<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 March 21, 1998
--------------
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 May 4, 1998: 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.
1
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BIG V SUPERMARKETS, INC.
FORM 10-Q FOR THE 12 WEEKS ENDED MARCH 21, 1998
INDEX
PART I
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C>
Item 1. Financial Statements
Unaudited Consolidated Statements of 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...................................... 7-11
</TABLE>
PART II
OTHER INFORMATION
<TABLE>
<S> <C>
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 LOSS
(In Thousands)
<TABLE>
<CAPTION>
UNAUDITED
-------------------------------
For the Twelve For the Twelve
Weeks Ended Weeks Ended
March 21, 1998 March 22, 1997
--------------- ---------------
<S> <C> <C>
SALES $182,237 $170,978
-------- --------
COSTS AND EXPENSES:
Cost of Sales (exclusive of depreciation and
amortization shown separately below) 135,020 128,320
Selling, general and administrative 38,929 34,710
Depreciation and amortization 3,601 3,859
Interest expense, net of interest income of $67 and
$44 for the 12 week periods ended March 21, 1998
and March 22, 1997, respectively 5,217 5,948
-------- --------
Total costs and expenses 182,767 172,837
-------- --------
LOSS BEFORE INCOME TAXES (530) (1,859)
INCOME TAX BENEFIT 190 146
-------- --------
NET LOSS $ (340) $ (1,713)
======== ========
</TABLE>
See notes to unaudited consolidated financial statements.
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BIG V SUPERMARKETS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
(UNAUDITED)
MARCH 21, 1998 DECEMBER 27, 1997/1/
--------------- --------------------
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash $ 11,296 $ 13,498
Accounts receivable 10,010 14,669
Inventories 35,331 36,851
Refundable income taxes 1,891 1,688
Prepaid expenses and other current assets 2,931 2,288
-------- --------
Total current assets 61,459 68,994
PROPERTY AND EQUIPMENT - At cost, less accumulated
depreciation and amortization of $76,474 at March 21, 1998
and $73,653 at December 27, 1997 61,534 60,783
GOODWILL - Less accumulated amortization of $13,390 at
March 21, 1998 and $12,926 at December 27, 1997 65,919 66,383
INVESTMENT IN WAKEFERN FOOD CORPORATION 11,276 11,236
WAKEFERN WAREHOUSE AGREEMENT - Less accumulated
amortization of $7,478 at March 21, 1998 and $7,239
at December 27, 1997 33,890 34,129
OTHER ASSETS 13,589 13,421
-------- --------
TOTAL ASSETS $247,667 $254,946
======== ========
LIABILITIES AND STOCKHOLDER'S DEFICIT
- -------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 34,979 $ 43,257
Accrued expenses and taxes other than income taxes 13,353 17,415
Deferred income taxes 6,152 6,152
Current portion of long-term debt 15,903 19,401
Current portion of capitalized lease obligations 619 619
-------- --------
Total current liabilities 71,006 86,844
-------- --------
OTHER LONG-TERM LIABILITIES 9,546 9,732
-------- --------
LONG-TERM DEBT - Less current portion 163,325 154,097
-------- --------
CAPITALIZED LEASE OBLIGATIONS - Less current portion 25,893 26,036
-------- --------
DEFERRED INCOME TAXES 5,423 5,423
-------- --------
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 8,530 8,530
Accumulated deficit (36,057) (35,717)
-------- --------
Total stockholder's deficit (27,526) (27,186)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT $247,667 $254,946
======== ========
</TABLE>
/1/ Taken from the audited consolidated financial statements for the year ended
December 27, 1997.
See notes to unaudited consolidated financial statements.
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BIG V SUPERMARKETS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
UNAUDITED
------------------------------
For the Twelve For the Twelve
Weeks Ended Weeks Ended
March 21, 1998 March 22, 1997
--------------- ---------------
<S> <C> <C>
CASH BALANCE, BEGINNING OF PERIOD $13,498 $10,595
------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss (340) (1,713)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 3,601 3,859
Amortization of deferred debt costs 270 264
Amortization of discount on debt 28 36
Noncash rent expense 332 187
Deferred income taxes - (286)
Loss on disposal of equipment 2 -
Changes in assets and liabilities:
Decrease in accounts receivable 4,659 2,128
Decrease in inventories 1,520 2,856
(Increase) decrease in refundable income taxes (203) 19
(Increase) decrease in prepaid expenses (708) 237
Increase in other assets (438) (718)
Decrease in accounts payable (8,278) (6,220)
Decrease in accrued expenses (4,062) (2,135)
Decrease in income taxes payable - (15)
Decrease in other long-term liabilities (518) -
------- -------
Net cash used in operating activities (4,135) (1,501)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (3,589) (375)
Proceeds from the sale of store equipment 3 -
Increase in investment in Wakefern Food Corp. (40) -
------- -------
Net cash used in investing activities (3,626) (375)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 32 29
Proceeds from revolver borrowings 10,000 6,000
Principal payments on long-term debt (4,330) (3,071)
Principal payments on capital lease obligations (143) (103)
Return of capital to Holding - (149)
------- -------
Net cash provided by financing activities 5,559 2,706
------- -------
NET (DECREASE) INCREASE IN CASH (2,202) 830
------- -------
CASH BALANCE, END OF PERIOD $11,296 $11,425
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 7,177 $ 8,109
Income taxes $ 14 $ 15
</TABLE>
See notes to unaudited consolidated financial statements.
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BIG V SUPERMARKETS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
1. Basis of Presentation
---------------------
The accompanying interim consolidated financial statements as of and for the
period ended March 21, 1998, 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 27, 1997, has been taken from the audited financial statements as of
that date. 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.
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 27, 1997. Operating
results for the periods presented are not necessarily indicative of the results
for the entire fiscal year.
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".
3. Reclassifications
-----------------
Certain reclassifications have been made to the prior years' consolidated
financial statement information provided herein to conform to the current
quarter's presentation.
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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
March 21, 1998 March 22, 1997
--------------- ---------------
<S> <C> <C>
INCOME STATEMENT DATA:
Sales.................................. 100.0% 100.0%
Gross margin........................... 25.9 24.9
Selling, general and administrative.... 21.4 20.3
EBITDA (1)............................. 4.6 4.7
Depreciation and amortization.......... 2.0 2.3
Interest, net.......................... 2.9 3.5
------ ------
Loss before income taxes............... (0.3) (1.1)
Income tax benefit..................... 0.1 0.1
------ ------
Net loss............................... (0.2)% (1.0)%
====== ======
OTHER DATA (IN MILLIONS):
EBITDA................................. $ 8.5 $ 8.1
====== ======
Net cash used in operating activities.. $ (4.1) $ (1.5)
====== ======
Net cash used in investing activities.. $ (3.6) $ (0.4)
====== ======
Net cash provided by financing
activities........................... $ 5.6 $ 2.7
====== ======
</TABLE>
(1) EBITDA represents earnings before interest expense, depreciation and
amortization, including noncash 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-
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RESULTS OF OPERATIONS
12 WEEKS ENDED MARCH 21, 1998 COMPARED TO 12 WEEKS ENDED MARCH 22, 1997
SALES
Total store sales were $182.2 million and $171.0 million for the 12 week
periods ended March 21, 1998 and March 22, 1997, respectively, reflecting a 6.5%
increase over the prior year. The increase in total store sales was primarily
attributable to the opening of the Company's thirty-second store in Mt. Vernon,
New York on January 3, 1998. Such increase was supplemented by incremental
sales from the Company's 1997 expansion and replacement stores.
Same store sales increased 2.9% to $176.0 million from the comparable
prior year amount of $171.0 million.
GROSS MARGIN
Gross margin increased in 1998 to 25.9% of sales compared to 24.9% for the
comparable prior year period. The improvement in margin is primarily the result
of improved selling margins in a number of the Company's operating departments
and the continued shift in share of business toward the higher margin perishable
departments. The margin improvements were partially offset by increased stock
loss.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses were 21.4% of sales for the
12 week period ended March 21, 1998 and 20.3% for the comparable prior year
period. Increased payroll and payroll related expenses, which exceeded 58.7% and
60.6% of selling, general and administrative expenses in 1998 and 1997,
respectively, increased 0.2% as a percentage of sales in the first quarter. In
addition, selling, general and administrative expenses increased as a result of
increased occupancy, pre-opening, and other costs associated with the Company's
new, expanded and replacement stores (0.4); a reduction in vendor promotional
money (0.3); and higher store supply and advertising expenses (0.2).
EBITDA
EBITDA increased 4.9% to $8.5 million for the 12 week period ended
March 21, 1998, compared to $8.1 million for the prior year period. The increase
in quarterly EBITDA is primarily related to increased gross margin partially
offset by the increased selling, general and administrative expenses described
above.
-8-
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DEPRECIATION AND AMORTIZATION
Depreciation and amortization, as a percentage of sales, were 2.0% and
2.3% of sales for the 12 week periods ended March 21, 1998 and March 22, 1997,
respectively. The reduction was primarily due to the full amortization of
several leasehold assets, the termination of a capital lease, and the disposal
of NCR front-end equipment replaced with leased IBM front-end equipment in the
latter half of the prior year.
INTEREST, NET
Interest, net, decreased $0.7 million or 0.6% of sales for the 12 week
period ended March 21, 1998 compared to the prior year period. The decrease was
primarily due to the settlement of prior year's state income and sales tax
audits, lower capital lease interest and scheduled principal payments.
NET LOSS
Net loss for the 12 week period ended March 21, 1998 was $0.3 million
compared to the net loss of $1.7 million in the prior year. The reduction in net
loss in the current quarter compared to the prior year was primarily
attributable to increased gross margin supplemented by lower interest,
depreciation and amortization expenses.
LIQUIDITY AND CAPITAL RESOURCES
The Company's long-term debt (including current maturities and capital
leases) at March 21, 1998 was $205.7 million. All mandatory principal payments
required by the various debt agreements were satisfied during the 12 week period
ended March 21, 1998.
The Company had a working capital ratio of .9:1 at March 21, 1998 and .8:1
at December 27, 1997. The Company typically requires small amounts of working
capital since inventory is generally sold prior to the time payments to Wakefern
Food Corp. and other suppliers are due. The Company's primary source of
liquidity during the 12 weeks ended March 21, 1998 was cash flows generated
through operations supplemented by increased revolver borrowings.
Net cash used in operating activities was $4.1 million and $1.5 million
for the 12 week periods ended March 21, 1998 and March 22, 1997, respectively.
The increase in net cash used in operating activities during the current period
was primarily due to the $4.0 million decrease in accounts payable and accrued
expenses in the current quarter. Such decrease was primarily related to the
payment of year-end accruals for the new store in Mt. Vernon, New York.
Net cash used in investing activities was $3.6 million and $0.4 million
for the 12 week periods ended March 21, 1998 and March 22, 1997, respectively.
The increase over the prior year was the result of point of sale system and
store equipment capital expenditures.
-9-
<PAGE>
Net cash provided by financing activities was $5.6 million and $2.7
million for the 12 week periods ended March 21, 1998 and March 22, 1997,
respectively. The increase in net cash provided by financing activities during
the current 12 week period compared to the prior year was due to increased
revolver borrowings.
During the 12 weeks ended March 21, 1998, the aggregate effect of net cash
used in operating activities of $4.1 million, net cash used in investing
activities of $3.6 million and net cash provided by financing activities of $5.6
million resulted in a net decrease in cash of $2.2 million at March 21, 1998, as
compared to December 27, 1997.
For the 52 weeks ending December 26, 1998, the Company projects 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 $19.4 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 believes 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, 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 $12.5 million outstanding as of March 21, 1998.
Additionally, $6.4 million was used from this facility for letters of credit and
bonding purposes. The Bank Credit Agreement requires the Company to 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 March 21, 1998. During 1999 the Company has approximately $23.8
million in scheduled principal payments. The Company will refinance all or a
portion of its debt structure prior to the amortization of an $8.0 million
installment, due April 30, 1999. Accordingly, the Company is holding discussions
with its lenders and other financial institutions with respect to a number of
refinancing opportunities. However, there can be no assurances that the
refinancing will occur or that the terms associated with any new agreement will
be more favorable to the Company.
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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
27 Financial Data Schedule
(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: May 5, 1998 /s/ James A. Toopes, Jr.
---------------------------------
James A. Toopes, Jr., Executive
Vice President-Finance,
Administration and Corporate
Development
Date: May 5, 1998 /s/ John Onufer, Jr.
---------------------------------
John Onufer, Jr., Vice President-
Controller
-12-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-26-1998
<PERIOD-START> DEC-28-1997
<PERIOD-END> MAR-21-1998
<CASH> 11,296
<SECURITIES> 0
<RECEIVABLES> 10,119
<ALLOWANCES> 109
<INVENTORY> 35,331
<CURRENT-ASSETS> 61,459
<PP&E> 138,008
<DEPRECIATION> 76,474
<TOTAL-ASSETS> 247,667
<CURRENT-LIABILITIES> 71,006
<BONDS> 163,325
0
0
<COMMON> 1
<OTHER-SE> (27,527)
<TOTAL-LIABILITY-AND-EQUITY> 247,667
<SALES> 182,237
<TOTAL-REVENUES> 182,237
<CGS> 135,020
<TOTAL-COSTS> 135,020
<OTHER-EXPENSES> 3,601
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,217
<INCOME-PRETAX> (530)
<INCOME-TAX> (190)
<INCOME-CONTINUING> (340)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (340)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
