-----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, QbUbjoQxrgzdZIw5MChxjdQrJSak1M+V4nwZs53OD0RmKemcMCVhXXFvkrQU0nOo DV/xQYkB8v/fB8WdGgTjJA== 0000037914-01-500012.txt : 20010911 0000037914-01-500012.hdr.sgml : 20010911 ACCESSION NUMBER: 0000037914-01-500012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010728 FILED AS OF DATE: 20010910 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FOODARAMA SUPERMARKETS INC CENTRAL INDEX KEY: 0000037914 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 210717108 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1102 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05745 FILM NUMBER: 1733902 BUSINESS ADDRESS: STREET 1: 922 HIGHWAY 33 STREET 2: BLDG 6 CITY: FREEHOLD STATE: NJ ZIP: 07728 BUSINESS PHONE: 7324624700 MAIL ADDRESS: STREET 1: 922 HIGHWAY 33 STREET 2: BLDG 6 CITY: FREEHOLD STATE: NJ ZIP: 07728 10-Q 1 p10q32001.txt 10Q 3RD QTR 2001 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 July 28, 2001 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 September 7, 2001 ------------- ----------------- Common Stock 1,105,290 shares $1 par value 1 FOODARAMA SUPERMARKETS, INC. PART I. FINANCIAL INFORMATION Item 1. Financial Statements Unaudited Consolidated Condensed Balance Sheets July 28, 2001 and October 28, 2000 Unaudited Consolidated Condensed Statements of Operations for the thirteen weeks ended July 28, 2001 and July 29, 2000 Unaudited Consolidated Condensed Statements of Operations for the thirty nine weeks ended July 28, 2001 and July 29, 2000 Unaudited Consolidated Condensed Statements of Cash Flows for the thirty nine weeks ended July 28, 2001 and July 29, 2000 Notes to the Unaudited 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" which may be referred to as we, us or our) 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, 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 including increased costs from the Company's cooperative supplier, Wakefern Food Corporation ("Wakefern"), 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. 2 PART I FINANCIAL INFORMATION FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES Consolidated Condensed Balance Sheets (in thousands) July 28, October 28, 2001 2000 (Unaudited) (1) ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 8,477 $ 3,977 Merchandise inventories 41,116 42,765 Receivables and other current assets 6,531 4,959 Prepaid income taxes -- 398 Related party receivables - Wakefern 6,376 8,557 Related party receivables - other 11 15 ------- -------- 62,511 60,671 ------- -------- Property and equipment: Land 308 308 Buildings and improvements 1,220 1,220 Leasehold improvements 38,394 36,931 Equipment 102,052 96,452 Property under capital leases 59,909 59,909 Construction in progress 2,657 1,513 -------- -------- 204,540 196,333 Less accumulated depreciation and amortization 96,984 87,487 -------- -------- 107,556 108,846 -------- -------- Other assets: Investments in related parties 12,758 12,758 Intangibles 3,224 3,487 Other 2,923 3,469 Related party receivables - Wakefern 1,951 1,782 Related party receivables - other 47 172 -------- -------- 20,903 21,668 -------- -------- $190,970 $191,185 ======== ======== (continued) (1) Derived from the Audited Consolidated Financial Statements for the year ended October 28, 2000. See accompanying notes to the consolidated condensed financial statements. 3 FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES Consolidated Condensed Balance Sheets (in thousands - except share data) July 28, October 28, 2001 2000 (Unaudited) (1) ----------- ---------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 5,138 $ 4,918 Current portion of long-term debt, related party 891 880 Current portion of obligations under capital leases 839 664 Current income taxes payable 918 - Deferred income tax liability 1,114 1,114 Accounts payable: Related party - Wakefern 34,870 34,051 Others 9,683 7,781 Accrued expenses 13,574 12,478 ---------- ---------- 67,027 61,886 ---------- ---------- Long-term debt 16,937 24,181 Long-term debt, related party 1,546 2,212 Obligations under capital leases 55,192 55,848 Deferred income taxes 2,756 2,585 Other long-term liabilities 7,308 7,051 ---------- ---------- 83,739 91,877 ---------- ---------- Shareholders' equity: Common stock, $1.00 par; authorized 2,500,000 shares; issued 1,621,767 shares; outstanding 1,105,290 shares July 28, 2001; 1,117,290 shares October 28, 2000 1,622 1,622 Capital in excess of par 2,351 2,351 Retained earnings 43,253 40,078 --------- ---------- 47,226 44,051 Less 516,477 shares July 28, 2001; 504,477 shares October 28, 2000, held in treasury, at cost 7,022 6,629 ---------- ---------- 40,204 37,422 ---------- ---------- $ 190,970 $ 191,185 ========== ========== (1) Derived from the Audited Consolidated Financial Statements for the year ended October 28, 2000. See accompanying notes to the consolidated condensed financial statements. 4 FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Operations - Unaudited (in thousands - except share data) 13 Weeks Ended July 28, July 29, 2001 2000 ---------- -------- Sales $ 233,052 $ 223,662 Cost of merchandise sold 174,696 169,273 ----------- ----------- Gross profit 58,356 54,389 Operating, general and administrative expenses 54,863 51,435 ----------- ----------- Income from operations 3,493 2,954 ----------- ----------- Other (expense) income: Interest expense (1,825) (1,958) Interest income 72 63 ----------- ----------- (1,753) (1,895) ----------- ----------- Earnings before income tax provision 1,740 1,059 Income tax provision (696) (423) ----------- ----------- Net income $ 1,044 $ 636 =========== =========== Per share information: Net income per common share, basic and diluted $ .94 $ .57 =========== =========== Weighted average number of common shares outstanding 1,115,413 1,117,290 =========== =========== Dividends per common share -0- -0- =========== =========== See accompanying notes to the consolidated condensed financial statements. 5 FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Operations - Unaudited (in thousands - except share data) 39 Weeks Ended July 28, July 29, 2001 2000 ---------- --------- Sales $ 695,572 $ 646,841 Cost of merchandise sold 523,762 491,149 ----------- ----------- Gross profit 171,810 155,692 Operating, general and administrative expenses 160,927 148,039 ----------- ----------- Income from operations 10,883 7,653 ----------- ----------- Other (expense) income: Interest expense (5,815) (4,936) Interest income 225 208 ----------- ----------- (5,590) (4,728) Earnings before income tax provision 5,293 2,925 Income tax provision (2,118) (1,170) ----------- ----------- Net income $ 3,175 $ 1,755 =========== =========== Per share information: Net income per common share, basic and diluted $ 2.84 $ 1.57 =========== =========== Weighted average number of common shares outstanding 1,116,664 1,117,290 =========== =========== Dividends per common share -0- -0- =========== =========== See accompanying notes to the consolidated condensed financial statements. 6 FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Cash Flows - Unaudited (in thousands) 39 Weeks Ended July 28, 2001 July 29, 2000 ------------- ------------- Cash flows from operating activities: Net income $ 3,175 $ 1,755 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 9,498 8,458 Amortization, intangibles 263 264 Amortization, deferred financing costs 191 186 Amortization, deferred rent escalation ( 45) 63 Provision to value inventory at LIFO 600 500 Deferred income tax (benefit) 171 ( 691) (Increase) decrease in Merchandise inventories 1,049 (4,029) Receivables and other current assets (1,572) ( 93) Prepaid income taxes 398 - Other assets 484 319 Related party receivables-Wakefern 2,012 1,665 Increase (decrease) in Accounts payable 2,721 7,198 Income taxes payable 918 463 Other liabilities 1,398 2,897 --------- -------- 21,261 18,955 --------- -------- Cash flows from investing activities: Cash paid for the purchase of property and equipment ( 7,072) (12,029) Cash paid for construction in progress ( 1,199) ( 925) Decrease in related party receivables-other 129 5 --------- --------- ( 8,142) (12,949) --------- --------- Cash flows from financing activities: Proceeds from issuance of debt - 17,161 Principal payments under long-term debt ( 7,024) (17,715) Principal payments under capital lease obligations ( 481) ( 547) Principal payments under long-term debt, related party ( 655) ( 448) Deferred financing costs ( 66) ( 949) Payments to acquire treasury stock ( 393) - --------- --------- (8,619) ( 2,498) --------- --------- NET INCREASE IN CASH AND CASH EQUIVALENTS 4,500 3,508 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,977 4,094 --------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 8,477 $ 7,602 ========= ========= See accompanying notes to the consolidated condensed financial statements. 7 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 July 28, 2001 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 28, 2000 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 28, 2000. At both July 28, 2001 and October 28, 2000, approximately 82% of merchandise inventories are valued by the Last-In-First-Out ("LIFO") method of inventory valuation while the balance of inventories are valued by the First-In-First-Out ("FIFO") method. If the FIFO method had been used for the entire inventory, inventories would have been $1,323,000 and $723,000 higher than reported at July 28, 2001 and October 28, 2000, respectively. 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. Note 2 Adoption of New Accounting Standards Accounting for Certain Sales Incentives Effective October 29, 2000 the Company adopted the Emerging Issues Task Force Issue No. 00-14 ("EITF 00-14"), "Accounting for Certain Sales Incentives." EITF 00-14 provides guidance on the accounting for certain sales incentives offered by companies to their customers, such as discounts, coupons, rebates and free products or services. In accordance with the provisions of EITF 00-14 the Company recorded those sales incentives covered by EITF 00-14 as a reduction of sales, resulting in a corresponding reduction in operating, general and administrative expenses, with no impact on the Company's net income. Prior year Sales incentives, relating to this change in presentation, amounted to $4,160,000 and $4,813,000 for the quarters ended July 28, 2001 and July 29, 2000, respectively and $13,765,000 and $15,065,000 for the nine months ended July 28, 2001 and July 29, 2000, respectively. July 28, 2001 and July 29, 2000, respectively. Accounting for Derivative Instruments and Hedging Activities Effective October 29, 2000 the Company adopted Statement of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative Instruments and Hedging Activities." This Statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. SFAS 133 requires the recognition of all derivatives as either assets or liabilities on the balance sheet and measures those instruments at fair value. The Company does not currently engage in any hedging 8 activity or hold any derivative instruments. Therefore, there was no significant impact from adopting the provisions of SFAS 133 in the quarter or nine months ended July 28, 2001. Revenue Recognition in Financial Statements Effective October 29, 2000 the Company adopted the Securities and Exchange Commission Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial Statements." This bulletin provides additional guidance on revenue recognition as well as criteria for when revenue is generally realized and earned and also requires the deferral of incremental costs. There was no significant impact from adopting the provisions of SAB 101 in the quarter or nine months ended July 28, 2001. Part I - Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition and Liquidity As of May 11 and August 7, 2001, the Company and its lenders amended the Second Amended and Restated Revolving Credit and Term Loan Agreement (as amended, the "Credit Agreement"). The Credit Agreement is secured by substantially all of the Company's assets and provided for a total commitment of $58,000,000, including a revolving credit facility (the "Revolving Note") of up to $28,000,000, a term loan (the "Term Loan") in the amount of $10,000,000 and a capital expenditures facility (the "Capex Facility") of up to $20,000,000. The amended Credit Agreement (a) increases the total amount available to the Company under the Revolving Note to $28,000,000 from $25,000,000, subject to the borrowing base limitation of 65% of eligible inventory; (b) reallocates the amount of permitted new indebtedness for fiscal year 2001 to fiscal year 2002 to more closely meet the Company's projected borrowing needs; (c) reallocates the limitations on indebtedness attributable to capitalized lease obligations over the term of the Credit Agreement to more closely track new real estate lease obligations; (d) permits capital expenditures relating to New/Replacement Store Projects over the term of the Credit Agreement to more closely track the projected timing of such expenditures; (e) permits capital expenditures relating to Adjusted Capex over the term of the Credit Agreement to more closely track the projected timing of such expenditures; (f) extends the expiration date of the period during which the Company may borrow against the Capex Facility to June 30, 2002; (g) allows the Company to repurchase its common stock for an aggregate purchase price not to exceed $5,000,000 subject to certain conditions and limitations; (h) allows for loans to employees not to exceed $50,000 in the aggregate; and (i) amends certain definitions. Other terms and conditions of the Credit Agreement previously reported upon by the Company have not been modified. As of July 28, 2001 the Company owed $7,000,000 on the Term Loan and $7,306,772 under the Capex Facility. The Company's compliance with the major financial covenants under the Credit Agreement was as follows as of July 28, 2001: Actual Financial Credit (As defined in the Covenant Agreement Credit Agreement) Adjusted EBITDA (1) Greater than $13,500,000 $ 21,622,000 Leverage Ratio (1) Less than 3.5 to 1.00 1.13 to 1.00 9 Debt Service Coverage Ratio Greater than 1.20 to 1.00 1.67 to 1.00 Adjusted Capex (2) Less than $12,750,000 (3) $ 7,072,000 (4) Store Project Capex Less than $13,000,000 (3) $ 1,199,000 (4) (1) Excludes obligations under capitalized leases, interest expense and depreciation expense attributable to capitalized leases and changes in the LIFO reserve. (2) Adjusted Capex is all capital expenditures other than New/Replacement Store Project Capex. (3) Represents limitations on capital expenditures for fiscal 2001. (4) Represents capital expenditures for the 39 weeks ended July 28, 2001. 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 Credit Agreement does not permit the payment of any cash dividends on our Common Stock. Working Capital At July 28, 2001, the Company had a working capital deficiency of $4,516,000 compared to deficiencies of $1,215,000 at October 28, 2000 and $4,136,000 at July 29, 2000. Cash and cash equivalents improved as the result of more efficient inventory control and product ordering and the cyclical increase in accounts payable. The decline in working capital from October 28, 2000 was primarily due to the collection of $2,181,000 of current related party receivables which were used to reduce the Revolving Note which is classified as long-term borrowings. 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: July 28, 2001 .93 to 1.0 October 28, 2000 .98 to 1.0 July 29, 2000 .94 to 1.0 Cash flows (in millions) were as follows: Thirty Nine Weeks Ended 7/28/01 7/29/00 Operating activities... $21.3 $19.0 Investing activities... ( 8.2) (13.0) Financing activities... ( 8.6) ( 2.5) ------ ------ Totals $ 4.5 $ 3.5 ====== ====== 10 The Company had $21,940,000 of available credit at July 28, 2001, under its revolving credit facility. The amount available under the Credit Agreement will adequately meet our operating needs, funding requirements for planned stock purchases, scheduled capital expenditures and debt service for fiscal 2001. For the thirty nine weeks ended July 28, 2001 depreciation was $9,498,000 while capital expenditures totaled $8,271,000, compared to $8,458,000 and $12,954,000, respectively, in the prior year period. The increase in depreciation was the result of the purchase of equipment and leasehold improvements for the two new locations opened in fiscal 2000, as well as two additional capitalized real estate leases. The decline in capital expenditures was due to the acquisition in fiscal 2000 of equipment and leasehold improvements for the two locations opened in the second quarter of fiscal 2000 compared to capital expenditures for one major remodeling in fiscal 2001. During the quarter ended July 28, 2001, the Company purchased a total of 12,000 shares of its Common Stock in privately negotiated transactions under the stock repurchase program announced on June 8, 2001. 5,000 of these shares were owned by the Estate of Mary Saker, of which the Company's Chairman, Joseph J. Saker, is a co-executor, and 7,000 shares were owned by certain members of Mr. Saker's family. $392,750, or an average of $32.73 per share, was expended for the purchase of these shares. In addition, during the quarter ended July 28, 2001 "Related party receivables-other" decreased by $177,000 as a result of the early retirement of certain indebtedness owed by the Company's Chairman. Results of Operations (13 weeks ended July 28, 2001 compared to 13 weeks ended July 29, 2000) Sales: Same store sales from the twenty two stores in operation in both periods increased 4.2%. Sales for the current quarter totaled $233.1 million as compared to $223.7 million of sales in the prior year period. Gross Profit: Gross profit as a percent of sales increased to 25.0% of sales compared to 24.3% in the prior year period. Patronage dividends, applied as a reduction of the cost of merchandise sold, were $1.6 million in the current period versus $1.5 million in the prior year period. Gross profit as a percentage of sales increased primarily as a result of improved product mix, a reduction in product loss through improved shrink control, more efficient commissary operations and the completion of promotional programs for the new locations opened in fiscal 2000, which was partially offset by the completion of Wakefern incentive programs for the new locations opened in fiscal 2000. Operating Expenses: Operating, general and administrative expenses as a percent of sales were 23.5% versus 23.0% in the prior year period. The increase in operating, general and administrative expenses, as a percent of sales, was due to increases in certain expense categories as a percentage of sales. As a percentage of sales, labor and 11 related fringe benefits increased .36%, depreciation increased .10%, other store expenses, which include Wakefern support services and debit/credit card fees, increased .10%, administrative expense increased .27% and miscellaneous income decreased .17%. These increases and the decrease in miscellaneous income were partially offset by decreases in occupancy of .17% and reserve for closed stores of .35%. The reserve for closed store expense relates to the anticipated expenses to be incurred over the balance of the lease for the location closed in April 2000 when the new Wall township store opened. Interest Expense: Interest expense decreased to $1,825,000 from $1,958,000 while interest income was $72,000 compared to $63,000 for the prior year period. The decrease in interest expense for the current year period was due to a decrease in the average outstanding debt and a decrease in the average interest rate paid on debt. Income Taxes: An income tax rate of 40% has been used in both the current and prior year periods based on the expected effective tax rates. Net Income: Net income was $1,044,000 in the current year period as compared to $636,000 in the prior year period. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the thirteen weeks ended July 28, 2001 were $6,963,000 as compared to $6,089,000 in the prior year period. Net income per common share, both basic and diluted, was $.94 in the current period compared to $.57 in the prior year period. Per share calculations are based on a weighted average basis of 1,115,413 shares outstanding in the current year period and 1,117,290 shares outstanding in the prior year period. Results of Operations (39 weeks ended July 28, 2001 compared to 39 weeks ended July 29, 2000) Sales: Same store sales from the twenty stores in operation in both periods increased 3.3%. Sales for the stores in operation for the current thirty nine week period totaled $695.6 million as compared to $646.8 million of sales from the stores operated in the prior year period. Sales for the current thirty nine 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 increased to 24.7% of sales compared to 24.1% in the prior year period. Patronage dividends, applied as a reduction of the cost of merchandise sold, were $4.6 million compared to $4.3 million in the prior year period. Gross profit as a percentage of sales increased primarily as a result of improved product mix, the contribution of the new locations, the completion of promotional programs initiated by the Company for the new locations opened in the 12 prior year period, a reduction in product loss through improved shrink control and more efficient commissary operations, which was partially offset by the completion of Wakefern incentive programs for the new locations opened in fiscal 2000. Operating Expenses: Operating, general and administrative expenses as a percent of sales were 23.1% versus 22.9% in the prior year period. The increase in operating, general and administrative expense, as a percent of sales, was primarily due to increases in certain expense categories as a percentage of sales. As a percentage of sales, labor and related fringe benefits increased .29%, depreciation increased .05%, other store expenses, which include Wakefern support services and debit/credit card fees, increased .06%, administrative expense increased .11% and miscellaneous income decreased .09%. These increases and the decrease in miscellaneous income were partially offset by decreases in selling expense of .06%, pre-opening costs of .13% and reserve for closed stores of .20%. Pre-opening costs were for the new Branchburg and Wall township stores opened in February and April 2000, respectively. The reserve for closed store expense relates to the anticipated expenses to be incurred over the balance of the lease for the location closed in April 2000 when the new Wall township store opened. Interest Expense: Interest expense increased to $5,815,000 from $4,936,000 while interest income was $225,000 compared to $208,000 for the prior year 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 partially offset by a decrease in the average interest rate paid on debt. Income Taxes: An income tax rate of 40% has been used in both the current and prior year periods based on the expected effective tax rates. Net Income: Net income was $3,175,000 in the current year period. This compares to $1,755,000 in the prior year period. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the current period were $20,790,000 as compared to $16,624,000 in the prior year period. Net income per common share, both basic and diluted, was $2.84 in the current period compared to $1.57 in the prior year period. Per share calculations are based on a weighted average basis of 1,116,664 shares outstanding in the current year period and 1,117,290 shares outstanding in the prior year period. 13 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit (27) - Financial Data Schedule. Exhibit (99) - Amendment No. 2 to Second Amended and Restated Credit and Term Loan Agreement (b) No reports on Form 8-K were required to be filed for the 13 weeks ended July 28, 2001. 14 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: September 10, 2001 /S/ MICHAEL SHAPIRO --------------------------- (Signature) Michael Shapiro Senior Vice President Chief Financial Officer Date: September 10, 2001 /S/ THOMAS H. FLYNN --------------------------- (Signature) Thomas H. Flynn Director of Accounting Principal Accounting Officer 15 EX-20 3 amendment2.txt AMENDMENT #2 TERM LOAN AGREEMENT AMENDMENT NO. 2 TO SECOND AMENDED AND RESTATED CREDIT AND TERM LOAN AGREEMENT THIS AMENDMENT NO. 2 (this 'Second Amendment') is entered into as of August 7, 2001, by and among NEW LINDEN PRICE RITE, INC., a New Jersey corporation ('New Linden'), FOODARAMA SUPERMARKETS, INC., a New Jersey corporation ("Parent") (New Linden and Parent, each a "Borrower" and collectively "Borrowers"), the Guarantors signatory hereto, the lenders set forth on the signature pages hereto (collectively with their respective permitted successors and assigns, each a "Lender" and collectively, "Lenders") and GMAC BUSINESS CREDIT, LLC as agent for Lenders (in such capacity together with any successor thereto in such capacity, the "Agent"). BACKGROUND Borrowers, Guarantors, Agent and Lenders are parties to a Second Amended and Restated Revolving Credit and Term Loan Agreement dated as of January 7, 2000 (as amended, restated, supplemented or otherwise modified from time to time, the "Loan Agreement") pursuant to which Agent and Lenders provide Borrowers with certain financial accommodations. Borrowers have requested that Agent and Lenders make certain amendments to the Loan Agreement, and Agent and Lenders are willing to do so on the terms and conditions hereafter set forth. NOW, THEREFORE, in consideration of any loan or advance or grant of credit heretofore or hereafter made to or for the account of Borrowers by Agent and Lenders, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Definitions. All capitalized terms not otherwise defined herein shall have the meanings given to them in the Loan Agreement. 2. Amendment to Loan Agreement. Subject to satisfaction of the conditions precedent set forth in Section 3 below, the Loan Agreement is hereby amended as follows: (a) Section I is amended as follows: (i) the following defined terms are added in their appropriate alphabetical order: "Second Amendment" shall mean Amendment No. 2 to Second Amended and Restated Credit and Term Loan Agreement dated as of August 7, 2001 by and among the Borrowers, Guarantors, Agent and Lenders. 1 "Second Amendment Effective Date" shall mean the date on which all conditions precedent set forth in the Second Amendment shall have been satisfied. (b) Section 7.10(a) of the Loan Agreement is amended in its entirety to provide as follows: "(a) Adjusted Capex in any Fiscal Year in an aggregate amount in excess of the following amounts for the Parent and its Subsidiaries on a Consolidated basis: - ------------------------------------------------------------- Adjusted Capex - ------------------------------------------------------------- - ------------------------------------------------------------- Fiscal Year 2000 $6,750,000 - ------------------------------------------------------------- - ------------------------------------------------------------- Fiscal Year 2001 $12,750,000 - ------------------------------------------------------------- - ------------------------------------------------------------- Fiscal Year 2002 $5,600,000 - ------------------------------------------------------------- - ------------------------------------------------------------- Fiscal Year 2003 $4,500,000 - ------------------------------------------------------------- - ------------------------------------------------------------- Fiscal Year 2004 and each $6,600,000" Fiscal Year thereafter - ------------------------------------------------------------- 3. Conditions of Effectiveness. This Second Amendment shall become effective upon the receipt by Agent and Lenders of five (5) copies of this Second Amendment duly executed by each Borrower and consented to by Guarantors. 4. Representations and Warranties. Each Borrower and Guarantor hereby represents and warrants as follows: (a) This Second Amendment and the Loan Agreement, as amended hereby, constitute legal, valid and binding obligations of Borrowers and Guarantors and are enforceable against Borrowers and Guarantors in accordance with their respective terms. (b) Upon the effectiveness of this Second Amendment, each Borrower and Guarantor hereby reaffirms all covenants, representations and warranties made in the Loan Agreement to the extent the same are not amended hereby and agree that all such covenants, representations and warranties shall be deemed to have been remade as of the effective date of this Second Amendment. (c) No Event of Default or Default has occurred and is continuing or would exist after giving effect to this Second Amendment. 2 (d) No Borrower or Guarantor has any defense, counterclaim or offset with respect to 6. the Loan Agreement. 5. Effect on the Loan Agreement. (a) Upon the effectiveness of Section 2 hereof, each reference in the Loan Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like import shall mean and be a reference to the Loan Agreement as amended hereby. (b) Except as specifically amended herein, the Loan Agreement, and all other documents, instruments and agreements executed and/or delivered in connection therewith, shall remain in full force and effect, and are hereby ratified and confirmed. (c) The execution, delivery and effectiveness of this Second Amendment shall not operate as a waiver of any right, power or remedy of Agent or Lenders, nor constitute a waiver of any provision of the Loan Agreement, or any other documents, instruments or agreements executed and/or delivered under or in connection therewith. 6. Governing Law. This Second Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and shall be governed by and construed in accordance with the laws of the State of New York. 7. Headings. Section headings in this Second Amendment are included herein for convenience of reference only and shall not constitute a part of this Second Amendment for any other purpose. 8. Counterparts; Facsimile. This Second Amendment may be executed by the parties hereto in one or more counterparts, each of which shall be deemed an original and all of which when taken together shall constitute one and the same agreement. Any signature delivered by a party by facsimile transmission shall be deemed to be an original signature hereto. 3 IN WITNESS WHEREOF, this Second Amendment has been duly executed as of the day and year first written above. NEW LINDEN PRICE RITE, INC., as Borrower and as Guarantor By: Name: Title: FOODARAMA SUPERMARKETS, INC., as Borrower and as Guarantor By: Name: Title: GMAC BUSINESS CREDIT, LLC, as Agent By: Name: Title: GMAC BUSINESS CREDIT, LLC, as Lender By: Name: Title: 4 THE CHASE MANHATTAN BANK, as Lender By: Name: Title: CITIZEN BUSINESS CREDIT COMPANY, as Lender By: Name: Title: CONSENTED AND AGREED TO: SHOP RITE OF READING, INC., as Guarantor By: Name: Title: SHOP RITE OF MALVERNE, INC., as Guarantor By: Name: Title: 5 -----END PRIVACY-ENHANCED MESSAGE-----