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TheStreet Open House

Fairway Group Holdings Corp. Reports Fourth Quarter And Full Year Fiscal 2013 Results

Stock quotes in this article: FWM

Forward-Looking Statements

Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties and other factors that may cause Fairway's actual results in current or future periods to differ materially from forecasted results. Food retail is a large and highly competitive industry, and Fairway's business involves many risks and uncertainties, including, but not limited to: our ability to open new stores on a timely basis or at all; our ability to achieve sustained sales and profitable operating margins at new stores; the availability of financing to pursue our new store openings on satisfactory terms or at all; our ability to compete effectively with other retailers; our ability to maintain price competitiveness; the geographic concentration of our stores; our ability to maintain or improve our operating margins; our history of net losses; ordering errors or product supply disruptions in the delivery of perishable products; restrictions on our use of the Fairway name other than on the East Coast and in California and certain parts of Michigan and Ohio; our ability to retain and attract senior management, key employees and qualified store-level employees; rising costs of providing employee benefits, including increased healthcare costs and pension contributions due to unfunded pension liabilities; our ability to satisfy our ongoing capital needs and unanticipated cash requirements; and other risk factors detailed in our filings with the Securities and Exchange Commission ("the SEC"), and available at the SEC's website at www.sec.gov . You are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements made herein speak only as of the date of this press release and the company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

FAIRWAY GROUP HOLDINGS CORP.    
CONSOLIDATED BALANCE SHEETS (Unaudited)    
($ in thousands except per share amounts)    
     
  Fiscal Year Ended
  April 1, March 31,
  2012 2013
     
ASSETS    
     
CURRENT ASSETS    
Cash and cash equivalents $30,172 $21,723
Accounts receivable, net  2,282 2,553
Merchandise inventories 19,960 24,759
Insurance claims receivable  --  5,184
Income tax receivable 709 817
Prepaid rent 2,533 3,146
Deferred financing fees 1,183 1,580
Prepaid expense and other 2,062 5,604
Deferred income taxes 1,657 915
Total current assets 60,558 66,281
     
PROPERTY EQUIPMENT, NET 93,937 126,958
GOODWILL 95,412 95,412
INTANGIBLE ASSETS, NET  26,008 25,729
DEFERRED INCOME TAXES 28,837 3,781
OTHER ASSETS 16,838 20,340
Total assets $321,590 $338,501
     
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT    
     
CURRENT LIABILITIES    
Current portion of long-term debt  2,000 2,750
Accounts payable  26,016 39,399
Accrued expenses and other  14,841 18,360
Total current liabilities 42,857 60,509
     
     
NONCURRENT LIABILITIES     
Long-term debt, net of current maturities (inclusive of amounts due to related party of $7,333 and $0 at April 1, 2012 and March 31, 2013 respectively) 201,552 256,563
Other long-term liabilities 14,122 22,629
Total liabilities 258,531 339,701
     
COMMITMENTS AND CONTINGENCIES    
     
REDEEMABLE PREFERRED STOCK    
Series A Preferred Stock, $0.001 par value per share, 52,982 shares authorized, and 43,058 shares issued and outstanding (inclusive of cumulative deemed dividends of $17,805 and $28,353 at April 1, 2012 and March 31, 2013 respectively) 73,780 84,328
Series B Preferred Stock, $0.001 par value per share, 64,018 shares authorized, and 64,017 shares issued and outstanding (inclusive of cumulative deemed dividends of $66,626 and $85,899 at April 1, 2012 and March 31, 2013 respectively) 130,643 149,916
Total redeemable preferred stock 204,423 234,244
     
STOCKHOLDERS' DEFICIT     
Class A Common stock, $0.00001 par value per share, 150,000,000 shares authorized 12,506,833, and 12,370,348 shares issued and outstanding at April 1, 2012 and March 31, 2013, respectively  --   -- 
Class B Common stock, $0.001 par value per share, 31,000,000 shares authorized no shares issued and outstanding at April 1, 2012 and March 31, 2013, respectively   --   -- 
Treasury Stock at cost, 0 and 136,485 shares at April 1, 2012 and March 31, 2013, respectively  --  (1,500)
Accumulated Deficit (141,364) (233,944)
Total stockholders' deficit (141,364) (235,444)
Total liabilities, redeemable preferred stock and stockholders' deficit $321,590 $338,501
     
FAIRWAY GROUP HOLDINGS CORP.        
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)        
($ in thousands except share and per share amounts)        
         
  Quarter Ended  Fiscal Year Ended
  April 1, March 31, April 1, March 31,
  2012 2013 2012 2013
         
Net Sales $150,331 $178,705 $554,858 $661,244
         
Cost of sales and occupancy costs (exclusive of depreciation and amortization) 99,087 118,571 368,728 445,379
         
Gross Profit  51,244 60,134 186,130 215,865
         
Direct store expenses 34,787 43,391 132,446 154,753
         
General and administrative expenses 13,733 17,700 44,331 60,192
         
Store opening costs 1,507 2,412 12,688 19,015
         
Income (loss) from operations  1,217 (3,369) (3,335) (18,095)
         
Business interruption insurance recoveries  --  2,500  --  5,000
         
Interest expense, net (4,548) (6,525) (16,918) (23,964)
         
Loss before income taxes (3,331) (7,394) (20,253) (37,059)
         
Income tax benefit (provision) 1,364 705 8,304 (25,809)
         
Net loss (1,967) (6,689) (11,949) (62,868)
         
Preferred stock dividends  (6,538) (7,712) (24,728) (29,821)
         
Net loss attributable to common holders  ($8,506) ($14,401) ($36,677) ($92,689)
         
Basic and diluted loss per common share  ($0.69) ($1.17) ($3.01) ($7.52)
         
Weighted average common shares outstanding  12,284,312 12,330,356 12,188,582 12,325,647
         
FAIRWAY GROUP HOLDINGS CORP.        
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)        
($ in thousands)        
         
  Quarter Ended  Fiscal Year Ended
  April 1, March 31, April 1, March 31,
  2012 2013 2012 2013
         
CASH FLOWS FROM OPERATING ACTIVITIES        
Net loss ($1,967) ($6,689) ($11,949) ($62,868)
Loss on early extinguishment of debt        
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:        
Deferred income taxes (1,330) (666) (8,304) 25,798
Deferred rent (963) 1,866 6,196 9,364
Depreciation and amortization of property and equipment 4,858 6,108 17,177 21,497
Amortization of intangibles 329 5 1,714 279
Amortization of discount on term loans and subordinated notes 98 610 339 1,553
Amortization of deferred financing fees 296 384 1,108 1,362
Amortization of prepaid rent 78 80 311 317
Non-cash stock compensation expense 108 26 437 109
Changes in operating assets and liabilities        
Accounts receivable (201) 904 469 (270)
Merchandise inventories 1,214 (697) (1,233) (4,799)
Insurance claims receivable  --  288  --  (5,184)
Prepaid expense and other 1,542 (44) (1,604) (4,661)
Other assets (34) 2,480 (398) (1,735)
Accounts payable (3,288) 1,225 3,672 13,383
Accrued expenses and other (883) (56) 2,572 2,656
Other long-term liabilities  --  (234) (1,690) 6
         
Net cash (used in) provided by operating activities (142) 5,590 8,817 (3,193)
         
CASH FLOWS FROM INVESTING ACTIVITIES        
Capital expenditures (8,937) (12,717) (44,528) (57,916)
Proceeds from insurance  --   --   --  3,398
         
Net cash used in investing activities (8,937) (12,717) (44,528) (54,518)
         
CASH FLOWS FROM FINANCING ACTIVITIES        
Proceeds from long-term debt, net of issuance costs  --  270,683 31,688 526,908
Payments on long-term debt (501) (267,371) (23,875) (476,146)
Repurchase of treasury stock  --  (1,500)  --  (1,500)
Proceeds from issuance of common stock  3  --  3  -- 
         
Net cash provided by financing activities (498) 1,812 7,816 49,262
         
Net increase (decrease) in cash and cash equivalents (9,577) (5,314) (27,895) (8,449)
         
Cash and cash equivalents – beginning of fiscal period 39,750 27,038 58,067 30,172
         
Cash and cash equivalents – end of fiscal period $30,172 $21,723 $30,172 $21,723
         
Cash paid during the period for         
Interest  $5,576 $8,585 $16,403 $21,514
Income taxes  $24  --  $193 $175
CONTACT: Fairway Group Holdings Corp.
         Nicholas Gutierrez
         Manager of Finance & Investor Relations
         (646) 616-8103
         nicholas.gutierrez@fairwaymarket.com

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