Annual Report (Form 10-K), fiscal year 1994




ITEM 2. PROPERTIES
The Company owns the sites of five of its supermarkets (containing 304,000 square feet of total space), all of which are free-standing stores, except the Egg Harbor store, which is part of a shopping center. The Company also owns the site of the former Easton and Maplewood stores. The Maplewood property is leased to another operator and the
Easton store is currently being marketed. The remaining eighteen supermarkets (containing 792,000 square feet of total space) are leased, with initial lease terms generally ranging from 20 to 30 years, usually with renewal options. Eleven of these leased stores are located in strip shopping centers and the remaining seven are free-standing stores. Except with respect to one lease between the Company and certain related parties, none of the Company's leases expire before 1997. The annual rent, including capitalized leases, for all of the Company's leased facilities for the year ended July 30, 1994 was approximately $6,100,000. The Company is a limited partner in two partnerships, each of which owns a shopping center in which one of the Company's leased supermarkets is located. The Company also is a general partner in a general partnership that is a lessor of one of the Company's free- standing supermarkets.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
No material legal proceedings.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters submitted to shareholders in the fourth quarter.
ITEM X. EXECUTIVE OFFICERS OF THE REGISTRANT
In addition to the information regarding directors incorporated by reference to the Company's definitive Proxy Statement in Part III, Item 10, the following is provided with respect to executive officers who are not directors:
NAME AGE POSITION WITH THE COMPANY
Carol Lawton 51 Vice President and Assistant Secretary since 1983; responsible for administration of headquarters staff.
Frank Sauro 36 General Counsel since April 1988. Mr. Sauro is a member of the New Jersey Bar.
Kevin Begley 36 Chief Financial Officer since December 1988. Mr. Begley is a Certified Public Accountant.
PART II ITEM 5.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS
The information required by this Item is incorporated by reference from Information appearing on Page 16 in the Company's Annual Report to Shareholders for the fiscal year ended July 30, 1994.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is incorporated by reference from Information appearing on Page 3 in the Company's Annual Report to Shareholders for the fiscal year ended July 30, 1994.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information required by this Item is incorporated by reference from Information appearing on Pages 4 and 5 in the Company's Annual Report to Shareholders for the fiscal year ended July 30, 1994.
ITEM 8.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is incorporated by reference from Information appearing on Page 3 and Pages 6 to 16 in the Company's Annual Report to Shareholders for the fiscal year ended July 30, 1994.
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item 10 is incorporated by reference from the Company's definitive Proxy Statement to be filed on or before November 7, 1994, in connection with its Annual Meeting scheduled to be held on December 9, 1994.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item 11 is incorporated by reference from the Company's definitive Proxy Statement to be filed on or before November 7, 1994, in connection with its Annual Meeting scheduled to be held on December 9, 1994.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item 12 is incorporated by reference from the Company's definitive Proxy Statement to be filed on or before November 7, 1994, in connection with its annual meeting scheduled to be held on December 9, 1994.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item 13 is incorporated by reference from the Company's definitive Proxy Statement to be filed on or before November 7, 1994, in connection with its annual meeting scheduled to be held on December 9, 1994.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
Consolidated Balance Sheets - July 30, 1994 and July 31, 1993 Consolidated Statements of Operations - years ended July 30, 1994; July 31, 1993 and July 25, 1992 Consolidated Statements of Shareholders' Equity - years ended July 30, 1994; July 31, 1993 and July 25, 1992 Consolidated Statements of Cash Flows - years ended July 30, 1994; July 31, 1993 and July 25, 1992 Notes to consolidated financial statements
The financial statements above and Independent Auditors' Report have been incorporated by reference from the Company's Annual Report to Shareholders for the fiscal year ended July 30, 1994.
All other schedules are omitted because they are not applicable, or not required, or because the required information is included in the consolidated financial statements or notes thereto.
3. Exhibits
EXHIBIT INDEX
Exhibit No. 3 - Certificate of Incorporation and By-Laws *
Exhibit No. 4 - Instruments defining the rights of security holders;
4.1 Note Purchase Agreement dated August 20, 1987 * 4.2 Loan Agreement dated March 29, 1994* 4.3 Amendment No. 1 to Loan Agreement
Exhibit No. 10 - Material Contracts:
10.1 Wakefern By-Laws * 10.2 Stockholders Agreement dated February 20, 1992 between the Company and Wakefern Food Corp. * 10.3 Voting Agreement dated March 4, 1987 * 10.4 1987 Incentive and Nonstatutory Stock Option Plan *
Exhibit No. 13 - Annual Report to Security Holders
Exhibit No. 28 a - Press release dated October 6, 1994
Exhibit No. 28 b - Third Quarter Report to Shareholders
Exhibit No. 22 - Subsidiaries of Registrant
Exhibit No. 23 - Consent of KPMG Peat Marwick LLP
* The following exhibits are incorporated by reference from the following previous filings:
Form 10-K for 1993: 3, 4.1, 10.1, 10.2, 10.3 and 10.4 Form 10-Q for April 23, 1994: 4.2
(b) No reports on Form 8-K were filed during the fourth quarter of fiscal 1994.
Independent Auditor's Report on Financial Statement Schedules
The Board of Directors Village Super Market, Inc.:
Under date of September 30, 1994, except as to note 5, which is as of October 21, 1994, we reported on the consolidated balance sheets of Village Super Market, Inc. as of July 30, 1994 and July 31, 1993, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the years in the three-year period ended July 30, 1994 as contained in the 1994 annual report to shareholders. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year 1994. In connection with our audits of the aforementioned consolidated financial statements, we also have audited the related financial statement schedules as listed in the accompanying index. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
KPMG Peat Marwick LLP Short Hills, New Jersey September 30, 1994, except as to note 5, which is as of October 21, 1994
VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, EQUIPMENT AND FIXTURES
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Village Super Market, Inc.
By: /S/ Kevin Begley By: /S/ Perry Sumas Kevin Begley Perry Sumas (Chief Financial & (Chief Executive Officer) Principal Accounting Officer)
Date: October 27, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on dates indicated:
/S/ Nicholas Sumas /S/ John P. Sumas Nicholas Sumas, October 27, 1994 John P. Sumas, October 27, 1994 (Director) (Director)
/S/ Perry Sumas /S/ James Sumas Perry Sumas, October 27, 1994 James Sumas, October 27, 1994 (Director) (Director)
/S/ William Sumas /S/ Robert Sumas William Sumas, October 27, 1994 Robert Sumas, October 27, 1994 (Director) (Director)
/S/ John J. McDermott /S/ George Andresakes John McDermott, October 27, 1994 George Andresakes, October 27, 1994 (Director) (Director)
/S/ Norman Crystal Norman Crystal, October 27, 1994 (Director)
EXHIBIT NO. 22
SUBSIDIARIES OF REGISTRANT
The Company currently has one wholly-owned subsidiary, Village Liquor, Inc. This corporation is organized under the laws of the State of New Jersey. The Financial statements of this subsidiary are included in the Company's consolidated financial statements.
EXHIBIT NO. 23
Independent Auditors' Consent
The Board of Directors Village Super Market, Inc.:
We consent to incorporation by reference in the Registration Statement (No. 2-86320) on Form S-8 of Village Super Market, Inc. of our reports dated September 30, 1994, except as to note 5, which is as of October 21, 1994, relating to the consolidated balance sheets of Village Super Market, Inc. and subsidiaries as of July 30, 1994 and July 31, 1993, and the related consolidated statements of operations, shareholders' equity, and cash flows and related schedules for each of the years in the three year period ended July 30, 1994, which reports appear in or are incorporated by reference in the July 30, 1994 annual report on Form 10-K of Village Super Market, Inc.
KPMG Peat Marwick LLP
Short Hills, New Jersey October 27, 1994
EXHIBIT NO. 28A Village Super Market, Inc., Reports Results For the Fourth Quarter and Year Ended July 30, 1994
Springfield, NJ - October 6, 1994 - Village Super Market, Inc. reported sales and a net loss for the fourth quarter ended July 30, 1994, Perry Sumas, President announced today.
In the fourth quarter, sales decreased 7.8% to $187,842,000. The Company had a net loss of $249,000 compared to a net loss of $127,000 in the fourth quarter of the prior year.
In reviewing the quarter, Mr. Sumas reported that the net loss for the quarter was due to flat same store sales, lower than expected gross margins and increased payroll costs. Sales decreased in the current quarter due to the prior year containing a fifteenth week as compared to the current year's fourteen weeks and the closing of a store in the current year. Same store sales were flat in the current quarter, despite a comparison to a year ago quarter that included a strike at six stores, due to the sluggish economy and competitive openings.
For the full year, the net loss was $807,000, which includes an increase to net income of $400,000 for the cumulative effect of a change in the method of accounting for income taxes. This compares with net income in the prior year of $1,437,000, which included a $1,022,000 gain on the sale of a store. Sales for the full year decreased 2.6% to $695,070,000. The sales decrease is due to the prior year containing 53 weeks and the impact of closed stores. Same store sales for the year increased 1.3%.
The net loss in fiscal 1994 compared to net income in the prior year is principally attributable to increased promotional spending, chiefly couponing, in the second and third quarter of this year. Although the additional promotional spending was partially responsible for increased same store sales in those quarters, a larger sales increase was expected in order to offset the costs of these coupons. In addition, gross margin percentages were lower than expected, fringe benefit and payroll costs increased and a loss was incurred on the sale of the Morristown store.
At July 30, 1994, the Company was not in compliance with certain financial covenants in its bank agreement and its private placement agreement. The Company expects to receive a waiver of the financial covenant and an amendment of its loan agreement with the banks. The Company is also not in compliance with a financial covenant in a debt agreement with another lender. This does not constitute an event of default; however, until this ratio is met or a waiver obtained, the Company is prevented from borrowing additional funds, declaring dividends and executing new leases.
With the closing in August 1994 of the Easton, Pa. store, Village Super Market now owns and operates a chain of 23 supermarkets under the ShopRite name in New Jersey and Eastern Pennsylvania. The following table summarizes results for the quarter and year ended July 30, 1994.
EXHIBIT NO. 28B THIRD QUARTER REPORT
To our shareholders:
The Company had a net loss of $1,131,000 in the third quarter ended April 23, 1994. This compared with net income of $182,000 in the third quarter of the prior year. The loss for the quarter was principally attributable to an increase in promotional spending, chiefly couponing. Also contributing to the loss in the third quarter were lower than expected gross margins, increased fringe benefit costs and an increase in the loss recorded on the sale of the Morristown store.
For the first nine months of fiscal 1994, the net loss was $558,000, which includes an increase to net income of $400,000 for the cumulative effect of the change in the method of accounting for income taxes. This compares with net income in the prior year of $1,563,000, which includes a gain, net of tax, of $1,022,000 on the sale of a store.
Sales for the third quarter were $171,776,000, an increase of 1.4% from the prior year. Same store sales increased 2.8% this quarter, which was partially offset by lower sales from stores closed since one year ago. Same store sales increased in the third quarter as a result of additional promotional spending and possibly some improvement in the local economy. Sales for the nine month period were $507,228,000, a slight decrease from the prior year. Same store sales increased 1.7% for the nine months, which was offset by stores closed since a year ago.
Gross margins as a percentage of sales for both the quarter and nine month period were 24.4% compared with 24.3% in both corresponding prior year periods. High levels of sale item penetration and price competition in the marketplace have prevented further increases in gross margins.
Operating and administrative expenses as a percentage of sales for the quarter and nine month period were 23.5% and 22.8%, respectively, compared with 22.2% in both corresponding prior year periods. The principal reason for these increases was the higher level of promotional spending, chiefly couponing, which began in the second quarter and increased further in the third quarter. Although the additional promotional spending was partially responsible for the increase in same store sales, a larger sales increase was expected in order to offset the costs of these coupons. Inclement weather contributed to the lower than expected sales and also increased snow removal costs. In addition, fringe benefit costs increased.
A loss of $81,000 on the sale of the Morristown store was recorded in the first quarter of fiscal 1994. An additional loss of $300,000 was recorded in the current quarter due to the failure of the Company's former sub-lessee to make required rent payments.
On March 29, 1994 the Company replaced its expired $20,000,000 revolving/term loan agreement with a new $30,000,000 loan agreement with two banks. The new agreement consists of a $10,000,000 term loan, a $12,000,000 revolving loan and a $8,000,000 convertible revolving loan. At April 23, 1994 the only balance outstanding on this facility was the $10,000,000 term loan. The $12,000,000 revolving loan, which can be used for any purpose except new store construction, matures March 31, 1997. The $8,000,000 convertible revolving loan is to be used only for capital expenditures and can be used through December 31, 1995.
At April 23, 1994, the Company did not meet financial ratios required by the above debt agreement and an additional debt agreement with a total of three lenders. This constitutes and event of default under these agreements. The Company is engaged in discussions with these lenders regarding this situation. Without the consent of the two banks, the Company will not be allowed to borrow under the $8,000,000 convertible revolving loan portion of the credit facility described above. Without a waiver from another lender, the Company would be pre vented from borrowing additional funds, executing new leases or declaring dividends. As a result of the events of default described above, the Company has reclassified $22,100,000 of long-term debt as a current liability in the April 23, 1994 balance sheet. There is no indication at this time that any of the three lenders intend to request immediate payment of these amounts. The Company is currently in the process of remodeling two stores. A remodel and expansion of an additional store is planned to begin shortly. A planned expenditure for 1994 had been the purchase of land for a new superstore. As this store has not yet received planning board approval, this expenditure has been rescheduled for fiscal 1995.
Respectfully,
Perry Sumas James Sumas President Chairman of the Board
June 13, 1994