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 August 3, 2002
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 September 6, 2002
------------- -----------------
Common Stock 986,367
shares
$1 par value
1
FOODARAMA SUPERMARKETS, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Consolidated Condensed Balance Sheets
August 3, 2002 and November 3, 2001
Unaudited Consolidated Condensed Statements
of Operations for the thirteen weeks ended
August 3, 2002 and July 28, 2001
Unaudited Consolidated Condensed Statements
of Operations for the thirty nine weeks
ended August 3, 2002 and July 28, 2001
Unaudited Consolidated Condensed Statements
of Cash Flows for the thirty nine weeks
ended August 3, 2002 and July 28, 2001
Notes to the Unaudited Consolidated
Condensed 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" which may be
referred to as we, us or our) 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 including increased costs from the Company's
cooperative supplier, Wakefern Food Corporation ("Wakefern"), 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
PART I FINANCIAL INFORMATION
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(in thousands)
August 3, November 3,
2002 2001
(Unaudited) (1)
------------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 5,089 $ 4,219
Merchandise inventories 42,929 42,827
Receivables and other current assets 8,062 5,466
Related party receivables - Wakefern 6,569 8,970
Related party receivables - other 12 7
--------- --------
62,661 61,489
--------- --------
Property and equipment:
Land 308 308
Buildings and improvements 1,220 1,220
Leasehold improvements 41,236 39,589
Equipment 112,546 103,394
Property under capital leases 69,867 59,909
Construction in progress 4,561 6,787
---------- ---------
229,738 211,207
Less accumulated depreciation and
amortization 108,680 98,218
--------- ---------
121,058 112,989
--------- ---------
Other assets:
Investments in related parties 12,758 12,758
Intangibles 2,873 3,136
Other 2,887 2,550
Related party receivables - Wakefern 1,702 1,593
Related party receivables - other - 11
--------- --------
20,220 20,048
--------- --------
$ 203,939 $194,526
========= ========
(continued)
(1) Derived from the Audited Consolidated Financial Statements for the year
ended November 3, 2001.
See accompanying notes to the consolidated condensed financial statements.
3
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(in thousands - except share data)
August 3, November 3,
2002 2001
(Unaudited) (1)
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 5,994 $ 5,390
Current portion of long-term debt,
related party 831 902
Current portion of obligations under
capital leases 1,098 899
Current income taxes payable 392 704
Deferred income tax liability 1,079 1,079
Accounts payable:
Related party - Wakefern 35,442 35,988
Others 8,201 8,780
Accrued expenses 12,684 14,654
---------- ----------
65,721 68,396
---------- ----------
Long-term debt 24,179 19,294
Long-term debt, related party 704 1,310
Obligations under capital leases 63,912 54,949
Deferred income taxes 1,563 1,201
Other long-term liabilities 10,949 10,883
---------- ----------
101,307 87,637
---------- ----------
Shareholders' equity:
Common stock, $1.00 par; authorized
2,500,000 shares; issued 1,621,767 shares;
outstanding 985,867 shares August 3, 2002;
1,088,220 shares November 3, 2001 1,622 1,622
Capital in excess of par 4,168 4,168
Deferred compensation (1,417) (1,696)
Retained earnings 46,669 44,016
Accumulated other comprehensive income:
Minimum pension liability (1,920) (1,920)
---------- ----------
49,122 46,190
Less 635,900 shares August 3, 2002;
533,547 shares November 3, 2001 held in
treasury, at cost 12,211 7,697
---------- ----------
36,911 38,493
---------- ----------
$ 203,939 $ 194,526
========== ==========
(1) Derived from the Audited Consolidated Financial Statements for the year
ended November 3, 2001.
See accompanying notes to the consolidated condensed financial statements.
4
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Operations - Unaudited
(in thousands - except share data)
13 Weeks Ended
-----------------------------
August 3, July 28,
2002 2001
----------- -----------
Sales $ 241,544 $ 233,052
Cost of goods sold 179,255 174,696
----------- -----------
Gross profit 62,289 58,356
Selling, general and
administrative expenses 58,256 54,863
----------- -----------
Earnings from operations 4,033 3,493
----------- -----------
Other (expense) income:
Interest expense (2,051) (1,825)
Interest income 23 72
----------- -----------
(2,028) (1,753)
Earnings before income tax provision 2,005 1,740
Income tax provision (802) (696)
----------- -----------
Net income $ 1,203 $ 1,044
=========== ===========
Per share information:
Net income per common share:
Basic $ 1.22 $ .94
=========== ===========
Diluted $ 1.15 $ .94
=========== ===========
Weighted average shares outstanding:
Basic 985,728 1,115,413
=========== ===========
Diluted 1,042,571 1,115,413
=========== ===========
Dividends per common share -0- -0-
=========== ===========
See accompanying notes to the consolidated condensed financial statements.
5
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Operations - Unaudited
(in thousands - except share data)
39 Weeks Ended
-----------------------------
August 3, July 28,
2002 2001
----------- -----------
Sales $ 728,807 $ 695,572
Cost of goods sold 544,243 523,762
----------- -----------
Gross profit 184,564 171,810
Selling, general and
administrative expenses 174,197 160,927
----------- -----------
Earnings from operations 10,367 10,883
----------- -----------
Other (expense) income:
Interest expense (6,038) (5,815)
Interest income 94 225
----------- -----------
(5,944) (5,590)
Earnings before income tax provision 4,423 5,293
Income tax provision (1,770) (2,118)
----------- -----------
Net income $ 2,653 $ 3,175
=========== ===========
Per share information:
Net income per common share:
Basic $ 2.56 $ 2.84
=========== ===========
Diluted $ 2.43 $ 2.84
=========== ===========
Weighted average shares outstanding:
Basic 1,036,917 1,116,664
=========== ===========
Diluted 1,092,395 1,116,664
=========== ===========
Dividends per common share -0- -0-
=========== ===========
See accompanying notes to the consolidated condensed financial statements.
6
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows - Unaudited
(in thousands)
39 Weeks Ended
--------------
August 3, 2002 July 28, 2001
-------------- -------------
Cash flows from operating activities:
Net income $ 2,653 $ 3,175
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 10,496 9,498
Amortization, intangibles 263 263
Amortization, deferred financing costs 243 191
Amortization, deferred rent escalation (173) (45)
Provision to value inventory at LIFO 340 600
Deferred income taxes 362 171
Amortization of deferred compensation 235 -
(Increase) decrease in
Merchandise inventories (442) 1,049
Receivables and other current assets (2,596) (1,572)
Prepaid income taxes - 398
Other assets (551) 484
Related party receivables-Wakefern 2,292 2,012
Increase (decrease) in
Accounts payable (1,125) 2,721
Income taxes payable (312) 918
Other liabilities (1,687) 1,398
--------- --------
9,998 21,261
--------- --------
Cash flows from investing activities:
Cash paid for the purchase of property
and equipment (6,252) (7,072)
Cash paid for construction in progress (2,359) (1,199)
Decrease in related party
receivables-other 6 129
--------- ---------
(8,605) (8,142)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of debt 9,597 -
Principal payments under long-term debt (4,108) (7,024)
Principal payments under capital
lease obligations (796) (481)
Principal payments under long-term debt,
related party (677) (655)
Deferred financing costs (25) (66)
Proceeds from exercise of stock options 10 -
Repurchase of common stock (4,524) (393)
--------- ---------
(523) (8,619)
--------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS 870 4,500
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,219 3,977
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,089 $ 8,477
========= =========
See accompanying notes to the consolidated condensed financial statements.
7
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
Note 1 Basis of Presentation
The unaudited Consolidated Condensed Financial Statements as of, or for the
period ended August 3, 2002 have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and rule 10-01. The balance sheet at November 3, 2001
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/A for the year ended November 3, 2001.
At both August 3, 2002 and November 3, 2001, approximately 82% of merchandise
inventories are valued by the Last-In-First-Out ("LIFO") method of inventory
valuation while the balance of inventories are valued by the First-In-First-Out
("FIFO") method. If the FIFO method had been used for the entire inventory,
inventories would have been $1,963,000 and $1,623,000 higher than reported at
August 3, 2002 and November 3, 2001, respectively.
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.
Note 2 Adoption of New Accounting Standards
Accounting for the Impairment or Disposal of Long-Lived Assets
Effective November 4, 2001 the Company adopted Statement of Financial Accounting
Standards No. 144 ("SFAS 144"), "Accounting for the Impairment or Disposal of
Long-Lived Assets". SFAS 144 requires, among other things, the application of
one accounting model for long-lived assets that are impaired or to be disposed
of by sale. There was no significant impact from the adoption of SFAS 144 in the
quarter or nine months ended August 3, 2002.
Accounting for Goodwill and Other Intangible Assets
In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 142 ("SFAS 142"), "Accounting for Goodwill
and Other Intangible Assets" which is effective for fiscal years beginning after
December 15, 2001. SFAS 142 discontinues the practice of amortizing goodwill and
indefinite lived intangible assets and initiates an annual review for
impairment. Impairment would be examined more frequently if certain indicators
are encountered. Intangible assets with a determinable useful life will continue
to be amortized over that period. The Company is currently assessing, but has
not yet determined, the impact of SFAS 142 on its financial position and results
of operations. The Company plans to adopt SFAS 142 in the first quarter of
fiscal year 2003.
8
Part I - Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition and Liquidity
The Company is a party to a Second Amended and Restated Revolving Credit and
Term Loan Agreement (the "Credit Agreement") with three financial institutions.
The Credit Agreement is secured by substantially all of the Company's assets and
provided for a total commitment of up to $58,000,000, including a revolving
credit facility of up to $28,000,000, a term loan in the amount of $10,000,000
and a capital expenditures facility of up to $20,000,000.
The Company's compliance with the major financial covenants under the Credit
Agreement was as follows as of August 3, 2002:
Actual
Financial Credit (As defined in the
Covenant Agreement Credit Agreement)
--------- --------- ------------------
Adjusted EBITDA (1) Greater than $16,000,000 $ 21,188,000
Leverage Ratio (1) Less than 3.2 to 1.00 1.50 to 1.00
Debt Service Coverage
Ratio Greater than 1.00 to 1.00 1.69 to 1.00
Adjusted Capex (2) Less than $5,600,000 (3)(5) $ 3,569,000 (4)
Store Project Capex Less than $4,500,000 (3)(5) $ 5,042,000 (4)
(1) Excludes obligations under capitalized leases, interest expense and
depreciation expense attributable to capitalized leases and changes in
the LIFO reserve.
(2) Adjusted Capex is all capital expenditures other than New/Replacement
Store Project Capex.
(3) Represents limitations on capital expenditures for fiscal 2002.
(4) Represents capital expenditures for the 39 weeks ended August 3, 2002.
(5) Does not include amounts not used in the prior fiscal year and available
to be carried forward to fiscal 2002: $710,000 for adjusted Capex and
$7,993,000 for Store Project Capex. After giving effect to the carry
forward of available amounts, the Company's actual (as defined in the
Credit Agreement) Store Project Capital Expenditures are less than the
fiscal 2002 limit for such expenditures set forth in the Credit
Agreement.
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 Credit Agreement does not permit the payment of any cash
dividends on our Common Stock.
The Company and its lenders are presently negotiating increases in the amount of
the credit facility and the restatement of the Credit Agreement (the "Restated
Credit Agreement"). Under the proposed Restated Credit Agreement, the total
commitment would increase to $80,000,000, including a revolving credit facility
(the "Revolving Note")
9
of up to $35,000,000, a term loan (the "Term Loan") in the amount of $25,000,000
and a capital expenditures facility (the "Capex Facility") of up to $20,000,000.
The outstanding balances on the existing term loan ($5,000,000) and the existing
capital expenditures facility ($10,652,662) will be incorporated into the Term
Loan. The Restated Credit Agreement will mature December 31, 2007. The Term Loan
is to be paid in quarterly principal payments of $1,250,000 commencing January
1, 2003. The Capex Facility provides for the payment of interest only on its
outstanding balance, an unused facility fee of .75% until December 31, 2004 and
fixed quarterly principal payments thereafter based on a seven year amortization
schedule with a balloon payment due December 31, 2007. Interest rates float on
the revolving credit facility, Term Loan and Capex Facility at the Base Rate
(defined below) plus 1.50%, 2.00% and 2.00%, respectively. 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 has the ability to use the London
Interbank Offered Rate ("LIBOR") plus 3.25% to determine the interest rate on
the revolving credit facility and LIBOR plus 3.75% to determine the interest
rate on the Term Loan and Capex Facility. Other terms and conditions under the
Restated Credit Agreement, including (a) the amount of permitted additional new
indebtedness; (b) the amount of permitted capitalized lease obligations; (c) the
amount of capital expenditures; (d) covenant objectives and (e) certain
definitions, have been modified to reflect the additional term of the Restated
Credit Agreement and the Company's financial and operational plan. Additionally,
the Company is allowed to repurchase its Common Stock for an aggregate purchase
price not to exceed $1,000,000, subject to certain conditions and limitations,
under the Restated Credit Agreement. The Company has reached an agreement in
principle with its lenders on the material terms of the new credit facility and
expects to close the Restated Credit Agreement before the end of September 2002;
however, the proposed new credit facility will not be available to the Company
unless and until definitive loan documents are executed and delivered.
Working Capital
At August 3, 2002, the Company had a working capital deficiency of $3,060,000
compared to deficiencies of $6,907,000 at November 3, 2001 and $4,516,000 at
July 28, 2001.
The improvement in working capital from November 3, 2001 was primarily due to
the reduction of accounts payable and accrued expenses which increased the
Revolving Note which is classified as long-term borrowings. The collection of
$2,401,000 of current related party receivables was offset by an increase in
receivables and other current assets of $2,596,000. This increase results
primarily from construction advances due from landlords.
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:
August 3, 2002 .95 to 1.0
November 3, 2001 .90 to 1.0
July 28, 2001 .93 to 1.0
10
Cash flows (in millions) were as follows:
Thirty Nine Weeks Ended
8/3/02 7/28/01
Operating activities... $10.0 $21.3
Investing activities... ( 8.6) ( 8.2)
Financing activities... ( .5) ( 8.6)
------ ------
Totals $ .9 $ 4.5
====== ======
The Company had $12,977,000 of available credit at August 3, 2002, under its
revolving credit facility. The amount available under the Credit Agreement will
adequately meet our operating needs, scheduled capital expenditures and debt
service for fiscal 2002. The Company has capital commitments (net of landlord
contributions) of $20,154,000 for equipment and $11,821,000 for leasehold
improvements related to four stores which are under construction. Two of these
are replacement stores, one is a new store and one is an expansion and
remodeling of an existing store. All of these projects are in central New
Jersey, will be World Class stores and are expected to open in the first and
second quarters of fiscal 2003. The Company expects that the Restated Credit
Agreement which it is currently negotiating will provide the funding for these
commitments.
For the thirty nine weeks ended August 3, 2002 depreciation was $10,496,000
while capital expenditures totaled $8,611,000, compared to $9,498,000 and
$8,271,000, respectively, in the prior year period. The increase in depreciation
was the result of the purchase of equipment and leasehold improvements for the
three locations remodeled in fiscal 2001, the new location opened in Middletown,
New Jersey in November 2001, as well as one additional capitalized real estate
lease.
During the nine months ended August 3, 2002, the Company repurchased a total of
102,853 shares of Common Stock under the stock repurchase program announced on
June 8, 2001. 101,553 of these shares were purchased in privately negotiated
transactions and the remaining 1,300 shares were acquired in open market
transactions. 6,377 of these shares were owned by a member of the family of
Joseph J. Saker, the Company's Chairman, and were purchased for an average of
$39.52 per share. $4,523,670, or an average of $43.98 per share, was expended
for the purchase of the 102,853 shares. Since the announcement of the stock
repurchase program, the Company has repurchased 131,923 shares for $5,591,597 or
an average of $42.39 per share.
Results of Operations (13 weeks ended August 3, 2002 compared to 13 weeks
ended July 28, 2001)
Sales:
Same store sales from the twenty one stores in operation in both periods
increased 1.2%. This increase in comparable store sales was partially offset by
decreased sales in certain of the Company's stores affected by competitive store
openings. Sales for the current quarter totaled $241.5 million as compared to
$233.1 million of sales in the prior year period. Sales for the current quarter
included the operations of a new location in Middletown, New Jersey opened
November 14, 2001, which replaced an older, smaller location in the same
shopping center.
11
Gross Profit:
Gross profit as a percent of sales increased to 25.8% of sales compared to 25.0%
in the prior year period. Patronage dividends, applied as a reduction of the
cost of merchandise sold, were $1.7 million in the current period versus $1.6
million in the prior year period. Gross profit as a percentage of sales
increased primarily as a result of improved product mix, a reduction in product
loss through improved shrink control and the contribution of the new Middletown
location. These increases were partially offset by programs implemented in
certain of the Company's stores to address competitive store openings.
Operating Expenses:
Selling, general and administrative expenses as a percent of sales were 24.1%
versus 23.5% in the prior year period. The increase in selling, general and
administrative expenses, as a percent of sales, was due to increases in certain
expense categories as a percentage of sales. As a percentage of sales, labor and
related fringe benefits increased .33%, depreciation, including depreciation on
capitalized leases, increased .08% and administrative expense increased .19%.
These increases were partially offset by a decrease in supply costs of .07%. The
increase in labor and related fringe benefits was the result of additional
personnel for the new Middletown store, increased sales in service intensive
departments and contractual increases in fringe benefits. The increase in
administrative expense was primarily due to increases in fringe benefit costs.
Interest Expense:
Interest expense increased to $2,051,000 from $1,825,000 while interest income
was $23,000 compared to $72,000 for the prior year period. The increase in
interest expense for the current year period was due to an increase in the
average outstanding debt, including increased capitalized lease obligations,
partially offset by a decrease in the average interest rate paid on debt.
Income Taxes:
An income tax rate of 40% has been used in both the current and prior year
periods based on the expected effective tax rates.
Net Income:
Net income was $1,203,000 in the current year period as compared to $1,044,000
in the prior year period. Earnings before interest, taxes, depreciation and
amortization ("EBITDA") for the thirteen weeks ended August 3, 2002 were
$7,790,000 as compared to $6,963,000 in the prior year period. Net income per
common share on a diluted basis was $1.15 in the current period compared to $.94
in the prior year period. Per share calculations are based on a weighted average
basis of 1,042,571 shares outstanding in the current year period and 1,115,413
shares outstanding in the prior year period.
12
Results of Operations (39 weeks ended August 3, 2002 compared to 39
weeks ended July 28, 2001)
Sales:
Same store sales from the twenty one stores in operation in both periods
increased 2.5%. This increase in comparable store sales was partially offset by
decreased sales in certain of the Company's stores affected by competitive store
openings.
Sales for the stores in operation for the current thirty nine week period
totaled $728.8 million as compared to $695.6 million of sales from the stores
operated in the prior year period. Sales for the current thirty nine week period
included the operations of one new location opened in Middletown, New Jersey in
November 2001 which replaced an older, smaller store in the same shopping
center.
Gross profit:
Gross profit as a percent of sales increased to 25.3% of sales compared to 24.7%
in the prior year period. Patronage dividends, applied as a reduction of the
cost of merchandise sold, were $5.0 million compared to $4.6 million in the
prior year period. Gross profit as a percentage of sales increased primarily as
a result of improved product mix, the contribution of the new location and a
reduction in product loss through improved shrink control. These increases were
offset in part by programs implemented in certain of the Company's stores to
address competitive store openings.
Operating Expenses:
Selling, general and administrative expenses as a percent of sales were 23.9%
versus 23.1% in the prior year period. The increase in selling, general and
administrative expense, as a percent of sales, was primarily due to increases in
certain expense categories as a percentage of sales. As a percentage of sales,
labor and related fringe benefits increased .67%, depreciation, including
depreciation on capitalized leases, increased .08% and administrative expense
increased .14%. These increases were partially offset by decreases in occupancy
expense of .12%. The increase in labor and related fringe benefits was the
result of additional personnel for the new Middletown store, increased sales in
service intensive departments and contractual increases in fringe benefits. The
increase in administrative expense was primarily due to increases in fringe
benefit costs.
Interest Expense:
Interest expense increased to $6,038,000 from $5,815,000 while interest income
was $94,000 compared to $225,000 for the prior year period. The increase in
interest expense for the current year period was due to an increase in average
outstanding debt, including increased capitalized lease obligations, partially
offset by a decrease in the average interest rate paid on debt.
Income Taxes:
An income tax rate of 40% has been used in both the current and prior year
periods based on the expected effective tax rates.
13
Net Income:
Net income was $2,653,000 in the current year period. This compares to
$3,175,000 in the prior year period. Earnings before interest, taxes,
depreciation and amortization ("EBITDA") for the current period were $21,196,000
as compared to $20,790,000 in the prior year period. Net income per common share
on a diluted basis was $2.43 in the current period compared to $2.84 in the
prior year period. Per share calculations are based on a weighted average basis
of 1,092,395 shares outstanding in the current year period and 1,116,664 shares
outstanding in the prior year period.
14
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit (99.1) - Certification of Chief Executive Officer
Exhibit (99.2) - Certification of Chief Financial Officer
(b) Reports on Form 8-K
May 17, 2002 - Foodarama Supermarkets, Inc. issued a press
release stating that, in a separate press release,
Wakefern reported that it had entered into an agreement
with Big V Supermarkets, Inc. ("Big V") and its creditors
to amend the terms under which Wakefern will purchase Big
V. A press release dated May 7, 2002 was filed as an
exhibit.
July 30, 2002 - Foodarama Supermarkets, Inc. issued a
press release stating that, in a separate press release,
Wakefern reported that it had closed on its purchase of
Big V on July 12, 2002. A press release dated July 26,
2002 was filed as an exhibit.
15
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 17, 2002 /S/ MICHAEL SHAPIRO
---------------------------
(Signature)
Michael Shapiro
Senior Vice President
Chief Financial Officer
Date: September 17, 2002 /S/ THOMAS H. FLYNN
---------------------------
(Signature)
Thomas H. Flynn
Director of Accounting
Principal Accounting Officer
16
Exhibit 99.1
CERTIFICATION
I, Joseph J. Saker, Sr., certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarterly
period ended August 3, 2002 of Foodarama Supermarkets, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Registrant as of, and for, the periods presented in
this quarterly report.
Date: September 17, 2002
/S/ JOSEPH J. SAKER, SR.
------------------------------------
(Signature)
Joseph J. Saker, Sr.
Chairman and Chief Executive Officer
17
Exhibit 99.2
CERTIFICATION
I, Michael Shapiro, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarterly
period ended August 3, 2002 of Foodarama Supermarkets, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Registrant as of, and for, the periods presented in
this quarterly report.
Date: September 17, 2002
/S/ MICHAEL SHAPIRO
-------------------------------
(Signature)
Michael Shapiro
Senior Vice President and Chief
Financial Officer
18