Winn-Dixie Stores, Inc. (NYSE: Win) announced sales and results of operations for its second quarter of fiscal 2001.

Sales for the 16 weeks ended January 10, 2001 were $4.0 billion, a decrease of $319.7 million or 7.5% compared with the same quarter last year. For the 28 weeks ended January 10, 2001, sales were $6.9 billion, a $541.0 million decrease, or 7.3% under the prior year. Average store sales increased 0.9% for the quarter and 1.4% for the year. Identical store sales decreased 4.1% for the quarter and 3.7% for the year. Comparable store sales, which include replacement stores, decreased 3.9% for the quarter and 3.4% for the year. Identical and comparable sales decreased largely because of the elimination of unprofitable sales departments (melon bars, salad bars, dry cleaners, etc.), as well as a reduction in the number of 24-hour stores and construction disruptions from numerous store modifications (retrofits). During the second quarter, 537 locations had construction in progress due to the retrofit activity.


In April 2000, the Board of Directors adopted management’s “Plan of Restructuring”. The Plan includes retrofits to approximately 650 stores during fiscal 2001 at an estimated expense of $144 million ($88.6 million after tax or $0.63 per diluted share). The current quarter includes restructuring charges totaling $37.3 million ($22.9 million after tax or $0.16 per diluted share). Year-to-date, restructuring charges totaled $46.2 million ($28.4 million after tax or $0.20 per diluted share).


Excluding restructuring and interest on Coli, net earnings for the quarter were $36.2 million, or $0.26 per diluted share, compared to $22.4 million, or $0.15 per diluted share, for the same quarter last year. Year-to-date, net earnings were $52.0 million, or $0.37 per diluted share, compared to $44.4 million, or $0.30 per diluted share. Including the restructuring and interest on COLI, net earnings for the quarter were $12.2 million, or $0.09 per diluted share, compared to a loss of ($18.8) million, or ($0.13) per diluted share, for the same quarter last year. Year-to-date, net earnings were $21.6 million, or $0.15 per diluted share, compared to $3.3 million, or $0.02 per diluted share, for the prior year.


Al Rowland, Winn-Dixie’s President and Chief Executive Officer, stated: “We are pleased to see our efforts from restructuring starting to provide improved operating results. Identical store sales continue to be affected by retrofit construction disruption at 537 stores, and the elimination of unprofitable sales departments. Gross profit is improving as our central procurement operation begins to overcome the start-up process. Labor reduction from 217 completed retrofits helped reduce operating expenses. We continue to focus on building sales through improved store operations. In addition, we completed the acquisition of 68 grocery stores and 32 gas stations from Jitney Jungle on January 11, 2001. We want to welcome our new Jitney Jungle, Sack & Save and Pump & Save associates to the Winn-Dixie family.”


“We also switched John Sheehan to Senior Vice President and Director of Operations, and Dan Lafever to Senior Vice President and Director of Sales and Procurement. This change supports our commitment to further improve the quality of our merchandising and central procurement function, while accelerating our progress towards operational excellence and customer service,” said Rowland. “It will also help us optimize the strengths and experience of both Dan and John.”


For the 28 weeks ended January 10, 2001, Winn-Dixie opened and/or acquired 22 new stores, averaging 50,600 square feet, closed 12 stores, averaging 36,600 square feet, enlarged 2 stores and remodeled 3 store locations. As of January 10, 2001, there were 1,089 stores in operation, compared to 1,185 last year. Of the 1,089 stores, 949 are larger than 35,000 square feet, with 796 being Marketplace stores. There are 6 new stores presently under construction. By the end of this fiscal year, the Company plans to have opened and/or acquired 95 new stores and enlarged or remodeled 12 existing stores.


According to published reports of sales, Winn-Dixie is one of the nation’s largest retail food chains.







SECOND QUARTER


Dollars in thousands except per share data





















































































































































































16 Weeks Ended


16 Weeks Ended

January 10, 2001 January 12, 2000
Amount % Amount %
Sales $ 3,956,338 100.0 4,276,024 100.0
Cost of sales 2,895,224 73.2 3,106,343 72.6
Gross profit 1,061,114 26.8 1,169,681 27.4
Operating & administrative expenses 988,007 25.0 1,124,005 26.3
Restructuring & other non-recurring charges 37,253 0.9 –      –   
Operating income 35,854 0.9 45,676 1.1
Interest expense* 16,068 0.4 26,803 0.7
Earnings before income taxes 19,786     0.5 18,873 0.4
Income taxes* 7,617 0.2 37,666 0.8
Net earnings (loss) $ 12,169 0.3 (18,793 ) (0.4

)

Basic earnings (loss) per share $ 0.09 (0.13 )
Diluted earnings (loss) per share $ 0.09 (0.13 )
Dividends per share $ 0.34 0.34
Number of stores 1,089

 






FISCAL YEAR-TO-DATE


Dollars in thousands except per share data











































































































































































28 Weeks Ended


28 Weeks Ended

January 10, 2001 January 12, 2000
Amount % Amount %
Sales $ 6,897,200 100.0 7,438,195 100.0
Cost of sales 5,089,187 73.8 5,398,922 72.6
Gross profit 1,808,013 26.2 2,039,273 27.4
Operating & administrative expenses 1,703,129 24.7 1,951,125 26.2
Restructuring & other non-recurring charges 46,206 0.7 –      –   
Operating income 58,678 0.8 88,148 1.2
Interest expense* 23,586 0.3 33,390 0.5
Earnings before income taxes 35,092     0.5 54,758 0.7
Income taxes* 13,510 0.2 51,482 0.7
Net earnings  $ 21,582 0.3 3,276 –    
Basic earnings per share $ 0.15 0.02
Diluted earnings per share $ 0.15 0.02
Dividends per share $ 0.51 0.51

* See note (3) Income Taxes






CONSOLIDATED BALANCE SHEETS


Dollars in thousands
 























































































Assets January 10, 2001 June 28, 2000
Current assets $ 1,657,272 1,471,922
Net property, plant and equipment 1,162,154 1,034,493
Other assets 245,381 240,678
$ 3,064,807 2,747,093
Liabilities and Shareholders’ Equity
Short-term borrowings $ 700,000 235,000
Other current liabilities 1,118,689 1,186,553
     Current liabilities 1,818,689 1,421,553
Other liabilities 428,796 457,705
Shareholders’ equity 817,322 867,835
$ 3,064,807 2,747,093






CASH FLOW INFORMATION


Dollars in thousands
 



















































































28 Weeks
Ended
28 Weeks
Ended
January 10, 2001 January 12, 2000
Net cash provided by operating activities $ 23,848 361,569
Net cash used in investing activities (256,249 ) (131,907 )
Net cash provided by (used in) financing activities 385,382 (231,261

)

Increase (decrease) in cash and cash equivalents 152,981 (1,599 )
Cash and cash equivalents at beginning of year 29,576 24,746
Cash and cash equivalents at end of period $ 182,557 23,147
Capital expenditures, net $ 228,870 150,981
Depreciation and amortization 102,227 142,103
Dividends paid 71,213 75,340

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 second quarter of fiscal 2001, the Company capitalized interest totaling $2.7 million, and $4.9 million for the year, related to construction of new stores and a warehouse facility in Jacksonville, Florida.


(3) Income Taxes:   During 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 $3.2 million ($2.0 million after tax) was recorded in the current year. 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. 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 has appealed. 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.










































Second Quarter


Year-to-Date


(Dollars in thousands except per share data)


FIFO Basis


16 Weeks
2001


16 Weeks
2000


28 Weeks
2001


28 Weeks
2000

Inventories $ 1,411,873 1,661,969 1,411,873 1,661,969
Net earnings (loss) from operations 14,613 (16,349 ) 25,859 7,553
Diluted earnings (loss) per share 0.10 (0.11 ) 0.18 0.05

(5) Earnings Per Share:   The following weighted average number of shares of common stock were used in the calculations for earnings per share.















































Basic


Diluted


(in thousands)


2001

Quarter 139,549 140,003
Year-to-Date 139,468 139,825

2000

Quarter 146,457 146,457
Year-to-Date 146,263 147,406

(6) Restructuring:   On April 19, 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 $144 million ($88.6 million after tax or $0.63 per diluted share) is expected to be incurred during fiscal 2001 for the store retrofits. Charges totaling $37.3 million ($22.9 million after tax or $0.16 per diluted share) were recorded in the current quarter and $46.2 million ($28.4 million after tax or $0.20 per diluted share) for the year. The Company expects a reduction in expenses of approximately $400 million per year ($246 million after tax or $1.76 per diluted share) approximately one year following completion of the restructuring.


(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.











































































































16 weeks ended January 10, 2001 As
Reported
Non-
recurring
Charges
Excluding
Non-recurring
Net sales $ 3,956,338    

    3,956,338
Cost of sales 2,895,224

2,895,224
Gross profit on sales 1,061,114

1,061,114
Operating and administrative expenses 988,007

988,007
Restructuring and other non-recurring charges 37,253 37,253

Operating income 35,854 (37,253 ) 73,107
Interest expense 16,068 1,851 14,217
Earnings before income taxes 19,786 (39,104 ) 58,890
Income taxes 7,617 (15,055 ) 22,672
Net earnings $ 12,169 (24,049 ) 36,218
Basic earnings per share $ 0.09 (0.17 ) 0.26
Diluted earnings per share $ 0.09 (0.17 ) 0.26











































































































28 weeks ended January 10, 2001 As
Reported
Non-
recurring
Charges
Excluding
Non- recurring
Net sales $ 6,897,200    

    6,897,200
Cost of sales 5,089,187

5,089,187
Gross profit on sales 1,808,013

1,808,013
Operating and administrative expenses 1,703,129

1,703,129
Restructuring and other non-recurring charges 46,206 46,206

Operating income 58,678 (46,206 ) 104,884
Interest expense 23,586 3,238 20,348
Earnings before income taxes 35,092 (49,444 ) 84,536
Income taxes 13,510 (19,036 ) 32,546
Net earnings $ 21,582 (30,408 ) 51,990
Basic earnings per share $ 0.15 (0.22 ) 0.37
Diluted earnings per share $ 0.15 (0.22 ) 0.37

(8) Reclassification:   Cash discounts and other income have been reclassified as a reduction of cost of sales and operating and administrative expense, respectively.  This reclassification is consistent with industry practice.  Certain prior year amounts have been reclassified to conform to the current year’s presentation.

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 complete successfully the restructuring of operations adopted by the Board of Directors on April 19, 2000, (ii) our ability to integrate successfully the acquisition on January 11, 2001, of 68 stores and 32 gas stations from Jitney Jungle, (iii) 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, (iv) changes in federal, state or local legislation or regulations affecting food manufacturing, food distribution, or food retailing, including environmental compliance; (v) 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 (vi) 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:


















































52 Weeks Ending
June 27, 2001


52 Weeks Ending
June 27, 2001


(dollars in thousands except per share)

Low High Low High
Earnings excluding restructuring and other non-recurring charges $ 133,000 147,000 224,000 245,000
Diluted earnings per share $ 0.95 1.05 1.60 1.75

Winn-Dixie Website: www.winndixie.com