SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended Commission file number
October 28, 2000 1-5745
----------------------------------------------------------------------------
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.)
Building 6, Suite 1, 922 Hwy. 33, Freehold, New Jersey 07728
------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (732) 462-4700
--------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
----------------------------------------------------------------
Common Stock American Stock Exchange
Par Value $1.00 per share
Securities registered pursuant to Section 12(g) of the Act:
NONE
---------------------
(Title of Class)
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 such filing
requirements for the past 90 days.
Yes x No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of voting stock held by non-affiliates of the
Registrant was approximately $7,395,000. Computation is based on the closing
sales price of $16.25 per share of such stock on the American Stock Exchange on
January 12, 2001.
As of January 12, 2001, the number of shares outstanding of Registrant's
Common Stock was 1,117,290.
DOCUMENTS INCORPORATED BY REFERENCE
Information contained in the 2001 definitive Proxy Statement to be filed
with the Commission and to be delivered to security holders in connection with
the Annual Meeting is incorporated by reference into this Form 10-K at Part III.
PART I
Disclosure Concerning Forward-Looking Statements
All statements, other than statements of historical fact, included in this Form
10-K, including without limitation the statements under "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Business",
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-K. 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-K 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.
Item 1. Business
General
Foodarama Supermarkets, Inc., a New Jersey corporation formed in 1958, operates
a chain of twenty-two supermarkets located in Central New Jersey, as well as two
liquor stores and two garden centers, all licensed as ShopRite. We also operate
a central food processing facility to supply our stores with meat, various
prepared salads, prepared foods and other items, and a central baking facility
which supplies our stores with bakery products. The Company is a member of
Wakefern , the largest retailer owned food cooperative warehouse in the United
States and owner of the ShopRite name.
The Company has incorporated the concept of "World Class" supermarkets into its
operations. "World Class" supermarkets are significantly larger than
conventional supermarkets and feature fresh fish-on-ice, prime meat service
butcher departments, in-store bakeries, international foods including Chinese,
sushi and kosher sections, meals to go, salad bars, snack bars, bulk foods and
pharmacies. We have also introduced many of these features into our
conventionally sized supermarkets through extensive renovations; these stores
are considered "Mini-World Class" supermarkets. Currently, seventeen of our
stores are "World Class", three are "Mini-World Class" and two are conventional
supermarkets.
2
The following table sets forth certain data relating to the Company's
business for the periods indicated:
Fiscal Year Ended
October 28, October 30, October 31, November 1, November 2,
2000 1999 1998 1997 1996
Average annual sales per store
(in millions)* .................... $ 41.4 $ 38.1 $ 35.8 $ 31.8 $ 31.8
Same store sales increase
from prior year ................... 3.99% 8.01% 4.79% 1.67% 2.63%
Total store area in square feet
(in thousands) .................... 1,294 1,195 1,195 1,080 1,080
Total store selling area in square
feet (in thousands) ............... 966 895 895 808 807
Average total square feet per store
(in thousands) .................... 59 57 57 54 54
Average square feet of selling area
per store (in thousands) .......... 44 43 43 40 40
Annual sales per square foot of
selling area* ..................... $ 944 $ 893 $ 832 $ 788 $ 789
Number of stores:
Stores remodeled (over $500,000) 2 1 1 0 1
New stores opened ............... 1 0 1 0 1
Stores replaced/expanded ........ 1 0 2 0 1
Stores closed/divested .......... 1 0 1 0 0
Number of stores by size
(total store area):
30,000 to 39,000 sq. ft ......... 3 4 4 4 4
40,000 to 49,000 sq. ft ......... 3 3 3 4 4
Greater than 50,000 sq. ft....... 16 14 14 12 12
Total stores open at period end ... 22 21 21 20 20
* Sales for stores open less than 52 weeks have been annualized.
** Calculated on a 53 week basis. A like 52 week comparison would be $31.2
million in average sales per store and $781 in annual sales per square foot of
selling area.
3
Store Expansion and Remodeling
We believe that significant capital investment is critical to our operating
strategy and we are continuing our program to upgrade our existing stores,
replace outdated locations and open new "World Class" supermarkets within our
core market area of Central New Jersey.
In fiscal year 2000, one replacement and one new store were opened in Wall
Township and Branchburg, New Jersey, respectively. Over the next three years the
Company plans to open four replacement and two new stores and expand three
existing locations. The expansion of one location is underway and construction
has started on two replacement stores. All of these stores are in Central New
Jersey and will be World Class operations.
Technology
Automation and computerization are important to the Company's operations and
competitive position. All stores utilize IBM 4690 software for the scanning
checkout systems. In fiscal 2000 point of sale ("POS") hardware was replaced in
one half of our stores. This POS upgrade brought all of our stores to a state of
the art level with increased processing speed and enhanced marketing
capabilities. These systems improve pricing accuracy, enhance productivity and
reduce checkout time for customers. Additionally, all stores have IBM RS/6000
processors, which were replaced with the current version of this equipment in
1999, and satellite communications. The use of these systems allows the Company
to offer its customers debit and credit card payment options as well as
participation in Price Plus, ShopRite's preferred customer program, and the
ShopRite co-branded credit card. By presenting the scannable Price Plus card or
the ShopRite co-branded card, customers can be given electronic discounts,
receive credit for the value of ShopRite in-ad Clip Less coupons and cash
personal checks. Also, customers receive a 1% future rebate when paying with the
ShopRite credit card. Additionally, Wakefern is presently testing an on-line
shopping and pick up service.
We are also using other in store computer systems. Computer generated ordering
is installed in all stores. This system is designed to reduce inventory levels
and out of stock positions, enhance shelf space utilization and reduce labor
costs. In all stores, meat, seafood and delicatessen prices are maintained on
department computers for automatic weighing and pricing. Additionally, all
stores have computerized time and attendance systems which are used for, among
other things, automated labor scheduling, and most stores have computerized
energy management systems. We also utilize a direct store delivery receiving and
pricing system for most items not purchased through Wakefern in order to provide
cost and retail price control over these products, and computerized pharmacy
systems which provide customer profiles, retail price control and third-party
billing. A frame relay communications network is now being used for high speed
transmission and collection of data. This system replaces slower telephone
lines. The increased speed improves our ability to access, review for accuracy
and analyze data. The Company has also installed computer based training systems
in all stores. The system is presently being used to train all new checkout and
appetizing department personnel and will be used in the future to train
4
employees in other store level positions.
In addition, all field merchandisers and operations supervisors are
equipped with laptop personal computers. This provides field personnel with
current labor and product information to facilitate making accurate and timely
decisions. Communication among the Company's stores, our executive offices and
Wakefern has been improved with the installation of Lotus Notes(R).
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.
Industry Segment and Principal Products
The Company is engaged in one industry segment. For the last three fiscal years,
our sales were divided among the categories listed below:
Fiscal Year Ended
Product Categories 10/28/00 10/30/99 10/31/98
Groceries 39.3% 39.9% 40.0%
Dairy & Frozen 16.5 16.7 16.5
Meats, Seafood & Poultry 10.5 10.4 10.9
Non-Foods 10.4 10.6 10.1
Produce 8.6 8.3 8.5
Appetizers & Prepared Foods 6.4 6.2 6.0
Pharmacy 4.5 4.2 4.0
Bakery 2.0 1.9 2.1
Liquor, Floral & Garden Centers 1.8 1.8 1.9
----------------------------
100.0% 100.0% 100.0%
Gross profit derived by the Company from each product category is not
necessarily consistent with the percentage of total sales represented by such
product category.
Wakefern Food Corporation
The Company owns a 12.3% interest in Wakefern, a New Jersey corporation
organized in 1946, which provides purchasing, warehousing and distribution
services on a cooperative basis to its shareholder members, including the
Company, who are operators of ShopRite or alternate format supermarkets. As
required by the Wakefern By-Laws, repayment of the Company's obligations to
Wakefern is personally guaranteed by Joseph J. Saker and Richard J. Saker. These
5
personal guarantees are required of any 5% shareholder of the Company who is
active in the operation of the Company. Wakefern and its shareholder members
operate approximately 200 supermarkets of which Wakefern owns and operates 17
locations. Products bearing the ShopRite label accounted for approximately 16%
of total sales for the fiscal year ended October 28, 2000. Wakefern maintains
warehouses in Elizabeth and South Brunswick, New Jersey which handle a full line
of groceries, meats, frozen foods, produce, bakery, dairy and delicatessen
products and health and beauty aids, as well as a number of non-food items.
Wakefern also operates a grocery and perishable products warehouse in Wallkill,
New York.
Wakefern's professional advertising staff and its advertising agency develop and
place most of the Company's advertising on television, radio and in major
newspapers. We are charged for these services based on various formulas which
account for the estimated proportional benefits we receive. In addition,
Wakefern charges us for, and provides the Company with, product and support
services in numerous administrative functions. These include insurance,
supplies, technical support for communications and electronic payment systems,
equipment purchasing and the coordination of coupon processing. Additionally, we
sublease two supermarkets from Wakefern. See Item 2. Properties.
Wakefern distributes, as a patronage dividend to each of its members, a share of
its net earnings in proportion to the dollar volume of business transacted by
each member with Wakefern during each fiscal year.
Although Wakefern has a significant in house professional staff, it operates as
a member cooperative and senior executives of the Company spend a substantial
amount of their time working on Wakefern committees overseeing and directing
Wakefern purchasing, merchandising and various other programs.
Wakefern licenses the ShopRite name to its shareholder members and provides a
substantial and extensive merchandising program for the ShopRite label. Except
for the license to use the name "ShopRite", we do not believe that the ownership
of or rights in patents, trademarks, licenses, franchises and concessions is
material to our business. The locations at which we may open new supermarkets
under the name ShopRite are subject to the approval of Wakefern's Site
Development Committee. Under circumstances specified in its By-Laws, Wakefern
may refuse to sell merchandise to, and may repurchase the Wakefern stock of, any
shareholder member. Such circumstances include certain unapproved transfers by a
shareholder member of its supermarket business or its capital stock in Wakefern,
unapproved acquisition by a shareholder member of certain supermarket or grocery
wholesale supply businesses, the conduct of a business in a manner contrary to
the policies of Wakefern, the material breach of any provision of Wakefern
By-Laws or any agreement with Wakefern or a determination by Wakefern that the
continued supplying of merchandise or services to such shareholder member would
adversely affect Wakefern.
Wakefern requires each shareholder to invest in Wakefern's capital stock to a
maximum of $550,000 for each store operated by such shareholder member. The
precise amount of the investment is computed according to a formula based on the
volume of each store's purchases from Wakefern.
6
Under its By-Laws, all bills for merchandise and other indebtedness are due and
payable to Wakefern weekly and, if these bills are not paid in full, an
additional 1% service charge is due on the unpaid portion. Wakefern requires its
shareholder members to pledge their Wakefern stock as collateral for payment of
their obligations to Wakefern. The Company's investment in Wakefern was
$11,805,000 and $10,163,000 as of October 28, 2000 and October 30, 1999,
respectively. We also have an investment in another company affiliated with
Wakefern which was $953,000 and $829,000 as of October 28, 2000 and October 30,
1999, respectively. See Note 4 of Notes to Consolidated Financial Statements.
Since September 18, 1987, the Company has had an agreement, amended in 1992,
with Wakefern and all other shareholders of Wakefern, which provides for certain
commitments by, and restrictions on, all shareholders of Wakefern. Under the
agreement, each shareholder, including the Company, agreed to purchase at least
85% of its merchandise in certain defined product categories from Wakefern. The
Company fulfilled this obligation during the 52 week period ended October 28,
2000. If any shareholder fails to meet these purchase requirements, it must make
payments to Wakefern (the "Compensatory Payments") based on a formula designed
to compensate Wakefern for the profit lost by it by virtue of its lost warehouse
volume. Similar payments are due if Wakefern loses volume by reason of the sale
of one or more of a shareholder's stores, any shareholder's merger with another
entity or the transfer of a controlling interest in the shareholder. Subject to
a right of first refusal granted to Wakefern, sales of certain under facilitated
stores are permitted free of the restrictions of the agreement. Also, the
restrictions of the agreement do not apply if volume lost by a shareholder by
the sale of a store is made up by such shareholder by increased volume of new or
existing stores and, in any event, the Compensatory Payments otherwise required
to be made by the shareholder to Wakefern are not required if the sale is made
to Wakefern, another shareholder of Wakefern or to a purchaser which is neither
an owner or operator of a chain of 25 or more supermarkets in the United States,
excluding any ShopRite supermarkets in any area in which Wakefern operates. The
agreement extends for an indefinite term and is subject to termination ten years
after the approval by a vote of 75% of the outstanding voting stock of Wakefern.
The loss of, or material change in, our relationship with Wakefern (neither of
which is considered likely) could have a significant adverse impact on the
Company's business. The failure of Wakefern to fulfill its obligations or
another member's insolvency or withdrawal from Wakefern could result in
additional costs to the remaining members. On November 22, 2000 Big V
Supermarkets, Inc. ("Big V"), a member of Wakefern, similar in sales volume to
the Company, filed for reorganization under chapter 11 of the U.S. Bankruptcy
Code and indicated its intent to depart from Wakefern. If Big V does in fact
withdraw from Wakefern the loss of volume to the cooperative could result in
increased costs to the Company. The Wakefern supply agreement requires Big V to
give notice of its decision to leave the cooperative and to pay a substantial
fee to Wakefern to make up for the loss of volume to the cooperative. Wakefern
has stated that it intends to take all appropriate actions to enforce its rights
if Big V doesn't comply with its obligations.
7
We also purchase products and items sold in our supermarkets from a variety of
sources other than Wakefern. Neither the Company nor, to the best of our
knowledge, Wakefern has experienced or anticipates experiencing any unique
material difficulties in procuring products and items in adequate quantities.
Competition
The supermarket business is highly competitive. The Company competes directly
with a number of national and regional chains, including A&P, Pathmark, Wegmans,
Acme, Stop & Shop and Foodtown, as well as various local chains and numerous
single-unit stores. We also compete with warehouse club stores which charge a
membership fee, are non-unionized and operate larger units. Additional
competition comes from drug stores, discount general merchandise stores, fast
food chains and convenience stores. See Management's Discussion and
Analysis-Results of Operations.
Many of the Company's competitors have greater financial resources and sales. As
most of our competitors offer substantially the same type of products,
competition is based primarily upon price, and particularly in the case of meat,
produce, bakery, delicatessen, and prepared foods, on quality. Competition is
also based on service, the location and appearance of stores and on promotion
and advertising. The Company believes that its membership in Wakefern and the
ShopRite brand name allow it to maintain a low-price image while providing
quality products and the availability of a wide variety of merchandise including
numerous private label products under the ShopRite brand name. We also provide
clean, well maintained stores, courteous and quick service to the customer and
flexibility in tailoring the products offered in each store to the demographics
of the communities we service. The supermarket business is characterized by
narrow profit margins, and accordingly, our viability depends primarily on our
ability to maintain a relatively greater sales volume and more efficient
operations than our competitors.
Many changes are presently taking place in our marketplace. Pathmark, one of our
principal competitors, has recently completed a reorganization, exiting Chapter
11 in September 2000. This restructuring of Pathmark is reported to have
eliminated almost one billion dollars of debt which was converted to common
stock. Edwards, another formidable competitor, has changed its name and format
to Stop & Shop, an affiliated company. Grand Union has filed for bankruptcy
under Chapter 11 and announced that it has sold almost all of its stores. Many
of the Grand Union locations in our trading area will operate as Stop & Shop and
Pathmark. The impact of these changes in our already highly competitive
marketplace is not known at this time.
Regulatory and Environmental Matters
Our stores and facilities, in common with those of the industry in general, are
subject to numerous existing and proposed Federal, State and Local regulations
which regulate the discharge of materials into the environment or otherwise
protect the environment, establish occupational safety and health standards and
cover other matters, including the licensing of the Company's pharmacies and two
liquor stores. We believe our operations are in compliance with such existing
regulations and are of the opinion that compliance with the regulations has not
8
had and will not have any material adverse effect on our capital expenditures,
earnings or competitive position.
Employees
As of December 31, 2000, the Company employed approximately 5,500 persons, of
whom approximately 5,000 are covered by collective bargaining agreements. 74% of
the employees are part time and almost all of these employees are covered by the
collective bargaining agreements. Although the Company has historically
maintained favorable relations with its unionized employees, it could be
affected by labor disputes. Most of our competitors are similarly unionized. The
Company is a party to six collective bargaining agreements expiring on various
dates from April 2001 to February 2005. The bargaining agreement with the United
Food and Commercial Workers Local 464-A expired in October 2000 and has been
renegotiated. The new contract expires February 2005.
By virtue of the nature of the Company's supermarket operations, information
concerning backlog, seasonality, major customers, government contracts, research
and development activities and foreign operations and export sales is not
relevant.
Item 2. Properties
The Company's twenty two supermarkets, all of which are leased, range in size
from 31,000 to 101,000 square feet with sales area averaging 75 percent of the
total area. All stores are air-conditioned, have modern fixtures and equipment,
have their own ample parking facilities and are located in suburban areas.
Leases for 19 of the Company's 22 existing supermarkets expire on various dates
from 2001 through 2025. We are leasing one location, which will be replaced, on
a month to month basis. Two of our supermarkets are subleased from Wakefern and
these subleases expire in 2006 and 2008, respectively. Upon expiration of these
subleases, the underlying leases for these supermarkets will be assigned to and
assumed by us if certain conditions, which include the absence of defaults by
the Company in its obligations to Wakefern and our lenders, and the maintenance
of a specified level of net worth, are satisfied. The terms of these leases
expire in 2021 and 2018, respectively. Except for the two subleases with
Wakefern, one lease which expires in 2004 and the one month to month lease, all
leases contain renewal options ranging from 5 to 25 years. Seven leases require,
in addition to a fixed rental, a further rental payment based on a percentage of
the annual sales in excess of a stipulated minimum. The minimum has been
exceeded in two of the seven locations in the last fiscal year. Most leases also
require us to pay for insurance, common area maintenance and real estate taxes.
Four additional leases have been signed for supermarket locations, all of which
will be replacements for existing stores. The terms of these leases are
substantially similar to the terms of the leases for our existing supermarkets.
The Company has experienced delays in the opening of certain new stores because
of extensive governmental approvals required to develop new retail properties in
New Jersey.
9
Also, we are subject to a lease covering our executive and principal
administrative offices containing approximately 18,000 square feet in Howell,
New Jersey. The Company also leases 57,000 square feet of space used for its
bakery operations and storage in Howell, New Jersey, and 50,000 square feet of
space used for storage in Lakewood, New Jersey. The Company owns meat and
prepared foods processing facilities in Linden, New Jersey, which is the only
real property owned by us. In addition, we are a party to an additional ten
leases for locations where we no longer conduct supermarket operations; eight of
these locations have been sublet to non-affiliated persons. In most instances
these stores have been sublet at terms at least substantially equivalent to the
Company's obligations under its prime lease. See Management's Discussion and
Analysis-Financial Condition and Liquidity. See Notes 10 and 13 of Notes to
Consolidated Financial Statements.
Item 3. Legal Proceedings
In the ordinary course of our business, we are party to various legal actions
not covered by insurance. Although a possible range of loss cannot be estimated,
it is the opinion of management, that settlement or resolution of these
proceedings will not, in the aggregate, have a material adverse impact on the
financial condition or results of operations of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
10
Part II
Item 5. Market for Registrant's Common Stock and Security Holder Matters
(a) The Company's Common Stock is traded on the American Stock Exchange.
The following table sets forth the high and low sales prices for the Common
Stock as reported on the American Stock Exchange for the fiscal years ended
October 30, 1999 and October 28, 2000.
Fiscal Quarter Ended High Low
January 30, 1999 32 5/8 31 1/8
May 1, 1999 32 1/4 26 1/2
July 31, 1999 30 3/8 27
October 30, 1999 31 27 1/2
January 29, 2000 28 3/8 19 3/4
April 29, 2000 27 1/4 20
July 29, 2000 28 24
October 28, 2000 24 1/4 17 3/4
(b) The approximate number of record holders of the Company's Common Stock
was 330 as of January 12, 2001.
(c) No dividends have been declared or paid with respect to the Company's
Common Stock since October 1979. We are prohibited from paying dividends on our
Common Stock by the Second Amended and Restated Revolving Credit and Term Loan
Agreement between the Company and three financial institutions. See Management's
Discussion and Analysis- Financial Condition and Liquidity. The Company has no
intention of paying dividends on its Common Stock in the foreseeable future.
Item 6. Selected Financial Data
The selected financial data set forth below is derived from the Company's
consolidated financial statements and should be read in conjunction with the
consolidated financial statements and related notes included elsewhere in this
Annual Report. See Management's Discussion and Analysis-Financial Condition and
Liquidity and Results of Operations.
11
Year Ended
October 28, October 30, October 31, November 1, November 2,
2000 (1) 1999 1998 (2) 1997 1996 (3)
-------------------------------------------------------------------
(Dollars in thousands, except per share amounts)
Income statement
data:
Sales $886,240 $799,693 $697,358 $636,731 $601,143
Net income $ 2,382 $ 1,945 $ 1,780 $ 1,064 $ 1,396
Income per
common share $ 2.13 $ 1.74 $ 1.59 $ .90 $ 1.13
Cash dividends
per common share - - - - -
Balance sheet data (at year end):
Working capital $ (1,215) $ 2,507 $ (2,725) $ 3,532 $ 3,056
Total assets $191,185 $156,186 $149,567 $121,500 $124,181
Long-term debt
(excluding current
portion) $ 82,241 $ 59,604 $ 50,656 $ 35,918 $ 41,243
Common share-
holders' equity $ 37,422 $ 35,040 $ 33,014 $ 31,315 $ 30,315
Book value per
common share $ 33.49 $ 31.36 $ 29.55 $ 28.03 $ 27.11
Tangible book value
per common share $ 30.37 $ 27.93 $ 25.47 $ 23.47 $ 22.22
(1) The Company opened one new and one replacement location in February and
April 2000, respectively. See Management's Discussion and Analysis - Results of
Operations-Sales.
(2) The Company opened one replacement and one new location in February and
August 1998, respectively. See Management's Discussion and Analysis - Results of
Operations - Sales.
(3) 53 week period. The Company opened two new locations in June and July,
1996.
12
Item 7. 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 $55,000,000, including a revolving
credit facility ("the Revolving Note") of up to $25,000,000, a term loan ("the
Term Loan") in the amount of $10,000,000 and a capital expenditures facility
("the Capex Facility") of up to $20,000,000. As of October 28, 2000 the Company
owed $8,500,000 on the Term Loan and $7,757,628 under the Capex Facility. The
Term Loan is to be paid in quarterly payments of $500,000 through December 31,
2004. The revolving credit facility also matures December 31, 2004 and the Capex
Facility provides for the payment of interest only on its outstanding balance,
an unused facility fee of .50% for the first two years of this loan and fixed
quarterly principal payments thereafter based on a seven year amortization
schedule with a balloon payment due December 31, 2004. Interest rates float on
the revolving credit facility, Term Loan and Capex Facility at the Base Rate
(defined below) plus .50%, .75% and .75%, 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 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. The Credit Agreement contains certain
affirmative and negative covenants which, among other matters, will (i) restrict
capital expenditures and the amount of additional indebtedness that the Company
may incur, (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 Company's compliance with the major financial covenants under the Credit
Agreement was as follows as of October 28, 2000:
Actual
Financial Credit (As defined in the
Covenant Agreement Credit Agreement)
--------- --------- ------------------
Adjusted EBITDA Greater than $13,000,000 $ 18,757,000
Leverage Ratio Less than 3.00 to 1.00 1.72 to 1.00
Debit Service Coverage
Ratio Greater than 1.10 to 1.00 1.53 to 1.00
Adjusted Capex (1) Less than $6,750,000 (2) $ 7,446,000 (3)(4)
Store Project Capex Less than $14,800,000 (2) $ 9,304,000 (3)
(1) Adjusted Capex is all capital expenditures other than New/Replacement
Store Project Capex.
(2) Represents limitations on capital expenditures for fiscal 2000.
(3) Represents capital expenditures for fiscal 2000.
(4) Non-compliance with this covenant was waived. In addition, the covenant
limiting additional indebtedness was exceeded by $277,000, which was
related to these capital expenditures. Non-compliance with the
indebtedness covenant was waived.
13
On December 31, 1999 the Company financed the purchase of $1,527,000 of POS
hardware in 17 operating locations. The financing bears interest at 7.60% and is
payable in monthly installments over its three year term.
On March 30, 1999 the Company financed the purchase of $520,000 of computer
equipment for all operating locations. The financing bears interest at 5.79% and
is payable in monthly installments over its three year term.
On April 2, 1998 the Company financed the purchase of $3,000,000 of equipment
for the new store location in East Windsor, New Jersey. The note bears interest
at 7.44% and is payable in monthly installments over its seven year term.
On October 22, 1998 the Company financed the purchase of $4,000,000 of equipment
for the new store location in Bound Brook, New Jersey. The note bears interest
at 7.26% and is payable in monthly installments over its six year term.
On November 14, 1997 the Company borrowed $1,500,000 as part of an amendment to
a Loan Agreement (the "Expansion Loan") to purchase a third building for
$606,000 in the Company's meat and prepared foods processing complex, with the
balance of the proceeds used for the remodeling and refurbishment of the
facility. The note bore interest at 9.18% and was payable in monthly
installments over its seven year term ending 2004 based on a ten year
amortization. The Expansion Loan was repaid in full on January 7, 2000.
No cash dividends have been paid on the Common Stock since 1979, and we have no
present intentions or ability to pay any dividends in the near future on our
Common Stock. The Credit Agreement does not permit the payment of any cash
dividends on the Company's Common Stock.
Working Capital:
At October 28, 2000, the Company had a working capital deficiency of $1,215,000
compared to working capital of $2,507,000 at October 30, 1999 and a deficiency
of $2,725,000 at October 31, 1998. Working capital decreased in fiscal 2000
primarily as the result of the net increase in accounts payable and accrued
expenses of $3,035,000 over the increase in inventory, which relates primarily
to cost of merchandise and operating expenses for the new Branchburg and Wall
Township, New Jersey stores. Additionally, the current portion of long-term
debt, primarily related to equipment financing, increased. Accounts receivable
consist primarily of returned checks due the Company, coupon receivables, third
party pharmacy insurance claims and organization charge accounts. The terms of
most receivables are 30 days or less. The allowance for uncollectible accounts
is large in comparison to the amount of accounts receivable because the
allowance consists primarily of a reserve for returned checks which are not
written off until all collection efforts are exhausted. 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 in fiscal 1999 increased primarily due to increases in inventory
and receivables and decreases in the current portion of long term debt partially
offset by increases in accounts payable. These increases were primarily due to
increased sales and the impact of double coupons.
14
Working capital in fiscal 1998 decreased primarily due to increases in accounts
payable and the current portion of long term debt partially offset by increases
in inventory and receivables. These increases were primarily due to increased
sales from two new locations and the impact of double coupons.
Working capital ratios were as follows:
October 28, 2000 .98 to 1.00
October 30, 1999 1.05 to 1.00
October 31, 1998 .95 to 1.00
Cash flows (in millions) were as follows:
2000 1999 1998
------------------------------
From operations..................... $15.5 $12.2 $14.9
Investing activities................ (15.2) ( 8.2) (17.0)
Financing activities................ ( .4) ( 3.8) 2.3
------ ------ ------
Totals $( .1) $ .2 $ .2
====== ====== ======
Fiscal 2000 capital expenditures totaled $16,750,000 with depreciation of
$11,524,000 compared to $8,781,000 and $10,838,000, respectively for fiscal 1999
and $17,625,000 and $8,273,000, respectively for fiscal 1998. The increase in
depreciation in fiscal 2000 was the result of the purchase of equipment and
leasehold improvements for the two new locations as well as two additional real
estate capitalized leases. The increase in depreciation in fiscal 1999 and 1998
resulted from the opening of two locations in fiscal 1998, a capitalized lease
for one of the two locations and the modification of a capitalized real estate
lease in fiscal 1999 for the expansion of a location. Capital expenditures
increased in fiscal 2000 and fiscal 1998 as the result of the purchase of
equipment and leasehold improvements for the locations opened in each of these
two fiscal years as well as for the expansion of a location in fiscal 1998.
Capital expenditures declined in fiscal 1999 when no new stores were opened.
In fiscal 2000 long-term debt increased $25,499,000 due to the capitalization of
real estate leases for the two locations opened in the current period, the
financing of POS hardware and equipment for two new locations and the
restructuring of borrowings under the Credit Agreement. These increases were
partially offset by cash generated by operations used to pay down a portion of
the balances outstanding under the revolving credit facility and other existing
debt.
In fiscal 1999 long-term debt increased $3,858,000 due to the modification of a
capitalized real estate lease for the expansion of the West Long Branch, New
Jersey store, the financing of computer equipment purchased and financing
obtained under the revolving credit facility. These increases were partially
offset by cash generated by operations used to pay down existing debt.
In fiscal 1998 long-term debt increased $16,246,000 due to the capitalization of
a real estate lease for the Bound Brook, New Jersey store, the financing of
equipment for the two new locations in East Windsor and Bound Brook, New
15
Jersey, the financing of the acquisition and refurbishing of the meat and
prepared foods processing facility in Linden, New Jersey and financing obtained
under the revolving credit facility. These increases were partially offset by
cash generated by operations used to pay down existing debt.
The Company had $18,863,000 of available credit, at October 28, 2000, under its
revolving credit facility. If Net Income and earnings before interest, taxes,
depreciation and amortization ("EBITDA") decrease, as discussed in the Net
Income section of Management's Discussion and Analysis-Results of Operations,
the Company will borrow additional funds under its revolving credit facility.
The Credit Agreement will adequately meet our operating needs, scheduled capital
expenditures and debt service for fiscal 2001.
RESULTS OF OPERATIONS
Sales:
The Company's sales were $886.2 million, $799.7 million and $697.4 million,
respectively in fiscal 2000, 1999 and 1998. This represents an increase of 10.8
percent in 2000 and an increase of 14.7 percent in 1999. These changes in sales
levels were the result of the opening of two new locations in February and April
2000 and the full year of operations in fiscal 1999 of two locations opened in
February and August 1998 and the impact of significantly increased promotional
activities and expenditures in fiscal 1999. The locations opened in April 2000
and February 1998 replaced smaller, older stores. Comparable store sales
increased 4.0% in fiscal 2000 and 8.0% in fiscal 1999. A significant increase in
promotional activities, including a variety of incentive programs and double
couponing, contributed to the increase in fiscal 1999.
Gross Profit:
Gross profit totaled $229.8 million in fiscal 2000 compared to $208.1 million in
fiscal 1999 and $176.7 million in fiscal 1998. Gross profit as a percent of
sales was 25.9% in fiscal 2000, 26.0% in fiscal 1999 and 25.3% in fiscal 1998.
The decrease in fiscal 2000 of gross profit as a percentage of sales was
primarily due to promotional programs for the new locations opened in the
current year period, the completion of Wakefern incentive programs for the new
locations opened in fiscal 1998 and the adoption of the Last-In-First-Out
("LIFO") method of inventory valuation for grocery and nonfood categories,
partially offset by improved product mix, reduced Wakefern assessment as a
percentage of sales and Wakefern incentive programs for the new locations opened
in fiscal 2000. See Note 1 of Notes to Consolidated Financial Statements -
Merchandise Inventories.
In fiscal 1999 gross profit improved as a result of improved product mix,
reduced Wakefern assessment as a percentage of sales and Wakefern incentive
programs for the new locations opened in fiscal 1998.
In fiscal 1998 gross profit percentage was positively affected by the continued
improvement in product mix and Wakefern incentive programs for the new
locations. However, this improvement was offset by price reductions instituted
to combat increased competitive pressure in our marketing area.
16
Patronage dividends applied as a reduction of the cost of merchandise sold were
$9,273,000, $8,202,000 and $7,438,000 for the last three fiscal years. This
translates to 1.05%, 1.03% and 1.07% of sales for the respective periods.
Gross profit dollars and percentage may be impacted by increased costs resulting
from the loss of volume to Wakefern if Big V withdraws from the cooperative.
These increased costs to Wakefern could result in higher assessment and
inventory processing charges to the Company.
Fiscal Years Ended
---------------------------------
10/28/00 10/30/99 10/31/98
(in millions)
Sales........................ $886.2 $799.7 $697.4
Gross profit................. 229.8 208.1 176.7
Gross profit percentage...... 25.9% 26.0% 25.3%
Operating, General and Administrative Expenses:
Fiscal 2000 expenses totaled $219.1 million compared to $199.8 million in fiscal
1999 and $170.6 million in fiscal 1998.
Fiscal Years Ended
---------------------------------
10/28/00 10/30/99 10/31/98
(in millions)
Sales........................ $886.2 $799.7 $697.4
Operating, General and
Administrative Expenses...... 219.1 199.8 170.6
Percent of Sales............. 24.7% 25.0% 24.5%
Operating, general and administrative expenses decreased as a percent of sales
when comparing fiscal 2000 to fiscal 1999. Decreases in selling expense,
occupancy, administration and depreciation were partially offset by increases in
labor and related fringe benefits, supplies, pre-opening costs and reserve for
closed store expense. The decrease in selling expense was the result of
decreased promotional activity, including the modification of a variety of
incentive programs and double couponing, in our marketing area. Occupancy
decreased as the result of an increase in rental income from sub-tenants within
our stores and the decrease in fixed occupancy costs as a percentage of sales.
Depreciation and administration increased in dollars but declined as a
percentage of sales. Labor and related fringe benefits increased as the result
of additional personnel dedicated to the two new stores, increased sales in
service intensive departments and premium rates paid to existing employees to
work additional hours due to labor shortages in certain of our marketing areas.
Supplies increased due to increased sales in supply intensive departments and an
increase in plastic prices which is related to increases in the cost of
petroleum. Pre-opening costs were for the new stores opened in February and
April 2000. The reserve for closed store expense relates primarily to the
anticipated expenses to be incurred over the balance of the lease for the
location closed in April 2000 when the new Wall Township store opened. As a
percentage of sales selling expense decreased .40%, occupancy decreased .28%,
17
administration decreased .09% and depreciation decreased .06%. These
decreases were partially offset by increases in labor and related fringe
benefits of .29%, supplies of .07%, pre-opening costs of .10% and reserve for
closed store expense of .13%. Pre-opening costs were $895,000 in fiscal 2000.
Operating, general and administrative expenses increased as a percent of sales
when comparing fiscal 1999 to fiscal 1998. Increases in selling expense,
depreciation and other store expense, which includes debit and credit card
processing fees and Wakefern support services, were partially offset by
decreases in labor and related fringe benefits, supplies, occupancy, pre-opening
costs, administration expense and an increase in miscellaneous income. The
increase in selling expense was the result of increased promotional activity,
including a variety of incentive programs and double couponing, in our marketing
area. Depreciation expense increased as the result of the increase in capital
expenditures from the two locations opened in fiscal 1998, a capitalized real
estate lease for one of the new locations, the modification of a capitalized
real estate lease for the expansion of a location and the acceleration of
depreciation for several locations which will be replaced by new stores. The
increase in miscellaneous income resulted from an increase in coupon handling
income from the additional coupon volume related to double couponing. The
increase in other store expense results primarily from an increase in the
percentage of sales paid for with debit and credit cards and increased costs
related to these types of payments. Occupancy decreased due to increased rental
income from sub-tenants within our stores. Decreases in fixed and semi-variable
expense percentages were the result of the increase in comparable store sales.
As a percentage of sales, selling expense increased 1.25%, depreciation
increased .17% and other store expense increased .09%. These increases were
partially offset by decreases in labor and related fringe benefits of .17%,
supplies of .07%, occupancy of .30%, pre-opening costs of .10%, administration
expense of .17% and an increase in miscellaneous income of .16%. There were no
pre-opening costs in fiscal 1999.
Amortization expense decreased in fiscal 2000 to $679,000 compared to $972,000
in fiscal 1999 and $1,339,000 in fiscal 1998. The decrease in fiscal 2000, as
compared to fiscal 1999, was the result of decreased amortization of deferred
financing costs and bargain leases partially offset by increased amortization of
deferred escalation rents, which resulted from the modification of the
amortization of one operating lease in fiscal 1999.
The decrease in fiscal 1999, as compared to fiscal 1998, was the result of
decreased amortization of deferred financing costs and deferred escalation
rents, which included the modification of the amortization of one operating
lease, partially offset by increased amortization of bargain leases, which
included the acceleration of the amortization of one bargain lease for a
location which is to be replaced. See Note 1 of Notes to Consolidated Financial
Statements - Intangibles and Deferred Financing Costs.
Interest Expense:
Interest expense totaled $7.1 million in fiscal 2000 compared to $5.6 million in
fiscal 1999 and $3.9 million in fiscal 1998. The increase in fiscal 2000, as
compared to fiscal 1999, was due to an increase in the average outstanding
18
debt in fiscal 2000, including capitalized lease obligations and an increase in
the average interest rate paid on the debt. The increase in fiscal 1999, as
compared to fiscal 1998, was due to an increase in the average outstanding debt
in fiscal 1999, including capitalized lease obligations, partially offset by a
decrease in the average interest rate on the debt. Interest income was $0.3
million in fiscal 2000 and fiscal 1999 and $0.4 million in fiscal 1998.
If net income and EBITDA decrease, as discussed in the Net Income section of
Management's Discussion and Analysis - Results of Operations, the Company will
borrow additional funds under its revolving credit facility thereby increasing
interest expense.
Income Taxes:
The Company recorded a tax provision of $1.6 million in fiscal 2000, $1.1
million in fiscal 1999 and $0.9 million in fiscal 1998. See Note 12 of Notes to
Consolidated Financial Statements.
Net Income:
The Company had net income of $2,382,000 or $2.13 per share in fiscal 2000
compared to net income of $1,945,000 or $1.74 per share in fiscal 1999. EBITDA
for fiscal 2000 were $22,914,000 as compared to $20,151,000 in fiscal 1999.
Fiscal 1998 resulted in net income of $1,780,000 or $1.59 per share. EBITDA for
fiscal 1998 were $15,765,000.
If gross profits decrease and interest expense increases as discussed in the
Gross Profit and Interest Expense sections of Management's Discussion and
Analysis - Results of Operations, net income and EBITDA will also decrease.
Shares outstanding were 1,117,290 for fiscal 2000, fiscal 1999 and fiscal 1998.
RECENT ACCOUNTING PRONOUNCEMENTS
Effective for fiscal years beginning after June 15, 2000, Statement of Financial
Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities," establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. SFAS 133 requires that
companies recognize all derivatives as either assets or liabilities on the
balance sheet and measure those instruments at fair value. The Company does not
currently engage in any hedging activity or hold any derivative instruments and
has no immediate plans to do so in the future. The Company does not expect a
significant impact from adopting the provisions of SFAS 133 in fiscal 2001.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"),
which is effective for fiscal years beginning after December 15, 1999. SAB 101
provides additional guidance on revenue recognition as well as criteria for when
19
revenue is generally realized and earned and also requires the deferral of
incremental costs. The Company does not expect a significant impact from
adopting the provisions of SAB 101 in fiscal 2001.
In May 2000, the Emerging Issues Task Force released Issue No. 00-14 ("EITF
00-14") "Accounting for Certain Sales Incentives," which provides guidance on
the accounting for certain sales incentives offered by companies to their
customers, such as discounts, coupons, rebates and free products or services.
EITF 00-14 is effective for fiscal years beginning after December 15, 1999 and
addresses the recognition, measurement and income statement classification of
sales incentives offered voluntarily by a vendor without charge to customers
that can be used in, or that are exercisable by a customer as a result of a
single exchange transaction. The Company currently records sales incentives as
part of operating, general and administrative expenses. Upon implementation in
fiscal 2001, in accordance with the provisions of EITF 00-14, such sales
incentives will be recorded as a reduction of sales, resulting in a
corresponding reduction in operating, general and administrative expenses with
no impact on net income.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Except for indebtedness under the Credit Agreement which is variable rate
financing, the balance of our indebtedness is fixed rate financing. We believe
that our exposure to market risk relating to interest rate risk is not material.
The Company believes that its business operations are not exposed to market risk
relating to foreign currency exchange risk, commodity price risk or equity price
risk.
Item 8. Financial Statements and Supplementary Data
See Consolidated Financial Statements and Schedules included in Part IV, Item
14.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
20
Part III
Item 10. Directors and Executive Officers of the Registrant
The information required in response to this item is contained in the Company's
definitive proxy statement to be filed pursuant to Regulation 14A under the
captions "Nominees as Director of the Company" and "Executive Officers of the
Company" and such information is incorporated herein by reference.
Item 11. Executive Compensation
The information required in response to this item is contained in the Company's
definitive proxy statement to be filed pursuant to Regulation 14A under the
caption "Executive Compensation" and such information is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required in response to this item is contained in the Company's
definitive proxy statement to be filed pursuant to Regulation 14A under
introductory paragraphs and under the captions "Principal Shareholders" and
"Securities Owned by Management" and such information is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions
The information required in response to this item is contained in the Company's
definitive proxy statement to be filed pursuant to Regulation 14A under the
captions "Executive Compensation" and "Certain Transactions" and such
information is incorporated herein by reference.
21
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
a.1. Audited financial statements and Page No.
supplementary data
Independent Auditors' Report F-1
Foodarama Supermarkets, Inc. and
Subsidiaries Consolidated Financial
Statements:
Balance Sheets as of October 28, 2000 F-2-3
and October 30, 1999.
Statements of Operations for each of the F-4
fiscal years ended October 28, 2000,
October 30, 1999 and October 31, 1998.
Statements of Shareholders' Equity F-5
for each of the fiscal years ended
October 28, 2000, October 30, 1999
and October 31, 1998.
Statements of Cash Flows for each of the F-6
fiscal years ended October 28, 2000,
October 30, 1999 and October 31, 1998.
Notes to Consolidated Financial Statements F-7 to 26
a.2. Financial Statement Schedules
Schedule II S-1
Schedules other than Schedule II have been
omitted because they are not applicable.
a.3. Exhibits E-1 to 5
b. Reports on Form 8-K
October 13, 2000 - Richard J. Saker elected President of Foodarama
Supermarkets, Inc. effective October 4, 2000 - press release dated
October 4, 2000 filed as an exhibit.
* * * * * *
22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities 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)
/S/ Michael Shapiro
Michael Shapiro
Senior Vice President,
Chief Financial Officer
/S/ Thomas H. Flynn
--------------------------
Thomas H. Flynn
Principal Accounting Officer
Date: January 25, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Name Title Date
/S/ Joseph J. Saker
--------------------------------------------------------
Joseph J. Saker Chairman of the Board January 23, 2001
of Directors, Chief
Executive Officer
/S/ Charles T. Parton
--------------------------------------------------------
Charles T. Parton Director January 18, 2001
/S/ Albert A. Zager
--------------------------------------------------------
Albert A. Zager Director January 18, 2001
/S/ Richard Saker
--------------------------------------------------------
Richard Saker President, Secretary January 18, 2001
and Director, Chief
Operating Officer
23
Independent Auditors' Report
Board of Directors and Shareholders
Foodarama Supermarkets, Inc.
Howell, New Jersey
We have audited the accompanying consolidated balance sheets of Foodarama
Supermarkets, Inc. and Subsidiaries as of October 28, 2000 and October 30, 1999,
and the related consolidated statements of operations, shareholders' equity and
cash flows for the fiscal years ended October 28, 2000, October 30, 1999 and
October 31, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Foodarama Supermarkets, Inc. and
Subsidiaries as of October 28, 2000 and October 30, 1999, and the results of
their operations and their cash flows for the fiscal years ended October 28,
2000, October 30, 1999 and October 31, 1998 in conformity with accounting
principles generally accepted in the United States of America.
As described in Note 1 to the consolidated financial statements, the Company
changed its method of determining cost for its grocery and nonfood inventory
items from the first-in, first-out (FIFO) method to the last-in, first-out
(LIFO) method.
In connection with our audits of the financial statements referred to above, we
audited the financial schedule listed under Item 14. In our opinion, the
financial schedule, when considered in relation to the financial statements
taken as a whole, presents fairly, in all material respects, the information
stated therein.
AMPER, POLITZINER & MATTIA P.A.
January 9, 2001
Edison, New Jersey
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
October 28, 2000 and October 30, 1999
(In thousands)
Assets
2000 1999
Current assets
Cash and cash equivalents $ 3,977 $ 4,094
Merchandise inventories 42,765 38,113
Receivables and other current assets 4,959 4,496
Prepaid income taxes 398 -
Related party receivables - Wakefern 8,557 8,000
Related party receivables - other 15 25
-------- --------
60,671 54,728
-------- --------
Property and equipment
Land 308 308
Buildings and improvements 1,220 1,220
Leasehold improvements 36,931 35,032
Equipment 96,452 80,991
Property under capital leases 59,909 38,218
Construction in progress 1,513 2,481
-------- -------
196,333 158,250
Less accumulated depreciation and amortization 87,487 76,227
-------- -------
108,846 82,023
--------- -------
Other assets
Investments in related parties 12,758 10,992
Intangibles 3,487 3,839
Other 3,469 2,872
Related party receivables - Wakefern 1,782 1,555
Related party receivables - other 172 177
-------- ---------
21,668 19,435
-------- ---------
$ 191,185 $ 156,186
======== =========
See notes to consolidated financial statements.
F-2
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets - (continued)
October 28, 2000 and October 30, 1999
(In thousands)
Liabilities and Shareholders' Equity
2000 1999
Current liabilities
Current portion of long-term debt $ 4,918 $ 2,605
Current portion of long-term debt, related party 880 503
Current portion of obligations under capital leases 664 492
Current income taxes payable - 457
Deferred income tax liability 1,114 1,541
Accounts payable
Related party - Wakefern 34,051 29,699
Others 7,781 7,115
Accrued expenses 12,478 9,809
------- ------
61,886 52,221
------- ------
Long-term debt 24,181 23,126
Long-term debt, related party 2,212 1,450
Obligations under capital leases 55,848 35,028
Deferred income taxes 2,585 2,732
Other long-term liabilities 7,051 6,589
------- -------
91,877 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 40,078 37,696
------- -------
44,051 41,669
Less 504,477 shares held in treasury, at cost 6,629 6,629
------- -------
37,422 35,040
------- -------
$191,185 $156,186
======== ========
See notes to consolidated financial statements.
F-3
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Fiscal Years Ended October 28, 2000, October 30, 1999 and October 31, 1998
(In thousands, except per share data)
2000 1999 1998
--------- --------- ---------
Sales ................................ $ 886,240 $ 799,693 $ 697,358
Cost of merchandise sold ............. 656,402 591,591 520,624
--------- --------- ---------
Gross profit ......................... 229,838 208,102 176,734
Operating, general and administrative 219,127 199,762 170,581
--------- --------- ---------
Income from operations ............... 10,711 8,340 6,153
--------- --------- ---------
Other (expense) income:
Interest expense ..................... (7,059) (5,569) (3,881)
Interest income ...................... 318 315 448
--------- -------- -----------
(6,741) (5,254) (3,433)
--------- -------- -----------
Earnings before income tax provision . 3,970 3,086 2,720
Income tax provision ................. (1,588) (1,141) (940)
--------- --------- -----------
Net income ........................... $ 2,382 $ 1,945 $ 1,780
========= ========= ===========
Per share information:
Net income per common share, basic and
diluted $ 2.13 $ 1.74 $ 1.59
---------- ----------- -----------
Weighted average shares outstanding .. 1,117,290 1,117,290 1,117,290
========== =========== ===========
See notes to consolidated financial statements.
F-4
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
Fiscal Years Ended October 28, 2000, October 30, 1999 and October 31, 1998
(In thousands, except per share data)
Accumulated
Common Stock Capital Other
Shares in Excess Comprehensive Comprehensive Retained Treasury Stock Total
Issued Amount of Par Income Income Earnings Shares Amount Equity
Balance - November 1, 1997 1,621,767 $1,622 $ 2,351 $ - $ 33,971 (504,477) $ (6,629) $ 31,315
Comprehensive income
Net income 1998 - - - - 1,780 1,780 - - 1,780
Other comprehensive income
Minimum pension liability - - - (81) (81) - - - (81)
---------- ------- ---------- ----------- ----------- --------- --------- --------- ----------
Comprehensive income $ 1,699
=========
Balance - October 31, 1998 1,621,767 1,622 2,351 (81) 35,751 (504,477) (6,629) 33,014
Comprehensive income
Net income 1999 - - - - 1,945 1,945 - - 1,945
Other comprehensive income
Minimum pension liability - - - 81 81 - - - 81
---------- ------- ---------- ----------- ----------- --------- --------- --------- ----------
Comprehensive income $ 2,026
===========
Balance - October 30, 1999 1,621,767 1,622 2,351 - 37,696 (504,477) (6,629) 35,040
Comprehensive income
Net income 2000 - - - - $ 2,382 2,382 - - 2,382
---------- ------- ---------- ----------- ----------- --------- --------- --------- ----------
Comprehensive income $ 2,382
===========
Balance - October 28, 2000 1,621,767 $1,622 $ 2,351 $ - $ 40,078 (504,477) $(6,629) $ 37,422
========= ======= ========== =========== ========= ========= ========= ==========
See notes to consolidated financial statements.
F-5
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Fiscal Years Ended October 28, 2000, October 30, 1999 and October 31, 1998
(In thousands)
2000 1999 1998
Cash flows from operating activities
Net income $ 2,382 $ 1,945 $ 1,780
Adjustments to reconcile net income to net
cash from operating activities
Depreciation 11,524 10,838 8,273
Amortization, intangibles 352 723 538
Amortization, deferred financing costs 243 297 535
Amortization, deferred rent escalation 84 (47) 266
Provision to value inventory at LIFO 723 - -
Deferred income taxes (574) (753) 253
(Increase) decrease in
Merchandise inventories (5,375) (309) (4,219)
Receivables and other current assets (463) (1,114) 194
Prepaid income taxes (398) 1,005 (613)
Other assets 207 (721) 90
Related party receivables - Wakefern (784) (1,325) (1,650)
Increase (decrease) in
Accounts payable 5,018 (157) 8,827
Income taxes payable (457) 457 -
Other liabilities 3,047 1,316 695
------- ------- -------
15,529 12,155 14,969
------- ------- -------
Cash flows from investing activities
Cash paid for the purchase of property
and equipment (14,280) (5,780) (17,019)
Cash paid for construction in progress (943) (2,481) -
Decrease in related party receivables - other 15 108 22
-------- -------- -------
(15,208) (8,153) (16,997)
--------- -------- --------
Cash flows from financing activities
Proceeds from issuance of debt 20,595 5,014 9,937
Principal payments under long-term debt (18,754) (7,904) (6,963)
Principal payments under capital lease
obligations (699) (463) (586)
Principal payments under long-term debt,
related party (627) (460) (108)
Deferred financing costs (953) - (25)
--------- ------- --------
(438) (3,813) 2,255
--------- ------- --------
Net change in cash and cash equivalents (117) 189 227
Cash and cash equivalents, beginning of year 4,094 3,905 3,678
------- ------- --------
Cash and cash equivalents, end of year $ 3,977 $ 4,094 $ 3,905
======== ======= ========
Supplemental disclosures of cash paid
Interest $ 6,683 $ 5,590 $ 3,960
Income taxes 2,869 27 900
See notes to consolidated financial statements.
F-6
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 1 - Summary of Significant Accounting Policies
Nature of Operations
Foodarama Supermarkets,Inc. and Subsidiaries (the "Company"), operate
22 ShopRite supermarkets, primarily in Central New Jersey. The Company
is a member of Wakefern Food Corporation ("Wakefern"), the largest
retailer-owned food cooperative in the United States.
Fiscal Year
The Company's fiscal year ends on the Saturday closest to October 31.
Fiscal 2000 consists of the 52 weeks ended October 28, 2000, fiscal
1999 consists of the 52 weeks ended October 30, 1999, and fiscal 1998
consists of the 52 weeks ended October 31, 1998.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
Revenue Recognition
Revenues from the sale of products are recognized at the point of sale
to the Company's customers. Vendor rebates and credits that relate to
the Company's buying and merchandising activities are recognized as
earned.
Industry Segment
The Company operates in one industry segment, the retail sale of food
and nonfood products, primarily in the Central New Jersey region.
Reclassifications
Certain reclassifications have been made to prior year financial
statements in order to conform to the current year presentation.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
F-7
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 1 - Summary of Significant Accounting Policies - (continued)
Fair Value of Financial Instruments
Cash and cash equivalents, receivables and accounts payable are
reflected in the consolidated financial statements at carrying value
which approximates fair value because of the short-term maturity of
these instruments. The fair value of long-term debt was approximately
equivalent to its carrying value, due to the fact that the interest
rates currently available to the Company for debt with similar terms
are approximately equal to the interest rates for its existing debt. As
the Company's investments in Wakefern can only be sold to Wakefern for
approximately the amount invested, it is not practicable to estimate
the fair value of such stock. Determination of the fair value of
related party receivables and long-term debt - related party is not
practicable due to their related party nature.
Cash Equivalents
The Company considers all highly liquid debt instruments purchased with
an original maturity of three months or less to be cash equivalents.
Merchandise Inventories
Merchandise inventories are stated at the lower of cost (first-in,
first-out) or market with cost being determined under the retail
method. Effective October 31, 1999, the Company adopted the last-in,
first-out (LIFO) method of inventory valuation for its grocery and
nonfood inventory items. The Company believes that the LIFO method, as
applied to these inventory items, results in a better matching of
revenues and expenses. Because the October 30, 1999 inventory, which is
valued at the first-in, first-out (FIFO) method, is the opening LIFO
inventory, there is neither a cumulative effect to October 31, 1999,
nor pro forma amounts of retroactive application of changing to the
LIFO method. The decision to change to LIFO was made in the third
quarter of fiscal year 2000.
If the FIFO method had been used, inventory at October 28, 2000 would
have been $723,000 higher.
Property and Equipment
Property and equipment is stated at cost and is depreciated on a
straight-line basis over the estimated useful lives of between three
and ten years for equipment, the shorter of the useful life or lease
term for leasehold improvements, and twenty years for buildings.
Property and equipment under capital leases are recorded at the lower
of fair market value or the net present value of the minimum lease
payments. They are depreciated on a straight-line basis over the
shorter of the related lease terms or its useful life.
Investments
The Company's investment in its principal supplier, Wakefern, is stated
at cost (see Note 4).
F-8
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 1 - Summary of Significant Accounting Policies - (continued)
Intangibles
Intangibles consist of goodwill and favorable operating lease costs.
Goodwill is being amortized on a straight-line basis over periods from
15 to 36 years. The favorable operating lease costs are being amortized
on a straight-line basis over the terms of the related leases which
range from 12 to 24 years.
Deferred Financing Costs
Deferred financing costs are being amortized over the life of the
related debt using the effective interest method.
Postretirement Benefits other than Pensions
The Company accrues for the cost of providing postretirement benefits,
principally supplemental income payments and limited medical benefits,
over the working careers of the officers in the plan.
Postemployment Benefits
The Company accrues for the expected cost of providing postemployment
benefits, primarily short-term disability payments, over the working
careers of its employees.
Advertising
Advertising costs are expensed as incurred. Advertising expense was
$28.4, $28.5 and $16.4 million for the fiscal years 2000, 1999 and
1998, respectively.
Store Closing Costs
The costs, net of amounts expected to be recovered, are expensed upon
the closing of a store. It is reasonably possible that these estimates
may change in the near term. Operating results continue to be reported
until a store is closed.
Recent Accounting Pronouncements
Effective for fiscal years beginning after June 15, 2000, Statement of
Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for
Derivative Instruments and Hedging Activities," establishes accounting
and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging
activities. SFAS 133 requires that companies recognize all derivatives
as either assets or liabilities on the balance sheet and measure those
instruments at fair value. The Company does not currently engage in any
hedging activity or hold any derivative instruments and has no
immediate plans to do so in the future. The Company does not expect a
significant impact from adopting the provisions of SFAS 133 in fiscal
2001.
F-9
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 1 - Summary of Significant Accounting Policies - (continued)
Recent Accounting Pronouncements - (continued)
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements" ("SAB 101"), which is effective for fiscal years beginning
after December 15, 1999. SAB 101 provides additional guidance on
revenue recognition as well as criteria for when revenue is generally
realized and earned and also requires the deferral of incremental
costs. The Company does not expect a significant impact from adopting
the provisions of SAB 101 in fiscal 2001.
In May 2000, the Emerging Issues Task Force released Issue No. 00-14
("EITF 00-14") "Accounting for Certain Sales Incentives," which
provides guidance on the accounting of certain sales incentives offered
by companies to their customers, such as discounts, coupons, rebates
and free products or services. EITF 00-14 is effective for fiscal years
beginning after December 15, 1999 and addresses the recognition,
measurement and income statement classification for sales incentives
offered voluntarily by a vendor without charge to customers that can be
used in, or that are exercisable by a customer as a result of a single
exchange transaction. The Company does not expect a significant impact
from adopting the recognition and measurement provisions. The Company
currently records sales incentives as part of operating, general and
administrative expenses. Upon implementation in fiscal 2001, in
accordance with the provisions of EITF 00-14, such sales incentives
will be recorded as a reduction of sales, resulting in a corresponding
reduction in operating, general and administrative expenses, with no
impact on net income.
Note 2 - Concentration of Cash Balance
As of October 28, 2000 and October 30, 1999, cash balances of
approximately $1,173,000 and $898,000, respectively, were maintained in
bank accounts insured by the Federal Deposit Insurance Corporation
(FDIC). These balances exceed the insured amount of $100,000.
Note 3 - Receivables and Other Current Assets
October 28, October 30,
2000, 1999
Accounts receivable $ 3,350 $ 3,334
Prepaids 2,121 1,598
Rents receivable 31 70
Less allowance for uncollectible accounts (543) (506)
-------- ---------
$ 4,959 $ 4,496
======== =========
F-10
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 4 - Related Party Transactions
Wakefern Food Corporation
As required by Wakefern's By-Laws, all members of the cooperative are
required to make an investment in the common stock of Wakefern for each
supermarket operated ("Store Investment Program"), with the exact
amount per store computed in accordance with a formula based on the
volume of each store's purchases from Wakefern. During fiscal 2000 and
1999, the required investment in Wakefern increased. The maximum
required investment per store was $550,000 at October 28, 2000, and
$500,000 at October 30, 1999. This resulted in a total increase in the
investment in Wakefern by $1,039,000 in 2000 and $1,286,000 in 1999 and
a related increase in the obligations due Wakefern for the same amount,
respectively. This increase in the obligation is non-interest bearing
and is payable over the next four years. The Company has a 12.3%
investment in Wakefern of $11,805,000 at October 28, 2000, and
$10,163,000 at October 30, 1999. Wakefern is operated on a cooperative
basis for its members. The shares of stock in Wakefern are assigned to
and held by Wakefern as collateral for any obligations due Wakefern. In
addition, the obligations to Wakefern are personally guaranteed by
principal officers/stockholders of the Company. As of October 28, 2000
and October 30, 1999, the Company was obligated to Wakefern for
$3,092,000 and $1,953,000, respectively, for the increase in its
required investment (see Note 8 Long-term Debt, Related Party).
The Company also has an investment of approximately 9.2% in
Insure-Rite, Ltd., a company affiliated with Wakefern, which was
$953,000 and $829,000 at October 28, 2000 and October 30, 1999,
respectively. During the year ended October 28, 2000, the Company was
required to invest an additional $124,000 relating to the opening of
two new stores. Insure-Rite, Ltd. provides the Company with liability
and property insurance coverage. Insurance premiums paid to
Insure-Rite, Ltd. for fiscal years 2000, 1999, and 1998 were
$3,528,000, $3,275,000, and $3,031,000, respectively.
As a stockholder member of Wakefern, the Company earns a share of an
annual Wakefern patronage dividend. The dividend is based on the
distribution of operating profits on a pro rata basis in proportion to
the dollar volume of business transacted by each member with Wakefern
during each fiscal year. It is the Company's policy to accrue quarterly
an estimate of the annual patronage dividend. The Company reflects the
patronage dividend as a reduction of the cost of merchandise in the
consolidated statements of operations. For fiscal 2000, 1999, and 1998,
the patronage dividends were $9,273,000, $8,202,000, and $7,438,000,
respectively.
At October 28, 2000 and October 30, 1999, the Company has current
receivables due from Wakefern of approximately $8,557,000 and
$8,000,000, respectively, representing patronage dividends, vendor
rebates, coupons and other receivables due in the ordinary course of
business and a noncurrent receivable representing a deposit of
approximately $1,782,000 and $1,555,000, respectively.
F-11
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 4 - Related Party Transactions - (continued)
Wakefern Food Corporation - (continued)
In September 1987, the Company and all other stockholder members of
Wakefern entered into an agreement, as amended in 1992, with Wakefern
which provides for certain commitments and restrictions on all
stockholder members of Wakefern. The agreement contains an evergreen
provision providing for an indefinite term and is subject to
termination ten years after the approval of 75% of the outstanding
voting stock of Wakefern. Under the agreement, each stockholder,
including the Company, agreed to purchase at least 85% of its
merchandise in certain defined product categories from Wakefern
and, if it fails to meet such requirements, to make payments to
Wakefern based on a formula designed to compensate Wakefern for its
lost profit. Similar payments are due if Wakefern loses volume by
reason of the sale of one or more of a stockholder's stores, merger
with another entity or on the transfer of a controlling interest in the
stockholder.
The Company fulfilled its obligation to purchase a minimum of 85% in
certain defined product categories from Wakefern for all periods
presented. The Company's merchandise purchases from Wakefern, including
direct store delivery vendors processed by Wakefern, approximated $588,
$536 and $494 million for the fiscal years 2000, 1999 and 1998,
respectively.
Wakefern charges the Company for, and provides the Company with support
services in numerous administrative functions. These services include
advertising, insurance, supplies, technical support for communications
and in-store computer systems, equipment purchasing, and the
coordination of coupon processing.
In addition to its investment in Wakefern, which carries only voting
rights, the Company's Chairman of the Board serves as a member of
Wakefern's Board of Directors and its finance committee. Several of the
Company's officers and employees also hold positions on various
Wakefern committees.
Other
The Company has receivables from related parties that include
stockholders, directors, officers, and real estate partnerships. At
October 28, 2000 and October 30, 1999, approximately $180,000 and
$197,000, respectively, of these receivables consist of notes bearing
interest at 9%. These receivables have been classified based upon the
scheduled payment terms. The remaining amounts are non-interest
bearing, have no repayment terms and are classified based on expected
payment dates.
F-12
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 5 - Intangibles
October 28, October 30,
2000 1999
------------ -----------
Goodwill $ 3,493 $ 3,493
Favorable operating lease costs 4,685 4,685
--------- -----------
8,178 8,178
Less accumulated amortization 4,691 4,339
--------- -----------
$ 3,487 $ 3,839
========= ===========
Note 6 - Accrued Expenses
October 28, October 30,
2000 1999
----------- ----------
Payroll and payroll related expenses $ 5,871 $ 5,004
Insurance 909 1,055
Sales, use and other taxes 1,214 1,096
Interest 483 107
Employee benefits 801 767
Occupancy costs 2,033 972
Real estate taxes 434 357
Other 733 451
------------ --------
$ 12,478 $ 9,809
============ ========
Note 7 - Long-term Debt
Long-term debt consists of the following:
October 28, October 30,
2000 1999
----------- ---------
Revolving note $ 2,837 $ 10,830
Term loan 8,500 1,500
Stock redemption note - 1,105
Expansion loan - 1,213
Capital expenditure facility 7,758 -
Other notes payable 10,004 11,083
----------- ---------
29,099 25,731
Less current portion 4,918 2,605
----------- ---------
$ 24,181 $ 23,126
=========== =========
F-13
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 7 - Long-term Debt - (continued)
The Company has a Revolving Credit and Term Loan Agreement (the
"Agreement") which was amended and assigned to three financial
institutions on January 7, 2000. The Agreement is collateralized by
substantially all of the Company's assets, provided for a total
commitment of $55,000,000 and matures December 31, 2004. The Agreement
provides the Company with the option to convert portions of the debt to
Eurodollar loans, as defined in the Agreement, which have interest
rates indexed to LIBOR. The Agreement consists of a Revolving Note, a
Term Loan and a Capital Expenditure Facility.
The Revolving Note has an overall availability of $25,000,000
(previously $20,000,000), not to exceed 65% of eligible inventory and
provides for availability of up to $4,500,000 for letters of credit.
The Revolving Note bears interest at prime plus .50% or LIBOR plus
2.50% (previously prime plus .25% and LIBOR plus 2.25%).
The Company had a $2,000,000 letter of credit outstanding at October
28, 2000 and October 30, 1999. A commitment fee of .5% is charged on
the unused portion of the Revolving Note. Available credit under the
Revolving Note was $18,863,000 and $7,170,000 at October 28, 2000 and
October 30, 1999. As of October 28, 2000 and October 30, 1999,
$7,001,000 and $6,197,000 of cash receipts on hand or in transit were
restricted for application against the Revolving Note balance.
The Term Loan is $10,000,000 and is payable in quarterly principal
installments of $500,000 commencing April 1, 2000 through December 31,
2004. Interest is payable monthly at prime plus .75% or LIBOR plus
2.75%. At October 28, 2000, $8,000,000 of the Term Loan balance was
under a six month Eurodollar rate of 9.63%, maturing February 2001.
The $20,000,000 Capital Expenditure Facility provides for a two year
non-restoring commitment to fund equipment purchases for five new
stores, with a maximum of $4,000,000 per store. Interest only is due
monthly at prime plus .75% or LIBOR plus 2.75% for any amount utilized
during the first two years of the commitment. At the end of the two
years, any outstanding amounts will be converted to a term loan with
interest payable monthly at rates described above and fixed quarterly
principal payments calculated on a seven year amortization schedule
with a balloon payment due at December 31, 2004. A commitment fee of
.5% is charged on the unused portion of the Capital Expenditure
Facility. During the fiscal year ended October 28, 2000 the Company had
borrowed $7,758,000 and had $12,000,000 available under this facility.
At October 28, 2000, $7,000,000 of the Capital Expenditure facility was
under a three month Eurodollar rate of 9.44%, maturing November 2000,
which was renewed through January 2001 at a rate of 9.46%.
F-14
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 7 - Long-term Debt - (continued)
The previous outstanding balances under the Term Loan, Stock Redemption
Note and Expansion Loan were fully satisfied and replaced by the
Agreement. These previous loans had fixed interest rates of 8.38% for
the Term Loan and Stock Redemption Note and 9.18% for the Expansion
Loan.
The Agreement places restrictions on dividend payments and requires the
maintenance of debt service coverage and leverage ratios and other
financial ratios, as well as limitations on capital expenditures and
new debt. For the year ended October 28, 2000, the Company exceeded its
capital expenditure and adjusted indebtedness limits, which were
waived.
The prime rate at October 28, 2000 and October 30, 1999 was 9.50% and
8.25%, respectively.
Other Notes Payable
Included in other notes payable are the following:
October 28, October 30,
2000 1999
-----------------------
Note payable to a financing institution, maturing
October 2004, payable at $56,000 per month
plus interest at 7.26%, collateralized by related
equipment. $ 2,663 $ 3,330
Note payable to a financing institution, maturing
April 2005, payable at $46,000 per month
including interest at 7.44%, collateralized by
related equipment. 2,057 2,449
Note payable to a financing institution, matured
February 2000, payable at $105,000 per month
including interest at 10.58%, collateralized by
related equipment. - 408
Various equipment loans maturing through
November 2004, at interest rates ranging from
5.79% to 9.53%, collateralized by various
equipment. 5,284 4,896
----------------------
Total other notes payable $ 10,004 $ 11,083
======================
F-15
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 7 - Long-term Debt - (continued)
Other Notes Payable - (continued)
Aggregate maturities of long-term debt are as follows:
Fiscal Year
2001 $ 4,918
2002 5,407
2003 5,254
2004 5,199
2005 8,321
Note 8 - Long-term Debt, Related Party
As of October 28, 2000 and October 30, 1999, the Company was indebted
for an investment in Wakefern in the amount of $3,092,000 and
$1,953,000, respectively. The debt is non-interest bearing and
payable in scheduled installments as follows:
Fiscal Year
2001 $ 880
2002 903
2003 778
2004 186
2005 182
Thereafter 163
Note 9 - Other Long-term Liabilities
October 28, October 30,
2000 1999
Deferred escalation rent $ 4,712 $ 4,628
Postretirement benefit cost 1,580 1,212
Other 759 749
-------- ---------
$ 7,051 $ 6,589
======== =========
Note 10 - Long-term Leases
Capital Leases
October 28, October 30,
2000 1999
Real estate $ 59,909 $ 38,218
Less accumulated amortization 10,313 8,027
-------- ---------
$ 49,596 $ 30,191
======== =========
F-16
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 10 -Long-term Leases - (continued)
Capital Leases - (continued)
The following is a schedule by year of future minimum lease payments
under capital leases, together with the present value of the net
minimum lease payments, as of October 28, 2000:
Fiscal Year
2001 $ 5,941
2002 6,102
2003 6,158
2004 6,230
2005 6,343
Thereafter 100,205
--------
Total minimum lease payments 130,979
Less amount representing interest 74,467
--------
Present value of net minimum lease payments 56,512
Less current maturities 664
--------
Long-term maturities $ 55,848
=========
Operating Leases
The Company is obligated under operating leases for rent payments
expiring at various dates through 2021. Certain leases provide for the
payment of additional rentals based on certain escalation clauses and
seven leases require a further rental payment based on a percentage of
the stores' annual sales in excess of a stipulated minimum. Percentage
rent expense was $264,000, $248,000, and $229,000 for the fiscal years
2000, 1999, and 1998, respectively. Under the majority of the leases,
the Company has the option to renew for additional terms at specified
rentals.
Total rental expense for all operating leases consists of:
Fiscal 2000 Fiscal 1999 Fiscal 1998
Land and buildings $ 10,828 $10,611 $ 10,928
Less subleases (2,059) (1,831) (1,765)
---------- ---------- -----------
$ 8,769 $ 8,780 $ 9,163
========== ========== ===========
F-17
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 10 - Long-term Leases - (continued)
Operating Leases - (continued)
The minimum rental commitments under all noncancellable operating
leases reduced by income from noncancellable subleases at October 28,
2000, are as follows:
Income from
Land and Noncancellable Net Rental
Fiscal Year Buildings Subleases Commitment
2001 $ 10,184 $ 2,417 $ 7,767
2002 9,592 2,048 7,544
2003 9,133 1,813 7,320
2004 8,059 1,172 6,887
2005 7,661 526 7,135
Thereafter 36,756 2,074 34,682
------------------------------------------
$ 81,385 $ 10,050 $71,335
==========================================
The Company is presently leasing one of its supermarkets, a garden
center, and liquor store from a partnership in which the Chairman of
the Board has a controlling interest, at an annual aggregate rental
of $719,000, $668,000, and $660,000 for the fiscal years 2000, 1999
and 1998, respectively.
Note 11 - Stock Options
On May 10, 1995, the Company's stockholders approved the Foodarama
Supermarkets, Inc. 1995 Stock Option Plan, which provides for the
granting of options to purchase up to 100,000 common shares until
January 31, 2005, at prices not less than fair market value at the date
of the grant. Options granted under the plan vest over a period of
three years from the date of grant. At October 28, 2000, no options had
been granted.
Note 12- Income Taxes
The income tax provisions consist of the following:
Fiscal 2000 Fiscal 1999 Fiscal 1998
-----------------------------------------
Federal:
Current $ 1,621 $ 1,857 $ 638
Deferred (411) (506) 99
State and local:
Current 541 37 49
Deferred (163) (247) 154
------------ --------- --------
$ 1,588 $ 1,141 $ 940
============ ========= ========
F-18
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 12 - Income Taxes - (continued)
The following tabulations reconcile the federal statutory tax rate
to the effective rate:
Fiscal 2000 Fiscal 1999 Fiscal 1998
-------------------------------------
Tax provision at the statutory rate 34.0 % 34.0 % 34.0 %
State and local income tax provision,
net of federal income tax 5.9 % 5.9 % 5.9 %
Goodwill amortization not deductible
for tax purposes 1.3 % 1.8 % 1.8 %
Tax credits (.7) % (1.0)% - %
Adjustment to prior years tax provision (1.0) % (5.1)% (5.4)%
Other .5 % 1.4 % (1.7)%
----------- ------ ------
Actual tax provision 40.0% 37.0 % 34.6 %
========== ====== ======
Net deferred tax assets and liabilities consist of the following:
October 28, October 30,
2000 1999
-----------------------
Current deferred tax assets:
Deferred gains on sale/leaseback $ 138 $ 152
Allowances for uncollectible receivables 301 279
Inventory capitalization 8 7
Closed store reserves 570 151
Vacation accrual 365 284
Accrued post-employment 162 151
Accrued post-retirement 640 491
Tax credits - 27
Other 37 37
------- --------
2,221 1,579
------- --------
Current deferred tax liabilities:
Prepaids (335) (316)
Patronage dividend receivable (2,073) (1,921)
Accelerated real estate taxes (174) (169)
Prepaid pension (753) (546)
Other - (168)
------- --------
(3,335) (3,120)
------- --------
Current deferred tax liability $ (1,114) $ (1,541)
========== =========
F-19
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 12 - Income Taxes - (continued)
October 28, October 30,
2000 1999
----------------------
Noncurrent deferred tax assets:
Lease obligations $ 2,811 $ 2,168
State loss carryforward 53 73
------- ---------
2,864 2,241
Valuation allowance (53) (73)
-------- ---------
2,811 2,168
-------- ---------
Noncurrent deferred tax liabilities:
Depreciation (4,524) (3,953)
Pension obligations (523) (435)
Other (349) (512)
--------- ----------
(5,396) (4,900)
--------- ----------
Noncurrent deferred tax liability $ (2,585) $ (2,732)
========= ==========
State loss carryforwards expire through October 2009.
Note 13 - Commitments and Contingencies
Legal Proceedings
The Company is involved in various legal actions and claims arising in
the ordinary course of business. Management believes that the outcome
of any such litigation and claims will not have a material effect on
the Company's financial position or results of operations.
Guarantees
The Company remains contingently liable under leases assumed by third
parties. As of October 28, 2000, the minimum annual rental under these
leases amounted to approximately $1,606,000 expiring at various dates
through 2011. The Company has not experienced and does not anticipate
any material nonperformance by such third parties.
Note 14 -Retirement and Benefit Plans
Defined Benefit Plans
The Company sponsors two defined benefit pension plans covering
administrative personnel and members of a union. Employees covered
under the administrative pension plan earned benefits based upon a
percentage of annual compensation and could make voluntary
contributions to the plan. Employees covered under the union pension
benefit plan earn benefits based on a fixed amount for each year of
service. The Company's funding policy is to pay at least the minimum
contribution required by the Employee Retirement Income Security Act of
1974. The plans' assets consist primarily of publicly traded stocks and
fixed income securities. As of October 28, 2000 and October 30, 1999,
the plans' assets included common stock of the Company with a fair
value of $702,000 and $1,065,000, respectively.
F-20
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 14 - Retirement and Benefit Plans - (continued)
Defined Benefit Plans - (continued)
A summary of the plans funded status and the amounts recognized in the
consolidated balance sheet as of October 28, 2000 and October 30, 1999
follows:
October 28, October 30,
2000 1999
-------------------------
Change in benefit obligation
Benefit obligation - beginning of year $ (5,936) $ (6,121)
Service cost (63) (71)
Interest cost (449) (447)
Actuarial gain (loss) 200 38
Benefits paid 476 665
---------------------
Benefit obligation - end of year (5,772) (5,936)
---------------------
Change in plan assets
Fair value of plan assets-beginning of year 6,433 6,643
Actual return (loss) on plan assets (342) 250
Employer contributions 559 205
Benefits paid (476) (665)
---------------------
Fair value of plan assets - end of year 6,174 6,433
---------------------
Funded status 402 497
Unrecognized prior service cost 236 273
Unrecognized net loss from past
experience different from that assumed 1,233 593
Unrecognized transition asset (11) (16)
--------------------
Prepaid pension cost $ 1,860 $ 1,347
=====================
F-21
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 14 - Retirement and Benefit Plans - (continued)
Defined Benefit Plans - (continued)
Pension expense consists of the following:
Fiscal 2000 Fiscal 1999 Fiscal 1998
------------------------------------
Service cost - benefits earned during
the period $ 63 $ 71 $ 36
Interest expense on benefit obligation 449 447 404
Expected return on plan assets (506) (522) (471)
Amortization of prior service costs 37 37 37
Amortization of unrecognized net loss (gain) 8 35 -
Amortization of unrecognized transition
obligation (asset) (5) (5) (5)
-----------------------------
Total pension expense $ 46 $ 63 $ 1
===============================
The discount rate used in determining the actuarial present value of
the projected benefit obligation ranged from 7.75% to 8.00% at October
28, 2000 and 6.75% to 7.25% at October 30, 1999. The expected long-term
rate of return on plan assets was 8% at October 28, 2000 and October
30, 1999, respectively.
On September 30, 1997, the Company adopted an amendment to freeze all
future benefit accruals relating to the plan covering administrative
personnel. A curtailment gain of $55,000 was recorded related to this
amendment.
At October 31, 1998, the accumulated benefit obligation exceeded the
fair value of the plans' assets in the plan covering members of one
union. The provisions of SFAS 87, "Employers' Accounting for Pensions,"
require recognition in the balance sheet of an additional minimum
liability and related intangible asset for pension plans with
accumulated benefits in excess of plan assets; any portion of such
additional liability which is in excess of the plan's prior service
cost is reflected as a direct charge to equity, net of related tax
benefit. Accordingly, at October 31, 1998, a liability of $188,000 was
included in other long-term liabilities, an intangible asset equal to
the prior service cost of $53,000 is included in other assets, and a
charge of $81,000 net of deferred taxes of $54,000 is reflected as a
minimum pension liability in stockholders' equity in the Consolidated
Balance Sheet. These amounts were reversed during fiscal 1999.
Multi-Employer Plans
Health, welfare, and retirement expense was approximately $9,155,000 in
fiscal 2000, $8,276,000 in fiscal 1999 and $7,804,000 in fiscal 1998
under plans covering union employees. Such plans are administered
through the unions involved. Under federal legislation regarding such
pension plans, a company is required to continue funding its
proportionate share of a plan's unfunded vested benefits in the event
of withdrawal (as defined by the legislation) from a plan or plan
termination. The Company participates in a number of these pension
plans and may have a potential obligation as a participant. The
information required to determine the total amount of this contingent
obligation as well as the total amount of accumulated benefits and net
assets of such plans, is not readily available. However, the Company
has no present intention of withdrawing from any of these plans, nor
has the Company been informed that there is any intention to terminate
such plans.
F-22
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 14- Retirement and Benefit Plans - (continued)
401(k)/Profit Sharing Plan
The Company maintains an employee 401(k) Savings Plan for all qualified
non-union employees. Employees are eligible to participate in the Plan
after completing one year of service (1,000 hours) and attaining age
21. Employee contributions are discretionary to a maximum of 15% of
compensation. The Company matches 25% of the employees' contributions
up to 6% of employee compensation. The Company has the right to make
additional discretionary contributions, which are allocated to each
eligible employee in proportion to their eligible compensation, which
was 2% for fiscal years 2000, 1999 and 1998. 401(k) expense for the
fiscal years 2000, 1999, and 1998 was approximately $507,000, $480,000
and $480,000, respectively.
Note 15- Other Postretirement and Postemployment Benefits
Postretirement Benefits
The Company will provide certain current officers and provides former
officers with supplemental income payments and limited medical benefits
during retirement. The Company recorded an estimate of deferred
compensation payments to be made to the officers based on their
anticipated period of active employment and the relevant actuarial
assumptions at October 28, 2000 and October 30, 1999, respectively.
The participants have agreed to certain non-compete arrangements and to
provide continued service availability for consulting services after
retirement.
A summary of the plan's funded status and the amounts recognized in the
balance sheet as of October 28, 2000 and October 30, 1999, follows:
October 28, October 30,
2000 1999
Change in benefit obligation
Benefit obligation - beginning of year $ (2,062) $ (1,875)
Service cost (89) (73)
Interest cost (174) (123)
Actuarial gain (loss) (352) (33)
Benefits paid 47 42
-------- --------
Benefit obligation - end of year (2,630) (2,062)
--------- --------
Change in plan assets
Fair value of plan assets - beginning of year - -
Actual return on plan assets - -
Employer contributions 47 42
Benefits paid (47) (42)
--------- -------
Fair value of plan assets - end of year - -
--------- -------
F-23
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 15 - Other Postretirement and Postemployment Benefits - (continued)
Postretirement Benefits - (continued)
October 28, October 30,
2000 1999
------------------------
Funded status (2,630) (2,062)
Unrecognized prior service cost 11 13
Unrecognized net loss from past experience
different from that assumed 1,039 837
-------------------
Accrued postretirement benefit cost $ (1,580) $ (1,212)
===================
Net postretirement benefit expense consists of the following:
Fiscal 2000 Fiscal 1999 Fiscal 1998
-----------------------------------
Service cost - benefits earned
during the period $ 89 $ 73 $ 39
Interest expense on benefit obligation 174 123 88
Expected return on plan assets - - -
Amortization of prior service costs 2 2 2
Amortization of unrecognized net
loss (gain) 149 81 30
Amortization of unrecognized
transition obligation (asset) - - -
---------------------------------
Postretirement benefit expense $ 414 $ 279 $ 159
=================================
The assumed discount rate used in determining the postretirement
benefit obligation as of October 28, 2000 and October 30, 1999 was
7.75%. The weighted average rate of compensation increase as of October
28, 2000 and October 30, 1999 was 4%.
Postemployment Benefits
Under SFAS No. 112, the Company is required to accrue the expected cost
of providing postemployment benefits, primarily short-term disability
payments, over the working careers of its employees.
The accrued liability under SFAS No. 112 as of October 28, 2000 and
October 30, 1999, was $401,000 and $374,000, respectively.
F-24
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 16 - Earnings Per Share
Fiscal 2000 Fiscal 1999 Fiscal 1998
-----------------------------------
Net income available to common stockholders $ 2,382 $ 1,945 $ 1,780
=================================
Basic EPS $ 2.13 $ 1.74 $ 1.59
=================================
Dilutive EPS $ 2.13 $ 1.74 $ 1.59
=================================
Weighted average shares outstanding 1,117,290 1,117,290 1,117,290
===================================
Note 17- Noncash Investing and Financing Activities
During fiscal 2000, capital lease obligations of $21,691,000 were
incurred when the Company entered into leases for two new stores.
During fiscal 1999, the Company modified one of its capitalized leases,
resulting in an increase of $5,865,000 in property under capitalized
leases and capitalized lease obligations. In fiscal 1998, a capital
lease obligation of $12,910,000 was incurred when the Company entered
into a lease for a new store.
During fiscal 2000, the required investment in Wakefern increased from
a maximum per store of $500,000 to $550,000. This resulted in an
increase of $1,039,000 in the investment and obligations due Wakefern.
During fiscal 1999, the required investment in Wakefern increased from
a maximum per store of $450,000 to $500,000. This resulted in a
increase of $1,286,000 in the investment and obligations due Wakefern.
The Company was required to make an additional investment in Wakefern
of $500,000 and $103,000 for a new store and a replacement store,
respectively, which opened during fiscal 2000. In conjunction with the
investment, liabilities were assumed for the same amount. In fiscal
1998, $450,000 was invested in Wakefern, and liabilities assumed, for a
new store.
During fiscal 2000, the Company was required to invest an additional
$124,000 in Insure-Rite, Ltd. In conjunction with the investment,
liabilities were assumed for the same amount.
During fiscal 2000 and 1999, the Company financed equipment purchased
for $1,527,000 and $520,000, respectively.
During fiscal 1998, the Company purchased a building in Linden, New
Jersey for $606,000 and obtained financing for $1,500,000. The
additional financing of $894,000 was used to purchase equipment at a
later date.
At October 31, 1998, the Company had an additional minimum pension
liability of $188,000, a related intangible of $53,000 and a direct
charge to equity of $81,000, net of deferred taxes of $54,000. These
amounts were reversed during fiscal 1999.
F-25
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 18 - Unaudited Summarized Consolidated Quarterly Information
Summarized quarterly information for the years ended October 28,
2000 and October 30, 1999, was as follows:
Thirteen Weeks Ended
January 29, April 29, July 29, October 28,
2000 2000 2000 2000
----------------------------------------------
Sales $ 216,222 $217,209 $ 228,475 $224,334
Gross profit 55,149 56,919 59,460 58,310
Net income 784 335 636 627
Earnings available per
basic and diluted share .70 .30 .57 .56
Thirteen Weeks Ended
January 30, May 1, July 31, October 30,
1999 1999 1999 1999
----------------------------------------------
Sales $ 203,607 $195,420 $203,243 $197,423
Gross profit 52,877 51,724 52,768 50,733
Net income 535 377 421 612
Earnings available per
basic and diluted share .48 .34 .38 .54
F-26
Schedule II
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
Fiscal Years Ended October 28, 2000, October 30, 1999 and October 31, 1998
(In thousands)
Additions
--------------------
Balance
at Charge to Charge to Balance
beginning costs and other at end
Description of year expenses accounts Deductions of Year
--------------------------------------------------------------------------------
Fiscal year ended October 28, 2000:
Allowance for doubtful
accounts (deducted from
receivables and other
current assets) $ 506 $ 143 $ - $ 106 (1) $ 543
======= ====== ======= ========== ======
Fiscal year ended October 30, 1999:
Allowance for doubtful
accounts (deducted from
receivables and other
current assets) $ 402 $ 199 $ - $ 95 (1) $ 506
======= ====== ======= ========== ======
Fiscal year ended October 31, 1998:
Allowance for doubtful
accounts (deducted from
receivables and other
current assets) $ 473 $ 149 $ - $ 220 (1) $ 402
====== ======= ======= ========== ======
(1) Accounts deemed to be uncollectible.
S-1
Schedule X
c. Exhibits
3. Articles of Incorporation and By-Laws
*i. Restated Certificate of Incorporation of Registrant
filed with the Secretary of State of the State of New
Jersey on May 15, 1970.
*ii. Certificate of Merger filed with the Secretary of
State of the State of New Jersey on May 15, 1970.
*iii. Certificate of Merger filed with the Secretary of
State of the State of New Jersey on March 14, 1977.
*iv. Certificate of Merger filed with the Secretary of
State of the State of New Jersey on June 23, 1978.
*v. Certificate of Amendment to Restated Certificate of
Incorporation filed with the Secretary of State of
the state of New Jersey on May 12, 1987.
**vi. Certificate of Amendment to Restated Certificate of
Incorporation filed with the Secretary of State of
the State of New Jersey on February 16, 1993.
****vii. Amendment to the Certificate of Incorporation of the
Registrant dated April 4, 1996.
*viii. By-Laws of Registrant.
*ix. Amendments to By-Laws of Registrant adopted
September 14,1983.
x. Amendment to By-Laws of Registrant adopted March 15,
1991 is incorporated herein by reference to the
Registrant's Annual Report on Form 10-K for the year
ended November 2, 1991 filed with the Securities and
Exchange Commission on February 18, 1992.
* Each of these Exhibits is incorporated herein by reference to the
Registrant's Annual Report on Form 10-K for the year ended October 29, 1988
filed with the Securities and Exchange Commission on February 13, 1989.
** Each of these Exhibits is incorporated herein by reference to the
Registrant's Annual Report on Form 10-K for the year ended October 31, 1992
filed with the Securities and Exchange Commission on February 19, 1993.
E-1
10. Material Contracts.
i. The Agreement dated September 18, 1987 entered into by
Wakefern Food Corporation and the Registrant is
incorporated herein by reference to Exhibit A to the
Registrant's Form 8-K filed with the Securities and
Exchange Commission on November 19, 1987.
***ii. Certificate of Incorporation of Wakefern Food
Corporation together with amendments thereto and
certificates of merger.
***iii. By-Laws of Wakefern Food Corporation.
***iv. Form of Deferred Compensation Agreement, between the
Registrant and certain of its key employees.
v. Registrant's 1987 Incentive Stock Option Plan is
incorporated herein by reference to Exhibit 4 (a) to
the Registrant's Form S-8 filed with the Securities
and Exchange Commission on May 26, 1989.
vi. Agreement, dated September 20, 1993, between the
Registrant, ShopRite of Malverne, Inc. and The Grand
Union Company is incorporated herein by reference to
the Registrant's Annual Report on Form 10-K for the
year ended October 30, 1993, filed with the Securities
and Exchange Commission on February 24, 1994.
vii. Revolving Credit and Term Loan Agreement, dated as of
February 15, 1995 between the Registrant and NatWest
Bank as agent for a group of banks is incorporated
herein by reference to the Registrant's Form 8-K filed
with the Securities and Exchange Commission on July 10,
1995.
viii. Asset Purchase Agreement dated April 20, 1995 and
Amendment No. 1 to the Agreement dated May 24, 1995
between the Registrant and Wakefern Food Corporation
is incorporated herein by reference to the Registrant's
Form 8-K filed with the Securities and Exchange
Commission on July 27, 1995.
ix. Amendment of Revolving Credit and Term Loan Agreement,
dated as of January 25, 1996, between the Registrant and
each of the banks which are signatory thereto is
incorporated herein by reference to the Registrant's
Form 10-Q for the quarterly period ended January 27,
1996, filed with the Securities and Exchange Commission
on March 12, 1996.
****x. Agreement, dated as of March 29, 1996, between the
Registrant and Wakefern Food Corporation.
---------------------------------------------------------------------------
*** Each of these Exhibits is incorporated herein by reference to
the Registrant's Annual Report on Form 10-K for the year ended
October 28, 1989 filed with the Securities and Exchange Commission
on February 9, 1990.
E-2
****xi. Amendment of Revolving Credit and Term Loan Agreement,
dated as of May 10, 1996, between the Registrant and
each of the Banks which are signatory thereto.
xii. Waiver and Amendment of Revolving Credit and Term Loan
Agreement, dated as of July 26, 1996, between the
Registrant and each of the Banks which are signatory
thereto is incorporated herein by reference to the
Registrant's Form 10-Q for the quarterly period ended
July 27, 1996, filed with the Securities and Exchange
Commission on September 10, 1996.
xiii. Amended and Restated Revolving Credit and Term Loan
Agreement, dated as of May 2, 1997, between the
Registrant and the Financial Institution which are
signatory thereto is incorporated herein by reference
to the Registrant's Form 10-Q for the quarterly period
ended May 3, 1997, filed with the Securities and
Exchange Commission on June 16, 1997.
*****xiv. First Amendment to Amended and Restated Revolving Credit
and Term Loan Agreement, dated October 28, 1997, between
the Registrant and the Financial Institution which are
signatory thereto.
*****xv. Consent and Second Amendment to Amended and Restated
Revolving Credit and Term Loan Agreement and other loan
documents, dated November 14, 1997, between the
Registrant and the Financial Institution which are
signatory thereto.
*****xvi. Third Amendment to Amended and Restated Revolving Credit
and Term Loan Agreement, dated January 15, 1998, between
the Registrant and the Financial Institution which are
signatory thereto.
xvii. Amendment to the Amended and Restated Revolving Credit
and Term Loan Agreement, dated March 11, 1999, between
the Registrant and the Financial Institution which are
signatory thereto, is incorporated herein by reference
to the Registrant's Form 10-Q for the quarterly period
ended May 1, 1999, filed with the Securities and
Exchange Commission on June 11, 1999.
**** Incorporated herein by reference to the Registrant's Form
10-Q for the quarterly period ended April 27, 1996, filed with the Securities
and Exchange Commission on June 10, 1996.
***** Incorporated herein by reference to the Registrant's Form 10-K for the
year ended November 1, 1997 filed with the Securities and Exchange Commission on
January 29, 1998.
E-3
xviii. Second Amended and Restated Revolving Credit and Term
Loan Agreement, dated as of January 7, 2000 between the
Registrant and each of the Financial Institutions which
are signatory thereto, is incorporated herein by
reference to the Registrant's Form 10-K for the year
ended October 30, 1999 filed with the Securities and
Exchange Commission on January 27, 2000.
xix. Restatement of Supplemental Executive Retirement Plan,
dated as of January 1, 1998, is incorporated herein by
reference to the Registrant's Form 10-Q for the
quarterly period ended January 24, 2000, filed with the
Securities and Exchange Commission on March 9, 2000.
E-4
Exhibit 21
LIST OF SUBSIDIARIES
OF FOODARAMA SUPERMARKETS, INC.
Name of Subsidiary State of
Incorporation
ShopRite of Malverne, Inc. New York
New Linden Price Rite, Inc. New Jersey
ShopRite of Reading, Inc. Pennsylvania
E-5