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 February 10, 1996
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 1-5171
_____
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 February 10, 1996, 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
February 10, 1996
Table of Contents
Page
PART I. FINANCIAL INFORMATION:
Item 1.
Financial Statements:
Consolidated Summary Balance Sheets --
February 10, 1996, February 11,
1995 and August 26, 1995 3
Consolidated Summary Statements of Income --
Twelve Weeks Ended February 10, 1996 and
February 11, 1995 5
Consolidated Summary Statements of Income --
Twenty-Four Weeks Ended February 10, 1996
and February 11, 1995 6
Consolidated Summary Statements of Cash Flows --
Twenty-Four Weeks Ended February 10, 1996
and February 11, 1995 7
Notes to Consolidated Financial Statements 8
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II. OTHER INFORMATION
Item 6.
Exhibits and Reports on Form 8-K 12
<PAGE> 3
3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Super Food Services, Inc. and Subsidiaries
Consolidated Summary Balance Sheets
February 10, 1996, February 11, 1995 and August 26, 1995
Feb. 10, 1996 Feb. 11, 1995 Aug. 26, 1995
_____________ _____________ _____________
ASSETS
Current Assets:
Cash $ 8,702,030 $ 7,380,950 $ 12,423,314
____________ ____________ ____________
Receivables:
Retailer-trade 71,195,184 67,201,065 59,832,159
-notes (current
portion) 5,510,885 4,543,046 5,510,885
Suppliers and
miscellaneous 10,950,477 9,232,111 8,619,826
____________ ____________ ____________
87,656,546 80,976,222 73,962,870
Less-Allowance for
doubtful accounts (10,552,120) (9,091,807) (9,293,061)
____________ ____________ ____________
Net Receivables 77,104,426 71,884,415 64,669,809
____________ ____________ ____________
Merchandise inventory 80,225,109 78,225,159 67,181,311
____________ ____________ ____________
Future tax benefits 4,568,828 6,767,576 4,568,828
____________ ____________ ____________
Prepaid Expenses 8,689,898 6,807,614 8,481,566
____________ ____________ ____________
Total Current Assets 179,290,291 171,065,714 157,324,828
Notes Receivable-
Retailers (net long-term
portion) 17,667,762 17,599,544 17,652,617
Land, Buildings and
Equipment, net 60,504,954 62,541,509 60,544,780
Other Assets 21,145,718 20,072,891 21,376,314
____________ ____________ ____________
Total Assets $278,608,725 $271,279,658 $256,898,539
____________ ____________ ____________
____________ ____________ ____________
The accompanying Notes are an integral part of these consolidated statements.
These interim statements are unaudited.
<PAGE>
4
LIABILITIES AND SHAREHOLDERS' EQUITY
Feb. 10, 1996 Feb. 11, 1995 Aug. 26, 1995
_____________ _____________ _____________
Current Liabilities:
Accounts payable $ 41,033,875 $ 36,706,194 $ 36,650,208
Notes payable to banks 17,000,000 19,000,000 5,000,000
Current maturities of
long-term notes and
mortgages payable 400,000 2,657,000 800,000
Current maturities of
obligations under
capitalized leases 864,173 797,024 864,173
Current portion of Florida
closing liabilities 0 918,740 0
Accrued payroll and
vacation 3,304,888 3,168,861 3,142,853
Taxes other than income 1,620,773 1,765,335 2,252,103
Other current
liabilities 12,185,766 10,980,186 8,919,404
____________ ____________ ____________
Total Current
Liabilities 76,409,475 75,993,340 57,628,741
Long-term Notes and
Mortgages Payable 35,000,000 35,405,286 35,000,000
Obligations Under
Capitalized Leases 25,086,429 22,289,103 25,419,906
Long-term Florida
Closing Liabilities 971,836 2,259,275 971,836
____________ ____________ ____________
Total Liabilities 137,467,740 135,947,004 119,020,483
____________ ____________ ____________
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 100,316,363 94,975,891 97,521,293
____________ ____________ ____________
Total Shareholders'
Equity 141,140,985 135,332,654 137,878,056
____________ ____________ ____________
Total Liabilities and
Shareholders' Equity $278,608,725 $271,279,658 $256,898,539
____________ ____________ ____________
____________ ____________ ____________
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 February 10, 1996 and February 11, 1995
1996 1995
_____________ _____________
Sales and Other Income $268,777,909 $258,838,986
____________ ____________
Cost and Expenses:
Cost of Sales 255,150,327 245,517,905
Selling, General and
Administrative Expenses 9,192,100 9,069,796
Interest expense 1,648,173 1,783,184
Interest income (910,789) (898,265)
____________ ____________
Total Costs and
Expenses 265,079,811 255,472,620
____________ ____________
Income Before Income Taxes 3,698,098 3,366,366
Provision for Income Taxes 1,399,035 1,308,577
____________ ____________
Net Income $ 2,299,063 $ 2,057,789
____________ ____________
____________ ____________
Weighted Average Number of
Common Shares outstanding 10,997,448 10,948,814
____________ ____________
____________ ____________
Earnings Per Common Share $ 0.21 $ 0.19
____________ ____________
____________ ____________
Dividends Declared Per
Common Share $ 0.10 $ 0.095
____________ ____________
____________ ____________
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 10, 1996 and February 11, 1995
1996 1995
_____________ _____________
Sales and Other Income $555,603,993 $531,124,536
____________ ____________
Cost and Expenses:
Cost of Sales 527,971,963 504,405,880
Selling, General and
Administrative Expenses 18,092,843 17,734,030
Interest expense 3,243,142 3,433,291
Interest income (1,807,968) (1,731,060)
____________ ____________
Total Costs and
Expenses 547,499,980 523,842,141
____________ ____________
Income Before Income Taxes 8,104,013 7,282,395
Provision for Income Taxes 3,109,597 2,843,162
____________ ____________
Net Income $ 4,994,416 $ 4,439,233
____________ ____________
____________ ____________
Weighted Average Number of
Common Shares outstanding 10,976,605 10,948,814
____________ ____________
____________ ____________
Earnings Per Common Share $ 0.46 $ 0.41
____________ ____________
____________ ____________
Dividends Declared Per
Common Share $ 0.20 $ 0.19
____________ ____________
____________ ____________
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 10, 1996 and February 11, 1995
1996 1995
_____________ _____________
CASH PROVIDED BY (USED FOR) OPERATIONS
Net Income $ 4,994,416 $ 4,439,233
Items not affecting cash--
Depreciation and amortization 3,921,686 3,493,568
Current items (excluding cash
and notes payable)--
Receivables (12,434,617) (6,185,026)
Merchandise Inventory (13,043,798) (14,882,181)
Prepaid expenses and other (208,332) 2,027,544
Accounts payable 4,383,667 (1,595,751)
Other current liabilities 2,822,415 79,765
Florida Closing Liabilities 0 (475,985)
____________ ____________
NET CASH USED FOR OPERATIONS (9,564,563) (13,098,833)
____________ ____________
CASH PROVIDED BY (USED FOR) INVESTING:
Additions of property, equipment
and direct financing leases (3,676,612) (3,447,477)
Increase in long-term notes receivable (2,866,435) (4,190,853)
Payments on long-term notes receivable 2,851,290 2,770,458
____________ ____________
NET CASH USED FOR INVESTING (3,691,757) (4,867,872)
____________ ____________
CASH PROVIDED BY (USED FOR) FINANCING:
Notes payable to banks (short-term) 12,000,000 10,000,000
Notes payable to bank (long-term) 0 10,000,000
Payments on term debt and
capital leases (733,477) (8,406,821)
Proceeds from Stock Purchase Plan/
Stock Option Plan 467,859 0
Cash dividends (2,199,346) (2,080,002)
____________ ____________
NET CASH PROVIDED BY FINANCING 9,535,036 9,513,177
____________ ____________
DECREASE IN CASH (3,721,284) (8,453,528)
CASH, BEGINNING OF YEAR 12,423,314 15,834,478
____________ ____________
CASH, END OF PERIOD $ 8,702,030 $ 7,380,950
____________ ____________
____________ ____________
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for:
Interest (excludes interest
capitalized and imputed
interest on leases) $ 2,222,204 $ 2,395,612
____________ ____________
____________ ____________
Income taxes $ 2,075,000 $ 2,346,486
____________ ____________
____________ ____________
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 informa-
tion 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 adjust-
ments 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 1996.
<PAGE>
9
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
1996 1995 % Change
___________________________________________________________________________
Sales and Other Income $268,778 $258,839 3.8%
___________________________________________________________________________
The increase in sales resulted primarily from increased volume from existing
customers; we continue to have competitive pressures in sales. Included in
sales are fees derived from providing certain services to our customers,
which are not significant to total sales.
1996 1995 % Change
___________________________________________________________________________
Cost of Sales $255,150 $245,518 3.9%
___________________________________________________________________________
Cost of sales includes cost of the products distributed as well as warehouse,
delivery and building expenses. The Company experienced higher warehouse
expenses ($394) and higher delivery expenses ($246). Both were caused by
higher payroll costs due to increased work force. Building costs increased
($198) primarily because of higher storage costs, amortization and repairs.
In addition, the Company experienced slightly higher margins as a result of
a favorable shift in product mix.
1996 1995 % Change
___________________________________________________________________________
Selling, general and
administrative expenses $ 9,192 $ 9,070 1.3%
___________________________________________________________________________
An increase in provision for doubtful accounts ($270) offset by a decrease in
administrative expenses, no one expense item having a significant effect,
($148) resulted in a net increase in selling, general and administrative
expenses ($122).
1996 1995 % Change
___________________________________________________________________________
Interest expense $ 1,648 $ 1,783 (7.6%)
___________________________________________________________________________
Interest expense decreased due to lower borrowing levels of short-term debt
and a decrease in overall borrowing rates.
1996 1995
___________________________________________________________________________
Effective tax rate 37.8% 38.9%
___________________________________________________________________________
The Company's effective tax rate shows a slight decrease because of lower
provisions for State income taxes.
PAGE
<PAGE>
10
1996 1995
___________________________________________________________________________
Net Income $ 2,299 $ 2,058
Earnings per common share $ .21 $ .19
___________________________________________________________________________
As reported, the Company's earnings to sales ratio increased to .86% in the
second quarter of fiscal 1996 from .80% in the second quarter of fiscal 1995.
Twenty-Four Weeks
1996 1995 % Change
___________________________________________________________________________
Sales and Other Income $555,604 $531,125 4.6%
___________________________________________________________________________
The increase in sales resulted primarily from increased volume from existing
customers; we continue to have competitive pressures in sales. Included in
sales are fees derived from providing certain services to our customers,
which are not significant to total sales.
1996 1995 % Change
___________________________________________________________________________
Cost of Sales $527,972 $504,406 4.7%
___________________________________________________________________________
The Company experienced higher warehouse expense ($600) caused by increased
labor cost ($380), higher expense of depreciation, repairs and supplies.
Delivery expense increased ($340) caused by increased labor cost ($135),
higher fuel cost, repair and higher depreciation expense. Building cost
increased ($300) primarily because of higher storage costs, repairs, and
higher amortization expense. In addition, the Company experienced slightly
higher margins as a result of a favorable shift in product mix.
1996 1995 % Change
___________________________________________________________________________
Selling, general and
administrative expenses $ 18,093 $ 17,734 2.0%
___________________________________________________________________________
Expenses increased ($359) due primarily to increase in allowance for doubtful
accounts ($245) and administrative expenses, no one expense item having a
significant effect, ($114).
1996 1995 % Change
___________________________________________________________________________
Interest expense $ 3,243 $ 3,433 (5.5%)
___________________________________________________________________________
Interest expense decreased due to lower borrowing levels of short-term debt
and a decrease in overall borrowing rates.
1996 1995
___________________________________________________________________________
Effective tax rate 38.4% 39.0%
___________________________________________________________________________
The Company's effective tax rate shows a slight decrease because of lower
provisions for State income taxes.
<PAGE>
11
1996 1995
___________________________________________________________________________
Net Income $ 4,994 $ 4,439
Earnings per common share $ .46 $ .41
___________________________________________________________________________
As reported, the Company's earnings to sales ratio increased to .90% for the
twenty-four weeks of fiscal 1996 from .84% for the twenty-four weeks of
fiscal 1995.
As of and for the 24 Weeks
in the period ended As of
______________________________ _____________
Liquidity and
Capital Resources Feb. 10, 1996 Feb. 11, 1995 Aug. 26, 1995
___________________________________________________________________________
Cash $ 8,702 $ 7,381 $ 12,423
___________________________________________________________________________
Working Capital 102,881 95,072 99,696
___________________________________________________________________________
Long-term debt 35,000 35,405 35,000
___________________________________________________________________________
Cash provided by (used for)
operations (9,565) (13,099)
___________________________________________________________
Cash provided by (used for)
investing (3,692) (4,868)
___________________________________________________________
Cash provided by (used for)
financing 9,535 9,513
___________________________________________________________
The Company's financial condition remained strong as of February 10, 1996.
The current ratio was 2.35 to 1 compared to 2.25 to 1 last year.
Since fiscal year-end 1995, net receivables increased by $12,435 and
inventories increased by $13,044 due to seasonality in the Company's
business. During certain times of the year, the Company experiences
increases in accounts receivable and inventories because of increased
holiday sales. The second quarter contains three such holidays that
historically have shown a sales increase. In addition, the Company
historically builds inventories for expected sales in the third quarter which
contains two holidays. To support the higher levels of receivables and
inventory, the Company borrowed short-term from its banks an additional
$12,000 since year-end. In addition, the Company's accounts payable level
increased by $4,384 in conjunction with the additional inventory purchases.
The Company experienced minimal price increases on products distributed
during the first twenty-four weeks of fiscal 1996.
Depreciation and amortization of property, equipment and capital leases
amounted to $3,922 in fiscal 1996 compared to $3,494 in fiscal 1995.
Increase is due to Bridgeport expansion. Total capital expenditures for the
twenty-four weeks ended February 10, 1996 were $3,677 compared to $3,447
during the first quarter of fiscal 1996.
The cash dividend on common shares was increased from $.095 to $.10 effective
with the dividend paid on December 15, 1995.
<PAGE>
12
PART II - OTHER INFORMATION
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:
There were no reports on Form 8-K filed for the twelve
weeks ended February 10, 1996.
<PAGE>
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: March 26, 1996 By /s/ Jack Twyman
_______________________________________
Jack Twyman
Chairman of the Board
(Chief Executive Officer)
Date: March 26, 1996 By /s/ Robert F. Koogler
_______________________________________
Senior Vice President-Finance,
Treasurer and Assistant Secretary
(Chief Financial and Accounting Officer)
EXHIBIT 11
SUPER FOOD SERVICES, INC.
COMPUTATION OF NET INCOME PER SHARE
Weighted
Average
Number of
Shares
Outstanding Net Income Per Share
__________________________________
February 11, 1995 - 12 Weeks
Net Income $2,058,000
__________________________________
Common Stock outstanding
as of November 20, 1994 10,949,000 $2,058,000 $0.19
__________________________________
__________________________________
Effect of outstanding
stock options which is
less than 3% and not
required to be disclosed
in the financial state-
ments (253,000 shares) 78,000
__________________________________
11,027,000 $2,058,000 $0.19
__________________________________
__________________________________
February 11, 1995 - 24 Weeks
Net Income $4,439,000
__________________________________
Common Stock outstanding
as of August 28, 1994 10,949,000 $4,439,000 $0.41
__________________________________
__________________________________
Effect of outstanding
stock options which is
less than 3% and not
required to be disclosed
in the financial state-
ments (253,000 shares) 78,000
__________________________________
11,027,000 $4,439,000 $0.40
__________________________________
__________________________________
February 10, 1996 - 12 Weeks
Net Income $2,299,000
__________________________________
Common Stock outstanding
as of November 19, 1995 10,997,000 $2,299,000 $0.21
__________________________________
__________________________________
Effect of outstanding
stock options which is
less than 3% and not
required to be disclosed
in the financial state-
ments (250,000 shares) 78,000
__________________________________
11,075,000 $2,299,000 $0.21
__________________________________
__________________________________
February 10, 1996 - 24 Weeks
Net Income $4,994,000
__________________________________
Common Stock outstanding
as of August 27, 1995 10,949,000 $4,994,000 $0.46
__________________________________
__________________________________
Effect of outstanding
stock options which is
less than 3% and not
required to be disclosed
in the financial state-
ments (250,000 shares) 78,000
__________________________________
11,027,000 $4,994,000 $0.45
__________________________________
__________________________________
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED SUMMARY BALANCE SHEETS AS OF FEBRUARY 10, 1996 AND THE
CONSOLIDATED SUMMARY STATEMENTS OF INCOME FOR THE 24 WEEKS ENDED
FEBRUARY 10, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> FEB-10-1996
<CASH> 8,702
<SECURITIES> 0
<RECEIVABLES> 76,706
<ALLOWANCES> 10,552
<INVENTORY> 80,225
<CURRENT-ASSETS> 179,290
<PP&E> 128,964
<DEPRECIATION> 68,459
<TOTAL-ASSETS> 278,609
<CURRENT-LIABILITIES> 76,113
<BONDS> 60,086
0
0
<COMMON> 10,997
<OTHER-SE> 130,144
<TOTAL-LIABILITY-AND-EQUITY> 278,609
<SALES> 553,249
<TOTAL-REVENUES> 555,604
<CGS> 527,972
<TOTAL-COSTS> 527,972
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,545
<INTEREST-EXPENSE> 3,243
<INCOME-PRETAX> 8,104
<INCOME-TAX> 3,110
<INCOME-CONTINUING> 4,994
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,994
<EPS-PRIMARY> .46
<EPS-DILUTED> .46
</TABLE>
