-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, JEjVL5MfUcJxaZtBiE3BB3iGr7p2Z94vvKg9A+aJGkXWtyx5nOBtS102l7PBJpav df8MSeWzw361fpOUvbvUvw== 0000037914-94-000002.txt : 19941007 0000037914-94-000002.hdr.sgml : 19941007 ACCESSION NUMBER: 0000037914-94-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940730 FILED AS OF DATE: 19940913 SROS: NONE 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: 1934 Act SEC FILE NUMBER: 001-05745 FILM NUMBER: 94548899 BUSINESS ADDRESS: STREET 1: 922 HIGHWAY 33 BLDG 6 STE 1 CITY: FREEHOLD STATE: NJ ZIP: 07728 BUSINESS PHONE: 9084624700 10-Q 1 QUARTERLY REPORT 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 30, 1994 Commission file number 1-5745-1 FOODARAMA SUPERMARKETS, INC. Building 6, Suite 1 922 Highway 33 Freehold, N.J. 07728 I.D. # 21-0717108 Telephone #908-462-4700 Indicate by check mark whether the Registrant (1) has filed all annual, quarterly and other reports required to be filed with the Commission and (2) has been subject to the filing require- ments 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 period covered by this report. OUTSTANDING AT CLASS July 30, 1994 Common Stock 1,118,150 shares $1 par value FOODARAMA SUPERMARKETS, INC. PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets July 30, 1994 and October 30, 1993 Consolidated Statements of Operations For the thirteen and thirty nine weeks ended July 30, 1994 and July 31, 1993 Consolidated Statements of Cash Flows for the thirty nine weeks ended July 30, 1994 and July 31, 1993 Notes to the Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION Item 3. Default Upon Senior Securities See Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources -- Forbearance Agreement Item 6. Exhibits and Reports on Form 8-K FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES Consolidated Statements of Operations - Unaudited (IN THOUSANDS - EXCEPT PER SHARE DATA) 13 Weeks Ended 7/30/94 7/31/93 Sales $ 150,791 $ 167,679 Cost of Sales 112,385 129,252 Gross profit 38,406 38,427 Operating expenses 36,622 42,965 Income (loss) from operations 1,784 ( 4,538) Interest - net 1,222 1,776 Income (loss) before taxes 562 ( 6,314) Income tax (benefit) provision 178 ( 2,643) Net income (loss) $ 384 $ ( 3,671) Net income (loss) per common share $ .31 $ (3.31) Weighted average of common shares outstanding 1,118,150 1,118,150 Dividends per share - 0 - - 0 - See accompanying notes to consolidated financial statements. FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (IN THOUSANDS) (Unaudited) Oct. 31, 1993 Nov. 1, 1992 to July 30, 1994 to July 31, 1993 Cash flows from operating activities: Net (loss) $ ( 877) $( 3,260) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of property and equipment 6,898 7,704 Amortization, other 2,505 2,603 Changes in assets and liabilities: Decrease in inventories 6,535 2,312 (Increase)Decrease in receivables and other 4,084 ( 453) (Increase)in other assets (2,012) ( 1,541) Increase (Decrease)in accounts payable (3,250) 5,334 Decrease in other liabilities (5,745) ( 1,831) Net cash provided by operating activities 8,138 10,868 Cash flows from investing activities: Purchase of property, plant and equipment (5,032) ( 5,935) Net cash used in investing activities (5,032) ( 5,935) Cash flows from financing activities: Proceeds from sale of preferred stock - 1,700 Principal payments under long-term debt (1,536) ( 8,732) Principal payments under capital lease obligations ( 967) ( 1,160) Proceeds from issuance of long-term debt - 2,000 Net cash used in financing activities (2,503) ( 6,192) Net Increase (Decrease)in cash and cash equivalents 603 ( 1,259) Cash and cash equivalents, beginning of period 4,765 8,348 Cash and cash equivalents, end of period $ 5,368 $ 7,089 See accompany notes to consolidated financial statements. PART I FINANCIAL INFORMATION FOODARAMA SUPERMARKETS, INC AND SUBSIDIARIES Consolidated Balance Sheets - July 30, 1994 and October 30, 1993 (IN THOUSANDS) July 30, October 30, 1994 1993 (Unaudited) (Audited) ASSETS Current assets: Cash and cash equivalents $ 5,368 $ 4,765 Merchandise inventories 27,448 33,983 Receivables and other 4,540 8,624 Total current assets 37,356 47,372 Property and equipment: Land 1,762 1,762 Buildings and improvements 2,132 2,132 Leaseholds and leasehold improvements 33,023 31,732 Equipment 49,852 48,042 Property under capital leases 9,649 9,649 Equipment under capital leases 8,677 8,859 105,095 102,176 Less accumulated depreciation and amortization including $10,037, and $8,984, relating to property and equipment under capital leases 44,259 39,474 60,836 62,702 Other assets: Investment in related party 8,626 8,626 Intangibles 6,954 8,145 Other 5,057 4,457 20,637 21,228 $118,829 $131,302 See accompanying notes to consolidated financial statements. FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES Consolidated Balance Sheets - July 30, 1994 and October 30, 1993 (IN THOUSANDS EXCEPT SHARE DATA) (continued) July 30, October 30, 1994 1993 (Unaudited) (Audited) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 7,825 $ 2,523 Current portion of long-term debt, related party 88 204 Long term obligation in default classified as current 28,379 34,415 Current portion of obligations under capital leases 1,004 1,245 Accounts payable: Related party 13,688 16,638 Other 11,812 12,112 Accrued expenses and other 4,264 10,009 Total current liabilities 67,060 77,146 Long-term debt 2,988 3,587 Long-term debt, related party 89 176 Obligations under capital leases 8,943 9,669 Deferred income taxes 4,921 4,921 Other long term liabilities 3,823 3,921 Mandatory redeemable preferred stock subscribed $12.50 par; authorized 1,000,000 shares; 136,000 shares issued 1,700 1,700 Shareholders' equity: Common stock, $1.00 par; authorized 2,500,000 shares; issued 1,621,627 shares 1,622 1,622 Capital in excess of par 2,351 2,351 Retained earnings 31,954 32,831 35,927 36,804 Less 503,477 shares, held in treasury, at cost 6,622 6,622 29,305 30,182 $ 118,829 $ 131,302 See accompanying notes to consolidated financial statements. PART II OTHER INFORMATION Item 3. Default Upon Senior Securities See Management's Discussion and Analysis of Financial Condition and Results of Operation -- Liquidity and Capital Resources -- Forbearance Agreement Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: NONE (b) No reports on Form 8-K were required to be filed for the 13 weeks ended July 30, 1994. 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 13, 1994 /S/ Michael Shapiro (Signature) Michael Shapiro Senior Vice President Chief Financial Officer Date: September 13, 1994 /S/ JOSEPH C. TROILO (Signature) Joseph C. Troilo Senior Vice President Principal Accounting Officer FOODARAMA SUPERMARKETS, INC. (Registrant) Date: September 13, 1994 (Signature) Michael Shapiro Senior Vice President Chief Financial Officer Date: September 13, 1994 (Signature) Joseph C. Troilo Senior Vice President Principal Accounting Officer Part I - Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Forbearance Agreement On June 1, 1994, the Company entered into a Standstill Agreement with its three bank lenders (the "Banks") and a Forbearance Agreement and Amendment with certain of its senior noteholders (collectively, the "Agreement"). The outstanding principal balance of the Company's indebtedness to the Banks as of June 1, 1994 was $15,957,000 and to its noteholders $19,195,000. The balances are the same at July 30, 1994. The instruments pursuant to which these loans were made are referred to herein as the "Loan Documents", and the Banks and the Company's senior noteholders are referred to herein collectively as the "Holders". The Forbearance Agreement has been subscribed to by the Holders of senior notes totalling $16.2 million representing 84.4% of the outstanding balance of such notes. The Agreements provide that the Company pay to the senior noteholders, subscribing to the Forbearance Agreement and Amendment, the interest on the senior notes which was due on June 1, 1994 which interest totalled $983,450, and the Company has paid such interest, but the Company has not paid to the senior noteholders the $2,523,000 principal payment due to such Holders on such date. Under the Agreements, the Holders agreed to forbear until September 30, 1994 from exercising their rights under the Loan Documents on account of certain specified defaults by the Company under the Loan Documents, including the failure to pay principal on June 1, 1994 to Holders of the senior notes. The Agreements contain a number of affirmative and negative covenants including covenants to supply designated information to the Holders and, except with the consent of the Banks and the Holders of two-thirds of the principal amount of the senior notes, not to incur additional indebtedness for borrowed money, not to sell assets nor to engage in certain other specified transactions. In addition, the Agreements provide that the Company shall continue to employ, at its own expense, its present restructuring advisor, or another restructuring advisor acceptable to the Holders, to assist the Company in the formulation of a business plan. The Agreements terminate if Wakefern Food Corporation modifies the terms on which it presently provides merchandise to the Company, if the Company has a negative cash flow (as defined in the Agreement) in any fiscal month during the four-month forbearance period, or if the Company suffers a pre-tax loss (calculated in accordance with the Agreement), in excess of $600,000 in any three-month period commencing with the three-month period ended July 31, 1994. The Agreements and a restated amendment to the Credit Agreement with the Company's bank creditors provide that interest under the Credit Agreements be paid monthly commencing July 1, 1994 and not quarterly or semi-annually as heretofore required under the Loan Documents. Working Capital As a result of covenant violations at July 30, 1994, $28.4 million of debt due to senior lenders has been classified as a current liability thereby creating a working capital deficiency of $29.7 million. At July 31, 1993, the working capital deficiency was $34.5 million. Cash flows (in millions) were as follows: 7/30/94 7/31/93 Operating activities... $ 8,138 $ 10,868 Investing activities... (5,032) ( 5,935) Financing activities... (2,503) ( 6,192) Totals $ 603 $( 1,259) Registrant continued its program to generate cash through inventory reduction which resulted in a decrease in inventory of $6.5 million from year end to July 30, 1994. Receivables and other current assets decreased $4.1 million since year end due in part to the sale of the New York division on October 18, 1993 and accelerated collection of receivables for manufacturers coupons. Accounts payable and accrued expenses decreased by $9.0 million from year end by reason of the New York sale, payments for property and equipment for the Neptune store, interest and other expense payments, payment of amounts due for workers' compensation insurance and a reduction of payables due Wakefern Food Corp. Registrant has no available lines of credit. Results of Operations (13 weeks ended 7/30/94 compared to 13 weeks ended 7/31/93) Sales: Sales for the twenty stores in operation at July 30,1994 totaled $149.5 million, including one World Class replacement store opened 9/23/93. Sales for the twenty six stores in operation in the prior period totaled $167.7 million of which $22.8 million represented sales of the five New York stores sold 10/18/93. Total sales for twenty one stores increased 4.1% while comparable store sales were flat period to period. A retail clerks strike in May 1993, affecting the Registrant and three other supermarket chains, impacted Registrant's sales by approximately $9 million for the thirteen weeks ending 7/31/93. Gross Profit: The current period produced a gross profit of 25.47% versus 22.92% in the prior year period. Registrant estimates the prior period strike reduced gross profit by 2.39%. Patronage dividends applied as a reduction of cost of sales were $1.1 million and $1.4 million respectively. Operating Expenses: Current period operating expenses totaled $36.6 million or 24.29% compared to $43.0 million or 25.62%. Comparable store expenses reflect a current reduction of .45% in payroll and benefits and .25% in promotional costs. The prior year period included customer claims reserve of .41% and additional strike costs of .30%. Income (loss) From Operations: The income for the current period versus the loss for the prior year period is primarily attributable to the severe impact of the May 1993 strike on the prior year period. Interest expense - net: This cost $1.2 million in the current period versus $1.8 million in the prior year period. The impact of the reduction in debt of $15.5 million since July 31, 1993 has been partially offset by increased interest rates due to a floating rate and defaults on bank and noteholder debt. Income Taxes: A 32% annualized rate has been used for the thirty nine weeks of fiscal 1994. This was the effective annual rate for fiscal 1993. The prior year period reflects a 42% rate which was the effective annual rate for fiscal 1992. Net Income (Loss) Per Share: Current period net income of $384,000 has been reduced by $34,000, the preferred stock dividend, thereby resulting in earnings of $.31 per common share on 1,118,150 shares outstanding. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1 Basis of Presentation The unaudited condensed Consolidated Financial Statements as of July 30, 1994, included herein, 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, 1993 has been taken from the audited financial statements at that date. In the opinion of the management of registrant, all adjustments (consisting only of normal recurring accruals) which registrant considers necessary for a fair presentation of the results of operation 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 Registrant's annual report on Form 10-K for the year ended October 30, 1993. These results are not necessarily indicative of the results for the entire fiscal year. Note 2 Postretirement Benefits other than Pensions Effective October 31, 1993, the Registrant adopted Statement of Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement Benefits other than Pensions." The Registrant provides limited postretirement medical benefits to certain individuals under deferred compensation agreements. The Registrant's does not provide such benefits to most of its non-union workforce and benefits related to its union employees are covered by collective bargaining agreements which require monthly contributions and which are not subject to the provisions of SFAS No. 106 requiring an accrual for such benefits. SFAS No. 106 requires the Registrant to accrue the estimated cost of retiree benefit payments during the years the employee provides services. The Registrant previously expensed the costs of such benefits as incurred. The Registrant recognized the cumulative effect of this liability on the immediate recognition basis. The cumulative effects as of January 29, 1994, of adopting SFAS No. 106 were an increase in accrued postretirement benefits and a decrease in pre tax earnings of $146,000 ($.08 per share), which have been included in the Registrant's financial statements for the fiscal quarter ended January 29, 1994. The Registrant's liability for such postretirement benefits are not funded. The effect of SFAS No. 106 on earnings for the fiscal quarter ended July 30, 1994 was not material. Note 3 Income Taxes In the fiscal quarter ended January 29, 1994, the Registrant adopted statement of Financial Accounting Standards (SFAS) No. 109. "Accounting for Income Taxes", effective October 31, 1993. The effect of adopting SFAS No. 109 on the Registrant's financial statements was immaterial. The Registrant provided a valuation allowance against all deferred tax assets recorded as of October 30, 1993. There was no change in the valuation allowance for the fiscal quarter ended July 30, 1994. FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES Consolidated Statements of Operations - Unaudited (IN THOUSANDS - EXCEPT PER SHARE DATA) 39 Weeks Ended 7/30/94 7/31/93 Sales $ 459,828 $ 509,400 Cost of Sales 346,587 386,571 Gross profit 113,241 122,829 Operating expenses 110,804 123,310 Income (loss) from operations 2,437 ( 481) Interest - net 3,726 5,148 Income (loss) before taxes (1,289) ( 5,629) Income tax (benefit) provision ( 412) ( 2,369) Net (loss) $ ( 877) $ ( 3,260) Net (loss) per common share $ (.87) $ (2.97) Weighted average of common shares outstanding 1,118,150 1,118,150 Dividends per share - 0 - - 0 - See accompanying notes to consolidated financial statements. -----END PRIVACY-ENHANCED MESSAGE-----