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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: April 30, 2005
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _______________
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.)
Building 6, Suite 1, 922 Highway 33, Freehold, New Jersey 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 June 10, 2005
- -------- --------------
Common Stock 988,117 shares
$1 par value
FOODARAMA SUPERMARKETS, INC.
----------------------------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Consolidated Condensed Balance
Sheets April 30, 2005 and October 30, 2004
Unaudited Consolidated Condensed Statements
of Operations for the thirteen weeks ended
April 30, 2005 and May 1, 2004
Unaudited Consolidated Condensed Statements
of Operations for the twenty six weeks ended
April 30, 2005 and May 1, 2004
Unaudited Consolidated Condensed Statements
of Cash Flows for the twenty six weeks ended
April 30, 2005 and May 1, 2004
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
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, warehouse club stores and discount general merchandise
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)
April 30, October 30,
2005 2004
(Unaudited) (1)
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 5,076 $ 6,001
Merchandise inventories 54,367 57,123
Receivables and other current assets 6,638 8,456
Prepaid and refundable income taxes 1,249 170
Related party receivables - Wakefern 7,879 14,799
------- -------
75,209 86,549
------- -------
Property and equipment:
Land 308 308
Buildings and improvements 1,220 1,220
Leasehold improvements 61,072 60,488
Equipment 163,097 161,554
Property under capital leases 152,354 152,354
Construction in progress 64 60
------- -------
378,115 375,984
Less accumulated depreciation and
amortization 151,130 140,138
------- -------
226,985 235,846
------- -------
Other assets:
Investments in related parties 17,655 17,655
Goodwill 1,715 1,715
Intangible assets, net 1,398 1,493
Other 3,534 3,339
Related party receivables - Wakefern 2,112 2,039
------- -------
26,414 26,241
------- -------
$328,608 $348,636
======== ========
(continued)
(1) Derived from the Audited Consolidated Financial Statements for the year
ended October 30, 2004.
See accompanying notes to the consolidated condensed financial statements.
3
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
- ---------------------------------------------
Consolidated Condensed Balance Sheets
- -------------------------------------
(In thousands except share data)
April 30, October 30,
2005 2004
(Unaudited) (1)
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 8,973 $ 8,415
Current portion of long-term debt,
related party 925 867
Current portion of obligations under
capital leases 1,873 1,727
Current income taxes payable 162 408
Deferred income taxes 1,579 1,579
Accounts payable:
Related party-Wakefern 37,494 39,639
Others 9,877 14,384
Accrued expenses 14,176 15,236
------- -------
75,059 82,255
------- -------
Long-term debt 51,909 63,051
Long-term debt, related party 3,128 3,590
Obligations under capital leases 141,544 142,504
Deferred income taxes 1,285 2,292
Other long-term liabilities 13,964 13,711
-------- -------
211,830 225,148
-------- -------
Commitments and Contingencies
Shareholders' equity:
Common stock, $1.00 par; authorized 2,500,000 shares;
issued 1,621,767 shares; outstanding 988,117 shares
April 30, 2005; 987,617 shares October 30, 2004 1,622 1,622
Capital in excess of par 4,168 4,168
Deferred compensation (411) (580)
Retained earnings 51,646 51,339
Accumulated other comprehensive income:
Minimum pension liability (3,140) (3,140)
---------- ---------
53,885 53,409
Less 633,650 shares April 30, 2005; 634,150 shares
October 30, 2004, held in treasury, at cost 12,166 12,176
--------- ---------
41,719 41,233
--------- ---------
$ 328,608 $ 348,636
========= =========
(1) Derived from the Audited Consolidated Financial Statements for the year
ended October 30, 2004. 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
---------------------
April 30, May 1,
2005 2004
--------- --------
Sales $ 292,035 $ 278,693
Cost of goods sold 214,947 204,632
--------- ----------
Gross profit 77,088 74,061
Selling, general and administrative expenses 72,394 68,701
--------- ---------
Earnings from operations 4,694 5,360
--------- ---------
Other income (expense):
Interest expense (4,637) (3,854)
Interest income 31 37
---------- ----------
(4,606) (3.854)
---------- ----------
Earnings before income tax provision 88 1,543
Income tax provision (34) (587)
---------- ----------
Net Income $ 54 $ 956
========== ==========
Per share information:
Net income per common share:
Basic $ .05 $ .97
========== ==========
Diluted $ .05 $ .93
========== ==========
Weighted average shares outstanding:
Basic 987,662 986,867
---------- ----------
Diluted 1,032,098 1,026,595
========== ==========
Dividends per common share -0- -0-
========== ==========
See accompanying notes to consolidated condensed financial statements.
5
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
- ---------------------------------------------
Consolidated Condensed Statements of Operations - Unaudited
- -----------------------------------------------------------
(In thousands - except share data)
26 Weeks Ended
-------------------
April 30, May 1,
2005 2004
--------- -------
Sales $ 609,624 $ 572,536
Cost of goods sold 452,429 422,247
---------- ---------
Gross profit 157,195 150,289
Selling, general and administrative expenses 147,469 139,172
---------- ---------
Earnings from operations 9,726 11,117
---------- ---------
Other income (expense):
Interest expense (9,297) (7,638)
Interest income 67 64
----------- ----------
(9,230) (7,574)
----------- ----------
Earnings before income tax provision 496 3,543
Income tax provision (189) (1,347)
----------- ----------
Net income $ 307 2,196
=========== =========
Per share information:
Net income per common share:
Basic $ .31 $ 2.23
=========== =========
Diluted $ .29 $ 2.15
=========== =========
Weighted average shares outstanding:
Basic 987,638 986,867
=========== =========
Diluted 1,033,451 1,020,607
=========== =========
Dividends per common share -0- -0-
=========== =========
See accompanying notes to consolidated condensed financial statements.
6
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
- ---------------------------------------------
Consolidated Condensed Statements of Cash Flows - Unaudited
- -----------------------------------------------------------
(In thousands)
- --------------
26 Weeks Ended
--------------------
April 30, May 1,
2005 2004
------- -------
Cash flows from operating activities:
Net income $ 307 $ 2,196
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 10,992 9,566
Amortization, intangibles 95 52
Amortization, deferred financing costs 380 325
Amortization, deferred rent escalation (161) (150)
Provision to value inventory at LIFO 428 525
Deferred income taxes (1,007) (166)
Amortization of deferred compensation 168 204
(Increase) decrease in
Merchandise inventories 2,328 (1,903)
Receivables and other current assets 1,043 409
Prepaid and refundable income taxes (1,079) 368
Other assets (575) (436)
Related party receivables-Wakefern 6,847 5,767
Increase (decrease) in
Accounts payable (6,652) 3,432
Income taxes payable (246) (728)
Other liabilities (645) 1,471
------- ----------
12,223 20,932
------- ----------
Cash flows from investing activities:
Decrease in construction advance due from landlords 775 9,905
Increase in construction advance due from landlords - (9,816)
Cash paid for the purchase of property and equipment (2,127) (15,745)
Cash paid for construction in progress (4) (3,875)
------- ---------
(1,356) (19,531)
------- ---------
Cash flows from financing activities:
Proceeds from issuance of debt - 7,123
Principal payments under long-term debt (10,584) (7,989)
Principal payments under capital lease obligations (814) (834)
Principal payments under long-term debt, related party (404) (501)
Deferred financing and other costs - (82)
Proceeds from exercise of stock options 10 -
--------- ----------
(11,792) (2,283)
--------- ----------
NET CHANGE IN CASH AND CASH EQUIVALENTS (925) (882)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 6,001 5,252
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,076 $ 4,370
========= =========
See accompanying notes to consolidated condensed financial statements.
7
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
- ----------------------------------------------------------------
Note 1 Basis of Presentation
- -------------------------------
The unaudited Consolidated Condensed Financial Statements as of, or for, the
period ending April 30, 2005, have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and rule 10-01. The balance sheet at October 30, 2004
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 and Form 10-K/A for the year ended October 30, 2004.
At both April 30, 2005 and October 30, 2004, approximately 82% of merchandise
inventories were valued by the Last-In-First-Out ("LIFO") method of inventory
valuation while the balance of inventories is valued by the First-In-First-Out
("FIFO") method. If the FIFO method had been used for the entire inventory,
inventories would have been $4,168,000 and $3,740,000 higher than reported at
April 30, 2005 and October 30, 2004, 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
- ---------------------------------------------
In November 2004, the Financial Accounting Standards Board (the "FASB) issued
SFAS No. 151, "Inventory Costs," an amendment of ARB No. 43, Chapter 4. SFAS No.
151 amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to
clarify the accounting for abnormal amounts of idle facility expense, freight,
handling costs, and spoilage. This statement requires that those items be
recognized as current period charges regardless of whether they meet the
criterion of "so abnormal" which was the criterion specified in ARB No. 43. This
pronouncement is effective for the fiscal years beginning after June 15, 2005.
The Company has not yet assessed the impact on adopting this new standard.
In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share-Based
Payment", which is a revision of SFAS No. 123, "Accounting for Stock-Based
Compensation." SFAS No. 123(R) supersedes APB Opinion No. 25, "Accounting for
Stock Issued to Employees" and amends SFAS No. 95, "Statement of Cash Flows."
Generally, the approach in SFAS No. 123(R) is similar to the approach described
in SFAS No. 123. However, SFAS No. 123(R) requires all share-based payments to
employees, including grants of employee stock options, to be recognized in the
income statement based on their fair values. Pro forma disclosure is no longer
an alternative. In April 2005, the Securities and Exchange Commission adopted a
final rule amending Rule 4-01(a) of Regulation S-X amending the compliance date
for FASB Statement No. 123(R) to be effective starting with the first interim or
annual reporting period of the first fiscal year beginning on or after June 15,
2005. The provisions of FASB Statement No. 123(R) will be effective for the
Company's first quarter of fiscal year 2006 beginning October 30, 2005. The
Company has not yet assessed the impact on adopting this new standard.
In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
Assets, an amendment of APB Opinion No. 29." SFAS No. 153 specifies the criteria
required to record a nonmonetary asset exchange using carryover basis. SFAS No.
153 is effective for nonmonetary asset exchanges occurring after July 1, 2005.
8
The Company will adopt this statement in the third quarter of fiscal 2005 and it
is not expected to have a material effect on the financial statements when
adopted.
In December 2004, the FASB issued FSP FAS 109-1, Application of FASB Statement
No. 109, "Accounting for Income Taxes," to the "Tax Deduction on Qualified
Production Activities Provided by the American Jobs Creation Act of 2004" to
provide accounting guidance on the appropriate treatment of tax benefits
generated by the enactment of the Act. The FSP requires that the manufacturer's
deduction be treated as a special deduction in accordance with SFAS 109 and not
as a tax rate reduction. The Company is awaiting final tax regulations from the
Internal Revenue Service before completing its assessment of the impact of
adopting FSP FAS 109-1 on its financial statements.
In March 2005, the FASB issued FASB Interpretation (FIN) No. 47, "Accounting for
Conditional Asset Retirement Obligations - an Interpretation of Financial
Accounting Standard (FAS) No. 143, `Accounting for Asset Retirement
Obligations.'" FIN No. 47 clarifies the requirements to record liabilities
stemming from a legal obligation to clean up and retire fixed assets, when
retirement depends on a future event. FASB believes this interpretation will
result in more consistent recognition of liabilities relating to asset
retirement obligations, more information about expected future cash outflows
associated with the obligations and investments in long-lived assets because
additional asset retirement costs will be recognized as part of the carrying
amounts of the assets. FIN No. 47 will be effective no later than the end of
fiscal years ending after December 15, 2005. The adoption of this standard does
not have an impact on the Company's financial statements.
In March 2005, the FASB issued FSP No. 46(R)-5, "Implicit Variable Interests
under FASB Interpretation No.46, or FIN 46 (Revised December 2003),
Consolidation of Variable Interest Entities," or FSP FIN 46(R)-5. FSP FIN
46(R)-5 provides guidance for a reporting enterprise on whether we hold an
implicit variable interest in Variable Interest Entities, or VIEs, or potential
VIEs when specific conditions exist. This FSP is effective in the first period
beginning after March 3, 2005 in accordance with the transition provisions of
FIN 46 (Revised 2003), "Consolidation of Variable Interest Entities -- an
Interpretation of Accounting Research Bulletin No. 51," or FIN 46(R). We have
determined the adoption of FSP FIN 46(R)-5 will not have an impact on our
results of operations and financial condition.
In May 2005, the FASB issued FASB Statement No. 154 "Accounting Changes and
Error Corrections a replacement of APB Opinion No. 20 and FASB Statement No. 3."
This Statement applies to all voluntary changes in accounting principle. It also
applies to changes required by an accounting pronouncement in the unusual
instance that the pronouncement does not include specific transition provisions.
APB Opinion No. 20 previously required that most voluntary changes in accounting
principle be recognized by including in net income of the period of the change
the cumulative effect of changing to the new accounting principle. This
Statement requires retrospective application to prior periods' financial
statements of changes in accounting principle, unless it is impracticable to
determine either the period-specific effects or the cumulative effect of the
change. FASB Statement No.154 will be effective for accounting changes and
corrections of errors made in fiscal years beginning after December 15, 2005.
Note 3 Stock-Based Compensation
- ---------------------------------
The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," ("APB 25") and related
interpretations in accounting for its employee stock options. Under this method,
compensation cost is measured as the amount by which the market price of the
underlying stock exceeds the exercise price of the stock option at the date at
which both the number of options granted and the exercise price are known.
9
In accordance with SFAS 148, "Accounting for Stock-Based Compensation -
Transition and Disclosure," the effect on net income and earnings per share if
the Company had applied the fair value recognition provisions of SFAS 123,
"Accounting for Stock-Based Compensation," to stock-based employee compensation
is as follows:
Thirteen Weeks Twenty Six Weeks
Ended Ended
-------------------------------------------
(In thousands, except (In thousands, except
per share amounts) per share amounts)
-------------------------------------------
April 30, May 1, April 30, May 1,
2005 2004 2005 2004
-------------------------------------------
Net income - as reported $ 54 $ 956 $ 307 $ 2,196
Add:
Stock-based employee compensation
expense, determined under the
intrinsic value method, included in
reported net income, net of related
tax effects 52 54 104 108
Deduct:
Adjustment to total stock-based
employee compensation expense
determined under the fair value
based method, net of related tax
effects (71) ( 74) (142) (148)
-------------------------------------------
Pro forma net income $ 35 $ 936 $ 269 $ 2,156
===========================================
Earnings per share:
Basic, as reported $ .05 $ .97 $ .31 $ 2.23
===========================================
Basic, pro forma $ .04 $ .95 $ .27 $ 2.18
===========================================
Diluted, as reported $ .05 $ .93 $ .29 $ 2.15
===========================================
Diluted, pro forma $ .03 $ .91 $ .26 $ 2.11
===========================================
Note 4 Employee Benefit Plans
- ------------------------------
The following tables summarize the components of the net periodic pension
expense for the Company sponsored defined benefit pension plans (both funded and
unfunded postretirement plans) for the 13 and 26 weeks ended April 30, 2005 and
May 1, 2004 (in thousands):
10
Components of Net Periodic Benefit Cost:
Pension Plans 13 Weeks Ended 26 Weeks Ended
- ------------- -------------- --------------
April 30, 2005 May 1, 2004 April 30, 2005 May 1, 2004
-------------- ----------- -------------- -----------
Service cost $ 123 $ 85 $ 246 $ 169
Interest cost 132 138 264 276
Expected return on plan
assets (134) (118) (268) (235)
Settlement (gain) loss
recognized - - - -
Amortization of prior
service cost 11 11 22 22
Recognized net actuarial
loss 95 99 190 198
------ ------- ------ -----
Net periodic benefit cost $ 227 $ 215 $ 454 $ 430
====== ======= ====== =====
Other Postretirement Plan 13 Weeks Ended 26 Weeks Ended
- ------------------------- -------------- --------------
April 30, 2005 May 1, 2004 April 30, 2005 May 1, 2004
-------------- ----------- -------------- -----------
Service cost $ 46 $ 42 $ 92 $ 85
Interest cost 83 79 166 157
Amortization of prior service cost 21 19 42 40
Recognized net actuarial loss 46 51 92 102
---- ---- ---- ----
Net periodic benefit $196 $191 $ 392 $ 384
==== ==== ===== =====
As previously disclosed in the Notes to the Consolidated Financial Statements in
the Company's 2004 Annual Report on Form 10-K/A filed with the SEC on February
28, 2005, the Company's current funding policy for its qualified pension plans
is to contribute annually the amount required by regulatory authorities to meet
minimum funding requirements. The Company presently anticipates contributing
approximately $1,246,000 to its pension plans during fiscal 2005. This amount is
based on preliminary information and the actual amount contributed will be
determined based on the final actuarial calculations, plan asset performance,
possible changes in law and other factors. The Company has contributed $562,000
during the twenty six weeks ended April 30, 2005, and anticipates contributing
approximately $684,000 more for expected future benefit payments during the
remainder of fiscal 2005.
Since the Company's Other Post Retirement Plan is unfunded, the contributions to
this plan are equal to the benefit payments made during the year. There were no
benefit payments made during the 26 weeks ended April 30, 2005.
PART I - Item 2 Management's Discussion and Analysis of Financial Condition and
- --------------------------------------------------------------------------------
Results of Operations
- ---------------------
OVERVIEW
- --------
We operate a chain of 26 ShopRite supermarkets in Central New Jersey. We believe
it is important to maintain a modern, one stop competitive shopping environment
for our customers and therefore have invested heavily in new, expanded and
remodeled facilities. We have incorporated upscale service departments in our
World Class supermarket concept. We are the largest member of Wakefern, the
largest retailer owned food cooperative warehouse in the United States. Since we
purchase from Wakefern most of the product we sell, participate in advertising,
supply, insurance and technology programs with Wakefern, and receive 13.5% of
Wakefern's patronage dividend, our success is integrally tied to the success of
Wakefern.
11
We operate in a highly competitive geographic area. Certain of our competitors
are non-union and therefore may have lower labor and related fringe benefit
costs. In the past five years a non-union competitor, Wegmans, has opened five
stores in our trading area. We expect Wegmans to continue to open additional
locations in our marketing area in the future. Additionally, another non-union
operator, Wal-Mart, is expected to open Super Centers, which include extensive
food operations, in our trading area.
Certain categories of selling, general and administrative expenses have
increased disproportionately in comparison to our sales growth and to inflation
in the last three years. We have experienced substantial increases in employee
health and pension costs under union contracts and for non-union associates.
Additionally, the cost of utilities to operate our stores increased dramatically
in fiscal 2004. This trend has continued in fiscal 2005.
We look at a variety of indicators to evaluate our performance, such as same
store sales; sales per store; sales per selling square foot; percentage of total
sales by department; shrink by department and store; departmental gross profit
margins; sales per man hour; hourly labor rates; and percent of overtime.
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, inventory valuation, patronage dividends earned
as a stockholder of Wakefern, pension plans and workers' compensation insurance
are described in the Company's Annual Report on Form 10-K for the year ended
October 30, 2004. As of April 30, 2005 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 serves as our primary funding source for working capital and
capital expenditures. 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 (the "Capex Facility") of up to $20,000,000. As of
April 30, 2005 the Company owed $12,500,000 on the Term Loan and $19,286,000
under the Capex Facility.
12
The Company's compliance with the major financial covenants under the Credit
Agreement was as follows as of April 30, 2005:
Actual
(As defined in the
Financial Covenant Credit Agreement Credit Agreement)
- --------------------------------------------------------------------------------
Adjusted EBITDA (1) Greater than $26,000,000 $ 26,702,000
- --------------------------------------------------------------------------------
Leverage Ratio (2) Less than 3.0 to 1.00 2.43 to 1.00
- --------------------------------------------------------------------------------
Debt Service Coverage
Ratio (3) Greater than 1.10 to 1.00 1.73 to 1.00
- --------------------------------------------------------------------------------
Adjusted Capex (4) Less than $4,117,000 (5) (7) $ 2,025,000 (6)
- --------------------------------------------------------------------------------
Store Project Capex Less than $27,269,000 (5)(7) $ 106,000 (6)
- --------------------------------------------------------------------------------
(1) EBITDA adjusted for non-cash write downs and changes in the LIFO reserve,
less minimum lease payments due under capitalized leases.
(2) The Leverage Ratio is calculated by dividing the current and non-current
portions of Long-Term Debt, excluding obligations under capitalized
leases, and Long-Term Debt Related Party by Adjusted EBITDA.
(3) The Debt Service Coverage Ratio is calculated by dividing Operating Cash
Flow by the sum of adjusted net interest expense, which excludes interest
on capitalized leases, the current provision for income taxes and
regularly scheduled principal payments, which exclude principal payments
on capitalized leases. Operating Cash Flow is calculated by subtracting
amounts expended for property and equipment which are not used for
projects in excess of $500,000 ($1,039,000 in the first half of fiscal
2005) from Adjusted EBITDA.
(4) Adjusted Capex is all capital expenditures other than New/Replacement
Store Project Capex.
(5) Represents limitations on capital expenditures for fiscal 2005. For fiscal
2005 the Company has budgeted $8,117,000 for capital expenditures. Any
unused amounts available under the Credit Agreement will be carried
forward to future periods.
(6) Represents capital expenditures for fiscal 2005.
(7) Includes amounts available but not used in the prior fiscal year and
available to be carried forward to fiscal 2005: $117,000 for Adjusted
Capex and $1,251,000 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 April 30, 2005, the Company had working capital of $150,000 as compared to
working capital of $4,294,000 at October 30, 2004 and a working capital
deficiency of $5,873,000 at May 1, 2004. Since the end of fiscal 2004, working
capital declined as a result of the collection of related party receivables from
Wakefern related to the fiscal 2004 patronage dividend receivable partially
offset by a decrease in accounts payable-others related to the payment of monies
due at the end of fiscal 2004 for construction costs and equipment for new
stores and major remodels. These transactions resulted in a net decrease in the
Revolving Note which is classified as long-term borrowings.
13
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:
April 30, 2005 1.00 to 1.0
October 30, 2004 1.05 to 1.0
May 1, 2004 .93 to 1.0
Cash flows (in millions) were as follows:
Twenty Six Weeks Ended
---------------------------
April 30, 2005 May 1, 2004
-------------- ------------
Operating activities $ 12.2 $ 20.9
Investing activities (1.3) ( 19.5)
Financing activities (11.8) (2.3)
------- -------
Totals $ (.9) $ (.9)
======= =======
The Company had $8,419,000 of available credit, at April 30, 2005, under its
revolving credit facility. The Company has no capital commitments for leasehold
improvements or equipment as of April 30, 2005. The amounts available under the
Credit Agreement will adequately meet our operating needs, scheduled capital
expenditures and debt service for fiscal 2005.
For the 26 weeks ended April 30, 2005 depreciation was $10,992,000 while capital
expenditures, excluding capitalized leases, totaled $2,131,000, compared to
$9,566,000 and $19,620,000, respectively, in the prior year period. The increase
in depreciation was the result of depreciation for the equipment and leasehold
improvements for the two new locations opened in fiscal 2004 as well as the
additional capitalized real estate lease and the modified capitalized real
estate lease related to these locations. Capital expenditures in the first six
months of fiscal 2005 decreased as compared to capital expenditures in the first
six months of fiscal 2004 when two new locations were opened and the remodeling
and expansion of the East Brunswick, New Jersey location was completed.
14
The following table summarizes our contractual obligations at April 30, 2005,
and the effect such obligations are expected to have on liquidity and cash flow
in future periods.
- --------------------------------------------------------------------------------
Payments Due By Period
- --------------------------------------------------------------------------------
Less Than 2-3 4-5 After 5
Contractual Obligations Total 1 Year Years Years Years
(Dollars In Thousands)
- --------------------------------------------------------------------------------
Long-term debt $ 60,882 $ 8,973 $32,653 $ 19,256 $ -
- --------------------------------------------------------------------------------
Interest on Long Term Debt(1) 13,906 4,319 6,693 2,894
- --------------------------------------------------------------------------------
Related party debt,
non interest bearing 4,053 925 1,741 1,043 344
- --------------------------------------------------------------------------------
Capital lease obligations
(2) 346,441 15,975 31,383 31,938 267,145
- --------------------------------------------------------------------------------
Operating leases (2) 59,153 9,213 15,073 10,993 23,874
- --------------------------------------------------------------------------------
Other Liabilities (3) 4,356 850 734 1,690 1,082
- --------------------------------------------------------------------------------
Purchase obligations -
leaseholds and equipment - - - - -
- --------------------------------------------------------------------------------
Lease commitments - stores
under construction - - - - -
- --------------------------------------------------------------------------------
Total $ 488,791 $40,255 $88,277 $ 67,814 $292,445
========= ======= ======= ======== ========
(1) Includes interest expense at estimated interest rates of 7.50% to 8.00% on
variable rate debt of $55,732 and interest expense at interest rates of
6.20% to 6.44% on fixed rate debt of $5,150.
(2) Lease obligation figures do not include insurance, common area maintenance
charges and real estate taxes for which the Company is obligated.
(3) Other liabilities include estimated unfunded pension liabilities, and
estimated post-retirement and post-employment obligations based on
available actuarial data.
Results of Operations (13 weeks ended April 30, 2005 compared to 13 weeks
- --------------------- ended May 1, 2004)
Sales:
- ------
Sales for the current period totaled $292.0 million as compared to $278.7
million in the prior year period. This represents an increase of 4.8%. Sales for
the current quarter included the operations of the new locations opened in April
and May 2004 in Lawrenceville and Aberdeen, New Jersey, respectfully, as well as
the location in Bordentown, New Jersey purchased from Wakefern in June 2004. The
location in Aberdeen replaced an older, smaller store in the same location.
Same store sales from the twenty three stores in operation in both periods
decreased 3.3%. Decreased sales in certain of the Company's stores affected by
competitive store openings and the impact from the opening of our new locations
were partially offset by comparable store sales increases in locations not
affected by competitive openings.
15
Gross Profit:
- ------------
Gross profit as a percent of sales decreased to 26.4% in the second quarter of
fiscal 2005 compared to 26.6% for the comparable period in fiscal 2004. Cost of
goods sold includes the costs of inventory sold and the related purchase,
inbound freight and distribution costs including those costs charged by Wakefern
for operation of warehouses, distribution and delivery of product to our stores.
Vendor allowances and rebates and Wakefern patronage dividends are reflected as
a reduction of cost of goods sold. Any costs to us related to other services
which Wakefern provides are not included in cost of goods sold.
Patronage dividends, applied as a reduction of the cost of goods sold, were $2.3
million in both the current and prior year periods.
The decrease in gross profit was the result of programs implemented in certain
of the Company's stores to address competitive store openings (.22%) partially
offset by a decrease in shrink (.05%). Shrink is the difference between expected
gross profit, based on the difference between the cost and expected selling
price of merchandise purchased, and actual gross profit. Shrink results from
theft, spoilage, breakage, mark ups and mark downs.
Operating Expenses:
- -------------------
Selling, general and administrative expenses totaled $72.4 million in the second
quarter of fiscal 2005 compared to $68.7 million for the comparable period in
fiscal 2004. Selling, general and administrative expenses as a percent of sales
were 24.8% versus 24.7% in the prior year period. Increases in fringe benefits,
depreciation, miscellaneous expense and occupancy costs were partially offset by
decreases in labor, pre-opening expense and administration. The increase in
fringe benefits was the result of contractual increases in pension and welfare.
Fringe benefits increased from $11,697,000 to $12,723,000. Depreciation
increased as the result of the purchase of equipment and leasehold improvements
for two new locations opened during 2004 in Lawrenceville and Aberdeen, New
Jersey, the completion in January 2004 of the expansion and remodeling of the
East Brunswick store, the remodeling of the Neptune location in October 2004 and
the purchase of the Bordentown, New Jersey location in June 2004, as well as the
addition of one new capitalized real estate lease and the increase in
obligations under a capitalized real estate lease for a replacement store.
Depreciation increased from $4,881,000 to $5,498,000. The increase in occupancy
costs was primarily the result of increases in utility costs, repairs and
maintenance, real estate tax expense and common area maintenance expense.
Occupancy increased from $9,173,000 to $10,399,000. The increase in
miscellaneous expense was primarily the result of increases in Wakefern support
services, debit/credit card and bank service fees and services provided by
outside vendors, including floor care and sanitation. Although labor decreased
as a percent of sales, labor expense increased from $28,569,000 to $29,488,000.
The decrease in labor as a percent of sales was due to improved efficiency in
the locations opened in fiscal 2003 and the increase in labor expense was due to
two additional locations, the replacement of a smaller store and the enlargement
of an additional location in fiscal 2004. Administration decreased as several
components increased at a slower rate than the increase in sales and the
incentive compensation accrual for administrative personnel decreased based upon
operating results for the current quarter. Administration costs declined from
$4,617,000 to $4,603,000. Pre-opening expense decreased as no new stores were
opened in fiscal 2005. One new location was opened in the second quarter of
fiscal 2004. Pre-opening costs decreased from $698,000 to zero.
As a percentage of sales, fringe benefits increased .15%, depreciation,
including depreciation on capitalized leases, increased .13%, occupancy
increased .27% and miscellaneous expense increased .12%. These increases were
partially offset by a decrease in labor of .20%, administration of .08% and
pre-opening expense of .25%.
16
Interest Expense:
- -----------------
Interest expense increased to $4,637,000 from $3,854,000, while interest income
was $31,000 compared to $37,000 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 38% has been used in both the current and the prior year
periods. The tax rate used is based on the expected effective tax rates.
Net Income:
- -----------
Net income was $54,000 in the current year period compared to $956,000 in the
prior year period. Earnings before interest, taxes, depreciation and
amortization ("EBITDA") for the current period were $10,295,000 as compared to
$10,341,000 in the prior year period. Net income per common share on a diluted
basis was $.05 in the current year period compared to $.93 in the prior year
period. Per share calculations are based on 1,032,098 weighted average diluted
shares outstanding in the current year period and 1,026,595 weighted average
diluted shares outstanding in the prior year period.
EBITDA is presented because management believes that EBITDA is a useful
supplement to net income and other measurements under accounting principles
generally accepted in the United States since it is a meaningful measure of a
company's performance and ability to meet its future debt service requirements,
fund capital expenditures and meet working capital requirements. EBITDA is not a
measure of financial performance under accounting principles generally accepted
in the United States and should not be considered as an alternative to (i) net
income (or any other measure of performance under generally accepted accounting
principles) as a measure of performance or (ii) cash flows from operating,
investing or financing activities as an indicator of cash flows or as a measure
of liquidity. The following table reconciles reported net income to EBITDA:
Thirteen Weeks Ended
----------------------------------------
April 30, 2005 May 1, 2004
-------------- -----------
Net income $ 54,000 $ 956,000
Add:
Interest expense, net 4,606,000 3,817,000
Income tax provision 34,000 587,000
Depreciation 5,498,000 4,881,000
Amortization 103,000 100,000
------------- -----------
EBITDA $10,295,000 $10,341,000
============= ===========
Results of Operations (26 weeks ended April 30, 2005 compared to 26 weeks ended
- --------------------- May 1, 2004)
Sales:
- ------
Sales for the current twenty six week period totaled $609.6 million as compared
to $572.5 million in the prior year period. This represents an increase of 6.5%.
Sales for the current twenty six week period included the operations of the new
17
locations opened in April and May 2004 in Lawrenceville and Aberdeen, New
Jersey, respectfully, as well as the location in Bordentown, New Jersey
purchased from Wakefern in June 2004. The location in Aberdeen replaced an
older, smaller store in the same location.
Same store sales from the twenty three stores in operation in both periods
decreased 1.5%. Decreased sales in certain of the Company's stores affected by
competitive store openings and the impact from the opening of our new locations
were partially offset by comparable store sales increases in locations not
affected by competitive openings.
Gross Profit:
- -------------
Gross profit as a percent of sales decreased to 25.8% in the first twenty six
weeks of fiscal 2005 compared to 26.2% for the comparable period in fiscal 2004.
Cost of goods sold includes the costs of inventory sold and the related
purchase, inbound freight and distribution costs including those costs charged
by Wakefern for operation of warehouses, distribution and delivery of product to
our stores. Vendor allowances and rebates and Wakefern patronage dividends are
reflected as a reduction of cost of goods sold. Any costs to us related to other
services which Wakefern provides are not included in cost of goods sold.
Patronage dividends, applied as a reduction of the cost of goods sold, were $4.8
million in the current period compared to $4.7 million in the prior year period.
The decrease in gross profit was the result of programs implemented in certain
of the Company's stores to address competitive store openings (.29%) and an
increase in shrink (.17%). Shrink is the difference between expected gross
profit, based on the difference between the cost and expected selling price of
merchandise purchased, and actual gross profit. Shrink results from theft,
spoilage, breakage, mark ups and mark downs.
Operating Expenses:
- -------------------
Selling, general and administrative expenses totaled $147.5 million in the first
twenty six weeks of fiscal 2005 compared to $139.2 million for the comparable
period in fiscal 2004. Selling, general and administrative expenses as a percent
of sales were 24.2% versus 24.3% in the prior year period. Decreases in labor,
administration and pre-opening expense were partially offset by increases in
fringe benefits, depreciation and occupancy costs. Although labor decreased as a
percent of sales, labor expense increased from $58,456,000 to $60,563,000. The
decrease in labor as a percent of sales was due to improved efficiency in the
locations opened in fiscal 2003 and the increase in labor expense was due to two
additional locations, the replacement of a smaller store and the enlargement of
an additional location in fiscal 2004. Administration decreased as several
components increased at a slower rate than the increase in sales and the
incentive compensation accrual for administrative personnel decreased based upon
operating results for the current twenty six week period. Administration costs
declined from $9,801,000 to $9,372,000. Pre-opening expense decreased as no new
stores were opened in fiscal 2005. One new location was opened in the second
quarter of fiscal 2004. Pre-opening costs decreased from $790,000 to zero. The
increase in fringe benefits was the result of contractual increases. Fringe
benefits increased from $23,912,000 to $26,456,000. Depreciation increased as
the result of the purchase of equipment and leasehold improvements for two new
locations opened during 2004 in Lawrenceville and Aberdeen, New Jersey, the
completion in January 2004 of the expansion and remodeling of the East Brunswick
store, the remodeling of the Neptune location in October 2004 and the purchase
of the Bordentown, New Jersey location in June 2004, as well as the addition of
one new capitalized real estate lease and the increase in obligations under a
capitalized real estate lease for a replacement store. Depreciation increased
from $9,566,000 to $10,992,000. The increase in occupancy costs was primarily
the result of increases in utility costs, real estate tax expense and common
area maintenance expense. Occupancy increased from $18,131,000 to $20,469,000.
18
As a percentage of sales, labor decreased .27%, administration decreased .17%
and pre-opening expense decreased .14%. These decreases were partially offset by
an increase in fringe benefits of .16%, depreciation, including depreciation on
capitalized leases, of .13% and occupancy of .19%.
Interest Expense:
- -----------------
Interest expense increased to $9,297,000 from $7,638,000, while interest income
was $67,000 compared to $64,000 for the prior year period. The increase in
interest expense for the current year period was due to an increase in average
outstanding debt, including increased capitalized lease obligations, and an
increase in the average interest rate paid on debt.
Income Taxes:
- -------------
An income tax rate of 38% has been used in both the current and the prior year
periods. The tax rate used is based on the expected effective tax rates.
Net Income:
- -----------
Net income was $307,000 in the current year period compared to $2,196,000 in the
prior year period. Earnings before interest, taxes, depreciation and
amortization ("EBITDA") for the current period were $21,032,000 as compared to
$20,910,000 in the prior year period. Net income per common share on a diluted
basis was $.29 in the current period compared to $2.15 in the prior year period.
Per share calculations are based on 1,033,451 weighted average diluted shares
outstanding in the current period and 1,020,607 weighted average diluted shares
outstanding in the prior year period.
EBITDA is presented because management believes that EBITDA is a useful
supplement to net income and other measurements under accounting principles
generally accepted in the United States since it is a meaningful measure of a
company's performance and ability to meet its future debt service requirements,
fund capital expenditures and meet working capital requirements. EBITDA is not a
measure of financial performance under accounting principles generally accepted
in the United States and should not be considered as an alternative to (i) net
income (or any other measure of performance under generally accepted accounting
principles) as a measure of performance or (ii) cash flows from operating,
investing or financing activities as an indicator of cash flows or as a measure
of liquidity. The following table reconciles reported net income to EBITDA:
Twenty Six Weeks Ended
----------------------
April 30, 2005 May 1, 2004
-------------- -----------
Net income $ 307,000 $ 2,196,000
Add:
Interest expense, net 9,230,000 7,574,000
Income tax provision 189,000 1,347,000
Depreciation 10,992,000 9,566,000
Amortization 314,000 227,000
----------- -----------
EBITDA $21,032,000 $20,910,000
=========== ===========
19
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, as of the end of the period
covered by this quarterly 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 President
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 Director of Internal Audit and Principal Accounting
Officer also participated in this evaluation. During the Company's last fiscal
quarter, there has been no significant change in the Company's internal control
over financial reporting that has materially affected, or is reasonably likely
to materially affect, the Company's internal control over financial reporting.
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.
PART II OTHER INFORMATION
- -----------------------------
Item 6. Exhibits
-----------------
Exhibit 31.1 Section 302 Certification of Chief Executive
Officer
Exhibit 31.2 Section 302 Certification of Chief Financial
Officer
Exhibit 32.1 Certification of Chief Executive Officer pursuant
to 18 U.S.C. Section 1350
Exhibit 32.2 Certification of Chief Financial Officer pursuant
to 18 U.S.C. Section 1350
20
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: June 13, 2005 /S/ MICHAEL SHAPIRO
----------------------
(Signature)
Michael Shapiro
Senior Vice President,
Chief Financial Officer
Date: June 13, 2005 /S/ THOMAS H. FLYNN
-----------------------
(Signature)
Thomas H. Flynn
Vice President,
Principal Accounting Officer
21
EXHIBIT 31.1
CERTIFICATION
I, Richard J. Saker, certify that:
1. I have reviewed this report on Form 10-Q of Foodarama Supermarkets, Inc.;
2. Based on my knowledge, this 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 report;
3. Based on my knowledge, the financial statements, and other financial
information included in this 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 report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;
(b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal control
over financial reporting.
Date: June 10, 2005 /s/ RICHARD J. SAKER
--------------------
(Signature)
Richard J. Saker
Chief Executive Officer
22
EXHIBIT 31.2
CERTIFICATION
I, Michael Shapiro, certify that:
1. I have reviewed this report on Form 10-Q of Foodarama Supermarkets, Inc.;
2. Based on my knowledge, this 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 report;
3. Based on my knowledge, the financial statements, and other financial
information included in this 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 report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;
(b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal control
over financial reporting.
Date: June 10, 2005 /s/ MICHAEL SHAPIRO
--------------------
(Signature)
Michael Shapiro
Chief Financial Officer
23
EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Foodarama Supermarkets, Inc.
(the "Company") on Form 10-Q for the period ended April 30, 2005 (the "Report"),
I, Richard J. Saker, Chief Executive Officer of the Company, do hereby certify,
pursuant to 18 U.S.C.ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) the Report fully complies with the requirements of ss. 13(a) or 15(d) of
the Securities Exchange Act of 1934, 15 U.S.C. ss. 78m(a) or 78o(d), and,
(2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
Date: June 10, 2005 /s/ RICHARD J. SAKER
--------------------
(Signature)
Richard J. Saker
Chief Executive Officer
24
EXHIBIT 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Foodarama Supermarkets, Inc.
(the "Company") on Form 10-Q for the period ended April 30, 2005 (the "Report"),
I, Michael Shapiro, Chief Financial Officer of the Company, do hereby certify,
pursuant to 18 U.S.C.ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) the Report fully complies with the requirements of ss. 13(a) or 15(d) of
the Securities Exchange Act of 1934, 15 U.S.C. ss. 78m(a) or 78o(d), and,
(2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
Date: June 10, 2005 /s/ MICHAEL SHAPIRO
-------------------
(Signature)
Michael Shapiro
Chief Financial Officer