What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-10-14 compared with 2020-10-08 · 100 added, 136 removed, 769 unchanged (23% of the section changed)

52 unchanged sentences

Less treasury stock, Class A, at cost:

726 shares at July 25, 2020 and 502 shares at July 27, 2019

726 shares at July 31, 2021 and July 25, 2020

( 13,939 ) ( 13,939 )

7 unchanged sentences

2021 July 25,

(53 Weeks) (52 Weeks)

Sales $ 2,030,330 $ 1,804,594

3 unchanged sentences

Depreciation and amortization 34,195 31,358

Impairment of assets 2,900 —

Operating income 29,163 30,284

19 unchanged sentences

Other comprehensive income (loss):

Unrealized losses on interest rate swaps, net of tax (1) ( 659 ) —

Unrealized gain (loss) on interest rate swaps, net of tax (1) 1,428 ( 659 )

Amortization of pension actuarial loss, net of tax (2) 409 397

3 unchanged sentences

Comprehensive income $ 19,681 $ 24,530

(1) Amount is net of tax of $ 262 for 2020.

(1) Amount is net of tax of $ 604 and $ 262 for 2021and 2020, respectively.

(2) Amounts are net of tax of $ 179 and $ 158 for 2021 and 2020, respectively.

19 unchanged sentences

Dividends — — — — ( 12,965 ) — — — ( 12,965 )

Exercise of stock options — 336 — — — — ( 36 ) 671 1,007

Treasury stock purchases — — — — — — 224 ( 4,389 ) ( 4,389 )

1 unchanged sentence

Share-based compensation expense 412 3,166 — — — — — — 3,166

Conversion of Class B shares to Class A shares 10 2 ( 10 ) ( 2 ) — — — — —

Adjustment due to the adoption of ASU 2016-02 , net of tax of $ 1,358

— — — — 3,514 — — — 3,514

Balance, July 25, 2020 10,985 $ 68,072 4,294 $ 697 $ 286,241 $ ( 8,751 ) 726 $ ( 13,939 ) $ 332,320

3 unchanged sentences

Dividends — — — — ( 13,050 ) — — — ( 13,050 )

Treasury stock purchases — — — — — — 224 ( 4,389 ) ( 4,389 )

Restricted shares forfeited ( 15 ) ( 71 ) — — — — — — ( 71 )

Share-based compensation expense 8 2,593 — — — — — — 2,593

Adjustment due to the adoption of ASU 2016-02 , net of tax of $ 1,385

— — — — 3,514 — — — 3,514

Balance, July 31, 2021 10,978 $ 70,594 4,294 $ 697 $ 293,185 $ ( 9,064 ) 726 $ ( 13,939 ) $ 341,473

5 unchanged sentences

July 31, 2021 July 25, 2020

(53 Weeks) (52 Weeks)

CASH FLOWS FROM OPERATING ACTIVITIES

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Amortization of business acquisition inventory step-up — 508

Gain on sale of prescription lists and property, equipment and fixtures ( 1,252 ) ( 102 )

Impairment of assets 2,900 —

Gain on sale of assets ( 5,103 ) ( 1,252 )

Changes in assets and liabilities:

11 unchanged sentences

Investment in notes receivable from Wakefern ( 2,287 ) ( 2,800 )

Maturity of notes receivable from Wakefern — 24,937

Business acquisitions, net of cash acquired — ( 73,622 )

1 unchanged sentence

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from exercise of stock options — 1,007

Excess tax benefit related to share-based compensation — 34

Proceeds from issuance of long-term debt 50,000 25,500

5 unchanged sentences

Treasury stock purchases, including shares surrendered for withholding taxes — ( 4,389 )

Net cash provided by (used in) financing activities 56,268 ( 14,495 )

Net cash (used in) provided by financing activities ( 21,686 ) 56,268

NET INCREASE IN CASH AND CASH EQUIVALENTS 4,633 10,560

21 unchanged sentences

The Company and its subsidiaries utilize a 52-53 week fiscal year ending on the last Saturday in the month of July.

Fiscal 2020 and 2019 contain 52 weeks.

Fiscal 2021 contains 53 weeks and fiscal 2020 contains 52 weeks.

Use of estimates

1 unchanged sentence

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 revenues and expenses during the reporting period.

Some of the more significant estimates are patronage dividends, pension accounting assumptions, accounting for contingencies, accounting for derivative instruments and hedging activities, purchase accounting and the impairment of long-lived assets and goodwill.

Actual results could differ from those estimates.

5 unchanged sentences

Sales tax is excluded from revenue.

Discounts provided to customers through ShopRite coupons and loyalty programs are recognized as a reduction of sales as products are sold.

Discounts provided by vendors are not recognized as a reduction in sales.

Discounts provided to customers through store coupons and loyalty programs are recognized as a reduction of sales as products are sold.

Discounts provided to customers by vendors are not recognized as a reduction in sales.

Rather, the Company records a receivable from the vendor for the difference in sales price and payment received from the customer.

The Company does not recognize revenue when it sells gift cards redeemable at Wakefern member stores.

Payment collected from customers for sale of these gift card is passed on to Wakefern as they can be redeemed at other locations, including those operated by Wakefern or other Wakefern members.

Payment collected from customers for sale of these gift cards is passed on to Wakefern as they can be redeemed at other locations, including those operated by Wakefern or other Wakefern members.

Revenue is recognized and a receivable from Wakefern is recorded when a customer redeems these gift cards to purchase products or services.

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(2) Consists primarily of produce, meat, deli, seafood, bakery, prepared foods and floral.

(3) Consists primarily of sales related to other income streams, including ShopRite from Home service fees, gift card and lottery commissions and wholesale sales.

(3) Consists primarily of sales related to other income streams, including service fees related to digital sales, gift card and lottery commissions and wholesale sales.

Cost of sales

Cost of sales consists of costs of inventory, inbound freight charges, and production costs at the Company's centralized commissary, including materials, labor and overhead.

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.

Shipping and handling costs associated with the Company’s digital sales are included in operating and administrative expense.

Cash and cash equivalents

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All other inventories are stated at the lower of FIFO cost or market.

Vendor allowances and rebates

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

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As such designation ended for these leases with adoption of the ASU, operating lease right-of-use asset and liability balances were established for these leases based on the Company's remaining fixed payment obligations under the leases and are included in the amounts described above.

Accordingly, the fixed lease payments related to these leases will be recognized as an operating lease cost on a straight-line basis over the lease term , and eliminated depreciation and interest expense in the fiscal 2020 consolidated statement of operations.

The Company recognized expense related to these leases in fiscal 2020 and 2019 as follows:

52 Weeks Ended

Consolidated Statement of Operations Classification July 25,

2020 July 27,

Operating and administrative expense $ 2,708 $ —

Depreciation and amortization — 396

Interest expense — 2,145

$ 2,708 $ 2,541

The adoption of this standard also resulted in a change in naming convention for leases classified historically as capital leases to finance leases.

The adoption of the new standard did not have a material impact on the consolidated statement of cash flows.

The Company determines if an arrangement is a lease at inception, and recognizes a finance and operating lease liability and asset for all leases with terms of more than 12 months at the lease commencement date.

Finance and operating lease liabilities represent the present value of minimum lease payments not yet paid.

For purposes of measuring the present value of its fixed payment obligations for a given lease, the Company uses its incremental borrowing rate as the discount rate implicit within its leases is generally not determinable.

The Company's incremental borrowing rate reflects the rate it would pay to borrow on a secured basis, and incorporates the term and economic environment of the lease.

Each renewal option is evaluated when recognizing the lease right-of-use assets and liabilities, and the Company utilizes the lease term for which it is reasonably certain to use the underlying asset.

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.

The Company accounts for rent holidays, escalating rent provisions, and construction allowances related to operating leases in rent expense on a straight-line basis over the term of the lease.

Finance lease payments are charged to interest expense and depreciation and amortization expense over the lease term.

Additional information on leases is provided in Note 7.

2 unchanged sentences

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.

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.

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If impairment is indicated, it is measured by comparing the fair value of the long-lived assets to their carrying value.

For the year ended July 31, 2021 the Company recorded an impairment of long-lived assets for one Gourmet Garage store of $ 514 .

Goodwill and indefinite-lived intangible assets

Goodwill and indefinite-lived intangible assets are tested at the end of each fiscal year, or more frequently if circumstances dictate, for impairment.

The Company's indefinite-lived intangible assets balance of $ 13,299 and $ 15,685 as of July 31, 2021 and July 25, 2020, respectively, are related to the Fairway and Gourmet Garage trade names.

An impairment loss is recognized to the extent that the carrying amount of goodwill and indefinite-lived intangible assets exceeds its implied fair value.

Village considers earnings multiples and other valuation techniques to measure fair value at the reporting unit level, in addition to the value of the Company’s stock.

The fair value of trade names are estimated based on the discounted cash flow model using the relief from royalty method.

Manhattan store sales have been impacted by localized residential population migration out of Manhattan and less commuter and tourist traffic during the COVID-19 pandemic.

Due to uncertainty regarding the duration and extent of the impact of the COVID-19 pandemic on Manhattan, the Company recognized an impairment charge related to the Fairway trade name of $ 2,386 for year ended July 31, 2021.

Net income per share

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Conversion of Class B to Class A shares 4,273 — 5,363 —

Effect of share-based compensation on allocated net income — — — ( 1 )

Net income allocated, diluted $ 19,368 $ 4,273 $ 24,220 $ 5,363

1 unchanged sentence

Conversion of Class B to Class A shares 4,294 — 4,294 —

Dilutive effect of share-based compensation — — — —

Weighted average shares outstanding, diluted 14,147 4,294 14,088 4,294

14 unchanged sentences

Recently issued accounting standards

In August 2018, the FASB issued ASU 2018-14, "Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20):

Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans." The guidance modifies disclosure requirements for defined benefit plans.

This guidance is effective for fiscal years ending after December 15, 2020, and early adoption is permitted.

The Company is currently assessing the potential impact of ASU 2018-14 on its consolidated financial statement disclosures.

In March 2020 and January 2021, the FASB issued ASU 2020-04, "Facilitation of the Effects of Reference Rate Reform on Financial Reporting" and ASU 2021-01, "Reference Rate Reform:

Scope", respectively.

These standards provide temporary optional expedients and exceptions for the application of GAAP to certain contract modifications, hedging relationships, and other arrangements that are expected to be impacted by the global transition away from certain reference rates, such as LIBOR.

The guidance was effective upon issuance and, once adopted, may be applied prospectively to contract modifications and hedging relationships through December 31, 2022.

The Company is currently assessing the potential impact of these standards on its consolidated financial statements and related disclosures, if adopted.

NOTE 2 — PROPERTY, EQUIPMENT and FIXTURES

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Village fulfilled the above obligation in fiscal 2021 and 2020.

The Company also has an investment of approximately 7.8 % in Insure-Rite, Ltd., a Wakefern affiliated company, which provides Village with liability and property insurance coverage.

The Company also has an investment of approximately 9.3 % in Insure-Rite, Ltd., a Wakefern affiliated company, which provides Village with workers' compensation, 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.

7 unchanged sentences

and $ 412 thereafter.

The maximum per store investment, which is currently $ 950 , did not change in fiscal 2020.

The maximum per store investment increased from $ 950 to $ 975 in fiscal 2021, resulting in an additional $ 670 capital pledge, which was paid in fiscal 2021.

Village receives additional shares of common stock to the extent paid for at the end of each fiscal year (which ends on or about September 30) of Wakefern calculated at the then book value per share.

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Patronage dividends and other vendor allowances and rebates amounted to $ 43,003 and $ 33,151 in fiscal 2021 and 2020, respectively.

Wakefern provides the Company with support services in numerous areas including advertising, liability and property insurance, supplies, certain equipment purchasing, coupon processing, certain financial accounting applications, retail technology support, and other store services.

Village incurred charges of $ 33,303 and $ 33,581 from Wakefern in fiscal 2020 and 2019, respectively, for these services, which are reflected in operating and administrative expense in the consolidated statements of operations.

Wakefern provides the Company with support services in numerous areas including advertising, workers' compensation, liability and property insurance, supplies, certain equipment purchasing, coupon processing, certain financial accounting applications, retail technology support, and other store services.

Village incurred charges of $ 47,462 and $ 33,303 from Wakefern in fiscal 2021 and 2020, respectively, for non-merchandise products and 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 7) with Wakefern.

At July 31, 2021, the Company held variable rate notes receivable due from Wakefern of $ 27,325 that earn interest at the prime rate plus 1.25 % and mature on August 15, 2022 and $ 27,970 that earn interest at the prime rate plus .75 % and mature on February 15, 2024.

The Company invested $ 24,937 of the proceeds received from the notes that matured on February 15, 2019 in variable rate notes receivable from Wakefern that earn interest at the prime rate plus .75 % and mature on February 15, 2024.

Wakefern has the right to prepay these notes at any time.

7 unchanged sentences

Unsecured revolving line of credit $ — $ 50,000

Secured term loan 47,025 $0 —

Unsecured term loan 21,104 24,694

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Additionally, Village executed an interest rate swap for a notional amount equal to the term loan amount that fixes the base LIBOR rate at .41 % per annum through May 4, 2027, resulting in a fixed effective interest rate of 1.76 % on the term note.

• The ability to convert up to $ 50,000 of the revolving line of credit to a secured converted term loan, which shall reduce the maximum amount available for borrowing under the revolving line of credit.

• On September 1, 2020, Village converted $ 50,000 of its revolving line of credit to a secured converted term loan.

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The Company is required to be in compliance with various regulations and contractual provisions that apply to the New Markets Tax Credit arrangement.

Noncompliance could result in Wells Fargo's projected tax benefits not being realized and, therefore, require the Company to indemnify Wells Fargo for any

loss or recapture of NMTCs.

Noncompliance could result in Wells Fargo's projected tax benefits not being realized and, therefore, require the Company to indemnify Wells Fargo for any loss or recapture of NMTCs.

The Company does not anticipate any credit recapture will be required in connection with this financing arrangement.

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Amounts reported in Accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the variable-rate loans.

The Company reclassified $ 12 from Accumulated other comprehensive loss to Interest expense during fiscal 2020.

The Company reclassified $ 328 and $ 12 from Accumulated other comprehensive loss to Interest expense during fiscal 2021 and 2020, respectively.

The notional value of the interest rate swaps were $ 68,472 as of July 31, 2021.

The fair value of interest rate swaps recorded in other liabilities is $ 921 as of July 25, 2020.

The fair value of interest rate swaps are included in the following captions on the consolidated balance sheets at July 31, 2021 and July 25, 2020:

Other assets (liabilities) 1,111 ( 921 )

The fair values of the Company’s interest rate swaps are based on Level 2 inputs, including the present value of estimated future cash flows based on market expectations of the yield curve on variable interest rates.

33 unchanged sentences

State income taxes, net of federal tax benefit 10.3 % 9.9 %

Settlement of tax audits — % ( 2.2 ) %

Federal net operating loss carryback — % ( 7.9 ) %

2 unchanged sentences

Fiscal 2020 includes a $ 2,512 incremental benefit from a federal net operating loss carryback at a rate higher than the current statutory tax rate.

In June 2019, the Company reached an agreement with the New Jersey Division of Taxation to settle an audit

of fiscal years 2011 through 2015 for all applicable entities and fiscal years 2000 through 2014 related to a settlement agreement reached in February 2015 regarding nexus of certain subsidiaries.

The Company recorded an income tax benefit of $ 777 , net of federal taxes, in fiscal 2019 related to the settlement and to reverse remaining unrecognized tax benefits and related interest and penalties in excess of the settlement.

The New Jersey Department of Treasury is currently auditing the fiscal 2016 through 2018 tax years for all applicable entities.

The Company is open to examination by the remaining relevant tax authorities with varying statutes of limitations, generally ranging from three to four years.

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

Balance at beginning of year $ — $ 648

Reductions based on settlement of tax audits — ( 648 )

Balance at end of year $ — $ —

The Company recognizes interest and penalties on income taxes in income tax expense.

The Company recognized a benefit of $ 242 in fiscal 2019 related to interest and penalties on income taxes.

The Company is not currently under audit by any tax authorities, but is open to examination with varying statutes of limitations, generally ranging from three to four years .

NOTE 7 — LEASES

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These options enable Village to retain the use of facilities in desirable operating areas.

Leases with an initial term of 12 months or less are not recorded on the balance sheet.

The Company accounts for rent holidays, escalating rent provisions, and construction allowances on a straight-line basis over the term of the lease.

The composition of total lease cost is as follows:

Consolidated Statement of Operations Classification July 31,

2021 July 25,

Operating lease cost Operating and administrative expense $ 37,677 $ 22,911

4 unchanged sentences

Total lease cost $ 60,103 $ 42,390

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

As of July 31, 2021 and July 25, 2020, finance lease right-of-use assets of $ 12,806 and $ 13,753 , respectively, are included in property, equipment and fixtures, net in the Company's consolidated balance sheet.

Maturities of operating and finance lease liabilities, including options to extend lease terms that are reasonably certain of being exercised, are as follows as of July 31, 2021:

10 unchanged sentences

The Company has approximately $ 9,280 of future payment obligations related to lease agreements that have not yet commenced but have been executed as of July 31, 2021.

The Company's incremental borrowing rate reflects the rate it would pay to borrow on a secured basis, and incorporates the term and economic environment of the lease.

As of July 31, 2021, the Company's lease terms and discount rates are as follows:

2021 July 25,

Weighted-average remaining lease term (years)

9 unchanged sentences

Financing cash flows from finance leases 689 572

In the first quarter of fiscal 2020, the Company adopted ASU 2016-02, and as required, the following disclosure is provided for periods prior to adoption.

Future minimum lease payments by year and in the aggregate for all non-cancelable leases with initial terms of one year or more consisted of the following at July 27, 2019:

financing leases Operating

2020 $ 5,173 $ 13,573

2021 5,240 12,972

2022 5,240 10,348

2023 5,305 9,747

2024 5,342 7,457

Thereafter 43,708 61,043

Minimum lease payments 70,008 $ 115,140

Less amount representing interest 28,233

Present value of minimum lease payments 41,775

Less current portion 1,022

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 $ 688 in both fiscal 2020 and 2019, and has a related lease obligation of $ 3,772 at July 25, 2020.

The Company paid rent to related parties under this lease of $ 704 and $ 688 in fiscal 2021 and 2020, respectively, and has a related lease obligation of $ 3,227 at July 31, 2021.

This lease expires in fiscal 2026 with options to extend at increasing annual rent.

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Repurchases of Village Class A common stock may be made from time to time through a variety of methods, including open market purchases and other negotiated transactions.

In September 2019, the Company's Board of Directors authorized an

incremental $ 5,000 share repurchase program, supplementing the existing authorization.

The Company made open market purchases totaling $ 2,482 and $ 846 under this repurchase program in fiscal 2020 and 2019, respectively, and an additional $ 1,907 and $ 224 in shares of Class A Common Stock were surrendered in satisfaction of withholding taxes in connection with the vesting of restricted shares in fiscal 2020 and 2019, respectively.

The Company's share repurchase program had $ 3,203 and $ 685 remaining at July 25, 2020 and July 27, 2019, respectively.

In September 2019, the Company's Board of Directors authorized an incremental $ 5,000 share repurchase program, supplementing the existing authorization.

The Company made open market purchases totaling $ 2,482 under this repurchase program in fiscal 2020 and an additional $ 1,907 in shares of Class A Common Stock were surrendered in satisfaction of withholding taxes in connection with the vesting of restricted shares in fiscal 2020.

The Company's share repurchase program had $ 3,203 remaining at July 31, 2021 and July 25, 2020.

Village has two share-based compensation plans, which are described below.

1 unchanged sentence

Total income tax benefit recognized in the consolidated statements of operations for share-based compensation arrangements was $ 633 and $ 202 in fiscal 2021 and 2020, respectively.

The Village Super Market, Inc.

2010 Stock Plan (the “2010 Plan”) provides for awards of incentive and nonqualified stock options and restricted stock.

There are 1,200 shares of Class A common stock authorized for issuance to employees and directors under the 2010 Plan.

Terms and conditions of awards are determined by the Board of Directors.

Option awards granted to date were granted at the fair value of the Company's stock on the date of grant, primarily cliff vest three years from the grant date and are exercisable up to ten years from the grant date.

Restricted stock awards primarily cliff vest three years from the date of grant.

There are no shares remaining for future grants under the 2010 Plan.

On December 16, 2016, the shareholders of the Company approved the Village Super Market, Inc.

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As of July 31, 2021, the aggregate intrinsic value was $ 0 for both options outstanding and options exercisable.

The total intrinsic value of options exercised was $ 87 in fiscal 2019.

The fair value of each option award is estimated on the date of grant using the Black-Scholes Option Pricing Model.

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That cost is expected to be recognized over a weighted-average period of 1.6 years.

Cash received from option exercises under all share-based compensation arrangements was $ 1,007 in fiscal 2019.

The actual tax benefit realized for tax deductions from option exercises under share-based compensation arrangements was $ 34 in fiscal 2019.

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

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The fourth plan is an unfunded, nonqualified plan providing supplemental pension benefits to certain executives.

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

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

Service cost $ 216 $ 202

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The plan had sufficient assets to satisfy all termination transaction obligations, and no benefit obligation or plan assets related to the Village Super Market, Inc.

Retail Clerks Employees’ Retirement Plan remain as of July 25, 2020.

Retail Clerks Employees’ Retirement Plan remained as of the termination date.

As a result of this termination, the Company recognized a non-cash pre-tax settlement charge totaling $ 669 during fiscal 2020.

This settlement charge represents the plan’s remaining unrecognized losses within accumulated other comprehensive loss as of the termination date.

Additionally, the Company recognized a settlement loss of $ 935 and $ 441 in fiscal 2020 and 2019, respectively, for a plan where benefits paid exceeded the sum of the service cost and interest cost components of net periodic pension cost.

Additionally, the Company recognized a settlement loss of $ 587 and $ 935 in fiscal 2021 and 2020, respectively, for plans where benefits paid exceeded the sum of the service cost and interest cost components of net periodic pension cost.

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:

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Net actuarial loss $ 14,167 $ 11,299

In fiscal 2020 the Company began the process of terminating the Village Super Market, Inc.

Employees’ Retirement Plan.

Upon satisfaction of all regulatory requirements, the Company will fully fund and liquidate all plan assets to purchase annuity contracts from an insurance company for all participants who do not elect a lump sum distribution.

At that time, the Company will recognize a non-cash pre-tax settlement charge representing the plan’s remaining unrecognized losses within accumulated other comprehensive loss as of the termination date.

As of July 25, 2020, the pre-tax amount included in Accumulated other comprehensive loss related to this plan is $ 10,823 .

Company expects approximately $ 504 of the net actuarial loss, excluding the impact of any potential plan settlements, to be recognized as a component of net periodic benefit costs in fiscal 2022.

The accumulated benefit obligations of the four plans were $ 76,849 and $ 69,932 at July 25, 2020 and July 27, 2019, respectively.

The accumulated benefit obligations of the plans were $ 71,931 and $ 76,849 at July 31, 2021 and July 25, 2020, respectively.

The following information is presented for those plans with an accumulated benefit obligation in excess of plan assets:

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Investments in the pension trusts are overseen by the trustees of the plans, who are officers of Village.

In fiscal 2018, the Company transitioned to a liability-driven investment ("LDI") strategy.

The Company utilizes 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.

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2022 $ 63,114

The Company expects contributions to its defined benefit pension plans to be immaterial in fiscal 2021.

2027 - 2030 1,010

In fiscal 2020 the Company began the process of terminating the Village Super Market, Inc.

Employees’ Retirement Plan.

Upon satisfaction of all regulatory requirements, which is expected to occur during fiscal 2022, the Company will fully fund and liquidate all plan assets to purchase annuity contracts from an insurance company for all participants who do not elect a lump sum distribution.

At the time of settlement, the Company will recognize a non-cash pre-tax charge representing the plan’s remaining unrecognized losses within accumulated other comprehensive loss as of the termination date.

As of July 31, 2021,

the funded status of this plan is a net liability of $ 3,844 and the pre-tax amount included in Accumulated other comprehensive loss is $ 15,155 .

Contributions to the remaining plans are expected to be immaterial in fiscal 2022.

Multi-Employer Plans

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2020 Surcharge

Pension Plan of Local 464A (1) 22-6051600-001 Green Green N/A $ 886 $ 894 N/A October 2020

Pension Plan of Local 464A (1) 22-6051600-001 Green Green N/A $ 874 $ 886 N/A August 2025

UFCW Local 1262 & Employers Pension Fund (2), (4) 22-6074414-001 Red Red Implemented 2,721 2,789 No October 2023

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Transaction costs were expensed as incurred.

The allocation of the purchase price consideration to the assets acquired and the liabilities assumed will be completed upon the finalization of working capital adjustments.

The final allocation of the purchase price consideration to the assets acquired and the liabilities assumed has been completed.

The following table summarizes how the purchase price has been allocated to the assets acquired and liabilities assumed at the date of acquisition.

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The unaudited pro forma financial information in the table below is not necessarily indicative of the results that would have occurred had the Fairway locations been acquired at the beginning of fiscal year 2019.

2020 July 27,

Sales $ 2,034,163

Net Income 30,313

Gourmet Garage Acquisition

On June 24, 2019, the Company purchased three Gourmet Garage specialty markets in Manhattan, New York City.

Village acquired the store fixtures, leases, inventory, other working capital and other assets for $ 5,267 , net of cash and cash equivalents.

Village has accounted for this transaction as a business combination in accordance with the acquisition method of accounting, which requires, among other things, that assets acquired and liabilities assumed be recognized at their estimated fair values as of the acquisition date.

In connection with this acquisition, the Company recorded $ 593 of goodwill attributable to the assembled workforce of Gourmet Garage and cost synergies and a $ 1,485 indefinite-lived intangible asset related to the trade name.

Transaction costs were expensed as incurred.

The final allocation of the purchase price consideration to the assets acquired and the liabilities assumed has been completed.

The following table summarizes how the purchase price has been allocated to the assets acquired and liabilities assumed at the date of acquisition:

Current Assets

Cash and cash equivalents $ 24

Merchandise inventories 564

Other current assets 49

Total current assets $ 637

Property, equipment and fixtures, net $ 3,475

Trade name intangible asset 1,485

Other assets 255

Total assets $ 5,852

Total current liabilities $ 1,154

Total Net Assets Acquired $ 4,698

Total Purchase Price $ 5,291

NOTE 11 — COMMITMENTS and CONTINGENCIES

2 unchanged sentences

Wakefern, as the policy holder, has pursued recovery of uncollected insurance claims on behalf of all Wakefern members through litigation against the insurance carrier and others since October 2013.

Litigation over this matter has ended and the Company received an additional $ 2,733 in the 4th quarter of fiscal 2020 which was recognized as a reduction in operating and administrative expense.

Village previously recognized $ 415 as a reduction in operating and administrative expense in the first quarter of fiscal 2019, and has received a total of $ 6,730 related to losses incurred as a result of Superstorm Sandy.

Litigation over this matter has ended and the Company received an additional $ 2,733 in fiscal 2020 which was recognized as a reduction in operating and administrative expense.

Village has received a total of $ 6,730 related to losses incurred as a result of Superstorm Sandy.

Approximately 89 % of our employees are covered by collective bargaining agreements.

Contracts with the Company’s seven unions have or will expire between March 2020 and May 2025.

Contracts with the Company’s seven unions have or will expire between March 2020 and August 2025.

Approximately 10 % of our associates are represented by unions whose contracts have already expired or expire within one year .

2 unchanged sentences

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.

NOTE 12 — SUBSEQUENT EVENTS

On October 13, 2021, Village completed the acquisition of the Galloway store shopping center for $ 9,800 .

As of July 31, 2021, the right-of-use asset and obligation related to the Galloway store's lease were $ 873 and $ 887 , respectively.

Report of Independent Registered Public Accounting Firm

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Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July 31, 2021 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

The Company completed the acquisition of businesses (Fairway) on May 14, 2020, and management has chosen to exclude from its assessment of the effectiveness of internal control over financial reporting as of July 25, 2020 the internal control over financial reporting of Fairway associated with assets representing 31.4% of consolidated total assets and revenue representing 2.6% of consolidated sales included in the consolidated financial statements of the Company as of and for the year ended July 25, 2020.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Fairway.

Change in Accounting Principle

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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.

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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.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of trade name intangible asset for impairment

As discussed in Note 1 to the consolidated financial statements, the Company tests its indefinite-lived intangible assets for impairment at the end of each fiscal year, or more frequently if circumstances dictate.

Manhattan store sales have been impacted by localized residential population migration out of Manhattan and less commuter and tourist traffic during the COVID-19 pandemic.

The estimated fair value of the trade name intangible asset was determined using the relief from royalty method.

The Company’s indefinite-lived intangible asset balance of $13,299 as of July 31, 2021, included the Fairway trade name.

We identified the evaluation of the Company’s fair value assessment of the Fairway trade name intangible asset as a critical audit matter.

Challenging and subjective auditor judgment was required to evaluate estimated future revenue and the discount rate used to determine the fair value of the Fairway trade name intangible asset due to their significant measurement uncertainty.

Minor changes to these assumptions had a significant effect on the Company’s estimate of the fair value of the Fairway trade name intangible asset.

Additionally, the audit effort associated with the evaluation of the Company’s discount rate required valuation professionals with specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s indefinite lived intangible asset valuation process, including controls over the future revenue and discount rate assumptions.

We compared estimates of future revenue to historical actual results and to current economic trends, including the impact of, and anticipated recovery from, the COVID-19 pandemic.

We performed sensitivity analyses over the future revenue assumption to assess the impact of changes on the Company’s determination of fair value.

We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the elements of the discount rate assumption used by management, by comparing them against publicly available market data.

We have served as the Company’s auditor since 1987.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data