As Filed with the United States Securities and Exchange
Commission on
April 30, 1999
Registration No. 33-57505
_________________________________________________________________
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
POST-EFFECTIVE AMENDMENT NO. 4
TO FORM S-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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
Telephone: (414) 547-7999
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Mr. Robert D. Ranus
Vice President and Chief Financial Officer
Roundy's, Inc.
23000 Roundy Drive
Pewaukee, WI 53072
(Name, address, including zip code and telephone number,
including area code, of agent for service)
With Copies to:
Andrew J. Guzikowski, Esq.
Whyte Hirschboeck Dudek S.C.
111 East Wisconsin Avenue, Suite 2100
Milwaukee, Wisconsin 53202
Telephone: (414) 273-2100
Approximate date of commencement of proposed sale to the
public: As promptly as practicable after the effective date of
this Registration Statement.
If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, check the following box. X
If the registrant elects to deliver its latest annual report to
security holders or a complete and legible facsimile thereof,
pursuant to Item 11(a)(1) of this Form, check the following box.
__________________________________________________________________
PROSPECTUS DATED APRIL , 1999
ROUNDY'S, INC.
23000 Roundy Drive
Pewaukee, Wisconsin 53072
1,500 Shares Class A (Voting) Common Stock
98,507 Shares Class B (Non-Voting) Common Stock
If you are or become the owner of a retail grocery store that
is supplied primarily by Roundy's, we are offering to sell you
Class A common stock. The conditions under which we will sell
you Class A common are described in detail in this prospectus,
which you should read carefully. We may also offer you Class B
common stock under certain circumstances which are described in
this prospectus.
If you are a director or key employee of Roundy's or a trustee
of the Roundy's, Inc. Voting Trust, we may offer you shares of
Class B common from time to time under the circumstances
described in this prospectus, which you should read carefully.
Voting Rights.
---------------
Class A common has voting rights on all matters submitted to
a vote of stockholders. Class B common has no voting rights
other than those provided by law.
Offering Price.
---------------
We are offering Roundy's stock at a price per share equal to the
book value per share of our outstanding stock at the end of our last
fiscal year prior to your purchase, adjusted for any subsequent stock
dividends or splits. The book value per share of Roundy's stock at
January 2, 1999, the end of our last fiscal year, was $114.80.
Proceeds.
---------
We will not pay any underwriting discounts or commissions relating
to this offering, nor will you have to pay any such discounts or
commissions. We will receive 100% of the proceeds from this offering.
No Market.
----------
The Roundy's stock we are offering is not listed or traded on any
securities exchange or market. No market exists, nor do we anticipate
that any market will develop, for our stock.
An investment in Roundy's stock involves certain risks. For
information about these risks, see "RISK FACTORS" beginning on
page 9.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
TABLE OF CONTENTS
-----------------
Cautionary Statement Regarding Forward-Looking Statements .......... 3
Prospectus Summary ................................................. 5
Risk Factors ....................................................... 9
The Offering ....................................................... 11
Use Of Proceeds .................................................... 13
Capitalization .................................................... 14
Selected Financial Information ..................................... 15
Management's Discussion And Analysis Of Results Of Operations
And Financial Condition ............................................ 15
The Company ........................................................ 20
Management ......................................................... 26
Cooperative Status; Patronage Dividends ............................ 27
Description Of Stock ............................................... 30
Exchange Of Class A Common For Class B Common ...................... 31
Repurchase Of Shares ............................................... 32
Voting Trust ....................................................... 34
Legal Matters ...................................................... 36
Experts ............................................................ 37
Indemnification .................................................... 37
Index To Financial Statements ...................................... F-1
Exhibit A - Subscription Agreement ................................. A-1
Exhibit B - Buying Deposit Agreement ............................... A-2
Exhibit C - Article V of the By-Laws ............................... A-4
Exhibit D - Policy Relating to Redemption of Stock by Inactive
Customer Shareholders and Former Employees ........................ A-6
Exhibit E - Policy Regarding Issuance and Sales of Roundy's,
Inc. Stock ....................................................... A-13
We have not authorized anyone to give any information or make
any representation about Roundy's that is different from, or adds
to, the information in this prospectus or in documents that are
publicly filed with the SEC. If anyone does give you different
or additional information, you should not rely on it.
This prospectus is an offer to sell Roundy's stock only under
circumstances and in jurisdictions where it is lawful to do so.
The information contained in this prospectus speaks only as of
its date unless we specifically tell you that another date
applies.
WHERE YOU CAN FIND MORE INFORMATION
-----------------------------------
We have filed a registration statement under the Securities Act
of 1933, as amended (the "Securities Act") with respect to the
Roundy's stock we are offering in this prospectus. You may
review the registration statement, of which this prospectus is a
part, and the exhibits thereto, for further information. We also
file annual, quarterly and current reports, and other information
with the SEC.
You may read and copy any document we have filed with the SEC,
including the registration statement, at the SEC's public
reference room located at 450 Fifth Street, N.W., Washington,
D.C. 20549, or at its public reference rooms located in New York,
New York and Chicago, Illinois. For your convenience, the SEC
file number of the registration statement is 33-57505, which is
the same SEC file number under which you can find our annual,
quarterly and current reports. You may call the SEC at 1 - 800 -
SEC - 0330 for further information about the public reference
rooms.
Our SEC filings are also available to the public on the SEC's
web site at http://www.sec.gov. They are located in the EDGAR
database on that web site. You may find it convenient to use our
Central Index Key (or "CIK") number when searching for our
documents at that site. Our CIK number is 0000314423.
The SEC allows us to "incorporate by reference" certain
information we file with them, which means that we can disclose
important information to you by referring you to those documents.
The information incorporated by reference is considered to be
part of this prospectus, and later information that we file with
the SEC will automatically update and supersede this information.
We incorporate by reference our Annual Report on Form 10-K for
the fiscal year ended January 2, 1999 and any future filings we
make with the SEC (including any filings we make prior to the
effectiveness of the registration statement) under Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
We will provide you with a copy of any or all of such documents
(other than exhibits to such documents which we have not
specifically incorporated by reference into the text of such
documents) without charge upon your oral or written request. Any
such request should be directed to:
Roundy's, Inc.
23000 Roundy Drive
Pewaukee, WI 53072
Attention: Robert D. Ranus
Telephone: (414) 547-7999.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
---------------------------------------------------------
This prospectus and the information incorporated by reference contain
certain statements that are "forward-looking," within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act.
Forward-looking statements include statements regarding, among other
matters, our beliefs, expectations, plans and estimates with respect
to certain future events, the impact of governmental regulation, the
impact of litigation and regulatory proceedings, actions to be taken
by others and similar expressions concerning matters that are not
historical facts. In particular terms such as "anticipate,"
"believe," "estimate," "expect," "indicate," "may be," "objective,"
"plan," "predict," "should," and "will" are intended to identify
forward-looking statements.
Such forward-looking statements are not guarantees of future
performance and involve known and unknown risks, uncertainties
and other factors that could cause actual events to differ
materially from those expressed in those statements. Important
factors that could cause actual results to differ materially from
such expectations, referred to as "cautionary factors," are
disclosed in our Annual Report on Form 10-K (see "Cautionary
Factors" at the end of Item 1 therein).
Although we believe that the expectations reflected in such
forward-looking statements are reasonable, we cannot assure you
that such expectations will prove to be correct. We do not
undertake to publicly update or revise our forward-looking
statements even if experience or future changes make it clear
that any projected results expressed or implied therein will not
be realized.
All subsequent written or oral forward-looking statements
attributable to Roundy's or our subsidiaries or persons acting on
our behalf are expressly qualified in their entirety by the
cautionary factors.
PROSPECTUS SUMMARY
------------------
In this section we have briefly summarized certain information
contained in this prospectus. The summary is incomplete and
selective and is qualified in its entirety by the detailed
information and financial statements appearing elsewhere in this
prospectus or incorporated by reference.
Our Business
- ------------
We are engaged principally in the wholesale distribution of
food and non-food products to supermarkets and warehouse food
stores located in 12 states. We own and operate 19 retail
warehouse food stores and service 806 retail grocery stores. We
also provide various ancillary services, including financial,
engineering, advertising, accounting, insurance and promotional
services to our retail customers. For more information, see "THE
COMPANY" beginning on page 10.
Capital Structure
- ------------------
Roundy's stock is divided into two classes: Class A common and
Class B common. The primary distinction between the two classes
is that Class A common has voting rights on all matters submitted
to a vote of stockholders and Class B common has no voting rights
other than those provided by law. Class A and Class B common have
equal rights to share in the proceeds of a liquidation or
dissolution of Roundy's.
The majority of our outstanding stock (approximately 72%) is
owned by those of our customers who own one or more retail food
store businesses that are supplied primarily by Roundy's (but not
those that are supplied by any of Roundy's subsidiaries). In
this prospectus, we refer to these stores as "retail grocery
stores." The owners of these stores are required to own Class A
common and may also own Class B common. We refer to these owners
as "stockholder-customers."
Class A Common.
---------------
We only issue Class A common to our stockholder-
customers, who are required to own exactly 100 shares of Class A
common for every retail grocery store they own. As of the date
of this prospectus, there are 11,700 shares of Class A common
issued and outstanding, which are held by a total of 57
stockholder-customers who owned 117 retail grocery stores
serviced by Roundy's.
We request, but do not require that our stockholder-customers
deposit their shares of Class A common into the Roundy's, Inc.
Voting Trust in exchange for voting trust certificates. This
Voting Trust limits the rights of these shares to vote for
directors. For more information, see "VOTING TRUST" beginning on
page 34.
Class B Common.
---------------
There are no provisions restricting who may own
Class B common. As of the date of this prospectus, there are
1,160,014 shares of Class B common issued and outstanding,
approximately 72% of which are owned by current stockholder-
customers. The balance is owned by former stockholder-customers,
current and former directors and key employees and trustees of
the Voting Trust.
The Offering
- ------------
In this prospectus, we are offering shares of Class A and Class
B common to our stockholder-customers and shares of Class B
common to our directors and key employees and to trustees of the
Voting Trust as described in the table on the following page. We
are offering both classes of stock at a price equal to the book
value per share of our outstanding stock at the end of the fiscal
year prior to purchase. For more information, see "THE OFFERING"
beginning on page 11.
The following table describes the terms of this offering of
Roundy's stock to our stockholder-customers and to our directors,
key employees and trustees of the Voting Trust:
Class A Common Stock, Class B Common Stock,
par value $1.25 per share par value $1.25 per share
------------------------- -------------------------
Stockholder- We are offering to From time to time,
Customers sell you Class A common we may offer to sell you
if you acquire one or Class B common during
more retail grocery three "window" periods
stores primarily supplied (the last two weeks of
by Roundy's or if May, August and November
Roundy's becomes the each year), subject to
primary supplier of one certain limitations.
or more stores that you
already own. We may issue shares
of Class B common to you
We are offering to in payment of a portion
sell you 100 shares of of your patronage
Class A common for each dividends.
of your new retail
grocery stores. We will exchange
shares of Class B common
You will be required for your Class A common
to own exactly 100 shares if you dispose of or
of Class A common for cease operating one or
each of your retail more of your retail
grocery stores for as grocery stores or change
long as you own the its primary supplier.
retail grocery store and
Roundy's is your primary
supplier.
If you dispose of or
cease operating one or
more of your retail
grocery stores or change
its primary supplier, you
will be required to
exchange the 100 shares
of Class A common
associated with that
retail grocery store for
an equal number of shares
of Class B common.
We will request, but
not require, that you
deposit your shares of
Class A common into the
Voting Trust in exchange
for voting trust
certificates.
Directors, You may not buy or We will offer you
Key hold Class A common. shares of Class B common
Employees if you exercise any
and employee stock options we
Trustees have previously granted
of the to you.
Voting
Trust From time to time,
in our discretion we may
offer to sell you Class B
common during three
"window" periods (the
last two weeks of May,
August and November each
year), subject to certain
limitations.
Market for Roundy's Stock
- -------------------------
Neither class of stock is traded or listed on any national
securities exchange or market, and the transfer of shares of
Class A common and Class B common is severely restricted. There
is no market for Roundy's stock. There is also no market for
Roundy's voting trust certificates.
No Dividends Other than Patronage Dividends
- -------------------------------------------
Except for patronage dividends (to which you are entitled only
if you are a stockholder-customer), no dividends have ever been
paid on Roundy's stock and we have no intention of paying
dividends, other than patronage dividends, in the foreseeable
future. Patronage dividends are paid on the basis of the amount
of business each stockholder-customer does with Roundy's, and are
not related to the number of shares of stock owned. We are not
obligated to continue the practice of paying patronage dividends
in the future.
Disposition of Shares
- ---------------------
In general, the only way in which you may dispose of your
Roundy's stock is by requiring us to repurchase it pursuant to our
stock redemption policy. Generally, you may only do this if your
customer relationship with us has been terminated or
substantially reduced or after your employment with us has ended.
With certain exceptions, we will repurchase one-fifth of your
stock in each year following your request at the book value
applicable in each such year. However, the aggregate dollar
amount of stock that we may repurchase at any particular time may
be limited by our agreements with our lenders.
Our stock redemption policy may be amended or rescinded at any
time and under certain circumstances you may not qualify to have
your stock redeemed. We may also make discretionary repurchases
of Class B common under certain circumstances.
For more information, see "REPURCHASE OF SHARES" beginning on
page 10 and the stock redemption policy which is attached to this
prospectus as Exhibit D.
Buying Deposit Requirement
- --------------------------
If you become a stockholder-customer, you will be required to
enter into a buying deposit agreement with us. If you are
already a stockholder-customer, you have already entered into a
buying deposit agreement. The amount you must maintain on
deposit with us is determined by the amount of business your
retail grocery stores do with Roundy's. This buying deposit may
be maintained in cash, Class A common, Class B common, or a
combination thereof. Your buying deposit serves as collateral
for your debts or obligations to us. For more information, see
"THE COMPANY - Stockholder-Customers- Buying Deposits;
Application of Deposited Funds" beginning on page 23.
Lien on Shares
- --------------
We have a lien on all of your Roundy's stock, whether currently
outstanding or issued in the future, as security for the payment
of any debts or obligations you may have to us. For more
information, see "DESCRIPTION OF STOCK" beginning on page 30.
Summary Financial Data
- ----------------------
The following table sets forth certain financial data for
Roundy's and our subsidiaries for each of the last three fiscal
years:
Fiscal Years
1998 1997 1996
(dollars in thousands)
---------- ---------- ----------
Earnings Statement Data:
Net Sales and Service Fees $2,576,222 $2,610,697 $2,579,010
Earnings Before Patronage Dividends
and Income Taxes 26,022 25,206 23,466
Patronage Dividends 5,976 5,687 5,568
Net Earnings 11,898 11,204 10,267
Balance Sheet Data (at year-end):
Total Assets 462,412 440,310 434,641
Working Capital 84,743 84,074 90,498
Long-term Debt (less current maturities) 73,298 83,458 93,615
Stockholders' Equity (1) 134,811 122,460 109,945
__________________________________
(1)Includes redeemable common stock. Also includes patronage
dividends payable in Class B common of $4,060, $3,738, and
$3,779 in 1998, 1997 and 1996, respectively.
For more information, see "SELECTED FINANCIAL INFORMATION" and
"INDEX TO FINANCIAL STATEMENTS."
RISK FACTORS
------------
Lack of Market for Roundy's Stock
- --------------------------------
You may not sell or otherwise transfer or pledge Roundy's stock
without our written consent. Although we are obligated under the
current stock redemption policy to repurchase stock from you, at
your request, if you have terminated or substantially reduced
your customer relationship with Roundy's or terminated you
employment relationship with Roundy's, there are certain
limitations contained in the stock redemption policy on our
obligation to repurchase stock. Further, the stock redemption
policy, and therefore, our obligation to repurchase stock, may be
modified or rescinded at any time without prior notice. For more
information, see "REPURCHASE OF SHARES" beginning on page 10 and
the stock redemption policy which is attached to this prospectus
as Exhibit D.
Limitations on Investment Return
- --------------------------------
You may be unable to realize a return on your investment, or
realize all or a portion of the value of shares purchased, unless
we repurchase such shares or Roundy's is sold or liquidated.
Although we may pay patronage dividends to stockholder-customers,
we cannot assure you when or whether patronage dividends will be
paid in the future because in any year we may not have sufficient
net earnings from Roundy's cooperative business and consolidated
net earnings to permit the payment of patronage dividends. Our
only obligation to pay patronage dividends is imposed by
Article V of our By-Laws, which may be amended or repealed at any
time by our Board of Directors. Patronage dividends are paid on
the basis of the amount of business each stockholder-customer
does with Roundy's, and are not related to the number of shares
of stock owned. We are not obligated to continue the practice of
paying patronage dividends in the future. See "COOPERATIVE
STATUS; PATRONAGE DIVIDENDS - Payment of Patronage Dividends"
beginning on page 28.
No dividends (other than patronage dividends) have ever been
paid, and we do not anticipate that they will be paid in the
future. Therefore, if you own Class B common and are not a
stockholder-customer, you cannot expect to receive any patronage
or other dividends of any kind.
Limitations on Purchasers
- -------------------------
We are only making this offering to certain of our customers
who are engaged in the operation of retail food stores primarily
supplied by Roundy's, to our directors and certain key employees,
and to the trustees of the Voting Trust. We are only offering
Class A common (the only class having voting rights) to you if
you are a stockholder-customer that has a new retail grocery
store, and the amount you may purchase is limited since you are
not permitted to own more than 100 shares for each of your retail
grocery stores. The amount of Class B common we are offering to
you is also limited pursuant to policies adopted by our Board of
Directors (which policies may be changed at any time). See "THE
OFFERING" beginning on page 11 and the stock issuance policy
included as Exhibit E to this prospectus.
Limitations on Stockholders' Ability to Elect Directors
- -------------------------------------------------------
As of the date of this prospectus, all of our outstanding
Class A common has been deposited in a Voting Trust. If you
purchase Class A common, you will be requested, but not required,
to deposit any Class A common you buy into the Voting Trust.
Once deposited, shares of Class A common are subject to a limited
right of withdrawal after they have been on deposit for five
years. All of the currently-outstanding shares of Class A common
are held in the Voting Trust.
The trustees of the Voting Trust are authorized to vote the
shares held in the Voting Trust in their discretion for the
election of a majority of our directors. With respect to the
election of four "retailer directors" and on most other matters,
the trustees must vote shares held in the Voting Trust as a block
as directed by a vote of the holders of outstanding voting trust
certificates. You will be entitled to one vote for each share of
Class A common you deposit in the Voting Trust.
The seven trustees of the Voting Trust, one of whom is also one
of our directors, may be deemed to be in "control" of Roundy's or
its subsidiaries. See "VOTING TRUST" beginning on page 34.
Lien on Shares
- --------------
We have a lien on all your Roundy's stock, whether currently
outstanding or issued in the future, as security for the payment
of any and all debts or obligations you may have to us. See
"DESCRIPTION OF STOCK" beginning on page 30.
Cooperative Tax Status
- ----------------------
Although we are a Wisconsin business corporation, we have
historically operated as a cooperative and have reported our tax
liability under tax rules applicable to corporations operating on
a cooperative basis. Applicable laws, regulations, rulings and
judicial interpretations do not precisely define a cooperative
for income tax purposes. Although we have no reason to believe
that our cooperative income tax status will be challenged, we
cannot assure you that our cooperative status could not be
challenged successfully by the Internal Revenue Service. If the
IRS successfully challenged such status, we would incur a
significant income tax liability. We are not obligated to
continue to operate as a cooperative in the future. See
"COOPERATIVE - Operation as a Cooperative" beginning on page 27.
Income Tax Liability for Patronage Dividends
- --------------------------------------------
For income tax reporting purposes, you must include the entire
amount of any patronage dividends you receive (both the cash and
non-cash portion) in your gross income. You must report any
Class B common which is part of the patronage dividend at its
full stated dollar amount.
Although we must pay you at least 20% of any patronage dividend
in cash, this cash may not be sufficient to pay your tax
liability on the entire patronage dividend you receive. See
"COOPERATIVE - Payment of Patronage Dividends" beginning on page 28.
Competition
- -----------
The grocery industry, including the wholesale food distribution
business, is characterized by intense competition and low profit
margins. We compete with a number of local and regional grocery
wholesalers and with a number of major businesses that market
their products directly to retailers, including companies having
greater assets and larger sales volume than we do. Our customers
and our corporate stores also compete at the retail level with
several chain store organizations which have integrated wholesale
and retail operations, as well as national merchandise retailers
who have expanded their stores to offer traditional grocery
items.
Year 2000
- ---------
We are subject to various substantial risks associated with the
Year 2000 information systems problem which could result in
business interruption and other material adverse effects. For a
more complete description of such risks and consequences, see
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION - Year 2000" beginning on page 18.
THE OFFERING
------------
We offer Roundy's stock through our officers, directors and
authorized employees. We have not authorized anyone else to
offer you Roundy's stock or to give you information regarding
this offering. No securities salespersons or dealers are or ever
have been employed to sell Roundy's stock. Our officers,
directors and employees will not receive any direct or indirect
commission, bonus, or other separate compensation for sales of
Roundy's stock.
We are primarily concerned with attracting stockholders who can
effectively use our services and whose trade with Roundy's will
be mutually beneficial. This is why we limit the sale and
issuance of our stock primarily to individuals, corporations or
other entities engaged in the operation of retail food stores
that purchase merchandise primarily from or through Roundy's. In
addition, we may sell or issue stock from time to time in our
discretion to our directors and key employees, as well as to the
trustees of the Voting Trust.
In this prospectus, we are offering Roundy's stock to
stockholder-customers and to our directors, key employees and
trustees of the Voting Trust.
If you are or become a stockholder-customer, we are offering to
sell you shares of Class A common under the conditions described
below under "- Offer to Stockholder-Customers - Class A Common."
Under certain circumstances , which are described below under "-
Offer to Stockholder-Customers - Class B Common," we may also
offer you shares of Class B common. You should read those
sections carefully.
If you are a director or key employee of Roundy's or a trustee
of the Voting Trust, we may offer you shares of Class B common
from time to time under the circumstances described below under
"- Offer to Directors, Employees and Voting Trustees - Class B
Common." You should read that section carefully.
We have not authorized anyone to use this prospectus to offer
or sell Roundy's stock to anyone other than present or future
stockholder-customers and our directors, key employees and
trustees of the Voting Trust.
Offer to Stockholder-Customers
- -------------------------------
Class A Common. We are offering Class A common exclusively to
present or future stockholder-customers; that is, individuals,
partnerships and corporations engaged in the operation of retail
food stores which are primarily supplied by Roundy's. You may
not own any Class A common unless you own at least one retail
grocery store.
If you are or become a stockholder-customer, we are offering to
sell you Class A common if you acquire one or more retail grocery
stores primarily supplied by Roundy's or if Roundy's becomes the
primary supplier of one or more stores that you already own. You
will be required to purchase 100 shares of Class A common for
each of your new retail grocery stores, and we will require that
you continue to own exactly 100 shares of Class A common for each
of your retail grocery stores for as long as you own the retail
grocery store and Roundy's remains your primary supplier.
If you dispose of one or more of your retail grocery stores or
change its primary supplier to an entity other than Roundy's, you
will be required to exchange the 100 shares of Class A common
associated with that retail grocery store for an equal number of
shares of Class B common. See " - Offer to Stockholder-Customers
- - Class B Common" below.
We will request, but not require, that you deposit your shares
of Class A common into the Voting Trust in exchange for voting
trust certificates. The voting trust provide you with the right
to vote indirectly on the election of four "retailer directors"
and on all other matters submitted to a vote of shareholders.
The balance of our directors are elected by the trustees of the
Voting Trust in their discretion. For more information, see
"VOTING TRUST" beginning on page 10.
Class B Common. If you are a stockholder-customer, we may
offer Class B common to you, as follows:
1) Purchase of Shares. You may purchase shares of Class B
common during three "window" periods each year (consisting of the
last two weeks of May, August and November, respectively).
Pursuant to our stock issuance policy, the total number of shares
that you may purchase in one year is limited to: (1) 15% of your
buying deposit deficit for retail grocery stores with a buying
deposit deficit, and (2) 5% of the buying deposit for retail
grocery stores without a buying deposit deficit. However, if you
are a new stockholder-customer, you may be entitled to purchase
shares up to 30% of your buying deposit in each year until your
initial buying deposit obligation is fulfilled. In addition, if
your buying deposit deficit increases as a result of an expansion
of your retail grocery store facilities, or your addition of new
retail grocery stores, you may be entitled to purchase additional
shares. For more information, see "- Buying Deposit; Application
of Deposited Funds" below, the current form of our buying deposit
agreement attached to this prospectus as Exhibit B, and our
current stock issuance policy attached to this prospectus as
Exhibit E.
If you choose, any funds you deposit with us to fulfill your
buying deposit requirement may be allocated toward the payment
of shares of Class B common for which you may subscribe
(within applicable limits) during the three "window" periods.
2) Patronage Dividends. You may receive shares of Class B
common in payment of a portion of your patronage dividend,
although there can be no assurance that Roundy's will pay
patronage dividends. For more information about patronage
dividends, see "THE COMPANY--Payment of Patronage Dividends."
3) Exchange of Class A Common. If you dispose of or cease
operating one or more of your retail grocery stores or change its
primary supplier, you will be required to exchange the 100 shares
of your Class A common with respect to each such retail grocery
store for an equal number of shares of Class B common. See
"EXCHANGE OF CLASS A COMMON FOR CLASS B COMMON."
Offer to Directors, Key Employees and Voting Trustees
- -----------------------------------------------------
Class A Common. If you are not a stockholder-customer, you are
not entitled to purchase or own Class A Common.
Class B Common. If you are a one of our directors, key
employees, or a trustee of the Voting Trust, we may offer shares
of Class B common to you as follows:
1) We will sell you shares of Class B common if you exercise
any employee stock options we have previously granted to you.
2) From time to time, in our discretion we may offer to sell
you shares of Class B common.
For more information, see our stock issuance policy attached to
this prospectus as Exhibit E.
Offering Price
- --------------
The offering price of each share of Class A common and Class B
common is equal to the book value per share of our outstanding
stock as of the close of the previous fiscal year, adjusted for
subsequent stock dividends (except patronage dividends) and stock
splits. We do not sell shares during any year until the book
value at the end of the immediately preceding fiscal year has
been determined.
We assign the same value to each share of Class B common that
is issued as a portion of a patronage dividend. For example, if
a patronage dividend is declared in 1999 with respect to
purchases from Roundy's during 1998, shares of Class B common
distributed in 1999 as patronage dividends will be valued at the
book value of outstanding shares determined as of the end of
fiscal 1998.
The book value of outstanding Roundy's stock (including both
Class A common and Class B common) at the end of fiscal 1998 was
$114.80 per share. Our By-Laws prohibit the payment of any
patronage dividend for any year unless sufficient earnings have
been retained to increase the book value of the outstanding
Roundy's stock by 8% during that year. See "THE COMPANY."
USE OF PROCEEDS
---------------
The proceeds we receive from the sale of the Roundy's stock
offered in this prospectus will be added to our working capital
and used for general working capital purposes. Such purposes
include the purchase of merchandise for resale and the
maintenance of adequate inventories of such merchandise. The
proceeds may also be used for capital expenditures as required.
Our principal source of working capital has been from borrowings,
rather than from the proceeds of the sale of Roundy's stock, and
we expect that this will continue to be true in the future.
CAPITALIZATION
--------------
The following table sets forth the consolidated
capitalization of Roundy's and our subsidiaries as of January 2,1999:
At January 2, 1999
To Be
Outstanding
If All Stock
Offered
Outstanding is Sold (1)
------------ ------------
SHORT-TERM INDEBTEDNESS:
Current maturities of long-term debt $ 10,159,700 $ 10,159,700
------------ ------------
Total short-term debt $ 10,159,700 $ 10,159,700
============ ============
LONG-TERM INDEBTEDNESS:
Senior unsecured notes payable:
9.26%, due 2000 to 2001 $ 5,000,000 $ 5,000,000
7.57% to 8.26%, due 2000 to 2008 17,300,000 17,300,000
6.94%, due 2000 to 2003 25,714,300 25,714,300
7.86%, due 2000 to 2006 25,000,000 25,000,000
Other long-term debt 283,800 283,800
------------ ------------
Total long-term debt $ 73,298,100 $ 73,298,100
============ ============
Redeemable Common Stock (3) $ 9,007,000 $ 9,007,000
============ ============
STOCKHOLDERS' EQUITY:
Common Stock:
Voting (Class A), $1.25 par value,
60,000 shares authorized, 11,900 issued
and outstanding, 13,400 as adjusted 14,900 16,800
Non-Voting (Class B), $1.25 par value,
2,400,000 shares authorized, 1,061,874
issued,1,160,381 as adjusted 1,327,300 1,450,500
------------ ------------
Total Common Stock 1,342,200 1,467,300
Patronage dividends payable in common stock (2) 4,060,000 4,060,000
Additional paid-in capital 31,582,600 42,938,300
Reinvested earnings 89,950,000 89,950,000
------------ ------------
126,934,800 138,415,600
Less treasury stock, at cost 1,131,200 1,131,200
------------ ------------
Total Stockholders' Equity $125,803,600 $137,284,400
============ ============
_______________________________
(1) The column "To Be Outstanding" reflects the sale and
issuance of shares of Roundy's Class A common and Class B common
hereunder, although this offering is not underwritten and there
is no assurance that any of such shares offered will be sold.
(2) Over the past several years, we have issued shares of
Roundy's Class B common as a portion of our patronage dividends.
See "THE COMPANY" on page 10.
(3) As of January 2, 1999, 78,464 shares were subject to redemption.
SELECTED FINANCIAL INFORMATION
------------------------------
The selected financial information for the five-year period
ended January 2, 1999 should be read in conjunction with the
Roundy's, Inc. and Subsidiaries Consolidated Financial Statements
and notes thereto included elsewhere in this prospectus.
<TABLE>
<CAPTION>
Fiscal Year
(amounts in thousands except per-share data and ratios)
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales and service fees $2,576,222 $2,610,697 $2,579,010 $2,488,196 $2,461,510
Earnings before patronage dividends
and income taxes 26,022 25,206 23,466 20,251 11,055
Patronage dividends 5,976 5,687 5,568 5,129 0
Earnings before income taxes 20,046 19,519 17,898 15,122 11,055
Net earnings 11,898 11,204 10,267 9,022 6,554
Total assets 462,412 440,310 434,641 407,337 404,652
Long-term debt 73,298 83,458 93,615 78,850 88,227
Stockholders' equity(1) 134,811 122,460 109,945 100,033 90,419
Book value per share 114.80 104.35 94.30 85.15 77.40
Ratio of current assets to current liabilities 1.36:1 1.39:1 1.42:1 1.43:1 1.43:1
Ratio of long-term debt to stockholders' equity 0.54:1 0.68:1 0.85:1 0.79:1 0.98:1
</TABLE>
(1) Includes redeemable common stock. Also includes patronage
dividends payable in Class B common of $4,060, $3,738, $3,779,
and $3,405 for 1998, 1997, 1996 and 1995, respectively. No
Class B common payable as patronage dividends is included for
1994 because Roundy's did not meet the requirement contained in
Article V of the By-Laws in effect at that time to increase Book
Value by 10% for 1994.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
---------------------------------------------
Liquidity And Capital Resources
- -------------------------------
When we look back at fiscal 1998, it can only be described as a
"Year of Opportunities." In February 1998 a fire completely
destroyed the Evansville Division; throughout the year, super-
centers and combination food-drugstores expanded in our markets
and in 1998 the term "Y2K" became important to Management at all
levels.
To address these opportunities, Management established
functional teams. These teams looked to the Company's long-range
Strategic Plan as their roadmap for moving forward. Further, the
teams engaged outside advisors to obtain independent assurance
that the basic strategies being followed continued to be sound.
The result was that the Company was able to make timely decisions
and move expeditiously to take advantage of these opportunities.
Specifically, a decision was made to rebuild the Evansville
Division in the same location. New marketing and promotional
programs were developed and implemented to meet the competition
from alternative formats. A plan to address Year 2000 ("Y2K")
issues was finalized and put into action.
The new Evansville facility was built at a cost of $10.8
million. Since the Company had not finalized its insurance claim
for the estimated fire loss as of January 2, 1999, a significant
portion of the construction cost was financed by Roundy's through
internally generated funds. Cash advances of $3.3 million were
received from the insurance carrier to cover construction and
debris removal costs. Total capital expenditures for 1998
including the net cost of the new Evansville facility were $24.9
million compared to $22.7 million in 1997 and $39.3 million in
1996. The bulk of the other 1998 capital expenditures were for
(1) new computer hardware and software to upgrade divisional
warehouse systems, (2) retail grocery store remodels and store
purchases, and (3) warehouse equipment and facility improvements.
In total, 1998 capital expenditures were comparable to 1997
levels. However, they were $14.4 million below 1996 expenditures,
primarily because the Company purchased the Westville Division
warehouse in 1996 for approximately $20 million in addition to
its normal capital expenditures. It had leased this building
previously. The Company, during the past three years, has
expended in excess of $99 million for new capital items including
capital assets obtained through business acquisitions.
Total cash flows provided from operations increased $9.9
million compared to 1997 and $19.4 million compared to 1996.
There were several factors which contributed to the positive
trend including (1) improved earnings, (2) improved vendor
payment terms, and (3) a decrease in accounts receivable. The
higher accounts payable levels were created primarily by the
Company's decision to rebuild Evansville. During the period when
the building was being rebuilt, Evansville customers were
supplied by both the Lima and the South Bend Divisions.
Inventories in these divisions increased to accommodate both the
variety and supply needs of those customers. In December 1998,
the Evansville replacement facility was completed and the process
of stocking the warehouse began. To minimize any imposition on
the Lima and South Bend customers or the Evansville retailers
during this holiday period, both the Lima and South Bend
Divisions continued to purchase inventory to supply the
Evansville customers while the process of restocking the new
facility commenced. Roundy's was able to maximize its payment
terms during this period.
As always, developing a quality customer base and emphasizing
collectibility in accordance with terms has been a high priority
of Management. Accordingly, in late 1997, the Company broadened
its credit control procedures. The new control procedures were
fully operational throughout fiscal 1998. This included a
Corporate Finance Committee, expanded Management reports and
comprehensive reviews directed at customer creditworthiness. The
result was for fiscal 1998 that the Company's combined ratio of
"accounts receivable days sales outstanding" averaged 8.6 days
compared to 9.2 days in 1997 and 10.0 days in 1996. This
resulted in a $6.9 million decline in accounts receivable.
As a result of its strong cash flow, the Company was able to
decrease its average outstanding debt. Average outstanding debt
for 1998 was $91.9 million versus $102.1 million for 1997 and
$106.1 for 1996. The Company has a $60 million borrowing line
available, but none was used in 1998. With the positive trend of
lower debt, Roundy's long-term debt to equity ratio declined to
0.54:1 at the end of 1998 versus 0.68:1 in 1997 and 0.85:1 in
1996. The average interest rates applicable to borrowings during
1998, 1997 and 1996 were 7.7%.
With improved Management controls and positive cash flows, the
Company was able to invest excess funds in various interest
earning vehicles during 1998. Daily investments averaged
approximately $41.9 million in 1998 versus $26.7 million in 1997.
The Company's 1998 and 1997 capital structure is summarized
below (dollars in millions):
1998 1997
------------- ----------------
Long-term debt $ 73.3 35.2% $ 83.4 40.5%
Stockholders' equity 134.8 64.8 122.5 59.5
------ ------ ------ ------
Total capital $208.1 100.0% $205.9 100.0%
====== ====== ====== ======
The Company's financial condition remains strong. We believe
that our cash, other liquid assets, operating cash flows and
access to capital markets, taken together, provide adequate
resources to fund ongoing operating requirements and future
capital expenditures related to the expansion of our existing
business and the development of new projects for the coming year.
Results Of Operations
- ---------------------
Net Sales And Service Fees
- ---------------------------
Net sales and service fees for the year were off approximately
$34.5 million or 1.3% compared to 1997. The retail segment's net
sales were down, approximately $7.5 million in 1998 compared to
1997. This decrease was primarily due to a fewer number of
retail grocery stores and partially due to the additional week in
1997, a 53-week year. The wholesale segment decreased
approximately $27 million. This decrease was primarily due to
the sales lost at the Eldorado and Evansville Divisions because
of the fire that destroyed the Evansville facility, and partially
due to the 53rd week in 1997. A new marketing program developed
to combat the growth of super centers in Roundy's markets
stimulated sales and helped partially offset the sales decline
due to the fire. Net sales for 1997 increased $31.7 million or
1.2% over 1996. This increase was primarily due to the
additional week in 1997.
Gross Profits
- -------------
Overall 1998 gross profits were comparable to 1997 and 1996, at
approximately 9.5%. The 1998 retail segment gross profits, as a
percent to net sales, have continued to exceed 20%. However, due
to increasing competitive pressures, the wholesale segment's 1998
gross profit has continued to decline. This gross profit, as a
percent to net sales, was 7.5% in 1998 compared to 7.7% in 1997
and 7.9% in 1996. With the continued influx of competition from
alternative format and food/drug combination stores throughout
Roundy's markets, the Company continued to keep price increases
at minimum levels. The strategy is to develop and promote value-
added programs, which are competitively priced and directed at
strengthening the Company's customer base. The challenge is to
continue to offer such programs, keep customers financially
strong and, in turn, contribute to Roundy's long-term financial
success.
Operating And Administrative Expenses
- -------------------------------------
Operating and administrative expenses, as a percent to net
sales and service fees, were down to 8.3% in 1998 from 8.4% in
1997 and 8.5% in 1996.The reduction of expenses, as a percent to
net sales, has been a major goal of the Company's Strategic Plan.
This expense percentage, excluding depreciation and amortization,
is also declining. The 1998 operating and administrative
expenses, excluding depreciation and amortization, were 7.6% of
net sales and service fees compared to 7.7% in 1997 and 7.8% in
1996. Several factors contributed to this downward trend.
Specifically, the decline from 1997 was in large part due to
efforts to consolidate functional duties in both the wholesale
and non-food warehouses including procurement and transportation.
During fiscal 1998, a major effort was made to reposition the
fleet in an effort to maximize its longevity and productiveness
without unduly increasing repairs and maintenance costs. Another
initiative included programs directed to reduce workers'
compensation type accidents through enhanced training, pre-work
exercises and constant reminders of safety.
Further, in the early part of fiscal 1998, Management undertook
a major initiative to reduce costs including reduced staffing and
travel and eliminating activities considered not contributing to
the overall goals of the Company. These efforts helped offset
the $4.9 million of Y2K costs which were incurred in 1998, while
such costs were minor in 1997 and 1996. Even with a significant
financial effort undertaken in 1998 to resolve Y2K issues, the
Company continued to grow its business and execute its Strategic
Plan.
The growth in Company-owned retail operations, since 1995, has
increased the overall ratio of operating and administrative
expenses to sales. The retail segment, in comparison to the
wholesale segment, maintains a higher wage expense and operating
costs as a percent to sales. The challenge is to find quality
associates for Corporate retail grocery stores. Since this is an
issue confronting many industries, the cost of wages and benefits
continues to escalate. Additionally, the cost of training
associates also continues to climb which in turn contributes to
the increase in operating and administrative expenses in the
retail segment.
In total, however, the Company has been able to overcome the
higher cost ratio at retail and drive costs from operations as
demonstrated by the fact that the Company's ratio of sales per
full-time equivalent associate has increased the past three years
to $615,000 for 1998 versus $612,000 for 1997 and $603,000 for
1996.
Interest Expense
- ----------------
The positive trend in interest expense continues both in
absolute dollars and as a percent of sales. In 1998, interest
expense was 0.28% of net sales and service fees compared to 0.31%
in 1997 and 0.33% in 1996. As a result of the growth in cash
flow generated by solid earnings and operational efficiencies,
the Company has been able to reduce borrowings resulting in lower
interest expense.
Taxes
- -----
The effective income tax rates for 1998, 1997 and 1996 were
40.7%, 42.6%, and 42.6%, respectively.
The reason for the improvement is due entirely to the Company's
efforts to reduce state and local taxes.
Earnings
- --------
Net earnings continued on a positive trend, achieving a record
level of 0.46% of net sales and service fees compared to 0.43%
for 1997 and 0.40% for 1996. Management firmly believes that its
efforts in developing, executing and achieving the programs
identified in its Strategic Plan are the main reasons leading to
higher earnings levels.
Other Matters
- -------------
Evansville Fire
---------------
On February 28, 1998 a fire totally destroyed the Evansville
Division Warehouse. The Company serviced the Evansville
customers from its Lima, Ohio and South Bend, Indiana facilities.
As a result of the fire, however, the Company lost approximately
$60 million in sales.
A decision was made to rebuild the warehouse in the same
location. As of January 2, 1999, the new facility was
essentially complete and was fully operational by January 30,
1999. The Company settled its inventory claim with its insurance
carrier in late 1998. However, the insurance recovery for the
loss of the building and equipment, extra costs incurred to
service these customers while the warehouse was being rebuilt and
the business interruption portions of the claim covering the lost
business have not been concluded as of year end.
Year 2000
---------
The Company is continuing the implementation of its
comprehensive plans to address the possible impact of Year 2000
issues on operations throughout its divisions. Progress is being
monitored and reported to management and to the Board of
Directors on a periodic basis.
On an enterprise-wide basis, as of January 2, 1999, the Company
has completed the approximate percentages of its expected Year
2000 activities for its systems set forth in the following table.
The table also shows the targeted date for the substantial
completion of each Year 2000 activity:
<TABLE>
<CAPTION>
Assessment Remediation Testing Implementation
------------- ----------------- ----------------- -------------------
Percent Target Percent Target Percent Target Percent Target
Complete Date Complete Date Complete Date Complete Date
-------- ------ --------- ------ -------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IT Systems:
Procurement, including EDI Systems
with product suppliers ................ 100% - 100% - 100% - 30% 3/99
Warehouse management, order processing
and distribution systems ............... 100% - 95% 2/99 80% 3/99 80% 6/99
General (includes financial reporting,
billing and collection and other
administrative systems................... 100% - 100% - 90% 3/99 80% 3/99
Non-IT Systems:
Office Systems ........................ 100% - 100% - 100% - 95% 1/99
Facilities ............................ 100% - 100% - 100% - 100% -
Other Non-IT Systems .................. 100% - n/a - n/a - 85% 3/99
</TABLE>
Efforts are continuing to contact all suppliers and service
providers and coordinate appropriate measures necessary to assure
the continuation of product deliveries and services. However,
because there is a range of alternative suppliers for comparable
products, the Company continues to focus on addressing potential
problems in its critical distribution network to its customers,
and is encouraging and assisting its customers in their
assessment of Year 2000 issues to help them minimize disruptions
at the customer level which could adversely impact the Company's
ability to distribute its products.
The Company's business depends upon its ability to deliver
inventory to its customers in a timely fashion. The Company
believes that the worst case scenario associated with the Year
2000 Issue is if, as a result of disruptions or malfunctions, the
Company is unable to process and deliver customer orders
consistent with the time-sensitive nature of this process. The
extent of such potential impact cannot be determined with
reliability at this time due, in large part, to the lack of
comprehensive information as to the Year 2000 readiness of the
Company's business partners (which the Company is attempting to
assemble). The Company is working with key suppliers and
customers to develop action and contingency plans designed to
minimize the risk of such disruptions. These plans are expected
to be in place approximately June 1999.
Contingency plans for internal operating systems are also
expected to be in place by June 1999.
The Company estimates total costs to be incurred to address the
Year 2000 issues will be approximately $8.8 million, of which
approximately $4.9 million had been spent as of January 2, 1999.
Of the total cost, approximately $6.9 million (78%) will be spent
on remediation and testing, and approximately $1.3 million (15%)
will be spent to upgrade packaged software applications.
Incremental costs, including the costs of third-party contractors
to modify existing systems and internal costs, are expensed as
incurred, with the funds coming from the Company's general
operations, and are included in Operating and Administrative
Expenses.
The Company has deferred certain IT projects as a result of its
focus on Year 2000 issues; however, the deferrals are not
expected to have a material impact on the Company's business or
financial condition.
The Company believes it is taking reasonable steps which, when
fully implemented, will prevent major business interruptions and
minimize the Company's risk of exposure to liability to third
parties due to the Year 2000 Issue. There can be no assurance,
however, that the Company will be successful in its efforts.
Further, the costs of the Company's efforts to address the Year
2000 Issue and the dates on which the Company believes it will
complete the projects described above are based upon Management's
best estimates. There also can be no assurance that these
estimates will prove to be accurate, and the actual cost and
progress on these projects could differ materially from those
currently anticipated. The reasonableness of the Company's
efforts, and the project time lines and budgets, were derived
based on information the Company believes to be reliable and by
making numerous assumptions regarding future events. For
additional details about the Company's Year 2000 efforts and the
risks associated with Year 2000 issues, see the Company's
quarterly report on Form 10-Q for the quarter ended October 3,
1998. Statements made herein or any past statements made or
contained herein are deemed Year 2000 readiness statements and
are subject to the Year 2000 Information and Readiness Disclosure
Act.
Market Risk Sensitivity
- -----------------------
We are not presenting any information concerning market risk
because we do not engage in any foreign-currency transactions or
conduct any business which is denominated in foreign currencies
or outside the United States. Further, we do not believe that our
capital structure is market-sensitive because all of our
outstanding material loans bear interest at a fixed rate.
THE COMPANY
-----------
Roundy's, Inc. was incorporated in 1952 under the Wisconsin
Business Corporation Law. Our executive offices are located at
23000 Roundy Drive, Pewaukee, Wisconsin 53072, and our telephone
number is (414) 547-7999.
General
- -------
We are engaged principally in the wholesale distribution of
food and non-food products to supermarkets and warehouse food
stores located in Wisconsin, Illinois, Michigan, Indiana, Ohio,
Kentucky, Missouri, Arkansas, Minnesota, Pennsylvania, Tennessee
and West Virginia. We also own and operate 13 retail warehouse
food stores under the names "Pick 'n Save" or "Park & Save," one
limited assortment food store under the name "Mor For Less" and
five conventional food stores under the names "Park & Shop,"
"Price Less" or "Buy Low Foods." We offer our customers a
complete line of nationally-known name brand merchandise, as well
as a number of our own private and controlled labels. We
currently service 806 grocery stores.
In addition to the distribution and sale of food and nonfood
products, we provide specialized support services for our
customers, including promotional merchandising and advertising
programs, accounting and inventory control, store development and
financing and assistance with other aspects of store management.
We maintain a staff of trained retail counselors who advise and
assist individual owners and managers with store operations.
Wholesale Food Distribution
- ---------------------------
We distribute a broad range of food and nonfood products to our
customers and to our corporate-owned food stores. We have seven
product lines: dry grocery, frozen food, fresh produce, meat,
dairy products, bakery goods and nonfood products. We have no
long-term purchase commitments, and we do not believe that we are
dependent upon any single source of supply. No source of supply
accounted for more than 9% of our purchases in fiscal 1998.
We sell brand name merchandise of unrelated manufacturers,
including most nationally advertised brands. In addition, we
sell numerous products under private and controlled labels,
including but not limited to "Roundy's," "Old Time," "Shurfine"
and "Buyers' Choice." Private label product sales accounted for
$173,339,000, $179,032,000, and $175,459,000 of our sales during
fiscal 1998, 1997 and 1996, respectively.
We have historically operated on a cooperative basis with
respect to our wholesale food distribution business. Our
cooperative operations accounted for approximately 39%, 37% and
37% of the Company's consolidated net sales and service fees for
fiscal 1998, 1997, and 1996, respectively. The balance of our
sales were to independent grocers or through our corporate-owned
stores. At January 2, 1999, we had 59 stockholder-customers
actively engaged in our retail business, operating a total of 119
retail grocery stores. Our cooperative wholesale food business
is focused primarily in Wisconsin, where 116 of these retail
grocery stores are located (3 are in Illinois). We are not
obligated to continue to operate on a cooperative basis in the
future.
Our primary marketing objective is to be the principal source
of supply to both our stockholder-customers and other independent
grocers. In 1998, we serviced 119 retail grocery stores operated
by our stockholder-customers, 687 grocery stores operated by non-
stockholders and 19 of our corporate-owned food stores. These
stores are located in 12 states.
Of our consolidated net sales and service fees in 1998,
$679,498,400 (26.4%) were attributable to our five largest
customers, with one customer accounting for $294,483,400 (11.4%)
of such sales. Approximately 642 stores purchased less than
$3,000,000 each from us in 1998. 105 customers owned more than
one store, with one customer owning 17 retail food stores.
We generally distribute our products by a fleet of 270 tractor
cabs and 640 trailers. 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
seven days per week. Orders are generally transmitted directly
to a warehouse computer center for prompt assembly and dispatch
of shipments.
We have retail counselors and merchandising specialists who
serve our customers in a variety of ways, including the
following:
1) analysis of and recommendation on store facilities and equipment;
2) development of programs and objectives for establishing
efficient methods and procedures for receipt, handling,
processing, checkout and other operations;
3) informing customers on latest industry trends;
4) assisting and dealing with training needs of customers; and,
5) if the need arises, acting as liaison or problem solver
between us and our customers.
The retail counselors and specialists are assigned a specific
geographic area and periodically visit each customer within their
assigned area.
We render statements to our customers on a weekly basis to
coincide with regular delivery schedules. Our 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 our 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, our bad debt expense has been less than
0.21% of sales. The Company's bad debt expense was $2,189,300,
$2,389,100, and $5,302,600 in 1998, 1997 and 1996, respectively.
Corporate-Owned Food Stores
- ---------------------------
We own and operate three types of corporate stores: high volume-
limited service food stores, high value-limited assortment food
stores, which are both considered "warehouse" food stores, and
conventional food stores.
1) 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.
2) The high value-limited assortment store designated as "Mor
For Less" is 24,000 square feet and emphasizes low cost, high
value lines to the customer.
3) Conventional 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, and their sales during these
years, were as follows:
Type of Store 1998 1997 1996
- ---------------------------- ---- ---- ----
Warehouse Food Stores 13 14 16
Conventional Retail grocery
stores 6 7 11
Sales (in thousands) $284,128 $291,613 $275,761
Employees
- ---------
At January 2, 1999, we employed 1,100 full-time executive,
administrative and clerical employees, 1,334 warehouse and
processing employees and drivers, and 742 retail employees, as
well as 2,017 part-time employees. Substantially all of our
warehouse employees, drivers and retail employees are represented
by unions, with contracts expiring in 1999 through 2002. We
consider our 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. Shifting 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, we
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.
We compete with a number of local and regional grocery
wholesalers and with a number of major businesses that market
their products directly to retailers, including companies having
greater assets and larger sales volume than we do. Our customers
and our corporate-owned stores also compete at the retail level
with several chain store organizations that have integrated
wholesale and retail operations. Our competitors range from
small local businesses to large national and international
businesses. Our success is in large part dependent upon the
ability of our independent retail customers to compete with
larger grocery store chains.
In the Milwaukee, Wisconsin area, our "Pick 'n Save" group,
which consists of both independently-owned and corporate-owned
stores, continues to be the market share leader with 52% 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 1998.
In competing for customers, emphasis is placed on high quality
and a wide assortment of product, low service fees and
reliability of scheduled deliveries. We believe that the range
and quality of other business services provided to retail grocery
store customers by the wholesaler are increasingly important
factors, and that success in the wholesale food industry is
dependent upon the success of our customers who are also engaged
in an intensely competitive, low profit margin industry.
Stockholder-Customers
- ---------------------
Substantially all of Roundy's (but not its subsidiaries')
customers are also Roundy's stockholders. We do not require that
our stockholders buy merchandise exclusively from us; however,
for a stockholder-customer to remain a holder of Class A common
with respect to a particular retail grocery store, Roundy's (but
not any of its subsidiaries) must be that retail grocery store's
principal source of supply.
Generally, we will stop selling to a stockholder-customer only
when there has been nonpayment for merchandise delivered or
indebtedness payable to us or the stockholder defaults in the
payment of indebtedness that we have guaranteed. If this occurs,
we will repurchase such person's stock, upon request, subject to
the limitations described under "REPURCHASE OF SHARES."
Buying Deposits; Application of Deposited Funds
- -----------------------------------------------
Each stockholder-customer is required to maintain a buying
deposit for each retail grocery store it operates. In general
the deposit must be in an amount equal to the greater of $20,000
or the estimated amount of purchases by the retail grocery store
from Roundy's over a two week period; however, we reserve the
right to increase the amount of the deposit required of any
retail grocery store.
This buying deposit requirement may be satisfied by either a
cash deposit in the specified amount (bearing no interest), or
the collateral pledge of Class A common and/or Class B common.
In either case, a stockholder-customer may make its entire buying
deposit by a payment in cash at the outset of its customer
relationship, or it may fulfill part or all of its buying deposit
requirement by means of weekly or monthly payments, in accordance
with an amortization schedule forming a part of the buying
deposit agreement between the stockholder-customer and Roundy's.
The form of buying deposit agreement is attached to this
prospectus as Exhibit B.
If a stockholder-customer elects to fulfill its buying deposit
requirements through periodic installment payments, the
stockholder-customer may apply such deposited amounts toward the
subscription price of shares of Class B Common in accordance with
the limitations described under "THE OFFERING - Offer to
Stockholder-Customers" beginning on page 10.
Neither the execution of a buying deposit agreement, nor the
deposit of funds by a stockholder-customer pursuant to a buying
deposit agreement, will constitute an agreement of any kind that
the stockholder-customer will purchase or that we will sell any
shares of Roundy's stock. See "THE COMPANY--Stockholder-
Customers" and the form of buying deposit agreement included as
Exhibit B to this prospectus.
Stockholder-customers who have already satisfied their buying
deposit requirements may also elect to subscribe for and purchase
shares of Class B common, subject to the limitations described
above under "THE OFFERING - Offer to Stockholder-Customers"
beginning on page 10.
Shares of Class B common issued as patronage dividends will be
applied to satisfy (in whole or in part) the buying deposit
deficit of stockholder-customers with a buying deposit deficit.
If such stockholder-customer has elected to pay its buying
deposit in periodic installments, those shares will be applied to
such installments in the inverse order of their due dates.
Lien on Shares. Our By-Laws provide that we have a lien
against all outstanding Class A common and Class B common as
security for the payment of any and all obligations of the holder
to us. No shares of stock held by a stockholder-customer will be
transferred on our books until all obligations of the stockholder-
customer to us or any of our subsidiaries have been paid in full.
To perfect our lien, we retain physical possession of all stock
certificates and provide stockholders with photocopies. If, at
the time of a repurchase of stock from a stockholder-customer,
that person has an unpaid obligation to us, or to any of our
subsidiaries, the amount of that obligation will be deducted from
the proceeds payable upon the repurchase of that stock. For a
description of other restrictions on transfer of stock contained
in the Company's By-Laws, see "DESCRIPTION OF STOCK--Restrictions
on Transfer" beginning on page 31.
Customer Services
- -----------------
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 customers for some
of these services, however, the income generated by such charges
is not material.
We have maintained a continuous effort to assist qualified
customers and independent retailers to remodel and expand
existing retail locations and to develop new retail outlets. Our
inventory and equipment loans receivable as of January 2, 1999
are summarized in the following table:
Inventory and Equipment Loans (1)
---------------------------------
Number of Loans 111
Original Amount $45,741,200
Outstanding Balance as of
January 2, 1999 $23,385,000
Range of Interest Rates Variable (2)
Range of Maturity Dates 1999-2011
(1) We have guaranteed customer bank loans and customer leases
amounting to $106,700 and $430,100, respectively at January 2,
1999. These amounts are not included in the table above.
(2)Variable rates based on our cost of borrowing.
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 1999 to 2018. Aggregate lease rentals
received under this program were $23,207,000, $21,249,900 and
$21,628,300 in fiscal 1998, 1997 and 1996, respectively.
Real Estate
- -----------
Our principal executive offices are located in Pewaukee,
Wisconsin on a 5-acre site. We own a portion of these facilities
and lease the remainder from a third party. We conduct wholesale
activities from the following warehouses (O = Owned and L =
Leased):
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
Evansville, Indiana Frozen food, meat and 136,000 (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
We believe our current properties are well maintained and, in
general, are adequately sized to house existing operations.
Regulation
- -----------
We are 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 our facilities and our
wholesale food business. We have not been subject to any
material actions brought under such regulations in the past five
years.
Transportation
- --------------
Our transportation fleet for distribution operations as of
January 2, 1999 consisted of 270 tractor cabs, 640 trailers and 3
straight delivery trucks. The fleet is primarily owned. In
addition, we own 46 automobiles.
Computers
- ----------
We own most of our computers and related peripheral equipment.
The computers are used for inventory control, billing and all
other general accounting purposes. We believe the computer
systems are adequate for our operations.
Legal Proceedings
- -----------------
We are not involved in any material litigation as either a
plaintiff or defendant, nor do we contemplate any other material
litigation, nor, to the best of our knowledge, has any such
litigation been threatened against us. Although we are involved
in various claims and litigation arising in the normal course of
business, we do not believe that the ultimate resolution of these
actions will materially affect our consolidated financial
position, results of operations or cash flows.
<TABLE>
<CAPTION>
MANAGEMENT
-----------
The directors and executive officers of Roundy's are as follows:
Name Age Position(s) Held with Roundy's and Business Experience
- ------------------ --- ----------------------------------------------------------------
<S> <C> <C>
Gerald F. Lestina 56 President and Chief Executive Officer since 1995; President and
Chief Operating Officer 1993-1995; Director since 1991 (term expires
2002)
Roger W. Alswager 50 Vice President of Real Estate since 1989
Londell J. Behm 48 Vice President of Advertising since 1987
Ralph D. Beketic 52 Vice President-Wholesale since 1996; President of Milwaukee Division
1993-1995
David C. Busch 50 Vice President of Administration since 1993
Edward G. Kitz 45 Vice President, Secretary & Treasurer since 1995; Vice President &
Treasurer 1989-1994
Charles H. Kosmaler, Jr. 56 Vice President of Planning and Information Services since 1999; Vice
President of Logistics and Planning 1993-1998
Debra A. Lawson 43 Vice President of Human Resources since 1997; Vice President
Administration Milwaukee Division 1994-1996
John E. Paterson 51 Vice President-Distribution since 1997; Vice President of Operations-
Milwaukee Division 1993-1996
Robert D. Ranus 58 Vice President and Chief Financial Officer since 1987; Director
since 1987 (term expires 2000)
Michael J. Schmitt 50 Vice President-Sales and Development since 1995; Vice
President, Northern Region 1992-1995
Marion H. Sullivan 52 Vice President of Marketing since 1989
Robert E. Bartels 61 Director since 1994 (term expires 2000); President and Chief Executive
Officer of Martin's Super Markets,Inc., South Bend, Indiana
Charles R. Bonson 52 Director since 1994 (term expires 2000); President of Bonson's Foods,
Inc., Eagle River, Wisconsin
Robert S. Gold 56 Director since 1998 (term expires 2001); President and stockholder of
B. & H. Gold Corporation, Gold's Market, Inc., Gold's, Inc., and Gold's of
Mequon, LLC, in Brown Deer, Grafton, Milwaukee, and Mequon, Wisconsin
George C. Kaiser 66 Director since 1986 (term expires 2001); 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
Henry Karbiner, Jr. 58 Director since 1999 (term expires 2002); Chairman, President and
Director of both Tri City National Bank and Tri City Bankshares
Corporation, Oak Creek, Wisconsin
Patrick D. McAdams 49 Director since 1995 (term expires 2001); General Manager and Treasurer
of McAdams, Inc., Wales, Wisconsin
George E. Prescott 51 Director since 1999 (term expires 2002); President and Chief Executive
Officer of Prescott's Supermarkets, Inc., West Bend, Wisconsin
Gary R. Sarner 52 Director since 1997 (term expires 2001); Chairman, Total Logistic
Control, LLC since 1996, President and Chief Operating Officer, Christiana
Companies, Inc. 1992 - 1997
</TABLE>
Our directors are elected by Class A common and generally serve
staggered three-year terms; approximately one-third of the board
of directors is elected annually. There are currently ten
members of the board, two of whom are currently executive
officers (Messrs. Lestina and Ranus) and four of whom must be
"retailer directors" (currently, Messrs. Bonson, Gold, McAdams
and Prescott.). The retailer directors are elected according to
the terms of the Voting Trust which provides that the trustees
will vote to elect stockholder-customers chosen by a plurality
vote of the voting trust certificate holders to serve three-year
terms as director. One retailer director is elected each year
and two are elected every third year. See "VOTING TRUST"
beginning on page 34.
COOPERATIVE STATUS; PATRONAGE DIVIDENDS
Operation as a Cooperative
- --------------------------
We have historically operated our food wholesale business (but
not that of our subsidiaries) on a cooperative basis, and
therefore determined our Federal income tax liability under
Subchapter T of the Internal Revenue Code, which governs the
taxation of corporations operating on a cooperative basis. In
general under Subchapter T, for a corporation be taxed as a
cooperative, a substantial majority of the voting securities of
the corporation must be owned by its members or customers and
each such customer's voting power must be equal, or nearly equal,
to that of every other customer. Our capital structure,
including the restrictions on stock ownership, was created to
conform to these two requirements. For additional information,
see "DESCRIPTION OF STOCK" beginning on page 30 and "VOTING
TRUST" beginning on page 34.
As of the date of this prospectus, all of our outstanding
Class A common is owned by our stockholder-customers who own 117
retail grocery stores serviced by Roundy's. Stockholder-
customers, who own approximately 72% of the combined total of
Class A common and Class B common, may receive patronage
dividends from us based on our sales to such stockholder-
customers.
Our subsidiaries do not operate as cooperatives. The customers
serviced by our subsidiaries are independent grocers, operating
687 grocery stores as of January 2, 1999. They do not own any
Class A common and do not receive patronage dividends.
Under Subchapter T of the Internal Revenue Code, we deduct
patronage dividends in determining our taxable income. The
patronage dividends (including the value of the Class B common)
are taxable to the stockholder-customers for income tax purposes,
when received.
We are not required to continue to operate on a cooperative
basis or pay patronage dividends and our operation as a
cooperative, as well as our practice of paying patronage
dividends, could be terminated at any time by our 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
are subject to interpretation. Although we believe that Roundy's
qualifies as a cooperative for such purposes, we have not
obtained, and do not intend to seek a ruling or other assurance
from the Internal Revenue Service that this is the case. If the
IRS were to challenge our cooperative status, and if we were
unsuccessful in defending such status, we could incur a federal
income tax liability with respect to patronage dividends
previously paid to stockholder-customers during the tax years in
question and taken as tax deductions by us.
The preceding discussion is only a summary of the most
significant aspects of the taxation of cooperatives under the
Internal Revenue Code, based on our understanding, and should not
be construed as tax advice to any individual stockholder. You
should consult with your own tax advisor for individual tax
advice.
Payment of Patronage Dividends
- ------------------------------
The patronage dividends we pay, if any, are determined on the
basis of qualifying sales by Roundy's to stockholder-customers.
The amount distributed to any stockholder-customer is therefore
based on that customer's volume of purchases from Roundy's and
not its stock holdings.
Minimum Increase in Book Value. Article V of our By-Laws
governs the payment of patronage dividends to stockholder-
customers. Under Article V, we are required to pay patronage
dividends out of the earnings from the business that Roundy's
does with stockholder-customers in any fiscal year ("patronage
earnings"). The amount of the patronage dividend for any year is
the lesser of (1) patronage earnings, or (2) an amount which will
reduce our net earnings (on a Company-wide basis) to an amount
that will cause the book value of the outstanding Roundy's stock
as of the close of such year to increase by 8% from the book
value at the close of the prior year.
For example, book value at January 2, 1999 was $114.80 per
share. No patronage dividends may be paid for 1999 unless at
least $9.19 (8% of $114.80) per share is added to such book value
as of the close of fiscal 1999. Any increase in book value over
$9.19 which is attributable to patronage earnings must be
distributed in the form of patronage dividends to the extent
permitted by the Internal Revenue Code. Based upon the number of
shares outstanding at January 2, 1999, we must retain earnings of
$10,466,978 in 1999 before patronage dividends may be paid in
2000.
Income from the operations of our subsidiaries and other income
(from sources such as investments in securities and the sale or
exchange of capital assets) is not patronage earnings and
therefore may not be distributed as patronage dividends.
Consequently, the actual increase in book value from year to year
(after we pay patronage dividends) may be more than the stated
growth percentage in any year.
The following table shows increases in book value of Roundy's
outstanding stock for the last three fiscal years. The
percentage increase in book value required under Article V of the
By-Laws before patronage dividends may be paid may be changed by
the Board of Directors at any time. In 1996 and 1997, this
percentage was 10%.
1998 1997 1996
------ ------ ------
Increase in book
value per share 10.0% 10.7% 10.7%
Minimum increase
required by By-Laws 8.0% 10.0% 10.0%
Composition of Patronage Dividends. If there are sufficient
patronage earnings in any fiscal year to enable us to pay
patronage dividends for that year, we will pay them during the
subsequent fiscal year. We must pay at least 20% of the
patronage dividend in cash, but may pay a greater percentage in
cash depending on our cash needs at the time and the requirements
of our credit agreements.
In each year that we pay patronage dividends, the board
determines the percentage to be paid in cash and in Class B
common. These percentages are applied to the dollar amounts
determined as the patronage dividend and the number of shares of
Class B common to be distributed to each stockholder-customer is
determined based on the book value of such shares as of the end
of the last fiscal year.
Stockholder-customers who purchase more merchandise from
Roundy's will be entitled to larger patronage dividends than
others. They also may have a greater equity interest in Roundy's
because they may own more Class B common. However, their voting
power will not increase proportionally because each stockholder-
customer is permitted to hold only 100 shares of Class A common
for each retail grocery store it operates, and the shares of
Class B common that are available for purchase and that are
distributed as patronage dividends are non-voting shares. (See
"DESCRIPTION OF STOCK" and "VOTING TRUST".)
The following table shows the total amount of patronage
dividends paid to stockholder-customers with respect to purchases
during the last three fiscal years, the percentage paid in cash
and in Class B common, and the number of shares of Class B common
issued:
1998 1997 1996
---------- ---------- -----------
Total Dividend $5,975,700 $5,687,000 $5,568,300
Percent in Cash 30% 30% 30%
Percent in Stock 70% 70% 70%
Number of Shares 34,656 36,386 40,013
Taxation of the Receipt of Patronage Dividends.
-----------------------------------------------
Under the Internal Revenue Code, if we pay at least 20% of the total
patronage dividend in cash and the balance in Class B common,
then we may deduct the total patronage dividend in determining
our taxable income. We are permitted to do this only if you
consent to include the full stated dollar amount of the Class B
common and the cash you receive as income on your tax return for
the year in which you receive it.
Your consent to include the full stated dollar amount of the
patronage dividend as income on your tax return can take the form
of (1) a written consent which you either signed (or will be
required to sign) before you became (or become) a stockholder-
customer, or (2) your purchase of stock (or your election to
remain a stockholder) after receiving written notice and a copy
of the provision of our By-Laws that states that a person
becoming or remaining a stockholder of Roundy's shall be deemed
to have given the requisite consent.
Although we are required to pay a minimum of 20% of the annual
patronage dividend in cash, the cash portion, whether it is 20%
or more, may be insufficient, depending upon the income tax
bracket of each recipient, to provide funds for the full payment
of the federal income tax liability incurred by the recipient
with respect to such patronage dividends.
Other
- ------
Although it has not been our practice to do so, Article V of
the By-Laws permits us, in our sole discretion, to pay patronage
dividends to Roundy's customers (but not to customers of any of
our subsidiaries) who are not stockholder-customers because
Roundy's is not their primary supplier. Persons who are not
current customers of Roundy's, such as customers of our
subsidiaries, former customers, or our directors, employees and
trustees of the Voting trust, are not entitled to receive
patronage dividends. No patronage dividends have been paid to
non-stockholder customers in the last four years; however, if we
were to pay patronage dividends to any non-stockholder-customers
in the future, computation of the amount of patronage dividends
payable to stockholder-customers in that year would be made after
the determination of patronage dividends payable to such non-
stockholder-customers.
We cannot assure you that patronage dividends will be paid in
the future, or, if paid, the amount or form of payment thereof.
We are under no obligation to pay patronage dividends except to
the extent provided by Article V of our By-Laws. This By-Law
provision is subject to modification or repeal at any time by
our board of directors. A copy of Article V of the By-Laws, as
amended, is included as Exhibit C for your reference.
DESCRIPTION OF STOCK
--------------------
Authorized Shares
- -----------------
Under our Articles of Incorporation we are authorized to issue
up to 60,000 shares of Class A common, $1.25 par value, and up to
2,400,000 shares of Class B common, $1.25 par value. On April 3,
1999, 11,700 shares of Class A common and 1,160,014 shares of
Class B common were issued and outstanding.
Voting Rights
- -------------
Holders of Class A common are entitled to one vote for each
share held, on all matters which are submitted to a vote of
stockholders. Stockholders are not entitled to cumulative voting
rights. As of the date of this prospectus, all of the outstanding
shares of Class A common were owned of record by the trustees of
the Voting Trust. Shares deposited in the Voting Trust will be
voted in the manner provided in the voting trust agreement. See
"VOTING TRUST" beginning on page 34.
Except as otherwise required by law, holders of Class B common
are not entitled to vote on any matter submitted to a vote of the
stockholders. The Wisconsin Statutes provide that the holders of
the outstanding shares of a class of stock must be entitled to
vote as a class upon any proposed merger, share exchange, sale of
all or substantially all assets of a company or any amendment to
the articles of incorporation which would, in either case, alter
the rights, preferences, or relative status of the shares in any
of a number of specified ways. These are the only circumstances
in which holders of Class B common are entitled to vote as
stockholders.
Dividend Rights
- ---------------
Holders of Class A common and Class B common are entitled to
such dividends as may be declared by the board of directors.
However, Roundy's does not expect to pay any dividends in the
foreseeable future other than patronage dividends as described
under "COOPERATIVE STATUS; PATRONAGE DIVIDENDS -Payment of
Patronage Dividends" on page 28. Stockholders who are not
customers of Roundy's are not entitled to receive patronage
dividends.
Liquidation Rights
- ------------------
In the event of the voluntary or involuntary liquidation of
Roundy's, the holders of Class A common and Class B common will
be entitled to share ratably in our remaining assets after
payment of all our liabilities.
Repurchase of Shares
- --------------------
Subject to certain limitations, we are obligated to repurchase
stock upon written request from stockholders who have terminated
or substantially reduced their customer or employee relationships
with us. We may, but are not obligated to, repurchase shares
held by other stockholders, including current stockholder-
customers See "REPURCHASE OF SHARES" beginning on page 32.
Restrictions on Transfer
- -------------------------
Our Articles of Incorporation provide that no shares of Class A
common or Class B common may be transferred for any purpose
(including, but not limited to, sales, gifts, testate or
intestate inheritance or pledge) unless and until (1) such
transfer has received our prior written consent, or (2) we have
agreed in writing to repurchase such shares and have failed to
satisfy such obligation.
The certificates representing Class A and Class B common bear a
legend setting forth the foregoing limitations on the resale of
such shares.
Other Restrictions and Rights
- -----------------------------
The Class A common and Class B common, the full consideration
for which has been paid, will not be subject to any further calls
or assessments by us. However, Section 180.0622(2)(b) of the
Wisconsin Statutes imposes personal liability on stockholders in
an amount equal to the par value of their respective shares (or
in an amount equal to the consideration paid for such shares in
the case of no-par value stock) for all debts owing to our
employees for services performed for us, not exceeding six
months' service in any one case. A Wisconsin court has
interpreted "par value" for purposes of this statute as the
"subscription price paid for the stock."
We have a first lien upon any shares of our stock held by any
stockholder for the amount of any indebtedness payable us by such
stockholder. To perfect our lien, we retain physical possession
of all stock certificates and provide stockholders with
photocopies. In addition to the other limitations on transfer,
no sale or transfer of any such stock shall be made until all
indebtedness to us has been paid in full. If, at the time of a
repurchase of stock from a stockholder-customer, that person has
an unpaid obligation to us, or to any of our subsidiaries, the
amount of that obligation will be deducted from the proceeds
payable upon the repurchase of that stock.
Transfer Agent
- --------------
We act as our own transfer agent for our Class A and Class B common.
Reports to Stockholders
- -----------------------
We will furnish annual reports to our stockholders within 120
days after the end of each fiscal year. Our annual report will
include financial statements for the latest fiscal year audited
by independent certified public accountants.
EXCHANGE OF CLASS A COMMON FOR CLASS B COMMON
- ---------------------------------------------
If a stockholder-customer disposes of or ceases to operate one or more of
its retail grocery stores or changes its primary supplier to an entity other
than Roundy's, our By-Laws require the stockholder-customer to exchange its
100 shares of Class A common associated with such retail grocery stores
for an equal number of shares of Class B common. We impose this
requirement to comply with the Internal Revenue Code and regulations
governing federal income taxation of corporations operating on a
cooperative basis. See "COOPERATIVE STATUS; PATRONAGE DIVIDENDS -
Operation as a Cooperative" beginning on page 27.
This exchange of Class A common for Class B common will be tax-
free to the stockholder-customer and to Roundy's.
Shares of Class A common will be automatically deemed to have
been surrendered for exchange when a stockholder-customer
disposes of or ceases to operate one or more of its retail
grocery stores or changes its primary supplier to an entity other
than Roundy's.
Any stockholder-customer who fails to actually surrender its
Class A common for Class B common within 90 days following the
termination of its customer relationship with Roundy's will not
be eligible for repurchase of shares under the stock redemption
policy and will not be eligible to receive patronage dividends
until such shares have been surrendered. For more information,
see "REPURCHASE OF SHARES" beginning on page 32.
REPURCHASE OF SHARES
--------------------
The following description of our stock redemption policy is
necessarily selective and is qualified in its entirety by the
full text of the stock redemption policy which is attached to
this prospectus as Exhibit D.
General
-------
Our Articles of Incorporation provide that we may repurchase or
redeem shares of Roundy's stock, without the consent of our
stockholders, on terms that the board deems appropriate subject
to applicable Wisconsin law. The board has adopted a stock
redemption policy which sets forth certain conditions under which
we will repurchase or redeem our stock. Our current stock
redemption policy is included as Exhibit D to this prospectus.
Other than under the stock redemption policy in effect at the
time, we have no obligation to repurchase any of our stock. Our
stock redemption policy may be amended or rescinded at any time
by our board, except that no amendment or rescission may reduce
the price payable for shares that have been properly tendered for
redemption prior to the date of such amendment or rescission.
Any changes to our stock redemption policy could have a material
adverse effect upon a stockholder's right to require us to
repurchase its shares of Roundy's stock, and could cause
stockholders to be unable to dispose of their shares for an
indefinite period of time.
Timing of Repurchases
- ---------------------
The stock redemption policy provides that we will repurchase
shares of stock following a request by the stockholder or his or
her legal representative made during one of three "window
periods" (the last two weeks of May, August and November of each
year) if our customer or employee relationship with the
stockholder has been terminated as follows:
1) A customer's relationship with us is considered terminated
when one of its retail food stores either cease to be principally
supplied by Roundy's or ceases to be owned or operated by the
stockholder.
2) An employee's relationship with us is considered terminated
when the stockholder's employment relationship with us is
terminated for any reason.
Under our current stock redemption policy, we are not required
to repurchase stock held by any stockholder that continues to own
a retail grocery store or be employed by us.
We are required to promptly acknowledge in writing the receipt
of a repurchase request. Once we have done so, the request
becomes irrevocable except with the written consent of our Board
of Directors.
If a stockholder makes a proper repurchase request, we must
repurchase one-fifth (20%) of the shares subject to the
repurchase request on each of the first through the fifth
anniversaries of the repurchase request date. Each of these
anniversaries is known as a "redemption target date." Our
obligation is subject to certain limitations which are discussed
below under "Limitations on Repurchase Obligation."
Notwithstanding the foregoing, if our customer or employee
relationship with the stockholder is terminated as a result of
the death of the stockholder, his or her estate may elect (by
written notice to Roundy's within 180 days after his or her
death) to have up to the first $50,000 in value of stock
repurchased on an accelerated basis within 180 days after we
receive written notice of such election.
Repurchase Price
- ----------------
The repurchase price for the shares under our current stock
redemption policy is the book value of such shares as of the end
of the fiscal year preceding the actual date of repurchase, as
adjusted for subsequent stock splits and stock dividends.
Because the repurchase price will fluctuate based on changes in
book value from year to year, the repurchase price payable for
any 20% annual increment may vary. There is no assurance that
book value will increase from one year to the next and it may
decline.
For example, a stockholder who made a proper repurchase request
for 800 shares on May 25, 1994 would have had his shares
repurchased as follows:
1) 160 shares (20%) on May 25, 1995 for $77.40 per share (book
value at the end of fiscal 1994),
2) 160 shares (20%) on May 25, 1996 for $85.15 per share (book
value at the end of fiscal 1995),
3) 160 shares (20%) on May 25, 1997 for $94.30 per share (book
value at the end of fiscal 1996),
4) 160 shares (20%) on May 25, 1998 for $104.35 per share (book
value at the end of fiscal 1997), and
5) 160 shares (20%) on May 25, 1999 for $114.80 per share (book
value at the end of fiscal 1998).
Limitations on Repurchase Obligation
- ------------------------------------
Our obligation to repurchase shares under the stock redemption
policy is subject to any limitations on repurchases that may be
contained in any of our present or future lending or other
agreements. These contract limits generally consist of covenants
and restrictions of a type frequently encountered in similar
transactions, such as stockholders' equity-to-capital ratios,
debt-to-capital ratios, liability-to-net worth ratios and
maintenance of certain amounts of working capital and
stockholders' equity. These contract limits change from time to
time.
In the event the contract limits prevent us from repurchasing
shares which are the subject of a repurchase request during a
given period of time, or if required repurchases are delayed for
any other reason, repurchases will be resumed promptly after such
suspension period is over. Repurchases will then be made in the
order of the redemption target dates which fell during the
suspension period, regardless of the dates the repurchase
requests were received. Such suspended repurchases will be prior
to redemptions becoming due on any subsequent redemption target
dates.
Notwithstanding these limitations, stock having a repurchase
price of $50,000 or less may be repurchased on an accelerated
basis in our sole discretion in cases of demonstrated hardship.
Any stockholder-customer who fails to surrender its Class A
common for Class B common within 90 days following the
termination of its customer relationship with Roundy's is not
eligible for repurchase of shares under the stock redemption
policy. For more information, see "EXCHANGE OF CLASS A COMMON FOR
CLASS B COMMON" beginning on page 31.
The right to have stock redeemed under the stock redemption
policy is not available to any person who, at the time of such
repurchase, is asserting a challenge to the authority of our
board of directors to have adopted any prior, then-current, or
pending redemption policy or is then asserting a challenge to the
enforceability or validity of our interpretation or application
of any provision of our then-current or any prior stock
redemption policy.
Non-Policy Redemptions. Regardless of the stock redemption
policy, we may repurchase or redeem stock on any other terms or
under such other circumstances as the board deems appropriate,
all without the consent or approval of the other stockholders.
For example, the board may authorize an accelerated repurchase
for hardship purposes on terms different from those provided for
in the stock redemption policy. The fact that we may redeem the
stock of any stockholder on terms other than those contained in
then-current stock redemption policy does not give any other
stockholders the right to such redemption and does not mean that
the stock redemption policy has been amended.
Effect of Repurchase Request. Each share that is subject to a
repurchase request continues to be outstanding for all purposes
until it is actually repurchased.
Pending and Future Redemptions. Based upon repurchase requests
we had received prior to the end of fiscal 1998, we expect to
repurchase 24,012 shares of Class B common in 1999 at $114.80 per
share (book value at January 2, 1999), for a total repurchase
obligation of $2,756,600. In addition, based upon these requests
(assuming the stock redemption policy remains unchanged), we
presently expect to repurchase 22,405 shares in 2000, 12,863
shares in 2001, 11,500 shares in 2002, and 7,684 shares in 2003,
at the repurchase prices applicable in those years. These
figures do not take into account any requests for accelerated
repurchase which we received since January 2, 1999, or which we
may receive in the future, from an estate of a deceased
shareholder, or any non-policy redemptions we may effect in the
future.
The number of shares of Class B common subject to repurchase in
years after 1999 may change based upon receipt of additional
repurchase requests after January 2, 1999, or if we should
exercise our discretion to redeem stock other than on the terms
prescribed by the stock redemption policy, as discussed above.
VOTING TRUST
-------------
Purchasers of Class A common are requested, but not required,
to deposit such shares in the Roundy's, Inc. Voting Trust. This
request is made only by means of a separate prospectus relating
to the voting trust certificates.
The Voting Trust was originally established in August 1971 as
the successor to an initial voting trust created at the time
Roundy's was incorporated. It was most recently amended in 1995.
The Voting 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 Voting Trust, and its predecessor, was to insure the
stability of management necessary to obtain long-term warehouse
and other financing. As of the date of this prospectus, all
outstanding shares of Class A common have been deposited in the
Voting Trust.
Stockholders depositing shares of Class A common in the Voting
Trust will receive voting trust certificates evidencing
beneficial ownership of the number of shares deposited. Such
certificates are not negotiable or transferable.
The voting trust agreement authorizes the trustees to vote all
shares deposited in the Voting Trust, in their discretion, for
the election of all but four of the ten members of the board of
directors. On other matters submitted to a vote of stockholders
(including the election of the four "retailer directors"), the
trustees are required to vote the shares deposited in the Voting
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 Voting Trust entitling the depositor thereof to one
vote).
With respect to the election of the four retailer directors to
be elected by the voting trust certificate holders (one in each
year and two every third year), the candidate receiving the
greatest number of votes from among the voting trust certificate
holders will receive the votes represented by all of the shares
held in the Voting Trust. On all other matters submitted to a
vote of the voting trust certificate holders, the shares of
Class A common held in the Voting Trust will be voted as a block
directed by a majority of the voting trust certificate holders
(except that, with respect to certain fundamental matters
submitted to a vote of stockholders, including the merger of
Roundy's, liquidation or sale of all our assets, the requisite
approval is increased to a two-thirds majority of voting trust
certificate holders unless such action has been recommended by
our board of directors).
The Wisconsin Statutes provide shareholders of Wisconsin
business corporations, such as Roundy's, with the right to
dissent from certain corporate actions (for example, a merger,
consolidation, certain amendments to the Articles of
Incorporation, and certain other specified corporate
transactions) and receive "fair value" for their shares in lieu
of any other consideration offered for such shares in connection
with the proposed transaction or action. These rights are called
"dissenter's rights". Although the shares of Class A common are
held of record by the trustees of the Voting Trust, the voting
trust agreement specifies that voting trust certificate holders
are entitled to exercise any dissenter's rights which arise from
a proposed corporate action or transaction on our part, and the
voting trust agreement specifies the procedure for a voting trust
certificate holder to notify the trustees of his, her or its
intention to exercise such dissenters' rights.
The voting trust agreement provides further that: (1) in the
event the Voting Trust is terminated upon the effectiveness of
such corporate action or transaction on our part, then shares of
Class A common shall be distributed to the voting trust
certificate holder, who shall thereafter be responsible for
complying with the appropriate statutory procedures for obtaining
"fair value" for such shares , and (2) that, if the Voting Trust
is not terminated upon the effectiveness of such corporate action
or transaction on our part, then a voting trust certificate
holder who has notified the trustees of his, her or its intention
to exercise dissenters' rights shall be deemed to have withdrawn
such shares from the Voting Trust and such shares will be
distributed to such dissenting shareholder in accordance with the
voting trust agreement.
A meeting of voting trust certificate holders is held prior to
each meeting of stockholders for the purpose of presenting to the
certificate holders the matters to be voted upon at the
stockholders' meeting. The format of the voting trust
certificate holders' meeting follows that of a customary meeting
of stockholders with respect to notice and the opportunity to
vote in person or by proxy.
Persons holding certificates issued with respect to shares
deposited in the Voting Trust (as amended and restated) prior to
September 16, 1983 who agreed to the amended and restated voting
trust agreement prior to December 17, 1983 have an annual right
to withdraw such shares from the Voting Trust. All other voting
trust certificate holders must wait until their shares of Class A
common have been on deposit for five full years before becoming
entitled to withdrawal rights. No more than one-third of the
total number of shares of Class A common outstanding may be
withdrawn in any single calendar year. The trustees give notice
of this right of withdrawal to each person entitled to withdraw
shares on or before January 31 of each year, and any withdrawals
must take place during the months of February or March.
All cash dividends received by the Voting Trust on the shares
of Class A common deposited in the Voting Trust will be paid to
the voting trust certificate holders. Any stock dividends
payable in Class A common will be retained by the trustees and a
like number of additional voting trust certificates will be
issued to the depositors. In the event of a liquidation of
Roundy's, all money or property received by the trustees with
respect to the stock deposited in the Voting Trust will be
distributed among the depositors in proportion to their
respective stock interests in the Voting Trust.
The voting trust agreement provides that there will be seven
trustees, consisting of the following:
1) two "officer voting trustees" who are officers of Roundy's.
The term of an officer voting trustee is determined by the board
of directors, except that an officer voting trustee automatically
ceases to be a trustee upon ceasing to be an officer of Roundy's.
The current officer voting trustees are Gerald F. Lestina and
Edward G. Kitz. For information concerning Mr. Lestina and Mr.
Kitz, see "MANAGEMENT";
2) two "independent voting trustees" who have executive
business management experience and must be independent from the
management and stockholders of Roundy's. Independent voting
trustees serve five-year terms. The current independent voting
trustees are Bronson J. Haase, President and Chief Executive
Officer of Wisconsin Gas Company, and Robert R. Spitzer,
President Emeritus of the Milwaukee School of Engineering; and
3) three "retailer voting trustees" who are stockholder-
customers but may not be directors of Roundy's. Retailer voting
trustees serve five-year terms. The current retailer voting
trustees are Victor C. Burnstad, President and stockholder of
Burnstad Bros., Inc., David J. Spiegelhoff, Vice President of
Portage Pick 'N Saves, Inc. and Spiegelhoff's Super Food Market,
Inc., and Gary N. Gundlach, owner of Pick `n Save retail grocery
stores in Columbus, DeForest, McFarland, Stoughton and Sun
Prairie, Wisconsin.
Upon the completion of a voting trustee's term, or if a trustee
ceases to be a trustee for any other reason, successor trustees
are appointed by majority vote of the remaining trustees.
The Voting Trust may be deemed to be an "affiliate" of Roundy's
or our subsidiaries, and the trustees of the Voting Trust, as a
group, may be considered to be "parents" of Roundy's, as these
terms are defined in the Securities Act of 1933, as amended, and
the regulations thereunder.
LEGAL MATTERS
-------------
The legality of the Class A common and Class B common we are
offering in this prospectus has been passed upon by Whyte
Hirschboeck Dudek S.C., 111 East Wisconsin Avenue, Suite 2100,
Milwaukee, Wisconsin 53202.
EXPERTS
-------
The consolidated financial statements of Roundy's, Inc. and
subsidiaries and the related consolidated financial statement
schedule as of January 2, 1999 and January 3, 1998 and for each
of the three years in the period ended January 2, 1999 included
and incorporated by reference in this prospectus have been
audited by Deloitte & Touche LLP, independent auditors, as stated
in their reports, which are included and incorporated by
reference herein, and have been so included and incorporated in
reliance upon the reports of such firm given upon their authority
as experts in accounting and auditing.
INDEMNIFICATION
----------------
In our By-Laws, we have established a policy indemnifying our
officers and directors for liabilities and expenses arising out
of their actions in their capacities as officers and directors.
This would include indemnification for certain liabilities on
the part of officers and directors under the Securities Act of
1933. It is the public policy of the state of Wisconsin, as expressed
in Section 180.0859 of the Wisconsin Business Corporation Law, to require
or permit indemnification against claims arising under federal law and
state securities laws.
However, insofar as indemnification for liabilities arising
under the Securities Act may be permitted to our directors,
officers or persons controlling us pursuant to the foregoing
provisions, we have been informed that in the opinion of the
United States Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
INDEX TO FINANCIAL STATEMENTS
Page
Roundy's, Inc. and Subsidiaries Audited Financial Statements:
Independent Auditors' Report F-2
Statements of Consolidated Earnings for each of the
three years in the period ended January 2, 1999 F-3
Consolidated Balance Sheets at January 2, 1999 and January 3,
1998 F-4
Statements of Consolidated Stockholders' Equity for each of the
three
years in the period ended January 2, 1999 F-6
Statements of Consolidated Cash Flows for each of the three
years in the period ended January 2, 1999 F-7
Notes to Financial Statements F-8
Independent Auditors' 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 2, 1999 and January 3,
1998 and the related statements of consolidated earnings, stockholders'
equity and cash flows for each of the three years in the period ended
January 2, 1999. 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 2, 1999 and January 3, 1998, and the results of their operations
and their cash flows for each of the three years in the period ended
January 2, 1999 in conformity with generally accepted accounting
principles.
Milwaukee, Wisconsin
February 19, 1999
Deloitte & Touche LLP
F-2
<TABLE>
<CAPTION>
Statements of Consolidated Earnings
For The Years Ended January 2, 1999, January 3, 1998 and December 28, 1996
1998 1997 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Revenues:
Net sales and service fees ........... $2,576,222,100 $2,610,696,700 $2,579,010,200
Other-net ............................ 2,428,500 3,695,700 4,494,700
-------------- -------------- --------------
2,578,650,600 2,614,392,400 2,583,504,900
-------------- -------------- --------------
Costs and Expenses:
Cost of sales ........................ 2,330,300,800 2,362,355,200 2,333,216,600
Operating and administrative ......... 215,034,300 218,610,500 218,342,700
Interest ............................. 7,293,100 8,220,900 8,479,900
-------------- -------------- --------------
2,552,628,200 2,589,186,600 2,560,039,200
-------------- -------------- --------------
Earnings Before Patronage Dividends ..... 26,022,400 25,205,800 23,465,700
Patronage Dividends ..................... 5,975,700 5,687,000 5,568,300
-------------- -------------- --------------
Earnings Before Income Taxes ............ 20,046,700 19,518,800 17,897,400
-------------- -------------- --------------
Provision (Credit) for Income Taxes:
Current-Federal ...................... 8,400,000 7,786,000 5,255,200
-State ........................ 1,539,000 1,722,300 859,800
Deferred ............................. (1,790,000) (1,193,100) 1,515,000
-------------- -------------- --------------
8,149,000 8,315,200 7,630,000
-------------- -------------- --------------
Net Earnings ............................ $ 11,897,700 $ 11,203,600 $ 10,267,400
============== ============== ==============
See notes to consolidated financial statements.
</TABLE>
F-3
<TABLE>
<CAPTION>
Consolidated Balance Sheets
As Of January 2, 1999 and January 3, 1998
1998 1997
------------ -----------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents ............................ $ 72,094,500 $ 52,366,900
Notes and accounts receivable, less allowance for ....
losses, $6,361,600 and $5,648,700, respectively ...... 78,489,000 86,998,500
Merchandise inventories .............................. 159,743,100 150,898,000
Prepaid expenses ..................................... 5,347,000 5,216,200
Future income tax benefits ........................... 6,373,800 6,227,800
------------ ------------
Total current assets ............................ 322,047,400 301,707,400
------------ ------------
Other Assets:
Notes receivable, less allowance for losses,
$6,015,000 and $5,299,000, respectively ........... 11,013,000 11,604,600
Goodwill and other assets ............................ 10,140,600 13,696,700
Other real estate .................................... 4,081,300 7,152,500
Deferred income tax benefit .......................... 4,492,000 2,848,000
------------ ------------
Total other assets .............................. 29,726,900 35,301,800
------------ ------------
Property and Equipment-At Cost:
Land ................................................. 5,640,500 5,602,000
Buildings ............................................ 75,843,500 69,445,600
Equipment ............................................ 120,581,900 115,757,400
Leasehold improvements ............................... 12,526,400 14,715,100
------------ ------------
214,592,300 205,520,100
Less accumulated depreciation and amortization ....... 103,955,000 102,219,500
------------ ------------
Property and equipment-net ...................... 110,637,300 103,300,600
------------ ------------
$462,411,600 $440,309,800
============ ============
</TABLE>
F-4
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities:
Current maturities of long-term debt ................. $ 10,159,700 $ 10,156,800
Accounts payable ..................................... 165,801,200 155,001,500
Accrued expenses ........................ ............ 56,924,600 50,148,300
Income taxes ......................................... 4,418,600 2,327,100
------------ ------------
Total current liabilities ....................... 237,304,100 217,633,700
------------ ------------
Long-Term Debt, Less Current Maturities ................. 73,298,100 83,457,800
Other Liabilities ....................................... 16,998,100 16,758,000
------------ ------------
Total liabilities ............................... 327,600,300 317,849,500
------------ ------------
Commitments and Contingencies (Note 10)
Redeemable Common Stock ................................. 9,007,700 6,375,300
Stockholders' Equity:
Common stock:
Voting (Class A) ................................... 14,900 15,800
Non-voting (Class B) ............................... 1,327,300 1,346,600
------------ ------------
Total common stock .............................. 1,342,200 1,362,400
Patronage dividends payable in common stock ......... 4,060,000 3,738,000
Additional paid-in capital ........................... 31,582,600 28,588,300
Reinvested earnings .................................. 89,950,000 83,527,500
------------ ------------
126,934,800 117,216,200
Less:
Treasury stock, at cost ............................ 1,131,200 1,131,200
------------ ------------
Total stockholders' equity ...................... 125,803,600 116,085,000
------------ ------------
$462,411,600 $440,309,800
============ ============
See note to consolidated financial statements.
</TABLE>
F-5
<TABLE>
<CAPTION>
Statements Of Consolidated Stockholders' Equity
For The Years Ended January 2, 1999, January 3, 1998 and December 28, 1996
Common Stock
--------------------------------------- Patronage
Class A Class B Dividends Additional
--------------------------------------- Paybable in Paid-in Reinvested
Shares Amount Shares Amount Common Stock Capital Earnings
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 30, 1995 .......... 13,400 $16,700 1,025,897 $1,182,400 $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
Net earnings ..................... 11,897,700
Common stock issued .............. 500 600 50,857 63,600 (3,738,000) 5,160,900
Common stock purchased ........... (1,200) (1,500) (28,120) (35,200) (945,900) (2,364,300)
Redeemable common stock .......... (38,148) (47,700) (1,220,700) (3,110,900)
Patronage dividends payable in
common stock .................. 4,060,000
---------------------------------------------------------------------------------------
Balance, January 2, 1999 ............ 11,900 $14,900 1,061,874 $1,327,300 $4,060,000 $31,582,600 $89,950,000
=======================================================================================
Treasury Stock, January 2, 1999,
January 3, 1998 and December 28,1996 ...... 13,285 $1,131,200
======================
See notes to consolidated financial statements.
</TABLE>
F-6
<TABLE>
<CAPTION>
Statements Of Consolidated Cash Flows
For The Years Ended January 2, 1999, January 3, 1998 and December 28, 1996
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net earnings ......................................................................... $11,897,700 $11,203,600 $10,267,400
Adjustments to reconcile net earnings to net cash flows provided by operating activities:
Depreciation and amortization..................................................... 18,782,300 17,132,300 16,326,800
Allowance for losses ............................................................. 2,189,300 2,389,100 5,302,600
Loss (gain) on sale of property and equipment .................................... 2,527,300 612,900 (1,233,500)
Patronage dividends payable in common stock ...................................... 4,060,000 3,738,000 3,779,000
(Increase) decrease in operating assets net of the effects of business acquisitions:
Notes and accounts receivable .................................................... 6,899,000 8,975,000 (2,818,400)
Merchandise inventories ......................................................... (8,398,300) 5,808,200 10,319,700
Prepaid expenses ................................................................ (129,100) (2,450,300) 2,453,500
Future income tax benefits ...................................................... (146,000) 1,589,600 679,400
Goodwill and other assets .................................................... (433,900) (76,500) (413,400)
Other real estate .............................................................. 3,071,200 (2,712,800) 219,700
Deferred income tax benefit .................................................... (1,644,000) (1,087,000) (860,100)
Increase (decrease) in operating liabilities:
Accounts payable .............................................................. 10,804,400 (4,036,600) (7,237,800)
Accrued expenses .............................................................. 6,877,200 6,092,900 1,470,600
Income taxes ................................................................... 2,091,500 1,391,000 864,300
Other liabilities .............................................................. 240,100 235,300 200,200
----------- ----------- -----------
Net cash flows provided by operating activities .................................... 58,688,700 48,804,700 39,320,000
----------- ----------- -----------
Cash Flows From Investing Activities:
Capital expenditures - net of insurance proceeds.................................... (24,936,000) (22,726,700) (39,291,800)
Proceeds from sale of property and equipment ....................................... 4,004,700 1,740,200 5,763,400
Payment for business acquisition net of cash acquired............................... (4,586,300) (3,967,400) (13,918,700)
Decrease in notes receivable .................................................... 320,000 1,059,000 3,927,500
----------- ----------- -----------
Net cash flows used in investing activities ........................................ (25,197,600) (23,894,900) (43,519,600)
----------- ----------- -----------
Cash Flows From Financing Activities:
Principal payments of long-term debt ............................................... (10,159,700) (10,156,800) (10,235,600)
Increase (decrease) in current maturities of long-term debt ........................ 2,900 (69,000) 6,449,300
Proceeds from sale of common stock ................................................ 1,487,100 1,043,100 973,500
Common stock purchased ......................................................... (5,093,800) (3,702,500) (4,027,300)
Proceeds from long-term borrowings ................................................. 25,000,000
----------- ----------- -----------
Net cash flows (used in) provided by financing activities .......................... (13,763,500) (12,885,200) 18,159,900
----------- ----------- -----------
Net Increase in Cash and Cash Equivalents ............................................ 19,727,600 12,024,600 13,960,300
Cash And Cash Equivalents, Beginning Of Year .......................................... 52,366,900 40,342,300 26,382,000
----------- ----------- -----------
Cash And Cash Equivalents, End Of Year ................................................ $72,094,500 $52,366,900 $40,342,300
=========== =========== ===========
Cash Paid During The Year For:
Interest ........................................................................ $ 7,487,600 $ 8,084,600 $ 8,545,900
Income Taxes ................................................................... 7,853,400 6,433,100 6,965,100
Supplemental Noncash Financing Activities-Patronage Dividends Payable in Common Stock.. 4,060,000 3,738,000 3,779,000
See notes to consolidated financial statements.
</TABLE>
F-7
Notes To Consolidated
Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
Fiscal year-The Company's fiscal year is the 52 or 53 week period ending
the Saturday nearest to December 31. The years ended January 2, 1999 and
December 28, 1996 included 52 weeks. The year ended January 3, 1998
included 53 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 2,
1999 and January 3, 1998 was $5,714,000 and $4,267,800, 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-nine years for buildings, three to ten
years for equipment and ten to twenty years for leasehold improvements.
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 1998, 1997 and 1996 for the present value
of these remaining future liabilities were not significant.
Income Taxes-The Company provides income taxes in accordance with SFAS 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 March 1998, the American Institute of
Certified Public Accountants issued Statement of Position ("SOP") No 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." The SOP is effective for fiscal years beginning after
December 15, 1998. The Company is in the process of evaluating the impact
on the Consolidated Financial Statements. The adoption of the SOP is not
expected to have a material impact on the Company's Consolidated Financial
Statements.
2. ACQUISITIONS
On December 8, 1998, the Company purchased a grocery retailer for
$4,586,300 in cash. 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 1998, 1997 and
1996 results of operations.
F-8
3. PATRONAGE DIVIDENDS
The Company's By-Laws require that, to the extent permitted by the Internal
Revenue Code, patronage dividends are to be paid out of earnings from
business activities with stockholder-customers in an amount which will
reduce the net earnings of the Company to an amount which will result in an
8% increase in the book value of its common stock. For years prior to 1998,
a 10% increase in book value was required. The dividends are payable at
least 20% in cash and the remainder in Class B common stock. Dividends for
the years ended January 2, 1999, January 3, 1998 and December 28, 1996 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 $6,357,000 and $7,523,400 at
January 2, 1999 and January 3, 1998, 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:
1998 1997
----------- -----------
Senior unsecured notes payable
9.26%, due 2000 to 2001 ......... $5,000,000 $7,500,000
7.57% to 8.26%, due 2000 to 2008. 17,300,000 18,500,000
6.94%, due 2000 to 2003 ......... 25,714,300 32,142,900
7.86%, due 2000 to 2006 ......... 25,000,000 25,000,000
Other long-term debt ............... 283,800 314,900
----------- -----------
Total ............................. $73,298,100 $83,457,800
=========== ===========
At January 2, 1999, $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:
1999 .......... $ 10,159,700
2000 .......... 24,734,400
2001 .......... 13,738,000
2002 .......... 11,242,000
2003 .......... 11,246,400
Thereafter ...... 12,337,300
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments, as defined in SFAS No. 107,
"Disclosures About Fair Value of Financial Instruments," consist primarily
of accounts and notes receivable, accounts payable, notes payable and long-
term debt. The carrying amounts for accounts and notes receivable, accounts
payable and notes payable approximate their fair values. Based on the
borrowing rates currently available to the Company for long-term debt with
similar terms and maturities, the fair value of long-term debt, including
current maturities, is approximately $83,950,000 and $93,460,000 as of
January 2, 1999 and January 3, 1998, respectively.
F-9
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 $114.80,
$104.35 and $94.30 for 1998, 1997 and 1996, 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
stockholders' equity. Redeemable common stock is held by inactive
customers and former employees. As of January 2, 1999 and January 3, 1998,
78,464 and 61,095 shares, respectively, were subject to redemption. The
Class B common stock subject to redemption is payable over a five year
period based upon the book value at the preceding fiscal year end. The
Company expects to repurchase shares of 24,012, 22,405, 12,863, 11,500 and
7,684 in 1999, 2000, 2001, 2002 and 2003, 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 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:
<TABLE>
<CAPTION>
Options
Weighted
Options SARs Price Average Price
------- ------ --------------- ---------------
<S> <C> <C> <C> <C>
Outstanding, December 30, 1995 ... 43,600 19,100 $53.10 - $77.40 $61.97
Exercised ................ (1,600) (2,266) 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
Granted .................. 4,200 800 104.35 104.35
------ ------ --------------
Outstanding, January 2, 1999 ..... 50,000 21,000 $53.10 -$104.35 67.96
====== ====== ===============
Excercisable at January 2, 1999 .. 43,966 17,816 $53.10 -$104.35 64.92
====== ====== ===============
Available for grant after
January 2, 1999 ................ 1,000 184
====== ======
</TABLE>
The following table summarizes information concerning currently outstanding
and excercisable options:
<TABLE>
<CAPTION>
Stock Options Outstanding Stock Options Excercisable
-------------------------------- --------------------------------
Weighted
Average Weighted Weighted
Number Remaining Average Number Average
of Contractual Exercise Of Exercise
Range of Exercise Price Shares Life Price Shares Price
----------------------- ------ ----------- -------- ------- --------
<C> <C> <C> <C> <C> <C>
$50.00 - 65.00 24,500 3.3 $ 55.06 23,200 $ 55.00
$65.01 - 80.00 17,000 5.9 70.89 16,400 71.10
$80.01 - 95.00 4,300 8.3 94.30 4,300 94.30
$95.01 - 110.00 4,200 9.3 104.35 66 104.35
------ --------- -------- ------- --------
50,000 $ 67.96 43,966 $ 64.92
====== ======== ======= ========
</TABLE>
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 an SAR, to receive cash in an
amount equal to the excess of the Fair Market Value per share of the
Company's common stock as of the date on which 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 1998, 1997 and 1996. 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 1998, 1997 and 1996.
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 1998, 1997 and 1996
net earnings would have been less than $80,000.
F-10
8. EMPLOYEE BENEFIT PLANS
Substantially all non-union employes 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 Financial Accounting Standards Board ("FASB") issued SFAS 132,
"Employers' Disclosures about Pension and Other Postretirement Benefits,"
in February 1998. The new standard does not change the measurement or
recognition of costs for pension or other postretirement plans. It
standardizes disclosures and eliminates those that are no longer useful.
The following tables, prepared in accordance with the new standard, set
forth pension obligations and plan assets as of January 2, 1999 and January
3, 1998:
1998 1997
------------- --------------
Change in benefit obligation:
Benefit Obligation - Beginning of Year ...... $45,893,300 $37,747,200
Service cost ................................ 2,811,400 2,238,700
Interest cost ............................... 3,272,400 2,937,100
Actuarial loss .............................. 2,282,200 4,522,500
Benefits paid ............................... (1,680,200) (1,552,200)
------------ ------------
Benefit Obligation - End of the Year ........ $52,579,100 $45,893,300
============ ============
Change in plan assets:
Fair Value - Beginning of Year .............. $37,631,100 $33,277,800
Actual return on plan assets ................ 3,247,100 3,916,700
Company contribution ........................ 3,323,600 1,988,800
Benefits paid ............................... (1,680,200) (1,552,200)
------------ ------------
Fair Value - End of the Year ................ $42,521,600 $37,631,100
============ ============
Funded status:
As of year end .............................. $(10,057,500) $(8,262,200)
Unrecognized cost:
Actuarial and investment (gains) losses, net. 7,295,700 4,840,400
Prior service cost .......................... 252,200 288,000
Transition asset ............................ (547,300) (721,400)
------------- ------------
Accrued benefit cost ........................ $ (3,056,900) $(3,855,200)
============= =============
<TABLE>
<CAPTION>
The components of pension cost are as follows: 1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Benefits earned during the year .................... $2,811,400 $2,238,700 $2,155,300
Interest cost on projected benefit obligation....... 3,272,400 2,937,100 2,608,900
Expected return on plan assets ..................... (3,444,100) (2,993,000) (2,651,500)
Net amortization and deferral
Unrecognized net loss............................... 23,900 1,800
Unrecognized prior service cost .................... 35,900 35,900 38,300
Unrecognized net asset ............................. (174,100) (174,100) (174,100)
---------- ---------- ----------
Net pension cost ................................... $2,525,400 $2,044,600 $1,978,700
========== ========== ==========
The assumptions used in the accounting were as follows:
Discount rate ..................................... 7.00% 7.25% 7.75%
Rate of increase in compensation levels ............ 4.00% 4.00% 4.00%
Expected long-term rate of return on assets ........ 9.00% 9.00% 9.00%
</TABLE>
The change in the discount rate in 1998 resulted in a $2,100,000 increase
in the projected benefit obligation in 1998 and is expected to result in an
increase in the 1999 pension expense of approximately $298,000.
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 $4,655,000, $4,530,300 and $4,296,100 in 1998, 1997 and 1996,
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 $1,181,400,
$858,400 and $556,600 in 1998, 1997 and 1996, respectively.
F-11
9. INCOME TAXES
Federal income tax at the statutory rates of 35% in 1998, 1997 and 1996 and
income tax expense as reported are reconciled as follows:
1998 1997 1996
---------- ---------- ----------
Federal income tax at statutory rates . $7,016,400 $6,831,600 $6,264,100
State income taxes, net of federal
tax benefits........................ 1,000,300 1,119,500 930,700
Other-net ............................. 132,300 364,100 435,200
---------- ---------- ----------
Income tax expense .................... $8,149,000 $8,315,200 $7,630,000
========== ========== ==========
The approximate tax effects of temporary differences at January 2, 1999 and
January 3, 1998 are as follows:
<TABLE>
<CAPTION>
1998 1997
----------------------------------- ----------------------------------------
Assets Liabilities Total Assets Liabilities Total
---------- ----------- ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Allowance for doubtful accounts ............ $ 1,084,000 $ 1,084,000 $ 1,057,000 $1,057,000
Inventories ................................ $(1,419,200) (1,419,200) $(1,264,200) (1,264,200)
Employee benefits .......................... 5,764,000 5,764,000 5,213,000 5,213,000
Accrued expenses not currently deductable .. 945,000 945,000 1,222,000 1,222,000
----------- ----------- ----------- ----------- ----------- ----------
Current .................................... 7,793,000 (1,419,200) 6,373,800 7,492,000 (1,264,200) 6,227,800
----------- ----------- ----------- ----------- ----------- ----------
Allowance for doubtful accounts ............ 2,431,000 2,431,000 2,142,000 2,142,000
Depreciation and amortization .............. (6,602,000) (6,602,000) (6,773,000) (6,773,000)
Employee benefits .......................... 5,067,000 5,067,000 4,115,000 4,115,000
Accrued expenses not currently deductable .. 3,828,000 3,828,000 3,583,000 3,583,000
Other ...................................... (232,000) (232,000) (219,000) (219,000)
----------- ----------- ----------- ----------- ----------- ----------
Noncurrent ................................. 11,326,000 (6,834,000) 4,492,000 9,840,000 (6,992,000) 2,848,000
----------- ----------- ----------- ----------- ----------- ----------
Total ...................................... $19,119,000 $(8,253,200) $10,865,800 $17,332,000 $(8,256,200) $9,075,800
=========== =========== =========== =========== =========== ==========
F-12
10. LEASE OBLIGATIONS AND CONTINGENT LIABILITIES
Rental payments and related subleasing rentals under operating leases are
as follows:
RENTAL PAYMENTS
-------------------------
SUBLEASING
MINIMUM CONTINGENT RENTALS
----------- ----------- ------------
1996 ............. $31,711,700 $ 486,600 $21,628,300
1997 ............. 28,625,700 406,600 21,249,900
1998 ............. 29,883,200 414,300 23,207,000
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 2, 1999:
1999 ........... $29,383,600
2000 ........... 27,978,100
2001 ........... 26,208,700
2002 ........... 25,517,900
2003 ........... 24,532,100
Thereafter ..... 173,039,300
-----------
Total .......... $306,659,700
============
Total minimum rentals to be received in the future under non-cancelable
subleases as of January 2, 1999 are $236,080,300.
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.
12. EVANSVILLE FIRE
During fiscal 1998, fire destroyed the Evansville, Indiana warehouse,
inventory and equipment. The Division supplied frozen food and meat
products to Roundy's customers in the Southern Midwest area. Discussions
are in process with the insurance carrier relating to the inventory,
building and equipment and estimated business interruption losses incurred.
Through January 2, 1999, cash advances aggregating $7.4 million were
received from the insurance carrier relative to (1) the cost of the
inventory destroyed in the fire ($4.1 million), (2) a partial advance on
the replacement cost of the destroyed building and equipment ($3.0 million)
and (3) to cover certain costs of demolishing the building and removing
debris from the site ($0.3 million).
The Company elected to rebuild the facility on the existing site and
completed the project in January 1999 at a cost of approximately $10.8
million. The new facility was fully operational by January 30, 1999, again
supplying frozen food and meat products to Roundy's customers.
The Company is in negotiations with the insurance carrier regarding an
overall settlement of its claims. Due to the complexity of the loss, the
Company anticipates that the final settlement may require an extended
period of negotiation. However, Management believes that the Company's
insurance coverage was sufficient and that the final settlement with its
insurance carrier will not have a material adverse impact on the Company's
future financial statements.
F-13
13. SEGMENT REPORTING
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information," which the Company has adopted in
the current year.
The Company and its subsidiaries sell and distribute food and nonfood
products that are typically found in supermarkets. The Company's wholesale
distribution segment sells to both corporately and independently owned
retail food stores, while the retail segment sells directly to the
consumer.
Gross Profit represents net sales, less cost of sales.
Identifiable assets are those used exclusively by that industry segment.
Corporate assets are principally cash and cash equivalents, notes
receivable, corporate office facilities and equipment.
1998 1997 1996
-------------- -------------- --------------
NET SALES
Wholesale ......... $2,512,268,000 $2,503,067,600 $2,483,307,100
Retail ......... 284,127,500 291,612,600 275,761,300
Eliminations ...... (220,173,400) (183,983,500) (180,058,200)
-------------- -------------- --------------
Total ........... $2,576,222,100 $2,610,696,700 $2,579,010,200
============== ============== ==============
GROSS PROFIT
Wholesale ......... $ 188,767,200 $ 191,931,500 $ 195,639,200
Retail ............ 60,132,300 59,048,700 52,583,000
Eliminations ...... (2,978,200) (2,638,700) (2,428,600)
-------------- -------------- --------------
Total ........... $ 245,921,300 $ 248,341,500 $ 245,793,600
============== ============== ==============
IDENTIFIABLE ASSETS
Wholesale ......... $ 304,332,200 $ 296,886,900 $ 313,589,800
Retail ............ 54,856,500 59,645,800 53,834,600
Corporate ......... 103,232,900 83,777,100 67,216,600
-------------- -------------- --------------
Total ............ $ 462,411,600 $ 440,309,800 $ 434,641,000
============== ============== ==============
DEPRECIATION AND AMORTIZATION
Wholesale ......... $ 8,311,100 $ 7,393,000 $ 6,533,400
Retail ........... 4,296,800 4,070,700 53,680,100
Corporate ......... 6,174,400 5,668,600 66,113,300
-------------- -------------- --------------
Total ........... $ 18,782,300 $ 17,132,300 $ 16,326,800
============== ============== ==============
CAPITAL EXPENDITURES
Wholesale ......... $ 12,942,400 $ 6,266,000 $ 30,109,000
Retail ............ 3,353,400 5,565,700 5,360,000
Corporate ......... 8,640,200 10,895,000 3,822,800
-------------- -------------- --------------
Total ........... $ 24,936,000 $ 22,726,700 $ 39,291,800
============== ============== ==============
F-14
Exhibit A
ROUNDY'S, INC.
Subscription Agreement
The undersigned customer/employee/director of Roundy's, Inc.
("Roundy's") hereby subscribes for and agrees to purchase _______
shares of Class A Common Stock and/or ______ shares of Class B
Common Stock of Roundy's, at the price per share set forth below,
being equal to the Book Value per share of such Common Stock as of
the close of the most recently ended fiscal year of Roundy's, as
determined by Roundy's audited financial statements and adjusted
for subsequent stock dividends and stock splits. The undersigned
acknowledges receipt of a Prospectus dated ______________, 19__
relating to Roundy's offer of the Class A or Class B Common Stock
subscribed for hereby.
The undersigned represents that the undersigned is purchasing
such securities for the undersigned's own account, for investment
only and not for resale or distribution. The undersigned further
acknowledges and understands that in no event may the Class A nor
Class B Common Stock be pledged, transferred or hypothecated
without Roundy's prior written consent. The undersigned
acknowledges and agrees to be bound by the provisions of Section
7.11 of Roundy's By-Laws (as the same may be amended and in effect
from time to time) imposing limitations on the ownership of
Roundy's Class A Common Stock and providing for the conversion of
shares of Class A Common Stock into shares of Class B Common Stock,
upon the occurrence of a "Customer/Shareholder Termination" as that
term is defined in Roundy's By-Laws.
This paragraph applies only to subscriptions by customers with
a Buying Deposit Deficit: The shares purchased hereby shall become
a part of the undersigned's Buying Deposit pursuant to the Buying
Deposit Agreement previously entered into by the undersigned for
the Store Location (Customer Number) set forth below. If so
indicated below, the undersigned hereby directs Roundy's to apply
the amount set forth below, from funds previously deposited by the
undersigned with Roundy's, against the subscription price provided
for herein.
Roundy's, by accepting this Subscription Agreement, agrees to
be bound by the Statement of Policy Regarding Repurchase of Stock
set forth as Exhibit D to Roundy's Prospectus, as such Statement of
Policy may be amended from time to time.
_________________________________
Legal Name of Subscriber
Applicable Federal
Identification or By_______________________________
Social Security Number
_________________________________
(Name) (Title)
Date:______________, _____ Customer Number _________
(If applicable)
Mailing Address:
________________________________
City ___________________________
State __________________Zip_____
Price per Share: $___________________
Total Subscription Price: $___________________
Amount to be applied from funds on deposits: $___________________
Cash remitted with this Subscription Agreement:
$___________________
Agreement Accepted:
Roundy's, Inc.
By:________________________________
Date:_____________________________
A-1
Exhibit B
ROUNDY'S, INC.
Buying Deposit Agreement
The undersigned customer of Roundy's, Inc. ("Roundy's") hereby
agrees to establish a Buying Deposit with Roundy's in the total
amount set forth below, and to make monthly installment payments of
such Buying Deposit to Roundy's as set forth below. The amount of
the Buying Deposit has been computed as an amount equal to the
estimated amount of purchases by the undersigned from Roundy's,
with respect to the store location identified below ("Store
Location") over a two week period, with a minimum amount of
$20,000. The total Buying Deposit will be established by periodic
payments to be made by the undersigned to Roundy's in accordance
with the amortization schedule set forth below. It is understood
that Roundy's shall have the right to increase the amount of the
Buying Deposit at any time, in which event the amortization
schedule set forth below shall be adjusted accordingly.
To fulfill its obligation to establish such Buying Deposit,
the undersigned may from time to time subscribe for and purchase
shares of Roundy's Class A and/or Class B Common Stock pursuant to
Roundy's Policy Regarding Issuance and Sales of Roundy's Stock
(adopted December 7, 1993; effective January 1, 1994, as amended)
(a copy of which the undersigned acknowledges having received as an
exhibit to the Prospectus dated _______, _____ for Roundy's Common
Stock (the "Prospectus"), which has been provided to the
undersigned). The undersigned acknowledges that such Policy may be
amended, modified, suspended or terminated at any time and from
time to time in the discretion of Roundy's Board of Directors, and
that by accepting this Buying Deposit Agreement, Roundy's has not
undertaken any obligation to issue or sell any shares of its stock
to the undersigned except to the extent provided in such Policy, as
the same may exist and be in effect from time to time.
Installment payments made to Roundy's from time to time will
be retained by Roundy's as a part of the undersigned's Buying
Deposit, and will be applied to the undersigned's purchase of
shares of Roundy's Common Stock only at such times and in such
amounts as the undersigned may designate (subject to the preceding
paragraph and the Policy described therein) pursuant to a
subscription agreement executed by the undersigned in the form
attached hereto.
Roundy's, by accepting this Buying Deposit Agreement, agrees
to be bound by the Statement of Policy Regarding Repurchase of
Stock set forth as Exhibit D to the Prospectus, as such Statement
of Policy may be amended from time to time.
The undersigned understands that patronage dividends, if any,
paid to the undersigned in Class B Common Stock from and after the
date hereof, until the Buying Deposit is satisfied, will be
credited against the installment payments of the undersigned's
Buying Deposit in the inverse order of the due dates of such
installments, at a price per share equal to the Book Value of such
shares as of the fiscal year-end immediately preceding the date of
their issuance.
Upon termination of the customer status of the undersigned
with Roundy's for any reason or if the undersigned at any time
shall not have made payments due from it to Roundy's in the manner
and within the time limits established by Roundy's, Roundy's shall
have the right to reimburse itself out of the undersigned's Buying
Deposit for any amounts owed to Roundy's by the undersigned.
A-2
Exhibit B
If the undersigned has previously entered into any prior
Buying Deposit Agreement(s) for the Store Location, this Buying
Deposit Agreement supersedes and cancels such prior Agreement(s) in
their entirety.
_______________________ ________________________________
Applicable Federal Legal Name of Subscriber
Identification or
Social Security Number By______________________________
________________________________
(Name) (Title)
Date:__________________, _____ Customer Number
Mailing Address:
________________________________
City ___________________________
State___________________________
Zip Code __________________
BUYING DEPOSIT - MONTHLY INSTALLMENT PAYMENTS
1. Total Buying Deposit _______________________
2. Less down payment _______________________
3. Balance to be amortized _______________________
4. Estimated weekly retail sales _______________________
Check Monthly Buying Deposit
Installment
Weekly Retail Sales One 1st Year 2nd Year 3rd Year
$ 40,000 - $100,000 _____ $ 300 $ 400 $ 500
$100,000 - $200,000 _____ 750 900 1050
Over $200,000 _____ 1,000 1,250 1500
Payment beginning (nearest 15th day of month following down
payment)
Approved:_____________________________________________
Retail Counselor, Roundy's, Inc.
Accepted:_____________________________________________
Sales Manager, Roundy's, Inc.
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Exhibit C
Article V of By-Laws of Roundy's, Inc., as amended by the Board of
Directors on February 24, 1998
FISCAL YEAR
ACCOUNTING AND PATRONAGE REBATES
The corporation is obligated to its Common stockholders on a
patronage basis or bases for all amounts received by it resulting
from sales to them as defined and limited herein.
5.1 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.
5.2 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 stockholders shall be promptly advised
of the amount of their respective patronage dividend and the method
of payment of such patronage dividend.
5.3 Consent. Each person who hereafter becomes a Class A
Common stockholder of this corporation and each Class A Common
stockholder of this corporation on the effective date of this By-
Law who continues as a Class A Common stockholder 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.
5.4 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.
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5.5 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.
5.6 Patronage Dividends to Nonstockholders. The corporation
may, in its sole discretion, enter into written agreements
obligating itself to pay patronage dividends to nonstockholder-
customers.
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Exhibit D
ROUNDY'S, INC. POLICY RELATING TO REDEMPTION OF STOCK
BY INACTIVE CUSTOMER SHAREHOLDERS AND FORMER EMPLOYEES
ARTICLE 1
Repurchase of Shares by Corporation
1.01 Agreement to Repurchase. Upon the terms and subject to
the conditions set forth in this Policy (including the applicable
provisions of Articles 2 and 3, below), the Corporation shall be
obligated to repurchase its shares of Class A Common Stock and
Class B Common Stock after proper request by the holder thereof, or
his or its legal representative, at any time after the occurrence
of a Customer/ Shareholder Termination with respect to such stock
or an Employee/ Shareholder Termination with respect to such
holder.
1.02 Repurchase in Increments. The Corporation's obligation
to repurchase stock shall accrue, subject to the other terms and
conditions of this Policy, in annual 20% increments during the five
year period beginning on the Repurchase Request Date with respect
to such stock. Beginning on the first anniversary date of the
Repurchase Request Date, the Corporation shall become obligated to
purchase in accordance herewith 20% of the aggregate number of
shares of Class A and Class B Common Stock as to which a proper
repurchase request has been received. Such percentage shall be
increased to 40% on the second anniversary date of the Repurchase
Request Date, 60% on the third anniversary date, 80% on the fourth
anniversary date and 100% on the fifth anniversary date of the
Repurchase Request Date. Regardless of the foregoing, in the event
that a Customer/Shareholder Termination or an Employee/Shareholder
Termination occurs as a result of the death of the shareholder and
the estate of such shareholder specifically so elects by written
notice to the Secretary of the Corporation within 180 days
thereafter, the repurchase of not more than the first $50,000 in
value of stock shall be accelerated to the date 180 days after
receipt by the Secretary of such written election. Each share
shall continue to be outstanding for all purposes until actually
repurchased.
1.03 Calculation of Repurchase Price. The repurchase price
for each share of stock of the Corporation shall be the Book Value
of such share at the date of repurchase.
1.04 Form of Repurchase Request. A proper repurchase request
for purposes hereof shall consist of a written notification to the
Secretary of the Corporation specifying the number of shares to be
repurchased, the reason for such repurchase request, and the date
or dates on which a Customer/Shareholder Termination or
Employee/Shareholder Termination occurred with respect to the stock
covered by such repurchase request. Such repurchase request must
be made in accordance with the procedures specified in Section
2.02, below.
1.05 Acknowledgment By Corporation of Repurchase Request.
Subject to the conditions set forth in the Policy (including the
applicable provisions of Articles 2 and 3, below), the Secretary
shall promptly acknowledge in writing receipt of a repurchase
request. Such acknowledgment shall set forth, among other things,
the Repurchase Target Dates with respect to the shares covered by
the repurchase request and the Book Value of the shares at the
Repurchase Request Date, and shall enumerate such documents and
instruments as may be reasonably required to be delivered to assure
the Secretary that the Corporation will receive unencumbered title
to the shares to be repurchased.
Neither such acknowledgment nor any other communication made by the
Corporation pursuant to this Policy shall be deemed to be an
agreement to purchase shares for purposes of this Policy, except
subject to all the terms and conditions hereof. After such
acknowledgment has been given by the Secretary, a stock repurchase
request shall be irrevocable except with the written consent of the
Board of Directors.
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1.06 Payment of Repurchase Price. Subject to the terms and
conditions of this Policy, the Corporation shall repurchase shares
subject to a proper repurchase request by payment of the full
purchase price in cash or by check within 10 days after the later
of the Repurchase Target Date or the date on which the appropriate
stock certificates have been received, in negotiable form, together
with any such other documents or instruments as the Secretary shall
have requested in its acknowledgment notice given under Section
1.05, all in form reasonably acceptable to the Secretary; provided,
however, that in no event shall the Corporation be obligated to
repurchase shares within 90 days after the end of its fiscal year.
By mutual agreement of the Corporation and the shareholder, such
shares may be repurchased at any time prior to the Repurchase
Target Date, but only if no other shareholder has been assigned an
earlier Repurchase Target Date and such shares have not yet been
actually repurchased.
1.07 Limitation on Corporation's Obligation to Repurchase.
The Corporation's obligation to repurchase shares hereunder is
subject to (i) all restrictions which may be imposed by applicable
law from time to time, and (ii) the limitations (if any) on
repurchases of shares contained in any lending or other agreements
of the Corporation in force from time to time. In the event the
Corporation is precluded during a given period of time from
repurchasing shares which are the subject of a repurchase request
because of such limitations or if required repurchases are delayed
for any other reason (in either case, a "Suspension"), repurchases
shall be resumed promptly thereafter in the order of the Repurchase
Target Dates which occurred during the period of the Suspension,
regardless of the dates the repurchase requests were received and
such suspended repurchases shall be made prior to repurchases
becoming due on any subsequent Repurchase Target Date.
Notwithstanding the foregoing provisions, stock having a repurchase
price of not in excess of $50,000 per shareholder may, in the sole
discretion of the Corporation, be repurchased on an accelerated
basis in cases of demonstrated hardship.
1.08 Authority Reserved.
(a) No provision of this Policy shall be construed as
limiting the Corporation's authority to repurchase outstanding
shares of its stock at the discretion of the Board of Directors or
the officers on any other terms at any time; provided however, that
no such discretionary purchases shall occur if a Repurchase Target
Date has passed with respect to shares required to be repurchased
under this Policy and such shares have not yet been repurchased.
(b) No provision of this Policy shall be construed as
limiting the authority of the Board of Directors to amend, revise
or rescind this Policy. This Policy does not create, and should
not be understood as creating, any vested rights or contractual
obligations of the Corporation except, and only to the extent, that
no amendment, revision or rescission shall reduce the Repurchase
Price payable by the Corporation for shares with respect to which
the Repurchase Request Date precedes the date of the resolution of
the Board of Directors effecting such amendment, revision or
rescission.
1.09 Adjustments. For all purposes hereof, in the event of a
stock split or similar capital change (excluding regular stock issu
ances associated with the Corporation's patronage dividends),
equitable adjustment will be made to the number of shares to be
repurchased and the repurchase price.
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ARTICLE 2
Additional Conditions to Repurchase Obligations
2.01 Notification to Corporation of Certain Termination
Events. 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.
2.02 Timing of Repurchase Requests. Requests by shareholders
to have their shares of stock redeemed or repurchased pursuant to
this policy will be accepted by the Corporation when made in
accordance with the following procedures:
(a) When Repurchase Requests May Be Made. Requests by a
shareholder to have its stock repurchased or redeemed will be
accepted only if made during one of three (3) "window" periods each
year -- after the first, second and third fiscal quarters of the
Corporation, consisting of the last two weeks of May, August and
November, respectively. These "window" periods are subject to
closure or modification by management or the Board of Directors of
the Corporation if, in the best judgment of management or the
Board, it would be inappropriate for the Corporation to be engaged
in the purchase or sale of its shares at such time. Requests for
redemption will be deemed to have been duly made during these
periods if they are received in writing at the Corporation's
Pewaukee office during the window period or, if received
thereafter, if they were postmarked during the window period.
(b) Authority Of The Board To Suspend Or Deviate From
These Requirements. The Board of Directors reserves at all times
the authority to alter, suspend or deviate from the requirements of
this Section 2.02, in its discretion, to the extent it determines
such action to be appropriate.
(c) Effective Date. The provisions of this Section 2.02
will be effective commencing January 1, 1994.
2.03 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.
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(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 after 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.
A-9
ARTICLE 3
Effective Date
3.01 Effective Date. The repurchase provisions set forth in
Article 1 of this Policy shall not apply to shares as to which
repurchase requests have been filed before January 1, 1991,
provided, however, that if the second, third, fourth or fifth
anniversary dates of a Repurchase Request Date occur on or after
January 1, 1991, the repurchase provisions set forth in Article 1
shall apply to the 20% increments which would be purchased on such
anniversary dates as if this Policy had been in effect on the
Repurchase Request Date.
3.02 Applicability.
(a) The repurchase provisions set forth in Article 1 of
this Policy shall not apply:
(1) With respect to the shares owned by any person
who directly, indirectly or beneficially owns shares of Class A
Common Stock in violation of the limitations on ownership contained
in Section 2.02(a), above (the "Ownership Limitation") if the
shares of Class A Common Stock are determined by the Corporation to
have been held in violation of such Ownership Limitations for a
period of ninety (90) days or more.
(2) With respect to any shares owned by any person
who is a Claimant, as defined herein.
(b) In the event that a shareholder who filed a
repurchase request on or after January 1, 1991, subsequently
becomes subject to the provisions contained in Sections 3.02(a)(1)
or (2), the Corporation shall be under no obligation at any time
thereafter to repurchase (or continue to repurchase, if the
repurchase in increments had already commenced) any shares from
such shareholder.
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ARTICLE 4
Definitions
4.01 Whenever used in this Policy;
(a) "Active Customer" means a retail food store whose
principal source of supply is purchases from the Corporation.
(b) "Book Value" at any given date means the Book Value
of a share of Common Stock (determined according to the annual
financial statements prepared by the Corporation, as audited and
certified by the Corporation's independent auditors) as of the end
of the fiscal year immediately preceding the fiscal year in which
such date occurs.
(c) "Claimant" means any shareholder of the Corporation
who has asserted and not irrevocably withdrawn such assertion or is
otherwise then asserting (in or in anticipation of any litigation
or other proceeding) a challenge (1) to the authority of the
Corporation or its Board of Directors to adopt any pending
Redemption Policy or to have adopted the then current Redemption
Policy or any prior Redemption Policy or to amend or revise any of
the same or (2) to the enforceability or validity or the
Corporation's interpretation or application of any provision of the
then current or any prior Redemption Policy.
(d) "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 shareholder (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).
(e) "Employee/Shareholder Termination" occurs, with
respect to a shareholder who is an employee of the Corporation,
upon the cessation of such person's employment relationship with
the Corporation for any reason.
(f) "Person" includes any individual, corporation,
partnership, joint venture, trust, estate or any other legal
entity.
(g) "Redemption Policy" means any written policy adopted by
the Board of Directors of the Corporation pursuant to Section 3.4
of the Articles of Incorporation setting forth terms, conditions or
provisions under which the Corporation will (during the term of
such policy) repurchase, redeem or otherwise acquire shares of the
Corporation's stock from shareholders of the Corporation.
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(h) "Repurchase Request Date" with respect to a share of
stock means the date of actual receipt by the Secretary of the
Corporation of a written request for repurchase of such share which
complies with Section 1.04 of this Policy.
(i) "Repurchase Target Date" with respect to a share of
stock means the date upon which the Corporation is to become obli
gated to repurchase such share of stock in accordance with Section
1.02 of this Policy. If such date is not a day on which business
is generally conducted in the Corporation's main offices, then the
"Repurchase Target Date" shall be the next subsequent business day.
A-12
Exhibit E
POLICY REGARDING ISSUANCE AND SALES OF ROUNDY'S, INC. STOCK
(As Adopted by the Board of Directors on December 7, 1993)
Roundy's, Inc. will make shares of its Class B Common Stock
("Stock") available for purchase from time to time on the following
terms and conditions:
(1) Persons to Whom Shares Will Be Issued. Shares of the
Company's Stock will be made available for purchase by:
- the Company's existing shareholders who are active
retailers doing business with the Roundy's
Cooperative ("Retailers");
- new Retailers; and
- employees of Roundy's, Inc. ("Employees"), upon the
recommendation of the Chief Executive Officer and the
approval of the Board of Directors or the Compensation
Committee of the Board.
Stock will not be made available to "inactive" retailers, even
if they have not yet tendered their stock for repurchase pursuant
to the inactive shareholder repurchase policy.
(2) Times at Which Stock Will Be Made Available for Purchase.
Stock will be made available for purchase by eligible purchasers
during three (3) "window" periods each year -- after the first,
second and third fiscal quarters of the Company consisting of the
last two weeks of May, August and November, respectively. These
"window" periods are subject to closure or modification by
management or the Board of Directors if, in the best judgment of
management or the Board, it would be inappropriate for the Company
to be engaged in the purchase or sale of its shares at such time.
Eligible purchasers wishing to purchase shares during any such
"window" period must deliver to the Company, within such "window"
period, a signed subscription agreement, in the form specified by
the Company, along with full payment of the subscription price of
the shares.
(3) Price at Which Shares Will Be Issued. When issued pursuant
to this policy, shares will be issued at a price equal to their
book value as of the preceding fiscal year end.
(4) Number of Shares Which Any Purchaser Shall Be Eligible to
Purchase. The terms set out in this Paragraph 4 are subject at all
times to the restrictions and limitations with respect to timing of
purchases as set out in Section (2) above.
(i) Retailers. The number of shares a Retailer will be
eligible to purchase will depend in part on the number of shares
already held by such Retailer relative to the number of shares
which such Retailer would be expected to hold under Roundy's
"Buying Deposit" policy. Roundy's encourages each of its Retailers
to purchase and hold shares of the Company's Stock having a total
"book value" equal to not less than twice the average amount of
such Retailer's weekly purchases from Roundy's. This amount is
referred to as the Retailer's "Buying Deposit." These shares are
pledged to Roundy's to secure the Retailer's accounts receivable
due Roundy's, as well as any other indebtedness of the Retailer to
Roundy's. The excess (if any) of a Retailer's
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Buying Deposit over the number of shares of Stock which such
Retailer holds at any time is referred to herein as such Retailer's
"Buying Deposit Deficit." For purposes of this policy, each
Retailer's Buying Deposit Deficit will be predetermined as of the
first day of each of the Company's fiscal years, based on purchases
by such Retailer during the immediately preceding fiscal year.
(A) Current Active Retailers Which Have a Buying Deposit
Deficit. Existing active Retailers which have a Buying
Deposit Deficit (other than an "Incremental Buying Deposit
Deficit" or an "Initial Buying Deposit Deficit" as defined
in Paragraphs (B) and (C) below) referred to herein in as a
"Regular Buying Deposit Deficit") will be entitled to
purchase, in each "window" period described in Section (2)
above, shares equal to five percent (5%) of their Regular
Buying Deposit Deficit.
(B) Current Active Retailers Which Create Or Increase Their
Buying Deposit Deficit Through Expansion Or Addition Of New
Store Facilities. In the case of a Retailer which expands
its store facilities or adds new facilities, and thereby
creates a Buying Deposit Deficit or increases its Buying
Deposit Deficit over its Regular Buying Deposit Deficit
(referred to herein as an "Incremental Buying Deposit
Deficit"), such Retailer will be entitled to purchase (in
addition to shares which may be purchased under the preceding
Paragraph (A) shares up to but not greater than fifty percent
(50%) of its Incremental Buying Deposit Deficit, but only if
such shares are purchased in he first "window" period, as
described in Section (2) above, following the date on which
the new or expanded store facility first opens, or in the
immediately following "window" period (unless the Company
does not authorize the sale of its shares during either of
such "window" periods, in which event such shares must be
purchased at the earliest time thereafter at which the Company
authorizes sales of its shares). The remainder of such
Retailer's Incremental Buying Deposit Deficit will become
part of its Regular Buying Deposit Deficit, and will be subject
to the provisions of Paragraph (A) above.
Notwithstanding the foregoing, a Retailer to which
Roundy's or any of its subsidiaries has loaned
funds(other than extensions of trade credit in the
ordinary course of business) or with respect to
which Roundy's or any of its subsidiaries has
guaranteed indebtedness (other than a guaranty or
other contingent liability for rentals due under
leases of store facilities or the equipment therein)
will not be eligible to purchase shares up to fifty
percent of the Incremental Buying Deposit Deficit as
described above. In that event, all of such
Retailer's Incremental Buying Deposit Deficit will
become part of its Regular Buying Deposit Deficit,
and will be subject to the provisions of Paragraph
(A) above.
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(C) New Retailers. New Retailers (those who do not, as
of January 1, 1994, do business with the Roundy's
Cooperative, either directly or through an
affiliated entity) will be eligible to purchase, in
each "window" period described in Section (2) above,
shares equal to 10% of their Buying Deposit at the
level at which it is initially established ("Initial
Buying Deposit"). If such Retailer's Buying Deposit
Deficit increases in any subsequent fiscal year to a
level greater than its Initial Buying Deposit
Deficit, such ncrease will constitute a Regular Buying Deposit Deficit,
and will be subject to the provisions of Paragraph
(A), above.
(D) Retailers With No Buying Deposit Deficit. A Retailer
which has no Regular Buying Deposit Deficit and no
Incremental Buying Deposit Deficit, and which is not
a new Retailer eligible to purchase shares equal to its
Initial Buying Deposit under the preceding Paragraph (C),
will be eligible to purchase in each year shares having a
total book value equal to five percent (5%) of its Buying
Deposit (as such Buying Deposit is determined as of the
first day of each fiscal year); provided that such shares
must be purchased in the first "window" period of each
fiscal year (unless the Company does not authorize the sale
of its shares during such "window" period, under Section (2)
above, in which event such shares must be purchased at the
earliest time thereafter at which the Company authorizes
sales of its shares).
Notwithstanding the foregoing, a Retailer to which Roundy's
or any of its subsidiaries has loaned funds (other than
extensions of trade credit in the ordinary course of business)
or with respect to which Roundy's or any of its subsidiaries
has guaranteed indebtedness (other than a guaranty or other
contingent liability for rentals due under leases of store
facilities or the equipment therein) will not be eligible
to purchase shares if it has no Regular Buying Deposit Deficit,
Incremental Buying Deposit Deficit, or Initial Buying
Deposit Deficit.
(E) Closed Window Periods. Except as expressly provided
otherwise in Paragraphs (B) and (D) above, shares which any
Retailer would have been entitled to purchase pursuant to
this subsection (4)(I) in any "window" period, but for the
fact that such "window" period was closed pursuant to
Section (2) above, shall not increase the number of shares
which such Retailer shall be entitled to purchase in any
subsequent "window" period or at any other time.
(ii) Inactive Retailer-Shareholders. Inactive Retailers will not
be permitted to acquire any additional shares.
A-15
(iii) Employees. An Employee may purchase shares in such
amount as may be authorized by the Board of Directors or the
Compensation Committee of the Board, upon the recommendation
of the Chief Executive Officer; provided, that any employee
desiring to purchase shares shall advise the Company of his or
her desire to do so prior to the end of the first fiscal
quarter of any year, and, if approval for the purchase of such
shares is granted, such shares shall be purchased in three
approximately equal installments in each of the three "window"
periods occurring during such year.
(5) Discretion Of The Board To Deviate From Or Modify The Policy.
The Board of Directors of the Company at all times retains the
discretion to alter, suspend, or deviate from the above
policy, in its discretion, to the extent that it determines
such action to be appropriate. However, it is not anticipated
that any such deviations from, modifications to, or
suspensions of this policy will be made except in the case of
significant transactions or events outside the ordinary course
of the Company's business.
(6) Effective Date. These policies will be effective commencing
January 1, 1994, except that Section (2) hereof, as revised,
will be effective as of January 1, 1995.
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 15. Indemnification of Directors and Officers.
Article VIII of Roundy's By-Laws provides for indemnification
by Roundy's of its Directors and Officers against liabilities
incurred in their capacities as such. The following summary is
subject to the specific provisions of said Article VIII and the
capitalized terms used therein are specifically defined in said
Article VIII:
Generally, Article VIII of Roundy's By-Laws requires
Roundy's to indemnify a Director or Officer for all Liability
and Expenses arising out of any claim made against such person
or in a Proceeding in which such person was a Party, unless
such Liability results from the person's Breach of Duty (which
generally includes a willful failure to deal fairly with
Roundy's or its stockholders while subject to a conflict of
interest; a transaction from which the Director or Officer
derived improper personal profit; a knowing violation of
criminal law; willful misconduct; or intentional or reckless
statements or omissions regarding matters under Board
consideration). Indemnification includes the reimbursement or
advancement or expenses. Article VIII sets forth specific
procedures for requesting indemnification and for determining
whether indemnification is proper. Article VIII provides that
it is not the exclusive source for rights of an Officer or
Director to indemnification.
Management believes that Roundy's policy with respect to
indemnification as expressed in Article VIII of the By-Laws is
consistent with application provisions of the Wisconsin Business
Corporation Law respecting indemnification of Directors and
Officers.
Item 16. Exhibits.
The following exhibits are filed as part of the Registration
Statement or, where so indicated, have previously been filed with
the Commission by Registrant and are incorporated herein by
reference.
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,
incorporated herein by reference to Exhibit 3.2 of
Registrant's Annual Report on Form 10-K for fiscal year ended
January 3, 1998, filed with the Commission on April 2, 1998,
Commission File No. 33-57505.
4.1 Policy Relating to Redemption of Stock by Inactive Customer
Shareholders and Former Employees. FILED HEREWITH (included
as Exhibit D to the Prospectus which forms a part of this
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.
II-1
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.
FILED HEREWITH (included as Exhibit E to the Prospectus which
forms a part of this 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
FILED HEREWITH (included as Exhibit A to the Prospectus which
forms a part of this Registration Statement).
4.7 Form of Buying Deposit Agreement
FILED HEREWITH (included as Exhibit B to the Prospectus which
forms a part of this Registration Statement).
4.8 Article V of Registrant's By-Laws "Fiscal Year Accounting and
Patronage Rebates," as amended on February 24, 1998.
FILED HEREWITH (included as Exhibit C to the Prospectus which
forms a part of this 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.
5.1 Opinion of Whyte Hirschboeck Dudek S.C. as to legality of
issuance of securities, incorporated herein by reference to
Exhibit 5.1 of Registrant's Registration Statement on Form S-2
(File No. 33-57505), dated May 1, 1995.
II-2
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 between the Registrant and cer
tain executive officers including Messrs. 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.
10.1(a)Amendment to Deferred Compensation Agreement between
Registrant and certain executive officers including Messrs.
Ranus, Beketic, Sullivan, and Schmitt, dated March 31, 1998,
incorporated herein by reference to Registrant's Registration
Statement on Form S-2 (File No. 33-57505) filed with the
Commission on April 28, 1998.
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, 1999 of
Directors and Officers Liability and Corporation Reimbursement
Policy incorporated herein by reference to Exhibit 10.2(a) of
Registrant's Annual Report on Form 10-K for the fiscal year
ended January 2, 1999, filed with the Commission on March 30,
1999, Commission File No. 33-57505.
10.3 Severance and Non-Competition Agreement dated April 13, 1998
between the Registrant and Gerald F. Lestina, incorporated
herein by reference to Exhibit 10.4 of Registrant's
Registration Statement on Form S-2 dated April 28, 1998,
Commission File No. 33-57505.
10.4 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.
10.5 1991 Stock Incentive Plan, as amended June 3, 1998,
incorporated herein by reference to Exhibit 10.6 of
Registrant's Form 10-Q for the quarterly period ended October
3, 1998, filed with the Commission on November 10, 1998,
Commission File No. 33-57505.
II-3
10.6 Form of Stock Appreciation Rights Agreement for certain
executive officers including Beketic, Sullivan and Schmitt,
incorporated herein by reference to Exhibit 10.7 of Registrant's
Form 10-Q for the quarterly period ended October 3, 1998, filed
with the Commission on November 10, 1998, Commission File No. 33-
57505
10.7 Amendment to Severance and Non-Competition Agreement between
the Registrant and Gerald F. Lestina, incorporated herein by
reference to Exhibit 10.8 of Registrant's Form 10-Q for the
quarterly period ended October 3, 1998, filed with the Commission
on November 10, 1998, Commission No. 33-57505.
10.8 Form of Second Amendment to Deferred Compensation Agreement
for certain executive officers including Ranus, Beketic,
Sullivan and Schmitt, incorporated herein by reference to
Exhibit 10.9 of Registrant's Form 10-Q for the quarterly
period ended October 3, 1998, filed with the Commission on
November 10, 1998, Commission No. 33-57505.
23.1 Consent of Deloitte & Touche LLP.
FILED HEREWITH.
24.1 Powers of Attorney of Certain Officers and Directors of
Registrant
FILED HEREWITH (included as part of Signature Page).
27.1 Financial Data Schedule
FILED HEREWITH.
Item 17. Undertakings.
(a) Rule 415 Offering. The undersigned registrant hereby
undertakes
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
II-4
(b) Filings Incorporating Subsequent Exchange Act Documents by
Reference. The undersigned registrant hereby undertakes that,
for purposes of determining any liability under the Securities
Act of 1933, as amended, each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934, as amended (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange
Act of 1934, as amended) that is incorporated by reference in
the registration statement shall be deemed to be a new
Registration Statement relating to the securities offered
therein and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(e) Incorporated Annual and Quarterly Reports. The undersigned
registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the
prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the
prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information
required to be presented by Article 3 of Regulation S-X are
not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or
given, the latest quarterly report that is specifically
incorporated by reference in the prospectus to provide such
interim financial information.
(h) Request for Acceleration of Effective Date or Filing of
Registration Statement on Form S-8. The undersigned
registrant hereby undertakes that, insofar as indemnification
for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment for the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to
believe that it meets all the requirements for filing on Form S-2
and has duly caused this Post-Effective Amendment No. 4 to
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the town of Pewaukee,
State of Wisconsin, on April 27, 1999.
ROUNDY'S, INC.
By ROBERT D. RANUS
Robert D. Ranus
Vice President and
Chief Financial Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Robert D. Ranus,
his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent,
full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-
fact and agent or his substitute, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Post-Effective Amendment No. 4 to Registration
Statement has been signed this 27th day of April, 1999 by the
following persons in the capacities indicated:
Signature Title
GERALD F. LESTINA Director, President and
- ------------------ Chief Executive Officer
Gerald F. Lestina
ROBERT D. RANUS
- ----------------- Director, Vice President and
Robert D. Ranus Chief Financial Officer and
Principal Accounting Officer
Signature Title
ROBERT E. BARTELS
- ------------------- Director
Robert E. Bartels
CHARLES R. BONSON
- ------------------- Director
Charles R. Bonson
ROBERT S. GOLD
- ---------------- Director
Robert S. Gold
GEORGE C. KAISER
- ------------------- Director
George C. Kaiser
HENRY KARBINER, JR.
- ------------------- Director
Henry Karbiner, Jr
GERALD F. LESTINA
- ------------------- Director
Gerald F. Lestina
PATRICK D. MCADAMS
- -------------------- Director
Patrick D. McAdams
GEORGE E. PRESCOTT
- ------------------- Director
George E. Prescott
ROBERT D. RANUS
- ----------------- Director
Robert D. Ranus
GARY R. SARNER
- --------------- Director
Gary R. Sarner
ROUNDY'S, INC.
FORM S-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
INDEX TO EXHIBITS
Exhibit Description and Incorporation by Reference
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,
incorporated herein by reference to Exhibit 3.2 of
Registrant's Annual Report on Form 10-K for fiscal year ended
January 3, 1998, filed with the Commission on April 2, 1998,
Commission File No. 33-57505.
4.1 Policy Relating to Redemption of Stock by Inactive Customer
Shareholders and Former Employees. FILED HEREWITH (included
as Exhibit D to the Prospectus which forms a part of this
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.
FILED HEREWITH (included as Exhibit E to the Prospectus which
forms a part of this 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
FILED HEREWITH (included as Exhibit A to the Prospectus which
forms a part of this Registration Statement).
4.7 Form of Buying Deposit Agreement
FILED HEREWITH (included as Exhibit B to the Prospectus which
forms a part of this Registration Statement).
4.8 Article V of Registrant's By-Laws "Fiscal Year Accounting and
Patronage Rebates," as amended on February 24, 1998.
FILED HEREWITH (included as Exhibit C to the Prospectus which
forms a part of this 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.
5.1 Opinion of Whyte Hirschboeck Dudek S.C. as to legality of
issuance of securities, incorporated herein by reference to
Exhibit 5.1 of Registrant's Registration Statement on Form S-2
(File No. 33-57505), dated May 1, 1995.
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 between the Registrant and
certain executive officers including Messrs. 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.
10.1(a)Amendment to Deferred Compensation Agreement between
Registrant and certain executive officers including Messrs.
Ranus, Beketic, Sullivan, and Schmitt, dated March 31, 1998,
incorporated herein by reference to Registrant's Registration
Statement on Form S-2 (File No. 33-57505) filed with the
Commission on April 28, 1998.
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, 1999 of
Directors and Officers Liability and Corporation Reimbursement
Policy incorporated herein by reference to Exhibit 10.2(a) of
Registrant's Annual Report on Form 10-K for the fiscal year
ended January 2, 1999, filed with the Commission on March 30,
1999, Commission File No. 33-57505.
10.3 Severance and Non-Competition Agreement dated April 13, 1998
between the Registrant and Gerald F. Lestina, incorporated
herein by reference to Exhibit 10.4 of Registrant's
Registration Statement on Form S-2 dated April 28, 1998,
Commission File No. 33-57505.
10.4 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.
10.5 1991 Stock Incentive Plan, as amended June 3, 1998,
incorporated herein by reference to Exhibit 10.6 of Registrant's
Form 10-Q for the quarterly period ended October 3, 1998, filed
with the Commission on November 10, 1998, Commission File No. 33-
57505.
10.6 Form of Stock Appreciation Rights Agreement for certain
executive officers including Beketic, Sullivan and Schmitt,
incorporated herein by reference to Exhibit 10.7 of Registrant's
Form 10-Q for the quarterly period ended October 3, 1998, filed
with the Commission on November 10, 1998, Commission File No. 33-
57505
10.7 Amendment to Severance and Non-Competition Agreement between
the Registrant and Gerald F. Lestina, incorporated herein by
reference to Exhibit 10.8 of Registrant's Form 10-Q for the
quarterly period ended October 3, 1998, filed with the Commission
on November 10, 1998, Commission No. 33-57505.
10.8 Form of Second Amendment to Deferred Compensation Agreement
for certain executive officers including Ranus, Beketic,
Sullivan and Schmitt, incorporated herein by reference to
Exhibit 10.9 of Registrant's Form 10-Q for the quarterly
period ended October 3, 1998, filed with the Commission on
November 10, 1998, Commission No. 33-57505.
23.1 Consent of Deloitte & Touche LLP.
FILED HEREWITH.
24.1 Powers of Attorney of Certain Officers and Directors of
Registrant
FILED HEREWITH (included as part of Signature Page).
27.1 Financial Data Schedule
FILED HEREWITH.
</TABLE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post-Effective
Amendment No. 4 to the Registration Statement No. 33-57505 of
Roundy's, Inc. on Form S-2 of our reports dated February 19, 1999,
included and incorporated by reference in the Annual Report on Form
10-K of Roundy's, Inc. for the year ended January 2, 1999, and to
the use of our report dated February 19, 1999, appearing in the
Prospectus, which is part of this Registration Statement. We also
consent to the reference to us under the heading "Experts" in such
Prospectus.
DELOITTE & TOUCHE, LLP
Deloitte & Touche, LLP
Milwaukee, Wisconsin
April 28, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ROUNDY'S
INC. FROM 10-K405 FOR THE PERIOD ENDED 01-02-99 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-02-1999
<PERIOD-END> JAN-02-1999
<CASH> 72,094,500
<SECURITIES> 0
<RECEIVABLES> 78,489,000
<ALLOWANCES> 0
<INVENTORY> 159,743,100
<CURRENT-ASSETS> 322,047,400
<PP&E> 214,592,300
<DEPRECIATION> 103,955,000
<TOTAL-ASSETS> 462,411,600
<CURRENT-LIABILITIES> 237,304,100
<BONDS> 73,298,100
0
0
<COMMON> 1,342,200
<OTHER-SE> 123,330,200
<TOTAL-LIABILITY-AND-EQUITY> 462,411,600
<SALES> 2,576,222,100
<TOTAL-REVENUES> 2,578,650,600
<CGS> 2,330,300,800
<TOTAL-COSTS> 2,330,300,800
<OTHER-EXPENSES> 218,820,700
<LOSS-PROVISION> 2,189,300
<INTEREST-EXPENSE> 7,293,100
<INCOME-PRETAX> 20,046,700
<INCOME-TAX> 8,149,000
<INCOME-CONTINUING> 11,897,700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,897,700
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
