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 April 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> June 1, 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> 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 PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS VILLAGE SUPER MARKET, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands) <TABLE> <CAPTION> April 27, 1996 July 29, 1995 ASSETS <S> <C> <C> Current assets Cash and cash equivalents $ 1,502 $ 9,655 Merchandise inventories 24,961 24,179 Patronage dividend receivable 1,699 2,683 Miscellaneous receivables 3,468 3,137 Prepaid expenses 600 630 Total current assets 32,230 40,284 Property, equipment and fixtures, net 70,975 69,916 Investment in related party 10,116 9,820 Goodwill, net 10,706 10,871 Other intangibles, net 2,592 2,791 Other assets 1,959 1,892 Total assets $ 128,578 $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 24,614 25,584 Accounts payable and accrued expenses 13,259 12,603 Deferred income taxes 772 772 Total current liabilities 43,725 44,039 Long-term debt, less current portion 26,421 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 & outstanding 1,035 1,035 Retained earnings 41,411 40,022 Less cost of treasury shares (6,185) (6,185) Total shareholders' equity 54,390 53,001 Total liabilities and shareholders' equity $ 128,578 $ 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 Wks End 13 Wks End 39 Wks End 39 Wks End Apr 27,1996 Apr 29,1995 Apr 27,1996 Apr 29,1995 <S> <C> <C> <C> <C> Sales $ 169,279 $ 164,453 $ 513,803 $ 503,624 Cost of sales 127,232 123,959 387,030 380,664 Gross margin 42,047 40,494 126,773 122,960 Operating and administrative expenses 39,079 37,855 116,474 112,956 Depreciation and amortization expense 2,097 2,134 6,243 6,376 Operating income 871 505 4,056 3,628 Interest expense, net 776 991 2,727 3.060 Gain (loss) on disposal of assets --- --- 952 (190) Income (loss) before provision for income taxes 95 (486) 2,281 378 Provision for income tax expense (benefit) 39 (193) 892 151 Net income (loss) $ 56 $ (293) $ 1,389 $ 227 Net income (loss) per share: Weighted average number of common shares out- standing 2,909,876 2,909,876 2,909,876 2,909,876 Net income (loss) $ .02 $ (.10) $ .48 $ .08 </TABLE> See accompanying notes to consolidated condensed financial statements. VILLAGE SUPER MARKET, INC. CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (Dollars in Thousands) <TABLE> <CAPTION> 39 Weeks Ended 39 Weeks Ended April 27, 1996 April 29, 1995 CASH FLOWS FROM OPERATING ACTIVITIES: <S> <C> <C> Net income $ 1,389 $ 227 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,243 6,376 Deferred taxes 360 --- Provision to value inventories at LIFO 450 450 (Gain) loss on disposal of assets (952) --- Changes in assets and liabilities: (Increase) decrease in inventory (1,232) 87 Decrease in patronage dividend receivable 984 813 (Increase) in misc. receivables (331) (485) Decrease in prepaid expenses 30 31 (Increase) in other assets (67) (636) (Decrease)in accounts payable to related party (970) (1,321) Increase (decrease) in accounts payable and accrued expenses 656 (465) Net cash provided by operating activities 6,560 5,077 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (7,224) (5,084) Investment in related party ( 296) ( 345) Proceeds from sale of assets, net 1,238 --- Net cash used in investing activities (6,282) (5,429) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of long-term debt --- 6,600 Principal payments of long-term debt ( 8,431) (4,553) Net cash used by financing activities ( 8,431) 2,047 NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS ( 8,153) 1,695 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 9,655 7,246 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,502 $ 8,941 </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 April 27, 1996 and July 29, 1995 and the results of operations and cash flows for the periods ended April 27, 1996 and April 29, 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 April 27, 1996 are not necessarily indicative of the results to be expected for the full year. 3. At both April 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 $7,263,000 and $6,813,000 higher than reported at April 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 third quarter of fiscal 1996 were $169,279,000, an increase of 2.9% from the third 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 nine months ended April 27, 1996 were $513,803,000, an increase of 2.0% from 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 nine months ended April 27, 1996 increased to 24.8% and 24.7%, respectively, compared with 24.6% and 24.4%, respectively, in the corresponding prior year periods. These improvements in gross margin are primarily due to aggressive buying practices and an improved mix of sales in high margin departments. Operating and administrative expenses as a percentage of sales for the quarter and nine months increased to 23.1% and 22.7%, respectively, compared with 23.0% and 22.4%, respectively, in the corresponding prior year periods. The slight increase in the third quarter was due to higher coupon, snow removal and credit card processing costs. Coupon costs increased in response to competitive entries and a more aggressive promotional program. Partially offsetting these higher costs were lower store payroll and fringe benefit costs. Interest expense declined due to lower average debt levels, lower interest rates and increased interest income in the current quarter. 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 was recorded in the second quarter. Net income was $56,000 compared with a net loss of $293,000 in the prior year third quarter. This improvement was principally attributable to higher same store sales, an increased gross margin percentage, and lower interest expense. LIQUIDITY AND FINANCIAL RESOURCES Current liabilities exceeded current assets by $11,495,000 at April 27, 1996 compared to $3,755,000 at July 29, 1995. The current ratio decreased to .74 at April 27, 1996 compared to .91 at July 29, 1995. The decline in working capital at April 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 nine month period, cash provided by operating activities of $6,560,000 was used to reduce debt outstanding by $8,431,000 and to fund $7,224,000 of capital expenditures. This resulted in a cash decrease of $8,153,000. At April 27,1996, $3,000,000 was outstanding on the Company's $12,000,000 line of credit. The majority of capital expenditures in the nine month period related to the ongoing expansion and remodel 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. Earlier this year, 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, 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 summer. During the April quarter, the Company completed the purchase of one of the pieces of property, primarily from the proceeds of the sale of the Maplewood property. The Company expects to complete the acquisition of the additional property in the fourth quarter using principally seller financing. The Company expects to complete the construction of the store in the later part of 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 April 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 June 4, 1996. Exhibit 28(b) Second Quarter Report to Shareholders 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, 1996 /s/ Perry Sumas Perry Sumas (President) Date: June 4, 1996 /s/ Kevin R. Begley Kevin R. Begley (Chief Financial Officer)