Winn-Dixie Stores, Inc. (NYSE: WIN) announced the completion of its restructuring plan and results of operations for its fourth quarter and fiscal year ended June 27, 2001.
Excluding non-recurring charges, net earnings for the quarter were $48.3 million, or $0.34 per diluted share, compared to $20.5 million, or $0.14 per diluted share, for the same quarter last year. For the fiscal year, net earnings were $139.3 million, or $0.99 per diluted share, compared to $75.2 million, or $0.52 per diluted share. Including non-recurring charges, net earnings for the quarter were $13.0 million, or $0.09 per diluted share, compared to net loss of $(242.4) million, or $(1.70) per diluted share, for the same quarter last year. For the fiscal year, net earnings were $45.3 million, or $0.32 per diluted share, compared to net loss of $(228.9) million, or $(1.57) per diluted share, for the prior year. Non- recurring charges include restructuring expenses and interest on the company owned life insurance (COLI) tax case.
Sales for the 12 weeks ended June 27, 2001, were $3.0 billion, a decrease of $70.1 million, or 2.3% compared with the same quarter last year. For the 52 weeks ended June 27, 2001, sales were $12.9 billion, a $794.2 million decrease, or 5.8% under the prior year. Identical store sales decreased 5.2% for the quarter and 4.4% for the year. Identical sales decreased largely because of the elimination of unprofitable sales departments (deli/cafes, melon bars, salad bars, dry cleaners, etc.), the elimination of unprofitable sales items in remaining departments, a reduction in the number of 24-hour stores and construction disruptions from numerous store modifications (retrofits).
Al Rowland, Winn-Dixie’s President and Chief Executive Officer, stated: “We are pleased to announce the completion of our restructuring plan. I want to acknowledge our management team for all their hard work over the past eighteen months in completing this undertaking in a timely manner. We are achieving our expected gross profit percent and are continuing our expense reduction programs. Our focus continues to be training and working with our various teams of associates to achieve our goal of improved customer service.”
For the 52 weeks ended June 27, 2001, Winn-Dixie opened 17 new stores and acquired 77 stores, averaging 38,500 square feet, closed 20 stores, averaging 34,800 square feet, enlarged 6 stores and remodeled 5 store locations. As of June 27, 2001, there were 1,153 stores in operation, compared to 1,079 last year. Of the 1,153 stores, 975 are larger than 35,000 square feet, with 806 being Marketplace stores.
According to published reports, Winn-Dixie is one of the nation’s largest retail food chains.
Fourth Quarter
Dollars in thousands except per share data12 Weeks Ended 12 Weeks Ended
June 27, 2001 June 28, 2000
Amount % Amount %Sales $2,989,861 100.0 3,059,996 100.0
Cost of sales 2,157,676 72.2 2,237,638 73.1
Gross profit 832,185 27.8 822,358 26.9
Operating &
administrative
expenses 739,776 24.7 793,417 25.9
Restructuring and
other non-recurring
charges 56,497 1.9 396,029 13.0
Operating income
(loss) 35,912 1.2 (367,088) (12.0)
Interest expense 14,800 0.5 6,784 0.2
Earnings (loss)
before income taxes 21,112 0.7 (373,872) (12.2)
Income taxes 8,107 0.3 (131,428) (4.3)
Net earnings (loss) $13,005 0.4 (242,444) (7.9)
Basic earnings (loss)
per share $0.09 (1.70)
Diluted earnings (loss)
per share $0.09 (1.70)
Dividends per share $0.255 0.255
Number of stores 1,153 1,079Fiscal Year
Dollars in thousands except per share data52 Weeks Ended 52 Weeks Ended
June 27, 2001 June 28, 2000Amount % Amount %
Sales $12,903,373 100.0 13,697,547 100.0
Cost of sales 9,449,346 73.2 9,970,497 72.8
Gross profit 3,454,027 26.8 3,727,050 27.2
Operating &
administrative
expenses 3,180,297 24.7 3,586,351 26.2
Restructuring and
other non-recurring
charges 147,245 1.1 396,029 2.9
Operating income
(loss) 126,485 1.0 (255,330) (1.9)
Interest expense 52,843 0.4 47,081 0.3
Earnings (loss)
before income taxes 73,642 0.6 (302,411) (2.2)
Income taxes 28,331 0.2 (73,516) (0.5)
Net earnings (loss) $45,311 0.4 (228,895) (1.7)
Basic earnings (loss)
per share $0.32 (1.57)
Diluted earnings (loss)
per share $0.32 (1.57)
Dividends per share $1.02 1.02Consolidated Balance Sheets
Dollar amounts in thousandsAssets June 27, 2001 June 28, 2000
Current assets $1,599,201 1,471,922
Property, plant and equipment, net 1,146,654 1,016,292
Other assets 295,815 258,879
$3,041,670 2,747,093Liabilities and Shareholders’ Equity
Short-term borrowings $— 235,000
Other current liabilities 1,149,907 1,186,553
Current liabilities 1,149,907 1,421,553
Long-term debt 697,414 —
Other liabilities 422,695 457,705
Shareholders’ equity 771,654 867,835
$3,041,670 2,747,093Cash Flow Information
Dollar amounts in thousands52 Weeks 52 Weeks
Ended Ended
June 27, 2001 June 28, 2000Net cash provided by operating activities $244,888 743,279
Net cash used in investing activities (443,591) (196,118)
Net cash provided by (used in)
financing activities 290,188 (542,331)
Increase in cash and cash equivalents 91,485 4,830
Cash and cash equivalents at
beginning of year 29,576 24,746
Cash and cash equivalents at end of period $121,061 29,576Capital expenditures, net $313,319 212,990
Depreciation and amortization $183,559 256,671
Dividends paid $142,853 148,966
Supplemental and Explanatory Information
- (1) Basis of Consolidation: The consolidated financial statements include the accounts of Winn-Dixie Stores, Inc. and its subsidiaries which operate as a major food retailer in fourteen states and the Bahama Islands.
- (2) Interest Expense: During the fourth quarter of fiscal 2001, the Company capitalized interest totaling $0.7 million, and $5.9 million for the year, related to construction of new stores and a warehouse facility in Jacksonville, Florida.
- (3) Income Taxes: In fiscal 2000, the Company reserved $30.4 million for taxes and $19.7 million for interest ($42.5 million after tax, or $0.29 per diluted share) after receiving an unfavorable opinion in October 1999 and a computational decision on January 11, 2000, from the U.S. Tax Court. Additional interest totaling $5.5 million was accrued for fiscal 2001. Interest will continue to accrue until the matter is finally resolved. The Tax Court upheld the Internal Revenue Service’s position that interest related to loans on broad-based, company owned life insurance policies in 1993 was not deductible for income tax purposes. The Eleventh Circuit Court of Appeals issued an opinion on June 28, 2001 affirming the Tax Court’s decision. Congress passed legislation phasing out such deductions over a three-year period in the fall of 1996. The Company held such policies and deducted interest on outstanding loans from March 1993 through December 1997. Management disagrees with the Tax Court’s decision and plans further appeal. While the ultimate outcome of this litigation cannot be predicted with certainty, in the opinion of management, the ultimate resolution of this matter will not have any additional material adverse impact on the Company’s financial condition or results of operations.
- (4) Inventory: The following supplemental information is provided to facilitate comparisons with companies using the FIFO method.
Fourth Quarter Year-to-Date
(Dollars in thousands except per share data)FIFO Basis 12 Weeks 12 Weeks 52 Weeks 52 Weeks
2001 2000 2001 2000Inventories $1,419,013 1,373,773 1,419,013 1,373,773
Net earnings from
operations (499) (239,271) 37,957 (219,612)
Diluted earnings
per share — (1.68) 0.27 (1.51)
Basic Diluted
(in thousands)
2001
Quarter 140,246 141,173
Fiscal Year 139,824 140,3992000
Quarter 142,274 142,274
Fiscal Year 145,445 145,445
- (6) Restructuring: During April 2000, the Board of Directors adopted management’s “Plan of Restructuring.” As a result of the restructuring, the Company recorded expenses of approximately $396 million ($256 million after tax or $1.76 per diluted share) in the fourth quarter of fiscal 2000. An additional $147.2 million ($90.6 million after tax or $0.64 per diluted share) was expensed during fiscal 2001. Charges totaling $56.5 million ($34.7 million after tax or $0.25 per diluted share) were recorded in the current quarter.
- (7) Results of operations: The following table shows the effect of the restructuring charges and interest on company owned life insurance for the current year.
Dollars in thousands except per share dataAs Non- Excluding
Reported recurring Non-recurring
Charges
12 weeks ended June 27, 2001Net sales $2,989,861 — 2,989,861
Cost of sales 2,157,676 — 2,157,676
Gross profit on sales 832,185 — 832,185
Operating and administrative
expenses 739,776 — 739,776
Restructuring and other
non-recurring charges 56,497 56,497 —
Operating income 35,912 (56,497) 92,409
Interest expense 14,800 887 13,913
Earnings before income taxes 21,112 (57,384) 78,496
Income taxes 8,107 (22,049) 30,156
Net earnings $13,005 (35,335) 48,340
Basic earnings per share $0.09 (0.25) 0.34
Diluted earnings per share 0.09 (0.25) 0.34As Non- Excluding
Reported recurring Non-recurring
Charges
52 weeks ended June 27, 2001Net sales $12,903,373 — 12,903,373
Cost of sales 9,449,346 — 9,449,346
Gross profit on sales 3,454,027 — 3,454,027
Operating and
administrative expenses 3,180,297 — 3,180,297
Restructuring and other
non-recurring charges 147,245 147,245 —
Operating income 126,485 (147,245) 273,730
Interest expense 52,843 5,512 47,331
Earnings before income tax 73,642 (152,757) 226,399
Income taxes 28,331 (58,768) 87,099
Net earnings $45,311 (93,989) 139,300
Basic earnings per share $0.32 (0.68) 1.00
Diluted earnings per share $0.32 (0.67) 0.99
Cautionary Statement Regarding Forward-Looking Information and Statements
The projections following this Cautionary Statement are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the results of operations of the Company. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those projected include, among others, the following possibilities: (i) our ability to achieve successfully the long-term benefits contemplated from the restructuring of operations adopted by the board of Directors on April 19, 2000, and which has been substantially completed; (ii) heightened competition, including specifically the intensification of price competition, the entry of new competitors, or the expansion of existing competitors in one or more of our operating regions, (iii) changes in federal, state or local legislation or regulations affecting food manufacturing, food distribution, or food retailing, including environmental compliance; (iv) the availability and terms of financing, including in particular the possible impact of changes in the ratings assigned to us by nationally recognized rating agencies; and (v) general business and economic conditions in our operating regions, including the rate of inflation/deflation and changes in population, consumer demands and spending, types of employment and numbers of jobs. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements. This news release, including the projections, should be read in conjunction with the reports of the Company on file with the Securities and Exchange Commission.
Securities and Exchange Commission Fair Disclosure Forward-Looking Earnings Forecast
To give guidance to all investors in the spirit of the Securities and Exchange Commission fair disclosure rules, the Company’s earnings model projects the following:
12 Weeks Ending 52 Weeks Ending
September 19, 2001 June 26, 2002
(dollars in thousands except per share)Low High Low High
Net Earnings $33,500 42,000 $225,000 246,000
Diluted earnings
per share $0.24 0.30 1.60 1.75
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