SECURITIES AND EXCHANGE COMMISSION
Washington, DC
20549
FORM 10 Q
(Mark One)
( X ) Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended November 25, 1995 Commission File number 0-80.
( ) Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934.
For the transition period from
to
SEAWAY FOOD TOWN, INC.
(Exact name of registrant as specified in its charter)
Ohio 34-4471466
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) (Identification No.)
1020 Ford Street, Maumee, Ohio 43537
(Address of principal executive offices) (Zip Code)
419/893-9401
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at January 4, 1996
Common stock, without par 2,183,302 shares
value (stated value $2.00 per share)
PART I. FINANCIAL INFORMATION
Summarized Financial Information:
The following consolidated statements of income, condensed consolidated
balance sheets, and condensed consolidated statements of cash flows are
unaudited, but include all adjustments, consisting only of normal recurring
accruals, which the Company considers necessary for a fair presentation of its
financial position, results of operations and cash flows for the periods and
the dates indicated. Since the unaudited financial statements have been
prepared in accordance with instructions to Form 10-Q, they do not contain all
disclosures normally provided in annual financial statements; they should be
read in conjunction with the consolidated financial statements and notes
thereto appearing in the Company's 1995 Annual Report to Shareholders.
PART I. FINANCIAL INFORMATION (Continued)
Consolidated Statements of Income
(Thousands of Dollars - Except
Average Share and Per-share Data)
Thirteen Weeks Ended
November 25 November 26,
1995 1994
------------- -------------
Net Sales $144,212 $136,988
Cost of merchandise sold 108,233 102,644
------------- -------------
Gross profit 35,979 34,344
Selling, general and
administrative expenses 34,422 32,162
------------- -------------
Operating profit 1,557 2,182
Interest expense (1,138) (1,183)
Other income - net 302 819
------------- -------------
Income before income taxes 721 1,818
Provision for income taxes 270 709
------------- -------------
Net income $ 451 $ 1,109
============= =============
Per common share:
Net income $ 0.21 $ 0.50
======== ========
Dividends paid $ 0.10 $ 0.09
======== ========
Average number of shares outstanding 2,193,352 2,214,887
========= =========
See notes to consolidated financial statements
PART I. FINANCIAL INFORMATION (Continued)
Condensed Consolidated Balance Sheets
(Thousands of Dollars)
November 25, August 26,
1995 1995 (note)
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 8,358 $ 7,402
Notes and accounts receivable 8,023 7,037
Less allowance for doubtful accounts (450) (450)
Merchandise inventories (Note B) 68,069 62,221
Less LIFO reserve (18,126) (18,157)
Prepaid expenses, including deferred
income taxes 5,977 5,582
------------ ------------
71,851 63,635
Other assets 6,334 6,366
Property and equipment:
Cost 192,553 188,420
Less accumulated depreciation and
amortization (107,635) (104,420)
------------ ------------
Net property and equipment 84,918 84,000
------------ ------------
$163,103 $154,001
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $42,781 $38,889
Income taxes 852 1,027
Accrued liabilities 13,488 14,080
Long-term debt due within one year 7,156 3,553
------------ ------------
Total current liabilities 64,277 57,549
Long-term debt 50,779 48,399
Deferred income taxes 5,276 5,276
Deferred other 1,808 2,046
Shareholders' equity:
Common stock 4,387 4,387
Capital in excess of stated value 680 680
Retained earnings 35,896 35,664
------------ ------------
Total shareholders' equity 40,963 40,731
------------ ------------
$163,103 $154,001
============ ============
Note: The balance sheet at August 26, 1995 has been derived from the audited
financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See notes to consolidated financial statements
PART I. FINANCIAL INFORMATION (Continued)
Condensed Consolidated Statements of Cash Flows
(Thousands of Dollars)
Thirteen
Weeks Ended
November 25, November 26,
1995 1994
------------- -------------
OPERATING ACTIVITIES-net cash
provided by (used in) $(331) $728
INVESTING ACTIVITIES
Expenditures for property and equipment (4,248) (1,884)
Proceeds from sale of property
and other assets 25 2,821
Other 9 224
------------- -------------
Net cash provided by
(used in)investing activities (4,214) 1,161
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 7,200 980
Payments of long-term debt (1,217) (929)
Payments for acquisition of common shares --- (667)
Dividends paid (219) (195)
Decrease in deferred other (263) (296)
------------- -------------
Net cash provided by
(used in) financing activities 5,501 (1,107)
------------- -------------
Increase in cash and cash equivalents 956 782
Cash and cash equivalents
at beginning of period 7,402 7,137
------------- -------------
Cash and cash equivalents
at end of period $8,358 $7,919
============= =============
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $853 $881
============= =============
Income Taxes $444 $(2)
============= =============
See notes to consolidated financial statements
PART I. FINANCIAL INFORMATION (Continued)
Notes to Consolidated Financial Information
Note A. Net income per common share is based on the weighted average number
of shares outstanding during the periods.
Note B. Meat, produce and pharmacy inventories are valued at the lower of
cost using the first-in, first-out (FIFO) method, or market. All
other merchandise inventories (including store inventories which are
determined by the retail inventory method) are valued at the lower
of cost using, the last-in, first-out (LIFO) method, or market.
PART I. FINANCIAL INFORMATION (Continued)
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Net sales for the first fiscal quarter of 1996 were $144,212,000 or 5.27%
higher than the same quarter in 1995. This net increase was attributable to
increases in both drugstore and supermarket sales resulting from increased
promotional activity. Sales from stores in operation both this past quarter
as well as the same quarter a year ago increased 5.02%.
Gross margins, as a percent of sales, decreased .12% in the first quarter of
fiscal 1996 compared to the same quarter in 1995 Gross margins have decreased
slightly this quarter after a period of increasing margins in 1995.
As a percent of sales, selling, general and administrative expenses increased
.39% in the first quarter. This increase is a result of increased wages,
supply costs, advertising and costs associated with enhancing management
information systems.
Interest expense remained consistent with the prior year. Slightly higher
interest rates were offset by lower outstanding borrowings.
Other income - net decreased $517,000 as compared to the same quarter in 1995.
This decrease is due primarily to the effect of a gain of $637,000 recognized
on the sale of the Company's dairy operations in the first quarter of 1995.
Income taxes as a percent of pre-tax income approximates the statutory tax
rates in effect.
Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Liquidity and Capital Resources
During the first thirteen weeks of fiscal 1996, the Company's working capital
increased $1,488,000 as compared to August 26, 1995. The working capital
ratio was 1.12 to 1 at the end of this quarter compared to 1.11 to 1 at
August 26, 1995 and 1.20 to 1 at November 26, 1994. During the first thirteen
weeks of fiscal 1996, the company utilized $331,000 of cash in operations due
primarily to increased inventory levels. Borrowings under the Company's
Revolving Credit Agreements increased to support operations and finance
capital expenditures and other corporate activity.
The funds required by the Company on a continuing basis for both working
capital, capital expenditures, and other needs are generated principally
through operations, long-term borrowings and capital leases, supplemented
by borrowings under revolving credit note agreements which have been arranged
primarily through institutional lenders. The Company is not aware of any
trends, demands, commitments or uncertainties which will result or which are
reasonably likely to result in a material change in the Company's liquidity.
During the first quarter of 1996 the company borrowed against revolving credit
agreements with the maximum amount outstanding under such agreements amounting
to $29,450,000.
Item 4 - Results of votes of security holders
(a) The Annual Meeting of Shareholders of Seaway Food Town, Inc.
was held on January 4, 1996.
(b) The election of the Directors previously nominated and as set
forth in the Proxy Statement of December 8, 1995, which is
incorporated herein by reference, was by the following vote:
Shares Shares voted
Voted FOR AUTHORITY TO VOTE
WITHHELD
Waldo E. Yeager 1,744,833 12,145
Richard B. Iott 1,744,833 12,145
Eugene R. Wos 1,739,590 17,388
(c) Pursuant to the proposal set forth in the Proxy Statement of
December 8, 1995, which is incorporated herein by reference,
approval of Ernst & Young, LLP as independent auditors for the
fiscal year ending August 31, 1996 was by the following vote:
1,754,510 shares voted FOR
2,364 shares voted AUTHORITY TO VOTE WITHHELD
104 shares voted AGAINST
Item 6. - Exhibits and Reports on Form 8 K.
6(b) Reports on Form 8 K.
There were no Form 8 K reports required to be filed by the Company
during any of the months included in the most recently completed fiscal
quarter.
Signature
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SEAWAY FOOD TOWN, INC.
Registrant
Date January 5, 1996 By /s/ Richard B. Iott
Richard B. Iott, President
Date January 5, 1996 By /s/ Waldo E. Yeager
Waldo E. Yeager,
Chief Financial Officer,
Treasurer