Village Super Market, Inc. (the “Company” or “Village”) was founded in 1937.  Village operates a chain of thirty34 supermarkets in New Jersey (26), New York (6), Maryland (1) and Pennsylvania (1) under the ShopRite supermarkets, fiveand Fairway Marketsbanners and threefour Gourmet Garage specialty markets located in New Jersey, New York, Pennsylvania and Maryland. Village competes by using low pricing, providing a superior customer experience and a broad range of consistently available quality products, including store and own brands.

Below is a summary of the range of store sizes at July 25, 2020:30, 2022:

The following table shows the percentage of the Company's sales allocated to various product categories during each of the periods indicated:

 

 

A variety of factors affect the profitability of each of the Company's stores, including competition, size, access and parking, lease terms, management supervision, and the strength of the applicable banner in the local community.  The Company gives ongoing attention to the décor and format of its stores and tailors each store's product mix to the preferences of the local community.  Village continually evaluates individual stores to determine if they should be closed, remodeled or replaced.

 

The Company has an ongoing program to upgrade and expand its supermarket chain.  This program has included store remodels as well as the opening or acquisition of additional stores.  When remodeling, Village has sought, whenever possible, to increase the amount of selling space in its stores.

Additional store remodels and sites for new stores are in various stages of development.  Village will also consider additional acquisitions should appropriate opportunities arise.

 

The Company is the second largest member of Wakefern and owns 12.5% of Wakefern’s outstanding stock as of July 25, 2020.30, 2022.  Wakefern, which was organized in 1946, is the nation’s largest retailer-owned food cooperative.  Wakefern and its 4946 shareholder members operate 362359 supermarkets and other retail formats, including 9490 stores operated by Wakefern.  Only Wakefern and its members are entitled to use the ShopRite, Fairway and Gourmet Garage names and trademarks, and to participate in related advertising and promotional programs.

The principal benefits to the Company from its relationship with Wakefern are the use of the ShopRite, Fairway and Gourmet Garage names and trademarks, volume purchasing, store and own branded products, distribution and warehousing economies of scale, advertising and promotional programs (including the ShopRite Price Plus card) and the development of advanced retail technology.  The Company believes that the ShopRite and Fairway names are widely recognized by its customers and is a factor in their decisions about where to shop. Store and own branded products accounted for approximately 12.6%12.8% of ShopRite sales in fiscal 2020.2022.

 

Wakefern distributes as a "patronage dividend" to each of its stockholders a share of substantially all of its earnings in proportion to the dollar volume of purchases by the stockholder from Wakefern during each fiscal year.

 

While Wakefern has a substantial professional staff, it operates as a member owned cooperative.  Executives of most members make contributions of time to the business of Wakefern.  Executives of the Company spend a significant amount of their time working on various Wakefern committees, which oversee and direct Wakefern purchasing, merchandising and other programs.  In addition, Nicholas Sumas, the Company’s Co-President, is a member of the Wakefern Board of Directors.

 

Most of the Company's advertising is developed and placed by Wakefern's professional advertising staff.  Wakefern is responsible for all broadcast television, radio, print and major newspaperdigital advertisements. Wakefern bills its members using various formulas

 

Wakefern operates warehouses and distribution facilities in Elizabeth, Keasbey, Whitehouse, Dayton, Newark and Jamesburg, New Jersey and Gouldsboro, Breinigsville and Breinigsville,Hatfield, Pennsylvania.  The Company and all other members of Wakefern are parties to the Wakefern Stockholders' Agreement which provides for certain commitments by, and restrictions on, all shareholders of Wakefern.  This agreement extends until ten years from the date that stockholders representing 75% of Wakefern sales notify Wakefern that those stockholders request the Wakefern Stockholders' Agreement be terminated.  Each member is obligated to purchase from Wakefern a minimum of 85% of its requirements for products offered by Wakefern.  If this purchase obligation is not met, the member is required to pay Wakefern's profit contribution shortfall attributable to this failure.  The Company fulfilled this obligation in fiscal 20202022 and 2019.2021.  This agreement also requires that in the event of unapproved changes in control of the Company or a sale of the Company or of individual Company stores, except to a qualified successor, the Company in such cases must pay Wakefern an amount equal to the annual profit contribution shortfall attributable to the sale of a store or change in control.  No payments are required if the volume lost by a shareholder as a result of the sale of a store is replaced by such shareholder by increased volume in existing or new stores.  A "qualified successor" must be, or agree to become, a member of Wakefern, and may not own or operate any supermarkets, other than ShopRite, PriceRite, The Fresh Grocer, Fairway, Gourmet Garage or Dearborn Market supermarkets, in the states of New York, New Jersey, Pennsylvania, Delaware, Maryland, Virginia, Connecticut, Massachusetts, Rhode Island, Vermont, New Hampshire, Maine or the District of Columbia, or own or operate more than 25 non-ShopRite supermarkets in any other locations in the United States.

 

Wakefern, under circumstances specified in its bylaws, may refuse to sell merchandise to, and may repurchase the Wakefern stock of, any member.  Such circumstances include a member's bankruptcy filing, certain unapproved transfers by a member of its supermarket business or its capital stock in Wakefern, unapproved acquisition by a member of certain supermarket or

grocery wholesale supply businesses, the material breach by a member of any provision of the bylaws of Wakefern or any agreement with Wakefern, or a failure to fulfill financial obligations to Wakefern.

 

Any material change in Wakefern's method of operation or a termination or material modification of the Company's relationship with Wakefern following termination of the above agreements, or otherwise, might have an adverse impact on the conduct of the Company's business and could involve additional expense for the Company.  The failure of any Wakefern member to fulfill its obligations under these agreements or a member's insolvency or withdrawal from Wakefern could result in increased costs to remaining members.

 

Wakefern does not prescribe geographical franchise areas to its members.  The specific locations at which the Company, other members of Wakefern, or Wakefern itself, may open new units under the ShopRite, PriceRite, The Fresh Grocer, Fairway, Gourmet Garage or Dearborn Market names are, however, subject to the approval of Wakefern's Site Development Committee.  This committee is composed of persons who are not employees or members of Wakefern.  Committee decisions to deny a site application may be appealed to the Wakefern Board of Directors.  Wakefern assists its members in their site selection by providing appropriate demographic data, volume projections and estimates of the impact of the proposed store on existing member supermarkets in the area.

 

Each of Wakefern's members is required to make capital contributions to Wakefern based on the number of stores operated by that member and the purchases from Wakefern generated by those stores.  As additional stores are opened or acquired by a member, additional capital must be contributed by it to Wakefern.  The Company’s investment in Wakefern and affiliates was $29,462$33,004 at July 25, 2020.30, 2022.  The total amount of debt outstanding from all capital pledges to Wakefern is $1,185$3,095 at July 25, 2020.30, 2022.  The maximum per store investment which is currently $950, did not change in fiscal 2020.$975.

As required by the Wakefern bylaws, the Company’s investment in Wakefern is pledged to Wakefern to secure the Company’s obligations to Wakefern.  In addition, fivefour members of the Sumas family have guaranteed the Company’s obligations to Wakefern.  These personal guarantees are required of any 5% shareholder of the Company who is active in the operation of the Company.  Wakefern does not own any securities of the Company or its subsidiaries.  The Company’s investment in Wakefern entitles the Company to enough votes to elect one member to the Wakefern Board of Directors due to cumulative voting rights.

 

As of July 25, 2020,30, 2022, the Company employed approximately 8,7137,177 persons with approximately 75%69% working part-time.  Approximately 90%88% of the Company’s employees are covered by collective bargaining agreements. Contracts with the

 

The majority of our revenues are generally not seasonal in nature. However, revenues tend to be higher during the major holidays throughout the year.

 

The Company’s business requires various licenses and the registration of facilities with state and federal health and drug regulatory agencies.  These licenses and registration requirements obligate the Company to observe certain rules and regulations, and a violation of these rules and regulations could result in a suspension or revocation of licenses or registrations and fines or penalties.  In addition, most licenses require periodic renewals.  The Company has not experienced material difficulties with respect to obtaining or retaining licenses and registrations. 

 

The supermarket business is highly competitive and characterized by narrow profit margins.  Village competes directly with multiple retail formats both in-store and online, including national, regional and local supermarket chains as well as warehouse clubs, supercenters, drug stores, discount general merchandise stores, fast food chains, restaurants, dollar stores and convenience stores. Some of the Company's principal competitors include Acme, Aldi, Amazon/Whole Foods, BJs, Costco, Foodtown, Giant, Kings, Lidl, Safeway, Stop & Shop, Target, Trader Joe's, Wal-Mart, Wegmans and Weis. Competition with these outlets is based on price, store location, convenience, promotion, product assortment, quality and service.  Some of these competitors have greater financial resources, lower merchandise acquisition costs and lower operating expenses than we do.

 

As a member of the Wakefern cooperative, Village relies upon our customer focused websites, shoprite.com, gourmetgarage.com and fairway.com, for interaction with customers and prospective employees.  This website isThese websites are maintained by Wakefern for the benefit of all ShopRite supermarkets under the Wakefern banners, and therefore does not contain any financial information related to the Company.

 

The Company will provide paper copies of the annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and press releases free of charge upon request to any shareholder.  In addition, electronic copies of these filings can be obtained at sec.gov.

 

 

Not applicable.

 

 

Not applicable.

 

As of July 25, 2020,30, 2022, finance lease right-of-use assets of $13,753$11,859 are included in property, equipment and fixtures, net in the Company's consolidated balance sheet.

The annual rental payment, including finance leases, for all of the Company's leased facilities for the year ended July 25, 202030, 2022 was approximately $24,865.$38,419. For additional information on lease obligations, see Note 7 to the consolidated financial statements.

 

The Company is involved in other 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.

 

 

(All dollar amounts are in thousands, except per share data).

 

 

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.

 

As of October 1, 2020,13, 2022, there were approximately 282266 holders of record of Class A common stock.

 

During fiscal 2020,2022, Village paid cash dividends of $12,965.$13,041.  Dividends in fiscal 20202022 consist of $1.00 per Class A common share and $.65 per Class B common share.

During fiscal 2019,2021, Village paid cash dividends of $12,890.$13,050.  Dividends in fiscal 20192021 consist of $1.00 per Class A common share and $.65 per Class B common share.

 

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

 

Fiscal 20162021 contains 53 weeks, with the additional week included in the fourth quarter. All other fiscal years contain 52 weeks.

 

 

(Dollars in thousands except per share amounts).

 

 

The Company utilizes a 52 - 53 week fiscal year, ending on the last Saturday in the month of July. Fiscal 20202022 contains 52 weeks and 2019 contain 52fiscal 2021 contains 53 weeks.

 

The following table sets forth the components of the consolidated statements of operations of the Company as a percentage of sales:

 

 

 

Sales were $1,804,594$2,061,084 in fiscal 2020,2022, an increase of $161,092,$30,754, or 9.8%1.5% from fiscal 2019. Sales2021. Fiscal 2021 contains 53 weeks, with the additional week included in the fourth quarter. Excluding the impact of the 53rd week, sales increased 3.5% due primarily to the Fairway acquisition completed on May 14, 2020,an increase in same store sales of 4.1% and the opening of the Stroudsburg replacement store on November 1, 2019, thea Gourmet Garage acquisitionin the West Village in Manhattan, NY on June 24, 2019 and a sameApril 29, 2022, partially offset by the closure of the Silver Spring, Maryland store sales increase of 5.3%.in February 2021. Same store sales increased due primarily to increased customer demand across mostsales in New York City stores, due to the impact of the COVID-19 pandemic, most significantly in March where sales reached unprecedented levels. Following the outbreak, average basket sizes increased andhigher transaction counts, decreased as customers consolidated shopping trips. Digital salesinflation and continued growth accelerated through both ShopRite from Home and partnerships with online grocery picking and delivery services, increasing 83% in fiscal 2020 compared to fiscal 2019. Sales in Gourmet Garage and Fairway have declined significantly compared to historical levels due primarily to population migration out of Manhattan during the pandemic.SNAP benefit redemptions.

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 and expansions are included in same store sales immediately.

 

Gross profit as a percentage of sales increased .28%to 28.12% in fiscal 20202022 compared to 27.83% in fiscal 20192021 due primarily to higher margins associated with the acquisitions of Gourmet Garage and Fairway, net of amortization of the acquisition related inventory step-up (.03%). Excluding the impact of acquired stores, gross profit as a percentage of sales decreased .23% due primarily to decreasedincreased departmental gross margin percentages (.31%(.57%) and a favorable change in product mix (.10%), partially offset by higher LIFO charges (.16%), decreased patronage dividends and rebates received from Wakefern (.08%(.09%) and an unfavorable change in product mix (.12%) partially offset by lowerhigher promotional spending (.15%) and increased leverage on warehouse assessment charges from Wakefern (.13%(.14%).

 

Operating and administrative expense as a percentage of sales increased .63%to 24.63% in fiscal 20202022 compared to 24.57% in fiscal 2019. Fiscal 2020 includes a gain on the sale of pharmacy prescription lists related to three store pharmacies closed in March 2020 (.07%), a gain for Superstorm Sandy insurance proceeds received (.15%), a gain arising from the breakup of Village’s initial “stalking

 

Depreciation and amortization expense was $31,358$33,122 and $27,290$34,195 in fiscal 20202022 and 2019,2021, respectively. Depreciation and amortization expense increased in fiscal 2020 compareddecreased due primarily to the prior year due to depreciation related to acquisitionsclosure of Fairwaythe Silver Spring, Maryland ShopRite in February 2021 and Gourmet Garage andthe timing of capital expenditures.

 

 

Interest expense was $2,611$3,907 and $4,436$3,943 in fiscal 20202022 and 2019,2021, respectively. Interest expense decreased in fiscal 2020 compared to fiscal 2019 due to lease costs reclassified to operating and administrative expenses as a result of the adoption of ASU 2016-02, “Leases” (see note 1 to the consolidated financial statements) partially offset by interest expense related to the credit agreement entered into on May 6, 2020 (see note 4 to the consolidated financial statements).

 

 

Interest income was $4,060$4,023 and $5,283$3,633 in fiscal 20202022 and 2019,2021, respectively. Interest income decreasedincreased in fiscal 20202022 compared to fiscal 20192021 due primarily to lowerhigher interest rates and larger amounts invested in demand deposits at Wakefern and lower interest rates earned on variable rate notes receivable from Wakefern and demand deposits invested at Wakefern.

 

 

The Company’s effective income tax rate was 21.4%31.3% and 28.1%30.7% in fiscal 20202022 and 2019, respectively.

Net income was $24,939$26,830 in fiscal 20202022 compared to $25,539$19,994 in fiscal 2019.  Fiscal 2020 includes a $1,911 (net of tax) gain for Superstorm Sandy insurance proceeds received, an $854 (net of tax) gain on the sale of pharmacy prescription lists related to three store pharmacies closed in March 2020, a $2,512 benefit from a federal net operating loss carryback at a rate higher than the current statutory tax rate, a $1,423 (net of tax) gain arising from the breakup of Village’s initial “stalking horse” bid under the January 20, 2020 Fairway Asset Purchase Agreement, transaction costs incurred for the Fairway acquisition of $1,888 (net of tax), amortization of acquisition related inventory step-up of $355 (net of tax), a non-cash pension charge related to the termination of a company-sponsored pension plan and other pension settlement charges of $1,160 (net of tax), pre-opening costs related to the Stroudsburg, Pennsylvania replacement store of $891 (net of tax) and store closure costs and charges to write off the lease asset and related obligations for the old Stroudsburg store of $557 (net of tax). Fiscal 2019 includes a $290 (net of tax) gain for Superstorm Sandy insurance proceeds received, a tax benefit of $777 related to the favorable settlement of a tax audit with the New Jersey Division of Taxation and pension settlement charges of $302 (net of tax). Excluding these items from both periods,2021.  Adjusted net income decreased 8%was $35,044 in fiscal 20202022 compared to $18,914 in fiscal 2021. Adjusted net income increased 85% compared to the prior year.

 

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.

 

 

 

Goodwill isand indefinite-lived intangible assets are tested for impairment at the end of each fiscal year, or more frequently if circumstances dictate.dictate, for impairment. The Company 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 25, 2020.30, 2022. 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 position and results of operations. The fair value of indefinite-lived intangible assets are estimated based on the discounted cash flow model using the relief from royalty method.

 

 

As a stockholder of Wakefern, Village earns a share of Wakefern’s earnings, which are distributed as a “patronage dividend.” This dividend is based on a distribution of substantially all of Wakefern’s operating profits for its fiscal year (which ends on or about 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 patronage dividend receivable based on these estimates was $11,204$12,239 and $11,908$11,860 at July 25, 202030, 2022 and July 27, 2019,31, 2021, respectively.

 

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 9 to the consolidated financial statements 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.

 

2022 compared to 3.41%2.44% at July 27, 2019.31, 2021. Changes in the discount rate and updated assumptions on mortality tables and improvement scales resulted in a net increasedecrease in the projected benefit obligation by approximately $12,599$2,017 at July 25, 2020.30, 2022. Village evaluated the expected increase in compensation costs of 4.50% and concluded no changes in this assumption was necessary in estimating pension plan obligations and expense. In fiscal 2018, theThe Company transitioned toutilizes a liability-driven investment ("LDI") strategy. A LDI strategy focuses on maintaining a close to fully-funded status over the long-term with minimal funded status risk.  This is achieved by investing more of the plan assets in fixed income instruments to more closely match the duration of the plan liability.  The investment allocation to fixed income instruments will increase as each plans' funded status increases. Based on the Company’s LDI strategy, the Company assumed a weighted-average assumed long-term rate of return on plan assets of 4.82%5.25% in fiscal 2020.2022.

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

In April 2022, the Company terminated the Village Super Market, Inc. Employees’ Retirement Plan. Prior to termination, the Company made a $1,485 contribution to fully fund the plan. Plan assets were liquidated to fund lump sum distributions to participants of $37,289 and purchase annuity contracts totaling $14,930 with an insurance company for all participants who did not elect a lump sum distribution. No benefit obligation or plan assets related to the Village Super Market, Inc. Employees’ Retirement Plan remain as of July 30, 2022. The Company recognized a $12,296 pre-tax settlement charge as a result of the termination, including a $10,856 non-cash charge for unrecognized losses within accumulated other comprehensive loss as of the termination date. Village made no contributions to the remaining plans in fiscal 20202022 and $5,009no contributions were made in fiscal 20192021 to these Company-sponsored pension plans. Village expects contributionsContributions to its defined benefit pensionthe remaining plans are expected to be immaterial in fiscal 2021. The 2019 contributions include $2,178 in benefit payments related to the unfunded, non-qualified supplemental benefit plan. Substantially all other contributions in 2019 were voluntary contributions.2023.

For the disclosure related to recently issued accounting standards, see Note 1 to the consolidated financial statements.

 

 

Net cash provided by operating activities was $83,948$79,625 in fiscal 20202022 compared to $55,788$52,692 in fiscal 2019. Net2021. The change in cash provided byflows from operating activities in fiscal 2022 was generated primarily bydue to changes in working capital and higher net income adjusted for non-cash items including depreciation and amortization, share-based compensation, deferred taxes, loss on pension settlements,settlement charges, the provision to value inventories at LIFO, impairment charges and the gain on sale of prescription lists and property, equipment and fixtures.

During fiscal 2020,2022, Village used cash to fund capital expenditures of $54,495,$43,270, dividends of $12,965, treasury stock purchases$13,041, principal payments of $4,389long-term debt of $8,299, an investment in a real estate partnership for the development of a retail center in Old Bridge, New Jersey of $5,010 and additional investments of $2,800$2,489 in notes receivable from Wakefern, netWakefern. Proceeds on the sale of proceeds received on matured notes. The $73,622 purchase price forassets of $4,352 are primarily related to the sale of a leasehold interest in a non-supermarket related parking lot obtained as part of the Fairway acquisition was funded by $50,000 drawn on the Company’s unsecured revolving line of credit and a $25,500 unsecured term loan pursuant to the Company's Credit Facility.acquisition. Capital expenditures primarily include costs associated with the openingpurchase of an 82,000 sq. ft. (52,000 selling sq. ft.)the Galloway store shopping center, the purchase of land in central New Jersey for a potential replacement store and other development, the new Gourmet Garage store in Stroudsburg, Pennsylvania that replaced our existing 53,000 sq. ft. store,the West Village of New York City, continued expansion of ShopRite from Home, including the opening of an automated micro-fulfillment center in southern New Jersey, one major store remodel, several smaller remodelsself-checkout, and various merchandising, technology, equipment upgrades, including those in the integration of the Fairway acquisition.and facility upgrades.

 

Working capital was $34,522$79,796 and $56,307$44,023 at July 25, 202030, 2022 and July 27, 2019,31, 2021, respectively. Working capital ratios at the same dates were 1.211.50 and 1.501.29 to one, respectively.  The decreaseincrease in working capital in fiscal 20202022 compared to fiscal 20192021 is due primarily to recognition of$28,627 in notes receivable from Wakefern that have been reclassified to current operating lease obligationsassets as a result of the adoption of ASU 2016-02, “Leases” and the current portion of long-term debt issued in conjunction with the Fairway acquisition.they matured on August 15, 2022. The Company’s working capital needs are reduced, since inventories are generally sold by the time payments to Wakefern and other suppliers are due.

 

We have budgeted $35,000$70,000 for capital expenditures in fiscal 2021.2023.  Planned expenditures include costs for construction of three replacement stores scheduled to open in fiscal 2024, two major remodels, including the conversion of the Pelham, NY store from the Fairway to the ShopRite banner, the purchase of the Vineland store shopping center, several smaller store remodels and merchandising initiatives, installation of electronic shelf labels in six stores, continued expansion of ShopRite from Home and self-checkout, and various merchandising, technology, equipment and facility upgrades. The Company’s primary sources of liquidity in fiscal 20212023 are expected to be cash and cash equivalents on hand at July 25, 202030, 2022 and operating cash flow generated in fiscal 2021.2023.

 

At July 25, 2020,30, 2022, the Company held variable rate notes receivable due from Wakefern of $26,130$28,627 that earn interest at the prime rate plus 1.25% and maturematured on August 15, 2022 and $26,878$29,157 that earn interest at the prime rate plus .75% and mature on February 15, 2024. The Company invested $28,850 of the proceeds received from the notes that matured on August 15, 2022 in variable rate notes receivable from Wakefern that earn interest at the prime rate plus .50% and mature on August 15, 2027. On September 28, 2022, the Company invested an additional $30,000 in variable rate notes receivable from Wakefern that earn interest at the prime rate plus .50% and mature on September 28, 2027. Wakefern has the right to prepay these notes at any time. Under certain conditions, the Company can require Wakefern to prepay the notes, although interest earned since inception would be reduced as if it was earned based on overnight money market rates as paid by Wakefern on demand deposits.

At July 25, 2020,30, 2022, Village had demand deposits invested at Wakefern in the amount of $76,259.$110,739. These deposits earn overnight money market rates.

On May 6, 2020, VillageJanuary 28, 2022, the Company entered into aan amended and restated credit agreement of the Company’s $150,500 credit facility (the “Credit Facility”) with Wells Fargo National Bank, National Association (“Wells Fargo”) that supersedes in its entirety. The notable changes from the prior creditprevious agreement with Wells Fargo dated November 9, 2017.include: (1) Modification of the reference rate from the London Interbank Offered Rate ("LIBOR") to the Secured Overnight Financing Rate ("SOFR") as a result of the expected cessation of LIBOR, (2) The principalexecution of a fifteen-year $7,350 secured term loan to finance the acquisition of the Galloway shopping center and (3) Modification of the definition of Total Adjusted Debt for the purpose of determining the Credit Facility ismaximum adjusted debt to finance general corporate and working capital requirements and Village’s acquisition of certain Fairway assets.EBITDAR ratio financial covenant. Among other things, the Credit Facility provides for a maximum loan amount of $150,500 as further set forth below:for:

The principal purpose of the Credit Facility is to finance general corporate and working capital requirements, Village’s acquisition of certain Fairway assets, the purchase of the Galloway store shopping center and certain capital expenditure projects. The Credit Facility also provides for up to $25,000 of letters of credit ($7,336 outstanding at July 25, 2020)30, 2022), which secure obligations for store leases and construction performance guarantees to municipalities. The Credit Facility contains covenants

During fiscal 2020,2022, Village paid cash dividends of $12,965.$13,041.  Dividends in fiscal 20202022 consist of $1.00 per Class A common share and $.65 per Class B common share.

During fiscal 2019,2021, Village paid cash dividends of $12,890.$13,050.  Dividends in fiscal 20192021 consist of $1.00 per Class A common share and $.65 per Class B common share.

 

 

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; uninsured losses; expected pension plan contributions; projected capital expenditures; expected dividend payments; cash flow requirements; inflation expectations; public health conditions; 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.

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

 

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 25, 2020,30, 2022, the Company’s indebtedness to Wakefern for the outstanding amount of this stock subscription was $1,185.$3,095. The maximum per store investment is currently $950.$975. 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, workers' compensation, liability and property insurance, technology support and other store services. Additional information is provided in Note 3 to the consolidated financial statements.

 

At July 25, 2020,30, 2022, the Company held variable rate notes receivable due from Wakefern of $26,130$28,627 that earn interest at the prime rate plus 1.25% and maturematured on August 15, 2022 and $26,878$29,157 that earn interest at the prime rate plus .75% and mature on February 15, 2024. The Company invested $24,937$28,850 of the proceeds received from the notes that matured on FebruaryAugust 15, 20192022 in variable rate notes receivable from Wakefern that earn interest at the prime rate plus .75%.50% and mature on FebruaryAugust 15, 2024.2027. On September 28, 2022, the Company invested an additional $30,000 in variable rate notes receivable from Wakefern that earn interest at the prime rate plus .50% and mature on September 28, 2027. Wakefern has the right to prepay these notes at any time. Under certain conditions, the Company can require Wakefern to prepay the notes, although interest earned since inception would be reduced as if it was earned based on overnight money market rates as paid by Wakefern on demand deposits.

At July 25, 2020,30, 2022, Village had demand deposits invested at Wakefern in the amount of $76,259.$110,739. These deposits earn overnight money market rates.

 

The Company subleases the Galloway and Vineland stores from Wakefern under sublease agreements which provided for combined annual rents of $959 and $1,355 in bothduring fiscal 20202022 and 2019,2021, respectively, and has related aggregate lease obligations of $3,521$607 at July 25, 2020.30, 2022. Both leases contain normal periodic rent increases and options to extend the lease. On October 13, 2021, Village completed the acquisition of the Galloway store shopping center for $9,800.

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 $688$735 and $704 in both fiscal 20202022 and 2019,2021, respectively, and has a related lease obligation of $3,772$2,545 at July 25, 2020.30, 2022. This lease expires in fiscal 20212026 with options to extend at increasing annual rents.

 

The Company has ownership interests in threefour real estate partnerships. Village paid aggregate rents to two of these partnerships for leased stores of $1,556 and $1,455$1,579 in fiscal 20202022 and 2019,2021, respectively, and has aggregate lease obligations of $13,179$12,340 at July 25, 202030, 2022 related to these leases.