WINN DIXIE STORES INC - 10-Q Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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 September 22, 2004

¨	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 1-3657

WINN-DIXIE STORES, INC.

(Exact name of registrant as specified in its charter)


Florida		59-0514290
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

5050 Edgewood Court, Jacksonville, Florida		32254-3699
(Address of principal executive offices)		(Zip Code)

(904) 783-5000

(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 is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨

As of October 20, 2004, there were 142,173,311 shares outstanding of the registrant’s common stock, par value $1.00 per share.

FORM 10-Q

TABLE OF CONTENTS


		Page
	Part I: Financial Information
Item 1.	Financial Statements

	Condensed Consolidated Statements of Operations (Unaudited), For the 12 Weeks Ended September 22, 2004 and September 17, 2003	1

	Condensed Consolidated Balance Sheets September 22, 2004 (Unaudited) and June 30, 2004 (Note A)	2

	Condensed Consolidated Statements of Cash Flows (Unaudited), For the 12 Weeks Ended September 22, 2004 and September 17, 2003	3

	Notes to Condensed Consolidated Financial Statements (Unaudited)	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33

Item 4.	Controls and Procedures	34
	Part II: Other Information

Item 1.	Legal Proceedings	35

Item 2.	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities	36

Item 3.	Defaults Upon Senior Securities	36

Item 4.	Submission of Matters to a Vote of Security Holders	36

Item 5.	Other Information	36

Item 6.	Exhibits and Reports on Form 8-K	37

Signatures		39

WINN-DIXIE STORES, INC. AND SUBSIDIARIES

Part I – Financial Information

Item 1. Financial Statements

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)


	For the 12 Weeks Ended
Amounts in thousands except per share data	September 22, 2004			September 17, 2003
Net sales	$	2,336,609		2,418,780
Cost of sales, including warehouse and delivery expenses		1,707,258		1,759,771

Gross profit on sales		629,351		659,009
Other operating and administrative expenses		640,662		646,595
Impairment charges		87,982		—
Restructuring charges		83,206		—

Operating (loss) income		(182,499	)	12,414
Interest expense, net		7,274		4,311

(Loss) earnings before income taxes		(189,773	)	8,103
Income tax (benefit) expense		(66,220	)	2,927

Net (loss) earnings from continuing operations		(123,553	)	5,176

Discontinued operations (Note Q):
Loss from discontinued operations		(15,137	)	(6,190	)
Loss on disposal of discontinued operations		(31,631	)	—
Income tax benefit		(17,244	)	(2,259	)

Net loss from discontinued operations		(29,524	)	(3,931	)

Net (loss) earnings	$	(153,077	)	1,245

Basic (loss) earnings per share:
(Loss) earnings from continuing operations	$	(0.88	)	0.04
Loss from discontinued operations		(0.21	)	(0.03	)

Basic (loss) earnings per share	$	(1.09	)	0.01

Diluted (loss) earnings per share:
(Loss) earnings from continuing operations	$	(0.88	)	0.04
Loss from discontinued operations		(0.21	)	(0.03	)

Diluted (loss) earnings per share	$	(1.09	)	0.01

Dividends per share	$	—		0.05

Weighted average common shares outstanding-basic		140,724		140,628

Weighted average common shares outstanding-diluted		140,724		141,108

See accompanying notes to condensed consolidated financial statements (unaudited).

WINN-DIXIE STORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


Dollar amounts in thousands except par value	September 22, 2004			June 30, 2004
	(Unaudited)			(Note A)
ASSETS
Current Assets:
Cash and cash equivalents	$	64,026		56,818
Marketable securities		19,397		19,275
Trade and other receivables, less allowance for doubtful items of $3,289 ($2,539 at June 30, 2004)		100,609		109,051
Insurance claims receivable		31,076		—
Income tax receivable		77,351		49,148
Merchandise inventories less LIFO reserve of $220,770 ($219,270 at June 30, 2004)		886,356		940,529
Prepaid expenses and other current assets		28,816		24,814
Assets held for sale		36,108		51,034
Deferred income taxes		89,880		100,129

Total current assets		1,333,619		1,350,798

Cash surrender value of life insurance, net		12,004		15,502
Property, plant and equipment, net		872,836		886,055
Goodwill		—		87,112
Non-current deferred income taxes		205,033		139,089
Other assets, net		141,318		140,335

Total assets	$	2,564,810		2,618,891

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current portion of long-term debt	$	280		273
Current obligations under capital leases		2,675		2,616
Accounts payable		492,535		511,443
Reserve for insurance claims and self-insurance		97,310		97,952
Accrued wages and salaries		99,735		93,385
Accrued rent		132,690		109,727
Accrued expenses		133,530		123,470

Total current liabilities		958,755		938,866

Reserve for insurance claims and self-insurance		182,612		182,514
Long-term debt		300,554		300,605
Obligations under capital leases		12,955		13,566
Defined benefit plan		69,471		68,827
Lease liability on closed facilities, net of current portion		238,649		160,214
Other liabilities		35,530		36,954

Total liabilities		1,798,526		1,701,546

Commitments and contingent liabilities (Notes J, M, N, Q and T)
Shareholders’ Equity:
Common stock $1 par value. Authorized 400,000,000 shares; 154,332,048 shares issued and 142,020,419 shares outstanding at September 22, 2004 and 154,332,048 issued and 142,028,240 outstanding at June 30, 2004		142,020		142,028
Retained earnings		627,861		778,819
Accumulated other comprehensive loss		(3,597	)	(3,502	)

Total shareholders’ equity		766,284		917,345

Total liabilities and shareholders’ equity	$	2,564,810		2,618,891

See accompanying notes to condensed consolidated financial statements (unaudited).

WINN-DIXIE STORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	For the 12 Weeks Ended
Dollar amounts in thousands	September 22, 2004			September 17, 2003
Cash flows from operating activities:
Net (loss) earnings	$	(153,077	)	1,245
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:
Loss on sale of facilities		567		—
Depreciation and amortization		35,066		38,806
Impairment charges		92,443		—
Deferred income taxes		(55,521	)	5,860
Stock compensation plans		2,112		1,175
Change in operating assets and liabilities:
Trade and other receivables		(22,634	)	(1,461	)
Merchandise inventories		51,444		(17,374	)
Prepaid expenses and other current assets		(1,640	)	(550	)
Accounts payable		(18,908	)	5,970
Lease liability on closed facilities		92,584		(9,544	)
Income taxes payable/receivable		(28,203	)	(11,487	)
Defined benefit plan		644		496
Reserve for insurance claims and self-insurance		(544	)	4,435
Other accrued expenses		25,314		499

Net cash provided by operating activities		19,647		18,070

Cash flows from investing activities:
Purchases of property, plant and equipment		(24,525	)	(37,675	)
(Increase) decrease in investments and other assets		(2,527	)	988
Proceeds from sale of facilities		15,788		—
Marketable securities, net		(163	)	—

Net cash used in investing activities		(11,427	)	(36,687	)

Cash flows from financing activities:
Principal payments on long-term debt		(44	)	(37	)
Debt issuance cost		(323	)	—
Principal payments on capital lease obligations		(597	)	(961	)
Dividends paid		—		(7,041	)
Other		(48	)	(20	)

Net cash used in financing activities		(1,012	)	(8,059	)

Increase (decrease) in cash and cash equivalents		7,208		(26,676	)
Cash and cash equivalents at beginning of year		56,818		127,515

Cash and cash equivalents at end of period	$	64,026		100,839

Supplemental cash flow information:
Interest paid	$	104		1,889
Interest and dividends received	$	127		642
Income taxes paid	$	229		6,410

See accompanying notes to condensed consolidated financial statements (unaudited).

WINN-DIXIE STORES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands except per share data, unless otherwise stated

(A)

Basis of Presentation: The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the 12 weeks ended September 22, 2004 are not necessarily indicative of the results that may be expected for the year ending June 29, 2005.

The balance sheet at June 30, 2004 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.

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