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 January 29, 1994
Commission file number 1-5745-1
FOODARAMA SUPERMARKETS, INC.
303 West Main Street
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 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 period covered by
this report.
OUTSTANDING AT
CLASS January 29, 1994
Common Stock 1,118,150 shares
$1 par value
<PAGE>
FOODARAMA SUPERMARKETS, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets
January 29, 1994 and October 30, 1993
Consolidated Statements of Operations
For the thirteen weeks ended
January 29, 1994 and January 30, 1993
Consolidated Statements of Cash Flows
for the thirteen weeks ended
January 29, 1994 and January 30, 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 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
PART I FINANCIAL INFORMATION
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
<TABLE>
Consolidated Balance Sheets - January 29, 1994 and October 30, 1993
(IN THOUSANDS)
<CAPTION>
ASSETS
January 29, October 30,
1994 1993
(Unaudited) (Audited)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 4,451 $ 4,765
Merchandise inventories 32,587 33,983
Receivables and other 6,065 8,624
Total current assets 43,103 47,372
Property and equipment:
Land 1,762 1,762
Buildings and improvements 2,132 2,132
Leaseholds and leasehold improvements 32,638 31,732
Equipment 49,458 48,042
Property under capital leases 9,649 9,649
Equipment under capital leases 8,859 8,859
104,498 102,176
Less accumulated depreciation and
amortization including $9,397,
1994 and $8,984, 1993 relating
to property and equipment
under capital leases 40,843 39,474
63,655 62,702
Other assets:
Investment in related party 8,626 8,626
Intangibles 7,748 8,145
Other 3,971 4,457
20,345 21,228
$127,103 $131,302
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets - January 29. 1994 and October 30. 1993
(IN THOUSANDS - EXCEPT PER SHARE DATA)
(continued)
<TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<CAPTION>
January 29, October 30,
1994 1993
(Unaudited) (Audited)
<S> <C> <C> <C>
Current liabilities:
Current portion of long-term debt $ 8,724 $ 2,523
Current portion of long-term debt,
related party 89 204
Long term obligation in default
classified as current 28,379 34,415
Current portion of obligations under
capital leases 1,200 1,245
Accounts payable:
Related party 13,434 16,638
Other 15,472 12,112
Accrued expenses and other 6,449 10,009
Total current liabilities 73,747 77,146
Long-term debt 2,966 3,587
Long-term debt, related party 89 176
Obligations under capital leases 9,344 9,669
Deferred income taxes 4,921 4,921
Other long term liabilities 4,114 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 32,871 32,831
36,844 36,804
Less 503,477 shares, held in
treasury, at cost 6,622 6,622
30,222 30,182
$ 127,103 $ 131,302
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
<TABLE>
Consolidated Statements of Operations - Unaudited
(IN THOUSANDS - EXCEPT SHARE DATA)
<CAPTION>
13 weeks Ended
1/29/94 1/30/93
<S> <C> <C> <C>
Sales $ 157,491 $ 172,719
Cost of Sales 118,789 129,505
Gross profit 38,702 43,214
Operating expenses 37,400 41,255
Income from operations 1,302 1,959
Interest - net 1,236 1,757
Income before income taxes 66 202
Income taxes 26 81
Net income $ 40 $ 121
Net income per share $ .01 $ .11
Weighted average of common
shares outstanding 1,118,150 1,118,150
Dividends per share - 0 - - 0 -
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
<TABLE>
Consolidated Statements of Cash Flows
(IN THOUSANDS)
<CAPTION>
Oct. 31, 1993 Nov. 1, 1992
to Jan. 29, 1994 to Jan. 30, 1993
<S> <C> <C>
Cash flows from operating activities:
Net income $ 40 $ 121
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization of property
and equipment 2,272 2,598
Amortization, other 749 833
Changes in assets and liabilities:
(Increase) Decrease in inventories 1,396 ( 369)
(Increase) Decrease in receivables and other 2,559 826
Decrease (Increase) in other assets 134 ( 606)
Increase (Decrease) in accounts payable 156 2,911
Increase (Decrease) in other liabilities (3,367) (1,807)
Net cash provided by operating activities 3,939 4,507
Cash flows from investing activities:
Purchase of property, plant and equipment (3,225) (2,529)
Net cash used in investing activities (3,225) (2,529)
Cash flows from financing activities:
Principal payments under long-term debt ( 658) ( 836)
Principal payments under capital
lease obligations ( 370) ( 402)
Net cash used in financing activities (1,028) (1,238)
Net (Decrease) Increase in cash and
cash equivalents ( 314) 740
Cash and cash equivalents, beginning of period 4,765 8,348
Cash and cash equivalents, end of period $ 4,451 $ 9,088
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 Basis of Presentation
The unaudited condensed Consolidated Financial Statements as of
January 29, 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 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 notes
thereto included in the Registrant's annual report on Form 10-K 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 Ac-
counting 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 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.
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 post-retirement benefits
and a decrease in pre tax earnings of $146,000 ($.08 pershare), which has
been included in the Registrant's financial statements for the fiscal quarter
ended January 29, 1994. The Registrant's liability for such post-retirement
benefits are not funded.
The effect of SFAS No. 106 on earnings for the fiscal quarter ended
January 29, 1994 was not material.
Note 3 Income Taxes
Income taxes have been provided at a rate of 40% of pre-tax income for both
periods. 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.
<PAGE>
The effect of adopting SFAS No. 109 on the Registrant's financial statements
was immaterial as well as for fiscal quarter ended January 29, 1994.
The Registrant provided a valuation allowance against all deferred tax assets
recorded as of October 30, 1993. There was no charge in the valuation
allowance for the fiscal quarter ended January 29, 1994.
<PAGE>
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition and Liquidity
As of January 29, 1994, the Registrant was not in compliance with
several covenants under its credit agreements with its senior lenders.
Due to the covenant violations, as of January 29, 1994, the Registrant has
classified its debt to these lenders totaling $30.3 million as a current
liability. The Registrant has retained an independent financial advisor to
assist in the preparation of a business plan which is anticipated to form the
basis for the negotiation of amended credit agreements with such lenders.
The Registrant has made all required principal and interest payments
under such credit agreements on a timely basis. The Registrant anticipates
that all future payments can be made, including principal payments of $2.5
million on June 1, 1994 and $4.3 million on October 31, 1994, although no such
assurances can be given. The Registrant is pursuing actions to increase
operating cash flow through inventory and expense reductions and to provide
positive cash flow from investing activities through limitations on capital
expenditures and the sale of certain operating and nonoperating assets.
The ability of the Registrant to continue as a going concern is dependent
on its ability to successfully implement the plans and actions described
above with regard to improving its cash flow. Due to the uncertainties
associated with these plans, there can be no assurances that the Registrant
will achieve its goals nor is there any assurance that the Registrant will be
able to negotiate amended credit agreements with its lenders. The Registrant
believes that such programs will be implemented successfully and that
sufficient cash flow will be generated to meet its obligations they become
due. The Registrant continues to employ thosestrategies of the business plan
as outlined in its fiscal 1993 Annual Report.
Wakefern by-laws provide for a service fee at the rate of 1% per week on
the outstanding payable balance which, subject to certain conditions,
Wakefern reduced retrospectively to one-quarter of 1% for the period 7/17/93
to 3/26/94. Fees at the rate of 1% per annum were reflected in the
Registrant's fiscal year end financial statements, and were reflected at the
reduced rate which aggregated approximately $167,000 in the quarter for the
quarter ended January 29, 1994.
<PAGE>
Working Capital:
As a result of several covenant violations at January 29, 1994,
$28.4 million of debt due to senior lenders has been classified as a current
liability thereby creating a working capital deficiency of $30.6 million.
At October 30, 1993, the working capital deficiency was $29.8 million
compared to positive working capital of $14 million at January 30, 1993.
Cash flows (in millions) were as follows:
<TABLE>
1/29/94 1/30/93
<CAPTION>
<S> <C> <C>
Operating activities... $ 3.9 $ 4.5
Investing activities... (3.2) (2.5)
Financing activities... (1.0) (1.3)
Totals $( .3) $ .7
</TABLE>
Receivables and other decreased as a result of the divestiture of
the New York division and faster collection of receivables for manufacturers
coupons.
The decrease in accrued expenses and other is primarily due to
the divestiture of the New York division on October 18, 1993 coupled with
a smaller accrual for interest and accelerated payments of worker's
compensation premiums.
The Registrant has no available lines of credit.
No cash dividends have been paid since 1979, and the Registrant has no
present intentions or ability to pay any dividends in the near future.
Results of Operations (13 weeks ended 1/29/94 compared to 13
weeks ended 1/30/93)
Sales for the twenty one stores in operation for the current quarter totaled
$157.5 million, including one World Class replacement store opened 9/23/93.
Sales for the twenty six stores in operation in the prior period totaled
$172.7 million of which $23.3 million represented sales of five New York
stores sold 10/18/93.
Gross profit on sales for the current period was 24.6%
compared to 25.0% in the prior year period.
Operating expenses as a percent of sales were 23.7% compared
to 23.9% in the prior year period.
<PAGE>
Current period expenses include Wakefern service fees of $167,000 and
the cumulative effect of postretirement benefits of $146,000.
Interest expense totaled $1,247,000 in the current period compared to
$1,806,000 in the prior year period. The decrease is attributable to the
overall reduction of debt levels. Of these amounts, $334,00 and $364,000,
respectively, represent interest on capitalized leases.
Interest income was $11,000 and $49,000 for the respective periods.
Income taxes have been provided at a rate of 40% of pre-tax income for both
periods. In the fiscal quarter ended January 29, 1994, the Registrant
adopted statement of Financial Accounting Standards (SFAS) No. 109.
"Accounting for Income Taxes". 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 31, 1993. There was no change in the valuation
allowance for the fiscal quarter ended January 29, 1994.
Net income of $40,00 or $.01 per share (after preferred stock dividend
requirement of $34,000) was realized for the current quarter compared to
$121,000 or $.11 per share in the prior year period. No preferred stock
dividend was required in the prior year period. In each period 1,118,150
shares were outstanding. Despite the continued intense competition of the
retail food industry and the lingering effects of the union strike in May
1993, the Registrant was able to record modest earnings for the fiscal
quarter ended January 29, 1994.
<PAGE>
PART II
OTHER INFORMATION
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 January 29, 1994.
<PAGE>
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 17, 1994 /S/ JOSEPH J. SAKER
(Signature)
Joseph J. Saker, President
Chief Executive Officer
Date: March 17, 1994 /S/ JOSEPH C. TROILO
(Signature)
Joseph C. Troilo
Senior Vice President
(& Principal Financial and
Accounting Officer)
