<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 June 14, 1997
-------------
or
[_] 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 1-6814
BIG V SUPERMARKETS, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 14-1459448
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
176 North Main Street, Florida, New York 10921
(Address of principal executive offices) (Zip Code)
(914) 651-4411
(Registrant's telephone number, including area code)
Not applicable.
(Former name, former address and former fiscal year,
if changed since last report)
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
----- -----
Shares of Common Stock outstanding as of July 25, 1997: 1,000 shares
This quarterly report on Form 10-Q is being filed voluntarily and shall not be
deemed to be subject to Section 18 of the Securities Exchange Act of 1934.
<PAGE>
BIG V SUPERMARKETS, INC.
FORM 10-Q FOR THE 12 WEEKS ENDED JUNE 14, 1997
INDEX
PART I
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C>
Item 1. Financial Statements
Unaudited Consolidated Statements of Income (Loss)........ 3
Unaudited Consolidated Balance Sheets..................... 4
Unaudited Consolidated Statements of Cash Flows........... 5
Notes to Unaudited Consolidated Financial Statements...... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 7-10
PART II
OTHER INFORMATION
Item 1. Legal Proceedings........................................... 11
Item 2. Changes in Securities....................................... 11
Item 3. Defaults upon Senior Securities............................. 11
Item 4. Submission of Matters to a Vote of Security Holders......... 11
Item 5. Other Information........................................... 11
Item 6. Exhibits and Reports on Form 8-K............................ 11
SIGNATURES........................................................... 12
</TABLE>
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<PAGE>
BIG V SUPERMARKETS, INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In Thousands)
<TABLE>
<CAPTION>
UNAUDITED
---------------------------------------------------------------------------
For the Twelve For the Twelve For the Twenty-Four For the Twenty-Four
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
June 14, 1997 June 15, 1996 June 14, 1997 June 15, 1996
<S> <C> <C> <C> <C>
SALES $ 173,170 $ 167,516 $ 344,149 $ 343,068
---------- ---------- ---------- ----------
COSTS AND EXPENSES:
Cost of Sales (exclusive of depreciation and
amortization shown separately below) 128,240 123,941 256,561 255,854
Selling, general and administrative 35,002 34,812 69,711 70,724
Depreciation and amortization 3,864 4,165 7,723 8,333
Interest expense, net of interest income of $64 and
$33 for the 12 week periods and $108 and $111
for the 24 week periods ended June 14, 1997 and
June 15, 1996, respectively 5,682 5,734 11,631 11,490
----- ----- ------ ------
Total costs and expenses 172,788 168,652 345,626 346,401
------- ------- ------- -------
INCOME (LOSS) BEFORE INCOME TAXES 382 (1,136) (1,477) (3,333)
INCOME TAX BENEFIT 318 268 463 1,322
--- --- --- -----
NET INCOME (LOSS) $ 700 $ (868) $ (1,014) $ (2,011)
========== ========== ========== ==========
</TABLE>
See notes to unaudited consolidated financial statements.
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<PAGE>
BIG V SUPERMARKETS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 14, 1997 DECEMBER 28, 1996/1/
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<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash $ 12,979 $ 10,595
Accounts receivable 13,260 13,066
Inventories 32,712 35,437
Refundable income taxes 345 120
Prepaid expenses and other current assets 2,663 3,434
----- -----
Total current assets 61,959 62,652
PROPERTY AND EQUIPMENT - At cost, less accumulated
depreciation and amortization of $75,816 at June 14, 1997
and $70,005 at December 28, 1996 69,513 72,304
GOODWILL - Less accumulated amortization of $11,842 at
June 14, 1997 and $10,914 at December 28, 1996 67,467 68,396
INVESTMENT IN WAKEFERN FOOD CORPORATION 11,236 11,236
WAKEFERN WAREHOUSE AGREEMENT - Less accumulated
amortization of $6,683 at June 14, 1997 and $6,205
at December 28, 1996 34,686 35,163
OTHER ASSETS 15,879 14,866
------ ------
TOTAL ASSETS $ 260,740 $ 264,617
======= =======
LIABILITIES AND STOCKHOLDER'S DEFICIT
- -------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 36,858 $ 39,738
Accrued expenses and taxes other than income taxes 15,105 15,028
Income taxes payable 8 17
Deferred income taxes 6,978 6,314
Current portion of long-term debt 12,584 10,959
Current portion of capitalized lease obligations 447 447
--- ---
Total current liabilities 71,980 72,503
------ ------
OTHER LONG-TERM LIABILITIES 6,744 6,247
----- -----
LONG-TERM DEBT - Less current portion 164,353 165,590
------- -------
CAPITALIZED LEASE OBLIGATIONS - Less current portion 36,408 36,614
------ ------
DEFERRED INCOME TAXES 6,713 7,973
----- -----
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S DEFICIT
Common stock, par value, $1.00 per share; authorized, 1,000
shares; issued, 1,000 shares 1 1
Paid-in capital 8,531 8,665
Accumulated deficit (33,990) (32,976)
------- -------
Total stockholder's deficit (25,458) (24,310)
------- -------
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT $ 260,740 $ 264,617
======= =======
</TABLE>
/1/ Taken from the audited consolidated financial statements for the year ended
December 28, 1996.
See notes to unaudited consolidated financial statements.
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<PAGE>
BIG V SUPERMARKETS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
UNAUDITED
--------------------------------------------
For the Twenty-Four For the Twenty-Four
Weeks Ended Weeks Ended
June 14, 1997 June 15, 1996
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<S> <C> <C>
CASH BALANCE, BEGINNING OF PERIOD $ 10,595 $ 11,683
------ ------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss (1,014) (1,982)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 7,723 8,333
Amortization of deferred debt costs 529 538
Amortization of discount on debt 71 8
Deferred income taxes (596) (383)
Non-cash rent expense 375 302
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (194) 1,461
Decrease in inventories 2,725 2,488
Decrease in prepaid expenses 660 289
(Increase) decrease in refundable income taxes (225) 145
Increase in other assets (1,542) (456)
Decrease in accounts payable (2,880) (9,698)
Increase (decrease) in accrued expenses 77 (761)
(Decrease) increase in income taxes payable (9) 405
Increase (decrease) in other long-term liabilities 122 (23)
--- ---
Net cash provided by operating activities 5,822 666
----- ---
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (3,415) (2,338)
Sale of Connecticut stores - 6,704
------ -----
Net cash (used in) provided by investing activities (3,415) 4,366
------ -----
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (4,841) (4,149)
Payments on revolver borrowings - (1,000)
Payments on capital lease obligations (206) (172)
Proceeds from long-term borrowings 658 52
Proceeds from revolver borrowings 4,500 -
Capital Contribution from Holding 15 -
Repurchase of stock for the treasury (149) (4)
----- ------
Net cash used in financing activities (23) (5,273)
----- ------
NET INCREASE (DECREASE) IN CASH 2,384 (241)
----- ------
CASH BALANCE, END OF PERIOD $ 12,979 $ 11,442
====== ======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 11,046 $ 11,352
Income taxes $ 245 $ 21
</TABLE>
During the period ended June 15, 1996, the Company's investment in Wakefern and
notes payable to Wakefern were reduced by $688 as a result of store closings.
See notes to unaudited consolidated financial statements.
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<PAGE>
BIG V SUPERMARKETS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
1. Basis of Presentation
---------------------
The unaudited consolidated financial statements as of June 14, 1997, included
herein have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and rule 10-01 of Regulation S-X promulgated by the Securities and
Exchange Commission. The balance sheet at December 28, 1996, has been taken
from the audited financial statements as of that date. In the opinion of
management, all adjustments (consisting only of normal recurring adjustments)
which are necessary for a fair presentation of the results of operations for the
period have been made; however, these results are not necessarily indicative of
the results for the entire fiscal year. Certain financial information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted.
Accordingly, reference is made to the consolidated financial statements and
notes thereto included in the Company's annual report on Form 10-K for the year
ended December 28, 1996.
2. Income Taxes
------------
Income taxes are based on the estimated effective tax rate expected to be
applicable for the full fiscal year in accordance with Accounting Standards
Board Opinion No. 28, "Interim Financial Reporting".
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<PAGE>
ITEM 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Basis of Presentation
The following discussion of the Company's financial condition and results
of operations should be read in conjunction with the unaudited financial
statements and notes thereto included elsewhere in this Form 10-Q.
<TABLE>
<CAPTION>
12 Weeks Ended 12 Weeks Ended 24 Weeks Ended 24 Weeks Ended
June 14, 1997 June 15, 1996 June 14, 1997 June 15, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Income Statement Data:
Sales...................... 100.0% 100.0% 100.0% 100.0%
Gross margin............... 25.9 26.0 25.5 25.4
Selling, general and administrative..... 20.2 20.8 20.3 20.6
EBITDA (1)................. 5.9 5.9 5.3 5.2
Depreciation and amortization........... 2.2 2.5 2.2 2.4
Interest, net.............. 3.3 3.4 3.4 3.4
--- --- --- ---
Income (Loss) before income taxes....... 0.2 (0.7) (0.4) (1.0)
Income tax benefit......... 0.2 0.2 0.1 0.4
--- --- --- ---
Net income (loss).......... 0.4% (0.5)% (0.3)% (0.6)%
==== ====== ====== ======
Other Data (in millions):
EBITDA..................... $ 10.1 $ 9.8 $ 18.2 $ 18.0
====== ====== ====== ======
Net cash provided by operating
activities................. $ 7.3 $ 4.9 $ 5.8 $ 0.7
====== ====== ====== ======
Net cash (used in) provided by
investing activities....... $ (3.0) $ (1.6) $ (3.4) $ 4.4
====== ====== ====== ======
Net cash used in financing
activities................. $ (2.7) $ (3.0) $ (0.0) $ (5.3)
====== ====== ====== ======
</TABLE>
- ------------
(1) EBITDA represents net earnings before interest expense, depreciation and
amortization, including non-cash losses on the sale of property, plant and
equipment, income taxes and LIFO provision/credit. EBITDA is a widely accepted
financial indicator of a company's ability to service and/or incur debt, and
also represents a primary debt covenant of the Company. Noncompliance with this
covenant would represent a default under the Company's debt agreements which
could subject the Company to debt acceleration if not waived or amended. EBITDA
should not be construed as an alternative to, or a better indicator of,
operating income (as determined in accordance with generally accepted accounting
principles) or to cash flows from operating activities (as determined in
accordance with generally accepted accounting principles) and should not be
construed as an indication of the Company's operating performance or as a
measure of liquidity.
-7-
<PAGE>
Results of Operations
12 and 24 Weeks Ended June 14, 1997 Compared to 12 and 24 Weeks Ended
June 15, 1996
Sales
For the 12 and 24 week periods ended June 14, 1997, total sales were $173.2
million and $344.1 million, respectively. For the comparable periods ended June
15, 1996, total sales were $167.5 million and $343.1 million, respectively.
Total and same store sales increased 3.4% and 1.0%, respectively, for the
quarter ended June 14, 1997, as compared to the prior year. For the 24 week
period ended June 14, 1997, total sales increased .3% while same store sales
decreased .8%, as compared to the same period of the prior year.
The comparable 12 and 24 week periods increase in total sales was the
product of numerous factors including new and newly renovated stores developing
their customer base, our company-wide program to increase customer satisfaction,
and aggressive marketing and perishable merchandising initiatives designed
specifically to build sales. The increase in year-to-date total sales would
have been 1.5% but for the one month impact of the Company's Connecticut stores
sold in January 1996. Positive same store sales for the quarter, attributable
to the above factors, were unable to compensate for the first quarter's mild
1997 winter and sustained competitive pressure.
Gross Margin
Gross margin decreased .1% for the quarter ended June 14, 1997, and
increased .1% for the 24 weeks ended June 14, 1997, from the comparable periods
of the prior year.
Gross margin decrease resulted from scheduled margin reductions on product
shipped to stores partially offset by reductions in stock loss and continued
improvements in mix. The lower margins on product shipped to stores through the
mid-second quarter was to stimulate sales in response to competitive activity.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were 20.2% of sales for the 12
week period ended June 14, 1997, and 20.8% for the comparable period ended June
15, 1996. The decrease in the current quarter compared to the same quarter of
the prior year was attributable to expense reductions spread over a larger sales
base.
The decrease in selling, general and administrative expenses of .6% of
sales for the quarter compared to the prior year quarter was attributable to
decreases in store labor and fringe costs (.1), store occupancy costs (.1),
Corporate labor, fringe, and incentive expenses (.4), general liability
insurance expense (.1), and a 1996 severance accrual (.2) for salary and
-8-
<PAGE>
other benefits due two former senior officers. These decreases were partially
offset by increases in workers' compensation expense (.1) and increased store
administration, training, and other direct expenses (.2). Selling, general,
and administrative expenses, as a percent of sales, were .3% better for the 24
week period ended June 14, 1997, compared to the same period of the prior year.
EBITDA
EBITDA increased 3.1% to $10.1 million for the 12 week period ended June
14, 1997, compared to $9.8 million for the comparable prior year period. For
the 24 week period ended June 14, 1997, EBITDA increased 1.0% to $18.2 million
compared to $18.0 million for the comparable prior year period.
The quarterly and year-to-date EBITDA increases of 3.1% and 1.0% are
primarily the result of the aforementioned decreases in selling, general and
administrative expenses.
Depreciation and Amortization
Depreciation and amortization, as a percentage of sales, were 2.2% of sales
for the 12 and 24 week periods ended June 14, 1997, and 2.5% and 2.4% of sales
for the comparable periods ended June 15, 1996, respectively. The whole dollar
decreases of $0.3 million and $0.6 million for the 12 and 24 week periods
compared to comparable prior year periods were due to the full amortization of
several leasehold assets and the termination of a capital lease in 1996.
Interest, net
Interest expense, net, experienced marginal change for the 12 and 24 week
periods ended June 14, 1997 compared to the same periods of the prior year. The
influences on interest expense during the quarter and year-to-date periods were
increased variable rates associated with the senior bank term loans and higher
average daily borrowings under the senior bank revolving loans. Both items were
nearly offset by the impact of scheduled principal paydowns on interest expense.
Net Income (Loss)
Net income for the 12 week period ended June 14, 1997 was $0.7 million
compared to the net loss of $0.9 million for the same period of the prior year.
Net losses were $1.0 million and $2.0 million for the 24 week periods ended June
14, 1997 and June 15, 1996, respectively. The reductions in net loss experienced
in the current quarter and year-to-date periods compared to the same periods of
the prior year were attributable to the higher level of EBITDA and lower levels
of depreciation and amortization .
-9-
<PAGE>
Liquidity and Capital Resources
The Company's long-term debt (including current maturities and capital
leases) at June 14, 1997, was approximately $213.8 million. All mandatory
principal payments required by the various debt agreements were satisfied during
the 12 and 24 week periods ended June 14, 1997.
The Company had a working capital ratio of approximately .9:1 at June 14,
1997 and December 28, 1996. The Company typically requires small amounts of
working capital since inventory is generally sold prior to the time that
payments to Wakefern Food Corp. and other suppliers are due. The Company's
primary source of liquidity during the 12 weeks ended June 14, 1997 were cash
flows generated through operations supplemented by increased revolver and other
long-term borrowings.
Net cash provided by operating activities was $5.8 million and $0.7 million
for the 24 week periods ended June 14, 1997 and June 15, 1996, respectively.
The increase in net cash provided by operating activities during the current 24
week period was primarily due to the $5.2 million increase in accounts payable
and accrued expenses since June 15, 1996..
Net cash used in investing activities was $3.4 million for the 24 week
period ended June 14, 1997. This compares to $4.4 million provided by investing
activities for the comparable period ended June 15, 1996. The decrease in the
current 24 week period was the result of the sale of the two Connecticut stores
on January 28, 1996.
Net cash used in financing activities was nil and $5.3 million for the 24
week periods ended June 14, 1997 and June 15, 1996, respectively. The decrease
in net cash used in financing activities during the current 24 week period
compared to the same period of the prior year was primarily due to increased
revolver and other long-term borrowings.
During the 24 weeks ended June 14, 1997, the aggregate effect of net cash
provided by operating activities of $5.8 million and net cash used in investing
activities of $3.4 million resulted in a net increase in cash of $2.4 million at
June 14, 1997, as compared to December 28, 1996.
For the 52 weeks ending December 27, 1997, the Company estimates that its
major uses of cash will be as follows: (i) cash interest payments (including
capitalized leases) of $23.1 million; (ii) capital expenditures of $12.9
million; and (iii) scheduled debt and capital lease payments of $16.6 million
(including the non-recourse demand note payable solely from the proceeds of the
sale of the Company's Baldwin Place Shopping Center located in Somers, New
York). Management continues to believe that operating cash flow, together with
borrowings under the bank revolving credit facility and equipment financing,
will be sufficient to meet the Company's operating needs, and scheduled capital
expenditures and will enable the Company to service its debt in accordance with
its terms.
The Bank Credit Agreement provides for a $26.0 million revolving credit
facility, under which there was $7.0 million outstanding as of June 14, 1997.
Additionally, $6.4 million was used from this facility for letters of credit and
bonding purposes. The Bank Credit Agreement requires that the Company maintain
minimum levels of consolidated net worth, EBITDA and fixed charge coverages, and
maximum levels of capital expenditures (each as defined in the Bank Credit
Agreement). The Company was in full compliance with all of its financial
covenants as of June 14, 1997 and management believes that the Company will
remain in compliance for the next 12 months.
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<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Not applicable.
(b) Reports on Form 8-K
Not applicable.
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<PAGE>
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.
BIG V SUPERMARKETS, INC.
Date: July 29, 1997 /s/ James A. Toopes, Jr.
-------------------------------
James A. Toopes, Jr., Executive
Vice President-Finance,
Administration and Corporate
Development
Date: July 29, 1997 /s/ John Onufer, Jr.
--------------------
John Onufer, Jr., Vice President-
Controller
-12-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-START> DEC-29-1997
<PERIOD-END> JUN-14-1997
<CASH> 12,979
<SECURITIES> 0
<RECEIVABLES> 14,009
<ALLOWANCES> 749
<INVENTORY> 32,712
<CURRENT-ASSETS> 61,959
<PP&E> 145,329
<DEPRECIATION> 75,816
<TOTAL-ASSETS> 260,740
<CURRENT-LIABILITIES> 71,980
<BONDS> 164,353
0
0
<COMMON> 1
<OTHER-SE> (25,459)
<TOTAL-LIABILITY-AND-EQUITY> 260,740
<SALES> 344,149
<TOTAL-REVENUES> 344,149
<CGS> 256,561
<TOTAL-COSTS> 256,561
<OTHER-EXPENSES> 7,723
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,631
<INCOME-PRETAX> (1,477)
<INCOME-TAX> (463)
<INCOME-CONTINUING> (1,014)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,014)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
