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 February 11, 1995
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 March 11, 1995, there were 10,948,814 Common Shares, $1.00 par
value per share, of the issuer's Common Shares outstanding.
<PAGE> 2
SUPER FOOD SERVICES, INC. AND SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
February 11, 1995
Page
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements:
Consolidated Summary Balance Sheets --
February 11, 1995, February 12, 1994
and August 27, 1994. . . . . . . . . . . . . . . . . . . . . .3
Consolidated Summary Statements of Income --
Twelve Weeks Ended February 11, 1995 and
February 12, 1994. . . . . . . . . . . . . . . . . . . . . . .5
Consolidated Summary Statements of Income --
Twenty-Four Weeks Ended February 11, 1995
and February 12, 1994. . . . . . . . . . . . . . . . . . . . .6
Consolidated Summary Statements of Cash Flows
Flows -- Twenty-Four Weeks Ended February 11,
1995 and February 12, 1994 . . . . . . . . . . . . . . . . . .7
Notes to Consolidated Financial Statements . . . . . . . . . . .8
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . . 10
Part II OTHER INFORMATION
Item 6.
Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . 13
<PAGE>
<TABLE>
3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Super Food Services, Inc. and Subsidiaries
Consolidated Summary Balance Sheets
February 11, 1995, February 12, 1994, and August 27, 1994
<CAPTION>
Feb. 11, 1995 Feb. 12, 1994 Aug. 27, 1994
_____________ _____________ _____________
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash $ 6,838,184 $ 6,017,753 $ 15,834,478
____________ ____________ ____________
Receivables:
Retailer-trade 67,656,278 69,036,957 60,679,596
-notes(current
portion) 4,543,046 4,733,487 4,543,046
Suppliers and miscellaneous 9,197,937 8,443,945 8,210,002
____________ ____________ ____________
81,397,261 82,214,389 73,432,644
Less-Allowance for
doubtful accounts (9,091,807) (8,352,940) (7,733,255)
____________ ____________ ____________
Net Receivables 72,305,454 73,861,449 65,699,389
____________ ____________ ____________
Merchandise inventory 77,459,696 77,091,017 63,342,978
____________ ____________ ____________
Future tax benefits 6,767,576 1,709,327 6,767,576
____________ ____________ ____________
Prepaid expenses 7,375,018 6,477,980 8,835,158
____________ ____________ ____________
Total Current Assets 170,745,928 165,157,526 160,479,579
Notes Receivable-Retailers
(net long-term portion) 17,964,846 17,857,748 16,179,149
Land, Buildings and
Equipment, net 61,922,648 57,417,594 62,423,968
Future Tax Benefits (925,268) 5,709,981 (925,268)
Other Assets 20,067,891 20,249,010 20,261,871
____________ ____________ ____________
Total Assets $269,776,045 $266,391,859 $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>
Feb. 11, 1995 Feb. 12, 1994 Aug. 27, 1994
_____________ _____________ _____________
<S> <C> <C> <C>
Current Liabilities:
Accounts payable $ 36,127,849 $ 38,748,429 $ 38,301,945
Notes payable to banks 19,000,000 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 918,740 2,100,000 1,250,000
Accrued payroll and
vacation 3,130,196 3,395,032 2,857,076
Taxes other than income 1,804,000 1,853,581 2,423,390
Other current liabilities 10,054,918 10,627,978 9,654,232
___________ ____________ ____________
Total Current Liabilities 74,489,727 74,395,427 67,047,761
Long-term Notes and
Mortgages Payable 35,405,286 32,586,569 31,601,617
Obligations Under
Capitalized Leases 22,289,103 24,818,823 24,392,499
Long-term Florida Closing
Liabilities 2,259,275 4,223,962 2,404,000
____________ ____________ ____________
Total Liabilities 134,443,391 136,024,781 125,445,877
____________ ____________ ____________
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 94,975,891 90,010,315 92,616,659
____________ ____________ ____________
Total Shareholders'
Equity 135,332,654 130,367,078 132,973,422
____________ ____________ ____________
Total Liabilities and
Shareholders' Equity $269,776,045 $266,391,859 $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 February 11, 1995 and February 12, 1994
<CAPTION>
1995 1994
_____________ _____________
<S> <C> <C>
Sales and Other Income $257,525,502 $257,424,766
____________ ____________
Cost and Expenses:
Cost of Sales 244,835,160 245,699,172
Selling, General and
Administrative Expenses 8,446,717 7,907,489
Interest Expense 1,767,733 1,473,006
Interest Income (890,474) (874,869)
____________ ____________
Total Costs and Expenses 254,159,136 254,204,798
____________ ____________
Income Before Income Taxes 3,366,366 3,219,968
Provision for Income Taxes 1,308,577 1,234,889
____________ ____________
Net Income Applicable to
Common Shares $ 2,057,789 $ 1,985,079
============ ============
Weighted Average Number of
Common Shares Outstanding 10,948,814 10,948,814
============ ============
Earnings Per Common Share $ 0.19 $ 0.18
============ ============
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 Income
For the Twenty-Four Weeks Ended February 11, 1995 and February 12, 1994
<CAPTION>
1995 1994
_____________ _____________
<S> <C> <C>
Sales and Other Income $528,766,124 $528,556,791
____________ ____________
Cost and Expenses:
Cost of Sales 503,302,518 504,733,590
Selling, General and
Administrative Expenses 16,494,431 15,615,929
Interest Expense 3,417,840 2,993,276
Interest Income (1,731,060) (1,710,836)
____________ ____________
Total Costs and Expenses 521,483,729 521,631,959
____________ ____________
Income Before Income Taxes 7,282,395 6,924,832
Provision for Income Taxes 2,843,162 2,678,491
____________ ____________
Net Income Applicable to
Common Shares 4,439,233 4,246,341
============ ============
Weighted Average Number of
Common Shares Outstanding 10,948,814 10,936,670
============ ============
Earnings Per Common Share $ .41 $ .39
============ ============
Dividends Declared Per
Common Share $ .19 $ .18
============ ============
<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 Twenty-Four Weeks Ended February 11, 1995 and February 12, 1994
<CAPTION>
1995 1994
_____________ _____________
<S> <C> <C>
CASH PROVIDED BY (USED FOR) OPERATIONS:
Net Income $ 4,439,233 $ 4,246,341
Items not affecting cash--
Depreciation and amortization 3,427,779 3,442,577
Current items (excluding cash and
notes payable)--
Receivables (6,606,065) (9,425,716)
Merchandise Inventory (14,116,718) (11,929,023)
Prepaid expenses and other 1,460,140 359,326
Accounts payable (2,174,096) 4,005,904
Other current liabilities 54,417 1,431,864
Florida Closing Liabilities (475,985) (1,100,044)
____________ ___________
NET CASH USED FOR OPERATIONS (13,991,295) (8,968,771)
____________ ____________
CASH PROVIDED BY (USED FOR) INVESTING:
Additions of property, equipment and
direct financing leases (2,896,111) (9,127,965)
Increase in long-term notes receivable (4,190,853) (1,681,234)
Payments on long-term notes receivable 2,405,156 1,792,829
____________ ____________
NET CASH USED FOR INVESTING (4,681,808) (9,016,370)
____________ ____________
CASH PROVIDED BY (USED FOR) FINANCING:
Notes payable to banks (short-term) 10,000,000 14,000,000
Note payable to bank (long-term) 10,000,000 0
Payments on term debt and capital leases (8,243,189) (2,879,046)
Proceeds from Stock Purchase Plan/
Stock Option Plan 0 446,281
Cash dividends (2,080,002) (1,966,832)
____________ ____________
NET CASH PROVIDED BY FINANCING 9,676,809 9,600,403
____________ ____________
INCREASE (DECREASE) IN CASH (8,996,294) (8,384,738)
CASH, BEGINNING OF YEAR 15,834,478 14,402,491
____________ ____________
CASH, END OF PERIOD $ 6,838,184 $ 6,017,753
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for:
Interest (excludes interest
capitalized and imputed
interest on leases) $ 2,395,612 $ 1,821,334
============ ============
Income taxes $ 2,346,486 $ 1,894,644
============ ============
<FN>
The accompanying Notes are an integral part of these consolidated statements.
These interim statements are unaudited.
<PAGE>
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 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 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 1995.
<PAGE>
9
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 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 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 specific
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 on December 27, 1994, the 5th District Court of Appeals
for the State of Florida affirmed, without opinion, the
dismissal by the Circuit Court of Orange County, Florida of
the Company's lawsuit against Albertsons. The Company then
filed a motion with the 5th District Court of Appeals
requesting either a rehearing, clarification or a
certification. On January 27, 1995, an order was entered
denying the Company's motion for a rehearing and/or
clarification or certification.
<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:
Second Quarter Comparisons
- --------------------------
1995 1994 % Change
Sales and Other Income $257,526 $257,425 %
The continuation of flat sales was attributed to deflation and
competitive pressures.
1995 1994 % Change
Cost of Sales $244,835 $245,699 (.4%)
Cost of sales includes cost of the products distributed as well as
warehouse, delivery and building expenses. The Company experienced
higher warehouse expenses ($132) and lower delivery expenses ($52).
Building costs decreased ($24) because of continued costs control.
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 $ 8,447 $ 7,907 6.8%
Expenses increased by $539 due primarily to a higher provision for
doubtful accounts ($115) and an increase in compensation and
employee benefits ($190).
1995 1994 % Change
Interest expense, net $ 877 $ 598 46.7%
Interest expense increased due to higher interest rates as well as
higher borrowing levels of short-term debt.
1995 1994
Effective tax rate 38.9% 38.4%
The Company's effective tax rate shows a slight increase because
the prior year included certain state tax refunds.
<PAGE>
11
1995 1994
Net Income $ 2,058 $ 1,985
Earnings per common share $ .19 $ .18
As reported, the Company's earnings to sales ratio increased from
.77% in the second quarter of fiscal 1994 to .80% in the second
quarter of fiscal 1995.
Twenty-Four Weeks
- -----------------
1995 1994 % Change
Sales and Other Income $528,766 $528,557 %
The slight sales increase was attributed to deflation and
competitive pressures.
1995 1994 % Change
Cost of Sales $503,303 $504,734 (.28%)
Cost of sales includes cost of the products distributed as well as
warehouse, delivery and building expenses. The Company experienced
lower cost of sales and slightly higher margins as a result of a
favorable shift in product mix. The Company experienced higher
warehouse expenses ($242) and higher building costs ($63) due
primarily to higher payroll and storage costs. Delivery costs
decreased ($104) due to continuing efforts to reduce payroll and
operating expenses.
1995 1994 % Change
Selling, general and
administrative expenses $ 16,494 $ 15,616 5.6%
Expenses increased by $878 due primarily to higher provision for
doubtful accounts ($210) and an increase in compensation and
employee benefits ($370).
1995 1994 % Change
Interest expense, net $ 1,687 $ 1,282 31.6%
Interest expense increased due to higher interest rates on
short-term borrowing as well as higher average borrowing levels of
both long-term and short-term debt.
<PAGE>
12
1995 1994
Effective tax rate 39.0% 38.7%
The Company's effective tax rate shows a slight increase because
the prior year included certain state tax refunds.
1995 1994
Net Income $ 4,439 $ 4,246
Earnings per common share $ .41 $ .39
The Company's earnings to sales ratio increased to .84% from .80%
for the twenty-four weeks of fiscal 1995 compared to the twenty-four weeks of
fiscal 1994.
As of and for the 24 Weeks
in the period ended As of
Liquidity and ____________________________ _____________
Capital Resources Feb. 11, 1995 Feb. 12, 1994 Aug. 27, 1994
_________________________________________________________________
Cash $ 6,838 $ 6,017 $15,834
Working Capital 96,256 90,762 93,432
Long-term debt 35,405 32,587 31,602
Cash provided by (used
for) operations (13,991) (8,969)
Cash provided by (used
for) investing (4,682) (9,016)
Cash provided by (used
for) financing 9,677 9,600
The Company's financial condition remained strong as of
February 11, 1995. The current ratio was 2.29 to 1.
Since fiscal year-end 1994, receivables increased by $6,606 and
inventories increased by $14,117 due to the seasonality of the
business. The Company experienced minimal price changes on
products distributed during the first twenty-four weeks 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; $10,000 from banks on a short-term basis and $10,000
under a long-term bank agreement. In addition, the Company's
accounts payable level decreased by $2,174 in conjunction with the
inventory purchases.
Depreciation and amortization of property, equipment and capital
leases decreased to $3,428 in fiscal 1995 compared to $3,443 in
fiscal 1994. Total capital expenditures for the twenty-four weeks
ended February 11, 1995 were $2,896 compared to $9,128 during the
first quarter of fiscal 1994. The decrease from the prior year
resulted primarily from the Bridgeport warehouse addition ($6,534)
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.
<PAGE> 13
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K:
Registrant filed a Form 8-K Current Report dated
January 3, 1995 (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 "SFS/Albertson's Litigation."
Registrant filed a Form 8-K Current Report dated
January 27, 1995 reporting that the District Court of
Appeal of the State of Florida, Fifth District,
entered an order denying Registrant's motion for a
rehearing and/or clarification and certification in
the Registrant's lawsuit against Albertson's, Inc.
<PAGE> 14
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: March 28, 1995 By /s/ Jack Twyman
--------------------------------
Jack Twyman
Chairman of the Board
(Chief Executive Officer)
Date: March 28, 1995 By /s/ Robert F. Koogler
--------------------------------
Robert F. Koogler
Senior Vice President-Finance,
Treasurer and Assistant
Secretary (Chief Financial
and Accounting Officer)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
ART. 5 FDS FOR 2ND QTR 10-Q
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-26-1995
<PERIOD-END> FEB-11-1995
<CASH> 6,838
<SECURITIES> 0
<RECEIVABLES> 72,199
<ALLOWANCES> 9,092
<INVENTORY> 77,460
<CURRENT-ASSETS> 170,746
<PP&E> 123,285
<DEPRECIATION> 61,362
<TOTAL-ASSETS> 269,776
<CURRENT-LIABILITIES> 74,490
<BONDS> 57,694
<COMMON> 10,949
0
0
<OTHER-SE> 124,384
<TOTAL-LIABILITY-AND-EQUITY> 269,776
<SALES> 526,536
<TOTAL-REVENUES> 528,766
<CGS> 503,303
<TOTAL-COSTS> 503,303
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,300
<INTEREST-EXPENSE> 3,418
<INCOME-PRETAX> 7,282
<INCOME-TAX> 2,843
<INCOME-CONTINUING> 4,439
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,439
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
