-----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, EkG6+116TBXDFnK7MjTCl31Iozecv1RFWe8quwhH760wyisfV513sdN4W65Kns0g upUZHdwl7bgVfHmysPvraw== 0001045969-01-500517.txt : 20010613 0001045969-01-500517.hdr.sgml : 20010613 ACCESSION NUMBER: 0001045969-01-500517 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010428 FILED AS OF DATE: 20010612 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SFW HOLDING CORP CENTRAL INDEX KEY: 0001043066 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [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: 1659308 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 d10q.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 April 28, 2001. ( ) 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 52-2014682 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 11840 Valley View Road, Eden Prairie, Minnesota 55344 ----------------------------------------------------- (Address of principal executive office) (Zip Code) (952) 828-4000 ---------------------------------------------------- (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 June 8, 2001 the registrant had 1,000 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 Item 1. Financial Statements The consolidated financial statements of SFW Holding Crop. (the "Company") and its wholly-owned subsidiary, Shoppers Food Warehouse Corp. ("Shoppers") included herein have been prepared by the Company without audit (except for the consolidated balance sheet as of January 27, 2001, 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 the Company's Annual Report on Form 10-K for the fiscal year ended January 27, 2001. SFW HOLDING CORP. AND SUBSIDIARY UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data)
April 28, January 27, 2001 2001 -------------- ------------- Assets Current assets: Cash and cash equivalents $ 4,124 $ 2,966 Accounts receivable, net 9,432 20,120 Merchandise inventories 35,165 38,065 Other current assets 5,897 5,286 -------------- ------------- Total current assets 54,618 66,437 Property and equipment, net 88,159 88,400 Goodwill, net 297,714 297,725 Lease rights, net 26,419 26,706 Note receivable, related party 47,953 46,897 Other assets 830 825 -------------- ------------- Total assets $ 515,693 $ 526,990 ============== ============= Liabilities and Stockholder's equity Current liabilities: Accounts payable $ 9,772 $ 8,861 Accrued expenses 24,906 23,388 Due to affiliates 46,728 63,677 Accrued income taxes 18,083 16,122 Current maturities of capital lease obligations 796 658 -------------- ------------- Total current liabilities 100,285 112,706 Senior notes due 2004 177,416 178,370 Capital lease obligations 26,319 26,619 Other liabilities 8,633 8,633 -------------- ------------- Total liabilities 312,653 326,328 -------------- ------------- 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 13,632 11,254 -------------- ------------- Total stockholder's equity 203,040 200,662 -------------- ------------- Total liabilities and stockholder's equity $ 515,693 $ 526,990 ============== =============
The accompanying notes are an integral part of these consolidated financial statements. SFW HOLDING CORP. AND SUBSIDIARY UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (in thousands)
April 28, 2001 April 29, 2000 ------------------ ------------------ (13 weeks) (13 weeks) Sales $ 235,900 $ 214,636 Cost of sales 177,474 161,223 ------------------ ------------------ Gross profit 58,426 53,413 Selling and administrative expenses 51,027 47,651 ------------------ ------------------ Operating income 7,399 5,762 Interest income 1,509 1,021 Interest expense 3,883 3,554 ------------------ ------------------ Net interest expense 2,374 2,533 Earnings before income taxes 5,025 3,229 Provision for income taxes 2,647 1,822 ------------------ ------------------ Net earnings $ 2,378 $ 1,407 ================== ==================
The accompanying notes are an integral part of these consolidated financial statements. SFW HOLDING CORP. AND SUBSIDIARY UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
April 28, 2001 April 29, 2000 --------------- -------------- (13 weeks) (13 weeks) Net cash provided by operating activities: 20,461 4,730 Cash flows used in investing activity: Capital expenditures (2,192) (3,899) Cash flows used in financing activities: Cash provided to affiliated companies (16,949) (2,738) Principal payments under capital lease obligations (162) (402) Net cash used in financing activities (17,111) (3,140) Net increase (decrease) in cash and cash equivalents 1,158 (2,309) Cash and cash equivalents, beginning of period 2,966 3,390 --------------- -------------- Cash and cash equivalents, end of period $ 4,124 $ 1,081 =============== ==============
The accompanying notes are an integral part of these consolidated financial statements. NOTE 1 - GENERAL General The accompanying consolidated financial statements include the accounts of SFW Holding Corp. (a Delaware corporation) and its subsidiaries, ("SFW" or the "Company") for the 13 weeks ended April 28, 2001 ("first quarter 2002"), and the 13 weeks ended April 29, 2000 ("first quarter 2001"). All significant intercompany accounts and transactions have been eliminated. Shoppers, the Company's operating subsidiary, operates in one business segment. The Company is an indirect wholly-owned subsidiary of SUPERVALU INC. ("SUPERVALU"). The accompanying consolidated financial statements of the Company as of April 28, 2001, and for first quarter 2002 and first quarter 2001, have not been audited. Certain information and footnote disclosures normally included in the consolidated 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 April 28, 2001, and the results of its operations for first quarter 2002 and first quarter 2001. Use of Estimates in Financial Statements The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. NOTE 2 - TRANSACTIONS WITH AFFILIATES Transactions with SUPERVALU The consolidated balance sheet includes $46.7 million and $63.7 million due to affiliates at April 28, 2001 and January 27, 2001, respectively. The amounts outstanding consist primarily of amounts due to SUPERVALU for the purchase of bonds, capital spending, incomes taxes, inventory purchases and general and administrative expenses. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company's sole asset is its ownership of 100% of the outstanding common stock of Shoppers. The Company's business is substantially the same as that of Shoppers and is subject to all of the risks associated therewith. Therefore, substantially all of the information set forth herein which pertains to the operations of the Company's business and its financial condition references the business and financial condition of Shoppers. Forward Looking Statements Statements in this report that are not historical in nature, including references to beliefs, anticipations or expectations, are "forward-looking" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are subject to a wide variety of risks and uncertainties that could cause actual results to differ materially from those projected including, without limitation, the ability of the Company to open new stores, the effect of regional economic conditions, the effect of increased competition in the markets in which the Company operates and other risks described from time to time in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation and does not intend to update, revise or otherwise publicly release any revisions to these forward-looking statements, which revisions may be made to reflect any future events or circumstances, other than through its regular quarterly and annual reports filed with the Securities and Exchange Commission (the "SEC"). Results of Operations Sales were $235.9 million for first quarter 2002, compared to $214.6 million for first quarter 2001, an increase of 9.9%. The sales increase was primarily due to the opening of four new stores since first quarter 2001, as well as an increase of 0.8% in comparable store sales. Gross profit, as a percentage of sales, remained essentially flat at 24.8% during first quarter 2002 and 24.9% during first quarter 2001. Selling and administrative expenses, as a percentage of sales, decreased to 21.6% for first quarter 2002, compared to 22.2% for first quarter 2001. The decrease is due to a focus on expense control combined with sales increases, which resulted in favorable expense leverage as a percent of sales. Operating income was $7.4 million for first quarter 2002, compared to $5.8 million for first quarter 2001. The increase was primarily due to the increase in sales. Interest income increased by approximately $0.5 million for first quarter 2002, compared to first quarter 2001, due to an increase in the outstanding balance of the notes receivable. Interest expense increased approximately $0.3 million from $3.6 million during first quarter 2001, to $3.9 million during first quarter 2002. The increase in interest expense was due to the interest relating to capital leases for new stores. The effective income tax rate for first quarter 2002 was 52.7%, compared to 56.4% for first quarter 2001. The decrease is primarily attributable to increased taxable earnings in relation to the fixed amount of non-deductible goodwill associated with the SUPERVALU acquisition. Net income was $2.4 million during first quarter 2002, compared to $1.4 million during first quarter 2001, an increase of 69.0%. Liquidity and Capital Resources During first quarter 2002, operating activities generated net cash of $20.5 million, compared to generating $4.7 million during first quarter 2001. The increase was primarily due to an increase in working capital of $12.7 million for first quarter 2002, compared to first quarter 2001. Investing activities used $2.2 million for capital expenditures during first quarter 2002, compared to $3.9 million during first quarter 2001. Financing activities primarily reflect the payment to affiliated companies of $16.9 million in first quarter 2002, compared to $2.7 million during first quarter 2001. The change was primarily due to the change in cash provided by operating activities for first quarter 2002, compared to first quarter 2001. The Company believes that cash flows from Shoppers' 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. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The registrant's market risk exposure is not material. Interest on both the Company's notes receivable and Senior Notes are at fixed rates. The market value of the fixed rate notes is subject to change due to fluctuations in market interest rates. The Company does not have any other financial instruments that result in material exposure to interest rate risk. PART II - Other Information Item 1. Legal Proceedings None Item 2. Changes in Securities and Use of Proceeds Not Applicable Item 3. Defaults Upon Senior Securities Not Applicable Item 4. Submission of Matters to a Vote of Security Holders Not Applicable Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (A) Exhibits None (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: June 12, 2001 By: /s/ Pamela K. Knous ------------------------------------- Pamela K. Knous Executive Vice President, Chief Financial Officer (authorized officer of the registrant and principal financial officer) -----END PRIVACY-ENHANCED MESSAGE-----