What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-10-13 compared with 2021-10-14 · 132 added, 173 removed, 696 unchanged (30% of the section changed)

9 unchanged sentences

Patronage dividend receivable 12,239 11,860

Notes receivable from Wakefern 28,627 —

Income taxes receivable 631 5,111

5 unchanged sentences

Investment in Wakefern 33,004 33,004

Investments in Real Estate Partnerships 7,162 1,970

Goodwill 24,190 24,190

32 unchanged sentences

Retained earnings 306,974 293,185

Accumulated other comprehensive loss ( 9,064 ) ( 8,751 )

Accumulated other comprehensive income (loss) 6,135 ( 9,064 )

Less treasury stock, Class A, at cost:

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

752 shares at July 30, 2022 and 726 shares at July 31, 2021

( 14,588 ) ( 13,939 )

33 unchanged sentences

2022 July 31,

(52 Weeks) (53 Weeks)

Net income $ 26,830 $ 19,994

Other comprehensive income (loss):

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

Unrealized gain on interest rate swaps, net of tax (1) 3,398 1,428

Amortization of pension actuarial loss, net of tax (2) 233 409

1 unchanged sentence

Pension settlement loss, net of tax (4) 8,556 409

Total other comprehensive loss ( 313 ) ( 409 )

Total other comprehensive income (loss) 15,199 ( 313 )

Comprehensive income $ 42,029 $ 19,681

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

(1) Amounts are net of tax of $ 1,505 and $ 604 for 2022 and 2021, respectively.

(2) Amounts are net of tax of $ 102 and $ 179 for 2022 and 2021, respectively.

All amounts are reclassified from accumulated other comprehensive loss to operating and administrative expense.

9 unchanged sentences

Comprehensive

Income (Loss) Total

Shareholders'

7 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 $ 1,358

— — — — 3,514 — — — 3,514

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

Net income — — — — 26,830 — — — 26,830

Other comprehensive loss, net of tax of $ 523

Other comprehensive income, net of tax of $ 6,741

— — — — — 15,199 — — 15,199

Dividends — — — — ( 13,041 ) — — — ( 13,041 )

Treasury stock purchases — — — — — — 26 ( 649 ) ( 649 )

Restricted shares forfeited ( 16 ) ( 198 ) — — — — — — ( 198 )

13 unchanged sentences

Non-cash share-based compensation 2,297 2,522

Loss on pension settlements 587 1,604

Non-cash pension settlement charges 10,856 587

Deferred taxes ( 5,093 ) ( 2,542 )

Provision to value inventories at LIFO 3,295 220

Amortization of business acquisition inventory step-up — 508

Impairment of assets — 2,900

13 unchanged sentences

Investment in notes receivable from Wakefern ( 2,489 ) ( 2,287 )

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

Investment in real estate partnerships ( 5,010 ) —

Net cash used in investing activities ( 46,417 ) ( 26,373 )

2 unchanged sentences

Principal payments of long-term debt ( 8,299 ) ( 8,414 )

Proceeds from revolving line of credit — 61,915

Payments on revolving line of credit — ( 50,000 )

2 unchanged sentences

Treasury stock purchases, including shares surrendered for withholding taxes ( 649 ) —

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

Net cash used in financing activities ( 14,690 ) ( 21,686 )

NET INCREASE IN CASH AND CASH EQUIVALENTS 18,518 4,633

13 unchanged sentences

Village Super Market, Inc.

(the “Company” or “Village”) operates a chain of 34 supermarkets under the ShopRite and Fairway names in New Jersey, Maryland, New York and eastern Pennsylvania and three specialty markets under the Gourmet Garage name in New York City.

(the “Company” or “Village”) operates a chain of 34 supermarkets under the ShopRite and Fairway names in New Jersey, Maryland, New York and eastern Pennsylvania and four specialty markets under the Gourmet Garage name in New York City.

The Company is a member of Wakefern Food Corporation ("Wakefern"), the nation's largest retailer-owned food cooperative and owner of the ShopRite, Fairway and Gourmet Garage names.

9 unchanged sentences

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, goodwill and indefinite-lived intangible assets.

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

Actual results could differ from those estimates.

28 unchanged sentences

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

Operating and administrative expense

Operating and administrative expenses consists primarily of store and corporate costs, including employee salaries, wages, company-sponsored and multi-employer health and welfare, pension, and defined contribution benefits, supplies, advertising, utilities, facility repairs and maintenance, rent, occupancy costs and administrative expenses.

Cash and cash equivalents

21 unchanged sentences

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

On July 28, 2019, the Company adopted ASU 2016-02, “Leases.” This guidance requires lessees to recognize lease liabilities and a right-of-use asset for all leases with terms of more than 12 months on the balance sheet.

The Company adopted the standard using the modified retrospective approach under which the cumulative effect of initially applying the standard was recognized as an adjustment to opening fiscal 2020 retained earnings, with no restatement of prior year amounts.

In addition, the Company applied the transition package of practical expedients permitted within the standard, which allowed the carryforward of historical lease classification, and applied the transition option which does not require application of the guidance to comparative periods in the year of adoption.

The adoption of the standard resulted in the recognition of operating lease assets and operating lease liabilities of $ 99,415 and $ 111,139 , respectively, as of the date of adoption.

Included in the initial measurement of the new lease assets is the reclassification of certain prepaid and deferred rent balances.

Additionally, the Company recorded an adjustment to reduce its opening retained earnings balance by $ 3,514 , net of income taxes, as the Company derecognized the remaining financing obligations of $ 17,442 and related net assets of $ 12,543 for leases in which the Company was previously deemed to be the owner of the project for accounting purposes but did not qualify for sale-leaseback treatment.

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.

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

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.

10 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.

4 unchanged sentences

Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows are considered cash flow hedges.

The Company records changes in the fair value of its interest rate swap contracts to Accumulated other comprehensive loss, net of taxes, as the Company has elected to designate its swaps as cash flow hedges and apply hedge accounting when the hedging relationship has satisfied the criteria necessary to apply hedge accounting.

The Company records changes in the fair value of its interest rate swap contracts to Accumulated other comprehensive income (loss), net of taxes, as the Company has elected to designate its swaps as cash flow hedges and apply hedge accounting when the hedging relationship has satisfied the criteria necessary to apply hedge accounting.

Additional information on derivative and hedging activities is provided in Note 5.

9 unchanged sentences

Long-lived assets

The Company reviews long-lived assets, such as property, equipment and fixtures and operating lease assets on an individual store basis for impairment when circumstances indicate the carrying amount of an asset group may not be recoverable.

Such review analyzes the undiscounted estimated future cash flows from such assets to determine if the carrying value of such assets are recoverable from their respective cash flows.

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

The Company reviews the carrying values of its long-lived assets, such as property, equipment and fixtures and operating lease assets on an individual store basis for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.

Factors considered by the Company that could result in an impairment triggering event include a current period operating or cash flow loss, underperformance of a store relative to historical or expected operating results, and significant negative industry or economic trends.

If an impairment triggering event is identified, the Company analyzes the undiscounted estimated future net cash flows from asset groups at the store level to determine if the carrying value of such assets are recoverable from their respective cash flows.

If impairment is indicated, it is measured by comparing the fair value of the long-lived asset groups 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 .

1 unchanged sentence

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.

The Company's indefinite-lived intangible assets balance of $ 13,299 as of July 30, 2022 and July 31, 2021 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.

Village considers earnings multiples and other valuation techniques to measure fair value of goodwill 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.

For the year ended July 31, 2021 the Company recorded an impairment of the Fairway trade name of $ 2,386 .

Net income per share

8 unchanged sentences

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.

The table below reconciles Net income to Net income available to Class A and Class B shareholders:

2022 July 31,

2021 July 25, 2020

(52 Weeks) (53 Weeks) (53 Weeks)

Net income $ 26,830 $ 19,994

Distributed and allocated undistributed Net (loss) income to unvested restricted shareholders

Net income income available to Class A and Class B shareholders

$ 26,053 $ 19,368

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

16 unchanged sentences

The Company recognizes the funded status of its Company sponsored retirement plans on the consolidated balance sheet.

Actuarial gains or losses, curtailments, prior service costs or credits, and transition obligations not previously recognized are recorded as a component of Accumulated Other Comprehensive Loss.

Actuarial gains or losses, curtailments, prior service costs or credits, and transition obligations not previously recognized are recorded as a component of Accumulated other comprehensive income (loss).

The Company uses July 31 as the measurement date for these plans.

2 unchanged sentences

Recently issued accounting standards

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.

The Company monitors accounting standards recently issued by the FASB to assess their impact on the consolidated financial statements, if any.

There were no recently issued accounting standards that will have a material impact on our consolidated financial statements.

NOTE 2 — PROPERTY, EQUIPMENT and FIXTURES

30 unchanged sentences

and $ 44 thereafter.

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.

The maximum per store investment remained $ 975 in fiscal 2022.

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.

8 unchanged sentences

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.

At July 30, 2022, the Company held variable rate notes receivable due from Wakefern of $ 28,627 that earn interest at the prime rate plus 1.25 % and matured on August 15, 2022 and $ 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.

6 unchanged sentences

2022 July 31,

Unsecured revolving line of credit $ — $ 50,000

Secured term loan $ 50,796 $ — $ 47,025

5 unchanged sentences

Credit Facility

On May 6, 2020, Village entered into a credit agreement (the “Credit Facility”) with Wells Fargo National Bank, National Association (“Wells Fargo”) that supersedes in its entirety the prior credit agreement with Wells Fargo dated November 9, 2017.

The principal purpose of the Credit Facility is to finance general corporate and working capital requirements and Village’s acquisition of certain Fairway assets.

Among other things, the Credit Facility provides for a maximum loan amount of $ 150,500 as further set forth below:

On January 28, 2022, the Company entered into an 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”).

The notable changes from the previous agreement 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 execution of a fifteen -year $ 7,350 secured term loan to finance the acquisition of the Galloway store shopping center and (3) Modification of the definition of Total Adjusted Debt for the purpose of determining the maximum adjusted debt to EBITDAR ratio financial covenant, as defined in the Credit Facility.

Among other things, the Credit Facility provides for:

• An unsecured revolving line of credit providing a maximum amount available for borrowing of $ 75,000 .

Indebtedness under this agreement bears interest at the applicable LIBOR rate plus 1.10 % and expires on May 6, 2025.

• An unsecured term loan with a maximum loan amount of $ 25,500 .

On May 12, 2020, Village executed a $ 25,500 term note, repayable in equal monthly installments based on a seven-year amortization schedule through May 4, 2027 and bearing interest at the applicable LIBOR rate plus 1.35 %.

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.

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

The conversion reduced the maximum amount available for borrowing under the revolving line of credit from $ 125,000 to $ 75,000 .

The term loan bears interest at the applicable LIBOR rate plus 1.50 % and is repayable in equal monthly installments based on a fifteen-year amortization schedule beginning on the conversion date.

Additionally, Village previously executed a forward interest rate swap, effective on the conversion date, for a notional amount equal to the term loan amount that fixes the base LIBOR rate at .69 % per annum for 15 years, resulting in a fixed effective interest rate of 2.19 % on the converted term loan.

Indebtedness under this agreement bears interest at the applicable SOFR plus 1.10 % and expires on May 6, 2025.

• An unsecured $ 25,500 term loan issued on May 12, 2020, repayable in equal monthly installments based on a seven-year amortization schedule through May 4, 2027 and bearing interest at the applicable SOFR plus 1.46 %.

Prior to the January 28, 2022 amendment to the credit facility, interest accrued on the unsecured term loan at the applicable LIBOR plus 1.35 %.

An interest rate swap with notional amounts equal to the term loan fixed the base LIBOR at .41 %, resulting in a fixed effective rate of 1.76 %.

In February 2022, the Company executed an amendment and restatement of the interest rate swap that changes the reference rate to SOFR and fixes the base SOFR at .26 % per annum through May 4, 2027, resulting in a fixed effective interest rate of 1.72 % on the term loan.

• A secured $ 50,000 term loan issued on September 1, 2020 repayable in equal monthly installments based on a fifteen-year amortization schedule through September 1, 2035 and bearing interest at the applicable SOFR plus 1.61 %.

Prior to the January 28, 2022 amendment to the credit facility, interest accrued on the secured term loan at the applicable LIBOR plus 1.50 %.

An interest rate swap with notional amounts equal to the term loan fixed the base LIBOR at .69 %, resulting in a fixed effective rate of 2.19 %.

In February 2022, the Company executed an amendment and restatement of the interest rate swap related to the term loan that changes the reference rate to SOFR and fixes the base SOFR at .57% per annum through September 1, 2035, resulting in a fixed effective interest rate of 2.18 % on the term loan.

The term loan is secured by real properties of Village Super Market, Inc.

and its subsidiaries, including the sites of three Village stores.

• A secured $ 7,350 term loan issued on January 28, 2022 repayable in equal monthly installments based on a fifteen-year amortization schedule through January 28, 2037 and bearing interest at the applicable SOFR plus 1.50 %.

Additionally, Village executed an interest rate swap for a notional amount equal to the term loan amount that fixes the base SOFR at 1.41 % per annum, resulting in a fixed effective interest rate of 2.91 % on the term loan.

The term loan is secured by the Galloway store shopping center acquired in the first quarter of fiscal 2022.

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 30, 2022), which secure obligations for store leases and construction performance guarantees to municipalities.

6 unchanged sentences

The NMTC program was provided for in the Community Renewal Tax Relief Act of 2000 (the “Act”) and is intended to induce capital investment in qualified lower income communities.

The Act permits taxpayers to claim credits against their Federal income taxes for up to 39% of qualified investments in the equity of community development entities (“CDEs”).

The Act permits taxpayers to claim credits against their Federal income taxes for up to 39% of qualified investments in the equity of community development entities

CDEs are privately managed investment institutions that are certified to make qualified low-income community investments.

18 unchanged sentences

NOTE 5 — DERIVATIVES AND HEDGING ACTIVITIES

The Company is exposed to interest rate risk arising from fluctuations in LIBOR related to the Company’s Credit Facility.

The Company is exposed to interest rate risk arising from fluctuations in LIBOR and SOFR related to the Company’s Credit Facility.

The Company manages exposure to this risk and the variability of related cash flows primarily by the use of derivative financial instruments, specifically, interest rate swaps.

1 unchanged sentence

Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

In 2020, the Company executed two interest rate swaps with an aggregate notional value of $ 75,500 to hedge the variable cash flows associated with variable-rate loans under the Company's Credit Facility.

As of July 30, 2022, the Company had four interest rate swaps with an aggregate initial notional value of $ 92,850 to hedge the variable cash flows associated with variable-rate loans under the Company's Credit Facility.

The interest rate swaps were executed for risk management and are not held for trading purposes.

The objective of the interest rate swaps is to hedge the variability of cash flows resulting from fluctuations in LIBOR.

The swaps replaced the applicable LIBOR with fixed interest rates and payments are settled monthly when payments are made on the variable-rate loans.

The objective of the interest rate swaps is to hedge the variability of cash flows resulting from fluctuations in the reference rate.

The swaps replaced the applicable reference rate with fixed interest rates and payments are settled monthly when payments are made on the variable-rate loans.

The Company's derivatives qualify and have been designated as cash flow hedges of interest rate risk.

The gain or loss on the derivative is recorded in Accumulated other comprehensive loss and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings.

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

The gain or loss on the derivative is recorded in Accumulated other comprehensive income (loss) and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings.

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

The Company reclassified $ 262 and $ 328 during the fiscal years ended July 30, 2022 and July 31, 2021, respectively, from Accumulated other comprehensive income (loss) to Interest expense.

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.

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

In fiscal 2022, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

Additionally, we elected to apply expedients related to the modification of hedged transactions related to reference rate reform.

of these expedients preserves the presentation of derivatives consistent with past presentation.

The adoption of this portion of the ASU did not have a material impact to our consolidated financial statements.

In connection with the modification of the reference rate from LIBOR to SOFR in the Amended and Restated Credit Facility, in February 2022, the Company executed the amendment and restatement of two interest rate swaps (see note 4).

The modified rates did not have a material impact to the consolidated financial statements.

The notional value of the interest rate swaps were $ 78,642 as of July 30, 2022.

The fair value of interest rate swaps are included in the following captions on the consolidated balance sheets at July 30, 2022 and July 31, 2021:

Other assets (liabilities) 1,111 ( 921 )

2022 July 31,

Other assets 6,020 1,111

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.

11 unchanged sentences

Lease liabilities $ 100,275 $ 106,615

Tax credit carryforward — 508

Compensation related costs 3,618 4,377

11 unchanged sentences

Deferred income tax assets (liabilities) are included in the following captions on the consolidated balance sheets at July 30, 2022 and July 31, 2021:

2022 July 31,

Other assets 515 1,642

6 unchanged sentences

State income taxes, net of federal tax benefit 10.1 % 10.3 %

Federal net operating loss carryback — % ( 7.9 ) %

Other 0.2 % ( 0.6 ) %

Effective income tax rate 31.3 % 30.7 %

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.

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 .

1 unchanged sentence

Description of leasing arrangements

The Company leases 32 retail stores, as well as a production distribution center (the "PDC"), the corporate headquarters and equipment at July 31, 2021.

The Company leases 31 retail stores, as well as a commissary, the corporate headquarters and equipment at July 30, 2022.

The majority of initial lease terms range from 20 to 30 years.

11 unchanged sentences

As of July 30, 2022 and July 31, 2021, finance lease right-of-use assets of $ 11,859 and $ 12,806 , 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:

Maturities of operating and finance lease liabilities, including options to extend lease terms that are reasonably certain of being exercised.

The Company's lease liabilities mature as follows as of July 30, 2022:

Operating leases Finance leases Total

26 unchanged sentences

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

The Company has ownership interests in three real estate partnerships.

The Company has ownership interests in four real estate partnerships.

Village paid aggregate rents to two of these partnerships for leased stores of $ 1,556 and $ 1,579 in fiscal 2022 and 2021, respectively, and has related aggregate lease obligations of $ 12,340 at July 30, 2022.

2 unchanged sentences

Village is a general partner entitled to 33 % of the partnership's profits and losses.

The Company subleases the Galloway and Vineland stores from Wakefern under sublease agreements which provided for combined annual rents of $ 1,355 in both fiscal 2021 and 2020, and has related aggregate lease obligations of $ 2,276 at July 31, 2021.

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 fiscal 2022 and 2021, respectively, and has related aggregate lease obligations of $ 607 at July 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 .

NOTE 8 — SHAREHOLDERS’ EQUITY

8 unchanged sentences

No shares have been issued.

The Board of Directors is authorized to designate series, preferences, powers and participations of any preferred stock issued.

The Board of Directors is authorized to designate series, preferences, powers and participation of any preferred stock issued.

The Company maintains share repurchase programs that comply with Rule 10b5-1 under the Securities Exchange Act of 1934.

3 unchanged sentences

The Company's share repurchase program had $ 3,203 remaining at July 30, 2022 and July 31, 2021.

In fiscal 2022, the Company purchased 23 shares totaling $ 561 from the Village Super Market, Inc.

Employees' Retirement Plan related to the termination and related liquidation of the plan's assets (see note 9 ).

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

4 unchanged sentences

There are 1,200 shares of Class A common stock authorized for issuance to employees and directors under the 2016 Plan.

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

Terms and conditions

of awards are determined by the Board of Directors.

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

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Company-Sponsored Pension Plans

The Company sponsored four defined benefit pension plans.

One of the plans was terminated in fiscal 2020, and two of the plans are frozen and participants no longer earn service credit.

Two are tax-qualified plans covering members of unions.

Benefits under these two plans are based on a fixed amount for each year of service.

One is a tax-qualified plan covering nonunion associates.

Benefits under this plan are based upon percentages of annual compensation.

The Company sponsored three defined benefit pension plans.

Two of the plans are tax-qualified plans, one covering members of a union, which is frozen and participants no longer earn service credit, and the other covering nonunion associates, which was terminated in fiscal 2022.

Benefits under the union plan are based on a fixed amount for each year of service, and benefits under the nonunion plan are based upon percentages of annual compensation.

Funding for these plans is based on an analysis of the specific requirements and an evaluation of the assets and liabilities of each plan.

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

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

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

5 unchanged sentences

Net periodic pension cost $ 12,911 $ 1,148

On December 23, 2019, the Company terminated the Village Super Market, Inc.

Retail Clerks Employees’ Retirement Plan.

All participants of the plan were former employees of a store previously closed in 1994.

An annuity contract totaling $ 1,302 was purchased with an insurance company for all participants who did not elect a lump sum distribution.

Additionally, lump sum distributions related to the termination totaled $ 451 .

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 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.

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.

Additionally, the Company recognized a settlement loss of $ 45 and $ 587 in fiscal 2022 and 2021, respectively, for plans where benefits paid exceeded the sum of the service cost and interest cost components of net periodic pension cost.

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Pension liabilities 4,569 10,182

Accumulated other comprehensive loss, net of income taxes 9,833 8,092

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

Accumulated other comprehensive loss (income), net of income taxes ( 1,962 ) 9,833

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

Net actuarial loss $ ( 2,872 ) $ 14,167

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 Company expects approximately $ 557 of the net actuarial gain, excluding the impact of any potential plan settlements, to be recognized as a component of net periodic benefit costs in fiscal 2023.

The accumulated benefit obligations of the plans were $ 7,513 and $ 71,931 at July 30, 2022 and July 31, 2021, respectively.

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Investments in securities are made through mutual funds.

In addition, one plan held Class A common stock of Village in the amount of $ 512 and $ 573 at July 31, 2021 and July 25, 2020, respectively.

In addition, the terminated Village Super Market, Inc.

Employees’ Retirement Plan plan held Class A common stock of Village in the amount of $ 512 at July 31, 2021.

Risk management is accomplished through diversification across asset classes and fund strategies, multiple investment portfolios and investment guidelines.

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July 30, 2022 July 31, 2021

Asset Category Level 1 Assets Measured at NAV Total Level 1 Assets Measured at NAV Total

Asset Category Assets Measured at NAV Total Level 1 Assets Measured at NAV Total

Cash $ — $ — $ 83 $ — $ 83

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2028 - 2031 930

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.

The Company expects contributions to its defined benefit pension plans to be immaterial in fiscal 2023.

Multi-Employer Plans

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Company contributions under these plans were $ 2,944 and $ 3,296 in fiscal 2022 and 2021, respectively.

NOTE 10 — BUSINESS ACQUISITIONS

Fairway Acquisition

On May 14, 2020, Village completed its acquisition of certain assets, including five supermarkets averaging 52,000 sq.

( 30,000 selling sq.

ft.), a production distribution center (the “PDC”) and the intellectual property of Fairway Group Holdings Corp.

and certain of its subsidiaries (“Fairway”), including the names “Fairway” and “Fairway Markets.” Four of the supermarkets are in Manhattan, specifically the Upper West Side, Upper East Side, Kips Bay and Chelsea locations, and a fifth store is located in Pelham, NY.

The acquisition was effectuated pursuant to the Asset Purchase Agreement (the "APA"), entered into on January 20, 2020, revised on March 25, 2020 and approved by the United States Bankruptcy Court for the Southern District of New York through a Sale Order entered on April 20, 2020.

Village paid $ 73,622 for the Fairway assets, net of cash acquired, and assumed certain liabilities, consisting primarily of those arising from acquired leases.

Additionally, at the time of closing Village received a $ 2,035 credit arising from the breakup of Village’s initial “stalking horse” bid under the January 20, 2020 Asset Purchase Agreement.

The credit was recognized as a reduction in operating and administrative expense in the fourth quarter of fiscal 2020.

The Fairway acquisition expands our presence in New York City under an iconic city brand and provides Village the ability to expand centralized food production to support stores under all of our banners.

Village 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 $ 11,540 of goodwill attributable to the assembled workforce and cost synergies.

The goodwill related to this acquisition is deductible for tax purposes.

Additionally, the Company recorded a $ 14,200 indefinite-lived intangible asset related to the trade name.

The fair value of the intangible asset was determined based on the discounted cash flow model using the relief from royalty method.

The fair value of the property, equipment and fixtures were determined based on the indirect cost approach in which current costs that were not new were adjusted for all forms of depreciation.

The Company also evaluated the fair value of the leases assumed in the acquisition, which evaluated comparable rents in the areas of the locations.

Leases were determined to be at market apart from one location.

For this location, the Company recorded a favorable lease of $ 4,360 within Operating lease assets.

The favorable lease is being amortized over the remaining duration of the lease.

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 $ 257

Merchandise inventories 5,390

Other current assets 247

Total current assets $ 5,894

Property, equipment and fixtures, net $ 37,006

Operating lease assets 218,326

Trade name intangible asset 14,200

Other assets 271

Total assets $ 275,697

Accrued wages and benefits $ 623

Operating lease obligations 212,735

Total liabilities $ 213,358

Total Net Assets Acquired $ 62,339

Goodwill 11,540

Total Purchase Price $ 73,879

The pro forma information includes historical results of operations of the Fairway locations acquired but does not include efficiencies, cost reductions, synergies or investments for the Company’s customers expected to result from the acquisitions.

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.

Sales $ 2,034,163

Net Income 30,313

NOTE 10 — COMMITMENTS and CONTINGENCIES

Superstorm Sandy devastated Village's trade area on October 29, 2012 and resulted in the closure of almost all of our stores for periods of time ranging from a few hours to eight days.

Village disposed of substantial amounts of perishable product and also incurred repair, labor and other costs as a result of the storm.

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 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 88 % of our employees are covered by collective bargaining agreements.

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 .

Contracts with the Company’s seven unions have or will expire between October 2023 and December 2026.

None of our associates are represented by unions whose contracts have already expired or expire within one year .

Any work stoppages could have an adverse impact on our financial results.

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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.

NOTE 11 — SUBSEQUENT EVENT

On September 1, 2022, the Company amended the Credit Facility due to the execution of a seven year $ 10,000 unsecured term loan.

The unsecured term loan is repayable in equal monthly installments based on a seven year amortization schedule through September 4, 2029 and bears interest at the applicable SOFR plus 1.35 %.

Village also executed an interest rate swap for a notional amount equal to the term loan amount that fixes the base SOFR at 2.95 %, resulting in a fixed effective rate of 4.30 %.

This loan qualified for an interest rate subsidy program with Wakefern on financing related to certain capital expenditure projects.

Net of the subsidy, the Company will pay interest at a fixed effective rate of 2.30 %.

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 30, 2022 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for leases as of July 28, 2019 due to the adoption of Accounting Standards Update (ASU) No.

2016-02, Leases (Topic 842).

Basis for Opinions

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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

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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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.

Assessment of indicators of impairment of long-lived assets

As discussed in Note 1 to the consolidated financial statements, the Company reviews its long-lived assets, such as property, equipment and fixtures and operating lease assets, for events or changes in circumstances that might indicate the carrying amount of an asset group may not be recoverable.

The Company’s judgment regarding the identification of impairment indicators is based, in part, on operational performance at the store level.

At July 30, 2022, the Company had property, equipment and fixtures, net and operating lease assets of $265,333 thousand and $293,295 thousand, respectively.

We identified the assessment of impairment triggering events related to long-lived assets as a critical audit matter.

A high degree of auditor judgment was required to evaluate the Company’s assessment of whether any of the following were indicators of impairment:

(1) stores with current period operating or cash flow losses, (2) underperforming stores based on current period operating or cash flow results relative to their respective historical and expected results, and (3) negative industry or economic trends.

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 evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s long-lived asset impairment process.

This included a control related to the Company’s assessment of impairment triggering events.

We assessed the Company’s identification and evaluation of potential impairment triggering events by:

• inspecting operating results and cash flows by store to identify stores with current period losses

• comparing actual operating and cash flow results to historical results, expected results, industry and economic trends, and to the net book value of store assets for a selection of stores

• reading board of directors meeting minutes and available industry information.

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