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 28, 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 (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> June 1, 2001 <S> <C> Class A Common Stock, No Par Value 1,429,200 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 - 10 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 <TABLE> <CAPTION> VILLAGE SUPER MARKET, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands) (Unaudited) April 28, July 29, 2001 2000 <S> ASSETS <C> <C> Current assets Cash and cash equivalents $ 22,595 $ 25,721 Merchandise inventories 31,330 31,033 Patronage dividend receivable 1,358 2,201 Miscellaneous receivables 4,315 5,255 Other current assets 1,323 650 Total current assets 60,921 64,860 Property, equipment and fixtures, net 84,582 80,628 Investment in related party, at cost 11,474 11,051 Goodwill, net 10,690 10,946 Other intangibles, net 210 1,523 Other assets 5,269 4,916 TOTAL ASSETS $ 173,146 $173,924 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current portion of long-term debt $ 1,668 $ 1,705 Accounts payable to related party 25,624 28,634 Accounts payable and accrued expenses 21,901 23,157 Income taxes payable -- 109 Total current liabilities 49,193 53,605 Long-term debt, less current portion 40,413 42,507 Deferred income taxes 2,403 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 66,589 60,739 Less cost of treasury shares (333,600 Class A shares at April 28, 2001 and 343,400 shares at July 29, 2000) (4,616) (4,751) Total shareholders' equity 81,137 75,152 TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $173,146 $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. 13 Wks. 39 Wks. 39 Wks. Ended Ended Ended Ended 4-28-01 4-29-00 4-28-01 4-29-00 <S> <C> <C> <C> <C> Sales $199,008 $188,876 $609,961 $585,146 Cost of sales 149,781 143,712 461,606 443,576 Gross profit 49,227 45,164 148,355 141,570 Operating and administrative expense 43,855 41,017 129,983 124,304 Depreciation and amortization expense 1,986 2,063 5,899 6,039 Non-cash impairment charge 1,122 --- 1,122 --- Operating income 2,264 2,084 11,351 11,227 Interest expense, net 562 848 2,116 2,508 Gain on disposal of assets --- 493 --- 493 Income before provision for income taxes 1,702 1,729 9,235 9,212 Provision for income taxes 617 650 3,348 3,574 Net income $ 1,085 $ 1,079 $ 5,887 $ 5,638 Net income per share: Basic $ .36 $ .36 $ 1.95 $ 1.88 Diluted $ .35 $ .35 $ 1.92 $ 1.85 </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) 39 Wks. Ended 39 Wks. Ended April 28, 2001 April 29, 2000 <S> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 5,887 $ 5,638 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,899 6,039 Non-cash impairment charge 1,122 --- Deferred taxes ( 257) ( 100) Provision to value inventories at LIFO 550 250 Gain on disposal of assets --- ( 493) Changes in assets and liabilities: (Increase) in merchandise inventories ( 847) ( 1,670) Decrease in patronage dividend receivable 843 561 (Increase) decrease in miscellaneous receivables 940 ( 1,007) (Increase) in other current assets ( 673) ( 372) (Increase) in other assets ( 353) ( 822) (Decrease) in accounts payable to related party ( 3,010) ( 3,080) (Decrease) in accounts payable and accrued expenses ( 900) ( 1,469) (Decrease) in income taxes payable ( 109) ( 736) Net cash provided by operating activities 9,092 2,739 CASH FLOW FROM INVESTING ACTIVITIES: Capital expenditures (10,623) ( 9,116) Investment in related party ( 423) ( 253) Proceeds from disposal of assets --- 862 Net cash used by investing activities (11,046) ( 8,507) CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from issuance of long-term debt --- 30,000 Proceeds from exercise of stock options 98 222 Principal payments of long-term debt ( 1,270) ( 14,701) Net cash (used in) provided by financing activities ( 1,172) 15,521 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 3,126) 9,753 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 25,721 9,771 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 22,595 $ 19,524 </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 April 28, 2001 and the consolidated results of operations and cash flows for the periods ended April 28, 2001 and April 29, 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. The results of operations for the period ended April 28, 2001 are not necessarily indicative of the results to be expected for the full year. 3. At both April 28, 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 $9,052,000 and $8,502,000 higher than reported at April 28, 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 39 Wks Ended 4/28/01 4/29/00 4/28/01 4/29/00 <S> <C> <C> <C> <C> Weighted Average Shares Outstanding - Basic 3,017,419 3,008,985 3,015,007 2,997,934 Dilutive Effect of Employee Stock Options 49,175 46,040 43,848 50,168 Weighted Average Shares Outstanding - Diluted 3,066,594 3,055,025 3,058,855 3,048,102 </TABLE> 5. In fiscal 2001, the Company adopted the provisions of the FASB's Emerging Issues Task Force Issue No. 00-14, "Accounting For Certain Sales Incentives". The consensus included a conclusion that the value of such sales 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. Effective with the first quarter of fiscal 2001, the Company has classified coupon expense as a reduction of sales. Previously, the Company recorded coupons as marketing expenses. Prior year amounts have been reclassified to conform to the current year presentation. Coupon expense for the quarter and nine month periods ended April 28, 2001 were $4,505,000 and $14,607,000, respectively, compared with $4,779,000 and $14,603,000, respectively, in the corresponding periods of the prior year. This reclassification had no effect on the Company's operating income or net income. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Sales in the third quarter of fiscal 2001 were $199,008,000, an increase of 5.4% 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, comparable store sales increased 4.2% in the third quarter. Sales increased 4.2% to $609,961,000 for the nine month period. Comparable store sales increased 3.4% for the nine month period. Gross profit as a percentage of sales increased to 24.7% and 24.3%, respectively, in the quarter and nine month periods ended April 28, 2001 compared with 23.9% and 24.2%, respectively, in the corresponding prior year periods. The improvement in the third quarter was due to improved sales in higher margin departments and increases in the gross profit percentage in most departments. Operating and administrative expenses as a percentage of sales for the quarter and nine month periods were 22.0% and 21.3%, respectively, compared with 21.7% and 21.2%, respectively, in the corresponding prior year periods. Operating and administrative expenses increased as a percentage of sales in both the quarter and nine month periods due to increased occupancy costs, partially offset by lower labor costs. The Company recorded a non-cash impairment charge of $1,122,000 in the third quarter of fiscal 2001 to write-off the value of a favorable sublease on the Ventnor store. The sublessor of the property rejected its lease in March 2001 pursuant to the U.S. Bankruptcy Code. The Company is currently negotiating with the property owner. The Company continues to operate the store under the terms of the sublease during these negotiations. Interest expense declined in the third quarter due to interest costs capitalized in the current fiscal year relating to the construction of a new superstore in Garwood, New Jersey. The Company reduced its income tax rate to 36.3% for both the quarter and nine month period of fiscal 2001 compared to 37.6% and 38.8%, respectively, in the quarter and nine month periods of the prior fiscal year through tax planning initiatives begun in the second half of fiscal 2000. Net income was $1,085,000 in the third quarter of fiscal 2001 as compared to $1,079,000 in the third quarter of the prior year. Net income, excluding the non-cash impairment charge, increased 66.8% in the quarter to $1,800,000. This increase is attributable to increased comparable store sales and higher gross profit percentages, partially offset by increased operating expenses. LIQUIDITY AND FINANCIAL RESOURCES Working capital was $11,728,000 at April 28, 2001 compared to $11,255,000 at July 29, 2000. The working capital ratio was 1.2 to 1 at both periods. 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, the Company had capital expenditures of $10,623,000. 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 and construction costs for a new store in Garwood, New Jersey. The Company has budgeted approximately $14 million for capital expenditures in fiscal 2001. The Company's primary source of liquidity in fiscal 2001 is 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 June 4, 2001. Exhibit 28 (b) Second Quarter Report to Shareholders dated March 13, 2001. 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 4, 2001 /s/ Perry Sumas Perry Sumas (President) Date: June 4, 2001 /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 28, 2001 Contact: Kevin Begley, C. F. O. (973) 467-2200 - Ext. 220 Springfield, New Jersey - June 4, 2001 - Village Super Market, Inc. (NSD - VLGEA) reported sales and net income for the third quarter ended April 28, 2001, Perry Sumas, President announced today. Net income was $1,085,000 ($.35 per diluted share) in the third quarter of fiscal 2001. Excluding a non-cash impairment charge, net income was $1,800,000, an increase of 66.8% from the prior year. Sales in the third quarter were $199,008,000, an increase of 5.4% from the prior year. Comparable store sales increased 4.2%. Net income, excluding a non-cash impairment charge, increased due to higher sales and an increased gross profit percentage, partially offset by increased operating costs. The Company recorded a non-cash impairment charge of $1,122,000 in the third quarter of fiscal 2001 to write-off the value of a favorable lease on one of its stores. For the nine month period, net income was $5,887,000 ($1.92 per diluted share). Sales were $609,961,000, an increase of 4.2% from the prior year. Comparable store sales increased 3.4%. 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 28, 2001: <TABLE> <CAPTION> April 28, 2001 April 29, 2000 13 Weeks Ended <S> <C> <C> Sales $199,008,000 $188,876,000 Net Income $ 1,085,000 $ 1,079,000 Net Income Per Share - Basic $ .36 $ .36 Net Income Per Share - Diluted $ .35 $ .35 39 Weeks Ended Sales $609,961,000 $585,146,000 Net Income $ 5,887,000 $ 5,638,000 Net Income Per Share - Basic $ 1.95 $ 1.88 Net Income Per share - Diluted $ 1.92 $ 1.85 </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 condition, 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 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: E The Company had net income of $2,582,000 in the second quarter ended January 27, 2001, an increase of 2% from the prior year. Net income increased due to higher sales and a lower tax rate offset by slightly reduced gross profit percentages and slightly increased operating expense percentages. Salesi n the second quarter 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 sores comparable store sales increased to 3.2% in the second quarter. Sales increased 3.7% to $410,953,000 for the six month period. Comparable store sales increased 3.0% for the six month period. Effective with the first quarter of fiscal 2001, the Company has classified coupon expense as a reduction of sales. This is in accordance with a recent change in accounting standards effective for this fiscal year. Previously, coupons had been recorded as an operating expense. Prior year amounts have been reclassified to conform to the current year presentation. This reclassification had no effect on the Company's net income. Gross profit margin as a percentage of sales decreased to 24.0% and 24.1%, respectively, in the quarter and six month periods compared with 24.1% and 24.3%, respectively, in the corresponding prior year periods. 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, respectively, in the corresponding prior year periods. Operating and administrative expenses increased in both the quarter and six month periods 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 effective income tax rate to 36.3% for both the quarter and six month periods of fiscal 2001, compared to 38.5% and 39.1%, respectively, in the quarter and six month periods of the prior year, through tax planning initiatives begun in the second half of fiscal 2000. 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, remodel costs for the store in Vineland and site work for the construction of a new store in Garwood, New Jersey. The Company has budgeted approximately $14 million for capital expenditures in fiscal 2001. The table accompanying this report summarizes Village Super Market's results for the quarter and six month period ended January 27, 2001. Respectfully, Perry Sumas James Sumas President Chairman of the Board March 13, 2001 <TABLE> <CAPTION> INCOME STATEMENT DATA 13 Weeks Ended 13 Weeks Ended January 27, 2001 January 29, 2000 <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 26 Weeks Ended January 27, 2001 January 29, 2000 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> <TABLE> <CAPTION> BALANCE SHEET COMPARISONS January 27, 2001 July 29, 2000 <S> <C> <C> Current Assets $ 67,223,000 $ 64,860,000 Current Liabilities $ 55,655,000 $ 53,605,000 Net Working Capital $ 11,568,000 $ 11,255,000 Long Term Debt $ 40,680,000 $ 42,507,000 Stockholders' Equity $ 79,977,000 $ 75,152,000 </TABLE>