VILLAGE SUPER MARKET INC - Quarter Report: 2010 January (Form 10-Q)

vlgea10q20100123.htm

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

[x]	QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended: January 23, 2010

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission File No. 0-2633

VILLAGE SUPER MARKET, INC.

(Exact name of registrant as specified in its charter)

NEW JERSEY	22-1576170
(State of other jurisdiction of incorporation or organization)	(I. R. S. Employer Identification No.)


733 MOUNTAIN AVENUE, SPRINGFIELD, NEW JERSEY	07081
(Address of principal executive offices)	(Zip Code)

(973) 467-2200
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. S Yes□ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). □ Yes□ No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12-b2 of the Exchange Act.

Large accelerated filer □	Accelerated filer S
Non-accelerated filer □ (Do not check if a smaller reporting company)	Smaller reporting company □

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). □ YesS No

Indicate the number of shares outstanding of the issuer's classes of common stock as of the latest practicable date:

	March 2, 2010
Class A Common Stock, No Par Value	6,999,194 Shares
Class B Common Stock, No Par Value	6,376,304 Shares

VILLAGE SUPER MARKET, INC.

INDEX

PART I		PAGE NO.

FINANCIAL INFORMATION


Item 1.	Financial Statements (Unaudited)

	Consolidated Condensed Balance Sheets	3

	Consolidated Condensed Statements of Operations	4

	Consolidated Condensed Statements of Cash Flows	5

	Notes to Consolidated Condensed Financial Statements	6-10

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	10-17

Item 3.	Quantitative & Qualitative Disclosures about Market Risk	18

Item 4.	Controls and Procedures	18



PART II

OTHER INFORMATION

Item 4.	Submission of Matters to a Vote of Security Holders	19

Item 6.	Exhibits	20

	Signatures	20

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

VILLAGE SUPER MARKET, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(in Thousands) (Unaudited)

	January 23,			July 25,
	2010			2009
ASSETS
Current assets
Cash and cash equivalents	$	75,147		$	54,966
Merchandise inventories		35,694			34,273
Patronage dividend receivable		3,496			7,446
Note receivable from Wakefern		----			15,684
Other current assets		14,599			12,189
Total current assets		128,936			124,558

Note receivable from Wakefern		17,588			16,983
Property, equipment and fixtures, net		165,818			162,261
Investment in Wakefern		20,263			19,673
Goodwill		10,605			10,605
Other assets		4,683			4,730
	$	347,893		$	338,810

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities
Current portion of long-term debt	$	----		$	4,555
Current portion of notes payable to Wakefern		298			269
Accounts payable to Wakefern		54,868			53,487
Accounts payable and accrued expenses		25,869			26,039
Income taxes payable		13,174			9,352
Total current liabilities		94,209			93,702

Long-term debt		30,732			30,752
Notes payable to Wakefern		1,657			1,829
Other liabilities		25,701			25,129

Commitments and contingencies

Shareholders' equity
Class A common stock - no par value, issued 7,541 shares at January 23, 2010 and 7,538 shares at July 25, 2009		30,676			28,982
Class B common stock - no par value, 6,376 shares issued and outstanding		1,035			1,035
Retained earnings		177,270			171,229
Accumulated other comprehensive loss		(10,149	)		(10,535	)
Less cost of Class A treasury shares (542 at January 23, 2010 and 555 at July 25, 2009)		(3,238	)		(3,313	)

Total shareholders’ equity		195,594			187,398

	$	347,893		$	338,810

See accompanying Notes to Consolidated Condensed Statements.

VILLAGE SUPER MARKET, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(in Thousands except Per Share Amounts)

(Unaudited)

	13 Wks. Ended			13 Wks. Ended			26 Wks. Ended			26 Wks. Ended
	Jan. 23, 2010			Jan. 24, 2009			Jan. 23, 2010			Jan. 24, 2009

Sales	$	315,309		$	312,714		$	618,093		$	603,698

Cost of sales		229,153			227,653			451,369			439,165

Gross profit		86,156			85,061			166,724			164,533

Operating and administrative expense		70,166			67,488			138,543			132,260

Depreciation and amortization		4,063			3,705			8,033			7,322

Operating income		11,927			13,868			20,148			24,951

Interest expense		(905	)		(708	)		(1,853	)		(1,434	)

Interest income		490			489			986			1,057

Income before income taxes		11,512			13,649			19,281			24,574

Income taxes		4,775			5,693			8,002			10,250

Net income	$	6,737		$	7,956		$	11,279		$	14,324

Net income per share:
Class A Common Stock:
Basic	$	.61		$	.72		$	1.01		$	1.30
Diluted	$	.50		$	.59		$	.83		$	1.07

Class B Common Stock:
Basic	$	.39		$	.47		$	.66		$	.84
Diluted	$	.39		$	.46		$	.65		$	.84

See accompanying Notes to Consolidated Condensed Financial Statements.

VILLAGE SUPER MARKET, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(in Thousands) (Unaudited)

	26 Weeks Ended			26 Weeks Ended
	January 23, 2010			January 24, 2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	11,279		$	14,324
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		8,033			7,322
Deferred taxes		(1,400	)		350
Provision to value inventories at LIFO		150			600
Non-cash share-based compensation		1,555			1,274

Changes in assets and liabilities:
Merchandise inventories		( 1,571	)		(2,662	)
Patronage dividend receivable		3,950			3,853
Accounts payable to Wakefern		1,381			2,017
Accounts payable and accrued expenses		(170	)		821
Income taxes payable		3,822			2,498
Other assets and liabilities		(7	)		(1,040	)
Net cash provided by operating activities		27,022			29,357

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(11,589	)		(13,170	)
Maturity of (investment in) notes receivable from Wakefern		15,079			( 818	)
Net cash provided by (used in) investing activities		3,490			(13,988	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options		122			339
Excess tax benefit related to share-based compensation		92			217
Principal payments of long-term debt and notes payable		( 5,307	)		( 5,218	)
Dividends		( 5,238	)		( 3,863	)
Net cash used in financing activities		( 10,331	)		( 8,525	)

NET INCREASE IN CASH AND CASH EQUIVALENTS		20,181			6,844

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		54,966			47,889
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	75,147		$	54,733

SUPPLEMENTAL DISCLOSURE OF CASH PAYMENTS MADE FOR:
Interest	$	1,964		$	1,360
Income taxes	$	5,487		$	8,939
NON-CASH SUPPLEMENTAL DISCLOSURES:
Investment in Wakefern	$	590		$	657
Financing lease obligation	$	----		$	5,700

See accompanying Notes to Consolidated Condensed Financial Statements.

VILLAGE SUPER MARKET, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(in Thousands) (Unaudited)

1. In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of normal and recurring accruals) necessary to present fairly the consolidated financial position as of January 23, 2010 and the consolidated results of operations and cash flows for the thirteen and twenty-six week periods ended January 23, 2010 and January 24, 2009 of Village Super Market, Inc. (“Village” or the “Company”).

The significant accounting policies followed by the Company are set forth in Note 1 to the Company's consolidated financial statements in the July 25, 2009 Village Super Market, Inc. Annual Report on Form 10-K, which should be read in conjunction with these financial statements.

2. The results of operations for the periods ended January 23, 2010 are not necessarily indicative of the results to be expected for the full fiscal year.

3. At both January 23, 2010 and July 25, 2009, approximately 67% of merchandise inventories are valued by the LIFO method while the balance is valued by FIFO. If the FIFO method had been used for the entire inventory, inventories would have been $14,397 and $14,247 higher than reported at January 23, 2010 and July 25, 2009, respectively.

4. The Company computes net income per share using the two-class method, 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, our Class A common stock is assumed to receive a 54% greater participation in undistributed earnings than our 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 shares of 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.

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. Net income per share amounts for the prior year periods as previously reported were as follows:

	13 Weeks Ended				26 Weeks Ended
	January 24, 2009
	Class A		Class B		Class A		Class B

Basic	$	.74	$	.48	$	1.33	$	.86
Diluted	$	.60	$	.47	$	1.08	$	.85

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

	13 Weeks Ended					26 Weeks Ended
	January 23, 2010
	Class A		Class B			Class A		Class B
Numerator:
Net income allocated, basic	$	4,072	$	2,506		$	6,811	$	4,199
Conversion of Class B to Class A shares		2,506		----			4,199		----
Effect of share-based compensation on allocated net income		17		(17	)		25		( 27	)
Net income allocated, diluted	$	6,595	$	2,489		$	11,035	$	4,172

Denominator:
Weighted average shares outstanding, basic		6,727		6,376			6,723		6,376
Conversion of Class B to Class A shares		6,376		---			6,376		---
Dilutive effect of share-based compensation		132		-----			135		---
Weighted average shares outstanding, diluted		13,235	_ 6,376				13,234		6,376

	13 Weeks Ended					26 Weeks Ended
	January 24, 2009
	Class A		Class B			Class A		Class B
Numerator:
Net income allocated, basic	$	4,790	$	2,985		$	8,619	$	5,378
Conversion of Class B to Class A shares		2,985		---			5,378		---
Effect of share-based compensation on allocated net income		24		(31	)		43		(53	)
Net income allocated, diluted	$	7,799	$	2,954		$	14,040	$	5,325

Denominator:
Weighted average shares outstanding, basic		6,642		6,376			6,636		6,376
Conversion of Class B to Class A shares		6,376		---			6,376		---
Dilutive effect of share-based compensation		155		----			152		---
Weighted average shares outstanding, diluted		13,173		6,376			13,164		6,376

Outstanding stock options to purchase Class A shares of 30 and 404 were excluded from the calculation of diluted net income per share at January 23, 2010 and January 24, 2009, respectively, as a result of their anti-dilutive effect. In addition, 256 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 January 23, 2010 and January 24, 2009, respectively, due to their anti-dilutive effect.

5. Comprehensive income was $6,930 and $11,665 for the thirteen and twenty-six week periods ended January 23, 2010, and $8,037 and $14,486 for the thirteen and twenty-six week periods ended January 24, 2009. Comprehensive income consists of net income and amortization of net losses on benefit plans, net of income taxes.

6. The Company sponsors four defined benefit pension plans. Net periodic pension cost for the four plans includes the following components:

	13 Weeks Ended						26 Weeks Ended
	1/23/10			1/24/09			1/23/10			1/24/09

Service cost	$	572		$	603		$	1,144		$	1,206
Interest cost on projected benefit obligations		583			520			1,166			1,040
Expected return on plan assets		(426	)		(434	)		(852	)		(868	)
Amortization of gains and losses		320			133			640			266
Amortization of prior service costs		2			2			4			4
Net periodic pension cost	$	1,051		$	824		$	2,102		$	1,648

As of January 23, 2010, the Company has contributed $41 to its pension plans in fiscal 2010. The Company expects to contribute an additional $2,959 during the remainder of fiscal 2010 to fund its pension plans.

7. 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.

8. The Company’s leasehold interest in the former 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. The Company recorded the purchase of land and building at its appraised value of $1,600. In fiscal 2009, the Company recorded a pre-tax charge for the balance of $1,500 related to the litigation. In addition to settling the litigation, the purchase of the former Washington store property eliminated any potential time period between the closing of the former Washington store and the opening of the replacement store.

On April 22, 2009, a Court formally invalidated the developer’s approval for our Washington replacement store. In September 2009, the Planning Board began consideration of a revised site plan. The Planning Board approved this revised site plan on November 11, 2009. This approval was appealed in December. The Company restarted construction on November 25, 2009 and the store opened on February 21, 2010. The Company’s investment in construction and equipment is $14,710 at January 23, 2010. In the event the Planning Board approval is overturned on appeal, the Company may record an impairment charge for this investment which could be material to the Company’s consolidated financial position and results of operations.

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

(Dollars in Thousands)

OVERVIEW

The Company operates a chain of 26 ShopRite supermarkets in New Jersey and northeastern Pennsylvania. 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. As further described in the Company’s Form 10-K, 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, six of which are owned, average 56,000 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.

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 2009 and the first two quarters of fiscal 2010, the supermarket industry was impacted by changing consumer behavior due to the weaker economy and increased unemployment. Consumers are increasingly cooking meals at home, trading down to lower priced items, including private label, and concentrating their buying on sale items. These trends amplified in the last nine months. The deflationary trend in food prices that began during the second half of fiscal 2009 continued in the first two quarters of fiscal 2010. As a result of these trends, same store sales decreased 1.7% in the second quarter of fiscal 2010 as the average transaction size declined. This compares to a same store sales increase in the second quarter of the prior year of 5.9%. However, customer counts increased slightly in the second quarter of fiscal 2010. Management believes that generally Village has benefited from these trends compared to its competitors due to ShopRite’s position as a price leader in New Jersey.

RESULTS OF OPERATIONS

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

	13 Weeks Ended						26 Weeks Ended
	1/23/10			1/24/09			1/23/10			1/24/09

Sales		100.00	%		100.00	%		100.00	%		100.00	%
Cost of sales		72.68			72.80			73.03			72.75
Gross profit		27.32			27.20			26.97			27.25
Operating and administrative expense		22.25			21.58			22.41			21.91
Depreciation and amortization		1.29			1.18			1.30			1.21
Operating income		3.78			4.44			3.26			4.13
Interest expense		(.29	)		(.23	)		(.30	)		( .24	)
Interest income		.16			.15			.16			.18
Income before taxes		3.65			4.36			3.12			4.07
Income taxes		1.51			1.82			1.30			1.70
Net income		2.14	%		2.54	%		1.82	%		2.37	%

Sales. Sales were $315,309 in the second quarter of fiscal 2010, an increase of .8% from the second quarter of the prior year. Sales increased due to the opening of the Marmora, New Jersey store on May 31, 2009. Same store sales decreased 1.7%. This compares to a same store sales increase in the second quarter of the prior year of 5.9%. Same store sales decreased due to cannibalization from the opening of the Marmora store, reduced sales in three stores due to competitive store openings and a decline in average transaction size. These declines were partially offset by a slight increase in transaction counts. The Company believes that the decline in transaction size is due to food price deflation and changing consumer behavior due to economic weakness, which has resulted in increased coupon usage, sale item penetration and trading down. The Company expects same store sales for all of fiscal 2010 to range from -.5% to +1.0%. New stores and replacement stores are included in same stores sales in the quarter after the store has been in operation for four full quarters. Store renovations are included in same stores sales immediately.

Sales were $618,093 in the six-month period of fiscal 2010, an increase of 2.4% from the prior year. Sales increased due to the opening of the Marmora store. Same stores sales decreased .6% due to cannibalization from the opening of the Marmora store and a decline in average transaction size, partially offset by increased transaction count.

Gross profit. Gross profit as a percentage of sales increased .12% in the second quarter of fiscal 2010 compared to the second quarter of the prior year primarily due to higher patronage dividends (.30%) and lower LIFO charges (.10%). These improvements were partially offset by increased warehouse assessment charges from Wakefern (.12%) and higher promotional spending (.09%). Gross profit was favorably impacted by receipt of patronage dividends from Wakefern greater than estimated amounts accrued in both the second quarter of fiscal 2010 (.38%) and 2009 (.26%). In addition, accruals for patronage dividends were increased .18% in the current fiscal quarter.

Gross profit as a percentage of sales decreased .28% in the six-month period of fiscal 2010 compared to the corresponding period of the prior year primarily due to higher promotional spending (.20%), decreased departmental gross margin percentage (.21%) and changed product mix (.07%). These decreases were partially offset by higher patronage dividends (.17%) and lower LIFO charges (.08%).

Operating and administrative expense. Operating and administrative expense increased .67% as a percentage of sales in the second quarter of fiscal 2010 compared to the second quarter of the prior year primarily due to increased fringe benefit cost (.41%), payroll (.21%) and occupancy costs (.16%). These increases were partially offset by recovery of prior year’s credit card fees through litigation settlement (.06%). Fringe benefit costs increased primarily due to increased medical, worker’s compensation insurance and pension costs. Payroll costs increased as a percentage of sales due to the loss of operating leverage from the 1.7% same store sale decline in the current year. Occupancy costs increased primarily due to increased snow removal, real estate taxes and insurance costs.

Operating and administrative expense increased .50% as a percentage of sales in the six-month period of fiscal 2010 compared to the corresponding period of the prior year primarily due to increased fringe benefit costs (.37%), payroll (.13%) and occupancy costs (.08%). Fringe benefit costs increased primarily due to increased medical, worker’s compensation insurance and pension costs. Payroll increased as a percentage of sales due to the loss of operating leverage from the .6% same store sales decline in the current year. Occupancy costs increased due to higher real estate taxes, snow removal and insurance costs.

Depreciation and amortization. Depreciation and amortization expense increased in the second quarter and six-month periods of fiscal 2010 compared to the corresponding periods of the prior year due to depreciation related to fixed asset additions, including the new Marmora store.

Interest expense. Interest expense increased in the second quarter and six-month periods of fiscal 2010 compared to the corresponding periods of the prior year 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 similar in the second quarter and six-month periods of fiscal 2010 compared to the corresponding periods of the prior year as higher amounts invested were offset by lower interest rates received.

Income Taxes. The effective income tax rate was 41.5% in both the second quarter and six-month periods of fiscal 2010 compared to 41.7% in the corresponding periods of the prior year.

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 Company’s critical accounting policies relating to the impairment of long-lived assets and goodwill, accounting for patronage dividends earned as a stockholder of Wakefern, accounting for pension plans, accounting for share-based compensation, and accounting for uncertain tax positions, are described in the Company’s Annual Report on Form 10-K for the year ended July 25, 2009. As of January 23, 2010, there have been no changes to any of the critical accounting policies contained therein.

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.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $27,022 in the six-month period ended January 23, 2010 compared with $29,357 in the corresponding period of the prior year. This decrease is primarily attributable to lower net income in fiscal 2010.

During the first six months of fiscal 2010, Village used cash to fund capital expenditures of $11,589, debt payments of $5,307 and dividends of $5,238. Debt payments include the final installment of $4,286 on Village’s unsecured Senior Notes.

Village has budgeted approximately $19 million for capital expenditures in fiscal 2010. Expenditures include the completion of the construction and equipment for the replacement store in Washington, New Jersey, which opened on February 21, 2010, installation of a solar energy system at the Garwood store, and several small remodels. The Company’s primary sources of liquidity in fiscal 2010 are expected to be cash and cash equivalents on hand and operating cash flow generated in fiscal 2010.

Working capital was $34,727 at January 23, 2010 compared to $30,856 at July 25, 2009. The working capital ratio was 1.4 to 1 at January 23, 2010 compared to 1.3 to 1 at July 25, 2009. On December 8, 2009, a $15,822 note receivable from Wakefern matured and is currently invested in overnight deposits at Wakefern. The Company’s working capital needs are reduced since inventories are generally sold by the time payments to Wakefern and other suppliers are due.

There have been no substantial changes as of January 23, 2010 to the contractual obligations and commitments discussed on page 10 of the Company’s Annual Report on Form 10-K for the year ended July 25, 2009, except for an additional $590 required investment in Wakefern common stock.

OUTLOOK

This Form 10-Q 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; 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 -.5% to +1.0% in fiscal 2010.

During fiscal 2009 and the first two quarters of fiscal 2010, the supermarket industry was impacted by changing consumer behavior due to the weaker economy and increased unemployment. Consumers are increasingly cooking meals at home, trading down to lower priced items, including private label, and concentrating their buying on sale items. These trends amplified in the last nine months. Same store sales decreased 1.7% in the second quarter of fiscal 2010 as customer counts increased slightly, but the average transaction size declined. Management expects these trends to continue for at least the next quarter. Management believes that generally Village has benefited from these trends compared to its competitors due to ShopRite’s position as a price leader in New Jersey.

We expect less retail price inflation in fiscal 2010 than in fiscal 2009 and fiscal 2008, with the first 9 months of fiscal 2010 being primarily deflationary.

We have budgeted $19,000 for capital expenditures in fiscal 2010, which includes the completion of the Washington replacement store, which opened on February 21, 2010, installation of a solar energy system at the Garwood store, 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 2010 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 affect on Village’s results of operations.

Approximately 92% 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.

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 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

A description of the Company’s transactions with Wakefern, its principal supplier, and with other related parties is included on pages 12, 21 and 24 of the Company’s Annual Report on Form 10-K for the year ended July 25, 2009. There have been no significant changes in the Company’s relationship or nature of transactions with related parties during the six months of fiscal 2010, except for additional required investments in Wakefern common stock of $590.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At January 23, 2010, the Company had demand deposits of $56,831 at Wakefern earning interest at overnight money market rates, which are exposed to the impact of interest rate changes.

At January 23, 2010, the Company had a $17,588 15-month note receivable due from Wakefern earning a fixed interest 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 March 3, 2011.

ITEM 4. CONTROLS AND PROCEDURES

As required by Rule 13a-15 under the Exchange Act, the Company carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures at the end of the period. This evaluation was carried out under the supervision, and with the participation, of the Company’s management, including the Company’s Chief Executive Officer along with the Company’s Chief Financial Officer. Based upon that evaluation, the Company’s Chief Executive Officer, along with the Company’s Chief Financial Officer, concluded that the Company’s disclosure controls and procedures are effective.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in Company reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in Company reports filed under the Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure.

There have been no significant changes in internal controls over financial reporting during the second quarter of fiscal 2010.

PART II - OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders

The Company’s annual meeting of shareholders was held on December 18, 2009. The following persons were elected as directors pursuant to the following votes:

Directors	For	Withheld

James Sumas	52,388,646	1,042,463
Robert Sumas	52,385,496	1,045,613
William Sumas	52,831,962	599,147
John P. Sumas	52,385,496	1,045,613
Kevin Begley	52,448,405	982,704
Nicholas Sumas	52,824,764	606,345
John J. Sumas	52,383,696	1,047,413
Steven Crystal	53,296,361	134,748
David Judge	53,295,666	135,443
Peter Lavoy	53,295,462	135,647
Stephen Rooney	53,295,706	135,403

The shareholders approved a proposal to ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the 2010 fiscal year. The vote totals were as follows: For – 53,384,644; Against – 45,564; Abstain - 900.

The shareholders approved a proposal to amend the Certificate of Incorporation to increase the number of authorized shares of both Class A and Class B common stock from 10,000,000 to 20,000,000. The vote totals were as follows: For – 51,808,849; Against - 1,620,960; Abstain - 1,296.

Item 6. Exhibits

	Exhibit 31.1	Certification

	Exhibit 31.2	Certification

	Exhibit 32.1	Certification (furnished, not filed)

	Exhibit 32.2	Certification (furnished, not filed)

	Exhibit 99.1	Press Release dated March 3, 2010

	Exhibit 99.2	First Quarter Report to Shareholders dated December 18, 2009

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Village Super Market, Inc.
	Registrant



Date: March 3, 2010	/s/ James Sumas
	James Sumas
	(Chief Executive Officer)


Date: March 3, 2010	/s/ Kevin R. Begley
	Kevin R. Begley
	(Chief Financial Officer)