UNITED STATES

SECURITIES & EXCHANGE COMMISSION

WASHINGTON, D. C. 20549 

FORM 10-K

(Exact name of registrant as specified in its charter) 

 

A variety of factors affect the profitability of each of the Company's stores, including competition, size, access and parking, lease terms, management supervision, and the strength of the ShopRite trademark in the local community.  Village continually evaluates individual stores to determine if they should be closed, remodeled or replaced.

 

DEVELOPMENT AND EXPANSION

 

The Company has an ongoing program to upgrade and expand its supermarket chain.  This program has included store remodels as well as the opening or acquisition of additional stores.  When remodeling, Village has sought, whenever possible, to increase the amount of selling space in its stores.

 

Village has budgeted $50$40 million for capital expenditures for fiscal 2018.2019.  Planned expenditures include the construction of a newreplacement store in Stroudsburg, Pennsylvania, three minor remodels, expansion of self-checkout across most stores and other various technology, equipment and facility upgrades.

In fiscal 2018, Village completed construction of the Bronx, New York a replacement store, two major remodels, several smallerminor remodels and various technology, upgrade projects.equipment and facility upgrades.

In fiscal 2017, Village completed a substantial portion of the remodel of the Chester, New Jersey store, several smaller remodels and energy efficient lighting projects in multiple stores.

In fiscal 2016, Village completed the expansion and remodel of the Stirling, New Jersey store, substantially completed one major remodel and completed several smaller remodels.

 

WAKEFERN FOOD CORPORATION

 

The Company is the second largest member of Wakefern and owns 12.9%12.8% of Wakefern’s outstanding stock as of July 29, 2017.28, 2018.  Wakefern, which was organized in 1946, is the nation’s largest retailer-owned food cooperative.  Wakefern and its 49 shareholder members operate 345350 supermarkets and other retail formats, including 9698 stores operated by Wakefern.  Only Wakefern and its members are entitled to use the ShopRite name and trademark, and to 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 the development of advanced retail technology.  The Company believes that the ShopRite name is widely recognized by its customers and is a factor in their decisions about where to shop. ShopRite private label products accounted for approximately 11.5%11.7% of sales in fiscal 2017.2018.

 

Wakefern distributes as a "patronage dividend" to each of its stockholders a share of substantially all of its earnings in proportion to the dollar volume of purchases by the stockholder from 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.  Executives of the Company spend a significant amount of their time working on various Wakefern committees, which oversee and direct Wakefern purchasing, merchandising and other programs.  In addition, Nicholas Sumas, the Company’s Chief Marketing Officer, is a member of the Wakefern Board of Directors.

 

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 using various formulas which allocate 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 and its affiliates provide the Company with other services including liability and property insurance, supplies, certain equipment purchasing, coupon processing, certain financial accounting applications, retail technology support, including shoprite.com and the ShopRite smart phone app,apps, and other store services.

 

Wakefern operates warehouses and distribution facilities in Elizabeth, Keasbey, Whitehouse, Dayton, Newark and Jamesburg, New Jersey and Gouldsboro and Breinigsville, Pennsylvania.  The Company and all other members of Wakefern are parties to the Wakefern Stockholders' 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 Stockholders' 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.  The Company fulfilled this obligation in fiscal 2017, 20162018 and 2015.2017.  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 a 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 new 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, PriceRite, or The Fresh Grocer or Dearborn Market 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 a member's bankruptcy filing, 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 failure to fulfill financial obligations to Wakefern.

 

Any material change in Wakefern's method of operation or a termination or material modification of the Company's relationship with Wakefern following termination 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.

 

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, PriceRite, and The Fresh Grocer or Dearborn Market 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.  Committee decisions 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 estimates of the impact of the proposed store on existing member supermarkets in the area.

 

July 29, 2017.28, 2018.  The total amount of debt outstanding from all capital pledges to Wakefern is $406$114 at July 29, 2017.28, 2018.  The maximum per store capital contribution increased from $900 towas $925 in both fiscal 2017, resulting in an additional $626 capital pledge, which was paid in fiscal2018 and 2017.

As required by the Wakefern bylaws, the Company’s investment in Wakefern is pledged to Wakefern to secure the Company’s obligations to Wakefern.  In addition, five members of the Sumas family have guaranteed the Company’s obligations to Wakefern.  These personal guarantees are required of any 5% shareholder of the Company who is active in the operation of the Company.  Wakefern does not own any securities of the Company or its subsidiaries.  The Company’s investment in Wakefern entitles the Company to enough votes to elect one member to the Wakefern Board of Directors due to cumulative voting rights.

LABOR

 

As of July 29, 2017,28, 2018, the Company employed approximately 6,5526,742 persons with approximately 74% working part-time.  Approximately 91%89% of the Company’s employees are covered by collective bargaining agreements. Contracts with the Company’s seven unions have expiration dates between July 2017March 2019 and July 2021.October 2023.  Approximately 6%19% of our associates are represented by unions whose contracts have expired or will expire within one year.  MostMany of the Company’s competitors are similarly unionized.

 

The majority of our revenues are generally not seasonal in nature. However, revenues tend to be higher during the major holidays throughout the year.

REGULATORY ENVIRONMENT

 

The Company’s business requires various licenses and the registration of facilities with state and federal health and drug regulatory agencies.  These licenses and registration requirements obligate the Company to observe certain rules and regulations, and a violation of these rules and regulations could result in a suspension or revocation of licenses or registrations and fines or penalties.  In addition, most licenses require periodic renewals.  The Company has not experienced material difficulties with respect to obtaining or retaining licenses and registrations. 

COMPETITION

 

ForThe supermarket business is highly competitive and characterized by narrow profit margins.  Village competes directly with multiple retail formats both in-store and online, including national, regional and local supermarket chains as well as warehouse clubs, supercenters, drug stores, discount general merchandise stores, fast food chains, restaurants, dollar stores and convenience stores. Some of the disclosure related to our competition, see Item 1A under the heading “Competitive Environment.”Company's principal competitors include Acme, Aldi, Amazon, BJs, Costco, Foodtown, Giant, Kings, Lidl, Safeway, Stop & Shop, Target, Wal-Mart, Wegmans, Weis and Whole Foods. Competition with these outlets is based on price, store location, convenience, promotion, product assortment, quality and service.  Some of these competitors have greater financial resources, lower merchandise acquisition costs and lower operating expenses than we do.

AVAILABLE INFORMATION

 

As a member of the Wakefern cooperative, Village relies upon our customer focused website, shoprite.com, for interaction with customers and prospective employees.  This website is maintained by Wakefern for the benefit of all ShopRite supermarkets, and therefore does not contain any financial information related to the Company.

 

The Company will provide paper copies of the annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and press releases free of charge upon request to any shareholder.  In addition, electronic copies of these filings can be obtained at sec.gov.

 

 

 

 

Not applicable.

 

 

As of October 1, 2017,2018, there were approximately 790 holders of Class A common stock.

 

During fiscal 2017, Village paid cash dividends of $12,788.  Dividends in fiscal 2017 consist of $1.00 per Class A common share and $.65 per Class B common share.

 

(Dollars in thousands, except per share data and per square foot data).

 

Fiscal 2016 contains 53 weeks, with the additional week included in the fourth quarter. All other fiscal years contain 52 weeks.

 

 

(Dollars in thousands except per share amounts).

 

 

 

Village Super Market, Inc. (the “Company” or “Village”) operates a chain of 2930 ShopRite supermarkets in New Jersey, Maryland, northeastern Pennsylvania and northeastern Pennsylvania.New York City. On June 28, 2018 Village opened a 53,000 sq. ft. (31,000 selling sq. ft.) store in the Bronx, New York City.  Village is the second largest member of Wakefern Food Corporation (“Wakefern”), the nation’s largest retailer-owned food cooperative and owner of the ShopRite name. This ownership interest in Wakefern provides Village with many of the economies of scale in purchasing, distribution, advanced retail technology, marketing and advertising associated with larger chains.

 

The supermarket industry is highly competitive and characterized by narrow profit margins.  The Company competes directly with multiple retail formats, both in-store and online, including national, regional and local supermarket chains as well as warehouse clubs, supercenters, drug stores, discount general merchandise stores, fast food chains, restaurants, dollar stores and convenience stores. Village competes by using low pricing, providing a superior customer experience and a broad range of consistently available

The Company’s stores, six of which are owned, average 59,000 total square feet. These larger store sizes enable the Company’s stores to provide a “one-stop” shopping experience and to feature expanded higher margin specialty departments such as an on-site bakery, an expanded delicatessen, a variety of natural and organic foods, ethnic and international foods, prepared foods and pharmacies.  

Many of our stores emphasize a Power Alley, which features high margin, fresh, convenience offerings in an area within the store that provides quick customer entry and exit for those customers shopping for today's lunch or dinner. Certain of our stores include the Village Food Garden concept featuring a restaurant style kitchen, and several kiosks offering a wide variety of store prepared specialty foods for both take-home and in-store dining.

Village also has on-site registered dieticians in seventeennineteen stores that provide customers with free, private consultations on healthy meals and proper nutrition, as well as leading health related events both in store and in the community as part of the Well Everyday program.  We have thirteen stores that offer ShopRite from Home covering most of the communities served by our stores.  ShopRite from Home is an online ordering system that provides for in-store pickup or home delivery.  Customers can browse our circular, create and edit shopping lists and use ShopRite from Home through shoprite.com or on their smart phones or tablets through the ShopRite app. 

We consider a variety of indicators to evaluate our performance, such as same store sales; percentage of total sales by department (mix); shrink; departmental gross profit percentage; sales per labor hour; units per labor hour; and hourly labor rates.

 The Company utilizes a 52 - 53 week fiscal year, ending on the last Saturday in the month of July. Fiscal 20172018 and 20152017 contain 52 weeks. Fiscal 2016 contains 53 weeks.

 

 

The following table sets forth the components of the Consolidated Statements of Operations of the Company as a percentage of sales:

 

 

 

Sales were $1,604,574$1,612,015 in fiscal 2017, a decrease2018, an increase of $30,330,$7,441, or 1.9%0.5% from fiscal 2016.2017. Sales decreasedincreased due primarily to fiscal 2016 containing 53 weeks. Samethe opening of the Bronx, New York City store on June 28, 2018 and a same store sales excluding the impactincrease of the 53rd week in fiscal 2016, were flat.0.2%. Same store sales increased due primarily to three competitor store closings and salescontinued growth in recently remodeled and expanded stores, in Stirlinginflation and Chester.increased promotional spending. These increases were offset primarily by fourtwo competitor store openings and deflation, particularly in the meat, produce and dairy departments.openings. 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 and expansions are included in same store sales immediately.

 

 

Gross profit as a percentage of sales was flatincreased .01% in fiscal 20172018 compared to fiscal 2016.2017. Increased departmental gross margin percentages (.09%(.07%) and more favorable product mix (.02%(.09%) were offset by decreased patronage dividends (.07%(.04%) and higher promotional spending (.04%(.10%).

 

Operating and administrative expense as a percentage of sales increased .11%.46% in fiscal 20172018 compared to fiscal 2016. Fiscal 2017 includes a non-recurring credit received related to multi-employer health and welfare benefits (.05%) and fiscal 2016 includes a gain for Superstorm Sandy insurance proceeds received (.06%). Excluding these items from both periods, operating and administrative expense as a percentage of sales increased .10% compared to fiscal 2016 primarily due to higher payroll (.30%) partially offset by decreased fringe benefit costs (.11%). Payroll costs increased due primarily to reduced operating leverage as a result of flat same store sales and investments in service departments, including the newly remodeled Chester store. Fringe benefit costs decreased due primarily to lower non-union pension expense (.15%) and lower healthcare costs (.08%).

 

Depreciation and amortization expense was $24,482, $24,101$24,999 and $23,330$24,482 in fiscal 2017, 20162018 and 2015,2017, respectively. Depreciation and amortization expense increased in fiscal 2017 and 20162018 compared to the prior yearsyear due to depreciation related to capital expenditures.

 

 

Interest expense was $4,452, $4,495$4,460 and $4,535,$4,452, in fiscal 2017, 20162018 and 2015,2017, respectively. Interest expense was flat in fiscal 20172018 compared to fiscal 2016 and fiscal 2015.2017.

 

 

Interest income was $2,841, $2,506$3,845 and $2,399$2,841 in fiscal 2017, 20162018 and 2015,2017, respectively. Interest income increased in both fiscal 2017 and 20162018 compared to fiscal 20152017 due primarily to higher amounts invested and higher interest rates earned on variable rate investments and higher amounts invested.notes receivable from Wakefern.

 

 

The Company’s effective income tax rate was 41.4%, 40.8%23.6% and 26.0%41.4% in fiscal 2017, 20162018 and 2015,2017, respectively.

For the fiscal year ended July 28, 2018 the Company had a blended federal corporate tax rate of 26.9% based on the effective date of the tax rate reduction.  As a result of the decrease in the federal tax rate, the Company recognized a decrease in its net deferred tax liabilities of $3,300 in fiscal 2015 include2018, with a corresponding reduction to deferred income tax benefitexpense. Excluding the impact of $6,452 relatedthese adjustments to the settlement with the New Jersey Division of Taxation, net of $841 of interest and penalties accrued prior to settlement. Excluding these items,deferred tax expense, the effective income tax rate was 41.6%33.7% in fiscal 2015. The effective income tax rate in fiscal 2016 was lower than both fiscal 2017 and 2015 due primarily to increased Work Opportunity Tax Credits.

 

Net income was $25,080 in fiscal 2018 compared to $22,921 in fiscal 2017 compared to $25,044 in fiscal 2016.2017.  Fiscal 20172018 includes a $465$3,300 reduction in deferred tax expense as a result of the Tax Act, an $822 (net of tax) non-recurring credit receivedaccrued related to multi-employer health and welfare benefits. Fiscal 2016 includes estimated net income of $280 due to the fiscal year including a 53rd week and a $545pension benefits, $877 (net of tax) gain duein non-recurring assessments from Wakefern and $695 (net of tax) in pre-opening costs related to the recovery of insurance receivables related to Superstorm Sandy.Bronx, New York City store. Excluding these items, from both periods, net income decreased 7%2% in fiscal 2017 compared to fiscal 2016 due primarily to flat same store sales and increased operating expenses.

 

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 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.

 

 

The Company reviews the carrying values of its long-lived assets, such as property, equipment and fixtures for possible impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. Such review analyzes the undiscounted estimated future net cash flows from asset groups at the store level to determine if the carrying value of such assets are recoverable from their respective cash flows. If impairment is indicated, it is measured by comparing the fair value of the long-lived asset groups, which include long-term leases, to their carrying value.

 

Goodwill is tested for impairment at the end of each fiscal year, or more frequently if circumstances dictate. The Company utilizes valuation techniques, such as earnings multiples, in addition to the Company’s market capitalization, to assess goodwill for impairment. Calculating the fair value of a reporting unit requires the use of estimates. Management believes the fair value of Village’s one reporting unit exceeds its carrying value at July 29, 2017.28, 2018. Should the Company’s carrying value of its one reporting unit exceed its fair value, the amount of any resulting goodwill impairment may be material to the Company’s financial position and results of operations.

 

 

As a stockholder of Wakefern, Village earns a share of Wakefern’s earnings, which are distributed as a “patronage dividend.” This dividend is based on a distribution of substantially all of Wakefern’s operating profits for its fiscal year (which ends on or about September 30) in proportion to the dollar volume of purchases by each member from Wakefern during that fiscal year. Patronage dividends are recorded as a reduction of cost of sales as merchandise is sold. Village accrues estimated patronage dividends due from Wakefern quarterly based on an estimate of the annual Wakefern patronage dividend and an estimate of Village’s share of this annual dividend based on Village’s estimated proportional share of the dollar volume of business transacted with Wakefern that year. The patronage dividend receivable based on these estimates was $11,937 and $12,655 at July 28, 2018 and $13,185 at July 29, 2017, and July 30, 2016, respectively.

 

The determination of the Company’s obligation and expense for Company-sponsored pension plans is dependent, in part, on Village’s selection of assumptions used by actuaries in calculating those amounts. These assumptions are described in Note 8 to the Consolidated Financial Statements and include, among others, the discount rate, the expected long-term rate of return on plan assets and the rate of increase in compensation costs. Actual results that differ from the Company’s assumptions are accumulated and amortized over future periods and, therefore, generally affect recognized expense in future periods. While management believes that its assumptions are appropriate, significant differences in actual experience or significant changes in the Company’s assumptions may materially affect cash flows, pension obligations and future expense.

 

The objective of the discount rate assumption is to reflect the rate at which the Company’s pension obligations could be effectively settled based on the expected timing and amounts of benefits payable to participants under the plans. Our methodology for selecting the discount rate as of July 29, 201728, 2018 was to match the plans' cash flows to that of a yield curve on high-quality fixed-income investments. Based on this method, we utilized a weighted-average discount rate of 3.99% at July 28, 2018 compared to 3.60% at July 29, 2017 compared to 3.08% at July 30, 2016.2017. Changes in the discount rate and the mortality table utilized decreased the projected benefit obligation by approximately $7,567$1,878 at July 29, 2017.28, 2018. Village evaluated the expected increase in compensation costs of 4.50% and concluded no changes in this assumptions was necessary in estimating pension plan obligations and expense. In fiscal 2018, the Company transitioned to a liability-driven investment ("LDI") strategy. A LDI strategy focuses on maintaining a close to fully-funded status over the long-term with minimal funded status risk.  This is achieved by investing more of the plan assets in fixed income instruments to more closely match the duration of the plan liability.  The investment allocation to fixed income instruments will increase as each plans funded status increases.  Based on the Company’s transition to an LDI strategy, the Company assumed a 6.50% long-term rate of return on plan assets of 7.5% and the expected increase in compensation costs of 4 to 4.5% and concluded no changes in these assumptions were necessary in estimating pension plan obligations and expense.for fiscal 2018.

Sensitivity to changes in the major assumptions used in the calculation of the Company’s pension plans is as follows:

 

Village contributed $3,000$6,510 and $3,524$3,000 in fiscal 20172018 and 2016,2017, respectively, to these Company-sponsored pension plans. Village expects to contribute $3,500$3,000 in fiscal 20182019 to these plans. Substantially all contributions in 20172018 and 20162017 are voluntary contributions.

 

 

Net cash provided by operating activities was $58,884 in fiscal 2018 compared to $46,153 in fiscal 2017 compared to $64,101 in fiscal 2016 and $17,468 in fiscal 2015.2017. Net cash provided by operating activities was generated primarily by changes in working capital and net income adjusted for non-cash items including depreciation and amortization, share-based compensation, deferred taxes and the provision to value inventories at LIFO.

During fiscal 2018, Village used cash to fund capital expenditures of $35,464, dividends of $12,878, investments in notes receivable related to New Market Tax Credit financing of $4,835, treasury stock purchases of $632 and additional investments of $2,401 in notes receivable from Wakefern, net of proceeds received on matured notes. See further discussion on the New Markets Tax Credit program in note 4 to the consolidated financial statements. Capital expenditures primarily includes costs associated with the construction of the Bronx, New Jersey Division of Taxation.York store, several minor remodels and various technology, equipment and facility upgrades.

During fiscal 2017, Village used cash to fund capital expenditures of $27,726, dividends of $12,788, treasury stock purchases of $4,081 and invested an additional $1,945 in notes receivable from Wakefern. Capital expenditures primarily includes costs associated with the completion offor the remodel of the Chester, New Jersey store, several smaller remodels of other existing stores and certain energy efficient lighting projects.

 

Working capital was $85,279, $60,538,$89,201 and $41,760$85,279 at July 29, 2017, July 30, 201628, 2018 and July 25, 2015,29, 2017, respectively. Working capital ratios at the same dates were 1.89, 1.61,1.88 and 1.441.89 to one, respectively.  The increase in working capital in fiscal 2017 compared to fiscal 2016 is due primarily to $22,118 in notes receivable from Wakefern that have been reclassified to current assets as they are due on August 15, 2017. The increase in working capital in fiscal 2016 compared to fiscal 2015 is due primarily to operating cash flows in excess of capital expenditures and dividends. The Company’s working capital needs are reduced, since inventories are generally sold by the time payments to Wakefern and other suppliers are due.

 

Village has budgeted approximately $50,000$40 million for capital expenditures infor fiscal 2018.2019.  Planned expenditures include the construction of a newreplacement store in the Bronx, New York, a replacement store, two majorStroudsburg, Pennsylvania, three minor remodels, several smaller remodelsexpansion of self-checkout across most stores and other various technology, upgrade projects.equipment and facility upgrades. The Company’s primary sources of liquidity in fiscal 20182019 are expected to be cash and cash equivalents on hand at July 29, 201728, 2018 and operating cash flow generated in fiscal 2018.2019.

 

At July 29, 2017,28, 2018, the Company had $44,680 in notes receivable due from Wakefern. Half of these notes earned interest at the prime rate plus .25% and matured on August 15, 2017 and half earn interest at the prime rate plus 1.25% and mature on February 15, 2019.  The Company invested $22,000 of the proceeds received from the notes that matured on August 15, 2017$47,081 in variable rate notes receivable due from Wakefern that earn interest at the prime rate plus 1.25% with $23,952 that mature on February 15, 2019 and $23,129 that mature on August 15, 2022. On August 15, 2017, notes receivable due from Wakefern of $22,142 that earned interest at the prime rate plus .25% matured.  The Company invested $22,000 of the proceeds received in variable rate notes receivable from Wakefern that mature on August 15, 2022. Wakefern has the right to prepay these notes at any time. Under certain conditions, the Company can require Wakefern to prepay the notes, although interest earned since inception would be reduced as if it was earned based on overnight money market rates as paid by Wakefern on demand deposits.

At July 29, 2017,28, 2018, Village had demand deposits invested at Wakefern in the amount of $60,037.$63,413. These deposits earn overnight money market rates.

Village has anEffective November 9, 2017, the Company entered into a credit agreement that amends, restates and supersedes in its entirety the loan agreement dated September 16, 1999 and all amendments to that agreement. The agreement maintains Village's unsecured revolving line of credit agreement providing a maximum amount available for borrowing of $25,000.  This loan$25,000, and extends the credit agreement expires onto December 31, 2018.2020.  The revolving credit line can be used for general corporate purposes. Indebtedness under this agreement bears interest at the primeapplicable LIBOR rate or at the Eurodollar rate, at the Company’s option, plus applicable margins based on the Company’s fixed charge coverage ratio. There were no amounts outstanding at July 29, 2017 or July 30, 2016 under this facility.

During fiscal 2017, Village paid cash dividends of $12,788.  Dividends in fiscal 2017 consist of $1.00 per Class A common share and $.65 per Class B common share.

 

This annual report contains certain forward-looking statements about Village’s future performance. These statements are based on management’s assumptions and beliefs in light of information currently available. Such statements relate to, for example: economic conditions; uninsured losses; expected pension plan contributions; projected capital expenditures; expected dividend payments; cash flow requirements; inflation expectations; and legal matters; and are indicated by words such as “will,” “expect,” “should,” “intend,” “anticipates,” “believes” and similar words or phrases. The Company cautions the reader that there is no assurance that actual results or business conditions will not differ materially from the results 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.

 

Various uncertainties and other factors could cause actual results to differ from the forward-looking statements contained in this report. These include:

 

The Company holds an investment in Wakefern, its principal supplier. Village purchases substantially all of its merchandise from Wakefern in accordance with the Wakefern Stockholder Agreement. As part of this agreement, Village is required to purchase certain amounts of Wakefern common stock. At July 29, 2017,28, 2018, the Company’s indebtedness to Wakefern for the outstanding amount of this stock subscription was $406.$114. The maximum per store investment, which is currently $925, increased by $25 in both fiscal 2017, and 2016, resulting in an additional investmentsinvestment of $626 and $717, respectively.$626. Wakefern distributes as a “patronage dividend” to each member a share of its earnings in proportion to the dollar volume of purchases by the member from Wakefern during the year. Wakefern provides the Company with support services in numerous areas including advertising, supplies, liability and property insurance, technology support and other store services. Additional information is provided in Note 3 to the Consolidated Financial Statements.

 

At July 29, 2017,28, 2018, the Company had $44,680 in notes receivable due from Wakefern. Half of these notes earned interest at the prime rate plus .25% and matured on August 15, 2017 and half earn interest at the prime rate plus 1.25% and mature on February 15, 2019.  The Company invested $22,000 of the proceeds received from the notes that matured on August 15, 2017$47,081 in variable rate notes receivable due from Wakefern that earn interest at the prime rate plus 1.25% with $23,952 that mature on February 15, 2019 and $23,129 that mature on August 15, 2022. On August 15, 2017, notes receivable due from Wakefern of $22,142 that earned interest at the prime rate plus .25% matured.  The Company invested $22,000 of the proceeds received in variable rate notes receivable from Wakefern that mature on August 15, 2022. Wakefern has the right to prepay these notes at any time. Under certain conditions, the Company can require Wakefern to prepay the notes, although interest earned since inception would be reduced as if it was earned based on overnight money market rates as paid by Wakefern on demand deposits.

At July 29, 2017,28, 2018, Village had demand deposits invested at Wakefern in the amount of $60,037.$63,413. These deposits earn overnight money market rates.

 

The Company subleases the Galloway and Vineland stores from Wakefern at combined current annual rents of $1,316.$1,322. Both leases contain normal periodic rent increases and options to extend the lease.

 

The Company leases a supermarket from a realty firm 30% owned by certain officers of Village. The Company paid rent to related parties under this lease of $688 $642in both fiscal 2018 and $640 in fiscal years 2017, 2016 and 2015, respectively.2017. This lease expires in fiscal 2021 with options to extend at increasing annual rents.

 

The Company has ownership interests in three real estate partnerships. Village paid aggregate rents to two of these partnerships for leased stores of approximately $1,500, $1,400,$1,455 in both fiscal 2018 and $1,300 in fiscal years 2017, 2016 and 2015, respectively.2017.

 

 See notes to consolidated financial statements.

 

See notes to consolidated financial statements.

 

See notes to consolidated financial statements.