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 30, 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 (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>
December 2, 1999
<S> <C>
Class A Common Stock, No Par Value 1,396,700 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 7-9
PART II
OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
Exhibit 28(a) 12-13
<TABLE>
<CAPTION>
VILLAGE SUPER MARKET, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
October 30, July 31,
1999 1999
ASSETS
<S> <C> <C>
Current assets
Cash and cash equivalents $ 21,448 $ 9,771
Merchandise inventories 30,643 29,923
Patronage dividend receivable 2,963 1,728
Miscellaneous receivables 4,848 3,729
Other current assets 1,191 1,119
Total current assets 61,093 46,270
Property, equipment and fixtures, net 74,895 75,307
Investment in related party, at cost 10,783 10,698
Goodwill, net 11,202 11,287
Other intangibles, net 1,713 1,776
Other assets 4,961 4,217
TOTAL ASSETS $ 164,647 $ 149,555
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 1,713 $ 2,149
Accounts payable to related party 26,009 27,086
Accounts payable and accrued expenses 20,650 23,496
Income taxes payable 1,660 736
Total current liabilities 50,032 53,467
Long-term debt, less current portion 43,778 27,204
Deferred income taxes 2,307 2,407
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 54,431 52,409
Less cost of treasury shares -
(366,100 shares at October 30, 1999
and 368,300 shares at July 31, 1999) (5,065) (5,096)
Total shareholders' equity 68,530 66,477
TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY $164,647 $149,555
</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 30, 1999 October 24, 1998
<S> <C> <C>
Sales $ 195,413 $ 178,058
Cost of sales 144,202 132,941
Gross margin 51,211 45,117
Operating and
administrative expense 45,080 40,374
Depreciation and
amortization expense 1,914 1,929
Operating income 4,217 2,814
Interest expense, net 847 779
Income before income
taxes 3,370 2,035
Provision for income taxes 1,340 855
Net income $ 2,030 $ 1,180
Net income per share:
Basic $ .68 $ .40
Diluted $ .67 $ .39
</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. 30, 1999 Oct. 24, 1998
CASH FLOWS FROM OPERATING
ACTIVITIES:
<S> <C> <C>
Net income $ 2,030 $ 1,180
Adjustments to reconcile net income
to net cash used by
operating activities:
Depreciation and amortization 1,914 1,929
Deferred taxes ( 100) ( 75)
Provision to value inventories
at LIFO 150 125
Changes in assets and liabilities:
(Increase) in inventory ( 870) ( 1,903)
(Increase) in patronage dividend
receivable ( 1,235) ( 1,103)
(Increase) in misc. receivables ( 1,119) ( 1,045)
(Increase) in other current assets ( 72) ( 39)
(Increase) in other assets ( 744) ( 14)
(Decrease) in accounts
payable to related party ( 1,077) ( 379)
(Decrease) in accounts payable
and accrued expenses ( 2,846) ( 1,598)
Increase in income taxes payable 924 842
Net cash used by operating
activities ( 3,045) ( 2,080)
CASH FLOW FROM INVESTING
ACTIVITIES:
Capital expenditures ( 1,353) ( 3,105)
Investment in related party ( 85) ( 2)
Net cash used by investing
activities ( 1,438) ( 3,107)
CASH FLOW FROM FINANCING
ACTIVITIES:
Proceeds from issuance of
long-term debt 30,000 5,000
Proceeds from exercise of
stock options 22 --
Principal payments of
long-term debt (13,862) ( 343)
Net cash provided by financing
activities 16,160 4,657
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 11,677 ( 530)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 9,771 5,679
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 21,448 $ 5,149
</TABLE>
See accompanying Notes to Consolidated Condensed Financial
Statements.
VILLAGE SUPER MARKET, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited
consolidated condensed financial statements contain all
adjustments(consisting of normal and recurring accruals)
necessary to present fairly the consolidated financial position
as of October 30, 1999 and the consolidated results of
operations and cash flows for the periods ended October 30, 1999
and October 24, 1998.
The significant accounting policies followed by the Company
are set forth in Note 1 to the Company's consolidated financial
statements in the July 31, 1999 Village Super Market, Inc. Annual
Report.
2. The results of operations for the period ended October 30, 1999
are not necessarily indicative of the results to be expected for
the full year.
3. At both October 30, 1999 and July 31, 1999, approximately 67%
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 $8,458,000
and $8,308,000 higher than reported at October 30, 1999 and
July 31, 1999 respectively.
4 The number of common shares outstanding for calculation of
net income per share is as follows:
<TABLE>
<CAPTION>
October 30, October 24,
1999 1998
<S> <C> <C>
Weighted average shares
outstanding - basic 2,989,831 2,969,876
Dilutive effect of employee
stock options 56,697 87,310
Weighted average shares
outstanding - diluted 3,046,528 3,057,186
</TABLE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Sales in the first quarter were $195,413,000, which represents
an increase of 9.7% from the prior year. Same store sales
increased 4.9% from the prior year. The remainder of the sales
increase was due to the acquisition of the Vineland store in
May 1999. Same store sales increased, in part, due to all 13 weeks
of the current year's quarter including double coupons in northern
New Jersey compared with seven weeks in the prior year. Same store
sales increases for the remainder of fiscal 2000 are expected to be
substantially below this 6% same store sales increase during fiscal
1999 and the 4.9% same store sales increase that was achieved in the
first quarter of fiscal 2000, as the comparisons for the remainder
of fiscal 2000 are to fiscal 1999 periods that included the full
impact of double coupons.
Gross margin as a percentage of sales increased to 26.2% from
25.3% in the prior year. Gross margins percentages improved in most
selling departments when compared to the prior year. In addition,
a portion of the gross margin improvement was due to special rebates
received for the new Vineland store.
Operating and administrative expenses as a percentage of sales
increased to 23.1% from 22.7% in the prior year. This increase was
a result of the increased cost associated with the doubling of
manufacturers coupons for a greater number of weeks in the current
fiscal year. This increase was partially offset by lower payroll
and fringe benefit costs as a percentage of sales.
Interest expense increased in the current quarter compared to
the prior year as a result of higher debt levels.
The 72% increase in net income compared to the prior year is
primarily attributable to the 4.9% same store sales increase
and the substantially improved gross margin percentage, partially
offset by increased coupon costs.
LIQUIDITY AND FINANCIAL RESOURCES
On September 16, 1999, the Company issued $30 million of 8.12%
unsecured Senior Notes. At the same time, the Company entered into
a $15 million unsecured revolving credit agreement. These two debt
agreements replaced the $6,667,000 term loan and a $24,000,000
revolving credit facility, both of which were secured by
substantially all of the Company's assets. The Company was in
full compliance with all terms and restrictive covenants of all
debt agreements at October 30, 1999.
Current assets exceeded current liabilities by $11,061,000 at
October 30, 1999 compared to current liabilities exceeding current
assets by $7,197,000 at July 31, 1999. The working capital ratio
increased to 1.22 at October 30, 1999 from .87 at July 31, 1999.
These improvements were primarily due to the increase in cash
resulting from the financing described above, less the $13,400,000
of long term debt that was paid off. The Company's working capital
needs are reduced by its high rate of inventory turnover and because
the warehousing the 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, the Company had capital expenditures of
$1,353,000. The Company has budgeted approximately $19,000,000 for
capital expenditures in fiscal 2000. Planned expenditures include
the replacement of the West Orange store, the start of two major
remodels, the purchase of land for a future store and technology
upgrades.
YEAR 2000:
The Company has participated 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. The Company believes
all in-store IT Systems are currently Y2K compliant.
The Company has 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 the remainder of 1999.
The Company and Wakefern have utilized 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 have not had a significant adverse
affect on continuing operations. All Y2K costs are being
expensed as incurred.
The Company has developed 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 1. Legal Proceedings
Footnote 11 to the Consolidated Financial Statements for fiscal
1999 includes a description of litigation decided against the
Company on August 31, 1999.
Item 6. Exhibits and Reports on Form 8-K
6(a) Exhibits
Exhibit 28(a) - Press Release dated December 2, 1999.
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: December 7, 1999 /s/ Perry Sumas
Perry Sumas
(President)
Date: December 7, 1999 /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 30, 1999
Contact: Kevin Begley, C.F.O.
(973) 467-2200, Ext. 220
Springfield, New Jersey - December 2, 1999 - Village Super
Market, Inc. reported sales and net income for the first quarter
ended October 30, 1999, Perry Sumas, President announced today.
Net income was $2,030,000 ($.67 per diluted share) in the first
quarter of fiscal 2000, an increase of 72% from the first quarter
of the prior year.
Sales in the first quarter were $195,413,000, an increase of
9.7% from the prior year. Same store sales increased 4.9% in the
first quarter. The remainder of the sales increase is due to the
acquisition of a store in May 1999. Same store sales increased
primarily due to all 13 weeks of the current year's quarter
including the impact of double coupons as compared to only seven
weeks in the first quarter of the prior year.
The large increase in first quarter net income compared with the
prior year is primarily a result of the improved same store sales
and a substantial improvement in gross margin percentages,
partially offset by increased costs from the doubling of
manufacturer coupons.
On September 16, 1999, the Company completed the sale of $30
million of 8.12% unsecured Senior Notes. At the same time, the
Company entered into a $15 million unsecured revolving credit
facility. These two agreements replace the $6,667,000 term loan
and $24 million credit facilities previously available to the
Company, both of which were secured.
Village Super Market operates a chain of 23 supermarkets under
the ShopRite name in New Jersey and eastern Pennsylvania. The
following table summarizes the results for the quarter ended
October 30, 1999:
<TABLE>
<CAPTION>
13 Weeks Ended 13 Weeks Ended
October 30, 1999 October 24, 1998
<S> <C> <C>
Sales $ 195,413,000 $ 178,058,000
Net Income $ 2,030,000 $ 1,180,000
Net Income Per Share - Basic $ .68 $ .40
Net Income Per Share - Diluted $ .67 $ .39
</TABLE>
FORWARD-LOOKING STATEMENTS:
This Press Release 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,
results of litigation and other risk factors detailed in the
Company's filings with the SEC.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-END> OCT-30-1999
<CASH> 21448
<SECURITIES> 0
<RECEIVABLES> 4848
<ALLOWANCES> 0
<INVENTORY> 30643
<CURRENT-ASSETS> 61093
<PP&E> 152706
<DEPRECIATION> 77811
<TOTAL-ASSETS> 164647
<CURRENT-LIABILITIES> 50032
<BONDS> 43778
0
0
<COMMON> 19164
<OTHER-SE> 51673
<TOTAL-LIABILITY-AND-EQUITY> 164647
<SALES> 195413
<TOTAL-REVENUES> 195413
<CGS> 144202
<TOTAL-COSTS> 144202
<OTHER-EXPENSES> 46994
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 847
<INCOME-PRETAX> 3370
<INCOME-TAX> 1340
<INCOME-CONTINUING> 2030
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2030
<EPS-BASIC> .68
<EPS-DILUTED> .67
</TABLE>
