-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D/P3ao+NCIHWA37UKm7dn964YR1BOYEu8VuwI3uGms20tf7kbHmZbxJOx2SYP37m NPVQz9od25+5lU654I8eJA== /in/edgar/work/20000608/0000037914-00-000004/0000037914-00-000004.txt : 20000919 0000037914-00-000004.hdr.sgml : 20000919 ACCESSION NUMBER: 0000037914-00-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000429 FILED AS OF DATE: 20000608 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FOODARAMA SUPERMARKETS INC CENTRAL INDEX KEY: 0000037914 STANDARD INDUSTRIAL CLASSIFICATION: [5411 ] IRS NUMBER: 210717108 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1102 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-05745 FILM NUMBER: 651277 BUSINESS ADDRESS: STREET 1: 922 HIGHWAY 33 STREET 2: BLDG 6 CITY: FREEHOLD STATE: NJ ZIP: 07728 BUSINESS PHONE: 732-462-4700 MAIL ADDRESS: STREET 1: 922 HIGHWAY 33 STREET 2: BLDG 6 CITY: FREEHOLD STATE: NJ ZIP: 07728 10-Q 1 0001.txt QUARTER ENDED APRIL 29, 2000 UNITED STATES 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 Quarterly period ended April 29, 2000 Commission file number 1-5745-1 FOODARAMA SUPERMARKETS, INC. (Exact name of Registrant as specified in its charter) New Jersey 21-0717108 ------------------------------- ------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) identification No.) 922 Highway 33, Freehold, N.J. 07728 --------------------------------------- (Address of principal executive offices) Telephone #732-462-4700 ------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to the filing requirements for at least the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the latest practicable date. OUTSTANDING AT CLASS June 2, 2000 ------------ ------------- Common Stock 1,117,290 shares $1 par value FOODARAMA SUPERMARKETS, INC. PART I. FINANCIAL INFORMATION Item 1. Financial Statements Unaudited Consolidated Condensed Balance Sheets April 29, 2000 and October 30, 1999 Unaudited Consolidated Condensed Statements of Operations for the thirteen weeks ended April 29, 2000 and May 1, 1999 Unaudited Consolidated Condensed Statements of Operations for the twenty six weeks ended April 29, 2000 and May 1, 1999 Unaudited Consolidated Condensed Statements of Cash Flows for the twenty six weeks ended April 29, 2000 and May 1, 1999 Notes to the Consolidated Condensed Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K Disclosure Concerning Forward-Looking Statements All statements, other than statements of historical fact, included in this Form 10-Q, including without limitation the statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations", are, or may be deemed to be, "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such forward-looking statements involve assumptions, known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Foodarama Supermarkets, Inc. (the "Company") to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements contained in this Form 10-Q. Such potential risks and uncertainties, -2- include without limitation, competitive pressures from other supermarket operators and warehouse club stores, economic conditions in the Company's primary markets, consumer spending patterns, availability of capital, cost of labor, cost of goods sold, and other risk factors detailed herein and in other of the Company's Securities and Exchange Commission filings. The forward-looking statements are made as of the date of this Form 10-Q and the Company assumes no obligation to update the forward- looking statements or to update the reasons actual results could differ from those projected in such forward-looking statements. -3- PART I FINANCIAL INFORMATION FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES Consolidated Condensed Balance Sheets (in thousands) April 29, October 30, 2000 1999 (Unaudited) (1) ASSETS Current assets: Cash and cash equivalents $ 5,307 $ 4,094 Merchandise inventories 42,237 38,113 Receivables and other current assets 4,387 4,496 Related party receivables - Wakefern 4,938 8,000 Related party receivables - other 13 25 -------- -------- 56,882 54,728 --------- -------- Property and equipment: Land 308 308 Buildings and improvements 1,220 1,220 Leaseholds and leasehold improvements 35,986 35,032 Equipment 91,948 80,991 Property under capital leases 59,909 38,218 Construction in progress 835 2,481 --------- -------- 190,206 158,250 Less accumulated depreciation and amortization 81,721 76,227 --------- -------- 108,485 82,023 --------- -------- Other assets: Investments in related parties 11,656 10,992 Intangibles 3,663 3,839 Other 3,045 2,872 Related party receivables - Wakefern 1,644 1,555 Related party receivables - other 177 177 -------- -------- 20,185 19,435 -------- -------- $ 185,552 $156,186 ========= ======== (continued) (1) Derived from the Audited Consolidated Financial Statements for the year ended October 30, 1999. See accompanying notes to consolidated condensed financial statements. -4- FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES Consolidated Condensed Balance Sheets (in thousands except share data) April 29, October 30, 2000 1999 (Unaudited) (1) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 4,103 $ 2,605 Current portion of long-term debt, related party 566 503 Current portion of obligations under capital leases 646 492 Current income taxes payable 469 457 Deferred income tax liability 1,541 1,541 Accounts payable: Related party-Wakefern 32,855 29,699 Others 9,319 7,115 Accrued expenses 11,141 9,809 --------- --------- 60,640 52,221 --------- --------- Long-term debt 21,394 23,126 Long-term debt, related party 1,736 1,450 Obligations under capital leases 56,196 35,028 Deferred income taxes 2,399 2,732 Other long-term liabilities 6,828 6,589 ---------- --------- 88,553 68,925 ---------- --------- Shareholders' equity: Common stock, $1.00 par; authorized 2,500,000 shares; issued 1,621,767 shares; Outstanding 1,117,290 shares 1,622 1,622 Capital in excess of par 2,351 2,351 Retained earnings 39,015 37,696 ---------- --------- 42,988 41,669 Less 504,477 shares held in treasury, at cost 6,629 6,629 ---------- --------- 36,359 35,040 ---------- --------- $ 185,552 $ 156,186 ========== ========= (1) Derived from the Audited Consolidated Financial Statements for the year ended October 30, 1999. See accompanying notes to consolidated condensed financial statements. -5- FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Operations - Unaudited (in thousands - except share data) 13 Weeks Ended April 29, May 1, 2000 1999 ---------- -------- Sales $ 217,209 $ 195,420 Cost of merchandise sold 160,123 143,696 ----------- --------- Gross profit 57,086 51,724 Operating, general and administrative expenses 54,823 49,835 ------------ --------- Income from operations 2,263 1,889 ------------ --------- Other (expense) income: Interest expense (1,604) (1,420) Interest income 67 98 ------------ ------- (1,537) (1,322) ------------ ------- Earnings before income tax provision 726 567 Income tax provision ( 291) ( 190) ----------- --------- Net income $ 435 $ 377 =========== ======== Per share information: Net income per common share, basic and diluted $ .39 $ .34 =========== ========= Weighted average number of common shares outstanding 1,117,290 1,117,290 =========== ========= Dividends per common share -0- -0- =========== ========= See accompanying notes to consolidated condensed financial statements. -6- FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Operations - Unaudited (in thousands - except share data) 26 Weeks Ended April 29, May 1, 2000 1999 ---------- -------- Sales $ 433,431 $ 399,027 Cost of merchandise sold 321,030 294,426 ----------- --------- Gross profit 112,401 104,601 Operating, general and administrative expenses 107,369 100,554 ------------ --------- Income from operations 5,032 4,047 ------------ --------- Other (expense) income: Interest expense (2,978) (2,816) Interest income 145 151 ------------ -------- (2,833) (2,665) ------------ -------- Earnings before income tax provision 2,199 1,382 Income tax provision ( 880) ( 470) ----------- --------- Net income $ 1,319 $ 912 =========== ======== Per share information: Net income per common share, basic and diluted $ 1.18 $ .82 =========== ========= Weighted average number of common shares outstanding 1,117,290 1,117,290 =========== ========= Dividends per common share -0- -0- =========== ========= See accompanying notes to consolidated condensed financial statements. -7- FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Cash Flows - Unaudited (in thousands) 26 Weeks Ended April 29, May 1, 2000 1999 ---------------------- Cash flows from operating activities: Net income $ 1,319 $ 912 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 5,494 5,463 Amortization, intangibles 176 362 Amortization, deferred financing costs 124 212 Amortization, deferred rent escalation 42 ( 131) Deferred income taxes ( 333) 126 (Increase) decrease in Merchandise inventories (4,124) (1,507) Receivables and other current assets 109 ( 620) Prepaid income taxes - 115 Other assets 634 ( 682) Related party receivables-Wakefern 2,973 2,330 Increase (decrease) in Accounts payable 5,360 (1,531) Income taxes payable 12 - Other liabilities 1,529 1,037 --------- -------- 13,315 6,086 --------- -------- Cash flows from investing activities: Cash paid for the purchase of property and equipment ( 9,908) (3,311) Cash paid for construction in progress ( 410) - Decrease in related party receivables-other 12 63 ---------- --------- (10,306) (3,248) ---------- --------- Cash flows from financing activities: Proceeds from issuance of debt 16,421 1,663 Principal payments under long-term debt (16,655) (3,996) Principal payments under capital lease obligations ( 369) ( 235) Principal payments under long-term debt, related party ( 315) ( 195) Deferred financing costs ( 878) - --------- --------- (1,796) (2,763) --------- --------- NET INCREASE IN CASH AND CASH EQUIVALENTS 1,213 75 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,094 3,905 --------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,307 $ 3,980 ========= ======== See accompanying notes to consolidated condensed financial statements. -8- NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) Note 1 Basis of Presentation The unaudited Consolidated Condensed Financial Statements as of or for the period ended April 29, 2000 have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and rule 10-01. The balance sheet at October 30, 1999 has been taken from the audited financial statements at that date. In the opinion of the management of the Company, all adjustments (consisting only of normal recurring accruals) which are considered necessary for a fair presentation of the results of operations for the period have been made. Certain financial information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The reader is referred to the consolidated financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended October 30, 1999. Certain reclassifications have been made to prior year financial statements in order to conform to the current year presentation. These results are not necessarily indicative of the results for the entire fiscal year. Part I - Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition and Liquidity The Company was a party to a Loan Agreement (the "Credit Agreement") with one financial institution which would have terminated on February 15, 2000. On January 7, 2000 the Credit Agreement was assigned to a lending group and amended and restated (the "Amended Credit Agreement"). The Amended Credit Agreement is secured by substantially all of the Company's assets and provides for a total commitment of up to $55,000,000 including a revolving credit facility ("the Revolving Note") of up to $25,000,000, a term loan (the "Term Loan") of $10,000,000 and a capital expenditures facility (the "Capex Facility") of up to $20,000,000. The Amended Credit Agreement contains certain affirmative and negative covenants which, among other matters, will (i) restrict capital expenditures, (ii) require the maintenance of certain levels of earnings before interest, taxes, depreciation and amortization less rent payments for capitalized lease locations ("Adjusted EBITDA") and (iii) require debt service coverage and leverage ratios to be maintained. The Amended Credit Agreement (a) increases the total amount available to the Company under the Revolving Note from $20,000,000 to $25,000,000, subject to the borrowing base limitation of 65% (previously 60%) of eligible inventory; (b) increases the Term Loan facility by $9,500,000; (c) eliminates the Stock Redemption Loan ($1,020,000) and the Expansion Loan ($1,175,000) which were part of the Credit Agreement; (d) extends the term of the Amended Credit Agreement to December 31, 2004; (e) provides for repayment of the Term Loan in quarterly installments of $500,000 each, commencing April 1, 2000 and ending on December 31, 2004; (f) provides for the payment of -9- interest only on the outstanding balance of the Capex Facility, and an unused facility fee of .50% for the first two years of the term of this loan and fixed quarterly principal payments thereafter based on a seven year amortization schedule with a balloon payment due December 31, 2004; (g) provides for three additional financial covenants; (h) amends certain definitions; (i) increases the interest rate on the Revolving Note by .25% to the Base Rate (defined below) plus .50%; (j) changes the Term Loan to a floating rate loan at the Base Rate plus .75%; (k) provides for the Capex Facility to be a floating rate loan at the Base Rate plus .75%; and (l) provides for certain additional borrowing limitations over the term of the Amended Credit Agreement. Other terms and conditions of the Credit Agreement previously reported on by the Company have not been modified. The Base Rate is the rate which is the greater of (i) the bank prime loan rate as published by the Board of Governors of the Federal Reserve System, or (ii) the Federal Funds rate, plus .50%. Additionally, the Company may elect to use the London Interbank Offered Rate ("LIBOR") plus 2.50% to determine the interest rate on the revolving credit facility and LIBOR plus 2.75% to determine the interest rate on the Term Loan and Capex Facility. As of April 29, 2000 the Company owed $9,500,000 on the Term Loan and $6,421,000 under the Capex Facility. The Company's compliance with the major financial covenants under the Amended Credit Agreement was as follows as of April 29, 2000: Amended Actual Financial Credit (As defined in the Covenant Agreement Amended Credit Agreement) Adjusted EBITDA Greater than $13,000,000 $ 16,940,000 Leverage Ratio Less than 3.0 to 1.00 1.64 to 1.00 Debit Service Coverage Ratio Greater than 1.10 to 1.00 1.41 to 1.00 Adjusted Capex Less than $6,750,000 (1) $ 2,462,000 (2) Store Project Capex Less than $14,800,000 (1) $ 7,856,000 (2) (1) Represents limitations on capital expenditures for fiscal 2000. Adjusted Capex is all capital expenditures other than New/Replacement Store Project Capex. (2) Represents capital expenditures for the 26 weeks ended April 29, 2000. No cash dividends have been paid on the Common Stock since 1979, and the Company has no present intentions or ability to pay any dividends in the near future on its Common Stock. The Amended Credit Agreement does not permit the payment of any cash dividends on our Common Stock. Year 2000 The Company and Wakefern did not experience any material adverse effect on store or warehouse operations as the result of the impact of year 2000 ("Y2K") issues on our computer based systems and applications. In preparation for the new millennium all critical systems were made Y2K compliant. The costs related to the Y2K project were included in the normal operating results and capital expenditures of both the Company's and Wakefern's Information Technology Departments and did not have any material effect on the Company's operating results. The Company does not currently expect any Y2K problems to be -10- encountered for the remainder of the year 2000 that would have a material effect on the operating results of the Company. Working Capital At April 29,2000, the Company had a working capital deficiency of $3,758,000 compared to working capital of $2,507,000 at October 30, 1999 and a deficiency of $10,312,000 at May 1, 1999. The decline in working capital from October 30, 1999 was primarily due to the collection of $3,062,000 of current related party receivables which were used to reduce the Revolving Note which is classified as long-term borrowings and the net increase of $2,568,000 in accounts payable over the increase in inventory which relates primarily to operating expenses and capital expenditures for the new Branchburg and Wall Township, New Jersey stores, which when paid, will increase the Revolving Note. The Company normally requires small amounts of working capital since inventory is generally sold at approximately the same time that payments to Wakefern and other suppliers are due and most sales are for cash or cash equivalents. Working capital ratios were as follows: April 29, 2000 .94 to 1.0 October 30, 1999 1.05 to 1.0 May 1, 1999 .84 to 1.0 Cash flows (in millions) were as follows: Twenty Six Weeks Ended 4/29/00 5/01/99 Operating activities... $13.3 $ 6.1 Investing activities... (10.3) (3.2) Financing activities... ( 1.8) (2.8) ------ ------ Totals $ 1.2 $ 0.1 ====== ====== The Company had $21,200,000 of available credit, at April 29, 2000, under its revolving credit facility. On January 7, 2000 the Company completed the renegotiation of the terms and conditions of the Credit Agreement. The Amended Credit Agreement will adequately meet our operating needs, scheduled capital expenditures and debt service for fiscal 2000 and 2001. For the twenty six weeks ended April 29, 2000 depreciation was $5,494,000 while capital expenditures totaled $9,908,000, compared to $5,463,000 and $3,838,000 respectively in the prior year period. -11- Results of Operations (13 weeks ended April 29, 2000 compared to 13 weeks ended May 1, 1999) Sales: Same store sales from the twenty stores in operation in both periods increased 3.4%. Sales for the current period totaled $217.2 million as compared to $195.4 million in the prior year period. Sales for the current quarter included the operations of two new locations opened in February and April 2000. The location opened in April 2000 replaced an older, smaller store. Gross Profit: Gross profit as a percent of sales decreased to 26.3% of sales compared to 26.5% in the prior year period. Patronage dividends, applied as a reduction of the cost of merchandise sold, were $1.4 million in the current period compared to $1.3 million in the prior year period. Gross profit as a percentage of sales declined primarily as a result of decreased patronage dividends as a percentage of sales, promotional programs for the new locations opened in the current year period and the completion of Wakefern incentive programs for the new locations opened in fiscal 1998, partially offset by reduced Wakefern assessment as a percentage of sales and Wakefern incentive programs for the new locations opened in fiscal 2000. Operating Expenses: Operating, general and administrative expenses as a percent of sales were 25.2% versus 25.5% in the prior year period. The decrease in operating, general and administrative expenses as a percent of sales was primarily due to decreases in certain expense categories as a percentage of sales. As a percentage of sales, occupancy decreased .27%, depreciation decreased .12%, administration decreased .11%, insurance decreased .06% and other income increased .12%. These decreases were partially offset by increases in labor and related fringe benefits of .21% and pre-opening costs of .24%. Pre-opening costs were for the new Branchburg and Wall Township stores opened in February and April 2000, respectively. Interest Expense: Interest expense increased to $1,604,000 from $1,420,000, while interest income was $67,000 compared to $98,000 for the prior period. The increase in interest expense for the current year period was due to an increase in average outstanding debt, including increased capitalized lease obligations, and an increase in the average interest rate paid on debt. -12- Income Taxes: An income tax rate of 40% has been used in the current year period compared to a rate of 34% in the prior year period based on the expected effective tax rates. Net Income: Net income was $435,000 in the current year period compared to $377,000 in the prior year period. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the current period were $5,227,000 as compared to $4,937,000 in the prior year period. Net income per common share, both basic and diluted, was $.39 in the current period compared to $.34 in the prior year period. Per share calculations are based on 1,117,290 shares outstanding in both periods. Results of Operations (26 weeks ended April 29, 2000 compared to 26 weeks ended May 1, 1999) Sales: Same store sales from the twenty stores in operation in both periods increased 4.9%. Sales for the current twenty six week period totaled $433.4 million as compared to $399.0 million in the prior year period. Sales for the current twenty six week period included the operations of two new locations opened in February and April 2000. The location opened in April 2000 replaced an older, smaller store. Gross Profit: Gross profit as a percent of sales decreased to 25.9% of sales compared to 26.2% in the prior year period. Patronage dividends, applied as a reduction of the cost of merchandise sold, were $2.8 million in the current period compared to $2.7 million in the prior year period. Gross profit as a percentage of sales declined primarily as a result of decreased patronage dividends as a percentage of sales, promotional programs for the new locations opened in the current year period and the completion of Wakefern incentive programs for the new locations opened in fiscal 1998, partially offset by reduced Wakefern assessment as a percentage of sales and Wakefern incentive programs for the new locations opened in fiscal 2000. Operating Expenses: Operating, general and administrative expenses as a percent of sales were 24.8% versus 25.2% in the prior year period. The decrease in operating, general and administrative expenses as a percent of sales was primarily due to decreases in certain expense categories as a percentage of sales. As a percentage of sales, selling expense decreased .26%, occupancy decreased .18%, depreciation decreased .11% and other income increased .08%. These decreases were partially offset by increases in labor and related fringe benefits of .06% and pre-opening costs of .20%. Pre-opening costs were for the new Branchburg and Wall Township stores opened in February and April 2000, respectively. -13- Interest Expense: Interest expense increased to $2,978,000 from $2,816,000, while interest income was $145,000 compared to $151,000 for the prior period. The increase in interest expense for the current year period was due to an increase in average outstanding debt, including increased capitalized lease obligations and an increase in the average interest rate paid on debt. Income Taxes: An income tax rate of 40% has been used in the current year period compared to a rate of 34% in the prior year period based on the expected effective tax rates. Net Income: Net income was $1,319,000 in the current year period compared to $912,000 in the prior year period. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the current period were $10,868,000 as compared to $9,953,000 in the prior year period. Net income per common share, both basic and diluted, was $1.18 in the current period compared to $.82 in the prior year period. Per share calculations are based on 1,117,290 shares outstanding in both periods. -14- PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit (27) - Financial Data Schedule. (b) No reports on Form 8-K were required to be filed for the 13 weeks ended April 29, 2000. -15- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FOODARAMA SUPERMARKETS, INC. (Registrant) Date: June 8, 2000 /S/ MICHAEL SHAPIRO ---------------------- (Signature) Michael Shapiro Senior Vice President Chief Financial Officer Date: June 8, 2000 /S/ THOMAS H. FLYNN --------------------- (Signature) Thomas H. Flynn Principal Accounting Officer EX-27 2 0002.txt FDS --
5 1000 6-Mos Oct-28-2000 Oct-31-1999 Apr-29-2000 5,307 0 9,828 (490) 42,237 56,882 190,206 (81,721) 185,552 60,640 0 0 0 0 0 185,552 433,431 0 321,030 0 107,369 0 2,978 2,199 880 1,319 0 0 0 1,319 1.18 1.18
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