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: October 25, 1997 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> November 24, 1997 <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 Statement 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 I - FINANCIAL INFORMATION Item 1. Financial Statements <TABLE> <CAPTION> VILLAGE SUPER MARKET, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands) October 25, July 26, 1997 1997 ASSETS <S> <C> <C> Current assets Cash and cash equivalents $ 4,827 $ 4,270 Merchandise inventories 25,238 24,836 Patronage dividend receivable 3,289 2,048 Miscellaneous receivables 3,541 3,269 Other current assets 865 850 Total current assets 37,760 35,273 Property, equipment and fixtures, net 72,348 72,293 Investment in related party 10,380 10,351 Goodwill, net 10,281 10,339 Other intangibles, net 2,220 2,284 Other assets 2,237 2,223 TOTAL ASSETS $135,226 $132,764 </TABLE> <TABLE> <CAPTION> LIABILITIES AND SHAREHOLDERS' EQUITY <S> <C> <C> Current liabilities Current portion of long-term debt $ 2,660 $ 3,260 Accounts payable to related party 25,782 27,141 Accounts payable and accrued expenses 16,494 17,017 Income taxes payable 414 462 Total current liabilities 45,350 47,880 Long-term debt, less current portion 28,704 24,027 Deferred income taxes 3,626 3,776 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 44,567 44,102 Less cost of treasury shares - (447,000 shares) (6,185) (6,185) Total shareholders' equity 57,546 57,081 TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $135,226 $132,764 </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 25, 1997 October 26, 1996 <S> <C> <C> Sales $ 169,888 $ 169,200 Cost of sales 127,776 127,341 Gross margin 42,112 41,859 Operating and administrative expense 38,723 38,669 Depreciation and amortization expense 1,764 1,823 Operating income 1,625 1,367 Interest expense (net) 809 894 Income before income taxes 816 473 Provision for income taxes 351 189 Net Income $ 465 $ 284 Weighted average number of common shares outstanding 2,909,876 2,909,876 Net income per share $ .16 $ .10 </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 25, 1997 October 26, 1996 CASH FLOWS FROM OPERATING ACTIVITIES: <S> <C> <C> Net income $ 465 $ 284 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 1,764 1,823 Deferred taxes (150) - Provision to value inventories at LIFO 150 150 Changes in assets and liabilities: (Increase) decrease in inventory ( 552) 172 (Increase) in patronage dividend receivable (1,241) ( 922) (Increase) in misc. receivables ( 272) ( 811) (Increase) in other current assets ( 15) ( 5) (Increase) in other assets ( 14) ( 23) Increase (decrease) in accounts payable to related party (1,359) 559 (Decrease) in accounts payable and accrued expenses ( 523) ( 23) (Decrease) in income taxes payable ( 48) - Net cash provided (used) by operating activities (1,795) 1,204 CASH FLOW FROM INVESTING ACTIVITIES: Capital expenditures (1,696) (1,891) Investment in related party ( 29) ( 59) Net cash used by investing activities (1,725) (1,950) CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from issuance of long-term debt 5,000 4,100 Principal payments of long-term debt ( 923) (3,151) Net cash provided by financing activities 4,077 949 NET INCREASE IN CASH AND CASH EQUIVALENTS 557 203 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,270 3,244 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,827 $ 3,447 </TABLE> See accompanying Notes to Consolidated 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 25, 1997 and July 26, 1997 and the results of operations and cash flows for the periods ended October 25, 1997 and October 26, 1996. The significant accounting policies followed by the Company are set forth in Note 1 to the Company's financial statements in the July 26, 1997 Village Super Market, Inc. Annual Report. 2. The results of operations for the period ended October 25, 1997 are not necessarily indicative of the results to be expected for the full year. 3. At both October 25, 1997 and July 26, 1997, 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 $7,729,000 and $7,579,000 higher than reported at October 25, 1997 and July 26, 1997 respectively. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Sales in the first quarter were $169,888,000 compared with $169,200,000 in the first quarter of the prior year. Same store sales increased 1.5% in the quarter, reflecting improved sales in remodeled stores, which was partially offset by sales declines in stores affected by competitive openings. One store was closed since one year ago. Gross margin as a percentage of sales increased to 24.8% from 24.7% in the prior year. This improvement in gross margin is due to a slightly improved mix of sales in higher margin departments. Operating and administrative expenses as a percentage of sales were 22.8% in both years. Savings from lower workers' compensation claims this year were partially offset by accruals for estimated liability insurance premium calls. Depreciation expense declined in the current quarter due to certain assets becoming fully depreciated. Interest expense declined in the current quarter due to lower average debt levels. The increase in net income of 64% in the quarter was due to the improvement in same store sales, higher gross margins, lower workers' compensation claims, lower depreciation and lower interest expense. These improvements were partially offset by a higher tax rate in the quarter. LIQUIDITY AND FINANCIAL RESOURCES Current liabilities exceeded current assets by $7,590,000 at October 25, 1997 compared to $12,607,000 at July 26, 1997. The current ratio increased to .83 at October 25, 1997 from .74 at July 26, 1997. 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 quarter, $5,000,000 of additional borrowings under the Company's credit facilities were used to make principal payments on long-term debt in the amount of $923,000, to fund $1,696,000 of capital expenditures and to fund cash used by operations. The majority of capital expenditures in the quarter related to the early stages of the expansion and remodel of the Livingston store and a minor remodel of the Watchung store. At October 25, 1997, $8,000,000 was outstanding of the Company's total available credit facility of $24,000,000. The Company was in full compliance with all terms and restrictive covenants of all debt agreements at October 25, 1997. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 6(a) Exhibits Exhibit 28(a) - Press Release dated November 21, 1997. 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 26, 1997 /s/ Perry Sumas Perry Sumas (President) Date: November 26, 1997 /s/ Kevin R. Begley Kevin R. Begley (Chief Financial Officer) EXHIBIT 28(a) VILLAGE SUPER MARKET, INC. REPORTS RESULTS FOR THE FIRST QUARTER ENDED OCTOBER 25, 1997 Springfield, New Jersey - November 21, 1997 - Village Super Market, Inc. reported sales and net income for the first quarter ended October 25, 1997, Perry Sumas, President announced today. Net income was $465,000 (16 cents per share) in the first quarter of fiscal 1998, an increase of 64% from the prior year. Sales for the first quarter were $169,888,000 compared with $169,200,000 in the prior year. Same store sales improved 1.5% in the quarter. The significant increase in net income in the quarter was due to the improvement in same store sales, higher gross margins, lower workers' compensation claims, lower depreciation and lower interest expense. Same store sales increased due to the positive impact of remodeled stores, which was partially offset by sales declines in stores affected by competitive openings. These improvements were partially offset by a higher tax rate in the quarter. 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 ended October 25, 1997: 13 Weeks Ended 13 Weeks Ended October 25, 1997 October 26, 1996 Sales $169,888,000 $169,200,000 Net Income $ 465,000 $ 284,000 Net Income Per Share $ .16 $ .10