UNITED STATES
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. |
For the fiscal year ended: July 29, 200628, 2007.
| [ ] | 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: 0-26330-33360
VILLAGE SUPER MARKET, INC.
(Exact name of registrant as specified in its charter)
NEW JERSEY | 22-1576170 |
(State or other jurisdiction of incorporation or organization) | (I. R. S. Employer 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:
Class A common stock, no par value | The NASDAQ Stock Market |
| (Title of Class) | (Name of exchange on which registered) |
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes __ No X .
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section15 (d) of the Act. Yes __ No X .
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]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer:
Large accelerated filer o | Accelerated filer ox | Non-accelerated filer xo |
Indicate by check mark whether the registrant is a shell company. Yes __ No X .
The aggregate market value of the Class A common stock of Village Super Market, Inc. held by non-affiliates was approximately $58.4$90.2 million and the aggregate market value of the Class B common stock held by non-affiliates was approximately $5.5$8.6 million based upon the closing price of the Class A shares on the NASDAQ on January 27, 2006,28, 2007, the last business day of the second fiscal quarter. 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 | | Outstanding at October 19, 20068, 2007 |
| | |
| Class A common stock, no par value | 1,642,813 | 3,323,886 Shares |
| Class B common stock, no par value | 1,594,076 | 3,188,152 Shares |
DOCUMENTS INCORPORATED BY REFERENCE
Information contained in the 20062007 Annual Report to Shareholders and the 20062007 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 8, 20067, 2007 are incorporated by reference into this Form 10-K at Part II, Items 5, 6, 7, 7A, and 8 and Part III.
PART I
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 the results expressed, suggested or implied by such forward-looking statements. The Company undertakes no obligation to update forward-looking statements and 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; the impact of higher energy prices; increased cost of goods sold, including increased costs from the Company’s principal supplier, Wakefern; the 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 under Risk Factors.
(All dollar amounts in this report are in thousands, except per square foot data).
GENERAL
Village Super Market, Inc. (the “Company” or “Village”), was founded in 1937, operates1937. At July 28, 2007, Village operated a chain of twenty-three ShopRite supermarkets, sixteen of which are located in northern New Jersey, one in northeastern Pennsylvania and six 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 CompanyVillage many of the economies of scale in purchasing, distribution, advanced retail technology and advertising associated with chains of greater size and geographic coverage.
The CompanyVillage seeks to generate high sales volume by offering a wide variety of high quality products at consistently low prices. During fiscal 2006,2007, sales per store were $44,209$45,497 and sales per selling square foot was $1,008.were $1,037. The Company gives continuingongoing attention to the déd��cor and format of its stores and tailors each store's product mix to the preferences of the local community. The CompanyVillage concentrates on the development of superstores. On August 11, 2007, Village acquired the store fixtures and lease of a location in Galloway Township, New Jersey from Wakefern for $3,500. This store had previously been operated by a competitor. The Company began operating a pharmacy at this location on August 11, 2007. The remainder of this 55,000 sq. ft. store opened on October 27, 2004,3 after the Company opened an 80,000 square footcompletion of a remodel. Village expects to open a new 67,000 sq. ft. store in Somers Point,Franklin, New Jersey to replace a smaller store.on October 31, 2007. Below is a summary of the range of store sizes at July 29, 2006:28, 2007:
Total Square Feet | | Number of Stores |
| | | | |
| Greater than 60,000 | | 9 | |
| 50,001 to 60,000 | | 5 | |
| 40,000 to 50,000 | | 7 | |
| Less than 40,000 | | 2 | |
| | | |
| Total | | 23 | |
These larger store sizes enable the Company’s superstores to provide a “one-stop” shopping experience and to feature expanded higher margin specialty departments such as home meal replacement, an on-site bakery, an expanded delicatessen including prepared foods, a variety of natural and organic foods, ethnic and international 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, small appliances, photo processing and in most cases, a pharmacy. Recently remodeled and new superstores emphasize a Power Alley, which features high margin, fresh convenience offerings such as salad bars, bakery and Bistro Street 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 superstores and percentage of selling square feet allocable to these stores during each of these periods:
Product Categories | | | Fiscal Year Ended In July |
| | | Fiscal Year Ended In July | | | | | | | |
| | | | | | | | | | 2007 | | 2006 | | 2005 |
| Product Categories | | 2006 | | 2005 | | 2004 | | |
| | | | | | | | | | | | | | |
| Groceries | | | 38.7 | % | | 38.6 | % | | 39.1 | % | | 38.6% | | 38.7% | | 38.6% |
| Dairy and Frozen | | | 16.4 | | | 16.4 | | | 16.4 | | | 16.5 | | 16.4 | | 16.4 |
| Meats | | | 10.0 | | | 10.2 | | | 10.1 | | | 10.0 | | 10.0 | | 10.2 |
| Non-Foods | | | 8.9 | | | 9.0 | | | 9.4 | | | 8.8 | | 8.9 | | 9.0 |
| Produce | | | 11.4 | | | 11.1 | | | 10.7 | | | 11.5 | | 11.4 | | 11.1 |
| Appetizers and prepared food | | | 5.3 | | | 5.3 | | | 5.0 | | | 5.4 | | 5.3 | | 5.3 |
| Seafood | | | 2.3 | | | 2.3 | | | 2.2 | | | 2.3 | | 2.3 | | 2.3 |
| Pharmacy | | | 5.2 | | | 5.3 | | | 5.3 | | | 5.1 | | 5.2 | | 5.3 |
| Bakery | | | 1.8 | | | 1.7 | | | 1.7 | | | 1.8 | | 1.8 | | 1.7 |
| Other | | | -- | | | .1 | | | .1 | | | -- | | -- | | .1 |
| | | | 100.0 | % | | 100.0 | % | | 100.0 | % | | 100.0% | | 100.0% | | 100.0% |
| | | | | | | | | | | | | | | | | |
| Number of superstores | | | 21 | | | 21 | | | 21 | | | 21 | | 21 | | 21 |
| | | | | | | | | | | | | | | | | |
| Selling square feet represented by superstores | | | 95 | % | | 95 | % | | 95 | % | | 95% | | 95% | | 95% |
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 CompanyVillage continually evaluates individual stores to determine if they should be closed. A stand-alone drug store near the Bernardsville store closed in fiscal 2005 when the Bernardsville store was expanded to include a pharmacy. The Company’s only liquor store closed on July 30, 2005.
DEVELOPMENT AND EXPANSION
The Company has an ongoing 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 CompanyVillage has sought, whenever possible, to increase the amount of selling space in its stores.
The Company has budgeted approximately $24 million for capital expenditures in fiscal 2008. Planned expenditures include the completion of the new store in Franklin, New Jersey, the remodel of the acquired Galloway store, and the beginning of the construction of a replacement store in Washington, New Jersey and a new store in Marmora, New Jersey.
In fiscal 2007, Village completed the Rio Grande remodel and several small remodels, and began the construction of a new, leased store in Franklin, New Jersey.
In fiscal 2006, the Company completed the expansion and remodel of the Springfield store, began a major remodel of the Rio Grande store, and completed smaller remodels of the Elizabeth and Chester stores.
In fiscal 2005, the Company opened an 80,000 square foot replacement store in Somers Point, completed the Bernardsvillean expansion and remodel of the Bernardsville store, and began the expansion and remodel of the Springfield store.
In fiscal 2004, the Company began the expansion and remodel of the Bernardsville store and the construction of the replacement store in Somers Point. In fiscal 2003, the Company remodeled the English Creek, Hillsborough and Rio Grande stores. In fiscal 2002, the Company opened a 64,000 sq. ft. store in Hammonton and a 59,000 sq. ft. store in Garwood. In fiscal 2001, the Company opened a 67,000 sq. ft. store in West Orange to replace an older, smaller store.
The Company has budgeted approximately $14 million for capital expenditures in fiscal 2007. Planned expenditures include the completion of the Rio Grande remodel and construction of an anticipated new store in Franklin, New Jersey.
Delays associated with governmental regulations, and the general difficulty in developing retail properties in the Company's primary trading area, have in recent years prevented the Company from opening the desired number of new stores. Additional store remodelings and sites for new stores are in various stages of development. The CompanyVillage will also consider additional acquisitions should appropriate opportunities arise.
WAKEFERN FOOD CORPORATION
The Company is the second largest member of Wakefern and owns 15.9%15.5% of Wakefern’s outstanding stock as of July 29, 2006.28, 2007. Wakefern, which was organized in 1946, is the nation’s largest retailer-owned food cooperative. Wakefern and its forty-two44 shareholder members operate 223238 supermarkets and other retail formats, including fifty-five62 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 a co-branded credit 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 12%13% of sales in fiscal 2006.2007.
Wakefern distributes as a "patronage dividend" to each of its stockholders a share 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. 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. James Sumas, the Company’s Chief Executive Officer, is Vice Chairman of Wakefern, and 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, equipment purchasing, coupon processing, certain financial accounting applications, and retail technology support.
Wakefern operates warehouses and distribution facilities in Elizabeth, Woodbridge and South Brunswick, New Jersey and Breinigsville, Pennsylvania. 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. The Company fulfilled this obligation in fiscal 2007, 2006 2005 and 2004.2005. 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. 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 twenty-five 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 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 name 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.
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. The Company’s investment in Wakefern and affiliates was $15,670$16,391 at July 29, 2006.28, 2007. The total amount of debt outstanding from all capital pledges to Wakefern is $798$384 at July 29, 2006.28, 2007. The maximum per store capital contribution increased from $650 to $675 on September 21, 2006, resulting in an additional $550 capital pledge, duewhich was paid in fiscal 2007.
As required by the Wakefern bylaws, the Company’s investment in Wakefern is pledged to Wakefern to secure the Company’s obligation 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.
TECHNOLOGY
The Company considers automation and information technology important to its operations and competitive position. All stores utilize IBM 4690 point of sale systems. Electronic payment options are offered at all checkout locations. We plan to upgrade these point of sale systems beginning in fiscal 2008. A frame relay communication network is used for reliable, high speed processing of electronic payments and transmission of data.
The Company’s commitment to advanced point of sale and communication systems enables it to participate in Price Plus, ShopRite’s preferred customer program. Customers receive electronic discounts by presenting a scannable Price Plus card. This technology also enables the CompanyVillage to offer continuity programs and focus on target marketing initiatives.
The Company began installing self-checkout systems in fiscal 2002. Currently, eleventhirteen stores use these systems to provide improved customer service, especially during peak periods, and reduce operating costs. Additional locations are planned for fiscal 2007.2008. In October 2006,fiscal 2007, we installed RFID readers in all checkout lanes to enable contactless payment options for customers to quicken checkout times.
The Company utilizes IBM RS/6000 computers in each store as an in-store processor to, among other things, replenish inventory. The CompanyVillage 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 product not purchased through Wakefern to provide equivalent cost and retail price control over these products. In fiscal 2007, both of these systems were replaced with upgraded versions.
The Company has installed computer based training systems in all stores to assist in the training of all new cashiers, produce and bakery associates. The CompanyVillage replaced the time and attendance system and labor scheduling system in fiscal 2006 to improve reporting, work flow and system interfaces, and reduce labor.
The CompanyVillage utilizes digital surveillance systems, which are integrated with the cashier monitoring systems, in all stores to aid shrink reduction, increase productivity and assist in accident investigations.
Certain in-store department records are computerized, including the records of all pharmacy departments. In all stores, meat, seafood, delicatessen, and bakery prices are maintained on computer for automatic weighing and pricing. The CompanyVillage seeks to design its stores to use energy efficiently, including recycling waste heat generated by refrigeration equipment for heating and other purposes. Most stores utilize computerized energy management systems.
The Company utilizes a division of Wakefern for data processing services, including financial accounting support.
Wakefern and the CompanyVillage have responded to customers increased use of the internet by creating shoprite.com to provide weekly advertising and other shopping information. In addition, on-line shopping is available in three store locations with store pick-up and delivery options.
COMPETITION
The supermarket industry is highly competitive. The Company competes directly with multiple retail formats, including national, regional and local supermarket chains as well as warehouse clubs, supercenters, drug stores, discount general merchandise stores, fast food chains, dollar stores and convenience stores. The CompanyVillage competes by using low pricing, courteous and quicksuperior customer service, to the customer, and a broad range of consistently available quality products, including ShopRite private labeled products. The ShopRite Price Plus card and the co-branded ShopRite credit card also strengthen customer loyalty.
The
Some of the Company's principal competitors include Pathmark, A&P, Stop & Shop, Acme, Kings, Walmart, Wegmans and Foodtown. Many of the Company'sthese competitors have financial resources substantially greater than those of the Company, and some are non-union.
LABOR
As of October 13, 2006,1, 2007, the Company employed approximately 4,400 persons of whomwith approximately 68% worked69% working part-time. Approximately 90%91% of the Company’s employees are covered by collective bargaining agreements. A contract with onea union representing employees in six stores will expireone store expired in October 2006.June 2007. Negotiations with this union continue as the store operates under the expired contract. Contracts with the Company’s other five unions expire between JuneOctober 2007 and August 2010.March 2012. Most of the Company’s competitors in New Jersey are similarly unionized.
AVAILABLE INFORMATION
As a member of the Wakefern cooperative, the CompanyVillage relies upon our customer focused website, www.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 www.sec.gov.
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. In addition, most licenses require periodic renewals. The Company has not experienced material difficulties with respect to obtaining or retaining licenses and registrations. In addition, the Company is subject to the requirements of the Sarbanes-Oxley Act of 2002.
COMPETITIVE ENVIRONMENT
The supermarket business is highly competitive and is characterized by narrow profit margins. Results of operations therefore may be materially adversely impacted by competitive pricing and promotional programs and competitor store openings. We competeVillage competes with national and regional supermarkets, local supermarkets, warehouse club stores, supercenters, drug stores, convenience stores, dollar stores, discount merchandisers, restaurants and other local retailers in the market areas we serve. Competition with these outlets is based on price, store location, promotion, product assortment, quality and service. Some of these competitors may have greater financial resources, lower merchandise acquisition cost and lower operating expenses than we do.
GEOGRAPHIC CONCENTRATION
The Company’s stores are concentrated in New Jersey, with one store in easternnortheastern Pennsylvania. We are vulnerable to economic downturns in New Jersey in addition to those that may affect the country as a whole. Economic conditions such as interest rates, energy costs and unemployment rates may adversely affect our sales. Further, since we areour store base is concentrated in densely populated metropolitan areas, opportunities for future store expansion may be limited, which may adversely affect our business and results of operations.
WAKEFERN RELATIONSHIP
The CompanyVillage purchases substantially all of its merchandise from Wakefern. In addition, Wakefern provides the Company with support services in numerous areas including supplies, advertising, liability and property insurance, technology support and other store services. Further, the CompanyVillage receives patronage dividends and other product incentives from Wakefern.
Any material change in Wakefern’s method of operation or a termination or material modification of the Company’sVillage’s relationship with Wakefern could have an adverse impact on the conduct of the Company’s business and could involve additional expense for the Company.Village. The failure of any Wakefern member to fulfill its obligations to Wakefern or a member’s insolvency or withdrawal from Wakefern could result in increased costs to the Company. Additionally, an adverse change in Wakefern’s results of operations could have an adverse affect on the Company’sVillage’s results of operations.
LABOR RELATIONS
A significant majority of our employees are covered by collective bargaining agreements with unions, and our relationship with those unions, including any work stoppages, could have an adverse impact on our financial results.
In future negotiations with labor unions, we expect that rising health care and pension costs, among other issues, will continue to be important topics for negotiation. Upon the expiration of our collective bargaining agreements, work stoppages by the affected workers could occur if we are unable to negotiate acceptable contracts with labor unions. This could significantly disrupt our operations. Further, if we are unable to control health care and pension costs provided for in the collective bargaining agreement, we may experience increased operating costs and an adverse impact on future results of operations.
FOOD SAFETY
The Company could be adversely affected if consumers lose confidence in the safety and quality of the food supply chain. Adverse publicity about these types of concerns, whether or not valid, could discourage consumers from buying our products. The real or perceived sale of contaminated food products by us could result in a loss of consumer confidence and product liability claims, which could have a material adverse effect on our sales and operations.
MULTI-EMPLOYER PENSION PLANS
The Company is required to make contributions to multi-employer pension plans in amounts established under collective bargaining agreements. Pension expense for these plans is recognized as contributions are funded. Benefits generally are based on a fixed amount for each year of service. Based on the most recent information available to us, we believe a number of these multi-employer plans are underfunded. As a result, we expect that contributions to these plans may increase. Additionally, the benefit levels and related items will be issues in the negotiation of our collective bargaining agreements. Under current law, an employer that withdraws or partially withdraws from a multi-employer pension plan may incur withdrawal liability to the plan, which represents the portion of the plan’s underfunding that is allocable to the withdrawing employer under very complex actuarial and allocation rules. The failure of a withdrawing employer to fund these obligations can impact remaining employers. The amount of any increase or decrease in our required contributions to these multi-employer pension plans will depend upon the outcome of collective bargaining, actions taken by trustees who manage the plans, government regulations and the actual return on assets held in the plans, among other factors.
ITEM 1B. | UNRESOLVED STAFF COMMENTS |
Not applicable.
The CompanyAs of July 28, 2007, Village owns the sites of five of its supermarkets (containing 335,000 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 eighteen supermarkets (containing 937,000 square feet of total space) and the corporate headquarters are leased, with initial lease terms generally ranging from twenty to thirty years, usually with renewal options. Ten of these leased stores are located in shopping centers and the remaining eight are freestanding stores.
The annual rent, including capitalized leases, for all of the Company's leased facilities for the year ended July 29, 200628, 2007 was approximately $9,728.$10,520. The Galloway Township, Franklin, Washington and Marmora stores expected to open in fiscal 2008 are leased facilities.
The Companylease on the Company’s current store in Washington New Jersey expires on May 31, 2008, which is before the replacement store is expected to be completed.
Village is a limited partner in a real estate partnership that sold its only asset and distributed the proceeds to the partners in fiscal 2005. The Company received proceeds of $3,096 and recorded income from the partnership of $1,509, which is the excess of the proceeds above the Company’s investment in the partnership and certain receivables due from the partnership. In addition, the Company is a limited partner in two otherthree partnerships, one of which owns a small shopping center in which one of the Company'sour leased supermarketsstores is located. The Company is also a general partner in a partnership that is a lessor of one of the Company's freestanding supermarkets.
The Company, in the ordinary course of business, is involved in various legal proceedings. The CompanyVillage does not believe the outcome of these proceedings will have a material adverse effect on the Company’s consolidated financial condition, results of operations or liquidity.
ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
No matters submitted to shareholders in the fourth quarter.
PART II
ITEM 5. | MARKET FOR THE REGISTRANT'S COMMON STOCK ANDEQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
The information required by this Item is incorporated by reference from Information appearing on Page 2427 in the Company's Annual Report to Shareholders for the fiscal year ended July 29, 2006.28, 2007 and in the Company’s definitive Proxy Statement to be filed on or before November 2, 2007 in connection with its Annual Meeting scheduled to be held on December 7, 2007.
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 29, 2006.28, 2007.
ITEM 7. | MANAGEMENT'S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The information required by this Item is incorporated by reference from Information appearing on Pages 4 through 89 in the Company's Annual Report to Shareholders for the fiscal year ended July 29, 2006.28, 2007.
ITEM 7A. | QUANTITATIVE AND QUALITATIVEDISCLOSURES ABOUT MARKET RISK |
The information required by this Item is incorporated by reference from Information appearing on Page
8 9 in the Company's Annual Report to Shareholders for the fiscal year ended July 29, 2006.
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
The information required by this Item is incorporated by reference from Information appearing on Page 3 and Pages 910 to 2426 in the Company's Annual Report to Shareholders for the fiscal year ended July 29, 2006.28, 2007.
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
None.
ITEM 9A. | CONTROLS AND PROCEDURES |
As required by Rule 13a-15 underof 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 fourth quarter of fiscal 2006.2007 that have materially, or are reasonably likely to materially effect, the Company’s internal control over financial reporting.
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.
Management’s Report on Internal Control over Financial Reporting and the Report of Independent Registered Public Accounting Firm are incorporated by reference from information appearing on page 28 in the Company’s Annual Report to Shareholders for the fiscal year ending July 28, 2007.
PART III
ITEM 10. | DIRECTORS, AND EXECUTIVE OFFICERS OF THE REGISTRANTAND CORPORATE GOVERNANCE |
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 3, 2006,2, 2007, in connection with its Annual Meeting scheduled to be held on December 8, 2006.
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 3, 2006,2, 2007, in connection with its Annual Meeting scheduled to be held on December 8, 2006.7, 2007.
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERSAND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
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 3, 2006,2, 2007, in connection with its annual meeting scheduled to be held on December 8, 2006.7, 2007.
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
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 3, 2006,2, 2007, in connection with its annual meeting scheduled to be held on December 8, 2006.7, 2007.
ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES |
The information required by this Item 14 is incorporated by reference from the Company’s definitive Proxy Statement to be filed on or before November 3, 20062, 2007 in connection with its annual meeting scheduled to be held on December 8, 2006.7, 2007.
PART IV
ITEM 15. | EXHIBITS, FINANCIAL STATEMENTS SCHEDULES |
| (a) 1. | Financial Statements: |
Consolidated Balance Sheets - July 29, 2006 and July 30, 2005. | Consolidated Balance Sheets - July 28, 2007 and July 29, 2006. |
Consolidated Statements of Operations - years ended July 29, 2006, July 30, 2005 and July 31, 2004. | Consolidated Statements of Operations - years ended July 28, 2007, July 29, 2006 and July 30, 2005. |
Consolidated Statements of Shareholders' Equity and Comprehensive Income - years ended July 29, 2006, July 30, 2005 and July 31, 2004. | Consolidated Statements of Shareholders' Equity and Comprehensive Income – years ended July 28, 2007, July 29, 2006 and July 30, 2005. |
Consolidated Statements of Cash Flows - years ended July 29, 2006, July 30, 2005 and July 31, 2004. | Consolidated Statements of Cash Flows - years ended July 28, 2007, July 29, 2006 and July 30, 2005. |
| Notes to consolidated financial statements. |
The consolidated financial statements above and the Report of Independent Registered Public Accounting Firm have been incorporated by reference from the Company's Annual Report to Shareholders for the fiscal year ended July 29, 2006.28, 2007.
| 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.
EXHIBIT INDEX
| Exhibit No. 3 | 3.1 | Certificate of Incorporation* |
| Exhibit No. 4 | Instruments defining the rights of security holders: |
| 4.5 | Note Purchase Agreement dated September 16, 1999* |
| 4.6 | Loan Agreement dated September 16, 1999* |
| 4.7 | First Amendment to Loan Agreement* |
| | |
| Exhibit No. 10 | Material Contracts: |
| 10.1 | Wakefern By-Laws*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* |
| 10.6 | Employment Agreement dated May 28, 2004* |
| 10.7 | Supplemental Executive Retirement Plan* |
| Exhibit No. 13 | Annual Report to Security Holders |
| | |
| Exhibit No. 14 | Code of Ethics |
| | |
| Exhibit No. 21 | Subsidiaries of Registrant |
| | |
| Exhibit No. 23 | Consent of KPMG LLP |
| | |
| Exhibit No. 31.1 | Certification |
| | |
| Exhibit No. 31.2 | Certification |
| | |
| Exhibit No. 32.1 | Certification (furnished, not filed) |
| | |
| Exhibit No. 32.2 | Certification (furnished, not filed) |
| | |
| * | The following exhibits are incorporated by reference from the following previous filings: |
Form 10-K for 2004: 3.2, 4.7, 10.7
15DEF 14A proxy statement filed October 25, 2004: 10.8
Form 10-K for 1999: 4.5, 4.6
| Form 10-K for 2004: 3.2, 4.7, 10.7 |
| | |
| DEF 14A proxy statement filed October 25, 2004: 10.8 |
| | |
| Form 10-Q for April 2004: 10.6 |
| | |
| Form 10-K for 1999: 4.5, 4.6 |
| | |
| Form 10-K for 1997: 10.5 |
| | |
|
Form 10-K for 1997: 10.5
Form 10-K for 1993: 3.1, 10.1, 10.2 and 10.3 |
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/ James Sumas |
| | Kevin Begley | | James Sumas |
| | Chief Financial & | | Chief Executive Officer |
| Principal Accounting Officer | | Chief Executive Officer |
Date: October 19, 20069, 2007
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 19, 20069, 2007 | | | October 19, 20069, 2007 |
| | | | |
| | | | |
/s/ Robert Sumas | | | /s/ William Sumas |
| Robert Sumas, Director | | | William Sumas, Director |
October 19, 20069, 2007 | | | October 19, 20069, 2007 |
| | | | |
| | | | |
/s/ John P. Sumas | | | /s/ John J. McDermott |
| John P. Sumas, Director | | | John J. McDermott, Director |
October 19, 20069, 2007 | | | October 19, 20069, 2007 |
| | | | |
| | | | |
/s/ David C . Judge | | | /s/ Steven Crystal |
| David C. Judge, Director | | | Steven Crystal, Director |
October 19, 20069, 2007 | | | October 19, 20069, 2007 |
Exhibit 14
VILLAGE SUPER MARKET, INC.
CODE OF ETHICS
In my role as a _____________________________ of Village Super Market, Inc., I recognize that I hold an important and elevated role in corporate governance. I am uniquely capable and empowered to ensure that stakeholders’ interests are appropriately balanced, protected and preserved. Accordingly, this Code provides principles to which I am expected to adhere and advocate. The Code embodies rules regarding individual and peer responsibilities, as well as responsibilities to the company, the public and other stakeholders.
I certify to you that I adhere to and advocate the following principles and responsibilities governing my professional and ethical conduct.
To the best of my knowledge and ability:
1. | I act with honesty and integrity, avoiding actual or apparent conflicts of interest in personal and professional relationships. |
2. | I provide constituents with information that is accurate, complete, objective, relevant, timely and understandable. |
3. | I comply with rules and regulations of federal, state, provincial and local governments, and other appropriate private and public regulatory agencies. |
4. | I act in good faith, responsibly, with due care, competence and diligence, without misrepresenting material facts or allowing my independent judgment to be subordinated. |
5. | I respect the confidentiality of information acquired in the course of my work except when authorized or otherwise legally obligated to disclose. Confidential information acquired in the course of my work is not used for personal advantage. |
6. | I share knowledge and maintain skills important and relevant to my constituents’ needs. |
7. | I proactively promote ethical behavior as a responsible partner among peers in my work environment and community. |
8. | I achieve responsible use of and control over all assets and resources employed or entrusted to me. |
Exhibit 21
SUBSIDIARIES OF REGISTRANT
The Company has two wholly-owned subsidiaries at July 29, 2006. Village Super Market of PA, Inc. is organized under the laws of Pennsylvania. Village Super Market of NJ, LP is organized under the laws of New Jersey.
The financial statements of all subsidiaries are included in the Company’s consolidated financial statements.
Exhibit 23
Consent of Independent Registered Public Accounting Firm
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 23, 2006, with respect to the consolidated balance sheets of Village Super Market, Inc. and subsidiaries as of July 29, 2006 and July 30, 2005 and the related consolidated statements of operations, shareholders' equity and comprehensive income, and cash flows for each of the years in the three-year period ended July 29, 2006, which report appears in the July 29, 2006 annual report on Form 10-K of Village Super Market, Inc.
Short Hills, New Jersey
October 23, 2006
Exhibit 31.1
CERTIFICATIONS
I, James Sumas, certify that:
1. | I have reviewed this annual report on Form 10-K 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) | 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 fourth 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: October 19, 2006 | /s/ James Sumas
|
| James Sumas |
| Chief Executive Officer |
Exhibit 31.2
CERTIFICATIONS
I, Kevin Begley, certify that:
1. | I have reviewed this annual report on Form 10-K 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) | 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 fourth 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: October 19, 2006 | /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 Annual Report of Village Super Market, Inc. (the “Company”) on Form 10-K for the period ending July 29, 2006 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.
| /s/ James Sumas
|
| James Sumas |
| Chief Executive Officer |
| October 19, 2006 |
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 Annual Report of Village Super Market, Inc. (the “Company”) on Form 10-K for the period ending July 29, 2006 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.
| /s/ Kevin Begley
|
| Kevin Begley |
| Chief Financial Officer & |
| Principal Accounting Officer |
| October 19, 2006 |