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<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
