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: April 24, 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 or
incorporation organization or
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>
May 28, 1999
<S> <C>
Class A Common Stock, No Par Value 1,385,500 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)
April 24, July 25,
1999 1998
ASSETS
<S> <C> <C>
Current assets
Cash and cash equivalents $ 7,739 $ 5,679
Merchandise inventories 28,373 26,549
Patronage dividend receivable 1,010 1,969
Miscellaneous receivables 3,580 3,416
Other current assets 1,117 778
Total current assets 41,819 38,391
Property, equipment and fixtures, net 73,747 73,331
Investment in related party 10,572 10,468
Goodwill, net 9,873 10,073
Other intangibles, net 1,840 2,030
Other assets 4,613 4,215
TOTAL ASSETS $142,464 $138,508
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 2,087 $ 2,830
Accounts payable to related party 26,150 27,370
Accounts payable and accrued expenses 18,919 17,583
Income taxes payable - 290
Total current liabilities 47,156 48,073
Long-term debt, less current portion 27,410 25,700
Deferred income taxes 2,942 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 51,012 47,759
Less cost of treasury shares
(377,300 shares at April 24, 1999
and 387,000 shares at July 25, 1998) (5,220) (5,355)
Total shareholders' equity 64,956 61,568
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $142,464 $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. Ended 13 Wks. Ended 39 Wks. Ended 39 Wks. Ended
Apr. 24, 1999 Apr. 25, 1998 Apr. 24, 1999 Apr. 25, 1998
<S> <C> <C> <C> <C>
Sales $ 182,096 $ 169,594 $ 552,788 $ 522,182
Cost of sales 135,282 126,765 411,808 392,164
Gross margin 46,814 42,829 140,980 130,018
Operating and
administrative
expense 42,665 38,727 127,315 117,933
Depreciation and
amortization
expense 1,894 1,975 5,686 5,529
Operating income 2,255 2,127 7,979 6,556
Interest expense 730 745 2,305 2,380
Income before
income taxes 1,525 1,382 5,674 4,176
Provision for
Income taxes 640 594 2,383 1,796
Net Income $ 885 $ 788 $ 3,291 $ 2,380
Net income
per share:
Basic $ .30 $ .27 $ 1.11 $ .81
Diluted $ .29 $ .26 $ 1.08 $ .80
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
<TABLE>
<CAPTION>
VILLAGE SUPER MARKET, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
39 Wks Ended 39 Wks Ended
Apr. 24, 1999 Apr. 25, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 3,291 $ 2,380
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 5,686 5,529
Deferred taxes ( 225) ( 500)
Provision to value inventories at LIFO 400 225
Changes in assets and liabilities:
(Increase) in inventory ( 2,224) ( 1,578)
Decrease in patronage dividend
receivable 959 826
(Increase) in misc. receivables ( 164) ( 403)
(Increase) in other current assets ( 339) ( 5)
(Increase) in other assets ( 398) ( 53)
(Decrease) in accounts payable to
related party ( 1,220) ( 949)
Increase in accounts payable and
accrued expenses 1,336 461
(Decrease) in income taxes payable ( 290) ( 280)
Net cash provided by operating
activities 6,812 5,653
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures ( 5,712) ( 7,098)
Investment in related party ( 104) ( 87)
Net cash used by investing activities ( 5,816) ( 7,185)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term
debt 3,431 4,700
Proceeds from exercise of stock
options(9,700 in 1999 and 60,000
in 1998) 97 480
Principal payments of long-term debt ( 2,464) ( 3,918)
Net cash provided by financing
activities 1,064 1,262
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 2,060 ( 270)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 5,679 4,270
CASH AND CASH EQUIVALENTS, END OF
PERIOD $ 7,739 $ 4,000
</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 April 24, 1999 and July 25, 1998
and the results of operations and cash flows for the periods ended
April 24, 1999 and April 25, 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 April 24, 1999
are not necessarily indicative of the results to be expected for the
full year.
3. At both April 24, 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 $8,115,000 and
$7,715,000 higher than reported at April 24, 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 39 Wks Ended
4/24/99 - 4/25/98 4/24/99-4/25/98
<S> <C> <C> <C> <C>
Weighted Average
Shares
Outstanding -
Basic 2,979,136 2,969,876 2,973,279 2,943,187
Dilutive Effect
of Employee
Stock Options 56,971 50,538 70,900 24,748
Weighted Average
Shares Outstanding
- Diluted 3,036,107 3,020,414 3,044,179 2,967,935
</TABLE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Sales in the third quarter of fiscal 1999 were $182,096,000, which
represents a same store sales increase of 7.4% from the prior year.
Sales for the nine month period were $552,788,000, a same store sales
increase of 5.9%. This acceleration in same store sales growth for the
quarter and nine 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 offered double
coupons.
Gross margin as a percentage of sales increased to 25.7% and 25.5%,
respectively, in the quarter and nine month periods ended April 24, 1999
compared with 25.2% and 24.9%, respectively in the corresponding prior
year periods. 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 nine months increased to 23.4% and 23.0%, respectively,
compared with 22.8% and 22.6%, respectively, in the corresponding prior
year periods. These increases are a result of increased costs associated
with double couponing.
Net income increased 12.3% in the quarter to $885,000. This
increase is primarily attributable to the 7.4% same store sales increase
and the substantially improved gross margin percentage, offset by the
increase in costs resulting from double couponing.
LIQUIDITY AND FINANCIAL RESOURCES
Current liabilities exceeded current assets by $5,337,000 at April 24,
1999 compared to $9,682,000 at July 25, 1998. The current ratio increased
to .89 at April 24, 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 nine month period, $3,431,000 of additional borrowings
and $6,812,000 of cash provided by operations were used to fund capital
expenditures of $5,712,000 and to make principal payments on long term
debt of $2,464,000. In addition, cash increased $2,060,000 in the
nine month period. The majority of capital expenditures in the
nine month period related to the expansion and remodel of the
Livingston store, which is substantially complete.
At April 24, 1999, $9,500,000 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 April 24, 1999.
SUBSEQUENT EVENT:
On May 9, 1999, the Company acquired all the assets of an existing
ShopRite supermarket in Vineland, New Jersey from Wakefern for
$4,700,000, including inventory of $1,200,000. The acquisition of this
67,000 square foot leased store was financed in part, by a $3,500,000 loan
secured by the equipment and fixtures of the store.
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. 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
compliant before the end of 1999.
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 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 June 1, 1999.
Exhibit 28(b) - Second Quarter Report to Shareholders
dated March 5, 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: June 1, 1999 /s/ Perry Sumas
Perry Sumas
(President)
Date: June 1, 1999 /s/ Kevin R. Begley
Kevin R. Begley
(Chief Financial Officer)
Exhibit 28(a)
VILLAGE SUPER MARKET, INC.
REPORTS RESULTS FOR THE QUARTER AND NINE MONTHS ENDED
APRIL 24, 1999
Contact: Kevin Begley, C. F. O.
(973) 467-2200 - Ext. 220
Springfield, New Jersey - June 1, 1999 - Village Super Market,
Inc. reported sales and net income for the third quarter ended April 24,
1999, Perry Sumas, President announced today.
Net income was $885,000 ($.29 per diluted share) in the third
quarter of fiscal 1999, an increase of 12% from the prior year. Sales
in the third quarter were $182,096,000, a same store sales increase of
7.4%.
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.
For the nine month period, sales were $552,788,000, an increase of
5.9% from the prior year. Net income for the nine month period was
$3,291,000 ($1.08 per share), an increase of 38% from the prior year.
On May 9, 1999, the Company acquired all the assets of an existing
ShopRite supermarket in Vineland, New Jersey from Wakefern for $4,700,000,
including inventory of $1,200,000. The acquisition of this 67,000 square
foot leased store was financed in part, by a $3,500,000 loan secured by
the equipment and fixtures of the store.
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 nine months ended
April 24, 1999:
<TABLE>
<CAPTION>
April 24, 1999 April 25, 1998
13 Weeks Ended
<S> <C> <C>
Sales $182,096,000 $169,594,000
Net Income $ 885,000 $ 788,000
Net Income Per Share - Basic $ .30 $ .27
Net Income Per Share - Diluted $ .29 $ .26
39 Weeks Ended
Sales $552,788,000 $522,182,000
Net Income $ 3,291,000 $ 2,380,000
Net Income Per Share - Basic $ 1.11 $ .81
Net Income Per share - Diluted $ 1.08 $ .80
</TABLE>
Exhibit 28(b)
* To Our Shareholders:
S * The Company had net income of $1,225,000 in the second quarter
ended January 23, 1999, an increase of 9% from the prior year.
E * Sales in the second quarter were $192,633,000, which represents
a same store sales increase of 5.4%. This acceleration in same
C * store sales growth is a result of the introduction of double
coupons in northern New Jersey on September 6, 1998.
O *
For the first six months of fiscal 1999, the Company had net
N * income of $2,406,000, an increase of 51% from the prior year.
Sales for the six month period were $370,692,000, an
D * increase of 5.1% from the prior year.
Gross margin as a percentage of sales increased to 25.5% and
Q * 25.4, respectively, in the quarter and six month periods ended
January 23, 1999 compared with 24.7% in both periods in fiscal
U * 1998. Gross margin percentages improved in most selling
departments, in part due to a reduction in sale item penetration
A * as a result of offering double coupons.
R * Operating and administrative expenses as a percentage of sales
for the quarter and six months increased to 23.0% and 22.8%,
T * respectively, compared with 22.2% and 22.5%, respectively, in
the corresponding prior year periods. These increases are a
E * result of increased costs associated with double couponing and
other promotional activities.
R *
Net income in the quarter and six month periods improved due to
higher same store sales and improved gross margin percentages,
R * partially offset by the increase in costs resulting from double
couponing and other marketing efforts.
E *
Capital expenditures for the six month period were $4,300,000.
P * The major expenditure was the expansion and remodel of the
Livingston store, which is substantially complete.
O *
The table accompanying this report summarizes Village Super
R * Market's results for the quarter and six month periods ended
January 23, 1999.
T *
Respectfully,
*
Perry Sumas James Sumas
* President Chairman of the Board
*
* March 5, 1999
<TABLE>
<CAPTION>
INCOME STATEMENT DATA
13 Wks Ended 13 Wks Ended
Jan 23, 1999 Jan 24, 1998
<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 Wks Ended 26 Wks Ended
Jan 23, 1999 Jan 24, 1998
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
BALANCE SHEET COMPARISONS
Jan 23, 1999 July 25, 1998
Current Assets $ 46,769,000 $ 38,391,000
Current Liabilities $ 52,369,000 $ 48,073,000
Net Working Capital (Deficit) $( 5,600,000) $( 9,682,000)
Long-Term Debt $ 28,419,000 $ 25,700,000
Stockholders' Equity $ 64,021,000 $ 61,568,000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-25-1998
<PERIOD-END> APR-24-1999
<CASH> 7739
<SECURITIES> 0
<RECEIVABLES> 3580
<ALLOWANCES> 0
<INVENTORY> 28373
<CURRENT-ASSETS> 41819
<PP&E> 146591
<DEPRECIATION> 72844
<TOTAL-ASSETS> 142464
<CURRENT-LIABILITIES> 47156
<BONDS> 27410
<COMMON> 19164
0
0
<OTHER-SE> 48734
<TOTAL-LIABILITY-AND-EQUITY> 142464
<SALES> 552788
<TOTAL-REVENUES> 552788
<CGS> 411808
<TOTAL-COSTS> 411808
<OTHER-EXPENSES> 133001
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</TABLE>
