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 28, 1995
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 January 28, 1995
Common Stock 1,118,150 shares
$1 par value<PAGE>
FOODARAMA SUPERMARKETS, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
January 28, 1995 and October 29, 1994
Consolidated Statements of Operations
For the thirteen weeks ended
January 28, 1995 and January 29, 1994
Consolidated Statements of Cash Flows
for the thirteen weeks ended
January 28, 1995 and January 29, 1994
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
<PAGE>
PART I FINANCIAL INFORMATION
FOODARAMA SUPERMARKETS, INC AND SUBSIDIARIES
Consolidated Balance Sheets
(IN THOUSANDS)
January 28, October 29,
1995 1994
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $ 4,971 $ 5,542
Merchandise inventories 29,811 29,800
Receivables and other current assets 5,919 6,276
Patronage dividend receivable 604 3,717
Total current assets 41,305 45,335
Property and equipment:
Land 1,762 1,762
Buildings and improvements 2,132 2,132
Leaseholds and leasehold improvements 33,103 33,146
Equipment 49,644 50,860
Property under capital leases 9,649 9,649
Equipment under capital leases 5,592 7,140
101,882 104,689
Less accumulated depreciation and
amortization including $8,424, 1995
and $9,397, 1994 relating
to property and equipment
under capital leases 44,873 45,612
57,009 59,077
Other assets:
Investments in related party 9,215 9,215
Intangibles 7,406 7,508
Other 10,243 9,686
26,864 26,409
$125,178 $130,821
(continued)
See accompanying notes to consolidated financial statements.
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(IN THOUSANDS EXCEPT SHARE DATA)
January 28, October 29,
1995 1994
(Unaudited) (Audited)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 10,799 $ 10,830
Current portion of long-term debt,
related party 345 349
Current portion of obligations under
capital leases 776 813
Accounts payable:
Related party 19,554 20,538
Others 7,531 11,005
Accrued expenses 9,108 8,464
Deferred income tax liability 2,010 2,010
Total current liabilities 50,123 54,009
Long-term debt 26,990 27,817
Long-term debt, related party 615 767
Obligations under capital leases 8,599 8,855
Deferred income taxes 2,730 2,730
Other long term liabilities 5,605 5,959
Total long-term liabilities 44,539 46,128
Mandatory redeemable preferred stock
$12.50 par; authorized
1,000,000 shares; issued 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 32,150 32,318
Minimum pension liability adjustment (685) (685)
35,483 35,606
Less 503,477 shares, held in
treasury, at cost 6,622 6,622
28,816 28,984
$ 125,178 $ 130,821
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
January 28, January 29,
1995 1994
Sales $ 151,748 $ 157,491
Cost of merchandise sold 114,124 118,789
Gross profit 37,624 38,702
Store operating, general and
administrative expenses 36,316 37,400
Income from operations 1,308 1,302
Interest - net 1,298 1,236
Income before taxes 10 66
Income tax 3 26
Income before cumulative effect of
change in accounting 7 40
Cumulative effect of change in accounting,
(net of taxes of $61) ( 175) -
Net (loss) income $ ( 168) $ 40
(Loss) income per share before cumulative
effect of change in accounting $ ( .02) $ .01
Cumulative effect of change in accounting,
net of taxes ( .16) 0
Net (loss)income per share $ ( .18) $ .01
Weighted average number 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 - Unaudited
(IN THOUSANDS)
Oct.30,1994 Oct.31,1993
to Jan.28,1995 to Jan.29,1994
Cash flows from operating activities:
Net (loss) income $ ( 168) $ 40
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 2,211 2,272
Amortization, intangibles 185 397
Amortization, deferred financing costs 43 147
Amortization, escalation rents 148 151
Amortization, other assets 32 204
Changes in assets and liabilities:
(Increase) decrease in inventories ( 11) 1,396
Decrease in receivables and other
assets 357 2,559
(Increase) in other assets ( 715) ( 16)
Decrease in patronage dividend 3,113 3,390
(Decrease)in accounts payable (4,458) ( 3,234)
Increase (decrease) in other liabilities 142 ( 3,367)
Net cash provided by operating
activities 879 3,939
Cash flows from investing activities:
Purchase of property and equipment ( 143) ( 3,225)
Net cash used in investing
activities ( 143) ( 3,225)
Cash flows from financing activities:
Principal payments under long-term debt (1,014) ( 658)
Principal payments under capital
lease obligations ( 293) ( 370)
Net cash used in financing activities (1,307) ( 1,028)
NET INCREASE (DECREASE)IN CASH AND CASH
EQUIVALENTS (571) ( 314)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 5,542 4,765
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,971 $ 4,451
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1 Basis of Presentation
The unaudited condensed Consolidated Financial Statements as of January 28,
1995, 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 29, 1994 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/A for the year ended October 29,
1994.
The Registrant has classified its debt to institutional lenders as of January
28, 1995 and October 29, 1994 according to the payment schedules in the
original loan agreements. While the Registrant was in default of these
agreements, it concluded a refinancing on February 15, 1995 and repaid those
lenders.
These results are not necessarily indicative of the results for the entire
fiscal year.
Note 2 Adoption of Accounting Standards
Employee Benefit plans
Effective October 30, 1994, the Registrant adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits." SFAS No. 112 requires the accrual for postemployment benefits
provided to former or inactive employees. The effect of this change resulted
in a pre tax charge of $236,000 and an after tax charge of $175,000 or $.16
per share. The registrant previously charged these amounts to expense on a
cash basis.
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. 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 January
28, 1995 was not material.
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". The effect of adopting SFAS No. 109 on the Registrant's
financial statements was immaterial.
Part I - Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition and Liquidity
On February 15, 1995, the Company entered into a Revolving Credit and Term
Loan Agreement ("the Agreement") with a group of banks providing for a total
commitment of $38,000,000, secured by substantially all of the Company's
assets. The proceeds from this financing were utilized to repay the Company's
Senior notes and bank debt which at January 28, 1995 totaled $34,300,000 and
to provide for a working capital facility to fund future operations and
capital expenditures, as necessary. The Company was in default under the old
loan agreements since July 31, 1993.
The Agreement consist of three Term Loans (A, B and C) and a Revolving Note.
Term Loan A totals $2,000,000, bears interest at 2% over prime, and is due
within six months from closing. Term Loan B totals $8,500,000, bears interest
at 2% over prime and is due within 1 year from closing. Term Loans A an B are
expected to be repaid from asset sales or equipment refinancing. Term Loan C
totals $12,500,000 and bears interest at 2% over prime until Term Loans A and
B are repaid, at which time interest is reduced to 1.25% over prime. Term
Loan C is payable in quarterly installments commencing March 31, 1996 thru
December 31, 1998. The Revolving Note, with a total availability of
$15,000,000 bears interest at 1.5% over prime until Term Loans A and B are
repaid, at which time interest is reduced to 1.25% over prime. A commitment
fee of 1/2 of 1 percent is charged on the unused portion of the Revolving
Note.
Pursuant to the provisions of the existing loan agreements, the Company is
required to pay a special premium totaling $1,100,000. Additionally, the
Company is required to pay the new lenders a facility fee of $1,000,000 and
an annual administrative fee of $150,000. The Company expects to record a
write off of approximately $1,600,000 in the second quarter of 1995 on the
early extinguishment of debt.
The 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, and maintenance of (iii) fixed charge
coverage and total liabilities to net worth ratios. The Company expects to be
in compliance with such covenants through fiscal 1995.
Working Capital
At January 28, 1995, the Registrant had a working capital deficiency of
$8,818 compared to a deficiency of $8,674 at October 29, 1994 and a
deficiency of $30,644 at January 29, 1994 which was the result of reflecting
$28,379 of debt in default as a current liability.
Working capital ratios were as follows:
January 28, 1995 0.8 to 1.0
October 29, 1994 0.8 to 1.0
January 29, 1994 0.6 to 1.0
Cash flows (in millions) were as follows:
1/28/95 1/29/94
Operating activities... $ 0.9 $ 3.9
Investing activities... (0.1) (3.2)
Financing activities... (1.3) (1.0)
Totals $(0.5) $(1.0)
At January 28, 1995, the Registrant had no available lines of credit, which
condition changed on February 15, 1995 as a result of the refinancing noted
above. No cash dividends have been paid on the Registrant's common stock
since 1979. The Registrant is prohibited from payment of same under its loan
agreement and the terms of the Preferred Stock held by Wakefern Food
Corporation. No cash dividends have been paid on the Preferred Stock which
was issued in February 1993.
Fiscal 1995 capital expenditures are projected at $7.6 million with
depreciation of approximately $8.7 million.
Results of Operations (13 weeks ended January 28, 1995 compared to 13
weeks ended January 29, 1994)
Sales:
Same store sales from the twenty stores in operation in both periods
decreased 2.17% in the current year period versus the prior year period.
Gross Profit:
Gross profit on sales increased slightly to 24.8% of sales compared to 24.6%
in the prior year period. Patronage dividends, applied as a reduction of the
cost of merchandise sold, were $1.2 million compared to $.9 million in the
prior year period.
Operating Expenses:
Store operating, general and administrative expenses as a percent of sales
were 23.9% versus 23.7% in the prior year period. Although the reduction in
sales in the current period contributed to the increase in percent, in
dollars the current period reflects a reduction of $1.1 million.
Interest Expense:
Interest expense rose slightly to $1.319 million from $1.247 million while
interest income was $21,000 compared to $11,000 for the prior period. The
prime interest rate was 8 1/2% during the current period versus 6% in the
prior year period which contributed to the increase in interest expense.
Income Taxes:
An income tax rate of 26% has been used in the current period based on the
full fiscal 1994 year rate while a rate of 40% was used in the prior year
period.
Net Income:
Net income before the cumulative effect of a change in accounting in the
current period was $7,000 and after the cumulative effect of a change in
accounting was a loss of $168,000, compared to $40,000 in the prior year
period. (Loss)earnings per share (after preferred stock dividends of $34,000
in both periods) was $(.02) compared to $0.1 in the prior year period. Total
shares outstanding were 1,118,150 in both periods.
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 28, 1995.
<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 14, 1995 /S/ MICHAEL SHAPIRO
(Signature)
Michael Shapiro
Senior Vice President
Chief Financial Officer
Date: March 14, 1995 /S/ JOSEPH C. TROILO
(Signature)
Joseph C. Troilo
Senior Vice President
Principal Accounting Officer
<PAGE>
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