UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
FORM 10-Q
____
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
X
____ OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 19, 1994
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 2-14466
_____
SUPER FOOD SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-2407235
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3233 Newmark Drive, Dayton, Ohio 45342
(Address of principal executive offices, including zip code)
(513) 439-7500
(Registrant's telephone number, including area code)
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 registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
At December 17, 1994, there were 10,948,814 Common Shares, $1.00
par value per share, of the issuer's Common Shares outstanding.
2
SUPER FOOD SERVICES, INC. AND SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
November 19, 1994
Table of Contents
Page
PART I. FINANCIAL INFORMATION:
Item 1.
Financial Statements:
Consolidated Summary Balance Sheets --
November 19, 1994, November 20, 1993
and August 27, 1994 3
Consolidated Summary Statements of Income --
Twelve Weeks Ended November 19, 1994
and November 20, 1993 5
Consolidated Summary Statements of Cash Flows --
Twelve Weeks Ended November 19, 1994 and
November 20, 1993 6
Notes to Consolidated Financial Statements 7
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Part II. OTHER INFORMATION
Item 4.
Submission of Matters to a Vote of Security Holders 12
Item 6.
Exhibits and Reports on Form 8-K 12
<PAGE>
<TABLE>
3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Super Food Services, Inc. and Subsidiaries
Consolidated Summary Balance Sheets
November 19, 1994, November 20, 1993 and August 27, 1994
<CAPTION>
Nov. 19, 1994 Nov. 20, 1993 Aug. 27, 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash $ 5,527,678 $ 3,572,353 $ 15,834,478
--------------- --------------- ---------------
Receivables:
Retailer-trade 74,055,292 73,731,282 60,679,596
-notes (current portion) 4,543,046 4,733,487 4,543,046
Suppliers and miscellaneous 9,758,819 8,102,111 8,210,002
--------------- --------------- ---------------
88,357,157 86,566,880 73,432,644
Less-Allowance for doubtful accounts (8,392,508) (7,860,298) (7,733,255)
--------------- --------------- ---------------
Net Receivables 79,964,649 78,706,582 65,699,389
--------------- --------------- ---------------
Merchandise inventory 81,331,047 82,692,289 63,342,978
--------------- --------------- ---------------
Future tax benefits 6,767,576 1,709,327 6,767,576
--------------- --------------- ---------------
Prepaid expenses 7,723,142 6,847,639 8,835,158
--------------- --------------- ---------------
Total Current Assets 181,314,092 173,528,190 160,479,579
Notes Receivable-Retailers (net long-term portion 17,155,495 17,726,667 16,179,149
Land, Buildings and Equipment, net 62,039,580 53,208,790 62,423,968
Future Tax Benefits (925,268) 5,709,981 (925,268)
Other Assets 20,135,082 20,351,268 20,261,871
--------------- --------------- ---------------
Total Assets $ 279,718,981 $ 270,524,896 $ 258,419,299
=============== =============== ===============
<FN>
The accompanying Notes are an integral part of these consolidated statements.
These interim statements are unaudited.
<PAGE>
4
LIABILITIES AND SHAREHOLDERS' EQUITY
<CAPTION>
Nov. 19, 1994 Nov. 20, 1993 Aug. 27, 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Current Liabilities:
Accounts payable $ 39,894,720 $ 42,486,041 $ 38,301,945
Notes payable to banks 29,000,000 14,000,000 9,000,000
Current maturities of long-term notes
and mortgages payable 2,657,000 2,657,000 2,657,000
Current maturities of obligations under
capitalized leases 797,024 1,013,407 904,118
Current portion of Florida closing liabilities 1,176,485 2,100,000 1,250,000
Accrued payroll and vacation 2,920,981 2,963,114 2,857,076
Taxes other than income 2,295,293 1,836,240 2,423,390
Other current liabilities 10,550,020 10,545,553 9,654,232
--------------- --------------- ---------------
Total Current Liabilities 89,291,523 77,601,355 67,047,761
Long-term Notes and Mortgages Payable 29,547,720 32,986,569 31,601,617
Obligations Under Capitalized Leases 24,263,733 25,245,703 24,392,499
Long-term Florida Closing Liabilities 2,301,139 5,324,006 2,404,000
--------------- --------------- ---------------
Total Liabilities 145,404,115 141,157,633 125,445,877
--------------- --------------- ---------------
Shareholders' Equity:
Common Shares, par value $1.00,
35,000,000 shares authorized 10,948,814 10,948,814 10,948,814
Paid-in capital 29,407,949 29,407,949 29,407,949
Retained earnings 93,958,103 89,010,500 92,616,659
--------------- --------------- ---------------
Total Shareholders' Equity 134,314,866 129,367,263 132,973,422
--------------- --------------- ---------------
Total Liabilities and Shareholders' Equity $ 279,718,981 $ 270,524,896 $ 258,419,299
=============== =============== ===============
<FN>
The accompanying Notes are an integral part of these consolidated statements.
These interim statements are unaudited.
<PAGE>
5
SUPER FOOD SERVICES, INC. AND SUBSIDIARIES
Consolidated Summary Statements of Income
For the Twelve Weeks Ended November 19, 1994 and November 20, 1993
<CAPTION>
1995 1994
--------------- ---------------
<S> <C> <C>
Sales and Other Income $ 271,240,622 $ 271,132,025
--------------- ---------------
Cost and Expenses:
Cost of Sales 258,467,358 259,034,418
Selling, General and Administrative Expenses 8,047,714 7,708,440
Interest expense 1,650,107 1,520,270
Interest income (840,586) (835,967)
--------------- ---------------
Total Costs and Expenses 267,324,593 267,427,161
--------------- ---------------
Income Before Income Taxes 3,916,029 3,704,864
Provision for Income Taxes 1,534,585 1,443,602
--------------- ---------------
Net Income Applicable to Common Shares $ 2,381,444 $ 2,261,262
=============== ===============
Weighted Average Number of Common
Shares outstanding 10,948,814 10,927,563
=============== ===============
Earnings Per Common Share $ 0.22 $ 0.21
=============== ===============
Dividends Declared Per Common Share $ .095 $ .09
=============== ===============
<FN>
The accompanying Notes are an integral part of these consolidated statements.
These interim statements are unaudited.
<PAGE>
6
SUPER FOOD SERVICES, INC. AND SUBSIDIARIES
Consolidated Summary Statements of Cash Flows
For the Twelve Weeks Ended November 19, 1994 and November 20, 1993
<CAPTION>
1995 1994
--------------- ---------------
<S> <C> <C>
CASH PROVIDED BY (USED FOR) OPERATIONS:
Net Income $ 2,381,444 $ 2,261,262
Items not affecting cash--
Depreciation and amortization 1,705,700 1,704,074
Current items (excluding cash and notes
payable)--
Receivables (14,265,260) (14,270,849)
Merchandise Inventory (17,988,069) (17,530,295)
Prepaid expenses and other 1,112,016 (10,333)
Accounts payable 1,592,775 7,743,516
Other current liabilities 855,596 1,362,402
Florida Closing Liabilities (176,376) (477,396)
--------------- ---------------
NET CASH USED FOR OPERATIONS (24,782,174) (19,217,619)
--------------- ---------------
CASH PROVIDED BY (USED FOR) INVESTING:
Additions of property, equipment and
direct financing leases (1,218,523) (3,267,743)
Increase in long-term notes receivable (2,213,973) (947,487)
Payments on long-term notes receivable 1,237,628 1,190,164
--------------- ---------------
NET CASH USED FOR INVESTING (2,194,868) (3,025,066)
--------------- ---------------
CASH PROVIDED BY (USED FOR) FINANCING:
Notes payable to banks 20,000,000 14,000,000
Payments on term debt and capital leases (2,289,757) (2,052,166)
Proceeds from Stock Purchase Plan/
Stock Option Plan 0 446,281
Cash dividends (1,040,001) (981,568)
--------------- ---------------
NET CASH PROVIDED BY FINANCING 16,670,242 11,412,547
--------------- ---------------
INCREASE (DECREASE) IN CASH (10,306,800) (10,830,138)
CASH, BEGINNING OF YEAR 15,834,478 14,402,491
--------------- ---------------
CASH, END OF PERIOD $ 5,527,678 $ 3,572,353
=============== ===============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for:
Interest (excludes interest capitalized and imputed
interest on leases) $ 1,149,170 $ 1,024,866
=============== ===============
Income taxes $ 75,000 $ 0
=============== ===============
</TABLE>
[FN]
The accompanying Notes are an integral part of these consolidated statements.
These interim statements are unaudited.
<PAGE>
7
Super Food Services, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
1. Financial Statements -
The condensed financial statements included herein have
been prepared by the Company, without audit, pursuant to
the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures
normally included in financial statements prepared in
accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the
disclosures are adequate to make the information
presented not misleading. It is suggested that these
condensed financial statements be read in conjunction
with the financial statements and the notes thereto
included in the Company's latest annual report on Form
10-K.
2. Accounting Policies -
The interim financial information presented in this
report has been prepared in accordance with the account-
ing policies described in the Notes to the Company's
financial statements filed on the most recent Form 10-K.
While management believes that the procedures followed in
the preparation of interim information are reasonable,
the accuracy of some estimated amounts is dependent upon
facts that will exist or calculations that will be accom-
plished later in the fiscal year. Examples of such
estimates (none individually significant) include unpaid
expenses not invoiced and pension costs. In addition, an
amount is expensed ratably for possible inventory shrink-
age (based on prior experience and is adjusted to actual
twice during the fiscal year) and to adjust the LIFO
reserve (based upon the Company's best estimate of infla-
tion to date).
The information included in this Form 10-Q reflects all
adjustments which are of a normal recurring nature and,
in the opinion of management, necessary for a fair state-
ment of the results of operations for the period
presented.
3. Reclassifications -
Certain reclassifications have been made to prior years'
amounts to make them comparable with the classifications
of such amounts for fiscal year 1994.
8
4. Florida Division Closing -
In the third quarter of Fiscal 1992, the Company recorded
a special pretax charge of $22,986,000 in connection with
the closing of the Company's Florida Division and the
disposition of its assets. The closing was required as
a result of the loss by the Florida Division of its
single largest customer, Albertson's, Inc.,
("Albertsons") which accounted for approximately 85% of
the sales of the Florida Division. This charge included
provisions primarily for losses incurred on the disposi-
tion of the inventory and fixed assets, the estimated
portion of the remaining lease obligations and the
related operating costs necessary to maintain the Florida
warehouse facilities until tenants can be found, litiga-
tion costs in connection with the Company's lawsuit
against Albertsons, and other costs relating to the
closing. This provision was based on management's best
estimate and judgment under the prevailing circumstances
but management believes such provision will adequately
provide for the costs associated with disposition of the
Florida assets and operations.
The Company's lawsuit against Albertsons was filed on
March 30, 1992, in the Ninth Judicial Circuit Court of
Orange County, Florida. Initially, the Company sought to
enjoin Albertsons temporarily from proceeding with its
plans to self-distribute in Florida and to obtain spec-
ific performance of Albertsons agreement to purchase the
assets of the Florida Division in settlement of the
Company's claims against Albertsons. The Court declined
to issue an injunction, holding that the Company had an
adequate remedy at law for damages if it proved that
Albertsons had violated its obligations to the Company,
and this decision was affirmed on appeal. The Company
filed an amended complaint seeking monetary damages for
Albertsons breach of the requirements contract between
the parties or, in the alternative, damages for
Albertsons failure to honor the settlement agreement
between the parties relating to the purchase by
Albertsons of the assets of the Company's Florida
Division. On March 29, 1994, the Company and Albertsons
entered into a joint stipulation to the entry of a final
judgment on the Company's claim for breach of the
requirements contract after the Court had ruled that if
a requirements contract existed between the parties, it
was terminable by either party upon reasonable notice and
that the issue to be tried would be limited as to whether
Albertsons notice of termination was reasonable, which
the Company did not allege as an issue on the lawsuit.
On March 31, 1994, the Court granted Albertsons' motion
for summary judgment on the Company's claims that
Albertsons failed to honor the settlement agreement
between the parties. The Company filed an appeal of the
Court's rulings and the case is presently pending in the
District Court of Appeal of the Florida Fifth District.
Oral arguments on the appeal were heard on December 13,
1994 and the Company is now awaiting the Court of Appeals
decision.
9
5. Subsequent Event -
On December 10, 1994, the Company prepaid the entire
$5,571,000 principal balance of the 9.65% Senior Note to
Teachers Insurance Annuity Association of America, plus
accrued interest and a prepayment premium.
<PAGE> 10
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto. All dollar
information is in thousands, except per share amounts:
First Quarter Comparisons
1995 1994 % Change
Sales and Other Income $271,241 $271,132 .04%
This slight increase in sales resulted primarily from a sluggish
economy and competitive pressures.
1995 1994 % Change
Cost of Sales $258,467 $259,034 (.22%)
Cost of sales includes cost of the products distributed as well as
warehouse, delivery and building expenses. The Company experienced
higher warehouse expenses ($137) and lower delivery expenses ($46).
Building costs increased ($60) because of higher storage costs and
increases in certain real estate taxes. In addition, the Company
experienced slightly higher margins as a result of a favorable
shift in product mix.
1995 1994 % Change
Selling, general and
administrative expenses $ 8,048 $ 7,708 4.41%
Expenses increased by $340 due primarily to higher provision for
doubtful accounts ($95), and an increase in compensation and
employee benefits ($180).
1995 1994 % Change
Interest expense $ 810 $ 684 18.42%
Interest expense increased due to higher interest rates as well as
higher borrowing levels of short-term debt.
1995 1994
Effective tax rate 39.2% 38.9%
The Company's effective tax rate shows a slight increase due to
state refunds received in the first quarter of fiscal 1994.
11
1995 1994
Net Income $ 2,381 $ 2,261
Earnings per common share $ .22 $ .21
As reported, the Company's earnings to sales ratio increased from
.83% in the first quarter of fiscal 1994 to .88% in the first
quarter of fiscal 1995.
As of and for the 12 Weeks
Liquidity and in the period ended As of
Capital Resources Nov. 19, 1994 Nov. 20, 1993 Aug. 27, 1994
Cash $ 5,528 $ 3,572 $ 15,834
Working Capital 92,023 95,927 93,432
Long-term debt 29,548 32,987 31,602
Cash provided by
(used for)
operations (24,782) (19,218)
Cash provided by
(used for)
investments (2,195) (3,025)
Cash provided by
(used for)
financing 16,670 11,413
The Company's financial condition remained strong as of
November 19, 1994. The current ratio was 2:03 to 1.
Since fiscal year-end 1994, net receivables increased by $14,265
and inventories increased by $17,988 due to the seasonality of the
business. The Company experienced minimal price decreases on
products distributed during the first quarter of fiscal 1995. To
support the higher levels of receivables and inventory, the Company
borrowed from its banks an additional $20,000 since year-end. In
addition, the Company's accounts payable level increased by $1,593
in conjunction with the additional inventory purchases.
Depreciation and amortization of property, equipment and capital
leases increased to $1,706 in fiscal 1995 compared to $1,704 in
fiscal 1994. Total capital expenditures for the twelve weeks ended
November 19, 1994 were $1,219 compared to $3,268 during the first
quarter of fiscal 1994. The decrease from the prior year resulted
primarily from the Bridgeport warehouse addition ($1,994) which was
completed by August 27, 1994.
The dividend on common shares was increased from $.09 to $.095
effective with the dividend paid on December 15, 1994.
12
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
At the annual meeting of shareholders of Registrant
held on December 13, 1994, election of the following
nominees for Class III Directors of Registrant to serve
until the election of Directors in 1997 or until their
successors are duly elected was submitted to a vote of the
shareholders of the Registrant. The number of votes for
or withheld as to this matter is shown in the table below:
For Withheld
Dr. Thomas S. Haggai 9,689,621 143,481
Dr. Edward H. Jennings 9,689,921 145,658
Jack Twyman 9,689,219 146,321
Based on these voting results, each of the Directors
nominated was elected.
Reference is made to Registrant's Definitive Proxy
Statement dated November 4, 1994, for further information
regarding the proposal voted upon at the annual meeting of
shareholders.
Item 6. Exhibits and reports on Form 8-K.
(a) Exhibits: 27 Financial Data Schedule
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed for the twelve
weeks ended November 19, 1994.
13
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.
Super Food Services, Inc.
(Registrant)
Date: December 29, 1995 By_______________________________
/s/ Jack Twyman
Jack Twyman
Chairman of the Board
(Chief Executive Officer)
Date: December 29, 1995 By_______________________________
/s/ Robert F. Koogler
Robert F. Koogler
Senior Vice President-Finance,
Treasurer and
Assistant Secretary
(Chief Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> AUG-26-1995
<PERIOD-END> NOV-19-1994
<CASH> 5,528
<SECURITIES> 0
<RECEIVABLES> 78,598
<ALLOWANCES> 8,393
<INVENTORY> 81,331
<CURRENT-ASSETS> 181,314
<PP&E> 122,385
<DEPRECIATION> 60,345
<TOTAL-ASSETS> 279,719
<CURRENT-LIABILITIES> 89,292
<BONDS> 53,811
<COMMON> 10,949
0
0
<OTHER-SE> 123,366
<TOTAL-LIABILITY-AND-EQUITY> 279,719
<SALES> 270,312
<TOTAL-REVENUES> 271,241
<CGS> 258,467
<TOTAL-COSTS> 258,467
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 660
<INTEREST-EXPENSE> 1,650
<INCOME-PRETAX> 3,916
<INCOME-TAX> 1,535
<INCOME-CONTINUING> 2,381
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,381
<EPS-PRIMARY> .22
<EPS-DILUTED> .22
</TABLE>
