UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
FORM 10-Q
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 18, 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 December 15, 1995, there were 10,997,448 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
November 18, 1995
Table of Contents
Page
PART I. FINANCIAL INFORMATION:
Item 1.
Financial Statements:
Consolidated Summary Balance Sheets November 18,
1995, November 19, 1994 and August 26, 1995 3
Consolidated Summary Statements of Income Twelve Weeks
Ended November 18, 1995 and November 19, 1994 5
Consolidated Summary Statements of Cash Flows Twelve
Weeks Ended November 18, 1995 and November 19. 1994 6
Notes to Consolidated Financial Statements 7
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II. OTHER INFORMATION
Item 4.
Submission of Matters to a Vote of Security Holders 10
Item 6.
Exhibits and Reports on Form 8-K 10
<PAGE>
3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
Super Food Services, Inc. and Subsidiaries
Consolidated Summary Balance Sheets
November 18, 1995, November 19, 1994 and August 26, 1995
<CAPTION>
Nov. 18, 1995 Nov. 19, 1994 Aug. 26, 1995
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash $ 2,999,304 $ 6,009,116 $ 12,423,314
------------ ------------ ------------
Receivables:
Retailer-trade 78,252,074 73,493,821 59,832,159
-notes (current portion) 5,510,885 4,543,046 5,510,885
Suppliers and miscellaneous 9,198,261 9,793,933 8,619,826
------------ ----------- -----------
92,961,220 87,830,800 73,962,870
Less-Allowance for doubtful
accounts (9,939,518) (8,392,508) (9,293,061)
------------ ----------- -----------
Net Receivables 83,021,702 79,438,292 64,669,809
------------ ----------- -----------
Merchandise inventory 89,544,610 82,095,814 67,181,311
------------ ----------- -----------
Future tax benefits 4,568,828 6,767,576 4,568,828
------------ ----------- -----------
Prepaid expenses 8,045,419 7,054,692 8,481,566
------------ ----------- -----------
Total Current Assets 188,179,863 181,365,490 157,324,828
Notes Receivable-Retailers (net
long-term portion) 17,532,530 16,783,775 17,652,617
Land, Buildings and Equipment, net 61,080,790 62,686,854 60,544,780
Other Assets 21,254,474 20,140,082 21,376,314
------------ ----------- -----------
Total Assets 288,047,657 280,976,201 256,898,539
============ =========== ===========
<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. 18, 1995 Nov. 19, 1994 Aug. 26, 1995
------------- ------------- -------------
<S> <C> <C> <C>
Current Liabilities:
Accounts payable $ 45,829,826 $ 40,226,672 $ 36,650,208
Notes payable to banks 23,000,000 29,000,000 5,000,000
Current maturities of long-
term notes and mortgages
payable 800,000 2,657,000 800,000
Current maturities of obligations
under capitalized leases 864,173 797,024 864,173
Current portion of Florida
closing liabilities 0 1,176,485 0
Accrued payroll and vacation 3,138,461 3,014,737 3,142,853
Taxes other than income 1,359,510 2,201,537 2,252,103
Other current liabilities 11,895,966 11,475,288 8,919,404
------------- ------------- -------------
Total Current Liabilities 86,887,936 90,548,743 57,628,741
Long-term Notes and Mortgages
Payable 35,000,000 29,547,720 35,000,000
Obligations Under
Capitalized Leases 25,246,362 24,263,733 25,419,906
Long-term Florida Closing
Liabilities 971,836 2,301,139 971,836
------------- ------------- -------------
Total Liabilities 148,106,134 146,661,335 119,020,483
------------- ------------- -------------
Shareholders' Equity:
Common Shares, par value
$1.00, 35,000,000 shares
authorized 10,997,448 10,948,814 10,948,814
Paid-in capital 29,827,174 29,407,949 29,407,949
Retained earnings 99,116,901 93,958,103 97,521,293
------------- ------------- -------------
Total Shareholders' Equity 139,941,523 134,314,866 137,878,056
------------- ------------- -------------
Total Liabilities and
Shareholders' Equity $288,047,657 $280,976,201 $256,898,539
============= ============= =============
</TABLE>
[FN]
The accompanying Notes are an integral part of these consolidated statements.
These interim statements are unauditied.
<PAGE>
5
SUPER FOOD SERVICES, INC. AND SUBSIDIARIES
Consolidated Summary Statements of Income
For the Twelve Weeks Ended November 18, 1995 and November 19, 1994
1996 1995
------------ ------------
Sales and Other Income $286,826,084 $272,285,550
Cost and Expenses:
Cost of Sales 272,821,636 258,887,975
Selling, General and Administrative Expenses 8,900,743 8,664,234
Interest expense 1,594,969 1,650,107
Interest income (897,179) (832,795)
------------ ------------
Total Costs and Expenses 282,420,169 268,369,521
------------ ------------
Income Before Income Taxes 4,405,915 3,916,029
Provision for Income Taxes 1,710,562 1,534,585
------------ ------------
Net Income Applicable to Common Shares $ 2,695,353 $ 2,381,444
============ ============
Weighted Average Number of Common
Shares outstanding 10,960,973 10,948,814
============ ============
Earnings Per Common Share $ 0.25 $ 0.22
============ ============
Dividends Declared Per Common Share $ 0.10 $ 0.095
============ ============
[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 18, 1995 and November 19, 1994
1996 1995
------------- -------------
CASH PROVIDED BY (USED FOR) OPERATIONS
Net Income $ 2,695,353 $ 2,381,444
Items not affecting cash
Depreciation and amortization 1,952,011 1,740,247
Current items (excluding cash and notes payable)--
Receivables (18,351,893) (13,738,903)
Merchandise Inventory (22,363,299) (18,752,836)
Prepaid expenses and other 436,147 1,780,466
Accounts payable 9,179,618 1,924,727
Other current liabilities 2,089,751 841,771
Florida Closing Liabilities 0 (176,376)
------------- -------------
NET CASH USED FOR OPERATIONS (24,362,312) (23,999,460)
------------- -------------
CASH PROVIDED BY (USED FOR) INVESTING:
Additions of property, equipment and
direct financing leases (2,376,355) (1,891,518)
Increase in long-term notes receivable (1,295,961) (2,213,973)
Payments on long-term notes receivable 1,416,048 1,609,347
------------- -------------
NET CASH USED FOR INVESTING (2,256,268) (2,496,144)
------------- -------------
CASH PROVIDED BY (USED FOR) FINANCING:
Notes payable to banks (short-term) 18,000,000 20,000,000
Payments on term debt and capital leases (173,544) (2,289,757)
Proceeds from Stock Purchase Plan/
Stock Option Plan 467,859 0
Cash dividends (1,099,745) (1,040,001)
------------- -------------
NET CASH PROVIDED BY FINANCING 17,194,570 16,670,242
------------- -------------
INCREASE (DECREASE) IN CASH (9,424,010) (9,825,362)
CASH, BEGINNING OF YEAR 12,423,314 15,834,478
------------- -------------
CASH, END OF PERIOD $ 2,999,304 $ 6,009,116
============= =============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for:
Interest (excludes interest capitalized and
imputed interest on leases) $ 1,149,688 $ 1,149,170
============= =============
Income taxes $ 150,000 $ 75,000
============= =============
[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 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 manage-
ment, 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 1996.
<PAGE>
8
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
- -------------------------
1996 1995 % Change
Sales and Other Income $286,826 $272,286 5.3%
The increase in sales resulted primarily from increased volume from existing
customers; we continue to have competitive pressures in sales.
1996 1995 % Change
Cost of Sales $272,822 $258,888 5.4%
Cost of sales includes cost of the products distributed as well as warehouse,
delivery and building expenses. The Company experienced higher warehouse
expenses ($196) and higher delivery expenses ($95). Both were caused by
higher payroll costs due to increased work force. Building costs increased
($114) primarily because of higher storage costs and repairs. In addition,
the Company experienced slightly lower margins as a result of an unfavorable
shift in product mix.
1996 1995 % Change
Selling, general and administrative expenses $ 8,901 $ 8,664 2.7%
Expenses increased ($237) due primarily to salaries, wages, and benefits
($45), other administrative expenses ($152), and promotional expenses ($40).
1996 1995 % Change
Interest expense $ 698 $ 817 (14.6%)
Interest expense decreased due to lower borrowing levels of short-term debt
and a decrease in overall borrowing rates.
1996 1995
Effective tax rate 38.8% 39.2%
The Company's effective tax rate shows a slight decrease because of lower
provisions for State income taxes.
<PAGE>
9
1996 1995
Net Income $ 2,695 $ 2,381
Earnings per common share $ .25 $ .22
As reported, the Company's earnings to sales ratio increased to .94% in the
first quarter of fiscal 1996 from .87% in the first quarter of fiscal 1995.
<TABLE>
<CAPTION>
As of and for the 12 Weeks
Liquidity and in the period ended As of
Capital Resources Nov. 18, 1995 Nov. 19, 1994 Aug. 26, 1995
<S> <C> <C> <C>
Cash $ 2,999 $ 6,009 $ 12,423
Working Capital 101,292 90,817 99,696
Long-term debt 35,000 29,548 35,000
Cash provided by (used for) operations (24,362) (23,999)
Cash provided by (used for) investing (2,256) (2,496)
Cash provided by (used for) financing 17,195 16,670
</TABLE>
The Company's financial condition remained strong as of November 18, 1995.
The current ratio was 2.17 to 1 compared to 2.00 to 1 last year.
Since fiscal year-end 1995, net receivables increased by $18,350 and
inventories increased by $22,360 due to the seasonality of the business.
The Company experienced minimal price increases on products distributed
during the first quarter of fiscal 1996. To support the higher levels of
receivables and inventory, the Company borrowed from its banks an additional
$18,000 since year-end. In addition, the Company's accounts payable level
increased by $9,180 in conjunction with the additional inventory purchases.
Depreciation and amortization of property, equipment and capital leases
amounted to $1,950 in fiscal 1996 compared to $1,740 in fiscal 1995.
Increase is due to Bridgeport expansion. Total capital expenditures for the
twelve weeks ended November 18, 1995 were $2,380 compared to $1,890 during
the first quarter of fiscal 1995.
The dividend on common shares was increased from $.095 to $.10 effective with
the dividend paid on December 15, 1995.
<PAGE>
10
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 12, 1995 election of the following nominees for Class I
Directors of Registrant to serve until the election of Directors in
1998 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
John Demos 9,514,450 163,832
Sam Robinson 9,514,450 163,832
Based on these voting results, each of the Directors nominated was
elected. The election of a director required a plurality of the
votes present and entitled to vote at the meeting. No other matters
were submitted to a vote of the shareholders.
Reference is made to Registrant's Definitive Proxy Statement dated
November 6, 1995, 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:
11 Computation of Net Income Per Share
27 Financial Data Schedule
(b) Reports on Form 8-K:
The Registrant filed a Form 8-K with the Securities and Exchange
Commission dated October 26, 1995 reporting the extension of the term
of the Employment Agreement between Registrant and John Demos to
March 2, 1998.
<PAGE>
11
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 27, 1995 By /s/ Jack Twyman
----------------------------------------
Jack Twyman
Chairman of the Board
(Chief Executive Officer)
Date: December 27, 1995 By /s/ Robert F. Koogler
----------------------------------------
Robert F. Koogler
Senior Vice President-Finance,
Treasurer and Assistant Secretary
Chief Financial and Accounting Officer)
EXHIBIT 11
<TABLE>
SUPER FOOD SERVICES, INC.
COMPUTATION OF NET INCOME PER SHARE
<CAPTION>
Weighted Average
Number of Shares Per
Outstanding Net Income Share
------------------------------------------------------
<S> <C> <C> <C>
November 19, 1994
Net Income $2,381,000
------------------------------------------------------
Common Stock Outstanding as of
August 28, 1994 10,949,000 $2,381,000 $ 0.22
======================================================
Effect of outstanding stock options which is
less than 3% and not required to be disclosed
in the financial statements (253,000 shares) 18,000
------------------------------------------------------
10,967,000 $2,381,000 $ 0.22
=======================================================
November 18, 1995
Net Income $2,695,000
Common Stock outstanding as of
August 27, 1995 10,949,000
Exercise of incentive plan (49,000 shares
issued) 12,000
-------------------------------------------------------
10,961,000 $2,695,000 $ 0.25
=======================================================
Effect of outstanding stock options which is
less than 3% and not required to be disclosed
in the financial statements (197,000 shares) 51,000
-------------------------------------------------------
11,012,000 $2,695,000 $ 0.24
=======================================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED SUMMARY BALANCE SHEETS AS OF NOVEMBER 18, 1995 AND THE CONSOLIDATED
SUMMARY STATEMENTS OF INCOME FOR THE 12 WEEKS ENDED NOVEMBER 18, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> NOV-18-1995
<CASH> 2,999
<SECURITIES> 0
<RECEIVABLES> 83,763
<ALLOWANCES> 9,940
<INVENTORY> 89,545
<CURRENT-ASSETS> 188,180
<PP&E> 128,106
<DEPRECIATION> 67,025
<TOTAL-ASSETS> 288,048
<CURRENT-LIABILITIES> 86,592
<BONDS> 60,246
<COMMON> 10,997
0
0
<OTHER-SE> 128,944
<TOTAL-LIABILITY-AND-EQUITY> 288,048
<SALES> 285,894
<TOTAL-REVENUES> 286,826
<CGS> 272,822
<TOTAL-COSTS> 272,822
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 635
<INTEREST-EXPENSE> 1,595
<INCOME-PRETAX> 4,406
<INCOME-TAX> 1,711
<INCOME-CONTINUING> 2,695
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,695
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
</TABLE>
