What changed in this filing

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Item 1. Financial Statements

2022-12-07 compared with 2022-06-08 · 88 added, 143 removed, 257 unchanged (47% of the section changed)

17 unchanged sentences

Investment in Wakefern 33,107 33,004

Investments in Real Estate Partnerships 8,438 7,162

Goodwill 24,190 24,190

20 unchanged sentences

Other liabilities 16,912 15,566

Commitments and contingencies

Commitments and contingencies (Note 6)

Shareholders' equity

3 unchanged sentences

Authorized 20,000 shares;

issued 10,975 shares at April 30, 2022 and 10,978 shares at July 31, 2021

issued 10,971 shares at October 29, 2022 and July 30, 2022

73,499 72,891

1 unchanged sentence

Authorized 20,000 shares;

issued and outstanding 4,294 shares at April 30, 2022 and July 31, 2021

issued and outstanding 4,294 shares at October 29, 2022 and July 30, 2022

Retained earnings 314,803 306,974

Accumulated other comprehensive income (loss) 5,490 ( 9,064 )

Accumulated other comprehensive income 8,804 6,135

Less treasury stock, Class A, at cost:

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

752 shares at October 29, 2022 and July 30, 2022

( 14,588 ) ( 14,588 )

6 unchanged sentences

(In thousands, except per share amounts) (Unaudited)

13 Weeks Ended 39 Weeks Ended

2022 April 24,

2021 April 30,

2022 April 24,

13 Weeks Ended

2022 October 30,

Sales $ 519,689 $ 494,211

3 unchanged sentences

Depreciation and amortization 8,547 8,335

Operating (loss) income ( 4,290 ) 3,848 20,936 15,337

Operating income 15,176 10,562

Interest expense ( 1,087 ) ( 970 )

Interest income 1,968 976

(Loss) income before income taxes ( 4,331 ) 3,758 20,844 15,044

Income before income taxes 16,057 10,568

Income taxes 4,976 3,240

Net (loss) income $ ( 3,231 ) $ 2,574 $ 14,227 $ 10,490

Net (loss) income per share:

Net income $ 11,081 $ 7,328

Net income per share:

Class A common stock:

9 unchanged sentences

(In thousands) (Unaudited)

13 Weeks Ended 39 Weeks Ended

2022 April 24,

2021 April 30,

2022 April 24,

Net (loss) income $ ( 3,231 ) $ 2,574 $ 14,227 $ 10,490

13 Weeks Ended

2022 October 30,

Net income $ 11,081 $ 7,328

Other comprehensive income:

1 unchanged sentence

Amortization of pension actuarial loss, net of tax (2) ( 96 ) 88

Pension settlement loss, net of tax (3) 8,525 — 8,525 —

Pension remeasurement, net of tax (4) 1,642 — 1,642 —

Comprehensive income $ 13,750 $ 8,207

(1) Amount is net of tax of $ 1,104 and $ 417 for the 13 weeks April 30, 2022 and April 24, 2021, respectively, and $ 1,767 and $ 896 for the 39 weeks ended April 30, 2022 and April 24, 2021, respectively.

(2) Amounts are net of tax of $ 37 and $ 46 for the 13 weeks April 30, 2022 and April 24, 2021, respectively, and $ 113 and $ 137 for the 39 weeks ended April 30, 2022 and April 24, 2021, respectively.

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

(3) Amounts are net of tax of $ 3,780 .

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

(4) Amounts are net of tax of $ 702 .

(1) Amount is net of tax of $ 1,242 and $ 339 for the 13 weeks ended October 29, 2022 and October 30, 2021, respectively.

(2) Amounts are net of tax of $ 43 and $ 38 for the 13 weeks ended October 29, 2022 and October 30, 2021, respectively.

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

See notes to consolidated financial statements.

3 unchanged sentences

(In thousands) (Unaudited)

13 Weeks Ended April 30, 2022 and April 24, 2021

Common Stock Class B

Common Stock Accumulated

Comprehensive

Income (Loss)

Treasury Stock

Class A Total

Shareholders'

Shares Issued Amount Shares Issued Amount Retained Earnings Shares Amount

Balance, January 29, 2022

10,981 $ 71,808 4,294 $ 697 $ 304,117 $ ( 7,338 ) 730 $ ( 14,028 ) $ 355,256

Net loss — — — — ( 3,231 ) — — — ( 3,231 )

Other comprehensive income, net of tax of $ 5,623

— — — — — 12,828 — — 12,828

Dividends — — — — ( 3,261 ) — — — ( 3,261 )

Treasury stock purchases — — — — — — 22 ( 560 ) ( 560 )

Restricted shares forfeited ( 6 ) ( 73 ) — — — — — — ( 73 )

Share-based compensation expense — 616 — — — — — — 616

Balance, April 30, 2022

10,975 $ 72,351 4,294 $ 697 $ 297,625 $ 5,490 752 $ ( 14,588 ) $ 361,575

Balance, January 23, 2021

10,985 $ 69,324 4,294 $ 697 $ 287,634 $ ( 7,454 ) 726 $ ( 13,939 ) $ 336,262

Net income — — — — 2,574 — — — 2,574

Other comprehensive income, net of tax of $ 463

— — — — — 1,054 — — 1,054

Dividends — — — — ( 3,262 ) — — — ( 3,262 )

Share-based compensation expense — 640 — — — — — — 640

Balance, April 24, 2021

10,985 $ 69,964 4,294 $ 697 $ 286,946 $ ( 6,400 ) 726 $ ( 13,939 ) $ 337,268

39 Weeks Ended April 30, 2022 and April 24, 2021

13 Weeks Ended October 29, 2022 and October 30, 2021

Common Stock Class B

1 unchanged sentence

Comprehensive

Income (Loss)

Treasury Stock

Income Treasury Stock

Class A Total

7 unchanged sentences

Dividends — — — — ( 3,252 ) — — — ( 3,252 )

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

Restricted shares forfeited ( 12 ) ( 129 ) — — — — — — ( 129 )

Share-based compensation expense — 608 — — — — — — 608

Balance, April 30, 2022

Balance, October 29, 2022

10,971 $ 73,499 4,294 $ 697 $ 314,803 $ 8,804 752 $ ( 14,588 ) $ 383,215

5 unchanged sentences

Dividends — — — — ( 3,264 ) — — — ( 3,264 )

Restricted shares forfeited ( 8 ) ( 24 ) — — — — — — ( 24 )

Treasury stock purchases — — — — — — 4 ( 89 ) ( 89 )

Share-based compensation expense 9 644 — — — — — — 644

Balance, April 24, 2021

Balance, October 30, 2021

10,987 $ 71,238 4,294 $ 697 $ 297,249 $ ( 8,185 ) 730 $ ( 14,028 ) $ 346,971

5 unchanged sentences

13 Weeks Ended

2022 April 24,

2022 October 30,

CASH FLOWS FROM OPERATING ACTIVITIES

3 unchanged sentences

Non-cash share-based compensation 608 644

Non-cash pension settlement charges 10,811 —

Deferred taxes 103 ( 600 )

14 unchanged sentences

Investment in notes receivable from Wakefern ( 59,767 ) ( 592 )

Maturity of notes receivable from Wakefern 28,850 —

Investment in real estate partnership ( 1,276 ) —

3 unchanged sentences

Principal payments of long-term debt ( 2,352 ) ( 1,999 )

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

Debt issuance costs ( 11 ) —

1 unchanged sentence

Treasury stock purchases, including shares surrendered for withholding taxes — ( 89 )

Net cash used in financing activities ( 9,311 ) ( 16,466 )

NET INCREASE IN CASH AND CASH EQUIVALENTS 3,601 996

Net cash provided by (used in) financing activities 4,385 ( 5,352 )

NET DECREASE IN CASH AND CASH EQUIVALENTS ( 15,585 ) ( 11,227 )

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 134,832 116,314

4 unchanged sentences

NONCASH SUPPLEMENTAL DISCLOSURES:

Investment in Wakefern and increase in notes payable to Wakefern $ — $ 351

Capital expenditures included in accounts payable and accrued expenses $ 5,427 $ 3,693

3 unchanged sentences

BASIS OF PRESENTATION and ACCOUNTING POLICIES

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal and recurring accruals) necessary to present fairly the consolidated financial position as of April 30, 2022 and the consolidated statements of operations, comprehensive income and cash flows for the 13 and 39 weeks ended April 30, 2022 and April 24, 2021 of Village Super Market, Inc.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal and recurring accruals) necessary to present fairly the consolidated financial position as of October 29, 2022 and the consolidated statements of operations, comprehensive income and cash flows for the 13 weeks ended October 29, 2022 and October 30, 2021 of Village Super Market, Inc.

(“Village” or the “Company”).

1 unchanged sentence

Annual Report on Form 10-K, which should be read in conjunction with these financial statements.

The results of operations for the periods ended April 30, 2022 are not necessarily indicative of the results to be expected for the full year.

The results of operations for the period ended October 29, 2022 are not necessarily indicative of the results to be expected for the full year.

Disaggregated Revenues

The following table presents the Company's sales by product categories during each of the periods indicated:

13 Weeks Ended 39 Weeks Ended

April 30, 2022 April 24, 2021 April 30, 2022 April 24, 2021

Amount % Amount % Amount % Amount %

13 Weeks Ended

October 29, 2022 October 30, 2021

Amount % Amount %

Center Store (1) $ 311,824 60.0 % $ 295,974 59.9 %

7 unchanged sentences

MERCHANDISE INVENTORIES

At both April 30, 2022 and July 31, 2021, approximately 62 % of merchandise inventories are valued by the LIFO method while the balance is valued by FIFO.

If the FIFO method had been used for the entire inventory, inventories would have been $ 16,783 and $ 15,321 higher than reported at April 30, 2022 and July 31, 2021, respectively.

At both October 29, 2022 and July 30, 2022, approximately 61 % of merchandise inventories are valued by the LIFO method while the balance is valued by FIFO.

If the FIFO method had been used for the entire inventory, inventories would have been $ 19,154 and $ 18,616 higher than reported at October 29, 2022 and July 30, 2022, respectively.

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 (loss) income to Net (loss) income available to Class A and Class B shareholders:

13 Weeks Ended 39 Weeks Ended

2022 April 24,

2021 April 30,

2022 April 24,

Net (loss) income $ ( 3,231 ) $ 2,574 $ 14,227 $ 10,490

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

( 93 ) 82 429 336

Net (loss) income available to Class A and Class B shareholders $ ( 3,138 ) $ 2,492 $ 13,798 $ 10,154

The tables below reconcile the numerators and denominators of basic and diluted Net (loss) income per share for all periods presented.

13 Weeks Ended 39 Weeks Ended

April 30, 2022 April 30, 2022

Class A Class B Class A Class B

Net (loss) income allocated, basic

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

13 Weeks Ended

2022 October 30,

Net income $ 11,081 $ 7,328

Distributed and allocated undistributed Net income to unvested restricted shareholders

Net income available to Class A and Class B shareholders $ 10,777 $ 7,104

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

13 Weeks Ended

October 29, 2022

Class A Class B

Net income allocated, basic

$ 8,402 $ 2,376

Conversion of Class B to Class A shares 2,376 —

Effect of share-based compensation on allocated net (loss) income ( 19 ) ( 14 ) — —

Net (loss) income allocated, diluted

Net income allocated, diluted

$ 10,778 $ 2,376

2 unchanged sentences

Weighted average shares outstanding, diluted 14,157 4,294

13 Weeks Ended 39 Weeks Ended

April 24, 2021 April 24, 2021

Class A Class B Class A Class B

13 Weeks Ended

October 30, 2021

Class A Class B

Net income allocated, basic $ 5,538 $ 1,566

4 unchanged sentences

Weighted average shares outstanding, diluted 14,158 4,294

Outstanding stock options to purchase Class A shares of 102 and 156 were excluded from the calculation of diluted net income per share at April 30, 2022 and April 24, 2021, respectively, as a result of their anti-dilutive effect.

In addition, 363 and 398 non-vested restricted Class A shares, which are considered participating securities, and their allocated net income were excluded from the diluted net income per share calculation at April 30, 2022 and April 24, 2021, respectively, due to their anti-dilutive effect.

Outstanding stock options to purchase Class A shares of 93 and 102 were excluded from the calculation of diluted net income per share at October 29, 2022 and October 30, 2021, respectively, as a result of their anti-dilutive effect.

In addition, 363 and 388 non-vested restricted Class A shares, which are considered participating securities, and their allocated net income were excluded from the diluted net income per share calculation at October 29, 2022 and October 30, 2021, respectively, due to their anti-dilutive effect.

PENSION PLANS

Net periodic pension cost for the three defined benefit pension plans sponsored in fiscal 2022 and 2021 includes the following components:

13 Weeks Ended 39 Weeks Ended

2022 April 24,

2021 April 30,

2022 April 24,

Net periodic pension cost for the two defined benefit pension plans sponsored in fiscal 2023 and the three defined

benefit pension plans sponsored in fiscal 2022 includes the following components:

13 Weeks Ended

2022 October 30,

Service cost $ 34 $ 47

1 unchanged sentence

Expected return on plan assets ( 19 ) ( 409 )

Loss on settlement 12,296 — 12,296 —

Amortization of net losses ( 139 ) 126

4 unchanged sentences

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 April 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.

No benefit obligation or plan assets related to the Village Super Market, Inc.

Employees’ Retirement Plan remain as of October 29, 2022.

Contributions to the remaining plans are expected to be immaterial in fiscal 2023.

1 unchanged sentence

A description of the Company’s transactions with Wakefern, its principal supplier, and with other related parties is included in the Company’s Annual Report on Form 10-K for the year ended July 30, 2022.

Included in cash and cash equivalents at April 30, 2022 and July 31, 2021 are $ 96,918 and $ 86,670 , respectively, of demand deposits invested at Wakefern at overnight money market rates.

On August 15, 2022, notes receivable due from Wakefern of $ 28,850 that earned interest at the prime rate plus 1.25 % matured.

The Company invested all of the proceeds received 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.

At October 29, 2022, the Company held variable rate notes receivable due from Wakefern of $ 29,606 that earn interest at the prime rate plus .75 % and mature on February 15, 2024, $ 29,078 that earn interest at the prime rate plus .50 % and mature on August 15, 2027 and $ 30,017 that earn interest at the prime rate plus .50 % and mature on September 28, 2027.

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

Under certain conditions, the Company can require Wakefern to prepay the notes, although interest earned since inception would be reduced as if it was earned based on overnight money market rates as paid by Wakefern on demand deposits.

Included in cash and cash equivalents at October 29, 2022 and July 30, 2022 are $ 95,356 and $ 110,739 , respectively, of demand deposits invested at Wakefern at overnight money market rates.

On April 28, 2022 the Company entered into a partnership agreement for 30 % interest in the development of a retail center in Old Bridge, New Jersey, which includes a Village replacement store with future lease obligations of $$ 9,280 .

Village's share of project costs are estimated to be $ 15,000 to $ 20,000 .

As of April 30, 2022, Village has invested $ 4,393 into the real estate partnership, which is accounted for as an equity method investment included in Other assets on the Consolidated Balance Sheet.

There have been no other significant changes in the Company’s relationships or nature of transactions with related parties during the 39 weeks ended April 30, 2022.

As of October 29, 2022, Village has invested $ 6,286 into the real estate partnership, which is accounted for as an equity method investment.

There have been no other significant changes in the Company’s relationships or nature of transactions with related parties during the 13 weeks ended October 29, 2022.

COMMITMENTS and CONTINGENCIES

10 unchanged sentences

Credit Facility

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.

The Company has a $ 150,500 credit facility (the “Credit Facility”) with Wells Fargo National Bank, National Association (“Wells Fargo”).

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.

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 SOFR plus 1.10 % and expires on May 6, 2025.

Indebtedness under this agreement bears interest at the applicable Secured Overnight Financing Rate ("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.

An interest rate swap with notional amounts equal to the term loan 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.

An interest rate swap with notional amounts equal to the term loan 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.

1 unchanged sentence

• 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.

An interest rate swap with notional amounts equal to the term loan fixes the base SOFR at 1.41 % per annum through January 28, 2037, 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 and the purchase of the Galloway store shopping center.

The Credit Facility also provides for up to $ 25,000 of letters of credit ($ 7,336 outstanding at April 30, 2022), which secure obligations for store leases and construction performance guarantees to municipalities.

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 %.

The Credit Facility also provides for up to $ 25,000 of letters of credit ($ 7,336 outstanding at October 29, 2022), which secure obligations for store leases and construction performance guarantees to municipalities.

The Credit Facility contains covenants that, among other conditions, require a minimum tangible net worth, a minimum fixed charge coverage ratio and a maximum adjusted debt to EBITDAR ratio.

The Company was in compliance with all covenants of the credit agreement at April 30, 2022.

The Company was in compliance with all covenants of the credit agreement at October 29, 2022.

As of October 29, 2022, $ 67,664 remained available under the unsecured revolving line of credit.

New Markets Tax Credit Financing

22 unchanged sentences

DERIVATIVES AND HEDGING ACTIVITIES

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

The Company is exposed to interest rate risk arising from fluctuations in 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.

As of April 30, 2022, the Company had three interest rate swaps with an aggregate initial notional value of $ 82,850 to hedge the variable cash flows associated with variable-rate loans under the Company's Credit Facility.

As of October 29, 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.

1 unchanged sentence

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 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 $ 89 and $ 86 during the 13 weeks ended April 30, 2022 and April 24, 2021, respectively, and $ 262 and $ 234 during the 39 weeks ended April 30, 2022 and April 24, 2021, respectively, from Accumulated other comprehensive income (loss) to Interest expense.

The notional value of the interest rate swaps were $ 70,508 as of April 30, 2022.

The fair value of interest rate swaps recorded in other assets is $ 6,998 as of April 30, 2022.

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.

During the second quarter of 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.

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

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

We continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

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 7).

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

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 income and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings.

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

The Company reclassified $ 243 and $ 88 during the 13 weeks ended October 29, 2022 and October 30, 2021, respectively, from Accumulated other comprehensive income to Interest expense.

The notional value of the interest rate swaps were $ 76,656 as of October 29, 2022.

The fair value of interest rate swaps recorded in Other assets in the consolidated balance sheets is $ 10,019 as of October 29, 2022.

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-Q

Item 1. Financial Statements