UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)



[x]	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

	For the quarterly period ended: ~~January 27, 2018~~October 26, 2019

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 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)

(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 has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes X No __

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12-b2 of the Exchange Act.



Large accelerated filer q		Accelerated filer x
Non-accelerated filer q (Do not check if a smaller reporting company)		Smaller reporting company qx

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes _____ No __X__



Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

		~~March 7, 2018~~December 4, 2019

	Class A Common Stock, No Par Value	~~10,065,045~~10,089,561 Shares
	Class B Common Stock, No Par Value	~~4,303,748~~4,293,748 Shares

VILLAGE SUPER MARKET, INC.

INDEX



PART I	PAGE NO.

FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Consolidated Balance Sheets	3

Consolidated Statements of Operations	4

Consolidated Statements of Comprehensive Income	5

Consolidated Statements of Shareholders' Equity	6

Consolidated Statements of Cash Flows	67

Notes to Consolidated Financial Statements	78

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3. Quantitative & Qualitative Disclosures about Market Risk	1817

Item 4. Controls and Procedures	1817

PART II

OTHER INFORMATION

~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds~~	20

Item 6. Exhibits	20

Signatures	21

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

VILLAGE SUPER MARKET, INC. CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)	VILLAGE SUPER MARKET, INC. CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)						VILLAGE SUPER MARKET, INC. CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)

	January 27, 2018			July 29, 2017			October 26, 2019			July 27, 2019
ASSETS
Current assets
Cash and cash equivalents	$	89,738		$	87,435		$	77,941		$	101,121
Merchandise inventories	42,346			41,852			40,683			38,503
Patronage dividend receivable	4,850			12,655			16,275			11,908
Notes receivable from Wakefern	—			22,118
Income taxes receivable	2,673			1,742			78			43
Other current assets	18,424			15,670			16,833			17,206
Total current assets	158,031			181,472			151,810			168,781

Property, equipment and fixtures, net	205,401			204,440			224,489			224,890
Operating lease assets							96,093			—
Notes receivable from Wakefern	45,731			22,562			51,004			50,208
Investment in Wakefern	27,093			27,093			28,783			28,644
Goodwill	12,057			12,057			12,650			12,650
Other assets	19,574			7,601			16,862			17,116

Total assets	$	467,887		$	455,225		$	581,691		$	502,289

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Capital and financing lease obligations	$	714		$	652
Operating lease obligations							$	11,325		$	—
Finance lease obligations							416			1,022
Notes payable to Wakefern	254			292			89			43
Accounts payable to Wakefern	63,332			59,556			64,581			66,130
Accounts payable and accrued expenses	16,401			17,279			22,666			23,950
Accrued wages and benefits	16,620			17,810			19,101			20,259
Income taxes payable	822			604			2,243			1,070
Total current liabilities	98,143			96,193			120,421			112,474

Long-term debt
Capital and financing lease obligations	42,167			42,532
Operating lease obligations							97,092			—
Finance lease obligations							23,595			40,753
Notes payable to Wakefern	6			114			839			803
Notes payable related to New Markets Tax Credit	6,563			—			6,107			6,169
Total long-term debt	48,736			42,646			127,633			47,725

Pension liabilities	14,431			15,194			4,672			4,759
Other liabilities	12,393			14,372			6,518			18,659

Commitments and contingencies

Shareholders' equity
Preferred stock, no par value: Authorized 10,000 shares, none issued	—			—			—			—
Class A common stock, no par value: Authorized 20,000 shares; issued 10,569 shares at January 27, 2018 and 10,562 shares at July 29, 2017	59,573			57,852
Class B common stock, no par value: Authorized 20,000 shares; issued and outstanding 4,304 shares at January 27, 2018 and July 29, 2017	699			699
Class A common stock, no par value: Authorized 20,000 shares; issued 10,593 shares at October 26, 2019 and July 27, 2019							65,947			65,114
Class B common stock, no par value: Authorized 20,000 shares; issued and outstanding 4,294 shares at October 26, 2019 and July 27, 2019							697			697
Retained earnings	250,397			244,308			273,614			270,753
Accumulated other comprehensive loss	(7,220		)	(7,406		)	(8,241		)	(8,342		)
Less treasury stock, Class A, at cost: 504 shares at January 27, 2018 and 477 shares at July 29, 2017	(9,265		)	(8,633		)
Less treasury stock, Class A, at cost: 503 shares at October 26, 2019 and 502 shares at July 27, 2019							(9,570		)	(9,550		)
Total shareholders’ equity	294,184			286,820			322,447			318,672

Total liabilities and shareholders’ equity	$	467,887		$	455,225		$	581,691		$	502,289

See accompanying Notes to Consolidated Financial Statements.

VILLAGE SUPER MARKET, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts) (Unaudited)

VILLAGE SUPER MARKET, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts) (Unaudited)

VILLAGE SUPER MARKET, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts) (Unaudited)

See accompanying Notes to Consolidated Financial Statements.

VILLAGE SUPER MARKET, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands) (Unaudited)

VILLAGE SUPER MARKET, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands) (Unaudited)

VILLAGE SUPER MARKET, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands) (Unaudited)

See accompanying Notes to Consolidated Financial Statements.

VILLAGE SUPER MARKET, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
26 Weeks Ended
January 27,
2018 January 28,
2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 12,528
$ 10,101
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 12,621
12,296
Non-cash share-based compensation 1,721
1,484
Deferred taxes (2,221 ) (90 )

Changes in assets and liabilities:
Merchandise inventories (494 ) (1,420 )
Patronage dividend receivable 7,805
7,907
Accounts payable to Wakefern 3,776
1,001
Accounts payable and accrued expenses (1,692 ) (1,712 )
Accrued wages and benefits (1,190 ) (664 )
Income taxes receivable / payable (713 ) (11,502 )
Other assets and liabilities (3,717 ) (2,255 )
Net cash provided by operating activities 28,424
15,146

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures (12,731 ) (13,013 )
Proceeds from the sale of assets 16
—
Investment in notes receivable from Wakefern (23,223 ) (927 )
Maturity of notes receivable from Wakefern 22,172
—
Investment in notes receivable related to New Markets Tax Credit financing
(4,835 ) —
Net cash used in investing activities (18,601 ) (13,940 )

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from exercise of stock options —
812
Excess tax benefit related to share-based compensation —
83
Proceeds from New Markets Tax Credit financing 6,860
—
Debt Issuance Costs (297 ) —
Principal payments of long-term debt (449 ) (1,043 )
Dividends (6,439 ) (6,330 )
Treasury stock purchases (632 ) —
Net cash used in financing activities (957 ) (6,478 )

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 8,866
(5,272 )

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD 87,435
88,379

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD $ 96,301
$ 83,107

SUPPLEMENTAL DISCLOSURES OF CASH PAYMENTS MADE FOR:

Interest $ 2,207
$ 2,230
Income taxes $ 5,140
$ 18,559

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (In thousands) (Unaudited)

	13 Weeks Ended October 26, 2019 and October 27, 2018
	Class A Common Stock					Class B Common Stock						Accumulated Other Comprehensive Income (Loss)			Treasury Stock Class A				Total Shareholders' Equity
	Shares Issued		Amount			Shares Issued	Amount		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Shares	Amount			Total Shareholders' Equity
Balance, July 27, 2019	10,593		$	65,114		4,294	$	697	$	270,753		$	(8,342	)	502	$	(9,550	)	$	318,672
Net income	—		—			—	—		2,567			—			—	—			2,567
Other comprehensive income, net of tax of $44	—		—			—	—		—			101			—	—			101
Dividends	—		—			—	—		(3,220		)	—			—	—			(3,220		)
Treasury stock purchases	—		—			—	—		—			—			1	(20		)	(20		)
Restricted shares forfeited	(2	)	(30		)	—	—		—			—			—	—			(30		)
Share-based compensation expense	2		863			—	—		—			—			—	—			863
Adjustment due to the adoption of ASU 2016-02, net of tax of $1,385	—		—			—	—		3,514			—			—	—			3,514
Balance, October 26, 2019	10,593		$	65,947		4,294	$	697	$	273,614		$	(8,241	)	503	$	(9,570	)	$	322,447

Balance, July 28, 2018	10,575		$	61,678		4,304	$	699	$	258,104		$	(8,185	)	496	$	(9,151	)	$	303,145
Net income	—		—			—	—		6,269			—			—	—			6,269
Other comprehensive income, net of tax of $43	—		—			—	—		—			102			—	—			102
Dividends	—		—			—	—		(3,222		)	—			—	—			(3,222		)
Treasury stock purchases	—		—			—	—		—			—			22	(565		)	(565		)
Share-based compensation expense	8		821			—	—		—			—			—	—			821
Balance, October 27, 2018	10,583		$	62,499		4,304	$	699	$	261,151		$	(8,083	)	518	$	(9,716	)	$	306,550

See accompanying Notes to Consolidated Financial Statements.

VILLAGE SUPER MARKET, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)

	13 Weeks Ended
	October 26, 2019			October 27, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	2,567		$	6,269
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	7,438			6,898
Non-cash share-based compensation	833			821
Deferred taxes	1,270			(254		)
Provision to value inventories at LIFO	—			103

Changes in assets and liabilities:
Merchandise inventories	(2,180		)	11
Patronage dividend receivable	(4,367		)	(4,351		)
Accounts payable to Wakefern	1,294			(4,189		)
Accounts payable and accrued expenses	(1,381		)	239
Accrued wages and benefits	(1,158		)	(929		)
Income taxes receivable / payable	1,138			2,969
Other assets and liabilities	(2,079		)	(1,462		)
Net cash provided by operating activities	3,375			6,125

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(22,349		)	(8,571		)
Investment in notes receivable from Wakefern	(796		)	(743		)
Net cash used in investing activities	(23,145		)	(9,314		)

CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments of long-term debt	(170		)	(298		)
Dividends	(3,220		)	(3,222		)
Treasury stock purchases, including shares surrendered for withholding taxes	(20		)	(565		)
Net cash used in financing activities	(3,410		)	(4,085		)

NET DECREASE IN CASH AND CASH EQUIVALENTS	(23,180		)	(7,274		)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	101,121			96,108

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	77,941		$	88,834

SUPPLEMENTAL DISCLOSURES OF CASH PAYMENTS MADE FOR:
Interest	$	567		$	1,116
Income taxes	$	68		$	—

NONCASH SUPPLEMENTAL DISCLOSURES:
Investment in Wakefern and increase in notes payable to Wakefern	$	93		$	1,482

See accompanying Notes to Consolidated Financial Statements.

VILLAGE SUPER MARKET, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) (Unaudited)

1. BASIS OF PRESENTATION and ACCOUNTING POLICIES

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal and recurring accruals) necessary to present fairly the consolidated financial position as of ~~January 27, 2018~~October 26, 2019 and the consolidated statements of operations, comprehensive income and cash flows for the 13 weeks ended October 26, 2019 and ~~26 week periods ended January~~October 27, 2018 ~~and January 28, 2017~~ of Village Super Market, Inc. (“Village” or the “Company”).

On June 24, 2019, the Company purchased three Gourmet Garage specialty markets in Manhattan, New York City. Village acquired the store fixtures, leases, inventory, other working capital and other assets for $5,267, net of cash and cash equivalents. Village has accounted for this transaction as a business combination in accordance with the acquisition method of accounting, which requires, among other things, that assets acquired and liabilities assumed be recognized at their estimated fair values as of the acquisition date. In connection with this acquisition, the Company recorded $593 of goodwill attributable to the assembled workforce of Gourmet Garage and cost synergies and a $1,485 indefinite-lived intangible asset related to the trade name. Transaction costs were expensed as incurred. The allocation of the purchase price consideration to the assets acquired and the liabilities assumed will be completed upon the finalization of working capital adjustments.

The significant accounting policies followed by the Company, except as updated for the adoption of new lease guidance, are set forth in Note 1 to the Company's consolidated financial statements in the July ~~29, 2017~~27, 2019 Village Super Market, Inc. Annual Report on Form 10-K, which should be read in conjunction with these financial statements. The results of operations for the ~~periods~~period ended ~~January 27, 2018~~October 26, 2019 are not necessarily indicative of the results to be expected for the full year.

Recently adopted accounting standards

On July 28, 2019, the Company adopted ASU 2016-02, “Leases.” This guidance requires lessees to recognize lease liabilities and a right-of-use asset for all leases with terms of more than 12 months on the balance sheet. The Company adopted the standard using the modified retrospective approach under which the cumulative effect of initially applying the standard was recognized as an adjustment to opening fiscal 2020 retained earnings, with no restatement of prior year amounts. In addition, the Company applied the transition package of practical expedients permitted within the standard, which allowed the carryforward of historical lease classification, and applied the transition option which does not require application of the guidance to comparative periods in the year of adoption.

The adoption of the standard resulted in the recognition of operating lease assets and operating lease liabilities of $99,415 and $111,139, respectively, as of the date of adoption. Included in the initial measurement of the new lease assets is the reclassification of certain prepaid and deferred rent balances. Additionally, the Company recorded an adjustment to reduce its opening retained earnings balance by $3,514, net of income taxes, as the Company derecognized the remaining financing obligations of $17,442 and related net assets of $12,543 for leases in which the Company was previously deemed to be the owner of the project for accounting purposes but did not qualify for sale-leaseback treatment. As such designation ended for these leases with adoption of the ASU, operating lease right-of-use asset and liability balances were established for these leases based on the Company's remaining fixed payment obligations under the leases and are included in the amounts described above. Accordingly, the fixed lease payments related to these leases will be recognized as an operating lease cost on a straight-line basis over the lease term, and eliminated depreciation and interest expense in the fiscal 2020 consolidated statement of operations. For the 13 weeks ended October 26, 2019 the Company recognized $677 of lease costs in Operating and administrative expense, and for the 13 weeks ended October 27, 2018 the Company recognized $107 of depreciation expense and $540 of interest expense related to these leases. The adoption of this standard also resulted in a change in naming convention for leases classified historically as capital leases to finance leases. The adoption of the new standard did not have a material impact on the consolidated statement of cash flows. Additional information on leases is provided in Note 7.

2. MERCHANDISE INVENTORIES

At both ~~January 27, 2018~~October 26, 2019 and July ~~29, 2017,~~27, 2019, approximately ~~65%~~64% 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 ~~$14,410~~$14,512 higher than reported at both ~~January 27, 2018~~October 26, 2019 and July ~~29, 2017.~~27, 2019.

3. NET INCOME PER SHARE

The Company has two classes of common stock. Class A common stock is entitled to cash dividends as declared 54% greater than those paid on Class B common stock. Shares of Class B common stock are convertible on a share-for-share basis for Class A common stock at any time.

The Company utilizes the two-class method of computing and presenting net income per share. The two-class method is an earnings allocation formula that calculates basic and diluted net income per share for each class of common stock separately based on dividends declared and participation rights in undistributed earnings. Under the two-class method, Class A common stock is assumed to receive a 54% greater participation in undistributed earnings than Class B common stock, in accordance with the classes' respective dividend rights. Unvested share-based payment awards that contain nonforfeitable rights to dividends are treated as participating securities and therefore included in computing net income per share using the two-class method.

Diluted net income per share for Class A common stock is calculated utilizing the if-converted method, which assumes the conversion of all shares of Class B common stock to Class A common stock on a share-for-share basis, as this method is more dilutive than the two-class method. Diluted net income per share for Class B common stock does not assume conversion of Class B common stock to shares of Class A common stock.

The tables below reconcile the numerators and denominators of basic and diluted net income per share for all periods presented.

Outstanding stock options to purchase Class A shares of ~~384~~241 and 52278 were excluded from the calculation of diluted net income per share at ~~January~~October 26, 2019 and October 27, 2018, ~~and January 28, 2017,~~ respectively, as a result of their anti-dilutive effect. In addition, ~~369~~323 and ~~246~~340 non-vested restricted Class A shares, which are considered participating securities, and their allocated net income were

The Company sponsors four defined benefit pension plans. Net periodic pension cost for the four plans includes the following components:

On November 29, 2016, the Company amended the Village Super Market Local 72 Retail Clerks Employees’ Retirement Plan, which covers union employees in the Stroudsburg store, to freeze all benefits effective January 31, 2017. As a result of this amendment, the Company recognized a pre-tax remeasurement gain totaling $629 in accumulated other comprehensive loss during fiscal 2017. The remeasurement had no impact on the consolidated statements of operations.

As of ~~January 27, 2018,~~October 26, 2019, the Company has ~~contributed $510~~not made any contributions to its pension plans in fiscal ~~2018.~~2020. The Company expects contributions to ~~contribute approximately $3,500 during~~its defined benefit pension plans to be immaterial in fiscal ~~2018 to fund its pension plans.~~2020.

5. RELATED PARTY INFORMATION ~~- WAKEFERN~~

A description of the Company’s transactions with Wakefern, its principal supplier, and with other related parties is included in the Company’s Annual Report on Form 10-K for the year ended July ~~29, 2017.~~ 27, 2019.

Included in cash and cash equivalents at October 26, 2019 and July 27, 2019 are $52,945 and $73,879, respectively, of demand deposits invested at Wakefern at overnight money market rates.

There have been no other significant changes in the Company’s relationships or nature of transactions with related parties during the ~~first~~13 weeks ended October 26, weeks of fiscal 2018 except for the maturity of $22,172 in notes receivable from Wakefern that earned interest at the prime rate plus .25% on August 15, 2017. The Company invested $22,000 of the proceeds received in variable rate notes receivable from Wakefern that earn interest at the prime rate plus 1.25% and 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.

~~Included in cash and cash equivalents at January 27, 2018 and July 29, 2017 are $69,619 and $60,037, respectively, of demand deposits invested at Wakefern at overnight money market rates.~~2019.

~~Effective November 9, 2017, the Company entered into a credit agreement that amends, restates~~COMMITMENTS 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 providing a maximum amount available for borrowing of $25,000, and extends the credit agreement to December 31, 2020. The revolving credit line can be used for general corporate purposes. Indebtedness under this agreement bears interest at the applicable LIBOR rate plus 1.25%. The credit agreement continues to provide for up to $3,000 of letters of credit, which secure obligations for construction performance guarantees to municipalities. The credit agreement continues to contain covenants that, among other conditions, require a maximum liabilities to tangible net worth ratio, a minimum fixed charge coverage ratio and a positive net income. There were no amounts outstanding at January 27, 2018 or July 29, 2017 under the superseded facility.CONTINGENCIES

~~On December~~Superstorm Sandy devastated Village's trade area on October 29, ~~2017,~~2012 and resulted in the ~~Company entered into~~closure of almost all of our stores for periods of time ranging from a ~~financing transaction under the New Markets Tax Credit program, see note 8~~few hours to ~~the unaudited consolidated financial statements for further discussion.~~

~~On December 22, 2017 the Tax Cuts~~eight days. Village disposed of substantial amounts of perishable product and Jobs Act (the “Tax Act”) was enacted by the U.S. Government. The Tax Act made significant changes to the U.S. tax code that will affect the Company's fiscal year ending July 28, 2018, including, but not limited to, reducing the U.S. federal corporate tax rate from 35.0%% to 21.0%% effective January 1, 2018,also incurred repair, labor and ~~introducing bonus depreciation that will allow for full expensing of qualified property.~~

As the Company’s fiscal year ends on July 28, 2018, the Company’s U.S. federal corporate statutory income tax rate will be subject to a full year blended tax rate of 26.9%% for fiscal 2018, and 21.0%% for subsequent fiscal years. Asother costs as a result of the ~~decrease~~storm. Wakefern, as the policy holder, has pursued recovery of uncollected insurance claims on behalf of all Wakefern members through litigation against the insurance carrier and others since October 2013. This litigation is ongoing and the Company received an additional $415 in November 2018 which was recognized as a reduction in Operating and administrative expense in the U.S. federal corporate statutory rate, deferred tax balances were remeasured based on the rates at which they are expected to reverse in the future. In the 26 weeks ended January 27, 2018, a benefit of $2,726 was recognized related to the remeasurement of the Company’s deferred tax balances, which is included in Income taxes on the consolidated statements of operations.

On December 22, 2017, the Securities Exchange Commission ("SEC") issued guidance under Staff Accounting Bulletin No. 118, "Income Tax Accounting Implications of the Tax Cuts and Jobs Act," allowing taxpayers to record provisional amounts for reasonable estimates when they do not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete their accounting for certain income tax effects of the Tax Act. The SEC has issued rules that would allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the related tax impacts. The Company has completed recording the impacts of the change in tax rate. Estimates on the other impacts of the Tax Act were based on information currently available. The final impacts of the Tax Act may differ from the Company’s estimates due to changes in interpretations of the Tax Act or further legislation related to the Tax Act. Any changes could affect the measurement of deferred tax balances or potentially give rise to new deferred tax amounts.

~~8. NEW MARKETS TAX CREDIT~~

~~2017 New Markets Tax Credit~~

On December 29, 2017, the Company entered into a financing transaction with Wells Fargo Community Investment Holdings, LLC (“Wells Fargo”) under a qualified New Markets Tax Credit (“NMTC”) program related to the construction of a new store in the Bronx, New York. The NMTC program was provided for in the Community Renewal Tax Relief Act of 2000 (the “Act”) and is intended to induce capital investment in qualified lower income communities. The Act permits taxpayers to claim credits against their Federal income taxes for up to 39% of qualified investments in the equity of community development entities (“CDEs”). CDEs are privately managed investment institutions that are certified to make qualified low-income community investments.

In connection with the financing, the Company loaned $4,835 to VSM Investment Fund, LLC (the "Investment Fund") at an interest rate of 1.403% per year and with a maturity date of December 31, 2044. Repayments on the loan commence in March 2025. Wells Fargo contributed $2,375 to the Investment Fund and, by virtue of such contribution, is entitled to substantially all of the tax benefits derived from the NMTC. The Investment Fund is a wholly owned subsidiary of Wells Fargo. The loan to the Investment Fund is recorded in Other assets in the consolidated balance sheets.

The Investment Fund then contributed the proceeds to a CDE, which, in turn, loaned combined funds of $6,563, net of debt issuance costs, to Village Super Market of NY, LLC, a wholly-owned subsidiary of the Company, at an interest rate of 1.000% per year with a maturity date of December 31, 2051. These loans are secured by the leasehold improvements and equipment related to the construction of the Bronx store. Repayment of the loans commences in March 2025. The proceeds of the loans from the CDE will be used to partially fund the construction of the Bronx store. The Notes payable related to New Markets Tax Credit, net of debt issuance costs, are recorded in Long-term debt in the consolidated balance sheets.

The NMTC is subject to 100% recapture for a period of seven years. The Company is required to be in compliance with various regulations and contractual provisions that apply to the New Markets Tax Credit arrangement. Noncompliance could result in Wells Fargo's projected tax benefits not being realized and, therefore, require the Company to indemnify Wells Fargo for any loss or recapture of NMTCs. The Company does not anticipate any credit recapture will be required in connection with this financing arrangement. The transaction includes a put/call provision whereby the Company may be obligated or entitled to repurchase Wells Fargo's interest in the Investment Fund. The value attributed to the put/call is de minimis. We believe that Wells Fargo will exercise the put option in December 2024, at the end of the recapture period, that will result in a net benefit to the Company of $1,728. The Company is recognizing the net benefit over the seven-year compliance period.

In November 2016, the FASB issued ASU No. 2016-18, "Restricted Cash," which requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and restricted cash. Accordingly, restricted cash will be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts presented on the statement of cash flows. The Company early-adopted ASU No. 2016-18 during the secondfirst quarter of fiscal 2019. Including the November 2018 and applied its provisions retrospectively. Other than the change in presentation within the consolidated statement of cash flows, the adoption of ASU No. 2016-18 did not have an impact on the Company's consolidated financial statements. Included in Other assets at January 27, 2018 is $6,563 of cash and cash equivalentsrecoveries, Village has received $3,998 related to ~~the NMTC financing transaction that~~losses incurred as a result of Superstorm Sandy. Any further proceeds recovered will be recognized as they are ~~restricted as to withdrawal and designated for expenditure in the construction of noncurrent assets in the Bronx store. There were no restricted cash or cash equivalents at July 29, 2017.~~received.

~~9. COMMITMENTS and CONTINGENCIES~~

The Company is involved in other litigation incidental to the normal course of business. Company management is of the opinion that the ultimate resolution of these legal proceedings should not have a material adverse effect on the consolidated financial position, results of operations or liquidity of the Company.

The Company leases 27 retail stores, as well as the corporate headquarters and equipment at October 26, 2019. The majority of initial lease terms range from 20 to 30 years. Most of the Company’s leases contain renewal options at increased rents of five to ten years each at the Company’s sole discretion. These options enable Village to retain the use of facilities in desirable operating areas. Each renewal option is evaluated when recognizing the lease right-of-use assets and liabilities, and the Company

The composition of total lease cost is as follows:



		13 Weeks Ended
	Consolidated Statement of Operations Classification	October 26, 2019
Operating lease cost	Operating and administrative expense	$	4,779
Finance lease cost
Amortization of leased assets	Depreciation and amortization	237
Interest on lease liabilities	Interest expense	517
Variable lease cost	Operating and administrative expense	3,695

Total lease cost		$	9,228

As of October 26, 2019, finance lease right-of-use assets of $14,464 are included in Property, equipment and fixtures, net in the Company's Consolidated Balance Sheet. Maturities of operating and finance lease liabilities, including options to extend lease terms that are reasonably certain of being exercised, are as follows as of October 26, 2019:



	Operating leases		Finance leases		Total
Remainder of 2020	$	12,663	$	2,000	$	14,663
2021	15,453		2,689		18,142
2022	14,658		2,689		17,347
2023	14,504		2,689		17,193
2024	12,369		2,689		15,058
Thereafter	79,309		24,428		103,737
Total lease payments	148,956		37,184		186,140
Less amount representing interest	40,539		13,173		53,712

Present value of lease liabilities	$	108,417	$	24,011	$	132,428

The Company has approximately $9,280 of future payment obligations related to lease agreements that have not yet commenced but have been executed as of October 26, 2019.

For purposes of measuring the present value of its fixed payment obligations for a given lease, the Company uses its incremental borrowing rate as the discount rate implicit within its leases is generally not determinable. The Company's incremental borrowing rate reflects the rate it would pay to borrow on a secured basis, and incorporates the term and economic environment of the lease. As of October 26, 2019, the Company's lease terms and discount rates are as follows:



	October 26, 2019
Weighted-average remaining lease term (years)
Operating leases	12.2
Finance leases	16.3
Weighted-average discount rate
Operating leases	5.3	%
Finance leases	8.5	%

Supplemental cash flow information related to leases is as follows:



	13 Weeks Ended
	October 26, 2019
Cash paid for amounts in the measurement of lease liabilities
Operating cash flows from operating leases	$	4,380
Operating cash flows from finance leases	517
Financing cash flows from finance leases	113

In the first quarter of fiscal 2020, the Company adopted ASU 2016-02, and as required, the following disclosure is provided for periods prior to adoption. Future minimum lease payments by year and in the aggregate for all non-cancelable leases with initial terms of one year or more consisted of the following at July 27, 2019:



	Capital and financing leases		Operating leases
2020	$	5,173	$	13,573
2021	5,240		12,972
2022	5,240		10,348
2023	5,305		9,747
2024	5,342		7,457
Thereafter	43,708		61,043
Minimum lease payments	70,008		$	115,140
Less amount representing interest	28,233

Present value of minimum lease payments	41,775

Less current portion	1,022
	$	40,753

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in Thousands)

Village Super Market, Inc. (the “Company” or “Village”) operates a chain of 2930 ShopRite supermarkets in New Jersey, eastern Pennsylvania, Maryland and ~~northeastern Pennsylvania.~~New York City and three Gourmet Garage specialty markets in Manhattan, New York City. On November 1, 2019, Village opened a 82,000 sq. ft. (52,000 selling sq. ft.) store in Stroudsburg, Pennsylvania and replaced our existing 53,000 sq. ft. store. On June 24, 2019, Village acquired the assets and certain liabilities of Gourmet Garage for $5,267. Gourmet Garage operates three specialty markets averaging 11,000 sq. ft. (5,800 selling sq. ft.) in Manhattan, New York City. On June 28, 2018, Village opened a 53,000 sq. ft. (31,000 selling sq. ft.) ShopRite 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.~~and Gourmet Garage names. As further described in the Company’s Form 10-K, this ownership interest in Wakefern provides Village many of the economies of scale in purchasing, distribution, ~~private label products,~~store brands, advanced retail technology, marketing and advertising associated with chains of greater size and geographic coverage.

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 service experience and a broad range of consistently available quality products, ~~(including~~including our own brands portfolio. In October 2019, ShopRite ~~private labeled products).~~introduced the Right Price Promise pricing strategy, a commitment to everyday low prices on the items customers purchase most frequently. The ShopRite Price Plus preferred customer program enables Village to offer continuity programs, focus on target marketing initiatives and to offer discounts and attach digital coupons directly to a customer's Price Plus card.

In November 2019, ShopRite launched the Bowl & Basket and Paperbird store brands. Bowl & Basket foods pair thoughtfully selected ingredients at a budget friendly price and Paperbird offers a new line of effective and beautifully designed household products. More than 100 newly branded items, including packaged salads, salty snacks, cooking oils, bottled water and paper goods, were introduced in early November. ShopRite expects to add nearly 3,500 Bowl & Basket foods and Paperbird household products over the next 18 months. The introduction of Bowl & Basket and Paperbird follows the successful 2016 launch of ShopRite’s Wholesome Pantry brands, which include the Wholesome Pantry Organic line as well as a range of products free from 110 ingredients and artificial additives and preservatives. Wholesome Pantry will also be introducing new products in the coming months, rounding out ShopRite’s reinvention of its own brands portfolio.

The Company’s stores, six of which are owned, average ~~59,000~~55,000 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 ~~seventeen~~19 ShopRite 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~~18 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.

RESULTS OF OPERATIONS

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

Sales. Sales were ~~$417,382~~$407,402 in the ~~second quarter of fiscal 2018,~~13 weeks ended October 26, 2019, an increase of ~~1.3%~~1.5% compared to the ~~second quarter~~13 weeks ended October 27, 2018. Sales increased due to the acquisition of ~~the prior year.~~Gourmet Garage on June 24, 2019 and a 0.1% increase in same store sales. Same store sales increased due to continued sales growth in the Bronx, New York City store opened on June 28, 2018, recently remodeled or replaced stores and ~~expanded stores in Chester and Stirling, inflation and increased promotional spending.~~continued growth of ShopRite from Home including expansion to four additional stores. These increases were partially offset by the impact of two competitor store ~~openings.~~openings, decreased promotional spending in Maryland and reduced sales in our existing store in Stroudsburg, Pennsylvania leading up to its closure and the opening of a replacement store on November 1, 2019. The Company expects same store sales in fiscal ~~2018~~2020 to range from a ~~0.5%~~2.0% decrease to ~~a 0.5% increase.~~flat.

Although the Company cannot accurately determine the precise impact of inflation or deflation on operations due to changes in product mix, customer buying patterns and competitive factors, we estimate that product prices experienced modest inflation during the 13 weeks ended October 26, 2019. 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.

Sales were $803,856 in the six-month period of fiscal 2018, an increase of 0.2% from the six-month period of the prior year. Same store sales increased 0.2% due primarily to sales growth in recently remodeled and expanded stores in Chester and Stirling, inflation and increased promotional spending. These increases were partially offset by four competitor store openings.

Although the Company cannot accurately determine the precise impact of inflation or deflation on operations due to changes in product mix, customer buying patterns and competitive factors, we estimate that product prices experienced moderate inflation during the second quarter and six-month period of fiscal 2018 across all selling departments other than pharmacy, which continued to experience deflation.

Gross Profit. Gross profit as a percentage of sales decreased ~~.09%~~.05% in the ~~second quarter of fiscal 2018~~13 weeks ended October 26, 2019 compared to the ~~second quarter~~13 weeks ended October 27, 2018. Excluding the impact of the ~~prior year~~addition of Gourmet Garage, gross profit as a percentage of sales decreased .26% in the 13 weeks ended October 26, 2019 compared to the 13 weeks ended October 27, 2018 due primarily ~~due~~ to ~~decreased patronage dividends from Wakefern (.07%), increased promotional spending (.05%) and~~ decreased departmental gross margin percentages ~~(.11%~~(.28%), increased warehouse assessment charges from Wakefern (.05%) partially offset by a favorable change in product mix ~~(.12%~~(.04%) and decreased LIFO charges (.03%).

~~Gross profit~~ Departmental gross profits decreased due primarily to decreased pharmacy margins as a ~~percentage~~result of ~~sales decreased .03%~~continued downward pressure on prescription reimbursement rates from third party providers and price investments, including the introduction in early October 2019 of ShopRite's Right Price Promise pricing strategy, a commitment to everyday low prices on the six-month period of fiscal 2018 compared to the six-month period of the prior year primarily due to decreased patronage dividends from Wakefern (.04%) and increased promotional spending (.09%) partially offset by a favorable change in product mix (.12%).items customers purchase most frequently.

Operating and Administrative Expense. Operating and administrative expense as a percentage of sales increased ~~.12%~~1.34% in the ~~second quarter of fiscal 2018~~13 weeks ended October 26, 2019 compared to the ~~second quarter~~13 weeks ended October 27, 2018. The 13 weeks ended October 26, 2019 includes pre-opening costs related to the Stroudsburg, Pennsylvania replacements store (.21%), charges to write off the lease asset related to the old Stroudsburg store (.07%) and lease costs reclassified from Depreciation and Amortization and Interest Expense to Operating and Administrative Expense (.17%) as a result of the ~~prior year due primarily~~adoption of ASU 2016-02, “Leases” (see note 1 to ~~payroll investments in service departments, training and other initiatives (.21%~~the consolidated financial statements). The 13 weeks ended October 27, 2018 includes a gain for Superstorm Sandy insurance proceeds received (.10%).

~~Operating~~ Excluding these items from both periods, operating and administrative expense as a percentage of sales increased ~~.29%~~.79% in the ~~six-monthperiod of fiscal 2018~~13 weeks ended October 26, 2019 compared to the ~~six-monthperiod of the prior year primarily~~13 weeks ended October 27, 2018 due primarily to increased payroll ~~investments in service departments, training~~(.35%), fringe benefit costs (.13%) and ~~other initiatives (.32%~~occupancy costs (.19%). Payroll increased due primarily to the addition of Gourmet Garage and continued growth of ShopRite from Home and expansion to four additional stores. Fringe benefit costs increased primarily due to increased claim costs on self-insured medical plans. Occupancy costs increased due primarily to the addition of Gourmet Garage and increased common area maintenance charges.

Depreciation and Amortization. Depreciation and amortization expense increased in the ~~second quarter and six-month period of fiscal 2018~~13 weeks ended October 26, 2019 compared to the ~~corresponding periods of the prior year~~13 weeks ended October 27, 2018 due to depreciation related to ~~fixed asset additions.~~acquisition of Gourmet Garage, capital expenditures and accelerated depreciation related to assets at the existing Stroudsburg store that was replaced on November 1, 2019.

Interest Expense. Interest expense in the ~~second quarter and six-month period of fiscal 2018 was flat~~13 weeks ended October 26, 2019 decreased compared to the ~~corresponding period~~13 weeks ended October 27, 2018 due to lease costs reclassified to Operating and Administrative Expenses (.13%) as a result of the ~~prior year.~~adoption of ASU 2016-02, “Leases” (see note 1 to the consolidated financial statements).

Interest Income. Interest income increased in the ~~second quarter and six-month period of fiscal 2018~~13 weeks ended October 26, 2019 compared to the ~~corresponding period of the prior year~~13 weeks ended October 27, 2018 due primarily to ~~higher~~larger amounts invested ~~and higher interest rates earned on~~in variable rate notes receivable from Wakefern and demand deposits invested at Wakefern.

Income Taxes. The effective income tax rate was ~~.9%~~29.9% in the ~~second quarter of fiscal 2018~~13 weeks ended October 26, 2019 compared to ~~40.9%~~30.2% in the ~~second quarter of the prior year.~~13 weeks ended October 27, 2018. The effective income tax rate ~~was 15.0% in the six-month period of fiscal 2018 compared~~decreased due to ~~41.2% in the six-month period of the prior year.~~

~~The effective tax rate was impacted by the~~increased estimated Work Opportunity Tax Cuts and Jobs Act (the "Tax Act") enacted on December 22, 2017. The Tax Act makes significant changes to the U.S tax code that will affect our fiscal year ended July 28, 2018, including, but not limited to, reducing the U.S. federal statutory tax rate from 35% to 21% effective January 1, 2018 and bonus depreciation that will allow for full expensing of qualified property.

For the fiscal year ended July 28, 2018 the Company will have 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 rate, the Company recognized a decrease in its net deferred tax liabilities of $2,726 in the second quarter of fiscal 2018, with a corresponding reduction to deferred income tax expense. Excluding the impact of the adjustment to deferred tax expense, the effective income tax rates were 29.3% and 33.5% in the second quarter and six-month period of fiscal 2018, respectively.Credits.

Net Income. Net income was ~~$9,511~~$2,567 in the ~~second quarter of fiscal 2018~~13 weeks ended October 26, 2019 compared to ~~$5,992~~$6,269 in the ~~second quarter~~13 weeks ended October 27, 2018. The 13 weeks ended October 26, 2019 includes pre-opening costs related to the Stroudsburg, Pennsylvania replacement store of $594 (net of tax) and charges to write off the ~~prior year.~~lease asset related to the old Stroudsburg store of $191 (net of tax). The ~~second quarter of fiscal~~13 weeks ended October 27, 2018 includes a ~~$2,726 non-cash reduction in deferred tax expense as a result~~$290 (net of ~~the Tax Act.~~tax) gain for Superstorm Sandy insurance proceeds received. Excluding ~~this item~~these items from ~~the second quarter of fiscal 2018,~~both periods, net income ~~increased 13%~~decreased 44% in the ~~second quarter of fiscal 2018~~13 weeks ended October 26, 2019 compared to the prior year due primarily ~~due~~ to ~~the favorable impact of a reduction in the fiscal 2018 estimated effective tax rate to 33.5% as a result of the Tax Act.~~

Net income was $12,528 in the six-month period of fiscal 2018 compared to $10,101 in the six-month period of the prior year. Fiscal 2018 includes a $2,726 non-cash reduction in deferred tax expense as a result of the Tax Act. Excluding this item, net income decreased ~~3% in the six-month period of fiscal 2018 compared to the prior year primarily due to higher~~gross profit margins and increased operating and administrative ~~expenses partially offset by the favorable impact of a reduction in the fiscal 2018 estimated effective tax rate to 33.5% as a result of the Tax Act.~~expenses.

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 and goodwill, 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 ~~29, 2017. As no material uncertain tax positions remain~~27, 2019. Except for the changes due to the adoption of ASU 2016-02 related to leases discussed in ~~the Company’s financial condition~~"Recently adopted accounting standards," Note 1, and ~~results~~Note 7 as of ~~operations, the Company has updated its critical accounting policies to exclude accounting for uncertain tax positions. As of January 27, 2018,~~October 26, 2019, there have been no ~~other~~ changes to 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 ~~$28,424~~$3,375 in the ~~six-monthperiod of fiscal 2018~~13 weeks ended October 26, 2019 compared to ~~$15,146~~$6,125 in the corresponding period of the prior year. The ~~increase~~decrease in net cash provided by operating activities in fiscal ~~2018~~2020 was primarily due to ~~changes in working capital and~~decreased net income adjusted for non-cash ~~expenses including depreciation~~expense and ~~amortization, share-based compensation and deferred taxes.~~changes in working capital. Working capital changes, including Other assets and ~~Other~~ liabilities, ~~increased net cash provided~~

During the ~~six-monthperiod of fiscal 2018,~~13 weeks ended October 26, 2019, Village used cash to fund capital expenditures of ~~$12,731,~~$22,349, dividends of ~~$6,439~~$3,220 and ~~invested an~~ additional ~~$1,051~~investments of $796 in notes receivable from ~~Wakefern, net of proceeds received on matured notes.~~Wakefern. Capital expenditures primarily include costs associated with ~~several smaller remodels.~~the Stroudsburg replacement store, expansion of ShopRite from Home and equipment purchases.

At ~~January 27, 2018,~~October 26, 2019, the Company ~~had $45,731 in~~held variable rate notes receivable due from Wakefern of $25,095 that earn interest at the prime rate plus ~~$1.25% with $23,265 that mature on February 15, 2019~~1.25% and ~~$22,466 that~~ mature on August 15, ~~2022. On August 15, 2017, notes receivable due from Wakefern of $22,142~~2022 and $25,909 that ~~earned~~earn 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~~.75% and mature on ~~August~~February 15, ~~2022.~~2024. Wakefern has the right to prepay these notes at any time. Under certain conditions, the Company can require

Village has ~~revised its~~ budgeted $55,000 for capital expenditures ~~downward from prior estimates to approximately $30,000~~ for fiscal ~~2018 due to delays in the timing of certain projects.~~2020. Planned expenditures include the construction of a ~~new~~replacement store in ~~the Bronx, New York, two~~Stroudsburg, Pennsylvania, three major remodels, ~~several smaller remodels~~expansion of ShopRite from Home, and various merchandising, technology, ~~upgrade projects.~~equipment and facility upgrades. The Company’s primary sources of liquidity in fiscal ~~2018~~2020 are expected to be cash and cash equivalents on hand at ~~January 27, 2018,~~October 26, 2019 and operating cash flow generated in fiscal ~~2018 and funding through the New Markets Tax Credit program as described in note 8 to the unaudited consolidated financial statements.~~2020.

Working capital was ~~$59,888~~$31,389 at ~~January 27, 2018~~October 26, 2019 compared to ~~$85,279~~$56,307 at July ~~29, 2017.~~27, 2019. Working capital ratios at the same dates were ~~1.61~~1.26 and ~~1.89~~1.50 to 1, respectively. The decrease in working capital in fiscal ~~2018~~2020 compared to fiscal ~~2017~~2019 is due primarily to ~~maturity~~a decrease in cash and cash equivalents as a result of ~~$22,142 in notes receivable from Wakefern,~~capital expenditures related to the Stroudsburg replacement store and recognition of ~~which $22,000 was reinvested in long-term notes receivable from Wakefern.~~current operating lease obligations as a result of the adoption of ASU 2016-02, “Leases”. The Company’s working capital needs are reduced, since inventories are generally sold by the time payments to Wakefern and other suppliers are due.

~~Effective November 9, 2017, the Company entered into a~~Village has an unsecured revolving 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 providing a maximum amount available for borrowing of ~~$25,000, and extends the credit agreement to December 31, 2020.~~ $25,000.

There have been no ~~other~~ substantial changes as of ~~January 27, 2018~~October 26, 2019 to the contractual obligations and commitments discussed in the Company’s Annual Report on Form 10-K for the year ended July ~~29, 2017.~~27, 2019.

OUTLOOK

This Form 10-Q 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: same store sales; economic conditions; expected pension plan contributions; projected capital expenditures; 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.

We expect same store sales to range from a 2.0% decrease ~~of 0.5%~~ to ~~an increase of 0.5%~~a flat in fiscal ~~2018. We expect sales trends to be negatively impacted by several local competitor store openings.~~2020, including the impact of expected investments in retail pricing and expansion of our own brand product portfolio.

We have ~~revised~~ budgeted $55,000 for capital expenditures ~~downward from prior estimates to approximately $30,000 for~~in fiscal ~~2018 due to delays in the timing of certain projects.~~2020. Planned expenditures include the construction of a ~~new~~replacement store in ~~the Bronx, New York, two~~Stroudsburg, Pennsylvania, three major remodels, ~~several smaller remodels~~expansion of ShopRite from Home, and various merchandising, technology, ~~upgrade projects.~~equipment and facility upgrades.

The Board’s current intention is to continue to pay quarterly dividends in ~~2018~~2020 at the most recent rate of $.25 per Class A and $.1625 per Class B share.

We believe cash and cash equivalents on hand, operating cash flow ~~from operations~~ and other sources of liquidity will be adequate to meet anticipated requirements for working capital, capital expenditures and debt payments for the foreseeable future.

We expect our effective income tax rate in fiscal ~~2018~~2020 to be in the range of ~~33.0%~~29.5% - ~~34.0%~~30.5%.

~~We expect operating expenses will be affected by increased costs in certain areas, such as medical and other fringe benefit costs.~~

We expect approximately ~~$100~~$1,600 of net periodic pension costs in fiscal ~~2018~~2020 related to the four Company sponsored defined benefit pension plans. The Company expects contributions to ~~contribute $3,500 in cash to all~~its defined benefit pension plans to be immaterial in fiscal ~~2018.~~2020.

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

The supermarket business is highly competitive and characterized by narrow profit margins. Results of operations may be materially adversely impacted by competitive pricing and promotional programs, industry consolidation and competitor store openings. 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 these competitors have greater financial resources, lower merchandise acquisition costs and lower operating expenses than we do.

The Company’s stores are concentrated in New Jersey, with two stores in Maryland, ~~and~~ one in northeastern ~~Pennsylvania.~~Pennsylvania and four in New York City. 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 inflation, deflation, interest rate fluctuations, movements in energy costs, social programs, minimum wage legislation, unemployment rates and changing demographics may adversely affect our sales and profits.

Village purchases substantially all of its merchandise from Wakefern. In addition, Wakefern provides the Company with support services in numerous areas including advertising, liability and property insurance, supplies, certain equipment purchasing, coupon processing, certain financial accounting applications, retail technology support, and other store services. Further, Village receives patronage dividends and other product incentives from Wakefern and also has demand deposits and notes receivable due from Wakefern.

Any material change in Wakefern’s method of operation or a termination or material modification of Village’s relationship with Wakefern could have an adverse impact on the conduct of the Company’s business and could involve additional expense for 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 or solvency could have an adverse effect on Village’s results of operations.

Approximately ~~91%~~88% of our employees are covered by collective bargaining agreements. Any work stoppages could have an adverse impact on our financial results. If we are unable to control health care and pension costs provided for in the collective bargaining agreements, we may experience increased operating costs.

The Company could be adversely affected if consumers lose confidence in the safety and quality of the food supply chain. 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.

Certain of the multi-employer plans to which we contribute 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 a 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, withdrawals by other participating employers and the actual return on assets held in the plans, among other factors.

The Company uses a combination of insurance and self-insurance to provide for potential liability for workers’ compensation, automobile and general liability, property, director and officers’ liability, and certain employee health care benefits. Any projection of losses is subject to a high degree of variability. Changes in legal claims, trends and interpretations, variability in inflation rates, changes in the nature and method of claims settlement, benefit level changes due to changes in applicable laws, and insolvency of insurance carriers could all affect our financial condition, results of operations, or cash flows.

Our long-lived assets, primarily store property, equipment and fixtures, are subject to periodic testing for impairment. Failure of our asset groups to achieve sufficient levels of cash flow could result in impairment charges on long-lived assets.

Our effective tax rate may be impacted by the results of tax examinations and changes in tax laws.

Wakefern provides all members of the cooperative with information system support that enables us to effectively manage our business data, customer transactions, ordering, communications and other business processes. These information systems are subject to damage or interruption from power outages, computer or telecommunications failures, computer viruses and related malicious software, catastrophic weather events, or human error. Any material interruption of our or Wakefern’s information systems could have a material adverse impact on our results of operations.

Due to the nature of our business, personal information about our customers, vendors and associates is received and stored in these information systems. In addition, confidential information is transmitted through our ShopRite from Home online business at shoprite.com and through the ShopRite app. Unauthorized parties may attempt to access information stored in or to sabotage or disrupt these systems. Wakefern and the Company maintain substantial security measures to prevent and detect unauthorized access to such information, including utilizing third-party service providers for monitoring our networks, security reviews, and other functions. It is possible that computer hackers, cyber terrorists and others may be able to defeat the security measures in place at the Company, Wakefern or those of third-party service providers.

Any breach of these security measures and loss of confidential information, which could be undetected for a period of time, could damage our reputation with customers, vendors and associates, cause Wakefern and Village to incur significant costs to protect any customers, vendors and associates whose personal data was compromised, cause us to make changes to our information systems and could result in government enforcement actions and litigation against Wakefern and/or Village from outside parties. Any such breach could have a material adverse impact on our operations, consolidated financial condition, results of operations, and liquidity if the related costs to Wakefern and Village are not covered or are in excess of carried insurance policies. In addition, a security breach could require Wakefern and Village to devote significant management resources to address problems created by the security breach and restore our reputation.

RELATED PARTY TRANSACTIONS

See note 5 to the unaudited consolidated financial statements for information on related party transactions.

RECENTLY ISSUED ACCOUNTING STANDARDS

In ~~May 2014,~~August 2018, the FASB issued ASU ~~No. 2014-09, “Revenue from Contracts with Customers,” which provides~~2018-14, "Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans." The guidance modifies disclosure requirements for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company expects to adopt the new standard in the first quarter of its fiscal year ending July 27, 2019. The Company does not anticipate it will have a material impact on its recognition of revenue at the point of sale, and is continuing to identify and assess transactions that may be affected by the new standard.

In February 2016, the FASB issued ASU 2016-02, "Leases." This guidance requires lessees to recognize lease liabilities and a right-of-use asset for all leases with terms of more than 12 months on the balance sheet.defined benefit plans. This guidance is effective for fiscal years ~~and interim periods within those years, beginning~~ending after December 15, ~~2018, with earlier~~2020, and early adoption is permitted. The Company ~~expects to adopt~~is currently assessing the new standard in the first quarter of its fiscal year ending July 25, 2020. ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after the date of initial adoption. The adoptionpotential impact of ASU 2016-02 will result in a significant increase to the Company’s Consolidated Balance Sheets for lease liabilities and right-of-use assets, and the Company is currently evaluating the other effects of adoption of this standard2018-14 on its consolidated financial ~~statements and related~~statement disclosures.

In February 2018, the FASB issued ASU No. 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which will allow a reclassification from accumulated other comprehensive income to retained earnings for the tax effects resulting from the Tax Act that are stranded in accumulated other comprehensive income. This standard also requires certain disclosures about stranded tax effects. This ASU, however, does not change the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations. The new guidance is effective for the first interim and annual periods beginning after December 15, 2018, with early adoption permitted. It must be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Act is recognized. The Company is currently evaluating the effects of adoption of this standard on its consolidated financial statements and related disclosures.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At ~~January 27, 2018,~~October 26, 2019, the Company had demand deposits of ~~$69,619~~$52,945 at Wakefern earning interest at overnight money market rates, which are exposed to the impact of interest rate changes.

At ~~January 27, 2018,~~October 26, 2019, the Company ~~had $45,731 in~~held variable rate notes receivable due from Wakefern of $25,095 that earn interest at the prime rate plus ~~$1.25% with $23,265~~1.25% and mature on August 15, 2022 and $25,909 that earn interest at the prime rate plus .75% and mature on February 15, ~~2019 and $22,466 that mature on August 15, 2022.~~2024. 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.

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.

Disclosure controls and procedures 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.

On July 28, 2019, the Company adopted ASU 2016-02, “Leases.” As part of the adoption of the new lease standard, the Company implemented additional internal controls and processes related to leases. There have been no other changes in the Company’s internal control over financial reporting during the quarter ended ~~January 27, 2018~~October 26, 2019 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ITEM 2C. ISSUER PURCHASES OF EQUITY SECURITIES

The number and average price of shares purchased in each fiscal month of the ~~second~~first quarter of fiscal ~~2018~~2020 are set forth in the table below:

Period(1) Total Number of Shares Purchased(2) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plan or Programs
October 29, 2017 to November 25, 2017 — $— — $2,008,972
November 26, 2017 to December 23, 2017 8,893 $23.02 8,893 $1,804,255
December 24, 2017 to January 27, 2018 11,845 $23.02 11,845 $1,531,583
Total 20,738 $23.02 20,738 $1,531,583



Period(1)	Total Number of Shares Purchased(2)	Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (3)
July 28, 2019 to August 24, 2019	812	$24.01	812	$665,465
August 25, 2019 to September 21, 2019	—	$—	—	$5,665,465
September 22, 2019 to October 26, 2019	—	$—	—	$5,665,465
Total	812	$24.96	812	$5,665,465


(1)	The reported periods conform to our fiscal calendar.

(2) Includes shares repurchased under a $5.0 million repurchase program of the Company's Class A Common Stock authorized by the Board of Directors and announced on June 12, 2015. Repurchases may be made from time-to-time through a variety of methods, including open market purchases and other negotiated transactions, including through plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934.

(3) Includes amount remaining under the program described in (2) and an additional $5.0 million repurchase program of the Company's Class A Common Stock authorized by the Board of Directors and announced on September 13, 2019. Repurchases may be made from time-to-time through a variety of methods, including open market purchases and other negotiated transactions, including through plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934.



Item 6.	Exhibits

Exhibit 31.1	Certification

Exhibit 31.2	Certification

Exhibit 32.1	Certification (furnished, not filed)

Exhibit 32.2	Certification (furnished, not filed)

Exhibit 99.1	Press Release

101 INS	XBRL Instance

101 SCH	XBRL Schema

101 CAL	XBRL Calculation

101 DEF	XBRL Definition

101 LAB	XBRL Label

101 PRE	XBRL Presentation

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

Dated: ~~March 8, 2018~~December 5, 2019	/s/ Robert P. Sumas
	Robert P. Sumas
	(Chief Executive Officer)

Dated: ~~March 8, 2018~~December 5, 2019	/s/ John Van Orden
	John Van Orden
	(Chief Financial Officer)

VILLAGE SUPER MARKET, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited)	VILLAGE SUPER MARKET, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited)												VILLAGE SUPER MARKET, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited)

	13 Weeks Ended						26 Weeks Ended						13 Weeks Ended
	January 27, 2018			January 28, 2017			January 27, 2018			January 28, 2017			October 26, 2019			October 27, 2018
Sales	$	417,382		$	412,215		$	803,856		$	801,907		$	407,402		$	401,550

Cost of sales	305,097			300,977			587,691			586,021			293,856			289,437

Gross profit	112,285			111,238			216,165			215,886			113,546			112,113

Operating and administrative expense	96,066			94,393			188,358			185,524			103,140			96,293

Depreciation and amortization	6,386			6,233			12,621			12,296			7,438			6,898

Operating income	9,833			10,612			15,186			18,066			2,968			8,922

Interest expense	(1,102		)	(1,114		)	(2,207		)	(2,230		)	(567		)	(1,116		)

Interest income	864			648			1,764			1,335			1,259			1,178

Income before income taxes	9,595			10,146			14,743			17,171			3,660			8,984

Income taxes	84			4,154			2,215			7,070			1,093			2,715

Net income	$	9,511		$	5,992		$	12,528		$	10,101		$	2,567		$	6,269

Net income per share:	Net income per share:												Net income per share:
Class A common stock:	Class A common stock:												Class A common stock:
Basic	$	0.74		$	0.47		$	0.97		$	0.80		$	0.20		$	0.49
Diluted	$	0.66		$	0.42		$	0.87		$	0.71		$	0.18		$	0.43

Class B common stock:
Basic	$	0.48		$	0.31		$	0.63		$	0.52		$	0.13		$	0.32
Diluted	$	0.48		$	0.31		$	0.63		$	0.52		$	0.13		$	0.32


	13 Weeks Ended					26 Weeks Ended					13 Weeks Ended
	January 27, 2018					January 27, 2018					October 26, 2019
	Class A		Class B			Class A		Class B			Class A			Class B
Numerator:
Net income allocated, basic	$	7,174	$	2,065		$	9,452	$	2,721		$	1,939		$	558
Conversion of Class B to Class A shares	2,065		—			2,721		—			558			—
Effect of share-based compensation on allocated net income	—		—			—		—			(2		)	(1		)
Net income allocated, diluted	$	9,239	$	2,065		$	12,173	$	2,721		$	2,495		$	557

Denominator:
Weighted average shares outstanding, basic	9,714		4,304			9,718		4,304			9,770			4,294
Conversion of Class B to Class A shares	4,304		—			4,304		—			4,294			—
Dilutive effect of share-based compensation	—		—			—		—
Weighted average shares outstanding, diluted	14,018		4,304			14,022		4,304			14,064			4,294

	13 Weeks Ended					26 Weeks Ended					13 Weeks Ended
	January 28, 2017					January 28, 2017					October 27, 2018
	Class A		Class B			Class A		Class B			Class A			Class B
Numerator:
Net income allocated, basic	$	4,548	$	1,327		$	7,664	$	2,239		$	4,739		$	1,361
Conversion of Class B to Class A shares	1,327		—			2,239		—			1,361			—
Effect of share-based compensation on allocated net income	6		(3		)	8		(3		)
Net income allocated, diluted	$	5,881	$	1,324		$	9,911	$	2,236		$	6,100		$	1,361

Denominator:
Weighted average shares outstanding, basic	9,613		4,319			9,603		4,319			9,732			4,304
Conversion of Class B to Class A shares	4,319		—			4,319		—			4,304			—
Dilutive effect of share-based compensation	52		—			50		—
Weighted average shares outstanding, diluted	13,984		4,319			13,972		4,319			14,036			4,304


	13 Weeks Ended				26 Weeks Ended				13 Weeks Ended
	January 27, 2018		January 28, 2017		January 27, 2018		January 28, 2017		October 26, 2019		October 27, 2018
Sales	100.00	%	100.00	%	100.00	%	100.00	%	100.00	%	100.00	%
Cost of sales	73.10		73.01		73.11		73.08		72.13		72.08
Gross profit	26.90		26.99		26.89		26.92		27.87		27.92
Operating and administrative expense	23.02		22.90		23.43		23.14		25.32		23.98
Depreciation and amortization	1.53		1.52		1.57		1.53		1.82		1.71
Operating income	2.35		2.57		1.89		2.25		0.73		2.23
Interest expense	(0.26	)	(0.27	)	(0.27	)	(0.28	)	(0.14	)	(0.28	)
Interest income	0.21		0.16		0.22		0.17		0.31		0.29
Income before taxes	2.30		2.46		1.84		2.14		0.90		2.24
Income taxes	0.02		1.01		0.28		0.88		0.27		0.68
Net income	2.28	%	1.45	%	1.56	%	1.26	%	0.63	%	1.56	%


(1)	Amounts are net of tax of ~~$41~~$44 and ~~$154~~$43 for the 13 weeks ended ~~January~~October 26, 2019 and October 27, 2018, ~~and January 28, 2017, respectively, and $98 and $264 for the 26 weeks ended January 27, 2018 and January 28, 2017,~~ respectively. All amounts are reclassified from ~~accumulated~~Accumulated other comprehensive loss to ~~operating~~Operating and administrative expense.


~~(2)~~	~~Amount is net of tax of $257.~~