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 October 3, 1998
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
Roundy's, Inc.
(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
(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 October 3, 1998
Common Stock, $1.25 par value
Class A (Voting) 12,600 Shares
Class B (Non-voting) 1,127,700 Shares
ROUNDY'S, INC.
INDEX
Page No.
PART I. Financial Information:
Consolidated Balance Sheets - 3
October 3, 1998 and January 3, 1998
Statements of Consolidated Earnings - 4
Thirteen Weeks and Thirty-nine Weeks
Ended October 3, 1998
and September 27, 1997
Statements of Consolidated Cash Flows - 5
Thirty-nine Weeks Ended October 3, 1998
and September 27, 1997
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of 7
Financial Condition and Results of
Operations
PART II. Other Information 12
SIGNATURES 13
PART I. FINANCIAL INFORMATION
ROUNDY'S, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
October 3, 1998 and January 3, 1998
October 3, January 3,
1998 1998
(Unaudited) (Audited)
-------------- --------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 83,242,000 $ 52,366,900
Notes and accounts receivable,
less allowance for losses
of $6,852,200
and $5,648,700, respectively 85,650,900 86,998,500
Merchandise inventories 164,443,400 150,898,000
Prepaid expenses 2,813,200 5,216,200
Refundable and future income tax
benefits 6,227,800 6,227,800
-------------- --------------
Total Current Assets 342,377,300 301,707,400
-------------- --------------
OTHER ASSETS:
Notes receivable, less allowance
for losses of $5,299,000 12,192,900 11,604,600
Goodwill and other assets 10,362,700 13,696,700
Other real estate 4,659,400 7,152,500
Deferred income tax benefit 2,848,000 2,848,000
-------------- --------------
Total Other Assets 30,063,000 35,301,800
-------------- --------------
PROPERTY AND EQUIPMENT - Net 96,577,700 103,300,600
-------------- --------------
$469,018,000 $440,309,800
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of
long-term debt $ 10,158,200 $ 10,156,800
Accounts payable 165,594,700 155,001,500
Accrued expenses 60,049,500 50,148,300
Income taxes 4,614,100 2,327,100
-------------- --------------
Total Current Liabilities 240,416,500 217,633,700
LONG-TERM DEBT, LESS CURRENT
MATURITIES 82,235,500 83,457,800
OTHER LIABILITIES 17,056,300 16,758,000
-------------- --------------
Total Liabilities 339,708,300 317,849,500
-------------- --------------
REDEEMABLE CLASS B COMMON STOCK 8,120,800 6,375,300
-------------- --------------
STOCKHOLDERS' EQUITY:
Common Stock:
Voting (Class A) 15,800 15,800
Non-Voting (Class B) 1,329,000 1,346,600
-------------- --------------
Total Common Stock 1,344,800 1,362,400
Patronage dividends payable in
common stock 3,738,000
Additional paid-in capital 31,829,200 28,588,300
Reinvested earnings 89,146,100 83,527,500
-------------- --------------
Total 122,320,100 117,216,200
Less Treasury Stock, at cost 1,131,200 1,131,200
-------------- --------------
Total Stockholders' Equity 121,188,900 116,085,000
-------------- --------------
$469,018,000 $440,309,800
============== ==============
See Notes to Consolidated Financial Statements.
<TABLE>
<CAPTION>
ROUNDY'S, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED EARNINGS
FOR THE THIRTEEN WEEKS AND THIRTY-NINE WEEKS ENDED
October 3, 1998 AND September 27, 1997
(UNAUDITED)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
October 3, 1998 September 27, 1997 October 3, 1998 September 27, 1997
<S> <C> <C> <C> <C>
REVENUES:
Net sales and service fees... $ 635,075,500 $ 629,712,300 $ 1,903,789,200 $ 1,881,349,200
Other - net.................. 1,375,000 881,000 3,907,400 2,614,500
----------------- ----------------- ------------------ ------------------
636,450,500 630,593,300 1,907,696,600 1,883,963,700
----------------- ----------------- ------------------ ------------------
COSTS AND EXPENSES:
Cost of sales ............... 574,711,100 569,349,400 1,722,281,600 1,700,059,800
Operating and administrative. 53,967,300 53,327,100 162,513,900 160,852,500
Interest..................... 1,803,000 2,012,600 5,490,800 6,042,100
----------------- ----------------- ------------------ ------------------
630,481,400 624,689,100 1,890,286,300 1,866,954,400
----------------- ----------------- ------------------ ------------------
EARNINGS BEFORE INCOME TAXES. 5,969,100 5,904,200 17,410,300 17,009,300
PROVISION FOR INCOME TAXES .. 2,432,400 2,406,000 7,094,700 6,931,300
----------------- ----------------- ------------------ ------------------
NET EARNINGS................. $ 3,536,700 $ 3,498,200 $ 10,315,600 $ 10,078,000
================= ================= ================== ==================
See Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
ROUNDY'S, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE THIRTY-NINE WEEKS ENDED OCTOBER 3, 1998 AND SEPTEMBER 27, 1997
(UNAUDITED)
Thirty-nine Weeks Ended
October 3, 1998 September 27, 1997
------------------ --------------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings........................... $ 10,315,600 $ 10,078,000
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization........... 13,739,200 12,733,800
Allowance for losses.................... 1,533,200 1,601,800
(Gain) loss on sale of assets........... (198,700) 369,200
(Increase) decrease in Operating Assets
net of the Effects of Disposition
Accounts receivable..................... 7,077,200 7,449,400
Merchandise inventories................. (18,220,900) (3,297,900)
Prepaid expenses........................ 2,398,900 58,800
Other real estate....................... 2,493,100 (1,573,600)
Goodwill and other assets............... (79,100) (47,300)
Increase (decrease)in Operating Liabilities
net of the Effects of Disposition
Accounts payable........................ 10,597,900 4,502,100
Accrued expenses........................ 10,064,900 6,552,200
Income taxes............................ 2,287,000 4,365,200
Other liabilities....................... 298,300 90,700
------------------ -----------------
Net cash flows provided by operating
activities.............................. 42,306,600 42,882,400
------------------ -----------------
Cash Flows from Investing Activities:
Capital Expenditures................... (10,054,600) (12,405,300)
Proceeds from sale of property and
equipment and other Productive Assets.. 3,454,100 1,291,300
Payment for business acquisition net of
cash acquired......................... (7,885,700)
(Increase) decrease in notes receivable. (143,900) 872,900
------------------ -----------------
Net cash flows used in investing activities (6,744,400) (18,126,800)
Cash Flows from Financing Activities:
Principal payments of long-term debt.... (1,222,300) (1,216,700)
Increase (decrease) in current
maturities of long-term debt.......... 1,400 (71,700)
Proceeds from sale of common stock...... 1,315,000 814,100
Common stock purchased.................. (4,781,200) (2,351,600)
------------------ -----------------
Net cash flows used by financing
activities.............................. (4,687,100) (2,825,900)
------------------ -----------------
Net Increase in Cash and Cash
Equivalents............................. 30,875,100 21,929,700
Cash and Cash Equivalents,
Beginning of Period..................... 52,366,900 40,342,300
------------------ -----------------
Cash and Cash Equivalents, End of Period $ 83,242,000 $ 62,272,000
================== =================
Cash paid during the period: - Interest $ 4,509,100 $ 4,769,700
- Income Taxes 4,940,400 2,679,000
See Notes to Consolidated Financial Statements.
</TABLE>
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 October 3, 1998
and January 3, 1998, and the results of operations for the
thirteen and thirty-nine weeks ended October 3, 1998 and
September 27, 1997 and changes in cash flows for the thirty-
nine weeks ended October 3, 1998 and September 27, 1997.
2. The results of operations for the thirteen and thirty-
nine weeks ended October 3, 1998 and September 27, 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 October 3,
1998 and January 3, 1998, 77,823 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 statements No. 130 "Reporting Comprehensive Income"
and No. 131 "Disclosures about Segments of an Enterprise and
Related Information." These statements will become effective
in 1998. The Company is currently evaluating the impact of
adopting these new pronouncements.
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, the Company has
since lost that division's largest customer. The Company is
still evaluating the financial impact and the amount to be
recovered under its insurance policies. 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:
<TABLE>
<CAPTION>
Comparison of
13 Weeks Ended October 3, 1998 39 Weeks Ended October 3, 1998
and September 27, 1997 and September 27, 1997
Increase/<Decrease> Increase/<Decrease>
------------------------------ ------------------------------
<S> <C> <C> <C> <C>
Net sales and service fees $5,363,200 0.9% $22,440,000 1.2%
Cost of sales 5,361,700 0.9% 22,221,800 1.3%
Operating and admin. expenses 640,200 1.2% 1,661,400 1.0%
Interest expense (209,600) (10.4)% (551,300) (9.1)%
Earnings before income taxes 64,900 1.1% 401,000 2.4%
</TABLE>
Net sales and service fees increased approximately $5.4 million during the
third quarter of 1998 as compared to the third quarter of 1997. The loss of
wholesale customers resulted in a decrease of approximately $21.8 million.
The closing or sale of seven Company-owned stores resulted in a decrease of
approximately $4.3 million. New Company-owned stores resulted in an increase
of approximately $1.5 million. Sales by existing Company-owned stores
increased $1.2 million. Sales to new and existing wholesale customers
increased $28.8 million.
Net sales and service fees increased approximately $22.4 million during the
first three quarters of 1998 as compared to the first three quarters of 1997.
The loss of wholesale customers resulted in a decrease of approximately $49.0
million. The closing or sale of thirteen Company-owned stores resulted in a
decrease of approximately $15.6 million. New Company-owned stores resulted
in an increase of approximately $15.6 million. Sales by existing Company-
owned stores increased $1.6 million. Sales to new and existing wholesale
customers increased $69.8 million.
Cost of sales approximated 90.5% and 90.4% of net sales and service fees for
both the thirteen weeks and thirty-nine ended October 3, 1997 and September
27, 1997, respectively.
Operating and administrative expenses approximated 8.5% of net sales and
service fees for the thirteen weeks ended October 3, 1998 and September 27,
1997. Year-to-date operating and administrative expenses approximated 8.5%
and 8.6% of net sales and service fees for the thirty-nine weeks ended
October 3, 1998 and September 27, 1997, respectively.
Interest expense decreased primarily as a result of lower borrowing levels
during the quarter ended October 3, 1998 as compared to the quarter ended
September 27, 1997.
No patronage dividends have been accrued as of October 3, 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 October 3, 1998. The consolidated long-term debt to equity ratio
has decreased from 0.68:1 at January 3, 1998 to 0.64:1 at October 3, 1998,
primarily due to increased equity levels.
Stockholders' equity, including redeemable common stock, increased
approximately $6.8 million due to reinvested earnings of $10.3 million and
proceeds from the sale of common stock of $1.3 million offset by common stock
purchases of $4.8 million.
YEAR 2000
Many computer software applications, hardware and equipment and embedded
chip systems identify dates using only the last two digits of the year or
contain inherent date limitations in their programming language. These
products may be unable to properly recognize or handle dates before, in or
after the Year 2000, causing the applications, equipment or systems to fail
or produce incorrect information. These potential problems are commonly
referred to as "Year 2000 Issues."
The Company relies primarily on computerized systems for procurement,
inventory control, sale and distribution of its products. The Company also
uses a number of computer software programs, operating systems, and types of
equipment with computer chips in its internal operations, including its
financial and business systems, its distribution/warehouse, procurement and
control systems and administrative functions. To the extent that these items
contain source code or computer chips that are unable to correctly handle the
Year 2000 Issue, some level of modification or possible replacement will be
necessary.
State of Readiness
The Company has developed comprehensive plans to address the possible
impact of the Year 2000 Issue on operations throughout its divisions. A Year
2000 Team has been organized to coordinate activities necessary to assure
that key automated systems and related processes will remain functional
through the year 2000. Progress is being monitored and reported to
management and to the Board of Directors on a periodic basis.
The Company's efforts to address the year 2000 Issue can be grouped into
three major categories: information technology ("IT") systems; Non-IT
systems; and third party relationships. Within each category there are
generally four phases: (i) assessment of the extent of potential Year 2000
Issues and risk exposures, as well as contingency planning; (ii) remediation
or replacement of non-compliant software or equipment; (iii) testing of
remediated or replaced software or equipment; and (iv) implementation of
fully tested compliant systems.
IT Systems. The Company has identified three IT systems it considers
most critical to its operations: (a) procurement, including electronic data
interchange ("EDI") systems with product suppliers; (b) warehouse management,
order processing and distribution systems; and (c) general control systems
(which include financial reporting, billing and collection, and other
administrative systems). The Company operates through several divisions,
some of which are farther along than others in addressing Year 2000 Issues.
While in certain instances the Company may rely extensively upon
representations of software vendors as to Year 2000 compliance, the Company
has generally adopted an approach of thoroughly testing critical IT systems
(using internal and external resources) in order to satisfy itself as to Year
2000 compliance.
Non-IT Systems. The Company is in the process of reviewing all of its
communication systems (phone and data transmission systems) fax machines,
photocopiers, postage machines, elevators, HVAC systems, security systems and
other Non-IT systems for purposes of determining whether Year 2000 Issues
exist. When available, written certifications of Year 2000 compliance for
these systems will be obtained. The Company's operations are, in part,
dependent upon embedded microprocessors in equipment used to physically sort,
store, and move inventory.
Status and Targeted Completion Date of IT and Non-IT System Activities.
In general, on an enterprise-wide basis, as of October 3, 1998, the Company
has completed the approximate percentages of its expected Year 2000
activities for its systems set forth in the following table. These
percentages are management's estimates derived largely from the percentage of
anticipated expenditures that has been spent through October 3, 1998. The
table also shows the targeted date for the substantial completion of each
Year 2000 activity:
<TABLE>
<CAPTION>
Assessment Remediation Testing Implementation
--------------------------- --------------------------- ---------------------------- ---------------------------
System Percent Target Completion Percent Target Completion Percent Target Completion Percent Target Completion
Complete Date Complete Date Complete Date Complete Date
-------- ----------------- -------- ----------------- -------- ----------------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IT Systems:
Procurement 100% - 100% - 95% 12/98 30% 1/99
Warehouse/
Distribution 95% 12/98 80% 2/99 80% 3/99 80% 4/99
Control
Systems 100% - 85% 12/98 90% 2/99 80% 3/99
Non-IT
System:
Office
Systems 100% - 100% - 95% 12/98 95% 1/99
Facilities 100% - 100% - 100% - 100% -
Other Non-
IT Systems 60% 11/98 n/a - n/a - 60% 3/99
</TABLE>
Third Party Relationships. The Year 2000 Issue can have an impact on
the Company's ability to receive accurate and timely deliveries from its
suppliers. Efforts are being made to contact all suppliers and service
providers and coordinate appropriate measures necessary to assure the
continuation of product deliveries and services. However, because there is a
range of alternative suppliers for essentially comparable products, which the
Company believes will reduce the impact of any disruptions in its procurement
systems, the Company is initially concentrating on solving potential problems
in its critical distribution network to its customers. The Company is
encouraging and assisting its customers in their assessment of Year 2000
Issues in order to help them avoid or minimize disruptions at the customer
level which would adversely impact the Company's ability to distribute its
products.
Overall Risk Assessment and Contingency Planning. The Company's
business depends upon its ability to deliver inventory to its customers in a
timely fashion. The Company believes that the most reasonable likely worst
case scenario associated with the Year 2000 Issue is if, as a result of
disruptions or malfunctions, the Company is unable to process and deliver
customer orders consistent with the time-sensitive nature of this process.
The extent of such potential impact cannot be determined with reliability at
this time due, in large part, to the lack of comprehensive information as to
the Year 2000 readiness of the Company's business partners (which the Company
is attempting to assemble). The Company is developing contingency plans
designed to minimize the risk of such disruptions. These contingency plans
include the development of backup procedures, identification of alternate
suppliers, and the establishment of processes designed to provide the Company
with adequate inventory and timely distribution to meet the needs of its
customers. The Company is working with key suppliers and customers to
develop action and contingency plans designed to achieve a timely and
accurate flow of inventory. These plans are expected to be in place
approximately March 1999.
Contingency plans for internal operating systems are expected to be in
place by June 1999.
Costs to Address the Year 2000 Issue
The Company estimates total costs to be incurred to address the
Year 2000 Issue will be approximately $8.8 million, of which approximately
$2.8 million had been spent as of October 3, 1998. Of the total cost,
approximately $6.9 million (78%) will be spent on remediation and testing,
and approximately $1.3 million (15%) will be spent to upgrade packaged
software applications. Incremental costs, including the costs of third-party
contractors to modify existing systems and internal costs, are expensed as
incurred, with the funds coming from the Company's general operations, and
are included in Other Operating and Administrative Expense.
The Company has deferred certain IT projects as a result of its focus on
Year 2000 issues; however, the deferrals are not expected to have a material
impact on the Company's business or financial condition.
General
The Company believes it is taking reasonable steps which, when fully
implemented, will prevent major business interruptions and will minimize the
Company's risk of exposure to liability to third parties due to the Year 2000
Issue. There can be no assurance, however, that the Company will be
successful in its efforts. Further, the costs of the Company's efforts to
address the Year 2000 Issue and the dates on which the Company believes it
will complete the projects described above are based upon management's best
estimates. There also can be no assurance that these estimates will prove to
be accurate, and the actual cost and progress on these projects could differ
materially from those currently anticipated. The reasonableness of the
Company's efforts, and the project time lines and budgets, were derived based
on information the Company believes to be reliable and by making numerous
assumptions regarding future events. Specific factors that could cause
actual results to differ include, but are not limited to, (i) the Company's
ability to assess, remediate, test and implement all relevant computer
hardware and software and embedded technology, (ii) the Company's reliance on
third-party assurances and the variability of definitions of "Year 2000
compliance" which may be used by such third parties, and (iii) the adequacy
of the Company's contingency plans, which are dependent in part upon the
involvement and cooperation of third-parties over whom the Company has no
control, and similar uncertainties.
II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.6 1991 Stock Incentive Plan, as amended June 3, 1998.
10.7 Form of Stock Appreciation Rights Agreement for certain
executive officers including Beketic, Sullivan and Schmitt.
10.8 Amendment to Severance and Non-Competition Agreement
between the Registrant and Gerald F. Lestina.
10.9 Form of Second Amendment to Deferred Compensation
Agreement for certain executive officers including Ranus,
Beketic, Sullivan and Schmitt.
(b) Reports on Form 8-K -- There were no reports on Form 8-K filed
for the thirteen weeks ended October 3, 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: November 10, 1998 ROBERT D. RANUS
----------------
Robert D. Ranus
Vice President and
Chief Financial Officer
(Principal Financial Officer)
EXHIBIT 10.6
ROUNDY'S, INC,
1991 STOCK INCENTIVE PLAN
Effective November 1, 1991
(Revised February 9, 1993)
(Amended June 3, 1998)
ROUNDY'S, INC.
1991 STOCK INCENTIVE PLAN
Effective November 1, 1991
(Revised February 9, 1993)
TABLE OF CONTENTS
SECTION 1. DEFINITIONS PAGE
1.1 Affiliate 1-1
1.2 Agreement 1-1
1.3 Base Price 1-1
1.4 Board 1-1
1.5 Book Value 1-1
1.6 Change in Control 1-1
1.7 Code 1-2
1.8 Committee 1-2
1.9 Company 1-2
1.10 Company Stock 1-2
1.11 Director 1-2
1.12 Eligible Employee 1-2
1.13 Exercise Period 1-2
1.14 Fair Market Value 1-3
1.15 Grantee 1-3
1.16 Option 1-3
1.17 Option Price 1-3
1.18 Person 1-3
1.19 Plan 1-3
1.20 SAR 1-3
1.21 Subsidiary 1-3
1.22 Vesting Interval 1-3
1.23 Vesting Rate 1-4
SECTION 2. PARTICIPATION
2.01 Purpose 2-1
2.02 Eligibility 2-1
2.03 No Employment Rights 2-1
SECTION 3. COMMITTEE
3.01 Administration 3-1
3.02 Authority of Committee 3-1
Table of Contents
(cont'd.)
SECTION 4. TERMS OF OPTIONS Page
4.01 General 4-1
4.02 Option Price 4-1
4.03 Period for Exercise 4-1
4.04 Exercise of Option 4-3
4.05 Date Option Granted 4-3
SECTION 5. TERMS OF SARS
5.01 General 5-1
5.02 Base Price 5-1
5.03 Period for Exercise 5-1
5.04 Exercise of SAR 5-2
5.05 Date SAR Granted 5-3
SECTION 6. COMPANY STOCK
6.01 Number of Shares Subject to Options 6-1
6.02 Maximum Number of SARs 6-1
6.03 Effect of Stock Dividends, Merger, etc. 6-1
SECTION 7. GENERAL
7.01 Government and Other Regulations 7-1
7.02 Nontransferability 7-1
7.03 General Restriction 7-1
7.04 No Rights as Stockholder 7-1
7.05 Effective Date and Duration of Plan 7-2
7.06 Amendments 7-2
7.07 Construction 7-2
SECTION 1
DEFINITIONS
1.1 "Affiliate" shall mean:
(a) any Person who directly or indirectly controls, is
controlled by or is under common control with another Person;
(b) any Person who owns (of record or beneficially) or
controls ten percent (10%) or more of the outstanding voting
securities of another Person;
(c) any Person who is an officer, director or partner
of another Person; or
(d) any corporation or partnership of which another
Person is an officer, director or partner.
1.2 "Agreement" shall mean the written agreement entered
into by and between the Company and a Grantee pursuant to which
the Grantee is granted an Option or a SAR.
1.3 "Base Price" shall mean the price per share of Company
Stock from which the amount payable upon exercise of a SAR, under
Section 5.04 hereof, is measured.
1.4 "Board" shall mean the Board of Directors of the
Company.
1.5 "Book Value" shall mean the book value of a share of
Company Stock as determined from the books and records of the
Company in accordance with generally accepted accounting
principles applied on a consistent basis as determined by the
independent certified accountants of the Company who audit the
Company's financial statements.
1.6 "Change in Control" shall mean the occurrence of:
(a) a sale, assignment or transfer by the Company of
all, or substantially all, of its operating assets or business in
a single transaction, or a series of related transactions, except
any sales, assignments or transfers to Affiliates of the Company;
(b) the merger, consolidation or reorganization of the
Company with or into any other corporation or corporations, other
than Affiliates of the Company, or other similar business
combination or reorganization; or
(c) the acquisition, by any Person or group of Persons
acting in concert, other than Affiliates of the Company, directly
or indirectly, of Company Stock which, when added to other shares
of Company Stock held by such Person or group of Persons, results
in such Person or group of Persons holding a majority of the
issued and outstanding shares of any class of the common stock of
the Company.
1.7 "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any successor or substitute
statute.
1.8 "Committee" shall mean the Executive Compensation
Committee of the Board which shall consist of three (3) Directors
who are not employees or officers of the Company plus the
Company's chief executive officer (who shall be a non-voting
member of the Committee).
1.9 "Company" shall mean Roundy's, Inc., a Wisconsin
corporation.
1.10 "Company Stock" shall mean the Class B Common Stock of
the Company of the par value of $1.25 per share and such other
stock and securities as may be substituted therefor pursuant to
Section 6.03.
1.11 "Director" shall mean a member of the Board.
1.12 "Eligible Employee" shall mean any senior executive or
key employee of the Company or a Subsidiary who satisfies all of
the requirements of Section 2.02 and is not excluded under
Section 3.01.
1.13 "Exercise Period" shall mean the period of time
provided pursuant to Section 4.03 and Section 5.03 within which
an Option or a SAR, respectively, may be exercised.
1.14 "Fair Market Value" shall mean as of a particular date
(the "Determination Date") the highest price per share (in money
or money's worth) (hereinafter "Trading Price") at which any
share of Company Stock is purchased or otherwise acquired (or
into which any share of Company Stock is converted or for which
it is exchanged) in a bona fide, arms length transaction between
unrelated parties, during the twelve-month period ending on (and
including) the Determination Date.
1.15"Grantee" shall mean any person who is granted an
Option or a SAR under the Plan.
1.16"Option" shall mean an Option granted under this Plan,
which shall be a nonstatutory stock option pursuant to the Code.
1.17"Option Price" shall mean the price at which each share
of Company Stock covered by an Option may be purchased.
1.18"Person" shall mean an individual, firm, partnership,
corporation, trust, pension plan or other entity.
1.19"Plan" shall mean the Roundy's, Inc. 1991 Stock
Incentive Plan, as may be amended from time to time.
1.20 "SAR" shall mean a Stock Appreciation Right granted
under this Plan.
1.21"Subsidiary" shall mean any corporation, now or
hereafter in existence, in which the Company owns, directly or
indirectly, a voting stock interest of more than fifty percent
(50%).
1.22 "Vesting Interval" shall mean the time period provided
for under any Agreement between the respective dates on which
each incremental amount of the total number of Options or SARs
granted under said Agreement becomes exercisable.
1.23 "Vesting Rate" shall mean the percentage of the total
number of Options or SARs under any Agreement which becomes
exercisable in each Vesting Interval.
SECTION 2
PARTICIPATION
2.01 Purpose. The purpose of the Plan is to further the
growth and success of the Company by providing senior executives
and key employees with additional incentive to contribute to such
growth and success and by aiding the Company in attracting and
retaining senior executives and key employees.
2.02 Eligibility.
(a) Senior executives and key employees of the Company
and its Subsidiaries (including officers and employees who may be
Directors) who, in the sole opinion of the Committee, upon the
recommendation of the President and Chief Executive Officer of
the Company, contribute significantly to the growth and success
of the Company or a Subsidiary shall be eligible for Options.
(b) Key employees of the Company and its Subsidiaries
(including officers and employees who may be Directors) who, in
the sole opinion of the Committee, upon the recommendation of the
President and Chief Executive Officer of the Company, contribute
significantly to the growth and success of the Company or a
Subsidiary shall be eligible for SARs.
(c) From among all such Eligible Employees, the
Committee shall determine from time to time those Eligible
Employees to whom Options and SARs shall be granted. No Eligible
Employee shall have any right whatsoever to receive Options or
SARs unless so determined by the Committee.
2.03 No Employment Rights. The Plan shall not be construed
as conferring any rights upon any individual for a continuation
of employment, nor shall it interfere with the rights of the
Company or any Subsidiary to terminate the employment of any
individual or to take any other action affecting such individual.
SECTION 3
COMMITTEE
3.01 Administration. The Plan shall be administered by the
Committee. The Committee shall hold meetings upon such notice
and at such place or places, and at such time or times as it may
from time to time determine. A majority of the members of the
Committee at the time in office shall constitute a quorum for the
transaction of business, and the acts of a majority of the
members participating in any meeting at which a quorum is present
shall be the acts of the Committee. The Committee may act
without a meeting if a consent in writing setting forth the
action so taken shall be signed by all of the members of the
Committee and filed with the minutes of the Committee. Members
of the Committee who are not employees of the Company or a
Subsidiary shall not be Eligible Employees.
3.02 Authority of Committee. Subject to the provisions of
the Plan, the Committee shall have full, complete and final
authority to determine:
(a) the persons to whom Options and SARs shall be
granted;
(b) the number of shares to be included in each Option
and SAR;
(c) the price at which the shares included in each
Option may be purchased;
(d) the date or dates on which Options and SARs are
granted;
(e) the period or periods of time within which each
Option and SAR may be exercised;
(f) the Vesting Rates and Vesting Intervals under any
Agreement; and
(g) any other terms or provisions of any Agreement
which the Committee in its discretion deems appropriate.
The Committee is empowered, in its discretion, (i) to modify
or renew or extend the term of any Option and SAR theretofore
granted, subject to the limitations set forth in Sections 4 and
5, respectively, (ii) to adopt, amend and rescind such rules and
regulations and take such other action as it shall deem necessary
or proper for the administration of the Plan, (iii) to authorize
any person to execute on behalf of the Company any instrument
required to effectuate the grant of an Option or a SAR previously
granted by the Committee, (iv) to shorten the Exercise Period for
any Option or any SAR theretofore granted, and (v) to accelerate
the vesting of any Option or any SAR theretofore granted;
provided, however, that any such discretionary acceleration may
occur with respect to any Agreement only once in any single
Vesting Interval, and no such discretionary acceleration may
increase the vesting Rate for any Vesting Interval under any
Agreement to a rate which is more than the greater of (x) 40% or
(y) twice the Vesting Rate in effect under such Agreement for
such Vesting Interval immediately prior to such acceleration; and
provided further, however, that the limitations contained in the
preceding proviso shall not apply to preclude the Committee from
accelerating the vesting of any Option or SAR upon the occurrence
of a Change In Control, nor shall they apply to any acceleration
of vesting which occurs pursuant to the express provisions of any
Agreement. The Committee shall also have full and complete
discretionary authority to interpret the Plan, and the decision
of the Committee on any questions concerning the interpretation
and administration of the Plan shall be final, conclusive and
binding on all Grantees and any other holders of any Options and
SARs granted under the Plan. The Committee may consult with
counsel, who may be counsel for the Company, and shall not incur
any liability for any action taken in good faith in reliance upon
the advice of counsel.
SECTION 4
TERMS OF OPTIONS
4.01 General. Each Option shall be evidenced by an
Agreement between the Company and the Grantee which shall be
subject to applicable provisions of the Plan and shall contain
the terms and conditions required by this Section 4, and such
other terms and conditions, not inconsistent herewith, as the
Committee may deem appropriate in each case.
4.02 Option Price. The price at which each share of Company
Stock covered by an Option may be purchased shall be equal to one
hundred percent (100%) of the Book Value of the Company Stock as
of the last day of the Company's fiscal year immediately
preceding the date the Option is granted.
4.03 Period for Exercise. Each Stock Option Agreement shall
state the period or periods of time within which the Option may
be exercised by the Grantee, in whole or in part, which shall be
such period or periods of time as may be determined in each case
by the Committee, provided that:
(a) The Exercise Period of any Option may not extend
beyond a date which is ten (10) years from the date on which the
Option is granted;
(b) Notwithstanding the specified Exercise Period of
any Option, if the Grantee's employment by the Company and its
Subsidiaries is terminated within the Exercise Period for any
reason other than for "cause" [as defined in Section 4.03(c)] or
death, the Exercise Period for any Option which is exercisable as
of the date of termination shall expire on the earlier of its
specified expiration date or a date which is ninety (90) days
following the date of such termination;
(c) Notwithstanding the specified Exercise Period of
any Option, if the Grantee's employment by the Company and its
Subsidiaries is terminated within the Exercise Period and the
Committee finds that there exists "cause" for such termination,
the Exercise Period for any Option held by the Grantee shall
expire on the date of such termination of employment. For
purposes of this Section 4.03(c), the term "cause" shall mean the
commission by Grantee of an act of fraud, dishonesty or moral
turpitude involving the Company, any material breach by the
Grantee of the Company's Code of Business Ethics and Conduct
Policy as the same may be in effect from time to time, disloyalty
to the Company's best interests, or the Grantee's commission
(whether or not he or she is charged or convicted) of any act
which would constitute, under any federal or state law, a crime
carrying a maximum penalty of at least one year incarceration or
a fine or forfeiture of at least $5,000; and
(d) Notwithstanding the specified Exercise Period of
any Option, if the Grantee dies during the Exercise Period while
in the employ of the Company or a Subsidiary, the Exercise Period
for any Option exercisable as of the date of death shall expire
on the earlier of its specified expiration date or on 12:00
midnight on a date which is one year after the date of such
death. Such Option may be exercised by the person or persons
entitled to do so under the Grantee's last will and testament, by
the Grantee's executor or personal representative, or, if the
Grantee shall fail to make testamentary disposition of his or her
Option or shall die intestate, by the person or persons entitled
to receive the Option under applicable intestacy laws.
(e) Notwithstanding the provisions of the preceding
paragraphs (a) through (d) of this Section 4.03, a Stock Option
Agreement may provide for Exercise Periods extending beyond the
limits specified in the preceding paragraphs (a) through (d) if
such Stock Option Agreement is approved by the Board, by the
affirmative vote of a majority of the Directors who are not
parties to such Stock Option Agreement.
4.04 Exercise of Option. Subject to Section 4.03, each
Option may be exercised in whole or in part (but only with
respect to whole shares) from time to time as specified in the
Agreement. Each Grantee may exercise an Option by giving written
notice of the exercise to the Company, specifying the number of
shares of Company Stock to be purchased, accompanied by payment
in full of the purchase price therefor, plus, if required, an
amount equal to all applicable withholding taxes. The purchase
price may be paid in cash, by check, or, with the approval of the
Committee, in shares of Company Stock having, at the time the
Option is exercised, an aggregate Fair Market Value equal to the
purchase price of the shares acquired pursuant to the exercise of
the Option, or a combination thereof. For purposes of this
Section 4.04, an Option shall be considered to be exercised on
the date notice of exercise and payment of the purchase price is
personally delivered or deposited in the United States mail,
first class, postage prepaid, addressed to the Company at its
then current corporate headquarters. No Grantee shall be under
any obligation to exercise any Option granted hereunder. The
Grantee may exercise or not exercise the Option in his or her
sole discretion.
4.05 Date Option Granted. For purposes of the Plan, an
Option shall be considered as having been granted on the date on
which the Committee authorized the grant of the Option, except
where the Committee has designated a later date, in which event
the later date shall constitute the date of grant of the Option;
provided, however, that in either case notice of the grant of the
Option shall be given to the Grantee within a reasonable time.
SECTION 5
TERMS OF SARS
5.01 General. Each SAR shall be evidenced by an Agreement
between the Company and the Grantee which shall be subject to
applicable provisions of the Plan and shall contain the terms and
conditions required by this Section 5, and such other terms and
conditions, not inconsistent herewith, as the Committee may deem
appropriate in each case.
5.02 Base Price. The Base Price of a SAR shall be equal to
one hundred percent (100%) of the Book Value of one share of
Company Stock as of the last day of the Company's fiscal year
immediately preceding the date the SAR is granted.
5.03 Period for Exercise. Each Agreement shall state the
period or periods of time within which the SAR may be exercised
by the Grantee, in whole or in part, which shall be such period
or periods of time as may be determined in each case by the
Committee, provided that:
(a) The Exercise Period of any SAR may not extend
beyond a date which is fifteen (15) years from the date on which
the SAR is granted;
(b) Notwithstanding the specified Exercise Period of
any SAR, if the Grantee's employment by the Company and its
Subsidiaries is terminated within the Exercise Period for any
reason other than for "cause" [as defined in Section 5.03(c)] or
death, the Exercise Period for any SAR which is exercisable as of
the date of termination shall expire on the earlier of the
specified expiration date or a date which is ninety (90) days
following the date of such termination;
(c) Notwithstanding the specified Exercise Period of
any SAR, if the Grantee's employment by the Company and its
Subsidiaries is terminated within the Exercise Period and the
Committee finds that there exists "cause" for such termination,
the Exercise Period for any SAR held by the Grantee shall expire
on the date of such termination of employment. For purposes of
this Section 5.03(c), the term "cause" shall mean the commission
by Grantee of an act of fraud, dishonesty or moral turpitude
involving the Company, any material breach by the Grantee of the
Company's Code of Business Ethics and Conduct Policy as the same
may be in effect from time to time, disloyalty to the Company's
best interests, or the Grantee's commission (whether or not he or
she is charged or convicted) of any act which would constitute,
under any federal or state law, a crime carrying a maximum
penalty of at least one year incarceration or a fine or
forfeiture of at least $5, 000; and
(d) Notwithstanding the specified Exercise Period of
any SAR, if the Grantee dies during the Exercise Period while in
the employ of the Company or a Subsidiary, the Exercise Period of
any SAR exercisable as of the date of death shall expire on the
earlier of the specified expiration date or 12: 00 midnight on a
date which is one year after the date of such death. Such SAR
may be exercised by the person or persons entitled to do so under
the Grantee's last will and testament, by the Grantee's executor
or personal representative, or, if the Grantee shall fail to make
testamentary disposition of his or her SAR or shall die
intestate, by the person or persons entitled to receive the SAR
under applicable intestacy laws.
5.04 Exercise of SAR. Subject to Section 5.03, each SAR may
be exercised in whole or in part (but only with respect to whole
shares) from time to time as specified in the Agreement. Each
Grantee may exercise a SAR by giving written notice of the
exercise to the Company, specifying the number of SARs which are
being exercised. Upon exercise of the SAR, the Grantee shall be
paid an amount equal to the difference between (i) the Fair
Market Value per share of the Company Stock as of the date on
which the SAR is exercised and (ii) the Base Price less, if
required, any applicable withholding taxes. For purposes of this
Section 5.04, a SAR shall be considered to be exercised on the
date notice of exercise is personally delivered or deposited in
the United States mail, first class, postage prepaid, addressed
to the Company at its then current corporate headquarters. No
Grantee shall be under any obligation to exercise any SAR granted
hereunder. The Grantee may exercise or not exercise a SAR in his
or her sole discretion.
5.05 Date SAR Granted. For purposes of the Plan, a SAR
shall be considered as having been granted on the date on which
the Committee authorized the grant of the SAR, except where the
Committee has designated a later date, in which event the later
date shall constitute the date of grant of the SAR; provided,
however, that in either case notice of the grant of the SAR shall
be given to the Grantee within a reasonable time.
SECTION 6
COMPANY STOCK
6.01 Number of Shares Subject to Options. The aggregate
number of shares of Company Stock that may be sold or delivered
under the Plan as Options shall not exceed Seventy Five Thousand
(75,000) shares. Shares of Company Stock sold or delivered under
the Plan may be authorized but unissued shares, shares reacquired
by the Company, or a combination of both, as the Committee may
from time to time determine. Shares of Company Stock not
purchased under any Option granted under the Plan which are no
longer available for purchase thereunder by virtue of the total
or partial expiration, termination or voluntary surrender of the
Option shall continue to be otherwise available for the purposes
of the Plan.
6.02 Maximum Number of SARs. The aggregate number of SARs
that may be issued or granted under the Plan shall not exceed the
equivalent of Twenty Five Thousand (25,000) shares of Company
Stock. SARs not exercised under the Plan which are no longer
available for exercise by virtue of the total or partial
expiration, termination or voluntary surrender of the SAR shall
continue to be otherwise available for the purposes of the Plan.
6.03 Effect of Stock Dividends, Merger, etc. In the event
of any merger, consolidation, share exchange, split-up or
combination involving the Company, if any stock dividend is
declared upon the Company Stock, or if there is any stock split,
stock distribution, or other recapitalization of the Company with
respect to its Company Stock, resulting in a split-up or
combination or exchange of shares, the aggregate number and kind
of shares which may thereafter be offered under the Plan, the
kind of shares then subject to Options granted and the per share
Option Price and the number of then issued SARs therefor shall be
proportionately and appropriately adjusted, without (in the case
of Options) any change in the aggregate Option Price, all as the
Committee may deem appropriate. If pursuant to any such
transaction shares of Company Stock outstanding are exchanged for
or converted into shares of stock or other equity securities of
any other corporation or entity, all outstanding Options shall
thereupon be converted into options to purchase, and all SARs
shall thereupon be deemed to represent, a proportionate number of
shares of the stock or other equity securities of such other
corporation or entity into which Company Stock is thereby
converted or exchanged, without (in the case of Options) any
change in the aggregate Option Price, all as the Committee may
deem appropriate.
SECTION 7
GENERAL
7.01 Government and Other Regulations. The obligation of
the Company to issue osr transfer and deliver shares for Options
exercised under the Plan shall be subject to all applicable laws,
regulations, rules, orders and approval which shall then be in
effect and required by governmental entities.
7.02 Nontransferability. No Option or SAR shall be
transferable or assignable by the Grantee except by last will and
testament or the laws of descent and distribution. During the
Grantee's lifetime, Options and SARs shall be exercisable only by
the Grantee or by the Grantee's guardian or legal representative.
7.03 General Restriction. Each Option shall be subject to
the requirement that if at any time the Board or the Committee
shall determine, in its discretion, that the listing,
registration, or qualification of securities upon any securities
exchange or under any state or federal law, or the consent or
approval of any government regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting
of such Option or the issue or purchase of securities thereunder,
such Option may not be exercised in whole or in part unless such
listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not
acceptable to the Board or the Committee.
7.04 No Rights as Stockholder. The holder of an Option
shall not have any rights of a stockholder of the Company with
respect to the shares of Company Stock subject to the Option
until such shares of Company Stock shall have been delivered to
him or her. The holder of a SAR shall not have any rights of a
stockholder of the Company.
7.05 Effective Date and Duration of Plan. The Plan shall
become effective November 1, 1991. No Options and no SARs shall
be granted under the Plan after November 30, 2001.
7.06 Amendments. The Board may from time to time amend,
modify, suspend or terminate the Plan; provided, however, that no
such action shall (a) impair without the Grantee's consent any
Option or SAR theretofore granted under the Plan or deprive any
Grantee of any shares of Company Stock which he or she may have
acquired through or as a result of the Plan, or (b) in the event
the Plan has been approved by the shareholders of the Company, be
made without Company shareholder approval where such change would
(i) materially increase the benefits accruing to participants
under the Plan, (ii) increase the total number of shares of
Common Stock that may be subject to Option or SARs under the Plan
(other than as provided in Section 6.02), (iii) decrease the
percentage relationship which must exist between the Option Price
and the Book Value of the Company Stock as provided under Section
4.02, or (iv) alter the class of employees who are eligible to be
granted Options and SARs pursuant to the provisions of Section
2.02.
7.07 Construction. Except as otherwise required by
applicable federal laws, the Plan shall be governed by, and
construed in accordance with, the laws of the State of Wisconsin.
EXHIBIT 10.7
FORM OF STOCK APPRECIATION RIGHTS AGREEMENT
THIS AMENDMENT is made this 3rd day of June, 1998, between
ROUNDY'S, INC., a Wisconsin corporation ("Roundy's") and
[EMPLOYEE NAME] ("Employee").
RECITALS:
1. The Employee and Roundy's are parties to certain "Stock
Appreciation Rights Agreements" dated as of [agreement dates]
(the "Existing Agreements"), entered into pursuant to the
Company's 1991 Stock Incentive Plan (the "Plan").
2. The Parties desire to amend the Existing Agreements, in the
manner set forth herein, to conform the Existing Agreements to
certain amendments made by Roundy's to the Plan.
AGREEMENT:
Therefore, in consideration of the premises and the
Employee's continued employment with Roundy's, Roundy's and the
Employee hereby agree as follows:
1. Amendment of Existing Agreements.
(A) Clause (a) of Section 7 of each of the Existing
Agreements is deleted and replaced with the following:
". . . (a) the Fair Market Value per share of the
Company Stock as of the date on which the SAR is
exercised and . . ."
(B) The Expiration Date of each of the respective Existing
Agreements, as set forth on Page 1 thereof, is extended to a date
five (5) years after the Expiration Date originally specified in
such Existing Agreement.
2. Agreements Otherwise Remain in Effect. Except as
expressly set forth above, the Existing Agreements remain in
force and effect in accordance with their original terms.
IN WITNESS WHEREOF, the parties have executed this
Amendment, as of the date first written above.
ROUNDY'S, INC.
By:
Gerald F. Lestina, President & CEO
Attest:
*, Employee Edward G. Kitz, Vice Pres., Secy. & Treas.
EXHIBIT 10.8
AMENDMENT TO SEVERANCE AND NON-COMPETITION AGREEMENT
THIS AMENDMENT is made this 3rd day of June, 1998, between
ROUNDY'S, INC., a Wisconsin corporation ("Roundy's") and Gerald F.
Lestina ("Mr. Lestina").
RECITALS:
1. Mr. Lestina and Roundy's are parties to a "Severance and Non-
Competition Agreement" dated as of April 13, 1998 (the
"Existing Agreement").
2. The Parties desire to amend the Existing Agreement, in the
manner set forth herein.
AGREEMENT:
Therefore, in consideration of the premises and Mr. Lestina's
continued employment with Roundy's, Roundy's and Mr. Lestina hereby
agree as follows:
1. Amendment of Existing Agreement. Section 4(d) of the
Existing Agreement is renumbered subsection 4(d)(i), and a new
subsection 4(d)(ii) is inserted to read as follows:
"(ii) Notwithstanding anything contained in the
preceding subsection 4(d)(ii) or elsewhere in this
Agreement, in the event any payments or other benefits
otherwise receivable by Mr. Lestina hereunder are
determined to be "parachute payments" (as hereinafter
defined), under no circumstances shall the Severance
Benefit exceed the "Maximum Amount" (as hereinafter
defined). The "Maximum Amount" for this purpose means a
dollar amount equal to (i) three (3) times Mr. Lestina's
"base amount" (as hereinafter defined), minus (ii) all
other amounts constituting parachute payments received or
receivable by Mr. Lestina in respect of the same Change
of Control, minus (iii) one dollar. The terms "parachute
payment" and "base amount" shall have the meanings given
them in Section 280G of the Internal Revenue Code of
1986, as amended from time to time (or the corresponding
provisions of any future tax laws that may be enacted in
substitution for or in place of said section) and the
Treasury Regulations and other interpretations of said
Section in existence from time to time, except that
"parachute payment" shall be defined without reference to
clause (ii) of subparagraph 280G(b)(2)(A). In the event
of any dispute between Mr. Lestina and Roundy's with
respect to the interpretation and effect of this
subsection 4(d)(ii) (including, without limitation, the
calculation of Mr. Lestina's base amount or the total
amount of parachute payments received or receivable by
Mr. Lestina), the matter shall be submitted for a
determination by Roundy's outside certified public
accountants, which determination shall be final and
binding on the parties."
2. Agreement Otherwise Remains in Effect. Except as
expressly set forth above, the Existing Agreement remains in force
and effect in accordance with its original terms.
IN WITNESS WHEREOF, the parties have executed this Amendment,
as of the date first written above.
ROUNDY'S, INC.
By: ROBERT D. RANUS
Its: VICE PRESIDENT
GERALD F. LESTINA
__________________________________
Gerald F. Lestina
EDWARD G. KITZ
Attest: --------------------------------------
Edward G. Kitz, Vice Pres., Sec'y & Treasurer
EXHIBIT 10.9
FORM OF SECOND AMENDMENT TO DEFERRED COMPENSATION AGREEMENT
THIS AMENDMENT is made this 3rd day of June, 1998, between
ROUNDY'S, INC., a Wisconsin corporation ("Roundy's") and [EMPLOYEE
NAME] ("Employee").
RECITALS:
1. The Employee and Roundy's are parties to a "Deferred
Compensation Agreement" dated as of April 16, 1997, as
previously amended (the "Existing Agreement").
2. The Parties desire to amend the Existing Agreement further, in
the manner set forth herein.
AGREEMENT:
Therefore, in consideration of the premises and the Employee's
continued employment with Roundy's, Roundy's and the Employee
hereby agree as follows:
1. Amendment of Existing Agreement. Section 3 of the
Existing Agreement is renumbered subsection 3(a), and a new
subsection 3(b) is inserted to read as follows:
"(b) Notwithstanding anything contained in the preceding
subsection 3(a) or elsewhere in this Agreement, in the
event any payments or other benefits otherwise receivable
by the Employee hereunder are determined to be "parachute
payments" (as hereinafter defined), under no
circumstances shall the Deferred Compensation Amount
exceed the "Maximum Amount" (as hereinafter defined).
The "Maximum Amount" for this purpose means a dollar
amount equal to (i) three (3) times the Employee's "base
amount" (as hereinafter defined), minus (ii) all other
amounts constituting parachute payments received or
receivable by the Employee in respect of the same Change
of Control, minus (iii) one dollar. The terms "parachute
payment" and "base amount" shall have the meanings given
them in Section 280G of the Internal Revenue Code of
1986, as amended from time to time (or the corresponding
provisions of any future tax laws that may be enacted in
substitution for or in place of said section) and the
Treasury Regulations and other interpretations of said
Section in existence from time to time, except that
"parachute payment" shall be defined without reference to
clause (ii) of subparagraph 280G(b)(2)(A). In the event
of any dispute between the Employee and Roundy's with
respect to the interpretation and effect of this
subsection 3(b) (including, without limitation, the
calculation of the Employee's base amount or the total
amount of parachute payments received or receivable by
the Employee), the matter shall be submitted for a
determination by Roundy's outside certified public
accountants, which determination shall be final and
binding on the parties."
2. Agreement Otherwise Remains in Effect. Except as
expressly set forth above, the Existing Agreement remains in force
and effect in accordance with its original terms.
IN WITNESS WHEREOF, the parties have executed this Amendment,
as of the date first written above.
ROUNDY'S, INC.
By:
Gerald F. Lestina, President & CEO
Attest: ______________________,
Edward G. Kitz, Vice President, Sec'y & Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ROUNDY'S,
INC. FORM 10-Q FOR THE QUARTER ENDING OCTOBER 3, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-02-1999
<PERIOD-END> OCT-03-1998
<CASH> 83,242,000
<SECURITIES> 0
<RECEIVABLES> 85,650,900
<ALLOWANCES> 0
<INVENTORY> 164,443,400
<CURRENT-ASSETS> 342,377,300
<PP&E> 202,094,000
<DEPRECIATION> 105,516,300
<TOTAL-ASSETS> 469,018,000
<CURRENT-LIABILITIES> 240,416,500
<BONDS> 82,235,500
0
0
<COMMON> 1,344,800
<OTHER-SE> 119,844,100
<TOTAL-LIABILITY-AND-EQUITY> 469,018,000
<SALES> 1,903,789,200
<TOTAL-REVENUES> 1,907,696,600
<CGS> 1,722,281,600
<TOTAL-COSTS> 1,722,281,600
<OTHER-EXPENSES> 160,980,700
<LOSS-PROVISION> 1,533,200
<INTEREST-EXPENSE> 5,490,800
<INCOME-PRETAX> 17,410,300
<INCOME-TAX> 7,094,700
<INCOME-CONTINUING> 10,315,600
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,315,600
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
