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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: January 29, 2005
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 by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes____ No _X_
Indicate the number of shares outstanding of the issuer's classes of common
stock as of the latest practicable date:
March 4, 2005
Class A Common Stock, No Par Value 1,579,200 Shares
Class B Common Stock, No Par Value 1,594,076 Shares
VILLAGE SUPER MARKET, INC.
INDEX
PART I PAGE NO.
FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Condensed Balance Sheets . . . . . . . . . . . . . . 3
Consolidated Condensed Statements of Operations . . . . . . . . . 4
Consolidated Condensed Statements of Cash Flows . . . . . . . . . 5
Notes to Consolidated Condensed Financial Statements . . . . . . 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . 7-13
Item 3. Quantitative & Qualitative Disclosures about Market Risk . . . . 14
Item 4. Controls and Procedures . . . . . . . . . . . . . . . . . . . . 14-15
PART II
OTHER INFORMATION
Item 6. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
VILLAGE SUPER MARKET, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
January 29, July 31,
2005 2004
ASSETS
Current assets
Cash and cash equivalents $ 61,721 $ 36,972
Merchandise inventories 31,465 30,976
Patronage dividend receivable 2,424 5,366
Note receivable from related party --- 20,274
Other current assets 7,478 6,195
--------- ---------
Total current assets 103,088 99,783
Property, equipment and fixtures, net 116,997 101,143
Investment in related party, at cost 15,879 15,875
Goodwill 10,605 10,605
Other assets 3,073 4,019
--------- ---------
TOTAL ASSETS $ 249,642 $ 231,425
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 7,481 $ 7,741
Accounts payable to related party 37,353 32,858
Accounts payable and accrued expenses 27,655 27,298
--------- ---------
Total current liabilities 72,489 67,897
Long-term debt 34,958 29,238
Other liabilities 15,243 14,199
Shareholders' equity
Class A common stock - no par value,
issued 1,762,800 shares 19,246 19,037
Class B common stock - no par value,
issued and outstanding 1,594,076 shares 1,035 1,035
Retained earnings 111,871 105,502
Accumulated other comprehensive loss (2,660) (2,660)
Less cost of Class A treasury shares -
(183,600 shares at January 29, 2005 and
204,100 shares at July 31, 2004) (2,540) (2,823)
--------- ---------
Total shareholders' equity 126,952 120,091
--------- ---------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 249,642 $ 231,425
========= =========
See accompanying Notes to Consolidated Condensed Financial Statements.
VILLAGE SUPER MARKET, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)
13 Wks. Ended 13 Wks. Ended 26 Wks. Ended 26 Wks. Ended
Jan. 29, 2005 Jan. 24, 2004 Jan. 29, 2005 Jan. 24, 2004
Sales $ 255,992 $ 242,209 $ 493,344 $ 468,943
Cost of sales 190,570 180,104 368,048 349,690
--------- --------- --------- ---------
Gross profit 65,422 62,105 125,296 119,253
Operating and
administrative expense 56,122 52,865 108,679 102,907
Depreciation and
amortization 2,779 2,263 5,160 4,479
--------- --------- --------- ---------
Operating income 6,521 6,977 11,457 11,867
Interest expense, net 646 592 1,027 1,213
Income from partnership 1,509 ---- 1,509 ----
--------- --------- --------- ---------
Income before
income taxes 7,384 6,385 11,939 10,654
Income taxes 3,027 2,734 4,895 4,484
--------- --------- --------- ---------
Net income $ 4,357 $ 3,651 $ 7,044 $ 6,170
========= ========= ========= =========
Net income per share:
Basic $ 1.38 $ 1.18 $ 2.23 $ 2.00
Diluted $ 1.37 $ 1.16 $ 2.21 $ 1.96
See accompanying Notes to Consolidated Condensed Financial Statements.
VILLAGE SUPER MARKET, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
26 Weeks Ended 26 Weeks Ended
January 29, 2005 January 24, 2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,044 $ 6,170
Adjustments to reconcile net income to net
cash provided by operating activities:
Income from partnership ( 1,509) ---
Depreciation and amortization 5,160 4,479
Deferred taxes 619 660
Provision to value inventories at LIFO 650 675
Tax benefit from exercise of stock options 192 137
Non-cash stock compensation 17 46
Changes in assets and liabilities:
(Increase) in merchandise inventories ( 1,139) ( 1,138)
Decrease in patronage dividend receivable 2,942 2,592
(Increase) in other current assets ( 1,283) ( 400)
(Increase) in other assets ( 81) ( 45)
Increase in accounts payable to related party 4,495 4,467
Increase in accounts payable and accrued expenses 357 5,340
Increase in other liabilities 425 269
--------- ---------
Net cash provided by operating activities 17,889 23,252
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturity of (investment in) note receivable
from related party 20,274 ( 20,042)
Proceeds from partnership distribution 2,516 ---
Capital expenditures ( 9,612) ( 4,938)
--------- ---------
Net cash provided by (used in) investing activities 13,178 ( 24,980)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 262 220
Principal payments of long-term debt ( 5,926) ( 5,999)
Dividends ( 654) ( 357)
--------- ---------
Net cash used in financing activities ( 6,318) ( 6,136)
--------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 24,749 ( 7,864)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 36,972 48,500
---------- ----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 61,721 $ 40,636
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH
PAYMENTS FOR:
Interest $ 1,593 $ 1,508
Income taxes $ 4,856 $ 1,029
NON-CASH SUPPLEMENTAL DISCLOSURE:
Investment in related party $ 4 $ ---
Capital lease obligation incurred $ 11,382 $ ---
See accompanying Notes to Consolidated Condensed Financial Statements.
VILLAGE SUPER MARKET, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. In the opinion of management, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of normal and
recurring accruals) necessary to present fairly the consolidated financial
position as of January 29, 2005 and the consolidated results of operations and
cash flows for the thirteen and twenty-six week periods ended January 29, 2005
and January 24, 2004.
The significant accounting policies followed by Village Super Market, Inc.
(the "Company") are set forth in Note 1 to the Company's consolidated financial
statements included in the July 31, 2004 Village Super Market, Inc. Annual
Report on Form 10-K, which should be read in conjunction with these financial
statements.
2. The results of operations for the period ended January 29, 2005 are not
necessarily indicative of the results to be expected for the full fiscal year.
3. At both January 29, 2005 and July 31, 2004, approximately 70% 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 $11,764,000 and $11,114,000 higher than reported at
January 29, 2005 and July 31, 2004, respectively.
4. The number of common shares outstanding for calculation of net income per
share is as follows:
13 Weeks Ended 26 Weeks Ended
1/29/05 1/24/04 1/29/05 1/24/04
Weighted average shares outstanding - Basic 3,162,584 3,094,518 3,157,779 3,092,029
Dilutive effect of employee stock options 27,310 51,143 25,357 49,114
--------- --------- --------- ---------
Weighted average shares outstanding - Diluted 3,189,894 3,145,661 3,183,136 3,141,143
========= ========= ========= =========
No potential common shares were excluded from the calculation of diluted
earnings per share.
5. Comprehensive income was $4,357,000 and $7,044,000 for the quarter and
six-month periods ended January 29, 2005, and $3,651,000 and $6,170,000 for the
quarter and six-month periods ended January 24, 2004.
6. The Company sponsors four defined benefit pension plans. Net periodic
pension costs for the four plans includes the following components:
13 Weeks Ended 26 Weeks Ended
1/29/05 1/24/04 1/29/05 1/24/04
Service cost $ 396,000 $ 195,000 $ 792,000 $ 390,000
Interest cost on projected
benefit obligations 280,000 250,000 560,000 500,000
Expected return on plan assets (186,000) (174,000) (372,000) (348,000)
Net amortization and deferral 110,000 61,000 220,000 122,000
-------- -------- --------- --------
Net periodic pension cost $ 600,000 $ 332,000 $1,200,000 $ 664,000
======== ======== ========= ========
As of January 29, 2005, the Company has contributed $1,730,000 to its
pension plans in fiscal 2005. The Company expects to contribute an additional
$656,000 during the remainder of fiscal 2005 to fund its pension plans.
7. The Company closed a stand-alone drugstore on December 5, 2004. The
Company remains obligated for future lease commitments for the closed store. In
accordance with Statement of Financial Accounting Standards No. 146, Accounting
for Costs Associated with Exit or Disposal Activities, the Company recorded a
charge in the second quarter of fiscal 2005 for future lease obligations, net of
estimated sublease rentals, in the amount of $463,000. This charge is included
in operating and administrative expense in the consolidated statement of
operations. As of January 29, 2005, $58,000 of these costs have been incurred,
with a remaining liability of $405,000.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The Company operates a chain of 23 Shop Rite supermarkets in New Jersey
and eastern Pennsylvania. The Company is the second largest member of Wakefern
Food Corporation ("Wakefern"), the nation's largest retailer-owned food
cooperative. As further described in the Company's Form 10-K, this ownership
interest in Wakefern provides the Company many of the economies of scale in
purchasing, distribution, advanced retail technology and advertising associated
with larger chains.
The Company's stores, five of which are owned, average 55,000 total square
feet. Larger store sizes enable the Company to offer the specialty departments
that customers desire for one-stop shopping, including pharmacies, natural and
organic departments, ethnic and international foods, and home meal replacement.
On October 27, 2004, the Company opened an 80,000 square foot store in Somers
Point, New Jersey to replace a smaller store.
We consider a variety of indicators to evaluate our performance, such as
same store sales; sales per store; percentage of total sales by department;
shrink; departmental gross profit percentage; sales per labor hour; and hourly
labor rates. In recent years, the Company, as well as many of our competitors,
has faced substantial increases in employee health and pension costs under union
contracts and for non-union associates.
RESULTS OF OPERATIONS
Sales. Sales were $255,992,000 in the second quarter of fiscal 2005, an
increase of 5.7% from the second quarter of the prior year. Sales increased due
to the opening of the Somers Point replacement store on October 27, 2004 and a
4.7% increase in same store sales, partially offset by the closing of a
stand-alone drug store. Approximately 31% of the improvement in same store
sales was due to higher sales in the recently remodeled Bernardsville store. In
addition, same store sales increased due to continued improvement in stores
opened and remodeled in recent fiscal years and increases in retail prices in
certain categories resulting from inflation. New stores and replacement stores
are included in same store sales in the quarter after the store has been in
operation for four full quarters. Store renovations are included in same store
sales immediately.
Sales were $493,344,000 for the six-month period of fiscal 2005, an
increase of 5.2% from the prior year. Same stores sales, which exclude the
Somers Point replacement store and the closed stand-alone drugstore, increased
4.7%. Same store sales increased due to higher sales in the recently remodeled
Bernardsville store, continued improvement in stores opened and remodeled in
recent fiscal years and increases in retail prices in certain categories
resulting from inflation.
Gross Profit. Gross profit as percentage of sales was 25.6% in both the
second quarter of fiscal 2005 and the second quarter of the prior year. As a
percentage of sales, gross profit increased primarily due to improved product
mix and reduced warehousing and related charges from Wakefern (.03%). These
improvements were offset by increased promotional spending (.35%).
Gross profit as a percentage of sales was 25.4% in both the six-month
period of fiscal 2005 and the corresponding period of the prior year. As
percentage of sales, gross profit increased primarily due to reduced warehousing
and related charges from Wakefern (.12%) and improved product mix. These
improvements were offset by increased promotional spending (.23%).
Operating and Administrative Expense. Operating and administrative
expense as a percentage of sales increased to 21.9% in the second quarter of
fiscal 2005 compared to 21.8% in the second quarter of the prior fiscal year.
As a percentage of sales, operating and administrative expense increased
primarily due to a charge for future lease obligations, net of estimated
sublease rentals, of the closed, stand-alone drugstore (.18%) and increased
supply costs (.10%). These increases were partially offset by decreased
occupancy costs as the Somers Point replacement store is a capital lease rather
than an operating lease (.06%) and the leverage provided by spreading fixed
costs over a higher sales base.
Operating and administrative expense as a percentage of sales increased to
22.0% in the six-month period of fiscal 2005 compared to 21.9% in the
corresponding period of the prior year. As a percentage of sales, operating and
administrative expense increased primarily due to the charge for future lease
obligations of the closed, stand-alone drugstore (.09%), fringe benefit costs
increases (.06%), supply cost increases (.07%) and Somers Point pre-opening
costs (.03%). These increases were partially offset by the leverage provided
by spreading fixed costs over a higher sales base.
Depreciation and Amortization. Depreciation and amortization expense
increased in the second quarter and six-month periods of fiscal 2005 compared to
the corresponding periods of the prior year due to depreciation on the fixed
asset additions related to the expansion and remodel of the Bernardsville store
and the Somers Point replacement store and adjustments to the depreciable lives
of leasehold improvements amounting to $137,000.
Interest Expense. Interest expense, net of interest income, increased to
$646,000 in the second quarter of fiscal 2005 compared to $592,000 in the second
quarter of the prior fiscal year due to interest expense of $303,000 for the
Somers Point replacement store capital lease, partially offset by reduced
borrowing levels in the current fiscal year and increased interest income from
higher rates received on excess cash invested at Wakefern.
Interest expense, net of interest income, decreased to $1,027,000 in the
six-month period of fiscal 2005 compared to $1,213,000 in the corresponding
period of the prior fiscal year due to reduced borrowing levels in the current
fiscal year and increased interest income from higher rates received on excess
cash invested at Wakefern. These increases were partially offset by interest
expense of $303,000 on the Somers Point replacement store capital lease.
Income from Partnership. The Company is a limited partner in a real
estate partnership that sold its only asset and distributed the net proceeds to
the partners in January 2005. The Company has not deposited the $3,096,000
proceeds received from the partnership in January 2005 on the advice of legal
counsel, as the Company contends it is entitled to a larger portion of the
proceeds. The Company expects to resolve this matter for no less than the
$3,096,000 received. As the proceeds were received prior to January 29, 2005,
the Company has recorded these proceeds as cash in the second quarter of fiscal
2005 and recorded income from the partnership of $1,509,000 ($890,000 after
tax), which is the excess of the proceeds above the Company's investment in the
partnership and certain receivables due from the partnership.
Income Taxes. The effective income tax rate decreased to 41.0% in both
the second quarter and six-month periods of fiscal 2005 compared to 42.8% and
42.1%, respectively, in the corresponding periods of the prior year. These
decreases are due to the prior fiscal year including additional taxes paid as a
result of routine tax audits.
Net Income. Net income was $4,357,000 in the second quarter of fiscal
2005, an increase of 19% from the second quarter of the prior year. Excluding
the $890,000 after-tax effect on net income from partnership income in fiscal
2005, pro forma net income would have decreased 5% to $3,467,000 from
$3,651,000. Management believes this is a more appropriate comparison of
operating results, as the partnership income is not expected to recur in the
future. This decrease is primarily attributable to the charge for future lease
obligations of the closed stand-alone drugstore.
CRITICAL ACCOUNTING POLICIES
Critical accounting policies are those accounting policies that management
believes are important to the portrayal of the Company's financial condition and
results of operations. These policies require management's most difficult,
subjective or complex judgments, often as a result of the need to make estimates
about the effect of matters that are inherently uncertain. The Company's
critical accounting policies relating to the impairment of long-lived assets,
accounting for patronage dividends earned as a stockholder of Wakefern, and
accounting for pension plans are described in the Company's Annual Report on
Form 10-K for the year ended July 31, 2004. As of January 29, 2005, there have
been no changes to any of the critical accounting policies contained therein.
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $17,889,000 for the
six-month period ended January 29, 2005 compared with $23,252,000 for the
six-month period ended January 24, 2004. This decrease is attributable to
less of an increase in accounts payable and accrued expenses in the current
fiscal year than in the prior fiscal year due to the timing of payments.
During the first six months of fiscal 2005, the Company used $17,889,000
of operating cash flow and $2,516,000 of proceeds from a partnership
distribution to fund capital expenditures of $9,612,000, debt payments of
$5,926,000 and dividends of $654,000. In addition, a $20,274,000 note
receivable from Wakefern matured January 15, 2005 and is included as a cash
equivalent at January 29, 2005 as these funds are invested in a demand deposit
at Wakefern. Major capital expenditures for the six-month period were the
expansion and remodel of the Bernardsville store and equipment for the Somers
Point replacement store. Debt payments included the second installment of
$4,286,000 on the Company's unsecured Senior Notes.
Working capital was $30,599,000 at January 29, 2005 compared to
$31,886,000 at July 31, 2004. The working capital ratio was 1.42 to 1 at
January 29, 2005 compared to 1.47 to 1 at July 31, 2004. The Company's working
capital needs are reduced since inventory is general sold by the time payments
to Wakefern and other suppliers are due.
The Company has budgeted approximately $13 million for capital
expenditures in fiscal 2005. Expenditures for the Somers Point replacement
store and the expansion and remodel of the Bernardsville store are complete as
of January 29, 2005. An expansion and remodel of the Springfield store is
underway. The Company's primary sources of liquidity in fiscal 2005 are
expected to be cash and cash equivalents on hand and operating cash flow
generated in fiscal 2005. The lease for the Somers Point replacement store has
been accounted for as a capital lease, resulting in additions to long-term debt
and property, equipment and fixtures of $11,382,000 during fiscal 2005.
There have been no substantial changes as of January 29, 2005 to the
contractual obligations discussed on page 7 of the Company's Annual Report on
Form 10-K for the year ended July 31, 2004.
RELATED PARTY TRANSACTIONS
A description of the Company's transactions with Wakefern, its principal
supplier, and with other related parties is included on pages 7, 8, 16 and 19 of
the Company's Annual Report on Form 10-K for the year ended July 31, 2004.
There have been no significant changes in the Company's relationship or nature
of the transactions with these related parties during the six months of fiscal
2005, except that the Company's $20,274,000 note receivable from Wakefern at
July 31, 2004 matured January 15, 2005 and was invested in a demand deposit at
Wakefern.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In December 2004, the Financial Accounting Standards Board issued SFAS
No. 123 (revised 2004), Share-Based Payment, which replaces SFAS No. 123,
Accountingfor Stock-Based Compensation. Generally, the approach in SFAS
No. 123 (R) is similar to the approach described in SFAS No. 123. However,
SFAS No. 123 (R) requires all share-based payments to employees, including
grants of employee stock options, to be recognized in the income statement
based on their grant date fair values. This pronouncement is effective for
the Company beginning July 31, 2005. As the Company adopted the fair value
recognition provisions of SFAS No. 123 during fiscal 2003, the Company
anticipates no material impact from the adoption of this new standard.
FORWARD-LOOKING STATEMENTS
All statements, other than statements of historical fact, included in this
Form 10-Q 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. The Company undertakes no obligation to update
forward-looking statements to reflect developments or information obtained after
the date hereof. The following are among the principal factors that could cause
actual results to differ from the forward-looking statements: 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; the availability of capital; the liquidity of the Company; the
success of operating initiatives; consumer spending patterns; increased cost of
goods sold, including increased costs from the Company's principal supplier,
Wakefern; the results of union contract negotiations; competitive store
openings; the rate of return on pension assets; and other factors detailed
herein and in other public filings of the Company.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risks arising from adverse changes in
interest rates. As of January 29, 2005, the Company's only variable rate
borrowings relate to an interest rate swap agreement. On October 18, 2001, the
Company entered into an interest rate swap agreement with a major financial
institution pursuant to which the Company pays a variable rate of six-month
LIBOR plus 3.36% (6.32% at January 29, 2005) on an initial notional amount of
$10,000,000 expiring in September 2009 in exchange for a fixed rate of 8.12%.
The swap agreement notional amount decreases in amounts and on dates
corresponding to the fixed rate obligation it hedges. At January 29, 2005 the
remaining notional amount of the swap agreement was $7,142,857. A 1% increase
in interest rates, applied to the Company's borrowings at January 29, 2005,
would result in an annual increase in interest expense and a corresponding
reduction in cash flow of approximately $71,429. The fair value of the
Company's fixed rate debt is also affected by changes in interest rates.
At January 29, 2005, the Company had demand deposits of $41,796,000 at
Wakefern earning interest at prime less 2.5%, or overnight money market rates,
which are exposed to the impact of interest rate changes.
ITEM 4. CONTROLS AND PROCEDURES
As required by Rule 13a-15 under the Exchange Act, the Company carried out
an evaluation of the effectiveness of the design and operation of the Company's
disclosure controls and procedures at the end of the period. This evaluation
was carried out under the supervision, and with the participation, of the
Company's management, including the Company's Chief Executive Officer along with
the Company's Chief Financial Officer. Based upon that evaluation, the
Company's Chief Executive Officer, along with the Company's Chief Financial
Officer, concluded that the Company's disclosure controls and procedures are
effective. There have been no significant changes in internal controls over
financial reporting during the second quarter of fiscal 2005.
Disclosure controls and procedures are controls and other procedures that
are designed to ensure that information required to be disclosed in Company
reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities
and Exchange Commission's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed in Company reports filed under the Exchange
Act is accumulated and communicated to management, including the Company's Chief
Executive Officer and Chief Financial Officer as appropriate, to allow timely
decisions regarding required disclosure.
PART II - OTHER INFORMATION
Item 6. Exhibits
Exhibit 28(a) Press Release dated March 8, 2005
Exhibit 28(b) First Quarter Report to Shareholders dated
December 13, 2004
Exhibit 31.1 Certification
Exhibit 31.2 Certification
Exhibit 32.1 Certification (furnished, not filed)
Exhibit 32.2 Certification (furnished, not filed)
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: March 8, 2005 /s/ James Sumas
James Sumas
(Chief Executive Officer)
Date: March 8, 2005 /s/ Kevin R. Begley
Kevin R. Begley
(Chief Financial Officer)
Exhibit 28(a)
VILLAGE SUPER MARKET, INC.
REPORTS RESULTS FOR THE QUARTER AND SIX MONTHS ENDED
JANUARY 29, 2005
Contact: Kevin Begley, CFO
(973) 467-2200 - Ext. 220
Springfield, New Jersey - March 8, 2005 - Village Super Market, Inc.
(NSD-VLGEA) today reported its results of operations for the second quarter
ended January 29, 2005.
Net income was $4,357,000 ($1.37 per diluted share) in the second quarter
of fiscal 2005, an increase of 19% from the second quarter of the prior year.
Results for the second quarter of fiscal 2005 include $890,000 (after-tax) of
income received from a partnership. Excluding this partnership income, pro
forma net income in the second quarter of fiscal 2005 was $3,467,000, a decrease
of 5% from the second quarter of the prior year. Excluding the partnership
income, pro forma net income in the second quarter of fiscal 2005 declined from
the prior year primarily due to charges for the future lease obligations of a
closed, stand-alone drugstore.
Sales were $255,992,000 in the second quarter of fiscal 2005, an increase
of 5.7% from the second quarter of the prior year. Sales increased due to the
opening of an 80,000 square foot replacement store in Somers Point, New Jersey
on October 27, 2004 and a same store sales increase of 4.7%. Same store sales
increased due to improved sales in the recently remodeled Bernardsville store,
continued improvement in stores opened and remodeled in recent fiscal years and
increases in retail prices in certain categories resulting from inflation.
Net income for the six-month period of fiscal 2005 was $7,044,000 ($2.21
per diluted share), an increase of 14% from the prior year. Excluding the
income received from the partnership described above, pro forma net income was
$6,154,000 in the six-month period of fiscal 2005, approximately the same as the
prior year. Sales for the six-month period of fiscal 2005 were $493,344,000,
an increase of 5.2% from the prior year. Same store sales increased 4.7% for
the six-month period of fiscal 2005 compared to the prior year.
Village Super Market operates a chain of 23 supermarkets under the
ShopRite name in New Jersey and eastern Pennsylvania.
All statements, other than statements of historical fact, included in this
Press Release 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. The Company undertakes no obligation to update
forward-looking statements to reflect developments or information obtained after
the date hereof. The following are among the principal factors that could cause
actual results to differ from the forward-looking statements: 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; the availability of capital; the liquidity of the Company; the
success of operating initiatives; consumer spending patterns; increased cost of
goods sold, including increased costs from the Company's principal supplier,
Wakefern; the results of union contract negotiations; competitive store
openings; the rate of return on pension assets; and other factors detailed
herein and in the Company's filings with the SEC.
VILLAGE SUPER MARKET, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIVE
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)
13 Wks. Ended 13 Wks. Ended 26 Wks. Ended 26 Wks. Ended
Jan. 29, 2005 Jan. 24, 2004 Jan. 29, 2005 Jan. 24, 2004
Sales $ 255,992 $ 242,209 $ 493,344 $ 468,943
Cost of sales 190,570 180,104 368,048 349,690
--------- --------- --------- ---------
Gross profit 65,422 62,105 125,296 119,253
Operating and
administrative expense 56,122 52,865 108,679 102,907
Depreciation and amortization 2,779 2,263 5,160 4,479
--------- --------- --------- ---------
Operating income 6,521 6,977 11,457 11,867
Interest expense, net 646 592 1,027 1,213
Income from partnership 1,509 ---- 1,509 ----
--------- --------- --------- ---------
Income before income taxes 7,384 6,385 11,939 10,654
Income taxes 3,027 2,734 4,895 4,484
--------- --------- --------- ---------
Net income $ 4,357 $ 3,651 $ 7,044 $ 6,170
========= ========= ========= =========
Net income per share:
Basic $ 1.38 $ 1.18 $ 2.23 $ 2.00
Diluted $ 1.37 $ 1.16 $ 2.21 $ 1.96
Gross profit as a % of sales 25.6% 25.6% 25.4% 25.4%
Operating and admin. expense
as a % of sales 21.9% 21.8% 22.0% 21.9%
Exhibit 28(b)
VILLAGE SUPER MARKET, INC.
EXECUTIVE OFFICES
733 Mountain Avenue
Springfield, New Jersey 07081
Phone: (973) 467-22000
Fax: (973) 467-6582
To Our Shareholders:
Net income was $2,687,000 ($.85 per diluted share) in the first quarter of
fiscal 2005, an increase of 7% from the first quarter of the prior year. Net
income increased primarily due to strong sales growth.
Sales were $237,352,000 in the first quarter of fiscal 2005. Total sales
and same store sales both increased 4.7% compared to the first quarter of the
prior year. Approximately 55% of the sales increase was due to improved sales
in the recently remodeled Bernardsville store and continued improvement in
stores opened and remodeled in recent fiscal years. In addition, sales were
higher due to increases in retail prices in certain categories resulting from
inflation.
Gross profit as a percentage of sales was 25.2% in both the first quarter of
fiscal 2005 and the first quarter of the prior year. As a percentage of sales,
gross profit in the first quarter improved compared to the prior year primarily
due to reduced warehousing and related charges from Wakefern (.21.%) and a
higher estimate of patronage dividends (.12%). These improvements were offset
by increased promotional spending (.16%) and lower gross margins in several
departments in the first quarter of fiscal 2005 compared to the prior year.
Operating administrative expenses as a percentage of sales was 22.1% in
both the first quarter of fiscal 2005 and the corresponding period of the prior
year. As a percentage of sales, fringe benefit costs increased .12%, utility
costs increased .07% and pre-opening costs for the Somers Point store were .06%.
These increases were offset by decreases in repairs of .07% and advertising
of .09%.
On October 27, 2004, we opened an 80,000 square foot store in Somers Point,
New Jersey to replace a smaller store. This superstore further refines our
Power Alley concept, which features a broad assortment of fresh, convenient
product offerings, including an expanded fresh bakeshop, natural and organic
produce, salad bar, sushi bar, coffee bar and Bistro Street, our chef-prepared
home meal replacement area.
On December 10, 2004, the Board of Directors declared a 47% increase in the
semi-annual cash dividend. The increased semi-annual dividend of $.25 per
Class A common share and $.163 per Class B common share will be payable
February 18, 2005 to shareholders of record on January 21, 2005.
Respectfully,
Perry Sumas James Sumas
President Chairman of the Board
December 13, 2004
All statements, other than statements of historical fact, included in this
report 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. The Company undertakes no obligation to update
forward-looking statements to reflect developments or information obtained after
the date hereof. The following are among the principal factors that could cause
actual results to differ from the forward-looking statements: 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; the availability of capital; the liquidity of the Company; the
success of operating initiatives; consumer spending patterns; increased cost of
goods sold, including increased costs from the Company's principal supplier,
Wakefern; results of ongoing litigation; the results of union contract
negotiations; competitive store openings; the rate of return on pension assets;
and other factors detailed herein and in the Company's filings with the SEC.
VILLAGE SUPER MARKET, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Amounts)
13 Wks. Ended 13 Wks. Ended
October 30, 2004 October 25, 2003
Sales $ 237,352 $ 226,734
Cost of sales 177,478 169,586
--------- ---------
Gross profit 59,874 57,148
Operating and administrative expense 52,557 50,042
Depreciation and amortization 2,381 2,216
--------- ---------
Operating income 4,936 4,890
Interest expense, net 381 621
--------- ---------
Income before income taxes 4,555 4,269
Income taxes 1,868 1,750
--------- ---------
Net income $ 2,687 $ 2,519
========= =========
Net income per share:
Basic $ .85 $ .82
Diluted $ .85 $ .80
Gross profit as a % of sales 25.2% 25.2%
Operating and administrative
expense as a % of sales 22.1% 22.1%
Exhibit 31.1
I, James Sumas, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Village Super
Market, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered
by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report.
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
c) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's second quarter that has materially effected, or is
reasonably likely to materially effect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design
or operation of internal controls over financial reporting which
are reasonably likely to adversely affect the registrant's ability
to record, process, summarize and report financial information and
have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: March 8, 2005 /s/ James Sumas
James Sumas
Chief Executive Officer
Exhibit 31.2
I, Kevin Begley, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Village Super
Market, Inc.
2. Based on my knowledge, this report does not contain any untrue statement
of material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered
by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the
registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
b) valuated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
c) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's second quarter that has materially effected, or is
reasonably likely to materially effect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design
or operation of internal controls over financial reporting which
are reasonably likely to adversely affect the registrant's ability
to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: March 8, 2005 /s/ Kevin Begley
Kevin Begley
Chief Financial Officer & Principal
Accounting Officer
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Village Super Market, Inc.
(the "Company") on Form 10-Q for the period ending January 29, 2005 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, James Sumas, Chief Executive Officer of the Company certify, pursuant to 18
U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
March 8, 2005 /s/ James Sumas
James Sumas
Chief Executive Officer
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Village Super Market, Inc.
(the "Company") on Form 10-Q for the period ending January 29, 2005 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Kevin Begley Chief Financial Officer of the Company certify, pursuant to 18
U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
March 8, 2005 /s/ Kevin Begley
Kevin Begley
Chief Financial Officer &
Principal Accounting Officer