UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
__X__ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended January 3, 1998
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 0-26602
THE GRAND UNION COMPANY
(Exact name of registrant as specified in its charter)
Delaware 22 - 1518276
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
201 Willowbrook Boulevard, Wayne, New Jersey 07470 - 0966
(Address of principal executive offices) (Zip Code)
973-890-6000
(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 by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes _X_. No ___.
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of February 17, 1998, there were issued and outstanding 10,182,371 shares,
par value $0.01 per share, of the Registrant's common stock.
1
THE GRAND UNION COMPANY
INDEX
PART I - FINANCIAL INFORMATION (Unaudited)
Item 1. Financial Statements.
Page No.
Consolidated Statements of Operations - 12 weeks ended January 3, 1998 and
January 4, 1997 and 40 weeks ended January 3, 1998 and January 4, 1997. ................................. 3
Consolidated Balance Sheets - January 3, 1998 and March 29, 1997 ............................................ 4
Consolidated Statements of Cash Flows - 40 weeks ended January 3, 1998 and
January 4, 1997 ........................................................................................ 5
Notes to Consolidated Financial Statements ................................................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations. .................................................................................................. 9
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders ................................................. 11
Item 5. Other Information ................................................................................... 12
Item 6. Exhibits and Reports on Form 8-K. ................................................................... 13
All items which are not applicable or to which the answer is negative have been
omitted from this report.
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
THE GRAND UNION COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
(unaudited)
12 WEEKS ENDED 40 WEEKS ENDED
-------------------------- --------------------------
January 3, January 4, January 3, January 4,
1998 1997 1998 1997
----------- ----------- ----------- -----------
Sales $ 534,320 $ 537,151 $ 1,761,214 $ 1,797,386
Cost of sales (378,115) (372,816) (1,269,566) (1,248,994)
----------- ----------- ----------- -----------
Gross profit 156,205 164,335 491,648 548,392
Operating and administrative expenses (130,044) (138,373) (442,369) (451,060)
Depreciation and amortization (16,593) (16,257) (61,369) (61,402)
Amortization of excess reorganization value (24,077) (23,678) (80,255) (78,928)
Unusual items (3,665) -- (3,665) --
Interest expense, net (27,654) (24,391) (85,986) (81,252)
----------- ----------- ----------- -----------
(Loss) before income taxes (45,828) (38,364) (181,996) (124,250)
Income tax benefit -- 6,687 -- 18,108
----------- ----------- ----------- -----------
Net (loss) (45,828) (31,677) (181,996) (106,142)
Accrued dividends on preferred stock (2,096) (788) (6,226) (1,031)
----------- ----------- ----------- -----------
Net (loss) applicable to common stock $ (47,924) $ (32,465) $ (188,222) $ (107,173)
=========== =========== =========== ===========
Basic and diluted net (loss) per share $ (4.79) $ (3.25) $ (18.82) $ (10.72)
=========== =========== =========== ===========
See accompanying notes to consolidated financial statements (unaudited).
3
THE GRAND UNION COMPANY
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except par value data)
(unaudited)
January 3, March 29,
1998 1997
----------- -----------
ASSETS
Current assets:
Cash $ 38,084 $ 34,119
Receivables 26,845 28,966
Inventories 134,597 131,409
Other current assets 15,585 14,326
----------- -----------
Total current assets 215,111 208,820
Property, net 416,324 411,911
Excess reorganization value, net 254,810 335,065
Deferred tax asset 51,393 51,393
Beneficial leases, net 43,112 52,266
Other assets 21,417 12,375
----------- -----------
$ 1,002,167 $ 1,071,830
=========== ===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities:
Current maturities of long-term debt $ -- $ 46
Current portion of obligations under capital leases 7,434 8,045
Accounts payable and accrued liabilities 180,781 175,540
----------- -----------
Total current liabilities 188,215 183,631
Long-term debt 796,697 740,207
Obligations under capital leases 154,637 140,058
Other noncurrent liabilities 92,824 96,144
----------- -----------
Total liabilities 1,232,373 1,160,040
----------- -----------
Redeemable Class A Preferred Stock, $1.00 par
value, 3,500,000 shares authorized, 1,300,566 shares
issued and outstanding, liquidation preference $69,311
and $65,000, respectively 69,311 65,000
----------- -----------
Redeemable Class B Preferred Stock, $1.00 par
value, 1,400,000 shares authorized, 800,000 shares
issued and outstanding, liquidation preference $41,915 41,915 --
----------- -----------
Stockholders' (deficit):
Common stock, $.01 par value; 60,000,000 shares 100 100
authorized, 10,000,000 shares issued and outstanding
Preferred stock, $1.00 par value; 10,000,000 shares
authorized, less amount authorized as Class A and Class
B preferred stock, no shares issued and outstanding
Capital in excess of par value 133,674 139,900
Accumulated (deficit) (475,206) (293,210)
----------- -----------
Total stockholders' (deficit) (341,432) (153,210)
----------- -----------
$ 1,002,167 $ 1,071,830
=========== ===========
See accompanying notes to consolidated financial statements (unaudited).
4
THE GRAND UNION COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
40 WEEKS ENDED
----------------------
January 3, January 4,
1998 1997
--------- ---------
OPERATING ACTIVITIES:
Net (loss) $(181,996) $(106,142)
Adjustments to reconcile net (loss) to
net cash (used for) operating
activities before reorganization items paid:
Depreciation and amortization 141,624 140,330
Deferred taxes -- (18,108)
Noncash interest 531 (145)
Net changes in assets and liabilities:
Receivables (8,870) (12,241)
Inventories (3,188) (5,598)
Other current assets (1,259) (279)
Accounts payable and accrued liabilities 17,634 10,357
Other (7,550) (4,399)
--------- ---------
Net cash (used for) operating
activities before reorganization items paid (43,074) 3,775
Reorganization items paid (3,681) (4,492)
--------- ---------
Net cash (used for) operating activities (46,755) (717)
--------- ---------
INVESTMENT ACTIVITIES:
Capital expenditures (35,465) (31,430)
Disposals of property 5,863 7,942
--------- ---------
Net cash (used for) investment activities (29,602) (23,488)
--------- ---------
FINANCING ACTIVITIES:
Net proceeds from sale of preferred stock 4O,000 28,O00
Net proceeds from long-term debt 77,978 9,000
Loan placement fees (9,744) --
Obligations under capital leases discharged (6,866) (8,434)
Net repayment of long-term debt (21,046) (7,695)
--------- ---------
Net cash provided by financing activities 80,322 20,871
--------- ---------
Net increase (decrease) in cash 3,965 (3,334)
Cash at beginning of year 34,119 39,425
--------- ---------
Cash at end of period $ 38,084 $ 36,091
========= =========
Supplemental disclosure of cash flow information:
Interest payments $ 64,245 $ 62,705
Capital lease obligations incurred 20,835 16,758
Accrued dividends 6,226 1,031
Decrease in common stock par value -- 9,900
See accompanying notes to consolidated financial statements (unaudited).
5
THE GRAND UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 - Basis of Accounting
The accompanying interim consolidated financial statements of The Grand
Union Company (the "Company") include the accounts of the Company and its
subsidiaries, all of which are wholly-owned. In the opinion of management, the
consolidated financial statements include all adjustments, which consist only of
normal recurring adjustments necessary for a fair presentation of operating
results for the interim periods.
These consolidated financial statements should be read in conjunction with
the consolidated financial statements and related notes contained in the
Company's Annual Report on Form 10-K for the 52 weeks ended March 29, 1997, and
the Company's Quarterly Reports on Form 10-Q for the 16 weeks ended July 19,
1997, and 28 weeks ended October 11, 1997. Operating results for the periods
presented are not necessarily indicative of results for the full fiscal year.
Certain reclassifications have been made to the prior year amounts to
conform to the current period presentation.
NOTE 2 - Preferred Stock Issuances
Pursuant to a series of related transactions commencing on July 30, 1996,
Trefoil Capital Purchasers II, L. P., a Delaware limited partnership, and GE
Investment Private Placement Partners II, A Limited Partnership, a Delaware
limited partnership (collectively, the "Purchasers"), currently maintains
beneficial ownership of an aggregate of approximately 70.41% of the Company's
outstanding voting stock as of the date of the filing of this Form 10-Q. On July
30, 1996, the Company entered into a definitive agreement (the "Stock Purchase
Agreement") to sell $100 million of Preferred Stock A to the Purchasers. Each
share of the Preferred Stock A was to be convertible at the option of the
holder, at any time, into 6.8966 shares of Common Stock. Pursuant to the Stock
Purchase Agreement, the Purchasers agreed to purchase, and the Company agreed to
sell, an aggregate of 2,000,000 shares of Preferred Stock A at a purchase price
of $50 per share (the "Stated Value") in stages through February 25, 1998. On
September 17, 1996, the first stage of the transaction was closed, and the
Purchasers acquired 800,000 shares of Preferred Stock A for an aggregate
purchase price of $40 million.
At a subsequent closing held on February 25, 1997, the Purchasers purchased
an additional 400,000 shares of Preferred Stock A for an aggregate purchase
price of $20 million. Additional subsequent closings were scheduled for August
25, 1997 and February 25, 1998 (the "Subsequent Closings"). At the Subsequent
Closings, the Purchasers would have been required to purchase an additional
800,000 shares of Preferred Stock A for an aggregate purchase price of $40
million.
Pursuant to an Acceleration and Exchange Agreement (the "Acceleration
Agreement"), dated June 12, 1997, between the Company and the Purchasers, the
Company and the Purchasers agreed to accelerate the sale and purchase of the
800,000 shares of Preferred Stock A to have occurred at the Subsequent Closings
(the "Accelerated Shares") to June 12, 1997 (the "Accelerated Closing") and to
exchange the Accelerated Shares for 800,000 shares of Preferred Stock B (the
"Exchange"). At the Accelerated Closing, the Company received the $40 million
purchase price for the sale of the Accelerated Shares. Immediately following the
Accelerated Closing, the Purchasers completed the Exchange pursuant to which
they received an aggregate of 800,000 shares of the Preferred Stock B, in
consideration for their surrender of the Accelerated Shares. Each share of
Preferred Stock B is convertible at the option of the holder, at any time, into
20.8333 shares of Common Stock. This conversion ratio is to be reset to a
conversion ratio based upon a 20% premium to the average trading price of Common
Stock during the twenty-day period commencing January 30, 1998 and ending with
the close of the market on February 27, 1998. The Purchasers obtained the
necessary funds to purchase the Preferred Stock from capital contributions from
their respective partners.
6
On March 20, 1997, the Company consummated the sale to The Roger Stangeland
Family Limited Partnership (the "Stangeland Partnership") of 60,000 shares of
Preferred Stock A at a purchase price of $50.00 per share (the "Stangeland
Shares"), pursuant to the terms of a Stock Purchase Agreement, dated February
25, 1997, as amended by Amendment No. 1 thereto dated as of March 20, 1997 (as
so amended, the "Stangeland Stock Purchase Agreement"), between the Company and
Mr. Stangeland. Pursuant to a Stockholder Agreement dated February 25, 1997 (the
"Stangeland Stockholder Agreement"), among the Purchasers, Mr. Stangeland and
the Company, Mr. Stangeland has granted the Purchasers certain take-along
rights, the Purchasers have granted Mr. Stangeland certain tag-along rights, and
the Purchasers and the Company have granted Mr. Stangeland certain registration
rights related to the Stangeland Shares and any shares of Preferred Stock A, and
Common Stock, if any, paid as dividends with respect to the Preferred Stock A
(collectively, "Securities"). Pursuant to an Addendum, dated as of March 20,
1997, to the Stangeland Stockholder Agreement, the Stangeland Partnership has
succeeded to all of the rights, and has assumed all of the obligations, of Mr.
Stangeland pursuant to the Stangeland Stockholder Agreement. The Purchasers
disclaim any and all ownership of the Stangeland Shares or any additional
Securities acquired by the Partnership in respect of the Stangeland Shares.
At January 3, 1998, there were a total of 1,300,566 outstanding shares of
Preferred Stock A, which were convertible into an aggregate of 8,969,483 shares
of Common Stock, and a total of 800,000 outstanding shares of Preferred Stock B,
which were convertible into an aggregate of 16,666,640 shares of Common Stock.
As of the date of the filing of this Form 10-Q, the aggregate shares of
Preferred Stock A and Preferred Stock B together account for approximately
71.57% of the Company's outstanding voting stock.
The Class A Preferred Stock and Class B Preferred Stock have been
classified as redeemable Class A Preferred Stock and Class B Preferred Stock in
the accompanying Consolidated Balance Sheets. On March 31, 1997, the Company
paid dividends on the Class A Preferred Stock through the issuance of 20,866
shares of Class A Preferred Stock, with an aggregate Stated Value of $1,043,300.
The Company elected to suspend the declaration of the dividends payable June 30,
1997, September 30, 1997 and December 31, 1997. The dividends on the Class A
Preferred Stock and the Class B Preferred Stock and the accrued and unpaid
dividends through December 31, 1997 have been accounted for by a charge against
Capital in Excess of Par Value and a corresponding increase in the carrying
amounts of the Class A Preferred Stock and Class B Preferred Stock. The Class A
and Class B Preferred Stock have a Liquidation Preference over the Common Stock
equal to the Stated Value of the outstanding shares of the Preferred Stock plus
all accrued, unpaid dividends.
NOTE 3 - Unusual Items
The Company recorded a charge to operations in the quarter ended January 3,
1998 of $3,665,000. This charge included a $3,000,000 supplement for a reserve
set at fiscal year end 1997 for the reorganization of the Company during fiscal
1998 and additional charges of $665,000 for legal costs to supplement a reserve
created as a result of the Company's Chapter 11 filing in calendar year 1995.
The above reserves are included in accounts payable and accrued liabilities and
other noncurrent liabilities in the accompanying balance sheets.
NOTE 4 - Net Loss Per Share
The net loss per share is computed in accordance with SFAS No. 128,
"Earnings Per Share," which is effective for interim and year end periods ending
after December 15, 1997. This statement requires that entities present, on the
face of the income statement for all periods presented, basic and diluted per
share amounts. Basic earnings per share is computed using the weighted average
number of common shares outstanding for the period. Diluted earnings per share
is computed using the weighted average number of common shares outstanding
adjusted for dilutive potential common shares. There were 10,000,000 weighted
average shares outstanding for both basic and diluted earnings per share for all
periods presented. All potential common shares were excluded from the
computation of the Company's diluted earnings per share because the effect would
have been antidilutive.
7
NOTE 5 - Stock Option Grants
On November 20, 1997, the Board of Directors, pursuant to the 1995 Equity
Incentive Plan, authorized a stock option grant of 100,000 shares of common
stock as a supplement to the 1,800,000 share stock option grant of the Board of
Directors on October 1, 1997 to certain associates of the Company, including
store managers, management personnel and other bi-weekly, exempt associates. On
November 20, 1997, eligible associates were granted the 100,000 options at an
exercise price of $2.15625 per share and the options will expire on November 19,
2007, although their expiration may be accelerated by certain events.
NOTE 6 - Amendment to Bank Facility
Effective August 29, 1997, the Company executed an amended and restated
Bank Facility (as amended and restated, the "Bank Facility") to eliminate
existing technical defaults and relax covenants relating to the Company's
performance in the future, thereby providing the Company access to the Revolving
Credit Facility. The Bank Facility also provides for a new term loan facility of
approximately $78 million. The amount available to the Company under the
Revolving Credit Facility was reduced to approximately $68 million. The
additional funds made available to the Company through the Bank Facility raise
the Company's total secured credit facility to $250 million. For additional
information regarding the Bank Facility, see the Company's Report on Form 8-K
filed on September 4, 1997. On October 15, 1997, the Company executed the
Eleventh Amendment to the Bank Facility. The Eleventh Amendment, which was made
effective retroactively to August 29, 1997, provided that certain interest
calculations and dates for those calculations under Section 1.8 (d) of the Bank
Facility would be adjusted to reflect the original intent of the August 29, 1997
amendment. Effective January 9, 1998, the Company executed the Twelfth Amendment
to the Bank Facility, which provided for the modification of certain real estate
security provisions relating to Section 7.11 of the Bank Facility and also
granted the Company permission to transact certain property exchanges
notwithstanding the provisions of Section 8.1 of the Bank Facility. For more
information concerning the Eleventh and Twelfth Amendments to the Bank Facility,
see Exhibits 10.1 and 10.2 to this Form 10-Q.
NOTE 7 - Related Party Transactions
Mr. Geoffrey T. Moore, a director, is a managing director and executive
officer of Shamrock Capital Advisors, Inc. ("SCA"). Pursuant to a three-year
management services agreement (the "Services Agreement") dated July 30, 1996,
between the Company and SCA, SCA shall consult with and provide advice to the
officers and management of the Company concerning matters relating to the
Company's financial policies, development and implementation of business plans
and general business affairs. The Services Agreement expires by its terms in
September 1999. SCA's compensation for such management and consulting services
under the Services Agreement was $300,000 in the fiscal year ending in 1997 and
will be $400,000 for the fiscal year ending in 1998. The Company also reimburses
SCA for its reasonable out-of-pocket costs and expenses incurred in connection
with the performance of its services under the Services Agreement. The Company
has agreed to indemnify SCA against all claims, liabilities, expenses, losses or
damages (or actions in respect thereof) related to or arising out of actions
taken (or omitted to be taken) by SCA pursuant to the terms of the Services
Agreement; provided that such liabilities did not result primarily from actions
taken, or omitted to be taken, by SCA in bad faith or due to SCA's gross
negligence.
8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
The following table sets forth certain statements of operations and other
data (all dollars in millions).
12 WEEKS ENDED 40 WEEKS ENDED
--------------------- ---------------------
January 3, January 4, January 3, January 4,
1998 1997 1998 1997
-------- -------- -------- --------
Sales $ 534.3 $ 537.2 $1,761.2 $1,797.4
Gross profit 156.2 164.3 491.6 548.4
Operating and administrative expenses (130.0) (138.4) (442.4) (451.1)
Depreciation and amortization (16.6) (16.3) (61.4) (61.4)
Amortization of excess reorganization value (24.1) (23.7) (80.3) (78.9)
Unusual item (3.7) -- (3.7) --
Interest expense, net (27.7) (24.4) (86.0) (81.3)
Income tax benefit -- 6.7 -- 18.1
Net (loss) (45.8) (31.7) (182.0) (106.1)
Sales percentage increase (decrease) (0.5%) (1.2%) (0.2%) 0.5%
Same store sales percentage increase (decrease) 0.8% (0.8%) (0.9%) 0.8%
Gross profit as a percentage of sales 29.2% 30.6% 27.9% 30.5%
Operating and administrative
expenses as a percentage of sales 24.3% 25.8% 25.1% 25.1%
Sales for the 12 (the "third quarter") and 40 (the "year to date") weeks
ended January 3, 1998, decreased $2.9 million, or 0.5%, and $36.2 million, or
2.0%, respectively, as compared to the 12 and 40 weeks ended January 4, 1997.
Comparable store sales, including replacement stores, increased 0.8% and
decreased 0.9% during the third quarter and year to date, respectively, compared
to the prior year. The Company opened one new store and closed one existing
store during the third quarter ended January 3, 1998. The Company has opened two
new stores and two replacement stores and closed eight stores (one due to fire)
for the year to date. The increase in same store sales for the third quarter is
mainly due to marketing strategies and initiatives instituted by the Company's
new management team. Same store sales decreased year to date primarily due to
continued competitive activity within the Company's operating area offset by the
new marketing strategies and initiatives.
Gross profit, as a percentage of sales, decreased to 29.2% from 30.6% for
the third quarter compared to the prior year due primarily to a reduction in
promotional income. On a year to date basis, it decreased to 27.9% from 30.5%,
compared to the prior year due to a reduction in promotional income.
Operating and administrative expenses, as a percentage of sales, decreased
to 24.3% from 25.8% for the third quarter compared to the prior year primarily
as a result of measures undertaken by the Company to reduce expenses. Operating
and administrative expenses, as a percentage of sales, remained constant at
25.1% year to date, compared to the prior year.
Depreciation and amortization increased to $16.6 million from $16.3 million
for the third quarter compared to the prior year due primarily to newly opened
and replacement stores. Depreciation and amortization remained constant at $61.4
million year to date, compared to the prior year.
Interest expense increased to $27.7 million from $24.4 million for the
third quarter and to $86.0 million from $81.3 million year to date, compared to
the prior year. The third quarter and year to date increase is mainly a result
of additional interest expense from the Bank Facility as amended and restated on
August 29, 1997.
The Company recorded no net income tax benefit or provision during the 1998
third quarter and year to date periods. A tax benefit related to the potential
use of operating loss carryforwards was offset by a valuation allowance.
9
Liquidity and Capital Resources
As announced on January 27, 1998, the Company has retained Salomon Smith
Barney as financial advisor to assist the Company in evaluating various
financial alternatives, including a possible capital restructuring. In
connection with this retention, the Company has had and continues to have
discussions with an unofficial committee (the "Unofficial Committee") of holders
of its 12% Senior Notes due September 1, 2004 (the "Notes") regarding such a
restructuring. In connection therewith, the Company has determined that it will
not pay the approximately $36 million interest payment due March 2, 1998 on the
Notes. The failure to make this payment will constitute a default under the
Indenture governing the Notes, subject to a thirty day grace period, and will
also constitute a default under the Company's Bank Facility. The Company is
currently in discussions with the lenders party to the Bank Facility concerning
a waiver of such default and is optimistic that it will be able to obtain such
waiver. No assurances can be made, however, as to whether such capital
restructuring will be agreed upon with the Unofficial Committee or other holders
of the Notes or the terms thereof, nor whether such waiver will be obtained or
the terms thereof. The Company anticipates that it will continue its operations
in the ordinary course and will timely pay all of its ordinary course operating
expenses. For more information concerning the retention of Salomon Smith Barney
and any potential capital restructuring, reference is made to Exhibit 99.2 the
Company's Report on Form 8-K dated January 27, 1998 and filed with the SEC on
January 28, 1998.
The Bank Facility provides the Company with a revolving line of credit of
approximately $68 million. Of that amount, $44 million is extended on letters of
credit and $15 million has been drawn at the end of the quarter. The additional
funds made available to the Company through the Bank Facility raise the
Company's total secured credit facility to a total of $250 million.
With the exception of historical information, some matters discussed herein
are "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject to
risks, uncertainties and other factors which could cause actual results to
differ materially from future results expressed or implied by such
forward-looking statements. Potential risks and uncertainties include, but are
not limited to, the competitive environment in which the Company operates, and
the general economic conditions in the geographic areas in which the Company
operates. For additional information about the Company and its operating and
financial condition, please see the Company's most recent Form 10-K for the year
ended March 29, 1997, as filed with the SEC.
10
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The Company held its annual meeting of stockholders on November 20, 1997,
and the following matters were voted on at that meeting:
(a) Votes cast in favor of and withheld from voting with respect to the
election of each nominee for director were as follows:
DIRECTOR VOTES FOR VOTES AGAINST OR WITHHELD
-------- --------- -------------------------
J. Wayne Harris 34,204,242 89,883
Gary M. Philbin 34,205,909 88,216
Roger E. Stangeland 34,205,909 88,216
James J. Costello 34,205,909 88,216
Jordan H. Krimstein 34,205,409 88,716
Mark H. Manski 34,205,909 88,216
Clifford A. Miller 34,205,909 88,216
Geoffrey T. Moore 34,206,409 87,716
Martha A. Pritchard 34,206,409 87,716
J. Richard Stonesifer 34,205,909 88,216
(b) The Associate Stock Purchase Plan (the "ASPP") which will allow
Company associates an opportunity to purchase common stock of the
Company through payroll deduction and direct purchase was approved,
with 29,904,408 votes in favor, 208,933 against, 48,058 in abstention
and 4,132,726 broker non-votes.
(c) The Executive Annual Incentive Bonus Plan (the "Bonus Plan") in order
to qualify certain incentive compensation under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations promulgated thereunder was approved, with 33,163,060 votes
in favor, 248,377 against, 60,501 in abstention and 822,187 broker
non-votes.
(d) The amendments to the Company's 1995 Equity Incentive Plan (the
"Employee Plan") to increase the number of shares issuable under the
Employee Plan to an aggregate of 6,000,000 and to increase the number
of shares and stock appreciation rights issuable under the Employee
Plan to any individual to an aggregate of 2,000,000 was approved, with
27,043,237 votes in favor, 3,054,081 against, 64,081 in abstention and
4,132,726 broker non-votes.
(e) The appointment of Price Waterhouse LLP as independent accountants of
the Company for the fiscal year ending March 28, 1998 was ratified,
with 34,192,044 votes in favor, 69,745 votes against and 32,336 votes
in abstention, with no broker non-votes.
11
Item 5. Other Information.
On January 5, 1998, the Board of Directors, pursuant to an employment
agreement between Jack W. Partridge, Jr. and the Company, elected Mr. Partridge
to the position of Chief Administrative Officer of the Company. Mr. Partridge's
employment agreement is incorporated by reference to Exhibit 99.1 to Grand
Union's Report on Form 8-K dated January 27, 1998 as filed with the SEC on
January 28, 1998. On January 15, 1998, the Board elected Mr. Partridge to serve
as a Director and Vice Chairman of the Board. In connection with Mr. Partridge's
election to the Board, the Company modified and amended its By-Laws. For more
information concerning the amended and restated By-Laws, please see Exhibit 3.1
to this Form 10-Q.
On January 27, 1998, the Company retained Salomon Smith Barney as financial
advisor to assist the Company in evaluating various financial alternatives
available to the Company, including a possible capital restructuring.
On January 27, 1998, the Company suspended the Associate Stock Purchase
Plan (the "ASPP") until further notice. The ASPP began November 1, 1997, and
provided associates of the Company with the opportunity to purchase the
Company's Common Stock at a 15% discount through payroll deductions or other
permissible contributions under the ASPP.
12
Item 6. Exhibits and Report on Form 8-K.
(a) Exhibits
Exhibit Number
3.1 By-Laws of The Grand Union Company, as amended and restated
through January 15, 1998.
10.1 Eleventh Amendment to the Amended and Restated Credit
Agreement ("Bank Facility") dated as of August 29, 1997,
among Grand Union, the lending institutions listed from time
to time on Schedule 1 thereto, and Bankers Trust as Agent.
10.2 Twelfth Amendment to the Bank Facility.
27.1 Financial Data Schedule
(b) Reports on Form 8-K
1. Report on Form 8-K dated October 28, 1997 as filed with the SEC on
October 29, 1997.
2. Report on Form 8-K dated January 27, 1998 as filed with the SEC on
January 28, 1998.
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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.
THE GRAND UNION COMPANY
(Registrant)
/s/ Jeffrey P. Freimark
-------------------------------
Jeffrey P. Freimark,
Executive Vice President,
Chief Financial Officer
Date: February 17, 1998
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