FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (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, 1995 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 or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 733 Mountain Avenue, Springfield, New Jersey 07081 (Address of principal executive offices) (Zip code) (201) 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> November 30, 1995 <S> <C> Class A, Common Stock, No Par Value 1,315,800 Shares Class B, Common Stock, No Par Value 1,594,076 Shares </TABLE> 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 . . . . . . . . . . . 7-8 Part II Other Information Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 9 Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Exhibit 28 (a). . . . . . . . . . . . . . . . . . . . . . . . . . 11 Part 1. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS VILLAGE SUPER MARKET, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands) <TABLE> <CAPTION > October 28, July 29, 1995 1995 ASSETS <S> <C> <C> Current assets Cash and cash equivalents $ 2,036 $ 9,655 Merchandise inventories 24,870 24,179 Patronage dividend receivable 3,996 2,683 Miscellaneous receivables 3,188 3,137 Prepaid expenses 668 630 Total current assets 34,758 40,284 Property, equipment and fixtures, net 69,295 69,916 Investment in related party 9,878 9,820 Goodwill, net 10,816 10,871 Other intangibles, net 2,725 2,791 Other assets 1,914 1,892 Total assets $129,386 $135,574 </TABLE> <TABLE> <CAPTION> LIABILITIES AND SHAREHOLDERS' EQUITY <S> <C> <C> Current liabilities Current portion of long-term debt $ 5,080 $ 5,080 Accounts payable to related party 24,574 25,584 Accounts payable and accrued expenses 10,627 12,603 Deferred income taxes 772 772 Total current liabilities 41,053 44,039 Long-term debt, less current portion 31,511 34,852 Deferred income taxes 3,682 3,682 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 40,161 40,022 Less cost of treasury shares (447,000 shares) (6,185) (6,185) Total shareholders' equity 53,140 53,001 Total liabilities and shareholders' equity $129,386 $135,574 </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) 13 Weeks Ended 13 Weeks Ended October 28, 1995 October 29, 1994 <S> <C> <C> Sales $ 166,522 $ 167,366 Cost of sales 125,487 126,740 Gross Margin 41,035 40,626 Operating and administrative expense 37,746 37,363 Depreciation and amortization expense 2,073 2,109 Operating income 1,216 1,154 Interest expense (net) 985 1,021 Income before provision for income taxes 231 133 Provision for income taxes 92 50 Net income $ 139 $ 83 Weighted average number of common shares outstanding 2,909,876 2,909,876 Net income per share $ .05 $ .03 </TABLE> See accompanying notes to consolidated condensed financial statements. <TABLE> <CAPTION> VILLAGE SUPER MARKET, INC. CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (Dollars in Thousands) 13 Weeks Ended 13 Weeks Ended October 28,1995 October 29,1994 CASH FLOWS FROM OPERATING ACTIVITIES <S> <C> <C> Net Income $ 139 $ 83 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 2,073 2,109 Provision to value inventories at LIFO 150 175 Changes in assets and liabilities: (Increase) decrease in inventory (841) 51 (Increase) in patronage dividend receivable (1,313) (1,377) (Increase) in misc. receivables ( 51) (1,282) (Increase) in prepaid expenses ( 38) ( 52) (Increase) in other assets ( 22) ( 22) Increase (decrease) in accounts payable to related party (1,010) 625 (Decrease) in accounts payable and accrued expenses (1,976) ( 724) Net cash used by operating activities (2,889) ( 414) CASH FLOW FROM INVESTING ACTIVITIES Capital expenditures (1,331) (1,888) Investment in related party ( 58) ( 38) Net cash used by investing activities (1,389) (1,926) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of long-term debt -- 4,100 Principal payments of long-term debt (3,341) (3,197) Net cash provided (used) by financing activities (3,341) 903 NET (DECREASE) IN CASH AND CASH EQUIVALENTS (7,619) (1,437) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 9,655 7,246 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,036 $ 5,809 </TABLE> 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 financial position as of October 28, 1995 and July 29, 1995 and the results of operations and cash flows for the periods ended October 28, 1995 and October 29, 1994. The significant accounting policies followed by the Company are set forth in Note 1 to the Company's financial statements in the July 29, 1995 Village Super Market, Inc. Annual Report. 2. The results of operations for the period ended October 28, 1995 are not necessarily indicative of the results to be expected for the full year. 3. At both October 28, 1995 and July 29, 1995 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 $6,963,000 and $6,813,000 higher than reported at October 28, 1995 and July 29, 1995, respectively. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - ---------------------------------------------------------------------- RESULTS OF OPERATIONS Sales for the first quarter were $166,522,000 compared with sales of $167,366,000 in the first quarter of the prior year. The slight sales decrease was due to the prior year including one month's operations of the Easton store. Same store sales were flat as the effects of new competitive entries were offset by improved sales at two stores remodeled last year. Gross margin as a percentage of sales increased to 24.6% in the current quarter compared with 24.3% in the corresponding quarter one year ago. This improvement in gross margin is primarily due to an improved mix of sales in higher margin departments and aggressive buying practices. Operating and administrative expenses as a percentage of sales increased to 22.7% compared with 22.3% in the prior year. This increase was due to higher coupon and supply costs. Coupon costs are higher in response to new competitive entries. Higher supply costs reflect the increased cost of paper bags that began in the second quarter of fiscal 1995. LIQUIDITY AND FINANCIAL RESOURCES Current liabilities exceeded current assets by $6,295,000 at October 28, 1995 compared to $3,755,000 at July 29, 1995. The current ratio decreased to .85 at October 28, 1995 compared to .91 at July 29, 1995. The decline in working capital at October 28, 1995 is primarily a result of the Company discontinuing its previous policy of borrowing funds at the end of each quarter to maintain the current ratio required in one of its debt agreements. That agreement has been amended to delete the current ratio maintenance requirement. During the quarter, debt payments of $3,341,000, capital expenditures of $1,331,000 and cash used by operations of $2,889,000 resulted in a $7,619,000 reduction in cash balances. At October 28, 1995 the balance outstanding on the Company's line of credit was $6,800,000. The majority of capital expenditures in the current quarter related to the ongoing remodel and expansion of the Absecon store. The Company has budgeted approximately $8,000,000 for capital expenditures in fiscal 1996, the majority of which relates to the Absecon project. The Company expects to finance these expenditures through internally generated funds and borrowings under its credit facility. In November, the Company sold property of a store previously closed in Maplewood, NJ for $1,450,000. A substantial gain on this transaction will be recorded in the second quarter. The Company is under contract to purchase properties in Westfield and Garwood, NJ, contingent upon receiving all approvals, on which it plans to construct one superstore. The Company's application to Westfield's Planning Board has been denied and the Company has filed suit to have this decision overturned. During November the company reached a tentative settlement, contingent on certain conditions, with Westfield to approve the building of a superstore and to settle the lawsuit. The Town of Garwood has approved the same plan that Westfield has denied. In addition, the Company has filed a second application with Garwood to build the store entirely in Garwood should the settlement with Westfield not be finalized. Should this store ultimately be approved for construction, the Company would increase its capital expenditure plans for fiscal 1996 and 1997. The Company believes it can obtain the portion of the financing not already in place to complete this project. At October 28, 1995, the Company was in compliance with all provisions of its revolving/term loan agreement. The Company did not meet a cash flow to fixed charge coverage ratio contained in two other debt agreements with one lender. This does not constitute an event of default. However, until this ratio is met or unless a waiver is obtained, the agreements prevent the Company from borrowing additional funds (other than the Company's revolving loan), declaring dividends and executing new leases. The Company expects to finalize an amendment to these agreements during the second quarter to allow the Company to borrow additional funds and execute leases. PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 6(a) Exhibits: Exhibit 28(a) - Press Release dated November 30, 1995 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: November 30, 1995 /s/ Perry Sumas Perry Sumas (President) Date: November 30, 1995 /s/ Kevin R. Begley Kevin R. Begley (Chief Financial Officer)