<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
--------------
For the Quarter Ended Commission File Number
May 2, 1998 0-16404
Supermarkets General Holdings Corporation
(Exact name of registrant as specified in its charter)
Delaware 13-3408704
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 Milik Street 07008
Carteret, New Jersey (Zip Code)
(Address of principal executive offices)
(732) 499-3000
(Registrant's telephone number, including area code)
-------------------
Securities registered pursuant to Section 12(b) of the
Act: None Securities registered pursuant to Section
12(g) of the Act:
$3.52 Cumulative Exchangeable Redeemable Preferred Stock
-------------------
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
------ --------
As of May 2, 1998, there were outstanding 650,675 shares of $0.01 par value
Class A Common Stock (voting) and 320,000 shares of $0.01 par value Class B
Common Stock (non-voting), all of which are privately owned and not traded on a
public market.
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<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
SUPERMARKETS GENERAL HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
13 Weeks Ended
----------------------------
May 2, May 3,
1998 1997
---------- ----------
<S> <C> <C>
Sales ...................................... $ 916,015 $ 922,398
Cost of sales (exclusive of depreciation and
amortization shown separately below) ...... 651,984 662,918
--------- ---------
Gross profit ............................... 264,031 259,480
Selling, general and administrative expenses 211,073 212,348
Depreciation and amortization .............. 19,686 20,216
--------- ---------
Operating earnings ......................... 33,272 26,916
Interest expense ........................... (41,569) (41,885)
--------- ---------
Loss before income tax (provision) benefit . (8,297) (14,969)
Income tax (provision) benefit ............. (30) 5,866
--------- ---------
Net loss ................................... (8,327) (9,103)
Less: non-cash preferred stock accretion and
dividend requirements ..................... (4,768) (4,750)
--------- ---------
Net loss attributable to common stockholder $ (13,095) $ (13,853)
--------- ---------
--------- ---------
</TABLE>
See notes to consolidated financial statements (unaudited).
1
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands except share amounts)
<TABLE>
<CAPTION>
May 2, January 31,
1998 1998
----------- ------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents ...................... $ 10,236 $ 62,914
Accounts receivable, net ....................... 13,056 11,519
Merchandise inventories ........................ 156,436 148,983
Deferred income taxes, net ..................... 8,354 8,492
Prepaid expenses ............................... 22,396 21,455
Due from suppliers ............................. 41,227 13,027
Other current assets ........................... 15,072 11,480
----------- -----------
Total Current Assets .......................... 266,777 277,870
Property and Equipment, Net ..................... 522,163 530,716
Deferred Financing Costs, Net ................... 17,537 18,547
Deferred Income Taxes, Net ...................... 47,053 46,279
Other Assets .................................... 33,691 34,342
----------- -----------
$ 887,221 $ 907,754
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDER'S DEFICIENCY
Current Liabilities
Accounts payable and book overdrafts ........... $ 98,094 $ 155,702
Current maturities of long-term debt ........... 39,538 43,478
Income taxes payable ........................... 1,353 372
Accrued payroll and payroll taxes .............. 46,424 49,599
Current portion of lease obligations ........... 24,486 24,417
Accrued interest payable ....................... 18,942 18,300
Accrued expense and other current liabilities .. 91,111 93,336
----------- -----------
Total Current Liabilities ..................... 319,948 385,204
----------- -----------
Long-Term Debt .................................. 1,259,061 1,208,327
----------- -----------
Lease Obligations, Long-Term .................... 174,611 170,471
----------- -----------
Other Noncurrent Liabilities .................... 373,177 370,697
----------- -----------
Redeemable Securities
Exchangeable Preferred Stock, $.01 par value ... 107,647 107,183
----------- -----------
Authorized: 9,000,000 shares
Issued and outstanding: 4,890,671
Liquidation preference, $25 per share: $122,267
Commitments and Contingencies (Note 4)
Stockholder's Deficiency
Class A Common Stock, $.01 par value ........... 7 7
Authorized: 1,075,000 shares
Issued and outstanding: 650,675
Class B Common Stock, $.01 par value ........... 3 3
Authorized: 1,000,000 shares
Issued and outstanding: 320,000
Paid-in Capital ................................. 197,057 197,521
Accumulated Deficit ............................. (1,544,290) (1,531,659)
----------- -----------
Total Stockholder's Deficiency ................. (1,347,223) (1,334,128)
----------- -----------
$ 887,221 $ 907,754
----------- -----------
----------- -----------
</TABLE>
See notes to consolidated financial statements (unaudited).
2
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIENCY (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Class A Class B Total
Common Common Paid-in Accumulated Stockholder's
Stock Stock Capital Deficit Deficiency
----- --- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance, January 31, 1998.......................... $ 7 $ 3 $ 197,521 $ (1,531,659) $ (1,334,128)
Net loss........................................... -- -- -- (8,327) (8,327)
Accrued dividends on preferred stock
($.88 per share)............................. -- -- -- (4,304) (4,304)
Accretion on preferred stock....................... -- -- (464) -- (464)
----- --- ---------- -------------- -------------
Balance, May 2, 1998............................... $ 7 $ 3 $ 197,057 $ (1,544,290) $ (1,347,223)
----- --- ---------- -------------- --------------
----- --- ---------- -------------- --------------
Balance, February 1, 1997.......................... $ 7 $ 3 $ 199,332 $ (1,457,497) $ (1,258,155)
Net loss........................................... -- -- -- (9,103) (9,103)
Accrued dividends on preferred stock
($.88 per share).................................. -- -- -- (4,304) (4,304)
Accretion on preferred stock....................... -- -- (446) -- (446)
----- --- ---------- -------------- -------------
Balance, May 3, 1997............................... $ 7 $ 3 $ 198,886 $ (1,470,904) $ (1,272,008)
----- --- ---------- -------------- -------------
----- --- ---------- -------------- -------------
</TABLE>
See notes to consolidated financial statements (unaudited).
3
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
13 Weeks Ended
-------------------------
May 2, May 3,
1998 1997
---------- ---------
<S> <C> <C>
Operating Activities
Net loss ............................................................ $ (8,327) $ (9,103)
Adjustments to reconcile net loss to net cash provided by (used for)
operating activities:
Depreciation and amortization ...................................... 20,590 21,172
Deferred income tax benefit ........................................ (636) (5,388)
Interest accruable but not payable ................................. 4,937 4,448
Amortization of original issue discount ............................ 894 814
Amortization of debt issuance costs ................................ 1,031 1,901
Loss on disposal of property and equipment ......................... 533 33
Cash provided by (used for) operating assets and liabilities:
Accounts receivable, net .......................................... (1,537) (61)
Merchandise inventories ........................................... (7,453) 1,275
Income taxes ...................................................... 981 (1,692)
Other current assets .............................................. (33,302) 565
Other assets ...................................................... 2,820 (1,809)
Accounts payable .................................................. (33,853) 5,549
Accrued interest payable .......................................... 674 (1,798)
Accrued expenses and other current liabilities .................... (5,400) (2,678)
Other noncurrent liabilities ...................................... (6,144) (8,078)
-------- --------
Cash provided by (used for) operating activities ................. (64,192) 5,150
-------- --------
Investing Activities
Property and equipment expenditures ................................ (9,076) (5,037)
Proceeds from disposition of property and equipment ................ 8,926 1,243
-------- --------
Cash used for investing activities ............................... (150) (3,794)
-------- --------
Financing Activities
Increase in Pathmark working capital facilities borrowings ......... 45,200 33,000
Repayment of Pathmark term loans ................................... (1,891) (12,627)
Decrease in book overdrafts ........................................ (23,755) (11,799)
Increase in other borrowings ....................................... 2,000 214
Repayment of other long-term borrowings ............................ (4,346) (642)
Reduction in lease obligations ..................................... (5,523) (5,186)
Deferred financing fees ............................................ (21) (268)
-------- --------
Cash provided by financing activities ............................ 11,664 2,692
-------- --------
Increase (decrease) in cash and cash equivalents .................... (52,678) 4,048
Cash and cash equivalents at beginning of period .................... 62,914 10,967
-------- --------
Cash and cash equivalents at end of period .......................... $ 10,236 $ 15,015
-------- --------
-------- --------
Supplemental Disclosures of Cash Flow Information
Interest paid ...................................................... $ 33,987 $ 36,370
-------- --------
-------- --------
Income taxes paid .................................................. $ 83 $ 1,671
-------- --------
-------- --------
Noncash Investing and Financing Activities
Capital lease obligations .......................................... $ 10,425 $ 6,807
-------- --------
-------- --------
</TABLE>
See notes to consolidated financial statements (unaudited).
4
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1--Organization and Basis of Presentation
Supermarkets General Holdings Corporation (the "Company" or "Holdings"),
through its indirect wholly owned subsidiary Pathmark Stores, Inc. ("Pathmark"),
operated 135 supermarkets as of May 2, 1998, primarily in the New York-New
Jersey and Philadelphia metropolitan areas, and is a wholly owned subsidiary of
SMG-II Holdings Corporation ("SMG-II").
The unaudited consolidated financial statements included herein have been
prepared by the Company in accordance with the same accounting principles
followed in the presentation of the Company's annual financial statements for
the year ended January 31, 1998, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the
consolidated financial statements included herein reflect all adjustments which
are of a normal and recurring nature and are necessary to present fairly the
results of operations and financial position of the Company. This report should
be read in conjunction with the financial statements and notes thereto included
in the Company's Form 10-K Annual Report for the year ended January 31, 1998.
Income taxes for the interim period are based on the estimated effective tax
rate expected to be applicable for the full fiscal year. The Company has
recorded a valuation allowance related to the income tax benefit for the first
quarter of Fiscal 1998; therefore, no income tax benefit has been recognized.
Note 2--Long-Term Debt
Long-term debt is comprised of the following (dollars in thousands):
<TABLE>
<CAPTION>
May 2, January 31,
1998 1998
------------ -----------
<S> <C> <C>
Pathmark term loan ("Term Loan") ............................. $ 261,359 $ 263,250
Pathmark working capital facility ("Working Capital Facility") 45,200 --
9.625% Pathmark Senior Subordinated Notes due 2003
("Pathmark Senior Subordinated Notes") ...................... 438,223 438,134
11.625% Pathmark Subordinated Notes due 2002
("Pathmark Subordinated Notes") ............................. 199,017 199,017
11.625% Holdings Subordinated Notes due 2002
("Holdings Subordinated Notes") ............................. 983 983
12.625% Pathmark Subordinated Debentures due 2002
("Pathmark Subordinated Debentures") ........................ 95,750 95,750
10.75% Pathmark Deferred Coupon Notes due 2003
("Pathmark Deferred Coupon Notes") .......................... 192,005 187,068
10.25% PTK Exchangeable Guaranteed Debentures due 2003
("PTK Exchangeable Guaranteed Debentures") .................. 31,234 30,429
Industrial revenue bonds ..................................... 8,362 6,375
Other debt (primarily mortgages) ............................. 26,466 30,799
---------- ----------
Total debt ................................................... 1,298,599 1,251,805
Less: current maturities ..................................... 39,538 43,478
---------- ----------
Long-term portion ............................................ $1,259,061 $1,208,327
---------- ----------
---------- ----------
</TABLE>
5
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)--(Continued)
Note 3--Interest Expense
Interest expense is comprised of the following (dollars in thousands):
<TABLE>
<CAPTION>
13 Weeks Ended
----------------------
May 2, May 3,
1998 1997
------- --------
<S> <C> <C>
Pathmark term loans .................... $ 5,304 $ 5,130
Pathmark working capital facilities .... 540 1,767
Pathmark Senior Subordinated Notes
Amortization of original issue discount 89 88
Currently payable ..................... 10,588 10,588
Pathmark Subordinated Notes ............ 5,813 5,813
Pathmark Subordinated Debentures ....... 3,022 3,022
Pathmark Deferred Coupon Notes
Accrued but not payable ............... 4,937 4,448
PTK Exchangeable Guaranteed Debentures
Amortization of original issue discount 805 726
Amortization of debt issuance costs .... 1,031 1,901
Obligations under capital leases ....... 5,497 5,491
Other, net ............................. 3,943 2,911
------- -------
Interest expense ....................... $41,569 $41,885
------- -------
------- -------
</TABLE>
The majority of the cash interest payments are scheduled in the second and
fourth quarters. However, the May 1 semi-annual interest payment of $21.2
million on the Pathmark Senior Subordinated Notes was paid in the first quarters
of Fiscal 1998 and Fiscal 1997 due to the timing of the quarter end dates.
Note 4--Contingencies
Rickel:
In connection with the sale of its home centers segment in Fiscal 1994, the
Company, as lessor, entered into nine leases for certain of the Company's owned
real estate properties with Rickel Home Centers, Inc. ("Rickel"), as tenant. In
addition, the Company assigned to Rickel 26 third party leases.
In 1996, Rickel filed for bankruptcy protection under Chapter 11 of the
United States Bankruptcy Code. Subsequent to the filing, of the 35 locations
leased to Rickel, Rickel entered into an agreement in 1998 to assign the leases
of 16 locations to Staples, Inc., nine leases have either been terminated or
assigned to third parties, and ten rejected leases are being actively marketed
by the Company to other prospective tenants.
Management has assessed its exposure with respect to this matter and has
concluded that it has sufficient reserves to cover any resulting liability which
may occur, including the future rent and real estate taxes, net of expected
sublease recoveries.
Other:
The Company is also a party to a number of legal proceedings in the ordinary
course of business. Management believes that the ultimate resolution of these
proceedings will not, in the aggregate, have a material adverse impact on the
financial condition, results of operations or business of the Company.
Note 5--Subsequent Event
On May 12, 1998, the Company's wholly owned subsidiary PTK Holdings, Inc.
repaid in full the PTK Exchangeable Guaranteed Debentures, totalling $31.2
million.
6
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The matters discussed herein, with the exception of historical information,
are "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject to
risks, uncertainties and other factors which could cause actual results to
differ materially from future results expressed or implied by such
forward-looking statements. Potential risks and uncertainties include, but are
not limited to, the competitive environment in which the Company operates and
the general economic conditions in the Company's trading areas.
Results of Operations
Sales:
Sales in the first quarter of Fiscal 1998 were $916.0 million compared to
$922.4 million in the prior year, a decrease of 0.7%. However, same store sales
increased 1.7% for the quarter. Sales in the first quarter of Fiscal 1998
compared to the prior year were impacted by sold and closed stores, partially
offset by new store openings and same store sales increases. The Company
operated 135 and 144 supermarkets at the end of the first quarters of Fiscal
1998 and Fiscal 1997, respectively.
Gross Profit:
Gross profit in the first quarter of Fiscal 1998 was $264.0 million or 28.8%
of sales compared with $259.5 million or 28.1% of sales in the prior year. The
increase in gross profit in both dollars and as a percentage of sales for the
first quarter of Fiscal 1998 compared to the prior year was primarily due to
improvements in the perishables mix and the savings realized from the Company's
outsourcing at the end of Fiscal 1997 of certain of its distribution center
operations to C&S Wholesale Grocers, Inc. ("C&S"). The cost of goods sold
amounts were affected by a pretax LIFO charge of $0.4 million in each of the
first quarters of Fiscal 1998 and Fiscal 1997, respectively.
Selling, General and Administrative Expenses ("SG&A"):
SG&A in the first quarter of Fiscal 1998 decreased $1.3 million or 0.6%
compared to the prior year. The decrease in SG&A in the first quarter of
Fiscal 1998 compared to the prior year was primarily due to sold and closed
stores. As a percentage of sales, SG&A were 23.0% in the first quarter of
Fiscal 1998 and Fiscal 1997, respectively.
Depreciation and Amortization:
Depreciation and amortization of $19.7 million in the first quarter of
Fiscal 1998 was $0.5 million lower than the prior year of $20.2 million. The
decrease in depreciation and amortization expense in the first quarter of Fiscal
1998 compared to the prior year was primarily due to the sale of certain of the
Company's distribution center facilities at the end of Fiscal 1997 as part of
its transaction with C&S, partially offset by capital expenditures. Depreciation
and amortization excludes video tape amortization, which is recorded in cost of
goods sold, of $0.8 million in each of the first quarters of Fiscal 1998 and
Fiscal 1997, respectively.
Operating Earnings:
Operating earnings in the first quarter of Fiscal 1998 were $33.3 million
compared with the prior year of $26.9 million. The increase in operating
earnings in the first quarter of Fiscal 1998 compared to the prior year was due
to higher gross profit and lower SG&A.
7
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
Interest Expense:
Interest expense was $41.6 million in the first quarter of Fiscal 1998
compared to $41.9 million in the prior year. The decrease in interest expense in
the first quarter of Fiscal 1998 compared to the prior year was primarily due to
lower levels of borrowings under the working capital facilities and lower
amortization of debt issuance costs, partially offset by the debt accretion on
the Deferred Coupon Notes.
Income Taxes:
Income taxes for the interim period are based on the estimated effective tax
rate expected to be applicable for the full fiscal year. The Company has
recorded a valuation allowance related to the income tax benefit for the first
quarter of Fiscal 1998; therefore, no income tax benefit has been recognized.
The income tax benefit in Fiscal 1997 was $5.9 million.
During the first quarter of Fiscal 1998, the Company made income tax
payments of $0.1 million and received income tax refunds of $0.5 million. During
the first quarter of Fiscal 1997, the Company made income tax payments of $1.7
million and received income tax refunds of $0.5 million.
Summary of Operations:
The Company's net loss in the first quarter of Fiscal 1998 was $8.3 million
compared to a net loss of $9.1 million for the prior year. The decrease in net
loss in the first quarter of Fiscal 1998 compared to the prior year was
primarily due to higher operating earnings and lower interest expense, partially
offset by a reduction in the income tax benefit.
EBITDA-FIFO:
EBITDA-FIFO was $54.2 million and $48.5 million in the first quarters of
Fiscal 1998 and Fiscal 1997, respectively. EBITDA-FIFO represents net earnings
before interest expense, income taxes, depreciation, amortization and the LIFO
charge. EBITDA-FIFO is a widely accepted financial indicator of a company's
ability to service and/or incur debt. EBITDA-FIFO should not be construed as an
alternative to, or a better indicator of operating income or to cash flows from
operating activities, as determined in accordance with generally accepted
accounting principles.
Financial Condition
Debt Service:
During the first quarter of Fiscal 1998, total debt increased $46.8
million from Fiscal 1997 year end due to borrowings under the Working Capital
Facility and debt accretion on the Pathmark Deferred Coupon Notes and PTK
Exchangeable Guaranteed Debentures, partially offset by a decrease in certain
mortgages. Borrowings under the Working Capital Facility were $45.2 million
at May 2, 1998 and have increased to $57.3 million at June 11, 1998. In
addition, during the first quarter of Fiscal 1998, total lease obligations
increased $4.2 million from Fiscal 1997 year end.
During the first quarter of Fiscal 1998, the Company sold a former
supermarket property for $7.6 million. There was no gain or loss recognized on
this transaction. The proceeds were used to pay down the related mortgage and a
portion of the Working Capital Facility.
8
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
The indebtedness under the Working Capital Facility and the Term Loan bear
interest at floating rates and, therefore, cash interest payments on that
indebtedness may vary in future years. The Company does not currently maintain
any interest rate hedging arrangements due to the reasonable risk that near term
interest rates will not rise significantly. The Company is continuously
evaluating this risk and will implement interest rate hedging arrangements if
deemed appropriate.
The majority of the cash interest payments are scheduled in the second and
fourth quarters. However, the May 1 semi-annual interest payment of $21.2
million on the Senior Subordinated Notes was paid in the first quarters of
Fiscal 1998 and Fiscal 1997 due to the timing of the quarter end dates.
The amount of principal payments required each year on outstanding long-term
debt (excluding the original issue discount with respect to the Deferred Coupon
Notes) are as follows (dollars in millions):
<TABLE>
<CAPTION>
Principal
Fiscal Years Payments
------------ ---------
<S> <C>
1998(a)............................................. $ 39.5
1999................................................ 19.8
2000................................................ 125.9
2001................................................ 256.2
2002................................................ 195.8
2003................................................ 661.4
</TABLE>
- ----------
(a) Subsequent to May 2, 1998.
Liquidity:
The consolidated financial statements of the Company indicate that, at May
2, 1998, current liabilities exceeded current assets by $53.2 million and
stockholder's deficiency was $1.3 billion. Management believes that cash flows
generated from operations, supplemented by the unused borrowing capacity under
the Working Capital Facility and the availability of capital lease financing
will be sufficient to pay the Company's debts as they come due, provide for its
capital expenditure program and meets its other cash requirements.
The Company believes that it will be able to make the scheduled payments or
refinance its obligations with respect to its indebtedness through a combination
of operating funds and borrowing facilities. Future refinancing will be
necessary if the Company's cash flow from operations is not sufficient to meet
its debt service requirements related to the maturity of the Term Loan and
Working Capital Facility in Fiscal 2001, and the maturity of the Subordinated
Notes and Subordinated Debentures in Fiscal 2002. The Company expects that it
will be necessary to refinance all or a portion of the Senior Subordinated Notes
and the Deferred Coupon Notes due in Fiscal 2003. The Company may undertake a
refinancing of some or all of such indebtedness sometime prior to its maturity.
The Company was in compliance with its various debt covenants at May 2, 1998
and, based on management's operating projections for Fiscal 1998, the Company
believes that it will continue to be in compliance with its various debt
covenants. The Company's ability to make scheduled payments or to refinance or
otherwise meet its obligations with respect to its indebtedness depends on its
financial and operating performance, which in turn, is subject to prevailing
economic conditions and to financial, business and other factors beyond its
control. Although the Company's cash flow from its operations and borrowings has
been sufficient to meet its debt service obligations, there can be no assurance
that the Company's operating results will continue to be sufficient or that
future borrowing facilities will be available for payment or refinancing of the
Company's indebtedness.
9
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
While it is the Company's intention to enter into other refinancings that it
considers advantageous, there can be no assurances that the prevailing market
conditions will be favorable to the Company. In the event the Company obtains
any future refinancing on less than favorable terms, the holders of outstanding
indebtedness could experience increased credit risk and could experience a
decrease in the market value of their investment, because the Company might be
forced to operate under terms that would restrict its operations and might find
its cash flow reduced.
Preferred Stock Dividends:
The terms of the Exchangeable Preferred Stock provide for cumulative
quarterly dividends at an annual rate of $3.52 per share when, and if declared
by the Board of Directors of the Company. Dividends for the first 20 quarterly
dividend periods (through October 15, 1992) were paid at the Company's option in
additional shares of Exchangeable Preferred Stock. Since January 15, 1993, all
dividends not paid in cash will cumulate at the rate of $3.52 per share per
annum, without interest, until declared and paid. As such, at May 2, 1998, the
unpaid dividends of $94.7 million were accrued and included in other noncurrent
liabilities.
Capital Expenditures:
Capital expenditures for the first quarter of Fiscal 1998, including
property acquired under capital leases, were $19.5 million compared to $11.8
million for the prior year. During the first quarter of Fiscal 1998, the Company
completed six renovations to existing supermarkets. During the remainder of
Fiscal 1998, the Company plans to open two new Pathmark stores, close one store
and to complete up to an aggregate of 13 major renovations and enlargements.
Capital expenditures for Fiscal 1998, including property to be acquired under
capital leases, are estimated to be $70.0 million. Management believes that cash
flows generated from operations, supplemented by the unused borrowing capacity
under the Working Capital Facility and the availability of capital lease
financing will be sufficient to provide for the Company's capital expenditure
program.
Cash Flows:
Cash used for operating activities was $64.2 million in the first quarter of
Fiscal 1998 compared to cash provided by operating activities of $5.2 million in
the prior year. The change in cash flow from operating activities was primarily
due to cash used for operating assets and liabilities in the first quarter of
Fiscal 1998, resulting from the paydown of trade accounts payable, utilizing the
proceeds received at the end of Fiscal 1997 related to the C&S transaction, and
an increase in due from suppliers related to the C&S transition. Cash used for
investing activities was $0.2 million in the first quarter of Fiscal 1998
compared to $3.8 million in the prior year. The decrease in cash used for
investing activities was primarily due to proceeds from property dispositions,
partially offset by an increase in expenditures of property and equipment. Cash
provided by financing activities was $11.7 million in the first quarter of
Fiscal 1998 compared to $2.7 million in the prior year. The increase in cash
provided by financing activities was primarily due to an increase in borrowings
under the working capital facilities and a decrease in repayments of the term
loans, partially offset by a decrease in book overdrafts related to the C&S
transition.
10
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: none
(b) Reports on Form 8-K:
The registrant filed one Form 8-K during the quarter for which this report
is filed.
Date of Report Item
-------------- ----
February 13, 1998 Sale of Pathmark's distribution assets
SIGNATURE
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.
SUPERMARKETS GENERAL HOLDINGS CORPORATION
By /s/ Joseph Adelhardt
---------------------------------------
(Joseph Adelhardt)
Senior Vice President and Controller,
Chief Accounting Officer
Date: June 16, 1998
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SUPERMARKETS
GENERAL HOLDINGS CORPORATION'S CONSOLIDATED STATEMENT OF OPERATIONS FOR THE 13
WEEKS ENDED MAY 2, 1998 AND CONSOLIDATED BALANCE SHEET AS OF MAY 2, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-30-1999
<PERIOD-END> MAY-02-1998
<CASH> 10,236
<SECURITIES> 0
<RECEIVABLES> 14,307
<ALLOWANCES> (1,251)
<INVENTORY> 156,436
<CURRENT-ASSETS> 266,777
<PP&E> 912,045
<DEPRECIATION> (389,882)
<TOTAL-ASSETS> 887,221
<CURRENT-LIABILITIES> 319,948
<BONDS> 1,259,061
107,647
0
<COMMON> 10
<OTHER-SE> (1,347,223)
<TOTAL-LIABILITY-AND-EQUITY> 887,221
<SALES> 916,015
<TOTAL-REVENUES> 916,015
<CGS> 651,984
<TOTAL-COSTS> 651,984
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 15
<INTEREST-EXPENSE> (41,569)
<INCOME-PRETAX> (8,297)
<INCOME-TAX> (30)
<INCOME-CONTINUING> (8,327)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,327)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
