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 January 27, 1996 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> February 28, 1996 <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> 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 PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS VILLAGE SUPER MARKET, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands) <TABLE> <CAPTION> January 27, 1996 July 29, 1995 ASSETS <S> <C> <C> Current assets Cash and cash equivalents $ 8,223 $ 9,655 Merchandise inventories 24,931 24,179 Patronage dividend receivable 1,083 2,683 Miscellaneous receivables 3,209 3,137 Prepaid expenses 577 630 Total current assets 38,023 40,284 Property, equipment and fixtures, net 68,648 69,916 Investment in related party 10,057 9,820 Goodwill, net 10,761 10,871 Other intangibles, net 2,658 2,791 Other assets 1,937 1,892 Total assets $ 132,084 $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 29,872 25,584 Accounts payable and accrued expenses 13,917 12,603 Deferred income taxes 772 772 Total current liabilities 49,641 44,039 Long-term debt, less current portion 24,067 34,852 Deferred income taxes 4,042 3,682 Shareholders' equity Class A common stock - no par value, issued 1,762,800 shares (including 447,000 in treasury) 18,129 18,129 Class B common stock - no par value 1,594,076 shares issued & outstandin 1,035 1,035 Retained earnings 41,355 40,022 Less cost of treasury shares (6,185) (6,185) Total shareholders' equity 54,334 53,001 Total liabilities and shareholders' equity $ 132,084 $ 135,574 </TABLE> See accompanying notes to consolidated condensed financial statements. VILLAGE SUPER MARKET, INC. CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Dollars in Thousands Except Per Share Amounts) <TABLE> <CAPTION> 13 Wk End 13 Wk End 26 Wk End 26 Wk End Jan 27,1996 Jan 28,1995 Jan 27,1996 Jan 28,1995 <S> <C> <C> <C> <C> Sales $ 178,002 $ 171,804 $ 344,524 $ 339,170 Cost of sales 134,311 129,964 259,798 256,704 Gross margin 43,691 41,840 84,726 82,466 Operating & administrative expenses 39,649 37,739 77,395 75,102 Depreciation and amortization expense 2,073 2,133 4,146 4,242 Operating income 1,969 1,968 3,185 3,122 Interest expense, net 966 1,048 1,951 2,069 Gain (loss) on disposal of assets 952 (190) 952 (190) Income before provision for income taxes 1,955 730 2,186 863 Provision for income tax expense 761 294 853 344 Net income $ 1,194 $ 436 $ 1,333 $ 519 Weighted average number of common shares out- standing 2,909,876 2,909,876 2,909,876 2,909,876 Net income per share $ .41 $ .15 $ .46 $ .18 </TABLE> See accompanying notes to consolidated condensed financial statements. VILLAGE SUPER MARKET, INC. CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (Dollars in Thousands) <TABLE> <CAPTION> 26 Weeks Ended 26 Weeks Ended January 27, 1996 January 28, 1995 CASH FLOWS FROM OPERATING ACTIVITIES: <S> <C> <C> Net income $ 1,333 $ 519 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,146 4,242 Deferred taxes 360 --- Provision to value inventories at LIFO 300 300 (Gain) loss on disposal of assets (952) --- Changes in assets and liabilities: (Increase) decrease in inventory (1,052) 237 Decrease in patronage dividend receivable 1,600 1,665 (Increase) in misc. receivables (72) (750) Decrease in prepaid expenses 53 40 (Increase) in other assets (45) (325) Increase in accounts payable to related party 4,288 3,915 Increase (decrease) in accounts payable and accrued expenses 1,314 (1,286) Net cash provided by operating activities 11,273 8,557 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (2,921) (3,549) Investment in related party ( 237) ( 239) Proceeds from sale of assets, net 1,238 --- Net cash used in investing activities (1,920) (3,788) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of long-term debt --- 3,000 Principal payments of long-term debt (10,785) (3,898) Net cash used by financing activities (10,785) ( 898) NET INCREASE(DECREASE)IN CASH AND CASH EQUIVALENTS (1,432) 3,871 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 9,655 7,246 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 8,223 $ 11,117 </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 January 27, 1996 and July 29, 1995 and the results of operations and cash flows for the periods ended January 27, 1996 and January 28, 1995. 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 January 27, 1996 are not necessarily indicative of the results to be expected for the full year. 3. At both January 27, 1996 and July 29, 1995 approximately 66% of the 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 $7,113,000 and $6,813,000 higher than reported at January 27, 1996 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 second quarter of fiscal 1996 were $178,002,000, an increase of 3.6% from the second quarter of the prior year. This same store sales increase is attributable to more aggressive promotional programs and improved sales at remodeled stores. Sales for the six months ended January 27, 1996 were $344,524,000, an increase of 1.6% from the prior year. The increase in sales for the sixth month period was entirely attributable to the improved sales in the second quarter, as first quarter same store sales were even with the prior year. The Company had 23 stores in operation in both fiscal years. Gross margin as a percentage of sales for the quarter and six months ended January 27, 1996 increased to 24.5% and 24.6%, respectively, compared with 24.4% and 24.3%, respectively, in the corresponding prior year periods. These improvements in gross margin are primarily due to an improved mix of sales in high margin departments and aggressive buying practices. Operating and administrative expenses as a percentage of sales for the quarter and six months increased to 22.3% and 22.5%, respectively, compared with 22.0% and 22.1%, respectively, in the corresponding prior year periods. These increases were due to higher coupon, advertising, snow removal and utility costs. Advertising and coupon costs increased in response to competitive entries and a more aggressive promotional program. Snow removal and utility costs increased due to the harsh winter in the northeast. Partially offsetting these higher costs were lower store payroll and fringe benefit costs. In November, the Company sold the property of a store previously closed in Maplewood, New Jersey for $1,238,000, net of certain costs. A gain before taxes in the amount of $952,000 has been recorded in the second quarter. LIQUIDITY AND FINANCIAL RESOURCES Current liabilities exceeded current assets by $11,618,000 at January 27, 1996 as compared to $3,755,000 at July 29, 1995. The current ratio decreased to .77 at January 27, 1996 compared to .91 at July 29, 1995. The decline in working capital at January 27, 1996 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 six month period, cash provided by operating activities of $11,273,000 was used to reduce debt outstanding by $10,785,000 and to fund $2,921,000 of capital projects. This resulted in a cash decrease of $1,432,000. At January 27, 1996 there was no balance outstanding on the Company's $12,000,000 line of credit. The majority of capital expenditures in the six month period related to the ongoing remodel and expansion of the Absecon store. The Company had originally budgeted approximately $8,000,000 for capital expenditures in fiscal 1996, the majority of which relates to the Absecon project. These capital expenditures will be financed through internally generated funds and borrowing under the credit facility. As previously disclosed, the Company is under contract to purchase properties in Westfield and Garwood, New Jersey on which the Company plans to construct one superstore. During the January quarter, the tentative settlement that had been reached with the town of Westfield to approve the building of a superstore in both towns and to settle the Company's lawsuit against the Westfield Planning Board was rejected by the Westfield Planning Board. Also, during the second quarter, the town of Garwood approved the Company's application to build a superstore in Garwood. The Company now intends to build this superstore entirely in the town of Garwood beginning this fiscal year. The Company expects to close on both pieces of property during the third quarter using principally seller financing and the proceeds from the sale of the Maplewood property in November 1995. The Company expects to begin construction in the fourth quarter and to complete the store in fiscal 1997. The Company believes it can obtain the portion of the financing not already in place to complete this project, including the necessary waivers from financial institutions. At January 27, 1996, the Company was in compliance with all provisions of all debt agreements. PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 6(a) Exhibits: Exhibit 28(a) Press Release dated February 29, 1996. Exhibit 28(b) First Quarter Report to Shareholders dated December 8, 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: February 29, 1996 /s/ Perry Sumas Perry Sumas (President) Date: February 29, 1996 /s/ Kevin R. Begley Kevin R. Begley (Chief Financial Officer)