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: October 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>
November 20, 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>
VILLAGE SUPER MARKET, INC.
INDEX
PART I PAGE NO.
FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets 3
Consolidated Condensed Statements 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 7-9
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
Exhibit 28(a) 12
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
VILLAGE SUPER MARKET, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
October 24, July 25,
1998 1998
ASSETS
<S> <C> <C>
Current assets
Cash and cash equivalents $ 5,149 $ 5,679
Merchandise inventories 28,327 26,549
Patronage dividend receivable 3,072 1,969
Miscellaneous receivables 4,461 3,416
Other current assets 817 778
Total current assets 41,826 38,391
Property, equipment and fixtures, net 74,637 73,331
Investment in related party 10,470 10,468
Goodwill, net 10,006 10,073
Other intangibles, net 1,967 2,030
Other assets 4,229 4,215
TOTAL ASSETS $143,135 $138,508
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 2,925 $ 2,830
Accounts payable to related party 26,991 27,370
Accounts payable and accrued expenses 15,985 17,583
Income taxes payable 1,132 290
Total current liabilities 47,033 48,073
Long-term debt, less current portion 30,262 25,700
Deferred income taxes 3,092 3,167
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,
issued & outstanding 1,594,076 shares 1,035 1,035
Retained earnings 48,939 47,759
Less cost of treasury shares - (387,000 shares) (5,355) (5,355)
Total shareholders' equity 62,748 61,568
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $143,135 $138,508
</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 Weeks Ended 13 Weeks Ended
October 24, 1998 October 25, 1997
<S> <C> <C>
Sales $ 178,058 $ 169,888
Cost of sales 132,941 127,776
Gross margin 45,117 42,112
Operating and administrative
expense 40,374 38,723
Depreciation and amortization
expense 1,929 1,764
Operating income 2,814 1,625
Interest expense 779 809
Income before income
taxes 2,035 816
Provision for income taxes 855 351
Net income $ 1,180 $ 465
Net income per share:
Basic $ .40 $ .16
Diluted $ .39 $ .16
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
<TABLE>
<CAPTION>
VILLAGE SUPER MARKET, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
13 Wks. Ended 13 Wks. Ended
Oct. 24, 1998 Oct. 25, 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 1,180 $ 465
Adjustments to reconcile net income
to net cash used by
operating activities:
Depreciation and amortization 1,929 1,764
Deferred taxes (75) ( 150)
Provision to value inventories at LIFO 125 150
Changes in assets and liabilities:
(Increase) in inventory (1,903) ( 552)
(Increase) in patronage dividend
receivable (1,103) (1,241)
(Increase) in misc. receivables (1,045) ( 272)
(Increase) in other current assets ( 39) ( 15)
(Increase) in other assets ( 14) ( 14)
(Decrease) in accounts
payable to related party ( 379) (1,359)
(Decrease) in accounts payable and
accrued expenses (1,598) ( 523)
Increase (decrease) in income
taxes payable 842 ( 48)
Net cash used by operating
activities (2,080) (1,795)
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures (3,105) (1,696)
Investment in related party ( 2) ( 29)
Net cash used by investing activities (3,107) (1,725)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 5,000 5,000
Principal payments of long-term debt ( 343) ( 923)
Net cash provided by financing
activities 4,657 4,077
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ( 530) 557
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 5,679 4,270
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 5,149 $ 4,827
</TABLE>
See accompanying Notes to Consolidated Condensed 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 October 24, 1998 and July 25, 1998 and the
results of operations and cash flows for the periods ended October 24,
1998 and October 25, 1997.
The significant accounting policies followed by the Company
are set forth in Note 1 to the Company's consolidated financial
statements in the July 25, 1998 Village Super Market, Inc. Annual Report.
2. The results of operations for the period ended October 24,
1998 are not necessarily indicative of the results to be expected for
the full year.
3. At both October 24, 1998 and July 25, 1998, 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 $7,840,000 and $7,715,000
higher than reported at October 24, 1998 and July 25, 1998 respectively.
4. During fiscal 1998, the Company adopted SFAS No. 128, "Earnings
Per Share." This statement requires the presentation of both basic
and diluted net income per share. The number of common shares
outstanding for calculation of net income per share is as follows:
<TABLE>
<CAPTION>
October 24, October 25,
1998 1997
<S> <C> <C>
Weighted average shares
outstanding - basic 2,969,876 2,909,876
Dilutive effect of
employee stock options 87,310 14,667
Weighted average shares
outstanding - diluted 3,057,186 2,924,543
</TABLE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Sales in the first quarter were $178,058,000, which
represents a same store sales increase of 4.8% from the prior
year. This acceleration in same store sales growth from the
2.8% experienced in the fourth quarter of the prior year is
a result of the introduction of double coupons in northern
New Jersey during the current quarter. On September 6, 1998,
the Company, as well as most supermarket competitors, began
offering to double the value of manufacturer coupons in the
16 stores in northern New Jersey where it previously had not
offered double coupons.
Gross margin as a percentage of sales increased to 25.3%
from 24.8% in the prior year. Gross margin percentages improved
in most selling departments when compared to the prior year.
This is in part due to a reduction in sale items penetration
as a result of offering double coupons.
Operating and administrative expenses as a percentage of
sales declined to 22.7% from 22.8% in the prior year. This
improvement was primarily a result of the effect of spreading
fixed costs over a greatly improved sales base slightly exceeding
the increased costs of double coupon expense in the current quarter.
The increase in net income of 154% for the quarter is primarily
attributable to the 4.8% sales increase and the substantially
improved gross margin percentage.
LIQUIDITY AND FINANCIAL RESOURCES
Current liabilities exceeded current assets by $5,207,000 at
October 24, 1998 compared to $9,682,000 at July 25, 1998. The
current ratio increased to .89 at October 24, 1998 from .80 at
July 25, 1998. 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 quarter, $5,000,000 of additional borrowings under
the Company's credit facilities were used to fund capital expenditures
of $3,105,000, to make principal payments on long term debt of
$343,000 and to fund cash used by operations. The majority of
capital expenditures in the quarter related to the expansion and
remodel of the Livingston store, which is nearly complete.
At October 24, 1998, $13,500,000 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 October 24, 1998.
YEAR 2000:
The Company is participating with Wakefern Food Corporation ("Wakefern"),
the retailer owned food cooperative to which it belongs
and its principal supplier, in a comprehensive assessment of its
information technology systems ("IT Systems") and its process control
and other systems that include micro-controllers ("Non-IT Systems")
to identify the systems that could be affected by the Year 2000
("Y2K") issue.
The Company and Wakefern have assessed all systems for Y2K
readiness, giving the highest priority to those IT Systems that are
considered critical to its business operations. At present, the Company
has implemented its cash and sales and payroll applications, and will
implement the general ledger and accounts payable applications in late
1998. Some in-store IT Systems are currently Y2K compliant. Others,
including receiving, labor management, pharmacy and electronic payments,
are at various stages of implementation or testing. The Company anticipates
that all critical IT Systems will be Y2K complaint before the end of 1999.
The Company has substantially completed an inventory of its Non-IT
Systems, which includes those systems containing embedded chip technology
commonly found in buildings and equipment connected with a
structure. The systems have been prioritized and assessed for
compliance. Ongoing testing and implementation of any remediation
required for the Non-IT Systems will be performed throughout 1999.
The Company and Wakefern are utilizing the necessary internal and
external resources to replace, upgrade or modify all significant systems
affected by Y2K. The total estimated costs to remediate the Y2K issue
will not have a significant adverse affect on continuing operations.
All Y2K costs are being expensed as incurred.
The Company is in the process of developing contingency plans for
those areas which may be affected by Y2K. Although the full consequences
are unknown, the failure of either the Company's critical systems or those
of its material third parties, including Wakefern, to be Y2K compliant
could result in the interruption of its business, which could have a
material adverse affect on the results of operations or financial condition
of the Company.
Forward-Looking Statements:
This Form 10-Q to shareholders contains "forward-looking
statements" within the meaning of federal securities law. The Company
cautions the reader that there is no assurance that actual results or
business conditions will not differ materially from future results,
whether expressed, suggested or implied by such forward-looking
statements. Such potential risks and uncertainties include, without
limitation, competitive pressures from the Company's operating
environment, the ability of the Company to maintain and improve its
sales and margins, the liquidity of the Company on a cash flow basis,
the success of operating initiatives, Y2K issues relating to computer
applications, and other risk factors detailed herein and in other filings
of the Company.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
6(a) Exhibits
Exhibit 28(a) - Press Release dated November 20, 1998.
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: November 24, 1998 /s/ Perry Sumas
Perry Sumas
(President)
Date: November 24, 1998 /s/ Kevin R. Begley
Kevin R. Begley
(Chief Financial Officer)
EXHIBIT 28(a)
VILLAGE SUPER MARKET, INC.
REPORTS RESULTS FOR THE FIRST QUARTER ENDED
OCTOBER 24, 1998
Contact: Kevin Begley, C.F.O.
(973) 467-2200 - Ext. 220
Springfield, New Jersey - November 20, 1998 - Village Super
Market, Inc. reported sales and net income for the first quarter ended
October 24, 1998, Perry Sumas, President announced today.
Net income was $1,180,000 ($.39 per diluted share) in the first
quarter of fiscal 1999, an increase of 154% from the prior year.
First quarter sales were $178,058,000, a same store sales increase of
4.8% from the prior year. The significant increase in first quarter
net income was due to the strong improvement in same store sales
and substantially increased gross margin percentages.
Sales increased above the previous trend primarily due to the
introduction of double coupons into northern New Jersey, where 16 of
the Company's stores operate, approximately midway through the first
quarter. Gross margin percentages increased in many of the
Company's selling departments, leading to an overall increase in
gross margin percentages of .5%. Operating expenses as a
percentage of sales declined slightly as the effect of spreading
costs over the much improved sales base slightly exceeded the
increased cost from the doubling of manufacturer coupons.
Village Super Market operates a chain of 22 supermarkets
under the ShopRite name in New Jersey and eastern Pennsylvania.
The following table summarizes Village's results for the quarter
ended October 24, 1998:
[CAPTION]
<TABLE>
13 Weeks Ended 13 Weeks Ended
October 24, 1998 October 25, 1997
<S> <C> <C>
Sales $178,058,000 $169,888,000
Net Income $ 1,180,000 $ 465,000
Net Income Per Share - Basic $ .40 $ .16
Net Income Per Share - Diluted $ .39 $ .16
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-25-1998
<PERIOD-END> OCT-24-1998
<CASH> 5149
<SECURITIES> 0
<RECEIVABLES> 4461
<ALLOWANCES> 0
<INVENTORY> 28327
<CURRENT-ASSETS> 41826
<PP&E> 143996
<DEPRECIATION> 69359
<TOTAL-ASSETS> 143135
<CURRENT-LIABILITIES> 47033
<BONDS> 30262
<COMMON> 19164
0
0
<OTHER-SE> 43584
<TOTAL-LIABILITY-AND-EQUITY> 143135
<SALES> 178058
<TOTAL-REVENUES> 178058
<CGS> 132941
<TOTAL-COSTS> 132941
<OTHER-EXPENSES> 42303
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 779
<INCOME-PRETAX> 2035
<INCOME-TAX> 855
<INCOME-CONTINUING> 1180
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1180
<EPS-PRIMARY> .40
<EPS-DILUTED> .39
</TABLE>
