vlgea10k20100731ex13.htm

EX-13 3 vlgea10k20100731ex13.htm ANNUAL REPORT TO SECURITY HOLDERS vlgea10k20100731ex13.htm

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES


Contents




Letter to Shareholders		2

Selected Financial Data		3

Unaudited Quarterly Financial Data		3

Management’s Discussion and Analysis of Financial Condition and Results of Operations.		4

Consolidated Balance Sheets		10

Consolidated Statements of Operations		11

Consolidated Statements of Shareholders’ Equity and Comprehensive Income		12

Consolidated Statements of Cash Flows		13

Notes to Consolidated Financial Statements		14

Management’s Report on Internal Control over Financial Reporting		27

Report of Independent Registered Public Accounting Firm		27

Stock Price and Dividend Information		28

Corporate Directory	Inside back cover

VILLAGE SUPER M ARKET, INC. AND SUBSIDIARIES

Dear Fellow Shareholders

The supermarket industry, and our customers, faced significant challenges this year. Our customers reacted to the weak economy and high unemployment by spending cautiously. Customers traded down to lower priced items, used more coupons, and bought more items on sale. The deflationary trend that began in the second half of fiscal 2009 continued in fiscal 2010. As a result of these factors, same store sales declined .7% in fiscal 2010.

Despite these challenges, we achieved solid results in fiscal 2010. Net income was $25.4 million, a decrease of 7%. Excluding the $1.2 million estimated positive impact of a 53rd week this year and the $.7 million litigation charge last year, net income decreased 13%. This is the second highest net income in our Company’s 73 year history. Sales increased 4.4% to $1.26 billion.

Village spent $20.2 million on capital expenditures in fiscal 2010. On February 21, 2010, we opened a 62,700 sq. ft. replacement store in Washington, NJ. We installed 1,000 solar panels on the roof of the Garwood store, reducing both carbon emissions and energy costs. Village has a high cash position and virtually no debt other than leases. This financial strength provides us the liquidity and flexibility to capitalize on any opportunities these difficult markets may provide us.

We continue to develop new ways to interact with customers to improve the shopping experience. Customers can now save on- line coupons directly to their PricePlus card. ShopRite® introduced an app for smart phones this year enabling customers to browse our circular, create and edit shopping lists, and essentially bring the power of shoprite.com to smart phones.

We continue to create ways to provide more value to customers. ShopRite® began selling a 90 day supply of over 300 generic drugs for $9.99 a year ago. This year we added a 30 day supply of certain generics for $3.99, and free generic diabetes drugs and antibiotics.

The Board increased the dividend again in fiscal 2010, distributing a total of $10.8 million to shareholders. The annualized dividend is currently $1.00 per Class A share and $.65 per Class B share.

While this is a challenging environment, Village’s performance has remained strong. Our 4,900 associates adapted to the difficult environment to continue to execute our priorities: offer a wide variety of high quality products at consistently low prices, provide superior customer service, create unique marketing initiatives, and continually improve our stores.

As always, we thank you for your support.

James Sumas,

Chairman of the Board

October 2010

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Selected Financial Data

(Dollars in thousands except per share and square feet data)

	July 31,			July 25,			July 26,			July 28,			July 29,
	2010			2009			2008			2007			2006
For year
Sales	$	1,261,825		$	1,208,097		$	1,127,762		$	1,046,435		$	1,016,817
Net income		25,381			27,255			22,543			20,503			16,487
Net income as a % of sales		2.01	%		2.26	%		2.00	%		1.96	%		1.62	%
Net income per share(1):
Class A common stock:
Basic	$	2.28		$	2.46		$	2.04		$	1.91		$	1.54
Diluted		1.88			2.02			1.67			1.56			1.26
Class B common stock:
Basic		1.48			1.60			1.33			1.24			1.00
Diluted		1.47			1.59			1.33			1.22			.99
Cash dividends per share
Class A		.970			.765			1.91			.345			.202
Class B		.631			.498			1.24			.224			.132

At year-end

Total assets	$	357,129		$	338,810		$	305,380		$	283,123		$	269,475
Long-term debt		41,831			32,581			27,498			21,767			27,110
Working capital		41,201			30,856			8,871			22,359			44,096
Shareholders’ equity		205,775			187,398			171,031			167,565			150,505
Book value per share		15.35			14.03			12.90			12.87			11.63
Other data
Same store sales increase (decrease)		(.7	%)		4.8	%		2.5	%		2.9	%		3.3	%
Total square feet		1,483,000			1,462,000			1,394,000			1,272,000			1,272,000
Average total sq. ft. per store		57,000			56,000			56,000			55,000			55,000
Selling square feet		1,171,000			1,155,000			1,103,000			1,009,000			1,009,000
Sales per average square foot of selling space	$	1,085		$	1,070		$	1,068		$	1,037		$	1,008
Number of stores		26			26			25			23			23
Sales per average number of stores	$	48,532		$	47,376		$	46,990		$	45,497		$	44,209
Capital expenditures	$	20,204		$	26,625		$	24,898		$	15,692		$	14,296

Unaudited Quarterly Financial Data

(Dollars in thousands except per share amounts)

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Fiscal Year
2010
Sales	$	302,784	$	315,309	$	300,991	$	342,741	$	1,261,825
Gross profit		80,568		86,156		82,413		93,788		342,925
Net income		4,542		6,737		5,205		8,897		25,381
Net income per share:
Class A common stock:
Basic		.41		.61		.47		.80		2.28
Diluted		.34		.50		.39		.66		1.88
Class B common stock:
Basic		.27		.39		.30		.52		1.48
Diluted		.26		.39		.30		.51		1.47

2009
Sales	$	290,984	$	312,714	$	293,474	$	310,925	$	1,208,097
Gross profit		79,471		85,061		80,070		85,943		330,545
Net income		6,367		7,956		6,252		6,680		27,255
Net income per share(1):
Class A common stock:
Basic		.58		.72		.56		.60		2.46
Diluted		.47		.59		.46		.49		2.02
Class B common stock:
Basic		.38		.47		.37		.39		1.60
Diluted		.37		.46		.36		.39		1.59

Fiscal 2010 contains 53 weeks, with the additional week included in the fourth quarter. All other fiscal years contain 52 weeks.

(1) Net income per share amounts for prior periods have been revised to reflect the adoption of a new accounting standard requiring share-based awards containing non-forfeitable rights to dividends be treated as participating securities. See note 1 to the consolidated financial statements.

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Dollars in thousands except per share and per square foot data)

OVERVIEW

Village Super Market, Inc. (the “Company” or “Village”) operates a chain of 26 ShopRite supermarkets in New Jersey and northeastern Pennsylvania. Village opened a replacement store in Washington, NJ on February 21, 2010. Village is the second largest member of Wakefern Food Corporation (“Wakefern”), the nation’s largest retailer-owned food cooperative and owner of the ShopRite name. This ownership interest in Wakefern provides Village many of the economies of scale in purchasing, distribution, advanced retail technology and advertising associated with larger chains.

The Company’s stores, five of which are owned, average 57,000 total square feet. Larger store sizes enable Village to offer the specialty departments that customers desire for one-stop shopping, including pharmacies, natural and organic departments, ethnic and international foods, and home meal replacement. During fiscal 2010, sales per store were $48,532 and sales per square foot of selling space were $1,085. Management believes these figures are among the highest in the supermarket industry.

The supermarket industry is highly competitive. The Company competes directly with multiple retail formats, including national, regional and local supermarket chains as well as warehouse clubs, supercenters, drug stores, discount general merchandise stores, fast food chains, dollar stores and convenience stores. Village competes by using low pricing, superior customer service, and a broad range of consistently available quality products, including ShopRite private labeled products. The ShopRite Price Plus card and the co-branded ShopRite credit card also strengthen customer loyalty.

We consider a variety of indicators to evaluate our performance, such as same store sales, percentage of total sales by department (mix); shrink; departmental gross profit percentage; sales per labor hour; and hourly labor rates.

During fiscal 2010, the supermarket industry was impacted by changing consumer behavior due to the weak economy and high unemployment. Consumers are increasingly cooking meals at home, but spending cautiously by trading down to lower priced items, including private label, and concentrating their buying on sale items. The deflationary trend in food prices that began during the second half of fiscal 2009 continued in fiscal 2010. As a result of these trends, same store sales, excluding the 53rd week, declined .7% in fiscal 2010. This compares to a same store sales increase in fiscal 2009 of 4.8%.

The Company’s leasehold interest in the old Washington store had been the subject of litigation related to the lease-end date, rent amounts and other matters. On July 30, 2009, the Company settled all litigation with the landlord and purchased the land and building for $3,100. During the fourth quarter of fiscal 2009, the Company recorded a pre-tax charge of $1,200 related to this litigation. This charge was based on the consideration paid in excess of the fair value of the property. In addition to settling the litigation, the purchase of the old Washington store property eliminated any potential time period between the closing of the old Washington store and the opening of the replacement store. The property is currently being marketed for sale.

The Company utilizes a 52 - 53 week fiscal year, ending on the last Saturday in the month of July. Fiscal 2010 contains 53 weeks. The inclusion of the 53rd week in fiscal 2010 had an estimated positive impact on net income of $1,200. Fiscal 2009 and 2008 contain 52 weeks.

RESULTS OF OPERATIONS

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

	July 31, 2010			July 25, 2009			July 26, 2008
Sales		100.00	%		100.00	%		100.00	%
Cost of sales		72.82			72.64			72.94
Gross profit		27.18			27.36			27.06
Operating and administrative expense		22.25			22.15			22.41
Depreciation and amortization		1.34			1.27			1.22
Operating income		3.59			3.94			3.43
Interest expense		(.29	)		(.25	)		(.26	)
Interest income		.16			.17			.27
Income before income taxes		3.46			3.86			3.44
Income taxes		1.45			1.60			1.44
Net income		2.01	%		2.26	%		2.00	%

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

SALES

Sales were $1,261,825 in fiscal 2010, an increase of $53,728, or 4.4% from the prior year. Sales increased due to opening of the Marmora, NJ store on May 31, 2009 and the opening of the Washington, NJ replacement store on February 21, 2010. In addition, sales increased approximately $21,000, or 1.7%, due to fiscal 2010 containing 53 weeks. Same store sales, excluding the impact of the 53rd week, declined .7%. Same store sales declined due to cannibalization from the opening of the Marmora store and reduced sales in three stores due to competitive store openings. In addition, sales were impacted in fiscal 2010 by deflation and changing consumer behavior due to economic weakness, which has resulted in increased coupon usage, sale item penetration and trading down. Same store sales in the fourth quarter of fiscal 2010, excluding the 53rd week, were flat. The Company expects same store sales, excluding the impact of the 53rd week, for fiscal 2011 to range from 0% to 2% as we expect the deflationary trend to end. New stores and replacement stores are included in same store sales in the quarter after the store has been in operation for four full quarters. Store renovations are included in same store sales immediately.

Sales were $1,208,097 in fiscal 2009, an increase of $80,335, or 7.1% from the prior year. Sales increased primarily due to a same store sales increase of 4.8%, a full year’s operations of the Galloway, NJ and Franklin, NJ stores, which opened on October 3, 2007 and November 7, 2007, respectively, and the opening of a new store in Marmora on May 31, 2009. Same store sales increased 4.8% in fiscal 2009 due to higher sales at the Galloway and Franklin stores after their inclusion in same stores sales, and improved transaction counts at most stores. Inflation in the second half of fiscal 2009 was lower than inflation in fiscal 2008 and the first half of fiscal 2009.

GROSS PROFIT

Gross profit as a percentage of sales decreased .18% in fiscal 2010 compared to the prior year primarily due to decreased departmental gross margin percentages (.22%), higher promotional spending (.14%) and increased warehouse assessment charges from Wakefern (.07%). These decreases were partially offset by higher patronage dividends (.12%), a LIFO benefit in fiscal 2010 compared to a charge in 2009 (.11%) and improved product mix (.04%).

Gross profit as a percentage of sales increased .30% in fiscal 2009 compared to the prior year, principally due to improved departmental gross margin percentages, as changes in product mix, promotional spending, warehouse assessment charges and LIFO charges had minimal impact on gross profit as a percentage of sales.

OPERATING AND ADMINISTRATIVE EXPENSE

Operating and administrative expense increased .10% as a percentage of sales in fiscal 2010 compared to the prior year primarily due to increased fringe benefit (.18%) and snow removal (.04%) costs, and the loss of operating leverage from the .7% same store sales decline in the current year. These increases were partially offset by the prior year including a charge (.10%) for litigation related to the old Washington store and leverage provided by the additional sales week in fiscal 2010.

Operating and administrative expense decreased .26% as a percentage of sales in fiscal 2009 compared to the prior year due to reduced payroll costs (.42%) and other operating leverage resulting from the 4.8% same store sales increase. These decreases were partially offset by a charge (.10%) for litigation related to the current Washington store in fiscal 2009 and the prior year including refunds of property and liability insurance premiums (.07%).

DEPRECIATION AND AMORTIZATION

Depreciation and amortization expense was $16,900, $15,319 and $13,713 in fiscal 2010, 2009 and 2008, respectively. Depreciation and amortization expense increased in fiscal 2010 and 2009 compared to the prior years due to depreciation related to fixed asset additions, including the new stores.

INTEREST EXPENSE

Interest expense was $3,660, $3,016 and $2,986 in fiscal 2010, 2009 and 2008, respectively. Interest expense increased in fiscal 2010 and 2009 compared to the prior years due to interest on the Marmora store financing lease, partially offset by lower interest expense due to payments on loans.

INTEREST INCOME

Interest income was $2,020, $2,064 and $3,030 in fiscal 2010, 2009 and 2008, respectively. Interest expense was similar in fiscal 2010 compared to fiscal 2009 as amounts invested and interest rates were comparable. Interest income declined in fiscal 2009 due to lower interest rates received.

INCOME TAXES

The Company’s effective income tax rate was 41.8%, 41.5% and 41.9% in fiscal 2010, 2009 and 2008, respectively.

CRITICAL ACCOUNTING POLICIES

Critical accounting policies are those accounting policies that management believes are important to the portrayal of the Company’s financial condition and results of operations. These policies require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

IMPAIRMENT

The Company reviews the carrying values of its long-lived assets, such as property, equipment and fixtures for possible impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. Such review analyzes the undiscounted estimated future cash flows from asset groups at the store level to determine if the carrying value of such assets are recoverable from their respective cash flows. If an impairment is indicated, it is measured by comparing the fair value of the long-lived asset groups held for use to their carrying value.

Goodwill is tested for impairment at the end of each fiscal year, or more frequently if circumstances dictate. Since the Company’s stock is not widely traded, management utilizes valuation techniques, such as earnings multiples, in addition to the Company’s market capitalization to assess goodwill for impairment. Calculating the fair value of a reporting unit requires the use of estimates. Management believes the fair value of Village’s one reporting unit exceeds its carrying value at July 31, 2010. Should the Company’s carrying value of its one reporting unit exceed its fair value, the amount of any resulting goodwill impairment may be material to the Company’s financial osition and results of operations.5

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

PATRONAGE DIVIDENDS

As a stockholder of Wakefern, Village earns a share of Wakefern’s earnings, which are distributed as a “patronage dividend” (see Note 3). This dividend is based on a distribution of substantially all of Wakefern’s operating profits for its fiscal year (which ends September 30) in proportion to the dollar volume of purchases by each member from Wakefern during that fiscal year. Patronage dividends are recorded as a reduction of cost of sales as merchandise is sold. Village accrues estimated patronage dividends due from Wakefern quarterly based on an estimate of the annual Wakefern patronage dividend and an estimate of Village’s share of this annual dividend based on Village’s estimated proportional share of the dollar volume of business transacted with Wakefern that year. The amount of patronage dividends receivable based on these estimates were $8,758 and $7,446 at July 31, 2010 and July 25, 2009, respectively.

PENSION PLANS

The determination of the Company’s obligation and expense for Company-sponsored pension plans is dependent, in part, on Village’s selection of assumptions used by actuaries in calculating those amounts. These assumptions are described in Note 8 and include, among others, the discount rate, the expected long-term rate of return on plan assets and the rate of increase in compensation costs. Actual results that differ from the Company’s assumptions are accumulated and amortized over future periods and, therefore, generally affect recognized expense in future periods. While management believes that its assumptions are appropriate, significant differences in actual experience or significant changes in the Company’s assumptions may materially affect cash flows, pension obligations and future expense.

The objective of the discount rate assumption is to reflect the rate at which the Company’s pension obligations could be effectively settled based on the expected timing and amounts of benefits payable to participants under the plans. Our methodology for selecting the discount rate as of July 31, 2010 was to match the plans cash flows to that of a yield curve on high- quality fixed-income investments. Based on this method, we utilized a weighted-average discount rate of 5.19% at July 31, 2010 compared to 5.87% at July 25, 2009. The 68 basis point decrease in the discount rate, and a change in the mortality table utilized, increased the projected benefit obligation at July 31, 2010 by approximately $2,429. Village evaluated the expected long-term rate of return on plan assets of 7.5% and the expected increase in compensation costs of 4 to 4.5% and concluded no changes in these assumptions were necessary in estimating pension plan obligations and expense.

Sensitivity to changes in the major assumptions used in the calculation of the Company’s pension plans is as follows:

		Projected benefit
	Percentage	obligation	Expense
	point change	decrease (increase)	decrease (increase)
Discount rate	+/- 1.0%	$3,867 ($4,696)	$ 93 ($ 110)
Expected return on assets	+/- 1.0%	—	$ 229 ($ 229)

Village contributed $3,045 and $3,080 in fiscal 2010 and 2009, respectively, to these Company-sponsored pension plans. Village expects to contribute $3,000 in fiscal 2011 to these plans. The 2010, 2009 and expected 2011 contributions are substantially all voluntary contributions.

SHARE-BASED EMPLOYEE COMPENSATION

All share-based payments to employees are recognized in the financial statements as compensation expense based on the fair market value on the date of grant. Village determines the fair market value of stock option awards using the Black-Scholes option pricing model. This option pricing model incorporates certain assumptions, such as a risk-free interest rate, expected volatility, expected dividend yield and expected life of options, in order to arrive at a fair value estimate.

UNCERTAIN TAX POSITIONS

The Company is subject to periodic audits by various taxing authorities. These audits may challenge certain of the Company’s tax positions such as the timing and amount of deductions and the allocation of income to various tax jurisdictions. Accounting for these uncertain tax positions requires significant management judgment. Actual results could materially differ from these estimates and could significantly affect the effective tax rate and cash flows in future years.

LIQUIDITY and CAPITAL RESOURCES

CASH FLOWS

Net cash provided by operating activities was $35,313 in fiscal 2010 compared to $47,863 in fiscal 2009. This decrease is primarily attributable to a decrease in payables in fiscal 2010 compared to an increase in payables in fiscal 2009. The changes in payables balances outstanding were due to differences in the timing of payments.

During fiscal 2010, Village used cash to fund capital expenditures of $20,204, dividends of $10,820 and debt payments of $5,448. Capital expenditures include the completion of construction and equipment for the replacement store in Washington, installation of a solar energy system at the Garwood store, and several small remodels. Debt payments include the final installment of $4,286 on Village’s unsecured Senior Notes.

Net cash provided by operating activities was $47,863 in fiscal 2009 compared to $45,339 in fiscal 2008. This increase is primarily attributable to improved net income and higher depreciation in fiscal 2009 and a smaller increase in inventories in fiscal 2009 than in fiscal 2008. These improvements were partially offset by a smaller increase in payables in fiscal 2009 than in fiscal 2008. Inventories increased less in fiscal 2009 than in fiscal 2008 due to the addition of only one new store in fiscal 2009 compared to two new stores in fiscal 2008. The changes in payables balances outstanding are due to differences in the timing of payments.

During fiscal 2009, Village used cash to fund capital expenditures of $26,625, dividends of $8,471 and debt payments of $5,618. Capital expenditures consisted primarily of construction and equipment for the new store in Marmora, NJ, which opened May 31, 2009, and construction of the replacement store in Washington, NJ. Debt payments made include the sixth installment of $4,286 on Village’s unsecured Senior Notes.6

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

LIQUIDITY and DEBT

Working capital was $41,201, $30,856 and $8,871 at July 31, 2010, July 25, 2009 and July 26, 2008, respectively. Working capital ratios at the same dates were 1.49, 1.33 and 1.10 to one, respectively. The increased working capital in fiscal 2010 is primarily due to a reduction in short term notes payable and accounts payable. The Company’s working capital needs are reduced since inventory is generally sold before payments to Wakefern and other suppliers are due.

Village has budgeted approximately $12,000 for capital expenditures in fiscal 2011. Planned expenditures include the purchase of land for future development and several small remodels. The Company’s primary sources of liquidity in fiscal 2011 are expected to be cash and cash equivalents on hand at July 31, 2010 and operating cash flow generated in fiscal 2011.

At July 31, 2010, the Company had a $18,204 15-month note receivable due from Wakefern earning a fixed rate of 7%. This note is automatically extended for additional, recurring 90-day periods, unless, not later than one year prior to the due date, the Company notifies Wakefern requesting payment on the due date. This note currently is scheduled to mature on August 30, 2011. On December 8, 2009, a $15,822 note receivable from Wakefern matured and is currently invested in overnight deposits at Wakefern.

On December 19, 2008, Village amended its unsecured revolving credit agreement, which would have expired on September 16, 2009. The amended agreement increased the maximum amount available for borrowing to $25,000 from $20,000. This loan agreement expires on December 31, 2011 with two one-year extensions available if exercised by both parties. Other terms of the amended revolving loan agreement, including covenants, are similar to the previous agreement. The revolving credit line can be used for general corporate purposes. Indebtedness under this agreement bears interest at the prime rate, or at the Eurodollar rate, at the Company’s option, plus applicable margins based on the Company’s fixed charge coverage ratio. There were no amounts outstanding at July 31, 2010 or July 25, 2009 under this facility.

The revolving loan agreement contains covenants that, among other conditions, require a maximum liabilities to tangible net worth ratio, a minimum fixed charge coverage ratio and a positive net income. At July 31, 2010, the Company was in compliance with all terms and covenants of the revolving loan agreement. Under the above covenants, Village had approximately $118,000 of net worth available at July 31, 2010 for the payment of dividends.

During fiscal 2010, Village paid cash dividends of $10,820. Dividends in fiscal 2010 consist of $.97 per Class A common share and $.631 per Class B common share.

During fiscal 2009, Village paid cash dividends of $8,471. Dividends in fiscal 2009 consist of $.765 per Class A common share and $.498 per Class B common share.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

The table below presents significant contractual obligations of the Company at July 31, 2010:

	Payments due by fiscal period
	2011		2012		2013		2014		2015		Thereafter		Total
Capital and financing leases (2)	$	4,025	$	4,025	$	4,025	$	4,285	$	4,475	$	92,946	$	113,781
Operating leases (2)		8,788		7,601		6,505		5,957		5,658		50,831		85,340
Notes payable to
Related party		341		347		365		365		264		139		1,821
	$	13,154	$	11,973	$	10,895	$	10,607	$	10,397	$	143,916	$	200,942

(1)	In addition, the Company is obligated to purchase 85% of its primary merchandise requirements from Wakefern (see Note 3).
(2)	The above amounts for capital, financing and operating leases include interest, but do not include certain obligations under these leases for other charges. These charges consisted of the following in fiscal 2010: Real estate taxes - $3,892; common area maintenance -$2,256; insurance - $218; and contingent rentals - $932.
(3)	Pension plan funding requirements are excluded from the above table as estimated contribution amounts for future years are uncertain. Required future contributions will be determined by, among other factors, actual investment performance of plan assets, interest rates required to be used to calculate pension obligations, and changes in legislation. The Company expects to contribute $3,000 in fiscal 2011 to fund Company-sponsored defined benefit pension plans compared to actual contributions of $3,045 in fiscal 2010. The table also excludes contributions under various multi-employer pension plans, which totaled $5,895 in fiscal 2010.
(4)	The amount of unrecognized tax benefits of $6,662 at July 31, 2010 has been excluded from this table because a reasonable estimate of the timing of future tax settlements cannot be determined.

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 2009, new accounting standards were issued which change how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance. These standards are effective beginning August 1, 2010 and earlier application is prohibited. We are currently evaluating the impact these standards may have on our consolidated financial position and results of operations.

RECENTLY ADOPTED ACCOUNTING STANDARDS

Effective July 26, 2009, the Company adopted a new accounting standard defining fair value and establishing a framework for measurement of fair value for non-financial assets and liabilities that are not remeasured at fair value on a recurring basis. This includes fair value calculated in impairment assessments of goodwill and other long-lived assets. The adoption had no impact on the Company’s consolidated financial position or results of operations

On July 26, 2009, the Company adopted a new accounting standard requiring unvested share-based payment awards that contain nonforfeitable rights to dividends be treated as participating securities and therefore included in computing net income per share using the two-class method. All prior period net income per share data has been adjusted to reflect the new standard.

OUTLOOK

This annual report contains certain forward-looking statements about Village’s future performance. These statements are based on management’s assumptions and beliefs in light of information currently available. Such statements relate to, for example: economic conditions; expected pension plan contributions; projected capital expenditures; cash flow requirements; inflation expectations; and legal matters; and are indicated by words such as “will,” “expect,” “should,” “intend,” “anticipates”, “believes” and similar words or phrases. The Company cautions the reader that there is no assurance that actual results or business conditions will not differ materially from the results expressed, suggested or implied by such forward-looking statements. The Company undertakes no obligation to update forward- looking statements to reflect developments or information obtained after the date hereof.

●	We expect same store sales to range from 0% to 2% in fiscal 2011, excluding the impact of the 53rd week that occurred in fiscal 2010.

●

●	We expect slight retail price inflation in fiscal 2011. Fiscal 2010 was deflationary.

●	We have budgeted $12,000 for capital expenditures in fiscal 2011, which includes the purchase of land for future development and several small remodels.

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

●	We expect our effective income tax rate in fiscal 2011 to be 41-42%.

●	We expect operating expenses will be affected by increased costs in certain areas, such as medical and pension costs, and credit card fees.

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

●

The supermarket business is highly competitive and characterized by narrow profit margins. Results of operations may be materially adversely impacted by competitive pricing and promotional programs, industry consolidation and competitor store openings. Village competes with national and regional supermarkets, local supermarkets, warehouse club stores, supercenters, drug stores, convenience stores, dollar stores, discount merchandisers, restaurants and other local retailers. Some of these competitors have greater financial resources, lower merchandise acquisition cost and lower operating expenses than we do.

●

The Company’s stores are concentrated in New Jersey, with one store in northeastern Pennsylvania. We are vulnerable to economic downturns in New Jersey in addition to those that may affect the country as a whole. Economic conditions such as inflation, deflation, interest rates, energy costs and unemployment rates may adversely affect our sales and profits.

●

Village purchases substantially all of its merchandise from Wakefern. In addition, Wakefern provides the Company with support services in numerous areas including supplies, advertising, liability and property insurance, technology support and other store services. Further, Village receives patronage dividends and other product incentives from Wakefern. Any material change in Wakefern’s method of operation or a termination or material modification of Village’s relationship with Wakefern could have an adverse impact on the conduct of the Company’s business and could involve additional expense for Village. The failure of any Wakefern member to fulfill its obligations to Wakefern or a member’s insolvency or withdrawal from Wakefern could result in increased costs to the Company. Additionally, an adverse change in Wakefern’s results of operations could have an adverse effect on Village’s results of operations.

●

Approximately 93% of our employees are covered by collective bargaining agreements. Any work stoppages could have an adverse impact on our financial results. If we are unable to control health care and pension costs provided for in the collective bargaining agreements, we may experience increased operating costs.

●

Village could be adversely affected if consumers lose confidence in the safety and quality of the food supply chain. The real or perceived sale of contaminated food products by us could result in a loss of consumer confidence and product liability claims, which could have a material adverse effect on our sales and operations.

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

●

We believe a number of the multi-employer plans to which we contribute are underfunded. As a result, we expect that contributions to these plans may increase. Additionally, the benefit levels and related items will be issues in the negotiation of our collective bargaining agreements. Under current law, an employer that withdraws or partially withdraws from a multi-employer pension plan may incur withdrawal liability to the plan, which represents the portion of the plan’s underfunding that is allocable to the withdrawing employer under very complex actuarial and allocation rules. The failure of a withdrawing employer to fund these obligations can impact remaining employers. The amount of any increase or decrease in our required contributions to these multi-employer pension plans will depend upon the outcome of collective bargaining, actions taken by trustees who manage the plans, government regulations and the actual return on assets held in the plans, among other factors.

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

RELATED PARTY TRANSACTIONS

The Company holds an investment in Wakefern, its principal supplier. Village purchases substantially all of its merchandise from Wakefern in accordance with the Wakefern Stockholder Agreement. As part of this agreement, Village is required to purchase certain amounts of Wakefern common stock. At July 31, 2010, the Company’s indebtedness to Wakefern for the outstanding amount of this stock subscription was $1,821. The maximum per store investment, which is currently $750, increased by $25 in both fiscal 2010 and 2009, resulting in additional investments of $590 and $550, respectively. Wakefern distributes as a “patronage dividend” to each member a share of its earnings in proportion to the dollar volume of purchases by the member from Wakefern during the year. Wakefern provides the Company with support services in numerous areas including advertising, supplies, liability and property insurance, technology support and other store services. Additional information is provided in Note 3 to the consolidated financial statements.

At July 31, 2010, Village had demand deposits invested at Wakefern in the amount of $51,174. These deposits earn overnight money market rates.

On August 11, 2007, the Company acquired the fixtures and lease of a store location in Galloway Township, NJ from Wakefern for $3,500.

The Company subleases the Galloway and Vineland stores from Wakefern at combined current annual rents of $1,227. Both leases contain normal periodic rent increases and options to extend the lease.

Village leases a supermarket from a realty firm partly owned by officers of Village. The Company paid rent to this related party of $595 in fiscal years 2010, 2009 and 2008. This lease expires in fiscal 2016 with options to extend at increasing annual rents.

The Company has ownership interests in three real estate partnerships. Village paid aggregate rents to two of these partnerships for leased stores of approximately $781, $750 and $727 in fiscal years 2010, 2009 and 2008, respectively.

IMPACT OF INFLATION AND CHANGING PRICES

Although the Company cannot accurately determine the precise effect of inflation or deflation on its operations, it estimates that product prices overall experienced deflation in fiscal 2010 compared to inflation in fiscal 2009 and 2008. The Company recorded a pre-tax LIFO benefit of $418 in fiscal 2010 compared to a pre-tax LIFO charge of $964 and $742 in fiscal 2009 and 2008, respectively. The Company calculates LIFO based on CPI indices published by the Department of Labor, which indicated weighted- average CPI changes of (1.3%), 3.3%, and 2.7% in fiscal 2010, 2009 and 2008, respectively.

MARKET RISK

At July 31, 2010, the Company had demand deposits of $51,174 at Wakefern earning interest at overnight money market rates, which are exposed to the impact of interest rate changes.

At July 31, 2010 the Company had a $18,204 15-month note receivable due from Wakefern earning a fixed rate of 7%. This note is automatically extended for additional, recurring 90-day periods, unless, not later than one year prior to the due date, the Company notifies Wakefern requesting payment on the due date. This note currently is scheduled to mature on August 30, 2011.

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands)

	July 31,		July 25,
	2010		2009
ASSETS
Current Assets
Cash and cash equivalents	$	69,043	$	54,966
Merchandise inventories		36,256		34,273
Patronage dividend receivable		8,758		7,446
Note receivable from Wakefern		—		15,684
Other current assets		11,825		12,189

Total current assets		125,882		124,558

Note receivable from Wakefern		18,204		16,983
Property, equipment and fixtures, net		175,286		162,261
Investment in Wakefern		20,263		19,673
Goodwill		10,605		10,605
Other assets		6,889		4,730

	$	357,129	$	338,810

LIABILITIES and SHAREHOLDERS’ EQUITY
Current Liabilities
Notes payable	$	—		$	4,286
Capital and financing lease obligations		13			269
Notes payable to Wakefern		341			269
Accounts payable to Wakefern		47,088			53,487
Accounts payable and accrued expenses		12,609			14,558
Accrued wages and benefits		11,825			11,481
Income taxes payable		12,805			9,352

Total current liabilities		84,681			93,702

Long-term Debt
Capital and financing lease obligations		40,351			30,752
Notes payable to Wakefern		1,480			1,829

Total long-term debt		41,831			32,581

Deferred income taxes		1,372			2,397
Pension liabilities		18,299			17,315
Other liabilities		5,171			5,417

Commitments and Contingencies (Notes 3, 4, 5, 6 and 9)

Shareholders’ Equity
Preferred stock, no par value:
Authorized 10,000 shares, none issued		—			—
Class A common stock, no par value:
Authorized 20,000 shares; issued 7,541 shares at July 31, 2010 and 7,538 shares at July 25, 2009		32,434			28,982
Class B common stock, no par value:
Authorized 20,000 shares; issued and outstanding 6,376 shares		1,035			1,035
Retained earnings		185,790			171,229
Accumulated other comprehensive loss		(10,421	)		(10,535	)
Less treasury stock, Class A, at cost (513 shares
at July 31, 2010 and 555 shares at July 25, 2009)		(3,063	)		(3,313	)

Total shareholders’ equity		205,775			187,398

	$	357,129		$	338,810

See notes to consolidated financial statements.

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(In thousands, except per share amounts)

	July 31, 2010			Years ended July 25, 2009			July 26, 2008

Sales	$	1,261,825		$	1,208,097		$	1,127,762
Cost of sales		918,900			877,552			822,564

Gross profit		342,925			330,545			305,198

Operating and administrative expense		280,767			267,667			252,739
Depreciation and amortization		16,900			15,319			13,713

Operating income		45,258			47,559			38,746

Interest expense		(3,660	)		(3,016	)		(2,986	)
Interest income		2,020			2,064			3,030

Income before income taxes		43,618			46,607			38,790
Income taxes		18,237			19,352			16,247

Net income	$	25,381		$	27,255		$	22,543

Net income per share: Class A common stock:
Basic	$	2.28		$	2.46		$	2.04
Diluted	$	1.88		$	2.02		$	1.67

Class B common stock:
Basic	$	1.48		$	1.60		$	1.33
Diluted	$	1.47		$	1.59		$	1.33

See notes to consolidated financial statements.

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Consolidated Statements of Shareholders’ Equity and Comprehensive Income

(in thousands)

Years ended July 31, 2010, July 25, 2009 and July 26, 2008

												Accumulated
	Class A				Class B							other			Treasury stock						Total
	Common stock				Common stock				Retained			comprehensive			Class A						shareholders’
	Shares issued		Amount		Shares issued		Amount		earnings			gain (loss)			Shares			Amount			equity
Balance, July 28, 2007		7,272	$	22,649		6,376	$	1,035	$	150,596		$	(4,526	)		624		$	(2,189	)	$	167,565
Net income		—		—		—		—		22,543			—			—			—			22,543
Recognition of pension actuarial loss, net of tax of $188		—		—		—		—		––			283			—			—			283
Reduction of pension liability, net of tax of $115		—		—		—		—		––			172			—			—			172
Comprehensive income																						22,998
Uncertain tax position adjustment		—		—		—		—		399			—			—			—			399
Dividends		—		—		—		—		(21,093	)		—			—			—			(21,093	)
Exercise of stock options		—		236		—		—		—			—			(62	)		352			588
Treasury stock purchases		—		—		—		—		—			—			80			(1,999	)		(1,999	)
Share-based compensation expense		250		1,725		—		—		––			—			—			—			1,725
Excess tax benefits from exercise of stock options and restricted share vesting		—		848		—		—		—			—			—			—			848
Balance, July 26, 2008		7,522		25,458		6,376		1,035		152,445			(4,071	)		642			(3,836	)		171,031
Net income		—		—		—		—		27,255			—			—			—			27,255
Recognition of pension actuarial loss, net of tax of $201		—		—		—		—		––			303			—			—			303
Increase in pension liability, net of tax of $4,511		—		—		—		—		––			(6,767	)		—			—			(6,767	)
Comprehensive income																						20,791
Dividends		—		—		—		—		(8,471	)		—			—			—			(8,471	)
Exercise of stock options		—		406		—		—		—			—			(87	)		523			929
Share-based compensation expense		16		2,573		—		—		––			—			—			—			2,573
Excess tax benefits from exercise of stock options and restricted share vesting		—		545		—		—		—			—			—			—			545
Balance, July 25, 2009		7,538		28,982		6,376		1,035		171,229			(10,535	)		555			(3,313	)		187,398
Net income		—		—		—		—		25,381			—			—			—			25,381
Recognition of pension actuarial loss, net of tax of $496		—		—		—		—		––			744			—			—			744
Increase in pension liability, net of tax of $420		—		—		—		—		––			(630	)		—			—			(630	)
Comprehensive income																						25,495
Dividends		—		—		—		—		(10,820	)		—			—			—			(10,820	)
Exercise of stock options		—		236		—		—		—			—			(42	)		250			486
Share-based compensation expense		3		2,929		—		—		––			—			—			—			2,929
Excess tax benefits from exercise of stock options and restricted share vesting		—		287		—		—		—			—			—			—			287
Balance, July 31, 2010		7,541	$	32,434		6,376	$	1,035	$	185,790		$	(10,421	)		513		$	(3,063	)	$	205,775

1See notes to consolidated financial statements.

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

				Years ended
	July 31, 2010			July 25, 2009			July 26, 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	25,381		$	27,255		$	22,543
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		16,900			15,319			13,713
Non-cash share-based compensation		2,929			2,573			1,725
Deferred taxes		(900	)		(16	)		58
Provision to value inventories at LIFO		(418	)		964			742
Changes in assets and liabilities:
Merchandise inventories		(1,565	)		(2,164	)		(4,023	)
Patronage dividend receivable		(1,312	)		(568	)		(478	)
Accounts payable to Wakefern		(6,399	)		1,142			10,435
Accounts payable and accrued expenses		(1,949	)		885			(2,084	)
Accrued wages and benefits		344			1,459			1,295
Income taxes payable		3,453			311			3,177
Other assets and liabilities		(1,151	)		703			(1,764	)

Net cash provided by operating activities		35,313			47,863			45,339

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(20,204	)		(26,625	)		(24,898	)
Maturity of (investment in) note receivable from Wakefern		14,463			(1,546	)		(1,880	)
Acquisition of Galloway store assets		—			—			(3,500	)

Net cash used in investing activities		(5,741	)		(28,171	)		(30,278	)

CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of construction loan		—			—			6,776
Proceeds from exercise of stock options		486			929			588
Excess tax benefit related to share-based compensation		287			545			848
Principal payments of long-term debt		(5,448	)		(5,618	)		(6,138	)
Dividends		(10,820	)		(8,471	)		(21,093	)
Treasury stock purchases		—			—			(1,999	)

Net cash used in financing activities		(15,495	)		(12,615	)		(21,018	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		14,077			7,077			(5,957	)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		54,966			47,889			53,846

CASH AND CASH EQUIVALENTS, END OF YEAR	$	69,043		$	54,966		$	47,889

SUPPLEMENTAL DISCLOSURES OF CASH PAYMENTS MADE FOR:
Interest	$	3,771		$	3,150		$	3,142
Income taxes	$	15,171		$	18,527		$	13,457

NONCASH SUPPLEMENTAL DISCLOSURES:
Financing and capital lease obligations	$	9,638		$	9,144		$	2,684
Investment in Wakefern	$	590		$	1,382		$	1,900

See notes to consolidated financial statements.13

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 1 — SUMMARY of SIGNIFICANT ACCOUNTING POLICIES

(All amounts are in thousands, except per share and sq. ft. data)

Nature of operations

Village Super Market, Inc. (the “Company” or “Village”) operates a chain of 26 ShopRite supermarkets in New Jersey and eastern Pennsylvania. The Company is a member of Wakefern Food Corporation (“Wakefern”), the largest retailer-owned food cooperative in the United States.

Principles of consolidation

The consolidated financial statements include the accounts of Village Super Market, Inc. and its subsidiaries, which are wholly owned. Intercompany balances and transactions have been eliminated.

Fiscal year

The Company and its subsidiaries utilize a 52-53 week fiscal year ending on the last Saturday in the month of July. Fiscal 2010 contains 53 weeks. Fiscal 2009 and 2008 contain 52 weeks.

Reclassifications

Certain amounts have been reclassified in the 2009 and 2008 consolidated balance sheets and statements of cash flows to conform to the 2010 presentation.

Industry segment

The Company consists of one operating segment, the retail sale of food and nonfood products.

Revenue recognition

Merchandise sales are recognized at the point of sale to the customer. Sales tax is excluded from revenue. Discounts provided to customers through ShopRite coupons and loyalty programs are recognized as a reduction of sales as the products are sold.

Cash and cash equivalents

The Company considers all highly liquid investments purchased with a maturity of three months or less and proceeds due from credit and debit card transactions with settlement terms of less than five days to be cash equivalents. Included in cash and cash equivalents at July 31, 2010 and July 25, 2009 are $51,174 and $37,764, respectively, of demand deposits invested at Wakefern at overnight money market rates.

Merchandise inventories

Approximately 67% of merchandise inventories are stated at the lower of LIFO (last-in, first-out) cost or market. If the FIFO (first-in, first-out) method had been used, inventories would have been $13,829 and $14,247 higher than reported in fiscal 2010 and 2009, respectively. All other inventories are stated at the lower of FIFO cost or market.

Vendor allowances and rebates

The Company receives vendor allowances and rebates, including the patronage dividend and amounts received as a pass through from Wakefern, related to the Company’s buying and merchandising activities. Vendor allowances and rebates are recognized as a reduction in cost of sales when the related merchandise is sold or when the required contractual terms are completed.

Property, equipment and fixtures

Property, equipment and fixtures are recorded at cost. Interest cost incurred to finance construction is capitalized as part of the cost of the asset. Maintenance and repairs are expensed as incurred.

Depreciation is provided on a straight-line basis over estimated useful lives of thirty years for buildings, ten years for store fixtures and equipment, and three years for vehicles. Leasehold improvements are amortized over the shorter of the related lease terms or the estimated useful lives of the related assets.

When assets are sold or retired, their cost and accumulated depreciation are removed from the accounts, and any gain or loss is reflected in the consolidated financial statements.

Investments

The Company’s investments in its principal supplier, Wakefern, and a Wakefern affiliate, Insure-Rite, Ltd., are stated at cost (see Note 3). Village evaluates its investments in Wakefern and Insure-Rite, Ltd. for impairment through consideration of previous, current and projected levels of profit of those entities.

The Company’s 20%-50% investments in certain real estate partnerships are accounted for under the equity method. One of these partnerships is a variable interest entity which does not require consolidation as Village is not the primary beneficiary (see Note 6).

Store opening and closing costs

All store opening costs are expensed as incurred. The Company records a liability for the future minimum lease payments and related costs for closed stores from the date of closure to the end of the remaining lease term, net of estimated cost recoveries that may be achieved through subletting, discounted using a risk-adjusted interest rate.

Leases

Leases that meet certain criteria are classified as capital leases, and assets and liabilities are recorded at amounts equal to the lesser of the present value of the minimum lease payments or the fair value of the leased properties at the inception of the respective leases. Such assets are amortized on a straight- line basis over the shorter of the related lease terms or the estimated useful lives of the related assets. Amounts representing interest expense relating to the lease obligations are recorded to effect constant rates of interest over the terms of the leases. Leases that do not qualify as capital leases are classified as operating leases. The Company accounts for rent holidays, escalating rent provisions, and construction allowances on a straight-line basis over the term of the lease.

For leases in which the Company is involved with the construction of the store, if Village concludes that it has substantively all of the risks of ownership during construction of the leased property and therefore is deemed the owner of the project for accounting purposes, an asset and related financing obligation are recorded for the costs paid by the landlord. Once construction is complete, the Company considers the requirements for sale-leaseback treatment. If the arrangement does not qualify for sale- leaseback treatment, the Company amortizes the financing obligation and depreciates the building over the lease term.14

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Continued)

NOTE 1 — SUMMARY of SIGNIFICANT ACCOUNTING POLICIES (continued)

Advertising

Advertising costs are expensed as incurred. Advertising expense was $8,972, $8,449, and $8,284 in fiscal 2010, 2009 and 2008, respectively.

Income taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

The Company recognizes a tax benefit for uncertain tax positions if it is “more likely than not” that the position is sustainable, based on its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50% likely of being realized upon effective settlement with a taxing authority having full knowledge of all relevant information.

Use of estimates

In conformity with U.S. generally accepted accounting principles, management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Some of the more significant estimates are patronage dividends, pension accounting assumptions, share-based compensation assumptions, accounting for uncertain tax positions, accounting for contingencies and the impairment of long-lived assets and goodwill. Actual results could differ from those estimates.

Fair value

Fair value is defined as the exit price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement that should be determined using assumptions that market participants would use in pricing an asset or liability. The fair value guidance establishes a three-level hierarchy to prioritize the inputs used in measuring fair value. The levels within the hierarchy range from Level 1 having the highest priority to Level 3 having the lowest.

Cash and cash equivalents, patronage dividends receivable, accounts payable and accrued expenses are reflected in the consolidated financial statements at carrying value, which approximates fair value because of the short-term maturity of these instruments. The carrying values of the Company’s notes receivable from Wakefern and short and long-term notes payable approximate their fair value based on the current rates available to the Company for similar instruments. As the Company’s investments in Wakefern can only be sold to Wakefern at amounts that approximate the Company’s cost, it is not practicable to estimate the fair value of such investments.

Long-lived assets

The Company reviews long-lived assets, such as property, equipment and fixtures on an individual store basis for impairment when circumstances indicate the carrying amount of an asset group may not be recoverable. Such review analyzes the undiscounted estimated future cash flows from such assets to determine if the carrying value of such assets are recoverable from their respective cash flows. If an impairment is indicated, it is measured by comparing the fair value of the long-lived assets to their carrying value.

Goodwill

Goodwill is tested at the end of each fiscal year, or more frequently if circumstances dictate, for impairment. An impairment loss is recognized to the extent that the carrying amount of goodwill exceeds its implied fair value. Village operates as a single reporting unit for purposes of evaluating goodwill for impairment and primarily considers earnings multiples and other valuation techniques to measure fair value, in addition to the value of the Company’s stock, as its stock is not widely traded.15

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Continued)

NOTE 1 — SUMMARY of SIGNIFICANT ACCOUNTING POLICIES (continued)

Net income per share

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

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

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

	2009				2008
	Class A		Class B		Class A		Class B
Basic	$	2.52	$	1.64	$	2.11	$	1.38
Diluted	$	2.06	$	.1.61	$	1.71	$	1.38

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

	2010					2009					2008
	Class A		Class B			Class A		Class B			Class A		Class B
Numerator:
Net income allocated, basic	$	15,351	$	9,435		$	16,422	$	10,201		$	13,245	$	8,491
Conversion of Class B to Class A shares		9,435		—			10,201		—			8,491		—
Effect of share-based compensation
on allocated net income		59		(57	)		78		(93	)		6		(9	)
Net income allocated, diluted	$	24,845	$	9,378		$	26,701	$	10,108		$	21,742	$	8,482

Denominator:
Weighted average shares
outstanding, basic		6,740		6,376			6,665		6,376			6,495		6,376
Conversion of Class B to Class A shares		6,376		—			6,376		—			6,376		—
Dilutive effect of share-based compensation		119		—			148		—			181		—
Weighted average shares
outstanding, diluted		13,235		6,376			13,189		6,376			13,052		6,376

Net income per share is as follows:

	2010				2009				2008
	Class A		Class B		Class A		Class B		Class A		Class B
Basic	$	2.28	$	1.48	$	2.46	$	1.60	$	2.04	$	1.33
Diluted	$	1.88	$	1.47	$	2.02	$	1.59	$	1.67	$	1.33

Outstanding stock options to purchase Class A shares of 36, 6 and 208 were excluded from the calculation of diluted net income per share at July 31, 2010, July 25, 2009 and July 26, 2008, respectively, as a result of their anti-dilutive effect. In addition, 256, 266 and 251 non-vested restricted Class A shares, which are considered participating securities, and their allocated net income were excluded from the diluted net income per share calculation at July 31, 2010, July 25, 2009 and July 26,2008, respectively, due to their anti-dilutive effect.16

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Continued)

NOTE 1 — SUMMARY of SIGNIFICANT ACCOUNTING POLICIES (continued)

Share-based compensation

All share-based payments to employees are recognized in the financial statements as compensation costs based on the fair market value on the date of the grant.

Benefit plans

The Company recognizes the funded status of its retirement plans on the consolidated balance sheet. Actuarial gains or losses, prior service costs or credits and transition obligations not previously recognized are recorded as a component of Accumulated Other Comprehensive Income.

Recently issued accounting standards

Recently adopted accounting standards

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Continued)

NOTE 2 — PROPERTY, EQUIPMENT and FIXTURES

Property, equipment and fixtures are comprised as follows:

	July 31, 2010			July 25, 2009
Land and buildings	$	78,019		$	73,419
Store fixtures and equipment		154,113			140,476
Leasehold improvements		74,859			64,935
Leased property under capital leases		21,686			15,723
Construction in progress		—			11,127
Vehicles		1,756			1,606

		330,433			307,286
Accumulated depreciation		(149,008	)		(139,347	)
Accumulated amortization of property under capital leases		(6,139	)		(5,678	)

Property, equipment and fixtures, net	$	175,286		$	162,261

Amortization of leased property under capital and financing leases is included in depreciation and amortization expense.

NOTE 3 — RELATED PARTY INFORMATION - WAKEFERN

The Company’s ownership interest in its principal supplier, Wakefern, which is operated on a cooperative basis for its stockholder members, is 14.1% of the outstanding shares of Wakefern at July 31, 2010. The investment is pledged as collateral for any obligations to Wakefern. In addition, all obligations to Wakefern are personally guaranteed by the principal shareholders of Village.

The Company is obligated to purchase 85% of its primary merchandise requirements from Wakefern until ten years from the date that stockholders representing 75% of Wakefern sales notify Wakefern that those stockholders request that the Wakefern Stockholder Agreement be terminated. If this purchase obligation is not met, Village is required to pay Wakefern’s profit contribution shortfall attributable to this failure. Similar payments are due if Wakefern loses volume by reason of the sale of Company stores or a merger with another entity. Village fulfilled the above obligation in fiscal 2010, 2009 and 2008. The Company also has an investment of approximately 7.7% in Insure-Rite, Ltd., a Wakefern affiliated company, that provides Village with liability and property insurance coverage.

Wakefern has increased from time to time the required investment in its common stock for each supermarket owned by a member, with the exact amount per store computed based on the amount of each store’s purchases from Wakefern. At July 31, 2010, the Company’s indebtedness to Wakefern for the outstanding amount of these stock subscriptions was $1,821. Installment payments are due as follows: 2011 - $341; 2012 - $347; 2013 - $365; 2014 - $365; 2015 - $264; and thereafter $139. The maximum per store investment, which is currently $750, increased by $25 in both fiscal 2010 and 2009, resulting in additional investments of $590 and $550, respectively. Village receives additional shares of common stock to the extent paid for at the end of each fiscal year (September 30) of Wakefern calculated at the then book value of such shares. The payments, together with any stock issued thereunder, at the option of Wakefern, may be null and void and all payments on this subscription shall become the property of Wakefern in the event the Company does not complete the payment of this subscription in a timely manner.

Village purchases substantially all of its merchandise from Wakefern. Wakefern distributes as a “patronage dividend” to each member a share of substantially all of its earnings in proportion to the dollar volume of purchases by the member from Wakefern during the year. Patronage dividends and other product incentives and rebates amounted to $18,193, $16,775, and $15,983, in fiscal 2010, 2009 and 2008, respectively.

Wakefern provides the Company with support services in numerous areas including advertising, supplies, liability and property insurance, technology support and other store services. Village incurred charges of $23,559, $23,353, and $22,168 from Wakefern in fiscal 2010, 2009 and 2008, respectively, for these services, which are reflected in operating and administrative expense in the consolidated statements of operations. Additionally, the Company has certain related party leases (see Note 6) with Wakefern.

At July 31, 2010, the Company had demand deposits invested at Wakefern in the amount of $51,174. These deposits earn overnight money market rates.

Interest income earned on investments with Wakefern was $2,020, $2,064, and $3,030 in fiscal 2010, 2009 and 2008, respectively.

On August 11, 2007, the Company acquired the fixtures and lease of a new store location in Galloway Township, New Jersey from Wakefern for $3,500.

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Continued)

NOTE 4 — DEBT

	July 31,		July 25,
	2010		2009

Senior Notes payable	$	—	$	4,286

Less current portion	$	—		4,286

	$	—	$	—

On September 16, 1999, the Company issued $30,000 of 8.12% unsecured Senior Notes. The principal was paid in seven equal annual installments beginning September 16, 2003 and ending September 16, 2009.

On December 19, 2008, Village amended its unsecured revolving credit agreement, which would have expired on September 16, 2009. The amended agreement increases the maximum amount available for borrowing to $25,000 from $20,000. This loan agreement expires on December 31, 2011 with two one-year extensions available if exercised by both parties. Other terms of the amended revolving loan agreement, including covenants, are similar to the previous agreement. The revolving credit line can be used for general corporate purposes. Indebtedness under this agreement bears interest at the prime rate, or at the Eurodollar rate, at the Company’s option, plus applicable margins based on the Company’s fixed charge coverage ratio. There were no amounts outstanding at July 31, 2010 or July 25, 2009 under this facility.

The revolving loan agreement provides for up to $3,000 of letters of credit ($1,958 outstanding at July 31, 2010), which secure obligations for self-insured workers’ compensation claims from 1995 to 1998 and construction performance guarantees to municipalities.

This loan agreement contains covenants that, among other conditions, require a maximum liabilities to tangible net worth ratio, a minimum fixed charge coverage ratio and a positive net income. At July 31, 2010, the Company was in compliance with all covenants of the revolving loan agreement. Under the above covenants, Village had approximately $118,000 of net worth available at July 31, 2010 for the payment of dividends.

NOTE 5 — INCOME TAXES

The components of the provision for income taxes are:

	2010			2009			2008
Federal:
Current	$	14,995		$	14,816		$	12,501
Deferred		(977	)		104			(152	)

State:
Current		4,142			4,552			3,688
Deferred		77			(120	)		210

	$	18,237		$	19,352		$	16,247

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Continued)

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax liabilities and assets are as follows:


	July 31, 2010		July 25, 2009
Deferred tax assets:
Leasing activities	$	3,565	$	3,135
Federal benefit of uncertain tax positions		4,474		3,553
Compensation related costs		3,902		2,946
Pension costs		6,947		6,995
Other		1,030		1,560

Total deferred tax assets		19,918		18,189

Deferred tax liabilities:
Tax over book depreciation		14,511		13,960
Patronage dividend receivable		3,550		2,970
Investment in partnerships		950		950
Other		170		170

Total deferred tax liabilities		19,181		18,050

Net deferred tax asset (liability)	$	737	$	139

Current deferred tax assets of $2,630 and $2,753 are included in other current assets at July 31, 2010 and July 25, 2009, respectively. Current deferred tax liabilities of $521 and $217 are included in accounts payable and accrued expenses at July 31, 2010 and July 25, 2009, respectively.

A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. In management’s opinion, in view of the Company’s previous, current and projected taxable income and reversal of deferred tax liabilities, such tax assets will more likely than not be fully realized. Accordingly, no valuation allowance was deemed to be required at July 31, 2010 and July 25, 2009.

The effective income tax rate differs from the statutory federal income tax rate as follows:

	2010			2009			2008
Statutory federal income tax rate		35.00	%		35.00	%		35.00	%
State income taxes, net of federal tax benefit		6.3			6.2			6.5
Other		0.5			0.3			0.4

Effective income tax rate		41.80	%		41.50	%		41.90	%

Effective July 29, 2007, the Company adopted new accounting standards related to uncertain tax positions. The effect of adoption was to increase retained earnings by $399 and to decrease the accrual for uncertain tax positions by a corresponding amount at July 29, 2007.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:

	2010		2009
Balance at beginning of year	$	8,250	$	6,437
Additions based on tax positions related to the current year		1,999		1,813
Balance at end of year	$	10,249	$	8,250

Unrecognized tax benefits at July 31, 2010 and July 25, 2009 include tax positions of $6,662 and $5,362 (net of federal benefit), respectively, that would reduce the Company’s effective income tax rate, if recognized in future periods.

The Company recognizes interest and penalties on income taxes in income tax expense. The Company recognized $696, $630 and $592 related to interest and penalties on income taxes in fiscal 2010, 2009 and 2008, respectively. The amount of accrued interest and penalties included in the consolidated balance sheet was $2,784 and $2,088 at July 31, 2010 and July 25, 2009, respectively.

The state of New Jersey has audited the Company’s tax returns for fiscal 2002 through fiscal 2005. The state has assessed a tax deficiency related to nexus and the deductibility of certain payments between subsidiaries, which the Company is contesting. We anticipate this matter may be resolved within the next twelve months through the state’s appeal process. The ultimate resolution of this matter could significantly increase or decrease the total amount of the Company’s unrecognized tax benefits. An examination of the Company’s fiscal 2004 federal tax return was completed in fiscal 2006.20

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Continued)

NOTE 6 — LEASES

Description of leasing arrangements

The Company leased twenty-one stores at July 31, 2010, including five that are capitalized for financial reporting purposes. The majority of initial lease terms range from 20 to 30 years.

Most of the Company’s leases contain renewal options at increased rents of five years each. These options enable Village to retain the use of facilities in desirable operating areas. Management expects that in the normal course of business, most leases will be renewed or replaced by other leases. The Company is obligated under all leases to pay for real estate taxes, utilities and liability insurance, and under certain leases to pay additional amounts based on maintenance and a percentage of sales in excess of stipulated amounts.

Future minimum lease payments by year and in the aggregate for all non-cancelable leases with initial terms of one year or more consist of the following at July 31, 2010:

		Capital and financing		Operating
		leases		leases
	2011	$	4,025	$	8,788
	2012		4,025		7,601
	2013		4,025		6,505
	2014		4,285		5,957
	2015		4,475		5,658
	Thereafter		92,946		50,831
Minimum lease payments			113,781	$	85,340
Less amount representing interest			73,417
Present value of minimum lease payments			40,364
Less current portion			13
		$	40,351

The following schedule shows the composition of total rental expense for the following years:

	2010		2009		2008
Minimum rentals	$	8,269	$	8,560	$	7,768
Contingent rentals		933		947		814
	$	9,202	$	9,507	$	8,582

Under accounting standards, Village was considered the owner of the Marmora land and building during the construction period as Village had an unlimited obligation to cover building construction costs over a certain amount. Upon the completion of construction, Village did not meet the requirements to qualify for sale-leaseback treatment. Therefore, $9,144 of land, site costs and construction costs paid by the landlord were recorded as property and long-term debt during fiscal 2009.

Beginning in fiscal 2007, Village loaned the developer of the Franklin store a portion of the funds needed to prepare the site and construct the store. This loan reached a maximum amount of $6,776 during the first quarter of fiscal 2008 and was repaid in the second quarter of fiscal 2008. The developer loan is presented as capital expenditures in the financial statements as Village was considered the owner of the building during the construction period. Upon completion of the construction, Village did not meet the requirements to qualify for sale-leaseback treatment. Therefore, the $6,776 construction loan and $2,684 of land and site costs paid by the landlord were recorded as property and long-term debt.

Related party leases

The Company leases a supermarket from a realty firm 30% owned by officers of Village. The Company paid rent to related parties under this lease of $595 in fiscal 2010, 2009 and 2008. This lease expires in fiscal 2016 with options to extend at increasing annual rents.

The Company has ownership interests in three real estate partnerships. Village paid aggregate rents to two of these partnerships for leased stores of $781, $750 and $727 in fiscal 2010, 2009 and 2008, respectively.

One of these partnerships is a variable interest entity, which is not consolidated as Village is not the primary beneficiary. This partnership owns one property, a stand-alone supermarket leased to the Company since 1974. Village is a general partner entitled to 33% of the partnerships profits and losses.

The Company leases the Galloway and Vineland stores from Wakefern under sublease agreements which provide for combined annual rent of $1,227. Both leases contain normal periodic rent increases and options to extend the lease.

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Continued)

NOTE 7 — SHAREHOLDERS’ EQUITY

On December 5, 2008 and March 21, 2007, the Company’s Board of Directors declared two-for-one stock splits of the Class A and Class B common stock.

The Company has two classes of common stock. Class A common stock is entitled to one vote per share and to cash dividends as declared 54% greater than those paid on Class B common stock. Class B common stock is entitled to 10 votes per share. Class A and Class B common stock share equally on a per share basis in any distributions in liquidation. Shares of Class B common stock are convertible on a share-for-share basis for Class A common stock at any time. Class B common stock is not transferable except to another holder of Class B common stock or by will under the laws of intestacy or pursuant to a resolution of the Board of Directors of the Company approving the transfer. As a result of this voting structure, the holders of the Class B common stock control greater than 50% of the total voting power of the shareholders of the Company and control the election of the Board of Directors.

The Company has authorized 10,000 shares of preferred stock. No shares have been issued. The Board of Directors is authorized to designate series, preferences, powers and participations of any preferred stock issued.

Village has two share-based compensation plans, which are described below. The compensation cost charged against income for these plans was $2,929, $2,573, and $1,725 in fiscal 2010, 2009 and 2008, respectively. Total income tax benefit recognized in the consolidated statements of operations for share-based compensation arrangements was $1,042, $900 and $538 in fiscal 2010, 2009 and 2008, respectively.

The 1997 Incentive and Non-Statutory Stock Option Plan (the “1997 Plan”) provided for the granting of options to purchase up to 1,000 shares of the Company’s Class A common stock by officers, employees and directors of the Company as designated by the Board of Directors. The Plan requires incentive stock options to be granted at exercise prices equal to the fair value of Village’s stock at the date of grant (110% if the optionee holds more than 10% of the voting stock of the Company), while nonqualified options may be granted at an exercise price less than fair value. All options granted under this plan were at fair value, vest over a one-year service period and are exercisable up to ten years from the date of grant. There are no shares remaining for future grants under the 1997 Plan.

On December 10, 2004, the shareholders of the Company approved the Village Super Market, Inc. 2004 Stock Plan (the “2004 Plan”) under which awards of incentive and nonqualified stock options and restricted stock may be made. There are 1,200 shares of Class A common stock authorized for issuance to employees and directors under the 2004 Plan. Terms and conditions of awards are determined by the Board of Directors. Option awards are primarily granted at the fair value of the Company’s stock at the date of grant, cliff vest three years from the grant date and are exercisable up to ten years from the date of grant. Restricted stock awards primarily cliff vest three years from the grant date.

The following table summarizes option activity under both plans for the following years:

	2010					2009					2008
	Shares			Weighted-average exercise price		Shares			Weighted-average exercise price		Shares			Weighted-average exercise price
Outstanding at beginning of year		417		$	18.21		486		$	16.54		372		$	11.05
Granted		29			27.43		18			26.14		180			25.33
Exercised		(42	)		11.64		(87	)		10.62		(62	)		9.47
Forfeited		—			—		—			—		(4	)		10.50

Outstanding at end of year		404		$	19.56		417		$	18.21		486		$	16.54

Options exercisable at end of year		177		$	11.69		190		$	10.13		250		$	10.05

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Continued)

As of July 31, 2010, the weighted-average remaining contractual term of options outstanding and options exercisable was 6.6 years and 4.9 years, respectively. As of July 31, 2010, the aggregate intrinsic value of options outstanding and options exercisable was $3,170 and $2,763, respectively. The weighted-average grant date fair value of options granted was $5.18, $5.51, and $5.50 per share in fiscal 2010, 2009 and 2008, respectively. The total intrinsic value of options exercised was $671, $1,626, and $883 in fiscal 2010, 2009 and 2008, respectively. The fair value of each option award is estimated on the date of grant using the Black-Scholes Option Pricing Model using the weighted-average assumptions in the following table. The Company uses historical data for similar groups of employees in order to estimate the expected life of options granted. Expected volatility is based on the historical volatility of the Company’s stock for a period of years corresponding to the expected life of the option. The risk free interest rate is based on the U.S. Treasury yield curve at the time of grant for securities with a maturity period similar to the expected life of the option.

	2010		2009		2008
Expected life (years)	5.0		5.0		5.0
Expected volatility	28.0	%	28.0	%	28.0	%
Expected dividend yield	3.5	%	2.7	%	2.4	%
Risk-free interest rate	2.5	%	2.4	%	2.4	%

The following table summarizes restricted stock activity under the 2004 Plan for fiscal 2010, 2009 and 2008:

	2010					2009					2008
				Weighted-average					Weighted-average					Weighted-average
	Shares			grant date fair value		Shares			grant date fair value		Shares			grant date fair value
Nonvested at beginning of year		267		$	25.61		252		$	25.39		208		$	10.50
Granted		3			27.58		16			29.03		250			25.39
Vested		(13	)		25.25		(1	)		27.52		(206	)		10.50
Forfeited		—			—		—			—		—			—
Nonvested at end of year		257		$	25.65		267		$	25.61		252		$	25.39

As of July 31, 2010, there was $1,770 of total unrecognized compensation costs related to nonvested share-based compensation arrangements granted under the above plans. That cost is expected to be recognized over a weighted-average period of .8 years. The total fair value of restricted shares vested during fiscal 2010, 2009 and 2008 was $371, $33 and $5,165, respectively.

Cash received from option exercises under all share-based compensation arrangements was $486, $929, and $588 in fiscal 2010, 2009 and 2008, respectively. The actual tax benefit realized for tax deductions from option exercises under share-based compensation arrangements was $287, $545, and $283 in fiscal 2010, 2009 and 2008, respectively.

The Company declared and paid cash dividends on common stock as follows:

		2010		2009		2008
Per share:
Class A common stock	$	.970	$	.765	$	1.91
Class B common stock		.631		.498		1.24

Aggregate:
Class A common stock	$	6,795	$	5,299	$	13,155
Class B common stock		4,025		3,172		7,938

	$	10,820	$	8,471	$	21,093

Dividends paid in fiscal 2008 include special dividends totaling $16,578 paid in the third quarter, comprised of $1.50 per Class A common share and $.97 per Class B common share.3

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Continued)

NOTE 8 — PENSION PLANS

The Company sponsors four defined benefit pension plans. Two are tax-qualified plans covering members of unions. Benefits under these two plans are based on a fixed amount for each year of service. One is a tax-qualified plan covering nonunion associates. Benefits under this plan are based upon percentages of annual compensation. Funding for these plans is based on an analysis of the specific requirements and an evaluation of the assets and liabilities of each plan. The fourth plan is an unfunded, nonqualified plan providing supplemental pension benefits to certain executives. The Company uses its fiscal year-end date as the measurement date for these plans.

Net periodic pension cost for the four plans include the following components:

	2010			2009			2008

Service cost	$	2,390		$	2,258		$	2,259
Interest cost on projected benefit obligation		2,309			2,124			1,835
Expected return on plan assets		(1,720	)		(1,736	)		(1,650	)
Amortization of gains and losses		1,231			496			454
Amortization of prior service costs		8			8			17

Net periodic pension cost	$	4,218		$	3,150		$	2,915

The changes in benefit obligations and the reconciliation of the funded status of the Company’s plans to the consolidated balance sheets were as follows:

	2010			2009
Changes in Benefit Obligation:
Benefit obligation at beginning of year	$	40,458		$	29,904
Service cost		2,390			2,258
Interest cost		2,309			2,124
Benefits paid		(443	)		(1,212	)
Actuarial loss		1,141			7,384
Benefit obligation at end of year	$	45,855		$	40,458

Changes in Plan Assets:
Fair value of plan assets at beginning of year	$	23,143		$	23,433
Actual return on plan assets		1,811			(2,158	)
Employer contributions		3,045			3,080
Benefits paid		(443	)		(1,212	)
Fair value of plan assets at end of year	$	27,556		$	23,143

Funded status at end of year	$	(18,299	)	$	(17,315	)

Amounts recognized in the consolidated balance sheets:
Pension liabilities	$	(18,299	)	$	(17,315	)
Accumulated other comprehensive loss, net of income taxes		(10,421	)		(10,535	)

Amounts included in Accumulated other comprehensive loss (pre-tax):

Net actuarial loss	$	17,324	$	17,497
Prior service cost		24		33
	$	17,348	$	17,530

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Continued)

The Company expects approximately $1,559 of the net actuarial loss and $8 of the prior service cost to be recognized as a component of net periodic benefit costs in fiscal 2011.

The accumulated benefit obligations of the four plans were $36,517 and $32,020 at July 31, 2010 and July 25, 2009, respectively.

Assumptions used to determine benefit obligations and net periodic pension cost for the Company’s defined benefit plans were as follows:

	2010			2009			2008
Assumed discount rate – net periodic pension cost		5.87	%		7.01	%		6.25	%
Assumed discount rate – benefit obligation		5.19	%		5.87	%		7.01	%
Assumed rate of increase in compensation levels		4 - 4.5	%		4 - 4.5	%		4 - 4.5	%
Expected rate of return on plan assets		7.50	%		7.50	%		7.50	%

Investments in the pension trusts are overseen by the trustees of the plans, who are officers of Village. The Company’s overall investment strategy is to maintain a broadly diversified portfolio of stocks, bonds and money market instruments, that along with periodic plan contributions, provide the necessary funds for ongoing benefit obligations. Expected rates of return on plan assets are developed by determining projected stock and bond returns and then applying these returns to the target asset allocations of the trusts, resulting in a weighted-average rate of return on plan assets. Equity returns were based primarily on historical returns of the S&P 500 Index. Fixed-income projected returns were based primarily on historical returns for the broad U.S. bond market. The target allocations for plan assets are 50-70% equity securities, 25-40% fixed income securities, and 0-10% cash. Asset allocations are reviewed periodically and appropriate rebalancing is performed.

Equity securities include investments in large-cap, small-cap and mid-cap companies located both in and outside the United States. Fixed income securities include U.S. treasuries, mortgage-backed securities and corporate bonds of companies from diversified industries. Investments in securities are made both directly and through mutual funds. In addition, one plan holds Class A common stock of Village in the amount of $621 at July 31, 2010.

Risk management is accomplished through diversification across asset classes and fund strategies, multiple investment portfolios and investment guidelines. The plans do not allow for investments in derivative instruments.

The fair values of the pension assets at July 31, 2010 by asset category are as follows:

	Quoted Prices in Active Markets
	For Identical Assets (Level 1)
Asset Category
Cash	$	558

Equity securities:
Company stock		621
U.S large cap (1)		9,530
U.S. small/mid cap (2)		3,755
International (3)		2,865
Emerging markets (4)		517

Fixed income securities:
U.S treasuries (5)		7,019
Mortgage-backed (5)		1,184
Corporate bonds (5)		1,507

Total	$	27,556

(1)	Includes directly owned securities and mutual funds, primarily low-cost equity index funds not actively managed that track the S&P 500.
(2)	Includes directly owned securities and mutual funds, which invest in diversified portfolios of publicly traded U.S. common stocks of small and medium cap companies.
(3)	Includes directly owned securities and mutual funds, which invest in diversified portfolios of publicly traded common stocks of large, non-U.S. companies.
(4)	Consists of mutual funds which invest in stocks in emerging markets around the world, primarily Brazil, Russia, China, Korea and Taiwan.
(5)	Includes directly owned securities and mutual funds.

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Continued)

Based on actuarial assumptions, estimated future defined benefit payments, which may be significantly impacted by participant elections related to retirement dates and forms of payment, are as follows:

Fiscal Year
2011	$	4,780
2012		2,289
2013		3,553
2014		3,125
2015		4,158
2016 - 2020		15,526

The Company expects to contribute $3,000 in cash to all defined benefit pension plans in fiscal 2011.

The Company also participates in several multi-employer pension plans for which the fiscal 2010, 2009, and 2008 contributions were $5,895, $5,325, and $4,932, respectively. Based on the most recent information available, the Company believes a number of these multi-employer plans are underfunded. Under current law, an employer that withdraws or partially withdraws from a multi-employer pension plan may incur withdrawal liability to the plan, which represents the portion of the plan’s underfunding that is allocable to the withdrawing employer under actuarial and allocation rules. The failure of a withdrawing employer to fund these obligations can impact remaining employers. The amount of any increase or decrease in Village’s required contributions to these multi-employer pension plans will depend upon the outcome of collective bargaining, actions taken by trustees who manage the plans, government regulations and the actual return on assets held in the plans, among other factors.

The Company sponsors a 401(k) savings plan for certain eligible associates. Company contributions under that plan, which are based on specified percentages of associate contributions, were $301, $279 and $276 in fiscal 2010, 2009, and 2008, respectively.

NOTE 9 — COMMITMENTS and CONTINGENCIES

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

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. With the participation of the Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework and criteria established in Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management has concluded that the Company’s internal control over financial reporting was effective as of July 31, 2010.

The Company’s independent registered public accounting firm has audited the accompanying consolidated financial statements and the Company’s internal control over financial reporting. The report of the independent registered public accounting firm is included below.

James Sumas	Kevin R. Begley
Chairman of the Board and	Chief Financial Officer
Chief Executive Officer

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Village Super Market, Inc.:

We have audited the accompanying consolidated balance sheets of Village Super Market, Inc. and subsidiaries as of July 31, 2010 and July 25, 2009, and the related consolidated statements of operations, shareholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended July 31, 2010. We also have audited Village Super Market, Inc.’s internal control over financial reporting as of July 31, 2010, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Village Super Market, Inc.’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Village Super Market, Inc. and subsidiaries as of July 31, 2010 and July 25, 2009, and the results of their operations and their cash flows for each of the years in the three-year period ended July 31, 2010, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, Village Super Market, Inc. maintained, in all material respects, effective internal control over financial reporting as of July 31, 2010, based on criteria established in Internal Control - Integrated Framework issued by COSO.


	Short Hills, New Jersey October 12, 2010

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Stock Price and Dividend Information

The Class A common stock of Village Super Market, Inc. is traded on the NASDAQ Global Select Market under the symbol “VLGEA.” The table below sets forth the high and low last reported sales price for the fiscal quarter indicated.

	High		Low
2010
4th Quarter	$	27.98	$	24.37
3rd Quarter		28.51		24.66
2nd Quarter		31.05		26.57
1st Quarter		30.24		27.89

2009
4th Quarter	$	31.77	$	26.22
3rd Quarter		32.61		24.48
2nd Quarter		28.69		19.70
1st Quarter		25.75		20.09

As of October 1, 2010, there were approximately 700 holders of ClassA common stock.

During fiscal 2010, the Company declared cash dividends of $.97 per Class A common share and $.631 per Class B common share.

During fiscal 2009, the Company declared cash dividends of $.765 per Class A common share and $.498 per Class B common share.

On December 5, 2008, the Company declared a two-for-one stock split. All per share amounts have been adjusted for all periods to reflect the split.

VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES

Village Super Market, Inc.

CORPORATE DIRECTORY

OFFICERS AND DIRECTORS

JAMES SUMAS

Chairman of the Board; Chief Executive Officer

Director

ROBERT SUMAS

President; Chief Operating Officer and Director

WILLIAM SUMAS

Vice Chairman of the Board; Executive Vice President; Director

JOHN P. SUMAS

Executive Vice President; Director

KEVIN BEGLEY

Chief Financial Officer and Treasurer; Director

NICHOLAS SUMAS

Vice President and Secretary; Director

JOHN J. SUMAS

Vice President and General Counsel; Director

STEVEN CRYSTAL

Director

DAVID C. JUDGE

Director

PETER R. LAVOY

Director

STEPHEN F. ROONEY

Director

EXECUTIVE OFFICES

733 Mountain Avenue

Springfield, New Jersey 07081

973-467-2200

REGISTRAR AND TRANSFER AGENT

American Stock Transfer & Trust Company

59 Maiden Lane

New York, New York 10038

800-937-5449

AUDITORS

KPMG LLP

150 John F. Kennedy Parkway

Short Hills, New Jersey 07078

FORM 10-K

Copies of the Company’s Form 10-K as filed with the Securities and Exchange Commission are available without charge upon written request to:

Mr. Nicholas Sumas, Secretary

Village Super Market, Inc.

Springfield, New Jersey 07081