SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended: January 24, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
Commission File No. 0-2633
VILLAGE SUPER MARKET, INC.
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-1576170
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
733 MOUNTAIN AVENUE, SPRINGFIELD, NEW JERSEY 07081
(Address of principal executive offices) (Zip Code)
(973) 467-2200
(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 (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of the issuer's classes of
common stock as of the latest practicable date:
<TABLE>
<CAPTION>
February 25, 1998
<S> <C>
Class A Common Stock, No Par Value 1,375,800 Shares
Class B Common Stock, No Par Value 1,594,076 Shares
</TABLE>
The Registrant was not involved in bankruptcy proceedings during the
preceding five years or any time prior thereto.
VILLAGE SUPER MARKET, INC.
INDEX
PART I PAGE NO.
FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets 3
Consolidated Condensed Statement of Income 4
Consolidated Condensed Statements of Cash Flows 5
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-8
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
Exhibit 28(a) 11
Exhibit 28(b) 12
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
VILLAGE SUPER MARKET, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
January 24, July 26,
1998 1997
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 5,637 $ 4,270
Merchandise inventories 25,356 24,836
Patronage dividend receivable 537 2,048
Miscellaneous receivables 4,144 3,269
Other current assets 859 850
Total current assets 36,533 35,273
Property, equipment and fixtures, net 73,412 72,294
Investment in related party 10,409 10,351
Goodwill, net 10,222 10,339
Other intangibles, net 2,157 2,284
Other assets 2,251 2,223
TOTAL ASSETS $134,984 $132,764
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 2,660 $ 3,260
Accounts payable to related party 29,471 27,141
Accounts payable and accrued expenses 17,936 17,017
Income taxes payable 244 462
Total current liabilities 50,311 47,880
Long-term debt, less current portion 22,044 24,027
Deferred income taxes 3,476 3,776
Shareholders' equity
Class A common stock - no par value,
issued 1,762,800 shares 18,129 18,129
Class B common stock - no par value,
1,594,076 shares issued & outstanding 1,035 1,035
Retained earnings 45,694 44,102
Less cost of Class A treasury shares
(387,000 shares at January 24, 1998
and 447,000 shares at July 26, 1997) (5,705) (6,185)
Total shareholders' equity 59,153 57,081
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $134,984 $132,764
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
<TABLE>
<CAPTION>
VILLAGE SUPER MARKET, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Amounts)
13 Wks. Ended 13 Wks. Ended 26 Wks. Ended 26 Wks. Ended
Jan. 24, 1998 Jan. 25, 1997 Jan. 24, 1998 Jan. 25, 1997
<S> <C> <C> <C> <C>
Sales $ 182,700 $ 177,598 $ 352,588 $ 346,797
Cost of sales 137,623 133,678 265,399 261,018
Gross margin 45,077 43,920 87,189 85,779
Operating and
admin. expenses 40,500 40,131 79,222 78,799
Depreciation and
amortization
expense 1,791 1,865 3,556 3,688
Operating income 2,786 1,924 4,411 3,292
Interest expense,
net 808 824 1,617 1,719
Income before
income taxes 1,978 1,100 2,794 1,573
Provision for income
tax expense 851 440 1,202 629
Net Income $ 1,127 $ 660 $ 1,592 $ 944
Net income
per share, basic
and diluted $ .38 $ .23 $ .54 $ .32
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
<TABLE>
<CAPTION>
VILLAGE SUPER MARKET, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
26 Weeks Ended 26 Weeks Ended
January 24, 1998 January 25, 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,592 $ 944
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 3,556 3,688
Deferred taxes (300) ---
Provision to value inventories at LIFO 225 300
Changes in assets and liabilities:
(Increase) decrease in inventory (745) 844
Decrease in patronage dividend
receivable 1,511 1,969
(Increase) in misc. receivables ( 875) ( 914)
(Increase) decrease in other
current assets ( 9) 10
(Increase) in other assets ( 28) ( 7)
Increase in accounts
payable to related party 2,330 3,485
Increase in accounts payable and
accrued expenses 919 741
(Decrease) in income taxes payable (218) ---
Net cash provided by operating
activities 7,958 11,060
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures (4,430) (3,797)
Investment in related party ( 58) ( 115)
Net cash used by investing activities (4,488) (3,912)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 1,000 2,500
Proceeds from exercise of 60,000
stock options 480 ---
Principal payments of long-term debt (3,583) (7,865)
Net cash used by financing activities (2,103) (5,365)
NET INCREASE IN CASH
AND CASH EQUIVALENTS 1,367 1,783
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 4,270 3,244
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 5,637 $ 5,027
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
VILLAGE SUPER MARKET, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited
consolidated condensed financial statements contain all adjustments
(consisting of normal and recurring accruals) necessary to present
fairly the financial position as of January 24, 1998 and July 26, 1997
and the results of operations and cash flows for the periods ended
January 24, 1998 and January 25, 1997.
The significant accounting policies followed by the Company are set forth
in Note 1 to the Company's financial statements in the July 26, 1997
Village Super Market, Inc. Annual Report.
2. The results of operations for the period ended January 24, 1998 are
not necessarily indicative of the results to be expected for the full year.
3. In accordance with Statement of Financial Accounting Standards
No. 128, "Earnings Per Share," the consolidated statement of income
includes the presentation of both basic and diluted net income per share.
Basic net income per share was computed by dividing net income by the
weighted-average number of common shares outstanding, which was 2,949,810
and 2,929,843 for the quarter and six month periods ended January 24, 1998,
respectively. Diluted net income per share was calculated by increasing the
denominator from the basic calculations to reflect the dilutive impact of
stock options outstanding.
The number of shares added to the denominator was 9,040 and 11,854
for the quarter and six month periods ended January 24, 1998,
respectively. The options outstanding were not dilutive in the fiscal
1997 periods presented.
The diluted net income per share calculations include the effect of
219,000 options granted on December 5, 1997 under the 1997 Incentive
& Non-Statutory Stock Option Plan. All options were granted at an
exercise price equal to fair market value.
4. At both January 24, 1998 and July 26, 1997 approximately 66% of
merchandise inventories are valued by the LIFO method while the balance
is valued by FIFO. If the FIFO method had been used for the entire
inventory, inventories would have been $7,804,000 and $7,579,000 higher
than reported at January 24, 1998 and July 26, 1997, respectively.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Sales in the second quarter of fiscal 1998 increased 2.9% to
$182,700,000. This same store increase reflects improved sales
in remodeled stores and increased Thanksgiving promotional
activities, partially offset by sales declines in stores effected
by competitive openings. Sales for the six month period
increased 1.7% to $352,588,000. Same store sales increased 2.2%
in the six month period.
Gross margin as a percentage of sales was 24.7% in the
quarter and six month periods ended January 24, 1998 and January
25, 1997. A slight improvement due to an improved mix of sales
in higher margin departments was offset by lower gross margins in
the produce department due to lower retail prices.
Operating and administrative expenses as a percentage of
sales for the quarter and six months declined to 22.2% and 22.5%,
respectively, compared with 22.6% and 22.7%, respectively, in the
corresponding prior year periods. The improvement in operating
expenses as a percentage of sales for the quarter was a result of
lower payroll costs, lower workers' compensation claims and the
effect of spreading fixed costs over a much improved sales base.
These improvements were partially offset by higher coupon costs
associated with Thanksgiving turkey promotions.
The increase in net income of 71% in the quarter was due to
the 2.9% improvement in same stores sales, lower operating costs
due to lower payrolls and workers' compensation claims, and flat
gross margins.
LIQUIDITY AND FINANCIAL RESOURCES
Current liabilities exceeded current assets by $13,778,000
at January 24, 1998 compared to $12,607,000 at July 26, 1997.
The current ratio decreased to .73 at January 24, 1998 from .74
at July 26, 1997. The Company's working capital needs are
reduced by its high rate of inventory turnover and because the
warehousing and distribution arrangements accorded to the Company
as a member of Wakefern permit it to minimize inventory levels
and sell most merchandise before payment is required.
During the six month period, cash provided by operating
activities of $7,958,000, additional long-term borrowings of
$1,000,000 and proceeds from the exercise of stock options of
$480,000 were used to make principal payments on long-term debt
of $3,583,000 and to fund capital expenditures of $4,430,000.
Capital expenditures in the six month period related primarily to
the expansion and remodel of the Livingston store, a minor
remodel of the Watchung store and an upgrade to the point of sale
software.
At January 24, 1998, $4,000,000 was outstanding of the
Company's total available credit facility of $24,000,000. The
Company was in full compliance with all terms and restrictive
covenants of all debt agreements at January 24, 1998.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
6(a) Exhibits
Exhibit 28(a) - Press Release dated February 27, 1998.
Exhibit 28(b) - First Quarter Report to Shareholders
dated December 9, 1997.
6(b) Reports on Form 8-K.
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
Village Super Market, Inc.
Registrant
Date: February 26, 1998 /s/ Perry Sumas
Perry Sumas
(President)
Date: February 26, 1998 /s/ Kevin R. Begley
Kevin R. Begley
(Chief Financial Officer)
Exhibit 28(a)
VILLAGE SUPER MARKET, INC.
REPORTS RESULTS FOR THE QUARTER AND SIX MONTHS ENDED
JANUARY 24, 1998
Springfield, New Jersey - February 27, 1998 - Village Super Market,
Inc. reported sales and net income for the second quarter ended January 24,
1998, Perry Sumas, President announced today.
Net income was $1,127,000 (.38 per share) in the second quarter of
fiscal 1998, an increase of 71% from the prior year. Sales for the
quarter were $182,700,000, which represents a same store sales increase of
2.9%.
The significant increase in net income in the quarter was due to the
improvement in same store sales and lower operating costs. Same store
sales increased due to the positive impact of remodeled stores and
increased Thanksgiving promotional activities. Operating costs decreased
due to lower payroll costs, lower workers' compensation claims and the
spreading of fixed costs over a higher sales base. This was partially
offset by increased coupon costs associated with the Thanksgiving turkey
promotions.
For the six month period, sales were $352,588,000, an increase of 1.7%
from the prior year. Same stores sales increased 2.2% in the six month
period. Net income for the six month period was $1,592,000, an increase of
69% from the prior year.
Village Super Market operates a chain of 22 supermarkets under the
ShopRite name in New Jersey and eastern Pennsylvania. The following table
summarizes results for the quarter and six months ended January 24, 1998:
<TABLE>
<CAPTION>
January 24, 1998 January 25, 1997
13 Weeks Ended
<S> <C> <C>
Sales $182,700,000 $177,598,000
Net Income $ 1,127,000 $ 660,000
Net Income Per Share,
basic and diluted $ .38 $ .23
26 Weeks Ended
Sales $352,588,000 $346,797,000
Net Income $ 1,592,000 $ 944,000
Net Income Per Share,
basic and diluted $ .54 $ .32
</TABLE>
Exhibit 28(b)
F * To Our Shareholders:
I * The Company had net income of $465,000 in the first quarter ended
October 25, 1997, an increase of 64% from the prior year.
R *
Sales in the first quarter were $169,888,000 compared with
S * $169,200,000 in the first quarter of the prior year. Same store
sales increased 1.5% in the quarter, reflecting improved sales in
T * remodeled stores, which was partially offset by sales
declines in stores affected by competitive openings. One store
* was closed since one year ago.
Q * Gross margin as a percentage of sales increased to 24.8% from 24.7%
in the prior year. This improvement in gross margin is due to a
U * slightly improved mix of sales in higher margin departments.
A * Operating and administrative expenses as a percentage of sales were
22.8% in both years. Savings from lower workers' compensation claims
R * this year were partially offset by accruals for estimated liability
insurance premium calls.
T *
Depreciation expense declined in the current quarter due to certain
E * assets becoming fully depreciated. Interest expense declined in the
current quarter due to lower average debt levels.
R *
The increase in net income was due to the improvement in same store
* sales, higher gross margins, lower workers' compensation claims,
lower depreciation and lower interest expense. These improvements
* were partially offset by a higher tax rate in the quarter.
R * Capital expenditures in the quarter were $1,696,000. The majority of
capital expenditures related to the early stages of the expansion and
E * remodel of the Livingston store and a minor remodel of the Watchung
store.
P *
The table accompanying this report summarizes Village Super Market's
O * results for the quarter ended October 25, 1997.
R *
Respectfully,
T *
Perry Sumas James Sumas
* President Chairman of the Board
*
* December 9, 1997
<TABLE>
<CAPTION>
INCOME STATEMENT DATA
13 Weeks Ended 13 Weeks Ended
October 25, 1997 October 26, 1996
<S> <C> <C>
Sales $169,888,000 $169,200,000
Net Income $ 465,000 $ 284,000
Net Income Per Share $ .16 $ .10
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET COMPARISONS
October 25, 1997 July 26, 1997
<S> <C> <C>
Current Assets $ 37,760,000 $ 35,273,000
Current Liabilities $ 45,350,000 $ 47,880,000
Net Working Capital (Deficit) $ ( 7,590,000) $ (12,607,000)
Long-Term Debt $ 28,704,000 $ 24,027,000
Stockholders' Equity $ 57,546,000 $ 57,081,000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-26-1997
<PERIOD-END> JAN-24-1998
<CASH> 5637
<SECURITIES> 0
<RECEIVABLES> 4144
<ALLOWANCES> 0
<INVENTORY> 25356
<CURRENT-ASSETS> 36533
<PP&E> 144365
<DEPRECIATION> 70953
<TOTAL-ASSETS> 134984
<CURRENT-LIABILITIES> 50311
<BONDS> 22044
0
0
<COMMON> 19164
<OTHER-SE> 43465
<TOTAL-LIABILITY-AND-EQUITY> 134984
<SALES> 352588
<TOTAL-REVENUES> 352588
<CGS> 265399
<TOTAL-COSTS> 265399
<OTHER-EXPENSES> 82778
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1617
<INCOME-PRETAX> 2794
<INCOME-TAX> 1202
<INCOME-CONTINUING> 1592
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1592
<EPS-PRIMARY> .54
<EPS-DILUTED> .54
</TABLE>
