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 23, 1999
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 incorporation (I. R. S. Employer
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 24, 1999
<S> <C>
Class A Common Stock, No Par Value 1,380,500 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 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 7-10
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
Exhibit 28(a) 13
Exhibit 28(b) 14
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
VILLAGE SUPER MARKET, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
January 23, July 25,
1999 1998
ASSETS
<S> <C> <C>
Current assets
Cash and cash equivalents $ 12,023 $ 5,679
Merchandise inventories 29,229 26,549
Patronage dividend receivable 391 1,969
Miscellaneous receivables 4,353 3,416
Other current assets 773 778
Total current assets 46,769 38,391
Property, equipment and fixtures, net 74,120 73,331
Investment in related party 10,494 10,468
Goodwill, net 9,939 10,073
Other intangibles, net 1,903 2,030
Other assets 4,601 4,215
TOTAL ASSETS $147,826 $138,508
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 2,017 $ 2,830
Accounts payable to related party 29,784 27,370
Accounts payable and accrued expenses 20,197 17,583
Income taxes payable 371 290
Total current liabilities 52,369 48,073
Long-term debt, less current portion 28,419 25,700
Deferred income taxes 3,017 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,
1,594,076 shares issued & outstanding 1,035 1,035
Retained earnings 50,147 47,759
Less cost of treasury shares
(382,300 shares at January 23, 1999
and 387,000 shares at July 25, 1998) (5,290) (5,355)
Total shareholders' equity 64,021 61,568
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $147,826 $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 Wks End 13 Wks End 26 Wks End 26 Wks End
Jan 23,1999 Jan 24,1998 Jan 23,1999 Jan 24,1998
<S> <C> <C> <C> <C>
Sales $ 192,633 $ 182,700 $ 370,692 $ 352,588
Cost of sales 143,585 137,623 276,526 265,399
Gross margin 49,048 45,077 94,166 87,189
Operating and
administrative
expense 44,276 40,500 84,650 79,222
Depreciation and
amortization
expense 1,863 1,791 3,792 3,556
Operating income 2,909 2,786 5,724 4,411
Interest expense 796 808 1,575 1,617
Income before
income taxes 2,113 1,978 4,149 2,794
Provision for income
taxes 888 851 1,743 1,202
Net Income $ 1,225 $ 1,127 $ 2,406 $ 1,592
Net income
per share:
Basic $ .41 $ .38 $ .81 $ .54
Diluted $ .40 $ .38 $ .79 $ .54
</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 Wks Ended 26 Wks Ended
Jan. 23, 1999 Jan. 24, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 2,406 $ 1,592
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 3,792 3,556
Deferred taxes ( 150) ( 300)
Provision to value inventories at LIFO 250 225
Changes in assets and liabilities:
(Increase) in inventory ( 2,930) ( 745)
Decrease in patronage dividend
receivable 1,578 1,511
(Increase) in misc. receivables ( 937) ( 875)
(Increase) decrease in other
current assets 5 ( 9)
(Increase) in other assets ( 386) ( 28)
Increase in accounts
payable to related party 2,414 2,330
Increase in accounts payable and
accrued expenses 2,614 919
Increase (decrease) in income taxes payable 81 ( 218)
Net cash provided by operating
activities 8,737 7,958
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures ( 4,320) (4,430)
Investment in related party ( 26) ( 58)
Net cash used by investing activities ( 4,346) (4,488)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 3,931 1,000
Proceeds from exercise of stock options
(4,700 in 1999 and 60,000 in 1998) 47 480
Principal payments of long-term debt ( 2,025) (3,583)
Net cash provided (used) by financing
activities 1,953 (2,103)
NET INCREASE IN CASH
AND CASH EQUIVALENTS 6,344 1,367
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 5,679 4,270
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 12,023 $ 5,637
</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 January 23, 1999 and July 25, 1998 and the
results of operations and cash flows for the periods ended January 23, 1999
and January 24, 1998.
The significant accounting policies followed by the Company are set forth
in Note 1 to the Company's financial statements in the July 25, 1998 Village
Super Market, Inc. Annual Report.
2. The results of operations for the period ended January 23, 1999 are
not necessarily indicative of the results to be expected for the full year.
3. At both January 23, 1999 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 $7,965,000 and $7,715,000 higher than reported
at January 23, 1999 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>
13 Wks Ended 26 Wks Ended
1/23/99 1/24/98 1/23/99 1/24/98
<S> <C> <C> <C> <C>
Weighted Average
Shares Outstanding - Basic 2,970,824 2,949,810 2,970,350 2,929,843
Dilutive Effect of Employee
Stock Options 68,418 9,040 77,864 11,854
Weighted Average Shares
Outstanding - Diluted 3,039,242 2,958,850 3,048,214 2,941,697
</TABLE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Sales in the second quarter of fiscal 1999 were $192,633,000, which
represents a same store sales increase of 5.4% from the prior year. Sales
for the six month period were $370,692,000, a same store sales increase of
5.1%. This acceleration in same store sales growth for the quarter and six
month period is a result of the introduction of double coupons in northern
New Jersey during the current fiscal year. 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 been doubled.
Gross margin as a percentage of sales increased to 25.5% and 25.4%,
respectively, in the quarter and six month periods ended January 23, 1999
compared with 24.7% in both the quarter and six month periods of fiscal 1998.
Gross margin percentages improved in most selling departments when compared
to the prior year. This is in part due to a reduction in sale item
penetration as a result of offering double coupons.
Operating and administrative expenses as a percentage of sales for the
quarter and six months increased to 23.0% and 22.8%, respectively, compared
with 22.2% and 22.5%, respectively, in the corresponding prior year periods.
These increases are a result of increased costs associated with double
couponing and other promotional activities in the current quarter.
Net income increased 8.7% in the quarter to $1,225,000. This increase
is primarily attributable to the 5.4% same store sales increase and the
substantially improved gross margin percentage, offset by the increase in
costs resulting from double couponing and other marketing efforts.
LIQUIDITY AND FINANCIAL RESOURCES
Current liabilities exceeded current assets by $5,600,000 at
January 23, 1999 compared to $9,682,000 at July 25, 1998. The current
ratio increased to .89 at January 23, 1999 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 six month period, $3,900,000 of additional borrowings and
$8,700,000 of cash provided by operations were used to fund capital
expenditures of $4,300,000 and to make principal payments on long term debt
of $2,000,000. In addition, cash increased $6,300,000 in the six month
period. The majority of capital expenditures in the six month period related
to the expansion and remodel of the Livingston store, which is substantially
complete.
At January 23, 1999, $10,000,000 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 23, 1999.
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, payroll, general ledger and accounts
payable applications. 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 building's infrastructure.
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 YK2 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 February 26, 1999.
Exhibit 28 (b)- First Quarter Report to Shareholders
dated December 11, 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: February 26, 1999 /s/ Perry Sumas
Perry Sumas
(President)
Date: February 26, 1999 /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 23, 1999
Contact: Kevin Begley, C. F. O.
(973) 467-2200 - Ext. 220
Springfield, New Jersey - February 26, 1999 - Village Super Market,
Inc. reported sales and net income for the second quarter ended January 23,
1999, Perry Sumas, President announced today.
Net income was $1,225,000 ($.40 per diluted share) in the second
quarter of fiscal 1999, an increase of 9% from the prior year. Sales in
the second quarter were $192,633,000, a same store sales increase of 5.4%.
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, in September 1998. Net income improved in the
quarter due to the same stores sales increase and a substantial improvement
in gross margin percentages, partially offset by increased costs from the
doubling of manufacturer coupons and other promotional activities.
For the six month period, sales were $370,692,000, an increase of 5.1%
from the prior year. Net income for the six month period was $2,406,000
($.79 per share), an increase of 51% 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 Village's results for the quarter and six months ended January
23, 1999:
<TABLE>
<CAPTION>
January 23, 1999 January 24, 1998
13 Weeks Ended
<S> <C> <C>
Sales $192,633,000 $182,700,000
Net Income $ 1,225,000 $ 1,127,000
Net Income Per Share - Basic $ .41 $ .38
Net Income Per Share - Diluted $ .40 $ .38
26 Weeks Ended
Sales $370,692,000 $352,588,000
Net Income $ 2,406,000 $ 1,592,000
Net Income Per Share - Basic $ .81 $ .54
Net Income Per share - Diluted $ .79 $ .54
</TABLE>
Exhibit 28(b)
F To Our Shareholders:
I The Company had net income of $1,180,000 ($.39 per diluted share) in
the first quarter ended October 24, 1998, an increase of 154% from the
R prior year. The significant increase in net income was due to a
strong increase in same store sales and substantially improved gross
S margin percentages.
T Sales in the first quarter were $178,058,000, a same store sales
increase of 4.8%. This acceleration in same store sales growth above
the recent trend is a result of the introduction of double coupons in
northern New Jersey on September 6, 1998.
Q 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
U departments. This is in part due to a reduction in sale item
penetration as a result of offering double coupons.
A
Operating and administrative expenses as a percentage of sales declined
R to 22.7% from 22.8% in the prior year. The improvement was primarily a
result of the effect of spreading fixed costs over the much improved
T sales base slightly exceeding the increased cost from the doubling of
manufacturer coupons.
E
Capital expenditures in the quarter were $3,105,000. The majority of
R capital expenditures in the quarter related to the expansion and remodel
of the Livingston store, which is nearly complete.
R The following table summarizes Village's results for the quarter ended
October 24, 1998:
E
Respectfully,
P Perry Sumas James Sumas
President Chairman of the Board
O
R December 11, 1998
T
<TABLE>
<CAPTION>
INCOME STATEMENT DATA
13 Wks Ended 13 Wks Ended
Oct.24, 1998 Oct. 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
BALANCE SHEET COMPARISONS
Oct. 24, 1998 July 25, 1998
Current Assets $ 41,826,000 $ 38,391,000
Current Liabilities $ 47,033,000 $ 48,073,000
Net Working Capital (Deficit) $( 5,207,000) $( 9,682,000)
Long Term Debt $ 30,262,000 $ 25,700,000
Stockholders' Equity $ 62,748,000 $ 61,568,000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-25-1998
<PERIOD-END> JAN-23-1999
<CASH> 12023
<SECURITIES> 0
<RECEIVABLES> 4353
<ALLOWANCES> 0
<INVENTORY> 29229
<CURRENT-ASSETS> 46769
<PP&E> 145200
<DEPRECIATION> 71080
<TOTAL-ASSETS> 147826
<CURRENT-LIABILITIES> 52369
<BONDS> 28419
<COMMON> 19164
0
0
<OTHER-SE> 44857
<TOTAL-LIABILITY-AND-EQUITY> 147826
<SALES> 370692
<TOTAL-REVENUES> 370692
<CGS> 276526
<TOTAL-COSTS> 276526
<OTHER-EXPENSES> 88442
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1575
<INCOME-PRETAX> 4149
<INCOME-TAX> 1743
<INCOME-CONTINUING> 2406
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2406
<EPS-PRIMARY> .81
<EPS-DILUTED> .79
</TABLE>
