11
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 July 4, 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 July 4, 1998
Common Stock, $1.25 par value
Class A (Voting) 12,600 Shares
Class B (Non-voting) 1,135,046 Shares
ROUNDY'S, INC.
INDEX
Page No.
PART I. Financial Informtion:
Consolidated Balance Sheets - 3
July 4, 1998 and January 3, 1998
Statements of Consolidated Earnings - 4
Thirteen Weeks and Twenty-six Weeks
Ended
July 4, 1998 and June 28, 1997
Statements of Consolidated Cash Flows - 5
Twenty-six Weeks Ended July 4, 1998
and June 28, 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
July 4, 1998 to January 3, 1998
July 4, 1998 January 3,
1998
(Unaudited) (Audited)
-------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 72,236,400 $ 52,366,900
Notes and accounts receivable, less
allowance for losses, $6,445,000
and $5,648,700, respectively 92,725,100 86,998,500
Merchandise inventories 156,919,700 150,898,000
Prepaid expenses 2,600,800 5,216,200
Refundable and future income tax
benefits 6,227,800 6,227,800
------------- -------------
Total Current Assets 330,709,800 301,707,400
------------- -------------
OTHER ASSETS:
Notes receivable, less allowance for
losses of $5,299,000 13,485,800 11,604,600
Goodwill and other assets 10,530,200 13,696,700
Other real estate 4,331,300 7,152,500
Deferred income tax benefit 2,848,000 2,848,000
------------- -------------
Total Other Assets 31,195,300 35,301,800
------------- -------------
PROPERTY AND EQUIPMENT - Net 96,322,400 103,300,600
------------- -------------
$458,227,500 $440,309,800
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term
debt $ 10,158,200 $ 10,156,800
Accounts payable 161,329,600 155,001,500
Accrued expenses 55,017,200 50,148,300
Income taxes 6,105,400 2,327,100
------------- -------------
Total Current Liabilities 232,610,400 217,633,700
------------- -------------
LONG-TERM DEBT, LESS CURRENT
MATURITIES 82,242,600 83,457,800
OTHER LIABILITIES 16,835,000 16,758,000
------------- -------------
Total Liabilities 331,688,000 317,849,500
------------- -------------
REDEEMABLE CLASS B COMMON STOCK 8,431,500 6,375,300
------------- -------------
STOCKHOLDERS' EQUITY:
Common Stock:
Voting (Class A) 15,800 15,800
Non-Voting (Class B) 1,334,460 1,346,600
------------- -------------
Total Common Stock 1,350,200 1,362,400
Patronage dividends payable in
common stock 3,738,000
Additional paid-in capital 31,868,100 28,588,300
Reinvested earnings 86,020,900 83,527,500
------------- -------------
Total 119,239,200 117,216,200
Less Treasury Stock, at cost 1,131,200 1,131,200
------------- -------------
Total Stockholders' Equity 118,108,000 116,085,000
------------- -------------
$458,227,500 $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 TWENTY-SIX WEEKS ENDED
JULY 4, 1998 AND JUNE 28, 1997
(UNAUDITED)
Thirteen Weeks Ended Twenty-six Weeks Ended
July 4, 1998 June 28, 1997 July 4, 1998 June 28, 1997
--------------------------------- -----------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Net sales and service fees $656,286,300 $634,137,900 $1,268,713,700 $1,251,636,900
Other - net .............. 1,285,000 637,900 2,532,400 1,733,500
------------- ------------- --------------- ---------------
657,571,600 634,775,800 1,271,246,100 1,253,370,400
------------- ------------- --------------- ---------------
COSTS AND EXPENSES:
Cost of sales ............ 594,092,300 573,368,600 1,147,570,500 1,130,710,400
Operating and administrative 54,401,000 52,386,800 108,546,600 107,525,400
Interest.................. 1,846,100 2,012,700 3,687,800 4,029,500
------------- ------------- --------------- ---------------
650,339,500 627,768,100 1,259,804,900 1,242,265,300
------------- ------------- --------------- ---------------
EARNINGS BEFORE INCOME TAXES 7,232,100 7,007,700 11,441,200 11,105,100
PROVISION FOR INCOME TAXES 2,947,100 2,855,600 4,662,300 4,525,300
TAXES...... ------------- ------------- --------------- ---------------
NET EARNINGS ............. $ 4,285,000 $ 4,152,100 $ 6,778,900 $ 6,579,800
============= ============= =============== ===============
</TABLE>
See Notes to Consolidated Financial Statements.
<TABLE>
<CAPTION>
ROUNDY'S, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE TWENTY-SIX WEEKS ENDED JULY 4, 1998 AND JUNE 28, 1997
(UNAUDITED)
Twenty-six Weeks Ended
July 4, 1998 June 28, 1997
-------------- ---------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings ............................ $ 6,778,900 $ 6,579,800
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Depreciation and amortization ........... 9,448,300 8,392,400
Allowance for losses .................... 1,002,700 1,284,400
(Gain) loss on sale of assets ........... (173,200) 344,400
(Increase) Decrease in Operating Assets,
Net of the Effects of Disposition
Accounts receivable ..................... 533,500 9,054,100
Merchandise inventories ................. (10,697,200) (1,285,200)
Prepaid expenses ........................ 2,611,300 (50,100)
Other real estate ....................... 2,821,200 (1,028,400)
Goodwill and other assets ............... (54,300) (25,600)
Increase(Decrease)in Operating Liabilities,
Net of the Effects of Disposition
Accounts payable ........................ 6,332,800 (6,028,000)
Accrued expenses ........................ 5,008,900 3,364,500
Income taxes ............................ 3,778,300 4,150,000
Other liabilities ....................... 77,000 58,400
------------- -------------
Net cash flows provided by operating
activities ............................... 27,468,200 24,810,700
------------- -------------
Cash Flows from Investing Activities:
Capital Expenditures .................... (5,455,600) (7,752,900)
Proceeds from sale of property and
equipment and other Productive Assets .. 3,207,200 1,408,900
(Increase) Decrease in notes receivable . (1,436,800) 738,600
------------- -------------
Net cash flows used in
investing activities .................. (3,685,200) (5,605,400)
------------- -------------
Cash Flows from Financing Activities:
Principal payments of long-term debt .... (1,215,700) (1,212,400)
Increase (Decrease) in current
maturities of long-term debt .......... 1,400 (53,300)
Proceeds from sale of common stock ...... 1,199,000 696,400
Common stock purchased .................. (3,898,700) (1,818,800)
------------- -------------
Net cash flows used by financing
activities .............................. (3,913,500) (2,388,100)
------------- -------------
Net Increase in Cash and Cash
Equivalents ............................. 19,869,500 16,817,200
Cash and Cash Equivalents,
Beginning of Period ..................... 52,366,900 40,342,300
------------- -------------
Cash and Cash Equivalents, End of Period .. $ 72,236,400 $ 57,159,500
============= =============
Cash paid during the period: - Interest $ 3,852,600 $ 4,029,000
- Income Taxes 981,700 457,600
</TABLE>
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 July 4, 1998 and January 3, 1998, and the
results of operations for the thirteen and twenty-six
weeks ended July 4, 1998 and June 28, 1997 and changes
in cash flows for the twenty-six weeks ended July 4,
1998 and June 28, 1997.
2) The results of operations for the thirteen and twenty-
six weeks ended July 4, 1998 and June 28, 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 which is subject to redemption is
reflected outside of stockholders' equity. As of July
4, 1998 and January 3, 1998, 80,800 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, 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 thirteen and twenty-
six weeks ended July 4, 1998. The Company is still
evaluating the financial impact and the amount of 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 July 4, 1998 26 Weeks Ended July 4, 1998
and June 28, 1997 and June 28, 1997
Increase/<Decrease> Increase/<Decrease>
------------------- -------------------
Net Sales and Service fees $22,148,400 3.49% $17,076,800 1.36%
Cost of sales 20,723,700 3.61% 16,860,100 1.49%
Operating and admin. expenses 2,014,300 3.85% 1,021,200 0.95%
Interest expense (166,600)(8.28)% (341,700)(8.48)%
Earnings before income taxes 224,400 3.20% 336,100 3.03%
Net sales and service fees increased approximately $22.1 million during
the second quarter of 1998 as compared to the second quarter of 1997.
The loss of wholesale customers resulted in a decrease of approximately
$16.6 million. The closing or sale of ten Company-owned stores
resulted in a decrease of approximately $4.7 million. New Company-
owned stores resulted in an increase of approximately $5.8 million.
Sales by existing Company-owned stores increased $2.5 million. Sales
to new and existing wholesale customers increased $35.1 million.
Net sales and service fees increased approximately $17.0 million during
the first two quarters of 1998 as compared to the first two quarters of
1997. The loss of wholesale customers resulted in a decrease of
approximately $27.2 million. The closing or sale of ten Company-owned
stores resulted in a decrease of approximately $11.3 million. New
Company-owned stores resulted in an increase of approximately $14.1
million. Sales by existing Company-owned stores increased $0.4
million. Sales to new and existing wholesale customers increased $41.0
million.
Cost of sales approximated 90.5% and 90.4% of net sales and service
fees for the thirteen weeks ended July 4, 1998 and June 28, 1997,
respectively. Year-to-date cost of sales approximated 90.5% and 90.3%
of net sales and service fees for the twenty-six weeks ended July 4,
1998 and June 28, 1997, respectively.
Operating and administrative expenses approximated 8.3% of net sales
and service fees for the thirteen weeks ended July 4, 1998 and June 28,
1997. Year-to-date operating and administrative expenses approximated
8.6% of net sales and service fees for the twenty-six weeks ended July
4, 1998 and June 28, 1997.
Interest expense decreased primarily as a result of lower borrowing
levels during the quarter ended July 4, 1998 as compared to the quarter
ended June 28, 1997.
No patronage dividends have been accrued as of July 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 July 4, 1998. The consolidated long-term debt to equity
ratio has decreased from 0.68:1 at January 3, 1998 to 0.65:1 at July 4,
1998, primarily due to increased equity levels.
Stockholders' equity, including redeemable common stock, increased
approximately $4.1 million due to reinvested earnings of $6.8 million
and proceeds from the sale of common stock of $1.2 million offset by
common stock purchases of $3.9 million.
II. OTHER INFORMATION
ITEM 4. Exhibits and Reports on Form 8-K
(a) Matters were submitted to a vote of the holders of the Company's
Class A common stock at the Company's annual meeting on April 28,
1998. A meeting of the Trustees of Roundy's, Inc. Voting Trust
was also held on April 28, 1998.
(b) At the annual meeting, Robert S. Gold and Patrick D. McAdams were
elected as retailer directors. At the meeting of the Trustees,
George C. Kaiser and Gary R. Sarner were elected as non-retailer
non-management directors. All of these votes were unanimous
since all of the Class A common stock is held in a voting trust
and the trustees are required to vote the Class A common stock as
a block. The following directors continue in office: Robert E.
Bartels, Charles R. Bonson, Gary N. Gundlach, Gerald F. Lestina,
Robert D. Ranus and Brenton H. Rupple.
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 July 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: August 7, 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 ENDED JULY 4, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-02-1999
<PERIOD-START> JAN-04-1998
<PERIOD-END> JUL-04-1998
<CASH> 72,236,400
<SECURITIES> 0
<RECEIVABLES> 92,725,100
<ALLOWANCES> 0
<INVENTORY> 156,919,700
<CURRENT-ASSETS> 330,709,800
<PP&E> 198,501,700
<DEPRECIATION> 102,179,300
<TOTAL-ASSETS> 458,227,500
<CURRENT-LIABILITIES> 232,610,400
<BONDS> 82,242,600
0
0
<COMMON> 1,350,200
<OTHER-SE> 116,757,800
<TOTAL-LIABILITY-AND-EQUITY> 458,227,500
<SALES> 1,268,713,700
<TOTAL-REVENUES> 1,271,246,100
<CGS> 1,147,570,500
<TOTAL-COSTS> 1,147,570,500
<OTHER-EXPENSES> 107,543,900
<LOSS-PROVISION> 1,002,700
<INTEREST-EXPENSE> 3,687,800
<INCOME-PRETAX> 11,441,200
<INCOME-TAX> 4,662,300
<INCOME-CONTINUING> 6,778,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,667,900
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
