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: January 27, 2001 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 incorporation (IRS Employer 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> March 1, 2001 <S> <C> Class A Common Stock, No Par Value 1,421,700 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 6. Exhibits and Reports on Form 8-K . . . . . 10 Signatures.. . . . . . . . . . . . . . . . 12 Exhibit 28(a) . . . . . . . . . . . . . . 13 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) January 27, July 29, 2001 2000 (Unaudited) <S> <C> <C> ASSETS Current assets Cash and cash equivalents $ 28,781 $ 25,721 Merchandise inventories 31,546 31,033 Patronage dividend receivable 661 2,201 Miscellaneous receivables 5,296 5,255 Other current assets 939 650 Total current assets 67,223 64,860 Property, equipment and fixtures, net 83,379 80,628 Investment in related party, at cost 11,341 11,051 Goodwill, net 10,776 10,946 Other intangibles, net 1,396 1,523 Other assets 5,137 4,916 TOTAL ASSETS $179,252 $173,924 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current portion of long-term debt $ 1,680 $ 1,705 Accounts payable to related party 30,630 28,634 Accounts payable and accrued expenses 23,345 23,157 Income taxes payable --- 109 Total current liabilities 55,655 53,605 Long-term debt, less current portion 40,860 42,507 Deferred income taxes 2,760 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, 1,594,076 shares issued & outstanding 1,035 1,035 Retained earnings 65,532 60,739 Less cost of treasury shares (341,100 shares at January 27, 2001 and 343,400 shares at July 29, 2001) (4,719) (4,751) Total shareholders' equity 79,977 75,152 TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $179,252 $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 Wks. Ended 13 Wks. Ended 26 Wks. Ended 26 Wks. Ended Jan. 27, 2001 Jan. 29, 2000 Jan. 27, 2001 Jan. 29, 2000 <S> <C> <C> <C> <C> Sales $ 212,920 $ 204,982 $ 410,953 $ 396,270 Cost of sales 161,811 155,662 311,825 299,864 Gross margin 51,109 49,320 99,128 96,406 Operating and administrative expense 44,291 42,332 86,128 83,207 Depreciation and amortization expense 1,959 2,062 3,913 3,976 Operating income 4,859 2,909 9,087 9,143 Interest expense, net 809 4,926 1,554 1,660 Income before provision for income taxes 4,050 4,113 7,533 7,483 Provision for income taxes 1,468 1,584 2,731 2,924 Net Income $ 2,582 $ 2,529 $ 4,802 $ 4,559 Net income per share: Basic $ .86 $ .41 $ 1.59 $ 1.52 Diluted $ .84 $ .40 $ 1.57 $ 1.50 </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) 26 Wks Ended 26 Wks Ended Jan. 27, 2001 Jan. 29, 2000 <S> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 4,802 $ 4,559 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,913 3,976 Deferred taxes 100 ( 200) Provision to value inventories at LIFO 275 250 Changes in assets and liabilities: (Increase) in inventory ( 788) ( 1,193) Decrease in patronage dividend receivable 1,540 1,359 (Increase) in misc. receivables ( 41) ( 1,568) (Increase) decrease in other current assets ( 289) ( 64) (Increase) in other assets ( 221) ( 772) Increase in accounts payable to related party 1,996 1,719 Increase in accounts payable and accrued expenses 542 127 Increase (decrease) in income taxes payable ( 109) ( 28) Net cash provided by operating activities 11,720 8,165 CASH FLOW FROM INVESTING ACTIVITIES: Capital expenditures ( 7,520) (2,960) Investment in related party ( 290) ( 169) Net cash used by investing activities ( 7,872) ( 3,129) CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from issuance of long-term debt ----- 30,931 Proceeds from exercise of stock options 23 102 Principal payments of long-term debt ( 811) (14,220) Net cash provided by financing activities 788 15,882 NET INCREASE IN CASH AND CASH EQUIVALENTS 3,060 20,918 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 25,721 9,771 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 28,781 $ 30,689 </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 January 27, 2001 and the consolidated results of operations and cash flows for the periods ended January 27, 2001 and January 28, 2000. 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 January 27, 2001 are not necessarily indicative of the results to be expected for the full year. 3. At both January 27, 2001 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 $8,777,000 and $8,502,000 higher than reported at January 27, 2001 and July 29, 2000, respectively. 4. The number of common shares outstanding for calculation of net income per share is as follows: <TABLE> <CAPTION> 13 Wks Ended 26 Wks Ended 1/27/01 1/29/00 1/27/01 1/29/00 <S> <C> <C> <C> <C> Weighted Average Shares Outstanding - Basic 3,014,125 2,994,824 3,013,801 2,992,408 Dilutive Effect of Employee Stock Options 47,852 47,768 41,184 52,233 Weighted Average Shares Outstanding - Diluted 3,061,978 3,042,753 3,054,985 3,044,641 </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 sale incentives that result in a reduction in 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 Expenses. Effective with the first quarter of fiscal 2001, the Company has classified coupon expense as a reduction of sales. Prior year amounts have been reclassified to conform to the current year presentation. Coupon expense for the quarter and six month period ended January 27, 2001 were $5,914,000 and $10,101,000 compared with $5,699,000 and $9,824,000 in the corresponding periods of the prior year. 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 second quarter of fiscal 2001 were $212,920,000 an increase of 3.9% 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. Also, the Company closed the South Orange, New Jersey store on October 28, 2000. Excluding these two stores, like store sales increased 3.2% in the second quarter. Sales increased 3.7% to $410,953,000 for the six month period. Like store sales increased 3.0% for the six month period. Gross margin as a percentage of sales decreased to 24.0% and 24.1%, respectively, in the quarter and six month periods ended January 27, 2001 compared with 24.1% and 24.3% respectively, in the corresponding prior year period. Operating and administrative expenses as a percentage of sales for the quarter and six month periods were 20.8% and 21.0%, respectively, compared with 20.7% and 21.0% in the corresponding prior year periods. Operating and administrative expenses increased in both the quarter and six month period due to increased occupancy and repair and maintenance costs. Those increases were substantially offset by lower payroll fringe benefit and advertising costs. The Company reduced its income tax rate to 36.3% for the quarter and six month period of fiscal 2001, compared to 38.5% and 39.1%, respectively, in the quarter and six month periods of the prior fiscal year, through tax planning initiatives begun in the second half of fiscal 2000. Net income increased 2.0% in the quarter to $2,582,000. The increase is attributed to increased sales and a lower tax rate, offset by slightly reduced gross margin percentages and slightly increased operating expenses. LIQUIDITY AND FINANCIAL RESOURCES Current assets exceeded current liabilities by $11,568,000 at January 27, 2001 compared to $11,255,000 at July 29, 2000. The working capital ratio was 1.2 to one 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 six month period, the Company had capital expenditures of $7,582,000. The major expenditures were equipment and leasehold improvements for the replacement store in West Orange, New Jersey, remodel costs for the store in Vineland, New Jersey and site work for the construction of a new store in Garwood, New Jersey. The Company had budgeted approximately $16 million for capital expenditures in fiscal 2001, which includes the construction of a new superstore in Garwood, New Jersey. The Company's primary source of liquidity in 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) to Form 10-Q for the quarterly period ended October 28, 2000. 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 March 2, 2001. Exhibit 28(b) First Quarter Report to Shareholders dated December 19, 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: March 2, 2001 /s/ Perry Sumas Perry Sumas (President) Date: March 2, 2001 /s/ Kevin R. Begley Kevin R. Begley (Chief Financial Officer) Exhibit 28(a) VILLAGE SUPER MARKET, INC. REPORTS RESULTS FOR THE QUARTER AND SIX MONTHS ENDED JANUARY 27, 2001 Contact Kevin Begley, C.F.O. (973) 467-2200 Ext. 220 Springfield, New Jersey - March 2, 2001 - Village Super Market, Inc. (NSD-VLGEA) reported sales and net income for the second quarter ended January 27, 2001, Perry Sumas, President announced today. Net income was $2,582,000 ($.84 per diluted share) in the second quarter of fiscal 2001, an increase of 2.1% from the prior year. Sales in the second quarter were $212,920,000, an increase of 3.9% from the prior year. Comparable store sales increased 3.2%. Net income increased due to higher sales and a lower tax rate, offset by slightly reduced gross margin percentages and slightly increased operating costs. For the six month period, net income increased 5.3% to $4,802,000 ($1.57 per diluted share). Sales were $410,953,000 an increase of 3.7% from the prior year. Comparable store sales increased 3.0%. 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 six months ended January 27, 2001: <TABLE> <CAPTION> Jan 27, 2001 Jan 29, 2000 13 Weeks Ended <S> <C> <C> Sales $212,920,000 $204,982,000 Net Income $ 2,582,000 $ 2,529,000 Net Income Per Share - Basic $ .86 $ .84 Net Income Per Share - Diluted $ .84 $ .83 26 Weeks Ended Sales $410,953,000 $396,270,000 Net Income $ 4,802,000 $ 4,559,000 Net Income Per Share - Basic $ 1.59 $ 1.52 Net Income Per share - Diluted $ 1.57 $ 1.50 </TABLE> 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, 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 in the Company's filings with the SEC. Exhibit 28(b) F To Our Shareholders: I The Company had net income of $2,220,000 in the first quarter ended October 28, 2000, an increase of 9% from the prior year. The R increase in net income in the quarter was attributable to increased sales, lower operating expenses as a percentage of S sales and a lower tax rate, partially offset by reduced gross margin percentages. T Sales in the first quarter were $198,033,000, an increase of 3.5% from the prior year. On August 10, 2000 the Company opened a 67,000 square Q foot store to replace its existing store in West Orange, New Jersey Excluding this replacement store, sales increased 2.6% in the quarter. U Effective with this first quarter of fiscal 2001, the Company has classified coupon expense as reduction of sales. This is in accordance A with a recent change in accounting standards effective for this fiscal year Previously, coupons had been recorded as an operating expense. R Prior year amounts have been reclassified to conform to the current year presentation. This reclassification had no effect on the Company's net T income. E 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 R compared to the prior year. Operating and administrative expenses as a percentage of sales R 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 E of sales. These decreases were partially offset by increased occupancy costs. P The Company reduced its effective income tax rate to 36.3% compared to O 39.8% in the prior fiscal year through tax planning initiatives begun in the second half of fiscal 2000. R During the first quarter, the Company had capital expenditures of T $5,245,000. The major expenditures related to the replacement store in West Orange, 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 table accompanying this report summarizes Village Super Market's results for the quarter ended October 28, 2000. Respectfully, Perry Sumas James Sumas President Chairman of the Board December 19, 2000 <TABLE> <CAPTION> INCOME STATEMENT DATA 13 Wks Ended 13 Wks Ended Oct 28, 2000 Oct 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> <TABLE> <CAPTION> BALANCE SHEET COMPARISONS Oct 28, 2000 July 29, 2000 <S> <C> <C> Current Assets $ 62,267,000 $ 64,860,000 Current Liabilities $ 52,092,000 $ 53,605,000 Net Working Capital $ 10,175,000 $ 11,255,000 Long Term Debt $ 41,261,000 $ 42,507,000 Stockholders' Equity $ 77,372,000 $ 75,152,000 </TABLE>