Prospectus Supplement No.3
Filed Pursuant to Rule 424(b)(3)
File Number 333-168065
Prospectus Supplement No. 3
(To prospectus dated November 1, 2010)
Tops Holding Corporation
Tops Markets, LLC
$350,000,000
10.125% Senior Secured Notes due 2015
This prospectus supplement No. 3 supplements and amends the prospectus dated November 1, 2010, as
supplemented and amended by prospectus supplement No. 1 dated November 22, 2010 and prospectus supplement No. 2 dated
April 1, 2011 (the Prospectus). This prospectus supplement should be read in conjunction with the Prospectus and may
not be delivered or utilized without the Prospectus.
On June 6, 2011, Tops Holding Corporation filed with the Securities and Exchange Commission its quarterly report
for the period ended April 23, 2011.
The date of this prospectus supplement is June 7, 2011.
1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED APRIL 23, 2011
OR
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o |
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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 333-168065
TOPS HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware
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26-1252536 |
(State or other jurisdiction of
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(I.R.S. Employer Identification No.) |
incorporation or organization) |
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6363 Main Street,
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(716) 635-5000 |
Williamsville, New York 14221
(Address of principal executive office, including zip code)
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(Telephone Number) |
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 þ No o.
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes
o No þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the
Exchange Act.
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer þ
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Smaller reporting company o |
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(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes o No þ
As of June 6, 2011, 144,776 shares of common stock of the registrant were outstanding.
TOPS HOLDING CORPORATION
TABLE OF CONTENTS
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1 |
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2 |
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3 |
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4 |
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16 |
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23 |
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24 |
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24 |
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25 |
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25 |
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25 |
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PART I FINANCIAL INFORMATION (Unaudited)
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ITEM 1. |
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CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
TOPS HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share amounts)
(Unaudited)
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April 23, 2011 |
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January 1, 2011 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
24,712 |
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$ |
17,419 |
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Accounts receivable, net |
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56,880 |
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57,044 |
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Inventory, net |
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118,703 |
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117,328 |
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Prepaid expenses and other current assets |
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15,229 |
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14,093 |
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Assets held for sale |
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650 |
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Income taxes refundable |
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186 |
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200 |
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Current deferred tax assets |
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2,265 |
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2,265 |
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Total current assets |
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217,975 |
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208,999 |
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Property and equipment, net |
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376,005 |
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378,575 |
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Intangible assets, net (Note 3) |
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76,343 |
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79,072 |
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Other assets |
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12,959 |
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13,705 |
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Total assets |
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$ |
683,282 |
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$ |
680,351 |
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Liabilities and Shareholders Deficit |
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Current liabilities: |
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Accounts payable |
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$ |
113,065 |
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$ |
93,311 |
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Accrued expenses and other current liabilities (Note 4) |
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61,324 |
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79,123 |
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Current portion of capital lease obligations |
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11,649 |
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11,095 |
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Current portion of long-term debt (Note 5) |
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407 |
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402 |
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Total current liabilities |
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186,445 |
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183,931 |
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Capital lease obligations |
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168,488 |
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172,216 |
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Long-term debt (Note 5) |
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370,250 |
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365,262 |
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Other long-term liabilities |
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21,649 |
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21,099 |
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Non-current deferred tax liabilities |
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3,701 |
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3,354 |
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Total liabilities |
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750,533 |
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745,862 |
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Shareholders deficit: |
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Common shares ($0.001 par value; 300,000 authorized shares,
144,776 shares issued & outstanding) |
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Paid-in capital |
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(2,320 |
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(2,668 |
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Accumulated deficit |
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(64,595 |
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(62,507 |
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Accumulated other comprehensive loss, net of tax |
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(336 |
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(336 |
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Total shareholders deficit |
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(67,251 |
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(65,511 |
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Total liabilities and shareholders deficit |
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$ |
683,282 |
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$ |
680,351 |
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See notes to unaudited condensed consolidated financial statements.
1
TOPS HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
(Unaudited)
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16-week periods ended |
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April 23, 2011 |
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April 24, 2010 |
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Net sales |
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$ |
717,259 |
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$ |
665,015 |
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Cost of goods sold |
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(500,744 |
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(458,168 |
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Distribution costs |
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(14,163 |
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(13,088 |
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Gross profit |
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202,352 |
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193,759 |
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Operating expenses: |
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Wages, salaries and benefits |
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(98,982 |
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(94,279 |
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Selling and general expenses |
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(33,383 |
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(31,763 |
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Administrative expenses (inclusive of stock-based
compensation expense of $348 and $244) |
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(25,483 |
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(39,979 |
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Rent expense, net |
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(5,903 |
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(5,837 |
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Depreciation and amortization |
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(15,041 |
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(18,730 |
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Advertising |
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(5,990 |
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(6,053 |
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Total operating expenses |
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(184,782 |
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(196,641 |
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Operating income (loss) |
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17,570 |
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(2,882 |
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Bargain purchase |
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15,681 |
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Loss on debt extinguishment |
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(1,008 |
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Interest expense, net |
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(19,291 |
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(18,410 |
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Loss before income taxes |
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(1,721 |
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(6,619 |
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Income tax (expense) benefit |
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(367 |
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9,913 |
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Net (loss) income |
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$ |
(2,088 |
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$ |
3,294 |
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See notes to unaudited condensed consolidated financial statements.
2
TOPS HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
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16-week periods ended |
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April 23, 2011 |
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April 24, 2010 |
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Cash flows provided by (used in) operating activities: |
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Net (loss) income |
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$ |
(2,088 |
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$ |
3,294 |
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Adjustments to reconcile net (loss) income to net cash provided by (used in)
operating activities: |
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Depreciation and amortization |
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20,318 |
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22,567 |
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Amortization of deferred financing costs |
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803 |
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679 |
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LIFO inventory valuation adjustments |
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(663 |
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(1,106 |
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Stock-based compensation expense |
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348 |
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244 |
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Deferred income taxes |
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347 |
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(10,288 |
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Bargain purchase |
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(15,681 |
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Loss on debt extinguishment |
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1,008 |
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Other |
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115 |
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314 |
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Changes in operating assets and liabilities: |
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Decrease (increase) in accounts receivable |
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164 |
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(1,364 |
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Increase in inventory, net |
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(712 |
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(1,028 |
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Increase in prepaid expenses and other current assets |
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(1,136 |
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(601 |
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Decrease in income taxes refundable |
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14 |
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Increase in accounts payable |
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20,044 |
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1,428 |
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Decrease in accrued expenses and other current liabilities |
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(15,776 |
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(3,463 |
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Increase in other long-term liabilities |
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525 |
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411 |
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Net cash provided by (used in) operating activities |
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22,303 |
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(3,586 |
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Cash flows used in investing activities: |
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Cash paid for property and equipment |
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(16,954 |
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(8,779 |
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Proceeds from sale of assets |
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650 |
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14,919 |
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Acquisition of Penn Traffic assets |
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(85,023 |
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Net cash used in investing activities |
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(16,304 |
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(78,883 |
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Cash flows provided by financing activities: |
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Borrowings on ABL Facility |
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220,800 |
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58,100 |
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Repayments on ABL Facility |
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(215,800 |
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(72,100 |
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Principal payments on capital leases |
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(3,233 |
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(2,670 |
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Proceeds from long-term debt borrowings |
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112,125 |
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Repayments of long-term debt borrowings |
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(126 |
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(36,113 |
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Change in bank overdraft position |
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(290 |
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323 |
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Deferred financing costs incurred |
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(57 |
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(4,782 |
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Proceeds from issuance of common stock |
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30,000 |
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Net cash provided by financing activities |
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1,294 |
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84,883 |
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Net increase in cash and cash equivalents |
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7,293 |
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2,414 |
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Cash and cash equivalentsbeginning of period |
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17,419 |
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19,722 |
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Cash and cash equivalentsend of period |
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$ |
24,712 |
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$ |
22,136 |
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See notes to unaudited condensed consolidated financial statements.
3
TOPS HOLDING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF THE COMPANY AND BASIS OF PRESENTATION
The Company
Tops Holding Corporation (Holding or Company) is the parent of Tops Markets, LLC (Tops or
Tops Markets). Holding was incorporated on October 5, 2007 and commenced operations on December
1, 2007. Holding is owned by various funds affiliated with Morgan Stanley Private Equity, an
affiliate of Morgan Stanley (Morgan Stanley), HSBC Private Equity Partners (HSBC), two minority
investors and a company employee. Holding has no other business operations as its sole purpose is
the ownership of Tops Markets. Tops operates as a food retailer in Upstate New York and Northern
Pennsylvania under the banner Tops.
On January 29, 2010, the Company completed the acquisition (the Acquisition) of substantially all
assets and certain liabilities of The Penn Traffic Company (Penn Traffic) and its subsidiaries,
including Penn Traffics 79 retail supermarkets, in exchange for cash consideration of $85.0
million. The Company has retained 55 of the acquired supermarkets, which currently operate under
the banners of Tops, P&C and Quality Markets in Upstate New York and Northern Pennsylvania. In
August 2010, the Federal Trade Commission (FTC) issued a Proposed Order that would require Tops
to sell seven of these retained supermarkets. In May 2011, Tops petitioned the FTC to approve an
agreement to sell three of these supermarkets, which is subject to a 30-day comment period ending
June 6, 2011. The Company is currently unable to determine the likelihood that the FTC will
approve this agreement. As part of a Final Order from the FTC, the Company will be required to
retain a divestiture trustee to market the supermarkets subject to the Proposed Order that have not
otherwise been sold. Net sales and operating loss for these seven
supermarkets were $17.2 million and $0.1 million, respectively, for the 16-week period ended April 23, 2011. The remaining
24 acquired supermarkets have been closed or sold. As of April 23, 2011, the Company operated 128
corporate retail supermarkets with an additional 5 franchise supermarkets.
Accounting Policies
The summary of significant accounting policies is included in Note 1 to the audited consolidated
financial statements of Tops Holding Corporation for the fiscal year ended January 1, 2011.
Basis of Presentation and Principles of Consolidation
The accompanying condensed consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America (GAAP). The condensed
consolidated financial statements include the accounts of the Company and all of its subsidiaries.
All intercompany transactions have been eliminated.
The Companys condensed consolidated financial statements for the 16-week periods ended April 23,
2011 and April 24, 2010 are unaudited, and, in the opinion of management, contain all adjustments
that are of a normal and recurring nature necessary for a fair statement of financial position and
results of operations for such periods.
The allocation of the purchase price to the assets acquired and liabilities assumed from the
Acquisition previously presented for the 16-week period ended April 24, 2010 has been
retrospectively adjusted to reflect final acquisition accounting adjustments made during Fiscal
2010. See Note 2 to the audited consolidated financial statements of Tops Holding Corporation for
the fiscal year ended January 1, 2011 for a summary of the final purchase price allocation.
Segments
The Company operates 128 corporate retail supermarkets with an additional 5 franchise supermarkets,
which offer grocery, produce, frozen, dairy, meat, floral, seafood, health and beauty care, general
merchandise, deli and bakery goods. Across all 128 retail supermarkets, the Company operates one
format where each supermarket offers the same general mix of products with similar pricing to
similar categories of customers. The Company has concluded that each individual supermarket is an
operating segment. As of April 23, 2011, 79 of the supermarkets offer pharmacy services and 38
fuel centers were in operation, including the franchise locations. The Companys retail
operations, which represent substantially all of the Companys consolidated sales, earnings and
total assets, are its only reportable segment.
These 128 operating segments have been aggregated into one reportable segment because, in the
Companys judgment, the operating segments have similar historical economic characteristics and are
expected to have similar economic characteristics and long-term financial performance in the
future. The principal measures and factors considered in determining whether the economic
characteristics are similar are gross margin percentage, capital expenditures, competitive
risks and employee labor agreements. In addition, each operating segment has similar products and
types of customers, similar methods of distribution and a similar regulatory environment.
4
The following table presents sales revenue by type of similar product (dollars in thousands):
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16-week period ended April 23, 2011 |
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16-week period ended April 24, 2010 |
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Amount |
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% of Total |
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Amount |
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% of Total |
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Non-perishables(1) |
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$ |
410,210 |
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57.2 |
% |
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$ |
387,614 |
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58.3 |
% |
Perishables(2) |
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188,658 |
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26.3 |
% |
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175,911 |
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26.5 |
% |
Fuel |
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58,366 |
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8.1 |
% |
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41,048 |
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6.2 |
% |
Pharmacy |
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55,094 |
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7.7 |
% |
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56,015 |
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8.4 |
% |
Other(3) |
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4,931 |
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0.7 |
% |
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|
4,427 |
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0.6 |
% |
|
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$ |
717,259 |
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100.0 |
% |
|
$ |
665,015 |
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100.0 |
% |
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(1) |
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Non-perishables consist of grocery, dairy, frozen, general merchandise, health and
beauty care and other non-perishable related products. |
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(2) |
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Perishables consist of produce, meat, seafood, bakery, deli, floral, prepared foods and
other perishable related products. |
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(3) |
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Other primarily consists of franchise income and service commission income, including
lottery, money orders and money transfers. |
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the amounts reported in the Companys
condensed consolidated financial statements and notes thereto. The most significant estimates used
by management are related to the accounting for vendor allowances, valuation of long-lived assets
including intangible assets, acquisition accounting, lease classification, self-insurance reserves,
inventory valuation, and income taxes. Actual results could differ from these estimates.
Fair Value of Financial Instruments
The provisions of ASC 820, Fair Value Measurements and Disclosures establish a framework for
measuring fair value and a hierarchy that categorizes and prioritizes the sources to be used to
estimate fair value as follows:
Level 1 observable inputs such as quoted prices in active markets;
|
|
Level 2 inputs include quoted prices for similar assets and liabilities in active
markets, quoted prices for identical or similar assets or liabilities in markets that are
not active, inputs other than quoted prices that are observable for the asset or liability
(interest rates, yield curves, etc.), and inputs that are derived principally from or
corroborated by observable market data by correlation or other means (market corroborated
inputs); and |
|
|
Level 3 unobservable inputs that reflect the Companys determination of assumptions that
market participants would use in pricing the asset or liability. These inputs are developed
based on the best information available, including the Companys own data. |
The carrying amount of the Companys cash and cash equivalents at April 23, 2011 represents fair
value as it includes cash on deposit with commercial banks.
The fair value of the Companys senior secured notes is based on quoted market prices. At April
23, 2011, the fair value of total debt excluding capital leases was $417.2 million, compared to a
carrying value of $370.7 million. At January 1, 2011, the fair value of total debt excluding
capital leases was $408.4 million, compared to a carrying value of $365.7 million.
2. RECENT ACCOUNTING PRONOUNCEMENTS
There are currently no recent accounting pronouncements which had or are expected to have a
material impact on the Companys consolidated financial statements as of the date of this Quarterly
Report on Form 10-Q (10-Q).
5
3. INTANGIBLE ASSETS, NET
Intangible assets, net of accumulated amortization, consist of the following (dollars in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
Gross |
|
|
|
|
|
|
Net |
|
|
Average |
|
|
|
Carrying |
|
|
Accumulated |
|
|
Carrying |
|
|
Amortization |
|
April 23, 2011 |
|
Amount |
|
|
Amortization |
|
|
Amount |
|
|
Period |
|
Acquired Penn Traffic intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Favorable/unfavorable lease rights |
|
$ |
7,023 |
|
|
$ |
(1,222 |
) |
|
$ |
5,801 |
|
|
|
7.9 |
|
Tradenames |
|
|
4,200 |
|
|
|
(944 |
) |
|
|
3,256 |
|
|
|
8.5 |
|
Customer relationships |
|
|
1,700 |
|
|
|
(389 |
) |
|
|
1,311 |
|
|
|
11.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tradename |
|
|
41,011 |
|
|
|
|
|
|
|
41,011 |
|
|
Indefinite life |
|
Customer relationships |
|
|
26,051 |
|
|
|
(16,196 |
) |
|
|
9,855 |
|
|
|
8.0 |
|
Favorable/unfavorable lease rights |
|
|
14,369 |
|
|
|
(7,468 |
) |
|
|
6,901 |
|
|
|
9.3 |
|
Franchise agreements |
|
|
11,538 |
|
|
|
(3,565 |
) |
|
|
7,973 |
|
|
|
11.0 |
|
Other |
|
|
403 |
|
|
|
(168 |
) |
|
|
235 |
|
|
|
4.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
106,295 |
|
|
$ |
(29,952 |
) |
|
$ |
76,343 |
|
|
|
9.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross |
|
|
|
|
|
|
Net |
|
|
|
Carrying |
|
|
Accumulated |
|
|
Carrying |
|
January 1, 2011 |
|
Amount |
|
|
Amortization |
|
|
Amount |
|
Acquired Penn Traffic intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Favorable/unfavorable lease rights |
|
$ |
7,023 |
|
|
$ |
(899 |
) |
|
$ |
6,124 |
|
Tradenames |
|
|
4,200 |
|
|
|
(700 |
) |
|
|
3,500 |
|
Customer relationships |
|
|
1,700 |
|
|
|
(300 |
) |
|
|
1,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Tradename |
|
|
41,011 |
|
|
|
|
|
|
|
41,011 |
|
Customer relationships |
|
|
26,051 |
|
|
|
(14,931 |
) |
|
|
11,120 |
|
Favorable/unfavorable lease rights |
|
|
14,369 |
|
|
|
(7,003 |
) |
|
|
7,366 |
|
Franchise agreements |
|
|
11,538 |
|
|
|
(3,242 |
) |
|
|
8,296 |
|
Other |
|
|
497 |
|
|
|
(242 |
) |
|
|
255 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
106,389 |
|
|
$ |
(27,317 |
) |
|
$ |
79,072 |
|
|
|
|
|
|
|
|
|
|
|
The Tops tradename is reviewed for impairment annually or more frequently if impairment
indicators arise. Based on the Companys assessment, no impairment was recorded during the 16-week
periods ended April 23, 2011 and April 24, 2010.
During the 16-week periods ended April 23, 2011 and April 24, 2010, amortization expense was $2.7
million and $3.0 million, respectively, and is included in administrative expenses in the
consolidated statements of operations.
As of April 23, 2011, expected future amortization of intangible assets is as follows (dollars in
thousands):
|
|
|
|
|
2011 (remaining period) |
|
$ |
5,847 |
|
2012 |
|
|
6,863 |
|
2013 |
|
|
6,018 |
|
2014 |
|
|
5,218 |
|
2015 |
|
|
3,983 |
|
Thereafter |
|
|
7,403 |
|
6
4. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of the following (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
April 23, 2011 |
|
|
January 1, 2011 |
|
Wages, taxes and benefits |
|
$ |
14,187 |
|
|
$ |
18,918 |
|
Lottery |
|
|
10,436 |
|
|
|
10,083 |
|
Property and equipment expenditures |
|
|
4,083 |
|
|
|
6,107 |
|
Sales and use tax |
|
|
3,750 |
|
|
|
2,101 |
|
Union medical, pension and 401(k) |
|
|
3,508 |
|
|
|
4,598 |
|
Gift cards |
|
|
2,788 |
|
|
|
4,271 |
|
Utilities |
|
|
2,787 |
|
|
|
2,980 |
|
Money orders |
|
|
2,762 |
|
|
|
3,651 |
|
Vacation |
|
|
2,283 |
|
|
|
1,110 |
|
Repairs and maintenance |
|
|
2,024 |
|
|
|
2,054 |
|
Professional and legal fees |
|
|
1,549 |
|
|
|
3,640 |
|
Self-insurance reserves |
|
|
1,406 |
|
|
|
1,406 |
|
Advertising |
|
|
1,262 |
|
|
|
1,920 |
|
Interest payable |
|
|
1,030 |
|
|
|
8,318 |
|
Other |
|
|
7,469 |
|
|
|
7,966 |
|
|
|
|
|
|
|
|
|
|
$ |
61,324 |
|
|
$ |
79,123 |
|
|
|
|
|
|
|
|
5. DEBT
Long-term debt is comprised of the following (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
April 23, 2011 |
|
|
January 1, 2011 |
|
Senior Notes |
|
$ |
350,000 |
|
|
$ |
350,000 |
|
Discount on Senior Notes, net |
|
|
(2,795 |
) |
|
|
(2,914 |
) |
ABL Facility |
|
|
20,000 |
|
|
|
15,000 |
|
Other loans |
|
|
2,344 |
|
|
|
2,400 |
|
Mortgage note payable |
|
|
1,108 |
|
|
|
1,178 |
|
|
|
|
|
|
|
|
Total debt |
|
|
370,657 |
|
|
|
365,664 |
|
Current portion |
|
|
(407 |
) |
|
|
(402 |
) |
|
|
|
|
|
|
|
Total long-term debt |
|
$ |
370,250 |
|
|
$ |
365,262 |
|
|
|
|
|
|
|
|
On October 9, 2009, the Company issued $275.0 million of Senior Notes, bearing interest of
10.125%. The Company received proceeds from the Senior Notes issuance, net of a $4.5 million
original issue discount, of $270.5 million. The Senior Notes mature October 15, 2015 and require
semi-annual interest payments on April 15 and October 15. The Senior Notes are collateralized by (i)
first-priority interests, subject to certain exceptions, in the Companys warehouse distribution
facility in Lancaster, New York, certain owned real property acquired by the Company, Tops Markets
and the guarantors, Tops PT, LLC and Tops Gift Card Company, LLC, following the issue date of the
Senior Notes, intellectual property, equipment, stock of subsidiaries and substantially all other
assets of the Company, Tops Markets and the guarantors (other than leasehold interests in real
property), other than assets securing the ABL Facility on a first priority basis (collectively, the
Notes Priority Collateral), and (ii) second-priority interests, subject to certain exceptions and
permitted liens, in the assets of the Company, Tops Markets and the guarantors that secure the ABL
Facility on a first-priority basis, including present and future receivables, inventory,
prescription lists, deposit accounts and certain related rights and proceeds relating thereto
(collectively, the ABL Priority Collateral).
Also effective October 9, 2009, the Company entered into a revolving ABL Facility that expires on
October 9, 2013. The ABL Facility allowed a maximum borrowing capacity of $70.0 million, including
a sub-limit for the issuance of letters of credit, subject to a borrowing base calculation. The
Companys ABL Facility was amended on January 29, 2010 to increase its borrowing capacity by up to
$41.0 million, consisting of an increase in the amount available under the revolving credit
facility of $30.0 million and a Term Loan of $11.0 million, in each case subject to a borrowing
base calculation. The Term Loan was repaid in full with the proceeds from the $75.0 million of
Senior Notes issued on February 12, 2010, as further described below. Based upon the borrowing
base calculation as of April 23, 2011, the unused commitment under the ABL Facility was $54.3
million, after giving effect to $14.2 million of letters of credit outstanding thereunder.
Revolving loans under the ABL Facility will, at the Companys option, bear interest at either i)
LIBOR plus a margin of 350 to 400 basis points, determined based on levels of borrowing
availability, or ii) the prime rate plus a margin of 250 to 300 basis points, determined based on
levels of borrowing availability. The ABL Facility is collateralized primarily by (i)
first-priority interests, subject to certain exceptions, in the ABL Priority Collateral and (ii)
second-priority interests, subject to certain exceptions, in the Notes Priority Collateral.
7
The proceeds from the Senior Notes and ABL Facility were utilized to repay the outstanding debt
related to the Companys previous senior secured credit facility
and warehouse mortgage, pay a $105.0 million
dividend to the Companys owners, settle the Companys outstanding interest rate swap arrangement,
and pay fees and expenses related to the financing transactions.
On January 29, 2010, the Company entered into a $25.0 million Bridge Loan with Morgan Stanley
Senior Funding, Inc. and Banc of America Bridge LLC. The Bridge Loan was repaid in full with the
proceeds from the $75.0 million of Senior Notes issued on February 12, 2010.
On February 12, 2010, the Company issued the additional $75.0 million of Senior Notes on the same
terms as the October 2009 issuance. The Company received proceeds of $76.1 million from this
issuance, including a $1.1 million original issue premium. The Company incurred $4.7 million of
financing costs, primarily related to the additional Senior Notes issuance, which are capitalized
in other assets in the Companys consolidated balance sheet.
The Senior Notes and ABL Facility contain customary affirmative and negative covenants, including
restrictions on indebtedness, liens, type of business, acquisitions, investments, sale or transfer
of assets, payment of dividends, transactions involving affiliates, change in control and other
matters customarily restricted in such agreements. Failure to meet any of these covenants would be
an event of default. As of April 23, 2011, the Company was in compliance with all such covenants.
6. INCOME TAXES
Income tax (expense) benefit was as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
16-week periods ended |
|
|
|
April 23, 2011 |
|
|
April 24, 2010 |
|
Current |
|
$ |
(20 |
) |
|
$ |
(375 |
) |
Deferred |
|
|
(347 |
) |
|
|
10,288 |
|
|
|
|
|
|
|
|
|
|
$ |
(367 |
) |
|
$ |
9,913 |
|
|
|
|
|
|
|
|
The income tax expense for the 16-week period ended April 23, 2011 reflects the establishment
of additional valuation allowance against net deferred tax assets resulting from the pre-tax loss
during the period. The overall effective tax rate was (21.3)%. The effective tax rate would have
been 34.5% without the impact of the additional valuation allowance and discrete charges.
The income tax benefit for the 16-week period ended April 24, 2010 was primarily attributable to
the reversal of $10.3 million of the valuation allowance established in Fiscal 2009. The reversal
of the valuation allowance was the result of recording a deferred tax liability that resulted from
the bargain purchase associated with the Penn Traffic Acquisition. The timing of taxable income
resulting from the amortization of the gain for tax purposes provides sufficient future taxable
income to support the future deductibility of the Companys deferred tax assets. The overall
effective rate for the 16-week period ended April 24, 2010 was 149.8%. The effective tax rate
would have been 27.2% without the impact of adjustments to the valuation allowance, the bargain
purchase, and discrete charges.
7. RELATED PARTY TRANSACTIONS
Tops Markets made a five-year loan to an executive for $0.2 million in connection with the
executives relocation. During March 2010, the loan balance and related accrued interest was
forgiven upon approval by the Companys Board of Directors. This loan forgiveness is included in
administrative expenses in the condensed consolidated statement of operations for the 16-week
period ended April 24, 2010.
On January 29, 2010, the Company entered into a $25.0 million Bridge Loan with Morgan Stanley
Senior Funding, Inc. (an affiliate of MSPE) and Banc of America Bridge LLC, as discussed in Note 5.
Also on January 29, 2010, the Company received $30.0 million from the issuance of common stock to
related parties.
Effective November 30, 2007, Holding entered into a Transaction and Monitoring
Fee Agreement with MSPE and HSBC. In consideration of certain services provided to Holding, the
Company pays an annual monitoring fee of $0.8 million to MSPE and $0.2 million to HSBC, payable on
a quarterly basis. During each of the 16-week periods ended April 23, 2011 and April 24, 2010, the
Company paid $0.2 million related to this agreement. These fees are included in administrative
expenses in the condensed consolidated statements of operations.
8
8. GUARANTOR FINANCIAL STATEMENTS
The obligations of Holding and Tops Markets under the Senior Notes (the Guaranteed Notes) are
jointly and severally, fully and unconditionally guaranteed by Tops Gift Card Company, LLC and Tops
PT, LLC (the Guarantor Subsidiaries), both of which are wholly-owned subsidiaries of Tops
Markets. Tops Gift Card Company, LLC was established in October 2008, while Tops PT, LLC was
established in January 2010. Tops Markets is a joint issuer of the notes and is 100% owned by
Holding. Separate financial statements of Holding, Tops Markets and of the Guarantor Subsidiaries
are not presented as the guarantees are full and unconditional and the Guarantor Subsidiaries are
jointly and severally liable.
The following supplemental financial information sets forth, on a condensed consolidating basis,
balance sheets as of April 23, 2011 and January 1, 2011 for Holding and Tops Markets, the Guarantor
Subsidiaries, and for the Company, and the related statements of operations and statements of cash
flows for the 16-week periods ended April 23, 2011 and April 24, 2010.
For purposes of the guarantor financial statements, the Company and its subsidiaries determine the
applicable tax provision for each entity generally using the separate return method. Under this
method, current and deferred taxes are allocated to each reporting entity as if it were to file a
separate tax return. The rules followed by the reporting entity in computing its tax obligation or
refund, including the effects of the alternative minimum tax, would be the same as those followed
in filing a separate return with the Internal Revenue Service. However, for purposes of evaluating
an entitys ability to realize its tax attributes, the Company assesses whether it is more likely
than not that those assets will be realized at the consolidated level. Any differences in the
total of the income tax provision for Holding only and the Guarantor Subsidiaries, as calculated on
the separate return method, and the consolidated income tax provision, are eliminated in
consolidation.
9
TOPS HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
APRIL 23, 2011
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tops Holding |
|
|
|
|
|
|
Guarantor |
|
|
|
|
|
|
|
|
|
Corporation |
|
|
Tops Markets, LLC |
|
|
Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
|
|
|
$ |
23,976 |
|
|
$ |
736 |
|
|
$ |
|
|
|
$ |
24,712 |
|
Accounts receivable, net |
|
|
|
|
|
|
45,484 |
|
|
|
11,396 |
|
|
|
|
|
|
|
56,880 |
|
Intercompany receivables |
|
|
|
|
|
|
3,088 |
|
|
|
13,541 |
|
|
|
(16,629 |
) |
|
|
|
|
Inventory, net |
|
|
|
|
|
|
80,766 |
|
|
|
37,937 |
|
|
|
|
|
|
|
118,703 |
|
Prepaid expenses and
other current assets |
|
|
|
|
|
|
12,506 |
|
|
|
2,723 |
|
|
|
|
|
|
|
15,229 |
|
Income taxes refundable |
|
|
|
|
|
|
186 |
|
|
|
|
|
|
|
|
|
|
|
186 |
|
Current deferred tax assets |
|
|
|
|
|
|
1,657 |
|
|
|
|
|
|
|
608 |
|
|
|
2,265 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
|
|
|
|
167,663 |
|
|
|
66,333 |
|
|
|
(16,021 |
) |
|
|
217,975 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
|
|
|
|
300,593 |
|
|
|
75,412 |
|
|
|
|
|
|
|
376,005 |
|
Intangible assets, net |
|
|
|
|
|
|
65,894 |
|
|
|
10,449 |
|
|
|
|
|
|
|
76,343 |
|
Other assets |
|
|
|
|
|
|
12,959 |
|
|
|
3,041 |
|
|
|
(3,041 |
) |
|
|
12,959 |
|
Investment in subsidiaries |
|
|
(77,177 |
) |
|
|
105,981 |
|
|
|
|
|
|
|
(28,804 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
(77,177 |
) |
|
$ |
653,090 |
|
|
$ |
155,235 |
|
|
$ |
(47,866 |
) |
|
$ |
683,282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders
(Deficit) Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
|
|
|
$ |
84,910 |
|
|
$ |
28,155 |
|
|
$ |
|
|
|
$ |
113,065 |
|
Intercompany payables |
|
|
3,088 |
|
|
|
13,541 |
|
|
|
|
|
|
|
(16,629 |
) |
|
|
|
|
Accrued expenses and
other current liabilities |
|
|
737 |
|
|
|
46,743 |
|
|
|
14,588 |
|
|
|
(744 |
) |
|
|
61,324 |
|
Current portion of capital
lease obligations |
|
|
|
|
|
|
11,372 |
|
|
|
277 |
|
|
|
|
|
|
|
11,649 |
|
Current portion of long-term debt |
|
|
|
|
|
|
407 |
|
|
|
|
|
|
|
|
|
|
|
407 |
|
Current
deferred tax liabilities |
|
|
|
|
|
|
|
|
|
|
11 |
|
|
|
(11 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
3,825 |
|
|
|
156,973 |
|
|
|
43,031 |
|
|
|
(17,384 |
) |
|
|
186,445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital lease obligations |
|
|
|
|
|
|
164,546 |
|
|
|
3,942 |
|
|
|
|
|
|
|
168,488 |
|
Long-term debt |
|
|
|
|
|
|
373,291 |
|
|
|
|
|
|
|
(3,041 |
) |
|
|
370,250 |
|
Other long-term liabilities |
|
|
|
|
|
|
18,225 |
|
|
|
3,424 |
|
|
|
|
|
|
|
21,649 |
|
Non-current deferred tax
liabilities |
|
|
|
|
|
|
16,425 |
|
|
|
(1,143 |
) |
|
|
(11,581 |
) |
|
|
3,701 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
3,825 |
|
|
|
729,460 |
|
|
|
49,254 |
|
|
|
(32,006 |
) |
|
|
750,533 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders (deficit)
equity |
|
|
(81,002 |
) |
|
|
(76,370 |
) |
|
|
105,981 |
|
|
|
(15,860 |
) |
|
|
(67,251 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders
(deficit) equity |
|
$ |
(77,177 |
) |
|
$ |
653,090 |
|
|
$ |
155,235 |
|
|
$ |
(47,866 |
) |
|
$ |
683,282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
TOPS HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
JANUARY 1, 2011
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tops Holding |
|
|
|
|
|
|
Guarantor |
|
|
|
|
|
|
|
|
|
Corporation |
|
|
Tops Markets, LLC |
|
|
Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
|
|
|
$ |
16,689 |
|
|
$ |
730 |
|
|
$ |
|
|
|
$ |
17,419 |
|
Accounts receivable, net |
|
|
|
|
|
|
43,696 |
|
|
|
13,348 |
|
|
|
|
|
|
|
57,044 |
|
Intercompany receivables |
|
|
|
|
|
|
2,850 |
|
|
|
13,091 |
|
|
|
(15,941 |
) |
|
|
|
|
Inventory, net |
|
|
|
|
|
|
80,060 |
|
|
|
37,268 |
|
|
|
|
|
|
|
117,328 |
|
Prepaid expenses and other
current assets |
|
|
|
|
|
|
11,445 |
|
|
|
2,648 |
|
|
|
|
|
|
|
14,093 |
|
Assets held for sale |
|
|
|
|
|
|
|
|
|
|
650 |
|
|
|
|
|
|
|
650 |
|
Income taxes refundable |
|
|
|
|
|
|
200 |
|
|
|
|
|
|
|
|
|
|
|
200 |
|
Current deferred tax assets |
|
|
|
|
|
|
1,657 |
|
|
|
|
|
|
|
608 |
|
|
|
2,265 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
|
|
|
|
156,597 |
|
|
|
67,735 |
|
|
|
(15,333 |
) |
|
|
208,999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
|
|
|
|
309,856 |
|
|
|
68,719 |
|
|
|
|
|
|
|
378,575 |
|
Intangible assets, net |
|
|
|
|
|
|
68,048 |
|
|
|
11,054 |
|
|
|
|
|
|
|
79,072 |
|
Other assets |
|
|
|
|
|
|
13,705 |
|
|
|
3,041 |
|
|
|
(3,041 |
) |
|
|
13,705 |
|
Investment in subsidiaries |
|
|
(75,094 |
) |
|
|
104,799 |
|
|
|
|
|
|
|
(29,705 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
(75,094 |
) |
|
$ |
653,005 |
|
|
$ |
150,519 |
|
|
$ |
(48,079 |
) |
|
$ |
680,351 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders
(Deficit) Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
|
|
|
$ |
69,881 |
|
|
$ |
23,430 |
|
|
$ |
|
|
|
$ |
93,311 |
|
Intercompany payables |
|
|
2,850 |
|
|
|
13,091 |
|
|
|
|
|
|
|
(15,941 |
) |
|
|
|
|
Accrued expenses and other
current liabilities |
|
|
544 |
|
|
|
62,099 |
|
|
|
17,224 |
|
|
|
(744 |
) |
|
|
79,123 |
|
Current portion of capital
lease obligations |
|
|
|
|
|
|
10,754 |
|
|
|
341 |
|
|
|
|
|
|
|
11,095 |
|
Current portion of long-term
debt |
|
|
|
|
|
|
402 |
|
|
|
|
|
|
|
|
|
|
|
402 |
|
Current deferred tax
liabilities |
|
|
|
|
|
|
|
|
|
|
11 |
|
|
|
(11 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
3,394 |
|
|
|
156,227 |
|
|
|
41,006 |
|
|
|
(16,696 |
) |
|
|
183,931 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital lease obligations |
|
|
|
|
|
|
168,743 |
|
|
|
3,473 |
|
|
|
|
|
|
|
172,216 |
|
Long-term debt |
|
|
|
|
|
|
368,303 |
|
|
|
|
|
|
|
(3,041 |
) |
|
|
365,262 |
|
Other long-term liabilities |
|
|
|
|
|
|
17,941 |
|
|
|
3,158 |
|
|
|
|
|
|
|
21,099 |
|
Non-current deferred tax
liabilities |
|
|
|
|
|
|
16,078 |
|
|
|
(1,917 |
) |
|
|
(10,807 |
) |
|
|
3,354 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
3,394 |
|
|
|
727,292 |
|
|
|
45,720 |
|
|
|
(30,544 |
) |
|
|
745,862 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders (deficit)
equity |
|
|
(78,488 |
) |
|
|
(74,287 |
) |
|
|
104,799 |
|
|
|
(17,535 |
) |
|
|
(65,511 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
shareholders (deficit) equity |
|
$ |
(75,094 |
) |
|
$ |
653,005 |
|
|
$ |
150,519 |
|
|
$ |
(48,079 |
) |
|
$ |
680,351 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
TOPS HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE 16-WEEK PERIOD ENDED APRIL 23, 2011
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tops Holding |
|
|
|
|
|
|
Guarantor |
|
|
|
|
|
|
|
|
|
Corporation |
|
|
Tops Markets, LLC |
|
|
Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Net sales |
|
$ |
|
|
|
$ |
540,933 |
|
|
$ |
176,690 |
|
|
$ |
(364 |
) |
|
$ |
717,259 |
|
Cost of goods sold |
|
|
|
|
|
|
(382,718 |
) |
|
|
(118,026 |
) |
|
|
|
|
|
|
(500,744 |
) |
Distribution costs |
|
|
|
|
|
|
(10,181 |
) |
|
|
(3,982 |
) |
|
|
|
|
|
|
(14,163 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
|
|
|
|
148,034 |
|
|
|
54,682 |
|
|
|
(364 |
) |
|
|
202,352 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wages, salaries and benefits |
|
|
|
|
|
|
(71,285 |
) |
|
|
(27,697 |
) |
|
|
|
|
|
|
(98,982 |
) |
Selling and general expenses |
|
|
|
|
|
|
(23,324 |
) |
|
|
(10,423 |
) |
|
|
364 |
|
|
|
(33,383 |
) |
Administrative expenses |
|
|
(780 |
) |
|
|
(18,395 |
) |
|
|
(6,308 |
) |
|
|
|
|
|
|
(25,483 |
) |
Rent expense, net |
|
|
|
|
|
|
(3,146 |
) |
|
|
(2,757 |
) |
|
|
|
|
|
|
(5,903 |
) |
Depreciation and amortization |
|
|
|
|
|
|
(11,428 |
) |
|
|
(3,613 |
) |
|
|
|
|
|
|
(15,041 |
) |
Advertising |
|
|
|
|
|
|
(4,154 |
) |
|
|
(1,836 |
) |
|
|
|
|
|
|
(5,990 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
(780 |
) |
|
|
(131,732 |
) |
|
|
(52,634 |
) |
|
|
364 |
|
|
|
(184,782 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
|
|
(780 |
) |
|
|
16,302 |
|
|
|
2,048 |
|
|
|
|
|
|
|
17,570 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
|
|
|
|
(19,200 |
) |
|
|
(91 |
) |
|
|
|
|
|
|
(19,291 |
) |
Equity (loss) income from
subsidiaries |
|
|
(2,083 |
) |
|
|
1,182 |
|
|
|
|
|
|
|
901 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before
income taxes |
|
|
(2,863 |
) |
|
|
(1,716 |
) |
|
|
1,957 |
|
|
|
901 |
|
|
|
(1,721 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
|
|
|
|
(367 |
) |
|
|
(775 |
) |
|
|
775 |
|
|
|
(367 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(2,863 |
) |
|
$ |
(2,083 |
) |
|
$ |
1,182 |
|
|
$ |
1,676 |
|
|
$ |
(2,088 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
TOPS HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE 16-WEEK PERIOD ENDED APRIL 24, 2010
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tops Holding |
|
|
|
|
|
|
Guarantor |
|
|
|
|
|
|
|
|
|
Corporation |
|
|
Tops Markets, LLC |
|
|
Subsidiary |
|
|
Eliminations |
|
|
Consolidated |
|
Net sales |
|
$ |
|
|
|
$ |
515,443 |
|
|
$ |
149,881 |
|
|
$ |
(309 |
) |
|
$ |
665,015 |
|
Cost of goods sold |
|
|
|
|
|
|
(360,560 |
) |
|
|
(97,608 |
) |
|
|
|
|
|
|
(458,168 |
) |
Distribution costs |
|
|
|
|
|
|
(9,590 |
) |
|
|
(3,498 |
) |
|
|
|
|
|
|
(13,088 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
|
|
|
|
145,293 |
|
|
|
48,775 |
|
|
|
(309 |
) |
|
|
193,759 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wages, salaries and benefits |
|
|
|
|
|
|
(68,861 |
) |
|
|
(25,418 |
) |
|
|
|
|
|
|
(94,279 |
) |
Selling and general expenses |
|
|
|
|
|
|
(22,538 |
) |
|
|
(9,534 |
) |
|
|
309 |
|
|
|
(31,763 |
) |
Administrative expenses |
|
|
(482 |
) |
|
|
(34,429 |
) |
|
|
(5,068 |
) |
|
|
|
|
|
|
(39,979 |
) |
Rent expense, net |
|
|
|
|
|
|
(3,427 |
) |
|
|
(2,410 |
) |
|
|
|
|
|
|
(5,837 |
) |
Depreciation and amortization |
|
|
|
|
|
|
(16,729 |
) |
|
|
(2,001 |
) |
|
|
|
|
|
|
(18,730 |
) |
Advertising |
|
|
|
|
|
|
(4,873 |
) |
|
|
(1,180 |
) |
|
|
|
|
|
|
(6,053 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
(482 |
) |
|
|
(150,857 |
) |
|
|
(45,611 |
) |
|
|
309 |
|
|
|
(196,641 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
|
|
(482 |
) |
|
|
(5,564 |
) |
|
|
3,164 |
|
|
|
|
|
|
|
(2,882 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bargain purchase |
|
|
|
|
|
|
|
|
|
|
15,681 |
|
|
|
|
|
|
|
15,681 |
|
Loss on debt extinguishment |
|
|
|
|
|
|
(1,008 |
) |
|
|
|
|
|
|
|
|
|
|
(1,008 |
) |
Interest expense, net |
|
|
|
|
|
|
(18,305 |
) |
|
|
(105 |
) |
|
|
|
|
|
|
(18,410 |
) |
Equity (loss) income from
subsidiaries |
|
|
(7,723 |
) |
|
|
17,529 |
|
|
|
|
|
|
|
(9,806 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before
income taxes |
|
|
(8,205 |
) |
|
|
(7,348 |
) |
|
|
18,740 |
|
|
|
(9,806 |
) |
|
|
(6,619 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
|
|
|
|
(375 |
) |
|
|
(1,211 |
) |
|
|
11,499 |
|
|
|
9,913 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(8,205 |
) |
|
$ |
(7,723 |
) |
|
$ |
17,529 |
|
|
$ |
1,693 |
|
|
$ |
3,294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13
TOPS HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE 16-WEEK PERIOD ENDED APRIL 23, 2011
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tops Holding |
|
|
|
|
|
|
Guarantor |
|
|
|
|
|
|
|
|
|
Corporation |
|
|
Tops Markets, LLC |
|
|
Subsidiaries |
|
|
Eliminations |
|
|
Consolidated |
|
Net cash (used in) provided by
operating activities |
|
$ |
(238 |
) |
|
$ |
12,919 |
|
|
$ |
9,622 |
|
|
$ |
|
|
|
$ |
22,303 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows used in investing
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for property and
equipment |
|
|
|
|
|
|
(7,263 |
) |
|
|
(9,691 |
) |
|
|
|
|
|
|
(16,954 |
) |
Proceeds from sale of assets |
|
|
|
|
|
|
|
|
|
|
650 |
|
|
|
|
|
|
|
650 |
|
Change in intercompany
receivables position |
|
|
|
|
|
|
(238 |
) |
|
|
(449 |
) |
|
|
687 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing
activities |
|
|
|
|
|
|
(7,501 |
) |
|
|
(9,490 |
) |
|
|
687 |
|
|
|
(16,304 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows provided by (used in)
financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings on ABL Facility |
|
|
|
|
|
|
220,800 |
|
|
|
|
|
|
|
|
|
|
|
220,800 |
|
Repayments on ABL Facility |
|
|
|
|
|
|
(215,800 |
) |
|
|
|
|
|
|
|
|
|
|
(215,800 |
) |
Principal payments on
capital leases |
|
|
|
|
|
|
(3,107 |
) |
|
|
(126 |
) |
|
|
|
|
|
|
(3,233 |
) |
Repayments of long-term
debt borrowings |
|
|
|
|
|
|
(126 |
) |
|
|
|
|
|
|
|
|
|
|
(126 |
) |
Change in bank overdraft
position |
|
|
|
|
|
|
(290 |
) |
|
|
|
|
|
|
|
|
|
|
(290 |
) |
Deferred financing costs
incurred |
|
|
|
|
|
|
(57 |
) |
|
|
|
|
|
|
|
|
|
|
(57 |
) |
Change in intercompany
payables position |
|
|
238 |
|
|
|
449 |
|
|
|
|
|
|
|
(687 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used
in) financing activities |
|
|
238 |
|
|
|
1,869 |
|
|
|
(126 |
) |
|
|
(687 |
) |
|
|
1,294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash
equivalents |
|
|
|
|
|
|
7,287 |
|
|
|
6 |
|
|
|
|
|
|
|
7,293 |
|
Cash and cash equivalentsbeginning of period |
|
|
|
|
|
|
16,689 |
|
|
|
730 |
|
|
|
|
|
|
|
17,419 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalentsend of period |
|
$ |
|
|
|
$ |
23,976 |
|
|
$ |
736 |
|
|
$ |
|
|
|
$ |
24,712 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
TOPS HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE 16-WEEK PERIOD ENDED APRIL 24, 2010
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tops Holding |
|
|
|
|
|
|
Guarantor |
|
|
|
|
|
|
|
|
|
Corporation |
|
|
Tops Markets, LLC |
|
|
Subsidiary |
|
|
Eliminations |
|
|
Consolidated |
|
Net cash (used in) provided by
operating activities |
|
$ |
(238 |
) |
|
$ |
(16,124 |
) |
|
$ |
12,776 |
|
|
$ |
|
|
|
$ |
(3,586 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows used in investing
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of Penn Traffic
assets |
|
|
|
|
|
|
|
|
|
|
(85,023 |
) |
|
|
|
|
|
|
(85,023 |
) |
Proceeds from sale of assets |
|
|
|
|
|
|
|
|
|
|
14,919 |
|
|
|
|
|
|
|
14,419 |
|
Cash paid for property and
equipment |
|
|
|
|
|
|
(7,987 |
) |
|
|
(792 |
) |
|
|
|
|
|
|
(8,779 |
) |
Investment in subsidiaries |
|
|
|
|
|
|
(85,023 |
) |
|
|
|
|
|
|
85,023 |
|
|
|
|
|
Change in intercompany
receivables position |
|
|
|
|
|
|
(238 |
) |
|
|
(26,148 |
) |
|
|
26,386 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing
activities |
|
|
|
|
|
|
(93,248 |
) |
|
|
(97,044 |
) |
|
|
111,409 |
|
|
|
(78,883 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows provided by
financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from long-term
debt borrowings |
|
|
|
|
|
|
112,125 |
|
|
|
|
|
|
|
|
|
|
|
112,125 |
|
Repayments of long-term
debt borrowings |
|
|
|
|
|
|
(36,113 |
) |
|
|
|
|
|
|
|
|
|
|
(36,113 |
) |
Borrowings on ABL Facility |
|
|
|
|
|
|
58,100 |
|
|
|
|
|
|
|
|
|
|
|
58,100 |
|
Repayments on ABL Facility |
|
|
|
|
|
|
(72,100 |
) |
|
|
|
|
|
|
|
|
|
|
(72,100 |
) |
Proceeds from issuance
of common stock |
|
|
30,000 |
|
|
|
30,000 |
|
|
|
|
|
|
|
(30,000 |
) |
|
|
30,000 |
|
Deferred financing costs
incurred |
|
|
|
|
|
|
(4,782 |
) |
|
|
|
|
|
|
|
|
|
|
(4,782 |
) |
Principal payments on
capital leases |
|
|
|
|
|
|
(2,568 |
) |
|
|
(102 |
) |
|
|
|
|
|
|
(2,670 |
) |
Capital contribution |
|
|
|
|
|
|
|
|
|
|
85,023 |
|
|
|
(85,023 |
) |
|
|
|
|
Change in bank overdraft
position |
|
|
|
|
|
|
323 |
|
|
|
|
|
|
|
|
|
|
|
323 |
|
Change in intercompany
payables position |
|
|
238 |
|
|
|
26,148 |
|
|
|
|
|
|
|
(26,386 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
financing activities |
|
|
30,238 |
|
|
|
111,133 |
|
|
|
84,921 |
|
|
|
(141,409 |
) |
|
|
84,883 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and
cash equivalents |
|
|
|
|
|
|
1,761 |
|
|
|
653 |
|
|
|
|
|
|
|
2,414 |
|
Cash and cash equivalentsbeginning of period |
|
|
|
|
|
|
19,712 |
|
|
|
10 |
|
|
|
|
|
|
|
19,722 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalentsend of period |
|
$ |
|
|
|
$ |
21,473 |
|
|
$ |
663 |
|
|
$ |
|
|
|
$ |
22,136 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
|
|
|
ITEM 2. |
|
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS |
The following discussion should be read in conjunction with our unaudited condensed consolidated
financial statements and related notes and other financial information appearing elsewhere in this
10-Q. This 10-Q contains forward-looking statements that involve risks and uncertainties. Our
actual results may differ from those indicated in the forward-looking statements. See
Forward-Looking Statements below and Risk Factors under Item 1A in Part II of this 10-Q.
COMPANY OVERVIEW
We are a leading supermarket retailer in our Upstate New York and Northern Pennsylvania markets.
Introduced in 1962, our Tops brand is widely recognized as a strong retail supermarket brand name
in our markets supported by strong customer loyalty and attractive supermarket locations. We are
headquartered in Williamsville, New York and have approximately 12,700 associates.
The terms we, our, us and the Company refer to Tops Holding Corporation and each of its
consolidated subsidiaries, including its wholly-owned subsidiary Tops Markets, LLC.
On January 29, 2010, we completed the Acquisition of substantially all assets and certain specified
liabilities of Penn Traffic and its subsidiaries, including its 79 retail supermarkets. We have
retained 55 of the acquired supermarkets from the Acquisition, which currently operate under the
banners of Tops, P&C and Quality Markets in Upstate New York and Northern Pennsylvania. In August
2010, the FTC issued a Proposed Order that would require us to sell seven of these retained
supermarkets. In May 2011, we petitioned the FTC to approve an agreement to sell three of these
supermarkets, which is subject to a 30-day comment period ending June 6, 2011. We are currently
unable to determine the likelihood that the FTC will approve this agreement. As part of a Final
Order from the FTC, we expect that we will be required to retain a divestiture trustee to market
the supermarkets subject to the Proposed Order that have not otherwise been sold. Net sales and
operating income for these seven supermarkets were $16.1 million and $0.2 million, respectively,
for the 16-week period ended April 23, 2011. The remaining 24 acquired supermarkets have been
closed or sold. We currently operate 128 corporate retail supermarkets with an additional 5
franchise supermarkets.
FORWARD-LOOKING STATEMENTS
This 10-Q includes forward-looking statements about future events. Generally, the words believe,
expect, intend, estimate, anticipate, project, will and similar expressions identify
forward-looking statements, which generally are not historical in nature. Important assumptions
relating to these forward-looking statements include, among others, assumptions regarding:
|
|
|
risks of claims relating to the Acquisition (as defined herein) that may not have been
properly discharged in the bankruptcy process; |
|
|
|
the severity of current economic conditions and the impact on consumer demand and
spending and our pricing strategy; |
|
|
|
pricing and market strategies, the expansion, consolidation and other activities of
competitors, and our ability to respond to the promotional practices of competitors; |
|
|
|
our ability to effectively increase or maintain our profit margins; |
|
|
|
the success of our expansion and renovation plans; |
|
|
|
fluctuations in utility, fuel and commodity prices which could impact consumer spending
and buying habits and the cost of doing business; |
|
|
|
risks inherent in our motor fuel operations; |
|
|
|
our exposure to local economies and other adverse conditions due to our geographic
concentration; |
|
|
|
risks of natural disasters and severe weather conditions; |
|
|
|
supply problems with our suppliers and vendors; |
|
|
|
our relationships with unions and unionized employees, and the terms of future
collective bargaining agreements or labor strikes; |
16
|
|
|
increased operating costs resulting from rising employee benefit costs or pension
funding obligations; |
|
|
|
changes in, or the failure or inability to comply with, laws and governmental
regulations applicable to the operation of our pharmacy and other businesses; |
|
|
|
the adequacy of our insurance coverage against claims of our customers in connection
with our pharmacy services; |
|
|
|
estimates of the amount and timing of payments under our self-insurance policies; |
|
|
|
risks of liability under environmental laws and regulations; |
|
|
|
our ability to maintain and improve our information technology systems; |
|
|
|
events that give rise to actual or potential food contamination, drug contamination or
food-borne illness or any adverse publicity relating to these types of concerns, whether or
not valid; |
|
|
|
threats or potential threats to security; |
|
|
|
our ability to retain key personnel; |
|
|
|
risks of data security breaches or losses of confidential customer information; |
|
|
|
risks relating to our substantial indebtedness; |
|
|
|
litigation claims or legal proceedings against us; |
|
|
|
decisions by our controlling shareholders that may conflict with the interests of the
holders of our equity and debt; and |
|
|
|
other factors referenced under Risk Factors and discussed elsewhere in this 10-Q. |
Forward-looking statements reflect our current expectations, based on currently available
information, and are not guarantees of performance. Although we believe that the expectations
reflected in such forward-looking statements are reasonable, these expectations could prove
inaccurate as such statements involve risks and uncertainties, many of which are beyond our ability
to control or predict. Should one or more of these risks or uncertainties, or other risks or
uncertainties not currently known to us or that we currently deem to be immaterial, materialize, or
should underlying assumptions prove incorrect, actual results may vary materially from those
anticipated, estimated or projected. Important factors relating to these risks and uncertainties
include, but are not limited to, those referenced in Risk Factors in Item 1A of Part II of this
10-Q. We caution that one should not place undue reliance on forward-looking statements, which
speak only as of the date on which they are made. We disclaim any intention, obligation or duty to
update or revise any forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by law.
BASIS OF PRESENTATION
We operate on a 52/53 week fiscal year ending on the Saturday closest to December 31. Our fiscal
years include 13 four-week reporting periods, with an additional week in the thirteenth reporting
period for 53 week fiscal years. Our first quarter of each fiscal year includes four reporting
periods, while the remaining quarters include three reporting periods.
Our condensed consolidated financial statements for the 16-week periods ended April 23, 2011 and
April 24, 2010 are unaudited, and, in the opinion of management, contain all adjustments that are
of a normal and recurring nature necessary for a fair statement of financial position and results
of operations for such periods.
RECENT AND FUTURE EVENTS AFFECTING OUR RESULTS OF OPERATIONS AND THE COMPARABILITY OF REPORTED
RESULTS OF OPERATIONS
Acquisition of Penn Traffic
On January 29, 2010, we completed the Acquisition, including Penn Traffics 79 retail supermarkets.
We have retained 55 of the acquired supermarkets. The remaining 24 supermarkets had been closed
or sold. Net sales and operating loss for these 24 supermarkets that were not retained were $33.0
million and $0.2 million, respectively, during the 16-week period ended April 24, 2010. Also
included in our results during the 16-week period ended April 24, 2010 were integration costs of
$10.9 million and one-time legal and professional fees related to the Acquisition of $4.4 million.
Additionally, we incurred $0.3 million and $2.1 million of legal expenses associated with the FTCs
review of the acquired supermarkets
during the 16-week periods ended April 23, 2011 and April 24, 2010, respectively. Additional
depreciation and amortization of $2.1 million was incurred during the 16-week period ended April
23, 2011, as compared to the 16-week period ended April 24, 2010, associated with acquired
property, equipment and intangible assets.
17
The excess of net assets acquired over the purchase price of $15.7 million has been recognized as a
bargain purchase in the condensed consolidated statement of operations for 16-week period ended
April 24, 2010. This bargain purchase was attributable to the distressed status of Penn Traffic
due to historical operating results, which led to its November 2009 bankruptcy filing.
Debt Refinancing
On February 12, 2010, we issued an additional $75.0 million of senior secured notes under the same
terms of the October 2009 issuance. We received proceeds of $76.1 million from this issuance,
including a $1.1 million original issue premium. The proceeds were used, in part, to repay in full
short-term borrowings that were entered into in order to finance the Acquisition.
Issuance of Common Stock
On January 29, 2010, we received $30.0 million of proceeds from the issuance of 44,776 shares of
common stock to certain shareholders of Holding.
Dividend
On July 26, 2010, we paid a dividend to our shareholders totaling $30.0 million, or $207.22 per
share of common stock outstanding.
General Economic Conditions
The United States economy and financial markets have declined and experienced volatility due to
uncertainties related to energy prices, availability of credit, inflation in food prices,
difficulties in the banking and financial services sectors, the decline in the housing market,
falling consumer confidence and high unemployment rates. As a result, consumers are more cautious,
possibly leading to additional reductions in consumer spending, to consumers trading down to a less
expensive mix of products, or to consumers trading down to discounts for grocery items, all of
which may affect our financial condition and results of operations.
Furthermore, because of economic conditions, we may experience reductions in traffic in our
supermarkets or limitations on the prices we can charge for our products, either of which may
reduce our sales and profit margins and have a material adverse affect on our financial condition
and results of operations. Other economic factors such as inflation, energy costs, increased
transportation costs, higher costs of labor, insurance and healthcare, and changes in laws and
regulations may increase our costs of sales and our operating expenses, and otherwise adversely
affect our financial condition and results of operations. During Fiscal 2010 and the first 16
weeks of Fiscal 2011, we have experienced the effects of some of these economic factors.
RESULTS OF OPERATIONS
16-Week Period Ended April 23, 2011 Compared with 16-Week Period Ended April 24, 2010
Executive Summary
The results of operations during the 16-week period ended April 23, 2011 when compared with the
16-week period ended April 24, 2010 were impacted primarily by the additional four weeks of
operating results for the acquired supermarkets during the 16-week period ended April 23, 2011, as
well as one-time acquisition and integration costs associated with the Acquisition incurred during the
16-week period ended April 24, 2010.
18
Net Sales
The following table includes a comparison of the components of our net sales for the 16-week
periods ended April 23, 2011 and April 24, 2010.
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16-week periods ended |
|
|
|
|
|
|
|
|
|
April 23, 2011 |
|
|
April 24, 2010 |
|
|
$ Change |
|
|
% Change |
|
Inside sales |
|
$ |
658,893 |
|
|
$ |
623,967 |
|
|
$ |
34,926 |
|
|
|
5.6 |
% |
Gasoline sales |
|
|
58,366 |
|
|
|
41,048 |
|
|
|
17,318 |
|
|
|
42.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
717,259 |
|
|
$ |
665,015 |
|
|
$ |
52,244 |
|
|
|
7.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Inside sales increased 5.6% in the 16-week period ended April 23, 2011 compared with the
16-week period ended April 24, 2010, primarily due to the operation of the acquired Penn Traffic
supermarkets for four additional weeks, combined with a 3.6% increase in same store sales.
Gasoline sales increased 42.2% in the 16-week period ended April 23, 2011 compared with the 16-week
period ended April 24, 2010 due to a 23.4% increase in the retail price per gallon. Additionally,
the number of gallons sold increased 15.2%, primarily due to the addition of four new fuel
stations.
Gross Profit
The following table includes a comparison of cost of goods sold, distribution costs and gross
profit for the 16-week periods ended April 23, 2011 and April 24, 2010.
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16-week |
|
|
|
|
|
|
16-week |
|
|
|
|
|
|
|
|
|
|
|
|
period ended |
|
|
% of |
|
|
period ended |
|
|
% of |
|
|
$ |
|
|
% |
|
|
|
April 23, 2011 |
|
|
Net Sales |
|
|
April 24, 2010 |
|
|
Net Sales |
|
|
Change |
|
|
Change |
|
Cost of goods sold |
|
$ |
(500,744 |
) |
|
|
69.8 |
% |
|
$ |
(458,168 |
) |
|
|
68.9 |
% |
|
$ |
42,576 |
|
|
|
9.3 |
% |
Distribution costs |
|
|
(14,163 |
) |
|
|
2.0 |
% |
|
|
(13,088 |
) |
|
|
2.0 |
% |
|
|
1,075 |
|
|
|
8.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
$ |
202,352 |
|
|
|
28.2 |
% |
|
$ |
193,759 |
|
|
|
29.1 |
% |
|
$ |
8,593 |
|
|
|
4.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a percentage of net sales, cost of goods sold increased during the 16-week period ended
April 23, 2011 compared with the 16-week period ended April 24, 2010, due to a higher proportion of
gasoline sales versus inside sales, where gasoline sales generally occur at lower margin rates.
Costs of goods sold for the sixteen-week periods ended April 23, 2011 and April 24, 2010 was net of
LIFO income of $0.7 million and $1.1 million, respectively. As we expect to experience a moderate
level of overall product cost and retail price inflation during the remainder of Fiscal 2011, we
anticipate LIFO expense during this period. As a percentage of net sales,
distribution costs remained consistent for the 16-week period ended April 23, 2011 compared with
the 16-week period ended April 24, 2010. Gross profit as a percentage of net sales decreased due
to the aforementioned change in sales mix.
19
Operating Expenses
The
following table includes a comparison of operating expenses for the 16-week periods ended April
23, 2011 and April 24, 2010.
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16-week |
|
|
|
|
|
|
16-week |
|
|
|
|
|
|
|
|
|
|
|
|
period ended |
|
|
% of |
|
|
period ended |
|
|
% of |
|
|
$ |
|
|
% |
|
|
|
April 23, 2011 |
|
|
Net Sales |
|
|
April 24, 2010 |
|
|
Net Sales |
|
|
Change |
|
|
Change |
|
Wages, salaries and
benefits |
|
$ |
98,982 |
|
|
|
13.8 |
% |
|
$ |
94,279 |
|
|
|
14.2 |
% |
|
$ |
4,703 |
|
|
|
5.0 |
% |
Selling and general
expenses |
|
|
33,383 |
|
|
|
4.7 |
% |
|
|
31,763 |
|
|
|
4.8 |
% |
|
|
1,620 |
|
|
|
5.1 |
% |
Administrative expenses |
|
|
25,483 |
|
|
|
3.6 |
% |
|
|
39,979 |
|
|
|
6.0 |
% |
|
|
(14,496 |
) |
|
|
(36.3 |
)% |
Rent expense, net |
|
|
5,903 |
|
|
|
0.8 |
% |
|
|
5,837 |
|
|
|
0.9 |
% |
|
|
66 |
|
|
|
1.1 |
% |
Depreciation and
amortization |
|
|
15,041 |
|
|
|
2.1 |
% |
|
|
18,730 |
|
|
|
2.8 |
% |
|
|
(3,689 |
) |
|
|
(19.7 |
)% |
Advertising |
|
|
5,990 |
|
|
|
0.8 |
% |
|
|
6,053 |
|
|
|
0.9 |
% |
|
|
(63 |
) |
|
|
(1.0 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
184,782 |
|
|
|
25.8 |
% |
|
$ |
196,641 |
|
|
|
29.6 |
% |
|
$ |
(11,859 |
) |
|
|
(6.0 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wages, Salaries and Benefits
As a percentage of net sales, the decrease in wages, salaries and benefits during the 16-week
period ended April 23, 2011 compared with the 16-week period ended April 24, 2010 was largely
attributable to the more effective utilization of labor in the acquired and retained Penn Traffic
supermarkets as a result of significant increases in sales levels in these stores. This decrease
was partially offset by normal wage rate increases and a 10% year-over-year increase in
multiemployer pension plan contributions.
Selling and General Expenses
As a percentage of net sales, selling and general expenses remained consistent during the 16-week
period ended April 23, 2011 compared with the 16-week period ended April 24, 2010.
Administrative Expenses
The decrease in administrative expenses during the 16-week period ended April 23, 2011 compared
with the 16-week period ended April 24, 2010 was primarily attributable to a combined $13.9 million
of Penn Traffic integration costs, one-time legal and professional fees related to the Acquisition
and non-recurring legal expenses associated with the FTCs review of the acquired supermarkets
recorded in administrative expenses during the 16-week period ended April 24, 2010. Additionally,
we experienced a decrease of $1.3 million in IT costs, largely resulting from our renegotiated IT
services contract.
Rent Expense, Net
Rent expense reflects our rental expense for our supermarkets under operating lease arrangements,
net of income we receive from various entities that rent space in our supermarkets under subleasing
arrangements. Rent expense remained relatively consistent for the 16-week period ended April 23,
2011 compared with the 16-week period ended April 24, 2010.
Depreciation and Amortization
The decrease in depreciation and amortization during the 16-week period ended April 24, 2010
compared with the 16-week period ended April 23, 2011 was largely attributable to a significant
value of assets that became fully depreciated near the conclusion of Fiscal 2010, partially offset
by incremental depreciation and amortization associated with assets acquired as part of the
Acquisition.
Advertising
Advertising remained relatively consistent for the 16-week period ended April 23, 2011 compared
with the 16-week period ended April 24, 2010.
20
Bargain Purchase
The excess of $15.7 million of the estimated fair value of Penn Traffic net assets acquired over
the purchase price has been recognized as a gain in the condensed consolidated statement of
operations for the 16-week period ended April 24, 2010.
The allocation of the purchase price to the assets acquired and liabilities assumed from the Acquisition previously
presented for the 16-week period ended April 24, 2010 has been retrospectively adjusted to reflect the final acquisition accounting
adjustments made during Fiscal 2010.
This bargain purchase was attributable to the distressed status of Penn Traffic
due to historical operating results, which led to its November 2009 bankruptcy filing.
Loss on Debt Extinguishment
On January 29, 2010, we entered into a $25.0 million bridge loan and an $11.0 million term loan,
and capitalized related financing costs. As both the bridge loan and term loan were repaid in full
on February 12, 2010 with the proceeds from the issuance of the additional $75.0 million of senior
secured notes, unamortized costs of $0.7 and $0.3 million, respectively, were recorded as a loss on
debt extinguishment in our condensed consolidated statement of operations for the 16-week period
ended April 24, 2010.
Interest Expense, Net
The $0.9 million increase in interest expense during the 16-week period ended April 23, 2011
compared with the 16-week period ended April 24, 2010 was primarily attributable to incremental
interest expense related to the $75.0 million senior secured notes issued on February 12, 2010 that
were outstanding for only a portion of the 16-week period ended April 24, 2010.
Income Tax (Expense) Benefit
The income tax expense for the 16-week period ended April 23, 2011 reflects the establishment of
additional valuation allowance against net deferred tax assets resulting from the pre-tax loss
during the period. The overall effective tax rate was (21.3)%. The effective tax rate would have
been 34.5% without the impact of the additional valuation allowance and discrete charges.
The income tax benefit for the 16-week period ended April 24, 2010 was primarily attributable to
the reversal of $10.3 million of the valuation allowance established in Fiscal 2009. The reversal
of the valuation allowance was the result of recording a deferred tax liability that resulted from
the bargain purchase associated with the Acquisition. The timing of taxable income resulting from
the amortization of the gain for tax purposes provides sufficient future taxable income to support
the future deductibility of our deferred tax assets. The overall effective rate for the 16-week
period ended April 24, 2010 was 149.8%. The effective tax rate would have been 27.2% without the
impact of adjustments to the valuation allowance, the bargain purchase, and discrete charges.
Net (Loss) Income
Our net (loss) income decreased to net loss of $2.1 million for the 16-week period ended April 23,
2011 compared with net income of $3.3 million for the 16-week period ended April 24, 2010. The
change in net (loss) income was attributable to the factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
On October 9, 2009, we issued $275.0 million of senior secured notes, bearing annual interest of
10.125%. We received proceeds from the senior secured notes issuance, net of a $4.5 million
original issue discount, of $270.5 million. The senior secured notes mature October 15, 2015 and
require semi-annual interest payments. The senior secured notes are collateralized by (i)
first-priority interests, subject to certain exceptions, in our warehouse distribution facility in
Lancaster, New York, certain owned real property acquired by us following the issue date of the
senior secured notes, intellectual property, equipment, stock of subsidiaries and substantially all
of our other assets (other than leasehold interests in real property), other than assets securing
the ABL Facility (as defined below) on a first priority basis (collectively, the Notes Priority
Collateral), and (ii) second-priority interests, subject to certain exceptions and permitted
liens, in our assets that secure the ABL Facility on a first-priority basis, including present and
future receivables, inventory, prescription lists, deposit accounts and certain related rights and
proceeds relating thereto (collectively, the ABL Priority Collateral).
Also effective October 9, 2009, we entered into an asset-based credit facility (the ABL Facility)
that expires on October 9, 2013. The ABL Facility allowed a maximum borrowing capacity of $70.0
million, including a sub-limit for the issuance of letters of credit, subject to a borrowing base
calculation. Our ABL Facility was amended on January 29, 2010 to increase the maximum borrowing
capacity to $100.0 million. As of April 23, 2011, the unused commitment under the ABL Facility was
$54.3 million, after giving effect to $14.2 million of letters of credit outstanding thereunder.
Revolving loans under the ABL Facility will, at our option, bear interest at either i) LIBOR plus a
margin of 350 to 400 basis points,
determined based on levels of borrowing availability, or ii) the prime rate plus a margin of 250 to
300 basis points, determined based on levels of borrowing availability. The ABL Facility is
collateralized primarily by (i) first-priority interests, subject to certain exceptions, in the ABL
Priority Collateral and (ii) second-priority interests, subject to certain exceptions, in the Notes
Priority Collateral.
21
On January 29, 2010, we completed the acquisition of substantially all assets and certain
liabilities of Penn Traffic and its subsidiaries, including Penn Traffics 79 retail supermarkets.
In addition to cash consideration of $85.0 million paid to Penn Traffic, we recorded $23.3
million of integration costs and $2.1 million of legal expenses associated with the FTCs review of
the acquired supermarkets during Fiscal 2010, and $5.3 million and $1.1 million of transaction
costs during Fiscal 2010 and Fiscal 2009, respectively. Of these combined expenses, $31.4 million
were paid during Fiscal 2010. We have sold certain of the acquired assets for $20.8
million during Fiscal 2010.
On February 12, 2010, we issued an additional $75.0 million of senior secured notes on the same
terms as the October 2009 issuance. We received proceeds of $76.1 million from this issuance,
including a $1.1 million original issue premium. The proceeds were used, in part, to repay in full
short-term borrowings that were entered into in order to finance the Acquisition. We incurred $4.7
million of financing costs, primarily related to the additional senior secured notes issuance, all
of which were capitalized in other assets in our consolidated balance sheet during Fiscal 2010.
The senior secured notes and ABL Facility contain customary affirmative and negative covenants,
including restrictions on indebtedness, liens, type of business, acquisitions, investments, sale or
transfer of assets, payment of dividends, transactions involving affiliates, change in control and
other matters customarily restricted in such agreements. Failure to meet any of these covenants
would be an event of default. As of April 23, 2011, we were in compliance with all such covenants.
On January 29, 2010, we received $30.0 million of proceeds from the issuance of 44,776 shares of
common stock to certain shareholders of Holding.
On July 26, 2010, we paid a dividend to our shareholders totaling $30.0 million, or $207.22 per
share of common stock outstanding. The payment of this dividend did not result in any borrowings
under our ABL Facility outside of the normal course of business.
Our primary sources of cash are cash flows generated from our operations and borrowings under our
ABL Facility. We believe that these sources will be sufficient to meet working capital
requirements, anticipated capital expenditures and scheduled debt payments for at least the next
twelve months. Our ability to satisfy debt service obligations, to fund planned capital
expenditures and to make acquisitions will depend upon our future operating performance, which will
be affected by prevailing economic conditions in the grocery industry and financial, business, and
other factors, some of which are beyond our control. See Risk Factors in Item 1A of Part II of
this 10-Q.
Cash Flows Information
The following is a summary of cash provided by or used in each of the indicated types of
activities:
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
16-week periods ended |
|
|
|
April 23, 2011 |
|
|
April 24, 2010 |
|
Cash provided by (used in): |
|
|
|
|
|
|
|
|
Operating activities |
|
$ |
22,303 |
|
|
$ |
(3,586 |
) |
Investing activities |
|
|
(16,304 |
) |
|
|
(78,883 |
) |
Financing activities |
|
|
1,294 |
|
|
|
84,883 |
|
Cash provided by operating activities during the 16-week period ended April 23, 2011 increased
$25.9 million compared with the 16-week period ended April 24, 2010 due to an increase in earnings,
adjusted for non-cash income and expenses. Operating cash flows for the 16-week period ended April
24, 2010 included $15.1 million of integration costs and one-time legal and professional fee cash
expenditures related to the Acquisition. Additionally, changes in operating assets and liabilities
provided cash from operating activities of $3.1 million during the 16-week period ended April 23,
2011, versus a use of cash of $4.6 million during the 16-week period ended April 24, 2010. This
year-over-year change was primarily attributable to a larger increase in accounts payable and
decrease in accrued expenses during the 16-week period ended April 23, 2011.
Cash used in investing activities during the 16-week period ended April 23, 2011 decreased $62.6
million compared with the 16-week period ended April 24, 2010, primarily due to cash consideration
paid in connection with the Acquisition during the 16-week period ended April 24, 2010, net of
proceeds from the subsequent divestiture of certain acquired assets. Cash paid for property and
equipment totaled $17.0 million and $8.8 million during the 16-week periods ended April 23,
2011 and April 24, 2010, respectively. We expect to invest approximately $40 million in capital
expenditures during the next twelve months.
22
Cash provided by financing activities decreased $83.6 million during the 16-week period ended April
23, 2011 compared with the 16-week period ended April 24, 2010 as a result of the issuance of an
additional $75.0 million of senior secured notes and the proceeds of $30.0 million from the
issuance of additional common stock shares during the 16-week period ended April 24, 2010. This was
partially offset by the change in net borrowings and repayments related to the ABL Facility.
Multiemployer Pension Plans
We contribute to the United Food and Commercial Workers District Union Local One (Local One)
Plan, a defined benefit multiemployer pension plan, under our collective bargaining agreements with
the Local One. This Local One Plan generally provides retirement benefits to participants based on
their service to contributing employers. During the 16-week periods ended April 23, 2011 and April
24, 2010, we made contributions of $3.0 million and $2.4 million, respectively, to the Local One
Plan.
We will be required to increase our annual contributions to the Local One Plan pursuant to our
collective bargaining agreements and the Local One Plans rehabilitation plan. We are also
contingently liable for withdrawal liability in the event that we withdraw from the Local One Plan.
In accordance with applicable accounting rules, our contingent withdrawal liability is not
included in our condensed consolidated financial statements. We have no present intention to
withdraw from the Local One Plan. For more information on future increases in our annual
contribution rates and our contingent withdrawal liability, see the discussion of risk factors in
Part I, Item 1A of the Companys Annual Report on Form 10-K for the fiscal year ended January 1,
2011.
In addition, at the time our supply arrangement was entered into with C&S Wholesale Grocers (C&S),
certain of our warehouse personnel became employees of C&S, with C&S assuming our obligations under
several multiemployer pension plans. Although we are not a sponsoring employer of, and make no
contribution payments to any of these other multiemployer pension plans, we have certain
contractual indemnification obligations for withdrawal liability that may arise in the event of
C&Ss withdrawal from such plans.
Off-Balance Sheet Arrangements
Other than the operating leases and multiemployer pension liabilities previously discussed, we are
not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a
current or future material effect on our financial condition, net sales, expenses, results of
operations, liquidity, capital expenditures or capital resources.
Inflation
Product cost inflation could vary from our estimates due to general economic conditions, weather,
availability of raw materials and ingredients in the products that we sell and their packaging, and
other factors beyond our control.
CRITICAL ACCOUNTING POLICIES
Our condensed consolidated financial statements are prepared in accordance with GAAP, which
requires us to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the reported periods. Our
audited consolidated financial statements as of January 1, 2011 include a description of certain
critical accounting policies, including those related to vendor allowances, inventory valuation,
valuation of tradename, valuation of long-lived assets, acquisition accounting, leases,
self-insurance programs and income taxes.
Recent Accounting PronouncementsNot Yet Adopted
There are currently no recent accounting pronouncements which had or are expected to have a
material impact on our consolidated financial statements as of the date of this 10-Q.
|
|
|
ITEM 3. |
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
We do not utilize financial instruments for trading or other speculative purposes, nor do we
utilize leveraged financial instruments.
We use derivative financial instruments from time to time primarily to manage our exposure to
fluctuations in interest rates and, to a lesser extent, adverse fluctuations in commodity prices
and other market risks. As a matter of policy, all of our derivative positions are intended to
reduce risk by hedging an underlying economic exposure. Because of the high
correlation between the hedging instrument and the underlying exposure, fluctuations in the value
of the instruments generally are offset by reciprocal changes in the value of the underlying
exposure.
23
At times, we manage our exposure to interest rates and changes in the fair value of our debt
instruments primarily through the strategic use of variable and fixed rate debt, and interest rate
swaps. As of April 23, 2011, we did not have any outstanding interest rate swaps designated as
fair value or cash flow hedges.
The table below provides information about our underlying debt portfolio. The amounts shown for
each year represent the contractual maturities of long-term debt, excluding capital leases, as of
April 23, 2011. Interest rates reflect the weighted average rate for the outstanding instruments.
The variable component of each variable rate debt instrument is based on the weighted average of
LIBOR using the forward yield curve and the prime rate as of April 23, 2011. The Fair Value column
includes the fair value of our debt instruments as of April 23, 2011. For more information, refer
to Note 1 of our condensed consolidated financial statements.
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected Fiscal Year of Maturity |
|
|
|
Remainder |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of 2011 |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2015 |
|
|
Thereafter |
|
|
Fair Value |
|
Debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate |
|
$ |
279 |
|
|
$ |
434 |
|
|
$ |
2,295 |
|
|
$ |
280 |
|
|
$ |
350,165 |
|
|
$ |
|
|
|
$ |
397,226 |
|
Average interest
rate |
|
|
7.1 |
% |
|
|
7.1 |
% |
|
|
3.5 |
% |
|
|
7.1 |
% |
|
|
10.1 |
% |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable rate |
|
$ |
|
|
|
$ |
|
|
|
$ |
20,000 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
20,000 |
|
Average interest
rate |
|
|
N/A |
|
|
|
N/A |
|
|
|
4.9 |
% |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
COMMODITY PRICE RISK
We purchase products that are impacted by commodity prices and are therefore subject to price
volatility caused by weather, market conditions and other factors, which are not considered
predictable or within our control.
|
|
|
ITEM 4. |
|
CONTROLS AND PROCEDURES |
As of April 23, 2011, the Chief Executive Officer and the Chief Financial Officer, together with
certain designated members of the finance and accounting organization, evaluated the Companys
disclosure controls and procedures. Management recognizes that any controls and procedures, no
matter how well designed and operated, can provide only reasonable assurance of achieving their
objectives and management necessarily applies its judgment in evaluating the cost-benefit
relationship of potential controls and procedures. Based on that evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures
were effective as of April 23, 2011.
Changes in Internal Control over Financial Reporting
No change in our internal control over financial reporting occurred during the 16-week period ended
April 23, 2011 that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
There are inherent limitations to the effectiveness of any system of internal control over
financial reporting. Accordingly, even an effective system of internal control over financial
reporting can only provide reasonable assurance with respect to financial statement preparation and
presentation in accordance with GAAP. Our internal controls over financial reporting are subject
to various inherent limitations, including judgments used in decision making, cost concerns,
assumptions about the likelihood of future events, the soundness of our systems, the possibility of
human error and the risk of fraud. Moreover, projections of any evaluation of effectiveness in
future periods are subject to the risk that controls may be inadequate because of changes in
conditions and that the degree of compliance with policies or procedures may decrease over time.
PART II OTHER INFORMATION
|
|
|
ITEM 1. |
|
LEGAL PROCEEDINGS |
The Company is subject to various legal proceedings and claims, either asserted or unasserted,
which arise in the ordinary course of business. The Company is also subject to certain
environmental claims. While the outcome of these claims cannot be predicted with certainty,
management does not believe that the outcome of any of these legal matters will have a material
adverse effect on our consolidated results of operations, financial position or cash flows.
24
There were no material changes in risk factors for the Company in the period covered by this 10-Q.
See the discussion of risk factors in Part I, Item 1A of the Companys Annual Report on Form 10-K
for the fiscal year ended January 1, 2011.
Item 6. EXHIBITS
|
|
|
|
|
Exhibit No. |
|
|
|
|
|
|
|
|
|
|
|
|
31.1*
|
|
Certification of Chief Executive Officer Pursuant to
Rule 13a-14(a) or Rule 15d-14(a), as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
|
|
31.2*
|
|
Certification of Chief Operating Officer and Chief Financial
Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a), as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002. |
|
|
|
|
|
|
|
32.1*
|
|
Certification of Chief Executive Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
|
|
32.2*
|
|
Certification of the Chief Operating Officer and Chief
Financial Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. |
* |
|
This prospectus supplement does not contain all of the exhibits filed with the Companys quarterly report for the
period ended April 23, 2011. Exhibits 31.1, 31.2, 32.1 and 32.2 are not filed with and should not be deemed a
part of this prospectus supplement. |
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TOPS HOLDING CORPORATION
|
|
|
|
|
By:
|
|
/s/ William R. Mills
William R. Mills |
|
|
|
|
Senior Vice President, Chief Financial Officer |
|
|
|
|
June 7, 2011 |
|
|
2