UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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 May 7, 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 May 7, 1994, there were 10,948,814 Common Shares, $1.00 par
value per share, of the issuer's Common Shares outstanding.
<PAGE>
SUPER FOOD SERVICES, INC. AND SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
May 7, 1994
Page
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements:
Consolidated Summary Balance Sheets -- May 7,
1994, May 8, 1993 and August 28, 1993 3
Consolidated Summary Statements of Income --
Twelve Weeks Ended May 7, 1994 and May 8, 1993 5
Consolidated Summary Statements of Income --
Thirty-Six Weeks Ended May 7, 1994 and May 8,
1993 6
Consolidated Summary Statements of Cash Flows --
Thirty-Six Weeks Ended May 7, 1994 and May 8,
1993 7
Notes to Consolidated Financial Statements 8
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Part II. OTHER INFORMATION
Item 6.
Exhibits and Reports on Form 8-K 15
<PAGE>
<TABLE>
3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Super Food Services, Inc. and Subidiaries
Consolidated Summary Balance Sheets
May 7, 1994, May 8, 1993 and August 28, 1993
<CAPTION>
May 7, 1994 May 8, 1993 Aug. 28, 1993
---------------- ---------------- ----------------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash $ 7,423,566 $ 5,560,922 $ 14,402,491
---------------- ---------------- ----------------
Receivables:
Retailer-trade 70,276,397 71,466,623 58,712,287
-notes (current portion) 4,733,487 4,673,487 4,733,487
Suppliers and miscellaneous 9,101,492 8,168,719 8,302,537
---------------- ---------------- ----------------
84,111,376 84,308,829 71,748,311
Less-Allowance for doubtful accounts (8,934,003) (7,437,822) (7,312,578)
---------------- ---------------- ----------------
Net Receivables 75,177,373 76,871,007 64,435,733
---------------- ---------------- ----------------
Merchandise inventory 76,575,495 78,680,573 65,161,994
---------------- ---------------- ----------------
Future tax benefits 1,709,327 3,834,000 1,709,327
---------------- ---------------- ----------------
Prepaid expenses 6,185,717 7,533,400 6,837,306
---------------- ---------------- ----------------
Total Current Assets 167,071,478 172,479,902 152,546,851
Notes Receivable-Retailers (net long-term portion 18,391,512 16,031,396 17,969,344
Land, Buildings and Equipment, net 59,429,367 50,089,508 51,558,037
Future Tax Benefits 5,709,981 7,057,575 5,709,981
Other Assets 20,146,751 9,656,533 20,453,526
---------------- ---------------- ----------------
Total Assets $ 270,749,089 $ 255,314,914 $ 248,237,739
================ ================ ================
<FN>
The accompanying Notes are an integral part of these consolidated statements.
These interim statements are unaudited.
<PAGE>
4
LIABILITIES AND SHAREHOLDERS' EQUITY
<CAPTION>
May 7, 1994 May 8, 1993 Aug. 28, 1993
---------------- ----------------- ------------------
<S> <C> <C> <C>
Current Liabilities:
Accounts payable $ 36,804,329 $ 35,708,081 $ 34,742,525
Notes payable to banks 22,000,000 15,000,000 ---
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 1,013,407 843,446 1,013,407
Current portion of Florida closing liabilities 2,100,000 10,223,000 2,100,000
Other current liabilities 14,460,984 9,599,712 14,475,075
---------------- ---------------- ----------------
Total Current Liabilities 79,035,720 74,031,239 54,988,007
Long-term Notes and Mortgages Payable 32,544,337 35,348,312 34,866,212
Obligations Under Capitalized Leases 24,636,945 15,539,495 25,418,226
Long-term Florida Closing Liabilities 3,331,218 5,560,054 5,324,006
---------------- ---------------- ----------------
Total Liabilities 139,548,220 130,479,100 120,596,451
---------------- ---------------- ----------------
Shareholders' Equity:
Common Shares, par value $1.00,
35,000,000 shares authorized 10,948,814 10,891,293 10,906,311
Paid-in capital 29,407,949 28,903,400 29,004,171
Retained earnings 90,844,106 85,041,121 87,730,806
---------------- ---------------- ----------------
Total Shareholders' Equity 131,200,869 124,835,814 127,641,288
---------------- ---------------- ----------------
Total Liabilities and Shareholders' Equity $ 270,749,089 $ 255,314,914 $ 248,237,739
================ ================ ================
<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 May 7, 1994 and May 8, 1993
<CAPTION>
1994 1993
---------------- ----------------
<S> <C> <C>
Sales and Other Income $ 253,233,977 $ 265,130,462
---------------- ----------------
Cost of Sales 241,477,283 253,681,298
Selling, General and Administrative Expenses 8,099,019 7,832,592
Interest, net 624,937 865,160
---------------- ---------------
Total Costs and Expenses 250,201,239 262,379,050
---------------- ----------------
Income Before Income Taxes 3,032,738 2,751,412
Provision for Income Taxes 1,209,858 1,028,677
---------------- ----------------
Net Income Applicable to Common Shares $ 1,822,880 $ 1,722,735
================ ================
Weighted Average Number of Common
Shares outstanding 10,948,814 10,891,293
================ ================
Earnings Per Common Share $ 0.17 $ 0.16
================ ================
Dividends Declared Per Common Share $ .09 $ .085
================ ================
<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 Income
For the Thirty-Six Weeks Ended May 7, 1994 and May 8, 1993
<CAPTION>
1994 1993
---------------- ----------------
<S> <C> <C>
Sales and Other Income $ 781,790,768 $ 810,212,747
---------------- ----------------
Cost and Expenses:
Cost of Sales 746,210,873 775,661,818
Selling, General and Administrative Expenses 23,714,948 23,003,775
Interest, net 1,907,377 2,393,755
---------------- ----------------
Total Costs and Expenses 771,833,198 801,059,348
---------------- ----------------
Income Before Income Taxes 9,957,570 9,153,399
Provision for Income Taxes 3,888,349 3,552,907
---------------- ----------------
Net Income Applicable to Common Shares $ 6,069,221 $ 5,600,492
================ ================
Weighted Average Number of Common
Shares outstanding 10,940,313 10,891,293
================ ================
Earnings Per Common Share $ 0.55 $ 0.51
================ ================
Dividends Declared Per Common Share $ .27 $ .255
================ ===============
<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
Consolidated Summary Statements of Cash Flows
For the Thirty-Six Weeks Ended May 7, 1994 and May 8, 1993
<CAPTION>
1994 1993
---------------- ----------------
<S> <C> <C>
CASH PROVIDED BY (USED FOR) OPERATIONS:
Net Income $ 6,069,221 $ 5,600,492
Items not affecting cash--
Depreciation and amortization 5,116,835 4,971,649
Current items (excluding cash and notes
payable)--
Receivables (10,741,640) (7,213,141)
Merchandise Inventory (11,413,501) (12,762,325)
Prepaid expenses and other 651,589 961,061
Accounts payable 2,061,804 963,797
Other current liabilities 284,209 (2,698,937)
Income taxes payable (298,300) 782,631
Florida Closing Liabilities (1,992,788) (1,858,952)
---------------- ----------------
NET CASH USED FOR OPERATIONS (10,262,571) (11,253,725)
---------------- ----------------
CASH PROVIDED BY (USED FOR) INVESTING:
Additions of property, equipment and
direct financing leases (12,681,390) (1,748,882)
Proceeds from sale of equipment --- 1,488,000
Increase in long-term notes receivable (3,611,720) (5,717,828)
Payments on long-term notes receivable 3,189,552 3,637,183
---------------- ----------------
NET CASH USED FOR INVESTING (13,103,558) (2,341,527)
CASH PROVIDED BY (USED FOR) FINANCING:
Notes payable to banks 22,000,000 10,000,000
Payments on term debt and capital leases (3,103,156) (3,092,460)
Proceeds from Stock Purchase Plan/
Stock Option Plan 446,281 ----
Purchase of Preferred Shares (566,534)
Cash dividends (2,955,921) (2,777,036)
---------------- ----------------
NET CASH PROVIDED BY FINANCING 16,387,204 3,563,970
---------------- ----------------
INCREASE (DECREASE) IN CASH (6,978,925) (10,031,282)
CASH, BEGINNING OF YEAR 14,402,491 15,592,204
---------------- ----------------
CASH, END OF PERIOD $ 7,423,566 $ 5,560,922
================ ================
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for:
Interest (excludes interest capitalized and imputed
interest on leases) $ 2,958,084 $ 3,373,151
================ ================
Income taxes $ 3,544,794 $ 1,800,000
================ ================
<FN>
The accompanying Notes are an integral part of these consolidated statements.
These interim statements are unaudited.
</TABLE>
8
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 informa-
tion 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 regu-
lations, 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
accounting 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 accomplished 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 shrinkage
(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
inflation 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 statement 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.
4. Early Retiree Health Care Benefits -
The Company provides early retiree health care
benefits to certain employees who retire from the
Company after January 1, 1989. These early retirees
generally must have attained age 55 with 15 years of
continuous service to be eligible for health care
benefits. These benefits are subject to deductibles,
copayment provisions and other limitations. Gener-
ally, Company-provided health care benefits terminate
when covered individuals become eligible for Medicare
benefits or reach age 65, whichever comes first. The
Company reserves the right to change or terminate such
benefits at any time. In addition, certain union
employees of the Company will continue to be covered
by collectively bargained multi-employer plans. Costs
under these plans are recognized as expense when paid.
Prior to fiscal 1994, all early retiree health care
benefit costs were recognized as expense when paid and
amounted to $46,000 and $139,000 in the twelve weeks
and thirty-six weeks ended May 8, 1993, respectively.
The Company adopted the new method of accounting for
post-employment benefits (Financial Accounting
Standards No. 106) effective August 29, 1993. This
new standard requires that the expected cost of these
benefits be charged to expense during the years that
the employees render service. This is a significant
change from the Company's current policy of recogniz-
ing these costs on the cash basis. The Company has
chosen to amortize the transition obligation over 20
years, which is longer than the average remaining
service life of the participants. Company management
has obtained its SFAS No. 106 liability from an
actuary based on the current provisions of such plans.
These plans are unfunded. The Company's Transition
Obligation at August 29, 1993 was $2.5 million (pre-
tax) and was based upon the following key assumptions:
Weighted average discount rate: 7.5
Retirement rates: Varies from 2% to 5%
per year between
Ages 55 through 61.
Increases up to 10%
to 25% per year
between Ages 62
through 64.
Health care costs trend rates: 12% for Fiscal 1994
and decreasing rat-
ably to 4.5% by
Fiscal 2001.
A one percentage point change in the assumed health
care costs trend rate would change the Transition
Obligation by approximately $300,000.
The Company's annual expense to be recognized in
accordance with SFAS No. 106 is approximately $400,000
for fiscal 1994. Expense related to SFAS No. 106
amounted to approximately $136,000 and $364,000 for
the twelve weeks and thirty-six weeks ended May 7,
1994, respectively. The new accounting method will
have no effect on the Company's cash outlays for
retiree benefits.
5. Income Taxes -
During the first quarter of fiscal 1994, the Company
adopted Statement of Financial Accounting Standards
No.109 (SFAS No. 109), "Accounting for Income Taxes".
This statement requires deferred tax recognition for
all temporary differences in accordance with the
liability method and requires adjustment of deferred
tax assets and liabilities for enacted changes in tax
laws and rates. Prior to the implementation of SFAS
No. 109, the Company accounted for income taxes using
Accounting Principles Board Opinion No. 11. As
permitted under the SFAS No. 109, prior years' finan-
cial statements have not been restated to reflect the
change in accounting method. The cumulative effect of
adopting SFAS No. 109 as of August 29, 1993 was not
material. Additionally, the impact of the new stan-
dard on the provision for income taxes for the twelve
weeks and thirty-six weeks ended May 7, 1994 was
immaterial.
Following are the temporary differences which gave
rise to the significant deferred tax assets and
liabilities as of August 29, 1993:
Florida closing liabilities $ 3,344
Accumulated depreciation (3,195)
Leasing activities 2,580
Insurance accruals 911
Employee benefits accruals 989
Bad debts 1,526
Inventory activities 1,046
Other 218
Valuation allowance -
--------
Total $ 7,419
========
Current Future Tax Benefits $ 1,709
========
Long-Term Future Tax Benefits $ 5,710
========
The Company does not require a valuation allowance as
described under SFAS No. 109. In addition, the
Company has no operating loss or tax credit carryfor-
wards. Company management has not increased its
future tax benefit balances for the recent 1% increase
in federal tax rates given its projected taxable
income levels.
6. 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 disposition 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,
litigation costs in connection with the Company's
lawsuit against Albertsons, and other costs relating
to the closing. This provision was based on manage-
ment'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
specific performance of Albertsons agreement to
purchase the assets of the Florida Division in settle-
ment 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 obliga-
tions 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 stipula-
tion to the entry of a final judgment on the Company's
claim for the breach of the requirements contract
after the Court 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 to whether Albertsons
notice of termination was reasonable, which the
Company did not allege as an issue in the lawsuit. On
March 31, 1994, the Court granted Albertsons motion
for a summary judgment on the Company's claim that
Albertsons failed to honor the settlement agreement
between the parties. The Company is appealing the
Court's rulings.
<PAGE>
12
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:
THIRD QUARTER COMPARISONS
- - - -------------------------
1994 1993 % Change
Sales and Other Income $253,234 $265,130 (4.5%)
This decrease in sales resulted primarily from a sluggish
economy and competitive pressures.
1994 1993 % Change
Cost of Sales $241,477 $253,681 (4.8%)
Cost of sales includes cost of the products distributed as well
as warehouse, delivery and building expenses. The Company
experienced lower cost of sales due to lower sales volumes and
slightly higher margins as a result of a favorable shift in
product mix. In addition, the Company incurred higher warehouse
expenses ($231) and higher delivery expenses ($152) due
primarily to higher payroll costs. Building costs increased
($195) because of higher payroll costs, storage costs and
increases in certain real estate taxes.
1994 1993 % Change
Selling, general and
administrative expenses $ 8,099 $ 7,833 3.4%
Expenses increased by $266 due primarily to a higher provision
for doubtful accounts ($113) and an increase in the provision
for early retiree health care benefits due to compliance with
SFAS No. 106 ($90).
1994 1993 % Change
Interest expense $ 625 $ 865 (27.8%)
Interest expense decreased due to lower interest rates on short-
term borrowings, as well as lower average borrowing levels of
long-term debt, and capitalization of interest costs ($88)
related to the Bridgeport warehouse expansion.
1994 1993
Effective tax rate 39.9% 37.4%
The Company's effective tax rate increased because of shifts in
taxable income to states with higher income tax rates.
1994 1993
Net Income $ 1,823 $ 1,723
Earnings per common share $ .17 $ .16
As reported, the Company's earnings to sales ratio increased
from .65% in the third quarter of fiscal 1993 to .72% in the
third quarter of fiscal 1994.
THIRTY-SIX WEEKS
- - - ----------------
1994 1993 % Change
Sales and Other Income $781,791 $810,213 (3.5%)
The decrease in sales resulted primarily from a sluggish
economy, competitive pressures and food price deflation.
1994 1993 % Change
Cost of Sales $746,211 $775,662 (3.8%)
Cost of sales includes cost of the products distributed as well
as warehouse, delivery and building expenses. The Company
experienced lower cost of sales due to lower sales volume and
slightly higher margins as a result of a favorable shift in
product mix. The Company experienced higher warehouse expenses
($250) and higher delivery expenses ($213) due primarily to
higher payroll costs. Building costs increased ($549) because
of higher payroll costs, storage costs, real estate taxes and
repairs.
1994 1993 % Change
Selling, general and
administrative expenses $ 23,715 $ 23,004 3.1%
Expenses increased by $711 due primarily to higher provision for
doubtful accounts ($300) and an increase in the provision for
early retiree health care benefits due to compliance with SFAS
No. 106 ($225).
1994 1993 % Change
Interest expense $ 1,907 $ 2,394 (20.3%)
Interest expense decreased due to lower interest rates on short-
term borrowings, as well as lower average borrowing levels of
long-term debt, and the capitalization of interest costs ($169)
related to the warehouse expansion in Bridgeport.
1994 1993
Effective tax rate 39.0% 38.8%
The Company's effective tax rate increased because of shifts in
taxable income to states with higher income tax rates.
1994 1993
Net Income $ 6,069 $ 5,600
Earnings per common share $ .55 $ .51
The Company's earnings to sales ratio increased to .78% from
.69% for the thirty-six weeks of fiscal 1994 compared to the
thirty-six weeks of fiscal 1993.
As of and for the
36 Weeks
LIQUIDITY AND in the period ended As of
CAPITAL RESOURCES May 7, 1994 May 8, 1993 Aug. 28, 1993
Cash $ 7,424 $ 5,561 $14,402
Working Capital 88,036 98,449 97,559
Long-term debt 32,544 35,348 34,866
Cash provided by
(used for)
operations (10,263) (11,254)
Cash provided by
(used for)
investing (13,104) (2,342)
Cash provided by
(used for)
financing 16,387 3,564
The Company's financial condition remained strong as of May 7,
1994. The current ratio was 2.11 to 1.
Since fiscal year-end 1993, trade receivables increased by
$10,742 and inventories increased by $11,414 due to the season-
ality of the business. The Company experienced minimal price
changes on products distributed during the first thirty-six
weeks of fiscal 1994. To support the higher levels of receiv-
ables and inventory, the Company borrowed from its banks an
additional $22,000 since year-end. In addition, the Company's
accounts payable level increased by $2,062 in conjunction with
the additional inventory purchases.
Depreciation and amortization of property, equipment and capital
leases increased to $5,117 in fiscal 1994 compared to $4,972 in
fiscal 1993. Total capital expenditures for the thirty-six
weeks ended May 7, 1994 were $12,681 compared to $1,749 in
fiscal 1993. The increase from the prior year resulted primar-
ily from the Bridgeport warehouse addition ($8,333). The
remaining balance was spent on delivery and other miscellaneous
equipment.
The dividend on common shares was increased from $.085 to $.09
effective with the dividend paid on December 15, 1993.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 10.1 Amended and Restated Supplemental
Executive Retirement Plan (formerly known as the
Excess Benefit Plan)
(b) Reports on Form 8-K
Registrant filed a Form 8-K Current Report
dated March 31, 1994 (Item 5) reporting that
Registrant issued a Press Release reporting the
status of its lawsuit against Albertson's, Inc.
Registrant appended as an exhibit thereto a copy of
the Press Release entitled "Lawsuit Against
Albertson's, Inc."
<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.
Super Food Services, Inc.
(Registrant)
Date: June 20, 1994 By /s/ Jack Twyman
Jack Twyman
Chairman of the Board
(Chief Executive Officer)
Date: June 20, 1994 By /s/ Robert F. Koogler
Robert F. Koogler
Senior Vice President-
Finance, Treasurer
and Assistant
Secretary
(Chief Financial and
Accounting Officer)
EXHIBIT 10.1
SUPER FOOD SERVICES, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(As Amended and Restated Effective as of May 18, 1994)
A. Super Food Services, Inc., a Delaware corporation, (the
"Company") has adopted the Retirement Plan For Employees of Super
Food Services, Inc., a defined benefit plan qualified under Sec-
tion 401(a) of the Internal Revenue Code which provides retirement
benefits to employees in specified remuneration and years of
service classifications.
B. By resolution adopted March 8, 1988, the Board of
Directors of the Company adopted the Super Food Services, Inc.,
Excess Benefit Plan (the "Excess Benefit Plan") which is an
unfunded, non-qualified plan which restores to certain designated
participating employees and their beneficiaries any retirement
benefits lost under the Retirement Plan For Employees of Super Food
Services, Inc., by reason of the application of Section 415 of the
Internal Revenue Code.
C. By resolution adopted on August 30, 1989, the Board of
Directors amended the Excess Benefit Plan to provide that benefits
under the Excess Benefit Plan shall be payable to a participant in
the event of a participant's death prior to retirement in addition
to when a participant continues in the employ of the Company until
attaining his or her retirement.
D. The benefits payable to certain designated participants
in the Retirement Plan For Employees of Super Food Services, Inc.,
are also subject to reduction by reason of the application of
Section 401(a)(17) of the Internal Revenue Code effective for years
commencing on and after January 1, 1989.
E. The Board of Directors deemed it desirable to restore any
benefits lost under the Retirement Plan For Employees of Super Food
Services, Inc., because of the limitations imposed by Sec-
tion 401(a)(17) of the Internal Revenue Code and to accomplish this
purpose, the Board of Directors by resolutions adopted on May 18,
1994, further amended the Excess Benefit Plan to restore any
benefits lost under the Retirement Plan For Employees of Super Food
Services, Inc., by reason of the application of Section 401(a)(17)
of the Internal Revenue Code.
F. By resolutions adopted May 18, 1994, the Board of
Directors also changed the name of the Excess Benefit Plan to the
Supplemental Executive Retirement Plan and adopted certain other
amendments to the Supplemental Executive Retirement Plan and
authorized that the Supplemental Executive Retirement Plan as
originally adopted and as subsequently amended be recorded and
restated in a plan document to read as follows:
G. Contemporaneously herewith, the Company has established
a grantor trust known as the Supplemental Executive Retirement
Trust (the "Trust") to hold assets of the Company as a reserve for
the complete discharge of its financial obligations under the
Supplemental Executive Retirement Plan.
H. A copy of the agreement establishing the Trust is
attached hereto and incorporated by this reference as part of the
Supplemental Executive Retirement Plan.
1. Definitions. Where the following words and phrases
appear in this Supplemental Executive Retirement Plan, they shall
have the respective meanings set forth below, unless the context
clearly indicate to the contrary:
(a) Beneficiary. The Participant's surviving
spouse or such other person or persons either designated by the
Participant or the Pension Plan to receive any death benefits
payable under the Pension Plan, in accordance with its procedures.
(b) Board. The persons from time to time elected
or appointed and acting as the Board of Directors of the Company.
(c) Change of Control. The purchase or other
acquisition by any person, entity or group of persons, within the
meaning of Section 13(d) or 14(d) of the Securities Exchange Act of
1934 ("Act"), or any comparable successor provisions, of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Act) of 20% or more of either the outstanding Common Shares or the
combined voting power of Company's then outstanding voting
securities entitled to vote generally, or the approval by the
stockholders of Company of a reorganization, merger, or consoli-
dation, in each case, with respect to which persons who were
stockholders of Company immediately prior to such reorganization,
merger or consolidation do not, immediately thereafter, own more
than 50 percent of the combined voting power entitled to vote
generally in the election of directors of the reorganized, merged
or consolidated Company's then outstanding securities, or a
liquidation or dissolution of Company or of the sale of all or
substantially all of Company's assets.
(d) Code. The Internal Revenue Code of 1986, as
amended from time to time, as construed, interpreted and modified
by regulations or rulings promulgated thereunder.
(e) Company. Super Food Services, Inc., a Delaware
corporation, or its successor or successors.
(f) Effective Date. March 8, 1988
(g) Participant. Any employee of the Company or
its subsidiaries who has been designated as a participant in the
Supplemental Executive Retirement Plan at any time on or after the
effective date by the Board.
(h) Pension Plan. The Retirement Plan For Employ-
ees of Super Food Services, Inc., as from time to time amended.
(i) Retirement. Termination of employment for any
reason (including death) after a Participant has fulfilled all
requirements for a Normal, Late or Early Retirement Pension under
the terms of the Pension Plan. Retirement shall be considered as
commencing on the date as of which the first Normal, Late or Early
Retirement Pension payment is made to the Participant.
(j) Supplemental Plan. Super Food Services, Inc.,
Supplemental Executive Retirement Plan, the Supplemental Plan set
forth herein as amended from time to time. The Supplemental Plan
is intended to be an unfunded, non-qualified plan primarily for the
purpose of providing deferred compensation to a select group of
Participants who are management or highly compensated employees of
the Company.
2. Purpose of Supplemental Plan. It is the express
purpose of the Supplemental Plan to provide Participants and their
Beneficiaries with deferred compensation on an unfunded basis, in
addition to any benefits provided under the Pension Plan and
without regard to the limitations imposed upon qualified plans
under Section 415 and Section 401(a)(17) of the Code. The Supple-
mental Plan is intended to be completely separate from the Pension
Plan and shall not be funded or secured in any way or qualified for
tax treatment under the Code.
3. Benefits Payable. (a) The Company shall pay to
each Participant or to such Participant's Beneficiary a monthly
benefit, the amount of which shall be equal to the difference, if
any, between:
(i) The monthly benefit payable to such
Participant or to his or her Beneficiary in
accordance with optional form of benefit
selected by Participant or otherwise provided
under the Pension Plan; and
(ii) The monthly benefit that would have
been payable to such Participant or to his
or her Beneficiary under the Pension Plan,
were it not for the limitations imposed on
benefits under the Pension Plan in order to
meet the requirements of Section 415 and Sec-
tion 401(a)(17) of the Code. Such monthly
benefit shall be determined by applying the
same actuarial assumptions to a benefit
payable in the same optional form commencing
on the same payment starting date as the
Pension Plan benefit described in Subpara-
graph 3(a)(i) above.
(b) The first benefit payment under the Supplemen-
tal Plan shall be made as of the date of the Participant's
Retirement under the Pension Plan or as of the date of the Partici-
pant's death prior to Retirement while in the employment of the
Company, and the last benefit payment shall be made as of the date
on which the last payment of a Normal, Late or Early Retirement
Pension or other death benefit is made to the Participant or to
such Participant's Beneficiary under the Pension Plan. If a
Participant's employment should terminate prior to his or her Early
Retirement for any reason other than death, no benefits shall be
paid under the Supplemental Plan. The payments under the Supple-
mental Plan shall be determined actuarially and shall be payable in
the same manner, and at the same time and shall be subject to all
of the same options, conditions, privileges and restrictions as are
applicable to the benefits payable to a Participant or to such
Participant's Beneficiary under the Pension Plan.
4. Accelerated Payment. Upon a Change of Control, as
defined herein, the Company shall, as soon as possible, but in no
event longer than thirty (30) days following the Change of Control,
make an irrevocable contribution to the Supplemental Plan and fund
any trust established pursuant to the provisions of Section 7
hereof in an amount (if any) which will cause the total assets held
in the trust to equal the present value of benefits payable from
the Supplemental Plan to each Participant or his or her Benefic-
iary. For purposes of this Section 4 only, the benefit payable
from the Supplemental Plan shall be determined as if the Partici-
pant terminated employment on the date of Change of Control,
retired immediately and commenced receiving benefit payments from
the Pension Plan. The present value of the Supplemental Plan
benefits shall be determined using the following actuarial assump-
tions:
Interest: The interest rate published by the Pension
Benefit Guaranty Corporation for purposes of valuing a benefit
payable from a terminating single employer qualified defined
benefit plan in the form of an immediate annuity. Such interest
rate shall be determined on the first day of the month during which
a Change in Control occurs.
Mortality: UP 1984
5. Rights to Benefits. Benefits payable to any
Participant under the Supplemental Plan shall not be subject to
attachment, garnishment or other legal process by any creditor of
any such Participant or his or her Beneficiary, nor shall any such
Participant have any right to alienate, anticipate, commute,
pledge, encumber or assign any of the benefit payments he or she
may expect to receive, contingently or otherwise, under the
Supplemental Plan.
6. Participation. (a) The following named individuals
are hereby designated as initial Participants in the Supplemental
Plan by the Board: Jack Twyman, John Demos, Samuel L. Robinson,
Robert F. Koogler, Al Burshtan, Jim Donnelly and Dave Meadows.
(b) Individual Participants in the Supplemental
Plan (other than those individuals specified in paragraph (a) of
this Section 6, shall be selected by the Board from key management
employees and executives of the Company. The term "employee" shall
mean any person (including any officer) employed by the Company who
is a member of a select group of management employees or is a
highly compensated employee for purposes of Title 2 of the Employee
Retirement Income Security Act of 1974, and no employee shall be
excluded because he or she is also a director of the Company.
After selection by the Board, each employee who participates in the
Supplemental Plan shall be required, as a condition of participa-
tion, to execute a copy of a written agreement on a form to be
provided by the Board agreeing to be bound by all of the terms and
provisions hereof.
7. Trust. (a) The officers of the Company are autho-
rized for and on behalf of and in the name of the Company to
establish a trust with a bank or trust company as trustee and to
transfer to the trust so established assets which shall be held
therein, subject to the claims of the Company's creditors in the
event of the Company's bankruptcy or insolvency until paid to the
designated participants and their Beneficiaries as trust beneficia-
ries under the Supplemental Plan, in such manner and at such times
as specified in the Supplemental Plan and in accordance with the
terms of the trust.
(b) The Company may, in its discretion, make
contributions to such trust from time to time to fund either
projected or actual accrued benefits for the Participants under the
Supplemental Plan as trust beneficiaries.
8. Facility of Payment. Whenever, in the Board's
opinion, a Participant entitled to receive any payment of a benefit
or installment thereof hereunder is under a legal disability, or is
incapacitated in any way so as to be unable to manage his or her
financial affairs, the Board may make payments to such person, or
to his or her legal representative for his or her benefit, or the
Board may apply the payment for the benefit of such person in such
manner as the Board considers advisable. Any payment of a benefit
or installment thereof in accordance with the provisions of this
paragraph shall be a complete discharge of any liability for the
making of such payment under the provisions of the Supplemental
Plan.
9. Small Pensions. If a benefit payable hereunder is
less than Seventy Five Dollars ($75.00) per month, the Board may,
in its discretion, direct that in lieu of such benefit, the actuar-
ial equivalent thereof be paid to the Participant in a lump sum, or
in a series of uniform monthly, quarterly or annual amounts for
life or for a designated period of time.
10. Administration. The Supplemental Plan shall be
administered by the Board, or by such person or persons as the
Board shall from time to time appoint. The Board may make such
rules and decisions as it deems necessary or desirable for the
administration of the Supplemental Plan, and any rule or decision
of the Board which is not inconsistent with the provisions of the
Supplemental Plan shall be conclusive and binding upon all persons
affected by it and there shall be no appeal from any ruling by the
Board which is within its authority. The Board shall be reimbursed
by the Company for any costs incurred by it in administering the
Supplemental Plan.
11. Funding. All benefits payable hereunder, and all
costs of administering the Supplemental Plan, shall be paid solely
as required out of the general assets of the Company. The Company
may, at its discretion, acquire an insurance policy or policies
insuring the life of any Participant in the Supplemental Plan from
which it may satisfy its obligations to make benefit payments
pursuant to the Supplemental Plan.
12. Limitation of Liability. It is expressly understood
and agreed by each Participant in the Supplemental Plan that
neither the Board, nor any member thereof, nor any person appointed
by the Board to administer the Supplemental Plan, shall be subject
to any legal liability to any Participant hereunder for any cause,
reason or thing whatsoever in connection with this Supplemental
Plan, and each Participant hereby releases the Board, its members
and agents, from any and all liability or obligation hereunder.
13. Amendment and Termination. The Board may, in its
discretion, amend the Supplemental Plan from time to time, and may
by resolution terminate the Supplemental Plan at any time, in whole
or in part; provided that no amendment shall reduce any Partici-
pant's accrued benefit at the time of such amendment or change the
terms and conditions of the payment thereof.
14. Miscellaneous. (a) Nothing contained in the
Supplemental Plan shall be construed as a contract of employment
between the Company and any Participants, or as a right of any
Participant to be continued in the employment of the Company, or as
a limitation of the rights of the Company to discharge any
Participant, with or without cause, except such limitations or
restrictions that may be contained in any other agreement between
any Participant and the Company, including without limitation, any
employment agreement between any Participant and the Company.
(b) The Supplemental Plan shall be construed
according to the laws of the State of Ohio provided, that nothing
in this paragraph shall be construed as placing any restriction
upon the Company, acting pursuant to the Supplemental Plan, to take
any action, or to incur any liability which it is authorized to
take or incur under its certificate of incorporation or by-laws or
under the laws of the state in which it is incorporated.
(c) The Participants and their Beneficiaries shall
be entitled to receive attorneys' fees, costs and expenses incurred
in enforcing their rights under the Supplemental Plan (which fees,
costs and expenses shall be paid on a current basis if the enforce-
ment action is due to the Company's nonpayment or nonprovision of
benefits under the Supplemental Plan).
(d) The Supplemental Plan shall be binding upon and
inure to the benefit of the Participants, their respective
Beneficiaries, heirs, personal representatives, successors and
assigns and the Company and any successor corporation or other
entity which may acquire all or substantially all of the Company's
assets and business, whether by reason of merger, consolidation,
purchase or otherwise.
(e) Nothing in the Supplemental Plan shall be
construed to alter, abridge, or in any manner affect the rights and
privileges of the Participant to participate in any pension,
profit-sharing or other employee benefit plan the Company may now
or hereafter provide.
To record the Amended and Restated Supplemental Executive
Retirement Plan as set forth above, the Company has caused the
Amended and Restated Supplemental Executive Retirement Plan to be
signed and attested on its behalf by its duly authorized represen-
tatives this 18th day of May, 1994.
SUPER FOOD SERVICES, INC., a
Delaware corporation
By______________________________
Chairman of the Board
Attest:
Secretary
