10-Q 1 0001.txt 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 29, 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 (State of other jurisdiction of 22-1576170 incorporation or organization (I. R. S. Employer 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:
June 1, 2000 Class A Common Stock, No Par Value 1,416,700 Shares Class B Common Stock, No Par Value 1,594,076 Shares
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 6. Exhibits and Reports on Form 8-K 10 Signatures 11 Exhibit 28(a) 12 Exhibit 28(b) 13-14 PART I - FINANCIAL INFORMATION Item 1. Financial Statements
VILLAGE SUPER MARKET, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands) April 29, July 31, 2000 1999 ASSETS Current assets Cash and cash equivalents $ 19,524 $ 9,771 Merchandise inventories 31,343 29,923 Patronage dividend receivable 1,167 1,728 Miscellaneous receivables 4,736 3,729 Other current assets 1,491 1,119 Total current assets 58,261 46,270 Property, equipment and fixtures, net 78,460 75,307 Investment in related party, at cost 10,951 10,698 Goodwill, net 11,032 11,287 Other intangibles, net 1,586 1,776 Other assets 5,039 4,217 TOTAL ASSETS $ 165,329 $149,555 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current portion of long-term debt $ 1,713 $ 2,149 Accounts payable to related party 24,006 27,086 Accounts payable and accrued expenses 22,027 23,496 Income taxes payable - 736 Total current liabilities 47,746 53,467 Long-term debt, less current portion 42,939 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, 1,594,076 shares issued & outstanding 1,035 1,035 Retained earnings 57,961 52,409 Less cost of treasury shares (346,100 shares at April 29, 2000 and 368,300 shares at July 31, 1999) (4,788) (5,096) Total shareholders' equity 72,337 66,477 TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $165,329 $149,555
See accompanying Notes to Consolidated Condensed Financial Statements.
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. 29, 2000 Apr. 24, 1999 Apr. 29, 2000 Apr. 24, 1999 Sales $ 193,655 $ 182,096 $ 599,749 $ 552,788 Cost of sales 143,712 135,282 443,576 411,808 Gross margin 49,943 46,814 156,173 140,980 Operating and administrative expense 45,796 42,665 138,907 127,315 Depreciation and amortization expense 2,063 1,894 6,039 5,686 Operating income 2,084 2,255 11,227 7,979 Interest expense, net 848 730 2,508 2,305 Gain on disposal of assets 493 -- 493 -- Income before income taxes 1,729 1,525 9,212 5,674 Provision for income taxes 650 640 3,574 2,383 Net Income $ 1,079 $ 885 $ 5,638 $ 3,291 Net income per share: Basic $ .36 $ 30 $ 1.88 $ 1.11 Diluted $ .35 $ .29 $ 1.85 $ 1.08
See accompanying Notes to Consolidated Condensed Financial Statements.
VILLAGE SUPER MARKET, INC. CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (Dollars in Thousands) 39 Weeks Ended 39 Weeks Ended April 29, 2000 April 25, 1999 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 5,638 $ 3,291 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,039 5,686 Deferred taxes ( 100) ( 225) Provision to value inventories at LIFO 250 400 Gain on disposal of assets ( 493) -- Changes in assets and liabilities: (Increase) in inventories ( 1,670) ( 2,224) Decrease in patronage dividend receivable 561 959 Increase) in miscellaneous receivables ( 1,007) ( 164) (Increase) in other current assets ( 372) ( 339) (Increase) in other assets ( 822) ( 398) (Decrease) in accounts payable to related party ( 3,080) ( 1,220) Increase (decrease) in accounts payable and accrued expenses ( 1,469) 1,336 (Decrease) in income taxes payable ( 736) ( 290) Net cash provided by operating activities 2,739 6,812 CASH FLOW FROM INVESTING ACTIVITIES: Capital expenditures ( 9,116) ( 5,712) Investment in related party ( 253) ( 104) Proceeds from disposal of assets 862 -- Net cash used by investing activities ( 8,507) ( 5,816) CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from issuance of long-term debt 30,000 3,431 Proceeds from exercise of stock options 222 97 Principal payments of long-term debt (14,701) ( 2,464) Net cash provided by financing activities 15,521 1,064 NET INCREASE IN CASH AND CASH EQUIVALENTS 9,753 2,060 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 9,771 5,679 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 19,524 $ 7,739
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 consolidated financial position as of April 29, 2000 and July 31, 1999 and the consolidated results of operations and cash flows for the periods ended April 29, 2000 and April 24, 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 31, 1999 Village Super Market, Inc. Annual Report. 2. The results of operations for the period ended April 29, 2000 are not necessarily indicative of the results to be expected for the full year. 3. At both April 29, 2000 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 $8,558,000 and $8,308,000 higher than reported at April 29, 2000 and July 31, 1999, respectively. 4. The number of common shares outstanding for calculation of net income per share is as follows:
13 Wks Ended 39 Wks Ended 4/29/00 4/24/99 4/29/00 4/24/99 Weighted Average Shares Outstanding - Basic 3,008,985 2,979,136 2,997,934 2,973,279 Dilutive Effect of Employee Stock Options 46,040 56,971 50,168 70,900 Weighted Average Shares Outstanding - Diluted 3,055,025 3,036,107 3,048,102 3,044,179
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Sales in the third quarter of fiscal 2000 were $193,655,000, an increase of 6.3% from the prior year. Same store sales increased 1.4%. The remainder of the sales increase was due to the acquisition of the Vineland store in May 1999. As disclosed in prior filings, the same store sales increase for the third quarter was below the trend for the first two quarters of fiscal 2000 due to competitive openings and comparisons to strong results in the prior fiscal year. Sales for the nine month period were $599,749,000, an increase of 8.5% from the prior year. Same store sales for the nine month period increased 3.5%. Same store sales for the nine month period include the benefit of 39 weeks of double coupon promotions in northern New Jersey in fiscal 2000 compared with 33 weeks in fiscal 1999. Same store sales increases for the fourth quarter of fiscal 2000 are expected to be closer to the same store sales increase achieved in the third quarter of fiscal 2000 than the higher same store sales results achieved in the first half of the year. Gross margin as a percentage of sales increased to 25.8% and 26.0%, respectively, in the quarter and nine month periods ended April 29, 2000 compared with 25.7% and 25.5%, respectively, in the corresponding prior year periods. 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 for the quarter and nine month periods were 23.6% and 23.2%, respectively, compared with 23.4% and 23.0%, respectively, in the corresponding prior year periods. The third quarter of fiscal 2000 includes a charge of approximately $350,000 to account for the anticipated disposal of a store in the fourth quarter of fiscal 2000. The nine month period of fiscal 2000 includes the cost of doubling manufacturer's coupons for 39 weeks (and tripling the cost of coupons to a limited extent for four weeks) compared to 33 weeks in the prior year. Both the quarter and nine month periods of fiscal 2000 include improvements from lower payroll and fringe benefit costs as a percentage of sales. Depreciation and amortization expense increased in the third quarter and nine month periods as a result of allocating the cost of the fixed assets of the current West Orange store over their reduced economic lives. The West Orange store will be replaced by a new store on the same site sometime this summer. Interest expense, net of interest income, increased for the quarter and nine month period as a result of the $30 million private placement closed in September 1999. The results for the third quarter of fiscal 2000 include a gain on the sale of real estate of a previously closed store in Easton, PA. in the amount of $493,000. Through planning initiatives implemented in fiscal 2000, the Company reduced its effective income tax rate. Net income increased 22% in the quarter to $1,079,000. This increase is attributable to the slightly improved gross margin percentage and the lower tax rate in the current year. 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 million revolving credit facility, both of which were secured by substantially all the Company's assets. The Company was in full compliance with all terms and restrictive covenants of all debt agreements at April 29, 2000. Current assets exceeded current liabilities by $10,515,000 at April 29, 2000 compared to current liabilities exceeding current assets by $7,197,000 at July 31, 1999. The working capital ratio increased to 1.22 at April 29, 2000 from .87 at July 31, 1999. These improvements were primarily due to the increase in cash resulting from the financing described above, less then $14,701,000 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 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. The Company currently plans to spend approximately $15 million on capital expenditures in fiscal 2000. These expenditures include the replacement of the West Orange store, the start of a major remodel, the purchase of land for a future store and technology upgrades. The Company expects to fund these capital expenditures through operating cash flow and the cash on hand from the financing described above. During the nine month period, the Company had capital expenditures of $9,116,000. 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, 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, 2000. Exhibit 28(b) Second Quarter Report to Shareholders dated March 13, 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: June 1, 2000 /s/ Perry Sumas Perry Sumas (President) Date: June 1, 2000 /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 29, 2000 Contact: Kevin Begley, C. F. O. (973) 467-2200 - Ext. 220 Springfield, New Jersey - June 1, 2000 - Village Super Market, Inc. reported sales and net income for the third quarter ended April 29, 2000, Perry Sumas, President announced today. Net income was $1,079,000 ($.35 per diluted share) in the third quarter of fiscal 2000, an increase of 22% from the prior year. Sales in the third quarter were $193,655,000, an increase of 6.3% from the prior year. Same store sales increased 1.4% in the third quarter. The remainder of the sales increase is due to the acquisition of a store in May 1999. The improvement in third quarter net income compared to the prior year is primarily a result of an improved gross margin percentage and a lower effective tax rate. For the nine month period, net income increased 71% to $5,638,000 ($1.85 per diluted share). Sales were $599,749,000, an increase of 8.5% from the prior year. Same store sales increased 3.5%. Village Super Market operates a chain of 23 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 29, 2000:
April 29, 2000 April 24, 1999 13 Weeks Ended Sales $193,655,000 $182,096,000 Net Income $ 1,079,000 $ 885,000 Net Income Per Share - Basic $ .36 $ .30 Net Income Per Share - Diluted $ .35 $ .29 39 Weeks Ended Sales $599,749,000 $552,788,000 Net Income $ 5,638,000 $ 3,291,000 Net Income Per Share - Basic $ 1.88 $ 1.11 Net Income Per share - Diluted $ 1.85 $ 1.08
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, results of litigation and other risk factors detailed in the Company's filings with the SEC. Exhibit 28(b) To Our Shareholders: S The Company had net income of $2,529,000 in the second quarter ended January 29, 2000, an increase of 106% from the prior year. E Sales in the second quarter were $210,681,000, an increase of 9.4% from the prior year. Same store sales increased 4.3%. C The remainder of the sales increase was due to the acquisition of the Vineland store in May 1999. O For the first six months of fiscal 2000, net income increased N 89% to $4,559,000. Sales for the six month period were $406,094,000, an increase of 9.6% from the prior year. Same D store sales increased 4.6%. Same store sales for the remainder of fiscal 2000 are expected to be below the current trend due to competitive openings and comparisons to strong results in Q fiscal 1999. U Gross margin as a percentage of sales increased to 26.1% and 26.2%, respectively, in the quarter and six month periods ended A January 29, 2000 compared with 25.5% and 25.4%, respectively, in the corresponding prior year periods. Gross margin R percentages improved in most selling departments, particularly the grocery department. T Operating and administrative expenses as a percentage of sales E for the quarter and six month periods were 22.8% and 22.9%, respectively, compared with 23.0% and 22.8%, respectively, in R the corresponding prior year periods. Both the quarter and six month period of fiscal 2000 include improvements from lower payroll and fringe benefit costs as a percentage of sales. R The six month period of fiscal 2000 includes 26 weeks of the cost of doubling manufacturer coupons as compared to 20 weeks E in the prior year. P The net income increase of 106% in the quarter is primarily attributable to the 4.3% same store sales increase and the O substantially improved gross margin percentage. The table accompanying this report summarizes Village Super R Market's results for the quarter and six month periods ended January 29, 2000: T Respectfully, Perry Sumas James Sumas President Chairman of the Board March 13, 2000
INCOME STATEMENT DATA 13 Wks Ended 13 Wks Ended Jan 29, 2000 Jan 23, 1999 Sales $ 210,681,000 $ 192,633,000 Net Income $ 2,529,000 $ 1,225,000 Net Income Per Share - Basic $ .84 $ .41 Net Income per Share - Diluted $ .83 $ .40 26 Wks Ended 26 Wks Ended Jan 29, 2000 Jan 23, 1999 Sales $ 406,094,000 $ 370,692,000 Net Income $ 4,559,000 $ 2,406,000 Net Income Per Share - Basic $ 1.52 $ .81 Net Income Per Share - Diluted $ 1.50 $ .79 BALANCE SHEET COMPARISONS January 29, 2000 July 31, 1999 Current Assets $ 68,404,000 $ 46,270,000 Current Liabilities $ 54,849,000 $ 53,467,000 Net Working Capital (Deficit) $ 13,555,000 $ ( 7,197,000) Long Term Debt $ 43,420,000 $ 27,204,000 Stockholders' Equity $ 71,138,000 $ 66,477,000
This letter 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, results of litigation and other risk factors detailed in the Company's filings with the SEC.