-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, SKMgp7KfqEZQIL6X5MekgFbZh2c+u9/XmTjlrsWktQDBN9VzqXDcA1GnyI6pYAGr Ps4tqOqfFG9U804yDeK8RQ== 0000014920-94-000002.txt : 19940525 0000014920-94-000002.hdr.sgml : 19940525 ACCESSION NUMBER: 0000014920-94-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940409 FILED AS OF DATE: 19940523 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRUNOS INC CENTRAL INDEX KEY: 0000014920 STANDARD INDUSTRIAL CLASSIFICATION: 5411 IRS NUMBER: 630411801 STATE OF INCORPORATION: AL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-06544 FILM NUMBER: 94529751 BUSINESS ADDRESS: STREET 1: P O BOX 2486 CITY: BIRMINGHAM STATE: AL ZIP: 35201 BUSINESS PHONE: 2059409400 MAIL ADDRESS: STREET 1: PO BOX 2486 CITY: BIRMINGHAM STATE: AL ZIP: 35201 10-Q 1 THIRD QTR 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Under Section 13 or 15 (d) of The Securities and Exchange Act of 1934 QUARTER ENDED April 9, 1994 COMMISSION FILE NO. 0-6544 BRUNO'S, INC. STATE OF INCORPORATION Alabama I.R.S. EMPLOYER I.D. NO. 63-0411801 ADDRESS OF PRINCIPAL EXECUTIVE OFFICE (INCLUDING ZIP CODE) 800 Lakeshore Parkway, Birmingham, Alabama 35211 REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE Area Code 205 - 940-9400 OUTSTANDING COMMON STOCK AS OF April 9, 1994, IS 78,090,441 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, and (2) has been subject to such filing requirements for the past 90 days. YES (X) NO ( ) Commission File No. 0-6544 BRUNO'S, INC. Index Page No. Financial Statements: Condensed Consolidated Balance Sheets April 9, 1994, and July 3, 1993. 2 Condensed Consolidated Statements of Income and Retained Earnings for the Forty (40) and Fourteen (14) Week Periods Ended April 9, 1994, and April 3, 1993. 3 Condensed Consolidated Statements of Cash Flows for the Forty (40) Week Periods Ended April 9, 1994, and April 3, 1993. 4 Notes to Condensed Consolidated Financial Statements. 5 Management's Discussion and Analysis of Financial Condition and Results of Operations. 7 Other Information 11 Commission File No. 0-6544 BRUNO'S, INC. CONDENSED CONSOLIDATED BALANCE SHEETS AS OF APRIL 9, 1994 AND JULY 3, 1993 (In Thousands Except Share And Per Share Amounts) (Unaudited)
4-9-94 7-3-93 _________ _________ ASSETS - - ------ Current Assets - Cash and Cash Equivalents $ 33,161 $ 20,093 Receivables 29,286 25,303 Inventories at LIFO 261,900 259,239 Prepaid Expenses and Other 10,266 9,276 _________ _________ Total Current Assets 334,613 313,911 Property, Equipment, Leasehold Improvements, Leasehold Interests and Investment in Property under Capital Leases, Net 546,403 543,877 Intangibles and Other Assets 57,527 59,135 _________ _________ Total Assets 938,543 916,923 ========= ========= LIABILITIES AND SHAREHOLDERS' INVESTMENT - - ---------------------------------------- Current Liabilities - Current Portion of Long-Term Debt and Capitalized Lease Obligations and Short-Term Borrowings 4,485 38,133 Accounts Payable 109,624 116,752 Other Accrued Expenses 36,138 40,963 Accrued Income Taxes 996 553 _________ _________ Total Current Liabilities 151,243 196,401 _________ _________ Long-Term Debt and Capitalized Lease Obligations 322,621 269,046 _________ _________ Deferred Income Taxes 48,900 46,955 _________ _________ Deferred Compensation 2,238 1,854 _________ _________ Shareholders' Investment - Common Stock ($.01 par value, 200,000,000 shares authorized, 78,090,441 and 78,047,341 shares respectively, issued and outstanding) 781 780 Paid-In Capital 42,191 42,072 Retained Earnings 370,641 360,022 _________ _________ 413,613 402,874 Deferred Compensation (72) (207) _________ _________ Total Shareholders' Investment 413,541 402,667 _________ _________ Total Liabilities and Shareholders' Investment 938,543 916,923 ========= ========= See accompanying notes to condensed consolidated financial statements.
-2- Commission File No. 0-6544 BRUNO'S, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS FOR THE FORTY AND FOURTEEN WEEK PERIODS ENDING APRIL 9, 1994, AND APRIL 3, 1993 (In Thousands Except Per Share Amounts) (Unaudited)
Forty Weeks Ended Fourteen Weeks Ended _____________________________ _____________________________ 4-9-94 4-3-93 4-9-94 4-3-93 ___________ ___________ ___________ ___________ Net Sales $ 2,173,757 $ 2,150,680 $ 764,602 $ 762,089 ----------- ----------- ----------- ----------- Cost and Expenses: Cost of Products Sold $ 1,679,689 $ 1,679,759 $ 591,243 $ 604,199 Store Operating, Selling and Administrative Expenses 391,436 367,642 138,891 132,746 Depreciation and Amortization 41,228 36,952 14,922 13,267 Interest Expense 15,930 14,004 5,753 5,159 Interest Income (3,213) (287) (1,435) (136) ___________ ___________ ___________ ___________ $ 2,125,070 $ 2,098,070 $ 749,374 $ 755,235 ___________ ___________ ___________ ___________ Income Before Provision For Income Taxes and Extraordinary Item $ 48,687 $ 52,610 $ 15,228 $ 6,854 Provison For Income Taxes (Note 3) 20,725 18,992 5,787 2,474 ----------- ----------- ----------- ----------- Income Before Extraordinary Item $ 27,962 $ 33,618 $ 9,441 $ 4,380 Extraordinary Item, Net (Note 5) (3,288) -- -- -- ___________ ___________ ___________ ___________ Net Income $ 24,674 $ 33,618 $ 9,441 $ 4,380 Cash Dividends (14,055) (13,090) (4,685) (4,295) Retained Earnings, Beginning Of Period 360,022 330,511 365,885 350,954 ___________ ___________ ___________ ___________ Retained Earnings, End Of Period $ 370,641 $ 351,039 $ 370,641 $ 351,039 =========== =========== =========== =========== Earnings Per Common Share: Income Before Extraordinary Item $ 0.36 $ 0.43 $ 0.12 $ 0.06 Extraordinary Item, Net (0.04) -- -- -- ___________ ___________ ___________ ___________ Net Income $ 0.32 $ 0.43 $ 0.12 $ 0.06 =========== =========== =========== =========== Cash Dividends Per Common Share $ 0.18 $ 0.165 $ 0.06 $ 0.055 =========== =========== =========== =========== See accompanying notes to condensed consolidated financial statements.
-3- Commission File No. 0-6544 BRUNO'S, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE FORTY WEEK PERIODS ENDING APRIL 9, 1994, AND APRIL 3, 1993 (In Thousands) (Unaudited)
________________________ 4-9-94 4-3-94 _________ _________ CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 24,674 $ 33,618 _________ _________ Adjustments to reconcile net income to net cash provided by operating activities- Depreciation & amortization $ 41,228 $ 36,952 LIFO provision (credit) (590) (1,642) Change in assets and liabilities (14,616) (28,851) _________ _________ Total adjustments $ 26,022 $ 6,459 _________ _________ Net cash provided by operating $ 50,696 $ 40,077 activities _________ _________ CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of property $ 8,899 $ -- Capital expenditures (52,653) (100,557) _________ _________ Net cash used in investing activities $ (43,754) $ (100,557) _________ _________ CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings (repayments) line of credit, net $ (35,000) $ 10,000 Purchase of stock -- (49,569) Proceeds form issuance of stock 255 1,335 Dividends paid (14,056) (13,090) Reductions of long-term debt (145,073) (2,212) Proceeds from issuance of long-term debt 200,000 100,000 _________ _________ Net cash provided by financing activities $ 6,126 $ 46,464 _________ _________ Net increase (decrease) in cash $ 13,068 $ (14,016) Cash beginning of period 20,093 19,507 _________ _________ Cash end of period $ 33,161 $ 5,491 ========= ========= See accompanying notes to condensed consolidated financial statements.
-4- Commission File No. 0-6544 BRUNO'S, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS APRIL 9, 1994 AND APRIL 3, 1993 (Dollar Amounts in Thousands) 1. Basis of Presentation The accompanying unaudited consolidated financial statements include the accounts of Bruno's, Inc. and its wholly owned sub- sidiaries. Significant intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the consolidated financial position and results of operations of the Company for the interim periods. The results of operations for the forty (40) weeks ended April 9, 1994, are not necessarily indicative of the results which may be expected for the entire year. 2. Earnings Per Share Earnings per share was computed on the weighted average number of common shares outstanding during the respective periods (78,087,000 and 78,936,000 for the forty week periods, respectively and 78,092,000 and 78,048,000 for the fourteen week periods, respectively). 3. Income Taxes On August 10, 1993, the Omnibus Budget Reconciliation Act of 1993, was signed into law which increased Federal income tax rates from 34% to 35% for the Company retroactively effective to January 1, 1993. The new law required an adjustment of approximately $2,200 to retroactively restate the current and deferred income tax liabilities. This adjustment combined with the increased effective tax rate, resulted in an effective income tax rate for the forty weeks ended April 9, 1994 of 42.6%. -5- Commission File No. 0-6544 4. Contingencies The Company is a party to various legal and taxing authority proceedings incidental to its business. In the opinion of management, the ultimate liability with respect to these actions will not materially affect the financial position or results of operations of the Company. The Company is contingently liable for rent payments for three store sites sold during fiscal 1992 should these stores be closed during the initial term of the remaining lease and not subleased to another party. The contingent liability for two of the stores is $1,514 per year through 2014, while the third store has not yet been leased. The Company has received a notice from the Pension Benefit Guaranty Corporation ("PBGC") contending that inappropriate actuarial assumptions were used in connection with final distributions of a previously terminated plan. As such, the PBGC has taken a position that additional distributions must be made to former participants. The amount of the Company's liability, if any, and the ultimate outcome is unknown at the present time, but is not expected to exceed $1,700, net of income taxes. 5. Debt Restructure On September 1, 1993, the Company redeemed the $142,750 of 6.5% Convertible Subordinated Debentures at 103.9% of face value in accordance with the terms of the related indenture. The redemption was financed with the proceeds of a $200,000 term loan which will amortize over 10 to 15 years at rates ranging from 6.6% to 7.1%. This redemption resulted in a loss of $3,288 (net of the applicable income tax benefit of $2,015) which is classified as an extraordinary item in the accompanying fiscal 1994 statements of income and retained earnings. -6- Commission File No. 0-6544 BRUNO'S, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is management's discussion and analysis of significant factors affecting the Company's earnings during the periods included in the accompanying condensed consolidated statements of income. A table showing the percentage of net sales represented by certain items in the Company's condensed consolidated state- ments of income is as follows:
FORTY WEEKS ENDED FOURTEEN WEEKS ENDED _______________________ _______________________ 4-9-94 4-3-93 4-9-94 4-3-93 ________ ________ ________ ________ Net Sales 100.0 % 100.0 % 100.0 % 100.0 % Cost Of Products Sold 77.3 78.1 77.3 79.3 ________ ________ ________ ________ Gross Profit 22.7 % 21.9 % 22.7 % 20.7 % Store Operating, Selling, and Administrative Expenses 18.0 17.1 18.2 17.4 Depreciation and Amortization 1.9 1.7 1.9 1.7 Net Interest Expense 0.6 0.6 0.6 0.7 ________ ________ ________ ________ Income Before Provision For Income Taxes and Extraordinary Item 2.2 % 2.5 % 2.0 % 0.9 % Provision for Income Taxes 0.9 0.9 0.8 0.3 ________ ________ ________ ________ Income Before Extraordinary Item 1.3 % 1.6 % 1.2 % 0.6 % Extraordinary Item, Net (0.2) -- -- -- ________ ________ ________ ________ Net Income 1.1 % 1.6 % 1.2 % 0.6 % ======== ======== ======== ========
A summary of the period to period changes in certain items included in the condensed statements of income is as follows:
COMPARISON OF ________________________________________________________________ FORTY WEEKS ENDED FOURTEEN WEEKS ENDED 4-9-94 and 4-3-93 4-9-94 and 4-3-93 ________________________________________________________________ Increase (Decrease) (Dollars in Thousands Except Per Share Amounts) Net Sales $ 23,077 1.1 % $ 2,513 0.3 % Cost Of Products Sold (70) 0.0 (12,956) (2.1) Store Operating, Selling, and Administrative Expenses 23,794 6.5 6,145 4.6 Depreciation and Amortization 4,276 11.6 1,655 12.5 Net Interest Expense (1,000) (7.3) (705) (14.0) Income Before Extraordinary Item (5,656) (16.8) 5,061 115.5 Extraordinary Item, Net 3,288 100.0 -- -- Net Income (8,944) (26.6) 5,061 115.5 Income Per Common Share Before Extraordinary Item (0.07) (16.3) 0.06 100.0 Net Income Per Common Share (0.11) (25.6) 0.06 100.0
- 7 - Commission File No. 0-6544 BRUNO'S, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollar Amounts In Thousands) RESULTS OF OPERATIONS Net sales increased 1.1% ($23,077) and .3% ($2,513), respectively, in the forty and fourteen week periods ended April 9, 1994, as compared to the applicable periods in the prior year. The net sales increase was primarily attributed to the thirteen new stores opened in the past year which more than offset closed and relocated stores. Same store sales decreased 1% during the third quarter of fiscal 1994 as compared with the same period in fiscal 1993. Gross profit as a percentage of net sales was 22.7%, in the forty and fourteen week periods ended April 9, 1994, as compared to a gross profit percentage of 21.9% and 20.7% for the applicable periods in fiscal 1993. The increase in gross profit percentages for the forty and fourteen week periods ended April 9, 1994 as compared to the same periods in fiscal 1993 are primarily due to a reduced margin pricing strategy inplace during in the third quarter of 1993. The Company did not extend the reduced margin strategy to fiscal year 1994, and thus margins have improved. Store operating, selling and administrative expenses as a percentage of net sales increased from 17.4% for the fourteen weeks ended April 3, 1993, to 18.2% for the fourteen weeks ended April 9, 1994. This increase as a percentage of net sales is a continuing trend of increased costs associated with new store openings and store renovations, coupled with slower sales growth. The increase in depreciation and amortization expense as a percentage of sales in fiscal 1994 over fiscal 1993 is the result of store growth (and the related growth in depreciable assets) exceeding the applicable sales growth. Net interest expense has decreased for the fourteen weeks ended April 9, 1994 as compared to the same period in 1993 due to lower levels of short-term borrowings. The Company's effective income tax rate increased from 36.1% in the third quarter of fiscal 1993 to 38.0% in the third quarter of fiscal 1994, and increased from 36.1% for the forty week periods ended April 3, 1993, to 42.6% for the same period in fiscal 1994. See Note 3 of Notes to Condensed Consolidated Financial Statements for a complete discussion of the increased provision for income taxes related to increased statutory Federal income tax rates. -8- Commission File No. 0-6544 As completely discussed in Note 5 of Notes to Condensed Consolidated Financial Statements, the Company redeemed its 6.5% Convertible Debentures at 103.9% of face value during the first quarter of fiscal 1994. This redemption resulted in an extraordinary loss of $3,288 (net of the applicable income tax benefit of $2,015). LIQUIDITY AND CAPITAL RESOURCES Historically, the Company has funded working capital requirements, capital expenditures and other cash requirements primarily through cash flow from operations. Operating activities have generated $50,696 and $40,077, respectively, in cash in each of the forty week periods ended April 9, 1994, and April 3, 1993. Additional working capital was raised in the first quarter of fiscal 1993 and 1994 through proceeds from the issuance of term loans. Also, the Company has at its disposal a $75 million unsecured line of credit to meet any short-term cash requirements. The primary use of cash in investing activities relates to the Company's capital expenditures. While the Company has decreased these activities, the Company has continued its expanding and remodeling of stores during fiscal 1994. Capital expenditures were $52,653 compared with $100,557 in fiscal 1994 and fiscal 1993, respectively. The fiscal 1994 capital expenditures were financed primarily with internally generated funds. The Company anticipates that funds necessary for the expansion of its business during the foreseeable future will be financed through available cash reserves, internally generated funds and short-term borrowings. However, the Company may use for such purposes additional sources of financing, which may include long-term borrowings and the issuance of additional debt or equity securities. The Company estimates capital expenditures for the remainder of fiscal 1994 to be approximately $10,000 and plans to finance these expenditures through internally generated funds or other available resources. These estimated capital expenditures are primarily related to the opening of new stores and the remodeling of existing stores. Management continuously evaluates all stores based upon volume, profitability, location, age, demographics, etc. and makes closure decisions based upon the evaluations. -9- Commission File No. 0-6544 As stated earlier, the Company has at its disposal a $75 million unsecured line of credit to meet short-term cash requirements. At July 3, 1993, $35 million of borrowings was outstanding under this line of credit, while no borrowings were outstanding at April 9, 1994. The other primary use of cash in financing activities relates to the payment of cash dividends which aggregated $14,056 and $13,090 during the first two quarters of fiscal 1994 and 1993, respectively. During the first quarter of fiscal 1993, the Company issued a term bank loan for $100,000 to finance a stock repurchase and repay short-term borrowings. As fully discussed in Note 5 of Notes to Condensed Consolidated Financial Statements, during the first quarter of fiscal 1994, the Company redeemed its 6.5% Convertible Subordinated Debentures with the proceeds of a $200,000 term loan. -10- Commission File No. 0-6544 BRUNO'S, INC. OTHER INFORMATION The Company was not required to report material unusual charges or credits to income pursuant to Item 10 (a) or a change in independent accountants pursuant to Item 12 of Form 8-K for any of the forty (40) weeks ended April 9, 1994. 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. BRUNO'S, INC. REGISTRANT Date May 20, 1994 Glenn J. Griffin Glenn J. Griffin Executive Vice President, and Chief Financial Officer * *Both duly authorized officer and principal financial officer. -11- -----END PRIVACY-ENHANCED MESSAGE-----