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 May 28, 2000.
|_| 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 1-7013
------
GRISTEDE'S FOODS, INC.
----------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-1829183
-------- ----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
823 Eleventh Avenue, New York, New York 10019
---------------------------------------------
(Address of Principal Executive Offices)
(212) 956-5803
--------------
(Registrant's Telephone Number, Including Area Code)
N/A
---
(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 to be
filed by Section 13 or 15 (d) of the Securities Exchange Act 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 |_|
At July 12, 2000, registrant had issued and outstanding 19,636,574
shares of common stock.
<PAGE>
GRISTEDE'S FOODS, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of
May 28, 2000 and November 28, 1999 Page 3
Consolidated Statements of Operations for
the quarters and six months ended
May 28, 2000 and May 30,1999 Page 4
Consolidated Statements of Stockholders'
Equity for the year ended
November 28, 1999 and the six months ended
May 28, 2000 Page 5
Consolidated Statements of Cash Flows for
the six months ended
May 28, 2000 and May 30, 1999 Page 6
Notes to Consolidated Financial Statements Page 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations Page 10
2
<PAGE>
Item 1
Financial Statements
GRISTEDE'S FOODS INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
May 28, November 28,
ASSETS 2000 1999
CURRENT ASSETS: ------------ ------------
<S> <C> <C>
Cash $ 249,173 $ 298,582
Accounts receivable - net of allowance for doubtful accounts
of $500,000 at May 28, 2000 and November 28, 1999 6,865,638 6,797,401
Inventory 27,930,445 25,241,677
Prepaid expenses and other current assets 1,231,743 1,761,378
Notes receivable - current portion 0 306,337
------------ ------------
Total current assets 36,276,999 34,405,375
------------ ------------
PROPERTY AND EQUIPMENT:
Furniture, fixtures and equipment 15,978,733 15,334,522
Capitalized equipment leases 14,942,588 13,072,200
Leaseholds and leasehold improvements 44,347,515 40,773,458
------------ ------------
75,268,836 69,180,180
Less accumulated depreciation and amortization 31,956,424 29,576,085
------------ ------------
Net property and equipment 43,312,412 39,604,095
Deposits and other assets 899,088 769,221
Deferred costs 2,776,575 2,994,991
Notes receivable - noncurrent portion 0 256,489
------------ ------------
TOTAL $ 83,265,074 $ 78,030,171
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable, trade $ 14,901,574 $ 14,800,350
Accrued payroll, vacation and withholdings 567,037 1,052,150
Accrued expenses and other current liabilities 1,695,941 1,510,690
Capitalized lease obligation - current portion 1,799,968 1,570,553
Current portion of long term debt 2,288,094 1,797,619
------------ ------------
Total current liabilities 21,252,614 20,731,362
Long-term debt - noncurrent portion 26,744,651 27,035,125
Due to affiliate 12,043,337 9,113,500
Deferred income 1,239,611 1,597,654
Capitalized lease obligation - noncurrent portion 6,355,479 5,651,425
Deferred rents 2,718,650 2,392,753
------------ ------------
Total liabilities 70,354,342 66,521,819
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $0.02 par value - shares authorized 25,000,000; outstanding
19,636,574 shares at May 28, 2000 and November 28, 1999 392,732 392,732
Additional paid-in capital 14,136,674 14,136,674
Retained eanings/ (deficit) (1,618,674) (3,021,054)
------------ ------------
Total stockholders' equity 12,910,732 11,508,352
------------ ------------
TOTAL $ 83,265,074 $ 78,030,171
============ ============
</TABLE>
See accompanying notes.
-3-
<PAGE>
GRISTEDE'S FOODS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE 26 WEEKS AND 13 WEEKS ENDED MAY 28, 2000 AND MAY 30, 1999
<TABLE>
<CAPTION>
26 weeks 13 weeks 26 weeks 13 weeks
ended ended ended ended
May 28, May 28, May 30, May 30,
2000 2000 1999 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Sales $ 106,017,817 $ 52,269,920 $ 88,543,266 $ 44,355,475
Cost of sales 63,881,642 31,473,563 53,683,555 26,547,699
------------- ------------- ------------- -------------
Gross profit 42,136,175 20,796,357 34,859,711 17,807,806
Store operating, general and administrative expense 32,516,371 16,256,185 27,141,048 14,018,068
Pre-store opening start-up costs 422,223 138,890 649,343 334,309
Depreciation and amortization 2,675,756 1,404,456 2,307,979 1,169,495
Non-store operating expenses:
Administrative payroll and fringes 2,185,950 1,109,612 1,861,176 881,759
General office expense 770,770 359,352 605,371 284,306
Professional fees 284,134 173,561 293,408 97,219
Corporate expense 87,514 45,199 115,083 75,833
------------- ------------- ------------- -------------
Total non-store operating expense 3,328,368 1,687,724 2,875,038 1,339,117
------------- ------------- ------------- -------------
Operating profit 3,193,457 1,309,102 1,886,303 946,817
------------- ------------- ------------- -------------
Other income (expense):
Interest expense (1,803,302) (917,116) (1,062,501) (517,647)
Interest income 25,275 10,568 47,562 18,774
------------- ------------- ------------- -------------
Total other expense - net (1,778,027) (906,548) (1,014,939) (498,873)
------------- ------------- ------------- -------------
Income before income taxes 1,415,430 402,554 871,364 447,944
Provision for corporate taxes 13,050 6,550 28,337 11,613
------------- ------------- ------------- -------------
Net income $ 1,402,380 $ 396,004 $ 843,027 $ 436,331
============= ============= ============= =============
Income per share of common stock, basic and diluted $ 0.07 $ 0.02 $ 0.04 $ 0.02
============= ============= ============= =============
Weighted average number of shares and
equivalents outstanding 19,636,574 19,636,574 19,636,574 19,636,574
============= ============= ============= =============
</TABLE>
See accompanying notes
-4-
<PAGE>
GRISTEDE'S FOODS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED NOVEMBER 28, 1999 AND 26 WEEKS ENDED MAY 28, 2000
<TABLE>
<CAPTION>
Additional Retained Total
Common stock Paid-In earnings Stockholders'
Shares Amount Capital (Deficit) Equity
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance at November 29, 1998 19,636,574 $ 392,732 $14,136,674 $ (147,723) $14,381,683
Net loss for the year ended
November 28, 1999 (2,873,331) (2,873,331)
----------- ----------- ----------- ----------- -----------
Balance at November 28, 1999 19,636,574 392,732 14,136,674 (3,021,054) 11,508,352
Net income for the twenty-six weeks
ended May 28, 2000 1,402,380 1,402,380
----------- ----------- ----------- ----------- -----------
Balance at May 28, 2000 19,636,574 $ 392,732 $14,136,674 $(1,618,674) $12,910,732
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes.
-5-
<PAGE>
GRISTEDE'S FOODS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
26 WEEKS ENDED MAY 28, 2000 AND MAY 30, 1999
<TABLE>
<CAPTION>
26 weeks 26 weeks
ended ended
May 28, May 30,
2000 1999
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,402,380 $ 843,025
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 2,675,756 2,307,979
Changes in operating assets and liabilities:
Accounts receivable - net (68,237) (1,038,137)
Inventory (2,688,768) (3,671,892)
Prepaid expenses and other current assets 529,635 (85,611)
Notes receivable 562,826 879,565
Other assets (206,868) (632,785)
Accounts payable, trade 101,225 1,679,345
Accrued payroll, vacation and withholdings (485,113) (882,754)
Accrued expenses and other current liabilities 185,251 117,682
Deferred rents 325,897 343,763
Other credits (358,043) 1,570,000
----------- -----------
Net cash provided by / (used) in operating activities 1,975,941 1,430,180
----------- -----------
Cash flows from investing activities:
Capital expenditures - net (4,247,020) (4,550,024)
----------- -----------
Net cash used in investing activities (4,247,020) (4,550,024)
----------- -----------
Cash flows from financing activities:
Repayments of bank loan (600,000) (1,645,473)
Repayment capitalized lease obligations (908,167) (414,780)
Advances from affiliate 2,929,837 4,520,000
Proceeds from bank loans 800,000 700,000
----------- -----------
Net cash provided by financing activities 2,221,670 3,159,747
----------- -----------
NET (DECREASE) / INCREASE IN CASH (49,409) 39,903
CASH begining of period 298,582 53,794
----------- -----------
CASH end of period $ 249,173 $ 93,697
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid for interest $ 1,447,821 $ 904,843
Cash paid for taxes $ 89,050 $ 13,337
Supplemental schedule of non cash financing activity:
Assets acquired under capital lease obligations $ 1,841,636 $ 1,659,087
</TABLE>
See accompanying notes.
-6-
<PAGE>
GRISTEDE'S FOODS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business - On November 4, 1997, Sloan's Supermarkets, Inc. ("Sloan's") changed
its name to Gristede's Sloan's, Inc. ("GRI" or the "Company"). On November 10,
1997, GRI acquired certain assets, net of liabilities, of 29 selected
supermarkets and a wholesale distribution business ("The Food Group") controlled
by Mr. John Catsimatidis, Chairman and 37% stockholder of Sloan's. The
transaction was accounted for as the acquisition of Sloan's by The Food Group
pursuant to Emerging Issues Task Force 90-13 as a result of The Food Group
obtaining control of Sloan's after the transaction. The assets and liabilities
of The Food Group were recorded at their historical cost. Sloan's assets and
liabilities were recorded at their fair value to the extent acquired.
Consideration for the transaction was based on an aggregate of $36,000,000 in
market value of the Company's common stock and the assumption of $4,000,000 of
liabilities. 16,504,298 shares of common stock were issued on the date of the
acquisition based on a market price of $2.18 per share. On August 16, 1999 the
Company changed its name to Gristede's Foods, Inc.
The Company operates 42 supermarkets (the "Supermarkets") and two pharmacy
stores. 37 Supermarkets and two pharmacy stores are located in Manhattan, New
York, three Supermarkets are located in Westchester County, New York, one
Supermarket is located in Brooklyn, New York and one Supermarket is located in
Long Island, New York. 7 of the Supermarkets are operated under the "Sloan's"
name and 35 are operated under the "Gristede's" name. The Company leases all of
its store locations.
The Company also owns City Produce Operating Corp., a corporation which operates
a warehouse and distribution center primarily for fresh produce on leased
premises in the Bronx, New York.
Principles of Consolidation - The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries. All material
intercompany accounts and transactions have been eliminated in consolidation.
Quarter End - The Company operates using the conventional retail 52/53 week
fiscal year. The fiscal quarter ends on the Sunday closest to the end of the
quarter. The Company's fiscal year ends on the Sunday closest to November 30.
Inventory - Store inventories are valued principally at the lower of cost or
market with cost determined under the retail first in, first out (FIFO) method.
Property and Equipment - Depreciation of furniture, fixtures and equipment is
computed by the straight-line method over the estimated useful lives of the
assets.
7
<PAGE>
Leases - The Company charges the cost of noncancelable operating lease payments
and beneficial leaseholds to operations on a straight-line basis over the lives
of the leases.
GRISTEDE'S FOODS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Provision for income taxes - Income taxes reflect Federal and State alternative
minimum tax only, as all regular income taxes have been offset by utilization of
the Company's net operating loss carry forward.
Income Per share - Per share data are based on the weighted average number of
shares of common stock and equivalents outstanding during each quarter. Income
per share is computed by the treasury stock method; primary and fully diluted
income per share are the same.
In the opinion of management, the information furnished reflects all adjustments
(consisting of normal recurring adjustments), which are necessary for a fair
statement of the results of operations for the interim period. The interim
figures are not necessarily indicative of the results to be expected for the
fiscal year.
The Company's Annual Report on Form 10-K for the 12 month period ended November
28, 1999 contains information which should be read in conjunction herewith.
2. RELATED PARTY TRANSACTIONS
Under a management agreement dated November 10, 1997, Namdor Inc., a subsidiary
of the Company, performs consulting and managerial services for three
supermarkets owned by corporations controlled by John Catsimatidis. In
consideration of such services, Namdor Inc. is entitled to receive on a
quarterly basis a management fee of 1.25% of all sales of merchandise made at
the managed supermarkets. During the quarter and six months ended May 28, 2000,
the management fee income was $19,291and $43,267, respectively. For the quarter
and six months ended May 30, 1999 the management fee income was $25,340 and
$52,881, respectively.
C&S Acquisition Corp. (formerly Red Apple Leasing, Inc.) a corporation wholly
owned by John Catsimatidis, leases equipment to the Company. Such leases are
primarily for store operating equipment. Obligations under capital leases at May
28, 2000 were $265,549 and require monthly payments of $35,114 through March 1,
2001. Obligations under operating leases were $41,676 per month during the
quarter ended May 28, 2000.
Advertising services are provided to the Company by an affiliated company, MCV
Advertising Associates Inc. a company owned by John Catsimatidis. For the
quarter and six months ended May 28, 2000 the costs incurred were $388,865 and
$763,967, respectively. For the quarter and six months ended May
8
<PAGE>
30, 1999 the costs incurred were $334,217 and $619,249, respectively.
The Company has entered into operating agreements with two affiliates regarding
the management of two stores owned by such affiliates. The agreements expire
December 3, 2000, and give the Company full operating control of all aspects of
the stores. The store's assets and liabilities at their net book values, and
sales and results of operations have been consolidated with the financial
statements of the Company. Under the agreements, the Company shall pay to the
affiliates $1 per annum, plus such other consideration as may be approved by the
Company's directors (excluding John Catsimatidis).
The Company leases three locations from Red Apple Real Estate, Inc., a company
solely owned by John Catsimatidis. During the quarter and six months ended May
28, 2000 the Company paid to Red Apple Real Estate, Inc. $272,000 and $579,858,
respectively. During the quarter and six months ended May 30, 1999 the Company
paid $404,200 and $629,866, respectively.
Amount due to affiliate, United Acquisition Corp., a corporation wholly owned by
John Catsimatidis, represent liabilities in connection with the acquisition of
The Food Group and subsequent advances made by such affiliate. The affiliate has
agreed not to demand payment of these liabilities in the next fiscal year.
Accordingly, the liability has been classified as noncurrent. Amount due to
affiliate at May 28, 2000 and November 28, 1999 was $12,043,337 and $9,113,500,
respectively; of these amounts $9,000,000 was subordinated to the Company's
banks. The liability does not bear interest. The $2,929,837 increase in due to
affiliate represents advances made during the six month ended May 28, 2000 by
such affiliate, the proceeds of which were primarily used to partially fund the
Company's store renovation and expansion program.
Wolf, Block, Schorr and Solis-Cohen LLP, a law firm of which Martin Bring, a
director of the Company is a partner, received fees of $92,561 and $145,419
during the quarter and six months ended May 28, 2000, respectively. During the
quarter and six months ended May 30, 1999, they received fees of $57,520 and
$94,164, respectively.
9
<PAGE>
GRISTEDE'S FOODS, INC. AND SUBSIDIARIES
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE QUARTERS AND SIX MONTHS ENDED MAY 28,
2000 AND MAY 30, 1999
RESULTS OF OPERATIONS :
The following table sets forth items from the Company's Consolidated Statements
of Operations as a percentage on sales.
26 weeks 13 weeks 26 weeks 13 weeks
ended ended ended ended
5/28/00 5/28/00 5/30/99 5/30/99
-------- -------- -------- --------
Sales 100.0 100.0 100.0 100.0
Cost of sales 60.3 60.2 60.6 59.9
----- ----- ----- -----
Gross profit 39.7 39.8 39.4 40.1
Store operating, general and
administrative expense 30.7 31.1 30.7 31.6
Pre-store opening startup costs 0.4 0.3 0.7 0.8
Depreciation and amortization 2.5 2.7 2.6 2.6
Non-store operating expense 3.1 3.2 3.3 3.0
----- ----- ----- -----
Operating profit 3.0 2.5 2.1 2.1
Other income (expense) (1.7) (1.7) (1.2) (1.1)
----- ----- ----- -----
Income from operations
before income taxes 1.3 0.8 0.9 1.0
Provisions for income taxes 0.0 0.0 0.0 0.0
----- ----- ----- -----
Net income 1.3 0.8 0.9 1.0
===== ===== ===== =====
Sales for the quarter and six months ended May 28, 2000 were $ 52,269,920 and
$106,017,817, respectively as compared to sales for the quarter and six months
ended May 30, 1999 of $44,355,475 and $88,543,266, respectively. The increase in
sales during the 2000 period was primarily the result of the Company's
remodeling program, which is continuing and three new stores that opened
subsequent to the 1999 period.
Gross profit was $20,796,357 or 39.79 % of sales and $42,136,175 or 39.74% of
sales for the quarter and six months ended May 28, 2000, respectively as
compared with $17,807,806 or 40.15% of sales and $34,859,711 or 39.37% of sales
for the quarter and six months ended May 30, 1999, respectively. The decrease in
gross profit as a percentage of sales, during the 2000 quarter, was
10
<PAGE>
primarily due to selected promotional price reductions in connection with the
grand reopening periods of the new and newly remodeled stores. The increase in
gross profit as a percentage of sales for the 2000 six month period was mainly
due to the recovery of certain stores from unusually low gross margins during
the fourth quarter of fiscal 1999.
Store operating, general and administrative expenses were $16,256,185 or 31.10%
of sales and $32,516,371or 30.67% of sales for the quarter and six months ended
May 28, 2000, respectively as compared to $14,018,068 or 31.61% of sales and
$27,141,048 or 30.66% of sales for the quarter and six months ended May 30,
1999, respectively. The decrease in store operating, general and administrative
expenses as a percentage of sales in the 2000 quarterly period was mainly due to
better cost controls in relation to the increased sales.
Pre-store opening startup costs were $138,890 or 0.27 % of sales and $422,223 or
0.40% of sales for the quarter and six months ended May 28, 2000, respectively
as compared to $334,309 or 0.75 % of sales and $649,343 or 0.73 % of sales for
the quarter and six months ended May 30, 1999, respectively. The decrease in
pre-store opening startup costs in the 2000 periods was primarily due to the
fact that the stores remodeled required less pre-opening advertising and store
set-up labor costs.
Non-store operating expenses were $1,687,724 or 3.23 % of sales and $3,328,368
or 3.14 % of sales for the quarter and six months ended May 28, 2000,
respectively as compared to $1,339117 or 3.02 % of sales and $2,875,038 or 3.24
% of sales for the quarter and six months ended May 30, 1999, respectively.
Administrative payroll and fringes were 2.12 % of sales and 2.06 % of sales for
the quarter and six months ended May 28, 2000, respectively as compared with
1.99 % of sales and 2.10 % of sales for the quarter and six months ended May
30,1999, respectively. The increase in the 2000 quarterly period reflects the
addition of supervisory and information technology personnel required as a
result of the additional business generated by the store remodeling program.
General office expenses as a percentage of sales were 0.69 % and 0.73 % for the
quarter and six months ended May 28, 2000, respectively as compared to 0.64 %
and 0.68 % for the quarter and six months ended May 30, 1999, respectively. The
increase during the 2000 period was primarily due to additional back office
costs in relation to the increased sales. Professional fees were 0.33 % and 0.27
% of sales for the quarter and six months ended May 28, 2000, respectively as
compared to 0.22 % and 0.33 % of sales for the quarter and six months ended May
30, 1999, respectively.
The increase in the 2000 quarterly period was due to the increased need for
outside legal services. Corporate expenses as a percentage of sales were 0.09 %
and 0.08 % for the quarter and six months ended May 28, 2000, respectively as
compared to 0.17 % and 0.13 % for the quarter and six months ended May 30, 1999,
respectively. The decrease was primarily due to decreased shareholder expenses.
Interest expense for the quarter and six months ended May 28, 2000 was $917,116
and $1,803,302, respectively as compared to $517,647 and $1,062,501 for the
quarter and six months ended May 30,1999, respectively. The increase in the 2000
period was primarily attributable to increased borrowings under the Company's
bank credit facility and increased capitalized equipment leasing. Interest
income for the quarter and six months ended May 28, 2000 was $10,568 and
$25,275, respectively as compared with $18,774 and $47,562 for the quarter and
six months ended May 30,
11
<PAGE>
1999, respectively. The decrease in the 2000 period was due to the reduction in
outstanding notes receivable as compared to the 1999 period.
As a result of the items reviewed above the net income before provision for
income taxes for the quarter and six months ended May 28, 2000 was $402,554 and
$1,415,430, respectively as compared to a net income of $447,944 and $871,364
for the quarter and six months ended May 30, 1999, respectively.
LIQUIDITY AND CAPITAL RESOURCES
On November 10, 1997, the Company completed its financial arrangements with a
group of banks for a credit facility in the aggregate amount of $25,000.000.
Under the credit agreement the Company obtained a term loan in the amount of
$12,000,000 to refinance prior bank debt, an improvement term loan line of
credit in the amount of $8,000,000 to finance capital improvements to its
Supermarkets and a revolving line of credit in the amount of $5,000,000 to
provide working capital. The revolving line of credit was increased to
14,000,000 effective as of May 29, 1999. The credit facility, as amended,
provided for (i) a maturity date of November 30, 2003, at which time all amounts
outstanding thereunder are due, (ii) certain financial covenants, (iii)
amortization of the term loan by $100,000 per month through and including June
1, 2000, and thereafter $147,857 per month; (iv) amortization of the improvement
term loan by $50,000 per month commencing July 1, 2000 through and including
June 1, 2001 and $133,333 per month thereafter and (v) a reduction in the
revolving credit commitment by $466,667 per month commencing July 1, 2001.
Presently, the bank facilities are fully utilized and the Company is negotiating
an increase in the credit facilities with its banks. There is no assurance that
the Company will be able to negotiate such an increase on terms satisfactory to
the Company. If the Company is unable to obtain its desired financing from its
banks, the Company will seek increased financing from third party leasing
companies and/or additional financing from the Company's principal shareholder
and other sources.
The Company has not incurred any material commitments for capital expenditures,
although it anticipates spending approximately $10,000,000 to $12,000,000 on its
store remodeling and expansion program in fiscal 2000. Such amount is subject to
adjustment based on the availability of funds.
Borrowings under the facility bear interest at a spread over either the prime
rate of the bank acting as agent for the group of banks or a LIBOR rate, with
the spread dependent on the ratio of the Company's funded debt to EBITDA ratio,
as defined in the credit agreement. The average interest rate on amounts
outstanding under the facility during the 13 weeks ended May 28, 2000 was 9.2%
per annum.
The credit facility contains covenants, representations and events of default
typical of credit facility agreements, including financial covenants which
require the Company to meet, among other things, a minimum tangible net worth,
debt service coverage ratios and fixed charge coverage ratios, and which limit
transactions with affiliates. The facility is secured by equipment, inventories
and accounts receivable.
12
<PAGE>
GRISTEDE'S FOODS INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Change in Securities And Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) No Current Reports on Form 8-K were filed for the quarter for which this
report is being filed.
13
<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.
Gristede's Foods, Inc.
By: /s/ John A. Catsimatidis
-------------------------
John A. Catsimatidis
Chairman of the Board and
Chief Executive Officer
Dated: July 17, 2000
