-----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, UJlUyhGJnVWdXKJ275XDfll8keRGXrvtDXly/2GqMCaySVvwW3KeErWbR+l4IRa6 mzj+DiMbMd4FJaDzt7eu9g== 0000037914-97-000003.txt : 19970317 0000037914-97-000003.hdr.sgml : 19970317 ACCESSION NUMBER: 0000037914-97-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970201 FILED AS OF DATE: 19970314 SROS: AMEX 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: 97556777 BUSINESS ADDRESS: STREET 1: 922 HIGHWAY 33 STREET 2: BLDG 6 SUITE 1 CITY: FREEHOLD STATE: NJ ZIP: 07728 BUSINESS PHONE: 908-462-4700 MAIL ADDRESS: STREET 1: 922 HIGHWAY 33 STREET 2: BLDG 6 CITY: FREEHOLD STATE: NJ ZIP: 07728 10-Q 1 10Q - 1ST QTR 1997 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 February 1, 1997 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 #908-462-4700 (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 12 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 March 12,1997 Common Stock 1,117,150 shares $1 par value FOODARAMA SUPERMARKETS, INC. PART I. FINANCIAL INFORMATION Item 1. Financial Statements Unaudited Consolidated Balance Sheets February 1, 1997 and November 2, 1996 Unaudited Consolidated Statements of Operations for the thirteen weeks ended February 1, 1997 and January 27, 1996 Unaudited Consolidated Statements of Cash Flows for the thirteen weeks ended February 1, 1997 and January 27, 1996 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 6. Exhibits and Reports on Form 8-K Certain information included in this report and other Registrant filings (collectively, "SEC filings") under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (as well as information communicated orally or in writing between the dates of such SEC filings) contain or may contain forward-looking information that is (i) based upon assumptions which, if changed, could produce significantly different results; or (ii) subject to certain risks, trends and uncertainties that could cause actual results to differ materially from expected results. Among these risks, trends and uncertainties are matters related to national and local economic conditions, the effect of certain governmental regulations and programs on the Registrant and competitive conditions in the marketplace in which the Registrant operates. The forward-looking statements are made as of the date of this Form 10-Q and the Registrant 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. See "Management's Discussion and Analysis of Financial Condition and Results of Operation." PART I FINANCIAL INFORMATION FOODARAMA SUPERMARKETS, INC AND SUBSIDIARIES Consolidated Balance Sheets (in thousands) February 1, November 2, 1997 1996 (Unaudited) (1) ASSETS Current assets: Cash and cash equivalents $ 3,797 $ 3,114 Merchandise inventories 32,696 31,654 Receivables and other current assets 3,899 2,731 Prepaid income taxes 915 974 Related party receivables - Wakefern 3,109 6,032 Related party receivables - other 811 1,259 Total current assets 45,227 45,764 Property and equipment: Land 1,650 1,650 Buildings and improvements 1,867 1,867 Leaseholds and leasehold improvements 33,028 33,238 Equipment 54,965 55,805 Property and equipment under capital leases 19,674 19,674 111,184 112,234 Less accumulated depreciation and amortization 53,765 53,498 57,419 58,736 Other assets: Investments in related parties 9,215 9,215 Intangibles 5,381 5,475 Other 2,644 3,730 Related party receivables - Wakefern 1,055 1,029 Related party receivables - other 84 232 18,379 19,681 $ 121,025 $124,181 (continued) (1) Derived from the Audited Consolidated Financial Statements for the year ended November 2, 1996. See accompanying notes to consolidated financial statements. FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES Consolidated Balance Sheets (in thousands except share data) February 1, November 2, 1997 1996 (Unaudited) (1) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 5,486 $ 5,182 Current portion of long-term debt, related party 52 52 Current portion of obligations under capital leases 200 67 Deferred income tax liability 1,261 1,261 Accounts payable: Related party 26,162 23,850 Others 4,472 5,100 Accrued expenses 7,720 7,196 Total current liabilities 45,353 42,708 Long-term debt 21,213 26,852 Long-term debt, related party 744 757 Obligations under capital leases 13,522 13,634 Deferred income taxes 2,886 2,886 Other long-term liabilities 5,157 5,329 Total long-term liabilities 43,522 49,458 Mandatory redeemable preferred stock $12.50 par; authorized 1,000,000 shares; issued and outstanding 136,000 shares 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 33,106 32,964 37,079 36,937 Less 504,477 shares February 1, 1997; 503,477 shares November 2, 1996, held in treasury, at cost 6,629 6,622 Total shareholders' equity 30,450 30,315 $ 121,025 $ 124,181 (1) Derived from the Audited Consolidated Financial Statements for the year ended November 2, 1996. See accompanying notes to consolidated financial statements. FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES Consolidated Statements of Operations - Unaudited (in thousands - except per share data) 13 Weeks Ended February 1, January 27, 1997 1996 Sales $ 163,356 $ 146,303 Cost of merchandise sold 122,768 109,763 Gross profit 40,588 36,540 Store operating, general and administrative expenses 39,246 34,889 Income from operations 1,342 1,651 Other (expense) income: Interest expense (1,077) (882) Interest income 29 19 (1,048) (863) Income before taxes 294 788 Income tax provision 118 292 Net income $ 176 $ 496 Per share information: Net income per common share $ .13 $ .41 Weighted average number of common shares outstanding 1,117,150 1,118,150 Dividends per common share -0- -0- See accompanying notes to consolidated financial statements. FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows - Unaudited (in thousands) 13 Weeks Ended Feb. 1,1997 Jan. 27,1996 Cash flows from operating activities: Net income $ 176 $ 496 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 2,019 2,049 Amortization, intangibles 94 209 Amortization, deferred financing costs 171 262 Amortization, deferred rent escalation 108 81 Amortization, other assets 181 - Changes in assets and liabilities: (Increase)in inventories (1,042) (696) (Increase) decrease in receivables and other current assets (1,290) 239 Decrease in other assets 1,037 1,094 Decrease in related party receivables-Wakefern 2,923 1,831 Increase in accounts payable 1,684 5,584 Increase (decrease)in other liabilities 237 (196) Net cash provided by operating activities 6,298 10,953 Cash flows from investing activities: Purchase of property and equipment (702) (1,554) Decrease(increase) in related party receivables-other 448 (309) Net cash used in investing activities (254) (1,863) Cash flows from financing activities: Principal payments under long-term debt (5,335) (13,049) Principal payments under capital lease obligations 21 ( 76) Proceeds from issuance of debt - 4,068 Preferred stock dividend payments (34) - Principal payments under long-term debt, related party (13) - Net cash used in financing activities (5,361) (9,057) NET INCREASE IN CASH AND CASH EQUIVALENTS 683 33 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,114 3,435 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,797 $ 3,468 See accompanying notes to consolidated financial statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1 Basis of Presentation The unaudited Consolidated Financial Statements as of or for the period endingFebruary 1, 1997, 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 November 2, 1996 has been taken from the audited financial statements at that date. In the opinion of the management of the Registrant, all adjustments (consisting only of normal recurring accruals) which the Registrant considers 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 Registrant's annual report on Form 10-K for the year ended November 2, 1996. These results are not necessarily indicative of the results for the entire fiscal year. Note 2 Adoption of Accounting Standards Impairment of Assets Effective November 3, 1996, the Registrant adopted Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the impairment of Long-Lived assets and for Long-Lived Assets to be Disposed of." This Statement establishes accounting standards for the impairment of long-lived assets, certain identifiable intangibles and goodwill related to those assets. This Statement requires that an asset to be held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. There was no material effect on earnings, in the quarter ended February 1, 1997, from the adoption of SFAS No. 121. Stock-Based Compensation Effective November 3, 1996, The Registrant adopted SFAS No. 123, "Accounting for Stock-Based Compensation." This Statement establishes a method of accounting for stock compensation plans based on fair value of employee stock options and similar equity instruments. There was no material effect on earnings, in the quarter ended February 1, 1997, from the adoption of SFAS No. 123. Part I - Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition and Liquidity The Registrant entered into a Revolving Credit and Term Loan Agreement on February 15, 1995 ("the Credit Agreement"), which was amended as of July 26, 1996 (the "Amended Credit Agreement"). The Amended Credit Agreement, which was assigned by the lending group to one financial institution on December 12, 1996, is secured by substantially all of the Registrant's assets and provides for a total commitment of $30,000,000, including a revolving credit facility and term loan referred to as Term Loan C. 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 net worth and earnings before interest, taxes, depreciation and amortization ("EBITDA"), and maintenance of (iii) fixed charge coverage and total liabilities to net worth ratios. The Registrant was in compliance with such covenants through February 1, 1997 except for the minimum level of EBITDA which was $330,000 or 2.2% less than the covenant requirement, and the maximum level of capital expenditures, which was exceeded by $282,000 or 4.9% of the covenant limit. The Registrant obtained a waiver of these covenants. The Amended Credit Agreement (a) increases the total amount available to the Registrant under the working capital facility ("Revolving Note") portion of the Agreement to $17,500,000 from $15,000,000, subject to the borrowing base limitation of 60% of eligible inventory; (b) increases the Term Loan C portion of the borrowings by $1,825,000 to its original principal amount of $12,500,000; (c) revises the repayment schedule for Term Loan C to provide that the first quarterly payment becomes due on December 31, 1996, subsequent quarterly payments are reduced in amount and a balloon payment of $4,500,000 becomes due on February 15, 1999; (d) amends certain definitions; (e) changes certain borrowing limitations, including a provision which permits secured borrowing of up to $6,536,000 from third party lenders in fiscal 1996; (f) permits capital expenditures in fiscal 1996 and 1997 in a manner consistent with the projected timing of such expenditures; and (g) waives technical non-compliance by the Registrant with certain covenants of the Credit Agreement. Other terms and conditions of the Credit Agreement previously reported upon by the Registrant have not been modified. The Registrant has pursued an asset redeployment program since entering into the Credit Agreement, utilizing the proceeds from the disposition of certain assets to repay indebtedness under the Credit Agreement. The remaining components of the asset redeployment program consist of the sale of real estate partnership interests in a non-supermarket property located in Shrewsbury, New Jersey, a shopping center in West Long Branch, New Jersey in which the Registrant operates a supermarket and the sale/leaseback or mortgaging of buildings owned by the Registrant and located in Linden and Aberdeen, New Jersey. The sale/leaseback of the supermarket property in Aberdeen was completed on February 3, 1997 for $2.3 million. The Amended Credit Agreement combined with the asset redeployment plan described above strengthen the Registrant's financial condition by increasing liquidity and providing increased working capital through the Revolving Note. The Registrant's compliance with the major financial covenants under the Agreement was as follows as of February 1, 1997. Amended Actual Financial Credit (As defined in the Covenant Agreement Amended Credit Agreement Capital Expenditures Less than $5,700,000 $ 5,982,000 (1) Net Worth Greater than $28,500,000 $33,344,000 Fixed Charge Coverage Ratio Greater than .9 to 1.00 1.18 to 1.00 Total Liabilities to Net Worth Ratio Less than 2.45 to 1.00 2.32 to 1.00 EBITDA Greater than $15,100,000 $14,770,000 (1) (1) Non-compliance with these covenants was waived. As of March 29, 1996 the Registrant and Wakefern Food Corporation, the owner of the Registrant's Class A 8% Cumulative Convertible Preferred Stock (the "Preferred Stock"), amended certain provisions of the Preferred Stock to (a) extend the date after which Wakefern shall be entitled to convert the Preferred Stock to Common Stock from March 31, 1996 to March 31, 1997; and (b) defer the 2% increase in the dividend rate effective March 1996 to March 1997. On May 14, 1996 the Registrant paid dividends in arrears on the Preferred Stock of $456,980 as well as a quarterly dividend of $34,000 for the quarter ended April 30, 1996 and since then has paid dividends of $34,000 per quarter. The Amended Credit Agreement provides that the Preferred Stock may be redeemed only if the Registrant has met or exceeded its financial performance and debt reduction targets for the year ended November 2, 1996. The Registrant has met all of these targets and although there can be no assurance, believes that it will be in a position and intends to redeem the Preferred Stock prior to March 31, 1997. No cash dividends have been paid on the Common Stock since 1979, and the Registrant 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 the Registrant's Common Stock. Working Capital At February 1, 1997, the Registrant had a working capital deficiency of $126,000 compared to positive working capital of $3,056,000 at November 2, 1996 and a deficiency of $7,488,000 at January 27, 1996. The decline in working capital from November 2, 1996 was due to the collection of $3,533,000 of current related party receivables which were used to reduce the Revolving Note which is classified as long term borrowings. The Registrant 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: February 1, 1997 1.00 to 1.0 November 2, 1996 1.07 to 1.0 January 27, 1996 0.84 to 1.0 Cash flows (in millions) were as follows: 2/1/97 1/27/96 Operating activities... $ 6.3 $ 10.6 Investing activities... ( .2) ( 1.5) Financing activities... (5.4) ( 9.1) Totals $ 0.7 $ 0.0 The Registrant had $11,751,000 of available credit, at February 1, 1997, under its revolving credit facility and believes that its capital resources are adequate to meet its operating needs, scheduled capital expenditures and its debt service in fiscal 1997. For the 13 weeks ended February 1, 1997 depreciation was $2,019,000 while capital expenditures totaled $702,000, compared to $2,049,000 and $1,554,000 respectively in the prior year period. Results of Operations (13 weeks ended February 1, 1997 compared to 13 weeks ended January 27, 1996) Sales: Same store sales from the eighteen stores in operation in both periods increased 2.51% in the current year period versus the prior year period. An increase in promotion expense in the current period contributed to this increase. Sales for the twenty stores in operation for the current quarter totaled $163.4 million as compared to $146.3 million of sales from the eighteen stores operated in the prior year period. Gross Profit: Gross profit on sales declined slightly to 24.8% of sales compared to 25.0% in the prior year period. Patronage dividends, applied as a reduction of the cost of merchandise sold, were $1.3 million in both periods. The decline in gross profit was primarily due to price reductions instituted to combat increased competitive pressure in the Registrant's marketing area. Operating Expenses: Store operating, general and administrative expenses as a percent of sales were 24.0% versus 23.8% in the prior year period. The increase in selling, general and administrative expenses was primarily due to increased promotional activity in the Registrant's trading area as well as increases in certain expense categories. As a percentage of sales, labor and related fringe benefit costs increased .10%, selling expense increased .19% and other store expenses increased .08%. These increases were partially offset by a decrease in administrative expense of .17%. Interest Expense: Interest expense increased to $1,077,000 from $882,000, while interest income was $29,000 compared to $19,000 for the prior period. The increase in interest expense for the current year period was due to an increase in outstanding debt since January 27, 1996, partially offset by a decrease in the interest rate paid on debt. Income Taxes: An income tax rate of 40% has been used in the current period based on the expected effective tax rate for fiscal 1997, while a rate of 37% was used in the prior year period. Net Income: Net income was $176,000 in the current year period compared to $496,000 in the prior year period. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the current period were $3,915,000 as compared to $4,252,000 in the prior year period. Net income per common share was $.13 in the current period compared to $.41 in the prior year period. Per share calculations are based on 1,117,150 shares outstanding in the current year period and 1,118,150 shares outstanding in the prior year period and a provision of $34,000 for preferred stock dividends in both periods. PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit (27) - Financial Data Schedule (b) Reports on Form 8-K/A 1. December 4, 1996 - Changes in Registrant's Certifying Accountant as of October 25, 1996 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: March 14, 1997 /S/ MICHAEL SHAPIRO (Signature) Michael Shapiro Senior Vice President Chief Financial Officer Date: March 14, 1997 /S/ JOSEPH C. TROILO (Signature) Joseph C. Troilo Senior Vice President Principal Accounting Officer EX-27 2
5 1000 3-MOS NOV-01-1997 FEB-01-1997 3,797 0 7,608 (771) 32,696 45,227 111,184 (53,765) 121,025 45,353 0 1,700 0 1,622 28,828 121,025 163,356 163,356 122,768 0 39,246 0 1,048 294 118 176 0 0 0 176 .13 .13
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