As Filed with the Securities and Exchange Commission-Subject to Change.
File No. 2-66296
________________________________________________________________________
________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
POST-EFFECTIVE AMENDMENT NO. 17
on
Form S-2
to
Form S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
_______________________
ROUNDY'S, INC.
(Exact name of Registrant as specified in charter)
WISCONSIN 39-0854535
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23000 ROUNDY DRIVE 53072
PEWAUKEE, WISCONSIN (Zip Code)
(Address of principal executive
offices)
Registrant's telephone number, including area code: (414) 547-7999
Robert D. Ranus
Vice President and Chief Financial Officer
Roundy's, Inc.
23000 Roundy Drive
Pewaukee, WI 53072
(414) 547-7999
(Name and address of agent for service)
______________________
Copies to:
Whyte Hirschboeck Dudek S.C.
Attn: Eric R. Christiansen
111 East Wisconsin Avenue, Suite 2100
Milwaukee, Wisconsin 53202
________________________________________________________________________
________________________________________________________________________
<PAGE>
CROSS REFERENCE SHEET
Between
Prospectus and Items in Form S-2
Item Number and Caption Prospectus Caption
- ----------------------- ------------------
1. Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus.................. (Cover Page)
2. Inside Front and Outside Back
Cover Pages of Prospectus................. (Second Page)
3. Summary Information, Risk Factors
and Ratio of Earnings to Fixed Charges.... Summary of
Prospectus;
Factors to be
Considered
4. Use of Proceeds........................... Use of Proceeds
5. Determination of Offering
Price..................................... Terms of Offering
6. Dilution.................................. Not Applicable
7. Selling Security Holders.................. Not Applicable
8. Plan of Distribution...................... Plan of
Distribution
9. Description of Securities
to be Registered.......................... Description of
Stock
10. Interests of Named Experts
and Counsel............................... Voting Trust
11. Information With Respect to
the Registrant............................ The Company;
Financial
Statements;
Selected Financial
Information;
Management's
Discussion and
Analysis of
Results of
Operations and
Financial
Condition;
Management
12. Incorporation of Certain
Information by Reference.................. Incorporation of
Documents by
Reference
13. Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities............................... Indemnification
<PAGE>
PROSPECTUS
ROUNDY'S, INC.
23000 Roundy Drive
Pewaukee, Wisconsin 53072
11,800 Shares Class A (Voting) Common Stock
67,571 Shares Class B (Non-voting) Common Stock
The shares of Class A Common Stock ("Class A Common") and Class B
Common Stock ("Class B Common") (together "Roundy's Stock") offered
hereby are offered only to certain persons purchasing for investment who
are engaged in the operation of retail food stores and who are customers
of Roundy's, Inc., and to the Directors and certain key employees of
Roundy's, Inc. References in this Prospectus to the "Company" mean
Roundy's, Inc. and its subsidiaries. References in this Prospectus to
"Roundy's" mean Roundy's, Inc. excluding its subsidiaries. Shares of
Class A Common and Class B Common may be purchased in installments by
stockholder-customers to fulfill their buying deposit requirements. See
"TERMS OF OFFERING--Methods of Purchasing Shares", "THE COMPANY--
Stockholder-Customers", and Exhibit B attached hereto. Subscriptions
may be canceled, or amended to purchase fewer shares, except that
purchasers of Class A Common must purchase a minimum of 100 shares but
may purchase or own no more than 100 shares for each retail food store
operated by such purchaser. No interest or other finance charge accrues
upon or is added to the unpaid balance of the subscription so long as
all payments are made when due. There is no limit as to the number of
shares of Class B Common which may be purchased. The Class B Common has
no voting rights. This Prospectus also relates to shares of Class B
Common which may be issued to stockholder-customers of Roundy's as part
of a patronage dividend (see "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION") and in exchange for
shares of Class A Common held by stockholder-customers of Roundy's who
have ceased to do business with Roundy's. See "TERMS OF OFFERING".
Patronage dividends, if and when paid, will be paid on the basis of net
sales of Roundy's to each respective stockholder-customer, and not in
proportion to the number of shares of Class A Common or Class B Common owned.
This offering is not underwritten. There can be no assurance that
all or any part of the securities offered hereby will be sold. The
transfer of shares is restricted and there is and will be no market for
Roundy's Stock.
------------------------------
SEE "FACTORS TO BE CONSIDERED"
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
=======================================================================
Underwriting Aggregate
Price to Discounts and Proceeds to
Public(1) Commissions Company
________________________________________________________________________
Class A Common Book Value None $ 845,470
________________________________________________________________________
Class B Common Book Value None $4,841,462
========================================================================
(1) The offering price per share is equal to the book value per share
of Roundy's outstanding stock at the end of the fiscal year prior
to the year of purchase, adjusted for subsequent stock dividends
and stock splits. The book value per share of Roundy's Stock at
January 1, 1994, was $71.65.
The date of this Prospectus is , 1994.
<PAGE>
TABLE OF CONTENTS
Items Page
----
Available Information......................................... 2
Incorporation of Documents by Reference....................... 3
Prospectus Summary............................................ 4
Factors to be Considered...................................... 7
Plan of Distribution.......................................... 9
Terms of Offering............................................. 9
Use of Proceeds............................................... 12
Repurchase of Shares.......................................... 12
Exchange of Class A Common for Class B Common................. 14
Capitalization................................................ 15
Selected Financial Information................................ 16
Management's Discussion and Analysis of
Results of Operations and Financial Condition............... 17
The Company................................................... 20
Management.................................................... 31
Description of Stock.......................................... 33
Voting Trust.................................................. 35
Legal Matters................................................. 36
Experts....................................................... 36
Indemnification............................................... 36
Index to Financial Statements................................. F-1
Exhibit A - Subscription Agreement............................ A-1
Exhibit B - Buying Deposit Agreement.......................... A-2
Exhibit C - Article V of the By-Laws.......................... A-4
Exhibit D - Policy Relating to Redemption of Stock by
Inactive Customer Shareholders and Former
Employees (as revised on May 21, 1991)............ A-6
Exhibit D-1-Policy Regarding Roundy's Redemptions/Repurchases
of Its Stock (effective as of January 1, 1994).... A-11
Exhibit E - Policy Regarding Issuance and Sales of Roundy's,
Inc. Stock (effective as of January 1, 1994)...... A-12
No person has been authorized to give any information or make any
representations other than as contained in this Prospectus in connection
with the offering described herein. This Prospectus does not constitute
an offer to sell, or a solicitation of an offer to buy, to any person in
any state in which it is unlawful to make such offer or solicitation.
The delivery of this Prospectus at any time does not imply that there
has been no change in the affairs of the Company subsequent to its date
of issue.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "1934 Act") and in accordance
therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). Such reports and other
information can be inspected and copied at the public reference facili-
ties maintained by the Commission at 450 5th Street N.W., Judiciary
Plaza, Washington, D.C. 20549 and at the Commission's regional offices
at Room 1204, Everett McKinley Dirksen Building, 219 South Dearborn
Street, Chicago, Illinois 60604 and at Room 1102, Federal Building, 26
Federal Plaza, New York, New York 10007, and copies of such material can
be obtained from the Public Reference Section of the Commission at 450
5th Street, N.W., Judiciary Plaza, Washington, D.C. 20549 at prescribed
rates. The Company will furnish annual reports to its stockholders
within 120 days after the end of each fiscal year, which will include
financial statements examined and reported on by independent certified
public accountants.
Roundy's has filed a Registration Statement under the Securities
Act of 1933, as amended, with respect to the issuance of the shares of
Roundy's Stock offered hereby. For further information, reference is
made to such Registration Statement, of which this Prospectus is a part,
and to the exhibits thereto, which are listed in such Registration
Statement.
INCORPORATION OF DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended
January 1, 1994, and all other reports filed thereafter with the
Securities and Exchange Commission pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, are hereby incorporated herein by
reference. To the extent that information contained therein is
modified, superseded or replaced by information contained elsewhere in
this Prospectus, investors should rely on such modified, superseded or
replaced information and not on the information contained in the
documents incorporated by reference. The Company will provide, without
charge to each person to whom this Prospectus is delivered, a copy of
any or all of the documents incorporated herein by reference (other than
exhibits to such documents) upon the oral or written request of such
person, to Roundy's, Inc., 23000 Roundy Drive, Pewaukee, Wisconsin
53072, Attention: Robert D. Ranus, telephone: (414) 547-7999.
<PAGE>
PROSPECTUS SUMMARY
The following is a brief summary of certain information contained
elsewhere in this Prospectus. The summary is necessarily incomplete and
selective and is qualified in its entirety by the detailed information
and financial statements appearing elsewhere and incorporated by
reference herein.
____________________
The Company and Its Business
- ----------------------------
Roundy's, Inc. and its subsidiaries (collectively the "Company")
are engaged principally in the wholesale distribution of food and non-
food products to supermarkets and warehouse food stores located in
Wisconsin, Illinois, Michigan, Indiana, Ohio, Iowa, Kentucky, Missouri,
Pennsylvania, Tennessee and West Virginia. References in this
Prospectus to the "Company" mean Roundy's, Inc. and its subsidiaries.
References in this Prospectus to "Roundy's" mean Roundy's, Inc.
excluding its subsidiaries. The Company also owns and operates 12
retail warehouse food stores under the name "Pick 'n Save," one limited
assortment food store under the name "Price Less Foods," one limited
assortment store under the name "Mor For Less" and five conventional
stores under the name "Cardinal Food Gallery" or "Buy Low Foods." The
Company provides various ancillary services, including financial,
engineering, advertising, accounting, insurance and promotional services
to its retail customers. The Company services 1,130 retail grocery
stores and 682 convenience stores.
Roundy's operates as a cooperative, with approximately 69% of its
Common Stock being owned by the owners of 155 retail grocery stores
serviced by the cooperative. The balance of the Company's customers are
independent grocers.
Basic Distinctions Between Classes of Stock and Voting Trust
- ------------------------------------------------------------
The issued and outstanding shares of Common Stock of the Company
are divided into two classes: Class A Common, having voting rights on
all matters submitted to a vote of stockholders, and Class B Common,
having no voting rights other than those provided by law.
Ownership of Class A Common is limited to 100 shares for each
retail food store operated by the stockholder. There are no
restrictions on the number of shares of Class B Common which a
stockholder may own, and such shares have been, and it is anticipated
that they will continue to be, distributed in payment of patronage
dividends declared to stockholder-customers. While dividends, other
than patronage dividends, may be paid on either class of Common Stock,
it is not anticipated that any such dividends will be paid in the
foreseeable future. In the event of the liquidation of Roundy's, shares
of Class A Common and Class B Common will share ratably in the net
assets of the Company. See "DESCRIPTION OF STOCK."
All Class A Common outstanding on the date of this Prospectus is
owned of record by the Trustees of a Voting Trust, which by its terms
will expire in 1997. Roundy's will request, but not require, all
purchasers of Class A Common offered hereby to deposit such shares in
the Voting Trust in exchange for Voting Trust Certificates.
<PAGE>
All matters (except the election or removal of Directors)
submitted to a vote of holders of Class A Common are submitted in turn
by the Trustees to a vote of certificate holders, who are entitled to
vote in proportion to the number of shares deposited with the Trustees
of the Voting Trust, exactly as if they were voting the shares so
deposited. The Trustees are required by the Voting Trust Agreement to
vote all shares in the Trust as directed by the majority of the
certificate holders so voting, in person or by proxy; except that a
proposal to liquidate or sell the assets of Roundy's, or to merge
Roundy's into another Company, must be approved by two-thirds of the
certificate holders so voting, unless the proposal has been recommended
by the Board of Directors. With respect to the election of Directors,
the Trustees are authorized in the Voting Trust Agreement to vote all
shares in the Trust in their discretion, except that the certificate
holders may direct the election of one Director in each annual election
(a total of three Directors at any given time). See "VOTING TRUST."
Basic Features of Offering
- --------------------------
The offering price of shares offered hereunder is the net book
value of outstanding shares of such stock, adjusted for subsequent stock
dividends and stock splits, as of the close of the Company's fiscal year
prior to the purchase of such stock. Shares may be purchased or
acquired by customers of Roundy's in one of the following ways:
(1) Within the limits placed upon ownership of Class A Common, a
customer may subscribe for shares of Class A Common or Class B Common
during three "window" periods each year (after the first, second and
third fiscal quarters of the Company, consisting of the first two weeks
of May, August and November, respectively), pay the full price therefor
(book value as of the close of the fiscal year prior to subscription)
and receive his shares. The total number of shares that may be
purchased in one year is limited to 15% of the buying deposit deficit
for active customers with a buying deposit deficit and 5% of the buying
deposit for active customers without a buying deposit deficit.
(2) A stockholder-customer may subscribe in the same manner as
described in (1), but pursuant to written agreement with Roundy's may
purchase such shares in installments to fulfill the buying deposit
requirement. During the period of payment, the stockholder-customer
makes equal weekly or monthly payments. During the three "window"
periods, a customer may allocate some or all of such payments (at the
book value of the stock as of the close of the fiscal year preceding the
year in which such payments were made) to the subscription of shares of
Class B Common. The total number of shares that may be purchased in one
year is limited to 15% of the buying deposit deficit for active
customers with a buying deposit deficit and 5% of the buying deposit for
active customers without a buying deposit deficit.
(3) A stockholder-customer may acquire shares of Class B Common
by receipt of such shares in payment of a portion of a patronage
dividend. Roundy's operates on a cooperative basis with respect to
purchases of merchandise made from it by stockholder-customers who are
the owners of shares of Class A Common (or holders of Voting Trust
Certificates). To the extent permitted by the Internal Revenue Code,
patronage dividends are declared from the net earnings of Roundy's, if
any, in an amount which will in each year reduce the Company's
consolidated net earnings to such amount as will generally result in an
increase of 10% in the Company's consolidated net book value per share
<PAGE>
(consolidated net book value per share may increase by more than 10% in
any year if Roundy's net earnings are insufficient to permit the payment
of patronage dividends in an amount which will sufficiently reduce
consolidated net earnings). The 10% limitation is set forth in Roundy's
By-Laws and may be changed by Roundy's Board of Directors to the extent
permitted under IRS regulations. At least 20% of the amount of
patronage dividends, if any, must be paid in cash; a greater percentage
may be paid in cash in the discretion of Roundy's. The balance of
patronage dividends, if any, will be paid in the form of Class B Common.
The entire patronage dividend (both the amount of cash and the full
stated dollar amount of the Class B Common received) is required by
federal tax law to be included by the recipient in the recipient's tax
return as income, in the taxable year in which such cash and stock are
received. There can be no assurance that Roundy's will have in any year
sufficient net earnings from Roundy's cooperative business and
consolidated net earnings to permit the payment of patronage dividends.
See "THE COMPANY."
(4) Stockholder-customers of Roundy's who cease to do business
with Roundy's are required to exchange their Class A Common for Class B
Common, on a share for share basis.
In addition, the Company may offer shares of Class B Common to its
Directors and certain key employees, at a price equaling the book value
of such shares as of the close of the prior fiscal year, or, in the case
of key employees, as bonus shares at the discretion of the Board of
Directors. See "TERMS OF OFFERING" and "EXCHANGE OF CLASS A COMMON FOR
CLASS B COMMON."
Use of Proceeds
- ---------------
The proceeds of this offering will be used for general working
capital purposes and for capital expenditures, as required. See "USE OF
PROCEEDS."
Repurchase of Shares
- --------------------
Roundy's is obligated under its current redemption policies
(Exhibits D and D-1) to repurchase shares of Common Stock upon request
made by or on behalf of a stockholder who has terminated or
substantially reduced his relationship with Roundy's, by reason of death
or for any other reason. This obligation, however, is subject to change
should the policy be revised and is limited with respect to the
aggregate dollar amount of repurchases that may be made at any
particular time depending upon whether other present or future
contractual requirements are satisfied. Shares offered for repurchase
in excess of this limitation in any year will be repurchased during the
ensuing fiscal years, subject to limitations in force at that time.
With certain exceptions, shares will be repurchased under the current
policy over a five-year period beginning on the first anniversary date
of the written repurchase request. The repurchase price is the book
value of shares at the end of the fiscal year preceding the date of the
actual repurchase. Roundy's is not obligated to repurchase any Common
Stock issued pursuant to this Prospectus except under such redemption
policy as may be in effect at the time of a repurchase request. See
"REPURCHASE OF SHARES."
<PAGE>
Summary Financial Data
- ----------------------
The following table sets forth certain data as to the Company for,
and as of the end of, each of the last three fiscal years:
Fiscal Years
---------------------------------------------
1993 1992 1991
(Dollars in Thousands)
Earnings Statement Data:
Net Sales and Service
Fees................ $2,480,254 $2,491,293 $2,534,418
Earnings Before Patronage
Dividends and Income
Taxes............... 20,053 16,528 14,826
Patronage Dividends.... 5,301 5,135 3,305
Net Earnings........... 8,028 7,353 6,813
Balance Sheet Data:
Total Assets........... 380,092 390,148 390,797
Working Capital....... 113,643 119,153 116,940
Long-term Debt (less
current maturities). 113,045 135,420 139,283
Stockholders' Equity(1) 86,066 78,573 70,917
(1) Includes patronage dividends payable in Class B Common of
$3,263,000, $3,210,000 and $2,212,000 in 1993, 1992, and
1991, respectively.
See "SELECTED FINANCIAL INFORMATION" and "INDEX TO FINANCIAL
STATEMENTS."
FACTORS TO BE CONSIDERED
Limitations on Purchasers
- -------------------------
This offering is being made only to persons who are engaged in the
operation of retail food stores which are customers of Roundy's, and to
the Directors and certain key employees of the Company. The amount of
Class A Common (the only class having voting rights and substantially
all of which is owned by Roundy's customers) which may be purchased by
any such person is limited, no person being permitted to own more than
100 shares for each retail store operated by such person. See "TERMS OF
OFFERING."
Patronage Dividends
- -------------------
No assurance can be given as to when or whether patronage
dividends will be paid in the future. See "THE COMPANY - Stockholder-
Customer Savings-Patronage Dividends." Dividends other than patronage
dividends have not been paid by the Company, and it is not anticipated
that any such dividends will be paid. Consequently, owners of Class B
Common who are not stockholder-customers cannot expect to receive any
patronage or other dividends of any kind.
<PAGE>
Sale of All Shares Offered Not Assured
- --------------------------------------
Because (a) of the limitations upon who may purchase shares
hereunder and upon how many shares of Class A Common any person may
purchase, (b) of the uncertainty of whether future patronage dividends
will be paid and if paid, the amount, if any, that may be paid in shares
of Class B Common, and (c) this offering is not underwritten, there can
be no assurance that all or any portion of the shares offered hereby
will be sold. See "PLAN OF DISTRIBUTION."
Limitations on Value and Marketability of Stock
- -----------------------------------------------
The shares offered hereby may not be sold or otherwise transferred
by the record holder thereof without Roundy's written consent. Although
the Company is obligated to repurchase its shares from a customer who
has terminated his or its business relationship with Roundy's for any
reason and who tenders such stock for purchase, this obligation is
limited in various respects, including (without limitation) the maximum
amount which Roundy's will pay for stock repurchases in any fiscal year.
See "REPURCHASE OF SHARES." Although Roundy's is obligated to pay
patronage dividends to its stockholders in certain circumstances in
proportion to the business done by Roundy's with each respective
stockholder, it is not expected that ordinary cash dividends will be
paid on shares of Common Stock in the foreseeable future. Accordingly,
it is neither intended nor expected that purchasers of the securities
offered hereby will necessarily realize a return on their investment.
In addition, the purchaser of shares hereunder may be unable to realize
all or a portion of the value of shares purchased except in the event of
repurchase by, or liquidation of, Roundy's.
Voting Trust
- ------------
As of the date of this Prospectus, all of the outstanding Class A
Common has been deposited in a Voting Trust, the Trustees of which are
authorized to vote the shares in their discretion for the election of
all but three of the Directors. On most other matters, including the
election of three members of the Board of Directors (one in each year),
the Trustees must vote shares held in the Voting Trust as directed by a
vote of the holders of outstanding Voting Trust Certificates (with each
share of Class A Common in the Trust entitling the certificate holder
thereof to one vote). The seven Trustees of the Voting Trust, one of
whom is a Director of Roundy's, may be deemed to be in "control" of the
Company. Purchasers of the Class A Common offered hereby will be
requested, but not required, to deposit such shares in the Voting Trust.
Shares of Class A Common purchased in this offering and deposited in the
Voting Trust are subject to a limited right of withdrawal after such
shares have been on deposit for five years. See "VOTING TRUST."
Lien Rights on Shares
- ---------------------
Roundy's has a lien on all of its shares, whether presently
outstanding or issued in the future, as security for the payment, from
time to time and as often as the same may become due and payable, of any
and all obligations of the owner thereof to the Company. See
"DESCRIPTION OF STOCK."
<PAGE>
Cooperative Status and Income Tax Liability for Patronage Dividends
- -------------------------------------------------------------------
Although Roundy's is incorporated as a Wisconsin business
corporation, it reports its federal income tax liability and operates as
a cooperative. The applicable laws, regulations, rulings and judicial
interpretations do not precisely define a cooperative for income tax
purposes. Therefore, no assurance can be given that the income tax
filing status of Roundy's could not successfully be challenged by the
Internal Revenue Service. If such status were to be successfully
challenged, the income tax liability of Roundy's for the year or years
in question and future years would probably increase significantly.
A purchaser of shares will be required to report as gross income,
for federal income tax purposes, the patronage dividends, if any,
distributed by Roundy's to such purchaser. Shares of Class B Common
issued as a portion of a patronage dividend must be reported as income
at their full stated dollar amount, along with cash received as the
other portion of such dividends. Although a minimum of 20% of each
recipient's total annual patronage dividend is required to be paid by
Roundy's in cash, the cash portion may be insufficient, depending upon
the income tax bracket of each recipient, to provide funds for the full
payment of the federal income tax liability incurred by the recipient
with respect to such patronage dividends. Shares of Class B Common
distributed as patronage dividends are subject to state income taxes in
Wisconsin, and may be subject to such taxes in other states. See
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION" and "THE COMPANY."
Issuance of Certificates for Shares Purchased
- ---------------------------------------------
Persons electing to pay for shares purchased hereunder by means of
periodic contributions to required buying deposits will receive
certificates for the amount of whole shares purchased during each
calendar year only at the end of each such year. See "TERMS OF
OFFERING."
PLAN OF DISTRIBUTION
The shares offered hereby are being offered only by Roundy's,
through its Officers, Directors and Employees.
Roundy's is primarily concerned with attracting stockholders who
can effectively use the services of Roundy's and whose trade with
Roundy's will be mutually beneficial. Sale of shares offered hereby is
limited primarily to individuals, partnerships or corporations which are
engaged in the operation of retail food stores and which purchase
merchandise from or through Roundy's. Company employees whose duties
consist of sales of merchandise to retail food stores are not authorized
to accept stock subscriptions or to sell shares of stock to any person.
No salesmen or securities dealers are or ever have been employed for the
sale of Roundy's Stock, and no Officer, Director or employee receives
any commission, bonus, or other separate compensation for sales of
Roundy's Stock.
<PAGE>
TERMS OF OFFERING
Limitation of Offerees and Purchases
- ------------------------------------
This offering is limited to individuals, partnerships and
corporations engaged in the operation of retail food stores which are
customers of Roundy's, and whose trade with Roundy's is and will be in
the opinion of the Officers of Roundy's, beneficial to Roundy's and to
its existing stockholders. Shares of Class B Common may also be sold
hereunder to the Directors and certain key employees of the Company.
Shares of Class A Common offered hereby must be purchased in units
of 100 shares. No person may own more than 100 shares of Class A Common
for each retail food store operated by such person. Roundy's does sell
merchandise to nonstockholders, but each retailer for whom Roundy's is
the primary source of supply is required to purchase and own 100 shares
of Class A Common for each retail food store operated by such person.
There is no limit as to the number of shares of Class B Common which may
be owned by a person who is a proper offeree hereunder, as described
above.
Methods of Purchasing Shares
- ----------------------------
Subject to the limitations upon offerees and purchasers described
above, shares offered hereby may be acquired in any one or more of the
following ways:
(1) A customer of Roundy's may subscribe for shares of Class A
Common and/or Class B Common during three "window" periods each year
(after the first, second and third fiscal quarters of the Company,
consisting of the first two weeks of May, August and November,
respectively), pay the full purchase price therefore, and receive his
shares. The form of Subscription Agreement is attached hereto as
Exhibit A.
(2) A customer of Roundy's may subscribe for shares of Class A
Common and/or Class B Common pursuant to an agreement to fulfill the
buying deposit requirements. During the payment period, the purchaser
makes equal weekly or monthly payments according to the terms of the
agreement. The purchaser receives annually the shares purchased by the
total of such payments. The purchase price for the shares is the book
value of such shares as of the close of the fiscal year preceding the
window period in which such shares are purchased, adjusted for
subsequent stock dividends and stock splits. The form of Buying Deposit
Agreement is attached hereto as Exhibit B.
(3) A customer of Roundy's may acquire shares of Class B Common
by receipt of such shares in payment of a portion of a patronage
dividend. In the event that Roundy's pays patronage dividends in the
future, it may issue as much as 80% of each patronage dividend in the
form of Class B Common. See "THE COMPANY - Stockholder-Customer Savings
- -Patronage Dividends."
(4) Stockholder-Customers of Roundy's who cease to do business
with Roundy's are required to exchange, on a share for share basis,
their Class A Common for Class B Common. See "EXCHANGE OF CLASS A
COMMON FOR CLASS B COMMON."
<PAGE>
(5) Directors of the Company, and certain key employees of the
Company who may be designated as offerees hereunder by the Officers of
the Company, may subscribe for shares of Class B Common hereunder; and
key employees may receive shares of Class B Common as bonus shares, in
the discretion of the Board of Directors.
Subscriptions may be cancelled, or amended to provide for the
purchase of fewer shares, at any time prior to the issuance of the
certificates. For this reason, subscriptions receivable aggregating
approximately $322,000 and $365,000 at January 1, 1994 and January 2,
1993, respectively, are not reflected in the balance sheets of the
Company.
Offering Price
- --------------
The offering price of each share of Class A Common and Class B
Common purchased hereunder is equal to the book value as of the close of
the previous fiscal year of Roundy's of each then outstanding share of
stock, as determined with reference to Roundy's audited financial
statements and adjusted for subsequent stock dividends and stock splits.
Shares are not sold during any year until the book value at the end of
the immediately preceding fiscal year has been determined.
The same value will also be assigned to each share of Class B
Common issued as a portion of a patronage dividend. That is, shares, if
any, distributed in 1995 (for example) as patronage dividends accrued
with respect to purchases from Roundy's during 1994 will be valued at
the book value of outstanding shares determined as of the end of the
1994 fiscal year of Roundy's.
The book value of Roundy's outstanding stock (both Class A and
Class B) at the end of the Company's 1993 fiscal year was $71.65 per
share. The By-Laws of Roundy's prohibit the payment of any patronage
dividend in any year unless sufficient earnings have been retained to
increase the net book value per share of the outstanding Common Stock by
10% during that year. See "THE COMPANY."
Terms of Payment
- ----------------
Each customer of Roundy's is required to maintain a buying deposit
for each store in an amount equal to the greater of $20,000 or the
estimated amount of purchases by the customer from Roundy's over a two
week period (subject to Roundy's reserved right to increase the amount
of the deposit required of any customer). This deposit requirement may
be satisfied by either a cash deposit in the specified amount (bearing
no interest), or a subscription to purchase Class A Common and/or Class
B Common in such amount, and the pledge of such stock as collateral for
the customer's purchases. In either case, a customer may make his
entire deposit or payment in cash at the outset, or he may complete part
or all of his buying deposit requirement by means of equal weekly or
monthly payments, in accordance with an amortization schedule forming a
part of the Buying Deposit Agreement between such customer and Roundy's.
Thus, if a customer subscribes to purchase stock offered hereby as a
means of satisfying his buying deposit requirement, he may pay for his
shares in full immediately, or may pay in installments until the buying
deposit requirement is fulfilled. See "THE COMPANY -- Stockholder-
<PAGE>
Customers" and Exhibit B attached hereto. Buying deposits satisfied by
deposit of cash are reflected on the Company's balance sheet as accounts
payable.
Customers who have already satisfied their buying deposit
requirements may nevertheless elect to purchase and pay for shares in
the same manner as above, pursuant to agreement with Roundy's.
All persons subscribing for shares offered hereby have the right,
at any time and from time to time, to pay all or any portion of the then
unpaid balance of the purchase price. No interest or other finance
charge is accrued upon or added to the unpaid balance so long as all
payments are made when due in accordance with the terms of the Buying
Deposit Agreement; but prepayment may result in a lower purchase price
per share of stock in the event the book value of such stock, which
determines the purchase price hereunder and is adjusted each year for
this purpose, should increase from year to year.
Time of Issuance of Stock Certificates
- --------------------------------------
Persons who elect to pay for stock purchased by means of monthly
installment payments receive annually a copy of a certificate
representing the number of whole shares purchased by the aggregate
amount of such person's periodic payments (including any prepayments).
Generally, Roundy's retains the actual stock certificate. The purchase
price for such stock is the book value of such shares as of the close of
the fiscal year preceding the window period in which such shares are
purchased, adjusted for subsequent stock dividends and stock splits. Any
excess of such payments after deduction has been made for the purchase
of the maximum possible number of whole shares is carried over to the
following window period for that customer.
If shares of Class B Common are issued as patronage dividends,
receipt by the stockholder-customer of a copy of the certificate
representing such shares issued by the Company is intended to constitute
receipt of a "qualified written notice of allocation," as defined in
Section 1388 of the Internal Revenue Code of 1954, as amended. See "THE
COMPANY." Such shares are fully paid and non-assessable at the time of
issuance, except as otherwise provided by Wisconsin law (see
"DESCRIPTION OF STOCK"), and subject to Roundy's lien against all
outstanding shares to secure the payment of the stockholder-customer's
obligations to the Company.
Copies of certificates for shares purchased in any manner other
than the above (i.e., by payment in full in cash) are issued by the
Company upon receipt of the full amount of the purchase price.
USE OF PROCEEDS
The net proceeds to be received from the sale of the Class A
Common and Class B Common offered hereby will be added to the working
capital of the Company and used for general working capital purposes,
including the purchase of merchandise to be resold by Roundy's and the
maintenance of adequate inventories of such merchandise, and for capital
expenditures as required. The Company's principal source of working
capital has been from borrowings, rather than from the proceeds of the
sale of equity securities, and it is expected that this will continue to
be true in the future.
<PAGE>
REPURCHASE OF SHARES
Roundy's Articles of Incorporation provide, in effect, that its
Board of Directors may cause Roundy's to repurchase or redeem its shares
of Common Stock on such terms as the Board deems appropriate (without
consent of the stockholders) subject to applicable Wisconsin law. While
not limiting the situations under which such repurchases could be made,
the Board of Roundy's has adopted various written policies over the
years setting forth conditions under which Roundy's would repurchase or
redeem its Common Stock (See Exhibit D and D-1). Absent such redemption
policies, there would be no requirement for repurchase of any of its
Common Stock under Roundy's Articles or By-Laws. Considering the
restrictions on ownership and resale of Roundy's Common Stock (see,
"DESCRIPTION OF STOCK - Restrictions on Transfer"), it could be
virtually impossible for a stockholder to liquidate an investment in the
Common Stock if no redemption policy exists requiring Roundy's to
repurchase such shares.
Roundy's current redemption policy (the "Current Policy") provides
that Roundy's will repurchase shares of its Common Stock following a
request by the stockholder or his or her legal representative during one
of these open window periods after the occurrence of a "customer-
shareholder termination" or an "employee-shareholder termination" as
defined in the Current Policy. A "customer-shareholder termination"
occurs whenever a retail food store principally supplied by Roundy's
(defined as an "Active Customer") which is owned by a stockholder either
ceases to be an Active Customer or ceases to be owned or operated by
such stockholder. An "employee-shareholder termination" occurs when a
stockholder's employment relationship with the Company is terminated for
any reason. This means that, under the Current Policy, Roundy's is not
required to redeem Common Stock held by a stockholder during the period
he or she is an Active Customer or remains an employee of the Company.
(The foregoing and following descriptions of the Current Policy are
necessarily selective and are qualified in their entirety by the full
text of the Current Policy which is attached as Exhibit D and D-1.)
The Current Policy requires Roundy's to acknowledge promptly in
writing receipt of a repurchase request. The acknowledgment is to set
forth certain information relating to the repurchase--such as the book
value of the shares as of the end of the prior fiscal year (if known),
the repurchase target dates and the various documents required to
transfer clear title to the shares back to Roundy's in conjunction with
the redemption payments. Once a repurchase request is so acknowledged
by Roundy's, the request becomes irrevocable except with the prior
written consent of the Board of Directors.
The obligation to repurchase stock under the Current Policy
arises, as to the number of shares covered by a repurchase request, in
annual 20% increments during the five year period beginning on the
repurchase request date. On each of the first through the fifth
anniversary dates of the repurchase request date (a "repurchase target
date"), Roundy's is obligated to purchase 20% of the aggregate number of
shares of Common Stock for which a proper repurchase request has been
received. Each share shall continue to be outstanding for all purposes
until actually repurchased. However, if a "customer-shareholder
termination" or an "employee-shareholder termination" occurs as a result
of the death of the stockholder, the estate of such stockholder may elect
(by written notice to Roundy's within 180 days after such death) to have not
more than the first $50,000 in value of stock repurchased on an accelerated
basis within 180 days after Roundy's receipt of such election notice.
<PAGE>
The repurchase price for the shares under the Current Policy shall
be the Book Value of such shares in effect at the date of repurchase,
with "Book Value" in effect being defined as the book value of the
shares as of the end of the preceding fiscal year based upon Roundy's
annual audited financial statements. Because the repurchase price will
fluctuate based on Book Value, the repurchase price payable for any 20%
increment to be repurchased at a later repurchase target date will not
necessarily equal or exceed that payable for a 20% increment repurchased
at an earlier date under the same repurchase request. There is no
assurance that book value will increase from one year to the next and it
may decline. Under the Current Policy, based upon pending repurchase
requests received by Roundy's on or prior to the end of its preceding
fiscal year (but, without taking into account any requests for
accelerated repurchase, if any, which may have been received from an
estate of a deceased shareholder), 36,544 shares of Class B Common are
expected to be repurchased in 1994 at the book value per share as of
January 1, 1994 of $71.65, for a total repurchase obligation of
$2,618,378. In addition, based upon such pending requests, Roundy's
presently expects to repurchase 25,096 shares of Class B Common in 1995,
16,249 shares in 1996, 10,178 shares in 1997 and 4,168 shares in 1998.
The repurchase price in each year after 1994 will be book value per
share of the Roundy's Stock as of the end of the fiscal year immediately
preceding the date of repurchase, assuming the Current Policy remains
unchanged. The number of shares of Class B Common subject to repurchase
requests in years after 1994 may change based upon receipt of additional
repurchase requests after January 1, 1994 or if the Company should
exercise its discretion under the Current Policy as described in the
final paragraph of this section.
Roundy's obligation to repurchase shares under the Current Policy
is subject to any limitations on repurchases that may be contained in
present or future lending or other agreements of the Company (the
"Contract Limits"). The current Contract Limits are set forth as
Exhibits 4.2 and 4.4 of Roundy's Annual Report on Form 10-K for the
fiscal year ended January 1, 1994 which is incorporated herein by
reference. See, "INCORPORATION OF DOCUMENTS BY REFERENCE." These
generally consist of covenants and restrictions of a type frequently
encountered in similar transactions, such as stockholders' equity to
capital ratios, debt to capital ratios, liability to net worth ratios
and maintenance of certain amounts of working capital and stockholders'
equity. There is no assurance that these Contract Limits will not be
modified. In the event the Contract Limits preclude Roundy's during a
given period of time from repurchasing shares which are the subject of a
repurchase request, or if required repurchases are delayed for any other
reason (in either case, a "Suspension"), redemptions shall be resumed
promptly thereafter in the order of the redemption target dates which
occurred during the period of the Suspension regardless of the dates the
repurchase requests were received and such suspended redemptions shall
be made under the Current Policy prior to redemptions becoming due on
any subsequent redemption target dates. Notwithstanding the foregoing
provisions, stock having a repurchase price of not in excess of $25,000
may be repurchased on an accelerated basis in the sole discretion of
Roundy's in cases of demonstrated hardship.
The Current Policy is subject to change at any time by the Board
of Directors, which changes could have a material adverse affect upon a
stockholder's right to obtain repurchase or redemption of shares that
were issued prior to or during the term of the Current Policy. The
Board presently has no plans to make any material change to the
<PAGE>
repurchase price formula (based on full Book Value) or to lengthen the
five year repurchase period specified in the Current Policy; the Board
would make such a change to the Current Policy only if in the exercise
of the Board's business judgment, such a change becomes necessary or
appropriate to avoid a threat to the financial condition or future
operation of the Company or to realize upon a business opportunity
deemed by the Board to be in the long term best interests of Roundy's
and its various constituencies.
Any stockholder-customer who fails to surrender their Class A
Common for an equal number of Class B Common (see "Exchange of Class A
Common for Class B Common") within 90 days following a customer-
shareholder termination is not eligible for repurchase of shares under
the Current Policy. In addition, the Current Policy does not apply,
according to its terms, to any person who, at the time of such
repurchase, is asserting a challenge to the authority of Roundy's or its
Board of Directors to have adopted any prior, then current or pending
redemption policy or is then asserting a challenge to the enforceability
or validity of Roundy's interpretation or application of any provision
of the then current or any prior redemption policy.
Notwithstanding the Current Policy, the Board of Directors may
cause Roundy's to repurchase or redeem stock of active or inactive
customers or current or former employees on any other terms or under
such other circumstances as the Board deems appropriate, all without the
consent or approval of the other stockholders. For example, the Board
may authorize an accelerated repurchase for hardship purposes on terms
differing from those provided for in the Current Policy (a "Non-Policy
Redemption"). The fact that any one stockholder may be given a Non-
Policy Redemption shall not give rise to similar redemption rights for
any other stockholders and shall not modify the Current Policy.
EXCHANGE OF CLASS A COMMON FOR CLASS B COMMON
Stockholder-customers of Roundy's, upon termination of Active
Customer status, are required to surrender their shares of Class A
Common in exchange for Class B Common, on a share for share basis, in
accordance with a provision of Roundy's By-Laws. Roundy's has imposed
this requirement to comply with the Internal Revenue Code and the
regulations thereunder governing federal income taxation of corporations
operating on a cooperative basis. See "THE COMPANY-Operation as a
Cooperative." Under Section 1036 of the Internal Revenue Code, as
amended, no gain or loss is recognized for federal income tax purposes
by a stockholder who exchanges common stock of a corporation for other
common stock of the same corporation. See "REPURCHASE OF SHARES."
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated
capitalization of the Company as of January 1, 1994:
To Be Out-
standing If
All Stock
Offered Here-
Outstanding by is Sold(1)
------------ ---------------
SHORT-TERM INDEBTEDNESS:
Notes payable and current
maturities of long-term
debt......................... $ 9,060,300 $ 9,060,300
------------ ------------
Total short-term debt.... $ 9,060,300 $ 9,060,300
============ ============
LONG-TERM INDEBTEDNESS (3):
Other long-term debt, 9% to
10%, due 1995 to 2006....... $ 1,162,700 $ 1,162,700
Obligations under capitalized
leases...................... 1,310,800 1,310,800
Industrial Development Bonds,
73% of the prime rate,
due 1995 to 1997............ 521,200 521,200
Senior unsecured notes payable:
10.31%, due 1995 to 1999.... 15,250,000 15,250,000
9.26%, due 1995 to 2001..... 17,500,000 17,500,000
7.57% to 8.26%, due
1995 to 2008................ 22,300,000 22,300,000
6.94%, due 1997 to 2003..... 45,000,000 45,000,000
Notes payable under revolving
credit agreements at 6%,
due 1997.................... 10,000,000 10,000,000
------------ ------------
Total long-term debt $113,044,700 $113,044,700
============ ============
CAPITAL STOCK:
Class A Common, $1.25 par
value, 60,000 shares
authorized.................. 15,500 27,300
Class B Common, $1.25 par
value, 2,400,000 shares
authorized (2).............. 1,140,302 1,207,873
(1) The column "To Be Outstanding" reflects the sale and issuance of
Roundy's shares of Class A Common and Class B Common hereunder,
although this offering is not underwritten and there is no
assurance that any of such shares offered will be sold.
(2) Over the past several years, Roundy's has issued shares of
Roundy's Class B Common as the major portion of its patronage
dividend payments. (See "THE COMPANY.") It is expected that
shares of Roundy's Class B Common will be issued in this manner in
the future.
(3) The prime interest rate was 6.0% and 6.25% at January 1, 1994 and
April 2, 1994, respectively.
<PAGE>
SELECTED FINANCIAL INFORMATION
(Dollars in thousands, except per-share data and ratios)
The selected financial information for the five-year period ended
January 1, 1994 should be read in conjunction with the Roundy's, Inc.
and Subsidiaries Consolidated Financial Statements and notes thereto
included elsewhere in this Prospectus.
Fiscal Year
-------------------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
Net sales and
service fees $2,480,254 $2,491,293 $2,534,418 $2,501,465 $2,331,091
Earnings before
patronage dividends
and income taxes 20,053 16,528 14,826 16,724 15,617
Patronage dividends 5,301 5,135 3,305 5,549 5,007
Earnings before
income taxes 14,752 11,393 11,521 11,175 7,924
Net earnings 8,028 7,353 6,813 6,507 6,053
Total assets 380,092 390,148 390,797 390,356 371,221
Long-term debt 113,045 135,420 139,283 140,435 149,349
Stockholders'
equity (1) 86,066 78,573 70,917 65,236 59,389
Book value per share 71.65 65.10 58.75 53.10 47.35
Ratio of current
assets to current
liabilities 1.64:1 1.70:1 1.66:1 1.59:1 1.69:1
Ratio of long-term
debt to stockholders'
equity 1.31:1 1.72:1 1.96:1 2.15:1 2.51:1
(1) Including patronage dividends payable in Common Stock of
$3,263,000, $3,210,000, $2,212,000, $3,414,000 and $3,312,000 for
1993, 1992, 1991, 1990 and 1989, respectively.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES. During 1993, the Company continued to
improve its capital structure through increased stockholders' equity,
lower debt and refinancing of high interest rate debt with lower
interest rate long-term debt. The combination of an excellent capital
market and low interest rates together with the Company's improved debt
ratios, enabled Roundy's to access the long-term debt market at very
favorable rates. The Company, in December 1993, replaced $25 million of
11.26% notes with $45 million of 6.94% notes with a ten year term and
used the remaining proceeds to reduce its borrowings under its revolving
credit agreement. The Company plans to prepay $9.75 million of its
10.31% senior notes on the first available prepayment date in late 1994.
The Company's goal is to continue to reduce its long-term debt to
equity ratio which was 1.31:1 in 1993 and 1.72:1 in 1992, yet keep all
options for providing capital resources, available to management. With
the additional reduction in floating rate debt, the Company continued to
minimize its exposure to major fluctuations in interest rates. The
percentage of floating rate debt to total long-term debt declined to
approximately 9% in 1993 from 30% in 1992.
As a result of the long-term refinancing, there was a need to
modify a portion of the Company's revolving credit agreement which was
due to expire in March, 1995. The entire agreement was modified and
extended until March, 1997. The revised agreement includes a provision
for a lower spread on interest rates indexed to the London Interbank
Offered Rate ("LIBOR"). Management views the extension and the positive
modification as an indication of the banking community's support for
Roundy's during a turbulent time within the grocery industry. It is
management's intention to continue to use this type of borrowing
vehicle, particularly when it provides a low cost option as it did
during the last two years.
The Capital Structure table illustrates the growing percentage of
stockholders' equity to total capital which is 43.2% in 1993 compared to
36.7% in 1992. This positive trend was primarily the result of the
$22.4 million decline in total long-term debt in 1993 and $7.5 million
increase in stockholders' equity.
Roundy's average daily borrowings declined $2.6 million in 1993
compared to 1992 and $4.2 million compared to 1991. The more significant
factors which contributed to both the improvement in Roundy's capital
structure in 1993 and the decline in borrowing requirements include an
$11.6 million reduction in inventories, a $7.9 million increase in
proceeds from the sale of property and equipment and other productive
assets versus 1992 proceeds and a reduction in operating and
administrative expenses as a percentage of net sales and service fees
from 8.5% in 1992 to 8.3% in 1993. Net cash flows provided by operations
increased $14.5 million in 1993 compared to 1992. This improvement
demonstrated the commitment of management to reduce inventory and
receivables and take costs out of the system directed at reducing
borrowing levels. From 1990 to 1993, management has reduced average
daily borrowings by $8.0 million.
<PAGE>
Although capital expenditures declined approximately $2.0 million
from 1992, they exceeded 1991 levels by $1.5 million. Management is
committed to continuing to invest in physical facilities, its
transportation fleet and customer related systems. In this regard,
1994's capital expenditure budget has been set at $17 million. The
largest portion of the expenditures is directed at new transportation
equipment, retail store renovations and facility modernization.
Management continues to emphasize the necessity to monitor and
control working capital levels. Our goal is to maintain working capital
necessary to meet debt covenant requirements, but to avoid investing
significant funds in nonearning assets. In this regard, total working
capital declined $5.5 million. The key factors affecting this change
were an $11.6 million reduction in inventory, a $5.9 million increase in
cash, an increase in accounts payable of $2.4 million and an increase in
accrued expenses of $2.9 million. During 1993, management implemented
new programs directed at lowering inventory levels and days sales
outstanding in accounts receivable. These continue to be areas of high
scrutiny. Management believes strongly that the continued emphasis on
controlling these areas are important factors in lowering borrowing
levels.
Book value per share increased to $71.65 or 10.1%. Since 1990,
book value per share has increased $18.55 per share or 34.9%. Patronage
dividends paid during this same three year period exceeded $13.7
million. It is important to note that 1991 earnings and patronage
dividends were reduced by the costs incurred during the labor dispute at
our largest wholesale division. During the period of 1991 through 1993,
stockholders' equity increased $20.8 million. This represents a 32%
growth in the net worth of the Company during a very competitive period
within the industry.
RESULTS OF OPERATIONS. Net sales and service fees declined $11.0 million
in 1993 from 1992 and $54.2 million from 1991. The 0.4% decline from
1992 can be attributed to several factors, including the loss of $15
million in sales resulting from the sale of Roundy's dairy and ice cream
operations in the early Fall of 1993; secondly, 1992 was a 53 week year
for Roundy's compared to 52 weeks for 1993; and finally, a $10 million
reduction in sales created by a major price decline in cigarettes
in 1993. After adjusting for these factors, 1993 net sales and service
fees increased in 1993 versus 1992 by $61 million or 2.4%. The decline
from 1991 is attributable to the loss of a major customer who sold his
entire retail operation to another wholesaler. Management believes, in
view of events happening in our market area that 1994 net sales and
service fees will increase due to the addition of new customers and
increased concentration from our existing customer base.
With the industry's continuing trend toward an "every day low
price" (EDLP) concept, there has been continuing pressure on margins.
The Company has experienced a decline in gross profit margins as a
percentage of net sales and service fees from 9.6% in 1991 and 1992 to
9.4% in 1993. It is management's belief that the pressures on margins
will continue in 1994 and wholesalers will have to seek alternative
methods to replace the declines in gross profit margins.
Operating and administrative expenses continued to decline in
1993, both in dollars and as a percent of net sales and service fees. In
1993, these expenses were 8.3% of net sales and service fees compared to
8.5% in 1992 and 8.6% in 1991. Management continues to look at this
category for further reductions which will help offset projected future
<PAGE>
declines in gross profit margins. Accordingly, a major effort was
undertaken during the past year to review and modify all compensation
and health care benefit programs, to evaluate possible consolidation of
functions within divisions, to consider further reductions in inventory
and thereby reduce related handling costs and to implement new systems
directed at improving efficiencies and the faster flow of information at
all levels within the Company. In this regard, management members are
active participants in the industry studies currently being conducted on
Efficient Consumer Response ("ECR") as they relate to inventory. It is
believed that all or some portion of this concept will benefit the
Company in lowering operating costs and benefit our customers in
enabling us to continue to provide them with the lowest cost of goods
available.
Management continued to seek opportunities to reduce debt,
strengthen its balance sheet and reduce interest expense. As mentioned,
the Company took several steps to achieve these goals including reduced
inventory levels, implementing automatic clearing house ("ACH") payment
programs to reduce receivables, seeking extended terms from vendors and
looking at charging vendors fees for poor performance. A major step was
taken in December 1993, when Roundy's elected to retire early, $25
million of 11.26% notes. The financial impact of this early retirement
was an extraordinary loss of $1.3 million, which was reflected in the
1993 Statement of Consolidated Earnings. Interest expense as a result of
both a decline in average daily borrowings and an improvement in rates
declined $1.0 million in 1993 compared to 1992 and $3.4 million compared
to 1991. At the end of 1993, Roundy's average cost of long-term debt was
7.9% compared to 8.6% in 1992 and 9.2% in 1991.
Effective income tax rates for 1993, 1992 and 1991 were 40.5%,
41.3% and 40.9%, respectively. The 1993 effective income tax rate
reflects increases resulting from President Clinton's new tax program as
well as the impact of the various state tax rates and jobs and other tax
credits. In 1992, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," issued by the
Financial Accounting Standards Board. The $660,000 cumulative effect of
adopting this statement is included in 1992 earnings.
Net earnings of Roundy's were the highest in the history of the
Company. Net earnings in 1993 were .32% of net sales and service fees
compared to .30% for 1992 and .27% for 1991. Net earnings in 1993 were
positively impacted by the gain from the sale of the Company's dairy and
ice cream operations. Management made the decision that these businesses
were not part of the "core" business in which the Company wanted to
concentrate future capital and management energies. It is believed that
these resources could be better deployed in retail and wholesale
operations to strengthen the Company for the future. Offsetting the
gain was the cost of the early retirement of debt. Management believes
that the recent influx of new business, coupled with the major emphasis
on cost reduction and control, will offset the continuing decline in
margins and increase net earnings in 1994.
<PAGE>
________________________________________________________________________
Capital Structure (in millions) 1993 1992
________________________________________________________________________
Long-term debt $111.7 56.1% $133.7 62.5%
Capitalized lease
obligations 1.3 0.7% 1.7 0.8%
________________________________________________________________________
Total long-term debt 113.0 56.8% 135.4 63.3%
Stockholders' equity 86.1 43.2% 78.6 36.7%
________________________________________________________________________
Total capital $199.1 100.0% $214.0 100.0%
________________________________________________________________________
<PAGE>
THE COMPANY
General
- -------
Roundy's, Inc. and its subsidiaries (collectively the "Company")
are engaged principally in the wholesale distribution of food and
nonfood products to supermarkets and warehouse food stores located in
Wisconsin, Illinois, Michigan, Indiana, Ohio, Iowa, Kentucky, Missouri,
Pennsylvania, Tennessee and West Virginia. The Company also owns and
operates 12 retail warehouse food stores under the name "Pick 'n Save,"
one limited assortment food store under the name "Price Less Foods," one
limited assortment food store under the name "Mor For Less" and five
conventional stores under the name "Cardinal Food Gallery" or "Buy Low
Foods." The Company offers its retail customers a complete line of
nationally-known name brand merchandise, as well as its own private
labels, including "Roundy's," "Old Time," "Scot Lad," "Spring Lake,"
"Perfect Match," "Shurfine," "Price Saver," "Buyers' Choice," "Super
Choice," "Sunny Valley," "Sunny Acres," "Sunny Acre Farms," "Classic,"
"Bonnie Blue," "Valu-Check'd," "Gold Coin," and "Meadow Moor Farms."
The Company services 1,130 retail grocery stores and 682 convenience
stores.
In addition to the distribution and sale of food and nonfood
products, the Company provides specialized support services for retail
grocers, including promotional merchandising and advertising programs,
accounting and inventory control, store development and financing and
assistance with other aspects of store management. The Company
maintains a staff of trained retail counselors who advise and assist
individual owners and managers with store operations.
Roundy's, Inc. was incorporated in 1952 under the Wisconsin
Business Corporation Law. The Company's executive offices are located
at 23000 Roundy Drive, Pewaukee, Wisconsin 53072, and its telephone
number is (414) 547-7999. Unless the context indicates otherwise, as
used herein, the term "Company" refers to Roundy's, Inc. and its
subsidiaries and the term "Roundy's" refers to Roundy's, Inc. without
its subsidiaries.
Operation as a Cooperative
- --------------------------
Roundy's operates its food wholesale business as a cooperative and
determines its Federal income tax liabilities under Subchapter T of the
Internal Revenue Code, which governs the taxation of corporations
operating on a cooperative basis. Substantially all of the outstanding
Class A (voting) Common Stock of Roundy's is owned by the owners
("stockholder-customers") of 155 retail grocery stores serviced by the
cooperative. These stockholder-customers, who own approximately 69% of
the combined total of Class A (voting) and Class B (non-voting) Common
Stock of Roundy's, receive patronage dividends from Roundy's based on
the sales of Roundy's to such stockholder-customers. The patronage
dividend is payable in at least 20% in cash and the remainder in Class B
Common Stock. Patronage dividends for the last three fiscal years were
payable 30% in cash and 70% in Class B Common Stock. Under Subchapter T
of the Internal Revenue Code, patronage dividends are deducted by
Roundy's, and are generally taxable to the stockholder-customers
(including the value of the Class B Common Stock), for Federal income
tax purposes.
<PAGE>
The subsidiaries of Roundy's do not operate as cooperatives. The
customers serviced by these subsidiaries are independent grocers,
operating 975 retail stores and 682 convenience stores, and do not
receive patronage dividends. In addition, approximately 31% of the
outstanding Common Stock of Roundy's is held by employees or former
customers of Roundy's and, although they participate in the accumulation
of equity in the consolidated Company, they do not receive patronage
dividends and do not own any Class A (Voting) Common Stock.
The applicable laws, regulations, rulings and judicial decisions
affecting the determination of whether a corporation qualifies as a
cooperative for Federal income tax purposes under Subchapter T of the
Internal Revenue Code are subject to interpretation. Management
believes that Roundy's qualifies as a cooperative for such purposes. If
the Internal Revenue Service were to challenge the cooperative status of
Roundy's, and if Roundy's were to be unsuccessful in defending such
status, Roundy's might incur a Federal income tax liability with respect
to patronage dividends previously paid to stockholder-customers during
the tax years in question and deducted by Roundy's. Roundy's thereafter
might incur significantly increased consolidated Federal income tax
liabilities in future tax years.
Wholesale Food Distribution
- ---------------------------
The Company distributes a broad range of food and non-food products to
its customers and to corporate-owned retail stores. The Company has
seven product lines: dry grocery, frozen food, fresh produce, meat,
dairy products, bakery goods and general merchandise. The Company has
no long-term purchase commitments and management believes that the
Company is not dependent upon any single source of supply. No source of
supply accounted for more than 5% of the Company's purchases in fiscal
1993.
The Company sells brand name merchandise of unrelated manufacturers,
including most nationally advertised brands. In addition, the Company
sells numerous products under private labels, including "Roundy's,"
"Old Time," "Scot Lad," "Spring Lake," "Perfect Match," "Shurfine,"
"Price Saver," "Buyers' Choice," "Super Choice," "Sunny Valley," "Sunny
Acres," "Sunny Acre Farms," "Classic," "Bonnie Blue," "Valu-Check'd,"
"Gold Coin," and "Meadow Moor Farms." Private label product sales for
the Company accounted for $137,176,000, $148,074,000 and $128,132,000 of
the Company's sales during fiscal 1993, 1992 and 1991, respectively.
Roundy's, exclusive of its subsidiaries, operates as a cooperative with
respect to its wholesale food distribution business. Roundy's
cooperative operations accounted for approximately 36%, 34% and 31% of
the Company's consolidated net sales and service fees for the fiscal
years ended January 1, 1994, January 2, 1993 and December 28, 1991,
respectively. At January 1, 1994, Roundy's had 83 stockholder-customers
actively engaged in the retail grocery business, operating a total of
155 retail grocery stores. Roundy's cooperative wholesale food business
is focused primarily in Wisconsin, where all but 21 of the 155 retail
grocery stores are located (8 are in Illinois and 13 are in Indiana).
At January 1, 1994 the Company had 975 independent retail food stores
and 682 convenience store customers. Sales by the Company to the
independent retail food and convenience stores accounted for 55%, 56%
and 56% of the Company's consolidated net sales and service fees for the
fiscal years ended January 1, 1994, January 2, 1993 and December 28,
1991, respectively.
<PAGE>
The Company's primary marketing objective is to be the principal source
of supply to both its stockholder-customers and other independent
retailers. In an 11 state area the Company serviced 155 retail grocery
stores operated by its stockholder-customers, 975 independent retail
stores, 682 convenience stores, and 19 Company-owned and operated retail
stores during the fiscal year ended January 1, 1994. Of the Company's
consolidated net sales and service fees for this period, $459,206,000 or
18.5% were attributable to five customers, with one customer accounting
for $169,193,700 or 6.8% of such sales. Approximately 83% or 941 retail
store customers purchased less than $3,000,000 each from the Company in
the fiscal year ended January 1, 1994. 102 customers owned more than
one retail food store, with one customer owning 13 retail food stores.
The Company generally distributes its various product lines by a fleet
of 270 tractor cabs and 650 trailers and some products are shipped
direct from manufacturers to customer locations. Most customers order
for their stores on a weekly basis and receive deliveries from one to
five days a week. Orders are generally transmitted directly to a
warehouse computer center for prompt assembly and dispatch of shipments.
The Company has retail counselors and merchandising specialists who
serve its customers in a variety of ways, including the analysis of and
recommendation on store facilities and equipment; development of
programs and objectives for establishing efficient methods and
procedures for receipt, handling, processing, checkout and other
operations; informing customers on latest industry trends; assisting and
dealing with training needs of customers; and, if the need arises,
acting as liaison or problem solver between the Company and the
customers. The retail counselors and specialists are assigned a
specific geographic area and periodically visit each customer within
their assigned area.
The Company renders statements to its customers on a weekly basis to
coincide with regular delivery schedules. Roundy's accounts of single
store owners are considered delinquent if not paid on the statement
date. Accounts of multiple store owners are considered delinquent if
not paid within three days of the statement date. Accounts of Roundy's
subsidiaries are considered delinquent if not paid within seven days of
the statement date. The majority of accounts are collected via the
Automated Clearing House ("ACH") system. Delinquent accounts are
charged interest at the rate of prime plus 5%, computed on a daily
basis. During each of the past three fiscal years, the Company's bad
debt expense has been less than .28% of sales. In 1993, 1992 and 1991,
the Company's bad debt expense was $6,738,600, $5,772,900 and
$4,030,300, respectively.
Roundy's stockholder-customers are required to maintain buying deposits
with Roundy's equal to the greater of the average amount of a
stockholder-customer's purchases over a two-week period of $20,000. The
book value of Class A and Class B Common Stock of Roundy's owned by a
stockholder-customer is credited against the buying deposit requirement,
and Roundy's has a lien against all such stock to secure any
indebtedness to Roundy's.
Retail Food Stores
- ------------------
The Company operates three types of corporate stores (high volume-
limited service retail "warehouse" stores, high value-limited assortment
retail stores and conventional retail stores). The high volume-limited
service warehouse stores are designated as "Pick 'n Save" which
generally offer, at discount prices, complete food and general
<PAGE>
merchandise lines to the customer, emphasizing higher demand items, with
stores ranging in square footage from 34,000 to 65,000 square feet per
store. The high value-limited assortment retail stores are designated
as "Mor For Less" or "Price Less Foods" which emphasize low cost, high
value lines to the customer, with stores ranging in square footage from
15,000 to 24,000 square feet per store. Conventional retail stores
operated under the name "Cardinal Food Gallery" or "Buy Low Foods"
generally emphasize full service to the customer at competitive prices.
These stores range in square footage from 25,000 to 42,000 square feet.
The number of stores operated by the Company at the end of its three
most recent fiscal years was as follows:
Type of Store 1993 1992 1991
- ---------------------------- ------ ------ ------
High Value-Limited Assort-
ment and High Volume-Limited
Service Stores (Warehouse
food stores...................... 14 14 19
Conventional Retail Stores....... 5 5 5
Sales of Company-operated stores during the three most recent fiscal
years were $238,724,000, $263,189,000 and $304,676,000 for 1993, 1992
and 1991, respectively. The additional volume of wholesale sales
generated by the retail stores owned and operated by the Company helps
to reduce the overhead of the business and increases the Company's
return to its stockholders.
Employees
- ---------
At the end of fiscal year 1993, the Company had employed full-time 1,183
executive, administrative and clerical employees, 1,463 warehouse and
processing employees and drivers and 563 retail employees and had
employed 1,952 part-time employees. Substantially all of the Company's
warehouse employees, drivers and retail employees are represented by
unions, with contracts expiring in 1994 through 1998. The Company
considers its employee relations to be normal. However, during the
third quarter of 1991 the Company experienced a 12-week labor dispute at
the Milwaukee Division. There have been no other significant work
stoppages during the last five years. Substantially all full-time
employees are covered by group life, accident, and health and disability
insurance.
Competition
- -----------
The grocery industry, including the wholesale food distribution
business, is characterized by intense competition and low profit
margins. The shifting of market share among competitors is typical of
the wholesale food business as competitors attempt to increase sales in
any given market. In order to compete effectively, the Company must
have the ability to meet rapidly fluctuating competitive market prices,
provide a wide range of perishable and nonperishable products, make
prompt and efficient delivery, and provide the related services which
are required by modern supermarket operations.
<PAGE>
The Company competes with a number of local and regional grocery
wholesalers and with a number of major businesses which market their
products directly to retailers, including companies having greater
assets and larger sales volume than the Company. Roundy's stockholder-
customers and the Company's corporate stores also compete with several
chain store organizations which have integrated wholesale and retail
operations. The Company's competitors range from small local businesses
to large national and international businesses. The Company's success
is in large part dependent upon the ability of its independent retail
customers and its stockholder-customers to compete with larger grocery
store chains.
In the Milwaukee area, the "Pick 'n Save" group, which consists of both
independently and Company-owned stores, continues to be the market share
leader with 47% as reported in the Milwaukee Journal Consumer Analysis
Survey taken in the Fall of 1993.
In competing for customers, emphasis is placed on high quality and a
wide assortment of product, low service fees and reliability of
scheduled deliveries. The Company believes that the range and quality
of other business services provided to retail store customers by the
wholesaler are increasingly important factors, and that success in the
wholesale food industry is dependent upon the success of the Company's
customers who are also engaged in an intensely competitive, low profit
margin industry.
Stockholder-Customers
- ---------------------
Substantially all of Roundy's retail supermarket customers are also
stockholders of Roundy's. Roundy's does not require that its
stockholders buy merchandise exclusively from Roundy's or that they
purchase a minimum amount of merchandise in order to remain
stockholders; however, Roundy's must be their principal source of supply
for them to remain a Class A (voting) shareholder. See "EXCHANGE OF
CLASS A COMMON FOR CLASS B COMMON." However, in order to continue to be
supplied by Roundy's, stockholders must meet certain minimum order
quantities. Generally, Roundy's will stop selling to a shareholder only
when there has been nonpayment for merchandise delivered or indebtedness
payable to Roundy's or the stockholder defaults in the payment of
indebtedness that Roundy's has guaranteed. In the event of such a
termination, Roundy's will repurchase such persons Common Stock subject
to the limitations described under "REPURCHASE OF SHARES."
Each stockholder-customer of Roundy's is required to maintain a buying
deposit for each store in an amount equal to the greater of $20,000 or
the estimated amount of purchases by the stockholder-customer from
Roundy's warehouse over a two-week period. A stockholder-customer may
fulfill this buying deposit requirement by purchasing shares on an
installment basis. See Exhibit B attached hereto. This requirement may
be satisfied by either a cash deposit in the specified amount or the
subscription to purchase Class A Common and/or Class B Common in such
amount and the pledge of that stock as collateral for the customer's
purchases. Roundy's reserves the right to increase the amount of the
buying deposit required.
In addition to the buying deposit described above, Roundy's By-Laws
provide that Roundy's has a lien against all outstanding Class A Common
and Class B Common as security for the payment, from time to time and as
often as the same may become due and payable, of any and all obligations
of the holder to Roundy's and no shares of stock held by a stockholder-
<PAGE>
customer will be transferred on the books of Roundy's until all
obligations of the stockholder-customer to Roundy's have been paid in
full. If, at the time of a repurchase of stock from a stockholder-
customer, that person has an unpaid obligation to Roundy's, or to any of
its subsidiaries, the amount of that obligation will be deducted from
the proceeds payable upon the repurchase of that stock. For a
description of other restrictions on transfer of stock contained in the
Company's By-Laws, see "DESCRIPTION OF STOCK--Restrictions on Transfer."
Stockholder-Customer Savings
- ----------------------------
Roundy's attempts to provide cost savings to stockholders-customers
through competitive prices and through patronage dividends.
1. Competitive Prices. By pooling the buying power of its
stockholder-customers, Roundy's is able to purchase a greater variety of
goods in larger quantities and at lower prices than would be generally
available to individual retail grocers. Roundy's cost savings from such
bulk purchasing (including that resulting from retail sales and sales to
nonstockholders) are reflected in Roundy's prices.
While the number of different items sold in the grocery industry makes
exact price comparisons impractical and potentially misleading, Roundy's
believes that its overall pricing structure presently compares favorably
with the pricing structures of its competitors after accounting for the
benefits that have historically been available to stockholder-customers.
In addition, Roundy's advises stockholder-customers and encourages them
to use to full advantage the merchandising and promotional programs of
Roundy's own suppliers. Future competitive conditions and the
merchandising and promotional programs of suppliers are not presently
predictable with a significant degree of reliability so that there can
be no assurance that any competitive price advantage Roundy's may have
at a given time will be able to be maintained.
2. Patronage Dividends. The Revenue Act of 1962 (the "Act") provides
for the taxation of cooperatives and their patrons so as to insure that
the business earnings of cooperatives are taxable either to the
cooperative or to the patrons. Roundy's operates on a cooperative basis
with respect to business transactions with its stockholder-customers
and, as a result, it and its stockholder-customers are taxed in the same
manner.
Roundy's is obligated by Article V of its By-Laws, as amended on
December 12, 1989, to pay a patronage dividend to its stockholder-
customers out of and based upon net earnings from business done by
Roundy's with such stockholder-customers in an amount which would reduce
the net income of the Company to such amount as would result in an
increase of 10% in the net book value per share of the Company's
outstanding Common Stock as of the close of such fiscal year (calculated
after the payment of patronage dividends). For example, book value at
January 1, 1994 was $71.65 per share. No patronage dividends for the
year ending December 31, 1994, may be paid until $7.17 (10% of $71.65)
per share is added to such book value. Based upon the number of shares
outstanding at January 1, 1994, earnings in the aggregate amount of
$8,287,100 must be retained before patronage dividends may be paid. Any
increase in book value per share over $7.17 must be distributed in the
form of patronage dividends to the extent permitted by the Internal
Revenue Code. Income from the operations of subsidiaries and other
incidental income, such as from investments in securities and from the
sale or exchange of capital assets, constitutes income derived from
<PAGE>
sources other than patronage and is not permitted by the Internal
Revenue Code to be distributed as patronage dividends. Consequently,
the book value per share may increase by more than 10% in any year.
Previous to the December 13, 1988 and the December 9, 1986 amendments to
the By-Laws, which required the net book value per share to increase by
12% and 15%, respectively, the net book value per share had to increase
by 12%. The Board of Directors of the Company annually reviews Article
V of its By-Laws to insure the requirements contained therein are
consistent with Company goals. The increases in book value per share of
Common Stock outstanding for the last three years are as follows:
Fiscal Increase in Book Minimum Requirement
Year Value Per Share Per Article V of By-Laws
- ------ ---------------- ------------------------
1993 10.1% 10%
1992 10.8% 10%
1991 10.6% 10%
There can be no assurance that patronage dividends will be paid in the
future, and, if paid, there can be no assurance of the amount or form of
payment thereof. A copy of Article V of the By-Laws, as amended, is
attached hereto as Exhibit C.
Patronage dividends are payable in the fiscal year following the fiscal
year in which accrued. At least 20% of the amount of patronage dividend
must be paid in cash, but a greater percentage may be paid in cash
depending on the cash needs of the Company at the time and the necessity
of compliance with the terms of the Company's credit agreements.
Patronage dividends, if any, are determined on the basis of qualifying
sales by Roundy's to its stockholder-customers. They are therefore
based on sales volume and not on existing stock holdings. While
stockholder-customer effecting larger purchases from Roundy's may have a
greater stock equity in Roundy's, the voting power of such customers
will not increase in proportion because the shares of Roundy's Class B
Common distributed as patronage dividends are non-voting shares. (See
"DESCRIPTION OF STOCK" and "VOTING TRUST".)
Sections 1381 through 1388 of the Act provide that if 20% or more of the
total patronage dividend is paid in cash and the balance in "qualified
written notices of allocation", then Roundy's, when computing its
taxable income, may deduct the total patronage dividend. The
stockholder-customers who receive "qualified written notices of
allocation" (Class B Common issued by Roundy's) are, in turn, required
to include the full stated dollar amount of the Class B Common and the
cash received in their respective tax returns as income when received.
A "written notice of allocation" becomes "qualified" when the
stockholder-customer consents to take the Class B Common into its income
at the stated dollar amount. This consent exists when a person signs a
written consent or when such person becomes a stockholder or remains a
stockholder after receiving written notice and a copy of Roundy's By-Law
provision stating that a person becoming or remaining a stockholder of
Roundy's shall be deemed to have given the requisite consent. Each new
stockholder-customer of Roundy's is required to sign a consent which
makes the certificates representing shares of Class B Common issued to
that stockholder qualified written notices of allocation. The
requirement to pay 20% of the patronage dividend in cash has had no
material adverse effect on Roundy's.
<PAGE>
The following table sets forth the total amount of patronage dividends
paid to stockholder-customers with respect to purchases during the past
four years, the percentage paid in cash and in securities and the number
of shares of Class B Common issued:
Securities
---------------------
Year Ended Total Dividend Cash % % No. of Shares
- ----------------- --------------- ------ --- -------------
January 1, 1994 $5,300,700 30 70 45,490
January 2, 1993 5,134,700 30 70 46,259
December 28, 1991 3,304,600 30 70 37,230
December 29, 1990 5,549,200 30 70 58,928
In each year in which patronage dividends are paid, the Board of
Directors determines the percentage to be paid in cash and in
securities. This percentage is applied to the dollar amounts determined
as the patronage dividend payable to each respective stockholder-
customer, to determine the number of shares to be distributed to such
person. The total dollar amounts payable in cash and in securities in
any given year to all stockholder-customers will not correspond exactly
to the given percentages, principally because of rounding to avoid the
issuance of fractional shares, and because patronage dividends payable
to former stockholder-customers whose shares have been redeemed during
the fiscal year are, in most cases, paid entirely in cash.
The above statements relating to the taxation of cooperatives under the
Act are representations of the management of Roundy's.
Roundy's may in its sole discretion pay patronage dividends to
nonstockholder-customers. No such dividends have been paid in the last
four years. Persons who are not customers of Roundy's are not entitled
to receive patronage dividends. Computation of the amount of patronage
dividends payable to stockholder-customers in any year is made after the
determination of patronage dividends, if any, payable to nonstockholder-
customers.
For further information with respect to patronage dividends, reference
is made to Article V of Roundy's By-Laws.
Stockholder-Customer Services
- -----------------------------
Roundy's provides a variety of services described below to its
stockholder-customers to help them maintain a competitive position
within the retail grocery industry. Roundy's charges for certain of
these services and provides other services as a general stockholder-
customer benefit. Such services are generally not offered to customers
who are not stockholders, but upon specific request of such a customer
some of these services may be rendered for a fee, in the discretion of
the Officers of Roundy's. Overall, the net income generated by these
services is not material.
Roundy's services to stockholder-customers include the following:
1. Pricing Services. Substantially all of the stockholder-customers
of Roundy's participate in one of three voluntary pricing program
options. Under each option, the individual retailer retains full resale
pricing discretion.
<PAGE>
a. Zone Pricing. For each item Roundy's delivers to
stockholder-customer stores there have been established several
suggested retail price zones. The stockholder-customer elects to have
his merchandise invoiced and priced at one of these zones based on his
competitive situation and location in the trading area. The retail
price that he chooses will be indicated on all of his invoices and on up
to ten cases of each item in every delivery. Approximately 45% of the
stockholder-customers participate in the suggested zone pricing service.
b. Custom Pricing. Stockholder-customers who wish to create
and maintain their own unique pricing structure participate in the
"custom pricing" program. Subscribing stockholder-customers provide
Roundy's with the retail price they wish to maintain on each item, and
Roundy's indicates these figures on the invoices and on up to ten cases
of each item in each delivery. The stockholder-customer may update this
pricing structure weekly in accordance with changes in wholesale costs
and competitive activity in his particular market area. Approximately
48% of the stockholder-customers participate in custom pricing.
c. Special Individual Pricing ("SIP"). Those stockholder-
customers desiring a more competitive pricing structure than zone
pricing but with less administrative requirements than custom pricing
may choose a SIP schedule. This allows a stockholder-customer to select
from each of the zones certain categories of merchandise to meet his
particular competitive needs. Suggested retail prices are changed
periodically to reflect changes in the wholesale cost of the item. In
all cases the stockholder-customer may make price changes on merchandise
within their stores as required by their own competitive market
situation. Approximately 7% of the stockholder-customers subscribe to
SIP pricing.
2. Ordering Assistance. Roundy's provides various programs to
increase the speed and efficiency of the order transmittal process. It
sells or rents to retailers electronic units with which the retailer can
transmit his orders electronically by telephone.
3. Point of Sale Host-Computer Support. Upon request, Roundy's will
provide assistance to the retailer and computer support in connection
with the retailer's adoption and use of scanners at the checkout
counter.
4. Velocity Reports. If desired, Roundy's can provide detailed
summaries of all items ordered by the retailer from Roundy's, together
with pricing, prior period, and profit margin data.
5. Store Engineering. Roundy's Store Engineering department aids
stockholder-customers in equipment procurement, store engineering and
site development activities. For a fee, Roundy's will provide plat
plans, floor plans, elevations and other drawings for new or remodeled
stores, construction cost estimates and design consultation. In
addition, the department can procure many types of store fixtures and
equipment at a price reflecting a volume discount.
<PAGE>
6. Customer Loans. Roundy's has maintained a continuous effort to
assist qualified stockholder-customers to remodel and expand existing
retail locations and to develop new retail outlets. The Company's loans
receivable as of January 1, 1994 are summarized in the table below (2).
Outstanding
Number Balance Range of Range of
of Original as of Interest Maturity
Loans Amount Jan. 1, 1994 Dates Dates
Inventory, ----- ----------- ------------ ----------- ---------
Equipment
Loans 141 $33,967,000 $25,750,400 Variable(1) 1994-2011
________________
(1) Variable rates based on the Company's cost of borrowing.
(2) The Company has guaranteed customer bank loans and customer
leases amounting to $4,600,100 and $1,170,300, respectively at January
1, 1994. These amounts are not included in the table above.
7. Lease Program. The Company has a lease program under which it may
in its discretion lease prime store sites and equipment for sublease to
qualified customers. This enables customers to compete with large
grocery store chains for choice sites at favorable rates. The Company
presently has such real estate and equipment leases with lease terms
from 1994 to 2018. Aggregate lease rentals received under this program
were $18,985,200, $18,590,300 and $17,326,800 in 1993, 1992 and 1991,
respectively.
8. Retail Accounting. Roundy's has a retail accounting program
available for stockholder-customers using its data processing equipment
and expertise. The service includes general ledger, payroll, personnel
reports, sales and income tax returns, accounts payable and financial
reporting. Stockholder-customers may select any one or more parts of
the program or the complete package. Approximately 73 stores
participate in this program. The service charges depend on the services
received by the stockholder-customer.
9. Group Advertising. Roundy's regularly sponsors institutional
brand advertising of Roundy's and Old Time products for all stores on a
continuing basis. This advertising, which may include TV, radio,
newspaper and anniversary sales is intended to help promote the sales of
the Roundy's private label products. All stockholder-customers may
utilize Roundy's Group Advertising Program. Each week these retailers
receive ad planners with suggested feature items together with window
signs, shelf talkers and newspaper layouts. The Group Advertising Staff
assists the stores in the improvement of their local advertising
program.
10. Bakery Program. Retailers participate in Roundy's bakery program,
taking advantage of centralized buying. Three programs are offered:
rack service stocked by the bakery representative, with and without
returns on unsold merchandise, and drop shipments without returns. All
programs are delivered directly from the supplier to the retailer, but
are billed through Roundy's.
11. Merchandising. Roundy's merchandising service advises customers
on such matters as in-store promotions, internal store arrangements and
shelf utilization.
<PAGE>
12. Insurance. Roundy's has a general insurance agency that markets
commercial property and casualty, personal lines, all group products,
and life insurance. The agency primarily specializes in programs for
the food industry.
13. Real Estate. Roundy's has a real estate department that provides
site surveys, financial projections, business valuations, lease
negotiations, and sales of supermarkets and residential properties.
14. Retail Training Programs. Roundy's has instituted and maintained
an ongoing training program for its stockholder-customers. The planned
programs include professionally conducted seminars relating to all
departments of the store and management. The programs are also geared
to present the retailers with up-to-date information on market changes
and new innovations on energy, productivity and scanning. The program
also makes available to the retailer a film library, home study courses,
programmed instructions, manuals and an audiscan program to train fully
all of the retailer's employees.
15. Miscellaneous Advisory Services. Roundy's has retail counselors
and merchandising specialists, who serve the stockholder-customers in a
variety of ways, including the analysis of and recommendations on store
facilities and equipment; development of programs and objectives for
establishing efficient methods and procedures for receipt, handling,
processing, checkout and other operations; informing stockholder-
customers on latest industry trends; assisting in dealing with training
needs of stockholder-customers; and, if the need arises, acting as
liaison or problem-solver between Roundy's and the stockholder-customer.
The retail counselors and specialists are assigned specific geographic
areas and periodically visit each customer within their assigned areas.
<PAGE>
Real Estate
- -----------
The Company's principal executive offices are located in Pewaukee,
Wisconsin. These offices are on an 85-acre site.
Wholesale activities are conducted by the Company from the following
warehouses:
Approximate
Warehouse
Location Products Distributed Square Footage
- -------- -------------------- --------------
Wauwatosa, Wisconsin All product lines, 745,000 (O)
except nonfood products
Mazomanie, Wisconsin Dry groceries and 225,000 (L)
nonfood products
Westville, Indiana All product lines, 557,000 (L)
except nonfood products
Lima, Ohio All product lines, 460,000 (O)
except produce and
nonfood products
Eldorado, Illinois Dry groceries and 384,000 (O)
dairy products
Columbus, Ohio All product lines, 320,000 (L)
except produce
Parkersburg, West
Virginia All product lines, 80,000 (O)
except produce
Van Wert, Ohio Nonfood products 115,000 (L)
Evansville, Indiana Frozen foods and 94,000 (O)
meat
South Bend, Indiana Frozen foods 84,000 (L)
Muskegon, Michigan All product lines, 215,000 (O)
except produce
O = Owned L = Leased
The Company is subject to regulation by the United States Food and Drug
Administration and to certain state and local health regulations in
connection with the operations of its facilities and its wholesale food
business. The Company has not been subject to any actions brought under
such regulations in the past five years.
Transportation
- --------------
The Company's transportation fleet for distribution operations as of
January 1, 1994, consisted of 270 tractor cabs and 650 trailers and 20
straight delivery trucks. In addition, the Company owns 60 automobiles
and an airplane. Approximately 75% of the fleet is owned by the Company
and the balance is leased.
<PAGE>
Computers
- ---------
The Company owns most of its computers and related peripheral equipment.
The computers are used for inventory control, billing and all other
general accounting purposes. The computer systems are adequate for the
Company's operations.
Legal Proceedings
- -----------------
The Company is not involved in any material litigation as either a
plaintiff or defendant, nor is any other material litigation
contemplated by Roundy's or, to the best of its knowledge, threatened
against it.
<PAGE>
MANAGEMENT
The Directors and Executive Officers of Roundy's are as follows:
Position(s) Held with Roundy's
Name Age and Business Experience
- ------------------- ---- ------------------------------------------
John R. Dickson 63 Chairman and Chief Executive Officer since
1993; President and Chief Executive
Officer 1986-1993; Director since 1986
(term expires 1995)
Gerald F. Lestina 51 President and Chief Operating Officer
since 1993; Vice President of Wisconsin
Region 1992-1993; President of Milwaukee
Division 1986-1993; Director since 1991
(term expires 1996)
Robert D. Ranus 53 Vice President and Chief Financial Officer
since 1987; Director since 1987 (term
expires 1997)
David C. Busch 45 Vice President of Administration since
1993; Vice President of Human Resources
1990-1993; Director of Human Resources
1988-1989
Edward G. Kitz 40 Vice President & Treasurer since 1989;
Vice President & Controller 1985-1988
Michael J. Schmitt 45 Vice President, Northern Region since
1992; Vice President and General Manager
of Milwaukee Division 1991; Vice President
of Retail Development 1990-1991; Director
of Retail Development 1988-1990
Robert G. Turcott 49 Vice President, Secretary and General
Counsel since 1987
Roger W. Alswager 45 Vice President of Real Estate and Develop-
ment since 1989; Director of Real Estate
and Development 1986-1988
Londell J. Behm 43 Vice President of Advertising since 1987
John M. Granger 47 Vice President of Management Information
Services since 1990; Vice President of
Management Information Systems, Richfood,
Inc. 1987-1990
Charles H. 51 Vice President, Logistics and Planning
Kosmaler, Jr. since 1993; Vice President of Adminis-
trative Efficiencies 1992-1993; Vice
President and Financial Operating Officer
1990-1991; Vice President of Finance,
Milwaukee Division 1988-1989
<PAGE>
Marion H. Sullivan 47 Vice President of Marketing since 1989;
President of Pick 'n Save 1989-1990;
Executive Vice President and Chief
Operating Officer, Pick 'n Save 1987-1988
Robert E. Bartels 56 Director since 1994 (term expires 1997);
President and Chief Executive Officer of
Martin's Super Markets, Inc., South Bend,
Indiana
Charles R. Bonson 47 Director since 1994 (term expires 1997);
President of Bonson's Foods, Inc., Eagle
River, Wisconsin
Gary N. Gundlach 50 Director since 1990 (term expires 1996);
President of G.E.M., Inc., McFarland,
Wisconsin
George C. Kaiser 61 Director since 1986 (term expires 1995);
Chairman and Chief Executive Officer,
Hanger Tight Company since 1988; Chief
Executive Officer, George C. Kaiser and
Co. since 1988; Director of The Baird
Funds, Inc. since 1992
George E. Prescott 46 Director since 1986 (term expires 1995);
President and Chief Executive Officer of
Prescott's Supermarkets, Inc., West Bend,
Wisconsin
Brenton H. Rupple 69 Director since 1993 (term expires 1996);
Retired Chairman of Robert W. Baird & Co.,
Milwaukee, Wisconsin
Directors of Roundy's are elected by class and generally serve three-
year terms; approximately one-third of the Board of Directors is elected
annually. Of the nine members of the Board of Directors, three are
currently Executive Officers of Roundy's (Messrs. Dickson, Lestina and
Ranus) and three are stockholder-customers of Roundy's (Messrs. Bonson,
Gundlach and Prescott). The terms of the Roundy's, Inc. Voting Trust
provide that each year the Trustees will vote to elect one stockholder-
customer, chosen by a plurality vote of the Voting Trust Certificate
Holders, to serve a three-year term as Director; therefore, at any time
there should be three "Retailer Directors" serving.
<PAGE>
DESCRIPTION OF STOCK
Authorized Shares
- -----------------
Roundy's is authorized by its Articles of Incorporation to issue 60,000
shares of Class A Common Stock, $1.25 par value, and 2,400,000 shares of
Class B Common Stock, $1.25 par value. On January 1, 1994, 15,500
shares of Class A Common Stock and 1,140,302 shares of Class B Common
Stock were outstanding. Holders of Roundy's Class A Common Stock are
entitled to one vote for each share held, on all matters which are
submitted to a vote of stockholders. Except as otherwise required by
law, holders of Roundy's Class B Common Stock are not entitled to vote
on any matter submitted to a vote of the stockholders.
Voting Rights
- -------------
Holders of Class A Common are entitled to one vote for each share held,
on all matters which are submitted to a vote of stockholders.
Stockholders are not entitled to cumulative voting rights. All of the
shares of Class A Common outstanding as of the date of this Prospectus
are owned of record by the Trustees of the Voting Trust. Shares
deposited in the Voting Trust will be voted in the manner provided in
the Voting Trust Agreement. See "VOTING TRUST."
Except as otherwise required by law, holders of Class B Common are not
entitled to vote on any matter submitted to a vote of the stockholders.
The Wisconsin Statutes provide that the holders of the outstanding
shares of a class of stock must be entitled to vote as a class upon any
proposed merger, share exchange, sale of all or substantially all assets
of the Company or any amendment to the articles of incorporation which
would, in either case, alter the rights, preferences, or relative status
of the shares in any of a number of specified ways. These are the only
circumstances in which holders of Class B Common are entitled to vote as
stockholders.
Dividend Rights
- ---------------
Holders of Class A Common and Class B Common are entitled to such
dividends as may be declared by the Board of Directors. However, the
Company does not expect to pay any dividends in the foreseeable future
other than patronage dividends as described under "THE COMPANY--
Operation as a Cooperative" above. Stockholders who are not customers
of Roundy's are not entitled to receive patronage dividends.
Liquidation Rights
- ------------------
In the event of the voluntary or involuntary liquidation of Roundy's,
the holders of Class A Common and Class B Common will be entitled to
share ratably in the assets of Roundy's remaining after payment of all
Roundy's liabilities.
Repurchase of Shares
- --------------------
Subject to certain limitations, Roundy's is obligated to repurchase
Class A Common and Class B Common upon written request from stockholders
who have terminated or substantially reduced their customer or employee
relationships with Roundy's. Roundy's may, but is not obligated to,
purchase shares held by other stockholders. See "REPURCHASE OF SHARES."
<PAGE>
Restrictions on Transfer
- ------------------------
Roundy's Articles of Incorporation provide that no shares of Class A
Common or Class B Common may be transferred for any purpose (including,
but not limited to, sales, gifts, testate or intestate inheritance or
pledge) unless and until (i) such transfer has received the prior
written consent of Roundy's or (ii) Roundy's has agreed in writing to
repurchase such shares and has failed to satisfy such obligation.
The certificates representing Class A and Class B Common bear a legend
setting forth the foregoing limitations on the resale of such shares.
Other Restrictions and Rights
- -----------------------------
The Class A Common and Class B Common, the full consideration for which
has been paid, will not be subject to any further calls or assessments
by Roundy's. However, Section 180.0622(2)(b) of the Wisconsin Business
Corporation Law imposes on stockholders personal liability in an amount
equal to the par value of their respective shares, or in an amount equal
to the consideration paid for such shares in the case of no-par value
stock, for all debts owing to employees of Roundy's for services
performed for Roundy's, not exceeding six months' service in any one
case. In a split decision without precedential value, the Supreme Court
of Wisconsin has affirmed a lower court ruling holding that "par value,"
for purposes of this statute, should be construed to mean the
"subscription price paid for the stock."
Roundy's has a first lien upon any shares of its stock held by any
stockholder for the amount of any indebtedness payable to Roundy's or
its subsidiaries by such stockholder, and no sale or transfer of any
such stock shall be made until all such indebtedness to "the Company"
shall have been paid in full.
Transfer Agent
- --------------
Roundy's acts as its own transfer agent for its Class A and Class B
Common Stock.
Reports to Stockholders
- -----------------------
Roundy's will furnish annual reports to its stockholders within 120 days
after the end of each fiscal year which will include financial
statements audited by independent certified public accountants.
<PAGE>
VOTING TRUST
Each purchaser of Class A Common is requested, but not required, to
deposit such shares in the Roundy's, Inc. Voting Trust (the "Trust").
Such requests will be made only by means of a Prospectus relating to the
Voting Trust Certificates.
The Trust was established in August, 1971, (amended and restated in 1983
and amended in 1986), as the successor to an initial voting trust
created at the time of the organization of Roundy's and will terminate
in 1997. The main purpose for the establishment of the Trust, and its
predecessor, was to insure the stability of management necessary to
obtain long-term warehouse and other financing. At present, the Trust
owns of record all of the outstanding Class A Common.
Stockholders depositing shares of Class A Common in the Trust will
receive Voting Trust Certificates evidencing beneficial ownership of the
number of shares deposited. Such certificates are not negotiable or
transferrable.
The Voting Trust Agreement authorizes the Trustees to vote all shares
deposited in the Trust, in their discretion, for the election of all but
three of the Directors (there are currently nine Directors). On other
matters submitted to a vote of stockholders (including the election of
one Director each year), the Trustees are required to vote the shares
deposited in the Trust as a block as directed by a vote of a majority of
the holders of outstanding Voting Trust Certificates (with each share of
Class A Common in the Trust entitling the depositor thereof to one
vote). Certain fundamental matters submitted to a vote of stockholders,
including the merger of Roundy's, liquidation or sale of all its assets,
require approval by two-thirds of the certificate holders unless such
action has been recommended by the Board of Directors. Because such
shares are voted as a block, a holder of Voting Trust Certificates who
opposes a transaction such as a merger has no statutory right to dissent
from such transaction and demand payment for his shares of Class A
Common deposited in the Voting Trust. A meeting of certificate holders
is held prior to each meeting of stockholders for the purpose of
presenting to the certificate holders the matters to be voted upon at
the stockholders' meeting. The format of the certificate holders'
meeting follows that of a customary meeting of stockholders with respect
to notice and the opportunity to vote in person or by proxy.
Persons holding certificates issued with respect to shares deposited in
the Trust (as amended and restated) prior to December 16, 1983 have an
annual right to withdraw such shares from the Trust. All other
certificate holders must wait until their shares of Class A Common have
been on deposit for five full years before becoming entitled to
withdrawal rights. No more than one-third of the total number of shares
of Class A Common outstanding may be withdrawn in any single calendar
year. The Trustees give notice of this right of withdrawal to each
person entitled to withdraw shares on or before January 31 of each year,
and all withdrawals must take place during the months of February or
March.
All cash dividends received by the Trustees on the shares of Class A
Common deposited in the Trust will be paid by them to the certificate
holders. Any stock dividends payable in Class A Common will be retained
by the Trustees and a like number of additional Voting Trust
<PAGE>
Certificates will be issued to the depositors. In the event of a
liquidation of Roundy's, all money or property received by the Trustees
with respect to the stock deposited in the Trust will be distributed
among the depositors in proportion to their respective stock interests
in the Trust.
The Voting Trust Agreement provides that there shall be seven Trustees,
consisting of two "Officer Trustees" (currently Gerald F. Lestina and
Robert G. Turcott), who shall be officers of Roundy's; two "Independent
Trustees" (currently Robert R. Spitzer and Charles E. Stenicka), who
shall be persons having executive business management experience who are
independent from the management and stockholders of Roundy's; and three
"Retailer Trustees" (currently John A. McAdams, Duane G. Tate and David
A. Ulrich), who shall be stockholder-customers of Roundy's but may not
be Directors. The term of an Officer Trustee is determined by the Board
of Directors, and an Officer Trustee automatically ceases to be a
Trustee upon ceasing to be an officer of Roundy's. Retailer Trustees
and Independent Trustees serve five-year terms. Successor Trustees are
appointed by majority vote of the remaining Trustees.
Mr. Stenicka is President of MR--The Management Association, Inc. Mr.
McAdams is President and stockholder of McAdams, Inc., a stockholder-
customer of Roundy's. Mr. Tate is President and principal stockholder
of Tate Foods, Inc., a stockholder-customer of Roundy's. Mr. Ulrich is
principal stockholder of Mega Marts, Inc., a stockholder-customer of
Roundy's. For information concerning Messrs. Lestina and Turcott see
"MANAGEMENT."
The Voting Trust may be deemed to be an "affiliate" of Roundy's, and the
Trustees of the Voting Trust, as a group, may be considered to be
"parents" of Roundy's, as these terms are defined in the Securities Act
of 1933, as amended, and the regulations thereunder.
LEGAL MATTERS
The legality of the Class A Common and Class B Common offered hereby has
been passed upon by Whyte Hirschboeck Dudek S.C., 111 East Wisconsin
Avenue, Suite 2100, Milwaukee, Wisconsin 53202.
EXPERTS
The consolidated financial statements of Roundy's, Inc. and subsidiaries
and the related financial statement schedules as of January 1, 1994 and
January 2, 1993 and for each of the three years in the period ended
January 1, 1994 included and incorporated by reference in this
prospectus have been audited by Deloitte & Touche, independent auditors,
as stated in their reports, which are included and incorporated by
reference herein, and have been so included and incorporated in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
INDEMNIFICATION
Roundy's has, in its By-Laws, established a policy indemnifying officers
and directors for liabilities and expenses arising out of their actions
in their capacities as officers and directors. This would include
indemnification for certain liabilities on the part of officers and
directors under the Securities Act of 1933 (the "Securities Act"). It
is the public policy of the state of Wisconsin, as expressed in Section
180.0859 of the Wisconsin Business Corporation Law, to require or permit
<PAGE>
indemnification against claims arising under federal law and state
securities laws.
However, insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons
controlling Roundy's pursuant to the foregoing provisions, Roundy's has
been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable.
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Page
Roundy's, Inc. and Subsidiaries:
Independent Auditors' Report F-2
Statements of Consolidated Earnings for each of
the three years in the period ended January 1, 1994 F-3
Consolidated Balance Sheets at January 1, 1994
and January 2, 1993 F-4
Statements of Consolidated Stockholders' Equity
for each of the three years in the period
ended January 1, 1994 F-6
Statements of Consolidated Cash Flows for each of
the three years in the period ended January 1, 1994 F-7
Notes to Financial Statements F-8
<PAGE>
INDEPENDENT AUDITORS' REPORT
- ----------------------------
To the Stockholders and Directors of Roundy's, Inc.:
We have audited the accompanying consolidated balance sheets of
Roundy's, Inc. and its subsidiaries as of January 1, 1994 and January 2, 1993
and the related statements of consolidated earnings, stockholders' equity and
cash flows for each of the three years in the period ended January 1, 1994.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the companies at January 1, 1994
and January 2, 1993 and the results of their operations and their cash
flows for each of the three years in the period ended January 1, 1994 in
conformity with generally accepted accounting principles.
As discussed in Notes 1 and 9 to the financial statements, the companies
changed their method of accounting for income taxes effective December 29,
1991, to conform with Statement of Financial Accounting Standards No. 109.
DELOITTE & TOUCHE
Milwaukee, Wisconsin
February 28, 1994
<PAGE>
STATEMENTS OF CONSOLIDATED EARNINGS
As of January 1, 1994 and January 2, 1993
1993 1992 1991
-------------- -------------- --------------
Revenues:
Net sales and service fees ..$2,480,254,200 $2,491,292,900 $2,534,418,400
Other-net ................... 6,526,600 3,290,100 5,047,300
-------------- -------------- --------------
2,486,780,800 2,494,583,000 2,539,465,700
-------------- -------------- --------------
Costs and Expenses:
Cost of sales ............... 2,248,336,000 2,252,976,400 2,291,962,200
Operating and administrative 206,253,600 211,949,500 217,096,400
Interest .................... 12,138,100 13,128,900 15,580,800
-------------- -------------- --------------
2,466,727,700 2,478,054,800 2,524,639,400
-------------- -------------- --------------
Earnings Before Patronage
Dividends ................ 20,053,100 16,528,200 14,826,300
Patronage Dividends ......... 5,300,700 5,134,700 3,304,600
-------------- -------------- --------------
Earnings Before Income Taxes 14,752,400 11,393,500 11,521,700
-------------- -------------- --------------
Provision (Credit) for
Income Taxes:
Current-Federal ........ 5,797,000 4,521,500 4,027,800
-Jobs and other
tax credits .. (485,500) (452,100) (485,100)
-State .......... 1,740,200 1,237,000 1,174,700
-Deferred ....... (1,078,000) (606,000) (9,000)
-------------- -------------- --------------
5,973,700 4,700,400 4,708,400
-------------- -------------- --------------
Earnings Before Extraordinary
Item and Cumulative Effect
of Accounting Change ..... 8,778,700 6,693,100 6,813,300
Extraordinary Loss on Early
Extinguishment of Long-
Term Debt (Net of Income
Tax Benefit of $511,000).. (751,000)
Cumulative Effect of
Accounting Change ....... 660,000
-------------- -------------- --------------
Net Earnings.................$ 8,027,700 $ 7,353,100 $ 6,813,300
============== ============== ==============
[FN]
See notes to financial statements.
<PAGE>
CONSOLIDATED BALANCE SHEETS
As of January 1, 1994 and January 2, 1993
ASSETS 1993 1992
------------ ------------
CURRENT ASSETS:
Cash and short-term investments $ 25,845,600 $ 19,912,000
Notes and accounts receivable,
less allowance for losses,
$8,766,500 and $7,578,200.... 99,826,500 96,420,200
Merchandise inventories......... 153,169,500 164,719,900
Prepaid expenses ............... 6,956,800 4,347,400
Future income tax benefits...... 4,281,800 4,576,800
------------ ------------
Total current assets......... 290,080,200 289,976,300
------------ ------------
OTHER ASSETS:
Notes receivable................ 14,894,700 19,497,200
Other real estate............... 7,343,000 6,540,700
Deferred expenses and other..... 7,885,100 8,654,500
------------ ------------
Total other assets........... 30,122,800 34,692,400
------------ ------------
PROPERTY AND EQUIPMENT:
Land............................ 5,100,600 4,647,200
Buildings....................... 39,668,000 40,529,900
Equipment....................... 71,508,900 76,275,100
Capitalized equipment leases.... 2,300,000 2,300,000
Leasehold improvements.......... 11,939,300 16,005,900
------------ ------------
130,516,800 139,758,100
Less accumulated depreciation
and amortization:
Owned....................... 68,721,000 72,602,300
Leased...................... 1,906,700 1,676,600
------------ ------------
Property and equipment-net 59,889,100 65,479,200
------------ ------------
$380,092,100 $390,147,900
============ ============
[FN]
See notes to financial statements.
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY:
1993 1992
------------ ------------
CURRENT LIABILITIES:
Notes payable...................$ 139,600 $ 502,400
Current maturities of
long-term debt............... 8,920,700 7,542,800
Accounts payable................ 130,187,600 127,775,500
Accrued expenses................ 36,778,500 33,867,100
Income taxes.................... 410,900 1,135,300
------------ ------------
Total current liabilities.... 176,437,300 170,823,100
Long-Term Debt, Less Current
Maturities...................... 113,044,700 135,420,100
Deferred Income Taxes.............. 600,000 2,184,000
Other Liabilities.................. 3,944,000 3,147,800
------------ ------------
Total liabilities ........... 294,026,000 311,575,000
Commitments and Contingencies (Note 10)
STOCKHOLDERS' EQUITY:
Common stock:
Voting (Class A)............. 19,400 20,100
Non-voting (Class B)......... 1,425,400 1,427,000
----------- -----------
Total common stock....... 1,444,800 1,447,100
Amount related to recording
minimum pension liability.... (308,700)
Patronage dividends payable in
common stock................. 3,263,000 3,210,000
Additional paid-in capital...... 20,388,900 16,867,000
Reinvested earnings............. 61,278,100 57,048,800
------------ ------------
Total stockholders' equity.... 86,066,100 78,572,900
------------ ------------
$380,092,100 $390,147,900
============ ============
<PAGE>
<TABLE>
STATEMENTS of CONSOLIDATED STOCKHOLDERS' EQUITY
For the years ended January 1, 1994, January 2, 1993 and December 28,
1991
<CAPTION>
Common Stock
------------------------------------- Patronage
Class A Class B Dividends Additional
-------------------------------------- Payable in Paid-in Reinvested
Shares Amount Shares Amount Common Stock Capital Earnings
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 29, 1990 17,200 $21,500 1,146,745 $1,433,400 $3,414,000 $11,682,600
$48,684,200
Net earnings............ 6,813,300
Common stock issued..... 1,100 1,400 75,845 94,800 (3,414,000) 3,910,600
Common stock purchased..(2,300) (2,900) (69,106) (86,300) (852,400) (2,995,600)
Patronage dividends
payable in common stock 2,212,000
---------------------------------------------------------------------------
Balance, December 28, 1991 16,000 20,000 1,153,484 1,441,900 2,212,000 14,740,800 52,501,900
Net earnings............ 7,353,100
Common stock issued..... 1,200 1,500 52,184 65,200 (2,212,000) 3,029,300
Common stock purchased..(1,100) (1,400) (64,110) (80,100) (903,100) (2,806,200)
Patronage dividends
payable in common stock 3,210,000
---------------------------------------------------------------------------
Balance, January 2, 1993 16,100 20,100 1,141,558 1,427,000 3,210,000 16,867,000 57,048,800
Net earnings............ 8,027,700
Common stock issued..... 700 900 82,193 102,700 (3,210,000) 5,058,100
Common stock purchased..(1,300) (1,600) (83,449) (104,300) (1,536,200) (3,798,400)
Patronage dividends
payable in common stock 3,263,000
---------------------------------------------------------------------------
Balance, January 1, 1994 15,500 $19,400 1,140,302 $1,425,400 $3,263,000 $20,388,900 $61,278,100
===========================================================================
<FN>
See notes to financial statements.
</TABLE>
<PAGE>
STATEMENTS of CONSOLIDATED CASH FLOWS
For the years ended January 1, 1994, January 2, 1993 and December 28,
1991
1993 1992 1991
------------ ------------ ------------
Cash Flows From Operating
Activities:
Net earnings.................$ 8,027,700 $ 7,353,100 $ 6,813,300
Adjustments to reconcile
net earnings to net
cash flows provided by
operating activities:
Depreciation and
amortization............. 12,913,200 13,350,100 12,892,700
Extraordinary loss on
early extinguishment
of debt.................. 751,000
Cumulative effect of
accounting change........ (660,000)
Allowance for losses....... 6,738,600 5,772,900 4,030,300
Gain on sale of property
and equipment and other
productive assets........ (3,680,300) (1,105,700) (1,804,800)
Patronage dividends payable
in common stock.......... 3,263,000 3,210,000 2,212,000
(Increase) decrease in operating
assets, net of the effects
of disposition:
Accounts receivable....... (13,819,500) (3,462,100) (6,676,200)
Merchandise inventories... 11,038,700 (2,273,400) (1,789,000)
Prepaid expenses.......... (2,105,000) (219,900) (359,800)
Future income tax benefits 295,000 (1,218,000) (293,000)
Other real estate......... (802,300) 245,200 456,300
Deferred expenses and other
assets.................... (27,700) (330,700) (38,000)
Increase (decrease) in operating
liabilities, net of the
effects of disposition:
Accounts payable.......... 7,715,000 (4,432,700) (5,528,100)
Accrued expenses.......... 772,900 1,893,000) 1,982,900
Income taxes.............. (724,400) (16,700) 432,300
Deferred income taxes..... (1,373,000) 232,000 157,000
Other liabilities......... 796,200 757,800 (1,325,300)
------------ ------------ ------------
Net cash flows provided by
operating activities 29,779,100 15,308,900 11,162,600
------------ ------------ ------------
Cash Flows From Investing Activities:
Capital expenditures......... (13,354,800) (15,332,300) (11,894,000)
Proceeds from sale of property
and equipment and other
productive assets.......... 11,017,900 3,096,800 14,574,300
(Increase) decrease in notes
receivable................. 4,602,500 (3,976,500) (7,034,400)
------------ ------------ -------------
Net cash flows provided by
(used in) investing activities 2,265,600 (16,212,000) (4,354,100)
------------ ------------ ------------
<PAGE>
Cash Flows From Financing Activities:
Proceeds from long-term
borrowings................. 45,000,000 48,000,000 8,475,000
Principal payments and
defeasance of long-term
debt....................... (68,637,400) (51,862,400) (9,627,600)
Increase in notes payable and
current maturities of long-
term debt.................. 1,015,100 909,200 194,100
Proceeds from sale of common
stock...................... 1,951,700 884,000 870,000
Common stock purchased....... (5,440,500) (3,790,800) (4,214,400)
------------ ------------ ------------
Net cash flows (used in)
financing activities....... (26,111,100) (5,860,000) (4,302,900)
------------ ------------ ------------
Net Increase (Decrease) in Cash
and Short-Term Investments... 5,933,600 (6,763,100) 2,505,600
Cash And Short-Term Investments,
Beginning Of Year............ 19,912,000 26,675,100 24,169,500
------------ ------------ ------------
Cash And Short-Term Investments,
End Of Year..................$ 25,845,600 $ 19,912,000 $ 26,675,100
============ ============ ============
Cash Paid During The Year For:
Interest.....................$ 13,100,200 $ 14,482,100 $ 14,918,900
Income Taxes................. 7,805,700 5,703,300 4,478,200
[FN]
See notes to financial statements.
<PAGE>
NOTES to FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Description of business-The Company is primarily engaged in the distribution
of food products and related non-food items through retail supermarkets,
many of which are owned by stockholder-customers or the Company.
Fiscal year-The Company's fiscal year is the 52 or 53 week period ending the
Saturday nearest to December 31. The years ended January 1, 1994 and December
28, 1991 included 52 weeks. The year ended January 2, 1993 included 53 weeks.
Consolidation practice-The financial statements include the accounts of the
Company and its subsidiaries. Significant interCompany balances and
transactions are eliminated.
Short-term investments-Short-term investments (maturing within three months)
are recorded at cost which approximates market value.
Inventories-Inventories are recorded at the lower of cost, on the first-in,
first-out method, or market.
Depreciation-Depreciation and amortization of property and equipment are
computed primarily on the straight-line method over their estimated
useful lives, which are generally thirty-one years for buildings, three to
ten years for equipment and five to twenty years for leasehold improvements.
Equipment under capitalized leases are amortized over the terms of the
respective leases.
Income Taxes-Prior to 1992, the Company provided deferred income taxes in
accordance with Statement of Financial Accounting Standards No. 96. Effective
December 29, 1991, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," which requires an asset and
liability approach to financial accounting and reporting for income taxes.
Deferred income tax assets and liabilities are computed annually for
differences between the financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income.
2. DISPOSITION
On August 28, 1993, the Company completed the sale of its dairy and ice cream
operations. The sale price of $14,976,500 consisted of cash of $9,649,600 and
liabilities assumed by the purchaser of $5,326,900. The sale resulted in a
pretax gain of $3,254,100 which is included in other revenues in the 1993
Statement of Consolidated Earnings.
3. PATRONAGE DIVIDENDS
The Company's By-Laws require that for each of the last three fiscal years,
to the extent permitted by the Internal Revenue Code, patronage dividends
are to be paid out of earnings from business done with stockholder-customers
in an amount which will reduce the net earnings of the Company to an amount
which will result in a 10% increase in the book value of its common stock.
The dividends are payable at least 20% in cash and the remainder in Class B
common stock. Dividends for the last three fiscal years were payable 30% in
cash.
<PAGE>
4. NOTES RECEIVABLE
The Company extends long-term credit to certain independent retailers it
serves to be used primarily for store expansion or improvements. Loans to
independent retailers are primarily collateralized by the retailer's
inventory and equipment. Interest rates are generally in excess of the prime
rate and terms of the notes are up to 10 years. Included in current notes
and accounts receivable are amounts due within one year totalling $9,661,400
and $10,755,200 at January 1, 1994 and January 2, 1993, respectively. Long-
term notes receivable at January 1, 1994 and January 2, 1993 are net of an
allowance for losses of $1,483,000.
5. LONG-TERM DEBT
Long-term debt, exclusive of current maturities, consists of the following
at the respective year-ends:
1993 1992
------------ ------------
Mortgage note payable at 9.75%, due 1994...... $ 1,579,200
Other long-term debt, 9% to 10%, due 1995
to 2006.......................................$ 1,162,700 2,741,800
Obligations under capitalized leases........... 1,310,800 1,738,400
Industrial development bonds, 73% of the
prime rate, due 1995 to 1997.................. 521,200 1,610,700
Senior unsecured notes payable:
10.31%, due 1995 to 1999...................... 15,250,000 18,750,000
11.26%, due 1995 to 1999...................... 25,000,000
9.26%, due 1995 to 2001...................... 17,500,000 20,000,000
7.57% to 8.26%, due 1995 to 2008............. 22,300,000 23,000,000
6.94%, due 1997 to 2003...................... 45,000,000
Notes payable under revolving credit
agreements at 6%, due 1997.................... 10,000,000 41,000,000
----------- ------------
Total..................................$113,044,700 $135,420,100
============ ============
Interest rates noted above are at January 1, 1994. The prime interest
rate was 6.0% at January 1, 1994 and January 2, 1993.
At January 1, 1994, $60,000,000 was available to the Company under its
revolving credit agreements. Certain property and equipment aggregating
approximately $3,000,000 are pledged as collateral to long-term debt and
other obligations at January 1, 1994. The loan agreements include, among
other provisions, minimum working capital and net worth requirements and
limit stock repurchases and total debt outstanding.
In December 1993, the Company completed a private placement of $45,000,000
of 6.94% Senior Unsecured Notes. Proceeds were used to prepay the $25,000,000
of 11.26% outstanding Senior Unsecured Notes and to reduce notes payable
under revolving credit agreements. Proceeds used to prepay the 11.26% Senior
Unsecured Notes were placed in an irrevocable trust and, as a result, this
debt is considered to be defeased and the liability has been removed from
the consolidated financial statements. The extraordinary loss on the early
extinguishment of the 11.26% Senior Unsecured Notes totalled $1,262,000,
before applicable income tax benefit of $511,000.
<PAGE>
Repayment of principal on long-term debt outstanding, excluding obligations
under capitalized leases (see Note 10), is as follows:
1994............................................................$ 8,512,500
1995............................................................ 6,929,400
1996............................................................ 7,681,600
1997............................................................ 25,508,300
1998............................................................ 11,656,800
Thereafter...................................................... 59,957,800
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments, as defined in Statement of Financial
Accounting Standards No. 107, "Disclosures About Fair Value of Financial
Instruments," consist primarily of accounts and notes receivable, accounts
payable, notes payable and long-term debt. The carrying amounts for accounts
and notes receivable, accounts payable and notes payable approximate their
fair values. Based on the borrowing rates currently available to the Company
for long-term debt with similar terms and maturities, the fair value of long-
term debt, including current maturities, is approximately $126,700,000.
7. COMMON STOCK
The authorized capital stock of the Company is 60,000 shares of Class A
common stock and 2,400,000 shares of Class B common stock with a par value
of $1.25 a share. Inactive customers are required to exchange Class A voting
stock held for Class B non-voting stock.
The issuance and redemption of common stock is based on the book value
thereof as of the preceding year-end. The year-end book value was $71.65,
$65.10 and $58.75 for 1993, 1992 and 1991, respectively. The Company is
obligated, upon request, to repurchase common stock held by inactive
customers or employees. The amount available for such repurchases in any year
is subject to limitations under certain loan agreements.
Effective November 1991, the Board of Directors adopted the 1991 Stock
Incentive Plan (the "Plan") under which up to 75,000 shares of Class B
common stock may be issued pursuant to the exercise of stock options. The
Plan also authorizes the grant of up to 25,000 stock appreciation rights
("SARs"). Options and SARs may be granted to senior executives and key
employees of the Company by the Executive Compensation Committee of the
Board of Directors. No options or SARs may be granted under the Plan after
November 30, 2001.
<PAGE>
Option and SAR transactions are as follows:
Options SARs Price
------- -------- -------------
Outstanding, December 29, 1990..... 0 0 -
Granted......................... 30,000 10,000 $53.10
------- -------- -------------
Outstanding, December 28, 1991..... 30,000 10,000 53.10
Granted......................... 15,000 5,000 58.75
------- -------- -------------
Outstanding, January 2, 1993....... 45,000 15,000 53.10-58.75
Granted......................... 15,000 5,000 65.10
Exercised....................... (15,333) 53.10-65.10
Cancelled....................... (1,500) (1,500) 53.10-58.75
------- -------- -------------
Outstanding, January 1, 1994....... 43,167 18,500 $53.10-$65.10
======= ======== =============
Available for grant after
January 1, 1994................. 16,500 6,500
======= ========
Options granted become exercisable based on the vesting rate which ranges
from 20% at the date of grant to 100% eight years from the date of grant. As
of January 1, 1994, options were exercisable for 21,015 shares at $53.10-
$65.10 per share.
SAR holders are entitled, upon exercise of a SAR, to receive cash in an
amount equal to the excess of the book value per share of the Company's
common stock as of the last day of the Company's fiscal year immediately
preceding the date the SAR is exercised over the base price of the SAR. SARs
granted become exercisable based on the vesting rate which ranges from 20% on
the last day of the fiscal year of the grant to 100% eight years from the
last day of the fiscal year of the grant. Compensation expense was not
material in 1993, 1992 and 1991. As of January 1, 1994, 5,950 SARs were
exercisable at $53.10-$65.10 per SAR.
In the event of a change in control of the Company, all options and SARs
previously granted and not exercised, become exercisable.
8. EMPLOYEE BENEFIT PLANS
Substantially all non-union employees of the Company and employees of its
subsidiaries are covered by defined benefit pension plans. Benefits are based
on either years of service and the employee's highest compensation during
five of the most recent ten years of employment or on stated amounts for
each year of service. The Company intends to annually contribute only the
minimum contributions required by applicable regulations.
<PAGE>
The following sets forth the funded status of the plans at January 1, 1994
and January 2, 1993:
1993 1992
----------------------------------------------------
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
Benefits Assets Benefits Assets
----------------------------------------------------
Actuarial present value of:
Vested benefit obligation $18,843,000 $3,234,100 $14,475,700 $2,126,900
=========== ========== =========== ==========
Accumulated benefit
obligation............ $21,103,200 $3,425,600 $15,400,500 $2,186,500
=========== ========== =========== ==========
Projected benefit
obligation............ $25,118,300 $3,425,600 $17,815,300 $2,186,500
Plan assets (primarily
listed stocks and bonds)
at market value........ 25,688,200 1,978,300 21,775,800 1,772,500
----------- ---------- ----------- ----------
Projected benefit obligation
(in excess of) or less
than plan assets....... 569,900 (1,447,300) 3,960,500 (414,000)
Unrecognized net (gain)
or loss................ (688,100) 519,700 (3,920,800) (337,700)
Prior service cost not yet
recognized in net
periodic pension cost.. 595,700 73,100 639,700 3,000
Unrecognized net asset.... (1,404,300) (1,575,500)
Adjustment required to
recognize minimum
liability................. (592,800)
----------- ----------- ----------- ----------
Accrued pension cost...... $ (926,800)$(1,447,300) $ (896,100) $ (748,700)
=========== =========== =========== ==========
The assumptions used in the accounting were as follows:
1993 1992
-------- --------
Discount rate.......................................... 7.5% 9.5%
Rate of increase in compensation levels................ 4.0% 5.0%
Expected long-term rate of return of assets............ 9.0% 9.5%
The changes in actuarial assumptions in 1993 resulted in a $6,047,000
increase in the projected benefit obligation in 1993, and is expected to
result in an increase in the 1994 pension expense of approximately $750,000.
In 1993, in accordance with Statement of Financial Accounting Standards No.
87, "Employers' Accounting for Pensions," the Company has recorded a minimum
pension liability of which $308,700, net of income taxes, is reflected as a
reduction of stockholders' equity.
<PAGE>
Net pension cost for the foregoing defined benefit plans includes the
following components:
1993 1992 1991
----------- ----------- -----------
Service cost-benefits earned during
the year...............................$ 1,314,800 $ 1,263,200 $ 1,217,300
Interest on projected benefit obligation 1,881,000 1,658,900 1,583,500
Actual return on plan assets............ (2,251,200) (2,007,400) (1,573,400)
Net amortization and deferral........... (247,500) (321,200) (134,700)
----------- ----------- ----------
Net pension cost........................$ 697,100 $ 593,500 $ 1,092,700
=========== =========== ===========
The Company and its subsidiaries also participate in various multi-employer
plans which provide defined benefits to employees under collective
bargaining agreements. Amounts charged to pension expense for such plans
were $3,437,500, $3,500,400 and $3,465,800 in 1993, 1992 and 1991,
respectively. Also, the Company has a defined contribution plan covering
substantially all salaried and hourly employees not covered by a collective
bargaining agreement. Total expense for the plan amounted to $513,700,
$508,200 and $480,000 in 1993, 1992 and 1991, respectively.
Effective January 3, 1993, the Company adopted the provisions of the Statement
of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," which covers health care and
other welfare benefits provided to retirees and Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits" issued by the Financial Accounting Standards Board. The adoption
of these statements, using the immediate recognition basis, did not have an
effect on the accompanying consolidated financial statements.
9. INCOME TAXES
Effective December 29, 1991, the Company adopted Statement of Financial
Standards No. 109, "Accounting for Income Taxes." The Company elected to
reflect the effect of this accounting principle change as a cumulative effect
adjustment as of December 29, 1991.
Federal income tax at the statutory rates of 35% in 1993 and 34% in 1992 and
1991 and income tax expense as reported, are reconciled as follows:
1993 1992 1991
---------- ---------- ------------
Federal income tax at
statutory rates.........$5,163,300 $3,873,800 $ 3,917,400
State income taxes,
net of federal tax
benefits................ 1,131,100 816,400 775,300
Jobs and other tax
credits................. (485,500) (452,100) (485,100)
Other-net................ 164,800 462,300 500,800
---------- ---------- -----------
Income tax expense.......$5,973,700 $4,700,400 $4,708,400
========== ========== ===========
<PAGE>
Deferred (prepaid) taxes on earnings result from the recognition of certain
items in different periods for tax and financial reporting purposes. The
sources and tax effects of these differences are as follows:
1993 1992 1991
------------ ------------ -----------
Depreciation and amortization..$ (423,000) $ 251,000 $1,065,000
Inventory valuation methods.... 59,000 91,000 (202,000)
Disposal of property and
equipment..................... (114,000) (47,000) (520,000)
Allowance for doubtful accounts 697,000 (1,215,000) 42,000
Loss contingencies............. (261,000) (213,000) (105,000)
Employee benefits.............. (1,015,000) 651,000 (224,000)
Other-net...................... (21,000) (124,000) (65,000)
------------ ----------- -----------
Total..........................$(1,078,000) $ (606,000) $ (9,000)
============ =========== ===========
The approximate tax effects of temporary differences at January 1, 1994
and January 2, 1993 are as follows:
<TABLE>
<CAPTION>
1993 1992
----------------------------------- ------------------------------------
Assets Liabilities Total Assets Liabilities Total
---------- ------------ ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts..............$1,652,000 $1,652,000 $2,349,000 $ 2,349,000
Inventories ........... $ (466,200) (466,200) $ (407,200) (407,200)
Employee benefits...... 2,296,000 2,296,000 1,954,000 1,954,000
Accrued expenses not
currently deductible.. 799,000 799,000 538,000 538,000
Other.................. 1,000 1,000 143,000 143,000
---------- ------------ ------------ ---------- ------------ -----------
Current................ 4,748,000 (466,200) 4,281,800 4,984,000 (407,200) 4,576,800
---------- ------------ ------------ ---------- ------------ -----------
Allowance for doubtful
accounts.............. 582,000 582,000 582,000 582,000
Depreciation and
amortization.......... (2,998,000) (2,998,000) (3,502,000) (3,502,000)
Employee benefits...... 1,745,000 1,745,000 668,000 668,000
Other.................. 71,000 71,000 68,000 68,000
---------- ------------ ------------ ---------- ------------ -----------
Noncurrent............. 2,398,000 (2,998,000) (600,000) 1,318,000 (3,502,000) (2,184,000)
---------- ------------ ------------ ---------- ------------ -----------
Total..................$7,146,000 $(3,464,200) $3,681,800 $6,302,000 $ (3,902,200) $ 2,392,800
========== ============ ============ ========== ============= ===========
</TABLE>
<PAGE>
10. LEASE OBLIGATIONS AND CONTINGENT LIABILITIES
Rental payments and related subleasing rentals under operating leases are as
follows:
RENTAL PAYMENTS
------------------------ SUBLEASING
MINIMUM CONTINGENT RENTALS
----------- ------------ ------------
1991........................... $40,735,700 $ 403,000 $17,326,800
1992........................... 36,778,100 363,400 18,590,300
1993........................... 36,675,800 398,800 18,985,200
Contingent rentals may be paid under certain store leases on the basis of
the store's sales in excess of stipulated amounts.
Future minimum rental payments under long-term leases are as follows at
January 1, 1994:
OPERATING CAPITALIZED
LEASES LEASES
------------ ---------
1994......................................... $ 35,161,300 $ 566,100
1995......................................... 33,253,900 566,100
1996......................................... 29,355,800 460,300
1997......................................... 25,424,900 160,300
1998......................................... 23,748,400 84,300
Thereafter................................... 224,569,100 282,200
------------ ---------
Total........................................ $371,513,400 2,119,300
Amount representing interest...................................400,300
---------
Present value of net minimum lease payments................. 1,719,000
Current portion.............................................. 408,200
---------
Long-term portion......................................... $1,310,800
==========
Total minimum rentals to be received in the future under non-cancelable
subleases as of January 1, 1994 are approximately $275,335,000.
The Company has guaranteed customer bank loans and customer leases
amounting to $4,600,100 and $1,170,300, respectively, at January 1, 1994.
11. EARNINGS PER SHARE
Earnings per share are not presented because they are not deemed to be
meaningful. See Notes 3 and 7 relating to patronage dividends and common
stock repurchase requirements.
<PAGE>
Exhibit A
ROUNDY'S, INC.
Subscription Agreement
The undersigned customer of Roundy's, Inc. hereby subscribes for
and agrees to purchase _______________ shares of Class A Common Stock
and/or ________________ shares of Class B Common Stock of Roundy's, Inc.
at a price per share equal to the book value as of the close of the most
recently ended fiscal year of Roundy's, Inc. of each then outstanding
share of stock, as determined by Roundy's, Inc. audited financial
statements and adjusted for subsequent stock dividends and stock splits.
The undersigned represents that the undersigned is purchasing the
securities for the undersigned's own account for investment. The
undersigned further acknowledges and understands that, in no event may
the Class A and Class B Common Stock be transferred without Roundy's,
Inc. prior written consent.
Roundy's, Inc., by accepting this Subscription Agreement, agrees
to be bound by the Statement of Policy Regarding Repurchase of Stock set
forth as Exhibit D to Roundy's, Inc. Prospectus, as such Statement of
Policy may be amended from time to time.
________________________________
Legal Name of Subscriber
Applicable Federal
Identification or
Social Security Number
______________________ By ____________________________
(Name) (Title)
Dated______________, 19____ Customer Number _________
Mailing Address:
________________________________
City ___________________________
State __________________________
Zip Code ________________
Accepted:
___________________________
Roundy's, Inc.
<PAGE>
Exhibit B
ROUNDY'S, INC.
Buying Deposit Agreement
The undersigned customer of Roundy's, Inc. ("Roundy's") hereby
agrees to establish a Buying Deposit with Roundy's in the total amount
set forth below, and to make monthly installment payments of such Buying
Deposit to Roundy's as set forth below. The amount of the Buying
Deposit is computed as an amount equal to the estimated amount of
purchases by the undersigned from Roundy's over a two week period, with
a minimum amount of $20,000. It is understood that Roundy's shall have
the right to increase the maximum amount of the Buying Deposit at any
time and the amortization schedule shall be adjusted accordingly.
The undersigned hereby subscribes for and agrees to purchase
shares of Roundy's Class A and/or Class B Common Stock pursuant to
Roundy's Policy Regarding Issuance and Sales of Roundy's Stock (adopted
December 7, 1993; effective January 1, 1994) (copy attached) to the
extent of the monthly installments paid at a price per share equal to
the book value, as of the close of the fiscal year of Roundy's preceding
the window period in which such shares are purchased, of each then
outstanding share of stock, as determined by Roundy's audited financial
statements and adjusted for subsequent stock dividends and stock splits.
The undersigned represents that the undersigned is purchasing the
securities for the undersigned's own account for investment. The
undersigned further acknowledges and understands that in no event may
the Class A and Class B Common Stock be transferred without Roundy's
prior written consent.
Roundy's, by accepting this Buying Deposit Agreement, agrees to be
bound by the Statement of Policy Regarding Repurchase of Stock set forth
as Exhibit D and D-1 to Roundy's Prospectus, as such Statement of Policy
may be amended from time to time.
The undersigned understands that patronage dividends, if any, paid
to the undersigned in Class B Common Stock from the date hereof, until
the Buying Deposit is satisfied, will be credited against the
installment payments of the undersigned's Buying Deposit in the inverse
order of the due dates of such installments. Upon termination of the
customer status of the undersigned with Roundy's for any reason or if
the undersigned at any time shall not have made payments due from it to
Roundy's in the manner and within the time limits established by
Roundy's, Roundy's shall have the right to reimburse itself out of the
undersigned's Buying Deposit for any amounts owed to Roundy's by the
undersigned.
<PAGE>
_______________________ ________________________________
Applicable Federal Legal Name of Subscriber
Identification or
Social Security Number
_______________________ By ____________________________
(Name) (Title)
Dated _________________, 19___ Customer Number _______________
Mailing Address:
________________________________
City ___________________________
State___________________________
Zip Code __________________
BUYING DEPOSIT - MONTHLY INSTALLMENT PAYMENTS
1. Total Buying Deposit _______________________________
2. Less down payment _______________________________
3. Balance to be
amortized _______________________________
4. Estimated weekly
retail sales _______________________________
Monthly Buying Deposit Installment
Check ------------------------------------
Weekly Retail Sales One 1st Year 2nd Year 3rd Year
------------------- ------ -------- -------- --------
$ 40,000 - $100,000 ______ $ 300 $ 400 $ 500
$100,000 - $200,000 ______ 750 900 1,050
Over $200,000 ______ 1,000 1,250 1,500
Payment beginning
(nearest 15th day of month following down payment)
Approved: ________________________________________
Retail Counselor, Roundy's, Inc.
Accepted: ________________________________________
Sales Manager, Roundy's, Inc.
<PAGE>
Exhibit C
Article V of By-Laws of Roundy's, Inc., as amended by the Board of
Directors on December 12, 1989
FISCAL YEAR
ACCOUNTING AND PATRONAGE REBATES
The corporation is obligated to its Common stockholders on a
patronage basis or bases for all amounts received by it resulting from
sales to them as defined and limited herein.
5.1 Patronage Dividends. Patronage dividends shall accrue to
Class A Common stockholders of the corporation out of net earnings from
business done with such stockholders and shall be determined and
distributed for each fiscal year pursuant to existing provisions of the
Internal Revenue Code; provided further that patronage dividends of the
corporation will be determined on the basis of the net sales of the
corporation to each Class A Common stockholder and paid in an amount
which will reduce net income of the corporation to such amount as will
result in an increase of ten percent (10%) in the net book value (as
determined by the corporation's independent certified public accoun-
tants) of the corporation's outstanding shares as of the close of such
fiscal year. The computation of the amount of patronage dividends
payable to Class A Common stockholders shall be made after the
determination of patronage dividends payable to
nonstockholder-customers.
5.2 Determination of Patronage Dividends. Patronage dividends
shall be determined from the records of the corporation as soon as
practicable after the close of the corporation's fiscal year, and the
Class A Common stockholders shall be promptly advised of the amount of
their respective patronage dividend and the method of payment of such
patronage dividend.
5.3 Consent. Each person who hereafter becomes a Class A Common
stockholder of this corporation and each Class A Common stockholder of
this corporation on the effective date of this By-Law who continues as a
Class A Common stockholder after such date shall, by such act alone,
consent that the amount of any distributions with respect to his
patronage occurring after January 3, 1976 which are made in written
notices of allocation (as defined in Section 1388 of the Internal
Revenue Code) and which are received by him from the corporation, will
be taken into account by him at their stated dollar amounts in the
manner provided in Section 1385(a) of the Internal Revenue Code in the
taxable year in which such written notices of allocation are received by
him.
5.4 Payment of Patronage Dividends.
(a) Patronage dividends are payable in the fiscal year
following the fiscal year in which accrued, in money, qualified written
notices of allocation (as defined by the Internal Revenue Code) or other
property (except non-qualified written notices of allocation as defined
by the Internal Revenue Code) provided, however, that at least twenty
percent (20%) of the amount of a patronage dividend shall be paid in
money or by qualified check as defined by the Internal Revenue Code.
<PAGE>
5.5 Corporate Accounting and Fiscal Year.
(a) The accounts of the corporation shall be kept on the
accrual basis and reflect assets, liabilities, stockholders' equities
and operations in accordance with generally accepted accounting
principles.
(b) The fiscal year of the corporation shall be on a 52-53
week basis ending on the Saturday nearest to December 31st as that
method permits.
5.6 Patronage Dividends to Nonstockholders. The corporation may,
in its sole discretion, enter into written agreements obligating itself
to pay patronage dividends to nonstockholder-customers.
<PAGE>
Exhibit D
ROUNDY'S, INC. POLICY RELATING TO REDEMPTION OF STOCK
BY INACTIVE CUSTOMER SHAREHOLDERS AND FORMER EMPLOYEES
(Effective as of May 21, 1991)
ARTICLE 1
Repurchase of Shares by Corporation
1.01 Agreement to Repurchase. Upon the terms and subject to the
conditions set forth in this Policy (including the applicability
provisions of Article 3, below), the Corporation shall be obligated to
repurchase its shares of Class A Common Stock and Class B Common Stock
after proper request by the holder thereof, or his or its legal
representative, at any time after the occurrence of a Customer/
Shareholder Termination with respect to such stock or an Employee/
Shareholder Termination with respect to such holder.
1.02 Repurchase in Increments. The Corporation's obligation to
repurchase stock shall accrue, subject to the other terms and conditions
of this Policy, in annual 20% increments during the five year period
beginning on the Repurchase Request Date with respect to such stock.
Beginning on the first anniversary date of the Repurchase Request Date,
the Corporation shall become obligated to purchase in accordance
herewith 20% of the aggregate number of shares of Class A and Class B
Common Stock as to which a proper repurchase request has been received.
Such percentage shall be increased to 40% on the second anniversary date
of the Repurchase Request Date, 60% on the third anniversary date, 80%
on the fourth anniversary date and 100% on the fifth anniversary date of
the Repurchase Request Date. Regardless of the foregoing, in the event
that a Customer/Shareholder Termination or an Employee/Shareholder
Termination occurs as a result of the death of the shareholder and the
estate of such shareholder specifically so elects by written notice to
the Secretary of the Corporation within 180 days thereafter, the
repurchase of not more than the first $50,000 in value of stock shall be
accelerated to the date 180 days after receipt by the Secretary of such
written election. Each share shall continue to be outstanding for all
purposes until actually repurchased.
1.03 Calculation of Repurchase Price. The repurchase price for
each share of stock of the Corporation shall be the Book Value of such
share at the date of repurchase.
1.04 Form of Repurchase Request. A proper repurchase request for
purposes hereof shall consist of a written notification to the Secretary
of the Corporation specifying the number of shares to be repurchased,
the reason for such repurchase request, and the date or dates on which a
Customer/Shareholder Termination or Employee/Shareholder Termination
occurred with respect to the stock covered by such repurchase request.
1.05 Acknowledgment By Corporation of Repurchase Request.
Subject to the conditions set forth in the Policy (including the
applicability provisions of Article 3, below), the Secretary shall
promptly acknowledge in writing receipt of a repurchase request. Such
acknowledgment shall set forth, among other things, the Repurchase
Target Dates with respect to the shares covered by the repurchase
request and the Book Value of the shares at the Repurchase Request Date,
and shall enumerate such documents and instruments as may be reasonably
<PAGE>
required to be delivered to assure the Secretary that the Corporation
will receive unencumbered title to the shares to be repurchased.
Neither such acknowledgment nor any other communication made by the
Corporation pursuant to this Policy shall be deemed to be an agreement
to purchase shares for purposes of this Policy, except subject to all
the terms and conditions hereof. After such acknowledgment has been
given by the Secretary, a stock repurchase request shall be irrevocable
except with the written consent of the Board of Directors.
1.06 Payment of Repurchase Price. Subject to the terms and
conditions of this Policy, the Corporation shall repurchase shares
subject to a proper repurchase request by payment of the full purchase
price in cash or by check within 10 days after the later of the
Repurchase Target Date or the date on which the appropriate stock
certificates have been received, in negotiable form, together with any
such other documents or instruments as the Secretary shall have
requested in its acknowledgment notice given under Section 1.05, all in
form reasonably acceptable to the Secretary; provided, however, that in
no event shall the Corporation be obligated to repurchase shares within
90 days after the end of its fiscal year. By mutual agreement of the
Corporation and the shareholder, such shares may be repurchased at any
time prior to the Repurchase Target Date, but only if no other
shareholder has been assigned an earlier Repurchase Target Date and such
shares have not yet been actually repurchased.
1.07 Limitation on Corporation's Obligation to Repurchase. The
Corporation's obligation to repurchase shares hereunder is subject to
(i) all restrictions which may be imposed by applicable law from time to
time, and (ii) the limitations (if any) on repurchases of shares
contained in any lending or other agreements of the Corporation in force
from time to time. In the event the Corporation is precluded during a
given period of time from repurchasing shares which are the subject of a
repurchase request because of such limitations or if required
repurchases are delayed for any other reason (in either case, a
"Suspension"), repurchases shall be resumed promptly thereafter in the
order of the Repurchase Target Dates which occurred during the period of
the Suspension, regardless of the dates the repurchase requests were
received and such suspended repurchases shall be made prior to
repurchases becoming due on any subsequent Repurchase Target Date.
Notwithstanding the foregoing provisions, stock having a repurchase
price of not in excess of $25,000 per shareholder may, in the sole
discretion of the Corporation, be repurchased on an accelerated basis in
cases of demonstrated hardship.
1.08 Authority Reserved.
(a) No provision of this Policy shall be construed as
limiting the Corporation's authority to repurchase outstanding shares of
its stock at the discretion of the Board of Directors or the officers on
any other terms at any time; provided however, that no such
discretionary purchases shall occur if a Repurchase Target Date has
passed with respect to shares required to be repurchased under this
Policy and such shares have not yet been repurchased.
(b) No provision of this Policy shall be construed as
limiting the authority of the Board of Directors to amend, revise or
rescind this Policy. This Policy does not create, and should not be
understood as creating, any vested rights or contractual obligations of
the Corporation except, and only to the extent, that no amendment,
<PAGE>
revision or rescission shall reduce the Repurchase Price payable by the
Corporation for shares with respect to which the Repurchase Request Date
precedes the date of the resolution of the Board of Directors effecting
such amendment, revision or rescission.
1.09 Adjustments. For all purposes hereof, in the event of a
stock split or similar capital change (excluding regular stock issuances
associated with the Corporation's patronage dividends), equitable
adjustment will be made to the number of shares to be repurchased and
the repurchase price.
ARTICLE 2
Additional Conditions to Repurchase Obligations
2.01 Notification to Corporation of Certain Termination Events.
Each shareholder (or his or its legal representative) shall, as soon as
possible after the occurrence of a Customer/Shareholder Termination or
an Employee/Shareholder Termination (occurring otherwise than as a
result of the death or retirement of the employee), give written notice
of the same to the Secretary of the Corporation, stating the nature and
date of such event. If it shall come to the attention of the
Corporation that such an event has occurred and no such notice has been
received, the Secretary shall give written notice of the same to the
record holder of such shares. Any determination so made in good faith
by the Corporation, including any determination as to the date upon
which a retail food store became or ceased to be an Active Customer, or
upon which a Customer/Shareholder Termination or an Employee/Shareholder
Termination occurred, shall be final and binding on all persons.
2.02 Limitations on Ownership of Class A Common Stock.
(a) No person may directly or indirectly beneficially own
shares of Class A Common Stock except a Person who or which directly or
indirectly owns an Active Customer or the trustees of a voting trust
formed by and for the benefit of such Persons. No Person may directly
or indirectly beneficially own more than 100 shares of Class A Common
Stock, except that (i) a Person owning and operating (or controlling)
more than one Active Customer at different locations may own not more
than 100 shares of Class A Common Stock for each such Active Customer,
and (ii) the trustees of a voting trust as set forth in the preceding
sentence may be the record holders of such number of shares as may be
owned in the aggregate by the depositors thereof.
(b) Any holder of shares of Class A Common Stock shall
immediately present his or its certificate(s) representing the same to
the Secretary of the Corporation, in negotiable form, upon the occur-
rence of a Customer/Shareholder Termination with respect to an Active
Customer owned and operated (or controlled) by such shareholder. In the
event such shareholder has theretofore owned more than 100 shares of
Class A Common Stock, there shall be presented to the Corporation 100 of
such shares for each such Active Customer as to which a Customer
/Shareholder Termination has occurred. Upon receipt of such
certificate(s), the Corporation shall issue to and in the name of the
record holder thereof a replacement certificate for a like number of
shares of Class B Common Stock. In the event any holder shall fail to
surrender such certificates to the Corporation within thirty (30) days
after the Customer/Shareholder Termination, the Corporation may, at any
time thereafter, by written notice to the record holder thereof, deem
<PAGE>
such shares of Class A Common Stock to have been converted into a like
number of shares of Class B Common Stock; and thereafter, such shares of
Class A Common Stock shall not be deemed outstanding for any purpose and
the certificate(s) therefor shall evidence only the right to receive a
certificate representing a like number of shares of Class B Common Stock
upon proper presentation to the Corporation in negotiable form. The
obligations of a shareholder hereunder to surrender and exchange shares
of Class A Common Stock shall be binding upon the legal representatives
or successors or such shareholder, any purported transferee, and any
nominee or trustee of a voting trust holding shares of Class A Common
Stock for the benefit of such shareholder, upon notice from the
Corporation or otherwise that a Customer/Shareholder Termination has
occurred.
ARTICLE 3
Effective Date
3.01 Effective Date. The repurchase provisions set forth in
Article 1 of this Policy shall not apply to shares as to which repur-
chase requests have been filed before January 1, 1991, provided,
however, that if the second, third, fourth or fifth anniversary dates of
a Repurchase Request Date occur on or after January 1, 1991, the
repurchase provisions set forth in Article 1 shall apply to the 20%
increments which would be purchased on such anniversary dates as if this
Policy had been in effect on the Repurchase Request Date.
3.02 Applicability.
(a) The repurchase provisions set forth in Article 1 of this
Policy shall not apply:
(1) With respect to the shares owned by any person who
directly, indirectly or beneficially owns shares of Class A Common Stock
in violation of the limitations on ownership contained in Section
2.02(a), above (the "Ownership Limitation") if the shares of Class A
Common Stock are determined by the Corporation to have been held in
violation of such Ownership Limitations for a period of ninety (90) days
or more.
(2) With respect to any shares owned by any person who
is a Claimant, as defined herein.
(b) In the event that a shareholder who filed a repurchase
request on or after January 1, 1991, subsequently becomes subject to the
provisions contained in Sections 3.02(a)(1) or (2), the Corporation
shall be under no obligation at any time thereafter to repurchase (or
continue to repurchase, if the repurchase in increments had already
commenced) any shares from such shareholder.
ARTICLE 4
Definitions
4.01 Whenever used in this Policy;
(a) "Active Customer" means a retail food store whose
principal source of supply is purchases from the Corporation.
(b) "Book Value" at any given date means the book value of
a share of Common Stock (determined according to the annual financial
statements prepared by the Corporation, as audited and certified by the
Corporation's independent auditors) as of the end of the fiscal year
immediately preceding the fiscal year in which such date occurs.
<PAGE>
(c) "Claimant" means any shareholder of the Corporation who
has asserted and not irrevocably withdrawn such assertion or is otherwise
then asserting (in or in anticipation of any litigation or other proceeding)
a challenge (1) to the authority of the Corporation or its Board of Directors
to adopt any pending Redemption Policy or to have adopted the then current
Redemption Policy or any prior Redemption Policy or to amend or revise any of
the same or (2) to the enforceability or validity or the Corporation's
interpretation or application of any provision of the then current or any
prior Redemption Policy.
(d) "Customer/Shareholder Termination" occurs whenever an
Active Customer owned and operated (or controlled) by a shareholder of
the Corporation either (A) ceases to be an Active Customer, or (B)
ceases to be owned and operated (or controlled) by such shareholder,
whether by reason of the death, adjudication of incompetency or complete
retirement from business by reason of age or disability of such
shareholder (if an individual), the dissolution or termination of such
shareholder (if a Person other than an individual), adjudication in
bankruptcy, transfer of the Active Customer or the entity owning or
controlling it, or otherwise. In the event the above shall occur with
respect to one or more but not all Active Customers owned and operated
(or controlled) by a single shareholder of the Corporation, a
Customer/Shareholder Termination shall be deemed to have occurred with
respect to that fraction of each class of Common Stock owned by such
shareholder as is equal to the fraction produced by dividing the number
of Active Customers owned and operated (or controlled) by such
shareholder after such event(s) by the number of Active Customers so
owned and operated (or controlled) immediately before such event(s).
(e) "Employee/Shareholder Termination" occurs, with respect
to a shareholder who is an employee of the Corporation, upon the
cessation of such person's employment relationship with the Corporation
for any reason.
(f) "Person" includes any individual, corporation,
partnership, joint venture, trust, estate or any other legal entity.
(g) "Redemption Policy" means any written policy adopted by
the Board of Directors of the Corporation pursuant to Section 3.4 of the
Articles of Incorporation setting forth terms, conditions or provisions
under which the Corporation will (during the term of such policy)
repurchase, redeem or otherwise acquire shares of the Corporation's
stock from shareholders of the Corporation.
(h) "Repurchase Request Date" with respect to a share of
stock means the date of actual receipt by the Secretary of the
Corporation of a written request for repurchase of such share which
complies with Section 1.04 of this Policy.
(i) "Repurchase Target Date" with respect to a share of
stock means the date upon which the Corporation is to become obligated
to repurchase such share of stock in accordance with Section 1.02 of
this Policy. If such date is not a day on which business is generally
conducted in the Corporation's main offices, then the "Repurchase Target
Date" shall be the next subsequent business day.
<PAGE>
Exhibit D-1
POLICY REGARDING ROUNDY'S REDEMPTIONS/REPURCHASES OF ITS STOCK
(As Adopted By the Board of Directors on December 7, 1993)
The following are the terms and conditions upon which Roundy's
ordinarily will respond to its shareholders' requests to redeem or
repurchase their Roundy's, Inc. stock:
(1) When Repurchase Requests May Be Made. Requests by a
shareholder to have its stock repurchased or redeemed will be accepted
only during three (3) "window" periods each year -- after the first,
second and third fiscal quarters of the Company consisting of the first
two weeks of May, August and November, respectively. These "window"
periods are subject to closure or modification by management or the
Board of Directors of the Company if, in the best judgment of management
or the Board, it would be inappropriate for the Company to be engaged in
the purchase or sale of its shares at such time. Requests for
redemption will be deemed to have been duly made during these periods if
they are received in writing at the Company's Pewaukee office during the
window period or, if received thereafter, if they were postmarked
during the window period. With respect to inactive retailers-
shareholders tendering their stock pursuant to the Company's repurchase
policy as set forth in its Prospectus, that policy will remain in force
in accordance with its current terms except that shares will be
repurchased pursuant to that policy only if the request for repurchase
is received during a window period as described above. Once such a
request has been received, the established terms of the repurchase
policy will govern the repurchase of and payment for the shares in
question.
With regard to so-called "hardship" redemptions, the Company will
continue its existing policy of considering such requests on an
individual basis in light of the specific circumstances involved in each
case. Requests for "hardship" redemptions may be made at any time,
without regard to the window periods discussed above, but the Company
will reserve the right to decline any such request (even if the
"hardship" standards are otherwise met) if in the judgment of the
Company's management it would be inadvisable for the Company to engage
in repurchases of its stock at such time.
(2) Number Of Shares Which May Be Tendered For Redemption.
Consistent with the Company's past practices, the number of shares which
may be repurchased from any shareholder at any time will be limited by
the Company's capacity to redeem shares under its existing loan
agreements. This available capacity will be applied to redemption
requests on a "first come, first served" basis. Subject to the
Company's policy regarding repurchases of its shares from inactive
shareholders, as contained in its Prospectus, the Company may also
decline to redeem or repurchase shares at any time, or limit the number
of shares which it will redeem from any shareholder, if in the
discretion of management or the Board of Directors such a limitation is
in the best interests of the Company.
(3) Shareholders Eligible To Tender Their Shares. These
policies apply to all shareholders of the Company.
<PAGE>
(4) Price At Which Shares Will Be Redeemed. Shares will be
redeemed pursuant to this policy at a price equal to their book value as
of the fiscal year end preceding the date on which the redemption
request is received.
(5) Authority Of The Board To Suspend Or Deviate From This
Policy. The Board of Directors reserves at all times the authority to
alter, suspend or deviate from this policy, in its discretion, to the
extent it determines such action to be appropriate.
(6) Effective Date. These policies will be effective commencing
January 1, 1994.
<PAGE>
Exhibit E
POLICY REGARDING ISSUANCE AND SALES OF ROUNDY'S, INC. STOCK
(As Adopted By the Board of Directors on December 7, 1993)
Roundy's, Inc. will make shares of its Class B Common Stock
("Stock") available for purchase from time to time on the following
terms and conditions:
(1) Persons to Whom Shares Will Be Issued. Shares of the Company's
Stock will be made available for purchase by:
- the Company's existing shareholders who are active
retailers doing business with the Roundy's
Cooperative ("Retailers");
- new Retailers; and
- employees of Roundy's, Inc. ("Employees"), upon the
recommendation of the Chief Executive Officer and the
approval of the Board of Directors or the Compensation
Committee of the Board.
Stock will not be made available to "inactive" retailers, even if
they have not yet tendered their stock for repurchase pursuant to the
inactive shareholder repurchase policy.
(2) Times at Which Stock Will Be Made Available for Purchase.
Stock will be made available for purchase by eligible purchasers during
three (3) "window" periods each year -- after the first, second and
third fiscal quarters of the Company consisting of the first two weeks
of May, August and November, respectively. These "window" periods are
subject to closure or modification by management or the Board of
Directors if, in the best judgment of management or the Board, it would
be inappropriate for the Company to be engaged in the purchase or sale
of its shares at such time.
(3) Price at Which Shares Will Be Issued. When issued pursuant to
this policy, shares will be issued at a price equal to their book value
as of the preceding fiscal year end.
(4) Number of Shares Which Any Purchaser Shall Be Eligible to
Purchase. The terms set out in this Paragraph 4 are subject at all
times to the restrictions and limitations with respect to timing of
purchases as set out in Section 2 above.
(i) Retailers. The number of shares a Retailer will be
eligible to purchase will depend in part on the number of shares already
held by such Retailer relative to the number of shares which such
Retailer would be expected to hold under Roundy's "Buying Deposit"
policy. Roundy's encourages each of its Retailers to purchase and hold
shares of the Company's Stock having a total "book value" equal to not
less than twice the average amount of such Retailer's weekly purchases
from Roundy's. This amount is referred to as the Retailer's "Buying
Deposit." These shares are pledged to Roundy's to secure the Retailer's
accounts receivable due Roundy's, as well as any other indebtedness of
the Retailer to Roundy's. The excess (if any) of a Retailer's Buying
Deposit over the number of shares of Stock which such Retailer holds at
<PAGE>
any time is referred to herein as such Retailer's "Buying Deposit
Deficit." For purposes of this policy, each Retailer's Buying Deposit
Deficit will be redetermined as of the first day of each of the
Company's fiscal years, based on purchases by such Retailer during the
immediately preceding fiscal year.
(A) Current Active Retailers Which Have a Buying Deposit
Deficit. Existing active Retailers which have a
Buying Deposit Deficit (other than an "Incremental
Buying Deposit Deficit" or an "Initial Buying Deposit
Deficit" as defined in paragraphs (b) and (c) below)
referred to herein in as a "Regular Buying Deposit
Deficit") will be entitled to purchase, in each
"window" period described in Section 2 above, shares
equal to five percent (5%) of their Regular Buying
Deposit Deficit.
(B) Current Active Retailers Which Create Or Increase
Their Buying Deposit Deficit Through Expansion Or
Addition Of New Store Facilities. In the case of a
Retailer which expands its store facilities or adds
new facilities, and thereby creates a Buying Deposit
Deficit or increases its Buying Deposit Deficit over
its Regular Buying Deposit Deficit (referred to
herein as an "Incremental Buying Deposit Deficit"),
such Retailer will be entitled to purchase (in
addition to shares which may be purchased under the
preceding paragraph A) shares up to but not greater
than fifty percent (50%) of its Incremental Buying
Deposit Deficit, but only if such shares are
purchased in the first "window" period, as described
in Section 2 above, following the date on which the
new or expanded store facility first opens, or in the
immediately following "window" period (unless the
Company does not authorize the sale of its shares
during either of such "window" periods, in which
event such shares must be purchased at the earliest
time thereafter at which the Company authorizes sales
of its shares). The remainder of such Retailer's
Incremental Buying Deposit Deficit will become part
of its Regular Buying Deposit Deficit, and will be
subject to the provisions of Paragraph A above.
Notwithstanding the foregoing, a Retailer to which
Roundy's or any of its subsidiaries has loaned funds
(other than extensions of trade credit in the
ordinary course of business) or with respect to which
Roundy's or any of its subsidiaries has guaranteed
indebtedness (other than a guaranty or other
contingent liability for rentals due under leases of
store facilities or the equipment therein) will not
be eligible to purchase shares up to fifty percent of
the Incremental Buying Deposit Deficit as described
above. In that event, all of such Retailer's
Incremental Buying Deposit Deficit will become part
of its Regular Buying Deposit Deficit, and will be
subject to the provisions of Paragraph A above.
<PAGE>
(C) New Retailers. New Retailers (those who do not, as
of January 1, 1994, do business with the Roundy's
Cooperative, either directly or through an affiliated
entity) will be eligible to purchase, in each
"window" period described in Section 2 above, shares
equal to 10% of their Buying Deposit at the level at
which it is initially established ("Initial Buying
Deposit"). If such Retailer's Buying Deposit Deficit
increases in any subsequent fiscal year to a level
greater than its Initial Buying Deposit Deficit, such
increase will constitute a Regular Buying Deposit
Deficit, and will be subject to the provisions of
Paragraph A, above.
(D) Retailers With No Buying Deposit Deficit. A Retailer
which has no Regular Buying Deposit Deficit and no
Incremental Buying Deposit Deficit, and which is not
a new Retailer eligible to purchase shares equal to
its Initial Buying Deposit under the preceding
paragraph (c), will be eligible to purchase in each
year shares having a total book value equal to five
percent (5%) of its Buying Deposit (as such Buying
Deposit is determined as of the first day of each
fiscal year); provided that such shares must be
purchased in the first "window" period of each fiscal
year (unless the Company does not authorize the sale
of its shares during such "window" period, under
Section 2 above, in which event such shares must be
purchased at the earliest time thereafter at which
the Company authorizes sales of its shares).
Notwithstanding the foregoing, a Retailer to which
Roundy's or any of its subsidiaries has loaned funds
(other than extensions of trade credit in the
ordinary course of business) or with respect to which
Roundy's or any of its subsidiaries has guaranteed
indebtedness (other than a guaranty or other
contingent liability for rentals due under leases of
store facilities or the equipment therein) will not
be eligible to purchase shares if it has no Regular
Buying Deposit Deficit, Incremental Buying Deposit
Deficit, or Initial Buying Deposit Deficit.
(ii) Inactive Retailer-Shareholders. Inactive Retailers will not
be permitted to acquire any additional shares.
(iii) Employees. An Employee may purchase shares in such amount
as may be authorized by the Board of Directors or the
Compensation Committee of the Board, upon the recommendation
of the Chief Executive Officer; provided, that any employee
desiring to purchase shares shall advise the Company of his
or her desire to do so prior to the end of the first fiscal
quarter of any year, and, if approval for the purchase of
such shares is granted, such shares shall be purchased in
three approximately equal installments in each of the three
"window" periods occurring during such year.
<PAGE>
(5) Discretion Of The Board To Deviate From Or Modify The
Policy. The Board of Directors of the Company at all
times retains the discretion to alter, suspend, or
deviate from the above policy, in its discretion, to
the extent that it determines such action to be
appropriate. However, it is not anticipated that any
such deviations from, modifications to, or suspensions
of this policy will be made except in the case of
significant transactions or events outside the
ordinary course of the Company's business.
(6) Effective Date. These policies will be effective
commencing January 1, 1994.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 15. Indemnification of Directors and Officers.
Article VIII of Roundy's By-Laws provides for indemnification by
Roundy's of its Directors and Officers against liabilities incurred in
their capacities as such. The following summary is subject to the
specific provisions of said Article VIII and the capitalized terms used
therein are specifically defined in said Article VIII:
Generally, Article VIII of Roundy's By-Laws requires Roundy's to
indemnify a Director or Officer for all Liability and Expenses
arising out of any claim made against such person or in a
Proceeding in which such person was a Party, unless such Liability
results from the person's Breach of Duty (which generally includes
a willful failure to deal fairly with Roundy's or its stockholders
while subject to a conflict of interest; a transaction from which
the Director or Officer derived improper personal profit; a
knowing violation of criminal law; willful misconduct; or
intentional or reckless statements or omissions regarding matters
under Board consideration). Indemnification includes the
reimbursement or advancement or expenses. Article VIII sets forth
specific procedures for requesting indemnification and for
determining whether indemnification is proper. Article VIII
provides that it is not the exclusive source for rights of an
Officer or Director to indemnification.
Management believes that Roundy's policy with respect to indemnification
as expressed in Article VIII of the By-Laws is consistent with
application provisions of the Wisconsin Business Corporation Law
respecting indemnification of Directors and Officers.
Item 16. Exhibits.
3.1 Articles of Incorporation of the Company, as amended, incorporated
herein by reference to Exhibit 4.1 of Registrant's Registration
Statement on Form S-2 (File No. 2-94485), dated December 5, 1984.
3.2 By-Laws of the Company, as amended December 9, 1986, incorporated
herein by reference to Exhibit 3.2 of Registrant's Annual Report
on Form 10-K for fiscal year ended January 3, 1987, filed with the
Commission on April 3, 1987.
3.3 1988-1 By-Law Amendments, incorporated herein by reference to
Exhibit 3.3 of Registrant's Annual Report on Form 10-K for the
fiscal year ended January 2, 1988, filed with the Commission on
April 1, 1988.
3.4 Amendment of By-Law Section 5.01, incorporated herein by reference
to Exhibit 3.4 of Registrant's Annual Report on Form 10-K for the
fiscal year ended December 30, 1989, filed with the Commission on
March 30, 1990.
3.5 Amendment of By-Law Sections 7.10, 7.11 and 7.12, incorporated
herein by reference to Exhibit 3.5 of Registrant's Annual Report
on Form 10-K for the fiscal year ended December 29, 1990, filed
with the Commission on March 28, 1991.
<PAGE>
4.1 Modification Letter dated March 1, 1989 to Note Purchase Agreement
dated September 1, 1987 between Roundy's, Inc. and Teachers
Insurance and Annuity Association of America, incorporated herein
by reference to Exhibit 4.1 of Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1988, filed with the
Commission on March 31, 1989.
4.2 Note Agreement dated March 1, 1989, between Roundy's, Inc. and
Teachers Insurance and Annuity Association of America,
incorporated herein by reference to Exhibit 4.2 of Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1988, filed with the Commission on March 31, 1989.
4.3 Modification Letter dated March 20, 1990 to Modification Letter
dated March 1, 1989 and to Note Purchase Agreement dated March 1,
1989 between Roundy's, Inc. and Teachers Insurance and Annuity
Association of America, incorporated herein by reference to
Exhibit 4.3 of Registrant's Annual Report on Form 10-K for the
fiscal year ended December 30, 1989, filed with the Commission on
March 30, 1990.
4.4 Credit Agreement dated March 6, 1989, between Roundy's, Inc. and
The Chase Manhattan Bank, N.A. (as agent), incorporated herein by
reference to Exhibit 4.3 of Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1988, filed with the
Commission on March 31, 1989.
4.5 Amendment No. 1 dated April 13, 1990 to the Credit Agreement dated
March 6, 1989, between Roundy's, Inc. and The Chase Manhattan
Bank, N.A. (as agent), incorporated herein by reference to Exhibit
4.5 of Registrant's Registration Statement on Form S-2 (File No.
2-66296), dated April 27, 1990.
4.6 Policy Relating to Redemption of Stock by Inactive Customer
Shareholders and Former Employees (Effective as of January 1,
1991), incorporated herein by reference to Exhibit 4.6 of
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 29, 1990, filed with the Commission on March 28, 1991.
4.7 Amendment No. 2 dated October 9, 1991 (effective October 24, 1991)
to the Credit Agreement dated March 6, 1989, between Roundy's,
Inc. and The Chase Manhattan Bank, N.A. (as agent), incorporated
herein by reference to Exhibit 4.7 of Registrant's Annual Report
on Form 10-K for the fiscal year ended December 28, 1991, filed
with the Commission on March 26, 1992.
4.8 Amendment No. 3 dated December 9, 1991 (effective December 30,
1991) to the Credit Agreement dated March 6, 1989, between
Roundy's, Inc. and The Chase Manhattan Bank, N.A. (as agent),
incorporated herein by reference to Exhibit 4.8 of Registrant's
Annual Report on Form 10-K for the fiscal year ended December 28,
1991, filed with the Commission on March 26, 1992.
4.9 Note Agreement dated December 15, 1991 (effective December 30,
1991), between Roundy's, Inc. and Massachusetts Mutual Life
Insurance Company and United of Omaha Life Insurance Company,
incorporated herein by reference to Exhibit 4.9 of Registrant's
Annual Report on Form 10-K for the fiscal year ended December 28,
1991, filed with the Commission on March 26, 1992.
<PAGE>
4.10 Amendment No. 4 dated December 14, 1992 (effective December 15,
1992) to the Credit Agreement dated March 6, 1989, between
Roundy's, Inc. and The Chase Manhattan Bank, N.A. (as agent),
incorporated herein by reference to Exhibit 4.10 of Registrant's
Annual Report on Form 10-K for the fiscal year ended January 2,
1993, filed with the Commission on March 30, 1993.
4.11 Note Agreement dated December 15, 1992 between Roundy's, Inc. and
Connecticut Mutual Life Insurance Company, The Ohio National Life
Insurance Company, Provident Mutual Life Insurance Company of
Philadelphia, Providentmutual Life and Annuity Company of America,
Guarantee Mutual Life Company, Woodmen Accident and Life Company
and United of Omaha Life Insurance Company, incorporated herein by
reference to Exhibit 4.11 of Registrant's Annual Report on Form
10-K for the fiscal year ended January 2, 1993, filed with the
Commission on March 30, 1993.
4.12 Policies relating to Roundy's Issuance and Sales and
Redemptions/Repurchases of its Stock (effective as of January 1,
1994), incorporated herein by reference to Exhibit 4.12 of
Registrant's Annual Report on Form 10-K for the fiscal year ended
January 1, 1994, filed with the Commission on March 31, 1994.
4.13 Amendment No. 5 dated December 15, 1993 (effective December 13,
1993) to the Credit Agreement dated March 6, 1989, between
Roundy's, Inc. and The Chase Manhattan Bank, N.A. (as agent),
incorporated herein by reference to Exhibit 4.13 of Registrant's
Annual Report on Form 10-K for the fiscal year ended January 1,
1994, filed with the Commission on March 31, 1994.
4.14 Note Agreement dated December 22, 1993 (effective December 22,
1993), between Roundy's, Inc. and The Variable Annuity Life
Insurance Company, The Life Insurance Company of Virginia, Phoenix
Home Life Mutual Insurance Company, Phoenix American Life
Insurance Company, Washington National Insurance Company, and TMG
Life Insurance Company, incorporated herein by reference to
Exhibit 4.14 of Registrant's Annual Report on Form 10-K for the
fiscal year ended January 1, 1994, filed with the Commission on
March 31, 1994.
9 Amended and Restated Voting Trust Agreement dated September 16,
1983, incorporated herein by reference to Exhibit 9 of
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1983, filed with the Commission on March 30, 1984.
9(a) Amendments No. 1 and 2, dated April 8, 1986 to Amended and
Restated Voting Trust Agreement, incorporated herein by reference
to Exhibit 9(a) of Registrant's Registration Statement on Form S-2
(File No. 2-66296), dated April 29, 1986.
9(b) Amendment No. 1987-1 to Amended and Restated Voting Trust
Agreement, incorporated herein by reference to Exhibit 9(b) of
Registrant's Registration Statement on Form S-2 (File No.
2-66296), dated April 29, 1987.
10.1 Employment Agreement dated July 1, 1992 between the Registrant and
John R. Dickson, incorporated herein by reference to Exhibit 10.1
of Registrant's Annual Report on Form 10-K for the fiscal year
ended January 2, 1993, filed with the Commission on March 30,
1993.
<PAGE>
10.2 Roundy's, Inc. Supplemental Pension Plan Agreement, effective July
1, 1987 between the Registrant and John R. Dickson, incorporated
herein by reference to Exhibit 10.3 of Registrant's Annual Report
on Form 10-K for the fiscal year ended January 2, 1993, filed with
the Commission on March 30, 1993.
10.3 Deferred Compensation Agreement plan between the Registrant and
certain executive officers including Messrs. Dickson, Ranus,
Lestina and Sullivan, incorporated herein by reference to Exhibit
10.4 of Registrant's Annual Report on Form 10-K for the fiscal
year ended December 30, 1989 filed with the Commission on March
30, 1990.
10.4 Directors and Officers Liability and Corporation Reimbursement
Policy issued by American Casualty Company of Reading,
Pennsylvania (CNA Insurance Companies) as of June 13, 1986,
incorporated herein by reference to Exhibit 10.3 of Registrant's
Annual Report on Form 10-K for the fiscal year ended January 3,
1987, filed with the Commission on April 3, 1987.
10.4(a)Declarations page for renewal of Directors and Officers Liability
and Corporation Reimbursement Policy, incorporated herein by
reference to Exhibit 10.4(a) of Registrant's Annual Report on Form
10-K for the fiscal year ended January 1, 1994, filed with the
Commission on March 31, 1994.
10.5 1991 Stock Incentive Plan, revised February 9, 1993, incorporated
herein by reference to Exhibit 10.6 of Registrant's Annual Report
on Form 10-K for the fiscal year ended January 2, 1993, filed with
the Commission on March 30, 1993.
23. Consent of Deloitte & Touche.
Item 17. Undertakings.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of Roundy's pursuant to the foregoing provisions, or
otherwise, Roundy's has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by Roundy's of expenses incurred or paid by a
director, officer or controlling person of Roundy's in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, Roundy's will, unless in the opinion of its counsel the mat-
ter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all the requirements for filing on Form S-2 and has duly caused
this Amendment No. 17 on Form S-2 to Form S-1 Registration Statement
under the Securities Act of 1933 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the town of Pewaukee, State
of Wisconsin, on April 12, 1994.
ROUNDY'S, INC.
By ROBERT D. RANUS
----------------------------
Robert D. Ranus
Vice President and
Chief Financial Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robert D. Ranus, his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute, may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 17 to the Registration Statement has been
signed this 12th day of April, 1994 by the following persons in the
capacities indicated:
Signature Title
--------- -----
JOHN R. DICKSON Director, Chairman and
- -------------------------- Chief Executive Officer
John R. Dickson
ROBERT D. RANUS Director, Vice President and
- -------------------------- Chief Financial Officer and
Robert D. Ranus Principal Accounting Officer
<PAGE>
Signature Title
--------- -----
JOHN R. DICKSON Director
- --------------------------
John R. Dickson
GERALD F. LESTINA Director
- --------------------------
Gerald F. Lestina
ROBERT D. RANUS Director
- --------------------------
Robert D. Ranus
ROBERT A. FARRELL Director
- --------------------------
Robert A. Farrell
GARY N. GUNDLACH Director
- --------------------------
Gary N. Gundlach
GEORGE E. PRESCOTT Director
- --------------------------
George E. Prescott
GEORGE C. KAISER Director
- --------------------------
George C. Kaiser
BRENTON H. RUPPLE Director
- --------------------------
Brenton H. Rupple
ROBERT R. SPITZER Director
- --------------------------
Robert R. Spitzer
ROBERT E. BARTELS Director
- --------------------------
Robert E. Bartels
CHARLES R. BONSON Director
- --------------------------
Charles R. Bonson
<PAGE>
INDEX TO EXHIBITS
Exhibit Description Page
------- ----------- ----
23 Consent of Deloitte & Touche 71
<PAGE>
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 17 to the
Registration Statement (Form S-1) of Roundy's, Inc. on Form S-2 of our
reports dated February 28, 1994, included and incorporated by reference
in the Annual Report on Form 10-K of Roundy's, Inc. for the year ended
January 1, 1994, and to the use of our report dated February 28, 1994,
appearing in the Prospectus, which is part of this Registration
Statement. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
DELOITTE & TOUCHE
Milwaukee, Wisconsin
March 31, 1994
<PAGE>
