UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1994
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _____________ to _______________
Commission file number: 2-66296
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Roundy's, Inc.
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(Exact name of registrant as specified in its charter)
Wisconsin 39-0854535
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23000 Roundy Drive
Pewaukee, Wisconsin 53072
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (414) 547-7999
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Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
As of December 31, 1994, 14,000 shares of Class A (voting) Common Stock
and 1,154,363 shares of Class B (non-voting) Common Stock were
outstanding. All of the outstanding shares of Class A Common Stock on
December 31, 1994 were held of record by the Roundy's, Inc. Voting Trust
which may be deemed an affiliate of the registrant. There is no
established public trading market for either class of such stock.
DOCUMENTS INCORPORATED BY REFERENCE
Documents Form 10-K Reference
--------- -------------------
Annual Report to Stockholders Part II, Items 6, 7, 8
for the year ended December 31, 1994
PART I
ITEM 1. Business.
---------
GENERAL
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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, Virginia and West Virginia. The Company also
owns and operates ten retail warehouse food stores under the name "Pick
'n Save," one limited assortment food store under the name "Mor For
Less" and four 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 a number of
its own private and controlled labels. The Company services 961 retail
grocery 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 has historically operated its food wholesale business on a
cooperative basis, and therefore determined 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 Common is owned by the
owners ("stockholder-customers") of 140 retail grocery stores serviced
by Roundy's. These stockholder-customers, who own approximately 66% of
the combined total of Class A Common and Class B Common, receive
patronage dividends from Roundy's based on the sales of Roundy's to such
stockholder-customers. The patronage dividend is payable at least 20%
in cash and the remainder in Class B Common. Patronage dividends for
the years ended January 1, 1994 and January 2, 1993 were payable 30% in
cash and 70% in Class B Common. There were no patronage dividends for
the year ended December 31, 1994 because the Company did not meet the
requirement to increase the book value of its common stock by 10%.
Under Subchapter T of the Internal Revenue Code, patronage dividends are
deducted by Roundy's, in determining taxable income, and are generally
taxable to the stockholder-customers (including the value of the Class B
Common), for Federal income tax purposes.
Roundy's anticipates that in the future it will continue to operate on a
cooperative basis in substantially this manner, although it is not
required to do so and its operation on this basis, as well as its
practice of paying patronage dividends, could be terminated at any
time by action of the Board of Directors.
The subsidiaries of Roundy's do not operate as cooperatives. The
customers serviced by these subsidiaries are independent grocers,
operating 821 retail stores. They do not receive patronage dividends.
In addition, approximately 34% of the outstanding Roundy's Stock is held
by employees or former customers of Roundy's and, although they
participate in the accumulation of equity in the Company, they do not
receive patronage dividends and do not own any Class A Common.
The applicable laws, regulations, rulings and judicial decisions
affecting the determination of whether a corporation is operating on a
cooperative basis for Federal income tax purposes under Subchapter T of
the Internal Revenue Code are subject to interpretation. Although
management believes that Roundy's qualifies as a cooperative for such
purposes, Roundy's has not obtained, and does intend to seek a ruling or
other assurance from the IRS that this is the case. 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
1994.
The Company sells brand name merchandise of unrelated manufacturers,
including most nationally advertised brands. In addition, the Company
sells numerous products under private and controlled labels, including
"Roundy's," "Old Time," "Scot Lad," "Spring Lake," "Shurfine," "Price
Saver," "Buyers' Choice," "Super Choice," "Sunny Valley," "Sunny Acres,"
"Sunny Acre Farms," "Bonnie Blue," and "Valu-Check'd." Private label
product sales for the Company accounted for $153,699,000, $137,176,000
and $148,074,000 of the Company's sales during fiscal 1994, 1993 and
1992, respectively.
As described above, Roundy's, exclusive of its subsidiaries, has
historically operated on a cooperative basis with respect to its
wholesale food distribution business. Roundy's cooperative operations
accounted for approximately 37%, 36% and 34% of the Company's
consolidated net sales and service fees for the fiscal years ended
December 31, 1994, January 1, 1994 and January 2, 1993, respectively.
At December 31, 1994, Roundy's had 82 stockholder-customers actively
engaged in the retail grocery business, operating a total of 140 retail
grocery stores. Roundy's cooperative wholesale food business is focused
primarily in Wisconsin, where all but 8 of the 140 retail grocery stores
are located (8 are in Illinois). At December 31, 1994 the Company
(including its subsidiaries) had 821 independent retail food store
customers. Sales by the Company to the independent retail food stores
accounted for 54%, 55% and 56% of the Company's consolidated net sales
and service fees for the fiscal years ended December 31, 1994, January
1, 1994 and January 2, 1993, respectively.
The Company's primary marketing objective is to be the principal source
of supply to both its stockholder-customers and other independent
retailers. In a 12 state area the Company serviced 140 retail grocery
stores operated by its stockholder-customers, 821 independent retail
stores, and 15 Company-owned and operated retail stores during the
fiscal year ended December 31, 1994. Of the Company's consolidated net
sales and service fees for this period, $508,454,000 or 20.7% were
attributable to five customers, with one customer accounting for
$196,627,000 or 8.0% of such sales. Approximately 82% or 834 retail
store customers purchased less than $3,000,000 each from the Company
in the fiscal year ended December 31, 1994. 123 customers owned more than
one retail food store, with one customer owning 13 retail food stores.
Services to Customers
---------------------
Stockholder-customers are provided, and independent retailers are
offered, a variety of services to help them maintain a competitive
position within the retail grocery industry. These services include
pricing programs, ordering assistance, point-of-sale computer support,
detailed reports of purchases, store engineering, retail accounting,
group advertising, centralized bakery purchasing, merchandising,
insurance, real estate services and retail training. The Company
charges its stockholder-customers for some of these services, however,
the income generated by such charges is not material. The foregoing
services are also available to the Company's independent retailers on a
fee basis.
Customer Loans, Guarantees and Leases
-------------------------------------
The Company has maintained a continuous effort to assist qualified
stockholder-customers and independent retailers to remodel and expand
existing retail locations and to develop new retail outlets, and has
made various loans to these individuals and entities for such purposes.
Loans outstanding as of December 31, 1994 are as follows:
Outstanding
Number Balance Range of
of Original as of Interest Maturity
Loans Amount Dec. 31, 1994 Rates Dates
------- ----------- ------------- ----------- ----------
Inventory,
Equipment
Loans 134 $30,377,300 $22,900,500 Variable(1) 1995-2009
________________
(1) Variable rates based on the Company's cost of borrowing.
The Company has guaranteed customer and employee bank loans and customer
leases amounting to $3,879,400 and $924,800, respectively at December
31, 1994.
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 1995 to 2018.
Aggregate lease rentals received under this program were $22,329,500,
$18,985,200 and $18,590,300 in 1994, 1993 and 1992, respectively.
Marketing and Distribution of Products
--------------------------------------
The Company generally distributes its various product lines by a fleet
of 280 tractor cabs and 680 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.
Terms of Sales and Bad Debt Experience
--------------------------------------
The Company renders statements to its customers on a weekly basis to
coincide with regular delivery schedules. Many customers pay the
Company via the Automated Clearing House ("ACH") system. 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. 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 .38% of sales. In 1994, 1993 and 1992,
the Company's bad debt expense was $9,166,600, $6,738,600 and
$5,772,900, 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 or $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
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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
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 store is designated as
"Mor For Less" which emphasize low cost, high value lines to the
customer, maintaining square footage of 24,000 square feet.
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 1994 1993 1992
------------- ---- ---- ----
High Value-Limited Assort-
ment and High Volume-Limited
Service Stores (Warehouse
food stores)..................... 11 14 14
Conventional Retail Stores....... 4 5 5
Sales of Company-operated stores during the three most recent fiscal
years were $231,364,000, $238,724,000 and $263,189,000 for 1994, 1993
and 1992, 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 1994, the Company had employed full-time 1,110
executive, administrative and clerical employees, 1,451 warehouse and
processing employees and drivers and 475 retail employees and had
employed 1,739 part-time employees. Substantially all of the Company's
warehouse employees, drivers and retail employees are represented by
unions, with contracts expiring in 1995 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
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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.
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 46% as reported in the Milwaukee Journal Consumer Analysis
Survey taken in the Fall of 1994.
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.
ITEM 2. Properties.
-----------
The Company's principal executive offices are located in Pewaukee,
Wisconsin. These offices are on an 63-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
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
December 31, 1994 consisted of 280 tractor cabs, 680 trailers and 10
straight delivery trucks. In addition, the Company owns 60 automobiles
and an airplane. Approximately 79% of the fleet is owned by the Company
and the balance is leased.
Computers
---------
The Company owns most of its computer 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.
ITEM 3. Legal Proceedings.
------------------
Roundy's 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.
ITEM 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
No matters were submitted to a vote of security holders during the
fourth quarter of the 1994 fiscal year.
PART II
ITEM 5. Market for the Registrant's Common Equity and Related
-----------------------------------------------------
Stockholder Matters.
--------------------
The transfer of shares of Roundy's Class A Common Stock and Roundy's
Class B Common Stock is substantially restricted and there is no
established public trading market for Roundy's stock. On December 31,
1994 an aggregate of 244 persons held shares of Roundy's Class A and/or
Class B Common Stock. As of December 31, 1994, all of the outstanding
shares of Roundy's Class A (voting) Common Stock are held of record by
the Roundy's, Inc. Voting Trust. Further information on the Voting
Trust is found in Item 12 of this report. There is also no established
public trading market for Roundy's Voting Trust Certificates and there
were 82 holders of such Certificates on December 31, 1994. Except for
patronage dividends (see Item 1, Business, and Note 3 to Roundy's
financial statements), no dividends have ever been paid on the Common
Stock of Roundy's. There is no intention of paying dividends, other
than patronage dividends, in the foreseeable future.
ITEM 6. Selected Financial Data.
------------------------
The information required by this Item is incorporated by reference from
the Registrant's Annual Report to Stockholders for the fiscal year ended
December 31, 1994 (the "Annual Report") under the caption "Selected
Financial Data."
ITEM 7. Management's Discussion and Analysis of Financial Condition
-----------------------------------------------------------
and Results of Operation.
-------------------------
The information required by this Item is incorporated by reference from
the Annual Report under the caption "Financial and Operational Review."
ITEM 8. Financial Statements and Supplementary Data.
--------------------------------------------
The required Financial Statements are incorporated by reference from the
Annual Report; see response to Item 14(a)(1), of this report. The
required financial statement schedules are filed with this report; see
the response to Item 14(a)(2) of this report. Supplementary data is not
furnished pursuant to Item 30(a)(5) of Regulation S-K.
ITEM 9. Changes in and Disagreements with Accountants on Accounting
-----------------------------------------------------------
and Financial Disclosure.
-------------------------
None.
PART III
ITEM 10. Directors and Executive Officers of the Registrant.
---------------------------------------------------
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 64 Chairman and Chief Executive Officer since
1993; President and Chief Executive
Officer 1986-1993; Director since 1986
(term expires 1995)
Gerald F. Lestina 52 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 54 Vice President and Chief Financial Officer
since 1987; Director since 1987 (term
expires 1997)
David C. Busch 46 Vice President of Administration since
1993; Vice President of Human Resources
1990-1993
Edward G. Kitz 41 Vice President, Secretary & Treasurer
since 1995; Vice President & Treasurer
since 1989
Thomas A. Loggia 40 Vice President-Wholesale since 1995;
President of Cardinal Foods, Inc. 1994-
1995 (a subsidiary of the Company);
Vice President-Logistics, Food 4 Less,
Inc. 1993-1994; Vice President-Operations,
Wetterau, Inc. 1988-1993
Michael J. Schmitt 46 Vice President-Sales and Development since
1995; Vice President, Northern Region
since 1992; Vice President and General
Manager of Milwaukee Division 1991; Vice
President of Retail Development 1990-1991
Marion H. Sullivan 48 Vice President of Marketing since 1989
Roger W. Alswager 46 Vice President of Real Estate and Develop-
ment since 1989
Londell J. Behm 44 Vice President of Advertising since 1987
John M. Granger 48 Vice President of Management Information
Services since 1990
Charles H. 52 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
Robert E. Bartels 57 Director since 1994 (term expires 1997);
President and Chief Executive Officer of
Martin's Super Markets, Inc., South Bend,
Indiana
Charles R. Bonson 48 Director since 1994 (term expires 1997);
President of Bonson's Foods, Inc., Eagle
River, Wisconsin
Gary N. Gundlach 51 Director since 1990 (term expires 1996);
President of G.E.M., Inc., McFarland,
Wisconsin
George C. Kaiser 62 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 47 Director since 1986 (term expires 1995);
President and Chief Executive Officer of
Prescott's Supermarkets, Inc., West Bend,
Wisconsin
Brenton H. Rupple 70 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 is intended to be three "Retailer Directors" serving.
ITEM 11. Executive Compensation.
-----------------------
The following table shows the compensation for the past three years of
Roundy's five most highly compensated executive officers performing
policy making functions for Roundy's, including the Chief Executive
Officer (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term
Other Compensation
Annual Securities All Other
Name and Compen- Underlying Compen-
Principal sation (A)Options sation
Position Year Salary Bonus(1) (2) (B)SARs (3)
-----------------------------------------------------------------------------
(A) (B)
----- -----
John R. Dickson 1994 460,225 36,100 - - - 25,551
Chairman and 1993 456,675 60,000 - 6,000 - 25,621
Chief Executive 1992 436,047 20,750 - 5,000 - 56,804
Officer
Gerald F. Lestina 1994 235,000 41,344 10,148 - - 7,697
President and Chief 1993 193,605 63,127 9,381 4,000 - 7,367
Operating Officer 1992 170,682 34,059 6,575 2,500 - 6,699
Robert D. Ranus 1994 200,000 23,600 14,668 - - 9,604
Vice President and 1993 181,125 62,500 13,895 3,000 - 9,527
Chief Financial 1992 178,365 30,000 10,317 2,500 - 9,054
Officer
Marion H. Sullivan 1994 125,000 25,499 7,298 - - 7,181
Vice President of 1993 116,000 22,936 - - 500 7,324
Marketing 1992 114,154 31,157 - 500 500 6,730
John M. Granger 1994 123,000 7,500 - - - 530
Vice President of 1993 119,000 8,000 - - - 463
Management Infor- 1992 117,212 6,250 - 500 500 405
mation Services
(1) Represents amounts paid in the year indicated for performance in
the previous year.
(2) Shown in this column are amounts reimbursed during the fiscal year
for the payment of income taxes.
(3) The amounts shown in this column for 1994, 1993 and 1992,
respectively, were derived from the following figures. Mr.
Dickson: $13,390, $13,390 and $44,640 representing the current
dollar value of the benefit to Mr. Dickson of the premium paid by
Roundy's for the split dollar life insurance policy covering Mr.
Dickson; $9,982, $9,982 and $9,982 - Roundy's paid term life
insurance premium; $2,179, $2,249 and $2,182 - Roundy's
contribution to the 401(k) plan. Term life insurance premiums
paid by Roundy's and Roundy's contributions to the 401(k) plan,
respectively, for the other named executive officers are shown
below. For 1994 - Mr. Lestina: $5,518 and $2,179. Mr. Ranus:
$7,425 and $2,179. Mr. Sullivan: $5,667 and $1,514. Mr.
Granger: $530 and $0. For 1993 - Mr. Lestina: $5,118 and
$2,249. Mr. Ranus: $7,278 and $2,249. Mr. Sullivan: $5,584 and
$1,740. Mr. Granger: $463 and $0. For 1992 - Mr. Lestina:
$4,883 and $1,816. Mr. Ranus: $7,161 and $1,893. Mr. Sullivan:
$5,519 and $1,211. Mr. Granger: $405 and $0.
The executive officers of Roundy's are each covered by $250,000 of
executive equity life insurance. In addition, executives, except Mr.
Dickson, are covered by a group life carve-out plan in the amount of
three times salary, which is in lieu of the group term life insurance
provided to substantially all nonunion employees under a Roundy's-
sponsored Plan. Mr. Dickson is covered under a split dollar insurance
program in the amount of $1,500,000 for a 10-year term of which Roundy's
will pay 90% of the premium and Mr. Dickson 10% of the premium with
Roundy's retaining all cash value in the policy unless Mr. Dickson
exercises an option to purchase the cash value. The executive officers
of Roundy's are also covered by an executive disability income insurance
wrap-around plan which is in addition to the disability income insurance
provided to substantially all nonunion employees under a Roundy's-
sponsored Plan.
The Board of Directors of the Company has authorized the Company to
guarantee the repayment of any loans incurred by senior executives and
key employees for the purpose of exercising certain stock options
granted by the Company. The guarantee is limited to a total aggregate
principal amount of loans of $3,000,000. Under this authority, the
Company has guaranteed loans on behalf of John R. Dickson which have a
current balance of $490,000.
The Company has Deferred Compensation Agreements with certain executive
officers, including Messrs. Dickson, Lestina, Ranus and Sullivan. The
Deferred Compensation Agreements provide generally that upon the
occurrence of a change in control of the Company, the Company shall pay
to the employee deferred compensation equal to the sum of the employee's
then current annual salary plus any bonus which may have been paid to
the employee within the fiscal year of the Company preceding the change
in control plus any other deferred compensation which may accrue to the
employee for the fiscal year of the Company preceding the change in
control under any deferred compensation plan or agreement plus the value
of any health or life insurance benefits. The deferred compensation
amount must be paid in a single payment six months following the date of
occurrence of the change in control or, if employee should be terminated
following the change in control, within thirty days of the date of such
termination, whichever occurs earlier.
Roundy's has an employment agreement with John R. Dickson. This
agreement has a three-year term ending June 30, 1995. The agreement
states that as Chief Executive Officer, Mr. Dickson will receive an
annual base salary of $445,000 for the first year. Thereafter, each
July 1, this base salary shall be increased in an amount equal to the
rate of inflation in the Consumer Price Index For All Urban Consumers
(CPI-U) for all items for the previous 12 months ended December 31 of
the preceding year, but in no event shall the increase be less than 3%.
All or part of this salary may be deferred upon Mr. Dickson's request.
Mr. Dickson is included in the bonus program for executives at an amount
not to exceed 20% of his base salary, which may be deferred upon Mr.
Dickson's request. The agreement also provides for certain health
insurance, disability income and other benefits for Mr. Dickson and his
wife, until their deaths, in addition to those provided to officers in
general. During the term of his employment with Roundy's and for a
period of one year following termination, either voluntary or
involuntary, Mr. Dickson agrees not to compete with Roundy's within 150
miles of any company operated retail or wholesale facility operated at
any time during the term of the agreement. Also under certain
conditions specified in the agreement, Mr. Dickson may extend the
Exercise Period of the stock options granted to him under the 1991 Stock
Incentive Plan.
Mr. Dickson also has a Supplemental Pension Plan Agreement with Roundy's
which provides additional retirement benefits of $15.625 per month for
each month of Mr. Dickson's employment. The benefit may accrue for 96
months to July 1, 1995 at which time the maximum benefit will be $1,500
per month, or $18,000 per year. Mr. Dickson is currently 90% vested in
these benefits pursuant to a schedule that results in 100% vesting on
July 1, 1995.
Effective November 1, 1991, the Board of Directors adopted the 1991
Stock Incentive Plan (the "Plan") under which up to 75,000 shares of
Class B Common Stock may be issued pursuant to the exercise of stock
options. The Plan also authorizes the grant of up to 25,000 stock
appreciation rights ("SARs"). Options and SARs may be granted to senior
executives and key employees of the Company by the Executive Compen-
sation Committee of the Board of Directors. No options or SARs may be
granted under the Plan after November 30, 2001. Options granted become
exercisable based on the vesting rate which ranges from 20% at the date
of grant to 100% eight years from the date of grant. SAR holders are
entitled, upon exercise of a SAR, to receive cash in an amount equal to
the excess of the book value per share of the Company's common stock as
of the last day of the Company's fiscal year immediately preceding the
date the SAR is exercised over the base price of the SAR. SARs granted
become exercisable based on the vesting rate which ranges from 20% on
the last day of the fiscal year of the grant to 100% eight years from
the last day of the fiscal year of the grant. In the event of a change
in control of the Company, all options and SARs previously granted and
not exercised, become exercisable.
The following table provides information on the Named Executive
Officers' option and SAR exercises in 1994 and the value of unexercised
options at December 31, 1994. Roundy's did not grant any options or
freestanding SARs to employees in 1994.
Aggregated Option/SAR Exercises in 1994
and 1994 Year-End Option Values
Number of
Unexercised Value ($) of
Shares (A)Options Unexercised In-The-
Acquired (B)SARs Money (A)Options
on Exercise at 12/31/94 (B)SARs at 12/31/94
(A)Options Value($) Exercisable/ Exercisable/
Name (B)SARs Realized Unexercisable Unexercisable
------------------ ----------- -------- -------------- --------------------
John R. Dickson (A) 3,667 34,604 - / 2,000 - / 24,600
(B) - - - -
Gerald F. Lestina (A) - - 10,166 / 1,334 200,917 / 16,408
(B) - - - -
Robert D. Ranus (A) - - 9,500 / 1,000 192,725 / 12,300
(B) - - - -
Marion H. Sullivan (A) - - 700 / 800 15,880 / 17,745
(B) - - 850 / 1,150 17,725 / 22,050
John M. Granger (A) - - 700 / 800 15,880 / 17,745
(B) - - 700 / 800 15,880 / 17,745
Benefits under the Roundy's, Inc. Retirement Plan are, in general, an
amount equal to 50% of average compensation minus 50% of the
participant's primary Social Security benefit; provided, however, that
if the employee has fewer than 25 years of credited service, the monthly
amount so determined is multiplied by a fraction, the numerator of which
is the years of credited service and the denominator of which is 25. In
addition, if credited service is greater than 25 years, the benefit is
increased by 1% of average compensation for each year of credited
service in excess of 25 years to a maximum of 10 additional years.
The following table sets forth the estimated annual pensions (before
deduction of the Social Security offset described below) which persons
in specified categories would receive if they had retired on December
31, 1994, at the age of 65:
Average Annual
Compensation
During Last Annual Pension After Specified
Five Completed Years of Credited Service
Calendar Years 15 Years 20 Years 25 Years 30 Years 35 Years
-------------- ---------------------------------------------------
$125,000 $37,500 $50,000 $62,500 $68,800 $75,000
150,000 43,700 58,200 72,800 80,100 87,300
175,000 49,700 66,300 83,000 91,500 99,800
200,000 56,300 75,400 94,400 104,400 113,900
225,000 63,000 84,400 105,900 117,200 120,000
250,000 64,400 86,300 108,200 119,900 120,000
300,000 64,400 86,300 108,200 119,900 120,000
400,000 64,400 86,300 113,400 120,000 120,000
450,000 64,400 94,000 120,000 120,000 120,000
500,000 67,200 104,500 120,000 120,000 120,000
Directors who are employees of Roundy's receive no fees for serving as
Directors. Customer-directors each received $500 per meeting during
1994; outside Directors each received $12,500, prorated on an annual
basis, plus $500 per meeting for their services during 1994.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management.
---------------------------------------------------------------
Roundy's is authorized by its Articles of Incorporation to issue 60,000
shares of Class A Common, $1.25 par value, and 2,400,000 shares of Class
B Common, $1.25 par value. On December 31, 1994, 14,000 shares of Class
A Common and 1,154,363 shares of Class B Common were outstanding.
Roundy's has a Voting Trust which was established in 1971 (amended and
restated during 1983 and amended in 1986), as the successor to an
initial voting trust created at the time of the organization of Roundy's,
and which 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. On December 31, 1994, all of the outstanding shares of
Roundy's Class A Common Stock held by current stockholder-customers were
on deposit in the Voting Trust. 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, 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 Stock in the Trust entitling the depositor thereof to one vote).
The Trustees of the Trust currently are Gerald F. Lestina, Robert R.
Spitzer, Charles E. Stenicka, Duane G. Tate, John A. McAdams, and David
A. Ulrich. Mr. Lestina is President and Chief Operating Officer of
Roundy's, Inc., and is a member of Roundy's Board of Directors. Mr.
Tate is President and Stockholder of Tate Foods, Inc., a stockholder-
customer of Roundy's. Mr. McAdams is President and Stockholder of
McAdams, Inc., a stockholder-customer of Roundy's. Mr. Ulrich is
President and Stockholder of Mega Marts, Inc., a stockholder-customer of
Roundy's. In the event of the death, resignation, incapacity or
inability of any of the Trustees, a successor Trustee may be named by a
majority of the remaining Trustees.
Vacancies need not be filled, except that there must be at least three
Trustees acting as such at all times, and one Trustee must always be a
stockholder-customer (or a principal of an entity which is a
stockholder-customer) of Roundy's.
Woodman's Food Market, Inc. (2919 North Lexington, Janesville, Wisconsin
53545) is the record owner of 101,458 shares (or 8.79%) of the Roundy's
Class B Common outstanding on December 31, 1994. Voting and investment
power over the shares owned by Woodman's Food Market, Inc. is solely
held by its owner, Willard R. Woodman, Jr. McAdams, Inc. (36933 West
Plank Road, Oconomowoc, Wisconsin 53066) is owner of 64,994 shares (or
5.63%) of the Roundy's Class B Common outstanding on December 31, 1994.
Voting and investment power over the shares owned by McAdams, Inc. is
solely held by its owner, John A. McAdams. Mega Marts, Inc. (6312 South
27th Street, Oak Creek, Wisconsin 53154) is owner of 1,200 shares (or
8.57%) of the Roundy's Class A Common Stock and 78,177 shares (or 6.77%)
of the Roundy's Class B Common Stock outstanding on December 31, 1994.
Voting and investment power over the shares owned by Mega Marts, Inc. is
solely held by its owner, David A. Ulrich. Except as set forth above or
in the table below, no other person (person or group who, directly or
indirectly, through any relationship, has or shares the power to vote,
or to direct the voting) owns of record or is known by Roundy's to own
beneficially more than 5% of the outstanding Roundy's Class A Common
Stock or Roundy's Class B Common Stock. Except for Mega Marts, Inc.
mentioned above, no other person owns of record or is known by Roundy's
to own beneficially more than 5% of the Voting Trust Certificates issued
by the Trustees of the Roundy's Voting Trust with respect to shares of
Roundy's Class A Common Stock deposited with the Trustees.
The following table sets forth the beneficial ownership of equity
securities of Roundy's by each Director at December 31, 1994, together
with the beneficial ownership of equity securities by all Directors and
Officers as a group:
Beneficial Percent
Title of Class Beneficial Owner Ownership(1) of Class
-------------- ---------------- ----------------- ----------
Class B Common John R. Dickson 24,000 shares (2) 2.08%
Class B Common Gerald F. Lestina 13,272 shares (3) 1.14%
Class B Common Robert D. Ranus 13,725 shares (4) 1.18%
Class B Common George C. Kaiser 2,500 shares (5) 0.22%
Class B Common Robert E. Bartels 3,949 shares 0.34%
Class A Common George E. Prescott 500 shares (6) 3.57%
Class B Common George E. Prescott 62,677 shares (6) 5.43%
Class A Common Gary N. Gundlach 500 shares (7) 3.57%
Class B Common Gary N. Gundlach 15,948 shares (7) 1.38%
Class A Common Charles R. Bonson 100 shares (8) 0.71%
Class B Common Charles R. Bonson 18,545 shares (8) 1.61%
Class A Common All Directors and
Officers as a Group
(3 persons, including
the above) 1,100 shares 7.86%
Class B Common All Directors and
Officers as a Group
(18 persons, including
the above) 163,741 shares (9) 13.88%
(1) Direct ownership except as otherwise noted, and except that all
shares of Class A Common Stock shown in the table are owned of
record by the Trustees of the Roundy's, Inc. Voting Trust.
(2) Includes 3,000 shares owned by the estate of Nancy B. Dickson.
Options for an additional 2,000 shares that have been granted that
are not currently exercisable are not included.
(3) Includes options for 10,166 shares that are currently exercisable
but does not include options for an additional 1,334 shares that
have been granted.
(4) Includes options for 9,500 shares that are currently exercisable
but does not include options for an additional 1,000 shares that
have been granted.
(5) Relates to shares owned by First Wisconsin Trust Company as
Trustee of George Kaiser Profit Sharing Plan.
(6) Includes 500 shares of Class A Common Stock and 45,814 shares of
Class B Common Stock owned by Prescott's Supermarkets, Inc. of
which Mr. Prescott is the principal shareholder; also includes
16,863 shares of Class B Common Stock held in certain Trusts for
the benefit of certain members of Mr. Prescott's family, as to
which 16,863 shares Mr. Prescott disclaims beneficial ownership.
(7) Relates to shares owned by Gary N. Gundlach, as sole proprietor or
G.E.M., Inc. of which Mr. Gundlach is principal shareholder.
(8) Relates to shares owned by Bonson's Foods, Inc. of which Mr.
Bonson is principal shareholder.
(9) Includes options for 25,166 shares that are currently exercisable
but does not include options for an additional 11,334 shares that
have been granted.
ITEM 13. Certain Relationships and Related Transactions.
-----------------------------------------------
Messrs. Bartels, Bonson, Prescott and Gundlach, customer-directors of
Roundy's, and Messrs. Duane G. Tate, David A. Ulrich and John A.
McAdams, Trustees of the Voting Trust, each own and/or operate retail
food stores which purchase merchandise from the Company as a supplier in
the ordinary course of business. Retail food stores owned by customer-
directors or Retailer Trustees purchase from the Company on the same
basis and conditions as all other stockholder-customers of Roundy's.
During the last three years, the aggregate amount of purchases from the
Company for each of the foregoing were as follows:
1994 1993 1992
---- ---- ----
David A. Ulrich $196,627,000 $169,194,000 $141,452,000
George E. Prescott 56,167,000 50,356,000 43,976,000
Gary N. Gundlach 31,960,000 28,110,000 22,202,000
Duane G. Tate 15,493,000 18,334,000 14,003,000
John A. McAdams 64,185,000 62,838,000 61,038,000
Charles R. Bonson 6,644,000 5,580,000 5,292,000
Robert E. Bartels 77,898,000 65,988,000 61,330,000
Woodman's Food Market, Inc., owner of 8.79% of Roundy's Class B Common
Stock, had aggregate purchases from Roundy's of $53,981,000,
$52,085,000, and $48,878,000 for 1994, 1993 and 1992, respectively.
Prescott's Supermarkets, Inc. agreed to sublease land and buildings from
the Company for periods of three to 18 years at five store sites, for an
aggregate annual rental of approximately $1,188,000.
George E. Prescott, a customer-director of Roundy's, is also a director
of Performance Foods of Shawano, Inc., another customer-stockholder of
Roundy's.
Gary N. Gundlach and G.E.M., Inc. have agreed to sublease land and
buildings from the Company for periods of two to 20 years at five store
sites, for an aggregate annual rental of approximately $969,000.
Tate Foods, Inc. agreed to sublease land and buildings from the Company
for periods of three to 16 years at two store sites, for an aggregate
annual rental of approximately $275,000.
McAdams, Inc. agreed to sublease land and buildings from the Company
for periods of seven to 16 years at three store sites, for an aggregate
annual rental of approximately $624,000.
Mega Marts, Inc. agreed to sublease land and buildings from the Company
for periods of five to 20 years at eight store sites, for an aggregate
annual rental of approximately $2,241,000.
In April, 1993, Tate Foods, Inc. issued promissory notes to Roundy's, Inc.
in the amount of $40,000. The amount outstanding as of February 25, 1995
was $16,600.
The Company has guaranteed $419,800 of notes which mature in December of
1997 for Tate Foods, Inc., of which Duane G. Tate is President and
stockholder.
Michael J. Schmitt, Vice President-Sales and Development of Roundy's, is
also a director of McGee & McGee, Inc., a customer of Roundy's.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on
-------------------------------------------------------
on Form 8-K.
------------
(a)(1) Financial Statements
The following consolidated financial statements of the Company are
incorporated by reference from its Annual Report to Stockholders for the
year ended December 31, 1994, filed as an exhibit hereto:
Independent Auditors' Report
Statements of Consolidated Earnings for each of the three years
in the period ended December 31, 1994
Consolidated Balance Sheets at December 31, 1994 and
January 1, 1994
Statements of Consolidated Stockholders' Equity for each of
the three years in the period ended December 31, 1994
Statements of Consolidated Cash Flows for each of the three
years in the period ended December 31, 1994
Notes to Financial Statements
(a)(2) Financial Statement Schedules as of December 31, 1994
Page
----
Independent Auditors' Report....................... 22
Schedule VIII - Valuation and qualifying
accounts......................... 23
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or the notes
thereto.
(a)(3) Exhibits
3.1 Articles of Incorporation of the Registrant, 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, Commission
File No. 2-66296.
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, Commission File No. 2-66296.
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, Commission File No. 2-66296.
3.5 Amendment of By-Law Section 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, Commission
File No. 2-66296.
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,
Commission File No. 2-66296.
4.2 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, Commission File No. 2-66296.
4.3 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, Commission
File No. 2-66296.
4.4 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.
4.5 Roundy's, Inc. Policy Relating to Redemption of Stock by
Inactive Customer Shareholders and Former Employees,
incorporated herein by reference to Exhibit 4.5 of Registrant's
Registration Statement on Form S-2 (File No. 33-57505) filed
with the Commission on January 30, 1995 (included as Exhibit D
to the prospectus which forms a part of the Registration
Statement).
4.6 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,
Commission File No. 2-66296.
4.7 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,
Commission File No. 2-66296.
4.8 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,
Commission File No. 2-66296.
4.9 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, Commission File No. 2-66296.
4.10 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, Commission File No. 2-66296.
4.11 Policy Regarding Issuance and Sales of Roundy's, Inc. Stock,
incorporated herein by reference to Exhibit 4.11 of
Registrant's Registration Statement on Form S-2 (File No. 33-
57505) filed with the Commission on January 30, 1995 (included
as Exhibit E to the prospectus which forms a part of the
Registration Statement).
4.12 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, Commission File No. 2-66296.
4.13 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, Commission File No. 2-66296.
4.14 Form of Subscription Agreement, incorporated by reference to
Exhibit 4.14 of Registrant's Registration Statement on Form S-2
(File No. 33-57505) filed with the Commission on January 30,
1995 (included as Exhibit A to the prospectus which forms a
part of the Registration Statement).
4.15 Form of Buying Deposit Agreement, incorporated by reference to
Exhibit 4.15 of Registrant's Registration Statement on Form S-2
(File No. 33-57505) filed with the Commission on January 30,
1995 (included as Exhibit B to the prospectus which forms a
part of the Registration Statement).
4.16 Article V of Registrant's By-Laws "Fiscal Year Accounting and
Patronage Rebates," as amended on December 12, 1989,
incorporated by reference to Exhibit 4.16 of Registrant's
Registration Statement on Form S-2 (File No. 33-57505) filed
with the Commission on January 30, 1995 (included as Exhibit C
to the prospectus which forms a part of the Registration
Statement).
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,
Commission File No. 2-66296.
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, Commission File No. 2-66296.
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, Commission File No. 2-66296.
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, Commission File No. 2-66296.
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, Commission File No. 2-66296.
10.4(a) Declarations page for renewal of Directors and Officers
Liability and Corporation Reimbursement Policy.
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, Commission File No. 2-66296.
13. 1994 Annual Report to Stockholders of Roundy's, Inc.
21. Subsidiaries of Roundy's, Inc.
(b) Reports on Form 8-K.
On October 7, 1994 a report on Form 8-K was filed to report,
under "Item 5. Other Events," the execution of a Memorandum of
Intent relating to the proposed merger of the Company with
Spartan Stores, Inc. of Grand Rapids, Michigan.
On November 21, 1994 a report on Form 8-K was filed to report,
under "Item 5. Other Events," the termination of merger
discussions with Spartan Stores, Inc.
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Directors of Roundy's, Inc.:
We have audited the consolidated financial statements of Roundy's, Inc.
and its subsidiaries as of December 31, 1994 and January 1, 1994, and
for each of the three years in the period ended December 31, 1994, and
have issued our report thereon dated February 24, 1995; such financial
statements and report are included in your 1994 Annual Report to
Stockholders and are incorporated herein by reference. Our audits also
included the financial statement schedule of Roundy's, Inc., listed in
Item 14. This financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based
on our audits. In our opinion, such financial statement schedule, when
considered in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the information set
forth therein.
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
February 24, 1995
<TABLE>
ROUNDY'S, INC. AND SUBSIDIARIES
===============================
VALUATION AND QUALIFYING ACCOUNTS
<CAPTION>
-------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------------------------------------------------------------------------------------------
ADDITIONS
(1) (2)
Balance at Charged to Charged Balance
Beginning Costs and to Other at End
Description of Period Expenses Accounts Deductions(A) of Period
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED December 31, 1994:
Allowance for Losses:
Current receivables...... $8,766,500 $9,166,600 $6,932,700 $11,000,400
Notes receivable, long-term 1,483,000 - 567,000 916,000
YEAR ENDED January 1, 1994:
Allowance for Losses:
Current receivables...... $7,578,200 $6,738,600 $5,550,300 $ 8,766,500
Notes receivable, long-term 1,483,000 - - 1,483,000
YEAR ENDED January 2, 1993:
Current receivables...... $7,038,900 $4,289,900 $3,750,600 $ 7,578,200
Notes receivable, long-term - 1,483,000 - 1,483,000
<FN>
(A) Amounts in Column D represent charges made for the purpose the allowance was provided.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, Roundy's, Inc. has duly caused this report to be
signed on its behalf of the undersigned, thereunto duly authorized.
ROUNDY'S, INC.
JOHN R. DICKSON ROBERT D. RANUS
_________________________ ________________________
By: John R. Dickson By: Robert D. Ranus
(Principal Executive Officer) (Principal Financial
Officer and Principal
Accounting Officer)
Date: March 30, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons (constituting
a majority of the Board of Directors) on behalf of the Registrant and in
the capacities and on the dates indicated:
JOHN R. DICKSON
_________________________ ________________________
John R. Dickson George E. Prescott
March 30, 1995 March 30, 1995
(Director) (Director)
GERALD F. LESTINA ROBERT D. RANUS
_________________________ ________________________
Gerald F. Lestina Robert D. Ranus
March 30, 1995 March 30, 1995
(Director) (Director)
GEORGE C. KAISER GARY N. GUNDLACH
_________________________ ________________________
George C. Kaiser Gary N. Gundlach
March 30, 1995 March 30, 1995
(Director) (Director)
ROBERT E. BARTELS
_________________________ ________________________
Brenton H. Rupple Robert E. Bartels
March 30, 1995 March 30, 1995
(Director) (Director)
_________________________
Charles R. Bonson
March 30, 1995
(Director)
SUPPLEMENTAL INFORMATION TO BE
FURNISHED WITH REPORTS FILED
PURSUANT TO SECTION 15(d)
OF THE ACT BY REGISTRANTS
WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE ACT
Registrant's annual report to securityholders for the year ended
December 31, 1994 is incorporated by reference in this report.
Registrant does not furnish proxy soliciting material to its
securityholders.
INDEX TO EXHIBITS
Exhibit Description
3.1 Articles of Incorporation of the Registrant, 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, Commission
File No. 2-66296.
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, Commission File No. 2-66296.
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, Commission File No. 2-66296.
3.5 Amendment of By-Law Section 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, Commission
File No. 2-66296.
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,
Commission File No. 2-66296.
4.2 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, Commission File No. 2-66296.
4.3 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, Commission
File No. 2-66296.
4.4 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.
4.5 Roundy's, Inc. Policy Relating to Redemption of Stock by
Inactive Customer Shareholders and Former Employees,
incorporated herein by reference to Exhibit 4.5 of Registrant's
Registration Statement on Form S-2 (File No. 33-57505) filed
with the Commission on January 30, 1995 (included as Exhibit D
to the prospectus which forms a part of the Registration
Statement).
4.6 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,
Commission File No. 2-66296.
4.7 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,
Commission File No. 2-66296.
4.8 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,
Commission File No. 2-66296.
4.9 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, Commission File No. 2-66296.
4.10 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, Commission File No. 2-66296.
4.11 Policy Regarding Issuance and Sales of Roundy's, Inc. Stock,
incorporated herein by reference to Exhibit 4.11 of
Registrant's Registration Statement on Form S-2 (File No. 33-
57505) filed with the Commission on January 30, 1995 (included
as Exhibit E to the prospectus which forms a part of the
Registration Statement).
4.12 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, Commission File No. 2-66296.
4.13 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, Commission File No. 2-66296.
4.14 Form of Subscription Agreement, incorporated by reference to
Exhibit 4.14 of Registrant's Registration Statement on Form S-2
(File No. 33-57505) filed with the Commission on January 30,
1995 (included as Exhibit A to the prospectus which forms a
part of the Registration Statement).
4.15 Form of Buying Deposit Agreement, incorporated by reference to
Exhibit 4.15 of Registrant's Registration Statement on Form S-2
(File No. 33-57505) filed with the Commission on January 30,
1995 (included as Exhibit B to the prospectus which forms a
part of the Registration Statement).
4.16 Article V of Registrant's By-Laws "Fiscal Year Accounting and
Patronage Rebates," as amended on December 12, 1989,
incorporated by reference to Exhibit 4.16 of Registrant's
Registration Statement on Form S-2 (File No. 33-57505) filed
with the Commission on January 30, 1995 (included as Exhibit C
to the prospectus which forms a part of the Registration
Statement).
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,
Commission File No. 2-66296.
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, Commission File No. 2-66296.
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, Commission File No. 2-66296.
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, Commission File No. 2-66296.
10.4(a) Declarations page for renewal of Directors and Officers
Liability and Corporation Reimbursement Policy. FILED HEREWITH.
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, Commission File No. 2-66296.
13 1994 Annual Report to Stockholders of Roundy's, Inc. FILED
HEREWITH.
21 Subsidiaries of Roundy's, Inc. FILED HEREWITH.
CHUBB EXECUTIVE PROTECTION POLICY EXHIBIT 10.4(a)
-------------------------------------------------------------------------------
DECLARATIONS
EXECUTIVE PROTECTION POLICY
Policy Number 8132-05-32B
Federal Insurance Company, a stock
insurance company, incorporated under
the laws of Indiana, herein called the
Company.
Item 1. Parent Organization:
ROUNDY'S,INC.
23000 ROUNDY DRIVE
PEWAUKEE, WISCONSIN
53072
Item 2. Policy Period: From 12:01 A.M. on NOVEMBER 01, 1994
To 12:01 P.M. November 01, 1995
Local time at the address shown in
Item 1.
Item 3. Coverage Summary
Description
-----------
GENERAL TERMS AND CONDITIONS
EXECUTIVE LIABILITY AND INDEMNIFICATION
Item 4. Termination of
Prior Policies: 8132-05-32A
THIS EXECUTIVE LIABILITY AND INDEMNIFICATION, FIDUCIARY LIABILITY, OUTSIDE
DIRECTORSHIP LIABILITY AND EMPLOYMENT PRACTICES LIABILITY COVERAGE SECTIONS
(WHICHEVER ARE APPLICABLE) ARE ALL WRITTEN ON A CLAIMS MADE BASIS. EXCEPT AS
OTHERWISE PROVIDED, THESE COVERAGE SECTIONS COVER ONLY CLAIMS FIRST MADE
AGAINST THE INSURED DURING THE POLICY PERIOD. PLEASE READ CAREFULLY.
In witness whereof, the Company issuing this policy has caused this policy to
be signed by its authorized officers, but it shall not be valid unless also
signed by a duly authorized representative of the Company.
FEDERAL INSURANCE COMPANY
HENRY A GULICK DEAN R OFFURE
--------------------------- --------------------------
Secretary President
JOHN S BAIN
--------------------------
Authorized Representative
November 10, 1994
Date
CHUBB EXECUTIVE PROTECTION POLICY
-------------------------------------------------------------------------------
DECLARATIONS
EXECUTIVE LIABILITY
INDEMNIFICATION COVERAGE SECTION
Item 1. Parent Organization:
ROUNDY'S,INC.
Item 2. Limits of Liability:
(A) Each Loss $15,000,000.
(B) Each Policy Period $15,000,000.
Note that the limits of liability and any deductible or
retention are reduced or exhausted by Defense Costs.
Item 3. Coinsurance Percent: NONE
Item 4. Deductible Amount:
Insuring Clause 2 $ 350,000.
Item 5. Insured Organization:
ROUNDY'S, INC.
AND ITS SUBSIDIARIES
RICHWOOD CARDINAL SUPERMARKET
Item 6. Insured Persons:
Any person who has been, now is, or shall become a duly elected
director or a duly elected or appointed officer of the Insured
Organization, including Trustees and Advisory Committee.
Item 7. Extended Reporting Period:
(A) Additional Premium: 25% OF THE ANNUAL PREMIUM
(b) Additional Period: 90 DAYS
Item 8. Pending or Prior Date: 06-13-93
Item 9. Continuity Date: 11-01-92
ROUNDY'S 1994 ANNUAL REPORT
EXHIBIT 13
Table of contents
FEATURES
2 selected financial data
4 message to stockholders
6 board of directors
BUILDING UPON THE FUNDAMENTALS
8 quality: marketing
10 ECR efforts
11 imports/exports
11 commitment: target marketing
12 training
13 service: retail services
13 pricing systems
15 computer services
FINANCIAL REVIEW
18 financial & operational review
22 independent auditors' report
23 statements of consolidated earnings
24 consolidated balance sheets
26 statements of consolidated stockholders' equity
27 statements of consolidated cash flows
28 notes to consolidated financial statements
MANAGEMENT STRUCTURE & MAP
34 board of directors, elected corporate officers, advisory
committee and trustees
36 roundy's divisional map
<PAGE>
Selected Financial Data
($000 omitted except
for per share data
and ratios)
1994 1993 1992 1991 1990
---------- ---------- ---------- ----------- ----------
Net sales and
service fees $2,461,510 $2,480,254 $2,491,293 $2,534,418 $2,501,465
Net earnings 6,554 8,028 7,353 6,813 6,507
Patronage dividends 0 5,301 5,135 3,305 5,549
Total assets 404,652 380,092 390,148 390,797 390,356
Long-term debt 88,227 113,045 135,420 139,283 140,435
Stockholders' equity 90,419 86,066 78,573 70,917 65,236
Book value per share 77.40 71.65 65.10 58.75 53.10
Working capital 91,814 113,643 119,153 116,940 106,428
Current ratio 1.43:1 1.64:1 1.70:1 1.66:1 1.59:1
Earnings before
patronage dividends
as a percent of net
sales and service fees .45% .81% .66% .58% .67%
<PAGE>
Message to Stockholders
Pablo Picasso, the self-styled artist and sculptor, labored
over a painting of his grim-faced patron, Gertrude Stein.
The portrait that ultimately emerged-- a grim-faced African-
style mask -- is now one of his best known works. Apparently
Ms. Stein, expecting a more or less photographic image of
herself, was not satisfied when she first viewed the portrait.
"I don't look like that," she complained.
"Don't worry," Picasso responded. "You will."
This year, our message, much like Picasso's portrait of Stein,
is about what we can grow to become. But before talking about
our future, we must first revisit -- and understand -- part of
our past.
Along with favorable and encouraging news, 1994 brought us
strong competition within our trade area, limited growth in
new stores, changing trade practices and divisional
restructuring. We aren't the only food wholesaler of our
type to experience these kinds of challenges. We are seeing
much more intense competition for strategic retail
locations. Under-capitalized retailers are failing.
Consumers, rightfully, continue to insist on quality
products at reasonable prices.
To paraphrase a well-known adage, we can regard these
marketplace challenges either as problems or as
opportunities. Roundy's Board of Directors and management
chose to see them as opportunities; opportunities to re-
evaluate our current--and in many cases longstanding--
operating philosophies. We resolved to respond in a way we
believe will allow us to continue to compete--and prevail--
over the next several years.
We have increased both our allowance for losses and our
closed facility reserves; consequently, you will see no
payment of patronage dividends for 1994. While these
increases will result in a less-than-satisfactory return for
some stockholders, we have concluded that they are necessary
and prudent. In short, we took aggressive, corrective
action.
Sales in 1994 were $2.46 billion, down $19 million from 1993
and down $30 million from 1992. Wholesale sales increased
$27.7 million from 1993 and $33.2 million from 1992.
In 1993 Roundy's determined it was not in our best long-term
economic interest to remain in the dairy and ice cream
manufacturing business. The sale of this division was
completed by the end of the third quarter of 1993.
Unfortunately, our competition successfully solicited this
business during the transition period; the sale resulted in
a loss of approximately $24 million in sales in 1994.
Together with the new owners of the dairy, we have developed
an aggressive program for 1995 which we believe will help us
recapture a large portion of the lost warehouse business.
<PAGE>
Earnings before patronage dividends were .45% of net sales
and service fees. This compares to .81% in 1993 and .66% in
1992. The reason for the decline from prior years, as
highlighted above, was due to the increase in both the
allowance for losses and the closed facility reserves. The
total of these combined expenses exceeded prior year
expenses by $10.4 million. When 1994 earnings before
patronage dividends are adjusted for these charges, the
ratio of earnings to net sales and service fees becomes
.87%.
One considerable factor causing the increase to our
allowance for losses is our operations in Ohio. The past
two years have seen a major influx of competition, including
alternative format stores which have produced significant
economic hardship for our independent retailers. We decided
in 1994 to evaluate the long-term viability of this
business. The result of our decision was to tighten credit
terms, and in certain instances, to discontinue doing
business with selected customers. We believe our core
business in this service territory is sound, but we will
continue to monitor and discontinue service to customers
whenever necessary.
Closed retailer facilities were also examined closely in
1994. The early 1990s brought rapid expansion to Roundy's;
several new retailer facilities were built, and
consequently, several older stores were closed. Also, a few
sites developed in Michigan markets did not achieve
projected sales and profit goals; accordingly, they were
closed. To date, we have not secured retailers--or other
tenants--for these sites to fully recover our costs. For
this reason, the Board and management increased our 1994
closed facility reserve by $8 million over 1993 reserves.
In order for us to remain competitive, Roundy's must
continue to make capital investments. Over the three years,
1991 through 1993, these annual capital expenditures
averaged $13.5 million. In 1994 we renewed our commitment
to invest in all segments of our business by expending over
$22.3 million on facilities, fleet, equipment, retail
development and new technology.
A new banana room complex was installed in the Milwaukee
division, replacing an outmoded system that rendered
inconsistent quality. New fleet purchases, necessitated by
replacement and business expansion, totalled $3.5 million.
Finally, we know from experience that existing retail
facilities cannot age without impacting on our business.
Therefore, over $5.5 million was used to upgrade corporate
stores.
Roundy's achieved significant milestones in 1994:
1. We lowered our long-term debt-to-equity ratio to below
the 1:1 level.
2. We implemented a new automated buying system in all
major operating divisions.
<PAGE>
3. We installed a new Accounts Payable system that will
improve cash flow and reduce interest expense.
Rising interest rates made 1994 a very volatile year,
however, in 1993 we successfully completed a major debt
refinancing which provided Roundy's access to low-rate, long-
term funds. That restructuring, along with improved cash
flow through the new Accounts Payable system, enabled us to
reduce interest expense by $2.7 million--a significant
savings for our company.
What We Can Become
In many ways, 1994 was a year of investment for Roundy's.
In addition to those above, we have made several other
decisions that should yield positive returns in the future:
* Roundy's private label program was restructured in 1994;
first-line labels were consolidated from two to one. The
Roundy's label is now offered company-wide to all our
customers.
* Our Advantage Plus programs have been essential in
countering the impact of alternative format stores.
Therefore, we have installed them among several major
retailers outside Wisconsin.
* We implemented a retail-driven "target marketing" program
designed to strengthen our customers' competitive positions.
With these necessary things in place, we are focused to move
our company toward the potential we believe it can achieve.
Our 1994 earnings were below expectations, mainly because of
conscious business decisions which we have illustrated.
Nonetheless, Roundy's is and continues to be a sound,
profitable company with great potential. Our customer base
is solid, our technology, fleet and facilities are modern,
and our staff is smart, experienced and dedicated.
Finally, we have begun formulation of a strategic plan that
will address the future needs of Roundy's and its
stockholders. This initiative will evaluate all facets of
our business, and will prepare a definitive direction for us
to take into the future.
We would like to thank every Roundy's stockholder, customer
and employee for your support and loyalty to the company in
1994. Even though some of these recent and ongoing changes
are challenging and unfamiliar, with your continued
commitment, we have an opportunity to become a more
profitable, cost-efficient competitor in the market areas in
which we are privileged to conduct business.
Picasso achieved his objectives--status, acceptance and fame--
by applying brush to canvas not in a familiar way, but in a
challenging, unfamiliar way. He believed (and he was right)
that an artist must do not what is expected, but what is
necessary.
<PAGE>
Roundy's will achieve its corporate objectives the same way.
<PAGE>
[Picture of Board of Directors]
Robert E. Bartels
Brenton H. Rupple
Gary N. Gundlach
George C. Kaiser
Charles R. Bonson
George E. Prescott
Gerald F. Lestina
John R. Dickson
Robert D. Ranus
<PAGE>
Roundy's-building upon the fundamentals
The future will belong to those organizations with the
courage to change now before they are compelled to change
tomorrow. 1994 was proof that Roundy's has taken this
thought to heart.
During the year, we underwent consistent review and
reevaluation of every aspect of our business. We sought to
streamline our work systems, reapply our most effective
processes and drive out costs that don't add value to our
products. In addition, we reaffirmed our partnership with
our retailers and our commitment to their success.
In the upcoming year, Roundy's will continue to build from
the basics that have worked so well for us in the past:
quality, commitment and service.
QUALITY
In today's highly competitive environment, the key to
earning and keeping customers is a combination of product
quality, product availability, cost and service. Roundy's
is working harder than ever to offer our retailers and their
customers even greater quality, both in our products and
service.
Marketing. Change is not always an easy process. The year
1994 was both exciting and demanding due to many
uncontrollable changes such as government regulations and
shifting consumer trends.
One change that made a major impact on our industry was the
initiation of the Nutritional Labeling and Education Act
("NLEA") on August 8, 1994.
As a company, we see NLEA as having substantial benefits for
the consumer, both short and long term. The information now
listed on labels allows all consumers to make better
decisions regarding nutrition and more accurate product side-
by-side comparisons. While the NLEA was costly to our
industry on the front end, consumer benefits make it
worthwhile.
During the process of making required packaging changes,
Roundy's recognized the opportunity to make an advantageous
move to one first label store brand. We have already moved
the Roundy's brand label into the vast majority of our
divisions.
There are several strong advantages offered to the retail
store and the consumer by moving to one first label store
brand. One is a major increase in the number of SKU's
available under the label store brand. The addition of many
new categories such as cultured products and cereal means
not only extra variety for the consumer, but higher sales
and bottom line profits for retailers. Perhaps the
strongest, most important advantage, though, is the fact
that Roundy's label product is of the highest possible
quality - national brand quality, or better. Additionally,
<PAGE>
this program is a living, breathing, constantly expanding
one that brings with it new items, new categories, new
marketing concepts and ongoing packaging and quality
upgrades such as diapers and feminine hygiene products.
The conversion to one label also brings with it increased
efficiency. In particular, we're already seeing it in the
area of labels and packaging. We've been able to reduce the
carrying cost of labels and packaging inventory on
approximately 450 SKU's. Additionally, we've achieved
savings through the much higher printing runs necessary for
one label, as opposed to smaller runs for multiple labels.
We are now also able to offer manufacturers much more
efficient product runs with a larger concentration of
tonnage under one label. We can make available to our
stores more special packs such as off-labels, pre-price
products and bonus packs. These opportunities help
consumers see our store brands in the same light as national
brands.
In 1994, special merchandising plans were developed to
implement our first quality label conversion. We worked
toward a controlled sell-down of Scot Lad inventories as
additional quantities of replacement Roundy's items became
available. New point-of-sale kits were printed,
prominently featuring the message: Roundy's, The Right
Choice. These kits were made available to participating
retailers to help them communicate the Roundy's label
message of quality and value to their customers. As the
conversion neared completion, a four page, full color
advertisement was produced, offering introductory pricing on
over 100 items.
Roundy's Corporate Roto program continued to gain momentum
with one program each quarter. Beginning with our first
store in 1993, we now have more than 270 participating
stores. We firmly believe the Roto program brings
incremental merchandise funds to retailers.
For the seventh year in a row, Roundy's witnessed double-
digit growth in private label sales. These product lines
provide retail stores an opportunity to set themselves apart
from the competition to enhance profitability, while
offering improved value to the consumer. The reception that
the Roundy's label has encountered is extremely satisfying.
We look forward to the continued growth of a program that
has delivered excellent quality at fair pricing for over 100
years.
ECR Efforts. In order to maximize Efficient Consumer
Response ("ECR"), Roundy's goal is to consolidate vendors
among all our store brand programs including Roundy's,
Shurfine, Old Time, Buyer's Choice and Mor For Less brands.
Vendor consolidation allows us to more effectively use our
massive buying clout. It also improves our shipping efficiency
which is important to maintaining ECR.
<PAGE>
Vendor consolidation also allows us to move substantial
amounts of our total private label purchases to national
brand manufacturers. Our store brands ship with branded
products on the same truck, reducing total inventory levels
at the distribution center and providing fresher products to
retailers. Some of the national brand manufacturers include
Kraft, Nabisco, Pet, Inc., Purina and Dean Foods. And the
list goes on and on.
Working with brand manufacturers offers us several strong
advantages. It reduces the net cost of goods to the retail
store through more efficient shipping arrangements such as
Just in Time ("JIT") deliveries. It helps us maintain
quality and improve our products. In categories such as low
fat, no fat, lite, low cholesterol, reduced calorie and
reduced sodium, Roundy's brands are flagged on the label to
make our brands the healthier alternative. Working with
branded manufacturers also helps us maintain Roundy's
commitment to the highest quality products in our industry.
Other ECR initiatives include our latest cross-dock program
which has been in three test stores for part of 1994. The
results have been outstanding: time savings, reduced
inventories, increased product variety and decreased overall
cost of goods to the retailer. Our plan calls for this
program to be rolled out to the entire customer base of the
Milwaukee Division during the first quarter of 1995. Also
in 1994, we began testing Roundy's Central Procurement Meat
Program. The mechanics and strategy of this program are
simple...and highly effective. All red meat orders for
Roundy's divisions are combined, so that only one purchase
is made. This allows all of our retailers to acquire beef at
a "truck load" price rather than "by the case." The program
has already helped our retailers realize a significant
savings in both time and money. During its first six-month
period, the program reduced the cost of goods by more than
one million dollars. Currently, plans are underway to
expand this program to include fresh pork, a move that will
be unique to the industry.
Imports/Exports. As international trade barriers lowered,
Roundy's interest in high quality, imported private label
products increased. Our primary source for all frozen
broccoli, cauliflower and brussel sprouts is now located in
the Bahio Valley in Central Mexico. There, our products are
packed in gleaming, state-of-the-art facilities under the
vigilance of U.S. trained, FDA certified technicians. In
1994, we also exported Roundy's products to destinations as
distant as Gladivostok, Russia. These additional sales
allow us to take advantage of lower costs realized through
volume-based efficiencies.
COMMITMENT
As part of our commitment to the success of Roundy's
retailers, we take a very hands-on approach to management.
Our goals are to initiate programs that save time and money,
to be flexible in our approach to serving our customers and
to reduce costs for every store, from the smallest to the
largest.
<PAGE>
Target Marketing. Ideas for new products and processes are
born from an understanding of our customers' emerging needs.
Creating the innovative products that meet these needs starts
with the ideas and expertise of our people, and becomes a
reality through technology.
One of those "ideas" has been our innovative frequent
shopper program called "Advantage Plus Savers Club." With
well over one million customer cards in distribution, the
program is one of the most successful in our industry.
During 1994, it was expanded to 138 stores in three
divisions. Continued expansion in our remaining divisions
will insure that all our customers have access to this
highly effective program.
To supplement the current Advantage Plus Savers Club, we
developed and introduced the Advantage Rewards Program in
1994. Roundy's entered into an agreement with a software
vendor to supply software and implementation assistance for
this new targeted marketing program.
The Advantage Rewards Program tracks an individual shopper's
purchasing history through the use of the Advantage Plus
Savers Club Card. It records volume and frequency of
purchases in very tightly defined categories. Each
participating Roundy's store has installed customer-
activated Advantage Rewards kiosks near their front
entrances. When the consumer scans a club card at the
kiosk, the system interrogates the database at the shopper's
home store. It identifies offers targeted for that customer
and prints a list of 15 to 20 items available at a discount
for that shopping trip. At the conclusion of the shopping
trip, the system updates the customer's purchase history at
the home store based on current purchases.
To support the program, we solicit participation from
Roundy's vendors for consumer offers. Participation can
occur at several different levels including Targeted
Customer Specific Offers, in which the vendor identifies
consumers to be targeted through historical purchases in
specific commodities. Participation in the market testing for
new products combines the strength of Roundy's market share
and the geographic isolation of the Milwaukee Metro Market with
the cutting-edge technology of our Advantage Rewards Program.
In December, 1994, the pilot program was implemented at two
Pick 'n Save stores in Fond du Lac, Wisconsin. The roll-out
for this innovative program is planned for the first half of
1995 with the addition of more than 60 Roundy's stores.
Training. Part of our positioning strategy depends on the
development of a team that knows how to be successful in the
face of change. To insure this, Roundy's introduced our
Selector Trainer and Mentor Program. As part of this
program, a full-time Trainer/Mentor monitors all activities
of new associates in the first week of employment by
practicing a "hands on" approach. This is followed by
extensive classroom training on company policies and
procedures, as well as safety guidelines. The
Trainer/Mentor Program has contributed to a substantial
<PAGE>
decrease in turnover in a number of divisions. Roundy's
Specialized Management and Retail Training ("S.M.A.R.T.")
Center also offered a number of programs ranging from
computer software training to leadership. Throughout the
last half of 1994, resources were dedicated to the
development of a variety of programs and training materials
in the S.M.A.R.T. Center. The result is new departmental
handbooks our retailers can use to aid in the initial
training of a new associate.
This developmental phase also witnessed the creation of a
comprehensive OSHA Train-the-Trainer Program. A trainer's
manual and participant guide were developed to give
retailers in all Roundy's operating divisions the essential
tools to train all store personnel in LockOut/TagOut,
Bloodborne Pathogens and Hazard Communication. Included in
the program is a complete set of trainer's materials with
presentation aides, participants' materials, a sample in-
store written program and guidelines for implementation.
SERVICE
Part of the reason for our ongoing success is the aggressive
measures Roundy's has initiated to keep our stores in
position to continue past successes. The programs,
technology and training we implement are designed to improve
the efficiency of all of our operations. As a result, our
stores are better able to effectively maneuver in an
increasingly competitive market.
Retail Services. In 1994, one of our goals was to affirm
and strengthen our commitment to enhanced retail technology
and electronic services. As part of this, the Corporate
Retail Services Department was created by combining the
personnel of Store Systems and Shelf Space Management, along
with the responsibilities of the Delta Net Electronic
Payments Systems Program. This new department will handle
all electronic retail systems including pricing, electronic
marketing programs, point of sale support, shelf space
management, DSD systems and in-store systems.
Pricing Systems. In 1994, we continued to integrate our
capabilities for quality and cost control. During the year,
we completed programming and implementation of the new
retail pricing system. Designed to control warehouse item
retail prices, the system was installed in all stores
serviced by Roundy's Milwaukee Division by the fourth
quarter. Roundy's Columbus Division stores followed.
For our retailers, this system offers the ultimate in
control options, allowing them to customize pricing to fit
their individual store needs. Options are selectable by
store, commodity level, or item level, and include:
- Cost versus base pricing.
- Zone pricing versus custom pricing.
- Percentage pricing from cost or base
retail change.
- Automatic rounding options.
- Automatic prepriced discounting.
<PAGE>
- Authorized/unauthorized item support.
- Optional tag type support.
- Multiple tag quantity support.
In addition, the system allows for automatic allowance pass-
through based on retailer-defined parameters specifying
minimum discount amounts, and the percentage of allowance to
be passed. For further convenience, pricing reports and
data are printed at the division for delivery in truck mail
or can be optionally delivered electronically if the store
chooses.
As part of the continuing evolution of our data processing
systems, we purchased Unix-based software to replace our
mainframe DSD system software. The conversion to the Unix-
based system will be completed in the first quarter of 1995.
This installation is Roundy's first use of the Standard
Interchange Language ("SIL") in a production environment.
It significantly advances our goal of a common interface to
our retailers.
In 1994, we completed a major review of Delta Net, our point
of sale debit and credit card payment system. In addition
to a detailed investigation of every phase of the program,
we solicited and interviewed alternative providers of
equipment, software and transaction processing. The result
was a solidified relationship with our Delta Net partners
and an affirmation that this program remains one of the most
efficient payment programs in the industry. During the
fourth quarter, we expanded Delta Net to all corporate
stores and reintroduced the program to all divisions.
Computer Services. At Roundy's, we define technology simply
as "know-how" - how to make a product better, how to make a
process better and how to better deliver a service. Every
aspect of our activity is being improved through technology
- not always with "high-tech" tools, but with approaches
that result in improvements in quality, service,
productivity and time compression. In 1994, we implemented
a number of these new approaches.
During the year, Electronic Data Interchange ("EDI") was
achieved with several of Roundy's larger vendors. EDI
allows computer-to-computer transfer of purchase orders and
invoices. EDI, ultimately, will replace computer-to-fax
purchase order transmission that is presently used by
vendors. In 1995, we will see a number of other
improvements: an increase in the number of vendors to EDI;
the addition of continuous replenishment transactions,
advance ship notices and item/price/promotion data; and the
fax transmission of time critical documents to stores.
During 1994, Roundy's Milwaukee Division stores were
converted to our new order entry system. This improves the
capability for early detection of irregularities in orders,
while providing a mechanism for their resolution. In 1995,
this system will be implemented in other divisions and the
capabilities of the editing process will be enhanced.
<PAGE>
Our newly developed personal computer-based payroll employee
maintenance system was introduced in 1994. This allows
convenient direct transmittal of store employee maintenance
and time to the Roundy's payroll system. Another advantage
is that the system provides retailers a choice of methods
for time transmission from timeclocks, handheld entry
devices or personal computers. Plus, retailer payroll
reports can now be provided on a computer bulletin board or
on microfiche.
In 1994, Roundy's Automated Purchasing System ("RAPS") was
implemented in the Columbus, Van Wert, Eldorado and
Evansville divisions. This efficient system provides
Roundy's buyers with deal, historical, comparative pricing,
promotional and projected volume requirements.
Work also began in 1994 to integrate continuous
replenishment activities into RAPS. A number of additional
functions will be added during 1995, including a perishables
subsystem, open-to-buy controls, use of EDI advance ship
notice transactions and expanded control of private label
product.
In 1994, we activated PROMPT, the second phase of RAPS.
This on-line system conveniently allows for the buyer's
direct approval of invoicing.
Roundy's General Merchandise Division and the Columbus
Division implemented Roundy's Automated Inventory and Labor
System ("RAILS"). This revolutionary new system was jointly
developed between Roundy's and a major warehousing systems
software vendor. RAILS is designed to provide all of the
functionality utilized by the Milwaukee Division RWACS
system on less costly "open architecture." Specific features
include full function inventory control, including warehouse
labor, through forklift-mounted radio frequency devices.
RAILS is designed to improve warehouse product turns, reduce
warehouse expenses and provide more immediate information on
quantity and location of product in Roundy's warehouses.
Shipping and load control subsystems and improved receiving
functions were implemented. Development of critical labor
management functions including selector, forklift and
replenishment stocker employee performance are underway.
Development of a variable weight subsystem for perishables
is also under consideration for development in 1995. RAILS
will be rolled out to additional Roundy's warehouses during
the upcoming year.
Billing systems were also optimized in 1994. This improves
the availability of selection labels to the warehouses,
while enhancing complete order turnaround to stores.
In 1994, enhancements were made to provide the ability to
pre-book merchandise selection, separate from regular
orders. This will allow Roundy's retailers to customize the
number of weeks presented on promotion and cost change
related reports. Pay Less Supermarkets implemented Computer
Assisted Ordering ("CAO") in 1994. CAO embraces the full
use of store, host and wholesaler technology. Using point
of sales item movement and perpetual inventory, the store
<PAGE>
computer generates a recommended order. Store personnel use
a hand-held computer to review and adjust the order as
needed. The order is then electronically transmitted to our
Van Wert Division. In return, an electronic invoice from
Van Wert updates the Pay Less accounting system and the
store's inventory when the product is physically delivered.
Product returns, overs and shorts, etc., are handled
electronically, as well.
The benefits of CAO are many: improved shelf condition
through reduction of out-of-stocks; more accurate orders;
better accounting control; up to 50% decrease in order
writing time for reduced labor expense; and reduced
inventory. Also important is the fact that inventory is
distributed properly and placed on the selling floor - not
left sitting in the back room.
The checks and balances of CAO improve data accuracy for all
information systems, making it a "win-win" situation for
both the retailer and the wholesaler.
Roundy's feels positive about the steps we've taken to adapt
to, and meet head on, the changes in our industry. We're
working to use change as a means to achieve a higher level
of excellence in the years ahead. In 1995, we will continue
in our efforts to build from the basics to grow the most
efficient organization possible through an enhanced
dedication to quality, a reaffirmed commitment to our
customers and improved services.
Financial & Operational Review
During 1994, Roundy's took a major step forward in
solidifying its future and strengthening its overall balance
sheet. Recognizing the need to "re-engineer" the company,
management and the Board of Directors strengthened Roundy's
balance sheet through increasing the allowance for bad debts
and closed facility reserve. It is the consensus of both
management and the Board of Directors that the company needs
to address this issue of "re-engineering" now, in order to
ensure our future as a leading food wholesaler in the
Midwest.
Improving the long-term debt to equity ratio of the company
over the past several years has been a major objective of
management. By placing emphasis on this objective, the
desired result was finally achieved. The long-term debt to
equity ratio was 1.72:1 in 1992, 1.31:1 in 1993 and .98:1 in
1994. The long-term debt to equity ratio of .98:1, less
than 1.00:1, is a milestone for the company. This ratio is
below one for the first time in over ten years. During
1994, Roundy's has been able to minimize its borrowings
under its floating rate revolving credit agreement. The
company has concentrated its borrowings in low, fixed rate
monies and reduced floating rate debt, enabling us to reduce
interest expense $2.7 million from 1993 and $3.6 million
from 1992. Throughout 1994, the Federal Reserve was very
active in raising short-term interest rates. However, as a
result of our $45,000,000 refinancing at 6.94% in 1993, we
<PAGE>
were able to neutralize, to a great degree, major
fluctuations in interest expense. Further, by centralizing
our accounts payable function for all divisions and putting
a major emphasis on controlling both inventory (average
investment in inventory was 34% in 1994 versus 39% in 1993)
and accounts and notes receivable, we were better able to
manage daily cash requirements and reduce borrowings from
our floating rate debt instrument.
Average daily borrowings declined $35.6 million in 1994
compared to 1993 and $2.6 million in 1993 compared to 1992.
The combination of the decline in average borrowings, as
noted above, and the 1993 debt refinancing are the two main
reasons for our lower interest expense in 1994 versus 1993
and 1992. The average cost of funded debt in 1994 was 7.8%
compared to 7.9% in 1993 and 8.6% in 1992.
Outlined to the right is our capital structure for fiscal
1994 compared to 1993. It should be noted that even with
management's decision to significantly increase its balance
sheet reserves, Roundy's still achieved a $4.3 million
increase in stockholders' equity compared to a $7.5 million
increase in 1993 and $7.7 million increase in 1992.
It is important to note that the Table reflects the fact
that equity now represents over 50.6% of Roundy's total
capital compared to 43.2% for 1993 and 36.7% in 1992.
As mentioned, management focused on (1) strengthening the
company's 1994 balance sheet through increasing certain
reserves (2) improving cash flow and (3) reinvesting in
facilities, fleet and warehouse equipment which will provide
operational efficiencies and immediate financial savings.
In 1994, Roundy's spent $22.3 million on capital additions,
including new fleet, corporate store remodels and new
equipment in operating divisions. This was $9.0 million
greater than 1993 and $7.0 million more than 1992. The
$22.3 million in capital expenditures in 1994 was the
largest one year capital expenditure ever made by Roundy's,
other than the purchase of another company. The company's
1995 planned capital expenditure budget exceeding $21
million, is also significant. It is management's strong
belief that this level of capital expenditures is necessary
for us to keep our facilities and equipment modern and
working efficiently and in turn, continue to keep operating
costs at the lowest possible level. Approximately $6.6
million of the 1995 budget will be directed toward
transportation equipment, $5.4 million for the Milwaukee
Division which includes enhancements for the "Target
Marketing" program and $4.0 will be directed toward retail
store enhancements.
Management continues to monitor and control its current
ratio. The objective is to reduce working capital invested
in the business but maintain the level necessary to meet
debt covenant requirements. The company's current ratio was
1.43:1, at December 31, 1994, 1.64:1, at January 1, 1994 and
1.70:1, at January 2, 1993. The declining trend in the
ratio is intentional and based on management's desire to
control the investment in inventory and notes and accounts
<PAGE>
receivable. Average inventory turns have steadily improved
in the past few years. These inventory turns were 14.4 in
1994, 14.1 in 1993 and 13.8 in 1992. Current notes and
accounts receivable declined $2.5 million in 1994 compared
to 1993 but were $2.1 million greater than 1992. Our
intention is to continue to reduce these assets where
practicable. Also, with the implementation of our new
automated purchasing system and the centralization of the
accounts payable function, we have been able to standardize
payment terms for all Roundy's divisions and explore
opportunities for extended terms.
Book value per share increased to $77.40 or 8.0% in 1994
compared to a 10.1% increase in 1993 and a 10.8% increase in
1992. The 1994 increase in book value was less than the 10%
increase required for a patronage dividend payment. As
previously noted, management and the Board of Directors
decided that 1994 was the year to "re-engineer" the company
and enhance its reserves. The industry has been changing
and all our major competitors have taken significant
restructuring charges directed at enhancing their future
operations and making them even more competitive. It should
be noted that during the three year period ending December
31, 1994, stockholders' equity increased to $19.5 million or
27.5%.
RESULTS OF OPERATIONS
Net sales and service fees declined .8% in 1994 compared to
1993 and 1.2% compared to 1992. The $18.7 million decline
from 1993 can be primarily attributed to the sale of
Roundy's dairy and ice cream operations in the Fall of 1993.
Wholesale sales increased $27.7 million or 1.2% over 1993
and $33.2 million or 1.4% over 1992. Management has been
very aggressive in soliciting both new customers and
improving concentration with existing customers. A major
factor contributing to the increase in wholesale sales has
been due to the success of the "Advantage Plus" program
which was implemented in several divisions. "Advantage
Plus" is an electronic marketing program which offers the
customer product savings at the store level. Management has
directed funds in the 1995 capital expenditure budget to
take this program to the next level. Enhancements include
adding "target marketing" capabilities and satellite
technology so the program can be expanded throughout
Roundy's entire service territory.
In the past few years the industry has undergone a major
change in its approach to generating revenues. With
continued pressure, both from competitors and manufacturers,
gross profit margins as a percentage of net sales and
service fees have remained constant or declined. With such
industry initiatives as Efficient Consumer Response ("ECR")
and manufacturer category funding, the trend of lower gross
profit margins will continue in the future. Our goal is to
continue to seek ways to reduce costs to offset the loss in
margins and to find alternative sources of revenue. Roundy's
1994 and 1993 gross profit margins were 9.4% compared to
9.6% in 1992.
<PAGE>
Operating and administrative expenses increased in 1994 to
8.7% from 8.3% in 1993 and 8.5% in 1992. In 1994,
management increased its allowance for bad debts and closed
facility reserve, substantially all of which was charged in
the fourth quarter. When you make 1994 Operating and
Administrative expenses comparable to 1993 and 1992 by
adjusting for the increases to these reserves, 1994's
adjusted ratio becomes 8.3%.
A second major factor affecting Operating and Administrative
expenses was the cost of implementing a computerized buying
system in all divisions. The cost of this project exceeded
$1 million in 1994. This buying system allows all divisions
to exchange data on buying opportunities and pricing thereby
providing them with the ability to secure lower cost of
goods for our customers. Management has recognized that it
is becoming more difficult to take costs out of the "system"
without further automation, both in the warehouse and at the
point of interface with the manufacturer. Accordingly,
efforts have been made to work with selected manufacturers
to develop and implement an ECR initiative at Roundy's. The
opportunities for future savings are believed to be
significant. Additionally, a major effort has been taken to
develop a satellite communications system which will enable
the company to enhance communication abilities with
customers throughout Roundy's entire service territory.
This network communications system is required for the
target marketing program. Management believes such a system
will position the company for significant future revenue
generation and cost savings opportunities for both Roundy's
and its customers.
The effective income tax rate was 40.7% for 1994, 40.5% for
1993, and 41.3% for 1992. The company continues to try to
minimize income taxes in accordance with Federal and state
income tax regulations.
Net earnings in 1994 were .27% of net sales and service
fees. This compares to .32% in 1993 and .30% in 1992. The
main reason for the decline in net earnings was the increase
in its allowance for bad debts and closed facility reserve.
As a result of strong competitive pressures in the company's
Eastern service territory, management re-evaluated its
customer base and elected to take a strong position against
continuing to invest in marginal customers. It is the firm
belief of management that we need to re-engineer our method
of servicing our customers, thereby solidifying the long-
term future of the company. By increasing these reserves in
1994, it is projected that the earnings in 1995 and
thereafter will provide sufficient funds to undertake
additional re-engineering of the company in order to remain
competitive and ensure the future of the company.
<PAGE>
Capital Structure (in millions) 1994 1993
-------------------------------------------------------------------------
Long-term debt $188.0 49.3% $111.7 56.1%
Capitalized lease obligations 0.2 0.1 1.3 0.7
-------------------------------------------------------------------------
Total long-term debt 88.2 49.4 113.0 56.8
Stockholders' equity 90.4 50.6 86.1 43.2
-------------------------------------------------------------------------
Total capital $178.6 100.0% $199.1 100.0%
<PAGE>
Independent auditors' report
To the Stockholders & Directors of Roundy's, Inc.
We have audited the accompanying consolidated balance sheets
of Roundy's, Inc. and its subsidiaries as of December 31,
1994 and January 1, 1994 and the related statements of
consolidated earnings, stockholders' equity and cash flows
for each of the three years in the period ended December 31,
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 December 31, 1994 and January
1, 1994 and the results of their operations and their cash
flows for each of the three years in the period ended
December 31, 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 LLP
Milwaukee, Wisconsin
February 24, 1995
<PAGE>
STATEMENTS of consolidated earnings
For the years ended December 31, 1994, January 1, 1994 and
January 2, 1993
1994 1993 1992
Revenues: -------------- -------------- --------------
Net sales and service fees $2,461,509,600 $2,480,254,200 $2,491,292,900
Other-net 3,892,300 6,526,600 3,290,100
-------------- -------------- --------------
2,465,401,900 2,486,780,800 2,494,583,000
-------------- -------------- --------------
Costs and Expenses:
Cost of sales 2,230,645,500 2,248,336,000 2,252,976,400
Operating and administrative 214,221,900 206,253,600 211,949,500
Interest 9,479,300 12,138,100 13,128,900
-------------- -------------- --------------
2,454,346,700 2,466,727,700 2,478,054,800
-------------- -------------- --------------
Earnings Before Patronage Dividends 11,055,200 20,053,100 16,528,200
Patronage Dividends 5,300,700 5,134,700
-------------- -------------- --------------
Earnings Before Income Taxes 11,055,200 14,752,400 11,393,500
-------------- -------------- --------------
Provision (Credit) for Income Taxes:
Current-Federal 7,863,700 5,797,000 4,521,500
-State 2,290,100 1,740,200 1,237,000
-Jobs and other tax credits (448,700) (485,500) (452,100)
Deferred (5,204,000) (1,078,000) (606,000)
-------------- -------------- --------------
4,501,100 5,973,700 4,700,400
-------------- -------------- --------------
Earnings Before Extraordinary Items
and Cumulative Effect of
Accounting Change 6,554,100 8,778,700 6,693,100
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 $ 6,554,100 $ 8,027,700 $ 7,353,100
============== ============== ==============
See notes to consolidated financial statements.
<PAGE>
CONSOLIDATED balance sheets As of December 31, 1994 and
January 1, 1994
1994 1993
------------ ------------
Assets
Current Assets:
Cash and cash equivalents $ 40,268,800 $ 25,845,600
Notes and accounts receivable,
less allowance for losses,
$11,000,400 and $8,766,500,
respectively 95,105,500 99,826,500
Merchandise inventories 157,195,700 153,169,500
Prepaid expenses 5,774,200 6,956,800
Future income tax benefits 5,691,800 4,281,800
------------ ------------
Total current assets 304,036,000 290,080,200
------------ ------------
Other Assets:
Notes receivable 14,631,300 14,894,700
Other real estate 6,584,200 7,343,000
Deferred expenses and other 7,066,200 7,885,100
Deferred income tax benefit 3,060,000
------------ ------------
Total other assets 31,341,700 30,122,800
------------ ------------
Property and Equipment:
Land 5,883,000 5,100,600
Buildings 43,934,300 39,668,000
Equipment 82,413,000 71,508,900
Capitalized equipment leases 1,550,000 2,300,000
Leasehold improvements 13,429,100 11,939,300
------------ ------------
147,209,400 130,516,800
Less accumulated depreciation
and amortization:
Owned 76,561,200 68,721,000
Leased 1,373,700 1,906,700
------------ ------------
Property and equipment-net 69,274,500 59,889,100
------------ ------------
$404,652,200 $380,092,100
============ ============
See notes to consolidated financial statements.
<PAGE>
1994 1993
------------ ------------
Liabilities and Stockholders' Equity
Current Liabilities:
Notes payable $ $ 139,600
Current maturities of long-term debt 5,678,600 8,920,700
Accounts payable 166,024,700 130,187,600
Accrued expenses 36,036,000 36,778,500
Income taxes 4,483,200 410,900
------------ ------------
Total current liabilities 212,222,500 176,437,300
Long-Term Debt, Less Current Maturities 88,226,700 113,044,700
Deferred Income Taxes 600,000
Other Liabilities 13,784,300 3,944,000
------------ ------------
Total liabilities 314,233,500 294,026,000
------------ ------------
Commitments and Contingencies (Note 10)
Stockholders' Equity:
Common stock:
Voting (Class A) 17,500 19,400
Non-voting (Class B) 1,443,000 1,425,400
------------ ------------
Total common stock 1,460,500 1,444,800
Amount related to recording
minimum pension liability (112,700) (308,700)
Patronage dividends payable
in common stock 3,263,000
Additional paid-in capital 23,159,700 20,388,900
Reinvested earnings 65,911,200 61,278,100
------------ ------------
Total stockholders' equity 90,418,700 86,066,100
------------ ------------
$404,652,200 $380,092,100
============ ============
<PAGE>
<TABLE>
STATEMENTS of consolidated stockholders' equity
For the years ended December 31, 1994, January 1, 1994 and
January 2, 1993
<CAPTION>
Common Stock Patronage
---------------------------------------Dividends Additional
Class A Class B Payable in Paid-in Reinvested
Shares Amount Shares Amount Common Stock Capital Earnings
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
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
Net earnings 6,554,100
Common stock issued 700 900 52,138 65,200 (3,263,000) 3,516,200
Common stock purchased (2,200) (2,800) (38,077) (47,600) (745,400) (1,921,000)
-----------------------------------------------------------------------------
Balance, December 31, 1994 14,000 $17,500 1,154,363 $1,443,000 $ 0 $23,159,700 $65,911,200
=============================================================================
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
STATEMENTS of consolidated cash flows
For the years ended December 31, 1994, January 1, 1994 and
January 2, 1993
1994 1993 1992
------------ ------------ -------------
Cash Flows From Operating
Activities:
Net earnings $ 6,554,100 $ 8,027,700 $ 7,353,100
Adjustments to reconcile
net earnings to net
cash flows provided by
operating activities:
Depreciation and
amortization 12,756,500 12,913,200 13,350,100
Extraordinary loss on
early extinguishment
of debt 751,000
Cumulative effect of
accounting change (660,000)
Allowance for losses 9,166,600 6,738,600 5,772,900
Gain on sale of property
and equipment and other
productive assets (1,087,700) (3,680,300) (1,105,700)
Increase in closed
facility reserve 8,000,000 1,000,000 500,000
Patronage dividends payable
in common stock 3,263,000 3,210,000
(Increase) decrease in operating
assets, net of the effects
of disposition:
Accounts receivable (5,012,600) (13,819,500) (3,462,100)
Merchandise inventories (4,026,200) 11,038,700 (2,273,400)
Prepaid expenses 1,182,600 (2,105,000) (219,900)
Future income tax benefits (1,410,000) 295,000 (1,218,000)
Other real estate 758,800 (802,300) 245,200
Deferred expenses and
other assets 323,300 (27,700) (330,700)
Deferred income tax benefit (3,060,000)
Increase (decrease) in operating
liabilities, net of the
effects of disposition:
Accounts payable 35,837,100 7,715,000 (4,432,700)
Accrued expenses (1,582,700) (227,100) (2,393,000)
Income taxes 4,072,300 (724,400) (16,700)
Deferred income taxes (734,000) (1,373,000) 232,000
Other liabilities 3,015,300 796,200 757,800
------------ ------------ -------------
Net cash flows provided by
operating activities 64,753,400 29,779,100 15,308,900
------------ ------------ -------------
Cash Flows From Investing Activities:
Capital expenditures (22,316,600) (13,354,800) (15,332,300)
Proceeds from sale of
property and equipment and
other productive assets 1,753,200 11,017,900 3,096,800
(Increase) decrease in notes
receivable 830,400 4,602,500 (3,976,500)
<PAGE>
------------ ------------ -------------
Net cash flows (used in)
provided by investing
activities (19,733,000) 2,265,600 (16,212,000)
------------ ------------ ------------
Cash Flows From Financing Activities:
Proceeds from long-term
borrowings 45,000,000 48,000,000
Principal payments and
defeasance of long-term
debt (24,818,000) (68,637,400) (51,862,400)
Increase (decrease) in notes
payable and current
maturities of long-term debt (3,381,700) 1,015,100 909,200
Proceeds from sale of common
stock 319,300 1,951,700 884,000
Common stock purchased (2,716,800) (5,440,500) (3,790,800)
------------ ------------ ------------
Net cash flows (used in)
financing activities (30,597,200) (26,111,100) (5,860,000)
------------ ------------ ------------
Net Increase (Decrease) in Cash
and Cash Equivalents 14,423,200 5,933,600 (6,763,100)
Cash And Cash Equivalents,
Beginning Of Year 25,845,600 19,912,000 26,675,100
------------ ------------ ------------
Cash And Cash Equivalents,
End Of Year $ 40,268,800 $ 25,845,600 $ 19,912,000
============ ============ ============
Cash Paid During The Year For:
Interest $ 9,775,300 $ 13,100,200 $ 14,482,100
Income Taxes 5,163,300 7,805,700 5,703,300
See notes to consolidated financial statements.
<PAGE>
NOTES to consolidated financial statements
1. SUMMARY OF 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 December 31, 1994 and January 1, 1994 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.
Cash and cash equivalents--The company considers all highly
liquid investments, with maturities of three months or less
when acquired, to be cash equivalents.
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.
Closed facility costs--When a facility is closed the remaining
investment, net of expected salvage value, is expensed. For
properties under lease agreements, the present value of any
remaining future liability under the lease, net of expected
sublease recovery, is also expensed. The amounts charged to
operations for the present value of these remaining future
liabilities were $8,000,000, $1,000,000 and $500,000 in
1994, 1993 and 1992, respectively.
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.
<PAGE>
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 transacted 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 years ended January 1, 1994
and January 2, 1993 were payable 30% in cash. There were no
patronage dividends for the year ended December 31, 1994
because the company did not meet the requirement to increase
the book value of its common stock by 10%.
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 $7,569,700 and
$9,661,400 at December 31, 1994 and January 1, 1994,
respectively. Long-term notes receivable at December 31,
1994 and January 1, 1994 are net of an allowance for losses
of $916,000 and $1,483,000, respectively.
<PAGE>
5. LONG-TERM DEBT
Long-term debt, exclusive of current maturities, consists of
the following at the respective year-ends:
1994 1993
------------ ------------
Senior unsecured notes payable:
10.31%, due 1996 to 1999 $ 6,000,000 $ 15,250,000
9.26%, due 1996 to 2001 15,000,000 17,500,000
7.57% to 8.26%, due 1996 to 2008 21,600,000 22,300,000
6.94%, due 1997 to 2003 45,000,000 45,000,000
Notes payable under revolving
credit agreements 10,000,000
Other long-term debt 391,800 1,683,900
Obligations under capitalized leases 234,900 1,310,800
------------ ------------
Total $ 88,226,700 $113,044,700
============ ============
At December 31, 1994, $70,000,000 was available to the
company under its revolving credit agreements. 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 $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 was considered to be defeased and the
liability was 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.
Repayment of principal on long-term debt outstanding,
excluding obligations under capitalized leases (see Note
10), is as follows:
1995 5,470,900
1996 4,723,100
1997 11,654,100
1998 11,656,800
1999 11,659,700
Thereafter 48,298,100
<PAGE>
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, was
approximately $91,240,000 and $126,700,000 as of December
31, 1994 and January 1, 1994, respectively.
<PAGE>
NOTES to consolidated financial statements continued
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, each 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 $77.40, $71.65 and $65.10 for 1994, 1993
and 1992, 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.
Option and SAR transactions are as follows:
Options SARs Price
-------- ------ -------------
Outstanding, December 28, 1991 30,000 10,000 $53.75
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) 53.10-65.10
-------- ------- -------------
Outstanding, January 1, 1994 43,167 18,500 53.10-65.10
Exercised (3,667) 58.75-65.10
-------- ------- -------------
Outstanding, December 31, 1994 39,500 18,500 $53.10-$65.10
======== ======= =============
Available for grant after
December 31, 1994 16,500 6,500
======== =======
<PAGE>
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 December 31, 1994,
options were exercisable for 26,566 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
1994, 1993 and 1992. As of December 31, 1994, 7,800 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.
<PAGE>
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.
The following sets forth the funded status of the plans at
December 31, 1994 and January 1, 1994:
1994 1993
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
Benefits Assets Benefits Assets
----------- ---------- ----------- ------------
Actuarial present value of:
Vested benefit
obligation $18,742,100 $2,816,400 $18,843,000 $ 3,234,100
=========== ========== =========== ===========
Accumulated benefit
obligation $20,704,000 $2,994,100 $21,103,200 $ 3,425,600
=========== ========== =========== ===========
Projected benefit
obligation $24,009,500 $2,994,100 $25,118,300 $ 3,425,600
Plan assets (primarily
listed stocks and
bonds) at market value 24,006,500 2,119,400 25,688,200 1,978,300
----------- ---------- ----------- -----------
Projected benefit obligation
(in excess of) or less
than plan assets (3,000) (874,700) 569,900 (1,447,300)
Unrecognized net (gain)
or loss (945,200) 189,700 (688,100) 519,700
Prior service cost not yet
recognized in net periodic
pension cost 395,600 68,300 595,700 73,100
Unrecognized net asset (1,243,500) (1,404,300)
Adjustment required to
recognize minimum
liability (257,900) (592,800)
----------- ---------- ----------- -----------
Accrued pension cost $(1,796,100) $ (874,600) $ (926,800) $(1,447,300)
=========== ========== =========== ===========
The assumptions used in the accounting were as follows:
1994 1993 1992
------- ------ ------
Discount rate 8.25% 7.50% 9.50%
Rate of increase in compensation levels 4.00% 4.00% 5.00%
Expected long-term rate of return of assets 9.00% 9.00% 9.50%
<PAGE>
The changes in actuarial assumptions in 1994 resulted in a
$3,218,000 decrease in the projected benefit obligation in
1994, and is expected to result in an insignificant decrease
in the 1995 pension expense. In accordance with Statement of
Financial Accounting Standards No. 87, "Employers'
Accounting for Pensions," the company has recorded a minimum
liability of which $112,700 and $308,700, net of income
taxes, is reflected as a reduction of stockholders' equity
in 1994 and 1993, respectively.
Net pension cost for the foregoing defined benefit plans
includes the following components:
1994 1993 1992
---------- ---------- ----------
Service cost-benefits earned
during the year $1,756,800 $1,314,800 $1,263,200
Interest on projected benefit
obligation 2,020,600 1,881,000 1,658,900
Actual (return) on plan assets 1,013,200 (2,251,200) (2,007,400)
Net amortization and deferral (3,625,300) (247,500) (321,200)
---------- ---------- ----------
Net pension cost $1,165,300 $ 697,100 $ 593,500
========== ========== ==========
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 $3,705,300,
$3,437,500 and $3,500,400 in 1994, 1993 and 1992,
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 $507,500, $513,700
and $508,200 in 1994, 1993 and 1992, 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.
<PAGE>
NOTES to consolidated financial statements continued
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 1994 and
1993 and 34% in 1992 and income tax expense as reported, are
reconciled as follows:
1994 1993 1992
---------- ---------- ----------
Federal income tax at statutory rates $3,869,300 $5,163,300 $3,873,800
State income taxes, net of federal
tax benefits 720,000 1,131,100 816,400
Jobs and other tax credits (448,700) (485,500) (452,100)
Other-net 360,500 164,800 462,300
---------- ---------- ----------
Income tax expense $4,501,100 $5,973,700 $4,700,400
========== ========== ==========
The approximate tax effects of temporary differences at
December 31, 1994 and January 1, 1994 are as follows:
<TABLE>
<CAPTION>
1994 1993
-----------------------------------------------------------------------
Assets Liabilities Total Assets Liabilities Total
----------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts $ 2,613,000 $2,613,000 $1,652,000 $1,652,000
Merchandise inventories $ (817,200) (817,200) $ (466,200) (466,200)
Employee benefits 2,580,000 2,580,000 2,296,000 2,296,000
Accrued expenses not
currently deductible 1,316,000 1,316,000 799,000 799,000
Other 1,000 1,000
----------- ----------- ---------- ---------- ----------- ----------
Current 6,509,000 (817,200) 5,691,800 4,748,000 (466,200) 4,281,800
----------- ----------- ---------- ---------- ----------- ----------
Allowance for doubtful
accounts 359,000 359,000 582,000 582,000
Depreciation and amortization (2,865,000) (2,865,000) (2,998,000) (2,998,000)
Employee benefits 2,883,000 2,883,000 1,745,000 1,745,000
Accrued expenses not
currently deductible 2,676,000 2,676,000
Other 7,000 7,000 71,000 71,000
----------- ----------- ---------- ---------- ------------ ----------
Noncurrent 5,925,000 (2,865,000) 3,060,000 2,398,000 (2,998,000) (600,000)
----------- ----------- ---------- ---------- ------------ ----------
Total $12,434,000 $(3,682,200) $8,751,800 $7,146,000 $(3,464,200) $3,681,800
=========== =========== ========== ========== ============ ==========
</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
----------- ----------- -----------
1992 $36,778,100 $ 363,400 $18,590,300
1993 36,675,800 398,800 18,985,200
1994 36,268,800 448,300 22,329,500
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 December 31, 1994:
OPERATING CAPITALIZED
LEASES LEASES
------------ ---------
1995 $ 33,920,300 $247,600
1996 29,169,700 180,800
1997 25,811,800 76,000
1998 24,636,400
1999 23,827,700
Thereafter 216,515,700
------------ ---------
Total $353,881,600 504,400
============
Amount representing interest 61,800
---------
Present value of net minimum lease payments 442,600
Current portion 207,700
---------
Long-term portion $234,900
=========
Total minimum rentals to be received in the future under non-
cancelable subleases as of December 31, 1994 are
$285,161,000.
The company has guaranteed customer and employee bank loans
and customer leases amounting to $3,879,400 and $924,800,
respectively, at December 31, 1994.
The company is involved in various claims and litigation
arising in the normal course of business. In the opinion of
management, the ultimate resolution of these actions will
not have a material effect on the company's financial
position and results of operations.
11. EARNINGS PER SHARE
Earnings per share are not presented because they are not
deemed meaningful. See Notes 3 and 7 relating to patronage
dividends and common stock repurchase requirements.
<PAGE>
board of directors
John R. Dickson Charles R. Bonson Robert E. Bartels
CHAIRMAN & CEO BONSON'S FOODS, INC. MARTIN'S SUPER MARKETS, INC.
EAGLE RIVER, WI SOUTH BEND, IN
Gerald F. Lestina
PRESIDENT & COO Gary N. Gundlach George C. Kaiser
PICK 'N SAVE - STOUGHTON MILWAUKEE, WI
Robert D. Ranus STOUGHTON, WI
VICE PRESIDENT & Brenton H. Rupple
CHIEF FINANCIAL George E. Prescott MILWAUKEE, WI
OFFICER PRESCOTT'S
SUPERMARKETS, INC.
WEST BEND, WI
Elected corporate officers
John R. Dickson David C. Busch Michael J. Schmitt
CHAIRMAN & CEO VICE PRESIDENT VICE PRESIDENT-SALES
OF ADMINISTRATION AND DEVELOPMENT
Gerald F. Lestina
PRESIDENT & COO Edward G. Kitz Marion H. Sullivan
VICE PRESIDENT, VICE PRESIDENT OF
Robert D. Ranus SECRETARY & MARKETING
VICE PRESIDENT & TREASURER
CHIEF FINANCIAL
OFFICER Thomas A. Loggia
VICE PRESIDENT-
WHOLESALE
<PAGE>
ADVISORY committee
Tom McAdams Dave Spiegelhoff
PICK 'N SAVE - MUKWANAGO PICK 'N SAVE - BURLINGTON
1010 ROCHESTER STREET 1120 MILWAUKEE AVE.
MUKWANAGO, WI 53149 BURLINGTON, WI 53105
George Prescott Mark Stinebrink
PRESCOTT'S SUPERMARKETS, INC. PICK 'N SAVE - LAKE GENEVA
1719 SOUTH MAIN STREET 100 EAST GENEVA SQUARE
WEST BEND, WI 53095 LAKE GENEVA, WI 53147
Dave Ruehlman John Stone
THE GRAND FOOD CENTER PICK 'N SAVE - BARABOO
606 GREEN BAY RD. 615 HIGHWAY 136
WINNETKA, IL 60093 WEST BARABOO, WI 53913
Frank Serio Scott Sylla
PICK 'N SAVE - CUDAHY ULTRA MART, INC.
5851 SOUTH PACKARD AVENUE W173 N9170 ST. FRANCIS DRIVE
CUDAHY, WI 53110 MENOMONEE FALLS, WI 53051
Rick Walker
PICK 'N SAVE - EAU CLAIRE
2717 BIRCH STREET
P.O. BOX 1508
EAU CLAIRE, WI 54703
Trustees
Gerald F. Lestina John A. McAdams
PRESIDENT & COO PICK 'N SAVE - OCONOMOWOC
OCONOMOWOC, WI
Duane G. Tate
PICK 'N SAVE - FRANKLIN
FRANKLIN, WI
David A. Ulrich
MEGA MARTS, INC.
OAK CREEK, WI
Robert R. Spitzer
PRESIDENT EMERITUS
MILWAUKEE SCHOOL OF ENGINEERING
MILWAUKEE, WI
Charles E. Stenicka
PRESIDENT, MRA
THE MANAGEMENT
ASSOCIATION, INC.
BROOKFIELD, WI
<PAGE>
DIVISIONAL map
1. Corporate Office - Roundy's, Inc.
23000 ROUNDY DRIVE, PEWAUKEE, WI 53072
2. Milwaukee Division
11300 W. BURLEIGH STREET, WAUWATOSA, WI 53222
3. Roundy's General Merchandise Division
400 WALTER ROAD, MAZOMANIE, WI 53560
4. Eldorado Division
ROUTE 45 SOUTH, ELDORADO, IL 62930
5. Evansville Perishable Division
4501 PETERS ROAD, EVANSVILLE, IN 47711
6. The Midland Grocery Company
6500 SOUTH U.S. 421, WESTVILLE, IN 46391
7. South Bend Perishable Division
2107 WESTERN AVENUE, SOUTH BEND, IN 46619
8. Midland Grocery of Michigan, Inc.
1764 CRESTON STREET, MUSKEGON, MI 49443
9. Spring Lake Merchandise, Inc.
1200 N. WASHINGTON, VAN WERT, OH 45891
10. Lima Division
1100 PROSPERITY ROAD, LIMA, OH 45802
11. Cardinal Foods, Inc.
4700 FISHER ROAD, COLUMBUS, OH 43228
<PAGE>
EXHIBIT 21
ROUNDY'S, INC.
Subsidiaries
Roundy's, Inc. has twelve wholly-owned first-tier subsidiaries, each a
Wisconsin corporation (except as otherwise noted) doing business under
their corporate names. These subsidiaries are:
Badger Assurance, Ltd.(1) Kee Wholesale, Inc.
CD of Wisconsin, Inc. Midland Grocery of Michigan, Inc.(6)
Holt Public Storage, Inc. Old Time, Inc.
I.T.A., Inc. Ropak, Inc.
Jondex Corp. Scot Lad Foods, Inc.
Kee Trans, Inc. WFC Foods, Inc.(2)
Five Wisconsin corporations doing business under their corporate names
are wholly-owned subsidiaries of Ropak, Inc. These corporations are:
Insurance Planners, Inc. Shop-Rite, Inc.
Pick 'n Save Warehouse Foods, Inc. Villard Avenue Shop-Rite, Inc.
Sheboygan Land Corporation
Four corporations doing business under their corporate names are wholly-
owned subsidiaries of Scot Lad Foods, Inc. These corporations are:
Bonnie Baking Co., Inc.(3) Cardinal Foods, Inc.(5)
Spring Lake Merchandise, Inc.(4) Scot Lad-Lima, Inc.(4)
Three corporations doing business under their corporate names are wholly-
owned subsidiaries of Cardinal Foods, Inc. These corporations are:
Columbus Leasing Group, Inc.(4) Wilson's Cardinal Supermarket, Inc.(4)
Englewood Cardinal Supermarket,
Inc.(4)
One corporation doing business under its corporate name is a subsidiary
of Shop-Rite, Inc. and is partially owned by Cardinal Foods, Inc. The
corporation is:
The Midland Grocery Company(4)
_____________
(1) A Bermuda corporation. (4) A Ohio corporation.
(2) An Illinois corporation. (5) A Delaware corporation.
(3) An Indiana corporation. (6) A Michigan corporation.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ROUNDY'S,
INC. FORM 10-K 405 FOR THE PERIOD ENDED 12-31-94 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 40,268,800
<SECURITIES> 0
<RECEIVABLES> 95,105,500
<ALLOWANCES> 0
<INVENTORY> 157,195,700
<CURRENT-ASSETS> 304,036,000
<PP&E> 147,209,400
<DEPRECIATION> (77,934,900)
<TOTAL-ASSETS> 404,652,200
<CURRENT-LIABILITIES> 212,222,500
<BONDS> 88,226,700
<COMMON> 1,460,500
0
0
<OTHER-SE> 88,958,200
<TOTAL-LIABILITY-AND-EQUITY> 404,652,200
<SALES> 2,461,509,600
<TOTAL-REVENUES> 2,465,401,900
<CGS> 2,230,645,500
<TOTAL-COSTS> 2,230,645,500
<OTHER-EXPENSES> 205,055,300
<LOSS-PROVISION> 9,166,600
<INTEREST-EXPENSE> 9,479,300
<INCOME-PRETAX> 11,055,200
<INCOME-TAX> 4,501,100
<INCOME-CONTINUING> 6,554,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,554,100
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
