3. Net Income (loss) Per Share

9 Months Ended

Apr. 26, 2014

Notes

3. Net Income (loss) Per Share

3. NET INCOME (LOSS) PER SHARE

The Company computes net income (loss) per share using the two-class method, an earnings allocation formula that calculates basic and diluted net income (loss) per share for each class of common stock separately based on dividends declared and participation rights in undistributed earnings.  Under the two-class method, our Class A common stock is assumed to receive a 54% greater participation in undistributed earnings (losses) than our Class B common stock, in accordance with the classes’ respective dividend rights.   

Diluted net income per share for Class A common stock is calculated utilizing the if- converted method, which assumes the conversion of all shares of Class B common stock to shares of Class A common stock on a share-for-share basis, as this method is more dilutive  than the two-class method.   Diluted net loss per share for Class A common stock is calculated utilizing the two-class method and does not assume conversion of Class B common stock to shares of Class A common stock as a result of its anti-dilutive effect.  Diluted net income (loss) per share for Class B common stock does not assume conversion of Class B common stock to shares of Class A common stock.    

The tables below reconcile the numerators and denominators of basic and diluted net income (loss) per share for all periods presented.

	13 Weeks Ended		39 Weeks Ended
	April 26, 2014
	Class A	Class B	Class A	Class B
Numerator:
Net income (loss) allocated, basic	$2,395	$720	$(595)	$(205)
Conversion of Class B to Class A shares	720	-	-	-
Effect of share-based compensation on allocated net income (loss)	-	-	-	-
Net income (loss) allocated, diluted	$3,115	$720	$(595)	$(205)
Denominator:
Weighted average shares outstanding, basic	9,288	4,361	9,207	4,378
Conversion of Class B to Class A shares	4,361	-	-	-
Dilutive effect of share-based compensation	30	-	-	-
Weighted average shares outstanding, diluted	13,679	4,361	9,207	4,378
	13 Weeks Ended		39 Weeks Ended
	April 27, 2013
	Class A	Class B	Class A	Class B
Numerator:
Net income allocated, basic	$3,245	$1,262	$13,698	$5,394
Conversion of Class B to Class A shares	1,262	-	5,394	-
Effect of share-based compensation on allocated net income	5	(3)	-	-
Net income allocated, diluted	$4,512	$1,259	$19,092	$5,394
Denominator:
Weighted average shares outstanding, basic	8,492	5,007	8,146	5,336
Conversion of Class B to Class A shares	5,007	-	5,336	-
Dilutive effect of share-based compensation	96	-	110	-
Weighted average shares outstanding, diluted	13,595	5,007	13,592	5,336

Outstanding stock options to purchase Class A shares of 443 and 3 were excluded from the calculation of diluted net income per share at April 26, 2014 and April 27, 2013, respectively, as a result of their anti-dilutive effect.  In addition, 288 and 299 non-vested restricted Class A shares, which are considered participating securities, and their allocated net income were excluded from the diluted net income per share calculation at April 26, 2014 and April 27, 2013, respectively, due to their anti-dilutive effect. 

As a result of the net loss in the nine-month period ended April 26, 2014, all outstanding stock options and restricted Class A shares were excluded from the diluted net loss per share calculation for the nine-month period ended April 26, 2014 due to their anti-dilutive effect.

On March 14, 2014 the Board of Directors of the Company granted 225 incentive stock options and 288 restricted stock awards to employees and directors under the Village Super Market, Inc. 2010 Stock Plan.  Incentive stock options, which were granted at the fair value of the Company’s stock, vest primarily over a three-year service period and are exercisable up to ten years from the date of grant.  Restricted stock awards vest over a three-year service period.  The Company is recording compensation expense for these grants over the vesting period.

The Company recorded compensation expense in the quarter ended April 26, 2014 for these grants in the amount of $372. The grant date fair value of the restricted shares was $8,291. The fair value of the options was estimated at $6.41 per share using the Black-Scholes option pricing model with the following assumptions: expected life – six years; expected volatility – 32.2%; expected dividend yield – 3.5%; and risk free interest rate- 1.85%. In addition, the total fair value of restricted shares vested in the third quarter of fiscal 2014 was $8,663.