SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended: January 25, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission File No. 0-2633
VILLAGE SUPER MARKET, INC.
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-1576170
(State of other jurisdiction of incorporation (I. R. S. Employer
or organization) Identification No.)
733 MOUNTAIN AVENUE, SPRINGFIELD, NEW JERSEY 07081
(Address of principal executive offices) (Zip Code)
(973) 467-2200
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X_ No __
Indicate the number of shares outstanding of the issuer's classes of common
stock as of the latest practicable date:
March 4, 2003
Class A Common Stock, No Par Value 1,491,200 Shares
Class B Common Stock, No Par Value 1,594,076 Shares
The Registrant was not involved in bankruptcy proceedings during the preceding
five years or any time prior thereto.
VILLAGE SUPER MARKET, INC.
INDEX
PART I PAGE NO.
FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets . . . . . . . . . 3
Consolidated Condensed Statements of Income . . . . . . 4
Consolidated Condensed Statements of Cash Flows . . . . 5
Notes to Consolidated Condensed Financial Statements. . 6 - 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . 8- 11
Item 3. Quantitative & Qualitative Disclosures about
Market Risk . . . . . . . . . . . . . . . . . . . . . . 12
Item 4. Controls and Procedures . . . . . . . . . . . . . . . . 12-13
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . 14
Signatures. . . . . . . . . . . . . . . . . . . . . . . 15
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
VILLAGE SUPER MARKET, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
January 25, July 27,
2003 2002
ASSETS (Unaudited)
Current assets
Cash and cash equivalents $ 45,133 $ 33,770
Merchandise inventories 34,381 33,780
Patronage dividend receivable 709 2,196
Other current assets 5,948 6,862
------- -------
Total current assets 86,171 76,608
Property, equipment and fixtures, net 100,052 98,674
Investment in related party, at cost 13,756 13,663
Goodwill 10,605 10,605
Other assets 4,740 4,503
------- -------
TOTAL ASSETS $ 215,324 $ 204,053
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 7,337 $ 3,061
Accounts payable to related party 33,865 30,631
Accounts payable and accrued expenses 24,637 22,705
--------- -------
Total current liabilities 65,839 56,397
Long-term debt 37,931 43,634
Other liabilities 7,515 6,579
Shareholders' equity
Class A common stock - no par value,
issued 1,762,800 shares 18,411 18,411
Class B common stock - no par value,
1,594,076 shares issued & outstanding 1,035 1,035
Retained earnings 88,966 82,517
Accumulated other comprehensive loss (616) (616)
Less cost of Class A treasury shares
(271,600 shares at January 25, 2003
and 282,200 shares at July 27, 2002) (3,757) (3,904)
------- -------
Total shareholders' equity 104,039 97,443
------- -------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 215,324 $ 204,053
======== ========
See accompanying Notes to Consolidated Condensed Financial Statements.
VILLAGE SUPER MARKET, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)
13 Wks. Ended 13 Wks. Ended 26 Wks. Ended 26 Wks. Ended
Jan. 25, 2003 Jan. 26, 2002 Jan. 25, 2003 Jan. 26, 2002
Sales $ 233,911 $ 230,636 $ 450,449 $ 441,468
Cost of sales 176,020 173,100 338,525 331,415
------- ------- ------- -------
Gross profit 57,891 57,536 111,924 110,053
Operating and
administrative
expense 49,650 48,988 96,591 94,175
Depreciation and
amortization 2,256 1,921 4,459 3,758
Non-cash impairment
charge ---- ---- ---- 640
------- ------- ------- -------
Operating income 5,985 6,627 10,874 11,480
Interest expense, net 844 843 1,623 1,488
Income from partnerships 1,639 ---- 1,639 ----
------- ------- ------- -------
Income before
income taxes 6,780 5,784 10,890 9,992
Income taxes 2,740 2,060 4,400 3,647
------- ------- ------ ------
Net income $ 4,040 $ 3,724 $ 6,490 $ 6,345
========== ========== ========== ==========
Net income
per share:
Basic $ 1.31 $ 1.22 $ 2.11 $ 2.08
Diluted $ 1.28 $ 1.19 $ 2.06 $ 2.03
See accompanying Notes to Consolidated Condensed Financial Statements.
VILLAGE SUPER MARKET, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
26 Weeks Ended 26 Weeks Ended
January 25, 2003 January 26, 2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,490 $ 6,345
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 4,459 3,758
Non-cash impairment charge ---- 640
Deferred taxes 700 150
Provision to value inventories at LIFO 200 400
Changes in assets and liabilities:
(Increase) in merchandise inventories ( 801) ( 2,644)
Decrease in patronage dividend receivable 1,487 1,829
(Increase) decrease in other current assets 914 ( 238)
(Increase) decrease in other assets ( 257) 52
Increase in accounts payable to related party 3,234 6,831
Increase in accounts payable and accrued expenses 1,932 3,083
Increase in other liabilities 236 197
-------- --------
Net cash provided by operating activities 18,594 20,403
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ( 5,817) (11,510)
-------- --------
Net cash used in investing activities ( 5,817) (11,510)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt ----- 3,000
Proceeds from exercise of stock options 106 278
Principal payments of long-term debt ( 1,520) ( 1,375)
--------- --------
Net cash provided by (used in) financing activities ( 1,414) 1,903
--------- --------
NET INCREASE IN CASH
AND CASH EQUIVALENTS 11,363 10,796
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 33,770 31,156
--------- ---------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 45,133 $ 41,952
========== =========
SUPPLEMENTAL DISCLOSURE OF CASH
PAYMENTS FOR:
Interest (net of amounts capitalized) $ 1,886 $ 1,902
Income taxes $ 300 $ 3,276
NON-CASH SUPPLEMENTAL DISCLOSURE:
Investment in related party $ 93 $ 550
See accompanying Notes to Consolidated Condensed Financial Statements.
VILLAGE SUPER MARKET, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of normal
and recurring accruals) necessary to present fairly the consolidated financial
position as of January 25, 2003 and the consolidated results of operations and
cash flows for the periods ended January 25, 2003 and January 26, 2002.
The significant accounting policies followed by the Company are set
forth in Note 1 to the Company's consolidated financial statements in the
July 27, 2002 Village Super Market, Inc. Annual Report on Form 10-K, which
should be read in conjunction with this Form 10-Q.
2. The results of operations for the period ended January 25, 2003
are not necessarily indicative of the results to be expected for the full year.
3. At both January 25, 2003 and July 27, 2002, approximately 66% 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 $9,562,000 and $9,362,000 higher than reported at
January 25, 2003 and July 27, 2002, respectively.
4. The number of common shares outstanding for calculation of net income
per share is as follows:
13 Weeks Ended 26 Weeks Ended
1/25/03 1/26/02 1/25/03 1/26/02
Weighted average shares
outstanding - basic 3,082,468 3,050,598 3,079,289 3,044,040
Dilutive effect of employee
stock options 67,385 81,395 68,684 76,423
--------- --------- --------- ---------
Weighted average shares
outstanding - diluted 3,149,853 3,131,993 3,147,973 3,120,463
========= ========= ========= =========
5. ADOPTION OF NEW ACCOUNTING STANDARDS
Effective July 28, 2002, the Company adopted the provisions of
Financial Accounting Standards Board ("FASB") Statement 143, "Accounting for
Asset Retirement Obligations." This statement addresses financial accounting
and reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement cost. The
implementation of this statement had an immaterial effect on the
consolidated financial statements of the Company.
Effective July 28, 2002, the Company adopted the provisions of FASB
Statement 144, "Accounting for the Impairment or Disposal of Long-lived
Assets." This statement requires that one accounting model be used for
long-lived assets to be disposed of, whether previously held and used or
newly acquired. This statement also broadens the presentation of discontinued
operations to include more disposal transactions. The implementation of this
statement did not have any impact on the consolidated financial statements
of the Company.
Effective July 28, 2002, the Company adopted the provisions of FASB
Statement 146, "Accounting for Costs Associated with Exit or Disposal
Activities." This statement requires companies to recognize costs associated
with exit or disposal activities when they are incurred rather than at the
date of a commitment to an exit or disposal plan. The implementation of this
statement did not have any impact on the consolidated financial statements of
the Company.
In November 2002, the FASB Emerging Issues Task Force (EITF) reached a
consensus with respect to EITF Issue No. 02-16, "Accounting for Consideration
Given by a Vendor to a Customer." This consensus includes a presumption that
cash consideration received by a customer from a vendor is to be treated as a
reduction of cost of sales in the customer's income statement. As the Company
already accounts for such consideration as a reduction of cost of sales, this
EITF has no impact on the Company's consolidated financial statements.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Sales were $233,911,000 in the second quarter of fiscal 2003, an
increase of 1.4% from the prior year. Same store sales increased 2.2% from
the prior year. Same store sales exclude the Hammonton, NJ store opened on
March 6, 2002 and the Ventnor, NJ store closed on February 5, 2002.
Approximately half of the same store sales increase is due to higher sales
at the Garwood, NJ store, which opened September 26, 2001, and is included
in same store sales for the first time in the second quarter of fiscal 2003.
Sales were $450,449,000 for the six month period of fiscal 2003, an increase
of 2.0% from the prior year. Same store sales increased 1.3% for the first
six months of fiscal 2003.
Same store sales increased less this fiscal year than in recent fiscal
years due to a substantial number of store openings by competitors near the
Company's stores in the last year, a softening of the economy and increased
levels of promotional activity in New Jersey. The Company estimates that the
timing of the 2003 Super Bowl occurring in the second fiscal quarter as
compared to the 2002 Super Bowl occurring in the third fiscal quarter,
increased sales by .5% in the second quarter. Based on the factors mentioned
above, we expect same store sales in the third quarter of fiscal 2003 to be
flat to a 1.5% increase.
Gross profit as a percentage of sales was 24.7% and 24.8%,
respectively, in the second quarter and six month periods of fiscal 2003
compared with 24.9% in both the corresponding prior year periods. Gross
profit as a percentage of sales decreased due to higher promotional spending
in the current year and incentives received one year ago in connection with
the store opening. This decrease was partially offset by improved product
mix and lower LIFO charges in the current year.
Operating and administrative expenses as a percentage of sales were
21.2% and 21.4%, respectively, in the quarter and six month periods of fiscal
2003 compared with 21.2% and 21.3%, respectively, in the corresponding prior
year periods. Fiscal 2003 includes increased payroll, fringe benefit, snow
removal and heating costs. Professional fees and front-end support costs
decreased in fiscal 2003.
Depreciation and amortization expense increased in the second quarter
and six month periods of fiscal 2003 compared to the prior year due to
additional depreciation on the substantial fixed asset additions placed in
service in fiscal 2002, partially offset by the discontinuance of depreciation
on the closed Ventnor store.
The Company recorded a non-cash impairment charge of $640,000 in the
first quarter of fiscal 2002 to write-off the book value of the equipment of
the Ventnor store.
Interest expense (net) increased in the six month period of fiscal 2003
compared to the prior year due to the first quarter of fiscal 2002 including
$171,000 of interest costs capitalized related to the construction of the new
store.
The second quarter of fiscal 2003 includes $1,639,000 of distributions
received from two partnerships in which the Company is a limited partner. The
Company's ownership interest in these partnerships resulted from its leasing
of supermarkets in two shopping centers. The Company remains a tenant in one
of the shopping centers. The Company's accounting for these partnerships
under the equity method has resulted in a zero investment balance in the
consolidated financial statements as of January 25, 2003
The effective income tax rate increased to 40.4% for the second quarter
and six month periods of fiscal 2003 compared to 35.6% and 36.5%,
respectively, in the corresponding periods of the prior year. This increase
is due to enacted changes in state tax law.
Net income was $4,040,000 in the second quarter of fiscal 2003, an
increase of 8.5% from the prior year. Excluding income received from
partnerships described above, net income was $3,063,000, a 17.7% decrease
from the prior year. This decrease is attributable to lower gross profit
percentages, a higher effective tax rate and slower same store sales growth.
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 and require management's most difficult,
subjective or complex judgments, often as a result of the need to make
estimates about the effect of matters that are inherently uncertain.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosures of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates. The Company's critical accounting policies relating to the
impairment of long-lived assets and accounting for patronage dividends earned
as a stockholder of Wakefern Food Corp. are described in the Company's Annual
Report on Form 10-K for the year ended July 27, 2002. As of January 25, 2003,
there have been no material changes to any of the critical accounting policies
contained therein.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activity was $18,594,000 for the six
months ended January 25, 2003 compared with $20,403,000 for the six month
period ended January 26, 2002. This change is attributable to smaller
increases in accounts payable to related party and accounts payable and
accrued expenses in the current fiscal year compared to larger increases
to those categories in the prior fiscal year.
During the first six months of fiscal 2003, the Company had capital
expenditures of $5,817,000, made debt payments of $1,520,000 and increased
cash on hand by $11,363,000. The largest capital expenditure in the six
month period related to the remodel of the English Creek, NJ store.
Working capital was $20,332,000 at January 25, 2003 compared to
$20,211,000 at July 27, 2002. The working capital ratio was 1.31 to one at
January 25, 2003 compared to 1.36 to one at July 27, 2002. The Company's
working capital needs are reduced since inventory is generally sold by the
time payment to Wakefern and other suppliers are due.
The Company has budgeted approximately $12,000,000 for capital
expenditures in fiscal 2003. In addition to the completed English Creek,
NJ remodel, the Company expects to start one major store expansion this
fiscal year. The Company's primary sources of liquidity in fiscal 2003
are expected to be cash on hand at January 25, 2003 and operating cash flow.
The Company has available a $15,000,000(none outstanding at January 25, 2003)
unsecured revolving credit line, which expires September 16, 2004.
There have been no substantial changes as of January 25, 2003 to the
contractual obligations discussed on page 5 of the Company's annual report on
Form 10-K for the year ended July 27, 2002.
RELATED PARTY TRANSACTIONS
A description of the Company's transactions with Wakefern Food Corp.,
its principal supplier, and with other related parties is included on page 6
of the Company's Annual Report on Form 10-K for the year ended July 27, 2002.
There have been no significant changes in the Company's relationship or nature
of the transactions with these related parties during the twenty-six weeks of
fiscal 2003.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS NOT YET ADOPTED
In December 2002, the FASB issued Statement No. 148 (SFAS 148),
"Accounting for Stock-Based Compensation - Transition and Disclosure, an
amendment of FASB Statement No. 123." This Statement amends FASB Statement
123 to provide alternative methods of transition for a voluntary change to the
fair value method of accounting for stock-based employee compensation and
amends the disclosure requirements of Statement 123 to require prominent
disclosures in both annual and interim financial statements. The Company has
a stock option plan as described more fully in note 7 of the Company's Annual
Report on Form 10-K for the year ended July 27, 2002. The Company will
present the required disclosures when they become effective under SFAS 148
which, for the Company, will be in its third quarter consolidated financial
statements, and in the consolidated financial statements for the year ended
July 26, 2003.
FORWARD-LOOKING STATEMENTS:
This Form 10-Q contains "forward-looking statements" within the meaning
of federal securities law. The Company cautions the reader that there is no
assurance that actual results or business conditions will not differ
materially from future results, whether expressed, suggested or implied by
such forward-looking statements. Such potential risks and uncertainties
include, without limitation, local economic conditions, competitive pressures
from the Company's operating environment, the ability of the Company to
maintain and improve its sales and margins, the ability to attract and
retain qualified associates, the availability of new store locations, the
availability of capital, the liquidity of the Company, the success of
operating initiatives and other risk factors detailed herein and in other
filings of the Company.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of operations, the Company is exposed to market
risks arising from adverse changes in interest rates. Market risk is defined
for these purposes as the potential change in the fair value resulting from an
adverse movement in interest rates. As of January 25, 2003, the Company's
only variable rate borrowings relate to a swap agreement. On October 18,
2001, the Company entered into an interest rate swap agreement with a major
financial institution pursuant to which the Company pays a variable rate of
six-month LIBOR plus 3.36% (5.19% at January 25, 2003) on a notional amount
of $10,000,000 expiring in September 2009 in exchange for a fixed rate of
8.12%. A 100 basis point increase in interest rates, applied to the Company's
borrowings at January 25, 2003, would result in an annual increase in interest
expense and a corresponding reduction in cash flow of approximately $100,000.
At January 25, 2003, the Company had demand deposits of $16,540,000
earning interest at prime less 2.5%, which are exposed to the impact of
interest rate changes.
ITEM 4. CONTROLS AND PROCEDURES
As required by Rule 13a-15 under the Exchange Act, within the 90 days
prior to the filing date of this report, the Company carried out an evaluation
of the effectiveness of the design and operation of the Company's disclosure
controls and procedures. 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 the 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 the Company's internal controls or in other factors,
which could significantly affect internal controls subsequent to the date the
Company carried out its evaluation.
Disclosure controls and procedures are controls and other procedures
that are designed to ensure that information required to be disclosed in
Company reports filed or submitted under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Securities and Exchange Commission's rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed
to ensure that information required to be disclosed in Company reports filed
under the Exchange Act is accumulated and communicated to management,
including the Company's Chief Executive Officer and Chief Financial Officer
as appropriate, to allow timely decisions regarding required disclosure.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
6 (a) Exhibits
Exhibit 28(a) - Press Release dated February 28, 2003.
Exhibit 28(b) - First Quarter Report to Shareholders
dated December 9, 2002.
Exhibit 99.1 - Certification
Exhibit 99.2 - Certification
6 (b) Reports on Form 8-K.
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Village Super Market, Inc.
Registrant
Date: March 4, 2003 /s/ James Sumas
James Sumas
(Chief Executive Officer)
Date: March 4, 2003 /s/ Kevin R. Begley
Kevin R. Begley
(Chief Financial Officer)
Certification
I, Kevin Begley, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Village Super
Market, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect
to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a) designed such disclosure controls and procedures 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 quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing of this quarterly report (the "Evaluation Date");
and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: March 4, 2003
/s/ Kevin Begley
Kevin Begley
Chief Financial Officer
Certification
I, James Sumas, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Village Super
Market, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect
to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a. designed such disclosure controls and procedures 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 quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing of this quarterly report (the "Evaluation Date");
and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes
in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: March 4, 2003
/s/ James Sumas
James Sumas
Chief Executive Officer
Exhibit 99.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Village Super Market, Inc.
(the "Company") on Form 10Q for the period ending January 25, 2003 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
March 4, 2003
Exhibit 99.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Village Super Market, Inc.
(the "Company") on Form 10Q for the period ending January 25, 2003 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
March 4, 2003
Exhibit 28(a)
VILLAGE SUPER MARKET, INC.
REPORTS RESULTS FOR THE QUARTER AND SIX MONTHS ENDED
JANUARY 25, 2003
Contact: Kevin Begley, C. F. O.
(973) 467-2200 Ext. 220
Springfield, New Jersey : February 28, 2003 - Village Super
Market, Inc. (NSD-VLGEA) today reported sales and net income for the
second quarter ended January 25, 2003.
Net income was $4,040,000 ($1.28 per diluted share) in the second
quarter of fiscal 2003, an increase of 8% from the prior year. Results for
the second quarter of fiscal 2003 include $1,639,000 (pre-tax) of income
received from interests in two partnerships. Excluding this partnership
income, net income in the second quarter of fiscal 2003 was $3,063,000
($.97 per diluted share), an 18% decrease from the prior year. Second quarter
results were adversely impacted by increased promotional spending, a sluggish
economy and a higher effective tax rate.
Sales in the second quarter were $233,911,000, an increase of 1.4%
from the prior year. Same store sales increased 2.2%. Approximately half of
the same store sales increase is due to higher sales at the Garwood, NJ store,
which opened September 26, 2001, and is included in same store sales for the
first time in the second quarter of fiscal 2003. Same store sales increased
less this fiscal year than in recent years due to a substantial number of
store openings by competitors near the Company's stores in the last year, a
softening of the economy and increased levels of promotional activity in New
Jersey. The Company estimates that the timing of the 2003 Super Bowl
occurring in the second fiscal quarter as compared to the prior year Super
Bowl occurring in the third fiscal quarter, increased sales by .5% in the
second quarter.
Net income for the six month period of fiscal 2003 was $6,490,000
($2.06 per diluted share), an increase of 2% from the prior year. Excluding
the income received from the partnerships described above and a non-cash
impairment charge in the prior year, net income declined 18% in the six
month period.
James Sumas, Chief Executive Officer, said "Despite the sluggish
economy and intense competition, we were able to achieve positive operating
results in the second quarter at the same time many in our industry are
struggling. We don't anticipate any easing in the competitive climate in
the third quarter. In addition, the third quarter will include a negative
impact from the recent severe snowstorm and a substantial increase in health
insurance costs. We expect same store sales in the third quarter of fiscal
2003 to be flat to a 1.5% increase. Based on these factors, we believe
it will be difficult to match the earnings level achieved in the third
quarter of the prior fiscal year."
Village Super Market operates a chain of 23 supermarkets under the
ShopRite name in New Jersey and eastern Pennsylvania.
This Press Release contains "forward looking statements" within the
meaning of federal securities law. The Company cautions the reader that there
are no assurance that actual results or business conditions will not differ
materially from future results, whether expressed, suggested or implied by
such forward looking statements. Such potential risks and uncertainties
include, without limitation, local economic conditions, competitive pressures
from the Company's operating environment, the ability of the Company to
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 on a cash flow basis, the success of
operating initiatives and other risk factors detailed herein and in the
Company's filings with the SEC.
VILLAGE SUPER MARKET, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Amounts)
13 Wks. Ended 13 Wks. Ended 26 Wks. Ended 26 Wks. Ended
Jan. 25, 2003 Jan. 26, 2002 Jan. 25, 2003 Jan. 26, 2002
Sales $ 233,911 $ 230,636 $ 450,449 $ 441,468
Cost of sales 176,020 173,100 338,525 331,415
--------- --------- --------- ---------
Gross profit 57,891 57,536 111,924 110,053
Operating and
administrative expense 49,650 48,988 96,591 94,175
Depreciation and amortization 2,256 1,921 4,459 3,758
Non-cash impairment charge ---- ---- ---- 640
--------- --------- --------- ---------
Operating income 5,985 6,627 10,874 11,480
Interest expense, net 844 843 1,623 1,488
Income from partnerships 1,639 ---- 1,639 ----
--------- --------- --------- ---------
Income before income taxes 6,780 5,784 10,890 9,992
Income taxes 2,740 2,060 4,400 3,647
--------- --------- --------- ---------
Net income $ 4,040 $ 3,724 $ 6,490 $ 6,345
========= ========= ========= =========
Net income per share:
Basic $ 1.31 $ 1.22 $ 2.11 $ 2.08
Diluted $ 1.28 $ 1.19 $ 2.06 $ 2.03
Gross profit as a % of sales 24.7% 24.9% 24.8% 24.9%
Operating and admin. expenses
as a % of sales 21.2% 21.2% 21.4% 21.3%
Exhibit 28(b)
To Our Shareholders:
The Company had net income of $2,450,000 in the first quarter of fiscal 2003,
a decrease of 7% from the prior year. Excluding a non-cash impairment charge
taken in the prior year, net income decreased 19%. Net income decreased due
to minimal same store sales growth, increased operating expense percentages
and a higher effective tax rate.
Sales in the first quarter were $216,538,000, an increase of 2.7% from the
prior year. Same store sales increased .3% in the first quarter. Same store
sales increased less than recent fiscal years due to a substantial number of
store openings by competitors near the Company's stores in the last six
months, a softening of the economy, and recently increased levels of
promotional activity by supermarket chains in the Company's operating areas.
Based on these factors, we expect same store sales in the second quarter of
fiscal 2003 of approximately a .5% decline to a 1.0% increase. As a result
of this more challenging environment, we believe it will be difficult to match
the earnings level achieved in the second quarter of the prior fiscal year.
Gross profit as a percentage of sales increased to 25.0% in the first quarter
compared to 24.9% in the prior year. Gross profit as a percentage of sales
increased due to improved product mix and lower LIFO charges. This increase
was partially offset by increased promotional spending in the current year
and incentives received one year ago in connection with a store opening.
Operating and administrative expenses as a percentage of sales increased to
21.7% in the first quarter compared to 21.4% in the first quarter last year.
The increase is due to increased payroll and fringe benefits costs.
The effective income tax rate increased to 40.4% in the first quarter of
fiscal 2003 compared to 37.7% in the first quarter of the prior year. This
increase is due to enacted changes in state tax law.
During the first quarter, the Company had capital expenditures of $3,211,000.
The largest expenditure in the first quarter was for the remodel of the
English Creek store. The Company has budgeted approximately $15,000,000 for
capital expenditures in fiscal 2003,which includes the expected start of two
major store expansions in the second half of the year.
Please be advised that effective December 9, 2002 the Company has appointed
American Stock Transfer and Trust Company as its stock transfer agent and
registrar. They can be contacted at: American Stock Transfer and Trust
Company, 59 Maiden Lane, New York, NY 10038. Phone: 877-777-0800.
The table accompanying this report summarizes Village Super Market's results
for the quarter ended October 26, 2002.
Respectfully,
Perry Sumas James Sumas
President Chairman of the Board
December 9, 2002
INCOME STATEMENT DATA
13 Weeks Ended 13 Weeks Ended
October 26, 2002 October 27, 2001
Sales $ 216,538,000 $ 210,831,000
Net Income $ 2,450,000 $ 2,621,000
Net Income Per Share - Basic $ .80 $ .86
Net Income Per Share - Diluted $ .78 $ .84
BALANCE SHEET COMPARISONS
October 26, 2002 July 27, 2002
Current Assets $ 74,138,000 $ 76,608,000
Current Liabilities $ 57,057,000 $ 56,397,000
Net Working Capital $ 17,081,000 $ 20,211,000
Long Term Debt $ 38,604,000 $ 43,634,000
Stockholder's Equity $ 99,944,000 $ 97,443,000
This report contains "forward-looking statements" within the meaning of
federal securities law. The Company cautions the reader that there is no
assurance that actual results or business conditions will not differ
materially from future results, whether expressed, suggested or implied by
such forward-looking statements. Such potential risks and uncertainties
include, without limitation, local economic conditions, competitive pressures
from the Company's operating environment, the ability of the Company to maintain
and improve its sales and margins, the ability to attract and retain qualified
associates, the availability of new store locations, the availability of
capital, the liquidity of the Company on a cash flow basis, the success of
operating initiatives, and other risk factors detailed herein and in the
Company's fillings with the SEC.