million in the 12 weeks ended
April 15, 1995, to $18.9 million as a result of the factors discussed above.
Interest Expense: Interest expense increased from $9.6 million in the 12
weeks ended April 15, 1995 to $15.3 million in the 12 weeks ended April 13,
1996. The increase in interest expense was due to the increased indebtedness
outstanding following the Acquisition.
<PAGE>
SAR's Termination Costs: In connection with the Acquisition, the Company
discharged certain obligations under its SAR's plan by making payments to
plan participants and recorded a charge of $26.2 million.
Net Income: Net income increased from a net loss of $15.7 million in the
12 weeks ended April 15, 1995 to a net income of $0.7 million in the 12 weeks
ended April 13, 1996, as a result of the factors discussed above.
Comparison of Results of Operations for the 24 Weeks Ended April 13, 1996
(Company) with the 24 Weeks Ended April 15, 1995 (Predecessor Company)
Sales: Sales decreased $8.9 million, or 0.8%, from $1,150.1 million in the
24 weeks ended April 15, 1995, to $1,141.2 million in the 24 weeks ended
April 13, 1996. The decrease in sales in the fiscal 1996 period was
primarily attributable to the impact of the closure of four conventional
stores during fiscal 1995 and the inclusion of the week following Easter
(which is a historically weak sales week for the Company) in the fiscal 1996
period and its exclusion in the fiscal 1995 period, offset by an increase in
comparable store sales of 0.1%. Excluding the impact of the post Easter
week, comparable store sales increased 0.6%.
Gross Profit: Gross profit increased $7.2 million, or 2.8%, from $253.8
million in the 24 weeks ended April 15, 1995, to $261.0 million in the 24
weeks ended April 13, 1996. Gross profit as a percentage of sales increased
from 22.1% in the 24 weeks ended April 15, 1995, to 22.9% in the 24 weeks
ended April 13, 1996, due primarily to the reduction of product costs
resulting from purchasing improvements, improved drug and perishable
department margins and reduced depreciation expense.
Selling, General and Administrative Expense: Selling, general and
administrative expense ("SG&A") decreased $7.5 million, or 3.3%, from $230.2
million in the 24 weeks ended April 15, 1995 to $222.7 million in the 24
weeks ended April 13, 1996. SG&A decreased from 20.0% of sales in the 24
weeks ended April 15, 1995, to 19.5% of sales in the 24 weeks ended April 13,
1996. The decrease in SG&A reflects the Company's reduced overhead costs,
better management of store-level labor costs and the inclusion in the fiscal
1995 period of certain non-recurring costs related to the 1995 acquisition of
the Company.
Operating Income: Operating income for the 24 weeks ended April 13, 1996
increased $14.7 million, or 62.6%, from $23.5 million in the 24 weeks ended
April 15, 1995, to $38.2 million as a result of the factors discussed above.
Interest Expense: Interest expense increased from $16.2 million in the 24
weeks ended April 15, 1995 to $31.0 million in the 24 weeks ended April 13,
1996. The increase in interest expense was due to the increased indebtedness
outstanding following the Acquisition.
SAR's Termination Costs: In connection with the Acquisition, the Company
discharged certain obligations under its SAR's plan by making payments to
plan participants and recorded a charge of $26.2 million.
Net Income: Net income increased from a net loss of $12.1 million in the
24 weeks ended April 15, 1995 to a net income of $1.4 million in the 24 weeks
ended April 13, 1996, as a result of the factors discussed above.
<PAGE>
Liquidity and Capital Resources
The Company's principal sources of liquidity are cash flow from operations,
borrowings under the Revolving Credit Facility and capital and operating
leases. The Company's principal uses of liquidity are to provide working
capital, finance capital expenditures and meet debt service requirements.
The Senior Credit Facilities consist of the $100 million six-year Revolving
Credit Facility and the $330 million Term Loan Facilities. The Term Loan
Facilities were initially comprised of the $140 million six year amortizing
Tranche A Loans, the $60 million seven-year amortizing Tranche B Loans, the
$65 million eight-year amortizing Tranche C Loans and the $65 million nine-
year amortizing Tranche D Loans and have been subsequently reduced as a
result of debt repayments. The Revolving Credit Facility is available for
ongoing working capital needs and for up to $30 million of commercial or
standby letters of credit. The letters of credit are used to cover workers'
compensation contingencies and for other purposes permitted under the Senior
Credit Facilities. Letters of credit for approximately $17.2 million were
issued under the Revolving Credit Facility at April 13, 1996, of which $13.5
were to support the Company's workers' compensation self-insurance program.
The Company generated approximately $2.6 million of cash for operating
activities during the 24 weeks ended April 13, 1996 as compared to $21.7
million during the 24 weeks ended April 15, 1995. The cash generated in the
24 weeks ended April 13, 1996, reflects a reduction in accounts payable of
$25 million related to an unusually high accounts payable balance at the end
of fiscal 1995, which was due primarily to the implementation of a new
accounts payable system. Typically, supermarket operators require small
amounts of working capital for inventory purchases since inventory is
generally sold prior to the time that payments to suppliers are due. This
reduces the need for short-term borrowings and allows cash from operations to
be used for non-current purposes such as financing capital expenditures and
other investing activities. Consistent with this pattern, the Company had a
working capital deficit of $18.5 million at April 13, 1996.
The Company's cash used in investing activities for the 24 weeks ended
April 13, 1996, was $7.5 million, consisting of $7.7 million of capital
expenditures, offset in part by the proceeds from the sale of assets.
Capital expenditures related primarily to store expenditures, and, to a
lesser extent, expenditures for warehousing, distribution and manufacturing
facilities and equipment, including data processing and computer systems.
The Company plans to make gross capital expenditures of approximately $38
million (or $16 million net of expected capital leases) during the remainder
of fiscal 1996. Such expenditures consist of approximately $29 million
related to remodels and new stores, as well as ongoing store expenditures for
equipment and maintenance and approximately $9 million related to
warehousing, distribution and manufacturing facilities and equipment,
including data processing and computer systems. Management expects that
these capital expenditures will be financed primarily through cash flow from
operations and capital leases. The capital expenditure budget for fiscal
1996 does not include certain environmental remediation costs which have been
accrued for in the Company's financial statements and are expected to be
incurred over the next several years. In the 24 weeks ended April 13, 1996,
the Company has sold and leased back under capital leases approximately $22
million of certain existing owned equipment.
<PAGE>
The capital expenditure plans discussed above do not include potential
acquisitions which the Company could make to expand within its existing
market or to enter contiguous markets. The Company may consider such
acquisition opportunities from time to time. Any such future acquisition may
require the Company to seek additional debt or equity financing.
The Company is a wholly owned subsidiary of DFF Supermarkets, Inc. ("DFF")
which is, in turn, a wholly owned subsidiary of Supermarkets. The Company's
principal debt instruments permit the Company to make distributions to DFF
and Supermarkets under certain circumstances, including for the payment of
taxes and, subject to limitations, for general and administrative purposes.
After the sixth anniversary of the Acquisition, the Company's principal debt
instruments permit the Company, subject to certain financial tests, to make
distributions to permit Supermarkets to pay cash dividends on the Parent
Preferred Stock.
The Company is highly leveraged. Based upon current levels of operations
and anticipated cost savings and future growth, the Company believes that its
cash flows from operations, together with available borrowings under the
Revolving Credit Facility and its other sources of liquidity (including
capital and operating leases) will be adequate to meet its anticipated
requirements for working capital, debt service and capital expenditures over
the next few years. However, there can be no assurance that the Company will
generate sufficient cash flow from operations or that it will be able to make
future borrowings under the Revolving Credit Facility.
Effects of Inflation
The Company's primary costs, inventory and labor, are affected by a number
of factors that are beyond its control, including the availability and price
of merchandise, the competitive climate and general and regional economic
conditions. As is typical of the supermarket industry, the Company has
generally been able to maintain gross profit margins by adjusting its retail
prices, but competitive conditions may from time to time render it unable to
do so while maintaining its market share.<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27 - Financial Data Schedule.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: May 28, 1996 DOMINICK'S FINER FOODS, INC.
/s/Robert A. Mariano
Robert A. Mariano
President and Chief Executive Officer
/s/ Darren W. Karst
Darren W. Karst
Executive Vice President and Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-02-1996
<PERIOD-END> APR-13-1996
<CASH> 54,926
<SECURITIES> 0
<RECEIVABLES> 17,520
<ALLOWANCES> 0
<INVENTORY> 177,120
<CURRENT-ASSETS> 12,795
<PP&E> 340,760
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,081,055
<CURRENT-LIABILITIES> 280,853
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 141,300
<TOTAL-LIABILITY-AND-EQUITY> 1,081,055
<SALES> 1,141,242
<TOTAL-REVENUES> 1,141,242
<CGS> 880,282
<TOTAL-COSTS> 880,282
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32,330
<INCOME-PRETAX> 5,886
<INCOME-TAX> 4,489
<INCOME-CONTINUING> 1,397
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,397
<EPS-PRIMARY> 1,397
<EPS-DILUTED> 1,397
</TABLE>
