UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 4, 1998
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission File Number 33-57505
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Roundy's, Inc.
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(Exact name of registrant as specified in its charter)
Wisconsin 39-0854535
- -------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23000 Roundy Drive, Pewaukee, Wisconsin 53072
- ---------------------------------------- -------------
(Address of principal executive offices) (Zip Code)
(414) 547-7999
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(Registrant's telephone number, including area code)
NOT APPLICABLE
- ---------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at April 4, 1998
- ----------------------------- ----------------------------
Common Stock, $1.25 par value
Class A (Voting) 12,400 Shares
Class B (Non-voting) 1,158,760 Shares
ROUNDY'S, INC.
INDEX
Page No.
PART I. Financial Informtion:
Consolidated Balance Sheets - 3
April 4, 1998 and January 3, 1998
Statements of Consolidated Earnings - 4
Thirteen Weeks Ended
April 4, 1998 and March 29, 1997
Statements of Consolidated Cash Flows - 5
Thirteen Weeks Ended April 4, 1998
and March 29, 1997
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of 7
Financial Condition and Results of
Operations
PART II. Other Information 9
SIGNATURES 10
PART I. FINANCIAL INFORMATION
ROUNDY'S, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
April 4, 1998 to January 3, 1998
April 4, 1998 January 3, 1998
(Unaudited) (Audited)
------------- ------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 63,551,000 $ 52,366,900
Notes and accounts receivable,less
allowance for losses, $5,954,600
and $5,648,700, respectively 94,040,800 86,998,500
Merchandise inventories 155,062,800 150,898,000
Prepaid expenses 3,710,700 5,216,200
Refundable and future income tax
benefits 6,227,800 6,227,800
------------- ------------------
Total Current Assets 322,593,100 301,707,400
------------- ------------------
OTHER ASSETS:
Notes receivable, less allowance for
losses, $5,299,000 and $5,576,000 10,803,900 11,604,600
Goodwill and other assets 13,061,500 13,696,700
Other real estate 4,087,000 7,152,500
Deferred income tax benefit 2,848,000 2,848,000
------------ ----------------
Total Other Assets 30,800,400 35,301,800
PROPERTY AND EQUIPMENT - Net 98,011,600 103,300,600
-------------- ----------------
$451,405,100 $440,309,800
============== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term
debt $ 10,156,800 $ 10,156,800
Accounts payable 159,180,800 155,001,500
Accrued expenses 54,647,300 50,148,300
Income taxes 3,661,500 2,327,100
------------- --------------
Total Current Liabilities 227,646,400 217,633,700
LONG-TERM DEBT, LESS CURRENT
MATURITIES 82,251,000 83,457,800
OTHER LIABILITIES 16,799,600 16,758,000
------------- -------------
Total Liabilities 326,697,000 317,849,500
-------------- -------------
REDEEMABLE CLASS B COMMON STOCK 6,330,200 6,375,300
-------------- -------------
STOCKHOLDERS' EQUITY:
Common Stock:
Voting (Class A) 15,500 15,800
Non-Voting (Class B) 1,389,200 1,346,600
------------- -------------
Total Common Stock 1,404,700 1,362,400
Patronage dividends payable in common
stock 3,738,000
Additional paid-in capital 32,270,000 28,588,300
Reinvested earnings 85,834,400 83,527,500
------------ -------------
Total 119,509,100 117,216,200
Less Treasury Stock, at cost 1,131,200 1,131,200
------------- -------------
Total Stockholders' Equity 118,377,900 116,085,000
------------- --------------
$451,405,100 $440,309,800
============= ==============
See Notes to Consolidated Financial Statements.
ROUNDY'S, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED EARNINGS
FOR THE THIRTEEN WEEKS ENDED
April 4, 1998 AND March 29, 1997
(UNAUDITED)
Thirteen Weeks Ended
April 4, 1998 March 29, 1997
--------------- ----------------
REVENUES:
Net sales and service fees $612,427,400 $617,499,000
Other - net 1,247,100 1,095,600
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613,674,500 618,594,600
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COSTS AND EXPENSES:
Cost of sales 553,478,200 557,341,800
Operating and administrative 54,145,500 55,138,600
Interest 1,841,700 2,016,800
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609,465,400 614,497,200
-------------- -------------
EARNINGS BEFORE INCOME TAXES 4,209,100 4,097,400
PROVISION FOR INCOME TAXES 1,715,200 1,669,700
------------- --------------
NET EARNINGS $ 2,493,900 $ 2,427,700
============= =============
See Notes to Consolidated Financial Statements.
ROUNDY'S, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE THIRTEEN WEEKS ENDED APRIL 4, 1998 AND MARCH 29, 1997
(UNAUDITED)
Thirteen Weeks Ended
April 4, 1998 March 29, 1997
---------------- ---------------
Cash Flows From Operating Activities:
Net earnings $ 2,493,900 $ 2,427,700
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 4,889,400 4,211,200
Allowance for losses 461,300 706,600
Gain on sale of assets (141,000) (11,600)
(Increase) Decrease in Operating Assets:
Accounts receivable (296,400) 8,461,600
Merchandise inventories (8,273,900) 1,946,500
Prepaid expenses 1,505,500 (1,024,000)
Other real estate 3,065,500 (8,800)
Goodwill and other assets (35,600) (10,600)
Increase(Decrease)in Operating Liabilities:
Accounts payable 4,179,300 (9,834,000)
Accrued expenses 4,537,500 2,296,100
Income taxes 1,334,400 1,571,900
Other liabilities 41,600 33,900
------------- -------------
Net cash flows provided by operating
activities 13,761,500 10,766,500
Cash Flows from Investing Activities:
Capital Expenditures (2,288,800) (1,311,300)
Proceeds from sale of property and
equipment 363,500 84,400
Decrease in notes receivable 800,700 373,100
Net cash flows used in ------------- -------------
investing activities (1,124,600) (853,800)
------------- -------------
Cash Flows from Financing Activities:
Principal payments of long-term debt (1,206,800) (1,204,100)
(Decrease) increase in current
maturities of long-term debt (26,300)
Proceeds from sale of common stock 59,100 41,400
Common stock purchased (305,100) (475,600)
--------------- --------------
Net cash flows used by financing
activities (1,452,800) (1,664,600)
--------------- --------------
Net Increase in Cash and Cash
Equivalents 11,184,100 8,248,100
Cash and Cash Equivalents,
Beginning of Period 52,366,900 40,342,300
-------------- --------------
Cash and Cash Equivalents, End of Period $ 63,551,000 $ 48,590,400
============== ===============
Cash paid during the period: - Interest $ 683,900 $ 744,300
- Income Taxes 415,800 138,600
See Notes to Consolidated Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) In the opinion of the Company, the accompanying consolidated
financial statements contain all adjustments (consisting only of
normal recurring accruals) necessary to present fairly the financial
position as of April 4, 1998, and January 3, 1998 and the results of
operations for the thirteen weeks ended April 4, 1998 and March 29,
1997 changes in cash flows for the thirteen weeks ended April 4, 1997
and March 29, 1997.
2) The results of operations for the thirteen weeks ended April 4, 1998
and March 29, 1997 are not necessarily indicative of the results to
be expected for the full fiscal year.
3) Earnings per share are not presented because they are not
deemed to be meaningful.
4) Class B common stock that is subject to redemption is reflected
outside of stockholders' equity. As of April 4, 1998 and
January 3, 1998, 60,664 and 61,095 shares, respectively, were
subject to redemption. The Class B common stock subject to
redemption is payable over a five year period based upon the book
value at the preceding fiscal year end.
5) Effective September 15, 1997, the Company purchased a grocery
retailer for approximately $7.9 million in cash. The
acquisition has been accounted for as a purchase and the
results of operation have been included in the consolidated
financial statements since the date of acquisition.
6) In June 1997, the Financial Accounting Standards Board issued
statement No. 131 "Disclosures about Segments of an Enterprise and
Related Information." This statement is effective for fiscal 1998.
The Company is in the process of evaluating the disclosure requirements.
The adoption of statement No. 131 will not have a material impact on
the Company's Consolidated Financial Statements.
7) The Company, as noted in the 1997 annual report,
experienced a fire in the early morning hours of February
27, 1998 at its Evansville, Indiana warehouse. The fire
completely destroyed that frozen food facility, including
both the building and the entire inventory contained
therein. The Company has transferred the business to
Lima, Ohio and South Bend, Indiana warehouses. However,
late in the quarter, the Company lost that division's
largest customer. The financial impact of the loss of
this customer was not material to the results of
operations for the quarter ended April 4, 1998. The
Company is still evaluating the financial impact and the
amount to be recovered under its insurance policies. The
Company is also evaluating its options for the replacement
of the frozen food warehouse. Due to the ongoing
evaluation of warehouse replacement options, the financial
impact on the Company's results of operations is not yet
determinable. The net book value of the fixed assets and
inventory that were destroyed in the fire were written off
and an insurance receivable for an equal amount was set up
in the consolidated balance sheet.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
The following is management's discussion and analysis of certain
significant factors, which have affected the Company's results of
operations during the periods included in the accompanying statements
of consolidated earnings.
A summary of the period to period changes in the principal items
included in the statements of consolidated earnings is shown below:
Comparison of
13 Weeks Ended April 4, 1998
and March 29, 1997
Increase/<Decrease>
Net sales and service fess $(5,071,600) (0.8)%
Cost of sales (3,863,600) (0.7)
Operating and admin. expense (993,100) (1.8)
Interest expense (175,100) (8.7)
Earnings before income taxes 111,700 2.7
Net sales and service fees decreased approximately $5.1 million during
the first quarter of 1998 as compared to the first quarter of 1997. The
loss of wholesale customers resulted in a decrease of approximately
$10.6 million. The closing or sale of ten Company-owned stores
resulted in a decrease of approximately $6.6 million. New Company-
owned stores resulted in an increase of approximately $8.3 million.
Sales by existing Company-owned stores decreased $2.1 million. Sales
to new and existing wholesale customers increased $5.9 million.
Cost of sales approximated 90.4% and 90.3% of net sales and service
fees for the thirteen weeks ended April 4, 1998 and March 29, 1997,
respectively.
Operating and administrative expenses approximated 8.8% and 8.9% of net
sales and service fees for the thirteen weeks ended April 4, 1998 and
March 29, 1997, respectively.
Interest expense decreased primarily as a result of lower borrowing
levels during the quarter ended April 4, 1998 as compared to the
quarter ended March 29, 1997.
No patronage dividends have been accrued as of April 4, 1998. The
Company's By-Laws require that, to the extent permitted by the Internal
Revenue Code, patronage dividends be paid out of earnings from business
done with stockholder-customers in an amount which will reduce net
earnings of the Company to such amount as will result in an 8 percent
increase in the book value of its common stock.
The income tax rate used for calculating the provision for income taxes
for the interim periods was 40.8% in 1998 and 1997.
Liquidity and Capital Resources
The Company's current ratio increased slightly from 1.39:1 at year-end
to 1.42:1 at April 4, 1998. The consolidated long-term debt to equity
ratio has decreased from 0.68:1 at January 3, 1998 to 0.66:1 at April
4, 1998, primarily due to increased equity levels.
Stockholders' equity, including redeemable common stock, increased
approximately $2.2 million due to reinvested earnings of $2.5 million
offset by common stock purchases of $0.3 million.
II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(b) Reports on Form 8-K -- There were no reports on Form 8-K filed
for the thirteen weeks ended April 4, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ROUNDY'S, INC.
(Registrant)
Date: May 12, 1998 ROBERT D. RANUS
-----------------
Robert D. Ranus
Vice President and
Chief Financial Officer
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ROUNDY'S,
INC. FORM 10-Q FOR THE QUARTER ENDING APRIL 4, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-02-1999
<PERIOD-START> JAN-04-1998
<PERIOD-END> APR-04-1998
<CASH> 63,551,000
<SECURITIES> 0
<RECEIVABLES> 94,040,800
<ALLOWANCES> 0
<INVENTORY> 155,062,800
<CURRENT-ASSETS> 322,593,100
<PP&E> 199,695,900
<DEPRECIATION> 101,684,300
<TOTAL-ASSETS> 451,405,100
<CURRENT-LIABILITIES> 227,646,400
<BONDS> 82,251,000
0
0
<COMMON> 1,404,700
<OTHER-SE> 116,973,200
<TOTAL-LIABILITY-AND-EQUITY> 451,405,100
<SALES> 612,427,400
<TOTAL-REVENUES> 613,674,500
<CGS> 553,478,200
<TOTAL-COSTS> 553,478,200
<OTHER-EXPENSES> 53,684,200
<LOSS-PROVISION> 461,300
<INTEREST-EXPENSE> 1,841,700
<INCOME-PRETAX> 4,209,100
<INCOME-TAX> 1,715,200
<INCOME-CONTINUING> 2,493,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,493,900
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
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