Note 6 - Leases

12 Months Ended

Jul. 26, 2014

Notes

Note 6 - Leases

NOTE 6 — LEASES

Description of leasing arrangements

The Company leased 23 stores at July 26, 2014, 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 26, 2014:

	Capital and financing leases	Operating Leases
2015	$                        4,674	$                      10,411
2016	4,875	9,265
2017	4,875	6,845
2018	4,959	6,282
2019	5,001	5,076
Thereafter	69,964	47,740
Minimum lease payments	94,348	$                      85,619
Less amount representing interest	49,949
Present value of minimum lease payments	44,399
Less current portion	231
	$                      44,168

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

	2014	2013	2012
Minimum rentals	$                      11,308	$                      11,192	$                      10,625
Contingent rentals	872	960	882
	$                      12,180	$                      12,152	$                      11,507

On November 6, 2013, the Company closed the Morris Plains, New Jersey store and opened a 77,000 sq. ft. replacement store in Hanover Township, New Jersey.  The Company recorded a $3,481 charge to Operating and administrative expense in fiscal 2014 for the remaining lease obligations, net of estimated sublease rentals, on the Morris Plains store.  As of July 26, 2014, $710 of these costs have been paid, with a remaining liability of $2,771.

On April 30, 2014, Village opened a 59,000 sq. ft. store in Union, New Jersey and closed our existing 40,000 sq. ft. store.  The Company recorded a $929 charge to Operating and administrative expense in fiscal 2014 for the remaining lease obligations, net of estimated sublease rentals, on the old Union store.  As of July 26, 2014, $132 of these costs have been paid, with a remaining liability of $797.

Related party leases

The Company leases a supermarket from a realty firm 30% owned by certain officers of Village. The Company paid rent to related parties under this lease of $640, $640 and $640 in fiscal 2014, 2013 and 2012, respectively. 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 $1,008, $834 and $801 in fiscal 2014, 2013 and 2012, respectively.  In November 2012, the Company received $1,980 in cash distributions from two partnerships.  Income from partnerships in fiscal 2013 of $1,450 represents proceeds received in excess of invested amounts. 

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 subleases the Galloway and Vineland stores from Wakefern under sublease agreements which provide for combined annual rent of $1,296. Both leases contain normal periodic rent increases and options to extend the lease.