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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
-------------------
FOR THE QUARTER ENDED COMMISSION FILE NUMBER
JULY 29, 1995 0-16404
SUPERMARKETS GENERAL HOLDINGS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-3408704
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
301 BLAIR ROAD, P. O. BOX 5301 07095-0915
WOODBRIDGE, NEW JERSEY (Zip Code)
(Address of principal executive office)
908-499-3000
(Registrant's telephone number, including area code)
-------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
$3.52 CUMULATIVE EXCHANGEABLE REDEEMABLE PREFERRED STOCK
(Title of Class)
-------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
-- --
As of July 29, 1995, there were outstanding 650,675 shares of $0.01 par
value Class A Common Stock (voting) and 320,000 shares of $0.01 par value Class
B Common Stock (non-voting), all of which are privately owned and not traded on
a public market.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
SUPERMARKETS GENERAL HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS)
13 WEEKS ENDED 26 WEEKS ENDED
------------------------ ------------------------
JULY 29, JULY 30, JULY 29, JULY 30,
1995 1994 1995 1994
---------- ---------- ---------- ----------
Sales...................................... $1,024,677 $1,040,645 $2,064,045 $2,073,736
Cost of sales (exclusive of depreciation
and amortization shown separately
below)................................... 730,222 748,588 1,472,267 1,493,943
---------- ---------- ---------- ----------
Gross profit............................... 294,455 292,057 591,778 579,793
Selling, general and administrative
expenses................................. 233,342 228,683 466,835 464,074
Depreciation and amortization.............. 20,117 18,499 40,096 36,802
---------- ---------- ---------- ----------
Operating earnings......................... 40,996 44,875 84,847 78,917
Gain on disposition of freestanding drug
stores................................... 15,535 -- 15,535 --
Interest expense........................... (43,750) (42,971) (86,920) (84,291)
Interest charged to discontinued
operations............................... -- 3,680 -- 7,357
---------- ---------- ---------- ----------
Earnings from continuing operations before
income taxes and extraordinary item...... 12,781 5,584 13,462 1,983
Income tax benefit (provision)............. 19,941 (1,450) 19,840 (1,492)
---------- ---------- ---------- ----------
Earnings from continuing operations before
extraordinary item....................... 32,722 4,134 33,302 491
Earnings (loss) from discontinued
operations............................... -- 2,802 -- (1,903)
---------- ---------- ---------- ----------
Earnings (loss) before extraordinary
item..................................... 32,722 6,936 33,302 (1,412)
Extraordinary item......................... (675) -- (927) --
---------- ---------- ---------- ----------
Net earnings (loss)........................ 32,047 6,936 32,375 (1,412)
Less: non-cash preferred stock accretion
and dividend requirements................ (4,721) (4,705) (9,437) (9,407)
---------- ---------- ---------- ----------
Net earnings (loss) attributable to common
stockholder.............................. $ 27,326 $ 2,231 $ 22,938 $ (10,819)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
See notes to consolidated financial statements.
1
SUPERMARKETS GENERAL HOLDINGS CORPORATION
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
JULY 29, JANUARY 28,
1995 1995
----------- -----------
ASSETS
Current Assets
Cash and marketable securities..................................... $ 11,121 $ 23,247
Accounts receivable, net........................................... 12,653 13,380
Merchandise inventories............................................ 232,816 255,631
Income taxes receivable............................................ -- 7,756
Prepaid expenses................................................... 25,229 26,580
Due from suppliers................................................. 16,684 18,256
Other current assets............................................... 20,481 29,541
----------- -----------
Total Current Assets........................................... 318,984 374,391
Property and Equipment, Net......................................... 588,751 598,801
Deferred Financing Costs, Net....................................... 37,114 40,446
Deferred Income Taxes............................................... 38,996 5,969
Investment in Purity Supreme, Inc. (net of valuation allowance of
$24,700
at July 29, 1995 and $24,100 at January 28, 1995).................. -- --
Other Assets........................................................ 25,619 23,951
----------- -----------
$ 1,009,464 $ 1,043,558
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current Liabilities
Accounts payable................................................... $ 234,645 $ 239,752
Current maturities of long-term debt............................... 48,303 46,310
Accrued payroll and payroll taxes.................................. 50,551 53,638
Income taxes payable............................................... 9,407 --
Current portion of obligations under capital leases................ 18,681 18,298
Accrued interest payable........................................... 20,855 19,672
Accrued expenses and other current liabilities..................... 97,138 94,630
----------- -----------
Total Current Liabilities...................................... 479,580 472,300
----------- -----------
Long-Term Debt...................................................... 1,271,938 1,365,571
----------- -----------
Obligations Under Capital Leases, Long-Term......................... 127,058 127,122
----------- -----------
Other Noncurrent Liabilities........................................ 285,467 256,911
----------- -----------
Redeemable Securities
Exchangeable Preferred Stock, $.01 par value....................... 102,788 101,959
Authorized: 9,000,000 shares
Issued and outstanding: 4,890,671 shares at July 29, 1995 and
January 28, 1995
Liquidation preference, $25 per share: $122,267 at July 29, 1995
and January 28, 1995
----------- -----------
Total Redeemable Securities.................................... 102,788 101,959
----------- -----------
Commitments and Contingencies (Note 13)
Stockholder's Deficit
Class A Common Stock, $.01 par value............................... 7 7
Authorized: 1,075,000 shares
Issued and outstanding: 650,675 shares at July 29, 1995 and
January 28, 1995
Class B Common Stock, $.01 par value............................... 3 3
Authorized: 1,000,000 shares
Issued and outstanding: 320,000 shares at July 29, 1995 and
January 28, 1995
Paid-in Capital.................................................... 198,306 199,135
Accumulated Deficit................................................ (1,455,683) (1,479,450)
----------- -----------
Total Stockholder's Deficit.................................... (1,257,367) (1,280,305)
----------- -----------
$ 1,009,464 $ 1,043,558
----------- -----------
----------- -----------
See notes to consolidated financial statements.
2
SUPERMARKETS GENERAL HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIT (UNAUDITED)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
CLASS A CLASS B TOTAL
COMMON COMMON PAID-IN ACCUMULATED STOCKHOLDER'S
STOCK STOCK CAPITAL DEFICIT DEFICIT
------- ------- -------- ----------- -------------
Balance at January 28, 1995................. $ 7 $ 3 $199,135 $(1,479,450) $ (1,280,305)
Net income................................ -- -- -- 32,375 32,375
Accrued dividends on preferred stock ($.88
per share per quarter).................. -- -- -- (8,608) (8,608)
Accretion on preferred stock.............. -- -- (829) -- (829)
------- ------- -------- ----------- -------------
Balance July 29, 1995....................... $ 7 $ 3 $198,306 $(1,455,683) $ (1,257,367)
------- ------- -------- ----------- -------------
------- ------- -------- ----------- -------------
Balance, January 29, 1994................... $ 7 $ 3 $200,748 $(1,485,468) $ (1,284,710)
Net loss.................................. -- -- -- (1,412) (1,412)
Accrued dividends on preferred stock ($.88
per share per quarter).................. -- -- -- (8,608) (8,608)
Accretion on preferred stock.............. -- -- (799) -- (799)
------- ------- -------- ----------- -------------
Balance July 30, 1994....................... $ 7 $ 3 $199,949 $(1,495,488) $ (1,295,529)
------- ------- -------- ----------- -------------
------- ------- -------- ----------- -------------
See notes to consolidated financial statements.
3
SUPERMARKETS GENERAL HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
26 WEEKS ENDED
--------------------
JULY 29, JULY 30,
1995 1994
-------- --------
Operating Activities
Net earnings (loss).................................................. $ 32,375 $ (1,412)
Adjustments to reconcile net earnings (loss) to net cash provided by
operating activities
Depreciation and amortization.................................... 41,396 38,096
Deferred income tax benefit...................................... (36,538) (893)
Gain on disposition of freestanding drug stores.................. (15,535) --
Extraordinary item............................................... 927 --
Interest accrued but not payable................................. 7,318 6,594
Amortization of original issue discount.......................... 4,192 6,987
Amortization of debt issuance costs.............................. 3,558 3,434
Gain on disposal of property and equipment....................... (42) (130)
Loss from discontinued operations................................ -- 1,903
Cash provided by (used for) operating assets and liabilities
Accounts receivable, net....................................... 727 1,300
Merchandise inventories........................................ 8,393 (4,773)
Income taxes................................................... 17,629 22,716
Prepaid expenses............................................... 51 (4,942)
Due from suppliers............................................. 1,572 3,457
Other current assets........................................... 4,353 (2,763)
Other assets................................................... (1,849) 6,490
Accounts payable............................................... (5,107) (21,520)
Accrued payroll and payroll taxes.............................. (3,087) (7,727)
Accrued interest payable....................................... 1,183 404
Accrued expenses and other current liabilities................. (4,681) 21,530
Other noncurrent liabilities................................... 4,932 (8,345)
-------- --------
Cash provided by operating activities........................ 61,767 60,406
-------- --------
Investing Activities
Property and equipment expenditures.................................. (26,430) (31,233)
Proceeds from disposition of property and equipment.................. 717 668
Proceeds from disposition of home centers segment.................... 4,706 --
Proceeds from disposition of freestanding drug stores................ 60,521 --
-------- --------
Cash provided by (used for) investing activities............. 39,514 (30,565)
-------- --------
Financing Activities
Increase (decrease) in Working Capital Facilities borrowings......... (34,000) 500
Decrease in Pathmark Term Loan....................................... (42,500) (17,500)
Repayment of PTK Exchangeable Guaranteed Debentures.................. (25,113) --
Premiums incurred in redemption of PTK Exchangeable Guaranteed
Debentures......................................................... (1,392) --
Increase in other borrowings......................................... 808 898
Repayment of other long-term borrowings.............................. (2,346) (2,004)
Reduction in obligations under capital leases........................ (8,864) (8,763)
-------- --------
Cash used for financing activities........................... (113,407) (26,869)
-------- --------
Increase (decrease) in cash and marketable securities.................. (12,126) 2,972
Cash and marketable securities at beginning of period.................. 23,247 6,168
-------- --------
Cash and marketable securities at end of period........................ $ 11,121 $ 9,140
-------- --------
-------- --------
See notes to consolidated financial statements.
4
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1--ORGANIZATION AND BASIS OF PRESENTATION
On February 4, 1991, Supermarkets General Holdings Corporation (the
"Company" or "Holdings"), through the consummation of an exchange offer (the
"Exchange Offer") pursuant to which the then existing common stockholders
exchanged on a one-for-one basis shares of the Company's common stock for shares
of common stock of SMG-II Holdings Corporation ("SMG-II"), became a wholly owned
subsidiary of SMG-II. As a result of the Exchange Offer, SMG-II owns all of the
Company's common stock and is effectively a holding company for the operations
of the Company. The holders of SMG-II's common stock include certain limited
partnerships controlled directly or indirectly by Merrill Lynch Capital
Partners, Inc., together with certain indirectly wholly owned subsidiaries of
Merrill Lynch & Co., Inc., certain members of the Company's management, CBC
Capital Partners, Inc. and the Equitable Life Assurance Society of the United
States and certain of its affiliates.
Pathmark Stores, Inc. ("Pathmark") and Plainbridge, Inc. ("Plainbridge") are
wholly owned subsidiaries of PTK Holdings, Inc. ("PTK"), which is a wholly owned
subsidiary of the Company.
The results from discontinued operations represent the operations of the
Company's home centers segment which was sold during Fiscal 1994 (see Note 2).
At the time of a recapitalization in Fiscal 1993, Holdings intended to further
spin off Plainbridge to Holdings' common stockholder. Such further spin-off
would have required the satisfaction of dividend restrictions with respect to
Holdings' Exchangeable Preferred Stock, as well as, obtaining consents from
various lenders to Plainbridge and PTK. During the fourth quarter of Fiscal
1994, as a result of the aforementioned dividend restrictions, Holdings
concluded that a further spin-off of Plainbridge to Holdings' common stockholder
is not likely to occur. Accordingly, prior year financial statements which had
included the results of Plainbridge's warehouse, transportation and real estate
operations as discontinued operations have been reclassified to include such
results in continuing operations.
The consolidated financial statements included herein reflect all
adjustments which, in the opinion of management, are of a normal and recurring
nature and are necessary to present fairly the results of operations and
financial position of the Company and have been prepared in accordance with the
same accounting principles followed in the presentation of the Company's annual
financial statements for the year ended January 28, 1995. The report should be
read in conjunction with the Company's Form 10-K Annual Report for the year
ended January 28, 1995, Notes to Consolidated Financial Statements.
The accompanying consolidated financial statements of the Company indicate
that at July 29, 1995 current liabilities exceed its current assets by $160.6
million and the Company's stockholder's deficit approximates $1.3 billion.
Management believes that cash flows generated from operations supplemented by
the unused borrowing capacity under the Pathmark and Plainbridge Working Capital
Facilities and the availability of capital lease financing will be sufficient to
pay the Company's debts as they come due, provide for its capital expenditure
program and meet its seasonal cash requirements. Further, the Company believes
it will continue to be in compliance with its various debt covenants.
Since the Company is a wholly owned subsidiary, earnings (loss) per share
information is not presented.
NOTE 2--DISCONTINUED OPERATIONS AND EXTRAORDINARY ITEM
On November 4, 1994, the Company's Plainbridge subsidiary completed the sale
of its home centers segment for approximately $88.7 million in cash, plus the
assumption of certain indebtedness. The Company used net cash proceeds of $66.6
million in Fiscal 1994 and $4.7 million in the first quarter
5
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)
NOTE 2--DISCONTINUED OPERATIONS AND EXTRAORDINARY ITEM--(CONTINUED)
of Fiscal 1995 to pay down the PTK DIBs, including accrued interest and debt
premium. The debt premium paid, including original issue discount, resulted in a
net loss on early extinguishment of debt of $0.3 million in the first quarter of
Fiscal 1995.
As of the date of sale, the net assets of the home centers segment were as
follows (dollars in thousands):
Current assets................................................................... $ 67,713
Property and equipment........................................................... 60,062
Other assets..................................................................... 3,244
--------
Total assets..................................................................... 131,019
--------
Current liabilities.............................................................. 39,841
Noncurrent liabilities........................................................... 22,219
--------
Total liabilities................................................................ 62,060
--------
Net assets....................................................................... $ 68,959
--------
--------
Through the date of sale, the Company reported the home center segment as
discontinued operations. Operating results of such discontinued operations were
as follows (dollars in thousands):
13 WEEKS 26 WEEKS
ENDED ENDED
JULY 30, JULY 30,
1994 1994
-------- --------
Sales.................................................................. $107,118 $182,577
-------- --------
-------- --------
Earnings (Loss) before income taxes(a)................................. $ 2,802 $ (1,903)
Income tax provision................................................... -- --
-------- --------
Net earnings (loss) from discontinued operations....................... $ 2,802 $ (1,903)
-------- --------
-------- --------
------------
(a) The Company charged the home centers segment interest expense relating to a
proportionate share of certain borrowings. These charges amounted to $3.7 million and
$7.4 million for the second quarter and the first six-month period of Fiscal 1994,
respectively and are included in the results of the discontinued operations.
NOTE 3--DISPOSITION OF FREESTANDING DRUG STORES
During the second quarter of Fiscal 1995, the Company made a decision to
dispose of its 36 freestanding drug stores. On July 28, 1995, the Company,
through its Pathmark subsidiary, completed the sale of 30 of its freestanding
drug stores to Rite Aid Corporation for $60.5 million, subject to any final
purchase price adjustments. Pathmark used $25.0 million of the proceeds to repay
a portion of its existing Term Loan and paid a dividend of $21.8 million to PTK,
as permitted by the indentures governing its debt instruments, in order for PTK
to repay a portion of its outstanding debt. The remaining proceeds, which were
applied against the Pathmark Working Capital Facility, will be used to pay
income taxes and expenses related to the sale.
The Company recorded a pretax gain on the disposition of its freestanding
drug stores of $15.5 million, net of a $19.0 million charge related to the
estimated exit costs of the remaining six freestanding drug stores. Pathmark
expects to dispose of the remaining six freestanding drug stores during the
year.
6
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)
NOTE 4--MERCHANDISE INVENTORIES
Merchandise inventories are comprised of the following (dollars in
thousands):
JULY 29, JANUARY 28,
1995 1995
-------- -----------
Merchandise inventories at FIFO cost............................... $276,237 $ 298,812
Less LIFO reserve.................................................. 43,421 43,181
-------- -----------
Merchandise inventories at LIFO cost............................... $232,816 $ 255,631
-------- -----------
-------- -----------
The reduction in merchandise inventory at July 29, 1995 compared to January
28, 1995 is due primarily to the sale of the freestanding drug stores.
NOTE 5--OTHER CURRENT ASSETS
The reduction in other current assets at July 29, 1995 compared to January
28, 1995 is primarily due to a reduction in assets held for sale in the normal
course of business.
NOTE 6--PROPERTY AND EQUIPMENT
Property and equipment are comprised of the following (dollars in
thousands):
JULY 29, JANUARY 28,
1995 1995
-------- -----------
Land.................................................................. $ 65,274 $ 65,142
Buildings and building improvements................................... 208,464 201,553
Fixtures and equipment................................................ 203,051 200,015
Leasehold costs and improvements...................................... 269,747 268,165
Transportation equipment.............................................. 19,078 19,828
-------- -----------
Property and equipment, owned......................................... 765,614 754,703
Property and equipment under capital leases........................... 172,284 173,175
-------- -----------
Property and equipment, at cost....................................... 937,898 927,878
Less accumulated depreciation and amortization........................ 349,147 329,077
-------- -----------
Property and equipment, net........................................... $588,751 $ 598,801
-------- -----------
-------- -----------
NOTE 7--LONG-TERM DEBT
Long-term debt is comprised of the following (dollars in thousands):
JULY 29, JANUARY 28,
1995 1995
---------- -----------
Pathmark Term Loan................................................. $ 305,750 $ 348,250
Pathmark Working Capital Facility.................................. 29,000 63,000
10.25% PTK Exchangeable Guaranteed Debentures due 2003............. 58,160 79,257
9.625% Pathmark Senior Subordinated Notes due 2003................. 437,249 437,072
10.75% Pathmark Deferred Coupon Notes due 2003..................... 144,171 136,853
12.625% Pathmark Subordinated Debentures due 2002.................. 95,750 95,750
11.625% Pathmark Subordinated Notes due 2002....................... 199,017 199,017
11.625% Holdings Subordinated Notes due 2002....................... 983 983
Industrial Revenue Bonds........................................... 6,375 6,375
Other Debt (primarily mortgages)................................... 43,786 45,324
---------- -----------
Total debt......................................................... 1,320,241 1,411,881
Less current maturities............................................ 48,303 46,310
---------- -----------
Long-term portion.................................................. $1,271,938 $ 1,365,571
---------- -----------
---------- -----------
7
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)
NOTE 8--INTEREST EXPENSE
Interest expense is comprised of the following (dollars in thousands):
13 WEEKS ENDED 26 WEEKS ENDED
-------------------- --------------------
JULY 29, JULY 30, JULY 29, JULY 30,
1995 1994 1995 1994
-------- -------- -------- --------
Pathmark Term Loan.................................... $ 7,730 $ 6,654 $ 15,655 $ 12,550
Pathmark Working Capital Facility..................... 1,669 1,378 2,938 1,908
Plainbridge Working Capital Facility.................. 21 97 42 371
Pathmark Senior Subordinated Notes
Amortization of original issue discount............. 88 88 176 176
Currently payable................................... 10,588 10,588 21,176 21,176
Pathmark Deferred Coupon Notes
Accrued but not payable............................. 3,707 3,340 7,318 6,594
Pathmark Subordinated Debentures...................... 3,022 3,022 6,044 6,044
Pathmark Subordinated Notes........................... 5,812 5,812 11,625 11,625
Amortization of PTK DIBs original issue discount...... 1,940 3,412 4,016 6,811
Amortization of debt issuance costs................... 1,779 1,717 3,558 3,434
Obligations under capital leases...................... 4,037 3,865 8,084 7,759
Other, net............................................ 3,357 2,998 6,288 5,843
-------- -------- -------- --------
Interest expense...................................... $ 43,750 $ 42,971 $ 86,920 $ 84,291
-------- -------- -------- --------
-------- -------- -------- --------
The Company made cash interest payments of $53.0 million and $52.0 million
during the second quarters of Fiscal 1995 and Fiscal 1994, respectively, and
$67.0 million and $64.0 million during the first six-month periods of Fiscal
1995 and 1994, respectively. The majority of the cash interest payments are
scheduled in the second and fourth quarters.
NOTE 9--LEASES
The Company incurred capital lease obligations of $10.6 million and $4.5
million during the first six-month periods of Fiscal 1995 and Fiscal 1994,
respectively, in connection with lease agreements to acquire property and
equipment.
NOTE 10--RELATED PARTY TRANSACTIONS
During Fiscal 1993, Pathmark and Plainbridge entered into related party
agreements and transactions. Refer to the Company's Form 10-K Annual Report for
the year ended January 28, 1995, Notes to the Consolidated Financial Statements,
for a more detailed description of such agreements. These related party
agreements and transactions are summarized as follows:
1) Spin-Off
A) Services Agreements:
Pathmark, Plainbridge and the Company are parties to agreements pursuant to
which Pathmark continues to provide certain administrative services relating to
the warehouse and distribution operations of Plainbridge and certain
administrative services to Chefmark. Such services include, among other things,
legal, human resources, data processing, insurance, accounting, tax, treasury
and property management services. Each of the agreements have an initial term of
five years, with renewal options at the end of such term. The cost of the
services charged to Plainbridge and Chefmark under these agreements in the
aggregate was approximately $3.0 million and $6.0 million during the second
quarter and the first six-month period of Fiscal 1995, respectively, and $3.6
million and $7.0 million during the second quarter and the first six-month
period of Fiscal 1994, respectively.
8
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)
NOTE 10--RELATED PARTY TRANSACTIONS--(CONTINUED)
B) The Logistical Services Agreements:
Under the Logistical Services Agreement, Plainbridge supplies Pathmark most
of the merchandise sold in Pathmark's retail stores and for the provision of
warehousing, distribution and other logistical services relating to the supply
of such merchandise. The cost of fees paid by Pathmark to Plainbridge related to
the Logistical Services Agreement in the aggregate was approximately $31.9
million and $65.4 million during the second quarter and first six-month period
of Fiscal 1995, respectively, and $33.9 million and $69.1 million during the
second quarter and first six-month period of Fiscal 1994, respectively. Pathmark
also received an allowance of approximately $5.9 million and $12.0 million
during the second quarter and first six-month period of Fiscal 1995,
respectively, and $6.3 million and $12.6 million during the second quarter and
first six-month period of Fiscal 1994, respectively, based on the amount of
merchandise purchased by Plainbridge at Pathmark's direction. Pursuant to the
Logistical Services Agreement, Pathmark directs the purchase of the merchandise
to be provided to it by Plainbridge. Pathmark negotiates directly with vendors
regarding the types of merchandise required, the quantities needed, the delivery
schedules, the pricing, and all the other terms and conditions of sale. All
merchandise is ordered by Pathmark for the account of Plainbridge, which will
pay for and will retain title to such merchandise until it has been delivered to
Pathmark. If requested by a vendor, Pathmark in its sole discretion, may
guarantee payment of such orders by Plainbridge. Pathmark guaranteed
approximately $27.8 million of such merchandise purchases by Plainbridge at July
29, 1995.
2) Other:
In conjunction with the Plainbridge Spin-Off, certain real property was
transferred to Plainbridge and is being leased to Pathmark at rentals which the
Company believes approximate fair value. During each of the second quarters and
the first six-month periods of Fiscal 1995 and Fiscal 1994, such rentals
amounted to $1.1 million and $2.2 million, respectively.
Certain management investors issued recourse notes to the Company related to
the purchase of the Company's Class A common stock. These management investors
have pledged shares of SMG-II Class A common stock to secure the repayment of
the recourse notes. Recourse notes in the amount of $1.7 million were
outstanding at July 29, 1995 and January 28, 1995.
NOTE 11--CUMULATIVE EXCHANGEABLE REDEEMABLE PREFERRED STOCK
Exchangeable Preferred Stock activity during the first six-month period of
Fiscal 1995 was as follows (dollars in thousands):
NUMBER OF
SHARES AMOUNT
--------- --------
Balance, January 28, 1995............................... 4,890,671 $101,959
Accretion on preferred stock............................ -- 829
--------- --------
Balance, July 29, 1995.................................. 4,890,671 $102,788
--------- --------
--------- --------
The terms of the Exchangeable Preferred Stock provide for cumulative
quarterly dividends at an annual rate of $3.52 per share when, as, and if
declared by the Board of Directors of the Company. Dividends for the first 20
quarterly dividend periods (through October 15, 1992) were paid at the Company's
option in additional shares of Exchangeable Preferred Stock since the Company
did not meet the conditions permitting cash dividend payments on the
Exchangeable Preferred Stock. Holdings does not expect to receive cash flow
sufficient to permit payments of dividends on the Exchangeable Preferred Stock
in the foreseeable future. All dividends not paid in cash will cumulate at the
rate of
9
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)
NOTE 11--CUMULATIVE EXCHANGEABLE REDEEMABLE PREFERRED STOCK--(CONTINUED)
$3.52 per share per annum, without interest, until declared and paid. As such,
at July 29, 1995, the unpaid dividends of $47.3 million were accrued and
included in other noncurrent liabilities.
Pursuant to the Certificate of Stock Designation for the Exchangeable
Preferred Stock (the "Certificate of Designation"), the Company was required to
pay cash dividends to the Exchangeable Preferred Stockholders at an annual rate
of $3.52 per share beginning on January 15, 1993. The Certificate of Designation
provides that the Exchangeable Preferred Stock is non-voting except that if an
amount equal to six quarterly dividends is in arrears in whole, or in part, the
Exchangeable Preferred Stockholders voting as a class are entitled to elect an
additional two members to the Board of Directors of the Company. The Company is
currently in arrears on the payment of ten quarterly dividends. Accordingly, the
Exchangeable Preferred Stockholders at a stockholders' meeting held on June 8,
1995, elected two members to the Company's Board of Directors.
NOTE 12--INCOME TAXES
Income taxes for the interim period are based on the estimated effective tax
rate expected to be applicable for the full fiscal year. At July 29, 1995, the
Company reversed the valuation allowance related to its net deferred income tax
assets. This reversal of $20.3 million, along with the benefit recognized during
the first six-month period of Fiscal 1995 of $5.5 million related to taxable
income generated during such period, have been included as components of the
income tax benefit and totalled $25.8 million. The reversal at the end of the
period was recorded in conjunction with the Company's continuing evaluation of
its deferred income tax assets. In the opinion of management, sufficient
evidence now exists, such as the positive trend in earnings for the last seven
quarters and the income generated from the disposition of the freestanding drug
stores, which indicates that it is more likely than not that the Company will be
able to realize its deferred income tax assets. At July 29, 1995, net deferred
income tax assets of $39.0 million consisted principally of alternative minimum
tax credit carryforwards and temporary book/tax basis differences. The income
tax provision for the first six-month period of Fiscal 1994 is net of an
increase in deferred income tax assets and related valuation allowance of $1.3
million due to additional net operating loss carryforwards. During the first
six-month period of Fiscal 1995, the Company made income tax payments of $1.4
million and received income tax refunds of $8.0 million. During the first
six-month period of Fiscal 1994, the Company made income tax payments of $0.5
million and received income tax refunds of $23.2 million.
NOTE 13--CONTINGENCIES
The Company is contingently liable for certain obligations of Purity
Supreme, Inc. ("Purity"), a former subsidiary, primarily consisting of
approximately 60 leases for real property, in the event of default thereunder by
the purchaser of Purity. As of January 28, 1995, the estimated present value of
such lease obligations approximated $109.5 million. The Company is also
contingently liable for a loan guarantee of approximately $1.0 million at July
29, 1995.
The Company is contingently liable for certain obligations of Rickel Home
Centers, Inc. ("Rickel"), a former subsidiary, primarily consisting of 19 leases
for real property, in the event of default thereunder by the purchaser of
Rickel. As of January 28, 1995, the estimated present value of such lease
obligations approximated $27.6 million.
The Company is a party to a number of legal proceedings in the ordinary
course of business. Management believes that the ultimate resolution of these
proceedings will not, in the aggregate, have a material adverse impact on the
financial condition, results of operations or business of the Company.
10
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)
NOTE 14--INVESTMENT IN PURITY SUPREME, INC.
On April 24, 1995, a strategic buyer announced its plans to purchase Purity,
subject to completion of regulatory approval and compliance with terms and
conditions of the purchase agreement. The sale is expected to close later in
1995, with the Company expecting to receive approximately $16 million based upon
the announced price. Until the proposed transaction is consummated, no
adjustment will be made to the valuation allowance related to the securities
representing the Company's investment in Purity. Further, based on the announced
price, if the proposed transaction is consummated, a capital tax loss
carryforward of approximately $70 million will be generated. The benefit of such
capital tax loss carryforward will only be realized to the extent the Company
generates capital gains.
11
SUPERMARKETS GENERAL HOLDINGS CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following is a discussion and analysis of the Company's financial
condition and results from continuing operations. The results from discontinued
operations for all periods presented represent the operations of the Company's
home centers segment which was sold during Fiscal 1994. At the time of a
recapitalization in Fiscal 1993, Holdings intended to further spin off
Plainbridge to Holdings' common stockholder. Such further spin-off would have
required the satisfaction of dividend restrictions with respect to Holdings'
Exchangeable Preferred Stock, as well as, obtaining consents from various
lenders to Plainbridge and PTK. During the fourth quarter of Fiscal 1994, as a
result of the aforementioned dividend restrictions, Holdings has concluded that
a further spin-off of Plainbridge to Holdings' common stockholder is not likely
to occur. Accordingly, prior year financial statements which had included the
results of Plainbridge's warehouse, transportation and real estate operations as
discontinued operations have been reclassified to include such results in
continuing operations.
RESULTS OF OPERATIONS
Sales:
Sales for the second quarter of Fiscal 1995 were $1.025 billion compared to
$1.041 billion in the prior-year period. Sales from supermarkets open in both
second quarter periods, including replacement stores, decreased 1.2%. Sales for
the first six-month period of Fiscal 1995 were $2.064 billion compared to $2.074
billion in the prior year period. Sales from supermarkets opened in both
six-month periods, including replacement stores, decreased 0.2%. At quarter end,
the Company operated 142 supermarkets, including 33 Pathmark 2000 format stores
compared with the end of Fiscal 1994 when the Company operated 143 supermarkets,
including 29 Pathmark 2000 format stores. The Company also operated six
freestanding drug stores at quarter end compared to 36 freestanding drug stores
at the end of Fiscal 1994 (see "Disposition of Freestanding Drug Stores"). In
order to improve sales and profitability, the Company is continuing to focus on
its supermarket enlargement and renovation program.
Gross Profit:
Gross profit for the second quarter of Fiscal 1995 was $294.5 million or
28.7% of sales compared with $292.1 million or 28.1% of sales for the second
quarter of Fiscal 1994 and for the first six-month period of Fiscal 1995 was
$591.8 million or 28.7% of sales compared with $579.8 million or 27.9% for the
prior year period. This improvement in gross profit as a percentage of sales is
primarily due to lower inventory shrink, increased focus on merchandising
programs as well as to the Company's continuing emphasis on the Pathmark 2000
format stores which allow expanded variety in all departments, particularly
higher margin perishables. The cost of goods sold comparisons were affected by a
pretax LIFO charge of $0.5 million for the second quarter of Fiscal 1995,
compared with a pretax LIFO charge of $0.8 million for the prior-year period and
a pretax LIFO charge of $1.3 million for the first six-month period of Fiscal
1995 compared with a pretax LIFO charge of $1.6 million for the prior year
period.
Selling, General and Administrative Expenses:
Selling, general and administrative expenses for the second quarter of
Fiscal 1995 increased $4.7 million or 2.0% compared to the prior-year period and
increased $2.8 million or 0.6% for the first six-month period of Fiscal 1995
compared with the prior year period. As a percentage of sales, selling, general
and administrative expenses were 22.8% for the second quarter of Fiscal 1995, up
from 22.0% in the prior-year period and were 22.6% for the first six-month
period of Fiscal 1995 up from 22.4% for the prior year period. The increase as a
percentage of sales in the second quarter and first six-month period compared to
the prior-year period was due to higher claims expenses, occupancy costs and
supplies partially offset by lower promotional costs and labor and labor related
expenses along with weather related expenses that adversely affected last year's
first quarter.
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Depreciation and Amortization:
Depreciation and amortization of $20.1 million for the second quarter of
Fiscal 1995 was $1.6 million higher than the prior-year period of $18.5 million.
For the first six-month period of Fiscal 1995, depreciation and amortization of
$40.1 million was $3.3 higher than the prior-year period of $36.8 million. The
increase in depreciation and amortization expense for the second quarter and
six-month period of Fiscal 1995 compared to the prior-year periods was primarily
due to capital expenditures. Depreciation and amortization excludes video tape
amortization, which is recorded in cost of goods sold, of $0.65 million and $1.3
million in each of the second quarters and first six-month periods of Fiscal
1995 and Fiscal 1994, respectively.
Operating Earnings:
Operating earnings for the second quarter of Fiscal 1995 were $41.0 million
compared with the prior-year period of $44.9 million. For the first six-month
period of Fiscal 1995, operating earnings were $84.8 million compared with $78.9
million for the prior-year period. The decrease in operating earnings during the
second quarter of Fiscal 1995 compared to the prior year period was primarily
due to higher operating expenses partially offset by improved gross profit. The
increase in operating earnings for the first six-month period of Fiscal 1995
compared to the prior-year period was due to higher gross profit partially
offset by higher operating expenses.
Disposition of Freestanding Drug Stores:
During the second quarter of Fiscal 1995, the Company made a decision to
dispose of its 36 freestanding drug stores. On July 28, 1995, the Company,
through its Pathmark subsidiary, completed the sale of 30 of its freestanding
drug stores to Rite Aid Corporation for $60.5 million, subject to any final
purchase price adjustments. Pathmark used $25.0 million of the proceeds to repay
a portion of its existing Term Loan and paid a dividend of $21.8 million to PTK,
as permitted by the indentures governing its debt instruments, in order for PTK
to repay a portion of its outstanding debt. The remaining proceeds, which were
applied against the Pathmark Working Capital Facility, will be used to pay
income taxes and expenses related to the sale.
The Company recorded a pretax gain on the disposition of its freestanding
drug stores of $15.5 million, net of a $19.0 million charge related to the
estimated exit costs of the remaining six freestanding drug stores. Pathmark
expects to dispose of the remaining six freestanding drug stores during the
year.
Interest Expense:
Interest expense of $43.8 million for the second quarter of Fiscal 1995 was
$0.8 million more than the prior-year period of $43.0 million and for the first
six-month period of Fiscal 1995 was $2.6 million more than the prior-year period
of $84.3 million. The increase was primarily due to the higher interest rates on
the Company's floating rate bank debt and higher average borrowings under the
Pathmark Working Capital Facility.
Income Taxes:
Income taxes are based on the estimated effective tax rate expected to be
applicable for the full fiscal year. At July 29, 1995, the Company reversed the
valuation allowance related to its net deferred income tax assets. This reversal
of $20.3 million, along with the benefit recognized during the second quarter of
Fiscal 1995 of $5.2 million related to taxable income generated during such
period, have been included as components of the income tax benefit and totalled
$25.5 million. The reversal at the end of the period was recorded in conjunction
with the Company's continuing evaluation of its deferred income tax assets. In
the opinion of management, sufficient evidence now exists, such as the positive
trend in earnings for the last seven quarters and the income generated from the
disposition of the freestanding drug stores, which indicates that it is more
likely than not that the Company will be able to realize its deferred income tax
assets. The income tax provision of $1.5 million for the second quarter of
Fiscal
13
1994 is net of a reduction in the net deferred income tax asset and related
valuation allowance of $2.1 million due to utilization of the net operating loss
carryforwards. The income tax benefit for the first six-month period of Fiscal
1995 was $19.8 million which includes a reversal of the valuation allowance
related to its net deferred income tax assets of $20.0 million, compared to an
income tax provision of $1.5 million for the prior-year period.
During the first six-month period of Fiscal 1995, the Company made income
tax payments of $1.4 million and received income tax refunds of $8.0 million.
During the first six-month period of Fiscal 1994, the Company made income tax
payments of $.05 million and received income tax refunds of $23.2 million.
Summary of Operations:
For the second quarter of Fiscal 1995, the Company's earnings from
continuing operations before extraordinary items were $32.7 million compared to
earnings of $4.1 million for the prior-year period. For the first six-month
period of Fiscal 1995, the Company's earnings from continuing operations before
extraordinary items were $33.3 million compared to earnings of $0.5 for the
prior-year period. The increase in earnings is primarily due to the increased
operating earnings, the gain on disposition of freestanding drug stores and the
tax benefit due to the reversal of the valuation allowance related to the
Company's net deferred income tax assets.
Extraordinary Item:
During the second quarter of Fiscal 1995 in connection with the proceeds
received related to the sale of 30 of its freestanding drug stores, the Company
was required to paydown $21.8 million of PTK DIBs; the premium paid, including
original issue discount, resulted in a net loss on early extinguishment of debt
of $0.7 million.
During the first quarter of Fiscal 1995, in connection with the proceeds
received related to the disposition of the home centers segment, the Company was
required to paydown $4.7 million of PTK DIBs; the premium paid, including
original issue discount, resulted in a net loss on early extinguishment of debt
of $0.2 million.
FINANCIAL CONDITION
Debt Service:
During the first six-month period of Fiscal 1995, total debt decreased $91.6
million from Fiscal 1994 year end primarily due to the scheduled Term Loan
repayments and a required Term Loan repayment in conjunction with the
disposition of the freestanding drug stores, a decrease in borrowings under the
Pathmark Working Capital Facility as well as the required paydown of the PTK
DIB's with the disposition of freestanding drug stores and home center disposal
proceeds, partially offset by debt accretion on Pathmark Deferred Coupon Notes
and PTK DIBs. Borrowings under the Pathmark Working Capital Facility were $29.0
million at July 29, 1995 and have decreased to $26.0 million at September 6,
1995. There were no outstanding borrowings under the Plainbridge Working Capital
Facility at July 29, 1995 and September 6, 1995.
Under the Pathmark Working Capital Facility, which expires in Fiscal 1998,
Pathmark can borrow or obtain letters of credit in an aggregate amount not to
exceed $175.0 million (of which the maximum of $100.0 million can be in letters
of credit) subject to an annual cleandown provision. Under the terms of the
Pathmark cleandown provision, in each fiscal year loans cannot exceed $50.0
million under the Pathmark Working Capital Facility for a period of 30
consecutive days. Pathmark satisfied the terms of the Fiscal 1995 cleandown
provision during the first quarter. Under the Plainbridge Working Capital
Facility, which expires in Fiscal 1997, Plainbridge can borrow or obtain letters
of credit in an aggregate amount not to exceed $40.0 million (of which the
maximum of $30.0 million can be in letters of credit).
The indebtedness under the Pathmark and Plainbridge Working Capital
Facilities and the Pathmark Term Loan bear interest at floating rates. To the
extent that certain indebtedness of the
14
Company bears interest at floating rates, cash interest payments on that
indebtedness may vary in future years. The Company does not currently maintain
any interest rate hedging arrangements due to the reasonable risk that near term
interest rates will not rise significantly. The Company is continuously
evaluating this risk and will implement interest rate hedging arrangements if
deemed appropriate.
The majority of the cash interest payments are scheduled in the second and
fourth quarters.
The amount of principal payments required each year on outstanding long-term
debt (excluding the original issue discount with respect to the Pathmark
Deferred Coupon Notes and the PTK DIBs) are as follows (dollars in millions):
PRINCIPAL
FISCAL YEARS PAYMENTS
---------------------------------------------------------- ------------------
1995(a)................................................. $ 27.9
1996.................................................... 48.0
1997.................................................... 58.1
1998.................................................... 135.5
1999.................................................... 113.7
2000.................................................... 50.6
2001.................................................... 50.0
2002.................................................... 195.8
2003.................................................... 640.4
------------
(a) Subsequent to July 29, 1995
Liquidity:
The consolidated financial statements of the Company indicate that at July
29, 1995, current liabilities exceed its current assets by $160.6 million and
the Company's stockholder's deficit approximates $1.3 billion. Management
believes that cash flows generated from operations, supplemented by the unused
borrowing capacity under the Pathmark and Plainbridge Working Capital Facilities
and the availability of capital lease financing will be sufficient to pay the
Company's debts as they come due, provide for its capital expenditure program
and meet its seasonal cash requirements. Further, the Company believes it will
continue to be in compliance with its various debt covenants, which include
certain levels of operating cash flow (as defined), minimum interest coverage
and a maximum leverage ratio.
Holdings believes that it will be able to make the scheduled payments or
refinance its obligations with respect to its indebtedness through a combination
of operating funds and the Company's borrowing facilities. Future refinancing
may be necessary if cash flow from operations is not sufficient to meet its debt
service requirements related to the maturity of the Plainbridge Working Capital
Facility in Fiscal 1997, the maturity of the Pathmark Working Capital Facility
and certain mortgages in Fiscal 1998, the amortization and subsequent maturity
of the Pathmark Term Loan in Fiscal 1999 and the maturity of the Pathmark
Subordinated Notes and Pathmark Subordinated Debentures in Fiscal 2002. The
Company expects that it will be necessary to refinance all or a portion of the
Pathmark Senior Subordinated Notes, the Pathmark Deferred Coupon Notes and the
PTK DIBs due in Fiscal 2003. The Company may undertake a refinancing of some or
all of such indebtedness sometime prior to its maturity. The Company's ability
to make scheduled payments or to refinance its obligations with respect to its
indebtedness depends on its financial and operating performance, which, in turn,
is subject to prevailing economic conditions and to financial, business and
other factors beyond its control. Although the Company's cash flow from its
operations and borrowings has been sufficient to meet its debt service
obligations, there can be no assurance that the Company's operating results will
continue to be sufficient or that future borrowing facilities will be available
for payment or refinancing of Pathmark's and PTK's indebtedness or that future
borrowing facilities will be available. While it is the Company's intention to
enter into refinancings that it considers advantageous, there can be no
assurances that the prevailing market conditions will be favorable to the
Company. In the event the Company obtains any future refinancing on less than
favorable terms, the holders of outstanding
15
indebtedness could experience increased credit risk and could experience a
decrease in the market value of their investment, because the Company might be
forced to operate under terms that would restrict its operations and might find
its cash flow reduced.
Preferred Stock Dividends:
The terms of the Exchangeable Preferred Stock provide for cumulative
quarterly dividends at an annual rate of $3.52 per share when, as, and if
declared by the Board of Directors of the Company. Dividends for the first 20
quarterly dividend periods (through October 15, 1992) were paid at the Company's
option in additional shares of Exchangeable Preferred Stock. Since January 15,
1993, all dividends not paid in cash will cumulate at the rate of $3.52 per
share per annum, without interest, until declared and paid. As such, at July 29,
1995, the unpaid dividends of $47.3 million were accrued and included in other
noncurrent liabilities.
Capital Expenditures:
Capital expenditures for the second quarter of Fiscal 1995, including
property acquired under capital leases, were approximately $20.1 million
compared to approximately $17.7 million for the prior-year period and for the
first six-month period of Fiscal 1995, including property acquired under capital
leases, were approximately $35.7 million compared to $30.9 million for the prior
year period. During the first six-month period of Fiscal 1995, the Company
completed six major renovations to existing supermarkets. During the remainder
of Fiscal 1995, the Company plans to open up to six new Pathmark 2000 format
stores, four of which will replace smaller stores, and plans to complete up to
16 major renovations and enlargements.
Cash Flows:
Net cash provided by operating activities amounted to $61.8 million in the
first six-month period of Fiscal 1995 compared to $60.4 million in the
prior-year period. The increase in net cash provided by operating activities is
primarily due to an increase in net earnings and an improvement in cash provided
by operating assets and liabilities, partially offset by the deferred income tax
benefit. Cash provided by investing activities in the first six-month period of
Fiscal 1995 was $39.5 million, primarily due to the net proceeds from the
disposition of the freestanding drug stores and the proceeds of $4.7 million
related to the disposition of the home centers segment, partially offset by
expenditures of property and equipment, compared to cash used for investing
activities of $30.6 million in the first six-month period of Fiscal 1994,
primarily reflecting the expenditures for property and equipment. Cash used for
financing activities in the first six-month period of Fiscal 1995 was $113.4
million compared to $26.9 million in the prior-year period. The increase in cash
used for financing activities is primarily due to a decrease in borrowings under
the Working Capital Facilities and a paydown of $25.0 million on the Pathmark
Term Loan as well as a paydown of $25.1 million on the PTK DIBs from the net
proceeds of the disposition of the freestanding drug stores and from the net
proceeds of the disposition of the home centers segment in Fiscal 1995.
Investment in Purity Supreme, Inc.:
On April 24, 1995, a strategic buyer announced its plans to purchase Purity,
subject to completion of regulatory approval and compliance with terms and
conditions of the purchase agreement. The sale is expected to close later in
1995, with the Company expecting to receive approximately $16 million based upon
the announced price. Until the proposed transaction is consummated, no
adjustment will be made to the valuation allowance related to the securities
representing the Company's investment in Purity. Further, based on the announced
price, if the proposed transaction is consummated, a capital tax loss
carryforward of approximately $70 million will be generated. The benefit of such
capital tax loss carryforward will only be realized to the extent the Company
generates capital gains.
16
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders of Supermarkets General Holdings
Corporation (the "Company") was held on June 8, 1995 for the sole purpose of
reelecting eight members and electing two new members of the board of directors.
Proxies for the meeting were solicited pursuant to Section 14(a) of the
Securities Exchange Act of 1934 and there was no solicitation in opposition to
management's solicitation. Each of management's nominees for directors as listed
below and in the proxy statement was elected. The results of the voting were:
(a) the sole stockholder of the Company's common stock (the "Common
Stock") re-elected James J. Burke, Jr., Anthony Cuti, Jack Futterman, Sunil
Khanna, Stephen McLean, Alexis Michas, Susan Penny and Jerry Rubenstein as
directors of the Company. Each director received 650,675 votes (100% of the
Company's outstanding Common Stock) in favor and none against; and
(b) the holders of the company's $3.52 Exchangeable Preferred Stock (the
"Preferred Stock") elected James B. Upchurch and Steven Volla as directors
of the Company. The vote in connection with the election of each of them was
3,639,394 shares of Preferred Stock in favor and 10,120 shares of Preferred
Stock against, with no abstentions.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No reports on Form 8-K have been filed during the quarter for which this
report has been filed.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
Undersigned thereunto duly authorized.
SUPERMARKETS GENERAL HOLDINGS
CORPORATION
By /s/ RON MARSHALL
...................................
(Ron Marshall)
Executive Vice President
and Chief Financial Officer
By /s/ JOSEPH ADELHARDT
...................................
(Joseph Adelhardt)
Vice President and Controller,
Chief Accounting Officer
Date: September 12, 1995
17