<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2000
------------------
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)
(845) 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 November 20, 2000: 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/A FOR THE 16 AND 40-WEEKS ENDED SEPTEMBER 30, 2000
INDEX
PART I
FINANCIAL INFORMATION
PAGE NO.
--------
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.. 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 9-13
PART II
OTHER INFORMATION
Item 1. Legal Proceedings..................................... 14
Item 2. Changes in Securities................................. 14
Item 3. Defaults upon Senior Securities....................... 14
Item 4. Submission of Matters to a Vote of Security Holders... 14
Item 5. Other Information..................................... 14
Item 6. Exhibits and Reports on Form 8-K...................... 14
SIGNATURES..................................................... 15
-2-
<PAGE>
BIG V SUPERMARKETS, INC.
CONSOLIDATED STATEMENTS OF LOSS
(In Thousands)
<TABLE>
<CAPTION>
UNAUDITED
--------------------------------------------------------------------------
Sixteen Sixteen Forty Forty
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
September 30, 2000 October 2, 1999 September 30, 2000 October 2, 1999
------------------ ---------------- ------------------ ----------------
<S> <C> <C> <C> <C>
SALES $297,333 $253,435 $743,100 $636,843
-------- -------- -------- --------
COSTS AND EXPENSES:
Cost of Sales (exclusive of depreciation and
amortization shown separately below) 217,059 186,771 546,164 468,329
Selling, general and administrative 64,714 52,623 158,297 135,025
Depreciation and amortization 5,903 4,273 16,458 11,863
Interest expense, net of interest income of $117 and
$190 for the 16-week periods and $333 and $401
for the 40-week periods ended September 30, 2000
and October 2, 1999, respectively 8,989 7,011 22,279 17,376
Restructuring charge - 8,500 - 8,500
-------- -------- -------- --------
Total costs and expenses 296,665 259,178 743,198 641,093
-------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES
AND EXTRAORDINARY CHARGE 668 (5,743) (98) (4,250)
INCOME TAX EXPENSE (BENEFIT) 915 (2,494) 615 (1,292)
-------- -------- -------- --------
LOSS BEFORE EXTRAORDINARY CHARGE (247) (3,249) (713) (2,958)
EXTRAORDINARY CHARGE, net of tax benefit of $246 - - - 547
-------- -------- -------- --------
NET INCOME (LOSS) $ (247) $ (3,249) $ (713) $ (3,505)
======== ======== ======== ========
See notes to unaudited consolidated financial statements.
</TABLE>
-3-
<PAGE>
BIG V SUPERMARKETS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
(UNAUDITED)
SEPTEMBER 30, 2000 DECEMBER 25, 1999/1/
------------------- --------------------
<S> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash $ 19,047 $ 21,604
Accounts receivable 19,619 18,748
Inventories 48,776 47,672
Refundable income taxes 537 1,995
Prepaid expenses and other current assets 5,559 4,303
Asset held for sale - 4,713
-------- --------
Total current assets 93,538 99,035
PROPERTY AND EQUIPMENT - At cost, less accumulated
depreciation and amortization of $105,725 at September 30, 2000
and $99,117 at December 25, 1999 68,486 69,336
GOODWILL - Less accumulated amortization of $19,248 at
September 30, 2000 and $17,041 at December 25, 1999 73,101 73,957
INVESTMENT IN WAKEFERN FOOD CORPORATION 17,082 15,625
WAKEFERN WAREHOUSE AGREEMENT - Less accumulated
amortization of $10,634 at September 30, 2000 and $9,387 at
December 25, 1999 39,534 40,781
OTHER ASSETS 14,141 13,720
-------- --------
TOTAL ASSETS $305,882 $312,454
======== ========
LIABILITIES AND STOCKHOLDER'S DEFICIT
-------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 50,632 $ 57,128
Accrued expenses and taxes other than income taxes 12,944 22,584
Deferred income taxes 5,800 7,300
Current portion of long-term debt 23,522 18,723
Current portion of capitalized lease obligations 1,242 1,303
-------- --------
Total current liabilities 94,140 107,038
-------- --------
OTHER LONG-TERM LIABILITIES 16,330 15,038
-------- --------
LONG-TERM DEBT - Less current portion 208,028 193,904
-------- --------
CAPITALIZED LEASE OBLIGATIONS - Less current portion 15,446 24,665
-------- --------
DEFERRED INCOME TAXES 3,287 2,645
-------- --------
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 8,134 7,934
Accumulated deficit (39,484) (38,771)
-------- --------
Total stockholder's deficit (31,349) (30,836)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT $305,882 $312,454
======== ========
</TABLE>
/ 1/ Taken from the audited consolidated financial statements for the year ended
December 25, 1999.
See notes to unaudited consolidated financial statements.
-4-
<PAGE>
BIG V SUPERMARKETS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
UNAUDITED
-------------------------------------
For the Forty For the Forty
Weeks Ended Weeks Ended
September 30, 2000 October 2, 1999
------------------- ----------------
<S> <C> <C>
CASH BALANCE, BEGINNING OF PERIOD $ 21,604 $ 15,674
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) (713) (3,505)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 16,458 11,863
Amortization of deferred debt costs 1,174 759
Write-off of unamortized deferred financing costs - 793
Accretion of discount on debt 70 72
Noncash rent expense 902 880
Deferred income taxes (858) (1,912)
Noncash gain from lease terminations (3,582) -
Changes in assets and liabilities:
Increase in accounts receivable (71) (3,292)
Increase in inventory (266) (791)
Decrease in refundable income taxes 1,458 246
Increase in prepaid expenses (1,234) (1,609)
Decrease (increase) in assets held for sale - (170)
Increase in other assets (1,652) (862)
Decrease in accounts payable (6,496) (9,082)
(Decrease) increase in accrued expenses (9,640) 2,265
Gain on sale of assets (1,786) -
Increase (decrease) in other long-term liabilities 389 (415)
-------- --------
Net cash used in operating activities (5,847) (4,760
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (19,206) (5,741)
Acquisitions of business (443) -
Investment in Wakefern Food Corp. (40) -
Proceeds from sale of assets 8,113 3
-------- --------
Net cash used in investing activities (11,576) (5,738)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 11,000 60,000
Proceeds from revolver borrowings 17,850 8,950
Principal payments on long-term debt (13,184) (52,264)
Financing fees in connection with new senior debt - (2,507)
Principal payments on capital lease obligations (1,000) (621)
Return of capital to Holding - (500)
Capital contribution from Holding 200 -
-------- --------
Net cash provided by financing activities 14,866 13,058
-------- --------
NET (DECREASE) INCREASE IN CASH (2,557) 2,560
-------- --------
CASH BALANCE, END OF PERIOD $ 19,047 $ 18,234
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 22,274 $ 18,698
Income taxes $ 5 $ 77
</TABLE>
-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 September 30, 2000, 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 25, 1999, 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 25, 1999. Operating
results for the periods presented are not necessarily indicative of the results
for the entire fiscal year.
2. Supply and Distribution Agreement
---------------------------------
During the third quarter of fiscal 2000, the Company entered into a fifteen-
year supply agreement with C&S Wholesale Grocers, Inc. ("C&S") under which C&S
will supply substantially all of the Company's grocery, frozen and perishable
merchandise. The Company has begun to significantly invest in its
infrastructure, both in terms of personnel, information technology, store
operations and merchandising requirements, and the requisite professional
expertise to help the Company achieve its long-term strategic objectives. To
this end, C&S has loaned the Company $5.0 million, collateralized by certain
equipment, to assist in the transition from the Company's current supplier. The
supply agreement is contingent upon a number of conditions which the Company
believes can be satisfied during fiscal 2001.
3. Sale of Store Assets
--------------------
During the third quarter of 2000 the Company sold to a real estate
development firm, the lease rights and equipment in one of its New York store
locations. Proceeds from the sale were $4.2 million comprised of $3.4 million
in cash and an $800,000 short-term note receivable. The Company will continue
to occupy and operate the store under a license agreement through February 28,
2001. A $1.8 million gain was deferred for the quarter ended September 30, 2000
and will be amortized into income over the term of the license agreement.
Subsequent to September 30, 2000, the Company collected the balance of the
sales price.
4. Store Lease Transactions
------------------------
During the third quarter of fiscal 2000 the Company terminated, renegotiated
and executed two new leases for certain store locations. The resulting
financial effects of these transactions were the decapitalization of two
existing store leases with a cumulative cost and accumulated amortization of
$8,326,000 and $3,627,000, respectively, and lease obligations of $8,281,000.
Such lease transactions resulted in the recognition of gains approximating
$3,582,000 which is included in selling, general and administrative expenses.
-6-
<PAGE>
5. Restricted Cash
---------------
At September 30, 2000, the balance sheet includes $2.5 million of cash held
in escrow to be used toward the payment of the Company's $16.0 million Junior
Subordinated Debt due as follows. The remaining principal payments are due as
follows:
Date Amount
---- ------
December 15, 2000 $ 6.0 million
March 15, 2001 10.0 million
-------------
$16.0 million
=============
6. Acquisition
-----------
On November 7, 1999, the Company acquired ShopRite of Pennington, Inc.
("SRP"), another Wakefern member. The five store chain, located in the Trenton
area of New Jersey, was purchased for $35.6 million, subject to certain purchase
price adjustments, which includes $0.7 million of acquisition related costs and
a $1.2 million note payable. The acquisition was financed with variable rate
debt including an initial funding of $36 million and a $5 million delayed draw
facility.
The acquisition has been accounted for under the purchase method of
accounting. The following pro forma information for the 16 and 40-week period
ended October 2, 1999 has been prepared by adjusting the historical data as set
forth in the accompanying consolidated statement of loss to give effect to the
SRP acquisition as if such acquisition occurred on December 27, 1998. Such pro
forma information is presented for comparative purposes and does not purport to
be indicative of the Company's actual results of operations had such transaction
actually been consummated on December 27, 1998 or of the Company's future
results of operations and is as follows:
<TABLE>
<CAPTION>
(In Thousands)
----------------------------------
16-Weeks Ended 40-Weeks Ended
October 2, 1999 October 2, 1999
---------------- ----------------
<S> <C> <C>
Sales $298,494 $749,996
Loss before extraordinary item (4,343) (6,017)
Net loss (4,343) (6,564)
</TABLE>
Pro forma adjustments include (i) the operations of SRP for the pre-
acquisition period from December 27, 1998 to October 2, 1999, (ii) the income
statement effects of the allocation of purchase price including the amortization
of intangibles and goodwill, (iii) the recognition of interest expense and
amortization of deferred financing costs related to $36 million of borrowings,
and (iv) the income tax effects of the above and to recognize income taxes on
SRP's results of operations based upon the Company's tax structure since SRP was
an S-Corporation.
7. Asset Held for Sale
-------------------
During the second quarter of fiscal 2000, the Company's wholly-owned
subsidiary, Somers Development Corporation, sold the Baldwin Place Shopping
Center located in Somers, NY for $7.2 million. Deferred revenue of $1.2 million
was recorded on the balance sheet and represents the present value the Company
anticipates spending on future monitoring costs to maintain compliance with the
1995 Record of Decision. A net gain of $0.6 million was recorded in the second
quarter's results of operations.
-7-
<PAGE>
The Company's noninterest-bearing note due to certain shareholders of the
Predecessor Company and payable solely from the net proceeds of the sale
discussed above was satisfied during the quarter for a total of $2.2 million.
Consequently, the Company recorded a gain of $0.3 million in the second quarter
of fiscal 2000 associated with the satisfaction of the note.
8. 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".
9. Subsequent Events
-----------------
During October of this fiscal year the Company sold to a real estate
development firm, the lease rights to two additional New York store locations.
Proceeds from the sale were $4.5 million in cash. The Company will continue to
occupy and operate the stores under separate license agreements through February
28, 2001.
On November 3, 2000, Fleet National Bank, in its capacity as administrative
agent for the Company's bank credit agreement, notified the Company that the
Company's sale of assets in excess of the $2.0 million annual limitation is an
Event of Default, as defined in section 9.02(ii) of the credit agreement.
Further, on November 9, 2000, the Company received additional correspondence
from Fleet National Bank, informing the Company that it was prohibited from
making any payment on account of any subordinated indebtedness. Accordingly,
the Company did not make an interest payment due November 15, 2000, of
approximately $566,000 to the holders of the Company's 14.14% junior
subordinated debt. The non-payment of interest represented an Event of Default
under the Company's 14.14% Subordinated Note Agreement. The Company continues
to have discussions with its lenders regarding waivers for the aforementioned
defaults.
On November 6, 2000, the Company further amended the Credit Agreement (Fourth
Amendment) by increasing the amount of additional unsecured Indebtedness
incurred by the Company from $1.0 to $4.0 million. The Company has used the
provisions of the Fourth Amendment to borrow and repay $3.0 million on two
separate occasions for short-term working capital purposes.
-8-
<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>
16-Weeks Ended 16-Weeks Ended 40-Weeks Ended 40-Weeks Ended
September 30, 2000 October 2, 1999 September 30, 2000 October 2, 1999
------------------- ---------------- ------------------- ----------------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales............................................ 100.0% 100.0% 100.0% 100.0%
Gross margin..................................... 27.0 26.3 26.5 26.5
Selling, general and administrative.............. 21.8 20.8 21.3 21.2
EBITDA (1)....................................... 5.3 5.7 5.3 5.4
Depreciation and amortization.................... 2.0 1.7 2.2 1.9
Interest, net.................................... 3.0 2.8 3.0 2.7
Restructuring charge............................. 0.0 3.4 0.0 1.3
------ ------ ------ ------
Income (Loss) before income taxes
and extraordinary charge......... 0.2 (2.3) 0.0 (0.7)
Income (benefit) tax expense..................... 0.3 (1.0) 0.1 (0.2)
------ ------ ------ ------
Income (Loss) before extraordinary charge........ (0.1) (1.3) (0.1) (0.5)
Extraordinary charge............................. 0.0 0.0 0.0 0.1
------ ------ ------ ------
Net income (loss)................................ (0.1)% (1.3)% (0.1)% (0.6)%
====== ====== ======
OTHER DATA (IN MILLIONS):
EBITDA........................................... $ 15.8 $ 14.4 $ 39.3 $ 34.2
====== ====== ====== ======
Net cash provided by (used in)
operating activities............................ $ 0.2 $ (7.4) $ (5.8) $ (4.8)
====== ====== ====== ======
Net cash used in investing activities............ $ (1.8) $ (2.4) $(11.6) $ (5.7)
====== ====== ====== ======
Net cash provided by financing activities........ $ 1.3 $ 9.7 $ 14.9 $ 13.1
====== ====== ====== ======
</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 component of many of the Company's debt covenants.
Noncompliance with a 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.
-9-
<PAGE>
RESULTS OF OPERATIONS
16 AND 40-WEEK PERIODS ENDED SEPTEMBER 30, 2000 COMPARED TO THE 16 AND 40-WEEK
PERIODS ENDED OCTOBER 2, 1999
SALES
For the 16 and 40-week periods ended September 30, 2000, total store sales
were $297.3 million and $743.1 million, respectively. Sales for the comparable
periods ended October 2, 1999 totaled $253.4 million and $636.8 million,
respectively.
Total store sales increased 17.3% and 16.7% for the 16 and 40-week periods
ended September 30, 2000, respectively, as compared to the prior year. The
increase in total store sales was attributable to the five new stores acquired
in the fourth quarter of 1999, a replacement store in Monticello, New York and
the expansion of stores in Warwick, Chester and Montgomery, New York.
Same store sales decreased 0.8% and 0.4% for the 16 and 40-week periods
ended September 30, 2000, respectively, due to competitive intrusions in several
of the Company's market areas. The Company anticipates the competitive
intrusions experienced this year and those anticipated to occur in the current
quarter, will continue to limit its ability to achieve positive same store sales
results over the remainder of the fiscal year and into the first and second
quarters of fiscal 2001.
GROSS MARGIN
Gross margin increased 0.7% from 26.3% to 27.0% for the 16-week period
ended September 30, 2000, as compared to the prior year. This increase was
primarily due to increased share of business in the higher margin perishable
departments with additional improvements in certain departments selling margins.
Gross margin remained constant at 26.5% for the 40-week period ended
September 30, 2000, as compared to the prior year. Compared to the prior year,
the year-to-date gross margin reflects an increased share of business offset by
lower gross margin for certain of the Company's perishable departments.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses were $64.7 million or 21.8%
of sales for the 16-week period ended September 30, 2000 compared to $52.6
million or 20.8% of sales for the 16-week period ended October 2, 1999. The
increase, as a rate to sales, was attributable to increases in advertising
expense, payroll and fringe related costs, and utility costs. Selling, general
and administrative expenses were $158.3 million or 21.3% of sales for the
40-week period ended September 30, 2000, compared to $135.0 million or 21.2% of
sales for the 40-week period ended October 2, 1999.
EBITDA
EBITDA increased to $15.8 million for the 16-week period ended September
30, 2000, compared to $14.4 million for the prior year period. The quarterly
EBITDA increase was due to the increase in total sales and the aforementioned
lease transactions. EBITDA margin was 5.3% for the 16-week period ended
September 30, 2000, compared to 5.7% for the 16-week ended October 2, 1999. For
the 40-week period ended September 30, 2000, EBITDA increased to $39.3 million
compared to $34.2 million for the comparable prior year period.
-10-
<PAGE>
DEPRECIATION AND AMORTIZATION
Depreciation and amortization, as a percentage of sales, was 2.0% and 2.2%
for the 16 and 40-week periods ended September 30, 2000 compared to 1.7% and
1.9% for the comparable prior year period. The increase was a result of the
Company's 1999 acquisition of a five-store chain, a replacement store in
Monticello, New York and the expansion of stores in Warwick and Chester, New
York.
INTEREST, NET
Interest, net, increased $2.0 million or 0.2% of sales for the 16-week
period ended September 30, 2000, compared to the prior year period. The
increase resulted from additional bank term loans and expenses incurred to
finance the Company's November 1999 acquisition. Increased variable interest
rates and higher average revolver borrowings also contributed to the increase.
For the 40-week period ended September 30, 2000, interest, net, increased $4.9
million or 0.3% of sales for the same reasons mentioned above.
NET LOSS
Net loss for the 16-week period ended September 30, 2000 was $0.2 million
compared to a net loss of $3.2 million in the prior year. The reduction in net
loss was due to the aforementioned lease transaction gains and the fiscal 1999
restructuring charge, partially offset by increased depreciation and
amortization and interest expense. Net loss for the 40-week period ended
September 30, 2000 was $0.7 million compared to the net loss of $3.5 million in
the prior year.
LIQUIDITY AND CAPITAL RESOURCES
During the third quarter of fiscal 2000, the Company notified the
Administrative Agent of the Credit Agreement that it was in default of the
Maximum Leverage Ratio covenant, as defined in section 9.09 of the Credit
Agreement, for the first and second quarters of the Company's current fiscal
year.
On August 14, 2000, the Company amended the Credit Agreement providing a
waiver of the aforementioned ratio through November 30, 2000. At September 30,
2000 the Company was in compliance with all of its financial covenants excluding
the Maximum Leverage Ratio covenant.
The Third Amendment requires that within 90 days of its effective date, an
equity contribution of at least $30.0 million be made to the Company by an
investor acceptable to the Required Lenders, as defined in the Credit Agreement,
otherwise the Required Lenders may determine that the failure to obtain the
equity contribution is an event of default. The Company acknowledges that such
investment has not been made as of this date. The Administrative Agent has not
notified the Company that it is in default of the Credit Agreement as it relates
to this matter.
The Third Amendment also provided the Company the ability to borrow up to
an additional $7.0 million of purchase money indebtedness during the current
fiscal year for a total fiscal 2000 limitation of $10.0 million. It also
limited the Company's fiscal 2000 capital expenditures to $22.0 million and
required the Company to grant to the Collateral Agent, to the extent possible,
security interests and mortgages in all real property owned or leased by the
Company.
-11-
<PAGE>
On November 3, 2000, Fleet National Bank, in its capacity as
administrative agent for the Company's bank credit agreement, notified the
Company that the Company's sale of assets in excess of the $2.0 million annual
limitation was an Event of Default, as defined in section 9.02(ii) of the credit
agreement. Further, on November 9, 2000, the Company received additional
correspondence from Fleet National Bank, informing the Company that it was
prohibited from making any payment on account of any subordinated indebtedness.
Accordingly, the Company did not make an interest payment due November 15, 2000,
of approximately $566,000 to the holders of the Company's 14.14% junior
subordinated debt. The non-payment of interest represents an Event of Default
under the Company's 14.14% Subordinated Note Agreement. The Company continues
to have discussions with its lenders regarding waivers for the aforementioned
defaults.
On November 6, 2000, the Company further amended the Credit Agreement
(Fourth Amendment) by increasing the amount of additional unsecured Indebtedness
available to be incurred by the Company from $1.0 to $4.0 million. The Company
has used the provisions of the Fourth Amendment to borrow and repay $3.0 million
on two separate occasions for short-term working capital purposes.
The Company had a working capital ratio of 1.0:1 at September 30, 2000 and
.9:1 at December 25, 1999. The Company's primary source of liquidity during the
16 weeks ended September 30, 2000 was cash flows generated through operations
supplemented by revolver borrowings and equipment collateralized loans.
Net cash used in operating activities was $5.8 million and $4.8 million
for the 40-week periods ended September 30, 2000 and October 2, 1999,
respectively. Cash payments to prior employees severed under the Company's 1999
Early Retirement Buyout Program and noncash gains from lease transactions were
partially offset by an increase in noncash depreciation and amortization.
Net cash used in investing activities was $11.6 million and $5.7 million
for the 40-week periods ended September 30, 2000 and October 2, 1999,
respectively. The increase from the prior year was due to the Company's
increased capital spending plan compared to 1999, partially offset by the
proceeds from the sale of the Somers, NY property and the sale of one of the
Company store's lease rights and equipment.
Net cash provided by financing activities was $14.9 million and $13.1
million for the 40-week periods ended September 30, 2000 and October 2, 1999,
respectively. The increase was due to higher levels of revolver borrowings and
a $5.0 million loan collateralized by specific store equipment.
For the 53 weeks ending December 30, 2000, the Company projects its major
uses of cash as follows: (i) cash interest payments (including capitalized
leases) of $24.1 million; (ii) capital expenditures of $22.0 million excluding
capital spending on the Company's strategic objectives which will approximate
$3.5 million; and (iii) scheduled debt and capital lease payments of $20.5
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).
The Agreement provides for a $25.0 million revolving credit facility.
Borrowings of $18.7 million were outstanding as of September 30, 2000.
Additionally, $6.3 million was used from this facility for letters of credit and
bonding purposes. The Agreement requires the Company to meet certain financial
covenants, including maximum amounts of annual capital expenditures, minimum
fixed charge coverage ratios, maximum leverage ratios, interest coverage ratios
and minimum amounts of consolidated net worth. The Company was in full
compliance with all of the foregoing financial covenants as of September 30,
2000. Negotiations are currently occuring with various lenders, including the
Company's senior bank lenders, on creating a capital structure which would
assist the Company in achieving its strategic objectives. The Company is also
evaluating several restructuring alternatives designed to alleviate the
Company's current liquidity issues.
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<PAGE>
RECENT ACCOUNTING DEVELOPMENTS
In December 1999, the Securities and Exchange Commission (SEC) issued SEC
Staff Accounting Bulletin 101 (SAB 101), "Revenue Recognition in Financial
Statements". SAB 101 summarizes certain of the staff's views in applying
generally accepted accounting principles to revenue recognition in financial
statements. The provisions of SAB 101 did not require a change in the Company's
current revenue recognition policies.
FORWARD-LOOKING STATEMENTS
Other than statements of historical fact, all statements included in this
Form 10-Q, including the statements under Item 2, "Management's Discussion and
Analysis of Financial Condition and Results of Operations", are, or may be
considered forward-looking information, as defined in the Private Securities
Litigation Reform Act of 1995. Examples of such statements in this report
include those concerning sales trends and projected cash outlays for interest,
principal payments, and capital expenditures. There is no assurance actual
results or business conditions will not differ materially from those forward-
looking statements whether expressed, suggested or implied as a result of
various factors. Such factors include, but are not limited to, increased
competitive pressures from existing competitors and new entrants, general or
regional economic conditions, interest rate environment and its effect on the
Company's cost of capital, the liquidity of the Company on a cash flow basis
(including the Company's ability to comply with the financial covenants of all
applicable credit agreements), the success of operating initiatives including
the ability to control various expense categories, the Company's relationships
with its current supplier and other suppliers and other risk factors detailed
herein and in other filings of 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
10.50 Supply and Distribution Agreement Between Big V
Supermarkets, Inc. and C&S Wholesale Grocers, Inc.
(b) Reports on Form 8-K
Press Release dated September 6, 2000 - Resignation of President
and C.E.O.
Press Release dated September 12, 2000 - Appointment of President
and C.E.O.
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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: November 21, 2000 /s/ James A. Toopes, Jr.
--------------------------
James A. Toopes, Jr.
President and Chief Executive Officer
Date: November 21, 2000 /s/ Anthony J. Moccio
---------------------------
Anthony J. Moccio
Vice President - Controller
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