UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended January 3, 1998
---------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _____________ to_______________
Commission file number: 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)
Registrant's telephone number, including area code: (414) 547-7999
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
As of March 30, 1998, 12,400 shares of Class A (voting) Common Stock and
1,159,144 shares of Class B (non-voting) Common Stock were outstanding.
All of the outstanding shares of Class A Common Stock on March 30, 1998
were held of record by the Roundy's, Inc. Voting Trust which may be
deemed an affiliate of the registrant. There is no established public
trading market for either class of such stock.
DOCUMENTS INCORPORATED BY REFERENCE
Documents Form 10-K Reference
---------- -------------------
Annual Report to Stockholders Part II, Items 6, 7, 8
for the year ended January 3, 1998
PART I
The discussions in this Annual Report on Form 10-K and in the Company's
1997 Annual Report to stockholders incorporated herein by reference
contain forward-looking statements within the meaning of Section 27A of the
Securities Exchange Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended. All
statements other than statements of historical facts
included herein or therein are forward-looking statements.
In particular, without limitation, terms such as
"anticipate," "believe," "estimate," "expect," "indicate,"
"may be," "objective," "plan," "predict," "should," and
"will" are intended to identify forward-looking statements.
Forward-looking statements are subject to certain risks,
uncertainties and assumptions which could cause actual
results to differ materially from those predicted.
Important factors that could cause actual results to differ
materially from such expectations ("Cautionary Factors") are
disclosed herein (see "Cautionary Factors" at the end of
Item 1, below). Although the Company believes that the
expectations reflected in such forward-looking statements
are reasonable, it can give no assurance that such
expectations will prove to have been correct. All
subsequent written or oral forward-looking statements
attributable to the Company or persons acting on behalf of
the Company are expressly qualified in their entirety by the
Cautionary Factors.
ITEM 1. Business.
---------
GENERAL
--------
Roundy's, Inc. and its subsidiaries (collectively the
"Company") are engaged principally in the wholesale
distribution of food and nonfood products to supermarkets
and warehouse food stores located in Wisconsin, Illinois,
Michigan, Indiana, Ohio, Kentucky, Missouri, Arkansas,
Pennsylvania, Tennessee and West Virginia. The Company also
owns and operates 13 retail warehouse food stores under the
name "Pick 'n Save" or "Park & Save," one limited assortment
food store under the name "Mor For Less" and 7 conventional
food stores under the names "Ron & Lloyd's", "Park & Shop",
"Price Less" or "Buy Low Foods." The Company offers its
retail customers a complete line of nationally-known name brand
merchandise, as well as a number of its own private and controlled labels.
The Company services 842 retail grocery stores.
In addition to the distribution and sale of food and nonfood
products, the Company provides specialized support services
for retail grocers, including promotional merchandising and
advertising programs, accounting and inventory control,
store development and financing and assistance with other
aspects of store management. The Company maintains a staff
of trained retail counselors who advise and assist
individual owners and managers with store operations.
Roundy's, Inc. was incorporated in 1952 under the Wisconsin
Business Corporation Law. The Company's executive offices
are located at 23000 Roundy Drive, Pewaukee, Wisconsin
53072, and its telephone number is (414) 547-7999. Unless
the context indicates otherwise, as used herein, the term
"Company" refers to Roundy's, Inc. and its subsidiaries and
the term "Roundy's" refers to Roundy's, Inc. without its
subsidiaries. Roundy's operates on a 52 or 53 week fiscal
year ending on the Saturday closest to January 1. In this
report, unless the context indicates otherwise, the terms
"1997" and "fiscal 1997" refer to the 53-week fiscal year
ended January 3, 1998; the terms "1996" and "fiscal 1996"
refer to the 52-week fiscal year ended December 28, 1996;
and the terms "1995" and "fiscal 1995" refer to the 52-week
fiscal year ended December 30, 1995.
OPERATION AS A COOPERATIVE
--------------------------
Roundy's has historically operated its food wholesale
business on a cooperative basis, and therefore determined
its Federal income tax liabilities under Subchapter T of the
Internal Revenue Code, which governs the taxation of
corporations operating on a cooperative basis.
Substantially all of Roundy's outstanding Class A (Voting)
Common Stock is owned by the owners ("stockholder-
customers") of 126 retail grocery stores serviced by
Roundy's. These stockholder-customers, who own
approximately 71% of the combined total of Class A Common
and Class B Common, may receive patronage dividends from
Roundy's based on the sales of Roundy's to such stockholder-
customers. Roundy's is obligated by Article 5 of its By-
Laws, as amended, to pay a patronage dividend to its
stockholders-customers out of and based upon the net
earnings from business done by Roundy's with such
stockholder-customers in any fiscal year in an amount which
would reduce the net income of the Company to such amount as
will result in an increase of 10% in the book value of
outstanding Roundy's stock as of the close of such fiscal
year (calculated after the payment of patronage dividends).
In February 1998, the Board of Directors adopted a
resolution amending the By-Laws to change the required
increase in net book value per share from 10% to 8%,
beginning in fiscal 1998. The patronage dividend is payable
at least 20% in cash and the remainder in Class B Common.
Patronage dividends for fiscal 1997, 1996 and 1995 were
payable 30% in cash and 70% in Class B Common. Under
Subchapter T of the Internal Revenue Code, patronage
dividends are deducted by Roundy's in determining taxable
income, and are generally taxable to the stockholder-
customers (including the value of the Class B Common), for
Federal income tax purposes.
Roundy's anticipates that in the future it will continue to
operate on a cooperative basis in substantially this manner,
although it is not required to do so and its operation on
this basis, as well as its practice of paying patronage dividends,
could be terminated at any time by action of the Board of Directors.
The applicable laws, regulations, rulings and judicial
decisions affecting the determination of whether a
corporation is operating on a cooperative basis for Federal
income tax purposes under Subchapter T of the Internal
Revenue Code are subject to interpretation. Although
management believes that Roundy's qualifies as a cooperative
for such purposes, Roundy's has not obtained, and does not
intend to seek a ruling or other assurance from the IRS that
this is the case. If the Internal Revenue Service were to
challenge the cooperative status of Roundy's, and if
Roundy's were to be unsuccessful in defending such status,
Roundy's might incur a Federal income tax liability with
respect to patronage dividends previously paid to
stockholder-customers during the tax years in question and
reflected as tax deductions by Roundy's. Roundy's
thereafter might incur significantly increased consolidated
Federal income tax liabilities in future tax years.
The subsidiaries of Roundy's do not operate as cooperatives.
The customers serviced by these subsidiaries are independent
grocers, operating 716 retail stores. They do not receive
patronage dividends. In addition, approximately 29% of the
outstanding combined Class A Common and Class B Common Stock
is held by employees or former customers of Roundy's and,
although they participate in the accumulation of equity in
the Company, they do not receive patronage dividends and do
not own any Class A Common.
WHOLESALE FOOD DISTRIBUTION
---------------------------
The Company distributes a broad range of food and nonfood
products to its customers and to corporate-owned retail
stores. The Company has seven product lines: dry grocery,
frozen food, fresh produce, meat, dairy products, bakery
goods and nonfood products. The Company has no long-term
purchase commitments and management believes that the
Company is not dependent upon any single source of supply.
No source of supply accounted for more than 8% of the
Company's purchases in fiscal 1997.
The Company sells brand name merchandise of unrelated
manufacturers, including most nationally advertised brands.
In addition, the Company sells numerous products under
private and controlled labels, including but not limited to
"Roundy's," "Old Time," "Shurfine" and "Buyers' Choice."
Private label product sales for the Company accounted for
$179,032,000, $175,459,000 and $166,045,000 of the Company's
sales during fiscal 1997, 1996 and 1995, respectively.
As described above, Roundy's, exclusive of its subsidiaries,
has historically operated on a cooperative basis with
respect to its wholesale food distribution business.
Roundy's cooperative operations accounted for approximately
37% of the Company's consolidated net sales and service fees
for each of fiscal 1997, 1996 and 1995. At January 3, 1998,
Roundy's had 68 stockholder-customers actively engaged in
the retail grocery business, operating a total of 126 retail
grocery stores. Roundy's cooperative wholesale food
business is focused primarily in Wisconsin, where all but 4
of the 126 retail grocery stores are located (4 are in
Illinois). At January 3, 1998 the Company (including its
subsidiaries) had 716 independent retail food store
customers. Sales by the Company to the independent retail
food stores accounted for 52%, 52% and 54% of the Company's
consolidated net sales and service fees for fiscal 1997,
1996 and 1995, respectively.
The Company's primary marketing objective is to be the
principal source of supply to both its stockholder-customers
and other independent retailers. In an 11 state area the
Company serviced 126 retail grocery stores operated by its
stockholder-customers, 716 retail stores operated by non-
stockholders and 21, Company-owned and operated retail
stores during fiscal 1997. Of the Company's consolidated net sales
and service fees for this period, $640,614,200 or 24.5% were
attributable to five customers, with one customer accounting
for $271,689,800 or 10.4% of such sales. Approximately 79%
or 683 retail stores purchased less than $3,000,000 each
from the Company in fiscal 1997. 113 customers owned more
than one retail food store, with one customer owning 16
retail food stores.
Services to Customers
- ---------------------
Stockholder-customers are provided, and independent
retailers are offered, a variety of services to help them
maintain a competitive position within the retail grocery
industry. These services include pricing services, ordering
assistance, point-of-sale host-computer support, detailed
reports of purchases, store engineering, retail accounting,
group advertising, centralized bakery purchasing,
merchandising, insurance, real estate services and retail
training. The Company charges its stockholder-customers for
some of these services, however, the income generated by
such charges is not material. The foregoing services are
also available to the Company's independent retailers on a
fee basis.
Customer Loans, Guarantees and Leases
- -------------------------------------
The Company has maintained a continuous effort to assist
qualified stockholder-customers and independent retailers to
remodel and expand existing retail locations and to develop
new retail outlets, and has made various loans to these
individuals and entities for such purposes.
Loans outstanding as of January 3, 1998 are as follows:
Outstanding
Number Balance Range of Range of
of Original as of Interest Maturity
Loans Amount Jan. 3,1998 Rates Dates
----- -------- ----------- ------- ---------
Inventory,
Equipment
Loans 124 $34,772,600 $24,427,000 Variable(1) 1998-2011
________________
(1) Variable rates based on the Company's cost of borrowing.
The Company has guaranteed customer bank loans and customer
leases amounting to $480,000 and $756,900, respectively at
January 3, 1998.
The Company has a lease program under which it may in its
discretion lease store sites and equipment for sublease to
qualified customers. This enables customers to compete with
large grocery store chains for store sites at favorable
rates. The Company presently has such real estate and
equipment leases with lease terms from 1998 to 2018.
Aggregate lease rentals received under this program were
$21,249,900, $21,628,300 and $22,045,500 in fiscal 1997,
1996 and 1995, respectively.
Marketing and Distribution of Products
- --------------------------------------
The Company generally distributes its various product lines
by a fleet of 320 tractor cabs and 650 trailers and some
products are shipped direct from manufacturers to customer
locations. Most customers order for their stores on a
weekly basis and receive deliveries from one to five days a
week. Orders are generally transmitted directly to a
warehouse computer center for prompt assembly and dispatch
of shipments.
The Company has retail counselors and merchandising
specialists who serve its customers in a variety of ways,
including the analysis of and recommendation on store
facilities and equipment; development of programs and
objectives for establishing efficient methods and procedures
for receipt, handling, processing, checkout and other
operations; informing customers on latest industry trends;
assisting and dealing with training needs of customers; and,
if the need arises, acting as liaison or problem solver
between the Company and the customers. The retail
counselors and specialists are assigned a specific
geographic area and periodically visit each customer within
their assigned area.
Terms of Sales and Bad Debt Experience
- ---------------------------------------
The Company renders statements to its customers on a weekly
basis to coincide with regular delivery schedules. Roundy's
accounts of single store owners are considered delinquent if
not paid on the statement date. Accounts of multiple store
owners are considered delinquent if not paid within three
days of the statement date. Accounts of Roundy's
subsidiaries are considered delinquent if not paid within
seven days of the statement date. The majority of accounts
are collected via the Automated Clearing House ("ACH")
system. Delinquent accounts are charged interest at the
rate of prime plus 5%, computed on a daily basis. During
each of the past three fiscal years, the Company's bad debt
expense has been less than .24% of sales. In 1997, 1996 and
1995, the Company's bad debt expense was $2,389,100,
$5,302,600 and $5,871,500, respectively.
Roundy's stockholder-customers are required to maintain
buying deposits with Roundy's equal to the greater of the
average amount of a stockholder-customer's purchases over a
two-week period or $20,000. The book value of Class A and
Class B Common Stock of Roundy's owned by a stockholder-
customer is credited against the buying deposit requirement,
and Roundy's has a lien against all such stock to secure any
indebtedness to Roundy's.
RETAIL FOOD STORES
------------------
The Company operates three types of corporate stores (high
volume-limited service retail "warehouse" stores, high value-
limited assortment retail stores and conventional retail
stores). The high volume-limited service warehouse stores
are designated as "Pick 'n Save" or "Park & Save" which
generally offer, at discount prices, complete food and
general merchandise lines to the customer, emphasizing
higher demand items, with stores ranging from 33,000 to
73,000 square feet per store. The high value, limited
assortment retail store, designated as "Mor For Less," is
24,000 square feet and emphasizes low cost, high value lines
to the customer. Conventional retail stores operated under
the names "Ron & Lloyd's," "Park & Shop," "Price Less" or
"Buy Low Foods", generally emphasize full service to the
customer at competitive prices. These stores range from
9,000 to 42,000 square feet. The number of stores operated
by the Company at the end of its three most recent fiscal
years was as follows:
Type of Store 1997 1996 1995
-------------- ---- ---- ----
High Value-Limited Assort-
ment and High Volume-Limited
Service Stores (Warehouse
food stores)..................... 14 16 15
Conventional Retail Stores....... 7 11 7
Sales of Company-operated stores during the three most
recent fiscal years were $291,613,000, $275,761,000 and
$226,513,000 for fiscal 1997, 1996 and 1995, respectively.
The additional volume of wholesale sales generated by the
retail stores owned and operated by the Company helps to
reduce the overhead of the business and increases the
Company's return to its stockholders.
EMPLOYEES
---------
At January 3, 1998, the Company had employed full-time 1,128
executive, administrative and clerical employees, 1,267
warehouse and processing employees and drivers and 768
retail employees and had employed 1,908 part-time employees.
Substantially all of the Company's warehouse employees,
drivers and retail employees are represented by unions, with
contracts expiring in 1998 through 2001. The Company
considers its employee relations to be normal. There have
been no significant work stoppages during the last five
years. Substantially all full-time employees are covered by
group life, accident, and health and disability insurance.
COMPETITION
-----------
The grocery industry, including the wholesale food
distribution business, is characterized by intense
competition and low profit margins. The shifting of market
share among competitors is typical of the wholesale food
business as competitors attempt to increase sales in any
given market. In order to compete effectively, the Company
must have the ability to meet rapidly fluctuating
competitive market prices, provide a wide range of
perishable and nonperishable products, make prompt and
efficient delivery, and provide the related services which
are required by modern supermarket operations.
The Company competes with a number of local and regional
grocery wholesalers and with a number of major businesses
which market their products directly to retailers, including
companies having greater assets and larger sales volume than
the Company. The Company's
customers and the Company's corporate stores also compete at
the retail level with several chain store organizations
which have integrated wholesale and retail operations. The
Company's competitors range from small local businesses to
large national and international businesses. The Company's
success is in large part dependent upon the ability of its
independent retail customers to compete with larger grocery
store chains.
In the Milwaukee area, the "Pick 'n Save" group, which
consists of both independently-owned and Company-owned
stores, continues to be the market share leader with 49% of
households in the Milwaukee metropolitan statistical area
purchasing "most of their groceries" from "Pick 'n Save" as
reported in the Milwaukee Journal Consumer Analysis Survey
taken in the Fall of 1997.
In competing for customers, emphasis is placed on high
quality and a wide assortment of product, low service fees
and reliability of scheduled deliveries. The Company
believes that the range and quality of other business
services provided to retail store customers by the
wholesaler are increasingly important factors, and that
success in the wholesale food industry is dependent upon the
success of the Company's customers who are also engaged in
an intensely competitive, low profit margin industry.
CAUTIONARY FACTORS
------------------
This report and other documents or oral statements which
have been and will be prepared or made in the future contain
or may contain forward-looking statements by or on behalf of
the Company. Such statements are based on management's
expectations at the time they are made. In addition to the
assumptions and other factors referred to specifically in
connection with such statements, the following factors,
among others, could cause actual results to differ
materially from those contemplated. These factors are in
addition to any other cautionary statements, written or
oral, which may be made or referred to in connection with
any such forward-looking statement.
Factors that could cause actual results to differ materially
from those contemplated include:
Wholesale Business Risks - The Company's sales and earnings
at wholesale are dependent on the Company's ability to
retain existing customers and attract new customers, as well
as its ability to control costs. Certain factors could
adversely impact the Company's results, including: decline
of its independent retailer customer base due to competition
and other factors; loss of corporate retail sales due to
increased
competition and other risks detailed more fully below;
consolidations of retailers or competitors; increased self-
distribution by chain retailers; increase in operating
costs; the possibility that the Company will incur
additional costs and expenses due to further rationalization
or consolidation of distribution centers; entry of new or
non-traditional distribution systems into the industry.
Retail Business Risks - The Company's retail segment faces
risks which may prevent the Company from maintaining or
increasing retail sales and earnings including: competition
from other retail chains, supercenters, non-traditional
competitors, and emerging alternative formats; operating
risks of certain strategically important retail operations;
and adverse impact from the entry of other retail chains,
supercenters and non-traditional or emerging competitors
into markets where the Company has a retail concentration.
Litigation - While the Company believes that it is currently
not subject to any material litigation, the costs and other
effects of legal and administrative cases and proceedings
and settlements are impossible to predict with certainty.
The current environment for litigation involving food
wholesalers may increase the risk of litigation being
commenced against the Company. The Company would incur the
costs of defending any such litigation whether or not any
claim had merit.
THE FOREGOING SHOULD NOT BE CONSTRUED AS EXHAUSTIVE AND THE
COMPANY DISCLAIMS ANY OBLIGATION SUBSEQUENTLY TO REVISE ANY
FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR
CIRCUMSTANCES AFTER THE DATE OF SUCH STATEMENTS OR TO
REFLECT THE OCCURRENCE OF ANTICIPATED OR UNANTICIPATED
EVENTS.
ITEM 2. Properties.
-----------
The Company's principal executive offices are located in
Pewaukee, Wisconsin. These offices are on a 5-acre site. A
portion of these facilities are owned by Roundy's and the
remainder are leased from a third party.
Wholesale activities are conducted by the Company from the
following warehouses:
Approximate
Warehouse
Location Products Distributed Square Footage
- -------------------- --------------------- --------------
Wauwatosa, Wisconsin All product lines, 745,000 (O)
(Two facilities) except nonfood products 192,000 (L)
Mazomanie, Wisconsin Dry groceries and 225,000 (L)
nonfood products
Westville, Indiana All product lines, 557,000 (O)
except nonfood products
Lima, Ohio All product lines, 515,000 (O)
(Two facilities) except produce and 94,000 (L)
nonfood products
Eldorado, Illinois Dry groceries and 384,000 (O)
dairy products
Van Wert, Ohio Nonfood products 115,000 (L)
South Bend, Indiana Frozen foods 84,000 (L)
Muskegon, Michigan All product lines, 215,000 (O)
except produce
O = Owned L = Leased
The Company believes its current properties are well
maintained and, in general, are adequately sized to house
existing operations. The Company is subject to regulation
by the United States Food and Drug Administration and to
certain state and local health regulations in connection
with the operations of its facilities and its wholesale food
business. The Company has not been subject to any actions
brought under such regulations in the past five years.
Subsequent Event
- ----------------
In the early morning hours of February 27, 1998, the Company
experienced a fire at its Evansville, Indiana warehouse.
Because of high winds, the fire completely destroyed that
frozen food facility, including both the building and all of
the inventory contained therein. There were no injuries and
the employees working at the time of the fire were able to
save all the tractors and trailers on the premises. Shortly
after the fire was put out, the Company began working on
transferring the business to the Lima, Ohio and South Bend,
Indiana warehouses. The first priority was to put the
customers back in service with respect to their frozen food
needs. The second priority will be the planning for the
replacement of the frozen food warehouse. The Company
cannot reasonably estimate, at this time, the total loss
experienced or the exact amount to be recovered under its
insurance policies. Preliminary indications are that such
amounts may be significant. However, it is believed that
total losses will not exceed the Company's insurance
coverage limits, which include both business interruption
and property loss coverage.
Transportation
- --------------
The Company's transportation fleet for distribution
operations as of January 3, 1998 consisted of 320 tractor
cabs, 650 trailers and 10 straight delivery trucks. In
addition, the Company owns 45 automobiles. Approximately
98% of the fleet is owned by the Company and the balance is
leased.
Computers
- ---------
The Company owns most of its computer and related peripheral
equipment. The computers are used for inventory control,
billing and all other general accounting purposes. The
computer systems are adequate for the Company's operations.
ITEM 3. Legal Proceedings.
------------------
The Company is involved in various litigation matters
arising in the normal course of business. It is the view of
management that the Company's recovery or liability, if any,
under pending litigation is not expected to have a material
effect on the Company's financial position or results of
operations, although no assurance to that effect can be
given.
ITEM 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
No matters were submitted to a vote of security holders
during the fourth quarter of fiscal 1997.
PART II
ITEM 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.
------------------------------------------------------
The transfer of shares of Roundy's Class A Common and
Roundy's Class B Common is substantially restricted and
there is no established public trading market for Roundy's
stock. As of January 3, 1998, all of the outstanding shares
of Roundy's Class A (voting) Common Stock were held of
record by the Roundy's, Inc. Voting Trust. Further
information on the Voting Trust is found in Item 12 of this
report. There is also no established public trading market
for Roundy's Voting Trust Certificates and there were 68
holders of such Certificates on January 3, 1998. On January
3, 1998 an aggregate of 207 persons held shares of Roundy's
Class B Common Stock and/or Voting Trust Certificates.
Except for patronage dividends (see Item 1, Business, and
Note 3 to Roundy's financial statements), no dividends have
ever been paid on the Common Stock of Roundy's. There is no
intention of paying dividends, other than patronage
dividends, in the foreseeable future.
ITEM 6. Selected Financial Data.
------------------------
The information required by this Item is incorporated by
reference from the Registrant's Annual Report to
Stockholders for the fiscal year ended January 3, 1998 (the
"Annual Report") under the caption "Selected Financial
Data."
ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operation.
------------------------------------------------------------
The information required by this Item is incorporated by
reference from the Annual Report under the caption
"Financial and Operational Review."
ITEM 8. Financial Statements and Supplementary Data.
--------------------------------------------
The required Financial Statements are incorporated by
reference from the Annual Report; see response to Item
14(a)(1), of this report. The required financial statement
schedules are filed with this report; see the response to
Item 14(a)(2) of this report. Supplementary data is not
furnished pursuant to Item 30(a)(5) of Regulation S-K.
ITEM 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
------------------------------------------------------------
None.
PART III
ITEM 10. Directors and Executive Officers of the Registrant.
----------------------------------------------------
The Directors and Executive Officers of Roundy's are as follows:
Position(s) Held with Roundy's
Name Age and Business Experience
- ------------------ ----- ---------------------------------
Gerald F. Lestina 55 President and Chief Executive Officer
since 1995; President and Chief Operating
Officer 1993-1995; Vice President of
Wisconsin Region 1992-1993; President of
Milwaukee Division 1986-1993; Director
since 1991 (term expires 1999)
Roger W. Alswager 49 Vice President of Real Estate since 1989
Londell J. Behm 47 Vice President of Advertising since 1987
Ralph D. Beketic 51 Vice President-Wholesale since 1996;
Vice President-Wisconsin Region 1996;
President of Milwaukee Division since
1993; Vice President of Sales-Milwaukee
Division 1991-1993
David C. Busch 49 Vice President of Administration since
1993; Vice President of Human Resources
1990-1993
Edward G. Kitz 44 Vice President, Secretary & Treasurer
since 1995; Vice President & Treasurer
1989-1994
Charles H. 55 Vice President of Logistics and Planning
Kosmaler, Jr. since 1993; Vice President of Adminis-
trative Efficiencies 1992-1993
Debra A. Lawson 42 Vice President of Human Resources since
1997; Vice President Administration-
Milwaukee Division 1994-1996; Director of
Consumer Affairs, Training and Development
1991-1993
John E. Paterson 50 Vice President-Distribution since 1997;
Vice President of Operations-Milwaukee
Division 1993-1996; Vice President of
Distribution for Quincy, Florida Division
of SUPERVALU INC. 1991-1993
Robert D. Ranus 57 Vice President and Chief Financial Officer
since 1987; Director since 1987 (term
expires 2000)
Michael J. Schmitt 49 Vice President-Sales and Development since
1995; Vice President, Northern Region
1992-1995
Marion H. Sullivan 51 Vice President of Marketing since 1989
Robert E. Bartels 60 Director since 1994 (term expires 2000);
President and Chief Executive Officer of
Martin's Super Markets, Inc., South Bend,
Indiana
Charles R. Bonson 51 Director since 1994 (term expires 2000);
President of Bonson's Foods, Inc., Eagle
River, Wisconsin
Gary N. Gundlach 54 Director since 1990 (term expires 1999);
Owner of Pick 'n Save retail grocery
stores in Columbus, DeForest, McFarland,
Stoughton and Sun Prairie, Wisconsin
George C. Kaiser 65 Director since 1986 (term expires 1998);
Chairman and Chief Executive Officer,
Hanger Tight Company since 1988; Chief
Executive Officer, George C. Kaiser and
Co. since 1988; Director of The Baird
Funds, Inc. since 1992
Patrick D. McAdams 48 Director since 1995 (term expires 1998);
General Manager and Treasurer of McAdams,
Inc., Oconomowoc, Wisconsin
George E. Prescott 50 Director since 1997 (term expires 1998);
President and Chief Executive Officer of
Prescott's Supermarkets, Inc., West Bend,
Wisconsin
Brenton H. Rupple 73 Director since 1993 (term expires 1999);
Retired Chairman of Robert W. Baird & Co.,
Milwaukee, Wisconsin
Gary R. Sarner 51 Director since 1997 (term expires 1998);
Chairman, Total Logistic Control, LLC
since 1996; President and Chief Operating
Officer, Christiana Companies, Inc. 1992-
1997
Directors of Roundy's are elected by class and generally serve three-
year terms; approximately one-third of the Board of
Directors is elected annually. Of the ten current members
of the Board of Directors, two are currently Executive
Officers of Roundy's (Messrs. Lestina and Ranus) and four
are "Retailer Directors" (Messrs. Bonson, Gundlach, McAdams
and Prescott). The terms of the Roundy's, Inc. Voting Trust
provide that each year the Trustees will vote to elect one
stockholder-customer, chosen by a plurality vote of the
Voting Trust Certificate Holders, to serve a three-year term
as Director; however, the Roundy's, Inc. Voting Trust
provides that in every third year, Voting Trust Certificate
Holders will choose two Retailer Directors. Therefore, at
any time there should be four Retailer Directors serving.
ITEM 11. Executive Compensation.
-----------------------
The following table shows the compensation for the past
three years of Roundy's five most highly compensated
executive officers performing policy making functions for
Roundy's, including the Chief Executive Officer (the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term
Other Compensation
Annual Securities All Other
Name and Compen- Underlying Compen-
Principal Salary sation (A)Options sation
Position Year (1) Bonus (2) (B)SARs (3)
- -----------------------------------------------------------------------------
(A) (B)
Gerald F. Lestina 1997 371,058 $105,120 - - - $9,994
President and Chief 1996 338,000 95,316 - - - 8,645
Executive Officer 1995 304,231 93,600 - 6,000 - 8,138
Robert D. Ranus 1997 221,077 62,496 - - - 11,409
Vice President and 1996 213,000 60,066 - - - 9,812
Chief Financial 1995 207,000 59,616 - - - 9,659
Officer
Ralph D. Beketic 1997 177,981 50,400 - - - 5,562
Vice President- 1996 137,096 38,775 - - - 1,937
Wholesale 1995 120,000 35,280 - 1,500 500 1,797
Marion H. Sullivan 1997 167,981 47,520 - - - 8,910
Vice President of 1996 146,000 41,172 - - - 7,211
Marketing 1995 135,846 40,320 - - 500 7,105
Michael J. Schmitt 1997 157,596 44,640 - - - 8,580
Vice President of 1996 138,174 39,010 - - - 7,093
Sales & Development 1995 125,846 37,440 - - - 7,068
(1) Includes amounts (if any) deferred pursuant to Roundy's Deferred
Compensation Plan.
(2) Pursuant to applicable SEC regulations, perquisites and
other personal benefits are omitted because they did
not exceed the lesser of either $50,000 or 10% of the
total of salary and bonus.
(3) The amounts shown in this column for 1997, 1996, and
1995, respectively, were derived from the following
figures. Term life insurance premiums paid by Roundy's
and Roundy's contributions to the 401(k) plan,
respectively, for the named executive officers are
shown below. For 1997 - Mr. Lestina: $6,819 and
$3,175. Mr. Ranus: $7,861 and $3,547. Mr. Beketic:
$2,670 and $2,891. Mr. Sullivan: $6,019 and $2,891.
Mr. Schmitt: $6,061 and $2,518. For 1996 - Mr.
Lestina: $6,270 and $2,375. Mr. Ranus: $7,732 and
$2,080. Mr. Beketic: $666 and $1,271. Mr. Sullivan:
$5,851 and $1,360. Mr. Schmitt: $5,911 and $1,182.
For 1995 - Mr.
Lestina: $5,828 and $2,310. Mr. Ranus: $7,589 and
$2,070. Mr. Beketic: $597 and $1,200. Mr. Sullivan:
$5,747 and $1,358. Mr. Schmitt: $5,810 and $1,258.
The executive officers of Roundy's are each covered by
$250,000 of executive equity life insurance. In addition,
executives are covered by a group life carve-out plan in the
amount of three times salary, which is in lieu of the group
term life insurance provided to substantially all nonunion
employees under a Roundy's-sponsored Plan. The executive
officers of Roundy's are also covered by an executive
disability income insurance wrap-around plan which is in
addition to the disability income insurance provided to
substantially all nonunion employees under a Roundy's-
sponsored Plan.
The Board of Directors of the Company has authorized the
Company to guarantee the repayment of any loans incurred by
senior executives and key employees for the purpose of
exercising certain stock options granted by the Company. The
guarantee is limited to a total aggregate principal amount
of loans of $2,000,000. There were no employee guarantees
outstanding as of January 3, 1998.
Roundy's has Deferred Compensation Agreements with certain
executive officers, including Messrs. Lestina, Ranus,
Beketic, Sullivan and Schmitt. The Deferred Compensation
Agreements provide generally that the Company will pay to
the employee a "deferred compensation amount," if at any
time within three years after the occurrence of a "change in
control" of the Company, the employee's employment is
terminated by the Company, other than for "good cause." If
the termination date occurs within two years after the date
on which a "change in control" occurs, the "deferred
compensation amount" will be equal to the "monthly benefit
amount" times twenty-four. If the termination date occurs
more than two years, but not more than three years, after
the date on which a "change of control" occurs, the
"deferred compensation amount" will be equal to the "monthly
benefit amount" times twenty four minus the number of
calendar months between the date two years after the date on
which a "change of control" occurs and the termination date.
The "monthly benefit amount" is equal to 1/12 of the
employee's annual base salary. The number by which the
"monthly benefit amount" is multiplied to determine the
"deferred compensation amount" is defined as the "monthly
multiplier." If the employee becomes entitled to the
payment of a "deferred compensation amount" the Company will
continue to provide to the employee those health and life
insurance benefits to which the employee was entitled as of
the termination date for that number of months following the
termination date which is equal to the "monthly multiplier."
The Company established a Deferred Compensation Plan,
applicable to the Officers who have been elected by the
Board of Directors, ("Elected Officers"), to assist the
Elected Officers in deferring income until their retirement,
death, or other termination of employment. The Plan
participants may make deferral commitments that are not less
than $10,000 over a period of not more than 7 years and not
less than $2,000 in any one year. The aggregate annual
deferral may not exceed $100,000 per calendar year for all
participants combined unless the Company's Board of Director
approves an amount in excess of that limit. For 1997, the
Board of Directors approved an annual deferral of $121,000.
Monthly interest is credited to each participant's account
based on the Moody's Long Term Bond Rate in effect on
January 1 of each year plus 2%. The Company established a
Trust to hold assets to be used to pay benefits under the
Plan, however, the rights of any participant, beneficiary or
estate to benefits under the Plan are solely those of an
unsecured creditor of the Company. Upon death of a
participant prior to termination of employment and before
any periodic payments have started, the Company will pay to
the participant's Designated Beneficiary a pre-retirement
death benefit equal to five times the total aggregate
deferral commitment of the participant payable in equal
annual installments over a ten-year period. The Company has
purchased life insurance policies on the lives of the
participants to fund its liabilities under the Plan.
Roundy's has a severance and non-competition agreement with
Gerald F. Lestina. This agreement continues in effect until
October 10, 2007. Upon Roundy's termination of Mr.
Lestina's employment (other than for "good cause" as defined
in the agreement), or Mr. Lestina's termination of his
employment (for "good reason" as defined in the agreement),
Roundy's will pay Mr. Lestina pro rata over the non-compete
period, an "applicable benefit." The "applicable benefit"
shall mean the
"monthly benefit amount" times twelve (12). The "monthly
benefit amount" means the sum of: (i) 1/12 of the amount of
Mr. Lestina's current salary; (ii) 1/12 of the amount of Mr.
Lestina's bonus paid or payable; and the fair value of any
health and/or life insurance benefits, on a monthly basis,
to which Mr. Lestina is entitled. If Mr. Lestina ceases to
be employed by Roundy's (including by reason of his death)
at any time after attaining age 55 and while he is then an
officer and a director of Roundy's (unless employment is
terminated for "good cause"), Roundy's will provide coverage
for Mr. Lestina and his spouse under the employee health,
medical and life insurance plans maintained by Roundy's for
its executive personnel, until, in addition to other
parameters, Mr. Lestina attains age 65.
For a period of one year following the termination of
employment of Mr. Lestina, which occurs under circumstances
giving rise to Roundy's obligation to pay the severance
benefit under this agreement, Mr. Lestina agrees not to
compete with Roundy's in the states of Wisconsin,
Michigan, Illinois, Indiana and Ohio, plus to the extent not
included in those states, the area encompassed within a
radius of 400 miles of any warehouse or distribution
facility operated by Roundy's, or any affiliate of Roundy's,
as of the termination date.
Effective November 1, 1991, the Board of Directors adopted
the 1991 Stock Incentive Plan (the "Plan") under which up to
75,000 shares of Class B Common Stock may be issued pursuant
to the exercise of stock options. The Plan also authorizes
the grant of up to 25,000 stock appreciation rights
("SARs"). Options and SARs may be granted to senior
executives and key employees of the Company by the Executive
Compen-sation Committee of the Board of Directors. No
options or SARs may be granted under the Plan after November
30, 2001. Options granted become exercisable based on a
vesting schedule which ranges from 20% at the date of grant
to 100% eight years from the date of grant. SAR holders are
entitled, upon exercise of a SAR, to receive cash in an
amount equal to the excess of the book value per share of
the Company's common stock as of the last day of the
Company's fiscal year immediately preceding the date the SAR
is exercised over the base price of the SAR. SARs granted
become exercisable based on the vesting rate which ranges
from 20% on the last day of the fiscal year of the grant to
100% eight years from the last day of the fiscal year of the
grant. In the event of a change in control of the Company,
all options and SARs previously granted and not exercised,
become exercisable.
Option/SAR Grants
- -----------------
None of the Named Executive Officers were granted stock
options or SARs during fiscal 1997.
Option/SAR Exercises
- --------------------
The following table provides information on the Named
Executive Officers' option and SAR exercises in 1997 and the
value of unexercised options at January 3, 1998.
Aggregated Option/SAR Exercises in 1997
and 1997 Year-End Option Values
------------------------------------------
Number of
Unexercised Value ($) of
Shares (A)Options Unexercised In-The-
Acquired (B)SARS Money (A)Options
on Exercise at 01/03/98 (B)SARs at 01/03/98
(A)Options Value ($) Exercisable/ Exercisable/
Name (B)SARS Realized Unexercisable Unexercisable
- ----------------- ---------- -------- -------------- -------------------
Gerald F. Lestina (A) - - 17,500/- $688,950/-
(B) - - - -
Robert D. Ranus (A) - - 10,500/- 488,000/-
(B) - - - -
Ralph D. Beketic (A) - - 1,850/150 56,385/ 6,840
(B) - - 1,450/550 52,985/22,540
Marion H. Sullivan(A) - - 1,150/350 56,960/17,090
(B) - - 1,950/550 82,210/24,940
Michael J. Schmitt(A) - - 2,350/1,150 104,060/48,490
(B) - - 1,150/350 56,960/17,090
Benefits under the Roundy's, Inc. Retirement Plan are, in
general, an amount equal to 50% of average compensation
minus 50% of the participant's primary Social Security
benefit; provided, however, that if the employee has fewer
than 25 years of credited service, the monthly amount so
determined is multiplied by a fraction, the numerator of
which is the years of credited service and the denominator
of which is 25. In addition, if credited service is greater
than 25 years, the benefit is increased by 1% of average
compensation for each year of credited service in excess of
25 years to a maximum of 10 additional years.
The following table sets forth the estimated annual pensions
(before deduction of the Social Security offset described
below) which persons in specified categories would receive
if they had retired on January 3, 1998, at the age of 65:
Average Annual
Compensation
During Last Annual Pension After Specified
Five Completed Years of Credited
Service ----------------------------------------------------
Calendar Years 15 Years 20 Years 25 Years 30 Years 35 Years
- -------------- -----------------------------------------------------
$100,000 $30,000 $40,000 $50,000 $55,000 $60,000
125,000 37,500 50,000 62,500 68,800 75,000
150,000 44,300 59,000 73,800 81,200 88,500
175,000 45,600 60,800 76,000 83,000 91,200
200,000 48,400 64,800 81,300 90,000 98,200
225,000 52,900 71,400 89,900 100,500 109,700
250,000 57,400 78,000 98,500 111,000 121,300
300,000 60,400 82,300 104,200 117,900 125,000
400,000 60,400 82,300 104,200 117,900 125,000
450,000 60,400 82,300 104,200 121,800 125,000
500,000 60,400 82,300 104,200 125,000 125,000
All of the Named Executive Officers are covered by the
Roundy's, Inc. Retirement Plan. Their average annual
compensation would be the combined amount listed under
Salary and Bonus shown in the Summary Compensation Table.
The estimated credited years of service for each of the
Named Executive Officers is as follows: Mr. Lestina: 28
years, Mr. Ranus: 11 years, Mr. Beketic: 7 years, Mr.
Sullivan: 10 years, and Mr. Schmitt: 20 years.
Directors who are employees of Roundy's receive no fees for
serving as Directors. Customer-directors each received $500
per meeting during 1997; outside Directors each received
$15,000, prorated on an annual basis, plus $500 per Board of
Directors meeting plus $500 per committee meeting not held
the same day as a Board of Directors meeting for their
services during 1997.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management.
---------------------------------------------------------------
Roundy's is authorized by its Articles of Incorporation to
issue 60,000 shares of Class A Common, $1.25 par value, and
2,400,000 shares of Class B Common, $1.25 par value. On
March 30, 1998, 12,400 shares of Class A Common and
1,159,144 shares of Class B Common were outstanding.
Roundy's has a Voting Trust (the "Trust") which was
established in August, 1971 (was amended and restated in
1983 and was further amended in 1986 and 1995), as the
successor to an initial voting trust created at the time of
the organization of Roundy's. The Trust has an indefinite
term, although it may be terminated upon the vote of the
Voting Trust Certificate Holders as provided therein. The
main purpose for the establishment of the Trust, and its
predecessor, was to insure the stability of management
necessary to obtain long-term warehouse and other financing.
On March 30, 1998, all of the outstanding shares of Roundy's
Class A Common held by current stockholder-customers were on
deposit in the Trust. The Voting Trust Agreement authorizes
the Trustees to vote all shares deposited in the Trust, in
their discretion, for the election of all but four of the
Directors (there are currently ten Directors). On other
matters submitted to a vote of stockholders (including the
election of one Director each year), the Trustees are
required to vote the shares deposited in the Trust as a
block as directed by a vote of the holders of outstanding
Voting Trust Certificates (with each share of Class A Common
in the Trust entitling the depositor thereof to one vote).
The Trustees of the Trust currently are Victor C. Burnstad,
Robert S. Gold, Edward G. Kitz, Gerald F. Lestina, Robert R.
Spitzer and David A. Ulrich. Mr. Lestina is President and
Chief Executive Officer of Roundy's, Inc., and is a member
of Roundy's Board of Directors. Mr. Kitz is Vice President,
Secretary and Treasurer of Roundy's, Inc. Mr. Burnstad is
President and Stockholder of Burnstad Bros., Inc., a
stockholder-customer of Roundy's. Mr. Gold is President and
Stockholder of B. & H. Gold Corporation, a stockholder-
customer of Roundy's. Mr. Ulrich is President and
Stockholder of Mega Marts, Inc., a stockholder-customer of
Roundy's. In the event of the death, resignation,
incapacity or inability of any of the Trustees, a successor
Trustee may be named by a majority of the remaining
Trustees. There is currently one trustee position vacant.
Vacancies need not be filled, except that there must be at
least three Trustees acting as such at all times, and one
Trustee must always be a stockholder-customer (or a
principal of an entity which is a stockholder-customer) of
Roundy's.
The following table sets forth the beneficial ownership of
equity securities of Roundy's as of March 30, 1998, by (i)
each director; (ii) each Named Executive Officer; (iii) all
directors and executive officers as a group; and (iv) each
person who is known to the Company to be the beneficial owner
of 5% or more of either of the outstanding classes shown.
Except as set forth in the table below, no other person
(or group who, directly or indirectly, through any relationship,
has or shares the power to vote, or to direct the voting) owns
of record or is known by Roundy's to own beneficially more than 5%
of the outstanding Roundy's Class A Common Stock or Roundy's Class
B Common Stock. Except for McAdams, Inc., Mega Marts, Inc.,
Woodmans's Food Market, Inc. and Ultra Mart, Inc. (see
below), no other person owns of record or is known by
Roundy's to own beneficially more than 5% of the Voting
Trust Certificates issued by the Trustees of the Roundy's
Voting Trust with respect to shares of Roundy's Class A
Common Stock deposited with the Trustees.
Beneficial Ownership (1)
--------------------------------
Class A Common Class B Common
--------------- -----------------
Number Percent Number Percent
of of Class of of Class
Shares (2) Shares (2)
---------------- ----------------
Woodman' Food Market, 700 5.65% 104,374 9.00%
Inc. (3)
McAdams, Inc. (4) 700 5.65% 73,818 6.37%
Mega Marts, Inc. (5) 1,600 12.90% 111,391 9.61%
Ultra Mart, Inc. (6) 700 5.65% 45,531 3.93%
Gerald F. Lestina (7) -(8) -(8) 20,606 1.75%
Robert D. Ranus (9) -(8) -(8) 14,875 1.27%
George C. Kaiser (10) -(8) -(8) 4,000 *
Brenton H. Rupple -(8) -(8) 300 *
Robert E. Bartels (11) -(8) -(8) 4,916 *
Gary R. Sarner -(8) -(8) 499 *
George E. Prescott (12) 600 4.84% 75,961 6.55%
Gary N,. Gundlach (13) 500 4.03% 24,717 2.13%
Charles R. Bonson (14) 100 * 20,154 1.74%
Patrick D. McAdams (4) 700 5.65% 73,818 6.37%
Ralph D. Beketic (15) -(8) -(8) 1,850 *
Marion H. Sullivan (16) -(8) -(8) 1,150 *
Michael J. Schmitt (17) -(8) -(8) 4,017 *
All Directors and 1,900 15.32% 257,029 21.44%
Executive Officers as a
Group (18)
(1) Direct ownership except as otherwise noted, and except
that all shares of Class A Common Stock shown in the
table are owned of record by the Trustees of the
Roundy's, Inc. Voting Trust.
(2) Asterisk (*) denotes less than 1%.
(3) Voting and investment power over the shares owned by
Woodman's Food Market, Inc., whose address is 2919
North Lexington, Janesville, Wisconsin 53545, is solely
held by its owner, Willard R. Woodman, Jr.
(4) Voting and investment power over the shares owned by
McAdams, Inc., whose address is 36933 West Plank Road,
Oconomowoc, Wisconsin 53066, is solely held by its
owner, John A. McAdams. The shares shown for Patrick
D. McAdams reflect all shares owned by McAdams, Inc. of
which Patrick D. McAdams is General Manager and
Treasurer.
(5) Voting and investment power over the shares owned by
Mega Marts, Inc., whose address is 6312 South 27th
Street, Oak Creek, Wisconsin 53154, is solely held by
its owner, David A. Ulrich.
(6) Voting and investment power over the shares owned by
Ultra Mart, Inc., whose address is W173 N9170 St.
Francis Drive, Menomonee Falls, Wisconsin 53051, is
solely held by its owner, Robert A. Farrell.
(7) Includes options for 17,500 shares that are exercisable
within 60 days of March 30, 1998.
(8) The Class A Common may only be held by the owners
("stockholder-customers") of retail grocery stores
serviced by Roundy's.
(9) Includes options for 10,500 shares that are exercisable
within 60 days of March 30, 1998.
(10) Includes 1,500 shares owned by First Wisconsin Trust
Company as Trustee of George Kaiser Profit Sharing
Plan.
(11) Includes 3,949 shares owned by Martin's Super Markets,
Inc., of which Mr. Bartels is President and
shareholder.
(12) Includes 600 shares of Class A Common Stock and 59,098
shares of Class B Common Stock owned by Prescott's
Supermarkets, Inc. of which Mr. Prescott is the
principal shareholder; also includes 16,863 shares of
Class B Common Stock held in certain Trusts for the
benefit of certain members of Mr. Prescott's family, as
to which 16,863 shares Mr. Prescott disclaims
beneficial ownership.
(13) Relates to shares owned by Gary N. Gundlach, as sole
proprietor and of G.E.M., Inc. of which Mr. Gundlach is
principal shareholder.
(14) Relates to shares owned by Bonson's Foods, Inc. of
which Mr. Bonson is principal shareholder.
(15) Includes options for 1,850 shares that are exercisable
within 60 days of March 30, 1998.
(16) Includes options for 1,150 shares that are exercisable
within 60 days of March 30, 1998.
(17) Includes options for 2,350 shares that are exercisable
within 60 days of March 30, 1998.
(18) The group of directors and executive officers who
control stockholder-customers and therefor may
beneficially own Class A Common (see Note (4)) consists
of four (4) persons: Messrs. Prescott, Gundlach, Bonson
and McAdams. The group of directors and executive
officers who own or may own Class B Common consists of
nineteen (19) persons. The total shown for Class B
Common for the group includes options for 39,616 shares
that are exercisable within 60 days of March 30, 1998,
but does not include options for an additional 5,384
shares that have been granted but are not exercisable
within 60 days of March 30, 1998.
ITEM 13. Certain Relationships and Related Transactions.
-----------------------------------------------
Messrs. Bartels, Bonson, Gundlach, McAdams and Prescott,
directors
of Roundy's, and Messrs. Burnstad, Gold and Ulrich, Trustees
of the Voting Trust, each own and/or operate retail food
stores which purchase merchandise from the Company as a
supplier in the ordinary course of business. Retail food
stores owned by directors or Retailer Trustees purchase from
the Company on the same basis and conditions as all other
stockholder-customers of Roundy's. During the last three
years, the aggregate amount of purchases from the Company
for each of the foregoing were as follows:
1997 1996 1995
---- ---- ----
Robert E. Bartels $114,306,000 $ 96,608,000 $ 81,542,000
Charles R. Bonson 8,471,000 7,616,000 7,094,000
Victor C. Burnstad 19,320,000 19,053,000 18,262,000
Robert S. Gold 52,712,000 48,212,000 46,770,000
Gary N. Gundlach 47,514,000 45,680,000 39,253,000
Patrick D. McAdams 70,639,000 63,003,000 63,598,000
George E. Prescott 78,218,000 70,757,000 60,567,000
David A. Ulrich 271,690,000 242,679,000 219,310,000
Woodman's Food Market, Inc., owner of 9.23% of Roundy's
Class B Common Stock, had aggregate purchases from Roundy's
of $51,395,000, $52,805,000 and $58,484,000 for 1997, 1996
and 1995, respectively.
Ultra Mart, Inc., owner of 5.56% of Roundy's Class A Common
Stock had aggregate purchases from Roundy's of $93,015,000,
$90,722,000 and $81,399,000 for 1997, 1996 and 1995,
respectively. Ultra Mart, Inc. agreed to sublease land and
buildings from the Company for a period of six to 16 years
at seven store sites, for an aggregate annual rental of
approximately $2,501,000.
Prescott Supermarkets, Inc. has agreed to sublease land and
buildings from the Company for periods of two to 15 years at
five store sites, for an aggregate annual rental of
approximately $1,639,000.
Gary N. Gundlach has agreed to sublease land and buildings
from the Company for periods of 11 to 17 years at four store
sites, for an aggregate annual rental of approximately
$926,000. In January, 1997, Gary N. Gundlach issued a
promissory note to Roundy's, Inc. in the amount of $97,000.
The amount outstanding as of February 28, 1998 was $33,000.
McAdams, Inc. agreed to sublease land and buildings from the
Company for periods of 12 and 13 years at two store sites,
for an aggregate annual rental of approximately $555,000.
Mega Marts, Inc. agreed to sublease land and buildings from
the Company for periods of two to 17 years at twelve store
sites and one additional storage site, for an aggregate
annual rental of approximately $4,413,000.
B. & H. Gold Corporation, Gold's Market, Inc., and Gold's,
Inc. have agreed to sublease land and buildings from the
Company for periods of eight to 21 years at three store
sites, for an aggregate annual rental of approximately
$1,184,000.
Burnstad Bros., Inc. has agreed to sublease land and a
building from the Company for a period of four years, for an
annual rental of approximately $44,000. In November, 1997,
Burnstad Bros., Inc. issued promissory notes to Roundy's,
Inc. in the amount of $48,200. The amount outstanding as of
February 28, 1998 was $48,200.
The Company has made payments in fiscal 1997 aggregating
$1,495,700 for handling, order selecting and storage of
frozen food, meat and ice cream to Total Logistic Control,
LLC of which Mr. Sarner is Chairman.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K.
-----------------------------------------------------
(a)(1) Financial Statements
The following consolidated financial statements of the
Company are incorporated by reference from its Annual Report
to Stockholders for the year ended January 3, 1998, filed as
an exhibit hereto:
Independent Auditors' Report
Statements of Consolidated Earnings for each of the three years
in the period ended January 3, 1998
Consolidated Balance Sheets at January 3, 1998 and
December 28, 1996
Statements of Consolidated Stockholders' Equity for each of
the three years in the period ended January 3, 1998
Statements of Consolidated Cash Flows for each of the three
years in the period ended January 3, 1998
Notes to Financial Statements
(a)(2) Financial Statement Schedules as of January 3,
1998
Page
-----
Independent Auditors' Report....................... 27
Schedule VIII - Valuation and qualifying
accounts.......................... 28
All other schedules are omitted because they are not
applicable or the required information is shown in the
financial statements or the notes thereto.
(a)(3) Exhibits
3.1 Articles of Incorporation of the Registrant, as
amended, incorporated herein by reference to Exhibit
4.1 of Registrant's Registration Statement on Form S-
2 (File No. 2-94485) dated December 5, 1984.
3.2 By-Laws of the Company as amended February 24, 1998.
FILED HEREWITH.
3.3 Amendment of By-Law Section 5.01. FILED HEREWITH.
4.1 Policy Relating to Redemption of Stock by Inactive
Customer Shareholders and Former Employees,
incorporated herein by reference to Exhibit 4.1 of
the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 28, 1996, filed with the
Commission on March 26, 1997, Commission File No. 33-
57505 (included as Exhibit D to the prospectus which
forms a part of the Registration Statement).
4.2 Note Agreement dated December 15, 1991 (effective
December 30, 1991), between Roundy's, Inc. and
Massachusetts Mutual Life Insurance Company and
United of Omaha Life Insurance Company, incorporated
herein by reference to Exhibit 4.9 of Registrant's
Annual Report on Form 10-K for the fiscal year ended
December 28, 1991, filed with the Commission on March
26, 1992, Commission File No. 2-66296.
4.3 Note Agreement dated December 15, 1992 between
Roundy's, Inc. and Connecticut Mutual Life Insurance
Company, The Ohio National Life Insurance Company,
Provident Mutual Life Insurance Company of
Philadelphia, Providentmutual Life and Annuity
Company of America, Guarantee Mutual Life Company,
Woodmen Accident and Life Company and United of Omaha
Life Insurance Company, incorporated herein by
reference to Exhibit 4.11 of Registrant's Annual
Report on Form 10-K for the fiscal year ended January
2, 1993, filed with the Commission on March 30, 1993,
Commission File No. 2-66296.
4.4 Policy Regarding Issuance and Sales of Roundy's, Inc.
Stock, incorporated herein by reference to Exhibit
4.11 of Registrant's Registration Statement on Form S-
2 (File No. 33-57505) filed with the Commission on
January 30, 1995 (included as Exhibit E to the
prospectus which forms a part of the Registration
Statement).
4.5 Note Agreement dated December 22, 1993 (effective
December 22, 1993), between Roundy's, Inc. and The
Variable Annuity Life Insurance Company, The Life
Insurance Company of Virginia, Phoenix Home Life
Mutual Insurance Company, Phoenix American Life
Insurance Company, Washington National Insurance
Company, and TMG Life Insurance Company, incorporated
herein by reference to Exhibit 4.14 of Registrant's
Annual Report on Form 10-K for the fiscal year ended
January 1, 1994, filed with the Commission on March
31, 1994, Commission File No. 2-66296.
4.6 Form of Subscription Agreement, incorporated by
reference to Exhibit 4.14 of Registrant's
Registration Statement on Form S-2 (File No. 33-
57505) filed with the Commission on January 30, 1995
(included as Exhibit A to the prospectus which forms
a part of the Registration Statement).
4.7 Form of Buying Deposit Agreement, incorporated by
reference to Exhibit 4.15 of Registrant's
Registration Statement on Form S-2 (File No. 33-
57505) filed with the Commission on January 30, 1995
(included as Exhibit B to the prospectus which forms
a part of the Registration Statement).
4.8 Article V of Registrant's By-Laws "Fiscal Year
Accounting and Patronage Rebates," as amended on
December 12, 1989, incorporated by reference to
Exhibit 4.16 of Registrant's Registration Statement
on Form S-2 (File No. 33-57505) filed with the
Commission on January 30, 1995 (included as Exhibit C
to the prospectus which forms a part of the
Registration Statement).
4.9 First Amendment dated May 1, 1996 to Note Agreements
dated December 15, 1991 and Note Agreements dated
December 15, 1992 and Note Agreements dated December
22, 1993, incorporated herein by reference to Exhibit
4.16 of Registrant's Form 10-Q for the quarterly
period ended June 29, 1996, filed with the Commission
on August 13, 1996, Commission File No. 33-57505.
4.10 Note Agreement dated May 15, 1996 between Roundy's,
Inc. and The Ohio National Life Insurance, Phoenix
American Life Insurance Company, Provident Mutual
Life Insurance, Providentmutual Life and Annuity
Company of America, United of Omaha Life Insurance
Company, John Alden Life Insurance Company, Oxford
Life Insurance Company, The Security Mutual Life
Insurance Company of Lincoln, Nebraska and Woodman
Accident and Life Company, incorporated herein by
reference to Exhibit 4.17 of Registrant's Form 10-Q
for the quarterly period ended June 29, 1996, filed
with the Commission on August 13, 1996, Commission
File No. 33-57505.
4.11 Credit Agreement dated December 13, 1996, between
Roundy's, Inc. and PNC Bank, NA (as agent),
incorporated herein by reference to Exhibit 4.11 of
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 28, 1996, filed with the
Commission on March 26, 1997, Commission File No. 33-
57505.
9 Amended and Restated Voting Trust Agreement dated
September 16, 1983, incorporated herein by reference
to Exhibit 9 of Registrant's Annual Report on Form 10-
K for the year ended December 31, 1983, filed with
the Commission on March 30, 1984, Commission File No.
2-66296.
9(a) Amendments No. 1 and 2, dated April 8, 1986 to
Amended and Restated Voting Trust Agreement,
incorporated herein by reference to Exhibit 9(a) of
Registrant's Registration Statement on Form S-2 (File
No. 2-66296), dated April 29, 1986.
9(b) Amendment No. 1987-1 to Amended and Restated Voting
Trust Agreement, incorporated herein by reference to
Exhibit 9(b) of Registrant's Registration Statement
on Form S-2 (File No. 2-66296), dated April 29, 1987.
9(c) Amendment 1995-1 to the Roundy's, Inc. Voting Trust
Agreement, incorporated herein by reference to
Exhibit 9(c) of Registrant's Registration Statement
on Form S-2 (File No. 33-57505), dated May 1, 1995.
9(d) Amendment 1995-2 to the Roundy's, Inc. Voting Trust
Agreement, incorporated herein by reference to
Exhibit 9(d) of Registrant's Registration Statement
on Form S-2 (File No. 33-57505), dated April 26,
1996.
10.1 Deferred Compensation Agreement plan between the
Registrant and certain executive officers including
Messrs. Lestina, Ranus, Beketic, Sullivan and
Schmitt, incorporated herein by reference to Exhibit
10.1, of Registrant's Registration Statement on Form
S-2 (File No. 33-57505) dated April 24, 1997.
10.2 Directors and Officers Liability and Corporation
Reimbursement Policy issued by American Casualty
Company of Reading, Pennsylvania (CNA Insurance
Companies) as of June 13, 1986, incorporated herein
by reference to Exhibit 10.3 of Registrant's Annual
Report on Form 10-K for the fiscal year ended January
3, 1987, filed with the Commission on April 3, 1987,
Commission File No. 2-66296.
10.2(a) Declarations page for renewal through November 1,
1998 of Directors and Officers Liability and
Corporation Reimbursement Policy. FILED HEREWITH.
10.3 1991 Stock Incentive Plan, revised February 9, 1993,
incorporated herein by reference to Exhibit 10.6 of
Registrant's Annual Report on Form 10-K for the
fiscal year ended January 2, 1993, filed with the
Commission on March 30, 1993, Commission File No. 2-
66296.
10.4 Severance and Non-Competition Agreement between the
Registrant and Gerald F. Lestina, incorporated herein
by reference to Exhibit 10.4 of Registrant's Annual
Report on Form 10-K for the fiscal year ended
December 30, 1995, filed with the Commission on March
28, 1996, Commission File No. 33-57505.
10.5 Roundy's, Inc. Deferred Compensation Plan, effective
March 19, 1996, incorporated herein by reference to
Exhibit 10.5 of Registrant's Registration Statement
on Form S-2 (File No. 33-57505), dated April 26,
1996.
13. 1997 Annual Report to Stockholders of Roundy's, Inc.
21. Subsidiaries of Roundy's, Inc.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed during the
last quarter of 1997.
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Directors of Roundy's, Inc.:
We have audited the consolidated financial statements of
Roundy's, Inc. and its subsidiaries as of January 3, 1998
and December 28, 1996, and for each of the three years in
the period ended January 3, 1998 and have issued our report
thereon dated February 20, 1998; such consolidated financial
statements and report are included in your 1997 Annual
Report to Stockholders and are incorporated herein by
reference. Our audits also included the financial statement
schedule of Roundy's, Inc. listed in Item 14(a)(2). This
financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, such
consolidated financial statement schedule, when considered
in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the
information set forth therein.
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
February 20, 1998
<PAGE>
<TABLE>
SCHEDULE VIII
ROUNDY'S, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
<CAPTION>
_______________________________________________________________________________________________
COLUMN COLUMN COLUMN COLUMN COLUMN
A B C D E
- -----------------------------------------------------------------------------------------------
ADDITIONS
(1) (2)
Balance at Charged Charged Balance
Beginning to Costs to Other Deductions at End
Description of Period & Expenses Accounts (A) of Period
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED January 3, 1998:
Allowance for Losses:
Current receivables .........$6,314,700 $2,389,100 $3,055,100 $5,648,700
Notes receivable, long-term. 5,576,000 - 277,000 5,299,000
YEAR ENDED December 28, 1996:
Allowance for Losses:
Current receivables ....... $8,431,300 $4,367,600 $6,484,200 $6,314,700
Notes receivable, long-term. 4,641,000 935,000 - 5,576,000
YEAR ENDED December 30, 1995:
Allowance for Losses:
Current receivables ....... $11,000,400 $2,146,500 $4,715,600 $8,431,300
Notes receivable, long-term. 916,000 3,725,000 - 4,641,000
<FN>
(A) Amounts in Column D represent accounts written off less recoveries.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, Roundy's, Inc. has duly
caused this report to be signed on its behalf of the
undersigned, thereunto duly authorized.
ROUNDY'S, INC.
GERALD F. LESTINA ROBERT D. RANUS
- ----------------------------- ----------------------
By: Gerald F. Lestina By: Robert D. Ranus
(Principal Executive Officer) (Principal Financial
Officer and Principal
Accounting Officer)
Date: March 31, 1998
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons (constituting a majority of the Board of Directors)
on behalf of the Registrant and in the capacities and on the
dates indicated:
PATRICK D. MCADAMS
- -------------------- --------------------
Robert E. Bartels Patrick D. McAdams
March 31, 1998 March 31, 1998
(Director) (Director)
CHARLES R. BONSON GEORGE E. PRESCOTT
- -------------------- ---------------------
Charles R. Bonson George E. Prescott
March 31, 1998 March 31, 1998
(Director) (Director)
GARY N. GUNDLACH ROBERT D. RANUS
- ------------------- ---------------------
Gary N. Gundlach Robert D. Ranus
March 31, 1998 March 31, 1998
(Director) (Director)
GEORGE C. KAISER BRENTON H. RUPPLE
- ------------------ ----------------------
George C. Kaiser Brenton H. Rupple
March 31, 1998 March 31, 1998
(Director) (Director)
GERALD F. LESTINA GARY R. SARNER
- ------------------ ----------------------
Gerald F. Lestina Gary R. Sarner
March 31, 1998 March 31, 1998
(Director) (Director)
SUPPLEMENTAL INFORMATION TO BE
FURNISHED WITH REPORTS FILED
PURSUANT TO SECTION 15(d)
OF THE ACT BY REGISTRANTS
WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE ACT
Registrant's annual report to securityholders for the year
ended January 3, 1998 is incorporated by reference in this report.
Registrant does not furnish proxy soliciting material to its
securityholders.
INDEX TO EXHIBITS
Exhibit Description
3.1 Articles of Incorporation of the Registrant, as
amended, incorporated herein by reference to Exhibit
4.1 of Registrant's Registration Statement on Form S-
2 (File No. 2-94485) dated December 5, 1984.
3.2 By-Laws of the Company as amended February 24, 1998.
FILED HEREWITH.
3.3 Amendment of By-Law Section 5.0l. FILED HEREWITH.
4.1 Policy Relating to Redemption of Stock by Inactive
Customer Shareholders and Former Employees,
incorporated herein by reference to Exhibit 4.1 of
the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 28, 1996, filed with the
Commission on March 26, 1997, Commission File No. 33-
57505 (included as Exhibit D to the prospectus which
forms a part of the Registration Statement).
4.2 Note Agreement dated December 15, 1991 (effective
December 30, 1991), between Roundy's, Inc. and
Massachusetts Mutual Life Insurance Company and
United of Omaha Life Insurance Company, incorporated
herein by reference to Exhibit 4.9 of Registrant's
Annual Report on Form 10-K for the fiscal year ended
December 28, 1991, filed with the Commission on March
26, 1992, Commission File No. 2-66296.
4.3 Note Agreement dated December 15, 1992 between
Roundy's, Inc. and Connecticut Mutual Life Insurance
Company, The Ohio National Life Insurance Company,
Provident Mutual Life Insurance Company of
Philadelphia, Providentmutual Life and Annuity
Company of America, Guarantee Mutual Life Company,
Woodmen Accident and Life Company and United of Omaha
Life Insurance Company, incorporated herein by
reference to Exhibit 4.11 of Registrant's Annual
Report on Form 10-K for the fiscal year ended January
2, 1993, filed with the Commission on March 30, 1993,
Commission File No. 2-66296.
4.4 Policy Regarding Issuance and Sales of Roundy's, Inc.
Stock, incorporated herein by reference to Exhibit
4.11 of Registrant's Registration Statement on Form S-
2 (File No. 33-57505) filed with the Commission on
January 30, 1995 (included as Exhibit E to the
prospectus which forms a part of the Registration
Statement).
4.5 Note Agreement dated December 22, 1993 (effective
December 22, 1993), between Roundy's, Inc. and The
Variable Annuity Life Insurance Company, The Life
Insurance Company of Virginia, Phoenix Home Life
Mutual Insurance Company, Phoenix American Life
Insurance Company, Washington National Insurance
Company, and TMG Life Insurance Company, incorporated
herein by reference to Exhibit 4.14 of Registrant's
Annual Report on Form 10-K for the fiscal year ended
January 1, 1994, filed with the Commission on March
31, 1994, Commission File No. 2-66296.
4.6 Form of Subscription Agreement, incorporated by
reference to Exhibit 4.14 of Registrant's
Registration Statement on Form S-2 (File No. 33-
57505) filed with the Commission on January 30, 1995
(included as Exhibit A to the prospectus which forms
a part of the Registration Statement).
4.7 Form of Buying Deposit Agreement, incorporated by
reference to Exhibit 4.15 of Registrant's
Registration Statement on Form S-2 (File No. 33-
57505) filed with the Commission on January 30, 1995
(included as Exhibit B to the prospectus which forms
a part of the Registration Statement).
4.8 Article V of Registrant's By-Laws "Fiscal Year
Accounting and Patronage Rebates," as amended on
December 12, 1989, incorporated by reference to
Exhibit 4.16 of Registrant's Registration Statement
on Form S-2 (File No. 33-57505) filed with the
Commission on January 30, 1995 (included as Exhibit C
to the prospectus which forms a part of the
Registration Statement).
4.9 First Amendment dated May 1, 1996 to Note Agreements
dated December 15, 1991 and Note Agreements dated
December 15, 1992 and Note Agreements dated December
22, 1993, incorporated herein by reference to Exhibit
4.16 of Registrant's Form 10-Q for the quarterly
period ended June 29, 1996, filed with the Commission
on August 13, 1996, Commission File No. 33-57505.
4.10 Note Agreement dated May 15, 1996 between Roundy's,
Inc. and The Ohio National Life Insurance, Phoenix
American Life Insurance Company, Provident Mutual
Life Insurance, Providentmutual Life and Annuity
Company of America, United of Omaha Life Insurance
Company, John Alden Life Insurance Company, Oxford
Life Insurance Company, The Security Mutual Life
Insurance Company of Lincoln, Nebraska and Woodman
Accident and Life Company, incorporated herein by
reference to Exhibit 4.17 of Registrant's Form 10-Q
for the quarterly period ended June 29, 1996, filed
with the Commission on August 13, 1996, Commission
File No. 33-57505.
4.11 Credit Agreement dated December 13, 1996, between
Roundy's, Inc. and PNC Bank, NA (as agent),
incorporated herein by reference to Exhibit 4.11 at
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 28, 1996, filed with the
Commission on March 26, 1997, Commission File No. 33-
57505.
9 Amended and Restated Voting Trust Agreement dated
September 16, 1983, incorporated herein by reference
to Exhibit 9 of Registrant's Annual Report on Form 10-
K for the year ended December 31, 1983, filed with
the Commission on March 30, 1984, Commission File No.
2-66296.
9(a) Amendments No. 1 and 2, dated April 8, 1986 to
Amended and Restated Voting Trust Agreement,
incorporated herein by reference to Exhibit 9(a) of
Registrant's Registration Statement on Form S-2 (File
No. 2-66296), dated April 29, 1986.
9(b) Amendment No. 1987-1 to Amended and Restated Voting
Trust Agreement, incorporated herein by reference to
Exhibit 9(b) of Registrant's Registration Statement
on Form S-2 (File No. 2-66296), dated April 29, 1987.
9(c) Amendment 1995-1 to the Roundy's, Inc. Voting Trust
Agreement, incorporated herein by reference to
Exhibit 9(c) of Registrant's Registration Statement
on Form S-2 (File No. 33-57505), dated May 1, 1995.
9(d) Amendment 1995-2 to the Roundy's, Inc. Voting Trust
Agreement, incorporated herein by reference to
Exhibit 9(d) of Registrant's Registration Statement
on Form S-2 (File No. 33-57505), dated April 26,
1996.
10.1 Deferred Compensation Agreement plan between the
Registrant and certain executive officers including
Messrs. Lestina, Ranus, Beketic, Sullivan and
Schmitt, incorporated herein by reference to Exhibit
10.1, of Registrant's Registration Statement on Form
S-2 (File No. 33-57505) dated April 24, 1997.
10.2 Directors and Officers Liability and Corporation
Reimbursement Policy issued by American Casualty
Company of Reading, Pennsylvania (CNA Insurance
Companies) as of June 13, 1986, incorporated herein
by reference to Exhibit 10.3 of Registrant's Annual
Report on Form 10-K for the fiscal year ended January
3, 1987, filed with the Commission on April 3, 1987,
Commission File No. 2-66296.
10.2(a) Declarations page for renewal through November 1,
1998 of Directors and Officers Liability and
Corporation Reimbursement Policy. FILED HEREWITH.
10.3 1991 Stock Incentive Plan, revised February 9, 1993,
incorporated herein by reference to Exhibit 10.6 of
Registrant's Annual Report on Form 10-K for the
fiscal year ended January 2, 1993, filed with the
Commission on March 30, 1993, Commission File No. 2-
66296.
10.4 Severance and Non-Competition Agreement between the
Registrant and Gerald F. Lestina, incorporated herein
by reference to Exhibit 10.4 of Registrant's Annual
Report on Form 10-K for the fiscal year ended
December 30, 1995, filed with the Commission on March
28, 1996, Commission File No. 33-57505.
10.5 Roundy's, Inc. Deferred Compensation Plan, effective
March 19, 1996, incorporated herein by reference to
Exhibit 10.5 of Registrant's Registration Statement
on Form S-2 (File No. 33-57505), dated April 26,
1996.
13 1997 Annual Report to Stockholders of Roundy's, Inc.
FILED HEREWITH.
21 Subsidiaries of Roundy's, Inc. FILED HEREWITH.
27 Financial Data Schedule. FILED HEREWITH.
BY-LAWS EXHIBIT 3.2
OF
ROUNDY'S, INC.
(a Wisconsin corporation)
INTRODUCTION -
VARIABLE REFERENCES
Date of Adoption of these By-Laws:
Date of Incorporation:
0.01. Date of annual shareholders' meeting (see Section
2.01):
The Second Wednesday in April in each year.
*
0.02. Required notice of shareholders' meeting (see
Section 2.04):
Not less than five (5) days.
*
0.03. Authorized number of directors (see Section 3.01):
ten (10)
*
0.04. Required notice of Special directors' meetings
(see Section 3.05):
A. Not less than three (3) days if by mail, and
B. Not less than 24 hours if by telegram,
cable or radiogram, personal delivery, or
word of mouth, telephone or radiophone.
*
* These spaces are reserved for official notation of future
amendments to these sections.
ARTICLE I
OFFICES
1.01. Principal and Business Offices. The
corporation may have such principal and other business
offices, either within or without the State of Wisconsin, as
the Board of Directors may designate or as the business of the
corporation may require from time to time.
1.02. Registered Office. The registered office of
the corporation required by the Wisconsin Business Corporation
Law to be maintained in the State of Wisconsin may be, but
need not be, identical with the principal office in the State
of Wisconsin, and the address of the registered office may be
changed from time to time by the Board of Directors. The
business office of the registered agent of the corporation
shall be identical to such registered office.
ARTICLE II
SHAREHOLDERS
2.01. Annual Meeting. The annual meeting of the
shareholders shall be held in each year on the date set forth
in Section 0.01, at the hour designated in the written notice
of said meeting given pursuant to Section 2.04, or at such
other time and date within thirty days before or after said
date as may be fixed by or under the authority of the Board of
Directors, for the purpose of electing directors and for the
transaction of such other business as may come before the
meeting. If the election of directors shall not be held on
the day designated herein, or fixed as herein provided, for
any annual meeting of the shareholders, or at any adjournment
thereof, the Board of Directors shall cause the election to be
held at a special meeting of the shareholders as soon
thereafter as convenient.
2.02. Special Meeting. Special meetings of the
shareholders, for any purpose or purposes, unless otherwise
prescribed by statute, may be called by either the President,
the Board of Directors, the Chairman of the Board (if the
Board of Directors determines to elect one), or by the holders
of not less than 25% of all shares of the corporation entitled
to vote at the meeting.
2.03. Place of Meeting. The Board of Directors may
designate any place, either within or without the State of
Wisconsin, as the place of meeting for any annual meeting or
for any special meeting called by the Board of Directors. A
waiver of notice signed by all shareholders entitled to vote
at a meeting may designate any place, either within or without
the State of Wisconsin, as the place for the holding of such
meeting. If no designation is made, or if a special meeting
be otherwise called, the place of the meeting shall be the
principal business office of the corporation in the State of
Wisconsin or such other suitable place in the county of such
principal office as may be designated by the person calling
such meeting, but any meeting may be adjourned to reconvene at
any place designated by vote of a majority of the shares
represented thereat.
2.04. Notice of Meeting. Written notice stating the
place, day and hour of the meeting and, in case of a special
meeting, the purpose or purposes for which the meeting is
called, shall be delivered not less than the number of days
set forth in Section 0.02 (unless a longer period is required
by law or the articles of incorporation) not more than fifty
days before the date of the meeting, either personally or by
mail, by or at the direction of the President, or the
Secretary, or other officer or persons calling the meeting, to
each shareholder of record entitled to vote at such meeting.
If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, addressed to the
shareholder at his address as it appears on the stock record
books of the corporation, with postage thereon prepaid. Such
notice may be given by placing such notice in a bulletin sent
to all Shareholders of the Corporation entitled to vote not
less than five (5) days prior to the meeting. When notice is
given through the bulletin, the notice shall be headed by the
words "Notice of Annual Meeting", or "Notice of Special
Meeting", as the case may be.
2.05. Closing of Transfer Books or Fixing of Record
Date. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders or any
adjournment thereof, or shareholders entitled to receive
payment of any dividend, or in order to make a determination
of shareholders for any other proper purpose, the Board of
Directors may provide that the stock transfer books shall be
closed for a stated period but not to exceed, in any case,
fifty days. If the stock transfer books shall be closed for
the purpose of determining shareholders entitled to notice of
or to vote at a meeting of shareholders, such books shall be
closed for at least ten days immediately preceding such
meeting. In lieu of closing the stock transfer books, the
Board of Directors may fix in advance a date as the record
date for any such determination of shareholders, such date in
any case to be not more than fifty days and, in case of a
meeting of shareholders, not less than ten days prior to the
date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock
transfer books are not closed and no record date is fixed for
the determination of shareholders entitled to notice of or to
vote at a meeting of shareholders, or shareholders entitled to
receive payment of a dividend, the close of business on the
date on which notice of the meeting is mailed or on the date
on which the resolution of the Board of Directors declaring
such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a
determination of shareholders entitled to vote at any meeting
of shareholders has been made as provided in this section,
such determination shall be applied to any adjournment thereof
except where the determination has been made through the
closing of the stock transfer books and the stated period of
closing has expired.
2.06. Voting Lists. The officer or agent having
charge of the stock transfer books for shares of the
corporation shall, before each meeting of shareholders, make a
complete list of the shareholders entitled to vote at such
meeting, or any adjournment thereof, with the address of and
the number of shares held by each, which list shall be
produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any shareholder
during the whole time of the meeting for the purposes of the
meeting. The original stock transfer books shall be prima
facie evidence as to who are the shareholders entitled to
examine such list or transfer books or to vote at any meeting
of shareholders. Failure to comply with the requirements of
this section shall not affect the validity of any action taken
at such meeting.
2.07. Quorum. Except as otherwise provided in the
articles of incorporation, a majority of the shares entitled
to vote, represented in person or by proxy, shall constitute a
quorum at a meeting of shareholders. If a quorum is present,
the affirmative vote of the majority of the shares represented
at the meeting and entitled to vote on the subject matter
shall be the act of the shareholders unless the vote of a
greater number or voting by classes is required by law or the
articles of incorporation. Though less than a quorum of the
outstanding shares are represented at a meeting, a majority of
the shares so represented may adjourn the meeting from time to
time without further notice. At such adjourned meeting at
which a quorum shall be present or represented, any business
may be transacted which might have been transacted at the
meeting as originally noticed.
2.08. Conduct of Meetings. Except to the extent the
Board of Directors may otherwise provide, the President, and
in his absence, a Vice President in the order provided under
Section 4.08, and in their absence, any person chosen by the
shareholders present shall call the meeting of the
shareholders to order and shall act as chairman of the
meeting, and the Secretary of the corporation shall act as
secretary of all meetings of the shareholders, but, in the
absence of the Secretary, the presiding office may appoint any
other person to act as secretary of the meeting.
2.09. Proxies. At all meetings of shareholders, a
shareholder entitled to vote may vote by proxy appointed in
writing by the shareholder or by his duly authorized attorney
in fact. Such proxy shall be filed with the Secretary of the
corporation before or at the time of the meeting. No proxy
shall be valid after eleven months from the date of its
execution, unless otherwise provided in the proxy. The Board
of Directors shall have the power and authority to make rules
establishing presumptions as to the validity and sufficiency
of proxies.
2.10. Voting of Shares. Each outstanding share,
regardless of class, shall be entitled to one vote upon each
matter submitted to a vote at a meeting of shareholders,
except to the extent that the voting rights of the shares of
any class or classes are enlarged, limited or denied by the
articles of incorporation.
2.11. Voting of Shares by Certain Holders.
A. Other Corporations. Shares standing in the
name of another corporation may be voted either in person or
by proxy, by the president of such corporation or any other
officer appointed by such president. A proxy executed by any
principal officer of such other corporation or assistant
thereto shall be conclusive evidence of the signer's authority
to act, in the absence of express notice to this corporation,
given in writing to the Secretary of this Corporation, of the
designation of some other person by the board of directors or
the by-laws of such other corporation.
B. Legal Representatives of Fiduciaries. Shares
held by an administrator, executor, guardian, conservator,
trustee in bankruptcy, receiver, or assignee for creditors
which shares are not standing in the name of such fiduciary
may be voted by him, either in person or by proxy, without a
transfer of such shares into his name provided that there is
filed with the Secretary before or at the time of meeting
proper evidence of his incumbency and the number of shares
held. Shares standing in the name of a fiduciary may be voted
by him, either in person or by proxy. A proxy executed by a
fiduciary shall be conclusive evidence of the signer's
authority to execute such proxy, in the absence of express
notice to this Corporation, given in writing to the Secretary
of this Corporation, that such manner of voting is expressly
prohibited or otherwise directed by the document creating the
fiduciary relationship.
C. Pledgees. A shareholder whose shares are
pledged shall be entitled to vote such shares until the shares
have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the share so
transferred.
D. Treasury Stock and Subsidiaries. Neither
treasury shares, nor shares held by another corporation if a
majority of the shares entitled to vote for the election of
directors of such other corporation is held by this
corporation, shall be voted at any meeting or counted in
determining the total number of outstanding shares entitled to
vote, but shares of its own issue held by this Corporation in
a fiduciary capacity may be voted and shall be counted in
determining the total number of outstanding shares entitled to
vote.
E. Minors. Shares held by a minor may be voted by
such minor in person or by proxy and no such vote shall be
subject to disaffirmance or avoidance, unless prior to such
vote the Secretary of the corporation has received written
notice or has actual knowledge that such shareholder is a
minor.
F. Incompetents and Spendthrifts. Shares held by
an incompetent or spendthrift may be voted by such incompetent
or spendthrift in person or by proxy and no such vote shall be
subject to disaffirmance or avoidance, unless prior to such
vote the Secretary of the corporation has actual knowledge
that such shareholder has been adjudicated an incompetent or
spendthrift or actual knowledge of filing of judicial proceed
ings for appointment of a guardian.
G. Joint Tenants. Shares registered in the name
of two or more individuals who are named in the registration
as joint tenants may be voted in person or by proxy signed by
any one or more of such individuals if either (i) no other
such individual or his legal representation is present and
claims the right to participate in the voting of such shares
or prior to the vote filed with the Secretary of the
corporation a contrary written voting authorization or
direction or written denial of authority of the individual
present or signing the proxy proposed to be voted or (ii) all
such other individuals are deceased and the Secretary of the
corporation has no actual knowledge that the survivor has been
adjudicated not to be the successor to the interest of those
deceased.
2.12. Waiver of Notice by Shareholders. Whenever any
notice whatever is required to be given to any shareholder of
the corporation under the articles of incorporation or by-laws
or any provision of law, a waiver thereof in writing, signed
at any time, whether before or after the time of meeting, by
the shareholder entitled to such notice, shall be deemed
equivalent to the giving of such notice; provided that such
waiver in respect to any matter of which notice is required
under any provision of the Wisconsin Business Corporation Law,
shall contain the same information as would have been required
to be included in such notice, except the time and place of
meeting.
2.13. Lien on Shares. Every certificate, and the
share represented thereby, issued to shareholders, are and
shall be deemed at all times to be continuously and
irrevocably pledged by the holder thereof as security for the
payment, from time to time and as often as the same may become
due and payable, of any and all obligations of the shareholder
to the corporation, and no shares of stock will be transferred
on the books of the corporation until all obligations of the
shareholder to the corporation have been paid in full.
ARTICLE III
BOARD OF DIRECTORS
------------------
3.01. General Powers and Number. The business and
affairs of the corporation shall be managed by its Board of
Directors. The number of directors of the corporation shall
be as set forth in Section 0.03.
3.02. Tenure and Qualifications. The Directors are
divided into three classes, two of such classes having three
directors and the third such class having four directors. At
each annual meeting the directors of one class are chosen to
succeed those whose terms expire for a term of office to
expire at the third annual meeting of shareholders after their
election. Four of the directors shall be retail members, one
of whom shall be a member of each three-director class and two
of whom shall be members of the four-director class. The
election of Retailer Directors shall be tabulated and verified
by the Secretary of the corporation and a Retailer Trustee and
an Independent Trustee of the Voting Trust. A director may be
removed from office by affirmative vote of a majority of the
outstanding shares entitled to vote for the election of such
director, taken at a meeting of shareholders called for that
purpose. A director may resign at any time by filing his
written resignation with the Secretary of the corporation.
Directors need not be residents of the State of Wisconsin or
shareholders of the Corporation.
3.03. Regular Meetings. A regular meeting of the
Board of Directors shall be held without other notice than
this by-law immediately after the annual meeting of
shareholders, and each adjourned session thereof. The place
of such regular meeting shall be the same as the place of the
meeting of shareholders which precedes it, or such other
suitable place as may be announced at such meeting of
shareholders. The Board of Directors may provide, by
resolution, the time and place either within or without the
State of Wisconsin, for the holding of additional regular meet
ings without other notice than such resolution.
3.04. Special Meetings. Special meetings of the
Board of Directors may be called by or at the request of the
Chairman of the Board (if the Board of Directors determines to
elect one), the President, Secretary or any two directors.
The Chairman of the Board, President or Secretary calling any
special meeting of the Board of Directors may fix any place,
either within or without the State of Wisconsin, as the place
for holding any special meeting of the Board of Directors
called by them, and if no other place is fixed, the place of
meeting shall be the principal business office of the
corporation in the State of Wisconsin.
3.05. Notice; Waiver. Notice of each meeting of the
Board of Directors (unless otherwise provided in or pursuant
to Section 3.03) shall be given to each director (i) by
written notice delivered personally or mailed or given by
telegram, cable or radiogram to such director at his business
address or at such other address as such director shall have
designated in writing filed with the Secretary, or (ii) by
word of mouth, telephone or radiophone personally to such
director, in each case not less than that number of days prior
thereto as set forth in Section 0.04. If mailed, such notice
shall be deemed to be delivered when deposited in the United
States mail so addressed, with postage thereon prepaid. If
notice be given by telegram, cable or radiogram, such notice
shall be deemed to be delivered when the telegram, cable or
radiogram is delivered to the transmitting agency. Whenever
any notice whatever is required to be given to any director of
the corporation under the articles of incorporation or by-laws
or any provision of law, a waiver thereof in writing, signed
at any time, whether before or after the time of meeting, by
the director entitled to such notice, shall be deemed
equivalent to the giving of such notice. The attendance of a
director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting and
objects thereat to the transaction of any business because the
meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular
or special meeting of the Board of Directors need be specified
in the notice or waiver of notice of such meeting.
3.06. Quorum. Except as otherwise provided by law or
by the articles of incorporation or these by-laws, a majority
of the number of directors set forth in Section 0.03 shall
constitute a quorum for the transaction of business at any
meeting of the Board of Directors, but a majority of the
directors present (though less than such quorum) may adjourn
the meeting from time to time without further notice.
3.07. Manner of Acting. The act of the majority of
the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors, unless the
act of a greater number is required by law or by the articles
of incorporation or these by-laws.
3.08. Conduct of Meetings. The Chairman of the
Board, or in the event the Board of Directors determines not
to elect a Chairman of the Board, or in his absence, the
President, and in his absence, a Vice President in the order
provided under Section 4.08, and in their absence, any
director chosen by the directors present, shall call meetings
of the Board of Directors to order and shall act as Chairman
of the meeting. The Secretary of the corporation shall act as
secretary of all meetings of the Board of Directors, but in
the absence of the Secretary, the presiding officer may
appoint any Assistant Secretary or any director or other
person present to act as secretary of the meeting.
3.09. Vacancies. Any vacancy occurring in the Board
of Directors, including a vacancy created by an increase in
the number of directors, may be filled until the next
succeeding annual election by the affirmative vote of a
majority of the directors then in office, though less than a
quorum of the Board of Directors.
3.10. Compensation. The Board of Directors, by
affirmative vote of a majority of the directors then in
office, and irrespective of any personal interest of any of
its members, may establish reasonable compensation of all
directors for services to the corporation as directors,
officers or otherwise, or may delegate such authority to an
appropriate committee. The Board of Directors also shall have
authority to provide for or to delegate authority to an
appropriate committee to provide for reasonable pensions,
disability or death benefits, and other benefits or payments,
to directors, officers and employees and to their estates,
families, dependents or beneficiaries on account of prior
services rendered by such directors, officers and employees to
the corporation.
3.11. Presumption of Assent. A director of the
corporation who is present at a meeting of the Board of
Directors or a committee thereof of which he is a member at
which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless his
dissent shall be entered in the minutes of the meeting or
unless he files his written dissent to such action with the
person acting as the secretary of the meeting before the
adjournment thereof or forwards such dissent by registered
mail to the Secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not
apply to a director who voted in favor of such action.
3.12. Executive Committee and Other Committees. The
Board of Directors by resolution adopted by the affirmative
vote of an majority of the number of directors set forth in
Section 0.03 may designate an Executive Committee and one or
more other committees, each committee to consist of three or
more directors elected by the Board of Directors. The
Executive Committee shall have and may exercise, when the
Board of Directors is not in session, the powers of the Board
of Directors in the management of the business and affairs of
the corporation, provided that in no case shall the Executive
Committee or any other committee act in respect to dividends
to shareholders, election of principal officers or the filling
of vacancies in the Board of Directors, or committees created
pursuant to this Section. Subject to the foregoing, the other
committees, if any, shall have and may exercise such powers as
may be provided in the Resolution of the Board of Directors
designating such committee, as such resolution may from time
to time be amended and supplemented. The Board of Directors
may elect one or more of its members as alternate members of
any such committee who may take the place of any absent member
or members at any meeting of such committee, upon request by
the President or upon request by the chairman of such meeting.
Each such committee shall elect a presiding officer from its
members, shall fix its own rules governing the conduct of its
activities and shall make such reports to the Board of
Directors of its activities as the Board of Directors may
request.
3.13. Advisory Committee. The Advisory Committee of
retailers shall consist of nine persons, each of whom shall be
either a record or beneficial holder of Class A Common Stock
or an officer of a corporation or partnership which is a
record or beneficial holder of Class A Common Stock. Three
members of the Advisory Committee shall be elected each year
by the retailer/shareholders and each shall serve a three-year
term. No Advisory Committee member shall serve more than six
years in succession as a committee member; but a person who
has served six successive years on the committee may be
re-elected to the committee if the person has not served on
the committee during the three years preceding their re-
election.
The Advisory Committee will nominate two candidates
for election to each vacancy that may occur on the committee.
The Members of the Advisory Committee shall meet at
reasonable intervals at a time and place convenient to the
members and shall cooperate with the Stockholders individually
and as a group with management and the Directors with relation
to problems brought to its attention by customers or other
matters the committee may choose to accept for consideration.
3.14. Unanimous Consent Without Meeting. Any action
required or permitted by the articles of incorporation or
by-laws or any provision of law to be taken by the Board of
Directors or any committee thereof at a meeting or by
resolution may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by
all of the directors or members of such committee entitled to
vote with respect to such action.
ARTICLE IV
OFFICERS
--------
4.01. Number. The principal officers of the
corporation shall be a Chairman of the Board (if the Board of
Directors determines to elect one), a President, one or more
Vice Presidents, a Secretary, and a Treasurer, each of whom
shall be elected by the Board of Directors. Such other
officers and assistant officers as may be deemed necessary may
be elected or appointed by the Board of Directors. Any two or
more offices may be held by the same person, except the
offices of President and Vice President and President and
Secretary. The duties of the officers shall be those
enumerated herein and any further duties designated by the
Board of Directors. The duties herein specified for
particular officers may be transferred to and vested in such
other officers as the Board of Directors shall elect or
appoint, from time to time and for such periods or without
limitation as to time as the Board shall order.
4.02. Election and Term of Office. The officers of
the corporation to be elected by the Board of Directors shall
be elected annually by the Board of Directors at the first
meeting of the Board of Directors held after each annual
meeting of the shareholders. If the election of officers
shall not be held at such meeting, such election shall be held
as soon thereafter as conveniently may be. Each officer shall
hold office until his successor shall have been duly elected
or until his prior death, resignation or removal.
4.03. Removal. Any officer or agent may be removed
by the Board of Directors whenever in its judgment the best
interests of the corporation will be served thereby, but such
removal shall be without prejudice to the contract rights, if
any, of the person so removed. Election or appointment shall
not of itself create contract rights.
4.04. Vacancies. A vacancy in any principal office
because of death, resignation, removal, disqualification or
otherwise, shall be filled by the Board of Directors for the
unexpired portion of the term.
4.05. Chairman of the Board. The Chairman of the
Board (if the Board of Directors determines to elect one)
shall preside at all meetings of the Board of Directors and
shall have such further and other authority, responsibility
and duties as may be granted to or imposed upon him by the
Board of Directors, including without limitation his
designation pursuant to Section 4.07 as chief executive
officer of the corporation.
4.06. President. The President, unless the Board of
Directors shall otherwise order pursuant to Section 4.07,
shall be the chief executive officer of the corporation and,
subject to the control of the Board of Directors, shall in
general supervise and control all of the business and affairs
of the corporation. He shall, when present, preside at all
meetings of the shareholders and shall preside at all meetings
of the Board of Directors unless the Board shall have elected
a Chairman of the Board of Directors. He shall have
authority, subject to such rules as may be prescribed by the
Board of Directors, to appoint such agents and employees of
the corporation as he shall deem necessary, to prescribe their
powers, duties and compensation, and to delegate authority to
them. Such agents and employees shall hold office at the
discretion of the President. He shall have authority to sign,
execute and acknowledge, on behalf of the corporation, all
deeds, mortgages, bonds, stock certificates, contracts,
leases, reports and all other documents or instruments
necessary or proper to be executed in the course of the
corporation's regular business, or which shall be authorized
by resolution of the Board of Directors; and except as
otherwise provided by law or the Board of Directors, he may
authorize any Vice President or other officer or agent of the
corporation to sign, execute and acknowledge such documents or
instruments in his place and stead. In general he shall
perform all duties incident to the office of the chief
executive officer and such other duties as may be prescribed
by the Board of Directors from time to time. In the event the
Board of Directors determines not to elect a Chairman of the
Board or in the event of his absence or disability, the
President shall perform the duties of the Chairman of the
Board and when so acting shall have all the powers of and be
subject to all of the duties and restrictions imposed upon the
Chairman of the Board.
4.07. Chairman of the Board as Chief Executive
Officer. The Board of Directors may designate the Chairman of
the Board as the chief executive officer of the corporation.
In such event, the Chairman of the Board shall assume all
authority, power, duties and responsibilities otherwise
appointed to the President pursuant to Section 4.06, and all
references to the President in these by-laws shall be regarded
as references to the Chairman of the Board as such chief
executive officer, except where a contrary meaning is clearly
required, and provided that in no case shall the Chairman of
the Board be empowered in place of the President to sign the
certificates for shares of stock of the corporation.
In further consequence of designating the Chairman
of the Board as the chief executive officer, the President
shall thereby become the chief administrative officer of the
corporation. He shall, in the absence of the Chairman of the
Board, preside at all meetings of stockholders and directors.
During the absence or disability of the Chairman of the Board
he shall exercise the functions of the chief executive officer
of the Corporation. He shall have authority to sign all
certificates, contracts, and other instruments of the
corporation necessary or proper to be executed in the course
of the corporation's regular business or which shall be
authorized by the Board of Directors and shall perform all
such other duties as are incident to his office or are
properly required of him by the Board of Directors or the
Chairman of the Board. He shall have the authority, subject
to such rules, directions, or orders, as may be prescribed by
the Chairman of the Board or the Board of Directors, to
appoint and terminate the appointment of such agents and
employees of the corporation as he shall deem necessary, to
prescribe their power, duties and compensation and to delegate
authority to them.
4.08. The Vice Presidents. In the absence of the
President or in the event of his death, inability or refusal
to act, or in the event for any reason it shall be
impracticable for the President to act personally, the Vice
Presidents in the order of their election, the Vice Presidents
in the order designated at the time of their election, or in
the absence of any such designation, then in the order of
their election, shall perform the duties of the President and
when so acting shall have all the powers of and be subject to
all the restrictions upon the President. Any Vice President
may sign with the Secretary or Assistant Secretary certifi
cates for shares of the corporation and shall perform such
other duties as from time to time may be assigned to him by
the President or the Board of Directors.
4.09. The Secretary. The Secretary shall: (a) keep
the minutes of the meetings of the shareholders and of the
Board of Directors in one or more books provided for that
purpose; (b) see that all notices are duly given in accordance
with the provisions of these by-laws or as required by law;
(c) be custodian of the corporate records and of the seal of
the corporation and see that the seal of the corporation is
affixed to all documents the execution of which on behalf of
the corporation under its seal is duly authorized; (d) keep or
arrange for the keeping of a register of the post office
address of each shareholder which shall be furnished to the
Secretary by such shareholder; (e) sign with the President, or
a Vice President, certificates for shares of the corporation,
the issuance of which shall have been authorized by resolution
of the Board of Directors; (f) have general charge of the
stock transfer books of the corporation; and (g) in general
perform all duties incident to the office of Secretary and
have such other duties and exercise such authority as from
time to time may be delegated or assigned to him by the
President or by the Board of Directors.
4.10. The Treasurer. The Treasurer shall: (a) have
charge and custody and be responsible for all funds and
securities of the corporation; (b) receive and give receipts
for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the
corporation in such banks, trust companies or other
depositories as shall be selected in accordance with the
provisions of Section 5.04; and (c) in general perform all of
the duties incident to the office of Treasurer and have such
other duties and exercise such other authority as from time to
time may be delegated or assigned to him by the President or
by the Board of Directors. If required by the Board of
Directors, the Treasurer shall give a bond for the faithful
discharge of his duties in such sum and with such surety or
sureties as the Board of Directors shall determine.
4.11. Assistant Secretaries and Assistant Treasurers.
There shall be such number of Assistant Secretaries and
Assistant Treasurers as the Board of Directors may from time
to time authorize. The Assistant Secretaries may sign with
the President or a Vice President certificates for shares of
the corporation, the issuance of which shall have been
authorized by a resolution of the Board of Directors. The
Assistant Treasurers shall respectively, if required by the
Board of Directors, give bonds for the faithful discharge of
their duties in such sums and with such sureties as the Board
of Directors shall determine. The Assistant Secretaries and
Assistant Treasurers, in general, shall perform such duties
and have such authority as shall from time to time be
delegated or assigned to them by the Secretary or the
Treasurer, respectively, or by the President or the Board of
Directors.
4.12. Other Assistants and Acting Officers. The
Board of Directors shall have the power to appoint any person
to act as assistant to any officer, or as agent for the
corporation in his stead, or to perform the duties of such
officer whenever for any reason it is impracticable for such
officer to act personally, and such assistant or acting
officer or other agent so appointed by the Board of Directors
shall have the power to perform all the duties of the office
to which he is so appointed to be assistant, or as to which he
is so appointed to act, except as such power may be otherwise
defined or restricted by the Board of Directors.
4.13. Salaries. The salaries of the principal
officers shall be fixed from time to time by the Board of
Directors or by a duly authorized committee thereof, and no
officer shall be prevented from receiving such salary by
reason of the fact that he is also a director of the cor
poration.
4.14. Bonds Required. All elected or appointed
officers may be bonded and in the discretion of management any
and all employees may be required to obtain surety bonds as a
condition of continued employment.
ARTICLE V
FISCAL YEAR, ACCOUNTING AND PATRONAGE REBATES
-----------------------------------------------
The corporation is obligated to its common shareholders
on a patronage basis or bases for all amounts received by it
resulting from sales to them as defined and limited herein.
5.01. Patronage Dividends. Patronage dividends shall
accrue to Class A common shareholders of the corporation out
of net earnings from business done with such shareholders and
shall be determined and distributed for each fiscal year
pursuant to existing provisions of the Internal Revenue Code;
provided further that patronage dividends of the corporation
will be determined on the basis of the net sales of the
corporation to each Class A common shareholder and paid in an
amount which will reduce net income of the corporation to such
amount as will result in an increase of eight percent (8%) in
the net book value (as determined by the corporation's
independent certified public accountants) of the corporation's
outstanding shares as of the close of such fiscal year. The
computation of the amount of patronage dividends payable to
Class A common shareholders shall be made after the
determination of patronage dividends payable to
non-shareholder customers.
5.02. Determination of Patronage Dividends.
Patronage dividends shall be determined from the records of
the corporation as soon as practicable after the close of the
corporation's fiscal year, and the Class A common shareholders
shall be promptly advised of the amount of their respective
patronage dividend and the method of payment of such patronage
dividend.
5.03. Consent. Each person who hereafter becomes a
Class A common shareholder of this corporation and each Class
A common shareholder of this corporation on the effective date
of this by-law who continues as a Class A common shareholder
after such date shall, by such act alone, consent that the
amount of any distributions with respect to his patronage
occurring after January 3, 1976, which are made in written
notices of allocation (as defined in Section 1388 of the
Internal Revenue Code) and which are received by him from the
corporation, will be taken into account by him at their stated
dollar amounts in the manner provided in Section 1385(a) of
the Internal Revenue Code in the taxable year in which such
written notices of allocation are received by him.
5.04. Payment of Patronage Dividends.
-------------------------------
A. Patronage dividends are payable in the fiscal
year following the fiscal year in which accrued, in money,
qualified written notices of allocation (as defined by the
Internal Revenue Code) or other property (except non-qualified
written notices of allocation as defined by the Internal
Revenue Code) provided, however, that at least twenty percent
(20%) of the amount of a patronage dividend shall be paid in
money or by qualified check as defined by the Internal Revenue
Code.
5.05. Corporate Accounting and Fiscal Year.
-------------------------------------
A. The accounts of the corporation shall be kept
on the accrual basis and reflect assets, liabilities,
stockholders' equities and operations in accordance with
generally accepted accounting principles.
B. The fiscal year of the corporation shall be on
a 52-53 week basis ending on the Saturday nearest to December
31st as that method permits.
5.06. Patronage Dividends to Nonshareholders. The
corporation may, in its sole discretion, enter into written
agreements obligating itself to pay patronage dividends to
nonshareholder customers.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS:
SPECIAL CORPORATE ACTS
-----------------------------------------
6.01. Contracts. The Board of Directors may
authorize any officer or officers, agent or agents, to enter
into any contract or execute or deliver any instrument in the
name of and on behalf of the corporation, and such
authorization may be general or confined to specific
instances. In the absence of other designation, all deeds,
mortgages and instruments of assignment or pledge made by the
corporation shall be executed in the name of the corporation
by the President or one of the Vice Presidents and by the
Secretary, an Assistant Secretary, the Treasurer or an
Assistant Treasurer; the Secretary or an Assistant Secretary,
when necessary or required, shall affix the corporate seal
thereto; and when so executed no other party to such
instrument or any third party shall be required to make any
inquiry into the authority of the signing officer or officers.
6.02. Loans. No indebtedness for borrowed money
shall be contracted on behalf of the corporation and no
evidences of such indebtedness shall be issued in its name
unless authorized by or under the authority of a resolution of
the Board of Directors. Such authorization may be general or
confined to specific instances.
6.03. Checks, Drafts, etc. All checks, drafts or
other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the
corporation, shall be signed by such officer or officers,
agent or agents of the corporation and in such manner,
including by means of facsimile signatures, as shall from time
to time be determined by or under the authority of a
resolution of the Board of Directors.
6.04. Deposits. All funds of the corporation not
otherwise employed shall be deposited from time to time to the
credit of the corporation in such banks, trust companies or
other depositories as may be selected by or under the
authority of a resolution of the Board of Directors.
6.05. Voting of Securities Owned by this Corporation.
Subject always to the specific directions of the Board of
Directors, (a) any shares or other securities issued by any
other corporation and owned or controlled by this corporation
may be voted at any meeting of security holders of such other
corporation by the President of this corporation if he be
present, or in his absence by any Vice President of this
corporation who may be present, and (b) whenever, in the
judgment of the President, or in his absence, of any Vice
President, it is desirable for this corporation to execute a
proxy or written consent with respect to any shares or other
securities issued by any other corporation and owned by this
corporation, such proxy or consent shall be executed in the
name of this corporation by the President or one of the Vice
Presidents of this corporation, without necessity of any
authorization by the Board of Directors, affixation of
corporate seal or countersignature or attestation by another
officer. Any person or persons designated in the manner above
stated as the proxy or proxies of this corporation shall have
full right, power and authority to vote the shares or other
securities issued by such other corporation and owned by this
corporation the same as such shares or other securities might
be voted by this corporation.
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
-------------------------------------------
7.01. Certificates for Shares. Certificates
representing shares of the corporation shall be in such form,
consistent with law, as shall be determined by the Board of
Directors. Such certificates shall be signed by the President
or a Vice President and by the Secretary or an Assistant
Secretary. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the
person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on
the stock transfer books of the corporation. All certificates
surrendered to the corporation for transfer shall be cancelled
and no new certificate shall be issued until the former
certificate for a like number of shares shall have been
surrendered and cancelled, except as provided in Section 7.06.
7.02. Facsimile Signatures and Seal. The seal of the
corporation on any certificates for shares may be a facsimile.
The signatures of the President or Vice President and the
Secretary or Assistant Secretary upon a certificate may be
facsimiles if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the
corporation itself or an employee of the corporation.
7.03. Signature by Former Officers. In case any
officer, who has signed or whose facsimile signature has been
placed upon any certificate for shares, shall have ceased to
be such officer before such certificate is issued, it may be
issued by the corporation with the same effect as if he were
such officer at the date of its issue.
7.04. Transfer of Shares. Prior to due presentment
of a certificate for shares for registration of transfer the
corporation may treat the registered owner of such shares as
the person exclusively entitled to vote, to receive
notifications and otherwise to exercise all the rights and
power of an owner. Where a certificate for shares is
presented to the corporation with a request to register for
transfer, the corporation shall not be liable to the owner or
any other person suffering loss as a result of such
registration of transfer if (a) there were on or with the
certificate the necessary endorsements, and (b) the
corporation had no duty to inquire into adverse claims or has
discharged any such duty. The corporation may require
reasonable assurance that said endorsements are genuine and
effective and in compliance with such other regulations as may
be prescribed under the authority of the Board of Directors.
7.05. Restrictions on Transfer. The face or reverse
side of each certificate representing shares shall bear a
conspicuous notation of any restriction imposed by the
corporation upon the transfer of such shares.
7.06. Lost, Destroyed or Stolen Certificates. Where
the owner claims that his certificate for shares has been
lost, destroyed or wrongfully taken, a new certificate shall
be issued in place thereof if the owner (a) so requests before
the corporation has notice that such shares have been acquired
by a bona fide purchaser, and (b) files with the corporation a
sufficient indemnity bond, and (c) satisfies such other reason
able requirements as the Board of Directors may prescribe.
7.07. Consideration for Shares. The shares of the
corporation may be issued for such consideration as shall be
fixed from time to time by the Board of Directors, provided
that any shares having a par value shall not be issued for a
consideration less than the par value thereof. The
consideration to be paid for shares may be paid in whole or in
part, in money, in other property, tangible or intangible, or
in labor or services actually performed for the corporation.
When payment of the consideration for which shares are to be
issued shall have been received by the corporation, such
shares shall be deemed to be fully paid and nonassessable by
the corporation. No certificate shall be issued for any share
until such share is fully paid.
7.08. Stock Regulations. The Board of Directors
shall have the power and authority to make all such further
rules and regulations not inconsistent with the statutes of
the State of Wisconsin as it may deem expedient concerning the
issue, transfer and registration of certificates representing
shares of the corporation, including the appointment or des
ignation of one or more stock transfer agents and one or more
stock registrars.
7.09. Lien on Stock. No assignment or transfer of
shares may be made or become effective until all debts due the
corporation from such shareholder are first paid in full.
Whenever the corporation exercises the right to purchase
shares, the corporation shall reimburse itself out of the
proceeds of sale for all debts due it by the shareholder.
7.10. Certain Provisions Applicable to Section 7.11.
----------------------------------------------
A. Wherever used in Section 7.11:
(1) "Active Customer" means a retail food
store whose principal source of supply is purchases from the
Corporation.
(2) "Customer/Shareholder Termination" occurs
whenever an Active Customer owned and operated (or controlled)
by a shareholder of the Corporation either (A) ceases to be an
Active Customer, or (B) ceases to be owned and operated (or
controlled) by such shareholder, whether by reason of the
death, adjudication of incompetency or complete retirement
from business by reason of age or disability of such share
holder (if an individual), the dissolution or termination of
such shareholder (if a Person other than an individual),
adjudication in bankruptcy, transfer of the Active Customer or
the entity owning or controlling it, or otherwise. In the
event the above shall occur with respect to one or more but
not all Active Customers owned and operated (or controlled) by
a single shareholder of the Corporation, a
Customer/Shareholder Termination shall be deemed to have
occurred with respect to that fraction of each class of Common
Stock owned by such shareholder as is equal to the fraction
produced by dividing the number of Active Customers owned and
operated (or controlled) by such shareholder after such
event(s) by the number of Active Customers so owned and
operated (or controlled) immediately before such event(s).
(3) "Person" includes any individual,
corporation, partnership, joint venture, trust, estate or any
other legal entity.
B. Each shareholder (or his or its legal
representative) shall, as soon as possible after the
occurrence of a Customer/Shareholder Termination or an
Employee/Shareholder Termination (occurring otherwise than as
a result of the death or retirement of the employee), give
written notice of the same to the Secretary of the
Corporation, stating the nature and date of such event. If it
shall come to the attention of the Corporation that such an
event has occurred and no such notice has been received, the
Secretary shall give written notice of the same to the record
holder of such shares. Any determination so made in good
faith by the Corporation, including any determination as to
the date upon which a retail food store became or ceased to be
an Active Customer, or upon which a Customer/Shareholder
Termination or an Employee/Shareholder Termination occurred,
shall be final and binding on all persons.
7.11. Limitations on Ownership of Class A Common Stock.
-------------------------------------------------
A. No person may directly or indirectly
beneficially own shares of Class A Common Stock except a
Person who or which directly or indirectly owns an Active
Customer or the trustees of a voting trust formed by and for
the benefit of such Persons. No Person may directly or
indirectly beneficially own more than 100 shares of Class A
Common Stock, except that (i) a Person owning and operating
(or controlling) more than one Active Customer at different
locations may own not more than 100 shares of Class A Common
Stock for each such Active Customer, and (ii) the trustees of
a voting trust as set forth in the preceding sentence may be
the record holders of such number of shares as may be owned in
the aggregate by the depositors thereof.
B. Any holder of shares of Class A Common Stock
shall immediately present his or its certificate(s)
representing the same to the Secretary of the Corporation, in
negotiable form, upon the occurrence of a Customer/Shareholder
Termination with respect to an Active Customer owned and
operated (or controlled) by such shareholder. In the event
such shareholder has theretofore owned more than 100 shares of
Class A Common Stock, there shall be presented to the
Corporation 100 of such shares for each such Active Customer
as to which a Customer/Shareholder Termination has occurred.
Upon receipt of such certificate(s), the Corporation shall
issue to and in the name of the record holder thereof a
replacement certificate for a like number of shares of Class B
Common Stock. In the event any holder shall fail to surrender
such certificates to the corporation within thirty (30) days
the Customer/Shareholder Termination, the Corporation may, at
any time thereafter, by written notice to the record holder
thereof, deem such shares of Class A Common Stock to have been
converted into a like number of shares of Class B Common
Stock; and thereafter, such shares of Class A Common Stock
shall not be deemed outstanding for any purpose and the
certificate(s) therefor shall evidence only the right to
receive a certificate representing a like number of shares of
Class B Common Stock upon proper presentation to the
Corporation in negotiable form. The obligations of a
shareholder hereunder to surrender and exchange shares of
Class A Common Stock shall be binding upon the legal
representatives or successors or such shareholder, any
purported transferee, and any nominee or trustee of a voting
trust holding shares of Class A Common Stock for the benefit
of such shareholder, upon notice from the Corporation or
otherwise that a Customer/Shareholder Termination has
occurred.
ARTICLE VIII
OFFICERS AND DIRECTORS:
LIABILITY AND INDEMNITY; TRANSACTIONS WITH CORPORATION
--------------------------------------------------------
8.01. Definitions Applicable to Article VIII.
A. "Applicable Corporate Law" shall mean those
statutes comprising the general corporation law of the
jurisdiction in which the Corporation is incorporated, as
amended from time to time.
B. "Breach of Duty" shall mean conduct of a
Director or Officer constituting any one or more of the
following:
(1) A willful failure to deal fairly with the
Corporation or its stockholders in connection with a matter in
which the Director or Officer has a material conflict of
interest.
(2) A violation of criminal law, unless the
Director or Officer had reasonable cause to believe his or her
conduct was lawful or had no reasonable cause to believe his
or her conduct was unlawful.
(3) A transaction from which the Director or
Officer derived an improper personal profit.
(4) Willful misconduct.
(5) With respect to any matter or decision
being considered by the Board of Directors or any other
officer, such Director or Officer intentionally or recklessly;
(a) makes any untrue statement or disclo
sure to the Board or other Officer of known material
information; or
(b) omits to state or otherwise disclose
to the Board or other Officer known material information
necessary in order to make the information known to have been
communicated to the Board or other Officer not misleading
under the circumstances then existing; or
(c) omits to state or otherwise disclose
to the Board or other Officer known material information which
is (or reasonably should be) known to the Director or Officer
to be relevant to the matter or decision under consideration,
regardless of whether or not such information is specifically
requested by the Board or other Officer.
C. "Claim" means any threatened or asserted claim
or cause of action involving actual or potential liability of
a Director or Officer arising from any act or omission of such
person alleged or determined to have been negligent, grossly
negligent or intentionally tortious or to have violated any
state or federal securities laws (including any rule or
regulation thereunder) or the Employee Retirement Income
Security Act of 1974 or any other foreign, federal, state or
local law, rule or regulation which is asserted or brought by
or in the right of the Corporation or by any governmental
authority or any other person or entity.
D. "Director or Officer" means any of the following:
(1) A natural person who is or was: (i) a
director (elected or appointed by the stockholders or Board of
Directors); or (ii) an officer (elected or appointed by the
Board of Directors) of the Corporation; or (iii) a Trustee.
(2) A natural person who, while such a
director or officer of the Corporation, is or was serving
either pursuant to the Corporation's specific request or as a
result of the nature of such person's duties to the
Corporation as a director, officer, partner, trustee, member
of any governing or decision making committee, employee or
agent of another corporation or foreign corporation,
partnership, joint venture, trust or other enterprise.
(3) A natural person who, while such a
director or officer of the Corporation, is or was serving an
employee benefit plan because his or her duties to the
Corporation also impose duties on, or otherwise involve
services by, the person to the plan or to participants in or
beneficiaries of the plan.
(4) Unless the context requires otherwise, the
estate or personal representative of any such director,
officer or Trustee.
This term is not intended to include any
person who holds a position of title of Vice President or
other apparent office without formal election or appointment
by the Board of Directors.
E. "Disinterested Majority" shall mean a majority
of the Board of Directors of the Corporation who are not
Parties to the subject Proceeding or any related Proceeding.
F. "Expenses" includes all reasonable fees, costs,
charges, disbursements, attorneys' fees and any other expenses
incurred by a Director or Officer in connection with a
Proceeding if such person was a Party because he or she is or
was a Director or Officer.
G. "Liability" includes the obligation to pay any
sums or perform any acts pursuant to a settlement, penalty,
assessment, forfeiture, fine, or judgment, including (without
limitation) any excise tax assessed with respect to any
employee benefit plan, punitive damages, costs, and expenses.
H. "Party" includes a natural person who was or
is, or who is threatened to be made, a named defendant or
respondent to a Claim in a Proceeding.
I. "Proceeding" means any threatened, pending or
completed civil, criminal, administrative or investigative
action, suit arbitration or other proceeding of any kind,
whether formal or informal in which a Claim is or may be
asserted against a Director or Officer or in which the
Director or Officer is a witness.
J. "Trustee" means any person who is or was a
trustee of that certain Amended and Restated Voting Trust
Agreement dated as of September 16, 1983, and as thereafter
amended, restated or modified relating to the Class A Common
Stock of the Corporation.
8.02. Director and Officer Liability Limitations.
-------------------------------------------
A. No Director or Officer shall be liable to the
Corporation, its shareholders or any person asserting rights
on behalf of the Corporation or its shareholders, for damages,
settlements fines, penalties or other monetary liabilities
arising from a breach of or failure to perform, any duty
resulting solely from his or her status as a Director or
Officer, regardless of whether constituting negligence or
other tortious or otherwise culpable conduct, unless the
person asserting liability proves that the breach or failure
to perform constitutes a Breach of Duty or conduct for which
the Director is liable under Section 180.0828 of the Wisconsin
Business Corporation Law. In addition to and not in
limitation of the foregoing, no Director or Officer shall have
any liability for acts or omissions constituting business
judgment within the business judgment rule.
B. The provisions of this Section 8.02 shall not
be exclusive of any other defenses such a Director or Officer
may have with respect to any Claim asserting a Liability.
C. The Board of Directors (by majority vote or
consent) may grant similar limitations on the Liability of any
employee of the Corporation (relating to performance of his or
duties as an employee) by written agreement with such employee
executed by the President.
8.03. Mandatory Indemnification.
---------------------------
A. Indemnification for Expenses. The Corporation
shall indemnify a Director or Officer for all Expenses
incurred (i) in the successful defense of any Claim (on the
merits or otherwise) in a Proceeding and/or (ii) as a
non-party witness in any Proceeding.
B. Indemnification for Liability and Expenses.
The Corporation shall indemnify a Director or Officer for all
Liability and Expenses with respect to any Claim against such
person in a Proceeding to which such person was a Party
because he or she is or was a Director or Officer, unless such
Liability and Expenses were incurred because the Director or
Officer is determined to have engaged in conduct constituting
a Breach of Duty.
C. Indemnification Exclusion for Collateral
Sources. Notwithstanding the foregoing provision of this
Section 8.03, indemnification shall not be required for any
Liability or Expenses to the extent the same have been paid or
are covered under any collectible insurance policy or are
otherwise paid or reimbursed by any third party under a legal
or contractual obligation to do so.
D. Reliance on Applicable Corporation Law or
Bylaw. Without intending to limit the generality of the
indemnification rights provided under subsections 8.03(A) and
(B) above, the Corporation shall indemnify a Director or
Officer for all Liability and Expenses with respect to any
Claim against such person in a Proceeding which is based, in
whole or in part, on such person's reliance on the validity of
any provision of the Applicable Corporation Law or these
Bylaws, even though it is thereafter determined that such
provision was invalid or otherwise could not have justifiably
been relied upon.
8.04. Procedural Requirements for Determination That
Indemnification is Proper.
-----------------------------------------------
A. Written Request for Indemnification. A
Director or Officer who seeks indemnification shall make a
written request therefor to the Corporation, selecting a means
for determining his or her right to indemnification as
provided under subsection 8.04(B) hereof.
B. Determination of Indemnification. Within 60
days of receipt by the Corporation of the Director's or
Officer's request for indemnification, a determination shall
be made as to whether or not the Director or Officer
requesting indemnification engaged in conduct constituting a
Breach of Duty and, as a result, is or is not entitled to
indemnification under this Article. Such determination shall
be made:
(1) by majority vote of a Disinterested
Majority if so designated by the Director or Officer seeking
indemnification. If a Disinterested Majority cannot be
obtained, the Director or Officer may designate that such
determination be made by a majority vote of a committee duly
appointed by the Board of Directors and consisting solely of
two or more directors not at the time Parties to the same or
related Proceedings. Directors who are Parties to the same or
related Proceedings may participate in the designation of
members of the committee;
(2) by independent legal counsel if so
designated by the Director or Officer; provided that such
counsel shall be mutually selected by such Director or Officer
and by a Disinterested Majority or, if a Disinterested
Majority cannot be obtained, then by a majority vote of the
Board of Directors, including Directors who are Parties to the
same or related Proceedings;
(3) by a panel of three arbitrators if so
designated by the Director or Officer, which shall be selected
from the panel of arbitrators of the American Arbitration
Association in Milwaukee, Wisconsin; provided, that (xx) one
arbitrator shall be selected by such Director or Officer, the
second arbitrator shall be selected by a Disinterested
Majority or, if a Disinterested Majority cannot be obtained,
then by a majority vote of the Board of Directors, including
Directors who are Parties to the same or related Proceedings,
and the third arbitrator shall be selected by the two
previously selected arbitrators, and (yy) in all other
respects, such panel shall be governed by the American
Arbitration Association's then existing Commercial Arbitration
Rules, except the fees of all arbitrators shall be shared
equally by the Corporation and the Director or Officer; or
(4) by a court if so designated by the
Director or Officer, pursuant to and in accordance with the
Applicable Corporation Law.
The results and basis of the determination made
hereunder shall be submitted in writing to the Corporation and
the Director or Officer (the "Indemnity Decision").
C. No Presumption Created. The termination of a
Proceeding by judgment, order, settlement or conviction, or
upon a plea of no contest or an equivalent plea, does not, by
itself, create a presumption that indemnification of the
requested amount of Liabilities and Expenses of the Director
or Officer is not required.
D. Payment of Liabilities and Expenses; Waiver of Claims.
------------------------------------------------------
(1) If it is determined that indemnification
is required hereunder, the Corporation shall pay the Director
or Officer the entire requested amount of Liabilities and
Expenses (net of any Expenses previously advanced pursuant to
Section 8.05), within 10 days of receipt of the Indemnity
Decision, provided, that if it is determined that a Director
or Officer is entitled to indemnification against Liabilities
and Expenses incurred in connection with some Claims, but not
as to others (such as if Claims are asserted to involve some
conduct constituting a Breach of Duty and other conduct which
does not), payment of the Liability and Expenses shall be
apportioned by applying the following:
(a) If the Director or Officer sustains
Liability for equal dollar amounts to a given party or person
under two or more Claims arising from the same general
conduct, transaction or series of events (even though
divisible for purposes of establishing Liability), one of
which would require indemnification and the other of which
would not, it shall be conclusively presumed that the
Liability and all Expenses related thereto were sustained and
incurred solely with respect to the Claim for which
indemnification is required; and if the Director or Officer
sustains Liability and Expenses for different dollar amounts
to a given party or person under two or more Claims arising
from the same general conduct, transaction or series of events
(even though divisible for purposes of establishing
Liability), one of which would require indemnification and the
other of which would not, it shall be conclusively presumed
that the Liability for which indemnification is required is
the sole Liability up to the dollar amount thereof (the
"covered Liability") and the Liability for which
indemnification is not required (the "Non-Covered Liability")
is reduced by the amount of the Covered Liability (resulting
in a "Net Non-Covered Liability") and the Expenses shall be
apportioned on the basis of the respective amounts of the
Covered Liability and the Net Non-Covered Liability such that
the Director or Officer shall be entitled to indemnification
for the Covered Liability and the apportioned Expenses
attributable to such Covered Liability. The foregoing shall
apply regardless of whether the Claim for the Non-Covered
Liability and the resulting Expenses in defense thereof occurs
prior to or following assertion of the Claim for the Covered
Liability and regardless of the actual time, effort and
Expenses involved in defense of the respective Claims.
(2) The Corporation waives all right and
claims against each Director and Officer for indemnification
which may otherwise exist or arise under common law principles
for Liabilities and/or Expenses incurred by the Corporation as
a result of the negligence or alleged negligence of the
Director or Officer, except in instances where such
Liabilities and/or Expenses are incurred as a result of
activities by the Director or Officer constituting a Breach of
Duty.
E. Binding Effect. An Indemnity Decision finding
that indemnification is required hereunder shall be binding
upon the Corporation, unless unsupported by any credible or
resulting from a clearly erroneous application of substantive
law.
8.05. Advancement of Expenses.
-----------------------
A. Procedure. Upon written request by a Director
or Officer who is a non-Party witness or a Party to a
Proceeding, the Corporation shall pay or reimburse from time
to time prior to completion of such Proceeding his or her
Expenses as incurred within 10 days after receipt of such
request accompanied by: (i) an executed written certificate
affirming the Director's or Officer's good faith belief that
(s)he has not breached or failed to perform his or her duties
to the Corporation by engaging in conduct constituting a
Breach of Duty; (ii) an executed written undertaking by the
Director or Officer to repay any advances made under this
Section if it is ultimately determined that the Director or
Officer is not entitled to be indemnified by the Corporation,
and (iii) written evidence of the Expenses incurred.
B. Ability to Repay; Undertaking to be Unsecured.
The undertaking provided in this Section shall be accepted by
the Corporation without reference to the Directors' or
Officers' ability to repay the allowance. The undertaking
shall be unsecured and the Director or Officer shall not be
required to pay interest on such amounts prior to a final
determination that repayment is required.
8.06. Right of Director or Officer to Bring Suit. If
an Indemnity Decision is not issued within the time specified
or such Indemnity Decision finds that the Director or Officer
is not entitled to indemnification or the Corporation fails to
make prompt payment pursuant to an Indemnity Decision, or a
request for an advancement of Expenses under Section 8.05 is
refused, the Director or Officer may at any time thereafter
bring suit against the Corporation to recover the unpaid
Liability and/or Expense. If successful in whole or in part
in any such suit, or in a suit brought by the Corporation to
recover an advancement or Expenses pursuant to the terms of an
undertaking, the Director or Officer shall be entitled to
recover the expense of successfully prosecuting or defending
such suit. If the Director or Officer engaged in conduct
constituting a Breach of Duty, such fact: (i) shall be a
defense to any claim for indemnification against the
Corporation (except for advancement of Expenses prior to
completion of a Proceeding); and (ii) shall entitle the
Corporation to recover all Expenses advanced prior to
completion of the Proceeding pursuant to the terms of the
undertaking once such fact has been established or admitted by
the Director or Officer.
An Indemnity Decision finding that indemnification
of the Director or Officer is not required shall not be
binding on the Director or Officer and shall not create a
presumption that the Director or Officer has engaged in
conduct constituting a Breach of Duty. In any suit brought by
the Director or Officer to enforce a right to indemnification
or to an advancement of Expenses hereunder or as otherwise
provided in the Applicable Corporation Law, or by the
Corporation to recover an advancement of Expenses pursuant to
the terms of an undertaking, the burden of proving that the
Director or Officer is not entitled to be indemnified or to
such advancement of Expenses, under this Article or otherwise
shall be on the Corporation.
8.07. Permissible Considerations. A Director or
Officer, in the discharge of his or her duties to the
Corporation and in making any decision or performing any other
act in such capacity, is not limited to considering only the
economic interests of shareholders in determining what is best
for the Corporation, but may also consider the following: (a)
the effects of the action on employees, suppliers and
customers of the Corporation; (b) effects on the community in
which the Corporation operates; and (c) any other factors the
Director or Officer considers pertinent.
8.08. Reliance by Directors or Officers. A Director
or Officer (absent actual knowledge to the contrary) may rely
in the discharge of his or her duties to the Corporation on
information, opinions, reports or statements (any of which may
be written or oral, formal or informal, including financial
statements) and other financial data if prepared or presented
by any of the following: (a) an Officer or employee of the
Corporation whom the Director or Officer believes in good
faith is reliable and competent as to the matters presented or
as to which the Director or Officer has no compelling reason
to believe is not reliable or competent; (b) legal counsel,
public accountants or other persons as to matters the Director
or Officer believes in good faith are within the person's
professional or expert competence; and (c) information
presented to the Board of Directors by any person, officer,
employee or committee of the Board where it is believed in
good faith the report merits confidence or where the Director
or Officer has no compelling reason to believe it does not
merit confidence.
8.09. Insurance. The Corporation may purchase and
maintain insurance on behalf of any person who is or was a
Director or Officer against any Liability asserted against or
incurred by the individual in any such capacity or arising out
of his status as such, regardless of whether the Corporation
is required or authorized to indemnify such person for
Liability or Expenses under this Article.
8.10. Severability and Intent. If any provision of
this Article shall be deemed invalid or inoperative, or if a
court of competent jurisdiction determines that any of the
provisions of this Article contravene public policy, this
Article shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and
effect and any such provisions which are invalid or
inoperative or which contravene public policy shall be deemed,
without further action, by or on behalf of the Corporation, to
be modified, amended and/or limited, but only to the extent
necessary to render the same valid and enforceable; it being
understood that it is the Corporation's intention to provide
the Directors and Officers with the broadest possible
protection against personal liability allowable under the
Applicable Corporation Law, and this Bylaw shall be liberally
construed in order to fulfill this intent, and in no event
shall a Director's or Officer's reliance on any of the
provisions of this Article which may be held to be invalid,
inoperative or in contravention of public policy render such
conduct a Breach of Duty.
8.11. Notice to the Corporation. A Director or
Officer shall promptly notify the Corporation in writing when
he or she has actual knowledge of a Proceeding which may
result in a claim of indemnification against Liabilities or
allowance of Expenses hereunder, but the failure to do so
shall not relieve the Corporation of any liability to the
Director or Officer hereunder unless the Corporation shall
have been irreparably prejudiced by such failure.
8.12. Indemnification and Allowance of Expenses of
Certain Others.
A. Employee of Authorized Agent. The Board of
Directors may, in its sole and absolute discretion, by
majority vote or consent indemnify against Liabilities
incurred by, and/or provide for the advance of reasonable
Expenses of, an employee or authorized agent of the
Corporation acting within the scope of his or her duties as
such, even if such employee or agent is not a Director or
Officer.
B. Indemnity Agreements. The Board of Directors,
by majority vote or consent, may authorize the Corporation to
enter written indemnity agreements with: (i) any Director or
Officer of the Corporation, which may further expand the
indemnification rights provided under these Bylaws or the
Applicable Corporation Law; and (ii) any employee or agent of
the Corporation, which may extend to such person the same,
greater or lesser rights of indemnification and reliance as
those afforded to Directors and Officers under this Article.
8.13. Amendment. This Article may only be altered,
amended or repealed by a vote of not less than two-thirds of
the Corporation's outstanding Class A common stock entitled to
vote, provided, however, that the Board of Directors may alter
or amend this Article without such stockholder approval if any
such alteration or amendment is (a) made in order to conform
to any amendment or revision of the Applicable Corporation
Law, which (i) expands or permits the expansion of a
Director's or Officer's right to indemnification thereunder;
(ii) limits or eliminates, or permits the limitation or
elimination of, the liability of a Director or Officer; or
(iii) is otherwise beneficial to the Directors and Officers or
(b) an alteration or amendment which is otherwise deemed by
the Board of Directors to be an immaterial modification. No
amendment of this Article shall terminate, reduce or impair a
Director's or Officer's rights to indemnification for any act,
occurrence or event taking place prior to the effective date
of such amendment and delivery of notice thereof to such
Director or Officer, regardless of when any claim relating
thereto is actually asserted.
8.14. Nonexclusivity of Article VIII. The rights of
a Director or Officer (or any other person) granted under this
Article shall not be deemed exclusive of any other rights to
indemnification against Liabilities or allowance of Expenses
which the Director or Officer (or such other person) may be
entitled to under any written agreement, Board of Directors
resolution, vote of shareholders of the Corporation or under
the Applicable Corporation Law or otherwise. Nothing
contained in this Article shall be deemed to limit the
Corporation's obligations to indemnify against Liabilities or
allow expenses to a Director or Officer under the Applicable
Corporation Law.
8.15. Transactions with the Corporation. The Board
of Directors may from time to time authorize transactions by
Officers, Directors and employees with the Corporation, and
may authorize lending money and granting credit of the
Corporation to or for the use of such Officers Directors and
employees, providing that the Directors who vote for or assent
to the making of a loan to an Officer or Director of the
Corporation shall be jointly and severally liable to the
Corporation for the amount of such loan until full repayment
thereof, unless such Directors shall sustain the burden of
proof that such loan was made for a proper business purpose.
Any contract or other transaction between the
Corporation and one or more of its Directors, or between the
Corporation and any firm of which one or more of its Directors
are members or employees, or in which they are interested, or
between the Corporation and any corporation or association of
which one or more of its Directors are shareholders, members,
directors, officers, or employees, or in which they are
interested, shall be valid for all purposes, notwithstanding
the presence of such Director(s) at the meeting of the Board
of Directors of the Corporation which acts upon, or in
reference to, such contract or transaction; and
notwithstanding his or their participation in such action, if
the fact of such interest shall be disclosed or known to the
Board of Directors and the Board of Directors shall,
nevertheless, authorize, approve or ratify such contract or
transaction by a vote of a majority of the Directors present,
such interested Director or Directors to be counted in
determining whether a quorum is present, but not to be counted
in calculating the majority of such quorum necessary to carry
such vote. This Section shall not be construed to invalidate
any contract or other transaction which would otherwise be
valid under the common and statutory law applicable thereto.
ARTICLE IX
GENERAL
-------
9.01. Seal. The Board of Directors shall provide a
corporate seal which shall be circular in form and shall have
inscribed thereon the name of the corporation and the words
"Corporate Seal, Wisconsin."
ARTICLE X
AMENDMENTS
----------
10.01. By Shareholders. These by-laws may be altered,
amended or repealed and new by-laws may be adopted by the
shareholders by affirmative vote of not less than a majority
of the shares present or represented at any annual or special
meeting of the shareholders at which a quorum is in
attendance; provided however, that the power to alter or amend
all or any part of Section 2.13, Article V, Section 7.09 and
this Article X of these By-Laws is hereby exclusively vested
in the Board of Directors.
10.02. By Directors. These by-laws may also be
altered, amended or repealed and new by-laws may be adopted by
the Board of Directors by affirmative vote of a majority of
the number of directors present at any meeting at which a
quorum is in attendance; but no by-law adopted by the
shareholders shall be amended or repealed by the Board of
Directors if the by-law so adopted so provides. The power to
alter or amend all or any part of Section 2.13, Article V,
Section 7.09 and this Article X is exclusively vested in the
Board of Directors.
10.03. Implied Amendments. Any action taken or
authorized by the shareholders or by the Board of Directors,
which would be inconsistent with the by-laws then in effect
but is taken or authorized by affirmative vote of not less
than the number of shares or the number of directors required
to amend the by-laws so that the by-laws would be consistent
with such action, shall be given the same effect as though the
by-laws had been temporarily amended or suspended so far, but
only so far as is necessary to permit the specific action so
taken or authorized.
EXHIBIT 3.3
5.01. Patronage Dividends. Patronage dividends
shall accrue to Class A common shareholders of the
corporation out of net earnings from business done with such
shareholders and shall be determined and distributed for
each fiscal year pursuant to existing provisions of the
Internal Revenue Code; provided further that patronage
dividends of the corporation will be determined on the basis
of the net sales of the corporation to each Class A common
shareholder and paid in an amount which will reduce net
income of the corporation to such amount as will result in
an increase of eight percent (8%) in the net book value (as
determined by the corporation's independent certified public
accountants) of the corporation's outstanding shares as of
the close of such fiscal year. The computation of the
amount of patronage dividends payable to Class A common
shareholders shall be made after the determination of
patronage dividends payable to non-shareholder customers.
EXHIBIT 10.2(a)
Executive Protection Policy
DECLARATIONS
EXECUTIVE PROTECTION POLICY
Policy Number 8132-05-32C
Federal Insurance Company, a stock
insurance company, incorporated
under the laws of Indiana, herein
called the Company.
Item 1. Parent Organization:
ROUNDY'S, INC.
23000 ROUNDY DRIVE
PEWAUKEE, WISCONSIN
53072
Item 2. Policy Period: From 12:01 A.M. on NOVEMBER 01, 1996
To 12:01 A.M. NOVEMBER 01, 1998
Local time at the address shown in
Item 1.
Item 3. Coverage Summary
Description
GENERAL TERMS AND CONDITIONS
EXECUTIVE LIABILITY AND INDEMNIFICATION
Item 4. Termination of
Prior Policies: 8132-05-32B
THE EXECUTIVE LIABILITY AND INDEMNIFICATION, FIDUCIARY LIABILITY,
OUTSIDE DIRECTORSHIP LIABILITY AND EMPLOYMENT PRACTICES LIABILITY
COVERAGE SECTIONS (WHICHEVER ARE APPLICABLE) ARE ALL WRITTEN ON A
CLAIMS MADE BASIS. EXCEPT AS OTHERWISE PROVIDED, THESE COVERAGE
SECTIONS COVER ONLY CLAIMS FIRST MADE AGAINST THE INSURED DURING
THE POLICY PERIOD. PLEASE READ CAREFULLY.
In witness whereof, the Company issuing this policy has caused
this policy to be signed by its authorized officers, but it shall
not be valid unless also signed by a duly authorized
representative of the Company.
FEDERAL INSURANCE COMPANY
HENRY A. GULICK DEAN R. OFFURE
_______________________ ______________________
Secretary President
NOVEMBER 12, 1996 JOHN S. BAIN
_______________________ ----------------------
Date Authorized
Representative
<TABLE>
<CAPTION>
($000 omitted except
for per share data and ratios) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Net sales and service fees $2,610,697 $2,579,010 $2,488,196 $2,461,510 $2,480,254
Net earnings 11,204 10,267 9,022 6,554 8,028
Patronage dividends 5,687 5,568 5,129 0 5,301
Total assets 440,310 434,641 407,337 404,652 380,092
Long term debt 83,458 93,615 78,850 88,227 113,045
Stockholders equity 122,460 109,945 100,033 90,419 86,066
Book value per share 104.35 94.30 85.15 77.40 71.65
Working capital 84,074 90,498 90,740 91,814 113,643
Current ratio 1.39:1 1.42:1 1.43:1 1.43:1 1.64:1
Earnings before
patronage dividends as
a percent of net sales .97% .91% .81% .45% .81%
and service fees
</TABLE>
"The secret of success is constancy to purpose." -Benjamin Disraeli, 1872
As we close out this, the 125th year of our Company, it is worthwhile to
take one more look back on the successes that have brought us closer to a
new millennium and, I believe, to the threshold of a new era of unbridled
prosperity for Roundy's.
Looking back, I find it very interesting to note that when Smith, Roundy &
Co. was founded, Ulysses S. Grant was in his first term as President. That
a Civil War hero was in the White House when this Company was founded is
significant because it gives a sense of the depth of our roots in the
history of Wisconsin and America.
Few companies have survived the turbulence and the changes in the society
and the economy for 125 years. Few companies have withstood the test of
time.
In an era of mergers and acquisitions and leveraged buy-outs, even fewer
can make the claim to be thriving 125 years after their founding. An even
smaller number can lay claim to maintaining their independence and their
local ownership for more than a century.
Roundy's has done all these things. It is what makes us unique.
Like Disraeli, who was Britain's prime minister at the time of our founding
and who I have quoted above, this Company's commitment to constancy of
purpose - its continued and unwavering commitment to high quality at a low
price - has been the key to our success for 125 years.
As a result, Roundy's has not only maintained its independence and
prosperity, we have enjoyed one of our best years ever in 1997.
In reviewing this year, you will gain a good understanding of how RoundyOs
has achieved its successes and why we are poised for further prosperity in
the future.
THE YEAR IN REVIEW
"Coming together is a beginning; keeping together is progress; working
together is success." -Henry Ford
This Company is a team. Our retailers, our associates and everyone
associated with Roundy's has worked together to create our success, and we
all share credit for a strong year in 1997.
The Company's achievements in 1997 were many and varied. Our 125th year saw
record sales, profits and the lowest ratio of long-term debt to equity in
more than a decade.
We will list just a few of the highlights:
- - Net sales and service fees increased $31.7 million from 1996, and
$122.5 million from 1995. These increases were significant in an
era of low inflation and increasing competition. Increases took place in
all areas of our business, including wholesale grocery, non-food and
corporate store operations.
- - Book value per share increased to $104.35 per share in 1997 from
$94.30 per share in 1996. Patronage dividends were also up to $5.7 million
for 1997 compared with $5.6 million for 1996. Stockholders' equity
increased $12.5 million.
- - Cash flows from operations continued to improve from strong
performances in previous years. This allowed the Company to use cash flows
from operations as the primary source for capital.
- - Average borrowings continued to decline. Borrowings were $102.1
million in 1997 compared with $106.1 million in 1996. With the continued
repayment of debt and decline in average borrowings, Roundy's long term
debt to equity ratio dropped.
- - The Company continues to work toward its strategic plan goal of
reducing operating and administrative costs. As such, operating and
administrative expenses excluding depreciation at wholesale were 5.43% of
net sales and fees compared to 5.55% in 1996 and 5.70% in 1995.
- - Roundy's had another outstanding year in private label, increasing
sales at a very healthy rate of 8.3% over a strong year in 1996. Growth
was fueled by perishable product offerings, but it was further boosted by
the introduction of 270 new items. We also received exceptional support
from the promotional campaign for our 125th anniversary as well as the
daily support from our retail stores.
- - In celebration of our 125th year, we recreated packaging for items
such as canned whole kernel corn, cut green beans and jellied cranberries
in a nostalgic, turn-of-the century style that was highly popular with our
customers. The enthusiasm and excitement over this promotion was
overwhelming, and it resulted into increased sales.
- - An initiative to improve productivity in the Milwaukee Division
through the use of engineered labor standards resulted in a significant
productivity increase.
- - The Lima Division also leased an additional 94,000 sq.ft. of warehouse
space for expanding its selection lines.
- - Management Information Systems accomplished several significant goals
in 1997 that included key system implementations in addition to the
design and nstallation of the overall network infrastructure.
The warehouse management system was successfully installed at Westville,
South Bend and Lima in 1997. The training of the people and maturing of
the system in Westville and South Bend is starting to produce the
anticipated return on investment by reducing operating costs whereas the
Lima Division will fully enjoy these benefits in 1998.
In order to centralize the computer processing and application controls in
Pewaukee, a complex wide area network integrated into the local networks
was essential. A corporate wide installation of the network was completed
this past year. Further, incremental costs of managing and maintaining the
network have been more than offset by a significant reduction in the costs
associated with long distance voice communications, a component that was
integrated into our overall voice and data communications strategy. To
complement the networks in addition to providing the escalated processing
power, a new computer was installed in the fall of the year.
The centralization and standardization strategy will continue to be a major
theme driving many of our initiatives in 1998, but all goals are predicated
around the Year 2000 Project. At the conclusion of 1997, a project plan
was being exercised that has targeted total replacement or remediation of
non-compliant code by the first quarter of 1999.
Further efforts in 1998 will undertake projects that will be focused on
defining in greater detail our proposed direction regarding electronic data
interchange (OEDIO), enterprise engineering, systems integration and the
internet.
THE CHALLENGE OF THE FUTURE
"In life, as in a football game, the principle to follow is: Hit the line
hard."
- -Teddy Roosevelt
The challenges of the coming years will be met with the same vigor, the
same strength and commitment to our customers that has made Roundy's thrive
for the past 125 years. In short, we will continue to "hit the line hard"
with a prudent but aggressive strategic plan.
The battlefield of the marketplace is constantly changing. But like the
tenacious generalship of Grant, Roundy's will never shy from the challenge
of being the market leader. I believe we will always meet that challenge
because we will never forget our roots.
We hold dear the things that have made us a success: Our customers, our
associates and sound, prudent business practices combined with the agility
to change with customer needs. We will honor this Company's 125-year-old
tradition by maintaining the values which made us a success.
Grant once said during a battle: "Wherever the enemy goes, let our troops
go also." We need to maintain that type of spirit. We cannot forget the
need to meet new challenges wherever they may present themselves.
We cannot rest on the successes which have brought us to this prominent
point in our history.
Rather, we must honor our past by being prepared to respond to the
challenges of the future. By visualizing and planning for success, and by
facing every challenge head on. To paraphrase Grant, wherever there is a
challenge, let us go there also. It is that kind of spirit that has built
this Company.
As a result, there is no question in my mind that our retailers and our
employees, the people who have made this Company a success going into our
126th year, will help us continue in our commitment to being the market
leader well into the next millennium.
IN CLOSING
As Roundy's closes out its 125th year and the celebration of our founding
and our roots winds down, we turn to the future with the promise of
prosperity and good times.
No discussion of this Company's success would be complete without thanking
the people who have built it. Our stockholders, our retailers and our
associates all deserve due credit for making 1997 a banner year.
We want to thank you all for being part of a tremendous year. You have all
helped us build the legacy of a strong Company with deep roots in the
community and a commitment to excellence.
We look forward to facing the challenges of the coming years with a strong
team in place, a vision for the future, and a powerful desire to work
together as a team to maintain Roundy's market leadership for many years to
come.
Sincerely,
GERALD F. LESTINA
Gerald F. Lestina
President and Chief Executive Officer
LIQUIDITY & CAPITAL RESOURCES
Two years ago we emphasized the Company's dedication to developing,
implementing and building its financial strength, utilizing a disciplined
approach under the framework of Roundy's corporate strategic plan.
Keys to achieving the goals and objectives outlined in the strategic plan
were sales growth, continued profitability and a strong capital structure.
The 1997 financial results have moved the Company a long way in the
direction of achieving many of its short-term goals. Specifically,
Roundy's achieved record sales, profits and the lowest ratio of long-term
debt to equity in over a decade.
In conjunction with the operating records, the Company continued to
strengthen its balance sheet and its cash flow from operations. During each
of the last two fiscal years, Roundy's was able to retire $10.2 million in
debt. Further, it did not have to maximize the use of its revolving credit
agreement but rather utilized cash flow from
operations as the primary source for capital. In this regard, cash flow
from operations continued to improve, up 24.1% from 1996 and up 92.9% from
1995. The strong internal cash flow also allowed the Company to reduce its
total debt and to maintain its low average cost of debt at 7.7%, both for
1997 and 1996.
Additionally, average borrowings continued to decline. These borrowings
were $102.1 million in 1997 compared to $106.1 million in 1996. With the
repayment of debt and the decline in average borrowings, Roundy's long-term
debt to equity ratio dropped to 0.68:1 in 1997 versus 0.85:1 in 1996.
The lowering of debt and the enhancing of interest income through overnight
investment of excess cash was the result of several factors. Emphasis
continues to be placed on lowering inventory levels, which declined $4.7
million in 1997 compared to 1996 and $12.3 million compared to 1995.
Average equity in inventory declined to 33.5% in 1997 versus 34.3% in 1996.
Lastly, average days sales outstanding in accounts receivable declined to
9.2 days in 1997 versus 10.0 days in 1996.
An essential element in building and strengthening the Company is a prudent
capital expenditure program. In 1997, the Company's capital expenditures
exceeded $22.7 million which was down $16.6 million from 1996Os record year
of $39.3 million. Approximately $9.4 million and $7.8 million,
respectively, were spent for fleet additions and on corporate retail stores
in 1997. Further, the Company purchased the stores of a former retail
customer which included fixed assets valued at $2.3 million. In excess of
$3.6 million was spent to remodel the Bluemound Pick `n Save store and to
open the new Oshkosh store. The balance of capital expenditures was for
warehouse enhancements, warehouse equipment, computers and computer systems.
A decision was made to standardize all key systems within the Company.
In this regard, over $2.2 million was expended on communications hardware
and software and other data processing equipment in an effort to facilitate
that process, maximize processing capabilities, reduce data transmission
costs and standardize all major systems within the Company. The goal is
to utilize standardization to (1) bring all divisions' data processing
capabilities to a desired level of performance, (2) reduce day to day
processing costs, (3) facilitate changes to more modern systems and
(4) coordinate this effort with the Company's Year 2000 project.
The Company's 1997 and 1996 capital structures are summarized in the table
below
Capital Structure (in millions)
1997 1996
-------------- -------------
Long term debt $83.4 40.5% $93.6 46.0%
Stockholder's equity 122.5 59.5 109.9 54.0
Total capital $205.9 100.0% $203.5 100.0%
An important ratio which management continues to monitor is the Company's
current ratio. The Company's goal is to maintain a strong current ratio
and minimize the investment of corporate resources in receivables and
inventory. As noted previously, average days sales outstanding in accounts
receivable has declined over 8.0% from 1996 and 14.8% from 1995. Further,
inventory turns improved to 15.4 turns in 1997 compared to 14.6 turns for
1996 and 14.1 turns for 1995. The implementation of a standard, modern
buying system at all divisions, reducing investment in inventory and expanding
of electronic purchasing with a greater number of vendors resulted in a 1997
current ratio of 1.39:1 versus 1.42:1 for 1996. This ratio meets credit
agreement requirements and is in line with the Company's strategic goal for
maintaining an appropriate current ratio while minimizing its working
capital investment.
Book value per share increased 10.7% in 1997 to $104. 35 per share from
$94.30 per share for 1996. Patronage dividends were also up 2.1% to $5.7
million for 1997 versus $5.6 million for 1996.
Finally, stockholders' equity in 1997 increased $12.5 million or 11.4%
compared to 1996 and increased $22.4 million or 22.4% from 1995.
RESULTS OF OPERATIONS
The year 1997 represented a 53 week year for Roundy's. Net sales and fees
for the year increased $31.7 million or 1.2% compared to 1996 and $122.5
million or 4.9% compared to 1995. These increases were significant during
a time of low inflation and intense competition. Further, the increases
were in all areas of the business including wholesale grocery, non-foods
and corporate retail store operations. The Company had a net decrease of
four Company operated stores in 1997 compared to 1996 and a net decline of
five stores compared to 1995. An effort was made to dispose of unprofitable
stores, which will strengthen ongoing total retail operations. In this
regard, the Company acquired three stores from a former customer during
the year, and the volume generated from these stores was a major reason
for the growth at retail in 1997. Finally, the non-foods divisions continue
to grow achieving a 3.6% increase in sales compared to 1996 and a 7.5%
increase compared to 1995.
Gross profits in total are relatively flat compared to 1996 levels, but up
0.34% over 1995. The modest increase over 1995 in gross profits is
indicative of the increasing competitive pressure. During 1997, certain
divisions began implementing programs which were directed at lowering
product cost to retailers. The full impact of these programs will be
realized in 1998, but there was some impact in 1997. The primary reason
for the modest increase in gross profits for 1997 and 1996 compared to 1995
is the growth in corporate retail sales. These sales, which maintain a
higher gross profit percent than wholesale sales, have increased an average
of 13.7% over the past two years. Some continuing programs directed at
improving Company gross profits include expansion of category management,
implementation of modern buying systems and expanded promotional programs.
Operating and administrative expenses, as a percent to net sales and
service fees, were down 0.20% from 1996 but were up 0.21% from 1995. A
major goal of the Company's strategic plan is the reduction of operating
and administrative expenses. These expenses, excluding corporate retail
operations and depreciation expenses, reflect a declining trend. Excluding
both of these expenses, 1997 operating and administrative expenses were
5.43% of net sales and service fees compared to 5.55% in 1996 and 5.70% in
1995. The declining percentage is the result of several factors including
a reduction in bad debt expense, down $2.9 million from 1996 and $3.5
million from 1995, improved efficiencies due to more modern data processing
systems and payroll reductions.
The growth in Company-owned retail operations has increased the overall
operating and administrative expense ratio due to its higher wage expense
and operating costs as a percent to sales, versus wholesale operations.
Further, the cost of closing non-performing corporate stores has impacted
the 1997 percentage modestly. The retail impact on the Company's operating
and administrative expense ratio represents a challenge for management, but
it is recognized that corporate stores are essential to Roundy's achieving
many of the key goals and objectives of its strategic plan. The future
challenge is to continue to grow retail within the guidelines of the
strategic plan and improve productivity in the wholesale divisions to
control the impact on total costs of operations.
The Company has undertaken a major effort to upgrade and standardize all
major computer systems. The new systems have been a key factor in allowing
the Company to achieve greater efficiencies and reduce staff. In contrast,
the cost of new systems and other required capital expenditures has caused
depreciation expense to increase to 0.66% of net sales and service fees for
1997 versus 0.63% for 1996 and 0.55% for 1995.
Interest expense continued on a positive trend as a percent of sales. In
1997, interest expense represented 0.31% of net sales and service fees
versus 0.33% in 1996 and 0.32% in 1995. 1996Os percentage was up modestly
from 1995, due to the financing of the high level of capital expenditures
in 1996. In 1997, a major emphasis was placed on establishing a five year
program for capital expenditures to achieve a more balanced spending
program and a better management of resources. Additionally, steps were
taken to further reduce inventory levels and improve inventory turns.
This, coupled with a reduction in accounts receivable and the growth in
cash flow generated from internal sources, enabled the Company to reduce
borrowings and lower interest expense.
The effective income tax rates for 1997, 1996 and 1995 were 42.6%, 42.6%
and 40.3%, respectively. The effective rate continues to be unfavorably
impacted by goodwill from the recent purchases of retail grocery stores.
Net earnings continued a strong, positive trend, achieving a record level
of 0.43% of net sales and service fees compared to 0.40% for 1996 and 0.36%
for 1995. Management firmly believes that its efforts in developing and
executing the program identified in its strategic plan are the main factors
enabling the Company to reach higher earnings levels. Record sales levels,
improved systems, reductions in inventory and accounts receivable have all
contributed to lower operating expenses, lower borrowing levels and record
earnings in 1997.
The Company has developed preliminary plans to address the possible
exposures related to the impact on its computer systems for the Year 2000.
Key financial, information and operational systems have been assessed and
detailed plans have been developed to address systems modifications
required. The cost of achieving Year 2000 compliance is estimated to be
approximately $8 million over the normal cost of software upgrades and
replacements. This amount will be incurred during 1998 and 1999.
SUBSEQUENT EVENT
In the early morning hours of February 27, 1998, the Company experienced a
fire at its Evansville, Indiana warehouse. Because of high winds, the fire
completely destroyed that frozen food facility, including both the building
and all of the inventory contained therein. There were no injuries and the
employees working at the time of the fire were able to save all the
tractors and trailers on the premises.
Shortly after the fire was put out, the Company began working on
transferring the business to Lima, Ohio and South Bend, Indiana warehouses.
The first priority was to put the customers back in service with respect to
their frozen food needs. The second priority will be the planning for the
replacement of the frozen food warehouse.
The Company cannot reasonably estimate, at this time, the total loss
experienced or the exact amount to be recovered under its insurance
policies. Preliminary indications are that such amounts may be significant.
However, it is believed that total losses will not exceed the Company's
insurance coverage limits, which include both business interruption and
property loss coverage.
Independant Auditor's Report
To the stockholders and Directors of Roundy's, Inc.:
We have audited the accompanying consolidated balance sheets of
Roundy's, Inc. and its subsidiaries as of January 3, 1998 and December 28,
1996 and the related statements of consolidated earnings, stockholders'
equity and cash flows for each of the three years in the period ended
January 3, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of the companies at
January 3, 1998 and December 28, 1996, and the results of their operations
and their cash flows for each of the three years in the period ended
January 3, 1998 in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
February 20, 1998
STATEMENTS OF CONSOLIDATED EARNINGS
For The Years Ended January 3, 1998, December 28, 1996 and December 30, 1995
1997 1996 1995
Revenues:
Net sales and service fees $2,610,696,700 $2,579,010,200 $2,488,196,200
Other - net 3,695,700 4,494,700 3,966,100
-------------- --------------- --------------
2,614,392,400 2,583,504,900 2,492,162,300
-------------- --------------- --------------
Cost and Expenses:
Cost of sales 2,362,355,200 2,333,216,600 2,260,039,400
Operating and administrative 218,610,500 218,342,700 203,943,400
Interest 8,220,900 8,479,900 7,929,000
-------------- -------------- -------------
2,589,186,600 2,560,039,200 2,471,911,800
-------------- -------------- -------------
Earnings Before Patronage
Dividends 25,205,800 23,465,700 20,250,250
Patronage Dividends 5,687,000 5,568,300 5,128,500
------------- ------------ ------------
Earnings Before Income Taxes 19,518,800 17,897,400 15,122,000
------------- ------------ ------------
Provision (Credit) for
Income Taxes
Current-Federal 7,786,000 5,255,200 7,255,500
-State 1,722,300 859,800 1,177,400
Deferred (1,193,100) 1,515,500 (2,333,000)
------------- ----------- ----------
8,315,200 7,630,000 6,099,900
------------- ----------- ----------
Net Earnings $11,203,600 $10,267,400 $9,022,100
============ =========== ==========
CONSOLIDATED BALANCE SHEETS
As of January 3, 1998 and December 28, 1996
Assets 1997 1996
------------- ------------
Current Assets:
Cash and cash equivalents $ 52,366,900 $ 40,342,300
Notes and accounts receivable, less
allowance for losses, $5,648,700 and
$6,314,700, respectively 86,998,500 98,593,300
Merchandise inventories 150,898,000 155,562,300
Prepaid expenses 5,216,200 2,741,000
Refundable and future income tax benefits 6,227,800 7,817,400
------------ -------------
Total current assets 301,707,400 305,056,300
------------ -------------
Other Assets:
Notes receivable, less allowance for
losses, $5,299,000 and $5,576,000
respectively 11,604,600 12,386,600
Other real estate 7,152,500 4,439,700
Goodwill and other assets 13,696,700 12,100,600
Deferred income tax benefit 2,848,000 1,922,000
------------ ------------
Total other assets 35,301,800 30,848,900
------------ ------------
Property and Equipment - At Cost:
Land 5,602,000 5,343,900
Buildings 69,445,600 69,084,600
Equipment 115,757,400 101,679,800
Leasehold improvements 14,715,100 13,467,600
------------ -------------
205,520,100 189,575,900
Less accumulated depreciation
and amortization 102,219,500 90,840,100
------------ -------------
Property and equipment - net 103,300,600 98,735,800
------------ -------------
$ 440,309,800 $ 434,641,000
============= =============
See notes to consolidated financial
statements.
CONSOLIDATED BALANCE SHEETS
As of January 3, 1998 and December 28, 1996
Liabilities and Stockholders' Equity 1997 1996
------------- -------------
Current Liabilities:
Current maturities of long-term debt $ 10,156,800 $ 10,225,800
Accounts payable 155,001,500 159,038,100
Accrued expenses 50,148,300 44,358,400
Income taxes 2,327,100 936,100
------------ -------------
Total current liabilities 217,633,700 214,558,400
------------ -------------
Long-Term Debt, Less Current Maturities 83,457,800 93,614,600
Other Liabilities 16,758,000 16,522,700
------------ -------------
Total liabilities 317,849,500 324,695,700
Commitments and Contingencies (Note 10)
Redeemable Common Stock 6,375,300 6,217,100
Stockholders' Equity:
Common stock
Voting (Class A) 15,800 16,300
Non-voting (Class B) 1,346,600 1,325,200
------------ -------------
Total common stock 1,362,400 1,341,500
Patronage dividends payable in
common stock 3,738,000 3,779,000
Additional paid-in capital 28,588,300 24,920,600
Reinvested earnings 83,527,500 75,051,100
------------ -------------
117,216,200 105,092,200
------------ -------------
Less:
Treasury stock, at cost 1,131,200 1,131,200
Amount related to recording
minimum pension liability 0 232,800
------------- -------------
1,131,200 1,364,000
------------- -------------
Total stockholders' equity 116,085,000 103,728,200
------------- -------------
$ 440,309,800 $ 434,641,000
============= =============
<PAGE>
<TABLE>
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JANUARY 3, 1998, DECEMBER 28, 1996 AND DECEMBER 30, 1995
<CAPTION>
Common Stock
------------------------------------ Patronage
Class A Class B Dividends Additional
------------------------------------ Payable in Paid-in Reinvested
Shares Amount Shares Amount Common Stock Capital Earnings
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 14,000 $17,500 1,082,792 $1,353,500 $21,741,200 $61,879,600
Net earnings 9,022,100
Common stock issued 200 200 12,755 16,000 931,400
Common stock purchased (800) (1,000) (17,446) (21,800) (384,500) (1,329,300)
Redeemable common stock (52,204) (65,300) (1,066,000) (3,313,900)
Patronage dividends payable
in common stock $3,405,000
-----------------------------------------------------------------------------------
Balance, December 30, 1995 13,400 16,700 1,025,897 1,282,400 3,405,000 21,222,100 66,258,500
Net earnings 10,267,400
Common stock issued 600 800 51,806 64,800 (3,405,000) 4,312,900
Common stock purchased (1,000) (1,200) (10,433) (13,100) (449,200) (980,300)
Redeemable common stock (7,090) (8,900) (165,200) (494,500)
Patronage dividends payable
in common stock 3,779,000
-----------------------------------------------------------------------------------
Balance, December 28, 1996 13,000 16,300 1,060,180 1,325,200 3,779,000 24,920,600 75,051,100
Net earnings 11,203,600
Common stock issued 1,100 1,400 51,219 64,000 (3,779,000) 4,756,700
Common stock purchased (1,500) (1,900) (15,539) (19,400) (568,900) (1,332,200)
Redeemable common stock (18,575) (23,200) (520,100) (1,395,000)
Patronage dividends payable
in common stock 3,738,000
-----------------------------------------------------------------------------------
Balance, January 3, 1998 12,600 $15,800 1,077,285 $1,346,600 $3,738,000 $28,588,300 $83,527,500
===================================================================================
Treasury Stock, January 3,
1998 and December 28, 1996 13,285 $1,131,200
=====================
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Years Ended January 3, 1998, December 28, 1996, and December 30, 1995
1997 1996 1995
------------ ------------ -------------
Cash Flows From Operating Activities:
Net Earnings $ 11,203,600 $ 10,267,400 $ 9,022,100
Adjustments to reconcile net earnings
to net cash flows provided by
operating activities:
Depreciation and amortization 17,132,300 16,326,800 13,594,400
Allowance for losses 2,389,100 5,302,600 5,871,500
Loss (gain) on sale of property
and equipment 612,900 (1,233,500) 451,900
Patronage dividends payable in
common stock 3,738,000 3,779,000 3,405,000
(Increase) decrease in operating assets:
Accounts receivable 8,975,000 (2,818,400) (6,768,000)
Merchandise inventories 5,808,200 10,319,700 (6,008,400)
Prepaid expenses (2,450,300) 2,453,500 713,500
Refundable and future income tax
benefits 1,589,600 679,400 (2,805,000)
Other real estate (2,712,800) 219,700 1,924,800
Goodwill and other assets (76,500) (413,400) 1,208,700
Deferred income tax benefit (1,087,000) (860,100) 472,000
Increase (decrease) in operating
liabilities:
Accounts payable (4,036,600) (7,237,800) (485,400)
Accrued expenses 6,092,900 1,470,600 6,060,500
Income taxes 1,391,000 864,300 (3,899,600)
Other liabilities 235,300 200,200 2,538,200
Net cash flows provided by operating ------------ ----------- ------------
activities 48,804,700 39,320,000 25,296,200
------------ ----------- ------------
Cash Flows From Investing Activities:
Capital expenditures (22,726,700) (39,291,800) (24,216,300)
Proceeds from sale of property
and equipment 1,740,200 5,763,400 5,296,500
Payment for business acquisition net
of cash acquired (3,967,400) (13,918,700)
(Increase) decrease in notes receivable 1,059,000 3,927,500 (6,342,800)
Net cash flows used in investing ------------ ------------ ------------
activities (23,894,900) (43,519,600) (25,262,600)
------------ ------------ ------------
Cash Flows From Financing Activities:
Proceeds from long-term borrowings 25,000,000
Principal payments of long-term debt (10,156,800) (10,235,600) (9,376,500)
Increase (decrease) in current
maturities of long-term debt (69,000) 6,449,300 (1,902,100)
Proceeds from sale of common stock 1,043,100 973,500 947,600
Common stock purchased (3,702,500) (4,027,300) (3,589,400)
Net cash flows (used in) provided by ------------ ------------ ------------
financing activities (12,885,200) 18,159,900 (13,920,400)
------------ ------------ ------------
Net Increase (Decrease) in Cash and
Cash Equivalents 12,024,600 13,960,300 (13,886,800)
Cash And Cash Equivalents,
Beginning of Year 40,342,300 26,382,000 40,268,800
------------ ------------ ------------
Cash And Cash Equivalents, End Of Year $ 52,366,900 $40,342,300 $26,382,000
============= ============ ============
Cash Paid During The Year For:
Interest $ 8,084,600 $ 8,545,900 $ 8,116,000
Income Taxes 6,433,100 6,965,100 12,319,000
Supplemental Noncash Financing
Activities-Patronage Dividends
Payable in Common Stock 3,738,000 3,779,000 3,405,000
See notes to consolidated financial statements.
NOTES To CONSOLIDATED
FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Description of business-The Company is primarily engaged in the
distribution of food products and related non-food items through retail
supermarkets, many of which are owned by stockholder-customers or the
Company.
Fiscal year-The Company's fiscal year is the 52 or 53 week period ending
the Saturday nearest to December 31. The year ended January 3, 1998
included 53 weeks. The years ended December 28, 1996 and December 30, 1995
included 52 weeks.
Consolidation practice-The financial statements include the accounts of the
Company and its subsidiaries. Significant intercompany balances and
transactions are eliminated.
Use of estimates-The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Cash and cash equivalents-The Company considers all highly liquid
investments, with maturities of three months or less when acquired, to be
cash equivalents.
Inventories-Inventories are recorded at the lower of cost, on the first-in,
first-out method, or market.
Goodwill and long-lived assets-The excess of cost over the fair value of
net assets of businesses acquired (goodwill) is being amortized on a
straight-line basis over 20 years. Accumulated amortization at January 3,
1998 and December 28, 1996 was $4,267,800 and $3,517,800, respectively. The
Company periodically evaluates the carrying value of long-lived assets in
accordance with Statement of Financial Accounting Standards ("SFAS") No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of." The Company analyzes the future recoverability
of the long-lived assets using the related undiscounted future cash flows
of the business and recognizes any adjustments to its carrying value on a
current basis.
Depreciation-Depreciation and amortization of property and equipment are
computed primarily on the straight-line method over their estimated useful
lives, which are generally thirty-one years for buildings, three to ten
years for equipment and five to twenty years for leasehold improvements.
Equipment under capitalized leases is amortized over the terms of the
respective leases.
Closed facilities reserve-When a facility is closed the remaining
investment, net of expected salvage value, is expensed. For properties
under lease agreements, the present value of any remaining future liability
under the lease, net of expected sublease recovery, is also expensed. The
amounts charged to operations in 1997, 1996 and 1995 for the present value
of these remaining future liabilities were not significant.
Income Taxes-The Company provides income taxes in accordance with Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes,"
which requires an asset and liability approach to financial accounting and
reporting for income taxes. Deferred income tax assets and liabilities are
computed annually for differences between the financial statement and tax
bases of assets and liabilities that will result in taxable or deductible
amounts in the future based on enacted tax laws and rates applicable to the
periods in which the differences are expected to affect taxable income.
New accounting pronouncement-In June 1997, the Financial Accounting
Standards Board issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." The Statement is effective for fiscal
1998. The Company is in the process of evaluating the disclosure
requirements. The adoption of SFAS No. 131 will not have a material impact
on the Company's Consolidated Financial Statements.
2. ACQUISITIONS
On September 15, 1997, The Company purchased a grocery retailer for
$3,967,400 in cash. On June 22, 1996, the Company purchased all of the
outstanding stock of a grocery retailer for $13,918,700 in cash. The
acquisitions have been accounted for as purchases and the results of
operations have been included in the Consolidated Financial Statements
since the dates of acquisition. On an unaudited pro-forma basis, the effect
of the acquisitions was not significant to the Company's 1997 and 1996
results of operations.
3. PATRONAGE DIVIDENDS
The Company's By-Laws require that for each of the last three fiscal years,
to the extent permitted by the Internal Revenue Code, patronage dividends
are to be paid out of earnings from business done with stockholder-
customers in an amount which will reduce the net earnings of the Company to
an amount which will result in a 10% increase in the book value of its
common stock. The dividends are payable at least 20% in cash and the
remainder in Class B common stock. Dividends for the years ended January 3,
1998, December 28, 1996 and December 30, 1995 were payable 30% in cash.
4. NOTES AND ACCOUNTS RECEIVABLE
The Company extends long-term credit to certain independent retailers it
serves to be used primarily for store expansion or improvements. Loans to
independent retailers are primarily collateralized by the retailer's
inventory, equipment, personal assets and pledges of Company stock.
Interest rates are generally in excess of the prime rate and terms of the
notes are up to 15 years. Included in current notes and accounts receivable
are amounts due within one year totalling $7,523,400 and $10,190,000 at
January 3, 1998 and December 28, 1996, respectively. The Company is exposed
to credit risk with respect to accounts receivable, although it is
generally limited due to short payment terms. The Company continually
monitors its receivables with customers by reviewing, among other things,
credit terms, collateral and guarantees.
5. LONG-TERM DEBT
Long-term debt, exclusive of current maturities, consists of the following
at the respective year-ends:
Senior notes payable 1997 1996
9.26% due 1999 to 2001 $7,500,000 $10,000,000
7.57% to 8.26% due 1999 to 2008 18,500,000 19,700,000
6.94% due 1999 to 2003 32,142,900 38,571,400
7.86% due 2000 to 2006 25,000,000 25,000,000
Other long-term debt 314,900 343,200
Total $83,457,800 $93,614,600
At January 3, 1998, $60,000,000 was available to the Company under its
revolving credit agreements, all of which was unused. The loan agreements
include, among other provisions, minimum working capital and net worth
requirements and limit stock repurchases and total debt outstanding.
Repayment of principal on long-term debt outstanding is as follows:
1998 $10,156,800
1999 10,159,700
2000 24,734,400
2001 13,738,000
2002 11,242,000
Thereafter 23,583,700
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments, as defined in Statement of Financial
Accounting Standards No. 107, "Disclosures About Fair Value of Financial
Instruments," consist primarily of accounts and notes receivable, accounts
payable, notes payable and long-term debt. The carrying amounts for
accounts and notes receivable and accounts payable and notes payable
approximate their fair values. Based on the borrowing rates currently
available to the Company for long-term debt with similar terms and
maturities, the fair value of long-term debt, including current maturities,
is approximately $93,460,000 and $102,750,000 as of January 3, 1998 and
December 28, 1996, respectively.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Continued
7. STOCKHOLDERS' EQUITY
The authorized capital stock of the Company is 60,000 shares of Class A
common stock and 2,400,000 shares of Class B common stock with a par value
of $1.25 a share. Inactive customers are required to exchange Class A
voting stock held for Class B non-voting stock.
The issuance and redemption of common stock is based on the book value
thereof as of the preceding year end. The year-end book value was $104.35,
$94.30 and $85.15 for 1997, 1996 and 1995, respectively. The Company is
obligated, upon request, to repurchase common stock held by inactive
customers or employees. The amount available for such repurchases in any
year is subject to limitations under certain loan agreements.
Class B common stock which is subject to redemption is reflected outside of
stockholdersO equity. Redeemable common stock is held by inactive
customers and former employees. As of January 3, 1998 and December 28,
1996, 61,095 and 65,929 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. The
Company expects to repurchase shares of 20,779, 16,604, 14,719, 5,178 and
3,815 in 1998, 1999, 2000, 2001 and 2002, respectively.
In conjunction with the 1996 acquisition discussed in Note 2, 13,285 shares
of Class B common stock were owned by the acquired Company. The fair market
value of the shares as of June 22, 1996 acquisition date has been reflected
in the Consolidated Balance Sheet as treasury stock.
Effective November 1991, the Board of Directors adopted the 1991 Stock
Incentive Plan (the "Plan") under which up to 75,000 shares of Class B
common stock may be issued pursuant to the exercise of stock options. The
Plan also authorizes the grant of up to 25,000 stock appreciation rights
("SARs"). Options and SARs may be granted to senior executives and key
employees of the Company by the Executive Compensation Committee of the
Board of Directors. No options or SARs may be granted under the Plan after
November 30, 2001.
Option and SAR transactions are as follows:
Options
Weighted
Average
Options SARS Price Price
-------- ------ -------------- ----------
Outstanding, December 31, 1994 39,500 18,500 $53.10-$65.10 $57.80
Granted 9,500 4,500 77.40 77.40
Exercised (3,400) (1,550) 53.10-65.10 60.82
Cancelled (2,000) (2,350) 53.10-65.10 54.80
------ ------- --------------
Outstanding, December 30, 1995 43,600 19,100 53.10-77.40 61.97
Exercised (1,600) (2,226) 53.10-77.40 68.29
Cancelled (500) (834 77.40 77.40
------- ------- -------------
Outstanding, December 28, 1996 41,500 16,000 53.10-77.40 61.54
Granted 4,300 4,200 94.30 94.30
------- ------- -------------
Outstanding January 3, 1998 45,800 20,200 $53.10-$94.30 64.62
======= ======= ==============
Exercisable at January 3, 1998 39,880 13,347 $53.10-$94.30 62.97
======= ======= ==============
Available for grant after January
3, 1998 5,200 984
======= ======
The following table summarizes information concerning outstanding and
excercisable options:
Stock Options Outstanding Stock Options
Exercisable
Weighted
Average Weighted Weighted
Number Remaining Average Number Average
Of Contractual Exercise Of Exercise
Exercise Price Shares Life Price Shares Price
$50.00-65.00 24,500 4.3 $55.06 22,250 $54.99
$65.01-80.00 17,000 6.9 70.89 16,200 71.17
$80.01-95.00 4,300 9.3 94.30 1,430 94.30
-----------------------------------------------------
45,800 $64.62 39,880 $62.97
=======================================================
Options granted become exercisable based on the vesting rate which ranges
from 20% at the date of grant to 100% eight years from the date of grant.
SAR holders are entitled, upon exercise of a SAR, to receive cash in an
amount equal to the excess of the book value per share of the Company's
common stock as of the last day of the Company's fiscal year immediately
preceding the date the SAR is exercised over the base price of the SAR.
SARs granted become exercisable based on the vesting rate which ranges from
20% on the last day of the fiscal year of the grant to 100% eight years
from the last day of the fiscal year of the grant. Compensation expense was
not material in 1997, 1996 and 1995. In the event of a change in control of
the Company, all options and SARs previously granted and not exercised,
become exercisable.
The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," but applies Accounting
Principles Board Opinion No. 25 and related interpretations in accounting
for its plans. Compensation expense was immaterial for 1997, 1996 and 1995.
If the Company had elected to recognize compensation cost for the Plan
based on the fair value of the options at the grant dates, consistent with
the method prescribed by SFAS No. 123, the decrease in 1997, 1996 and 1995
net earnings would have been less than $60,000.
8. EMPLOYEE BENEFIT PLANS
Substantially all non-union employees of the Company and employees of its
subsidiaries are covered by defined benefit pension plans. Benefits are
based on either years of service and the employee's highest compensation
during five of the most recent ten years of employment or on stated amounts
for each year of service. The Company intends to annually contribute only
the minimum contributions required by applicable regulations.
The following sets forth the funded status of the plans at January 3, 1998
and December 28, 1996:
1997 1996
---------------------- ---------------------
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
Actuarial present value of: Benefits Assets Benefits Assets
- ----------------------------- --------- ----------- ----------- ----------
Vested benefit obligation $601,800 $35,961,300 $25,136,600 $5,211,100
======== =========== =========== ==========
Accumulated benefit obligatio $601,800 $38,625,300 $27,197,200 $5,347,300
======== =========== =========== ==========
Projected benefit obligation $601,800 $45,291,500 $32,399,900 $5,347,300
Plan assets (primarily listed
stocks and bonds)at market value 636,600 36,994,500 28,647,200 4,630,600
-------- ----------- ----------- ----------
Projected benefit obligation
less than or (in excess of)
plan assets 34,800 (8,297,000) (3,752,700) (716,700)
Unrecognized net loss 7,600 4,832,800 907,600 333,900
Prior service cost not yet
recognized in net periodic
pension cost 288,000 240,100 83,800
Unrecognized net asset (721,400) (776,500) (118,900)
Adjustment required to
recognize minimum liability (393,900)
-------- ----------- ------------ ---------
Accrued pension cost $42,400 $(3,897,600 $(3,381,500) $(811,800)
======== ============ ============= ==========
The assumptions used in the accounting were as follows:
1997 1996 1995
Discount Rate 7.25% 7.75% 7.75%
Rate of increase in compensation levels 4.00% 4.00% 4.00%
Expected long-term rate of return of 9.00% 9.00% 9.00%
assets
The changes in the discount rate in 1997 resulted in a $3,534,500 increase
in the projected benefit obligation in 1997 and is expected to result in an
increase in the 1998 pension expense of approximately $270,000. In
accordance with Statement of Financial Accounting Standards No. 87,
"Employers' Accounting for Pensions," the Company has recorded a minimum
liability of which $232,800, net of income taxes, is reflected as a
reduction of stockholders' equity in 1996.
Net pension cost for the foregoing defined benefit plans includes the
following components:
1997 1996 1995
Service cost benefits earned during the year $2,238,700 $2,155,300 $1,652,800
Interest on projected benefit obliation 2,937,100 2,608,900 2,191,100
Actual return on plan assets (3,916,700)(3,361,100) (4,424,500)
Net amortization and deferral 785,500 575,600 1,989,200
----------------------------------
Net pension cost $2,044,600 $1,978,700 $1,408,600
==================================
The Company and its subsidiaries also participate in various multi-employer
plans which provide defined benefits to employees under collective
bargaining agreements. Amounts charged to pension expense for such plans
were $4,530,300, $4,296,100 and $3,611,600 in 1997, 1996 and 1995
respectively. Also, the Company has a defined contribution plan covering
substantially all salaried and hourly employees not covered by a collective
bargaining agreement. Total expense for the plan amounted to $858,400,
$556,600 and $541,500 in 1997, 1996 and 1995, respectively.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Continued
9. INCOME TAXES
Federal income tax at the statutory rates of 35% in 1997, 1996 and 1995 and
income tax expense as reported, are reconciled as follows:
1997 1996 1995
Federal income tax at statutory rates $6,831,600 $6,264,100 $5,292,700
State income taxes, net of federal tax
tax benefits 1,119,500 930,700 765,300
Other - net 364,100 435,200 41,900
----------- ----------- -----------
Income tax expense $8,315,200 $7,630,000 $6,099,900
=========== =========== ===========
The approximate tax effects of temporary differences at January 3, 1998 and
December 28, 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
------------------------------ --------------------------------------
Assets Liabilities Total Assets Liabilities Total
<S> <C> <C> <C> <C> <C> <C>
Allowance for doubtful accounts $ 1,057,000 $1,057,000 $ 1,285,000 $1,285,000
Inventories $(1,264,200) (1,264,200) $(1,314,200) (1,314,200)
Employee benefits 5,213,000 5,213,000 4,225,000 4,225,000
Accrued expenses not currently
deductable 1,222,000 1,222,000 1,926,000 1,926,000
---------- ------------ ---------- ----------- ------------ ----------
Current 7,492,000 (1,264,200) 6,227,800 7,436,000 (1,314,200) 6,121,800
----------- ------------ ---------- ---------- ------------ -----------
Allowance for doubtful accounts 2,142,000 2,142,000 2,254,000 2,254,000
Depreciation and amortization (6,773,000) (6,773,000) (6,989,000) (6,989,000)
Employee benefits 4,115,000 4,115,000 3,971,000 3,971,000
Accrued expenses not currently
deductable 3,583,000 3,583,000 2,906,000 2,906,000
Other (219,000) (219,000) (220,000) (220,000)
----------- ------------ ---------- ----------- ------------ -----------
Noncurrent 9,840,000 (6,992,000) 2,848,000 9,131,000 (7,209,000) 1,922,000
------------ ------------ ---------- ----------- ------------ -----------
Total $17,332,000 $(8,256,200) $9,075,800 $16,567,000 $(8,523,200) $8,043,800
=========== ============ ========== =========== ============ ===========
10. LEASE OBLIGATIONS AND CONTINGENT LIABILITIES
Rental payments and related subleasing rentals under operating leases are
as follows:
Rental Payments
---------------------- Subleasing
Minimum Contingent Rentals
1995 $35,264,400 $422,900 $22,045,500
1996 31,711,700 486,600 21,628,300
1997 28,625,700 406,600 21,249,900
Contingent rentals may be paid under certain store leases on the basis of
the store's sales in excess of stipulated amounts.
Future minimum rental payments under long-term operating leases are as
follows at January 3, 1998:
1998 $31,323,600
1999 30,275,500
2000 29,200,600
2001 27,635,600
2002 27,072,100
Thereafter 191,451,000
Total $336,958,400
Total minimum rentals to be received in the future under non-cancelable
subleases as of January 3, 1998 are $251,371,000.
The Company has guaranteed customer bank loans and customer leases
amounting to $480,000 and $756,900, respectively, at January 3, 1998.
The Company is involved in various claims and litigation arising in the
normal course of business. In the opinion of management, the ultimate
resolution of these actions will not materially affect the consolidated
financial position, results of operations or cash flows of the Company.
11. EARNINGS PER SHARE
Earnings per share are not presented because they are not deemed
meaningful. See Notes 3 and 7 relating to patronage dividends and common
stock repurchase requirements.
BOARD OF DIRECTORS
Gerald F. Lestina
PRESIDENT & CEO
Robert D. Ranus
VICE PRESIDENT &
CHIEF FINANCIAL OFFICER
Charles R. Bonson
Bonson's Foods, Inc.
Eagle river, WI
Gary N. Gundlach
Pick `n Save - Stoughton
Stoughton, WI
Patrick D. McAdams
McAdams, Inc.
Oconomowoc, WI
Robert E. Bartels
Martin's Super Markets, Inc.
South bend, IN
George C. Kaiser
Milwaukee, WI
George E. Prescott
Prescott's Supermarkets, Inc.
1719 South Main Street
West Bend, WI 53095
Brenton H. Rupple
Milwaukee, WI
Gary R. Sarner
Chairman
Total Logistic Control, LLC
Milwaukee, WI
Elected corporate officers
Gerald F. Lestina
PRESIDENT & CEO
Ralph D. Beketic
VICE PRESIDENT -
WHOLESALE
David C. Busch
VICE PRESIDENT
OF ADMINISTRATION
Edward G. Kitz
VICE PRESIDENT, SECRETARY & TREASURER
Charles H. Kosmaler, Jr.
VICE PRESIDENT OF
LOGISTICS AND PLANNING
Robert D. Ranus
VICE PRESIDENT &
CHIEF FINANCIAL OFFICER
Michael J. Schmitt
VICE PRESIDENT - SALES
AND DEVELOPMENT
Marion H. Sullivan
VICE PRESIDENT OF
MARKETING
Advisory Committee
Kent Burnstad
BURNSTAD'S SUPERMARKET
701 E. ClIFTON STREET
TOMAH, WI 54660
Bob Glisch
MEGA MARTS, INC.
6312 S. 27th STREET
OAK CREEK, WI 53154
Tom McAdams
PICK ` SAVE - MUKWONAGO
1010 ROCHESTER STREET
MUKWOAGO, WI 53149
Dave Connelly
RUDOLPH'S SHOP-RITE
22930 DURAND
KANSASVILLE, WI 53139
Frank Serio
PICK `N SAVE - CUDAHY
5851 SOUTH PACKARD AVENUE
CUDAHY, WI 53110
John Stone
PICK `n SAVE - BARABOO
615 HIGHWAY 136
WEST BARABOO, WI 53913
Scott Sylla
ULTRA MART, INC.
W173 N9170 ST. FRANCIS DRIVE
MENOMONEE FALLS, WI 53051
TRUSTEES
Gerald F. Lestina
PRESIDENT & CEO
Edward G. Kitz
ViCE PRESIDENT, SECRETARY
& TREASURER
Victor C. Burnstad
BURNSTAD BROS., INC.
TOMAH, WI
Robert S. Gold
B. & H. GOLD CORPORATION
BROWN DEER, WI
David A. Ulrich
MEGA MARTS, INC.
OAK CREEK, WI
Robert R. Spitzer
PRESIDENT EMERITUS
MILWAUKEE SCHOOL OF
ENGINEERING
MILWAUKEE, WI
Divisions
1. Corporate Office - ROUNDY'S, INC.
23000 ROUNDY DRIVE, PEWAUKEE, WI 53072
2. Milwaukee Division
11300 W. BURLEIGH STREET, WAUWATOSA, WI 53222
3. Roundy's General Merchandise Division
400 WALTER ROAD, MAZOMANIE, WI 53560
4. Eldorado Division
ROUTE 45 SOUTH, ELDORADO, IL 62930
5. Evansville Perishable Division
4501 PETERS ROAD, EVANSVILLE, IN 47711
6. Westville Division
6500 SOUTH U.S. 421, WESTVILLE, IN 46391
7. South Bend Perishable Division
2107 WESTERN AVENUE, SOUTH BEND, IN 46619
8. Muskegon Division
1764 CRESTON STREET, MUSKEGON, MI 49443
9. Van Wert Division
1200 N. WASHINGTON, VAN WERT, OH 45891
10. Lima Division
1100 prosperity road, lima, oh 45802
</TABLE>
EXHIBIT 21
ROUNDY'S, INC.
Subsidiaries
Roundy's, Inc. has twelve wholly-owned first-tier
subsidiaries, each a
Wisconsin corporation (except as otherwise noted) doing
business under their corporate names. These subsidiaries
are:
Badger Assurance, Ltd.(1) Kee Wholesale, Inc.
CD of Wisconsin, Inc. Midland Grocery of Michigan,
Inc.(6)
Holt Public Storage, Inc. Old Time, Inc.
I.T.A., Inc. Ropak, Inc.
Jondex Corp. Scot Lad Foods, Inc.
Kee Trans, Inc. WFC Foods, Inc.(2)
Six Wisconsin corporations doing business under their
corporate names are wholly-owned subsidiaries of Ropak, Inc.
These corporations are:
Insurance Planners, Inc. Shop-Rite, Inc.
Pick 'n Save Warehouse Foods, Inc. Villard Avenue Shop-Rite,
Inc.
Sheboygan Land Corporation Rindt Enterprises, Inc.
Four corporations doing business under their corporate names
are wholly-owned subsidiaries of Scot Lad Foods, Inc. These
corporations are:
Bonnie Baking Co., Inc.(3) Cardinal Foods, Inc. (5)
Spring Lake Merchandise, Inc.(4) Scot Lad-Lima, Inc.(4)
Two corporations doing business under their corporate names
are wholly-owned subsidiaries of Cardinal Foods, Inc. These
corporations are:
Wilson's Cardinal Gardner Food Galleries, Inc.
(4)
Supermarket, Inc.(4)
One corporation doing business under its corporate name is a
subsidiary of Shop-Rite, Inc. and is partially owned by
Cardinal Foods, Inc. The corporation is:
The Midland Grocery Company(4)
_____________
(1) A Bermuda corporation. (4) An Ohio corporation.
(2) An Illinois corporation. (5) A Delaware corporation.
(3) An Indiana corporation. (6) A Michigan corporation.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ROUNDY'S
INC. FORM 10-K 405 FOR THE PERIOD ENDED 01-03-98 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-END> JAN-03-1998
<CASH> 52,366,900
<SECURITIES> 0
<RECEIVABLES> 86,998,500
<ALLOWANCES> 0
<INVENTORY> 150,898,000
<CURRENT-ASSETS> 301,707,400
<PP&E> 205,520,100
<DEPRECIATION> 102,219,500
<TOTAL-ASSETS> 440,309,800
<CURRENT-LIABILITIES> 217,633,700
<BONDS> 83,457,800
0
0
<COMMON> 1,362,400
<OTHER-SE> 114,722,600
<TOTAL-LIABILITY-AND-EQUITY> 440,309,800
<SALES> 2,610,696,700
<TOTAL-REVENUES> 2,614,392,400
<CGS> 2,362,355,200
<TOTAL-COSTS> 2,362,355,200
<OTHER-EXPENSES> 221,908,400
<LOSS-PROVISION> 2,389,100
<INTEREST-EXPENSE> 8,220,900
<INCOME-PRETAX> 19,518,800
<INCOME-TAX> 8,315,200
<INCOME-CONTINUING> 11,203,600
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,203,600
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
