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 28, 2000
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 4, 2000
<S> <C>
Class A Common Stock, No Par Value 1,419,400 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 6-7
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 10
Exhibit 28(a) 11-12
Exhibit 28(b) 13-14
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
VILLAGE SUPER MARKET, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
October 28, July 29,
2000 2000
<S> <C> <C>
ASSETS (Unaudited)
Current assets
Cash and cash equivalents $ 21,337 $ 25,721
Merchandise inventories 30,872 31,033
Patronage dividend receivable 3,600 2,201
Miscellaneous receivables 5,658 5,255
Other current assets 800 650
Total current assets 62,267 64,860
Property, equipment and fixtures,
net 82,867 80,628
Investment in related party, at cost 11,189 11,051
Goodwill, net 10,861 10,946
Other intangibles, net 1,459 1,523
Other assets 4,792 4,916
TOTAL ASSETS $ 173,435 $ 173,924
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 1,693 $ 1,705
Accounts payable to related party 27,667 28,634
Accounts payable and accrued expenses 21,728 23,157
Income taxes payable 1,004 109
Total current liabilities 52,092 53,605
Long-term debt, less current portion 41,261 42,507
Deferred income taxes 2,710 2,660
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 62,959 60,739
Less cost of Class A treasury shares
(343,400 shares at October 28, 2000
and July 29, 2000) (4,751) (4,751)
Total shareholders' equity 77,372 75,152
TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY $173,435 $173,924
</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)
(Unaudited)
13 Weeks Ended 13 Weeks Ended
October 28, 2000 October 30, 1999
<S> <C> <C>
Sales $ 198,033 $ 191,292
Cost of sales 150,014 144,202
Gross margin 48,019 47,090
Operating and administrative
expense 41,837 40,959
Depreciation and amortization
expense 1,954 1,914
Operating income 4,228 4,217
Interest expense, net 745 847
Income before provision for
income taxes 3,483 3,370
Provision for income taxes 1,263 1,340
Net income $ 2,220 $ 2,030
Net income per share:
Basic $ .74 $ .68
Diluted $ .73 $ .67
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
<TABLE>
<CAPTION>
VILLAGE SUPER MARKET, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
13 Wks. Ended 13 Wks. Ended
Oct. 28, 2000 Oct. 30, 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,220 $ 2,030
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 1,954 1,914
Deferred taxes 50 ( 100)
Provision to value inventories at LIFO 100 150
Changes in assets and liabilities:
(Increase) decrease in merchandise
inventories 61 ( 870)
(Increase) in patronage dividend
receivable ( 1,399) ( 1,235)
(Increase) in misc. receivables ( 403) ( 1,119)
(Increase) in other current assets ( 150) ( 72)
(Increase) decrease in other assets 124 ( 744)
(Decrease) in accounts
payable to related party ( 967) ( 1,077)
(Decrease) in accounts payable and
accrued expenses ( 1,090) ( 2,846)
Increase in income taxes payable 895 924
Net cash provided by (used in)
operating activities 1,395 ( 3,045)
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures ( 5,245) ( 1,353)
Investment in related party ( 138) ( 85)
Net cash used in investing activities ( 5,383) ( 1,438)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt -- 30,000
Proceeds from exercise of stock options -- 22
Principal payments of long-term debt ( 396) ( 13,862)
Net cash provided by (used in)
financing activities ( 396) 16,160
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ( 4,384) 11,677
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 25,721 9,771
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 21,337 $ 21,448
</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 28, 2000
and the consolidated results of operations and cash flows for the
periods ended October 28, 2000 and October 30, 1999.
The significant accounting policies followed by the Company are
set forth in Note 1 to the Company's consolidated financial
statements in the July 29, 2000 Village Super Market, Inc. Annual
Report on Form 10-K, which should be read in conjunction with this
Form 10-Q.
2. The results of operations for the period ended
October 28, 2000 are not necessarily indicative of the results to
be expected for the full year.
3. At both October 28, 2000 and July 29, 2000, 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 $8,602,000 and
$8,502,000 higher than reported at October 28, 2000 and July 29,
2000, respectively.
4. The number of common shares outstanding for calculation of net
income per share is as follows:
<TABLE>
<CAPTION>
October 28, October 30,
2000 1999
<S> <C> <C>
Weighted average shares
outstanding - basic 3,013,476 2,989,831
Dilutive effect of employee
stock option 34,516 56,697
Weighted average shares
outstanding - diluted 3,047,992 3,046,528
</TABLE>
5. At a recent FASB Emerging Issues Task Force meeting, a consensus
was reached with respect to the issue "Accounting for Certain Sales
Incentives" including point of sale coupons, rebates and free
merchandise. The consensus included a conclusion that the value of
such sales incentives that result in a reduction of the price paid by the
customer should be netted against revenue and not classified as a marketing
expense. The Company historically recorded coupons as operating and
administrative expense. Effective with the first quarter of fiscal 2001,
the Company has classified coupon expense a reduction of sales. Prior
year amounts have been reclassified to conform to the current year
presentation. Coupon expense for the quarter ended October 28, 2000 and
October 30, 1999 was $4,187,000 and $4,125,000, respectively. This
reclassification had no effect on the Company's net income.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Sales in the first quarter of fiscal 2001 were $198,033,000, an
increase of 3.5% from the prior year. On August 10, 2000, the
Company opened a 67,000 square foot store to replace its existing
store in West Orange, New Jersey. Excluding this replacement
store, sales increased 2.6% in the first quarter.
Gross margin as a percentage of sales decreased to 24.2% from
24.6% in the prior year. Gross margin percentages declined in
several departments compared to the prior year.
Operating and administrative expenses as a percentage of sales
decreased to 21.1% from 21.4% in the prior year. This decrease was
a result of lower payroll, advertising and utility costs as a
percentage of sales. These decreases were partially offset by
increased occupancy costs.
The Company reduced its effective income tax rate to 36.3%,
compared to 39.8% in the prior fiscal year, through tax planning
initiatives begun in the second half of fiscal 2000.
Net income increased 9% in the quarter to $2,220,000. This
increase is attributable to increased sales, lower operating
expenses as a percentage of sales and a lower tax rate, offset by
reduced gross margin percentages.
As previously announced, the Company closed the South Orange,
New Jersey store on October 28, 2000.
LIQUIDITY AND FINANCIAL RESOURCES
Current assets exceeded current liabilities by $10,175,000 at
October 28, 2000 compared to $11,255,000 at July 29, 2000. The
working capital ratio was 1.2 to 1 at both dates. 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 first quarter, the Company had capital expenditures of
$5,245,000. The major expenditures were equipment and leasehold
improvements for the replacement store in West Orange, New Jersey
and remodel costs for the store in Vineland, New Jersey. The Company
has budgeted approximately $16 million for capital expenditures in fiscal
2001. This amount includes the construction, which recently began, and
equipment for a new superstore in Garwood, New Jersey. The Company's
primary sources of liquidity in fiscal 2001 are expected to be cash
on hand and operating cash flow.
OTHER MATTERS
On November 22, 2000, Big V Supermarkets, Inc., the largest member
of the Wakefern Food cooperative, filed for reorganization under
Chapter 11 of the U .S. Bankruptcy Code. In addition, Big V announced
its intention to depart from the Wakefern cooperative. Separately,
Wakefern has publicly stated that Wakefern will take all appropriate
actions to enforce its rights under the Wakefern stockholder's agreement.
The Company's Form 10-K includes a comprehensive description of the
Company's relationship with Wakefern and the rights and obligations of
the Company and other members under the Wakefern stockholder's agreement.
Further, a press release issued by Wakefern in response to this situation
is attached as Exhibit 28(b). At this time, any impact on Wakefern
and the Company from these developments cannot be ascertained.
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,
local economic conditions, competitive pressures from the Company's
operating environment, the ability of the Company to maintain and
improve its sales and margins, the ability to attract and retain
qualified associates, the availability of new store locations, the
liquidity of the Company on a cash flow basis, 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 December 1, 2000.
Exhibit 28(b) - Wakefern Food Corporation press release
dated November 24, 2000.
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 5, 2000 /s/ Perry Sumas
Perry Sumas
(President)
Date: December 5, 2000 /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 28, 2000
Contact: Kevin Begley, C.F.O.
(973) 467-2200, Ext. 220
Springfield, New Jersey - December 1, 2000 - Village Super Market,
Inc. (NSD - VLGEA) reported sales and net income for the first
quarter ended October 28, 2000, Perry Sumas, President announced
today.
Net income was $2,220,000 ($.73 per diluted share) in the first
quarter of fiscal 2001, an increase of 9% from the first quarter
of the prior year.
Sales in the first quarter were $198,033,000, an increase of 3.5%
from the prior year. Excluding a replacement store that opened in
West Orange, New Jersey on August 10, 2000, sales increased 2.6%.
Net income increased due to higher sales, lower operating costs as a
percentage of sales and a lower effective tax rate, partially offset
by lower gross margin percentages.
On November 22, 2000, Big V Supermarkets, Inc., the largest member of
the Wakefern Food cooperative, filed for reorganization under Chapter
11 of the U.S. Bankruptcy Code and announced its intention to depart
the Wakefern cooperative. Separately, Wakefern has publicly stated
that Wakefern will take all appropriate actions to enforce its rights
under the Wakefern Stockholder's agreement. Village is a member of
the Wakefern cooperative. The impact of Big V's actions on Wakefern
and Village cannot be ascertained at this time.
Village Super Market operates a chain of 22 supermarkets under the
ShopRite name in New Jersey and eastern Pennsylvania. The following
table summarizes the results for the quarter ended October 28, 2000:
<TABLE>
<CAPTION>
13 Weeks Ended 13 Weeks Ended
October 28, 2000 October 30, 1999
<S> <C> <C>
Sales $ 198,033,000 $ 191,292,000
Net Income $ 2,220,000 $ 2,030,000
Net Income Per Share - Basic $ .74 $ .68
Net Income Per Share - Diluted $ .73 $ .67
</TABLE>
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, local economic conditions, competitive pressures
from the Company's operating environment, the ability of the Company
to maintain and improve its sales and margins, the ability to attract
and retain qualified associates, the availability of new store
locations, the liquidity of the Company on a cash flow basis, and
other risk factors detailed herein and in the Company's filings with
the SEC.
Exhibit 28(b)
600 York St.
Wakefern Food Corporation Elizabeth, NJ
07207
Press Release
Contact: Mary Ellen Gowin
732-906-5150
FOR IMMEDIATE RELEASE
November 24, 2000
WAKEFERN RESPONDS TO BIG V ACTION
Elizabeth, New Jersey, November 24,2000...-- In Big V
Supermarkets' 10Q filing with the United States Securities and Exchange
Commission on November 20,2000, they announced that they had entered
into a supply agreement with C&S Wholesale Grocers, Inc. for supplying
their grocery, frozen, and perishable merchandise. Subsequent to that
action, they announced that they had voluntarily filed for
reorganization under Chapter 11 of the U.S. Bankruptcy Code and plan to
close a number of stores. That bankruptcy filing relates only to Big
V and does not implicate Wakefern or any other of its Members and or
stores.
"One of our greatest concerns is for the Associates who work for Big V
and the Customers they serve. As well, we sincerely hope they will
fulfill their obligations to their dedicated associates. Customers in
that region have come to rely on the ShopRite brand and the quality
and value it represents," stated Thomas P. Infusino, Chairman of the
Board and CEO of Wakefern Food Corporation. Infusino also pointed out
that Big V is party to an agreement with Wakefern that requires all
Members of Wakefern to give notice if they decide to leave and to pay
a substantial fee for the "loss-of-volume" to the cooperative.
Mr. Infusino also added, "We assume that Big V will honor its
contractual commitments to Wakefern. However, in the event that
Big V does not comply with its obligations, Wakefern will take all
appropriate actions to enforce its rights."
In addition to the wholesale procurement and distribution services that
Wakefern provides to its Membership, Wakefern also offers comprehensive
services in the areas of store development, engineering, technology,
loss prevention, quality assurance, product development, advertising,
merchandising, consumer affairs and financial and accounting services,
among others. "When utilized properly, these services have allowed
our Membership to achieve unparalleled success while providing them
substantial savings. It allows us to remain highly competitive and to
focus our attention on servicing our customers," stated Mr. Infusino.
Mr. Infusino also noted, "We have survived loss of volume before, and we
will once again prove the power of the cooperative structure by recouping
this volume over time." The 41 Members who independently own and operate
ShopRite Supermarkets drive Wakefern's volume. While the largest member,
Big V represents only 13% of Wakefern's volume. In 1967, Supermarkets
General withdrew from the Cooperative to become Pathmark. At that time,
their volume made up one-half of Wakefern's total volume. Although it
was a major challenge, Wakefern Members made up that volume, resulting
in the development of an even stronger commitment to the cooperative
structure.
The ShopRite organization is a very successful and stable company with
a strong brand identity. Today, Wakefern is a 7 billion dollar company.
ShopRite has been the recognized #1 market leader for many years.
ShopRite Owners/Members are in the process of remodeling stores and
building a substantial number of new stores, with many more under
development. Our alternate format store, PriceRite , is extremely
successful with 8 stores in Connecticut, Massachusetts and Rhode
Island and has very aggressive growth plans in those areas.
Wakefern Food Corporation is the largest Member-owned wholesale
cooperative in the United States, providing distribution, products
and services to its Members who own and operate 205 supermarkets in
the North East. Stores are located in New Jersey, New York, Connecticut,
Pennsylvania and Delaware, Rhode Island, and Massachusetts.
