UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
----------------------------
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended February 1, 2003
Commission file number 1-5745-1
FOODARAMA SUPERMARKETS, INC.
-------------------------------------------------
(Exact name of Registrant as specified in its charter)
New Jersey 21-0717108
------------------------------- -----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
922 Highway 33, Freehold, N.J. 07728
-----------------------------------------
(Address of principal executive offices)
Telephone #732-462-4700
---------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months and
(2) has been subject to such filing requirements for the past 90
days.
Yes __X__ No _____
Indicate by check mark whether the Registrant is an accelerated
filer (as defined in Rule 12b-2 of the Exchange Act). Yes____ No _X_
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the close of the latest practicable
date.
OUTSTANDING AT
CLASS March 7, 2003
--------- --------------
Common Stock 986,867 shares
$1 par value
FOODARAMA SUPERMARKETS, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Consolidated Condensed Balance
Sheets February 1, 2003 and November 2, 2002
Unaudited Consolidated Condensed Statements
of Operations for the thirteen weeks ended
February 1, 2003 and February 2, 2002
Unaudited Consolidated Condensed Statements
of Cash Flows for the thirteen weeks ended
February 1, 2003 and February 2, 2002
Notes to the Unaudited Consolidated
Condensed Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations
Item 3. Quantitative and Qualitative Disclosures
About Market Risk
Item 4. Controls and Procedures
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Disclosure Concerning Forward-Looking Statements
All statements, other than statements of historical fact, included in this Form
10-Q, including without limitation the statements under "Management's Discussion
and Analysis of Financial Condition and Results of Operations", are, or may be
deemed to be, "forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such
forward-looking statements involve assumptions, known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of Foodarama Supermarkets, Inc. (the "Company", which may be
referred to as we, us or our) to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements contained in this Form 10-Q. Such potential risks and
uncertainties, include without limitation, competitive pressures from other
supermarket operators and warehouse club stores, economic conditions in the
Company's primary markets, consumer spending patterns, availability of capital,
cost of labor, cost of goods sold including increased costs from the Company's
cooperative supplier, Wakefern Food Corporation ("Wakefern"), and other risk
factors detailed herein and in other of the Company's Securities and Exchange
Commission filings. The forward-looking statements are made as of the date of
this Form 10-Q and the Company assumes no obligation to update the
forward-looking statements or to update the reasons actual results could differ
from those projected in such forward-looking statements.
2
PART I FINANCIAL INFORMATION
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(in thousands)
February 1, November 2,
2003 2002
(Unaudited) (1)
ASSETS ------------ -----------
Current assets:
Cash and cash equivalents $ 4,671 $ 4,280
Merchandise inventories 46,140 43,707
Receivables and other current assets 10,081 11,214
Prepaid and refundable income taxes 775 257
Related party receivables - Wakefern 5,403 8,903
-------- --------
67,070 68,361
-------- --------
Property and equipment:
Land 308 308
Buildings and improvements 1,220 1,220
Leasehold improvements 50,031 41,311
Equipment 124,155 114,077
Property under capital leases 89,264 69,867
Construction in progress 5,771 15,364
-------- --------
270,749 242,147
Less accumulated depreciation and
amortization 115,238 112,360
-------- --------
155,511 129,787
-------- --------
Other assets:
Investments in related parties 13,373 12,758
Goodwill 1,715 1,715
Intangibles 1,238 1,290
Other 3,618 3,743
Related party receivables - Wakefern 1,774 1,735
-------- --------
21,718 21,241
-------- --------
$244,299 $219,389
======== ========
(continued)
(1) Derived from the Audited Consolidated Financial Statements for the year
ended November 2, 2002.
See accompanying notes to the consolidated condensed financial statements.
3
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(in thousands except share data)
February 1, November 2,
2003 2002
(Unaudited) (1)
LIABILITIES AND SHAREHOLDERS' EQUITY ------------ -----------
Current liabilities:
Current portion of long-term debt $ 7,565 $ 7,158
Current portion of long-term debt,
related party 630 629
Current portion of obligations under
capital leases 1,208 1,140
Current income taxes payable 421 -
Deferred income taxes 1,433 1,433
Accounts payable:
Related party-Wakefern 43,108 31,935
Others 10,603 14,078
Accrued expenses 13,779 12,578
-------- --------
78,747 68,951
---------- ----------
Long-term debt 30,950 35,745
Long-term debt, related party 1,085 686
Obligations under capital leases 82,520 63,606
Deferred income taxes 1,275 1,142
Other long-term liabilities 12,645 12,634
---------- ----------
128,475 113,813
---------- ----------
Shareholders' equity:
Common stock, $1.00 par; authorized
2,500,000 shares; issued 1,621,767
shares; outstanding 986,867 shares
February 1, 2003; 986,367 shares
November 2, 2002 1,622 1,622
Capital in excess of par 4,168 4,168
Deferred Compensation (1,231) (1,324)
Retained earnings 47,605 47,256
Accumulated other comprehensive income:
Minimum pension liability (2,896) (2,896)
---------- ----------
49,268 48,826
Less 634,900 shares February 1, 2003;
635,400 shares November 2, 2002,
held in treasury, at cost 12,191 12,201
---------- ----------
37,077 36,625
---------- ----------
$ 244,299 $ 219,389
========== ==========
(1) Derived from the Audited Consolidated Financial Statements for the year
ended November 2, 2002.
See accompanying notes to the consolidated condensed financial statements.
4
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Operations - Unaudited
(in thousands - except share data)
13 Weeks Ended
-----------------------------
February 1, February 2,
2003 2002
------------- -------------
Sales $ 257,091 $ 252,027
Cost of goods sold 192,334 188,635
----------- -----------
Gross profit 64,757 63,392
Selling, general and
administrative expenses 61,891 59,412
----------- -----------
Earnings from operations 2,866 3,980
----------- -----------
Other income (expense):
Interest expense (2,321) (1,907)
Interest income 37 40
----------- -----------
(2,284) (1,867)
Earnings before income tax provision 582 2,113
Income tax provision (233) (846)
----------- -----------
Net income $ 349 $ 1,267
=========== ===========
Per share information:
Net income per common share:
Basic $ .35 $ 1.17
=========== ===========
Diluted $ .34 $ 1.12
=========== ===========
Weighted average shares outstanding:
Basic 986,550 1,079,675
=========== ===========
Diluted 1,016,482 1,133,528
=========== ===========
Dividends per common share -0- -0-
=========== ===========
See accompanying notes to the consolidated condensed financial statements.
5
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows - Unaudited
(in thousands)
13 Weeks Ended
-------------------------------
February 1, February 2,
2003 2002
-------------------------------
Cash flows from operating activities:
Net income $ 349 $ 1,267
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 3,832 3,405
Amortization, goodwill - 35
Amortization, intangibles 52 53
Amortization, deferred financing costs 115 75
Amortization, deferred rent escalation (79) (58)
Provision to value inventory at LIFO 155 100
Deferred income taxes 133 200
Amortization of deferred compensation 77 81
(Increase) decrease in
Merchandise inventories (2,588) (2,899)
Receivables and other current assets (556) (1,296)
Prepaid and refundable income taxes (518) (113)
Other assets 28 (443)
Related party receivables-Wakefern 3,461 4,382
Increase (decrease) in
Accounts payable 7,698 3,428
Income taxes payable 421 (704)
Other liabilities 1,307 (1,838)
--------- ----------
13,887 5,675
---------- ----------
Cash flows from investing activities:
Construction advance due from landlords 1,845 -
Cash paid for the purchase of property
and equipment (8,150) (3,470)
Cash paid for construction in progress (2,009) (261)
Deposits on equipment (156) -
Increase in related party receivables-other - (1)
--------- -------
(8,470) (3,732)
----------- --------
Cash flows from financing activities:
Proceeds from issuance of debt 5,595 4,000
Principal payments under long-term debt (9,983) (3,456)
Principal payments under capital
lease obligations (415) (298)
Principal payments under long-term
debt, related party (215) (252)
Deferred financing costs (18) -
Proceeds from exercise of stock options 10 -
Repurchase of common stock - (442)
-------- ------------
(5,026) (448)
---------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS 391 1,495
CASH AND CASH EQUIVALENTS, BEGINNING OF
THE PERIOD 4,280 4,219
---------- -------
CASH AND CASH EQUIVALENTS, END OF THE PERIOD $ 4,671 $ 5,714
========== =========
See accompanying notes to the consolidated condensed financial statements.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
Note 1 Basis of Presentation
-------------------------------
The unaudited Consolidated Condensed Financial Statements as of or for the
period ending February 1, 2003, have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and rule 10-01. The balance sheet at November 2, 2002
has been taken from the audited financial statements at that date. In the
opinion of the management of the Company, all adjustments (consisting only of
normal recurring accruals) which are considered necessary for a fair
presentation of the results of operations for the period have been made. Certain
financial information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. The reader is referred to the consolidated
financial statements and notes thereto included in the Company's annual report
on Form 10-K for the year ended November 2, 2002.
At both February 1, 2003 and November 2, 2002, approximately 82% of merchandise
inventories are valued by the Last-In-First-Out ("LIFO") method of inventory
valuation while the balance of inventories are valued by the First-In-First-Out
("FIFO") method. Effective November 3, 2002 the Company changed from the 80%
LIFO method to the 100% LIFO method. The effect of this change on the first
quarter ended February 1, 2003 was to decrease net income $54,000 ($.05 per
diluted share). If the FIFO method had been used for the entire inventory,
inventories would have been $2,175,000 and $2,020,000 higher than reported at
February 1, 2003 and November 2, 2003, respectively.
Certain reclassifications have been made to prior year financial statements in
order to conform to the current year presentation.
These results are not necessarily indicative of the results for the entire
fiscal year.
Note 2 Adoption of New Accounting Standards
---------------------------------------------
Accounting for Goodwill and Other Intangible Assets
---------------------------------------------------
Effective November 3, 2002, the Company implemented Statement of Financial
Accounting Standards No. 142 ("SFAS 142"), "Accounting for Goodwill and Other
Intangible Assets." Goodwill and other intangibles that have indefinite useful
lives will not be amortized, but instead will be tested at least annually for
impairment at the reporting unit level. The Company has determined that it is
contained within one reporting unit and as such, impairment is tested at the
company level. During the first quarter of fiscal 2003, the Company completed
goodwill transition and annual impairment tests prescribed by SFAS 142 and
concluded that no impairment of goodwill existed as of November 3, 2002.
The gross carrying amount and accumulated amortization of the Company's other
intangible assets as of February 1, 2003 and November 2, 2002 are as follows:
7
February 1, 2003 November 2, 2002
---------------- ----------------
(in thousands)
Gross Gross
Amortized Intangible Carrying Accumulated Carrying Accumulated
Assets Amount Amortization Amount Amortization
------ ------------ ------ ----------
Bargain Leases $ 3,918 $ 2,900 $ 3,918 $ 2,848
Unamortized Intangible
Assets
Liquor Licenses 220 - 220 -
----------------------------------------------------
Total $ 4,138 $ 2,900 $ 4,138 $ 2,848
====================================================
Amortization expense recorded on the intangible assets for the thirteen weeks
ended February 1, 2003 and February 2, 2002 was $52,000 and $53,000,
respectively. As a result of the adoption of SFAS 142, there were no changes to
amortizable lives or amortization methods. The estimated amortization expense
for the Company's other intangible assets for each of the five succeeding fiscal
years is as follows:
Fiscal Year (In thousands)
----------- --------------
2003 $192
2004 106
2005 106
2006 106
2007 106
The following table illustrates net income available to common stockholders and
earnings per share, exclusive of goodwill amortization expense in the prior
periods:
Thirteen weeks ended
--------------------------------------------------------
February 1, 2003 February 2, 2002
---------------- ----------------
(in thousands, except per share data)
Basic Diluted Basic Diluted
earnings earnings earnings earnings
Net per per Net per per
Income share share Income share share
------ ------ ------ ------ ------ ------
Reported net income $349 $.35 $.34 $ 1,267 $1.17 $1.12
Goodwill amortization - - - 35 .03 .03
----------------------------------------------------------
Adjusted net income $349 $.35 $.34 $ 1,302 $1.20 $1.15
==========================================================
Accounting for Asset Retirement Obligations
-------------------------------------------
Effective November 3, 2002 the Company adopted Statement of Financial Accounting
Standards No. 143 ("SFAS 143"), "Accounting for Asset Retirement Obligations".
SFAS 143 addresses financial accounting and reporting for obligations associated
with the retirement of tangible long-lived assets and the associated asset
retirement costs. There was no significant impact from the adoption of SFAS 143
in the quarter ended February 1, 2003.
8
Recission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No.
13, and Technical Corrections
Effective November 3, 2002 the Company adopted Statement of Financial Accounting
Standards No. 145 ("SFAS 145"), "Recission of FASB Statements No. 4, 44 and 64,
Amendment of FASB Statement No. 13, and Technical Corrections". Under SFAS 145,
gains and losses from extinguishment of debt will no longer be aggregated and
classified as an extraordinary item, net of related income tax effect, on the
statement of earnings. There was no significant impact from the adoption of SFAS
145 in the quarter ended February 1, 2003.
Accounting for Costs Associated with Exit or Disposal Activities
----------------------------------------------------------------
Effective November 3, 2002 the Company adopted Statement of Financial Accounting
Standards No. 146 ("SFAS 146"), "Accounting for Costs Associated with Exit or
Disposal Activities". SFAS No. 146 requires recognition of a liability for the
costs associated with an exit or disposal activity when the liability is
incurred, as opposed to when the entity commits to an exit plan as required
under EITF Issue No. 94-3. SFAS 146 will primarily impact the timing of the
recognition of costs associated with any future exit or disposal activities.
There was no significant impact from the adoption of SFAS 146 in the quarter
ended February 1, 2003.
Part I - Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
--------------------------------------------------------------------------------
Critical Accounting Policies and Estimates
------------------------------------------
Critical accounting policies are those accounting policies that management
believes are important to the portrayal of the Company's financial condition and
results and require management's most difficult, subjective or complex
judgments, often as a result of the need to make estimates about the effect of
matters that are inherently uncertain. The preparation of financial statements
in conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures 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. The Company's critical accounting policies relating
to the impairment of goodwill, patronage dividends earned as a stockholder of
Wakefern and workers' compensation insurance are described in the Company's
Annual Report on Form 10-K for the year ended November 2, 2002. As of February
1, 2003 there have been no material changes to any of the critical accounting
policies contained therein.
Financial Condition and Liquidity
---------------------------------
The Company is a party to a Third Amended and Restated Revolving Credit and Term
Loan Agreement (the "Credit Agreement") with four financial institutions. The
Credit Agreement is secured by substantially all of the Company's assets and
provided for a total commitment of up to $80,000,000, including a revolving
credit facility (the "Revolving Note") of up to $35,000,000, a term loan ("the
Term Loan") in the amount of $25,000,000 and a capital expenditures facility
9
(the "Capex Facility") of up to $20,000,000. As of February 1, 2003 the Company
owed $23,750,000 on the Term Loan and $1,595,274 under the Capex Facility.
On January 31, 2003 the Company financed the purchase of $4,000,000 of equipment
for the new store location in Woodbridge, New Jersey. The note bears interest at
6.45% and is payable in monthly installments over its seven year term.
The Company's compliance with the major financial covenants under the Credit
Agreement was as follows as of February 1, 2003:
Actual
Financial Credit (As defined in the
Covenant Agreement Credit Agreement)
--------- --------- ---------------------
Adjusted EBITDA (1) Greater than $16,500,000 $ 19,931,000
Leverage Ratio (1) Less than 3.6 to 1.00 2.02 to 1.00
Debt Service Coverage
Ratio Greater than 1.10 to 1.00 1.87 to 1.00
Adjusted Capex (2) Less than $5,740,000 (3)(5) $ 1,393,000 (4)
Store Project Capex Less than $23,175,000 (3)(5) $ 8,766,000 (4)
(1) Excludes obligations under capitalized leases, interest expense and
depreciation expense attributable to capitalized leases and changes in the
LIFO reserve.
(2) Adjusted Capex is all capital expenditures other than New/Replacement Store
Project Capex.
(3) Represents limitations on capital expenditures for fiscal 2003.
(4) Represents capital expenditures for the quarter ended February 1,2003.
(5) Does not include amounts not used in the prior fiscal year and available to
be carried forward to fiscal 2003: $2,589,000 for Adjusted Capex and
$8,191,000 for Store Project Capex.
No cash dividends have been paid on the Common Stock since 1979, and the Company
has no present intentions or ability to pay any dividends in the near future on
its Common Stock. The Credit Agreement does not permit the payment of any cash
dividends on our Common Stock.
Working Capital
---------------
At February 1, 2003, the Company had a working capital deficiency of $11,677,000
compared to deficiencies of $590,000 at November 2, 2002 and $6,952,000 at
February 2, 2002. Since the end of fiscal 2002 the working capital deficiency
increased as the result of the collection of related party receivables from
Wakefern related to the fiscal 2002 patronage dividend receivable and the
increase in related party accounts payable to Wakefern resulting from increased
sales, the inventory for the new Woodbridge and Ewing stores and the deferral of
payment for Wakefern promotional programs. Funds used to pay these accounts
payable will come from the revolving credit facility thereby increasing the
Revolving Note which is classified as long-term borrowings. This will result in
a corresponding increase in working capital. Receivables and other current
assets include receivables due from the landlord for construction allowances for
the Woodbridge, New Jersey location. These receivables are currently in dispute
as a result of litigation with the landlord over the correct commencement date
of the lease for the new Woodbridge location. The Company denies the landlord's
allegations, and the amount and timing of collection of the construction
allowances will depend upon the outcome of the litigation. When collected, the
proceeds from these receivables will be used to reduce the Revolving Note which
is classified as long-term borrowings. This will result in a corresponding
decrease in working capital.
10
During the fiscal year 2002, the Business Tax Reform Act was passed in the State
of New Jersey. This legislation is effective for tax years beginning on or after
January 1, 2002 (fiscal 2003). Corporate taxpayers are subject to an Alternative
Minimum Assessment ("AMA"), which is based upon either New Jersey gross receipts
or New Jersey gross profits, if the AMA exceeds the tax based on net income. The
Company has reflected in its current tax provision the effect of the AMA. The
AMA increased the Company's current tax liability by $317,000.
The Company normally requires small amounts of working capital since inventory
is generally sold at approximately the same time that payments to Wakefern and
other suppliers are due and most sales are for cash or cash equivalents.
Working capital ratios were as follows:
February 1, 2003 .85 to 1.0
November 2, 2002 .99 to 1.0
February 2, 2002 .90 to 1.0
Cash flows (in millions) were as follows:
Thirteen Weeks Ended
-----------------------------
2/1/03 2/2/02
------ ------
Operating activities... $ 13.9 $ 5.7
Investing activities... (8.5) (3.7)
Financing activities... (5.0) (.5)
------- -----
Totals $ .4 $ 1.5
======= ======
The Company had $19,656,000 of available credit, at February 1, 2003, under its
revolving credit facility. The Company has capital commitments (net of landlord
contributions) of $9,461,000 for equipment and $3,143,000 for leasehold
improvements related to two stores which are under construction and the two
stores which opened in the quarter ended February 1, 2003. Two of these are
replacement stores, one is a new store and one is an expansion and remodeling of
an existing store. All of these projects are in central New Jersey, are or will
be World Class stores and have opened or are expected to open in the third
quarter of fiscal 2003. The amounts available under the Credit Agreement will
adequately meet our operating needs, scheduled capital expenditures and debt
service for fiscal 2003.
For the 13 weeks ended February 1, 2003 depreciation was $3,832,000 while
capital expenditures totaled $10,159,000, compared to $3,405,000 and $3,731,000,
respectively, in the prior year period. The increase in depreciation was the
result of the purchase of equipment and leasehold improvements for the two new
locations opened in Woodbridge and Ewing, New Jersey in December 2002 and
January 2003, respectively, as well as two additional capitalized real estate
leases. The increase in capital expenditures was due to the acquisition of
equipment and leasehold improvements for the locations opened in the first
quarter of fiscal 2003 and the two stores under construction as compared with
only one new location opened in the first quarter of fiscal 2002.
11
Results of Operations (13 weeks ended February 1, 2003 compared to 13
--------------------- weeks ended February 2, 2002)
Sales:
------
Sales for the current period totaled $257.1 million as compared to $252.0
million in the prior year period. Same store sales from the twenty stores in
operation in both periods decreased 1.4%. This decrease was primarily due to a
softening in the economy, the effect of competitive store openings and the
impact of deflation in certain product categories.
Sales for the current quarter included the operations of the new locations
opened in December 2002 and January 2003 in Woodbridge and Ewing, New Jersey,
respectfully. The location in Woodbridge replaced an older, smaller store in the
same shopping center.
Gross Profit:
-------------
Gross profit as a percent of sales was 25.2% for both fiscal 2003 and fiscal
2002. Patronage dividends, applied as a reduction of the cost of merchandise
sold, were $1.9 million in the current year period compared to $1.7 million in
the prior year period.
Operating Expenses:
-------------------
Selling, general and administrative expenses as a percent of sales were 24.1%
versus 23.6% in the prior year period. The increase in selling, general and
administrative expenses as a percent of sales was primarily due to increases in
certain expense categories as a percentage of sales. As a percentage of sales,
labor and related fringe benefits increased .23%, occupancy increased .13%,
other store expenses, which included Wakefern support services and debit/credit
card fees, increased .05%, depreciation, including depreciation on capitalized
leases, increased .14%, and pre-opening costs increased .25%. These increases
were partially offset by a decrease in selling expense of .16%, supplies of .07%
and administration of .07%. The increase in labor and related fringe benefits
was the result of contractual increases in fringe benefits. Pre-opening costs
were for the new Woodbridge and Ewing stores opened in December 2002 and January
2003, respectfully.
Interest Expense:
-----------------
Interest expense increased to $2,321,000 from $1,907,000, while interest income
was $37,000 compared to $40,000 for the prior year period. The increase in
interest expense for the current year period was due to a net increase in
average outstanding debt, including capitalized lease obligations, and an
increase in the average interest rate paid on debt.
Income Taxes:
-------------
An income tax rate of 40% has been used in both the current and prior year
periods based on the expected effective tax rates.
12
Net Income:
-----------
Net income was $349,000 in the current year period compared to $1,267,000 in the
prior year period. Earnings before interest, taxes, depreciation and
amortization ("EBITDA") for the current period were $6,786,000 as compared to
$7,490,000 in the prior year period. Net income per common share on a diluted
basis was $.34 in the current period compared to $1.12 in the prior year period.
Per share calculations are based on 1,016,482 shares outstanding in the current
year period and 1,133,528 shares outstanding in the prior year period.
Item 3. 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 4. Controls and Procedures
----------------------------------
As required by Rule 13a-15 under the Exchange Act, within ninety (90) days prior
to the filing date of this report, the Company carried out an evaluation of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. This evaluation was carried out under the supervision and with
the participation of the Company's management, including the Company's Chairman
and Chief Executive Officer along with the Company's Chief Financial Officer,
who concluded that the Company's disclosure controls and procedures are
effective. The Company's Internal Auditor and Principal Accounting Officer also
participated in this evaluation. There have been no significant changes in the
Company's internal controls or in other factors which could significantly affect
internal controls subsequent to the date the Company carried out its evaluation.
Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in Company
reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed in Company reports filed under the Exchange
Act is accumulated and communicated to management, including the Company's Chief
Executive Officer and Chief Financial Officer as appropriate, to allow timely
decisions regarding required disclosure.
13
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit (99.1) - Certification of Chief Executive Officer
Exhibit (99.2) - Certification of Chief Financial Officer
(b) Reports on Form 8-K
None
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
FOODARAMA SUPERMARKETS, INC.
----------------------------
(Registrant)
Date: March 14, 2003 /S/ MICHAEL SHAPIRO
------------------------------
(Signature)
Michael Shapiro
Senior Vice President
Chief Financial Officer
Date: March 14, 2003 /S/ THOMAS H. FLYNN
------------------------------
(Signature)
Thomas H. Flynn
Director of Accounting
Principal Accounting Officer
15
CERTIFICATION
I, Joseph J. Saker, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Foodarama
Supermarkets, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the period presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: March 14, 2003 /S/ JOSEPH J. SAKER, SR.
------------------------
(Signature)
Joseph J. Saker, Sr.
Chief Executive Officer
CERTIFICATION
I, Michael Shapiro, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Foodarama
Supermarkets, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the period presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: March 14, 2003 /S/ MICHAEL SHAPIRO
-------------------
(Signature)
Michael Shapiro
Chief Financial Officer
Exhibit 99.1
CERTIFICATION
I, Joseph J. Saker, Sr., certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarterly
period ended February 1, 2003 of Foodarama Supermarkets, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report.
Date: March 14, 2003
/S/ JOSEPH J. SAKER, SR.
---------------------------
(Signature)
Joseph J. Saker, Sr.
Chairman and Chief Executive Officer
18
Exhibit 99.2
CERTIFICATION
I, Michael Shapiro, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarterly
period ended February 1, 2003 of Foodarama Supermarkets, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report.
Date: March 14, 2003
/S/ MICHAEL SHAPIRO
-------------------------------
(Signature)
Michael Shapiro
Senior Vice President and Chief
Financial Officer
19