SECURITIES & EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
(Mark One)
[x] Annual Report Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934 (Fee Required).
For the fiscal year ended: July 28, 2001.
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934 (Fee Required)
for the transition period from to .
COMMISSION FILE NUMBER: 0-2633
VILLAGE SUPER MARKET, INC.
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-1576170
(State or other jurisdiction of incorporation (I. R. S. Employer
or organization) Identification No.)
733 MOUNTAIN AVENUE, SPRINGFIELD, NEW JERSEY 07081
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (973)467-2200
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
None None
Securities registered pursuant to Section 12(g) of the Act:
CLASS A COMMON STOCK, NO PAR VALUE
(Title of Class)
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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K. [x]
The aggregate market value of the Class A common stock of
Village Super Market, Inc. held by non-affiliates was
approximately $5,416,000 and the aggregate market value of the
Class B common stock held by non-affiliates was approximately
$17,934,000 (based upon the closing price of the Class A shares
on the Over the Counter Market on October 1, 2001).
There are no other classes of voting stock outstanding.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of latest
practicable date.
Outstanding at
Class October 22, 2001
Class A common stock, no par value 1,436,800 Shares
Class B common stock, no par value 1,594,076 Shares
DOCUMENTS INCORPORATED BY REFERENCE
Information contained in the 2001 Annual Report to
Shareholders and the 2001 definitive Proxy Statement to be
filed with the Commission and delivered to security holders
in connection with the Annual Meeting scheduled to be held
on December 7, 2001 are incorporated by reference into
this Form 10-K at Part II, Items 5, 6, 7 and 8 and Part III.
PART I
ITEM I. BUSINESS
FORWARD-LOOKING STATEMENTS
All statements, other than statements of historical fact,
included in this Form 10-K are or may be considered 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 business 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 associates, the availability of
new store locations, availability of capital, the liquidity of
the Company on a cash flow basis, the success of operating
initiatives, results of ongoing litigation and other risk
factors detailed herein and in other filings of the Company.
GENERAL
Village Super Market, Inc. operates a chain of 23 (including
the recently opened Garwood store) ShopRite supermarkets, 16
of which are located in northern New Jersey, one of which is
in northeastern Pennsylvania and six of which are in the
southern shore area of New Jersey. The Company is a member
of Wakefern Food Corporation ("Wakefern"), the nation's largest
retailer owned food cooperative and owner of the ShopRite name.
This relationship provides the Company many of the economies
of scale in purchasing, distribution, advanced retail
technology and advertising associated with chains of greater
size and geographic reach.
The Company believes that the regional nature of its business
and the continuity of its management under the leadership of
its founding family have permitted the Company to operate with
greater flexibility and responsiveness to the demographic
characteristics of the communities served by its stores.
The Company seeks to generate high sales volume by offering
a wide variety of high quality products at consistently low
prices. The Company attempts to efficiently utilize its selling
space, gives continuing attention to the decor and format of
its stores and tailors each store's product mix to the
preferences of the local community. The Company concentrates
on the development of superstores, which average 59,000 total
square feet, compared with an average of 30,000 total square
feet for conventional supermarkets. Several of the Company's
recent remodels have expanded superstores to 65,000 square
feet. These larger store sizes enable the Company to feature
expanded higher margin specialty service departments such as
home meal replacement, an on-site bakery, an expanded
delicatessen including prepared foods, and a fresh seafood
section. Superstores also offer an expanded selection of
non-food items such as cut flowers, health and beauty aids,
greeting cards, videocassette rentals, small appliances and
in most cases, a pharmacy. Two superstores also include
a warehouse section featuring products in giant sizes.
Recently remodeled and new superstores emphasize a Power
Alley, which features high margin convenience offerings
such as salad bars, bakery and home meal replacement in
an area within the store that provides quick customer entry
and exit for those customers shopping for today's lunch
or dinner. The following table shows the percentage of
the Company's sales allocable to various product categories
during each of the periods indicated as well as the number
of the Company's superstores and percentage of selling square
feet allocable to these stores during each of these periods:
Product Categories Fiscal Year Ended In July
1999 2000 2001
Groceries 41.2% 41.1% 40.7%
Dairy and Frozen 16.1 16.0 15.9
Meats 9.6 9.7 9.5
Non-Foods 10.8 10.4 10.3
Produce 10.0 10.0 10.3
Deli and prepared 4.6 4.5 4.6
Seafood 2.0 2.0 2.1
Pharmacy 4.0 4.5 4.8
Bakery 1.6 1.6 1.6
Other .1 .2 .2
----- ----- -----
100.0% 100.0% 100.0%
Number of superstores 20 20 20
Selling square feet
represented by
superstores 92% 92% 94%
A variety of factors affect the profitability of each of the
Company's stores including local competitors, size, access
and parking, lease terms, management supervision, and the
strength of the ShopRite trademark in the local community.
The Company continually evaluates individual stores to
decide whether they should be closed. Accordingly, the
Orange, Maplewood, Kingston, Morristown, Easton, Florham
Park and South Orange stores have been closed since
December 1991. The Company operates one liquor store.
DEVELOPMENT AND EXPANSION
The Company is engaged in a continuing program to upgrade
and expand its supermarket chain. This program has
included major store remodelings as well as the opening
or acquisition of additional stores. When remodeling,
the Company has sought, whenever possible, to increase
the amount of selling space in its stores. In fiscal 2001,
the Company opened a 67,000 sq. ft. store in West Orange
to replace its older, smaller store. In fiscal 2000,
the Company purchased land in Garwood, N.J. and
substantially remodeled the interior of the Vineland
store. In fiscal 1999, the Company completed the 22,000
square foot expansion and remodel of the Livingston store.
In addition, the Company acquired a leased 67,000 square
foot store in Vineland, New Jersey in May 1999 from
Wakefern.
The Company has budgeted $20,000,000 for capital
expenditures in fiscal 2002. The major planned
expenditures are the completion of construction and
equipment for a new superstore in Garwood and construction
and equipment of a new superstore in Hammonton, N.J.
In the last five years, the Company has completed four
remodels, two new stores and one store acquisition. The
Company's goal has been to open an average of one new
superstore and conduct a major remodel of one store each
year. However, because of delays associated with
increased governmental regulations and the general
difficulty in developing retail properties in the Company's
primary trading area the Company has, at times, been
unable to open the desired number of new stores.
Additional store remodelings and sites for new stores are
in various stages of development. The Company will also
consider additional acquisitions should appropriate
opportunities arise.
WAKEFERN
The Company is the third largest member of Wakefern (owning
14.2% of Wakefern's outstanding stock) and one of the
Company's principal shareholders was a founder of Wakefern.
Wakefern, which was organized in 1946, is the nation's
largest retailer-owned food cooperative. There are
presently 41 individual member companies and 203
supermarkets including 21 operated by Wakefern, which
comprise the Wakefern cooperative. Only Wakefern and
member companies are entitled to use the ShopRite name
and trademark, and participate in ShopRite advertising and
promotional programs.
The principal benefits to the Company from its relationship
with Wakefern are the use of the ShopRite name and trademark,
volume purchasing, ShopRite private label products,
distribution and warehousing economies of scale, ShopRite
advertising and promotional programs including the ShopRite
Price Plus card and a co-branded credit card and the
development of shared, advanced retail technology. The
Company believes that the ShopRite name is widely recognized
by its customers and is a factor in those customers'
decisions about where to shop. In addition, Wakefern can
purchase large quantities and varieties of products at
favorable prices which it can then pass onto its members.
These benefits are important to the Company's success.
ShopRite private label products accounted for approximately
18% of sales in fiscal 2001.
Wakefern distributes as a "patronage dividend" to each of
its stockholders a share of earnings of Wakefern in
proportion to the dollar volume of business done by the
stockholder with Wakefern during each fiscal year.
While Wakefern has a substantial professional staff, it
operates as a member owned cooperative. Executives of most
members make contributions of time to the business of
Wakefern. Senior executives of the Company spend a
significant amount of their time working on various
Wakefern committees which oversee and direct Wakefern
purchases and other programs.
Most of the Company's advertising is developed and placed
by Wakefern's professional advertising staff. Wakefern is
responsible for all television, radio and major newspaper
advertisements. Wakefern bills its members by various
formulas which distribute advertising costs in accordance
with the estimated proportional benefits to each member
from such advertising. The Company also places Wakefern
developed materials with local newspapers. In addition,
Wakefern provides the Company with other services including
insurance, equipment purchasing and retail technology support.
Wakefern operates warehouses and distribution facilities in
Elizabeth, New Jersey; Wallkill, New York; and South Brunswick,
New Jersey. The Company and all other members of Wakefern
are parties to the Wakefern Stockholder's Agreement which
provides for certain commitments by, and restrictions on all
shareholders of Wakefern. This agreement extends until ten
years from the date that stockholders representing 75% of
Wakefern sales notify Wakefern that those stockholders request
the Wakefern Stockholder Agreement be terminated. Each member
is obligated to purchase from Wakefern a minimum of 85% of
its requirements for products offered by Wakefern. If this
purchase obligation is not met, the member is required to pay
Wakefern's profit contribution shortfall attributable to this
failure. This agreement also requires that in the event of
unapproved changes in control of the Company or a sale of the
Company or of individual Company stores, except to a qualified
successor, the Company in such cases must pay Wakefern an amount
equal to the annual profit contribution shortfall attributable
to the sale of store or change in control. No payments are
required if the volume lost by a shareholder as a result of the
sale of a store is replaced by such shareholder by increased
volume in existing or in new stores. Such payments were waived
by Wakefern in connection with the sale of the Orange, Maplewood,
Kingston and Morristown stores. A "qualified successor" must
be or agree to become a member of Wakefern and may not own or
operate any supermarkets other than ShopRite supermarkets, in
the states of New York, New Jersey, Pennsylvania, Delaware,
Maryland, Virginia, Connecticut, Massachusetts, Rhode Island,
Vermont, New Hampshire, Maine or the District of Columbia or
own or operate more than 25 non-ShopRite supermarkets in any
other locations in the United States.
Wakefern, under circumstances specified in its bylaws, may
refuse to sell merchandise to, and may repurchase the Wakefern
stock of, any member. Such circumstances include certain
unapproved transfers by a member of its supermarket business
or its capital stock in Wakefern, unapproved acquisition by a
member of certain supermarket or grocery wholesale supply
businesses, the material breach by a member of any provision of
the bylaws of Wakefern or any agreement with Wakefern or a
determination by Wakefern that the continued supplying of
merchandise or services to such member would adversely affect
Wakefern.
Any material change in Wakefern's method of operation or a
termination or material modification of the Company's relationship
with Wakefern following expiration of the above agreements or
otherwise might have an adverse impact on the conduct of the
Company's business and could involve additional expense for the
Company. The failure of any Wakefern member to fulfill its
obligations under these agreements or a member's insolvency or
withdrawal from Wakefern could result in increased costs to
remaining members. 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. Wakefern has publicly stated that it will
take all appropriate actions to enforce its rights under the
Wakefern Stockholder's Agreement. A recent decision by the U.S.
Bankruptcy Court has upheld that Big V would be required to pay
substantial withdrawal fees to Wakefern to make up for the loss of
volume to the cooperative in the event Big V departs from the
Wakefern Cooperative. These matters are subject to further legal
proceedings. At this time, the ultimate impact, if any, on Wakefern
and the Company from these proceedings cannot be ascertained,
although any significant loss of volume from a termination of the
Wakefern supply agreement by Big V without payment of the
aforementioned withdrawal fees, could result in increased costs to
the Company for product purchases and services.
Wakefern does not prescribe geographical franchise areas to its
members. The specific locations at which the Company, other members
of Wakefern or Wakefern itself may open new units under the ShopRite
names are, however, subject to the approval of Wakefern's Site
Development Committee. This committee is composed of persons
who are not employees or members of Wakefern and from whose decision
to deny a site application may be appealed to the Wakefern Board of
Directors. Wakefern assists its members in their site selection
by providing appropriate demographic data, volume projections and
projections of the impact of the proposed market on existing
member supermarkets in the area.
Each member's Wakefern stock (including the Company's) is
pledged to Wakefern to secure all of that member's obligations
to Wakefern. Moreover, every owner of 5% or more of the voting
stock of a member (including five members of the Sumas family)
must personally guarantee prompt payment of all amounts due
Wakefern from that member. Wakefern does not own any securities
of the Company or its subsidiaries.
Each of Wakefern's members is required to make capital
contributions to Wakefern based on the number of stores operated
by that member and the purchases generated by those stores. As
additional stores are opened or acquired by a member, additional
capital must be contributed by it to Wakefern. On occasion, as
its business needs have required, Wakefern has increased the
maximum per-store capital contributions (currently $550,000)
required of its members. Wakefern has in the past permitted
these increases in required capital to be paid in installments
over a period of time. As a result, the Company is required to
invest $1,491,000 over the next six years.
TECHNOLOGY
The Company considers automation and computerization important
to its operations and competitive position. All stores have
IBM 4690 software for the scanning check-out systems. These
systems improve pricing accuracy, enhance productivity and
reduce checkout time for customers. The hardware for these
point of sale systems was replaced in fiscal 2000. The Company
utilizes IBM RS/6000 computers and satellite communications
in each store to, among other things, offer customers debit
and credit card payment options.
The Company's commitment to advanced scanning systems has enabled
it to participate in Price Plus, ShopRite's preferred customer
program. Customers receive electronic discounts by presenting a
scannable Price Plus card. This technology has also enabled the
Company to focus on target marketing initiatives.
The Company utilizes a computer generated ordering system, which
is designed to reduce inventory levels and out of stock
conditions, enhance shelf space utilization, and reduce labor
costs. The Company utilizes a direct store delivery system,
consisting of personal computers and hand held scanners, for
most items not purchased through Wakefern in order to provide
equivalent cost and retail price control over these products.
In addition, certain in-store department records are
computerized, including the records of all pharmacy departments.
In all stores, meat, seafood and delicatessen prices are
maintained on computer for automatic weighing and pricing.
Furthermore, all stores have computerized time and attendance
systems and most also have computerized energy management
systems. The Company seeks to design its stores to use energy
efficiently, including recycling waste heat generated by
refrigeration equipment for heating and other purposes. The
Company has installed computer based training systems in
all stores.
In fiscal 2002, a frame relay communications network will be
installed to replace the current satellite communications network.
This new network will provide improved reliability and capacity
in handling consumer based transactions and interactive retail
applications.
Wakefern and the Company have responded to our customers
increased use of the internet by creating shoprite.com to
provide weekly advertising and other shopping information.
In addition, an on-line shopping and pick-up service is being
tested by Wakefern at this time.
COMPETITION
The supermarket business is highly competitive. Industry profit
margins are narrow, consequently earnings are dependent on high
sales volume and operating efficiency. The Company is in direct
competition with national, regional and local chains as well as
independent supermarkets, warehouse clubs, super centers, drug
stores, discount department stores, fast food chains and
convenience stores. The Company competes by using low pricing,
courteous, quick, service to the customer, and a broad range of
consistently available quality products including the ShopRite
private label. The ShopRite Price Plus card and the co-branded
ShopRite credit card also create significant customer loyalty.
The Company believes its regional focus and the continuity of its
management by the Sumas family permit it to operate with greater
flexibility in tailoring the products offered in each store to the
demographics of the communities they serve as compared to national
and larger regional chains. The Company's principal competitors
are Pathmark, A&P, Stop & Shop, Foodtown, Acme and King's. Many
of the Company's competitors have financial resources substantially
greater than those of the Company.
In the last year, several competitive developments occurred in
our marketplace. One of our principal competitors, Pathmark,
completed a restructuring which substantially reduced its
previously high debt levels. In addition, another competitor,
Stop & Shop changed the name and format of all of its stores.
The future impact of these recent developments on our already
highly competitive marketplace is unknown at this time.
LABOR
As of October 1, 2001, the Company employed approximately 3,850
persons of whom approximately 66% worked part-time.
Approximately 89% of the Company's employees are covered by
collective bargaining agreements. The Company was affected by a
labor dispute with its largest union in fiscal 1993. Contracts
with the Company's six unions expire between November 2001 and
April 2005. Most of the Company's competitors in New Jersey
are similarly unionized.
REGULATORY ENVIRONMENT
While the Company must secure a variety of health and food
distribution permits for the conduct of its business, it does
not believe that such regulation is material to its operations.
The Company's pharmacy departments are subject to state regulation
and licensed pharmacists must be on duty at all times. The
Company's liquor operation is also subject to regulation by state
and municipal administrative authorities. The Company does not
presently anticipate expanding its liquor operations. Compliance
with statutes regulating the discharge of materials into the
environment is not expected to have a material effect on capital
expenditures, earnings and competitive position in fiscal 2002 and
2003.
ITEM 2. PROPERTIES
The Company owns the sites of six (including the recently
opened Garwood store) of its supermarkets (containing 389,000
square feet of total space), all of which are freestanding
stores, except the Egg Harbor store, which is part of a shopping
center. The remaining 17 supermarkets (containing 854,000 square
feet of total space) are leased, with initial lease terms generally
ranging from 20 to 30 years, usually with renewal options. Ten
of these leased stores are located in strip shopping centers and
the remaining seven are freestanding stores.
The lease for the Morris Plains store expires in June 2002. The
Company is currently negotiating with the landlord for a new lease
for an expanded store. The Company is a sublessee of the Ventnor
store location. 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 to remain in
this location under new lease terms. With the exception of the
above two situations, none of the Company's store leases expire
before 2008.
The annual rent, including capitalized leases, for all of the
Company's leased facilities for the year ended July 28, 2001 was
approximately $8,190,000. The Company is a limited partner in
two partnerships, one of which owns a shopping center in which
one of the Company's leased supermarkets is located. The Company
also is a general partner in a partnership that is a lessor
of one of the Company's freestanding supermarkets.
ITEM 3. LEGAL PROCEEDINGS
No material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters submitted to shareholders in the fourth
quarter.
ITEM X. EXECUTIVE OFFICERS OF THE REGISTRANT
In addition to the information regarding directors incorporated
by reference to the Company's definitive Proxy Statement in
Part III, Item 10, the following is provided with respect to
executive officers who are not directors:
NAME AGE POSITION WITH THE COMPANY
Carol Lawton 58 Vice President and Assistant
Secretary since 1983;
responsible for administration
of headquarters staff.
Kevin Begley 43 Chief Financial Officer since 1987.
Mr. Begley is a Certified
Public Accountant.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS
The information required by this Item is incorporated by
reference from Information appearing on Page 20 in the
Company's Annual Report to Shareholders for the fiscal
year ended July 28, 2001.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is incorporated by
reference from Information appearing on Page 3 in the Company's
Annual Report to Shareholders for the fiscal year ended
July 28, 2001.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information required by this Item is incorporated
by reference from Information appearing on Page 4 through
6 in the Company's Annual Report to Shareholders for the
fiscal year ended July 28, 2001.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is incorporated by
reference from Information appearing on Page 3 and Page 7 to
20 in the Company's Annual Report to Shareholders for the
fiscal year ended July 28, 2001.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item 10 is incorporated by
reference from the Company's definitive Proxy Statement to be
filed on or before November 9, 2001, in connection with its
Annual Meeting scheduled to be held on December 7, 2001.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item 11 is incorporated by
reference from the Company's definitive Proxy Statement to be
filed on or before November 9, 2001, in connection with its
Annual Meeting scheduled to be held on December 7, 2001.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The information required by this Item 12 is incorporated by
reference from the Company's definitive Proxy Statement to
be filed on or before November 9, 2001, in connection with
its annual meeting scheduled to be held on December 7, 2001.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item 13 is incorporated by
reference from the Company's definitive Proxy Statement to be
filed on or before November 9, 2001, in connection with its
annual meeting scheduled to be held on December 7, 2001.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS
ON FORM 8-K
(a) 1. Financial Statements:
Consolidated Balance Sheets - July 28, 2001 and July 29, 2000;
Consolidated Statements of Operations - years ended
July 28, 2001, July 29, 2000 and July 31, 1999;
Consolidated Statements of Shareholders' Equity - years ended
July 28, 2001; July 29, 2000 and July 31, 1999;
Consolidated Statements of Cash Flows - years ended
July 28, 2001; July 29, 2000 and July 31, 1999.
Notes to consolidated financial statements.
The consolidated financial statements above and Independent
Auditors' Report have been incorporated by reference from
the Company's Annual Report to Shareholders for the fiscal
year ended July 28, 2001.
2. Financial Statement Schedules:
All schedules are omitted because they are not applicable,
or not required, or because the required information is
included in the consolidated financial
statements or notes thereto.
3. Exhibits
EXHIBIT INDEX
Exhibit No. 3 Certificate of Incorporation and By-Laws*
Exhibit No. 4 Instruments defining the rights of security
holders;
4.4 Loan Agreement dated May 30, 1997*
4.5 Note Purchase Agreement dated September
16, 1999*
4.6 Loan Agreement dated September 16, 1999*
Exhibit No. 10 Material Contracts:
10.1 Wakefern By-Laws*
10.2 Stockholders Agreement dated February 20,
1992 between the Company and
Wakefern Food Corp.*
10.3 Voting Agreement dated March 4, 1987*
10.5 1997 Incentive and Non-Statutory Stock
Option Plan*
Exhibit No. 13 Annual Report to Security Holders
Exhibit No. 21 Subsidiaries of Registrant
Exhibit No. 23 Consent of KPMG LLP
Exhibit No. 99 Press Release dated October 2, 2001
* The following exhibits are incorporated by reference from
the following previous filings:
Form 10-K for 1999: 4.5, 4.6
Form 10-K for 1997: 4.4, 10.5
Form 10-K for 1993: 3, 10.1, 10.2 and 10.3
(b) No reports on Form 8-K were filed during the fourth quarter
of fiscal 2001.
The Company
Village Super Market, Inc. operates a chain of 23 ShopRite
supermarkets, 16 of which are located in northern New Jersey,
1 in northeastern Pennsylvania and 6 in the southern shore
area of New Jersey.
Village is a member of Wakefern Food Corporation, the largest
retailer-owned food cooperative in the United States.
Village's business was founded in 1937 by Nicholas and Perry
Sumas and has continued to be principally owned and operated
under the active management of the Sumas family.
Contents
Letter to Shareholders 2
Selected Financial Data 3
Unaudited Quarterly Financial Data 3
Management's Discussion and Analysis of
Financial Condition and Results of Operations 4
Consolidated Balance Sheets 7
Consolidated Statements of Operations 8
Consolidated Statements of Shareholders' Equity 9
Consolidated Statements of Cash Flows 10
Notes to Consolidated Financial Statements 11
Independent Auditors' Report 20
Stock Price and Dividend Information 20
Corporate Directory Inside back cover
Dear Fellow Shareholders
Village continued to perform exceptionally well this year. Net
income, excluding a nonrecurring charge, exceeded $10 million
for the first time. Sales reached a record $800 million. Our
customers responded enthusiastically to our new store in West
Orange, and we recently opened a store in Garwood.
Net income, excluding a nonrecurring charge, increased 21% to
$10,163,000, or $3.31 per share in fiscal 2001. Sales increased
4.5% to $820,627,000. The substantial improvement in net income
was due to a comparable store sales increase of 3.6%, increased
gross profits and a lower effective tax rate, partially offset
by increased operating costs.
Capital expenditures were $15,070,000 in fiscal 2001. In August
2000, we opened a 67,000 square feet store in West Orange. The
customer response and the performance of this replacement store
have exceeded our expectations.
On September 26, 2001, we opened a 59,000 square feet store in
Garwood. This is the fifth store to include our full Power Alley.
This format features a wide assortment of perishable products,
including an expanded fresh bakeshop, sushi bar, salad bar and
Bistro Street; our chef prepared home meal replacement section.
Our business demands a continuing focus on customers. In response
to our customers changing needs, the "Natural Choice at ShopRite"
program was introduced this year to communicate and merchandise
our expanded selection of natural and organic foods. We also have
increased our emphasis on international foods. For example, the
new Garwood store includes a "Kosher Village".
We continue to invest in advanced retail technology. We recently
installed several self-checkout systems in our Chester and Garwood
stores. Based on the enthusiastic customer response, we plan to
make self-checkout available in most stores in the future. During
fiscal 2002, with Wakefern's assistance, we will install a frame
relay communications network in all stores. This network will
provide more reliable, higher speed communications for customer
transactions, as well as provide a vehicle for enhanced retail
applications on a Wakefern intranet in the near future.
Over the last five years, our net income has grown on average
37% a year. This success is a direct result of our management team
and associates commitment to executing our priorities. These
priorities remain offering high quality products at consistently
low prices, providing outstanding service, creating unique
marketing initiatives, and expanding and remodeling our store base.
Thank you for your support as fellow shareholders and customers.
James Sumas, Perry Sumas,
Chairman of the Board President
Selected Financial Data
(Dollars in thousands except per share and square feet data)
July 28, July 29, July 31, July 25, July 26,
2001 2000 1999 1998 1997
For year
Sales (1) $820,627 $784,995 $750,680 $693,667 $679,944
Net income 9,443 8,426 4,722 4,007 2,074
Net income per
share - basic 3.13 2.81 1.59 1.36 .71
Net income per
share - diluted 3.08 2.76 1.55 1.34 .71
Cash dividends
per share
Class A - - - - -
Class B - - - - -
At year end
Total assets 183,346 175,987 149,555 138,508 132,764
Long-term debt 43,363 43,998 27,204 25,700 24,027
Working capital
(deficit) 17,087 10,690 (7,197) (9,682) (12,607)
Shareholders'
equity 84,770 75,152 66,477 61,568 57,081
Book value
per share 27.97 24.94 22.24 20.73 19.62
Other data
Same store sales
increase 3.6% 2.9% 6.0% 2.4% 1.0%
Total square
feet 1,184,000 1,182,000 1,182,000 1,093,000 1,093,000
Average
total sq.
ft. per store 54,000 51,000 51,000 50,000 50,000
Selling square
feet 935,000 934,000 934,000 866,000 866,000
Sales per average
square foot of
selling space 874 840 846 801 792
Number of stores 22 23 23 22 22
Sales per average
number of stores 37,156 34,080 33,722 31,530 30,767
Capital
expenditures 15,070 13,312 7,084 9,956 8,593
Unaudited Quarterly Financial Data
(Dollars in thousands except per share amounts)
First Second Third Fourth Fiscal
Quarter Quarter Quarter Quarter Year
2001
Sales $198,033 $212,920 $199,008 $210,666 $820,627
Gross profit 47,919 50,934 48,952 53,168 200,973
Net income 2,220 2,582 1,085 3,556 9,443
Net income per
share -
diluted $.73 $.84 $.35 $1.15 $3.08
2000
Sales $191,292 $204,982 $188,876 $199,845 $784,995
Gross profit 47,090 49,320 45,164 49,550 191,124
Net income 2,030 2,529 1,079 2,788 8,426
Net income per
share -
diluted $.67 $.83 $.35 $.91 $2.76
(1) As a result of adopting Emerging Issues Task Force Issue
No. 00-14, "Accounting For Certain Sales Incentives," the Company
reclassified prior period coupon expense from marketing expenses
to sales. These reclassifications had no effect on previously
reported operating profit or net income. For further information
see note 1 to the consolidated financial statements.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
The following table sets forth the major components of the
Consolidated Statements of Operations of the Company as a
percentage of sales:
July 28, July 29, July 31,
2001 2000 1999
Sales 100.00% 100.00% 100.00%
Cost of sales 75.51 75.65 76.16
----- ----- -----
Gross profit 24.49 24.35 23.84
Operating and administrative
expense 21.26 21.18 20.99
Depreciation and amortization .96 1.05 1.02
Non-cash impairment and special
charges .14 - .35
---- ---- ----
Operating income 2.13 2.12 1.48
Interest expense (net) .33 .42 .41
Gain (loss) on disposal of assets (.01) .06 -
---- ---- ----
Income before income taxes 1.79 1.76 1.07
Income taxes .64 .69 .44
---- ---- ----
Net income 1.15% 1.07% .63%
==== ==== =====
Sales were $820,627,000 in fiscal 2001, an increase of
$35,632,000, or 4.5% from the prior year. On August 10, 2000,
the Company opened a 67,000 sq. ft. superstore to replace
its smaller, older store in West Orange. Also, the Company
closed the under facilitated South Orange store on October
28, 2000. Excluding these two stores, comparable store sales
increased 3.6% in fiscal 2001. Sales were $784,995,000 in
fiscal 2000, an increase of $34,315,000, or 4.6% from the
prior year. Fiscal 2000 sales were $28,376,000 higher due to
the acquisition of the Vineland store during the fourth quarter
of fiscal 1999. Same store sales increased 2.9% in fiscal 2000.
Partially offsetting these increases was a reduction in sales
of approximately $14,000,000 as fiscal 2000 contained 52 weeks
compared to 53 weeks in fiscal 1999.
Gross profit as a percentage of sales increased in fiscal 2001
due to improved sales in higher margin departments and a
reduction in promotional coupons, partially offset by increased
LIFO charges. Gross profit as a percentage of sales increased
in fiscal 2000 in most selling departments. In addition, gross
profit improved in fiscal 2000 due to rebates received for the
acquired Vineland store.
Operating and administrative expense increased as a percentage
of sales in fiscal 2001 due to increased occupancy, fringe benefit
and credit card processing costs, partially offset by reduced
advertising costs. Operating and administrative expense increased
as a percentage of sales in fiscal 2000 due to increased credit
card processing costs, professional fees and a charge to account
for the anticipated disposal of the South Orange store.
Depreciation and amortization declined in fiscal 2001 (and
increased in fiscal 2000) primarily due to fiscal 2000 including
accelerated depreciation of the old West Orange store, which
was replaced in August 2000.
Fiscal 2001 results include a non-cash impairment charge of
$1,122,000 to write off the book 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
to remain in this location under new lease terms. The Company
continues to operate the store during these negotiations. Should
the Company be unsuccessful in negotiating a new lease, the
remaining book value of the assets of the Ventnor store of
$641,000 may be written off.
Interest expense decreased in fiscal 2001 primarily due to
interest costs capitalized in the amount of $389,000 related
to the construction of a new superstore in Garwood. Interest
expense increased in fiscal 2000 due to higher debt levels
outstanding, partially offset by increased interest income
earned on higher cash balances.
Fiscal 2000 results include a gain on the sale of real estate
of a previously closed store in Easton, PA in the amount of
$492,000. Fiscal 1999 results include a special charge in the
amount of $2,600,000 related to litigation in connection with
a contract to purchase property for a new superstore.
(See note 10).
The Company's effective income tax rate was 35.9%, 39.0% and
41.2% in fiscal 2001, 2000 and 1999, respectively. The effective
income tax rate declined in fiscal 2001 and fiscal 2000 due to
tax planning initiatives begun in the second half of fiscal 2000.
Due to recent tax law changes enacted in New Jersey, the Company
expects its effective income tax rate to be approximately 38.3%
in fiscal 2002.
LIQUIDITY AND CAPITAL RESOURCES
Current assets exceeded current liabilities by $17,087,000
at July 28, 2001 compared to $10,690,000 at July 29, 2000 and
compared to current liabilities exceeding current assets by
$7,197,000 at July 31, 1999. Working capital ratios at the same
dates were 1.33, 1.20, and .87 to one, respectively. The Company's
working capital needs are reduced since inventory is generally
sold by the time payment to Wakefern and other suppliers are due.
During fiscal 2001, operating cash flow of $19,653,000 was used
to fund capital expenditures of $15,070,000 and to increase
cash on hand by $5,435,000. The major capital expenditures were
equipment and leasehold improvements for the replacement store
in West Orange, remodel costs for the Vineland store and site
work and construction costs for a new store in Garwood, New
Jersey, which opened on September 26, 2001.
During fiscal 2000, operating cash flow of $13,634,000 and
net borrowings of $14,506,000 were used to fund capital
expenditures of $13,312,000 and to increase cash balances by
$15,950,000. The principal capital expenditure projects were
the purchase of land in Garwood, the remodel of the Vineland
store and a portion of the cost of the replacement store in West
Orange.
On September 16, 1999, the Company completed the sale of
$30,000,000 of 8.12% unsecured Senior Notes. At the same time,
the Company entered into a $15,000,000 unsecured revolving credit
agreement. These two debt agreements replaced the $6,667,000 term
loan and a $24,000,000 revolving credit facility, both of which
were secured by substantially all of the Company's assets.
The Company has budgeted approximately $20 million for capital
expenditures in fiscal 2002. Planned expenditures include the
completion of construction and equipment for a new superstore in
Garwood (opened September 26, 2001), the construction and equipment
for a new superstore in Hammonton, New Jersey and the start of
two major remodels. The Company's primary sources of liquidity
in fiscal 2002 are expected to be cash on hand at July 28, 2001,
operating cash flow and equipment financing.
Adoption of New Accounting Standard
In fiscal 2001, the Company adopted the provisions of the
Financial Accounting Standards Boards (FASB) Emerging Issues
Task Force Issue No. 00-14, "Accounting For Certain Sales
Incentives." This pronouncement requires the value of certain
sales incentives that result in a reduction of the price paid by
the customer, such as discounts, coupons, rebates and free
products, be netted against revenue and not classified as a
marketing expense. Accordingly, 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. This reclassification had no effect on the
Company's operating income or net income. The amount of such
sales incentives included as a reduction in sales were
$18,457,000, $18,365,000 and $17,459,000 in fiscal 2001,
2000 and 1999, respectively.
Impact of Recently Issued Accounting Standards
In July 2001, the FASB issued Statement No. 141, "Business
Combinations", and Statement No. 142, "Goodwill and Other
Intangible Assets". Statement 141 requires that the purchase
method of accounting be used for all business combinations
initiated after June 30, 2001. Statement 141 also specifies
criteria that intangible assets acquired in a purchase method
business combination must meet to be recognized and reported
apart from goodwill. Statement 142 requires that goodwill and
intangible assets with indefinite useful lives no longer be
amortized, but instead tested for impairment at least annually.
Statement 142 also requires that intangible assets with definite
useful lives be amortized over their respective estimated useful
lives to their estimated residual values, and reviewed for
impairment.
The Company is required to adopt the provisions of Statement 141
immediately and to adopt Statement 142 effective the first day
of fiscal 2003. Goodwill and intangible assets acquired in
business combinations completed before July 1, 2001 will continue
to be amortized prior to the adoption of Statement 142.
The Company will early adopt Statement 142 effective July 29, 2001
Statement 141 requires that, upon adoption of Statement 142, the
Company evaluate existing intangible assets and goodwill that were
acquired in a purchase business combination effective prior to
June 30, 2001, and to make any necessary reclassifications in
order to conform with the new criteria in Statement 141. Upon
adoption of Statement 142, the Company will be required to
reassess the useful lives and residual values of all intangible
assets acquired in purchase business combinations, and make any
necessary amortization period adjustments by the end of the
first interim period after adoption.
In connection with the transitional goodwill impairment
evaluation, Statement 142 requires the Company to perform,
within six months, an assessment of whether there is an
indication that goodwill is impaired as of the date of adoption.
If such indication exists, the Company must perform the second
step of the transitional impairment test by comparing the implied
fair value of goodwill to its carrying amount, both of which would
be measured as of the date of adoption. This second step is required
to be completed as soon as possible, but no later than the end of
the year of adoption. Any transitional impairment loss will be
recognized as the cumulative effect of a change in accounting
principle in the Company's consolidated statement of operations.
As of the date of adoption, the Company has unamortized goodwill
in the amount of $10,605,000 and unamortized identifiable
intangible assets in the amount of $200,000, both of which will
be subject to the transition provisions of Statements 141 and 142.
Amortization expense related to goodwill was $341,000 for the year
ended July 28, 2001. Because of the extensive effort needed to
comply with adopting Statements 141 and 142, it is not practicable
to reasonably estimate the impact of adopting these Statements on
the Company's consolidated financial statements at the date of
this report, including whether any transitional impairment losses
will be required to be recognized as the cumulative effect of a
change in accounting principle.
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.
Wakefern has publicly stated that it 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. A recent decision
by the U.S. Bankruptcy Court has upheld that Big V would be
required to pay substantial withdrawal fees to Wakefern to make
up for the loss of volume to the cooperative in the event Big V
departs from the Wakefern Cooperative. These matters are subject
to further legal proceedings. At this time, the ultimate impact,
if any, on Wakefern and the Company from these proceedings cannot
be ascertained, although any significant loss of volume from a
termination of the Wakefern supply agreement by Big V, without
payment of the aforementioned withdrawal fees, could result in
increased costs to the Company for product purchases and services.
Impact of Inflation and Changing Prices
Although the Company cannot accurately determine the precise effect
of inflation on its operations, it does not believe inflation has
had a material effect on sales or results of operations.
Forward-Looking Statements
This annual report 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, availability
of capital, the liquidity of the Company on a cash flow basis,
and other risk factors detailed herein and in other filings of
the Company.
Consolidated Balance Sheets
July 28, July 29,
2001 2000
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 31,155,564 $ 25,721,033
Merchandise inventories 30,468,377 31,032,737
Patronage dividend receivable 2,144,993 2,200,646
Other current assets 5,274,198 5,905,609
---------- ----------
Total current assets 69,043,132 64,860,025
PROPERTY, EQUIPMENT AND
FIXTURES, net 86,508,372 80,628,090
OTHER ASSETS
Investment in related
party, at cost 13,113,449 13,113,449
Goodwill, net 10,605,021 10,946,301
Other intangibles, net 200,000 1,522,501
Other assets 3,875,842 4,916,228
---------- ----------
Total other assets 27,794,312 30,498,479
$183,345,816 $175,986,594
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 1,661,359 $ 1,272,686
Capitalized lease obligations 463,138 432,412
Notes payable to related party 602,414 571,614
Accounts payable to related party 28,364,268 28,633,470
Accounts payable and accrued
expenses 20,864,959 23,259,794
---------- ----------
Total current liabilities 51,956,138 54,169,976
LONG-TERM DEBT
Notes payable 36,031,432 34,746,847
Capitalized lease obligations 6,443,071 7,760,163
Notes payable to related party 888,605 1,491,019
---------- ----------
Total long-term debt 43,363,108 43,998,029
Other Liabilities 3,256,979 2,666,300
COMMITMENTS AND CONTINGENCIES (notes 6 and 9)
SHAREHOLDERS' EQUITY
Preferred stock, no par value:
Authorized 10,000,000 shares,
none issued-
Class A common stock, no par
value:
Authorized 10,000,000 shares,
issued 1,762,800 shares 18,129,472 18,129,472
Class B common stock, no par
value: Authorized 10,000,000
shares, issued and outstanding
1,594,076 shares 1,034,679 1,034,679
Retained earnings 70,115,802 60,739,316
Less treasury stock, Class A,
at cost(326,000 shares at
July 28, 2001 and 343,400
shares at July 29, 2000) ( 4,510,362) (4,751,178)
---------- ----------
Total shareholders' equity 84,769,591 75,152,289
$183,345,816 $175,986,594
=========== ===========
See notes to consolidated financial statements.
Consolidated Statements of Operations
Years Ended
July 28, July 29, July 31,
2001 2000 1999
Sales $820,627,178 $784,994,578 $750,679,864
Cost of Sales 619,654,196 593,870,652 571,684,669
----------- ----------- -----------
Gross Profit 200,972,982 191,123,926 178,995,195
Operating and
administrative
expense 174,489,515 166,254,778 157,601,122
Depreciation and
amortization 7,875,059 8,204,456 7,648,644
Non-Cash Impairment
and Special
Charges 1,122,000 - 2,600,000
---------- ---------- ----------
Operating Income 17,486,408 16,664,692 11,145,429
Interest expense, net of
interest income of
$1,007,511,
$797,688 and
$55,812 2,725,021 3,333,114 3,116,442
Gain (Loss) on
Disposal of Assets (35,973) 492,155 -
---------- ---------- ---------
Income Before
Income Taxes 14,725,414 13,823,733 8,028,987
Income Taxes 5,282,112 5,397,487 3,307,010
---------- ---------- ----------
Net Income $ 9,443,302 $ 8,426,246 $ 4,721,977
========== ========== =========
Net Income Per
Share:
Basic $3.13 $2.81 $1.59
Diluted $3.08 $2.76 $1.55
See notes to consolidated financial statements.
Consolidated Statements of Shareholders' Equity
Years Ended July 28, 2001,
July 29, 2000 and July 31, 1999
Class A Class B
Common Stock Common Stock
Retained Treasury
Shares Amount Shares Amount Earnings Stock
Balance,
July
25,
1998 1,762,800 $18,129,472 1,594,076 $1,034,679 $47,758,531 $(5,354,603)
Net
Income - - - - 4,721,977 -
Exercise
of
stock
options - - - - (71,808) 258,808
------- ---------- --------- --------- ---------- ----------
Balance,
July
31,
1999 1,762,800 18,129,472 1,594,076 1,034,679 52,408,700 (5,095,795)
Net
Income - - - - 8,426,246 -
Exercise
of stock
options - - - - (95,630) 344,617
-------- ---------- --------- --------- ---------- ---------
Balance,
July
29,
2000 1,762,800 18,129,472 1,594,076 1,034,679 60,739,316 (4,751,178)
Net
Income - - - - 9,443,302 -
Exercise
of
stock
options - - - - (66,816) 240,816
-------- ---------- --------- --------- --------- --------
Balance,
July
28,
2001 1,762,800 $18,129,472 1,594,076 $1,034,679 $70,115,802 $(4,510,362)
========= ========== ========= ========= ========== ==========
See notes to consolidated financial statements.
Consolidated Statements of Cash Flows
Years Ended
July 28, July 29, July 31,
2001 2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $9,443,302 $8,426,246 $4,721,977
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and amortization 7,875,059 8,204,456 7,648,644
Non-cash impairment charge 1,122,000 - -
Deferred taxes 308,664 359,654 (975,857)
Provision to value inventories
at LIFO 806,993 193,758 593,182
(Gain) loss on disposal of assets 35,973 (492,155) -
Changes in assets and liabilities:
(Increase) in merchandise
inventories (242,633) (1,303,189) (2,667,901)
(Increase) decrease in patronage
dividend receivable 55,653 (472,570) 240,595
(Increase) decrease in other
current assets 631,411 (1,580,630) (276,174)
(Increase) in other assets (454,049) (699,157) (1,500)
Increase (decrease) in accounts
payable to related party (269,202) 1,547,445 (284,317)
Increase (decrease) in accounts
payable and accrued expenses (39,377) (587,547) 6,198,611
Increase in other liabilities 379,390 37,599 -
---------- ---------- ----------
Net cash provided by
operating activities 19,653,184 13,633,910 15,197,260
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (15,069,721)(13,312,329) (7,084,284)
Acquisition of Vineland store - - (4,800,000)
Proceeds from disposal of assets - 872,855 -
---------- ---------- ----------
Net cash used in investing
activities (15,069,721)(12,439,474)(11,884,284)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of
long-term debt 3,000,000 30,000,000 5,931,000
Proceeds from exercise of stock
options 174,000 248,987 187,000
Principal payments of long-term
debt (2,322,932)(15,493,812) (5,338,405)
--------- ---------- ---------
Net cash provided by financing
Activities 851,068 14,755,175 779,595
NET INCREASE IN CASH AND
CASH EQUIVALENTS 5,434,531 15,949,611 4,092,571
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 25,721,033 9,771,422 5,678,851
---------- ---------- ---------
CASH AND CASH EQUIVALENTS,
END OF YEAR $31,155,564 $25,721,033 $9,771,422
========== ========== =========
SUPPLEMENTAL DISCLOSURES OF
CASH PAYMENTS MADE FOR:
Interest
(net of amounts capitalized) $3,748,819 $3,315,784 $3,163,477
Income taxes $5,233,766 $5,248,456 $4,080,631
NONCASH SUPPLEMENTAL DISCLOSURES:
Investment in related party - $1,120,000 $1,178,000
See notes to consolidated financial statements.
Notes to Consolidated Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of operations
Village Super Market, Inc. (the "Company") operates a chain of 22
ShopRite supermarkets in New Jersey and eastern Pennsylvania.
The Company is a member of Wakefern Food Corporation ("Wakefern"),
the largest retailer-owned food cooperative in the United States.
On May 9, 1999, the Company acquired all the assets of an existing
supermarket in Vineland, New Jersey from Wakefern for $3,500,000 plus
the cost of inventory. The transaction was financed in part by a
$3,500,000 loan. The acquisition has been accounted for using the
purchase method and, accordingly, the assets acquired, liabilities
assumed, and results of operations are included in the consolidated
financial statements from the date of acquisition. The purchase
price was allocated to the underlying assets and liabilities based
on their fair values, with the excess recorded as goodwill.
Principles of consolidation
The consolidated financial statements include the accounts of
Village Super Market, Inc. and its subsidiaries, which are
wholly owned. Inter-company balances and transactions have been
eliminated.
Fiscal year
The Company and its subsidiaries utilize a 52-53 week fiscal
year ending on the last Saturday in the month of July. Fiscal
1999 contains 53 weeks. Fiscal 2001 and 2000 contain 52 weeks.
Reclassifications
Certain amounts have been reclassified in the fiscal 2000 and
1999 consolidated financial statements to conform to the fiscal
2001 presentation.
Industry segment
The Company consists of one operating segment, the retail sale
of food and non-food products.
Revenue recognition
Merchandise sales are recognized at the point of sale to
the customer.
Cash and cash equivalents
The Company considers all highly liquid investments purchased
with a maturity of three months or less to be cash equivalents.
Included in cash at July 28, 2001 and July 29, 2000 are
$20,926,000 and $15,291,000, respectively, of demand deposits
invested at Wakefern.
Merchandise inventories
Approximately 65% of merchandise inventories are stated at the
lower of LIFO (last-in, first-out) cost or market. If the FIFO
(first-in, first-out) method had been used, inventories would
have been $9,309,000 and $8,502,000 higher than reported in
fiscal 2001 and 2000, respectively. All other inventories are
stated at the lower of FIFO cost or market.
Property, equipment and fixtures
Property, equipment and fixtures are recorded at cost. Interest
cost incurred to finance construction is capitalized as part of
such cost. Renewals and betterments are capitalized. Maintenance
and repairs are expensed as incurred.
Depreciation is provided on a straight-line basis over estimated
useful lives of thirty years for buildings, ten years for store
fixtures and equipment, and three years for vehicles. Leasehold
improvements are amortized over the shorter of the related lease
terms or the economic lives of the related assets.
When assets are sold or retired, their cost and accumulated
depreciation are removed from the accounts, and any gain or
loss is reflected in the consolidated financial statements.
Store opening and closing costs
All store opening costs are expensed as incurred. Provisions
are made for losses resulting from store closings at the time
a decision to close a store is made. This includes items such
as future lease payments, net of expected sublease recovery,
and charges to reduce assets to net realizable value.
Leases
Leases which meet certain criteria are classified as capital
leases, and assets and liabilities are recorded at amounts
equal to the lesser of the present value of the minimum lease
payments or the fair value of the leased properties at the
inception of the respective leases. Such assets are amortized
on a straight-line basis over the shorter of the related lease
terms or the economic lives of the related assets. Amounts
representing interest expense relating to the lease obligations
are recorded to effect constant rates of interest over the terms
of the leases. Leases which do not qualify as capital leases are
classified as operating leases, and related rentals are charged
to expense as incurred.
Goodwill
Goodwill resulting from the acquisition of the Vineland store in
fiscal 1999 is being amortized over twenty years. Goodwill
arising after October 31, 1970 and before fiscal 1999 is being
amortized over forty years. The Company does not amortize goodwill
amounting to approximately $2,900,000 acquired prior to October 31,
1970 since, in management's opinion, the value of such intangibles
has not diminished. Accumulated amortization of goodwill amounted
to $4,306,960 and $3,965,680 at July 28, 2001 and July 29, 2000,
respectively. The Company regularly assesses the recoverability
of unamortized amounts of goodwill utilizing relevant cash flow
and profitability information. The assessment of the recoverability
of unamortized amounts will be impacted if estimated future
operating cash flows are not achieved.
Other intangibles
At July 28, 2001, other intangibles consists of trademarks acquired
in a business acquisition. In previous fiscal years, other
intangibles also included the fair value of a favorable sublease
acquired in a business acquisition. The Company recorded a non-cash
impairment charge of $1,122,000 in fiscal 2001 to write off the
book value of that favorable sublease due to the bankruptcy of the
sublessor, and its rejection of the sublease in bankruptcy court.
Other intangibles are being amortized over 20 years. Accumulated
amortization of other intangibles amounted to $600,000 and
$3,552,499 at July 28, 2001 and July 29, 2000, respectively.
Advertising
Advertising costs are expensed as incurred. Advertising expense
was $6,402,000, $7,011,000 and $6,501,000 in fiscal 2001, 2000
and 1999, respectively.
Income taxes
Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment
date.
Use of estimates
In conformity with generally accepted accounting principles,
management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities
and the disclosure of contingent assets and liabilities at the
date of the consolidated financial statements and the reported
amounts of expenses during the reporting period. Actual results
could differ from those estimates.
Fair value of financial instruments
Cash and cash equivalents, accounts payable and accrued expenses
are reflected in the consolidated financial statements at carrying
value which approximates fair value because of the short-term
maturity of these instruments. The carrying value of the Company's
short-and long-term notes payable approximates the fair value
based on the current rates available to the Company for similar
instruments. As the Company's investments in Wakefern can only
be sold to Wakefern at amounts that approximate the Company's cost,
it is not practicable to estimate the fair value of such stock.
Impairment of long-lived assets
The Company reviews long-lived assets for impairment when
circumstances indicate the carrying amount of an asset may not
be recoverable. An impairment is recognized to the extent
the sum of undiscounted estimated future cash flow expected
to result from the use of the asset is less than the carrying value.
Net income per share
The number of common shares outstanding for calculation of net
income per share is as follows:
2001 2000 1999
Weighted average shares
outstanding - basic 3,017,862 3,001,493 2,975,233
Dilutive effect of employee
stock options 50,056 49,905 63,789
--------- --------- ---------
Weighted average
shares outstanding - diluted 3,067,918 3,051,398 3,039,022
========= ========= =========
Adoption of New Accounting Standard
In fiscal 2001, the Company adopted the provisions of the Financial
Accounting Standards Boards (FASB) Emerging Issues Task Force
Issue No. 00-14, "Accounting For Certain Sales Incentives." This
pronouncement requires the value of certain sales incentives that
result in a reduction of the price paid by the customer, such as
discounts, coupons, rebates and free products, be netted against
revenue and not classified as a marketing expense. Accordingly,
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. This reclassification had no effect on the
Company's operating income or net income. The amount of such sales
incentives included as a reduction in sales were $18,457,000,
$18,365,000 and $17,459,000 in fiscal 2001, 2000 and 1999,
respectively.
NOTE 2 - PROPERTY, EQUIPMENT AND FIXTURES
Property, equipment and fixtures are comprised as follows:
July 28, July 29,
2001 2000
Land and buildings $52,798,551 $53,191,318
Store fixtures and equipment 62,162,318 66,087,959
Leasehold improvements 30,828,130 28,809,897
Leased property under capital leases 10,334,892 11,268,667
Construction in progress 5,350,765 1,667,345
Vehicles 1,430,969 1,202,773
----------- -----------
162,905,625 162,227,959
Less accumulated depreciation
and amortization 76,397,253 81,599,869
---------- ----------
Property, equipment and fixtures - net $86,508,372 $80,628,090
========== ==========
Interest cost capitalized amounted to $389,000 in fiscal 2001
(none in fiscal 2000 and 1999). Amortization of leased property
under capital leases is included in depreciation and amortization
expense.
NOTE 3 - RELATED PARTY INFORMATION
The Company's ownership interest in its principal supplier, Wakefern,
which is operated on a cooperative basis for its stockholder members,
is less than 20% of the outstanding shares of Wakefern. The investment
is pledged as collateral for any obligations to Wakefern. In addition,
this obligation is personally guaranteed by the principal shareholders
of the Company. The Company is obligated to purchase 85% of its
primary merchandise requirements from Wakefern, until ten years from
the date that stockholders representing 75% of Wakefern sales notify
Wakefern that those stockholders request that the Wakefern Stockholder
Agreement be terminated. The Company also has an investment of less
than 20% in Insure-Rite, Ltd., a Wakefern affiliated company, that
provides the Company with liability and property insurance coverage.
The Company purchases substantially all of it's merchandise from
Wakefern. Wakefern distributes as a "patronage dividend" to each
member a share of earnings of Wakefern in proportion to the dollar
volume of business done by the member with Wakefern during the year.
Patronage dividends, which are recorded as a reduction of cost of
sales, amounted to $8,551,000, $8,658,000 and $7,419,000 in fiscal
2001, 2000 and 1999, respectively.
Wakefern has increased from time to time the required investment
in its common stock for each supermarket owned by a member, with
the exact amount per store computed in accordance with a formula
based on the volume of each store's purchases from Wakefern up to
a maximum of $550,000. At July 28, 2001, the Company's indebtedness
to Wakefern for the outstanding amount of this stock subscription
was $1,491,019. Installment payments are due as follows: 2002 -
$602,414; 2003 - $396,760; 2004 - $299,845; 2005 - $91,000; 2006 -
$91,000; and thereafter - $10,000. The Company will receive
additional shares of common stock to the extent paid for at the
end of each fiscal year (September 30) of Wakefern calculated at
the then book value of such shares. The payments, together with
any stock issued thereunder, at the option of Wakefern, may be
null and void and all payments on this subscription shall become
the property of Wakefern in the event the Company does not
complete the payment of this subscription in a timely manner.
NOTE 4 - NOTES PAYABLE
July 28, July 29,
2001 2000
Senior notes payable (a) $30,000,000 $30,000,000
Notes payable, interest at
4.39% to 7.90%, payable in
monthly installments through
April 2008, collateralized
by certain equipment 7,692,791 6,019,533
---------- ----------
37,692,791 36,019,533
Less current portion 1,661,359 1,272,686
---------- ----------
$36,031,432 $34,746,847
========== ==========
Aggregate principal maturities of notes payable as of
July 28, 2001 are as follows:
Year ending July:
2002 $1,661,359
2003 1,741,251
2004 5,711,622
2005 5,559,160
2006 4,926,568
Thereafter 18,092,831
(a) On September 16, 1999, the Company issued $30,000,000 of 8.12%
unsecured Senior Notes. Interest on these notes is due semi-annually.
The principal is due in equal annual installments beginning
September 16, 2003.
On September 16, 1999, the Company also entered into an unsecured revolving
loan agreement in the amount of $15,000,000. This agreement expires
September 16, 2003, with a one-year extension available if exercised by
both parties. The revolving credit line can be used for any purpose except
new store construction. Indebtedness under this agreement bears interest at
the prime rate or at the Eurodollar rate, at the Company's option, plus
applicable margins based on the Company's fixed charge coverage ratio.
At July 28, 2001, the Company was in compliance with all terms and
covenants of all debt agreements. These agreements contain
restrictive covenants which, among other matters, specify total
debt levels, maintenance of net worth, fixed charge coverage ratios,
limitation on payment of dividends and limitation of capital
expenditures.
The revolving loan agreement provides a maximum commitment for
letters of credit of $3,000,000 ($1,720,000 outstanding at
July 28, 2001) to secure obligations for the Company's self-insured
workers' compensation claims and for construction performance
guarantees to municipalities.
NOTE 5 - INCOME TAXES
The components of the provision for income taxes are:
2001 2000 1999
Federal:
Current $4,844,006 $4,653,754 $3,267,396
Deferred 241,443 196,583 (721,444)
State:
Current 129,442 384,079 1,015,471
Deferred 67,221 163,071 (254,413)
--------- --------- ---------
$5,282,112 $5,397,487 $3,307,010
========= ========= =========
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income
tax purposes. Significant components of the Company's deferred tax
liabilities and assets are as follows:
July 28, July 29,
2001 2000
Deferred tax liabilities:
Tax over book depreciation $4,439,205 $4,455,098
Patronage dividend receivable 759,106 780,024
Other 591,339 613,862
--------- ---------
Total deferred tax liabilities 5,789,650 5,848,984
Deferred tax assets:
Amortization of capital leases 1,380,873 1,523,150
Accrual for special charges 830,000 830,000
Other 609,684 835,405
--------- ---------
Total deferred tax assets 2,820,557 3,188,555
--------- ---------
Net deferred tax liability $2,969,093 $2,660,429
========= =========
Long-term deferred taxes of $2,839,990 and $2,628,701 are included
in other long-term liabilities at July 28, 2001 and July 28, 2000,
respectively. Current deferred taxes of $129,103 and $31,728 are
included in accrued expenses at July 28, 2001 and July 29, 2000,
respectively.
A valuation allowance is provided when it is more likely than not
that some portion of the deferred tax assets will not be realized.
In management's opinion, in view of the Company's previous, current
and projected taxable income, such tax assets will more likely than
not be fully realized. Accordingly, no valuation allowance was
deemed to be required at July 28, 2001 and July 29, 2000.
The effective income tax rate differs from the statutory federal
income tax rate as follows:
2001 2000 1999
Statutory federal income tax rate 35.0% 35.0% 34.0%
Amortization of intangibles .6 .7 1.1
State income taxes, net of federal tax benef .9 2.6 6.3
Other (.6) .7 (.2)
----- ----- -----
Effective income tax rate 35.9% 39.0% 41.2%
===== ===== =====
NOTE 6 - LONG-TERM LEASES
Description of leasing arrangements
The Company conducts a major part of its operations from leased
facilities, with the majority of initial lease terms ranging from
20 to 30 years. All of the Company's leases expire through fiscal
2059.
Most of the Company's leases contain renewal options of five years
each. These options enable the Company to retain the use of
facilities in desirable operating areas. Management expects that
in the normal course of business, most leases will be renewed or
replaced by other leases. The Company is obligated under all leases
to pay for real estate taxes, utilities and liability insurance,
and under certain leases to pay additional amounts based on
maintenance, insurance and a percentage of sales in excess of
stipulated amounts.
Future minimum lease payments by year and in the aggregate for
all non-cancelable leases with initial terms of one year or more
consisted of the following at July 28, 2001:
Capital Operating
Leases Leases
2002 $ 1,603,380 $ 4,983,648
2003 1,603,380 4,763,750
2004 1,603,380 4,550,218
2005 1,614,800 4,370,404
2006 1,545,789 4,027,112
Thereafter 5,913,030 62,775,997
---------- ----------
Minimum lease payments 13,883,759 $85,471,129
Less amount representing interest 6,977,550 ==========
----------
Present value of minimum lease payments 6,906,209
Less current portion 463,138
---------
$6,443,071
=========
The following schedule shows the composition of total
rental expense under operating leases for the following periods:
2001 2000 1999
Minimum rentals $5,602,486 $4,554,604 $3,882,620
Contingent rentals 934,970 974,926 865,500
--------- --------- ---------
$6,537,456 $5,529,530 $4,748,120
========= ========= =========
Related party leases
The Company currently leases two supermarkets, storage space and
its office facility from realty firms partly or wholly-owned by
officers of the Company. The Company paid aggregate rentals under
these leases, including minimum rent and contingent rent, of
approximately $1,152,000, $1,243,000 and $1,242,000 for fiscal
years 2001, 2000 and 1999, respectively. In addition, two
supermarkets are leased from partnerships in which the Company
is a partner.
The Company leases the Vineland store from Wakefern, the previous
owner, under a sublease agreement which provides for annual rent
of $650,000.
NOTE 7 - COMMON STOCK
Class A common stock has one vote per share and is entitled to cash
dividends as declared 54% greater than those paid on the Class B
common stock. Class B common stock has ten votes per share.
Class B common stock is not transferrable except to another holder
of Class B common stock or by will or under the laws of intestacy
or pursuant to a resolution of the Board of Directors of the
Company approving the transfer. Shares of Class B common stock
are convertible on a share-for-share basis for Class A common stock.
The 1997 Incentive and Non-Statutory Stock Option Plan provides for
the granting of options or stock appreciation rights to purchase up
to 250,000 shares of the Company's Class A common stock by officers,
employees and directors of the Company as designated by the Board
of Directors. The Plan requires incentive stock options to be granted
at exercise prices equal to the fair market value of the Company's
stock at the date of grant (110% if the optionee holds more than 10%
of the voting stock of the Company), while non-statutory options may
be granted at an exercise price less than market value. All options
granted to date were at market value and are exercisable up to 10
years from the date of the grant.
The following table summarizes option activity for the following
periods:
2001 2000 1999
Shares Weighted Shares Weighted Shares Weighted
average average average
exercise exercise exercise
price price price
Outstanding
at beginning
of year 184,400 $10.14 205,300 $10.05 219,000 $10.00
Granted - - 4,000 13.00 5,000 12.85
Exercised (17,400) 10.00 (24,900) 10.00 (18,700) 10.00
Cancelled - - - - - -
------ ----- ------ ----- ------ -----
Outstanding
at end
of year 167,000 $10.13 184,400 $10.14 205,300 $10.05
======= ===== ======= ===== ======= =====
Options
exercisable
at end
of year 167,000 $10.13 180,400 $10.08 200,300 $10.00
======= ===== ======= ===== ======= =====
At July 28, 2001 and July 29, 2000, the weighted-average remaining
contractual life of outstanding options was 6.3 and 7.3 years,
respectively, and the exercise prices ranged from $10.00 to $13.00.
The Company has adopted the disclosure only provisions of
SFAS No. 123, "Accounting for Stock-Based Compensation." In
accordance with the provisions of SFAS No. 123, the Company
applied APB Opinion 25's intrinsic value method of accounting
for stock options. Accordingly, compensation cost for stock
options is measured as the excess, if any, of the quoted market
price of the Company's stock at the date of grant over the
amount an employee may pay to acquire the stock. As all stock
options have been granted at fair market value at the date of grant,
no compensation expense has been recorded in the Company's
consolidated financial statements.
If the Company had elected to recognize compensation costs based on
the fair value of the options granted as prescribed by SFAS No. 123,
fiscal 2001, 2000 and 1999 results would be reduced to the following
pro forma amounts: net income - $9,443,000, $8,412,000 and $4,604,000;
net income per share, basic - $3.13, $2.80 and $1.55; and net income
per share, diluted - $3.08, $2.76 and $1.51. The fair value of options
granted was estimated at $3.57 using the Black-Scholes Option Pricing
Model with the following assumptions used for fiscal 2000 and 1999
grants: risk-free interest rate of 6.0%; expected life of 6 years;
expected dividend rate of zero; and expected volatility of 20.9%.
NOTE 8 - PENSION PLANS
The Company sponsors three defined benefit pension plans covering
administrative personnel and members of two unions. Employees covered
under the administrative pension benefit plan earn benefits based
upon percentages of annual compensation. Employees covered under the
union pension benefit plans earn benefits based on a fixed amount for
each year of service. The Company's funding policy is to pay at least
the minimum contribution required by the Employee Retirement Income
Security Act of 1974.
Net periodic pension cost for the three plans included the
following components:
2001 2000 1999
Service cost 624,916 $523,532 $610,517
Interest cost on projected benefit
obligation 690,064 712,678 614,941
Expected return on plan assets (855,794) (881,218) (804,656)
Net amortization and deferral (8,662) (12,052) (14,150)
------- ------- -------
Net periodic pension cost $450,524 $342,940 $406,652
======= ======= =======
The changes in benefit obligations and the reconciliation of the
funded status of the Company's plans to the consolidated balance
sheets were as follows:
2001 2000
Change in Benefit Obligation:
Benefit obligation at
beginning of year $10,960,792 $9,614,137
Service cost 624,916 523,532
Interest cost 690,064 712,678
Benefits paid (425,333) (832,777)
Actuarial (gain) loss (1,124,176) 943,222
---------- ----------
Benefit obligation at end of year $10,726,263 $10,960,792
========== ==========
Change in Plan Assets:
Fair value of plan at
beginning of year $10,217,541 $10,087,841
Actual return on plan assets (430,372) 416,780
Employer contributions 76,462 545,697
Benefits paid (425,333) (832,777)
--------- ----------
Fair value of plan assets at
end of year $9,438,298 $10,217,541
========= ==========
Fair value of plan assets (less)
than benefit obligation $(1,287,965) $(743,251)
Unrecognized net loss 894,886 760,664
--------- -------
Prepaid (Accrued) pension cost $(393,079) $17,413
======== ======
Change in Prepaid (Accrued) Pension Cost:
Prepaid (Accrued) pension
cost at beginning of year $17,413 $(125,450)
Net periodic pension cost (450,524) (342,940)
Additional liability (36,430) (59,894)
Contributions 76,462 545,697
------- -------
Prepaid (Accrued) pension cost
at end of year $(393,079) $17,413
======= ======
Plan assets are invested principally in government securities, common
stocks and mutual funds.
Assumptions used in determining the net fiscal 2001, 2000 and 1999
periodic pension cost were as follows:
Assumed discount rate 7.25%
Assumed rate of increase in compensation levels 4%
Expected rate of return on plan assets 8.0 to 8.5%
The Company also participates in several multiemployer pension plans
for which the fiscal 2001, 2000 and 1999 contributions were $1,809,000,
$1,737,000 and $1,586,000, respectively.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
The Company is involved in litigation incidental to the normal course of
business. Company management is of the opinion that the ultimate
resolution of these legal proceedings should not have a material adverse
effect on the consolidated financial position, results of operations or
liquidity of the Company.
NOTE 10 - SPECIAL CHARGE
The Company recorded a charge to earnings of $2,600,000 in the fourth
quarter of fiscal 1999 to reflect the impact of a court decision
regarding the contract price of a property in Garwood and Westfield,
New Jersey. This charge was taken as the Company did not believe the
additions to the purchase price of the property as a result of the
litigation were recoverable from the development of the superstore on
this property.
In March 2000, the Company acquired only the property in Garwood for
$4,585,000 as a final settlement with the property owner. Construction
of a new superstore commenced in October 2000 and was completed in
September 2001.
Independent Auditors' Report
The Board of Directors and Shareholders
Village Super Market, Inc.:
We have audited the accompanying consolidated balance sheets of Village
Super Market, Inc. and subsidiaries as of July 28, 2001 and July 29,
2000, and the related consolidated statements of operations,
shareholders' equity, and cash flows for each of the years in the
three-year period ended July 28, 2001. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Village Super Market, Inc. and subsidiaries as of July 28, 2001 and
July 29, 2000, and the results of their operations and their cash
flows for each of the years in the three-year period ended July 28,
2001, in conformity with accounting principles generally accepted in
the United States of America.
KPMG LLP
Short Hills, New Jersey
October 2, 2001
Stock Price and Dividend Information
The Class A common stock of Village Super Market, Inc. is traded on the
NASDAQ National Market tier of the NASDAQ Stock Market under the symbol
"VLGEA." The table below sets forth the high and low last reported
sales price for the fiscal year indicated.
Class A Stock
High Low
2001
4th Quarter 20.20 14.50
3rd Quarter 14.70 13.50
2nd Quarter 14.37 13.00
1st Quarter 13.00 11.75
2000
4th Quarter 14 12-1/2
3rd Quarter 14-3/4 12-3/4
2nd Quarter 14-1/4 12-7/8
1st Quarter 15-3/4 12-1/8
As of October 1, 2001, there were 493 holders of record of the
Company's Class A common stock.
No dividends were paid during fiscal 2001 and 2000.
Village Super Market, Inc.
CORPORATE DIRECTORY
OFFICERS AND DIRECTORS
PERRY SUMAS
Chief Executive Officer and President; Director
JAMES SUMAS
Chairman of the Board; Chief Operating Officer and Treasurer; Director
ROBERT SUMAS
Executive Vice President and Secretary; Director
WILLIAM SUMAS
Executive Vice President; Director
JOHN SUMAS
Executive Vice President; Director
CAROL LAWTON
Vice President and Assistant Secretary
KEVIN BEGLEY
Chief Financial Officer
GEORGE J. ANDRESAKES
Director
JOHN J. McDERMOTT
Director
NORMAN CRYSTAL
Director
EXECUTIVE OFFICES
733 Mountain Avenue
Springfield, New Jersey 07081
REGISTRAR AND TRANSFER AGENT
First City Transfer Company
P.O. Box 170
Iselin, New Jersey 08330
AUDITORS
KPMG LLP
150 John F. Kennedy Parkway
Short Hills, New Jersey 07078
FORM 10-K
Copies of the Company's Form 10-K as filed with the Securities
and Exchange Commission are available without charge upon written
request to:
Mr. Robert Sumas, Secretary
Village Super Market, Inc.
733 Mountain Avenue
Springfield, New Jersey 07081
Exhibit 23
Independent Auditors' Consent
The Board of Directors
Village Super Market, Inc.:
We consent to incorporation by reference in the Registration
Statement (No. 2-86320) on Form S-8 of Village Super Market, Inc.
of our report dated October 2, 2001, relating to the consolidated
balance sheets of Village Super Market, Inc. and subsidiaries as
of July 28, 2001 and July 29, 2000 and the related consolidated
statements of operations, shareholders' equity, and cash flows
for each of the years in the three-year period ended July 28, 2001,
which report is incorporated by reference in the July 28, 2001
annual report on Form 10-K of Village Super Market, Inc.
KPMG LLP
Short Hills, New Jersey
October 24, 2001
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
By: /s/ Kevin Begley By: /s/ Perry Sumas
Kevin Begley Perry Sumas
Chief Financial & Chief Executive Officer
Principal Accounting Officer
Date: October 24, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on dates indicated:
Village Super Market, Inc.
/s/ Perry Sumas /s/ James Sumas
Perry Sumas, Director James Sumas, Director
October 24, 2001 October 24, 2001
/s/ Robert Sumas /s/ William Sumas
Robert Sumas, Director William Sumas, Director
October 24, 2001 October 24, 2001
/s/ John P. Sumas /s/ John J. McDermott
John P. Sumas, Director John J. McDermott, Director
October 24, 2001 October 24, 2001
/s/ George Andresakes /s/ Norman Crystal
George Andresakes, Director Norman Crystal, Director
October 24, 2001 October 24, 2001
Exhibit 21
SUBSIDIARIES OF REGISTRANT
The Company has two wholly-owned subsidiaries at July 28, 2001.
Village Super Market of PA, Inc., which is organized under the
laws of Pennsylvania and Village Super Market of NJ, L.P.,
which is organized under the laws of New Jersey.
The financial statements of all subsidiaries are included in the
Company's consolidated financial statements.
Exhibit 99
VILLAGE SUPER MARKET, INC.
REPORTS RECORD RESULTS FOR THE FOURTH QUARTER & YEAR ENDED
JULY 28, 2001
Contact: Kevin Begley, C.F.O.
(973) 467-2200, Ext. 220
Springfield, New Jersey - October 2, 2001 - Village Super Market,
Inc. reported record sales and net income for the fourth quarter
and year ended July 28, 2001, Perry Sumas, President announced
today.
Net income was a record $3,556,000 ($1.15 per diluted share) in
the fourth quarter of fiscal 2001, an increase of 28% from the
prior year. Sales in the fourth quarter were $210,666,000, an
increase of 5.4% from the prior year. The net income improvement
in the fourth quarter is attributable to a 4.0% increase in
comparable store sales and higher gross profit percentages,
partially offset by increased operating expenses.
Net income for the fiscal year increased to a record $9,443,000
($3.08 per diluted share), an increase of 12% from the prior year.
Excluding a non-cash impairment charge in the current year, net
income increased 21%. Sales for fiscal 2001 were $820,627,000,
an increase of 4.5%. Comparable store sales increased 3.6% for
the fiscal year. In addition, sales increased due to the opening
of a replacement store in West Orange early in the fiscal year.
The increase in net income for the fiscal year was primarily
attributable to the increased comparable store sales, increased
gross profit percentages and a lower effective tax rate, partially
offset by increased operating costs.
Village Super Market operates a chain of 23 supermarkets (including
a store in Garwood, N.J. that opened September 26, 2001) under the
ShopRite name in New Jersey and eastern Pennsylvania. The following
table summarizes the results for the quarter and year ended July 28,
2001:
July 28, 2001 July 29, 2000
Quarter Ended
Sales $210,666,000 $199,845,000
Net Income $ 3,556,000 $ 2,788,000
Net Income Per Share - Basic $ 1.17 $ .93
Net Income Per Share - Diluted $ 1.15 $ .91
Year Ended
Sales $820,627,000 $784,995,000
Net Income $ 9,443,000 $ 8,426,000
Net Income Per Share - Basic $ 3.13 $ 2.81
Net Income Per Share - Diluted $ 3.08 $ 2.76
FORWARD-LOOKING STATEMENTS:
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 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,
availability of capital, the liquidity of the Company on a cash
flow basis, the success of operating initiatives, and other risk
factors detailed in the Company's filings with the SEC.