UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 3, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission File Number 33-57505
Roundy's, Inc.
(Exact name of registrant as specified in its charter)
Wisconsin 39-0854535
------------------------------ -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23000 Roundy Drive, Pewaukee, Wisconsin 53072
- ---------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
(414) 547-7999
----------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
- ---------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X
No___
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at July 3, 1999
Common Stock, $1.25 par value
Class A (Voting) 11,600 Shares
Class B (Non-voting) 1,153,044 Shares
ROUNDY'S, INC.
INDEX
Page No.
PART I. Financial Informtion:
Consolidated Balance Sheets - 3
July 3, 1999 and January 2, 1999
Statements of Consolidated Earnings - 4
Thirteen Weeks and Twenty-six Weeks
Ended
July 3, 1999 and July 4, 1998
Statements of Consolidated Cash Flows - 5
Twenty-six Weeks Ended July 3, 1999
and July 4, 1998
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of 8
Financial Condition and Results of
Operations
PART II. Other Information 13
SIGNATURES 14
PART I. FINANCIAL INFORMATION
ROUNDY'S, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
July 3, 1999 and January 2, 1999
July 3, 1999 January 2, 1999
ASSETS (Unaudited) (Audited)
CURRENT ASSETS: ------------- ---------------
Cash and cash equivalents $ 78,174,400 $ 72,094,500
Notes and accounts receivable, less
allowance for losses, $6,040,300
and $6,361,600, respectively 84,762,800 78,489,000
Merchandise inventories 159,415,000 159,743,100
Prepaid expenses 2,580,800 5,347,000
Future income tax benefits 6,373,800 6,373,800
------------- --------------
Total Current Assets 331,306,800 322,047,400
------------- --------------
OTHER ASSETS:
Notes receivable, less allowance for
losses of $6,015,000 11,143,500 11,013,000
Goodwill and other assets 9,838,500 10,140,600
Other real estate 4,981,300 4,081,300
Deferred income tax benefit 4,492,000 4,492,000
------------- --------------
Total Other Assets 30,455,300 29,726,900
------------- --------------
PROPERTY AND EQUIPMENT - Net 116,340,900 110,637,300
------------- --------------
$478,103,000 $462,411,600
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 24,731,200 $ 10,159,700
Accounts payable 162,873,900 165,801,200
Accrued expenses 67,667,200 56,924,600
Income taxes 6,351,700 4,418,600
------------- --------------
Total Current Liabilities 261,624,000 237,304,100
LONG-TERM DEBT, LESS CURRENT MATURITIES 57,511,400 73,298,100
OTHER LIABILITIES 17,589,700 16,998,100
------------- --------------
Total Liabilities 336,725,100 327,600,300
------------- --------------
REDEEMABLE CLASS B COMMON STOCK 8,214,200 9,007,700
------------- --------------
STOCKHOLDERS' EQUITY:
Common Stock:
Voting (Class A) 14,500 14,900
Non-Voting (Class B) 1,368,500 1,327,300
------------- --------------
Total Common Stock 1,383,000 1,342,200
Patronage dividends payable in common
stock 4,060,000
Additional paid-in capital 36,463,900 31,582,600
Reinvested earnings 96,448,000 89,950,000
------------- --------------
Total 134,294,900 126,934,800
Less Treasury Stock, at cost 1,131,200 1,131,200
------------- --------------
Total Stockholders' Equity 133,163,700 125,803,600
------------- --------------
$478,103,000 $462,411,600
============= ==============
See Notes to Consolidated Financial Statements.
<TABLE>
<CAPTION>
ROUNDY'S, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED EARNINGS
FOR THE THIRTEEN WEEKS AND TWENTY-SIX WEEKS ENDED
JULY 3, 1999 AND JULY 4, 1998
(UNAUDITED)
Thirteen Weeks Ended Twenty-six Weeks Ended
July 3, 1999 July 4, 1998 July 3, 1999 July 4, 1998
-------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Net sales and service fees $666,913,400 $656,286,300 $1,317,527,200 $1,268,713,700
Other - net 1,321,200 1,285,300 2,349,200 2,532,400
-------------- -------------- --------------- ---------------
668,234,600 657,571,600 1,319,876,400 1,271,246,100
-------------- -------------- --------------- ---------------
COSTS AND EXPENSES:
Cost of sales 601,406,600 594,092,300 1,190,259,500 1,147,570,500
Operating and administrative 57,253,400 54,401,100 113,396,900 108,546,600
Interest 1,628,200 1,846,100 3,262,500 3,687,800
-------------- -------------- --------------- ---------------
660,288,200 650,339,500 1,306,918,900 1,259,804,900
-------------- -------------- --------------- ---------------
EARNINGS BEFORE INCOME TAXES 7,946,400 7,232,100 12,957,500 11,441,200
PROVISION FOR INCOME TAXES 3,238,200 2,947,100 5,280,200 4,662,300
-------------- -------------- --------------- ---------------
NET EARNINGS $ 4,708,200 $ 4,285,000 $ 7,677,300 $ 6,778,900
============== ============== =============== ===============
See Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
ROUNDY'S, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE TWENTY-SIX WEEKS ENDED JULY 3, 1999 AND JULY 4, 1998
(UNAUDITED)
Twenty-six Weeks Ended
July 3, 1999 July 4, 1998
-------------- --------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings $ 7,677,300 $ 6,778,900
Adjustments to reconcile net earnings to net
cash flows provided by operating activities:
Depreciation and amortization 9,087,400 9,448,300
Allowance for losses 803,300 1,002,700
Gain on sale of assets (71,500) (173,200)
(Increase) decrease in operating assets:
Notes and accounts receivable (7,077,100) 533,500
Merchandise inventories 2,112,100 (10,697,200)
Prepaid expenses 2,769,300 2,611,300
Other real estate (900,000) 2,821,200
Goodwill and other assets (125,200) (54,300)
Increase(decrease)in operating liabilities:
Accounts payable (2,927,300) 6,332,800
Accrued expenses 10,701,600 5,008,900
Income taxes 1,933,100 3,778,300
Other liabilities 591,600 77,000
------------ ------------
Net cash flows provided by operating activities 24,574,600 27,468,200
------------ ------------
Cash Flows From Investing Activities:
Capital expenditures (11,327,700) (5,442,800)
Proceeds from sale of property and
equipment and other productive assets 971,900 3,194,400
Payment for business acquisition net
Of cash acquired (5,682,500)
Increase in notes receivable (130,500) (1,436,800)
------------ ------------
Net cash flows used in investing activities (16,168,800) (3,685,200)
------------ ------------
Cash Flows From Financing Activities:
Reclass to current maturities and
principal payments of long-term debt (15,786,700) (1,215,700)
Increase in current maturities of
long-term debt 14,571,500 1,400
Proceeds from sale of common stock 1,425,000 1,199,000
Common stock purchased (2,535,700) (3,898,700)
------------ ------------
Net cash flows used in financing activities (2,325,900) (3,913,500)
------------ ------------
Net Increase in Cash and Cash Equivalents 6,079,900 19,869,500
Cash and Cash Equivalents,
Beginning of Period 72,094,500 52,366,900
------------ ------------
Cash and Cash Equivalents, End of Period $78,174,400 $72,236,400
============ ============
Cash paid during period: - Interest $ 3,283,700 $ 3,852,600
- Income Taxes 3,411,300 981,700
See Notes to Consolidated Financial Statements.
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) In the opinion of the Company, the accompanying consolidated
financial statements contain all adjustments (consisting only of
normal recurring accruals) necessary to present fairly the
financial position as of July 3, 1999 and January 2, 1999, and the
results of operations for the thirteen and twenty-six weeks ended
July 3, 1999 and July 4, 1998 and changes in cash flows for the
twenty-six weeks ended July 3, 1999 and July 4, 1998.
2) The results of operations for the thirteen and twenty-six weeks
ended July 3, 1999 and July 4, 1998 are not necessarily indicative
of the results to be expected for the full fiscal year.
3) Earnings per share are not presented because they are not deemed to
be meaningful.
4) Class B common stock, which is subject to redemption, is reflected
outside of stockholders' equity. As of July 3, 1999 and January 2,
1999, 71,552 and 78,464 shares, respectively, were subject to
redemption. The Class B common stock subject to redemption is
payable over a five year period based upon the book value at the
preceding fiscal year end.
5) 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 July 3, 1999, cash advances aggregating $7.4 million were
received from the insurance carrier relative to (1) cover 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 has also recorded an insurance claim
receivable for expenses directly related to costs incurred in
connection with this fire.
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-including additional expenses,
building, equipment and business interruption. Due to the
complexity of the claim, 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.
6) On December 8, 1998, the Company purchased a grocery retailer for
approximately $4.6 million in cash. On April 12, 1999, the Company
purchased a grocery retailer for approximately $5.7 Million 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 the acquisitions.
7) Segment Reporting. 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 corporate 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.
<TABLE>
<CAPTION>
For the thirteen weeks ended For the twenty-six weeks ended
July 3, 1999 July 4, 1998 July 3, 1999 July 4, 1998
------------ ------------ -------------- --------------
<S> <C> <C> <C> <C>
Net Sales
Wholesale $639,398,900 $636,928,000 $1,268,053,500 $1,228,956,200
Retail 80,835,200 72,468,900 151,660,000 141,893,800
Eliminations (53,320,700) (53,110,600) (102,186,300) (102,136,300)
------------- ------------- --------------- ---------------
Total $666,913,400 $656,286,300 $1,317,527,200 $1,268,713,700
============= ============= =============== ===============
Gross Profit
Wholesale $ 48,553,600 $ 47,364,200 $ 95,842,900 $ 92,435,700
Retail 17,712,000 15,547,100 32,967,700 30,203,200
Eliminations (758,800) (717,300) (1,542,900) (1,495,700)
------------- -------------- --------------- ---------------
Total $ 65,506,800 $ 62,194,000 $ 127,267,700 $ 121,143,200
============= ============== =============== ===============
Depreciation and
Amortization
Wholesale $ 1,904,300 $ 1,771,500 $ 3,616,600 $ 4,074,800
Retail 1,325,600 1,090,100 2,411,200 2,223,500
Corporate 1,490,800 1,697,300 3,059,600 3,150,000
------------- -------------- --------------- ---------------
Total $ 4,720,700 $ 4,558,900 $ 9,087,400 $ 9,448,300
============= ============== =============== ===============
Capital Expenditures
Wholesale $ 1,357,000 $ 1,346,800 $ 3,440,700 $ 2,204,900
Retail 125,400 127,200 364,600 169,500
Corporate 2,596,700 1,680,000 7,522,400 3,068,400
------------- -------------- --------------- ---------------
Total $ 4,079,100 $ 3,154,000 $ 11,327,700 $ 5,442,800
============= ============== =============== ===============
Identifiable Assets July 3, 1999 January 2, 1999
------------- ---------------
Wholesale $302,431,700 $ 304,332,200
Retail 57,942,100 54,856,500
Corporate 117,729,200 103,232,900
------------ -------------
Total $478,103,000 $ 462,421,600
============ =============
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
- ---------------------
The following is management's discussion and analysis of certain
significant factors, which have affected the Company's results of
operations during the periods included in the accompanying statements
of consolidated earnings.
A summary of the period to period changes in the principal items
included in the statements of consolidated earnings is shown below:
<TABLE>
<CAPTION>
Comparison of
13 Weeks Ended July 3, 1999 26 Weeks Ended July 3, 1999
and July 4, 1998 and July 4, 1998
Increase/<Decrease> Increase/<Decrease>
---------------------------- ----------------------------
<S> <C> <C>
Net sales and service fees $10,627,100 1.62% $48,813,500 3.85%
Cost of sales 7,314,300 1.23% 42,689,000 3.72%
Operating and admin. expenses 2,852,300 5.24% 4,850,300 4.47%
Interest expense (217,900) (11.80)% (425,300) (11.53)%
Earnings before income taxes 714,300 9.88% 1,516,300 13.25%
</TABLE>
Net sales and service fees increased approximately $10.6 million during
the second quarter of 1999 as compared to the second quarter of 1998.
The loss of wholesale customers resulted in a decrease of approximately
$10.4 million. The closing or sale of four Company-owned stores
resulted in a decrease of approximately $7.1 million. New Company-
owned stores resulted in an increase of approximately $12.6 million.
Sales by existing Company-owned stores increased $2.9 million. Sales
to new and existing wholesale customers increased $12.6 million.
Net sales and service fees increased approximately $48.8 million during
the first two quarters of 1999 as compared to the first two quarters of
1998. The loss of wholesale customers resulted in a decrease of
approximately $22.4 million. The closing or sale of four Company-owned
stores resulted in a decrease of approximately $15.7 million. New
Company-owned stores resulted in an increase of approximately $17.8
million. Sales by existing Company-owned stores increased $7.6
million. Sales to new and existing wholesale customers increased $61.5
million.
Cost of sales approximated 90.2% and 90.5% of net sales and service
fees for the thirteen weeks ended July 3, 1999 and July 4, 1998,
respectively. Year-to-date cost of sales approximated 90.3% and 90.5%
of net sales and service fees for the twenty-six weeks ended July 3,
1999 and July 4, 1998, respectively.
Operating and administrative expenses approximated 8.6% and 8.3% of net
sales and service fees for the thirteen weeks ended July 3, 1999 and
July 4, 1998, respectively. Year-to-date operating and administrative
expenses approximated 8.6% of net sales and service fees for the twenty-
six weeks ended July 3, 1999 and July 4, 1998. During the quarter
ended July 3, 1999, the Company received approximately $3.5 million
from a customer for early termination of a supply agreement. The
Company also accrued approximately $1.5 million for the license to use
bar-code technology. Both of these items are reflected in Statement of
Consolidated Earnings for the thirteen and twenty-six week periods
ended July 3, 1999.
Interest expense decreased primarily as a result of lower borrowing
levels during the quarter ended July 3, 1999 as compared to the quarter
ended July 4, 1998.
No patronage dividends have been accrued as of July 3, 1999. The
Company's by-laws require that, to the extent permitted by the Internal
Revenue Code, patronage dividends be paid out of earnings from business
done with stockholder-customers in an amount which will reduce net
earnings of the Company to such amount as will result in an 8 percent
increase in the book value of its common stock.
The income tax rate used for calculating the provision for income taxes
for the interim periods was 40.8% in 1999 and 1998.
Liquidity and Capital Resources
- -------------------------------
The Company's current ratio decreased slightly from 1.36:1 at year-end
to 1.27:1 at July 3, 1999. The consolidated long-term debt to equity
ratio has decreased from 0.54:1 at January 2, 1999 to 0.41:1 at July 3,
1999, partially due to increased equity levels and partially due to the
reclass of approximately $14.6 million to current maturities of long-
term debt.
Stockholders' equity, including redeemable common stock, increased
approximately $6.6 million due to reinvested earnings of $7.7 million
and proceeds from the sale of common stock of $1.4 million offset by
common stock purchases of $2.5 million.
YEAR 2000
- ---------
Many computer software applications, hardware and equipment and
embedded systems identify dates using only the last two digits of the
year or contain inherent date limitations in their programming
language. These products may be unable to properly recognize or handle
dates before, in or after the year 2000, causing the applications,
equipment or systems to fail or produce incorrect information. These
potential problems are commonly referred to as "Year 2000 Issues."
The Company relies primarily on computerized systems for
procurement, inventory control, sale and distribution of its products.
The Company also uses a number of computer software programs, operating
systems, and types of equipment with computer chips in its internal
operations, including its financial and business systems, its
distribution/warehouse, procurement and control systems and
administrative functions. To the extent that these items contain
source code or computer chips that are unable to correctly handle the
Year 2000 Issue, some level of modification or possible replacement
will be necessary.
State of Readiness
The Company had developed comprehensive plans to address the
possible impact of the Year 2000 Issue on operations throughout its
divisions. A Year 2000 Team has been organized to coordinate
activities necessary to assure that key automated systems and related
processes will remain functional
through the Year 2000. Progress is being monitored and reported to
management and to the Board of Directors on a periodic basis.
The Company's efforts to address the Year 2000 Issue can be
grouped into three major categories: information technology (IT)
systems, Non-IT systems, and third party relationships. Within each
category there are generally four phases: (i) assessment of the extent
of potential Year 2000 Issues and risk exposures, as well as
contingency planning; (ii) remediation or replacement of non-compliant
software or equipment; (iii) testing of remediated or replaced software
or equipment; and (iv) implementation of fully tested compliant
systems.
IT Systems. The Company has identified three IT systems it
considers most critical to its operations: (a) procurement, including
electronic data interchange (EDI) systems with product suppliers; (b)
warehouse management, order processing and distribution systems; and
(c) general control systems (which include financial reporting, billing
and collection, and other administrative systems). The Company
operates through several divisions, some of which are farther along
than others in addressing Year 2000 Issues. While in certain
instances the Company may rely extensively upon representations of
software vendors as to Year 2000 compliance, the Company has generally
adopted an approach of thoroughly testing critical IT systems (using
internal and external resources) in order to satisfy itself as to Year
2000 compliance.
Non-IT Systems. The Company is in the process of reviewing all of
its communication systems (phone and data transmission systems), fax
machines, photocopiers, postage machines, elevators, HVAC systems,
security systems and other Non-IT systems for purposes of determining
whether Year 2000 Issues exist. When available, written certifications
of Year 2000 compliance for these systems will be obtained. The
Company's operations are, in part, dependent upon embedded
microprocessors in equipment used to physically sort, store, and move
inventory.
Status and Targeted Completion Date of IT and Non-IT System
Activities. In general, on an enterprise-wide basis, as of July 3,
1999, the Company has completed the approximate percentages of its
expected Year 2000 activities for its systems set forth in the
following table. These percentages are Management's estimates derived
largely from the percentage of anticipated expenditures that has been
spent through July 3, 1999. The table also shows the targeted date for
the substantial completion of each Year 2000 activity:
<TABLE>
<CAPTION>
Assessment Remediation Testing Implementation
--------------------- -------------------- -------------------- --------------------
System Percent Target Percent Target Percent Target Percent Target
Complete Completion Complete Completion Complete Completion Complete Completion
Date Date Date Date
-------- ---------- -------- ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IT
Systems:
Procurement 100% - 100% - 100% - 97% 7/99
Warehouse/
Distribution 100% - 100% - 100% - 95% 8/99
Control
Systems 100% - 100% - 100% - 100% -
Non-IT System:
Office Systems 100% - 100% - 100% - 100% -
Facilities 100% - 100% - 100% - 100% -
Other Non-IT
Systems 100% - n/a - n/a - 100% -
</TABLE>
Third Party Relationships. The Year 2000 Issue can have an impact on
the Company's ability to receive accurate and timely deliveries from its
suppliers. Efforts are being made to contact all suppliers and service
providers and coordinate appropriate measures necessary to assure the
continuation of product deliveries and services. However, because there
is a range of alternative suppliers for essentially comparable products,
which the Company believes will reduce the impact of any disruptions in
its procurement systems, the Company is initially concentrating on solving
potential problems in its critical distribution network to its customers.
The Company is encouraging and assisting its customers in their assessment
of Year 2000 Issues in order to help them avoid or minimize disruptions at
the customer level which would adversely impact the Company's ability to
distribute its products.
Overall Risk Assessment and Contingency Planning. The Company's
business depends upon its ability to deliver inventory to its customers in
a timely fashion. The Company believes that the most reasonable likely
worst case scenario associated with the Year 2000 Issue is if, as a result
of disruptions or malfunctions, the Company is unable to process and
deliver customer orders consistent with the time-sensitive nature of this
process. The extent of such potential impact cannot be determined with
reliability at this time due, in large part, to the lack of comprehensive
information as to the Year 2000 readiness of the Company's business
partners (which the Company is attempting to assemble). The Company is
developing contingency plans designed to minimize the risk of such
disruptions. These contingency plans include the development of backup
procedures, identification of alternate suppliers, and the establishment
of processes designed to provide the Company with adequate inventory and
timely distribution to meet the needs of its customers. The Company is
working with key suppliers and customers to develop action and contingency
plans designed to achieve a timely and accurate flow of inventory. These
plans were completed at the end of the second quarter of 1999.
Contingency plans for mission critical internal operating systems are
expected to be in place by October 1999.
Costs to Address the Year 2000 Issue. The Company estimates total
costs to be incurred to address the Year 2000 Issue will be approximately
$8.8 million, of which approximately $7.7 million had been spent as of
July 3, 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 Other
Operating and Administrative Expense.
The Company has deferred certain IT projects as a result of its focus
on
Year 2000 issues; however, the deferrals are not expected to have a
material impact on the Company's business or financial condition.
General. The Company believes it is taking reasonable steps which,
when fully implemented, will prevent major business interruptions and will
minimize the Company's risk of exposure to liability to third parties due
to the Year 2000 Issue. There can be no assurance, however, that the
Company will be successful in its efforts. Further, the costs of the
Company's efforts to address the Year 2000 Issue and the dates on which
the Company believes it will complete the projects described above are
based upon management's best estimates. There also can be no assurance
that these estimates will prove to be accurate, and the actual cost and
progress on these projects could differ materially from those currently
anticipated. The reasonableness of the Company's efforts, and the project
time lines and budgets, were derived based on information the Company
believes to be reliable and by making numerous assumptions regarding
future events. Specific factors that could cause actual results to differ
include, but are not limited to, (i) the Company's ability to assess,
remediate, test and implement all relevant computer hardware and software
and embedded technology, (ii) the Company's reliance on third-party
assurances and the variability of definitions of "Year 2000 compliance"
which may be used by such third parties, and (iii) the adequacy of the
Company's contingency plans, which are dependent in part upon the
involvement and cooperation of third-parties over whom the Company has no
control, and similar uncertainties.
II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
(a) Matters were submitted to a vote of the holders of the Company's
Class A common stock at the Company's annual meeting on April
27, 1999. A meeting of the Trustees of Roundy's, Inc. Voting
Trust was also held on April 27, 1999.
(b) At the annual meeting, George E. Prescott was elected as a
retailer director. At the meeting of the Trustees, Henry
Karbiner, Jr. was elected as non-retailer non-management
director and Gerald F. Lestina was elected as an officer
director. All of these votes were unanimous since all of the
Class A common stock is held in a voting trust and the trustees
are required to vote the Class A common stock as a block. The
following directors continue in office: Robert E. Bartels,
Charles R. Bonson, Robert S. Gold, George C. Kaiser, Patrick D.
McAdams, Robert D. Ranus and Gary R. Sarner.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.9 Roundy's Inc. Supplemental Employee Retirement Plan for certain
executive officers including Lestina, Ranus, Beketic and Sullivan.
(b) Reports on Form 8-K -- There were no reports on Form 8-K filed
for the thirteen weeks ended July 3, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ROUNDY'S, INC.
(Registrant)
Date: August 9, 1999 ROBERT D. RANUS
--------------- ---------------
Robert D. Ranus
Vice President and
Chief Financial Officer
(Principal Financial Officer)
Exhibit 10.9
ROUNDY'S, INC.
SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN
Table of Contents Page
----------------- ----
ARTICLE I 1-1
DEFINITIONS 1-1
1.1 Beneficiary 1-1
1.2 Benefit Objective 1-1
1.3 Board 1-1
1.4 Company 1-1
1.5 Committee 1-1
1.6 Earnings 1-1
1.7 Final Average Annual Earnings 1-1
1.8 Integrated Benefits 1-1
1.9 Normal Retirement Date 1-1
1.10 Participant 1-1
1.11 Plan 1-2
1.12 Plan Benefit Commencement Date 1-2
1.13 Termination of Employment 1-2
ARTICLE II 2-1
PARTICIPATION AND ELIGIBILITY FOR BENEFITS 2-1
2.1 Participation 2-1
2.2 Vesting of Benefits 2-1
2.3 No Guarantee of Employment 2-1
ARTICLE III 3-1
RETIREMENT BENEFITS 3-1
3.1 Benefit Objective 3-1
3.2 Retirement Benefit Under this Plan 3-1
3.3 Integration of Other Benefits and Plan Benefit Computation 3-1
3.4 Computation of Actuarial Equivalents 3-2
ARTICLE IV 4-1
COMMITTEE 4-1
4.1 Administration 4-1
4.2 Duties of Committee 4-1
ARTICLE V 5-1
PAYMENT OF RETIREMENT BENEFITS 5-1
5.1 Amount of Benefit 5-1
5.2 Payment of Benefit 5-1
5.3 Alternative Method of Payment 5-1
5.4 Eligibility for Survivor's Benefits 5-1
5.5 Amont of Beneficiary's Benefit and Form of Payment 5-1
5.6 Forfeiture of Benefits 5-1
5.7 Payment to Representatives 5-2
5.8 Timing of Payments 5-2
5.9 Funding 5-2
ARTICLE VI 6-1
GENERAL PROVISIONS 6-1
6.1 Effective Date 6-1
6.2 Amendment and Termination 6-1
6.3 Non-Alienation of Benefits 6-1
6.6 Governing Law 6-1
6.7 Indemnification 6-1
6.9 Severability 6-1
6.10 Gender and Number 6-1
6.11 Titles and Headings 6-1
ROUNDY'S, INC.
SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN
PREFACE
The purpose of the Roundy's, Inc. Supplemental Employee
Retirement Plan is to supplement the benefits which are payable
through the Roundy's, Inc. Retirement Plan for certain select
employees of Roundy's, Inc., so that the effects of the
limitation on compensation under the Roundy's, Inc. Retirement
Plan due to Section 401(a)(17) of the Internal Revenue Code are
ameliorated.
ARTICLE I.
DEFINITIONS
1.1 Beneficiary. "Beneficiary" means the person or entity
designated as the Participant's Beneficiary under this Plan.
1.2 Benefit Objective. "Benefit Objective" shall have the
meaning provided in Section 3.1 of this Plan.
1.3 Board. "Board" means the Board of Directors of the
Company.
1.4 Company. "Company" means Roundy's, Inc., a Wisconsin
corporation, and any successor corporation.
1.5 Committee. "Committee" means the Compensation
Committee of the Board. Any function exercisable by such
Committee may also be exercised by the Board.
1.6 Earnings. "Earnings" means the base salary paid to the
Participant by the Company without regard to any limitations
imposed by Section 401(a)(17) of the Internal Revenue Code,
including employer contributions made pursuant to a salary
reduction agreement which are not includable in the gross income
of a Participant under Sections 125, 402(e), 402(h) or 403(b) of
the Internal Revenue Code and deferrals, if any, made out of base
salary to the Roundy's, Inc. Deferred Compensation Plan, but
excluding bonuses, overtime, commissions or other pay.
1.7 Final Average Annual Earnings. "Final Average Annual
Earnings" means one- fifth (1/5) of the Participant's total
Earnings for the sixty (60) consecutive months immediately
preceding the month before such Participant's Termination of
Employment; provided, however, that a Participant's Final Average
Annual Earnings shall be reduced pro-rata for each year that a
Participant's years of Credited Service are less than twenty-five
(25) years of Credited Service. For purposes of this Plan, the
term "Credited Service" shall have the same meaning as such term
is defined in the Roundy's, Inc. Retirement Plan.
1.8 Integrated Benefits. "Integrated Benefits" shall have
the meaning provided in Section 3.3(b) of this Plan.
1.9 Normal Retirement Date. "Normal Retirement Date" means
the first day of the month following the month in which the
Participant attains age sixty-five (65).
1.10 Participant. "Participant" means a highly compensated
executive officer of the Company who has been designated as a
Participant by the Committee. A Participant shall also mean a
retired or terminated Participant who continues to be entitled to
retirement benefits under this Plan after such Participant's
Termination of Employment.
1.11 Plan. "Plan" means the Roundy's, Inc. Supplemental
Employee Retirement Plan provided herein and any amendments
hereto.
1.12 Plan Benefit Commencement Date. "Plan Benefit
Commencement Date" means the date on which benefits commence to
be payable to a Participant or Beneficiary under the Plan. Such
date shall be the same date on which benefit payments commence
under the Roundy's, Inc. Retirement Plan to such Participant (or
his or her designated beneficiary therein).
1.13 Termination of Employment. "Termination of Employment"
means an employee's resignation, discharge, retirement, death, or
failure to return to the performance of duties at the end of a
leave of absence, or upon the happening of any other event or
circumstance which, under the policy of the Company as in effect
from time to time, results in the termination of the employer-
employee relationship. A "Termination of Employment" shall not
be deemed to occur upon a transfer between any combination of
affiliated companies.
ARTICLE II.
PARTICIPATION AND
ELIGIBILITY FOR BENEFITS
2.1 Participation. The Participants shall be those key
employees of the Company designated from time to time by the
Board as Participants in the Plan. Participation in the Plan
shall be evidenced by an agreement between the Company and the
Participant which shall be subject to applicable provisions of
the Plan and shall incorporate by reference the terms and
provisions of the Plan, and such other terms and conditions, not
inconsistent herewith, as the Committee may deem appropriate in
each case.
2.2 Vesting of Benefits. Except as provided in Section 5.6
of this Plan, benefits under this Plan shall be vested to the
extent a Participant hereunder has satisfied the requirements for
vesting in his accrued benefit under the Roundy's, Inc.
Retirement Plan.
2.3 No Guarantee of Employment. This Plan shall not be
construed as conferring any rights upon any individual for a
continuation of employment, nor shall it interfere with the
rights of the Company to terminate the employment of any
individual or to take any other action affecting such individual.
ARTICLE III.
RETIREMENT BENEFITS
3.1 Benefit Objective. Under the terms of this Plan, a
Participant's Benefit Objective shall be a fifteen (15) year term
certain annuity commencing on the Participant's Plan Benefit
Commencement Date where the annual annuity amount is equal to
fifty percent (50%) of the Participant's Final Average Annual
Earnings.
3.2 Retirement Benefit Under this Plan. The amount of a
Participant's actual retirement benefit under this Plan shall be
a supplemental benefit representing the difference between the
value of a Participant's Benefit Objective over the value of such
Participant's Integrated Benefits, determined under Sections 3.3
and 3.4 of this Plan, payable in the form of a fifteen (15) year
term certain annuity commencing on such Participant's Plan
Benefit Commencement Date, as provided in Article V of this Plan.
3.3 Integration of Other Benefits and Plan Benefit
Computation. A Participant's retirement benefit under this Plan
shall be determined as follows:
(a) The value of such Participant's Benefit Objective
shall first be expressed as an actuarially equivalent
lump sum, as provided under Section 3.4 of this Plan;
(b) The value of such Participant's Integrated
Benefits shall then be expressed as an actuarially
equivalent lump sum, as provided under Section 3.4 of
this Plan. For purposes of this Plan and the
determination of such Participant's actual retirement
benefit under this Plan, the term "Integrated Benefits"
shall mean the following benefits payable to such
Participant:
(i) such Participant's Accrued Monthly
Benefit under the Roundy's, Inc. Retirement Plan;
and
(ii) such Participant's Primary Social
Security Amount as calculated by the actuary for
the Roundy's, Inc. Retirement Plan for purposes of
determining such Participant's Accrued Monthly
Benefit under such Retirement Plan.
For purposes of this Plan, the terms "Accrued Monthly
Benefit" and "Primary Social Security Amount" shall
have the same meaning as such terms are defined in the
Roundy's, Inc. Retirement Plan.
(c) The annual annuity amount for such Participant's
actual retirement benefit under this Plan shall be
determined such that a fifteen (15) year term certain
annuity of such amount, commencing at such
Participant's Plan Benefit Commencement Date, is equal
to the value of the actuarial equivalent of the lump
sum amount resulting from the difference between the
value of the lump sum determined under paragraph (a)
above and the value of the lump sum determined under
paragraph (b) above. The annual amount due under such
annuity shall be the actual retirement benefit under
this Plan, payable as provided in Article V.
3.4 Computation of Actuarial Equivalents. For purposes of
determining the supplemental benefits under this Plan, actuarial
equivalents shall be determined on the basis of interest rates,
mortality assumptions and actuarial factors used by the actuary
for the Roundy's, Inc. Retirement Plan, as specified in Section
6.5(a) therein. In the event that a supplemental retirement
benefit is payable under this Plan at a time prior to a
Participant's Normal Retirement Date, the present value of such
early payment shall be adjusted to account for such early
payment, using eight percent (8%) as the discount factor. An
illustration of this present value calculation is attached as
Exhibit A.
ARTICLE IV.
COMMITTEE
4.1 Administration. The general administration of this Plan
shall be the responsibility of the Committee which is hereby
authorized, in its sole discretion, to delegate said
responsibilities to an administrator or administrative committee.
The Committee shall appoint a qualified actuary or actuaries to
perform all actuarial calculations, and the good faith
determination of the Committee in reliance upon such actuary or
actuaries shall be final and conclusive. The Committee shall
hold such meetings as it deems appropriate, upon such notice and
at such place or places, and at such time or times as it may from
time to time determine. The Committee may act without a meeting
if a consent in writing setting forth the action so taken shall
be signed by all of the members of the Committee and filed with
the minutes of the Company.
4.2 Duties of Committee. Subject to the provisions of the
Plan, the Committee shall have the following duties:
(a) to recommend to the Board employees who should be
chosen to participate in the Plan; and
(b) to recommend to the Board the date or dates on
which such employees become Participants.
In addition, notwithstanding any provision of the Plan to the
contrary, unless the Board takes action on the following matters,
the Committee shall have authority to act on the following: (i)
to adopt, amend and rescind such rules and regulations and take
any such other action as it shall deem necessary or proper for
the administration of the Plan; and (ii) to shorten the payment
period for any benefit or accelerate payment thereof. In
addition, the Committee shall also have full and complete
discretionary authority to interpret the Plan, and the decision
of the Committee on any question concerning the interpretation
and administration of the Plan shall be final, conclusive and
binding on all Participants. The Committee, the Company or the
Board may consult with counsel, who may be counsel for the
Company, and shall not incur any liability for any action taken
in good faith in reliance upon the advice of counsel.
ARTICLE V.
PAYMENT OF RETIREMENT BENEFITS
5.1 Amount of Benefit. Subject to Sections 5.3 and 5.5,
the monthly retirement benefit to which a Participant is entitled
shall be one-twelfth of the retirement benefit computed under
Section 3.2 for a period of fifteen (15) years, commencing at
such Participant's Plan Benefit Commencement Date.
5.2 Payment of Benefit. Payment of benefits shall be made
in the form of a fifteen (15) year term certain annuity unless
otherwise provided under Sections 5.3 and 5.5. Benefits shall
commence on the Plan Benefit Commencement Date and subsequent
payments shall be due on the first day of each month thereafter
with the last payment being due on the first day of the last
month in the fifteen (15) year period. The Company shall be
entitled to deduct from any payment under the Plan the amount of
any tax required by law to be withheld with respect any full or
partial payment of a Participant's benefit, or may require any
Participant or other person to pay such amount to the Company
prior to and as a condition of making such payment.
5.3 Alternative Method of Payment. Retirement benefits
under this Plan may, in the absolute discretion of the Committee,
be paid in another form requested by the Participant or
Beneficiary, including, without limitation, a lump sum. Any
alternative form of payment shall, in any event, be the actuarial
equivalent of the fifteen (15) year term certain annuity
otherwise payable under this Plan, determined in accordance with
Section 3.4 of this Plan.
5.4 Eligibility for Survivor's Benefits. A survivor's
benefit will be paid to a Participant's Beneficiary under the
terms and conditions of this Article V if a Participant dies
prior to commencement of benefits and was otherwise eligible to
receive a benefit under this Plan at the time of such
Participant's death.
5.5 Amount of Beneficiary's Benefit and Form of Payment.
The amount of a Beneficiary's benefit shall be determined under
Article III of this Plan based on the Participant's Benefit
Objective and Integrated Benefits, adjusted to account for
payment prior to such Participant's Normal Retirement Date.
Where a Participant's benefit payments under the Plan have not
commenced as of the date of such Participant's death, payment of
the Beneficiary's benefits shall be made as soon as
administratively practicable after the Participant's death in the
form of a lump sum distribution. Where a Participant's benefit
payments under the Plan have commenced prior to his or her date
of death, the remainder of such Participant's benefit payments
shall be made to his or her Beneficiary in the same time and
manner as such benefit would have been paid to such Participant.
5.6 Forfeiture of Benefits. Notwithstanding any other
provision of the Plan, participation herein and all rights to any
payments hereunder will be discontinued and forfeited, and the
Company will have no further obligation hereunder to a
Participant if at any time the Participant: commits a material
act of dishonesty or moral turpitude involving the Company; is
convicted of a felony or pleads guilty or no contest to the same;
incurs a Termination of Employment due directly to such
Participant's wilful failure to carry out the duties and
responsibilities of his or her office with the Company; wilfully
discloses material proprietary confidential information of the
Company to or for the benefit of a competitor of the Company (to
the extent such information is not publicly available); or makes
any intentional misrepresentation to the shareholders or
directors of the Company. Notwithstanding the foregoing, in
determining whether a Participant's interests in this Plan shall
be forfeited, the Committee shall, in its sole discretion,
determine whether any intent or wilfulness of a Participant was
done or omitted to be done in good faith and in the reasonable
belief that it was in or not opposed to the best interests of the
Company.
5.7 Payment to Representatives. If an individual entitled
to receive any benefits hereunder is determined by the Committee
or is adjudged to be legally incapable of giving valid receipt
and discharge for such benefits, they shall be paid to the duly
appointed and acting guardian, if any, and if no such guardian is
appointed and acting, to such persons as the Committee may
designate. Such payment shall, to the extent made, be deemed a
complete discharge for such payments under this Plan.
5.8 Timing of Payments. If the Committee is unable to make
the determinations required under this Plan in sufficient time
for payments to be made when due, the Committee shall make the
payments upon the completion of such determinations with interest
at a reasonable rate from the due date and may, at its option,
make provisional payments, subject to adjustment, pending such
determinations.
5.9 Funding. Benefits under this Plan shall not be
prefunded, but shall be payable by the Company as and when they
become due as provided herein, and a Participant's interest in
benefits under this Plan (and the interest of any Beneficiary)
shall not be greater than that of an unsecured creditor of the
Company.
ARTICLE VI.
GENERAL PROVISIONS
6.1 Effective Date. This Plan shall be effective upon
adoption by the Board.
6.2 Amendment and Termination. The Board may at any time,
or from time to time, amend this Plan in any respect or terminate
this Plan without restriction and without consent of any
Participant or Beneficiary, provided, that any such amendment or
termination shall not impair the right of any Participant or
Beneficiary to receive benefits accrued hereunder prior to such
amendment or termination without the consent of such Participant
or Beneficiary.
6.3 Non-Alienation of Benefits. No benefit payable
hereunder may be assigned, pledged, mortgaged or hypothecated
and, except to the extent required by applicable law, no such
benefit shall be subject to legal process or attachment for the
payment of any claims of a creditor of a Participant or
Beneficiary.
6.6 Governing Law. The provisions of this Plan shall be
construed according to the law of the State of Wisconsin
excluding the provisions of any such laws that would require the
application of the laws of another jurisdiction.
6.7 Indemnification. The Company shall indemnify any
Committee member for, and hold such individual harmless against,
any and all claims, liabilities, charges and expenses (including
reasonable attorneys' fees) in connection with or arising out of
such individual's performance of duties hereunder.
6.8 Binding Upon Successors. This Plan shall be binding
upon and inure to the benefit of the Company, its successors and
assigns and the Participants and their respective Beneficiaries,
heirs, executors, administrators and legal representatives.
6.9 Severability. If any of the provisions of the Plan
shall be held to be invalid, or shall be determined to be
inconsistent with the purpose of this Plan, the remainder of this
Plan shall not be affected thereby.
6.10 Gender and Number. The masculine pronoun whenever used
shall include the feminine. Wherever any words are used herein
in the singular, they shall be construed as though they were also
used in the plural in all cases where they shall so apply.
6.11 Titles and Headings. The titles to articles and
headings of sections of this Plan are for convenience of
reference and in case of any conflict the text of the Plan,
rather than such titles and headings, shall control.
IN WITNESS WHEREOF, the Company has caused the Plan to be
executed by its duly authorized officers effective the 26 day
of May, 1999.
ROUNDY'S, INC.
By: GEORGE C. KAISER
----------------
George Kaiser, Member of
its Board of Directors
ATTEST:
By: CHARLES R. BONSON
------------------
Charles R. Bonson, Member of
its Board of Directors
Exhibit A
---------
Illustration of Discounted Early Payment of SERP Benefit
(Plan Section 3.4)
Assumptions:
A. Monthly Benefit Objective @ Age 65 = $ 10,000.00
B. Sum of Monthly Accrued Retirement Plan Benefit
And Monthly Social Security Benefit @ Age 65 = $ 7,000.00
C. Factor for 15-Year Certain Annuity @ 6%,
Payable Monthly at Beginning of Month = 10.025087
D. Lump Sum Value of Benefit Objective,
Equal to 12 x (A) x (C) = $1,203,010.44
E. Factor for Immediately Payable Age 65 Life
Annuity at:
Interest 6%
Mortality: 1971 GAT, 80% Male/20% Female
Payable Monthly at Beginning of Month = 9.549564
F. Lump Sum Value of "Integrated Benefits"
Equal to 12 x (B) x (E) = $ 802,163.38
G. Lump Sum Value of SERP Benefit
Equal to (D) - (F) = $ 400,847.06
H. Monthly SERP Benefit Payable @ Age 65
Equal to (G) divided by (C) divided by 12 = $ 3,332.03
Calculation of Discounted SERP Benefit for Early Retirement at Age 55
I. Interest-Only Discount Factor for 10 Years
(Age 65 - Age 55), Nominal Rate of Interest
Equal to 8% Compounded Monthly = 0.450523
J. Monthly Reduced SERP Benefit, Payable at Age 55
Equal to (H) x (I) = $ 1,501.16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ROUNDY'S,
INC. FORM 10-Q FOR THE QUARTER ENDING JULY 3, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-01-2000
<PERIOD-END> JUL-03-1999
<CASH> 78,174,400
<SECURITIES> 0
<RECEIVABLES> 84,762,800
<ALLOWANCES> 0
<INVENTORY> 159,415,000
<CURRENT-ASSETS> 331,306,800
<PP&E> 225,785,300
<DEPRECIATION> 109,444,400
<TOTAL-ASSETS> 478,103,000
<CURRENT-LIABILITIES> 261,624,000
<BONDS> 57,511,400
0
0
<COMMON> 1,383,000
<OTHER-SE> 131,780,700
<TOTAL-LIABILITY-AND-EQUITY> 478,103,000
<SALES> 1,317,527,200
<TOTAL-REVENUES> 1,319,876,400
<CGS> 1,190,259,500
<TOTAL-COSTS> 1,190,259,500
<OTHER-EXPENSES> 112,593,600
<LOSS-PROVISION> 803,300
<INTEREST-EXPENSE> 3,262,500
<INCOME-PRETAX> 12,957,500
<INCOME-TAX> 5,280,200
<INCOME-CONTINUING> 7,677,300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,677,300
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
