-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AcQ9m87A/o5V2du2wYtugLx4W0JRJJ+Pjm2uyY/+x2LR/D9y0cxzTGokm7g5KPCL vJWEsDDZO74cwvwWHYZKsQ== /in/edgar/work/20000912/0001045969-00-000677/0001045969-00-000677.txt : 20000922 0001045969-00-000677.hdr.sgml : 20000922 ACCESSION NUMBER: 0001045969-00-000677 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000729 FILED AS OF DATE: 20000912 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SFW HOLDING CORP CENTRAL INDEX KEY: 0001043066 STANDARD INDUSTRIAL CLASSIFICATION: [5411 ] IRS NUMBER: 522014682 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-32825-01 FILM NUMBER: 721418 BUSINESS ADDRESS: STREET 1: 3300 75TH AVENUE CITY: LANDOVER STATE: MD ZIP: 20785 BUSINESS PHONE: 3013068600 MAIL ADDRESS: STREET 1: 4600 FORBES BLVD CITY: LENHAM STATE: MD ZIP: 20706 10-Q 1 0001.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period (13 weeks) ended July 29, 2000. ( ) 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 333-32825 SFW HOLDING CORP. (Exact name of registrant as specified in its charter) Delaware 53-2014682 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3300 75TH Ave. Landover, Maryland, 20785 ---------------------------------------- (Address of principal executive office) (Zip Code) (301) 226-1200 -------------- (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 the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- At September 5, 2000, the registrant had 1,000 shares of common stock. The common stock of SFW Holding Corp. is not publicly traded. The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format. Part I - Financial Information Item 1. Financial Statements The consolidated financial statements included herein have been prepared by SFW Holding Corp. ("SFW" or the "Company") without audit (except for the consolidated balance sheet as of January 29, 2000, which has been derived from the audited consolidated balance sheet as of that date) 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 because they are not applicable or not required. It is suggested that these consolidated financial statements are read in conjunction with the consolidated financial statements and notes thereto included in SFW's Annual Report on Form 10-K for the fiscal year ended January 29, 2000. SFW HOLDING CORP. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data)
July 29, January 29, 2000 2000 ---------- ------------ (Unaudited) Assets Current assets: Cash and cash equivalents $ 1,679 $ 3,390 Accounts receivable, net 11,229 10,275 Merchandise inventories 33,843 31,324 Deferred income taxes 4,185 4,185 Other current assets 1,538 2,761 -------- -------- Total current assets 52,474 51,935 Property and equipment, net 72,565 64,017 Goodwill, net of accumulated amortization 301,858 305,431 Leasehold rights, net of accumulated amortization 27,373 27,945 Note receivable 44,563 42,491 Other assets 676 751 -------- -------- Total assets $499,509 $492,570 ======== ======== Liabilities and Stockholder's Equity Current liabilities: Accounts payable $ 8,751 $ 6,245 Accrued interest 2,014 2,058 Accrued insurance 7,082 7,740 Accrued expenses 12,578 13,908 Due to affiliates 42,896 51,992 Accrued income taxes 11,689 9,315 Other current liabilities 618 618 -------- -------- Total current liabilities 85,628 91,876 Senior notes due 2004 180,045 181,748 Capital lease obligations 22,378 12,034 Deferred income taxes 14,218 14,218 Other liabilities 678 803 -------- -------- Total liabilities 302,947 300,679 -------- -------- Stockholder's equity: Class A common stock, voting, par value $0.01 per share, 1,000 shares authorized, issued and outstanding Additional paid-in capital 189,408 189,408 Retained earnings 7,154 2,483 -------- -------- Total stockholder's equity 196,562 191,891 -------- -------- Total liabilities and stockholder's equity $499,509 $492,570 ======== ========
The accompanying notes are an integral part of these statements. SFW HOLDING CORP. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) (In thousands)
Second quarter (13 weeks) ended Year-to-date (26 weeks) ended -------------------------------- --------------------------------- July 29, July 31, July 29, July 31, 2000 1999 2000 1999 --------------- -------------- -------------- -------------- (Post-SUPERVALU (Pre-SUPERVALU (Post-SUPERVALU (Pre-SUPERVALU acquisition) acquisition) acquisition) acquisition) --------------- -------------- -------------- -------------- Sales $224,955 $219,784 $439,591 $439,853 Cost of sales 168,701 164,283 329,924 329,268 -------- -------- -------- -------- Gross profit 56,254 55,501 109,667 110,585 -------- -------- -------- -------- Selling and administrative expenses 47,279 47,856 94,930 95,623 -------- -------- -------- -------- Operating income 8,975 7,645 14,737 14,962 Interest income 1,190 853 2,211 1,727 Interest expense 3,707 4,329 7,261 8,658 -------- -------- -------- -------- Net interest expense 2,517 3,476 5,050 6,931 Earnings before income taxes 6,458 4,169 9,687 8,031 Provision for income taxes 3,194 2,253 5,016 4,415 -------- -------- -------- -------- Net earnings $ 3,264 $ 1,916 $ 4,671 $ 3,616 ======== ======== ======== ========
The accompanying notes are an integral part of these statements. SFW HOLDING CORP. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands)
Year-to-date (26 weeks) ended ------------------------------- July 29, July 31, 2000 1999 --------------- -------------- (Post-SUPERVALU (Pre-SUPERVALU acquisition) acquisition) --------------- -------------- Net cash provided by operating activities $ 9,324 $ 7,621 -------- -------- Cash flows from investing activities: Capital expenditures (3,343) (4,053) Reimbursement of renovation costs from landlord 4,371 -- -------- -------- Net cash provided by (used in) investing activities 1,028 (4,053) -------- -------- Cash flows from financing activities: Cash provided to affiliated companies (9,096) (7,857) Principal payments under capital lease obligations (2,967) (300) -------- -------- Net cash used in financing activities (12,063) (8,157) -------- -------- Net decrease in cash and cash equivalents (1,711) (4,589) Cash and cash equivalents at beginning of period 3,390 6,602 -------- -------- Cash and cash equivalents at end of period $ 1,679 $ 2,013 ======== ======== Supplemental Cash Flow Information: Disclosure of noncash investing activity Assets acquired under capital lease $ 13,311 $ -- ======== ========
The accompanying notes are an integral part of these statements. SFW HOLDING CORP. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - GENERAL The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. The accompanying consolidated financial statements of the Company as of July 29, 2000, and for the 13 weeks and 26 weeks ended July 29, 2000, and July 31, 1999, have not been audited. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted from the accompanying consolidated financial statements. In the opinion of the Company, the accompanying consolidated financial statements reflect all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position of the Company as of July 29, 2000, and the results of its operations for the 13-week and 26-week periods ended July 29, 2000, and July 31, 1999. NOTE 2 - ACQUISITION On August 31, 1999, Richfood Holdings, Inc. ("Richfood") was acquired in a merger by a wholly-owned subsidiary of SUPERVALU INC., a Delaware corporation ("SUPERVALU"), and the Company became an indirect, wholly-owned subsidiary of SUPERVALU at that time ("the SUPERVALU acquisition"). Prior to August 31, 1999, the Company was an indirect, wholly-owned subsidiary of Richfood. SUPERVALU has accounted for the acquisition of Richfood using the purchase method of accounting and, accordingly, a new accounting basis was established as of August 31, 1999 and was used for the remaining twenty-two weeks of fiscal 2000. The assets and liabilities of SFW were restated to reflect their estimated fair market values as of that date. The excess of the purchase price paid for the Company over its net assets acquired (goodwill) of $310,076 has been pushed down to the Company. The goodwill is being amortized on a straight-line basis over 40 years. Certain financial statements and related footnote amounts for periods prior to the SUPERVALU acquisition may not be comparable to corresponding amounts subsequent to the acquisition. NOTE 3 - TRANSACTIONS WITH AFFILIATES The July 29, 2000 consolidated balance sheet includes $42.9 million due to affiliates compared to $52.0 million at January 29, 2000. The $42.9 million consists primarily of amounts due to SUPERVALU for the purchase of bonds and amounts due for inventory purchases and general and administrative expenses. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information in this Quarterly Report includes forward-looking statements. Important risks and uncertainties that could cause actual results to differ materially from those discussed in such forward looking statements are: the impact of changing economic or business conditions, the impact of competition, the nature and extent of the consolidation of the retail food and food distribution industries, the ability to attract and retain customers for the company's businesses, the ability to control food distribution costs, the ability of the Company to grow through acquisition and assimilate acquired entities, the availability of favorable credit and trade terms, food price changes and other risk factors inherent in the food wholesaling and retail businesses. Other risks or uncertainties may be detailed from time to time in the Company's future Securities and Exchange Commission filings. Results of Operations - --------------------- RESULTS FOR THE QUARTER: Sales increased by $5.2 million to $225.0 million during the 13 weeks ended July 29, 2000, compared to $219.8 million during the 13 weeks ended July 31, 1999, an increase of 2.4%. This increase was due primarily to two new stores and two store remodels which have occurred since last year second quarter, offset, in part, by the closing of one store last year. Comparable store sales increased 0.7% for the 13 weeks ended July 29, 2000, compared to the corresponding period of the prior year. The increase in comparable store sales was due primarily to the completion of the two remodels during the current year. Gross profit, as a percentage of sales, was 25.0% during the 13 weeks ended July 29, 2000, compared to 25.3% during the 13 weeks ended July 31, 1999. The decrease was primarily due to higher promotional activities. Selling and administrative expenses, as a percentage of sales, were 21.0% for the 13 weeks ended July 29, 2000, compared to 21.8% for the 13 weeks ended July 31, 1999. The decrease was due primarily to decreased wages as a result of improved labor management and lower administrative and advertising costs. Operating income was $9.0 million for the 13 weeks ended July 29, 2000, compared to $7.6 million for the 13 weeks ended July 31, 1999. The increase was primarily due to the decrease in selling and administrative expenses during the current year. Interest income increased to approximately $1.2 million for the 13 weeks ended July 29, 2000, compared to $0.9 million for the 13 weeks ended July 31, 1999 due to an increase in the outstanding balance of the note receivable. Interest expense decreased approximately $0.6 million, to $3.7 million for the 13 weeks ended July 29, 2000, compared to $4.3 million for the 13 weeks ended July 31, 1999, a 14.4% decrease. The reduction in interest expense was due to the retirement of $24.6 million of the Senior Notes in October 1999. The effective income tax rate for the 13 weeks ended July 29, 2000, was 49.5% compared to 54.0% for the 13 weeks ended July 31, 1999. The decrease is primarily attributable to increased taxable earnings in relation to the fixed amount of acquisition non-deductible goodwill associated with the SUPERVALU acquisition. Net income was $3.3 million for the 13 weeks ended July 29, 2000 compared to $1.9 million for the 13 weeks ended July 31, 1999. YEAR TO DATE RESULTS: Sales remained relatively flat at $439.6 million for the 26 weeks ended July 29, 2000 compared to $439.9 million for the 26 weeks ended July 31, 1999. Comparable store sales decreased by 0.6% for the 26 weeks ended July 29, 2000, compared to the corresponding period of the prior year. The decrease in comparable store sales was due primarily to increased competition, offset, in part, by the two new remodels completed since the end of the prior year. Gross profit, as a percentage of sales, was relatively flat at 24.9% for the 26 weeks ended July 29, 2000 and 25.1% for the 26 weeks ended July 31, 1999. Selling and administrative expenses, as a percentage of sales, were 21.6% for the 26 weeks ended July 29, 2000, compared to 21.7% for the 26 weeks ended July 31, 1999. Operating income was $14.7 million for the 26 weeks ended July 29, 2000, compared to $15.0 million for the 26 weeks ended July 31, 1999, a decrease of 1.5%. Interest income increased to approximately $2.2 million for the 26 weeks ended July 29, 2000, compared to $1.7 million for the 26 weeks ended July 31, 1999, due to an increase in the outstanding balance of the note receivable. Interest expense decreased approximately $1.4 million, to $7.3 million for the 26 weeks ended July 29, 2000, compared to $8.7 million for the 26 weeks ended July 31, 1999, a 16.1% decrease. The reduction in interest expense was due to the retirement of $24.6 million of the Senior Notes in October 1999. The effective income tax rate for the 26 weeks ended July 29, 2000, was 51.8% compared to 55.0% for the 26 weeks ended July 31, 1999. The decrease is primarily attributable to increased taxable earnings in relation to the fixed amount of acquisition non-deductible goodwill associated with the SUPERVALU acquisition. Net income was $4.7 million for the 26 weeks ended July 29, 2000 compared to $3.6 million for the 26 weeks ended July 31, 1999, an increase of 29.2%. Liquidity and Capital Resources - ------------------------------- During the 26 weeks ended July 29, 2000, operating activities generated net cash of $9.3 million, compared to $7.6 million provided during the 26 weeks ended July 31, 1999. The increase was due primarily to higher operating earnings in the current year. Investing activities generated net cash of $1.0 million during the 26 weeks ended July 29, 2000 compared to using $4.1 million for the 26 weeks ended July 31, 1999. The increase in net cash provided was due to the reimbursement of $4.4 million of renovation costs by a landlord. The Company estimates that it will make total capital expenditures of approximately $44.0 million during the 52 weeks ending February 3, 2001, of which $23.0 million relates to capital leases for new stores. Management expects that these capital expenditures will be financed primarily through cash flows from operations, cash provided by affiliated companies and capital leases. Financing activities used $12.1 million during the 26 weeks ended July 29, 2000, compared to using $8.2 million during the 13 weeks ended July 31, 1999. The increase was due to the change in cash provided to affiliated companies and an increase in payments on capital leases. The Company believes that cash flows from SFW's operations as well as cash provided by affiliated companies will be adequate to meet its anticipated requirements for working capital, debt service, and capital expenditures. PART II - Other Information Item 1. Legal Proceedings None Item 2. Changes in Securities and Use of Proceeds N/A Item 3. Defaults Upon Senior Securities N/A Item 4. Submission of Matters to a Vote of Security Holders N/A Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (A) Exhibits 27.1 Financial Data Schedule (B) Reports on Form 8-K None 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. SFW HOLDING CORP Date: September 12, 2000 By: /s/ Pamela K. Knous ------------------------------------- Pamela K. Knous Executive Vice President, Chief Financial Officer (authorized officer of the registrant and principal financial officer) EX-27.1 2 0002.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE TWENTY-SIX WEEKS ENDED JULY 29, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS FEB-03-2001 JAN-30-2000 JUL-29-2000 1,679 0 11,521 (292) 33,843 52,474 78,762 (6,197) 499,509 85,628 202,423 0 0 0 196,562 499,509 439,591 439,591 329,924 329,924 0 0 7,261 9,687 5,016 4,671 0 0 0 4,671 140.13 140.13
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