-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Lk6vJHWYJUfYnKeYHFG5KODwGydvFzrlc9pkaT3nnVJuJbJ37aSMKPZL6LShMl/V iknc5Qf6rZHIY75iDCU1YQ== 0000103595-04-000006.txt : 20040602 0000103595-04-000006.hdr.sgml : 20040602 20040602140950 ACCESSION NUMBER: 0000103595-04-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040424 FILED AS OF DATE: 20040602 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VILLAGE SUPER MARKET INC CENTRAL INDEX KEY: 0000103595 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 221576170 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-02633 FILM NUMBER: 04843891 BUSINESS ADDRESS: STREET 1: 733 MOUNTAIN AVE CITY: SPRINGFIELD STATE: NJ ZIP: 07081 BUSINESS PHONE: 2014672200 MAIL ADDRESS: STREET 1: 733 MOUNTAIN AVE CITY: SPRINGFIELD STATE: NJ ZIP: 07081 10-Q 1 village10q.txt VILLAGE SUPER MARKET, INC. 10-Q FOR APRIL 24, 2004 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: April 24, 2004 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 (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 by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act.) Yes ____ No __X__ Indicate the number of shares outstanding of the issuer's classes of common stock as of the latest practicable date:
June 1, 2004 Class A Common Stock, No Par Value 1,534,700 Shares Class B Common Stock, No Par Value 1,594,076 Shares
VILLAGE SUPER MARKET, INC. INDEX PART I PAGE NO. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) 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 - 12 Item 3. Quantitative & Qualitative Disclosures about Market Risk . . . 13 Item 4. Controls and Procedures . . . . . . . . . . . . . . . . . . . . 14 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . 15 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . 15 PART I - FINANCIAL INFORMATION Item 1. Financial Statements VILLAGE SUPER MARKET, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands) (Unaudited)
April 24, July 26, 2004 2003 ASSETS Current assets Cash and cash equivalents $ 28,949 $ 48,500 Merchandise inventories 31,440 32,304 Patronage dividend receivable 2,760 3,634 Note receivable from related party 20,148 ---- Other current assets 5,654 5,207 ------- ------- Total current assets 88,951 89,645 Property, equipment and fixtures, net 98,437 96,320 Investment in related party, at cost 15,875 15,875 Goodwill 10,605 10,605 Other assets 4,095 4,133 -------- -------- TOTAL ASSETS $ 217,963 $ 216,578 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current portion of long-term debt $ 7,636 $ 7,730 Accounts payable to related party 29,336 32,348 Accounts payable and accrued expenses 22,055 21,323 -------- -------- Total current liabilities 59,027 61,401 Long-term debt 30,291 37,241 Other liabilities 12,552 11,159 Commitments and Contingencies Shareholders' equity Class A common stock - no par value, issued 1,762,800 shares 18,885 18,535 Class B common stock - no par value, 1,594,076 shares issued & outstanding 1,035 1,035 Retained earnings 101,658 93,239 Accumulated other comprehensive loss (2,330) ( 2,330) Less cost of Class A treasury shares (228,100 shares at April 24, 2004 and 267,600 shares at July 26, 2003) ( 3,155) (3,702) -------- -------- Total shareholders' equity 116,093 106,777 -------- -------- TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 217,963 $ 216,578 ======== ========
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 39 Wks. Ended 39 Wks. Ended Apr. 24, 2004 Apr. 26, 2003 Apr. 24, 2004 Apr. 26, 2003 Sales $ 229,531 $ 221,450 $ 698,473 $ 671,899 Cost of sales 170,824 166,281 520,513 504,806 --------- --------- --------- --------- Gross profit 58,707 55,169 177,960 167,093 Operating and administrative expense 51,175 49,058 154,081 145,648 Depreciation and amortization 2,389 2,231 6,868 6,690 --------- --------- --------- --------- Operating income 5,143 3,880 17,011 14,755 Income from partnerships --- --- --- 1,639 Interest expense, net 493 698 1,707 2,321 --------- --------- --------- --------- Income before income taxes 4,650 3,182 15,304 14,073 Income taxes 1,906 1,285 6,390 5,685 --------- --------- --------- --------- Net income $ 2,744 $ 1,897 $ 8,914 $ 8,388 ========= ========= ========= ========= Net income per share: Basic $ .88 $ .61 $ 2.87 $ 2.72 Diluted $ .87 $ .60 $ 2.83 $ 2.66
See accompanying Notes to Consolidated Condensed Financial Statements.
VILLAGE SUPER MARKET, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited) 39 Weeks Ended 39 Weeks Ended April 24,2004 April 26,2003 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 8,914 $ 8,388 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,868 6,690 Deferred taxes 990 750 Provision to value inventories at LIFO 1,075 450 Tax benefit from exercise of stock options 287 71 Non-cash stock compensation 63 --- Changes in assets and liabilities: (Increase) decrease in merchandise inventories ( 211) 2,214 (Increase) decrease in patronage dividend receivable 874 ( 31) (Increase) decrease in other current assets ( 447) 1,356 (Increase) in other assets ( 161) ( 163) (Decrease) in accounts payable to related party ( 3,012) ( 1,624) Increase (decrease) in accounts payable and accrued expenses 732 ( 1,802) Increase in other liabilities 403 353 --------- --------- Net cash provided by operating activities 16,375 16,652 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Investment in note receivable from related party ( 20,148) ----- Capital expenditures ( 8,954) ( 7,604) Proceeds from disposal of assets ----- 4,006 --------- --------- Net cash used in investing activities ( 29,102) ( 3,598) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of stock options 408 125 Principal payments of long-term debt ( 6,875) ( 2,319) Dividends ( 357) ----- --------- --------- Net cash used in financing activites ( 6,824) ( 2,194) --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENT ( 19,551) 10,860 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 48,500 33,770 ---------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 28,949 $ 44,630 ========== ========= SUPPLEMENTAL DISCLOSURE OF CASH PAYMENTS FOR: Interest $ 2,603 $ 3,207 Income taxes $ 3,654 $ 1,925 NON-CASH SUPPLEMENTAL DISCLOSURE: Investment in related party $ ----- $ 93
See accompanying Notes to Consolidated Condensed Financial Statements. VILLAGE SUPER MARKET, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 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 April 24, 2004 and the consolidated results of operations and cash flows for the periods ended April 24, 2004 and April 26, 2003. The significant accounting policies followed by Village Super Market, Inc. (the "Company") are set forth in Note 1 to the Company's consolidated financial statements in the July 26, 2003 Village Super Market, Inc. Annual Report on Form 10-K, which should be read in conjunction with these financial statements. 2. The results of operations for the period ended April 24, 2004 are not necessarily indicative of the results to be expected for the full year. 3. At both April 24, 2004 and July 26, 2003, approximately 70% 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 $10,787,000 and $9,712,000 higher than reported at April 24, 2004 and July 26, 2003, respectively. 4. The number of common shares outstanding for calculation of net income per share is as follows:
13 Weeks Ended 39 Weeks Ended 4/24/04 4/26/03 4/24/04 4/26/03 Weighted Average Shares Outstanding - Basic 3,120,419 3,085,650 3,101,492 3,084,059 Dilutive Effect of Employee Stock Options 42,022 62,146 46,750 66,505 --------- --------- --------- --------- Weighted Average Shares Outstanding - Diluted 3,162,441 3,147,796 3,148,242 3,150,564 ========= ========= ========= =========
5. The note receivable from related party of $20,148,000 is invested with Wakefern Food Corp. ("Wakefern"), the Company's principal supplier. This unsecured note, which carries interest at prime minus 1.5%, is dated January 15, 2004 and matures January 15, 2005. At April 24, 2004, cash and cash equivalents included $16,639,000 of demand deposits invested at Wakefern earning interest at prime less 2.5%, or overnight money rates. 6. Comprehensive income was $2,744,000 and $8,914,000 for the quarter and nine-month periods ended April 24, 2004, and $1,897,000 and $8,388,000 for the quarter and nine-month periods ended April 26, 2003. 7. The fair value of each of the 6,000 options granted in fiscal 2004 was estimated at $11.39 using the Black-Scholes Pricing model with the following assumptions: Expected life 6 years Expected volatility 36.0% Expected dividend yield 1.0% Risk-free rate 4.3% 8. The Company sponsors three defined benefit pension plans covering administrative personnel and members of two unions. Net periodic pension costs for the three plans includes the following components:
13 Weeks 13 Weeks 39 Weeks 39 Weeks Ended 4/24/04 Ended 4/26/03 Ended 4/24/04 Ended 4/26/03 Service cost $ 195,000 $ 196,000 $ 584,000 $ 589,000 Interest cost on projected benefit obligations 250,000 233,000 750,000 699,000 Expected return on plan assets (174,000) (181,000) (523,000) (543,000) Net amortization and deferral 61,000 ( 47,000) 184,000 (142,000) ---------- ---------- ---------- ---------- Net periodic pension cost $ 332,000 $ 201,000 $ 995,000 $ 603,000 ========== ========== ========== ==========
As of April 24, 2004, the Company has contributed $1,335,000 to its pension plans in fiscal 2004. The Company expects to contribute an additional $274,000 in the fourth quarter of fiscal 2004 to fund its pension plans. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Village Super Market, Inc. operates a chain of 23 ShopRite supermarkets in New Jersey and eastern Pennsylvania. The Company is a member of Wakefern, the nation's largest retailer-owned food cooperative and owner of the ShopRite name. As further described in the Company's Form 10-K, the Company's ownership interest in Wakefern provides many of the economies of scale in purchasing, distribution, advanced retail technology and advertising associated with larger chains. RESULTS OF OPERATIONS Sales were $229,531,000 in the third quarter of fiscal 2004. Total sales and same store sales both increased 3.6% compared to the third quarter of the prior year. Sales were $698,473,000 for the nine-month period of fiscal 2004, an increase of 4.0% from the prior year. Sales increased due to continued improvement in the two stores opened in fiscal 2002, increased sales in stores remodeled in fiscal 2003 and increases in retail prices in certain categories resulting from inflation in fiscal 2004. In addition, sales in fiscal 2004 benefited from comparison to fiscal 2003 periods that included the impact from a substantial number of store openings by competitors, higher levels of promotional activity and a softer economy. Gross profit as a percentage of sales increased to 25.6% and 25.5%, respectively, in the third quarter and nine-month periods of fiscal 2004 compared with 24.9% in both the third quarter and nine-month period of the prior year. As a percentage of sales, gross profit in the third quarter increased compared to the prior year primarily due to an increased estimate of patronage dividends, improved gross margins in several departments, improved product mix and reduced Wakefern assessment charges. These improvements were partially offset by increased LIFO charges and higher promotional spending in the third quarter of fiscal 2004. As a percentage of sales, gross profit for the nine-month period increased from the prior year primarily due to a higher estimate of patronage dividends, improved gross margins in several departments, reduced Wakefern assessment charges and lower promotional spending. These improvements were partially offset by increased LIFO charges in the current nine-month period. Operating and administrative expenses as a percentage of sales increased to 22.3% and 22.1%, respectively, in the third quarter and nine-month periods of fiscal 2004 compared with 22.2% and 21.7%, respectively, in the corresponding prior year periods. As a percentage of sales, fringe benefits costs, primarily contributions to employee health and pension plans, utility costs and marketing costs increased in the fiscal 2004 periods compared to the prior fiscal year periods. As a percentage of sales, payroll costs declined in the fiscal 2004 periods compared to the prior fiscal year periods. Depreciation and amortization expense increased in the third quarter and nine-month periods of fiscal 2004 compared to the corresponding periods of the prior year due to additional depreciation on fixed assets placed in service in fiscal 2004 and 2003. Interest expense (net) decreased in the third quarter and nine-month period of fiscal 2004 compared to the corresponding periods of the prior year due to reduced borrowing levels in the current fiscal year and increased interest income from higher rates received on excess cash invested at Wakefern. In addition, the prior fiscal year included interest expense from a capital lease disposed of in the third quarter of fiscal 2003. Fiscal 2003 included $1,639,000 ($967,000 after-tax) 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 two 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 had previously resulted in a zero investment balance in the consolidated financial statements. The effective income tax rate was 41.0% and 41.8%, respectively, for the third quarter and nine-month period of fiscal 2004 compared to 40.4% in both of the corresponding periods of the prior year. The increase in the nine-month period is due to completed tax audits of previous fiscal years. Net income was $2,744,000 in the third quarter of fiscal 2004, an increase of 45% from the third quarter of the prior fiscal year. This increase is attributable to strong sales growth and increased gross profit percentages, partially offset by a slightly higher operating and administrative expense percentage. 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 Company's critical accounting policies relating to the impairment of long-lived assets, 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 26, 2003. As of April 24, 2004, there have been no material changes to any of the critical accounting policies contained therein. 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. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities was $16,375,000 for the nine-month period ended April 24, 2004 compared with $16,652,000 for the nine-month period ended April 26, 2003. Although net cash provided by operating activities was similar, fiscal 2004 included greater net income, LIFO charges, and patronage dividends received, while fiscal 2003 included reduced inventories and reduced tax receivables, partially offset by larger decreases in accounts payable to related party and accounts payable and accrued expenses. During the first nine months of fiscal 2004, the Company used $16,375,000 of operating cash flow and $19,551,000 of cash on hand primarily to fund capital expenditures of $8,954,000, to make debt payments of $6,875,000 and to invest $20,148,000 of excess cash in a note receivable from Wakefern. The debt payments made included the first installment of $4,285,714 on the Company's unsecured Senior Notes. The investment in the note receivable from Wakefern is a one-year note dated January 15, 2004, which matures January 15, 2005. These funds were previously invested in a demand deposit at Wakefern. Working capital was $29,924,000 at April 24, 2004 compared to $28,244,000 at July 26, 2003. The working capital ratio was 1.51 to one at April 24, 2004 compared to 1.46 to one at July 26, 2003. The Company's working capital needs are reduced since inventory is generally sold by the time payments to Wakefern and other suppliers are due. The Company has budgeted approximately $13,000,000 for capital expenditures in fiscal 2004. Planned expenditures include the expansion and remodel of the Bernardsville store and equipment for the Somers Point replacement store. The Company's primary sources of liquidity in fiscal 2004 are expected to be cash on hand at April 24, 2004 and operating cash flow. The Company has available a $15 million (none outstanding at April 24, 2004) unsecured revolving credit line, which expires September 16, 2004. The Company expects to replace this credit facility prior to expiration. There have been no substantial changes as of April 24, 2004 to the contractual obligations discussed on page 6 of the Company's Annual Report on Form 10-K for the year ended July 26, 2003. RELATED PARTY TRANSACTIONS A description of the Company's transactions with Wakefern, its principal supplier, and with other related parties is included on pages 8,16 and 19 of the Company's Annual Report on Form 10-K for the year ended July 26, 2003. There have been no significant changes in the Company's relationship or the nature of the transactions with these related parties during the nine months of fiscal 2004, except that the Company invested $20,148,000 of cash in a note receivable from Wakefern in fiscal 2004 that was invested in demand and overnight deposits at Wakefern on July 26, 2003. The note, which carries interest at prime minus 1.5%, is dated January 15, 2004 and matures January 15, 2005. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In December 2003, the Financial Accounting Standards Board (the "FASB") issued SFAS No. 132 (revised 2003), "Employers' Disclosures about Pensions and Other Postretirement Benefits", to revise employers' annual and quarterly disclosures about pension plans and other postretirement benefit plans. It does not change the measurement or recognition of those plans required by SFAS No. 87, "Employers' Accounting for Pensions", SFAS No. 88, "Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits", and SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions". This Statement retains the disclosure requirements contained in SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits", which it replaces. It requires additional disclosures to those in the original SFAS 132 about the assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. The annual disclosure requirements under this Statement are effective for the Company's fiscal year ending July 31, 2004, and the quarterly disclosure requirements are effective for the Company's interim periods beginning with the quarter ending April 24, 2004, and have been included herein. In December 2003, the FASB issued FASB Interpretation No. 46 (revised December 2003), "Consolidation of Variable Interest Entities", which addresses how a business enterprise should evaluate whether it has a controlling financial interest in an entity through means other than voting rights and accordingly should consolidate the entity. The Company adopted FASB Interpretation No. 46 effective April 24, 2004, which did not have any impact on the Company. FORWARD-LOOKING STATEMENTS: All statements, other than statements of historical fact, included in this Form 10-Q are or may be considered forward-looking statements within the meaning of federal securities law. The Company cautions the reader that there is no assurance that actual results or business conditions will not differ materially from future results, whether 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. The following are among the principal factors that could cause actual results to differ from the forward-looking statements: local economic conditions; competitive pressures from the Company's operating environment; the ability of the Company to maintain and improve its sales and margins; the ability to attract and retain qualified associates; the availability of new store locations; the availability of capital; the liquidity of the Company on a cash flow basis; the success of operating initiatives; consumer spending patterns; increased cost of goods sold, including increased costs from the Company's principal supplier, Wakefern; results of ongoing litigation; the results of union contract negotiations; competitive store openings; the rate of return on pension assets; and other factors detailed herein 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 April 24, 2004, 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% (4.51% at April 24, 2004) on an initial notional amount of $10,000,000 expiring in September 2009 in exchange for a fixed rate of 8.12%. The swap agreement notional amount decreases in amounts and on dates corresponding to the repayment of the fixed rate obligation it hedges. At April 24, 2004 the remaining notional amount of the swap agreement was $8,571,429. A 100 basis point increase in interest rates, applied to the Company's borrowings at April 24, 2004, would result in an annual increase in interest expense and a corresponding reduction in cash flow of approximately $85,714. At April 24, 2004, the Company had demand deposits of $16,639,000 at Wakefern earning interest at prime less 2.5%, or overnight money market rates, which are exposed to the impact of interest rate changes. In addition, at April 24, 2004, the Company had a $20,148,000 adjustable rate promissory note from Wakefern earning interest at prime less 1.5%, which is exposed to the impact of interest rate changes. 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. There have been no significant changes in internal controls over financial reporting during the third quarter of fiscal 2004. 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 10.6 - Employment agreement dated January 1,2004 between the Company and Kevin Begley Exhibit 28(a) - Press Release dated May 28, 2004. Exhibit 28(b) - Second Quarter Report to Shareholders dated March 13, 2004. Exhibit 31.1 - Certification Exhibit 31.2 - Certification Exhibit 32.1 - Certification (furnished, not filed) Exhibit 32.2 - Certification (furnished, not filed) 6 (b) Reports on Form 8-K. On March 1, 2004, the Company filed a report on Form 8-K with the SEC regarding its release announcing consolidated financial results for the second quarter of fiscal 2004. 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: June 1, 2004 /s/ James Sumas James Sumas (Chief Executive Officer) Date: June 1, 2004 /s/ Kevin R. Begley Kevin R. Begley (Chief Financial Officer) Exhibit 28(a) VILLAGE SUPER MARKET, INC.REPORTS RESULTS FOR THE QUARTER AND NINE MONTHS ENDED APRIL 24, 2004 Contact: Kevin Begley, CFO (973) 467-2200 - Ext. 220 Kevin.Begley@wakefern.com Springfield, New Jersey - May 28, 2004 - Village Super Market, Inc. (NSD-VLGEA) today reported its results of operations for the third quarter ended April 24, 2004. Net income was $2,744,000 ($.87 per diluted share) in the third quarter of fiscal 2004, an increase of 45% from the third quarter of the prior year. Net income in the third quarter increased primarily due to strong sales growth and increased gross profit percentages, partially offset by a slightly higher operating expense percentage. Sales were $229,531,000 in the third quarter of fiscal 2004. Total sales and same store sales both increased 3.6% compared to the third quarter of the prior year. Sales increased due to continued improvement in the two stores opened in fiscal 2002, higher sales in stores remodeled in fiscal 2003 and increased inflation. In addition, sales in the third quarter of fiscal 2004 benefited from comparison to a year ago period that included the impact of a substantial number of store openings by competitors, higher levels of promotional activity and a softer economy. Net income for the nine-month period of fiscal 2004 was $8,914,000 ($2.83 per diluted share) an increase of 6% from the prior year. Results for fiscal 2003 included $967,000 (after-tax) of income received from two partnerships. Excluding the income received from these partnerships in fiscal 2003, net income for the nine-month period of fiscal 2004 would have increased 20% from fiscal 2003. Sales for the nine-month period of fiscal 2004 were $698,473,000, an increase of 4.0% from the prior year. Village Super Market operates a chain of 23 supermarkets under the ShopRite name in New Jersey and eastern Pennsylvania. All statements, other than statements of historical fact, included in this Press Release are or may be considered forward-looking statements within the meaning of federal securities law. The Company cautions the reader that there is no assurance that actual results or business conditions will not differ materially from future results, whether 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. The following are among the principal factors that could cause actual results to differ from the forward-looking statements: local economic conditions; competitive pressures from the Company's operating environment; the ability of the Company to maintain and improve its sales and margins; the ability to attract and retain qualified associates; the availability of new store locations; the availability of capital; the liquidity of the Company on a cash flow basis; the success of operating initiatives; consumer spending patterns; increased cost of goods sold, including increased costs from the Company's principal supplier, Wakefern; results of ongoing litigation; the results of union contract negotiations; competitive store openings; the rate of return on pension assets; and other factors detailed herein and in the Company's filings with the SEC.
VILLAGE SUPER MARKET, INC. CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Dollars in Thousands Except Per Share Amounts) (Unaudited) 13 Wks. Ended 13 Wks. Ended 39 Wks. Ended 39 Wks. Ended Apr. 24, 2004 Apr. 26, 2003 Apr. 24, 2004 Apr. 26, 2003 Sales $ 229,531 $ 221,450 $ 698,473 $ 671,899 Cost of sales 170,824 166,281 520,513 504,806 ---------- ---------- ---------- ---------- Gross profit 58,707 55,169 177,960 167,093 Operating and administrative expense 51,175 49,058 154,081 145,648 Depreciation and amortization 2,389 2,231 6,868 6,690 ---------- ---------- ---------- ---------- Operating income 5,143 3,880 17,011 14,755 Interest expense 493 698 1,707 2,321 Income from partnerships ---- ---- ---- 1,639 ---------- ---------- ---------- ---------- Income before income taxes 4,650 3,182 15,304 14,073 Income taxes 1,906 1,285 6,390 5,685 ---------- ---------- ---------- ---------- Net income $ 2,744 $ 1,897 $ 8,914 $ 8,388 ========== ========== ========== ========== Net income per share: Basic $ .88 $ .61 $ 2.87 $ 2.72 Diluted $ .87 $ .60 $ 2.83 $ 2.66 Gross profit as a % of sales 25.6% 24.9% 25.5% 24.9% Operating and admin. expense as a % of sales 22.3% 22.2% 22.1% 21.7%
Exhibit 28(b) To our Shareholders: Net income was $3,651,000 ($1.16 per diluted share) in the second quarter of fiscal 2004, a decrease of 10% from the second quarter of the prior year. Results for the second quarter of fiscal 2003 included $967,000 (after-tax) of income received from two partnerships. Excluding this partnership income, net income in the second quarter of fiscal 2004 increased 19% from the second quarter of fiscal 2003. Net income in the second quarter of fiscal 2004 increased primarily due to strong sales growth, increased gross profit percentages and lower interest expense, partially offset by higher operating expense percentages. Sales were $242,209,000 in the second quarter of fiscal 2004. Total sales and same store sales both increased 3.5% compared to the second quarter of the prior year. Sales increased due to continued improvement in the two stores opened in fiscal 2002 and increased sales in stores remodeled in fiscal 2003. In addition, sales in the second quarter of fiscal 2004 benefited from comparison to a year ago period that included the impact of a substantial number of store openings by competitors, higher levels of promotional activity and a softer economy. Net income for the six-month period of fiscal 2004 was $6,170,000 ($1.96 per diluted share), a decrease of 5% from the prior year. Excluding the income received from the partnership described above, net income increased 12% in the six-month period. Sales for the six-month period of fiscal 2004 were $468,943,000, an increase of 4.1% from the prior year. Village Super Market operates a chain of 23 supermarkets under the ShopRite name in New Jersey and eastern Pennsylvania. Respectfully, Perry Sumas James Sumas President Chairman of the Board March 13, 2004 All statements, other than statements of historical fact, included in this report are or may be considered forward-looking statements within the meaning of federal securities law. The Company cautions the reader that there is no assurance that actual results or business conditions will not differ materially from future results, whether 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. The following are among the principal factors that could cause actual results to differ from the forward-looking statements: local economic conditions; competitive pressures from the Company's operating environment; the ability of the Company to maintain and improve its sales and margins; the ability to attract and retain qualified associates; the availability of new store locations; the availability of capital; the liquidity of the Company on a cash flow basis; the success of operating initiatives; consumer spending patterns; increased cost of goods sold, including increased costs from the Company's principal supplier, Wakefern; results of ongoing litigation; the results of union contract negotiations; competitive store openings; the rate of return on pension assets; and other factors detailed herein and in the Company's filings with the SEC.
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. 24, 2004 Jan. 25, 2003 Jan. 24, 2004 Jan. 25, 2003 Sales $ 242,209 $ 233,911 $ 468,943 $ 450,449 Cost of sales 180,104 176,020 349,690 338,525 ---------- ---------- ---------- ---------- Gross profit 62,105 57,891 119,253 111,924 Operating and administrative expense 52,865 49,650 102,907 96,591 Depreciation and amortization 2,263 2,256 4,479 4,459 ---------- ---------- ---------- ---------- Operating income 6,977 5,985 11,867 10,874 Interest expense 592 844 1,213 1,623 Income from partnerships ---- 1,639 ---- 1,639 ---------- ---------- ---------- ---------- Income before income taxes 6,385 6,780 10,654 10,890 Income taxes 2,734 2,740 4,484 4,400 ---------- ---------- ---------- ---------- Net income $ 3,651 $ 4,040 $ 6,170 $ 6,490 ========== ========== ========== ========== Net income per share: Basic $ 1.18 $ 1.31 $ 2.00 $ 2.11 Diluted $ 1.16 $ 1.28 $ 1.96 $ 2.06 Gross profit as a % of sales 25.6% 24.7% 25.4% 24.8% Operating and admin. expense as a % of sales 21.8% 21.2% 21.9% 21.4%
Exhibit 31.1 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 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report. 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's second quarter that has materially effected, or is reasonably likely to materially effect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information and 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 control over financial reporting. Date: June 1, 2004 /s/ James Sumas James Sumas Chief Executive Officer Exhibit 31.2 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 report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's second quarter that has materially effected, or is reasonably likely to materially effect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: June 1, 2004 /s/ Kevin Begley Kevin Begley Chief Financial Officer & Principal Accounting Officer Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Village Super Market, Inc. (the "Company") on Form 10-Q for the period ending April 24, 2004 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 June 1, 2004 Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Village Super Market, Inc. (the "Company") on Form 10-Q for the period ending April 24, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Kevin Begley Chief Financial Officer of the Company certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Kevin Begley Kevin Begley Chief Financial Officer & Principal Accounting Officer June 1, 2004 EX-10 2 employ.txt EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT AGREEMENT, dated as of the 1st day of January 2004, between Village Super Market, Inc. (the "Company"), a New Jersey corporation, and Kevin R. Begley (the "Executive"). W I T N E S S E T H: WHEREAS, the Executive presently serves as the Chief Financial Officer and Treasurer of the Company, and WHEREAS, the Company desires to continue to employ the Executive on the terms and conditions set forth in this Agreement, and WHEREAS, the Executive is willing to accept continued employment with the Company on such terms and conditions; now, therefore, IN CONSIDERATION of the promises and the mutual covenants herein contained, the parties hereto hereby agree as follows: SECTION 1. TERM OF EMPLOYMENT. The Company will employ the Executive, and the Executive hereby accepts employment by the Company, on the terms and conditions contained in this Agreement for the period commencing upon January 1, 2004 and ending December 31, 2006. If not terminated as of December 31, 2006, the term of the Executive's employment under this Agreement (the "Term") will continue thereafter on a year to year basis, subject to the respective rights of the Executive and the Company to terminate the Term pursuant to Section 5 below. SECTION 2. DUTIES. 2.1 Positions. During the Term, the Executive shall serve as the Company's Chief Financial Officer and Treasurer, with such additions to the scope of the duties of his employment within the Company's field of operations or those of the Company's subsidiaries or affiliated corporations as the Board of Directors (the "Board") and the Executive may agree. 2.2 Time. The Executive shall devote substantially all of his time, efforts and skill during normal business hours to the affairs of the Company and its subsidiaries and affiliated corporations and to the promotion of their interests, provided that the Executive may serve as a director of both for-profit and not-for-profit corporations. The Executive may also serve as a principal of such business and other ventures as the Board expressly shall permit in the exercise of its discretion. SECTION 3. CURRENT COMPENSATION. 3.1 Salary. During the Term, the Company shall pay the Executive a base salary at the rate of $265,000 per year, which will be reviewed annually by the Chief Executive Officer ("CEO") and the Board, or a designated Committee of the Board, and will be increased on the basis of such review commensurate with the increases granted to the other executive officers of the Company. The base salary may be decreased only in the event of, and in proportion with, a decrease in the salaries of all other executive officers of the Company. The base salary shall be payable in equal installments in accordance with the Company's normal practices for payment of executives. 3.2 Bonus Compensation. (a) The Executive will also be entitled to annual bonus compensation based upon a formula, or based upon a discretionary grant, which shall be reviewed annually by the CEO and the Board, or a designated Committee of the Board. The Board may increase the annual bonus from the Executive's 2003 annual bonus of $35,000 based on such review. The annual bonus may be decreased only in the event of, and in proportion with, a decrease in the annual bonus of all other executive officers of the Company. The annual bonus will be paid within 30 days following the end of the year, although the annual bonus may be deferred at the Executive's option in accordance with the provisions of the Village Super Market, Inc. Deferred Compensation Plan. (b) In addition to such annual bonuses, the Company agrees to accrue for the benefit of the Executive a Retention Bonus of $75,000 a year, which will be reviewed annually by the CEO and the Board, or a designated Committee of the Board, and may be increased, but not decreased. One year after the date such bonus is accrued (December 31 of each year being the accrual date), the bonus shall become payable if the Executive is then an employee of the Company. Should the Company terminate the Executive, with or without cause, or if the Company does not agree to renew this Agreement on substantially equivalent terms as found in this Agreement or on terms more favorable to the Executive, then all of the accrued retention bonuses shall become immediately payable. Should the Executive terminate both this Agreement and his employment, except as a result of retirement (including early retirement), all accrued but unpaid retention bonuses will be cancelled. Should the Executive leave his employment as a result of retirement (including early retirement), disability or death, the Executive shall be entitled to receive all accrued but unpaid retention bonuses within 30 days of the date of retirement, disability or death. The Company may chose to pay the Retention Bonus in cash or stock. At the Executive's option, any cash retention bonus may be deferred in accordance with the provisions of the Village Super Market, Inc. Deferred Compensation Plan. 3.3 Stock Awards. The Board will consider the Executive for the grant of additional stock options, restricted stock or other stock-based compensation under any stock option, restricted stock or other stock-based plan in effect or adopted hereafter for the benefit of other executive officers of the Company. The Executive's participation in any such plan shall be at a level commensurate with his position with the Company and generally consistent with his participation in prior plans. 3.4 Reimbursement for Expenses. During the Term, the Company will reimburse the Executive for all expenses properly incurred by the Executive in the performance of the Executive's duties under this Agreement. In addition, the Company's obligations to indemnification and reimbursement under Sections 11 and 13 will continue indefinitely beyond the term of this agreement. 3.5 Other Benefits. In addition to the benefits specified in Sections 3.1 through 3.4, during the Term the Executive will be entitled to participate in any present and future life insurance, disability insurance, health insurance, pension, retirement and similar plans adopted by the Company for the general and overall benefit of its other executive officers, including any supplemental employee retirement plans. SECTION 4. NONASSIGNABILITY OF BENEFITS. No benefit under the Agreement shall be subject in any manner to anticipation, alienation, sale, transfer or assignment by the Executive, his beneficiaries or his estate, nor shall any benefit in any manner be liable for or subject to attachments or legal process for or against the Executive, his beneficiaries or his estate. SECTION 5. TERMINATION OF AGREEMENT. 5.1 Termination Generally. This Agreement shall cease and terminate upon the earliest of the events specified below, provided that such termination shall not effect the right of the Executive or his estate or beneficiaries to receive any salary or bonus accrued but unpaid (see Section 3.2(b) for the effect on any Retention Bonus), and shall not affect any vested rights which the Executive may have at the time of his death pursuant to any insurance or other death benefit plans or any other plans, policies or arrangements of the Company or any of its subsidiaries or affiliated corporations: (a) Expiration of the Term (including any continuation thereof) upon written notice of non-renewal by the Company to the Executive or by the Executive to the Company at least three months prior to any expiration date; (b) the disability of the Executive, to such an extent that he shall be unable to substantially perform the functions of his office for a continuous period of 6 months or such longer period as the Board shall determine; (c) the death of the Executive, subject to Section 5.3; (d) the date of termination for cause as discussed in Section 5.2; (e) the date of retirement, including early retirement, as defined in the Company's Employee Retirement Plan. 5.2 Termination for Cause. The Company may terminate the Term and all of the Company's then remaining obligations hereunder by termination for cause. Termination by the Company for "cause" shall mean termination by action of a majority vote of the Company's Board because of the Executive's willful and repeated failure (other than by reason of incapacity due to physical or mental illness) to perform the material duties of his employment after written notice from the Company of such failure and his inability or unwillingness to reasonably correct such failure within thirty days of such notice. 5.3 Death. If the Executive dies during the Term, the Executive's estate shall be entitled to a bonus under Section 3.2(a) and 3.2(b) for the year of his death prorated according to the number of months in such year through the month of the Executive's death. 5.4 Termination by Executive. The Executive may terminate this Agreement upon sixty days notice, subject to the restrictions in Section 3.2(b). 5.5 Post-Termination Compensation in the Event of a Change of Control. Anything herein to the contrary notwithstanding, if within five years of a change in control of the Company in a transaction or occurrence, or a related series of transactions or occurrences, resulting from a material change in ownership of the Company's Class A or Class B common stock and evidenced by cessation in service as directors of a majority of those persons theretofore serving as members of the Board or the Sumas Family Combined Voting Power falling below 40% of the Company's available votes for Class A and Class B shares, and a notice of termination is given to the Executive or a notice of non-renewal is given pursuant to 5.1(a) to the Executive or the Executive's duties are altered, then the Company will pay the Executive the greater of (1) damages for breach of this Agreement if a breach has occurred, or (2) five year's base salary at the then current rate together with five year's bonus determined by averaging the Executive's bonus for each of the five fiscal years preceding the year of termination together with five year's Retention Bonus determined by averaging the Executive's Retention Bonus for each of the five fiscal years preceding the year of termination, less any salary or bonus payments received by the Executive after the date of the change in control. Such amount shall be considered to be a severance payment and shall relieve the Executive and the Company of all obligations hereunder except the Executive's covenants in Section 6, 7 and 8. All accrued but unpaid retention bonuses shall become immediately payable in the event of a change in control and shall not reduce the severance amount. The Sumas Family Combined Voting Power is defined as the percentage of total shareholder votes available associated with Class A and Class B common shares beneficially owned collectively by Perry Sumas, James Sumas, Robert Sumas, William Sumas and John Sumas, as disclosed in the Company's annual proxy statement (68% per the 2003 proxy). SECTION 6. CONFIDENTIALITY. During the Term of this Agreement and for three years thereafter, the Executive will not, except in the performance of his duties or with the written consent of the Board, disclose information concerning the Company's business affairs, including undisclosed financial information, projects to open new stores or remodel existing stores, the identity of suppliers or other information which a reasonable man would consider confidential and as to which the Executive has obtained specific knowledge during the Term of this Agreement and which is otherwise unknown to the public. Nothing in this Section will prohibit the Executive from responding to inquiries from relevant regulatory authorities or from courts of competent jurisdiction. SECTION 7. ASSIGNMENT AND DISCLOSURE OF INVENTIONS. 7. For purposes of this Agreement, the term "Restricted Inventions" means all inventions, discoveries, improvements or modifications to inventions or discoveries, whether patentable or not, which are conceived of, reduced to practice, or both conceived of and reduced to practice, by the Executive at any time during the Term of the Agreement and which are used or useful by the Company in any of its lines of business. 7.2 The Executive will disclose any Restricted Invention promptly to the Company and the Executive hereby assigns the Company all rights to any Restricted Invention. The Executive will sign all documents necessary for the Company to apply for and obtain domestic and foreign patents for Restricted Inventions. The obligations of the Executive to sign such documents will continue beyond the Term of the Agreement with respect to Restricted Inventions, discoveries and improvements, whether patentable or not, conceived or made by the Executive during the Term of the Agreement. SECTION 8. NO COMPETING EMPLOYMENT. During the Term of this Agreement, without the prior written consent of the Company in each case, the Executive will not directly or indirectly: (a) make any public statement or disclosures inconsistent with his duties and the interests of the Company, (b) engage in research, scientific investigation, employment or consulting as an officer, director, employee, consultant or individual in any capacity whatsoever in any retail supermarket business in substantial competition with the business of the Company; or (c) solicit employees of the Company in connection with any business, whether or not in competition with the Company. If the Executive voluntarily terminates this agreement, or the Company terminates the Executive in accordance with Section 5.5, then the Executive will comply with this Section 8 for one year from the date of termination. SECTION 9. SEVERABILITY. If any provision of this Agreement shall, for any reason, be adjudged by any court of competent jurisdiction to be invalid or unenforceable, such judgment shall not affect, impair or invalidate the remainder of this Agreement but shall be confined in its operation to the provision of this Agreement directly involved in the controversy in which such judgment shall have been rendered. SECTION 10. SUCCESSORS AND ASSIGNS. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no succession had taken place. This Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns and shall be binding upon and inure to the benefit of the Executive and his heirs, executors, administrators, legal representatives and assigns. SECTION 11. INDEMNIFICATION The Company shall indemnify the Executive as an officer and employee of the Company to the maximum extent permitted by law. This obligation shall indefinitely survive the termination of the Executive's employment with the Company and the termination of this Agreement. This provision shall in no way limit the Company's obligation to indemnify the Executive under any other agreement or pursuant to the Company's articles of incorporation or bylaws. SECTION 12. NOTICES. All notices, requests, demands and other communications hereunder must be in writing and shall be deemed to have been duly given if mailed by first class certified mail, return receipt requested, postage prepaid, addressed as follows: (a) to the Executive: Kevin R. Begley 35 Lincoln Avenue Livingston, NJ 07039 (b) to the Company: Village Super Market, Inc. Chief Executive Officer 733 Mountain Avenue Springfield, NJ 07081 Either party by notice in writing mailed to the other as hereunder provided may change the address to which future notices to such party shall be mailed. SECTION 13. MISCELLANEOUS. This Agreement shall be construed and enforced in accordance with, and governed by, the laws of the State of New Jersey. This Agreement embodies the entire agreement and understanding between the Company and the Executive and supersedes all prior agreements and understandings relating to the subject matter hereof except for written obligations relating to the stock option and any benefit plan. This Agreement may not be modified or amended or any term or provision thereof waived or discharged except in writing signed by the party against whom such amendment, modification, waiver or discharge is sought to be enforced. In the event of a dispute regarding this Agreement, all of the Executive's costs and expenses of litigation or arbitration, including attorney's fees, shall be borne by the Company and paid as incurred, whether or not the Executive prevails in the litigation or arbitration. The headings of this Agreement are for the purpose of reference only and shall not limit or otherwise affect the meaning thereof. Under certain circumstances, Section 8 may survive the expiration of this agreement. IN WITNESS WHEREOF, the parties hereto have executed and delivered this agreement as of the day and year first above written. VILLAGE SUPER MARKET, INC. By: Chairman of the Board and Chief Executive Officer Kevin R. Begley Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----