-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K7+2HA5nE5C4Kh/pH2feXYCbUeUwSZWsE+y/FLnn/GsAWX16aCMkj8EOJ3Emi1qd tQlt14ZJi1r9GS6cM0HaOw== 0000014920-96-000003.txt : 19960921 0000014920-96-000003.hdr.sgml : 19960921 ACCESSION NUMBER: 0000014920-96-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960727 FILED AS OF DATE: 19960910 SROS: NASD 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: 96627747 BUSINESS ADDRESS: STREET 1: 800 LAKESHORE PKWY CITY: BIRMINGHAM STATE: AL ZIP: 35211 BUSINESS PHONE: 2059409400 MAIL ADDRESS: STREET 1: PO BOX 2486 CITY: BIRMINGHAM STATE: AL ZIP: 35201 10-Q 1 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: JULY 27, 1996 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 (205) 940-9400 OUTSTANDING COMMON STOCK AS OF July 27, 1996 is 25,147,639 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. PART I. FINANCIAL INFORMATION Item 1. Financial Statements: Condensed Consolidated Balance Sheets at July 27, 1996 and January 27, 1996 2 Condensed Consolidated Statements of Income for the Twenty-six (26) and Thirteen (13) Week Periods Ended July 27, 1996 and the Twenty-six (26) and Twelve (12) Week Periods Ended July 1, 1995 3 Condensed Consolidated Statements of Cash Flows for the Twenty-six (26) Week Periods Ended July 27, 1996 and July 1, 1995 4 Notes to Condensed Consolidated Financial Statements 5-6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-11 PART II. OTHER INFORMATION Item 1. Legal Proceedings 12 Item 2. Change in Securities 12 Item 3. Defaults Upon Senior Securities 12 Item 4. Submission of Matters to a Vote of Security Holders 12-13 Item 5. Other Information 13 Item 6. Exhibits and Reports on Form 8-K 13-14 Commission File No. 0-6544 BRUNO'S, INC. CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JULY 27, 1996 AND JANUARY 27, 1996 (In Thousands Except Share and Per Share Amounts) - - -----------------------------------------------------------------------------------------
July 27, January 27, 1996 1996 (unaudited) ------------ ------------ ASSETS: Current assets: Cash and cash equivalents $ 61,595 $ 57,387 Receivables 23,965 25,294 Inventories, net of LIFO reserve of $10,405 and and $8,905, respectively 205,348 215,589 Prepaid expenses 9,583 11,225 Deferred income taxes 7,352 6,733 ------------ ------------ Total current assets 307,843 316,228 ------------ ------------ Property and equipment, net 490,880 491,664 ------------ ------------ Intangibles and other assets, net 62,012 65,254 ------------ ------------ Total $ 860,735 $ 873,146 ============ ============ LIABILITIES AND DEFICIENCY IN NET ASSETS: Current liabilities: Current maturities of long-term debt and capitalized lease obligations $ 1,890 $ 1,938 Accounts payable 159,239 167,283 Accrued income taxes 1,457 583 Accrued payroll and related expenses 15,492 17,975 Other accrued expenses 67,161 62,736 ------------ ------------ Total current liabilities 245,239 250,515 ------------ ------------ Noncurrent liabilities: Long-term debt 809,112 834,223 Capitalized lease obligations 17,156 17,963 Deferred income taxes 24,683 21,082 Other noncurrent liabilities 38,520 29,947 Deferred compensation 759 759 ------------ ------------ Total noncurrent liabilities 890,230 903,974 ------------ ------------ Deficiency in net assets: Common Stock, $.01 par value, 60,000,000 251 250 shares authorized; 25,147,639 and 25,007,015 issued and outstanding, respectively Paid-in capital (590,410) (592,096) Retained earnings 315,425 310,503 ------------ ------------ Total deficiency in net assets (274,734) (281,343) ------------ ------------ Total $ 860,735 $ 873,146 ============ ============ See notes to condensed consolidated financial statements.
2 Commission File No. 0-6544 BRUNO'S, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE TWENTY-SIX AND THIRTEEN WEEK PERIODS ENDED JULY 27, 1996 AND THE TWENTY-SIX AND TWELVE WEEK PERIODS ENDED JULY 1, 1995 (UNAUDITED) (In Thousands Except Share and Per Share Amounts) - - ----------------------------------------------------------------------------------------------------
July 27, July 1, July 27, July 1, 1996 1995 1996 1995 (26 Weeks) (26 Weeks) (13 Weeks) (12 Weeks) NET SALES $ 1,452,497 $ 1,431,828 $ 719,775 $ 668,554 ----------- ----------- ----------- ----------- COST AND EXPENSES: Cost of products sold 1,100,842 1,099,986 546,718 511,740 Store operating, selling and administrative expenses 272,029 282,864 135,035 120,147 Depreciation and amortization 28,108 26,037 14,402 12,546 Interest expense, net 42,513 10,972 21,373 4,773 ----------- ----------- ----------- ----------- Total cost and expenses 1,443,492 1,419,859 717,528 649,206 ----------- ----------- ----------- ----------- Income before provision for income taxes 9,005 11,969 2,247 19,348 INCOME TAXES 3,422 4,229 854 7,033 ----------- ----------- ----------- ----------- Income before extraordinary item 5,583 7,740 1,393 12,315 EXTRAORDINARY ITEM, NET 662 - 662 - ----------- ----------- ----------- ----------- Net income $ 4,921 $ 7,740 $ 731 $ 12,315 =========== =========== =========== =========== EARNINGS (LOSS) PER COMMON SHARE: Income before extraordinary item 0.22 0.10 0.06 0.16 Extraordinary Item, net (0.03) - (0.03) - ----------- ----------- ----------- ----------- Net Income $ 0.19 $ 0.10 $ 0.3 $ 0.16 =========== =========== =========== =========== CASH DIVIDENDS PER COMMON SHARE $ - $ 0.30 $ - $ 0.24 ============ =========== =========== =========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 25,129,29 77,503,071 25,147,639 77,503,341 ============ =========== =========== =========== See notes to condensed consolidated financial statements.
3 Commission File No. 0-6544 BRUNO'S, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE TWENTY-SIX WEEK PERIODS ENDED JULY 27, 1996 AND JULY 1, 1995 (UNAUDITED) (Amounts In Thousands) - - ---------------------------------------------------------------------------------
July 27, July 1, 1996 1995 (26 Weeks) (26 Weeks) ------------- ------------ OPERATING ACTIVITIES: Net income $ 4,921 $ 7,740 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 28,108 26,037 LIFO provision 1,500 (529) Change in assets and liabilities 20,906 59,439 ------------- ------------ Total adjustments 50,514 84,947 ------------- ------------ Net cash provided by operating activities 55,435 92,687 ------------- ------------ INVESTING ACTIVITIES: Proceeds from sale of property 1,400 6,447 Capital expenditures (28,348) (27,516) ------------- ------------ Net cash used in investing activities (26,948) (21,069) ------------- ------------ FINANCING ACTIVITIES: Reductions of long-term debt (25,966) (41,132) Sale of common stock 1,687 4 Dividends paid - (10,060) ------------- ------------ Net cash used in financing activities (24,279) (51,188) ------------- ------------ NET INCREASE IN CASH AND CASH EQUIVALENTS 4,208 20,430 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 57,387 5,486 ------------- ------------ CASH AND CASH EQUIVALENTS, END OF PERIOD $ 61,595 $ 25,916 ============= ============ See notes to condensed consolidated financial statements.
4 Commission File No. 0-6544 BRUNO'S, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE TWENTY-SIX AND THIRTEEN WEEK PERIODS ENDED JULY 27, 1996 AND THE TWENTY-SIX AND TWELVE WEEK PERIODS ENDED JULY 1, 1995 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements include the accounts of Bruno's, Inc. and its wholly-owned subsidiaries. Significant inter-company balances and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary for a fair statement of the consolidated financial position and results of operations of the Company for the interim periods. In December, 1995, the Company changed its fiscal year to a 52 or 53 week year ending on the Saturday closest to January 31 from the Saturday closest to June 30. Due to the change in year end described above, the consolidated statements of income compare the twenty-six (26) and thirteen (13) week periods ended July 27, 1996 to the twenty-six (26) and twelve (12) week periods ended July 1, 1995. The results of operations of the Company for the twenty-six weeks ended July 27, 1996, are not necessarily indicative of the results which may be expected for the entire year. 2. INCOME PER SHARE Income per share was computed based on the weighted average number of common shares outstanding during the respective periods. As a result of the merger of Crimson Acquisition Corp. with and into the Company on August 18, 1995, 25,147,639 shares are outstanding at July 27, 1996. Stock options outstanding are common stock equivalents but were excluded from income per common share computations because their effect either was not material or would be antidilutive to the calculation of net income per share. 3. CONTINGENCIES In 1991, the Company received a favorable termination letter with respect to the termination of the employee pension plan of a supermarket chain acquired by the Company in 1989. Pursuant to that termination, distributions were made to all participants of that employee pension plan. After all of the benefit liabilities were paid, remaining plan assets of approximately $2.7 million were transferred to the Company as a reversion of excess pension assets. On June 15, 1992, the Company received a letter from the Pension Benefit Guaranty Corporation ("PBGC") contending that inappropriate actuarial assumptions were used to determine the value of the benefits distributed and that additional distributions must be made to numerous former participants in the plan. In August 1994, the Company filed suit in the U.S. District Court for the Northern District of Alabama challenging the PBGC's determination. In April 1995, the District Court entered summary judgment against the Company and in favor of the PBGC. The Company appealed the District Court's ruling to the 5 Commission File No. 0-6544 U.S. Court of Appeals for the Eleventh Circuit, which ruled against the Company. At July 27, 1996, the Company had provided a $2.0 million liability for this matter in its consolidated financial statements. In addition, 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. On May 23, 1996, the Company entered into an agreement to purchase Seesel Holdings, Inc. ("SHI"), which owns and operates a retail supermarket business in Memphis, Tennessee. SHI had formerly entered into an agreement with Fleming Companies, Inc. ("Fleming") under which SHI gave Fleming the right of first refusal to elect to acquire SHI on the same terms as the agreement with the Company. There is currently a dispute involving SHI, Fleming and the Company regarding whether Fleming properly exercised its right of first refusal. This dispute is the subject of pending litigation in the United States District Court for the Western District of Tennessee. The Company contends that Fleming did not properly exercise its right of first refusal and, as a result, that the Company has the right to complete the acquisition of SHI pursuant to the terms of the agreement between the Company and SHI. Under such agreement, the Company would purchase SHI for approximately $62 million in cash. The Company intends to pursue other acquisition opportunities as and when they become available. The Company also has commenced an analysis of the return on assets for each of the Company's existing stores. Based on the results of this analysis, which the Company expects to complete during the quarter ended October 26, 1996, the Company may sell or close certain of its existing stores. 6 Commission File No. 0-6544 ITEM II 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. The quarter ended July 27, 1996 is a thirteen week period and the quarter ended July 1, 1995 is a twelve week period and accordingly, certain of the period-to-period changes are a consequence of such difference. A table showing the percentage of net sales represented by certain items in the Company's condensed consolidated statements of income is as follows: COMPARISON OF: --------------------------------------------------------- July 27, July 1, July 27, July 1, 1996 1995 1996 1995 (26 Weeks) (26 Weeks) (13 Weeks) (12 Weeks) ---------- ---------- ---------- ---------- Net sales 100.00% 100.00% 100.00% 100.00% Cost of products sold 75.79% 76.82% 75.96% 76.54% Store operating, selling, and administrative expenses 18.73% 19.76% 18.76% 17.98% --------- --------- --------- --------- EBITDA 5.48% 3.42% 5.28% 5.48% Depreciation and amortization 1.94% 1.82% 2.00% 1.88% Interest expense, net 2.93% 0.77% 2.97% 0.71% --------- --------- --------- --------- Income before provision for income taxes and extraordinary item 0.62% 0.84% 0.31% 2.89% Income taxes 0.24% 0.30% 0.12% 1.05% Extraordinary item, net 0.05% 0.00% 0.09% 0.00% --------- --------- --------- --------- Net income 0.34% 0.54% 0.10% 1.84% ========= ========= ========= =========
A summary of the period to period changes in certain items included in the condensed statements of income is as follows:
Increase (Decrease) Twenty-six weeks ended Thirteen weeks ended July 27, 1996 July 27, 1996 and July 1, 1995 and twelve weeks ended July 1, 1995 ------------------------- ----------------------------------- Dollars in Thousands Except Per Share Amounts $ % Change $ % Change ---------- ---------- ---------- ---------- Net sales 20,669 1.44% 51,221 7.66% Cost of products sold 856 0.08% 34,978 6.84% Store operating, selling, and administrative expenses 10,835) -3.83% 14,888 12.39% --------- --------- EBITDA 30,648 62.58% 1,355 3.70% Depreciation and amortization 2,071 7.95% 1,856 14.79% Interest expense, net 31,541 287.47% 16,600 347.80% --------- Income before provision for income taxes and extraordinary item (2,964) -24.77% (17,101) -88.39% Income taxes (807) -19.08% (6,179) -87.86% Extraordinary item, net 662 N/A 662 N/A --------- --------- Net income (2,819) -36.43% (11,584) -94.07% ========= ========= Net income per common share before extraordinary items 0.12 120.00% (0.10) -62.50% Net income per common share 0.09 90.00% (0.13) -81.25% ========= =========
7 Commission File No. 0-6544 BRUNO'S, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS COMPARISON OF OPERATIONS FOR THE TWENTY-SIX WEEK PERIOD ENDED JULY 27, 1996 TO THE TWENTY-SIX WEEK PERIOD ENDED JULY 1, 1995 (UNAUDITED) Net Sales Net sales increased $20.7 million or 1.4% for the period ended July 27, 1996, as compared to the period ended July 1, 1995. The Company did not report results of operations for the twenty-six week period ended July 29, 1995; however, same store sales increased 0.5% for the period ended July 27, 1996 compared to the period ended July 29, 1995. Gross Profit Gross profit (net sales less cost of products sold) as a percentage of net sales was 24.2% in the period ended July 27, 1996, as compared to 23.2% in the period ended July 1, 1995. The increase in gross profit was primarily due to improved buying and pricing practices resulting from the implementation of a new distribution center ordering system. Gross profit in the prior year was adversely impacted by the Company recognizing a lower level of vendor allowances in the 1995 period as compared to the 1996 period. Store Operating, Selling and Administrative Expenses Store operating, selling and administrative expenses as a percentage of net sales was 18.7% for the period ended July 27, 1996, as compared to 19.8% for the period ended July 1,1995. The decline was primarily the result of an unusual adjustment recorded in the period ended July 1, 1995 to increase the self- insurance reserve by $22.2 million. Excluding the self-insurance adjustment, store operating, selling and administrative expenses as a percentage of net sales increased to 18.7% for the period ended July 27, 1996 from 18.2% for the period ended July 1, 1995 due to costs associated with increased promotional activities. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) EBITDA increased $30.6 million or 62.6% in the period ended July 27, 1996 compared to the period ended July 1, 1995. The period ended July 1, 1995 included the adjustment to increase the Company's self-insurance reserve and a lower level of vendor allowances as compared to the 1996 period. 8 Commission File No. 0-6544 Interest Expense, Net The $31.5 million increase in net interest expense for the period ended July 27, 1996, compared to the period ended July 1, 1995 is due to the Company's increase in long-term debt from $221.5 million at July 1, 1995 to $828.2 million at July 27, 1996. The increase in long-term debt is attributable to financing incurred in connection with the Company's merger with Crimson Acquisition Corp. on August 18, 1995 (the "Merger"). Income Taxes The Company's effective income tax rate remained at 38% during the periods ended July 27, 1996 and July 1, 1995. Extraordinary Item, Net In July 1996, the Company prepaid $25 million in principal amount of its $475 million term loan facility entered into in connection with the Merger. As a result of this repayment, the related debt issuance costs of $662,000 (net of tax of $405,000) were written off in the period ended July 27, 1996. COMPARISON OF OPERATIONS FOR THE THIRTEEN WEEK PERIOD ENDED JULY 27, 1996 TO THE TWELVE WEEK PERIOD ENDED JULY 1, 1995 (UNAUDITED) Net Sales Net sales increased $51.2 million or 7.7% in the thirteen-week period ended July 27, 1996 as compared to the twelve-week period ended July 1, 1995. Excluding the impact of the thirteenth week in the period ended July 27, 1996, sales decreased $1.1 million or 0.2%. The Company did not report results of operations for the thirteen-week period ended July 29, 1995; however, same store sales decreased 0.6% for the thirteen-week period ended July 27, 1996 as compared to the thirteen-week period ended July 29, 1995 due to a number of recent new store openings by competitors in the Company's trading areas. Gross Profit Gross profit (net sales less cost of products sold) as a percentage of net sales was 24.0% in the period ended July 27, 1996, as compared to a gross profit percentage of 23.5% for the period ended July 1, 1995. The increase in gross profit was primarily due to improved buying and pricing practices resulting from the implementation of a new distribution center ordering system. Store Operating, Selling and Administrative Expenses Store operating, selling and administrative expenses as a percentage of net sales was 18.8% for the period ended July 27, 1996, as compared to 18.0% for the period ended July 1, 1995 primarily due to costs associated with increased promotional activities. 9 Commission File No. 0-6544 Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) EBITDA increased $1.4 million or 3.7% in the period ended July 27, 1996 compared to the period ended July 1, 1995 due to the additional week in the current year's period. Interest Expense, Net The $16.6 million increase in net interest expense for the period ended July 27, 1996, compared to the period ended July 1, 1995 is due to the Company's increase in long-term debt from $221.5 million at July 1, 1995 to $828.2 million at July 27, 1996. The increase in long-term debt is attributable to financing incurred in connection with the Merger. Income Taxes The Company's effective income tax rate remained at 38% during the periods ended July 27, 1996 and July 1, 1995. Extraordinary Item, Net In July 1996, the Company prepaid $25 million in principal amount of its $475 million term loan facility entered into in connection with the Merger. As a result of this repayment, the related debt issuance costs of $662,000 (net of tax of $405,000) were written off in the period ended July 27, 1996. 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 generated $55.4 million and $92.7 million, respectively, in cash in each of the periods ended July 27, 1996 and July 1, 1995. The Company believes that operating cash flows will be sufficient to fund store expansion and working capital needs; however, if the Company needs additional cash, it has a $125 million undrawn revolving credit facility available. There were no borrowings outstanding under this facility during the twenty-six week period ended July 27, 1996. Cash flows used in investing activities were $26.9 million and $21.1 million for the twenty-six week periods ended July 27, 1996 and July 1, 1995, respectively. Proceeds from the sale of certain property totaled $1.4 million during the twenty-six week period ended July 27, 1996 compared to $6.4 million during the twenty-six week period ended July 1, 1995. Capital expenditures were $28.3 in the twenty-six week period ended July 27, 1996 compared to $27.5 million in the twenty-six week period ended July 1, 1995. The Company's capital expenditures are primarily related to the opening of new and replacement stores and investments in purchasing and warehousing systems technology. The Company believes that capital expenditures for the remainder of fiscal 1996 will be financed through cash flows from operations, existing cash balances and, if necessary, borrowings under its revolving credit facility. The primary use of cash in financing activities during the twenty-six week period ended July 27, 1996, was $25.9 million in long-term debt repayments, of which $25 million was a prepayment under the term loan facility. The Company also generated $1.7 million through sales of shares of the Company's common 10 Commission File No. 0-6544 stock to four senior executives of the Company. The Company's financing arrangements contain certain restrictions which limit its ability to make future borrowings beyond the amounts currently available. On May 23, 1996, the Company entered into an agreement to purchase Seesel Holdings, Inc. ("SHI"), which owns and operates a retail supermarket business in Memphis, Tennessee. SHI had formerly entered into an agreement with Fleming Companies, Inc. ("Fleming") under which SHI gave Fleming the right of first refusal to elect to acquire SHI on the same terms as the agreement with the Company. There is currently a dispute involving SHI, Fleming and the Company regarding whether Fleming properly exercised its right of first refusal. This dispute is the subject of pending litigation in the United States District Court for the Western District of Tennessee. The Company contends that Fleming did not properly exercise its right of first refusal and, as a result, that the Company has the right to complete the acquisition of SHI pursuant to the terms of the agreement between the Company and SHI. Under such agreement, the Company would purchase SHI for approximately $62 million in cash, which would be financed through existing cash balances and, if necessary, borrowings under its revolving credit facility. The Company intends to pursue other acquisition opportunities as and when they become available. The Company also has commenced an analysis of the return on assets for each of the Company's existing stores. Based on the results of this analysis, which the Company expects to complete during the quarter ended October 26, 1996, the Company may sell or close certain of its existing stores. 11 Commission File No. 0-6544 PART II. OTHER INFORMATION Item 1. Legal Proceedings In 1991, the Company received a favorable termination letter with respect to the termination of the employee pension plan of a supermarket chain acquired by the Company in 1989. Pursuant to that termination, distributions were made to all participants of that employee pension plan. After all of the benefit liabilities were paid, remaining plan assets of approximately $2.7 million were transferred to the Company as a reversion of excess pension assets. On June 15, 1992, the Company received a letter from the Pension Benefit Guaranty Corporation ("PBGC") contending that inappropriate actuarial assumptions were used to determine the value of the benefits distributed and that additional distributions must be made to numerous former participants in the plan. In August 1994, the Company filed suit in the U.S. District Court for the Northern District of Alabama challenging the PBGC's determination. In April 1995, the District Court entered summary judgment against the Company and in favor of the PBGC. The Company appealed the District Court's ruling to the U.S. Court of Appeals for the Eleventh Circuit, which ruled against the Company. At July 27, 1996, the Company has provided a $2.0 million liability for this matter in its consolidated financial statements. In addition, 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. Item 2. Change In Securities In connection with the Merger, the shareholders of the Company approved the Company's Amended and Restated Articles of Incorporation, which among other things reduced the authorized shares of the Company's common stock from 200,000,000 to 60,000,000. The rights of the holders of the Company's common stock have not been materially modified. Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders The 1996 Annual Meeting of Stockholders of the Company was held on July 11, 1996 for the purpose of (i) electing eight directors of the Company, (ii) ratifying the appointment of Deloitte & Touche LLP as the Company's independent certified public accountants for the current fiscal year, and (iii) approving the 1996 Stock Purchase and Option Plan for Key Employees of Bruno's, Inc. and Subsidiaries. 12 Commission File No. 0-6544 The persons who were elected as directors of the Company and the vote for each such person are set forth below:
Director For Authority Withheld -------- ------ ------------------ William J. Bolton 24,229,467 19,152 Henry R. Kravis 24,229,250 19,369 George R. Roberts 24,228,874 19,745 Paul E. Raether 24,229,251 19,368 James H. Greene, Jr. 24,229,209 19,410 Nils P. Brous 24,229,307 19,312 Ronald G. Bruno 24,232,210 16,409 Robert G. Tobin 24,229,596 19,023
The voting results with respect to the ratification of the appointment of Deloitte & Touche LLP as the Company's independent certified public accountants for the current fiscal year are set forth below:
For Against Abstain ----- ------- ------- 24,226,334 7,183 15,102
The following is a summary of the voting results with respect to the approval of the 1996 Stock Purchase and Option Plan for Key Employees of Bruno's, Inc. and Subsidiaries:
For Against Abstain ----- ------- ------- 23,523,024 38,897 22,306
No other matters were submitted to a vote of the Company's stockholders, through the solicitation of proxies or otherwise, during the period covered by this report. Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit Number Description --------- ------------------- 27 Financial Data Schedule (for SEC use only) 10.32 1996 Stock Purchase and Option Plan for Key Employees of Bruno's, Inc. and Subsidiaries 13 Commission File No. 0-6544 (b) Reports on Form 8-K None 14 Commission File No. 0-6544 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BRUNO'S, INC. _________________ James J. Hagan, Senior Vice President-Finance and Chief Financial Officer Dated: September 10, 1996 15 EX-27 2 ARTICLE 5 FINANCIAL DATA SCHEDULE FOR SECOND QTR. 10-Q
5 1,000 6-Mos Jan-27-1996 Jan-28-1996 Jul-27-1996 61,595 0 23,965 0 205,348 307,843 490,880 28,108 860,735 245,239 400,000 251 0 0 (274,734) 860,735 1,452,497 1,452,497 1,100,842 1,100,842 272,029 0 42,513 9,005 3,422 5,583 0 662 0 4,921 0.19 0.19
EX-10.32 3 Commission File No. 0-6544 1996 STOCK PURCHASE AND OPTION PLAN FOR KEY EMPLOYEES OF BRUNO'S, INC. AND SUBSIDIARIES 1. Purpose of Plan The 1996 Stock Purchase and Option Plan for Key Employees of Bruno's, Inc. and Subsidiaries (the "Plan") is designed: (a) to promote the long term financial interests and growth of Bruno's, Inc. (the "Corporation") and its subsidiaries by attracting and retaining management personnel with the training, experience and ability to enable them to make a substantial contribution to the success of the Corporation's business; (b) to motivate management personnel by means of growth- related incentives to achieve long range goals; and (c) to further the alignment of interests of participants with those of the stockholders of the Corporation through opportunities for increased stock, or stock-based, ownership in the Corporation. 2. Definitions As used in the Plan, the following words shall have the following meanings: (a) "Grant" means an award made to a Participant pursuant to the Plan and described in Paragraph 5, including, without limitation, an award of an Incentive Stock Option, Stock Option, Stock Appreciation Right, Dividend Equivalent Right, Restricted Stock, Purchase Stock, Performance Units, Performance Shares or Other Stock Based Grant or any combination of the foregoing. (b) "Grant Agreement" means an agreement between the Corporation and a Participant that sets forth the terms, conditions and limitations applicable to a Grant. (c) "Board of Directors" means the Board of Directors of the Corporation. (d) "Committee" means the Compensation Committee of the Board of Directors. (e) "Common Stock" or "Share" means common stock of the Corporation which may be authorized but unissued, or issued and reacquired. Commission File No. 0-6544 (f) "Employee" means a person, including an officer, in the regular full-time employment of the Corporation or one of its Subsidiaries who, in the opinion of the Committee, is, or is expected to be, primarily responsible for the management, growth or protection of some part or all of the business of the Corporation. (g) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (h) "Fair Market Value" means such value of a Share as reported for stock exchange transactions and/or determined in accordance with any applicable resolutions or regulations of the Committee in effect at the relevant time. (i) "Participant" means an Employee, or other person having a unique relationship with the Corporation or one of its Subsidiaries, to whom one or more Grants have been made and such Grants have not all been forfeited or terminated under the Plan; provided, however, a non-employee director of the Corporation or one of its Subsidiaries may not be a Participant. (j) "Stock-Based Grants" means the collective reference to the grant of Stock Appreciation Rights, Dividend Equivalent Rights, Restricted Stock, Performance Units, Performance Shares and Other Stock Based Grants. (k) "Stock Options" means the collective reference to "Incentive Stock Options" and "Other Stock Options". (l) "Subsidiary" shall mean any corporation in an unbroken chain of corporations beginning with the Corporation if each of the corporations, or group of commonly controlled corporations, other than the last corporation in the unbroken chain then owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 3. Administration of Plan (a) The Plan shall be administered by the Committee. None of the members of the Committee shall be eligible to be selected for Grants under the Plan, or have been so eligible for selection within one year prior thereto; provided, however, that the members of the Committee shall qualify to administer the Plan for purposes of Rule 16b-3 (and any other applicable rule) promulgated under Section 16(b) of the Exchange Act to the extent that the Corporation is subject to such rule. The Committee may adopt its own rules of procedure, and action of a majority of the members of the Committee taken at a meeting, or action taken without a meeting by unanimous written consent, shall constitute action by the Committee. The Committee shall have the power and authority to administer, construe and interpret the Plan, to make rules for carrying it out and to make changes in such rules. Any such interpretations, rules, and administration shall be consistent with the basic purposes of the Plan. (b) The Committee may delegate to the Chief Executive Officer and to other senior officers of the Corporation its duties under the Plan subject to such conditions and limitations as the Committee shall prescribe except that only the Committee may designate and make Grants to Participants who are subject to Section 16 of the Exchange Act. 2 Commission File No. 0-6544 (c) The Committee may employ attorneys, consultants, accountants, appraisers, brokers or other persons. The Committee, the Corporation, and the officers and directors of the Corporation shall be entitled to rely upon the advice, opinions or valuations of any such persons. All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon all Participants, the Corporation and all other interested persons. No member of the Committee shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or the Grants, and all members of the Committee shall be fully protected by the Corporation with respect to any such action, determination or interpretation. 4. Eligibility The Committee may from time to time make Grants under the Plan to such Employees, or other persons having a unique relationship with Corporation or any of its Subsidiaries, and in such form and having such terms, conditions and limitations as the Committee may determine. No Grants may be made under this Plan to non-employee directors of Corporation or any of its Subsidiaries. Grants may be granted singly, in combination or in tandem. The terms, conditions and limitations of each Grant under the Plan shall be set forth in a Grant Agreement, in a form approved by the Committee, consistent, however, with the terms of the Plan; provided, however, such Grant Agreement shall contain provisions dealing with the treatment of Grants in the event of the termination, death or disability of a Participant, and may also include provisions concerning the treatment of Grants in the event of a change of control of Corporation. 5. Grants From time to time, the Committee will determine the forms and amounts of Grants for Participants. Such Grants may take the following forms in the Committee's sole discretion: (a) Incentive Stock Options - These are stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended ("Code"), to purchase Common Stock. In addition to other restrictions contained in the Plan, an option granted under this Paragraph 5(a), (i) may not be exercised more than 10 years after the date it is granted, (ii) may not have an option price less than the Fair Market Value of Common Stock on the date the option is granted, (iii) must otherwise comply with Code Section 422, and (iv) must be designated as an "Incentive Stock Option" by the Committee. The maximum aggregate Fair Market Value of Common Stock (determined at the time of each Grant) with respect to which Incentive Stock Options are first exercisable with respect to any participant under this Plan and any Incentive Stock Options granted to the Participant for such year under any plans of the Corporation or any Subsidiary in any calendar year is $100,000. Payment of the option price shall be made in cash or in shares of Common Stock, or a combination thereof, in accordance with the terms of the Plan, the Grant Agreement, and of any applicable guidelines of the Committee in effect at the time. (b) Other Stock Options - These are options to purchase Common Stock which are not designated by the Committee as "Incentive Stock Options". At the time of the Grant the Committee shall determine, and shall include in the Grant Agreement or other Plan rules, the option exercise period, the option price, and such other conditions or restrictions on the grant or 3 Commission File No. 0-6544 exercise of the option as the Committee deems appropriate, which may include the requirement that the grant of options is predicated on the acquisition of Purchase Shares under Paragraph 5(e) by the Optionee. In addition to other restrictions contained in the Plan, an option granted under this Paragraph 5(b), (i) may not be exercised more than 10 years after the date it is granted and (ii) may not have an option exercise price less than 50% of the Fair Market Value of Common Stock on the date the option is granted. Payment of the option price shall be made in cash or in shares of Common Stock, or a combination thereof, in accordance with the terms of the Plan, the Grant Agreement and of any applicable guidelines of the Committee in effect at the time. (c) Stock Appreciation Rights - These are rights that on exercise entitle the holder to receive the excess of (i) the Fair Market Value of a share of Common Stock on the date of exercise over (ii) the Fair Market Value on the date of Grant (the "base value") multiplied by (iii) the number of rights exercised as determined by the Committee. Stock Appreciation Rights granted under the Plan may, but need not be, granted in conjunction with an Option under Paragraph 5(a) or 5(b). The Committee, in the Grant Agreement or by other Plan rules, may impose such conditions or restrictions on the exercise of Stock Appreciation Rights as it deems appropriate, and may terminate, amend, or suspend such Stock Appreciation Rights at any time. No Stock Appreciation Right granted under this Plan may be exercised less than 6 months or more than 10 years after the date it is granted except in the event of death or disability of a Participant. To the extent that any Stock Appreciation Right that shall have become exercisable, but shall not have been exercised or cancelled or, by reason of any termination of employment, shall have become non-exercisable, it shall be deemed to have been exercised automatically, without any notice of exercise, on the last day on which it is exercisable, provided that any conditions or limitations on its exercise are satisfied (other than (i) notice of exercise and (ii) exercise or election to exercise during the period prescribed) and the Stock Appreciation Right shall then have value. Such exercise shall be deemed to specify that the holder elects to receive cash and that such exercise of a Stock Appreciation Right shall be effective as of the time of automatic exercise. (d) Restricted Stock - Restricted Stock is Common Stock delivered to a Participant with or without payment of consideration with restrictions or conditions on the Participant's right to transfer or sell such stock; provided that the price of any Restricted Stock delivered for consideration and not as bonus stock may not be less than 50% of the Fair Market Value of Common Stock on the date such Restricted Stock is granted or the price of such Restricted Stock may be the par value. If a Participant irrevocably elects in writing in the calendar year preceding a Grant of Restricted Stock, dividends paid on the Restricted Stock granted may be paid in shares of Restricted Stock equal to the cash dividend paid on Common Stock. The number of shares of Restricted Stock and the restrictions or conditions on such shares shall be as the Committee determines, in the Grant Agreement or by other Plan rules, and the certificate for the Restricted Stock shall bear evidence of the restrictions or conditions. No Restricted Stock may have a restriction period of less than 6 months, other than in the case of death or disability. (e) Purchase Stock - Purchase Stock refers to shares of Common Stock offered to a Participant at such price as determined by the Committee, the acquisition of which will make him eligible to receive under the Plan, including, but not limited to, Other Stock Options; provided, however, that the price of such Purchase Shares may not be less than 50% of the Fair Market Value of the Common Stock on the date such shares of Purchase Stock are offered. 4 Commission File No. 0-6544 (f) Dividend Equivalent Rights - These are rights to receive cash payments from the Corporation at the same time and in the same amount as any cash dividends paid on an equal number of shares of Common Stock to shareholders of record during the period such rights are effective. The Committee, in the Grant Agreement or by other Plan rules, may impose such restrictions and conditions on the Dividend Equivalent Rights, including the date such rights will terminate, as it deems appropriate, and may terminate, amend, or suspend such Dividend Equivalent Rights at any time. (g) Performance Units - These are rights to receive at a specified future date payment in cash of an amount equal to all or a portion of the value of a unit granted by the Committee. At the time of the Grant, in the Grant Agreement or by other Plan rules, the Committee must determine the base value of the unit, the performance factors applicable to the determination of the ultimate payment value of the unit and the period over which the Corporation's performance will be measured. These factors must include a minimum performance standard for the Corporation below which no payment will be made and a maximum performance level above which no increased payment will be made. The term over which the Corporation's performance will be measured shall be not less than six months. (h) Performance Shares - These are rights to receive at a specified future date payment in cash or Common Stock, as determined by the Committee, of an amount equal to all or a portion of the average Fair Market Value for all days that the Common Stock is traded during the last forty-five (45) days of the specified period of performance of a specified number of shares of Common Stock at the end of a specified period based on the Corporation's performance during the period. At the time of the Grant, the Committee, in the Grant Agreement or by Plan rules, will determine the factors which will govern the portion of the rights so payable and the period over which the Corporation's performance will be measured. The factors will be based on the Corporation's performance and must include a minimum performance standard for the Corporation below which no payment will be made and a maximum performance level above which no increased payment will be made. The term over which the Corporation's performance will be measured shall be not less than six months. Performance Shares will be granted for no consideration. (i) Other Stock-Based Grants - The Committee may make other Grants under the Plan pursuant to which shares of Common Stock (which may, but need not, be shares of Restricted Stock pursuant to Paragraph 5(d)) or other equity securities of the Corporation are or may in the future be acquired, or Grants denominated in stock units, including ones valued using measures other than market value. Other Stock-Based Grants may be granted with or without consideration; provided, however, that the price of any such Grant made for consideration that provides for the acquisition of shares of Common Stock or other equity securities of the Corporation may not be less than 50% of the Fair Market Value of the Common Stock or such other equity securities on the date of grant of such Grant. Such Other Stock-Based Grants may be made alone, in addition to or in tandem with any Grant of any type made under the Plan and must be consistent with the purposes of the Plan. 5 Commission File No. 0-6544 6. Limitations and Conditions (a) The number of Shares available for Grants under this Plan shall be 2,050,000 shares of the authorized Common Stock as of the effective date of the Plan. The number of Shares subject to Grants under this Plan to any one Participant shall not be more than 456,530 shares. Unless restricted by applicable law, Shares related to Grants that are forfeited, terminated, cancelled or expire unexercised, shall immediately become available for Grants. (b) No Grants shall be made under the Plan beyond ten years after the effective date of the Plan, but the terms of Grants made on or before the expiration of the Plan may extend beyond such expiration. At the time a Grant is made or amended or the terms or conditions of a Grant are changed, the Committee may provide for limitations or conditions on such Grant. (c) Nothing contained herein shall affect the right of the Corporation to terminate any Participant's employment at any time or for any reason. (d) Deferrals of Grant payouts may be provided for, at the sole discretion of the Committee, in the Grant Agreements. (e) Except as otherwise prescribed by the Committee, the amounts of the Grants for any employee of a Subsidiary, along with interest, dividend, and other expenses accrued on deferred Grants, shall be charged to the Participant's employer during the period for which the Grant is made. If the Participant is employed by more than one Subsidiary or by both the Corporation and a Subsidiary during the period for which the Grant is made, the Participant's Grant and related expenses will be allocated between the companies employing the Participant in a manner prescribed by the Committee. (f) Other than as specifically provided with regard to the death of a Participant, no benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to do so shall be void. No such benefit shall, prior to receipt thereof by the Participant, be in any manner liable for or subject to the debts, contracts, liabilities, engagements, or torts of the Participant. (g) Participants shall not be, and shall not have any of the rights or privileges of, stockholders of the Corporation in respect of any Shares purchasable in connection with any Grant unless and until certificates representing any such Shares have been issued by the Corporation to such Participants. (h) No election as to benefits or exercise of Stock Options, Stock Appreciation Rights, or other rights may be made during a Participant's lifetime by anyone other than the Participant except by a legal representative appointed for or by the Participant. (i) Absent express provisions to the contrary, any grant under this Plan shall not be deemed compensation for purposes of computing benefits or contributions under any retirement plan of the Corporation or its Subsidiaries and shall not affect any benefits under any other benefit plan of any kind now or subsequently in effect under which the availability or amount of benefits is related to level of compensation. This Plan is not a "Retirement Plan" or "Welfare Plan" under the Employee Retirement Income Security Act of 1974, as amended. 6 Commission File No. 0-6544 (j) Unless the Committee determines otherwise, no benefit or promise under the Plan shall be secured by any specific assets of the Corporation or any of its Subsidiaries, nor shall any assets of the Corporation or any of its Subsidiaries be designated as attributable or allocated to the satisfaction of the Corporation's obligations under the Plan. 7. Transfers and Leaves of Absence For purposes of the Plan, unless the Committee determines otherwise: (a) a transfer of a Participant's employment without an intervening period of separation among the Corporation and any Subsidiary shall not be deemed a termination of employment, and (b) a Participant who is granted in writing a leave of absence shall be deemed to have remained in the employ of the Corporation during such leave of absence. 8. Adjustments In the event of any change in the outstanding Common Stock by reason of a stock split, spin-off, stock dividend, stock combination or reclassification, recapitalization or merger, change of control, or similar event, the Committee may adjust appropriately the number of Shares subject to the Plan and available for or covered by Grants and Share prices related to outstanding Grants and make such other revisions to outstanding Grants as it deems are equitably required. 9. Merger, Consolidation, Exchange, Acquisition, Liquidation or Dissolution In its absolute discretion, and on such terms and conditions as it deems appropriate, coincident with or after the grant of any Stock Option or any Stock-Based Grant, the Committee may provide that such Stock Option or Stock-Based Grant cannot be exercised after the merger or consolidation of the Corporation into another corporation, the exchange of all or substantially all of the assets of the Corporation for the securities of another corporation, the acquisition by another corporation of 80% or more of the Corporation's then outstanding shares of voting stock or the recapitalization, reclassification, liquidation or dissolution of the Corporation, and if the Committee so provides, it may, in its absolute discretion and on such terms and conditions as it deems appropriate, also provide, either by the terms of such Stock Option or Stock-Based Grant or by a resolution adopted prior to the occurrence of such merger, consolidation, exchange, acquisition, recapitalization, reclassification, liquidation or dissolution, that, for some period of time prior to such event, such Stock Option or Stock- Based Grant shall be exercisable as to all shares subject thereto, notwithstanding anything to the contrary herein (but subject to the provisions of Paragraph 6(b)) and that, upon the occurrence of such event, such Stock Option or Stock-Based Grant shall terminate and be of no further force or effect; provided, however, that the Committee may also provide, in its absolute discretion, that even if the Stock Option or Stock-Based Grant shall remain exercisable after any such event, from and after such event, any such Stock Option or Stock-Based Grant shall be exercisable only for the kind and amount of securities and/or other property, or the cash equivalent thereof, receivable as a result of such event by the holder of a number of shares of stock for which such Stock Option or Stock-Based Grant could have been exercised immediately prior to such event. 7 Commission File No. 0-6544 10. Amendment and Termination The Committee shall have the authority to make such amendments to any terms and conditions applicable to outstanding Grants as are consistent with this Plan provided that, except for adjustments under Paragraph 8 or 9 hereof, no such action shall modify such Grant in a manner adverse to the Participant without the Participant's consent except as such modification is provided for or contemplated in the terms of the Grant. The Board of Directors may amend, suspend or terminate the Plan except that no such action, other than an action under Paragraph 8 or 9 hereof, may be taken which would, without shareholder approval, increase the aggregate number of Shares available for Grants under the Plan, decrease the price of outstanding Options or Stock Appreciation Rights, change the requirements relating to the Committee or extend the term of the Plan. 11. Foreign Options and Rights The Committee may make Grants to Employees who are subject to the laws of nations other than the United States, which Grants may have terms and conditions that differ from the terms thereof as provided elsewhere in the Plan for the purpose of complying with foreign laws. 12. Withholding Taxes The Corporation shall have the right to deduct from any cash payment made under the Plan any federal, state or local income or other taxes required by law to be withheld with respect to such payment. It shall be a condition to the obligation of the Corporation to deliver shares upon the exercise of an Option or Stock Appreciation Right, upon payment of Performance units or shares, upon delivery of Restricted Stock or upon exercise, settlement or payment of any Other Stock-Based Grant that the Participant pay to the Corporation such amount as may be requested by the Corporation for the purpose of satisfying any liability for such withholding taxes. Any Grant Agreement may provide that the Participant may elect, in accordance with any conditions set forth in such Grant Agreement, to pay a portion or all of such withholding taxes in shares of Common Stock. 13. Effective Date and Termination Dates The Plan shall be effective on and as of the date of its approval by the stockholders of the Corporation and shall terminate ten years later, subject to earlier termination by the Board of Directors pursuant to Paragraph 10. 8 -----END PRIVACY-ENHANCED MESSAGE-----