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Filed Pursuant to Rule 424(b)(3)
File Number 333-168065
Prospectus Supplement No. 3
(To prospectus dated November 1, 2010)
![(Tops Holding Corp. logo)](https://capedge.com/proxy/424B3/0000950123-11-057266/c18485p1848501.jpg)
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.
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þ | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
Delaware | 26-1252536 | |
(State or other jurisdiction of | (I.R.S. Employer Identification No.) | |
incorporation or organization) | ||
6363 Main Street, | (716) 635-5000 | |
Williamsville, New York 14221 (Address of principal executive office, including zip code) | (Telephone Number) |
Large accelerated filero | Accelerated filero | Non-accelerated filerþ | Smaller reporting companyo | |||
(Do not check if a smaller reporting company) |
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ITEM 1. | CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
April 23, 2011 | January 1, 2011 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 24,712 | $ | 17,419 | ||||
Accounts receivable, net | 56,880 | 57,044 | ||||||
Inventory, net | 118,703 | 117,328 | ||||||
Prepaid expenses and other current assets | 15,229 | 14,093 | ||||||
Assets held for sale | — | 650 | ||||||
Income taxes refundable | 186 | 200 | ||||||
Current deferred tax assets | 2,265 | 2,265 | ||||||
Total current assets | 217,975 | 208,999 | ||||||
Property and equipment, net | 376,005 | 378,575 | ||||||
Intangible assets, net (Note 3) | 76,343 | 79,072 | ||||||
Other assets | 12,959 | 13,705 | ||||||
Total assets | $ | 683,282 | $ | 680,351 | ||||
Liabilities and Shareholders’ Deficit | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 113,065 | $ | 93,311 | ||||
Accrued expenses and other current liabilities (Note 4) | 61,324 | 79,123 | ||||||
Current portion of capital lease obligations | 11,649 | 11,095 | ||||||
Current portion of long-term debt (Note 5) | 407 | 402 | ||||||
Total current liabilities | 186,445 | 183,931 | ||||||
Capital lease obligations | 168,488 | 172,216 | ||||||
Long-term debt (Note 5) | 370,250 | 365,262 | ||||||
Other long-term liabilities | 21,649 | 21,099 | ||||||
Non-current deferred tax liabilities | 3,701 | 3,354 | ||||||
Total liabilities | 750,533 | 745,862 | ||||||
Shareholders’ deficit: | ||||||||
Common shares ($0.001 par value; 300,000 authorized shares, 144,776 shares issued & outstanding) | — | — | ||||||
Paid-in capital | (2,320 | ) | (2,668 | ) | ||||
Accumulated deficit | (64,595 | ) | (62,507 | ) | ||||
Accumulated other comprehensive loss, net of tax | (336 | ) | (336 | ) | ||||
Total shareholders’ deficit | (67,251 | ) | (65,511 | ) | ||||
Total liabilities and shareholders’ deficit | $ | 683,282 | $ | 680,351 | ||||
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16-week periods ended | ||||||||
April 23, 2011 | April 24, 2010 | |||||||
Net sales | $ | 717,259 | $ | 665,015 | ||||
Cost of goods sold | (500,744 | ) | (458,168 | ) | ||||
Distribution costs | (14,163 | ) | (13,088 | ) | ||||
Gross profit | 202,352 | 193,759 | ||||||
Operating expenses: | ||||||||
Wages, salaries and benefits | (98,982 | ) | (94,279 | ) | ||||
Selling and general expenses | (33,383 | ) | (31,763 | ) | ||||
Administrative expenses (inclusive of stock-based compensation expense of $348 and $244) | (25,483 | ) | (39,979 | ) | ||||
Rent expense, net | (5,903 | ) | (5,837 | ) | ||||
Depreciation and amortization | (15,041 | ) | (18,730 | ) | ||||
Advertising | (5,990 | ) | (6,053 | ) | ||||
Total operating expenses | (184,782 | ) | (196,641 | ) | ||||
Operating income (loss) | 17,570 | (2,882 | ) | |||||
Bargain purchase | — | 15,681 | ||||||
Loss on debt extinguishment | — | (1,008 | ) | |||||
Interest expense, net | (19,291 | ) | (18,410 | ) | ||||
Loss before income taxes | (1,721 | ) | (6,619 | ) | ||||
Income tax (expense) benefit | (367 | ) | 9,913 | |||||
Net (loss) income | $ | (2,088 | ) | $ | 3,294 | |||
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16-week periods ended | ||||||||
April 23, 2011 | April 24, 2010 | |||||||
Cash flows provided by (used in) operating activities: | ||||||||
Net (loss) income | $ | (2,088 | ) | $ | 3,294 | |||
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 20,318 | 22,567 | ||||||
Amortization of deferred financing costs | 803 | 679 | ||||||
LIFO inventory valuation adjustments | (663 | ) | (1,106 | ) | ||||
Stock-based compensation expense | 348 | 244 | ||||||
Deferred income taxes | 347 | (10,288 | ) | |||||
Bargain purchase | — | (15,681 | ) | |||||
Loss on debt extinguishment | — | 1,008 | ||||||
Other | 115 | 314 | ||||||
Changes in operating assets and liabilities: | ||||||||
Decrease (increase) in accounts receivable | 164 | (1,364 | ) | |||||
Increase in inventory, net | (712 | ) | (1,028 | ) | ||||
Increase in prepaid expenses and other current assets | (1,136 | ) | (601 | ) | ||||
Decrease in income taxes refundable | 14 | — | ||||||
Increase in accounts payable | 20,044 | 1,428 | ||||||
Decrease in accrued expenses and other current liabilities | (15,776 | ) | (3,463 | ) | ||||
Increase in other long-term liabilities | 525 | 411 | ||||||
Net cash provided by (used in) operating activities | 22,303 | (3,586 | ) | |||||
Cash flows used in investing activities: | ||||||||
Cash paid for property and equipment | (16,954 | ) | (8,779 | ) | ||||
Proceeds from sale of assets | 650 | 14,919 | ||||||
Acquisition of Penn Traffic assets | — | (85,023 | ) | |||||
Net cash used in investing activities | (16,304 | ) | (78,883 | ) | ||||
Cash flows provided by financing activities: | ||||||||
Borrowings on ABL Facility | 220,800 | 58,100 | ||||||
Repayments on ABL Facility | (215,800 | ) | (72,100 | ) | ||||
Principal payments on capital leases | (3,233 | ) | (2,670 | ) | ||||
Proceeds from long-term debt borrowings | — | 112,125 | ||||||
Repayments of long-term debt borrowings | (126 | ) | (36,113 | ) | ||||
Change in bank overdraft position | (290 | ) | 323 | |||||
Deferred financing costs incurred | (57 | ) | (4,782 | ) | ||||
Proceeds from issuance of common stock | — | 30,000 | ||||||
Net cash provided by financing activities | 1,294 | 84,883 | ||||||
Net increase in cash and cash equivalents | 7,293 | 2,414 | ||||||
Cash and cash equivalents—beginning of period | 17,419 | 19,722 | ||||||
Cash and cash equivalents—end of period | $ | 24,712 | $ | 22,136 | ||||
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16-week period ended April 23, 2011 | 16-week period ended April 24, 2010 | |||||||||||||||
Amount | % of Total | Amount | % of Total | |||||||||||||
Non-perishables(1) | $ | 410,210 | 57.2 | % | $ | 387,614 | 58.3 | % | ||||||||
Perishables(2) | 188,658 | 26.3 | % | 175,911 | 26.5 | % | ||||||||||
Fuel | 58,366 | 8.1 | % | 41,048 | 6.2 | % | ||||||||||
Pharmacy | 55,094 | 7.7 | % | 56,015 | 8.4 | % | ||||||||||
Other(3) | 4,931 | 0.7 | % | 4,427 | 0.6 | % | ||||||||||
$ | 717,259 | 100.0 | % | $ | 665,015 | 100.0 | % | |||||||||
(1) | Non-perishables consist of grocery, dairy, frozen, general merchandise, health and beauty care and other non-perishable related products. | |
(2) | Perishables consist of produce, meat, seafood, bakery, deli, floral, prepared foods and other perishable related products. | |
(3) | Other primarily consists of franchise income and service commission income, including lottery, money orders and money transfers. |
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 Company’s 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 Company’s own data. |
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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 | ||||||
2011 (remaining period) | $ | 5,847 | ||
2012 | 6,863 | |||
2013 | 6,018 | |||
2014 | 5,218 | |||
2015 | 3,983 | |||
Thereafter | 7,403 |
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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 | |||||
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 | ||||
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16-week periods ended | ||||||||
April 23, 2011 | April 24, 2010 | |||||||
Current | $ | (20 | ) | $ | (375 | ) | ||
Deferred | (347 | ) | 10,288 | |||||
$ | (367 | ) | $ | 9,913 | ||||
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.
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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 | ||||||||
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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 | ||||||||
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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 | ) | |||||||
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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 | ||||||||
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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 equivalents—beginning of period | — | 16,689 | 730 | — | 17,419 | |||||||||||||||
Cash and cash equivalents—end of period | $ | — | $ | 23,976 | $ | 736 | $ | — | $ | 24,712 | ||||||||||
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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 equivalents—beginning of period | — | 19,712 | 10 | — | 19,722 | |||||||||||||||
Cash and cash equivalents—end of period | $ | — | $ | 21,473 | $ | 663 | $ | — | $ | 22,136 | ||||||||||
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ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | 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; |
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• | 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. |
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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 | % | ||||||||
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 | % | ||||||||||||
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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 | )% | |||||||||||
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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 |
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ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
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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 |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
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ITEM 1A. | RISK FACTORS |
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 Company’s 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 | |||
Senior Vice President, Chief Financial Officer | ||||
June 7, 2011 |
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