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 January 29, 2000
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 #732-462-4700
(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 13 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 3,2000
------------ -------------
Common Stock 1,117,290 shares
$1 par value
<PAGE>
FOODARAMA SUPERMARKETS, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Consolidated Balance Sheets
January 29, 2000 and October 30, 1999
Unaudited Consolidated Statements of
Operations for the thirteen weeks
ended January 29, 2000 and January
30, 1999
Unaudited Consolidated Statements of
Cash Flows for the thirteen weeks
ended January 29, 2000 and January
30, 1999
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
Disclosure Concerning Forward-Looking Statements
All statements, other than statements of historical fact, included in this Form
10-Q, including without limitation the statements under "Management's Discussion
and Analysis of Financial Condition and Results of Operations", are, or may be
deemed to be, "forward- looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such
forward-looking statements involve assumptions, known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of Foodarama Supermarkets, Inc. (the "Company") to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements contained in this Form 10-Q. Such
potential risks and uncertainties, include without limitation, competitive
pressures from other supermarket operators and warehouse club stores, economic
conditions in the Company's primary markets, consumer spending patterns,
availability of capital, cost of labor, cost of goods sold, and other risk
factors detailed herein and in other of the Company's Securities and Exchange
Commission filings. The forward-looking statements are made as of the date of
this Form 10-Q and the Company 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.
2
<PAGE>
PART I FINANCIAL INFORMATION
FOODARAMA SUPERMARKETS, INC AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
January 29, October 30,
2000 1999
(Unaudited) (1)
ASSETS
Current assets:
Cash and cash equivalents $ 7,082 $ 4,094
Merchandise inventories 40,314 38,113
Receivables and other current assets 4,276 4,496
Related party receivables - Wakefern 4,416 8,000
Related party receivables - other 22 25
-------- -------
56,110 54,728
-------- -------
Property and equipment:
Land 308 308
Buildings and improvements 1,220 1,220
Leasehold improvements 34,979 35,032
Equipment 81,747 80,991
Property under capital leases 38,218 38,218
Construction in progress 8,672 2,481
-------- -------
165,144 158,250
Less accumulated depreciation and
amortization 78,919 76,227
------- -------
86,225 82,023
------- -------
Other assets:
Investments in related parties 11,053 10,992
Intangibles 3,751 3,839
Other 2,685 2,872
Related party receivables - Wakefern 1,592 1,555
Related party receivables - other 172 177
------- -------
19,253 19,435
------- -------
$161,588 $156,186
======== ========
(continued)
(1) Derived from the Audited Consolidated Financial Statements for the year
ended October 30, 1999. See accompanying notes to consolidated financial
statements.
3
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands except share data)
January 29, October 30,
2000 1999
(Unaudited) (1)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 4,254 $ 2,605
Current portion of long-term debt,
related party 523 503
Current portion of obligations under
capital leases 505 492
Current income taxes payable 181 457
Deferred income tax liability 1,541 1,541
Accounts payable:
Related party-Wakefern 36,109 29,699
Others 9,443 7,115
Accrued expenses 10,197 9,809
--------- ---------
62,753 52,221
---------- ---------
Long-term debt 17,379 23,126
Long-term debt, related party 1,365 1,450
Obligations under capital leases 34,896 35,028
Deferred income taxes 2,546 2,732
Other long-term liabilities 6,725 6,589
---------- ---------
62,911 68,925
---------- ---------
Shareholders' equity:
Common stock, $1.00 par; authorized
2,500,000 shares; issued 1,621,767
shares; outstanding 1,117,290 shares 1,622 1,622
Capital in excess of par 2,351 2,351
Retained earnings 38,580 37,696
---------- ---------
42,553 41,669
Less 504,477 shares held
in treasury, at cost 6,629 6,629
---------- ---------
35,924 35,040
---------- ---------
$ 161,588 $ 156,186
========== =========
(1) Derived from the Audited Consolidated Financial Statements for the year
ended October 30, 1999.
See accompanying notes to consolidated financial statements.
4
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations - Unaudited
(in thousands - except share data)
13 Weeks Ended
January 29, January 30,
2000 1999
------------- --------
Sales $ 216,222 $ 203,607
Cost of merchandise sold 160,907 150,730
---------- ---------
Gross profit 55,315 52,877
Operating, general and
administrative expenses 52,546 50,719
----------- ---------
Income from operations 2,769 2,158
----------- ---------
Other (expense) income:
Interest expense (1,374) (1,396)
Interest income 78 53
----------- ---------
(1,296) (1,343)
Earnings before income tax provision 1,473 815
Income tax provision (589) (280)
---------- ----------
Net income $ 884 $ 535
=========== ---------
Per share information:
Net income per common share, basic
and diluted $ .79 $ .48
========== =========
Weighted average number of common
shares outstanding 1,117,290 1,117,290
========== =========
Dividends per common share -0- -0-
========== =======
See accompanying notes to consolidated financial statements.
5
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows - Unaudited
(in thousands)
13 Weeks Ended
January 29, January 30,
2000 1999
--------------- --------
Cash flows from operating activities:
Net income $ 884 $ 535
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 2,692 2,713
Amortization, intangibles 88 181
Amortization, deferred financing costs 71 136
Amortization, deferred rent escalation 21 ( 172)
Deferred income taxes ( 186) 84
(Increase) decrease in
Merchandise inventories ( 2,201) (2,249)
Receivables and other current assets 220 ( 445)
Prepaid income taxes - 81
Other assets 1,046 34
Related party receivables-Wakefern 3,547 2,911
Increase (decrease) in
Accounts payable 8,738 1,732
Income taxes payable ( 276)
Other liabilities 503 764
---------- -------
15,147 6,305
Cash flows from investing activities:
Cash paid for the purchase of property
and equipment ( 756) (1,945)
Cash paid for construction in progress ( 6,191) -
Decrease in related party
receivables-other 8 32
---------- -------
( 6,939) (1,913)
---------- --------
Cash flows from financing activities:
Proceeds from issuance of debt 11,400 -
Principal payments under long-term debt (15,498) (3,374)
Principal payments under capital
lease obligations ( 119) ( 125)
Principal payments under long-term
debt, related party ( 126) ( 69)
Deferred financing costs ( 877) -
--------- -------
( 5,220) (3,568)
-------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS 2,988 824
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,094 3,905
--------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 7,082 $ 4,729
========- =======
See accompanying notes to consolidated financial statements.
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1 Basis of Presentation
The unaudited Consolidated Financial Statements as of or for the period ending
January 29, 2000, 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, 1999
has been taken from the audited financial statements at that date. In the
opinion of the management of the Company, all adjustments (consisting only of
normal recurring accruals) which are considered 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 Company's annual report
on Form 10-K for the year ended October 30, 1999.
Certain reclassifications have been made to prior year financial statements in
order to conform to the current year presentation.
These results are not necessarily indicative of the results for the entire
fiscal year.
Part I - Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition and Liquidity
The Company was a party to a Loan Agreement (the "Credit Agreement") with one
financial institution which would have terminated on February 15, 2000. On
January 7, 2000 the Credit Agreement was assigned to a lending group and amended
and restated (the "Amended Credit Agreement"). The Amended Credit Agreement is
secured by substantially all of the Company's assets and provides for a total
commitment of up to $55,000,000 including a revolving credit facility ("the
Revolving Note") of up to $25,000,000, a term loan (the "Term Loan") of
$10,000,000 and a capital expenditures facility (the "Capex Facility") of up to
$20,000,000. 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 earnings before
interest, taxes, depreciation and amortization less rent payments for
capitalized lease locations ("Adjusted EBITDA") and (iii) require debt service
coverage and leverage ratios to be maintained.
The Amended Credit Agreement (a) increases the total amount available to the
Company under the Revolving Note from $20,000,000 to $25,000,000, subject to the
borrowing base limitation of 65% (previously 60%) of eligible inventory; (b)
increases the Term Loan facility by $9,500,000; (c) eliminates the Stock
Redemption Loan ($1,020,000) and the Expansion Loan ($1,175,000) which were part
of the Credit Agreement; (d) extends the term of the Amended Credit Agreement to
December 31, 2004; (e) provides for repayment of the Term Loan in quarterly
installments of $500,000 each, commencing April 1, 2000 and ending on December
31, 2004; (f) provides for the payment of interest only on the outstanding
balance of the Capex Facility, and an unused facility fee of .50% for the first
two years of the term of this loan and fixed quarterly principal payments
thereafter based on a seven year amortization schedule with a balloon payment
7
<PAGE>
due December 31, 2004; (g) provides for three additional financial covenants;
(h) amends certain definitions; (i) increases the interest rate on the Revolving
Note by .25% to the Base Rate (defined below) plus .50%; (j) changes the Term
Loan to a floating rate loan at the Base Rate plus .75%; (k) provides for the
Capex Facility to be a floating rate loan at the Base Rate plus .75%; and (l)
provides for certain additional borrowing limitations over the term of the
Amended Credit Agreement. Other terms and conditions of the Credit Agreement
previously reported on by the Company have not been modified. The Base Rate is
the rate which is the greater of (i) the bank prime loan rate as published by
the Board of Governors of the Federal Reserve System, or (ii) the Federal Funds
rate, plus .50%. Additionally, the Company may elect to use the London Interbank
Offered Rate ("LIBOR") plus 2.50% to determine the interest rate on the
revolving credit facility and LIBOR plus 2.75% to determine the interest rate on
the Term Loan and Capex Facility.
As of January 29, 2000 the Company owed $10,000,000 on the Term Loan and had not
borrowed any funds under the Capex Facility.
The Company's compliance with the major financial covenants under the Amended
Credit Agreement was as follows as of January 29, 2000:
Amended Actual
Financial Credit (As defined in the
Covenant Agreement Amended Credit Agreement)
- --------- --------- -------------------------
Adjusted EBITDA Greater than $13,000,000 $ 16,891,000
Leverage Ratio Less than 3.0 to 1.00 1.39 to 1.00
Debit Service Coverage
Ratio Greater than 1.10 to 1.00 1.55 to 1.00
Adjusted Capex Less than $6,750,000 (1) $ 756,000 (2)
Store Project Capex Less than $14,800,000 (1) $ 6,191,000 (2)
(1) Represents limitations on capital expenditures for fiscal 2000. Adjusted
Capex is all Capex other than New/Replacement Store Project Capex.
(2) Represents capital expenditures for the quarter ended January 29, 2000.
No cash dividends have been paid on the Common Stock since 1979, and the Company
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 our Common Stock.
Year 2000
The Company and Wakefern did not experience any material adverse effect on store
or warehouse operations as the result of the impact of year 2000 ("Y2K") issues
on our computer based systems and applications. In preparation for the new
millennium all critical systems were made Y2K compliant. The costs related to
the Y2K project were included in the normal operating results and capital
expenditures of both the Company's and Wakefern's Information Technology
Departments and did not have any material effect on the Company's operating
results. The Company does not currently expect any Y2K problems to be
encountered for the remainder of the year 2000 that would have a material effect
on the operating results of the Company.
8
<PAGE>
Working Capital
At January 29, 2000, the Company had a working capital deficiency of $6,643,000
compared to working capital of $2,507,000 at October 30, 1999 and a working
capital deficiency of $4,775,000 at January 30, 1999.
The decline in working capital from October 30, 1999 was primarily due to the
collection of $4,537,000 of current related party receivables which were used to
reduce the Revolving Note which is classified as long-term borrowings and the
increase in accounts payable of $8,738,000 which relates primarily to inventory,
capital expenditures and pre-opening costs for the new Branchburg and Wall
Township, New Jersey stores, which, when paid, will increase the Revolving Note.
The Company 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:
January 29, 2000 .89 to 1.0
October 30, 1999 1.05 to 1.0
January 30, 1999 .92 to 1.0
Cash flows (in millions) were as follows:
Thirteen Weeks Ended
1/29/00 1/30/99
Operating activities... $15.1 $ 6.3
Investing activities... (6.9) (1.9)
Financing activities... (5.2) (3.6)
------ -----
Totals $ 3.0 $ 0.8
====== =====
The Company had $18,189,000 of available credit, at January 29, 2000, under its
revolving credit facility. On January 7, 2000 the Company completed the
renegotiation of the terms and conditions of the Credit Agreement. The Amended
Credit Agreement will adequately meet our operating needs, scheduled capital
expenditures and debt service for fiscal 2000 and 2001.
For the 13 weeks ended January 29, 2000 depreciation was $2,692,000 while
capital expenditures totaled $756,000, compared to $2,713,000 and $1,945,000
respectively in the prior year period.
Results of Operations (13 weeks ended January 29, 2000
compared to 13 weeks ended January 30, 1999)
Sales:
Sales for the current period totaled $216.2 million as compared to $203.6
million in the prior year period. Same store sales from the twenty one stores in
operation in both periods increased 6.2%. This increase is attributable, in
part, to increased sales in stores opened or expanded in the last four years.
9
<PAGE>
Gross Profit:
Gross profit as a percent of sales decreased to 25.6% of sales compared to 26.0%
in the prior year period. Patronage dividends, applied as a reduction of the
cost of merchandise sold, were $1.4 million in both the current and prior year
periods. Gross profit as a percentage of sales declined primarily as a result of
decreased patronage dividends as a percentage of sales and the completion of
Wakefern incentive programs for the new locations opened in fiscal 1998,
partially offset by reduced Wakefern assessment as a percentage of sales.
Operating Expenses:
Operating, general and administrative expenses as a percent of sales were 24.3%
versus 24.9% in the prior year period. The decrease in operating, general and
administrative expenses as a percent of sales was primarily due to decreases in
certain expense categories as a percentage of sales. As a percentage of sales,
selling expense decreased .44%, labor and related fringe benefits decreased
.10%, occupancy decreased .14% and depreciation decreased .08%. These decreases
were partially offset by an increase in pre-opening costs of .17%. Pre-opening
costs were for the new Branchburg, New Jersey store opened in February 2000.
Interest Expense:
Interest expense decreased to $1,374,000 from $1,396,000, while interest income
was $78,000 compared to $53,000 for the prior period. The decrease in interest
expense for the current year period was due to a decrease in average outstanding
debt, including capitalized lease obligations, since January 30, 1999 partially
offset by an increase in the average interest rate paid on debt.
Income Taxes:
An income tax rate of 40% has been used in the current year period compared to a
rate of 34% in the prior year period based on the expected effective tax rates.
Net Income:
Net income was $884,000 in the current year period compared to $535,000 in the
prior year period. Earnings before interest, taxes, depreciation and
amortization ("EBITDA") for the current period were $5,641,000 as compared to
$5,016,000 in the prior year period. Net income per common share, both basic and
diluted, was $.79 in the current period compared to $.48 in the prior year
period. Per share calculations are based on 1,117,290 shares outstanding in both
periods.
10
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit (27) - Financial Data Schedule
Exhibit (99)- Restatement of Foodarama Supermarkets, Inc.
Supplemental Executive Retirement Plan-dated
as of January 1, 1998
(b) No reports on Form 8-K were required to be filed for the 13 weeks
ended January 29, 2000
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
FOODARAMA SUPERMARKETS, INC.
----------------------------
(Registrant)
Date: March 9, 2000 /S/ MICHAEL SHAPIRO
----------------------
(Signature)
Michael Shapiro
Senior Vice President
Chief Financial Officer
Date: March 9, 2000 /S/ THOMAS H. FLYNN
---------------------
(Signature)
Thomas H. Flynn
Principal Accounting Officer
12
<PAGE>
- - oOo - -
EXHIBIT 99
FOODARAMA SUPERMARKETS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
- - oOo - -
Restatement Date: January 1, 1998
<PAGE>
Table of Contents
Section Title Page
Article I Name, Effective Date and Purpose 1
Article II Definitions 2
Article III Eligibility and Participation 6
Article IV Determination of Benefits 7
Article V Distributions 10
Article VI Pre-Retirement Death Benefits 11
Article VII Administration of the Plan 12
Article VIII Amendment and Termination 15
Article IX Miscellaneous 16
Appendix A 20
Appendix B 21
<PAGE>
Article I
Name, Effective Date and Purpose
Section 1.01 -- Name
The name of the Plan is "Foodarama Supermarkets, Inc.
Supplemental Executive Retirement Plan," hereinafter referred to as the "Plan".
Section 1.02 -- Effective Date
The effective date of the Plan is January 17, 1989 and restated
effective January 1, 1998. Section 1.03 -- Purpose
The purpose of the Plan is to provide a select group of management
employees the incentive to remain in employment until age sixty-five (65) by
providing additional benefit security to the employee through the provision of
supplemental retirement benefits, supplemental pre-retirement death benefits,
and supplemental disability benefits.
<PAGE>
Article II
Definitions
Section 2.01 -- Actuarial Equivalent
For Participants and beneficiaries shall be determined using the
1983 Group Annuity Mortality Table blended fifty percent (50%) males and fifty
percent (50%) females, assuming a rate of investment return of eight percent
(8%) compounded annually. Section 2.02 -- Beneficiary
Shall mean the individual designated by the Participant to receive
any Pre-retirement Death Benefits or to be a contingent beneficiary for
Retirement Benefits under the Plan. Section 2.03 -- Board
Shall mean the Board of Directors of the Employer.
Section 2.04-- Cause
Shall mean that the Participant has engaged in any act of willful
misconduct during the course of his employment with the Employer in
the reasonable determination of the Committee, including, but not
limited to, having: (a) Committed an intentional act of fraud,
embezzlement, or theft in connection with Participant's duties or in
the course of his employment with Employer;
Caused intentional wrongful damage to property of Employer in the course of his
employment with Employer; or Engaged in any gross misconduct in the course of
his employment with Employer.
(Provided , that with respect to any of the acts described in the
preceding subparagraphs (a) through (c), such act shall have been materially
harmful to Employer). For purposes of this Plan, an act or omission on the part
of the Participant shall be deemed "intentional" if it was not due primarily to
an error in judgement or negligence and was done by a Participant not in good
faith and without reasonable belief that the act or omission was in the best
interests of Employer. Section 2.05 -- Change of Control
Shall mean the purchase or acquisition by any person, entity or
group of persons, within the meaning of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934 ("Act"), or any comparable successor provisions, of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Act) of more than 50% of the outstanding shares of common stock or the combined
voting power of Employer's then outstanding voting securities entitled to vote
generally, in or at the election of the directors or the approval by the
stockholders of the Employer of a reorganization, merger, or consolidation, in
each case, with respect to which persons who were stockholders of Employer
immediately prior to such reorganization, merger or consolidation do not,
immediately thereafter, own more than 50 percent of the combined voting power
entitled to vote generally in the election of directors of the reorganized,
merged or consolidated Employer's then outstanding securities, or a liquidation
or dissolution of Employer or of the sale of all or substantially all of
Employer's assets. Section 2.06 -- Code
Shall mean the Internal Revenue Code of 1986 as amended from time
to time.
Section 2.07-- Committee
Shall mean the Committee established under the provisions of Article
VII.
<PAGE>
Section 2.08 -- Disabled
Shall mean a physical or mental condition which renders the
Participant incapable of continuing his usual and customary duties with the
Employer and can be expected to result in death or be of a long, continued and
indefinite duration. Disability shall be determined in the sole discretion of
the Committee. Section 2.09 -- Employee
Shall mean any full-time person who is employed by the Employer.
Section 2.10-- Employer
- ------------ --------
Shall mean Foodarama Supermarkets, Inc.
Section 2.11 -- 401(k) Plan
Shall mean the Foodarama Supermarkets, Inc. 401(k) Savings Plan.
Section 2.12 -- Final Average Earnings
Shall mean the Participant's five (5) year average annual W-2 pay in
addition to elected deferrals under the 401(k) Plan during any sixty (60)
consecutive months prior to his retirement which produce the highest average.
Section 2.13 -- Late Retirement Date
Shall mean the first day of any month following Normal Retirement
Date.
Section 2.14 -- Normal Retirement Date
Shall mean the first day of the calendar month coincident or next
following the Participant's Normal Retirement Age.
Section 2.15 -- Normal Retirement Age
Shall mean the attainment of age sixty-five (65).
<PAGE>
Section 2.16 -- Participant
Shall mean any Employee who has completed five (5) or more years of
employment with the Employer and has been designated as participating in the
Plan by the Board or their designee and who has a benefit that is payable under
this Plan.
Section 2.17 -- Participation Agreement
Shall mean the Agreement under which the Employer designates the
Participant's annual retirement income as a percentage of
compensation and the Participant designates his beneficiary.
Section 2.18-- Pension Plan
Shall mean the Foodarama Supermarkets, Inc. Pension Plan.
Section 2.19 -- Plan
Shall mean the Foodarama Supermarkets, Inc. Supplemental Executive
Retirement Plan as set forth herein.
Section 2.20 -- Plan Administrator
Shall mean the Committee under the Plan.
Section 2.21 -- Plan Year
Shall mean a year which commences on the first date of January and
ends on the last day of December.
Section 2.22-- Vested
Shall mean that portion of the Participant's benefit which is
non-forfeitable.
<PAGE>
Article III
Eligibility and Participation
Section 3.01 -- Eligibility
An Employee of the Employer who:
(a) is a member of a select group of management or is a highly
compensated Employee; and
(b) is specifically designated and notified by the Committee
of his eligibility to join the Plan
shall become a Participant in the Plan as of the first day of the Plan Year in
which notification occurs subject to meeting the requirements of Section 3.02
of the Plan.
Section 3.02-- Notification
The Committee shall notify in writing each Employee whom it has
determined is eligible to join the Plan. Upon completion of a Participation
Agreement by the Employee, the Employee's name shall be added to Appendix A as a
Participant of the Plan.
<PAGE>
Article IV
Determination of Benefits
Section 4.01 -- Amount of Supplemental Retirement Benefit
The amount of benefit that a Participant is entitled to when he retires on
his Normal or Late Retirement date shall be equal to a - (b + c + d) plus (e)
where: (a) Annual benefit percentage from the Participant's Participation
Agreement times the Participant's Final Average Earnings; (b) Annual benefit
from the Pension Plan payable in the form of a one hundred and twenty (120)
month certain and life annuity.
(c)Annual Employer provided benefit from the 401(k) plan. The annual
Employer provided benefit from the 401(k) Plan shall be the Participant's
account balance attributable to the Employer profit sharing and matching
contributions converted to a one hundred and twenty (120) month certain and life
annuity in accordance with Appendix B. In determining the Employer matching
contributions, for purposes of this Plan it is assumed the Employee elects to
defer an amount sufficient to receive the maximum Employer matching contribution
defined by the 401(k) Plan; and The annual benefit derived from the
Participant's Social Security, plus:
In addition to the monthly benefit determined under (a) through
(d) the Participant will have a medical spending account available to continue
medical benefit coverage with the Company or to be used for reimbursement of
reasonable and customary expenses for medical, dental, pharmaceutical, or
optical expenses. Reimbursement requires submission of receipts of amounts paid.
The amount of the account will accrue on a monthly basis equal to fifty percent
(50%) of the cost of maintaining benefit coverage based on the programs of
benefits provided by the Company for its active full-time salaried employees.
The account will be set up each year on a calendar year for expenses incurred
during the calendar year. Any unused account balance will be set to zero at
year-end and will not carry over to the next year. All reimbursement requests
must be submitted by April 30 following the close of the calendar year the
expense was incurred to be eligible for reimbursement. Section 4.02 --
Disability Benefits
Should the Participant become Disabled prior to attainment of Normal
Retirement Age, the Participant shall be entitled to receive an immediate
Disability Benefit based on Final Average Earnings at the date the Participant
became Disabled. The Disability Benefit shall be the annual benefit percentage
determined pursuant to the Participant's Participation Agreement times his Final
Average Earnings offset by payments from any Employer plan of long-term
disability and Social Security payments. Upon the attainment of Normal
Retirement Age, the Participant's annual benefit shall be calculated pursuant to
Section 4.01 of the Plan utilizing Final Average Earnings at the time the
Participant became disabled.
Section 4.03 -- Vesting
A Participant shall vest in his benefit upon the attainment of the
earlier of becoming Disabled, in the event of death, Change of Control, or upon
attaining Normal Retirement Age. Any Participant who has terminated employment
prior to these events will not be vested and therefore have no rights to
benefits under this Plan. Section 4.04 -- Loss of Benefits
A Participant shall forfeit any and all benefits, including those
Vested under the Plan if:
(a) The Participant is terminated for Cause.
(b) The Participant uses trade secrets in competition with the
Employer. In the event the Employer determines that a Participant
has used or is using trade secrets or other confidential, secret or
proprietary information of the Employer to compete with the
Employer, the Employer shall discontinue all benefit payments to or
on behalf of the Participant effective thirty (30) days after the
Employer gives the Participant written notice of its determination.
Such notice shall be sent registered mail, return receipt requested,
and shall provide the manner in which the Participant may respond to
the Employer's determination. If, within one (1) year of the date of
such notice, the Employer in its sole discretion determines that the
Participant has ceased to so use such information and that future
use of such information is not likely to cause substantial detriment
to the Employer, the Employer, in its sole discretion, may resume
benefit payments, but any discontinued or missed payments shall be
forfeited.
<PAGE>
Article V
Distributions
Section 5.01 -- Payment of Benefits
A Participant shall be entitled to receive a distribution of his
benefit following termination of employment on the first day of the
month coincident with or following:
(a) Determination of entitlement for disability benefits
In the event of the Participant's death
The later of the Participant's
Normal Retirement Date; or
Late Retirement Date
Section 5.02 -- Form of Distribution
The Participant shall receive his benefit in the form of a life
annuity with one hundred and twenty (120) monthly payments guaranteed.
Should the Participant die prior to receiving one hundred and twenty (120)
monthly payments, the unpaid installments shall be paid to the Participant's
Beneficiary. If there is no designated Beneficiary, the unpaid installments
shall be paid to the Participant's estate in a lump sum using Actuarial
Equivalencies for lump sum payments.
<PAGE>
Article VI
Pre-Retirement Death Benefits
Section 6.01 -- Pre-Retirement Death Benefit
If the Participant dies prior to commencement of benefits in the
Plan, then the Participant's Beneficiary shall be entitled to a pre-retirement
death benefit. The amount of benefit that the Beneficiary is entitled to upon
the death of the Participant shall be equal to fifty percent (50%) of the
benefit payable under Section 4.01 that the Participant would have received if
the Participant had retired on the day immediately before his death. For
purposes of calculating the pre-retirement death benefit, the offsets in (b),
(c) and (d) in Section 4.01 shall be calculated at the time of the Participant's
death. The Participant's Beneficiary shall continue to receive the benefit
provided in Section 4.01(e) for a period not to exceed one hundred and twenty
(120) months from the date benefit payments commence from this plan. Section
6.02 -- Form and Commencement of Benefit
The Pre-Retirement Death Benefit shall commence on the first day of
the month following the Participant's death. The Pre-Retirement Death Benefit
shall be payable in one hundred and twenty (120) monthly installments. Should
the Participant's Beneficiary die prior to receiving the one hundred and twenty
(120) monthly installments, the unpaid installments shall be paid to a
designated contingent Beneficiary. If there is no designated contingent
Beneficiary, the unpaid installments shall be paid to the Beneficiary's estate
in a lump sum using the Actuarial Equivalencies for lump sum payments.
<PAGE>
Article VII
Administration of the Plan
Section 7.01 -- Appointment of the Committee
The day-to-day administration of the Plan, as provided herein,
including the supervision of the payment of all benefits to retired Participants
and their Beneficiaries, shall be vested in and be the responsibility of the
Committee which shall be the Benefits Committee of the Employer.
Section 7.02 -- Conduct of Committee Business
The Committee shall conduct its business and hold meetings as
determined by it from time to time. A majority of the Committee shall have the
power to act, and the concurrence of any member may be by telephone, telegram or
letter. The Committee may delegate any one of its members to carry out specific
duties and to sign appropriate forms and authorizations. In carrying out its
duties, the Committee may, from time to time, employ an administrative
organization and agents and may delegate to them ministerial and limited
discretionary duties as it sees fit, and may consult with counsel, who may be
counsel to the Employer.
Section 7.03 -- Committee Officers, Subcommittees, and Agents
The Committee shall elect from its members a Chairman and shall
appoint such subcommittees as it shall deem necessary and appropriate, and may
authorize one (1) or more of its members or any agent to execute or deliver any
instrument on its behalf and do any and all other things necessary and proper in
the administration of the Plan.
Section 7.04 -- Expenses of the Committee and Plan Costs
The expenses of administering the Plan, including the printing of
literature and forms related thereto, the disbursement of benefits thereunder,
and the compensation of administrative organizations, agents, actuary, or
counsel shall be paid by the Employer.
Section7.05 -- Records of the Committee
The Committee shall keep a record of all its proceedings, which
shall be open to inspection by the Employer.
Section 7.06-- Committee's Right to Administer and Interpret the Plan
The Committee shall have the absolute power, discretion, and
authority to administer and interpret the Plan and to adopt such rules and
regulations as in the opinion of the Committee are necessary or advisable to
implement, administer, and interpret the Plan, or to transact its business. Such
rules and regulations as adopted by the Committee shall be binding upon any
persons having an interest in or under the Plan.
Section 7.07 -- Claims Procedure
A claim for benefits under the Plan must be made to the Committee in
writing. The Committee shall provide adequate notice in writing to any
Participant, or Beneficiary whose claim for benefits under the Plan has been
denied, setting forth the specific reasons for such denial, written in a manner
calculated to be understood by the Participant, or Beneficiary. If a claim is
denied, in whole or in part, the Committee shall send the claimant a notice
explaining the reasons for claim denial. A claimant whose claim has been denied,
or his authorized representative, may request a review of the denial, but such a
request must be in writing, and must be submitted to the Committee within sixty
(60) days after the claimant's receipt of the notice of denial. The review of a
claim which has been denied shall be made by the Committee within sixty (60)
days of the receipt of the request for review, unless the Committee determines
that special circumstances require additional time, in which case a decision
shall be rendered not later than one hundred twenty (120) days after receipt of
the request for review. The decision on the review shall be in writing and shall
include specific reasons for the decision, written in a manner calculated to be
understood by the claimant, and specific reference to the pertinent Plan
provisions on which the decision is based. The Committee shall have the absolute
authority and discretion to adjudicate claims under this section.
Section 7.08 -- Responsibility and Authority of the Committee
The responsibilities and authority of the Committee shall not exceed
the limitations of this Article VII. The Committee shall direct the Employer, an
insurance company, or the trustees of a rabbi trust to make payments to
Participants or Beneficiaries as provided under the Plan.
Section 7.09 -- Indemnity of the Committee
The Employer shall indemnify and hold harmless the members of the
Committee against any and all claims, loss, damage, expense or liability arising
from any action or failure to act with respect to this Plan, except as limited
by law.
<PAGE>
Article VIII
Amendment and Termination
Section 8.01 -- Amendment
The Employer reserves the right to amend the Plan at any time.
However, no amendment shall reduce the Participant's right to the benefits
defined by their Participation Agreement upon becoming vested as of the
amendment date. Any such amendment shall be made pursuant to a resolution of the
Board.
Section 8.02 -- Termination
The Employer through actions of its Board reserves the right to
terminate the Plan at any time. If the Board has elected to permanently cease
the Plan, the Plan shall be considered a frozen Plan and a distribution shall
not be made to a Participant until the occurrence of an event described in
Section 5.01 of the Plan. If the Pension Plan is terminated, no additional
Participation Agreement shall become part of this Plan. The Plan shall be
treated as a frozen plan unless the Board elects to terminate the Plan. If the
Plan is terminated for whatever reason, the Participant's benefit shall be paid
in a lump sum ninety (90) days after the termination of the Plan. The lump sum
shall be the Actuarial Equivalent of the Participant's Supplemental Retirement
Benefit under the Plan as of the Plan's termination date.
<PAGE>
Article IX
Miscellaneous
Section 9.01 -- Unsecured Creditor
Participants and their Beneficiaries, heirs and successors under
this Plan shall have solely those rights of an unsecured creditor of the
Employer. Any and all assets of the Employer shall not be deemed to be held in
trust for any Participant, their Beneficiaries, heirs and successors, nor shall
any assets be considered security for the performance of obligations of the
Employer and said assets shall at all times remain unpledged, unrestricted
general assets of the Employer. The Employer's obligation under the Plan shall
be an unsecured and unfunded promise to pay benefits at a future date.
Section 9.02 -- Unfunded Plan
This Plan is an unfunded plan maintained to provide retirement
benefits for a select group of management and highly compensated employees. Any
Participant's benefit under the Plan is maintained for recordkeeping purposes
only and is not to be construed as funded. Notwithstanding the unfunded status
of the Plan, the Employer may establish a grantor trust pursuant to Section 677
of the Code to hold assets under the Plan.
Section 9.03 -- Non-Assignability
The Participant and their Beneficiaries, heirs and successors shall
not have any right to commute, sell, pledge, assign, transfer or otherwise
convey the right to receive any payment under this Plan. The right to any
payment of benefits shall be non-assignable and non-transferable. Such right to
payment shall not be subject to legal process or levy of any kind.
Section 9.04 -- Not A Contract of Employment
The terms and conditions of this Plan shall not be deemed to
constitute a contract of employment between the Employer and the Participant.
Moreover, nothing in this Plan shall be deemed to give a Participant the right
to be retained in the service of the Employer or to interfere with the right of
the Employer to discipline or discharge him at any time.
Section 9.05 -- Successor Organizations
The Employer agrees that it will not merge or consolidate with any
other corporation or organization, or permit its business activities to be taken
over by any other organization, unless and until the succeeding or continuing
organization or corporation assumes the rights and obligations under this Plan.
If the successor organization refuses to accept the rights and obligations of
this Plan, all benefits will vest and the Plan shall terminate prior to the
consolidation, merger or business takeover. Benefits shall be calculated and
distributed pursuant to Section 8.02 of the Plan.
Section 9.06 -- Governing Law
Subject to the provisions of the Employer Retirement Income Security
Act of 1974 and to the extent superseded by Federal law, the Plan shall be
construed, administered and enforced under the laws of the State of New Jersey.
Section 9.07-- Binding Agreement
This Plan shall be binding on the parties hereto, their heirs,
executors, administrators, and successors in interest.
Section 9.08 -- Invalidity of Certain Provisions
If any provision of this Plan is held invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provision hereof and
this Plan shall be construed and enforced as if such provision had not been
included.
Section 9.09 -- Masculine, Feminine, Singular and Plural
The masculine shall include the feminine and the singular shall
include the plural and the plural the singular wherever the person or entity or
context shall plainly so require.
Section 9.10-- Withholding Taxes
The Committee shall make any appropriate arrangements to deduct from
all amounts paid under the Plan any taxes required to be withheld by any
government or governmental agency.
Section 9.11 -- Incapacity
In the event that any Participant is unable to care for his affairs
because of illness or accident, any payment due may be paid to the Participant's
spouse, parent, brother, sister or other person deemed by the Committee to have
incurred expenses for the care of such Participant, unless a duly qualified
guardian or other legal representative has been appointed.
Section 9.12 -- Number of Counterparts
This Plan may be executed in any number of counterparts, each of
which when duly executed by the Employer shall be deemed to be an original, but
all of which shall together constitute but one instrument, which may be
evidenced by any counterpart.
<PAGE>
IN WITNESS WHEREOF, This Plan has been adopted this ______________
day of _____________________, 1998.
Attest: FOODARAMA SUPERMARKETS, INC.
By: _________________________ By:_________________________________
----------------------
Title
<PAGE>
APPENDIX A
PLAN PARTICIPANTS
<PAGE>
APPENDIX B
DEFINED CONTRIBUTION PLAN ANNUITY CONVERSION FACTORS
Age Factor Age Factor
45 6.83% 61 8.33%
46 6.89% 62 8.48%
47 6.95% 63 8.63%
48 7.02% 64 8.79%
49 7.09% 65 8.96%
50 7.16% 66 9.14%
51 7.24% 67 9.32%
52 7.32% 68 9.51%
53 7.41% 69 9.70%
54 7.50% 70 8.89%
55 7.60% 71 10.09%
56 7.71% 72 10.30%
57 7.82% 73 10.50%
58 7.94% 74 10.70%
59 8.06% 75 10.90%
60 8.19%
Basis: 1983 Group Annuity Mortality Table (50% male)
Interest = 6%
To convert the balance of employer-provided 401(k) matching and profit sharing
contributions to an annual annuity, payable for the participant's life with 120
payments guaranteed, multiply the balance by these factors. The Supplemental
Executive Retirement Plan benefit must be offset by this annuity.
For example, for each $1,000 in the balance at age 65, reduce the annual
Supplemental Executive Retirement Plan benefit by $89.60.
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<S> <C>
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<FISCAL-YEAR-END> Oct-28-2000
<PERIOD-START> Oct-31-1999
<PERIOD-END> Jan-29-2000
<CASH> 7,082
<SECURITIES> 0
<RECEIVABLES> 9,254
<ALLOWANCES> (540)
<INVENTORY> 40,314
<CURRENT-ASSETS> 56,110
<PP&E> 165,144
<DEPRECIATION> (78,919)
<TOTAL-ASSETS> 161,588
<CURRENT-LIABILITIES> 62,753
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0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 161,588
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<CGS> 160,907
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