<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 13, 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 July 27, 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.
<PAGE>
BIG V SUPERMARKETS, INC.
FORM 10-Q FOR THE 12-WEEKS ENDED JUNE 13, 1998
INDEX
PART I
FINANCIAL INFORMATION
PAGE NO.
--------
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......................... 7-11
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
-2-
<PAGE>
BIG V SUPERMARKETS, INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In Thousands)
<TABLE>
<CAPTION>
UNAUDITED
---------------------------------------------------------
Twelve Twelve Twenty-Four Twenty-Four
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
June 13, 1998 June 14, 1997 June 13, 1998 June 14, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
SALES $184,765 $173,170 $367,002 $344,149
-------- -------- -------- --------
COSTS AND EXPENSES:
Cost of Sales (exclusive of depreciation and
amortization shown separately below) 135,993 128,240 271,013 256,561
Selling, general and administrative 38,442 35,002 77,371 69,711
Depreciation and amortization 3,755 3,864 7,356 7,723
Interest expense, net of interest income of $44 and
$64 for the 12-week periods and $111 and $108
for the 24-week periods ended June 13, 1998
and June 14, 1997, respectively 5,497 5,682 10,714 11,631
-------- -------- -------- --------
Total costs and expenses 183,687 172,788 366,454 345,626
-------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES 1,078 382 548 (1,477)
INCOME TAX EXPENSE (BENEFIT) 511 (318) 321 (463)
-------- -------- -------- --------
NET INCOME (LOSS) $ 567 $ 700 $ 227 $ (1,014)
======== ======== ======== ========
</TABLE>
See notes to unaudited consolidated financial statements.
-3-
<PAGE>
BIG V SUPERMARKETS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 13, 1998 DECEMBER 27, 1997/1/
------------- -------------------
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash $12,600 $13,498
Accounts receivable 11,359 14,669
Inventories 34,711 36,851
Refundable income taxes 1,349 1,688
Prepaid expenses and other current assets 3,402 2,486
------- -------
Total current assets 63,421 69,192
PROPERTY AND EQUIPMENT - At cost, less accumulated
depreciation and amortization of $79,463 at
June 13, 1998 and $73,653 at December 27, 1997 60,694 60,783
GOODWILL - Less accumulated amortization of
$13,855 at June 13, 1998 and $12,926 at
December 27, 1997 65,454 66,383
INVESTMENT IN WAKEFERN FOOD CORPORATION 11,276 11,236
WAKEFERN WAREHOUSE AGREEMENT - Less accumulated
amortization of $7,717 at June 13, 1998 and $7,239
at December 27, 1997 33,651 34,129
OTHER ASSETS 13,546 13,422
-------- --------
TOTAL ASSETS $248,042 $255,145
======== ========
LIABILITIES AND STOCKHOLDER'S DEFICIT
- -------------------------------------
CURRENT LIABILITIES:
Accounts payable $39,121 $43,257
Accrued expenses and taxes other than income taxes 17,546 17,372
Deferred income taxes 6,235 6,152
Current portion of long-term debt 22,258 19,401
Current portion of capitalized lease obligations 619 619
-------- --------
Total current liabilities 85,779 86,801
-------- --------
OTHER LONG-TERM LIABILITIES 10,012 9,974
-------- --------
LONG-TERM DEBT - Less current portion 148,057 154,097
-------- --------
CAPITALIZED LEASE OBLIGATIONS - Less current portion 25,750 26,036
-------- --------
DEFERRED INCOME TAXES 5,403 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 (35,490) (35,717)
-------- --------
Total stockholder's deficit (26,959) (27,186)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT $248,042 $255,145
======== ========
</TABLE>
/1/ Taken from the audited consolidated financial statements for the year ended
December 27, 1997.
See notes to unaudited consolidated financial statements.
-4-
<PAGE>
BIG V SUPERMARKETS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
UNAUDITED
----------------------------
Twenty-Four Twenty-Four
Weeks Ended Weeks Ended
June 13, 1998 June 14, 1997
------------- -------------
<S> <C> <C>
CASH BALANCE, BEGINNING OF PERIOD $13,498 $10,595
------ ------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) 227 (1,014)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 7,356 7,723
Amortization of deferred debt costs 540 529
Amortization of discount on debt 52 71
Noncash rent expense 688 375
Deferred income taxes 63 (596)
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 3,310 (194)
Decrease in inventories 2,140 2,725
Decrease (increase) in refundable income taxes 339 (225)
(Increase) decrease in prepaid expenses (1,043) 660
Increase in other assets (664) (1,542)
Decrease in accounts payable (8,278) (6,220)
Decrease in accrued expenses (4,062) (2,135)
Decrease in income taxes payable - (9)
(Decrease) increase in other long-term
liabilities (650) 122
------ ------
Net cash provided by operating activities 8,396 5,822
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (5,738) (3,415)
Proceeds from the sale of store equipment 5 -
Increase in investment in Wakefern Food Corp. (40) -
------ ------
Net cash used in investing activities (5,773) (3,415)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 65 658
Proceeds from revolver borrowings 3,500 4,500
Principal payments on long-term debt (6,800) (4,841)
Principal payments on capital lease obligations (286) (206)
Capital contribution from Holding - 15
Return of capital to Holding - (149)
------ ------
Net cash used in financing activities (3,521) (23)
------ ------
NET (DECREASE) INCREASE IN CASH (898) 2,384
------ ------
CASH BALANCE, END OF PERIOD $12,600 $12,979
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 9,966 $11,046
Income taxes $ 19 $ 245
</TABLE>
See notes to unaudited consolidated financial statements.
-5-
<PAGE>
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 June 13, 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.
-6-
<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 13, 1998 June 14, 1997 June 13, 1998 June 14, 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales................................ 100.0% 100.0% 100.0% 100.0%
Gross margin......................... 26.4 25.9 26.2 25.5
Selling, general and administrative.. 20.8 20.2 21.1 20.3
EBITDA (1)........................... 5.6 5.9 5.1 5.3
Depreciation and amortization........ 2.0 2.2 2.0 2.2
Interest, net........................ 3.0 3.3 2.9 3.4
----- ----- ----- -----
Income (loss) before income taxes.... 0.6 0.2 0.2 (0.4)
Income tax expense (benefit)......... 0.3 (0.2) 0.1 (0.1)
----- ----- ----- -----
Net income (loss) 0.3% 0.4% 0.1% (0.3)%
====== ====== ====== ======
OTHER DATA (IN MILLIONS):
EBITDA $ 10.4 $ 10.1 $ 18.8 $ 18.2
====== ====== ====== ======
Net cash provided by operating
activities $ 12.5 $ 7.3 $ 8.4 $ 5.8
====== ====== ====== ======
Net cash used in investing activities $ (2.2) $ (3.0) $ (5.8) $ (3.4)
====== ====== ====== ======
Net cash used in financing activities $ (9.1) $ (2.7) $ (3.5) $ (0.0)
====== ====== ====== ======
</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-
<PAGE>
RESULTS OF OPERATIONS
12 AND 24-WEEKS ENDED JUNE 13, 1998 COMPARED TO 12 AND 24-WEEKS ENDED
JUNE 14, 1997
SALES
For the 12 and 24-week periods ended June 13, 1998, total store sales were
$184.8 million and $367.0 million, respectively. Sales for the comparable
periods ended June 14, 1997 totaled $173.2 million and $344.1 million,
respectively.
Total and same store sales increased 6.7% and 3.1%, respectively, for the
quarter ended June 13, 1998, as compared to the prior year. For the 24-week
period ended June 13, 1998 total and same store sales increased 6.6% and 3.0%,
respectively, as compared to the same period of 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. Additionally, two replacement stores in Montague, NJ, and Hyde Park,
NY, added significantly to the total and same store increases.
GROSS MARGIN
Gross margin, as a percentage of sales, was 26.4% and 26.2% for the 12 and
24-week periods ended June 13, 1998, respectively. Gross margin for the
comparable periods ended June 14, 1997, was 25.9% and 25.5%, respectively. The
improvement in margin was 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. Improvements in stock loss
also contributed to the 12-week results.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses were 20.8% of sales for the
12-week period ended June 13, 1998 and 20.2% for the comparable prior year
period. The increase was attributable to a reduction in vendor promotional
money (.7%), increased occupancy costs (.3%) partially offset by savings in
store and corporate payroll and payroll related expenses (.2%), and store
administrative expenses (.1%).
Selling, general and administrative expenses, as a percentage of sales,
were .8% higher for the 24-week period ended June 13, 1998, compared to the same
period of the prior year. The year-to-date increase was attributable to the
items discussed above as well as increased pre-opening expenses related to new,
expanded and replacement stores
-8-
<PAGE>
EBITDA
EBITDA increased 3.0% to $10.4 million for the 12-week period ended June
13, 1998, compared to $10.1 million for the comparable prior year period. The
quarterly EBITDA increase was due to the aforementioned improvements in gross
margin partially offset by increases in selling, general and administrative
expenses. For the 24-week period ended June 13, 1998, EBITDA increased 3.3% to
$18.8 million compared to $18.2 million for the comparable prior year period.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization, as a percentage of sales, were 2.0% for the
12 and 24-week periods ended June 13, 1998, compared to 2.2% for the comparable
prior year periods. The reduction was primarily due to the full amortization of
several leasehold assets in late 1997, 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 $0.2 million, or .3% of sales for the 12-week
period ended June 13, 1998, compared to the prior year period. The decrease was
due to lower capital lease interest and scheduled principal payments partially
offset by increased revolver borrowings. For the 24-week period ended June 13,
1998 interest, net, decreased $0.9 million or .5% of sales.
NET INCOME
Net income was $0.6 million and $0.7 million for the 12-week periods ended
June 13, 1998 and June 14, 1997, respectively. The reduction in net income in
the current quarter compared to the prior year was attributable to increased
income tax expense partially offset by increased gross margin and lower
interest, depreciation and amortization expenses. Net income for the 24-week
period ended June 13, 1998 was $0.2 million compared to the net loss of $1.0
million for the same period of the prior year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's long-term debt (including current maturities and capital
leases) at June 13, 1998 was $196.7 million. All mandatory principal payments
required by the various debt agreements were satisfied during the 12 and 24-week
periods ended June 13, 1998.
The Company had a working capital ratio of .7:1 at June 13, 1998 and .8:1
at December 27, 1997. The decrease was the result of increases in the current
portion of long-term debt due to an $8.0 million principal payment due to be
paid April 30, 1999. 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 June 13, 1998 was cash flows generated
through operations supplemented by increased revolver borrowings.
-9-
<PAGE>
Net cash provided by operating activities was $8.4 million and $5.8
million for the 24-week periods ended June 13, 1998 and June 14, 1997,
respectively. The increase in net cash provided by operating activities during
the current period was primarily due to a $1.2 million increase in net income, a
$2.1 million decrease in inventories and the collection of several large
accounts receivable balances due primarily from Wakefern.
Net cash used in investing activities was $5.8 million and $3.4 million
for the 24-week periods ended June 13, 1998 and June 14, 1997, respectively.
The increase over the prior year was the result of capital expenditures for
store equipment, leasehold improvements, and various information technology
upgrades.
Net cash provided by financing activities was $3.5 million and nil for the
24-week periods ended June 13, 1998 and June 14, 1997, respectively. The
increase in net cash used in financing activities during the current 24-week
period compared to the prior year was due to increased principal payments offset
by fewer proceeds from revolver borrowings and other long-term financing.
During the 24-weeks ended June 13, 1998, the aggregate effect of net cash
provided by operating activities of $8.4 million, net cash used in investing
activities of $5.8 million and net cash used in financing activities of $3.5
million resulted in a net decrease in cash of $0.9 million at June 13, 1998, as
compared to December 27, 1997.
For the 52 weeks ending December 26, 1998, the Company projects its major
uses of cash will be as follows: (i) cash interest payments (including
capitalized leases) of $23.1 million; (ii) capital expenditures of $10.5
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 $6.0 million outstanding as of June 13, 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 June 13, 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.
-10-
<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.
-11-
<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 27, 1998 /s/ James A. Toopes, Jr.
-------------------------------------
James A. Toopes, Jr.,
Executive Vice President-Finance,
Administration and Corporate
Development
Date: July 27, 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> 6-MOS
<FISCAL-YEAR-END> DEC-26-1998
<PERIOD-START> DEC-28-1997
<PERIOD-END> JUN-13-1998
<CASH> 12,600
<SECURITIES> 0
<RECEIVABLES> 11,451
<ALLOWANCES> 92
<INVENTORY> 34,711
<CURRENT-ASSETS> 63,421
<PP&E> 140,157
<DEPRECIATION> 79,463
<TOTAL-ASSETS> 248,042
<CURRENT-LIABILITIES> 85,779
<BONDS> 148,057
0
0
<COMMON> 1
<OTHER-SE> (26,960)
<TOTAL-LIABILITY-AND-EQUITY> 248,042
<SALES> 367,002
<TOTAL-REVENUES> 367,002
<CGS> 271,013
<TOTAL-COSTS> 271,013
<OTHER-EXPENSES> 7,356
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,714
<INCOME-PRETAX> 548
<INCOME-TAX> 321
<INCOME-CONTINUING> 227
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 227
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
