As Filed with the United States Securities and Exchange
Commission on
April 26, 2000
Registration No.333-33222
______________________________________________________________________
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
Amendment No. 1
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: (262) 953-7999
(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 therof, pursuant
to Item 11(a) (1) of this Form, check the following box.___
<PAGE>
CALCULATION OF REGISTRATION FEE
Title of each Amount to Proposed Proposed Amount of
class of be maximum maximum registration
securities to registered offering aggregate fee
be registered price per offering
unit price
- ------------- ---------- ---------- ----------- -------------
Class A 4,000 $129.95 $ 519,800 $137.23
(Voting) shares
Common Stock,
$1.25 par
value
- ---------------------------------------------------------------------
Class B (Non- 300,000 $129.95 $38,985,000 $10,292.04
voting) shares
Common Stock,
$1.25 par
value
- ---------------------------------------------------------------------
TOTAL 304,000 $129.95 $39,504,800 $10,429.27
shares
All of the securities offered hereby will be offered at a price
per share equal to the book value per share of Roundy's
outstanding common stock as of the end of the fiscal year prior
to the year of purchase, adjusted for subsequent stock dividends
and stock splits. The book value per share of Roundy's common
stock at January 1, 2000 was $129.95.
<PAGE>
PROSPECTUS DATED APRIL __, 2000
ROUNDY'S, INC.
23000 Roundy Drive
Pewaukee, Wisconsin 53072
4,000 Shares Class A (Voting) Common Stock
300,000 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 Proceeds. We will
common has voting rights on not pay any underwriting
all matters submitted to a discounts or commissions
vote of stockholders. Class relating to this offering,
B common has no voting rights nor will you have to pay any
other than those provided by such discounts or
law. commissions. We will receive
100% of the proceeds from
Offering Price. We are this offering.
offering Roundy's stock at a
price per share equal to the No Market. The Roundy's
book value per share of our stock we are offering is not
outstanding stock at the end listed or traded on any
of our last fiscal year prior securities exchange or
to your purchase, adjusted market. No market exists,
for any subsequent stock nor do we anticipate that any
dividends or splits. The market will develop, for our
book value per share of stock.
Roundy's stock at January 1,
2000, the end of our last
fiscal year, was $129.95.
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.
<PAGE>
TABLE OF CONTENTS
Cautionary Statement Regarding Forward-Looking Statements .. 3
Recent Developments ........................................ 4
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 ................................................ 19
Management ................................................. 25
Cooperative Status; Patronage Dividends .................... 26
Description Of Stock ....................................... 29
Exchange Of Class A Common For Class B Common .............. 30
Repurchase Of Shares ...................................... 31
Voting Trust ............................................... 33
Legal Matters .............................................. 35
Experts ................................................... 36
Indemnification ............................................ 36
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.
<PAGE>
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 333-33222. The SEC
file number under which we file our annual quarterly and current
reports is 002-94984. 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 1, 2000, our Current Report on Form
8-K filed on April 14, 2000 to report our acquisition of 17
retail grocery stores from Mega Marts, Inc. and NDC, Inc. on
March 31, 2000 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: (262) 953-7999.
<PAGE>
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.
<PAGE>
RECENT DEVELOPMENTS
On March 31, 2000, we completed the acquisition of: (i) all of
the outstanding stock of Mega Marts, Inc., which operated sixteen
retail grocery stores in Southeast Wisconsin, from the
shareholders of Mega Marts for a purchase price of approximately
$123.9 million, subject to post-closing adjustments; and (ii)
certain of the assets of NCD, Inc., consisting of a retail
grocery store known as the "Tri-City Pick `n Save" located in
Southeast Wisconsin, for a purchase price of approximately $11.2
million, subject to post-closing adjustments. The respective
post-closing adjustments are not expected to be material. We financed
this acquisition utilizing the proceeds of the Credit Agreement described
below, and issued approximately $39 million in promissory notes to
certain of the shareholders of Mega. We intend to continue to
operate the Mega business and the retail grocery store acquired
from NDC by consolidating these businesses into our operations.
On March 31, 2000, we entered into a Credit Agreement in the
maximum aggregate amount of $250,000,000 with various lenders.
The Credit Agreement provides for $170,000,000 of revolving loans
and $80,000,000 of term loans. On March 31, 2000 we drew
approximately $175.5 million from the revolving loans and the
term loans. Of this amount, approximately $15.0 million was used
to pay indebtedness of Mega, approximately $96.2 million was paid
to the shareholders of Mega and to NDC, Inc., approximately $63.0
million was used to retire certain of our long-term indebtedness
of the Company, and the remaining approximately $1.3 million was
used to pay other expenses, primarily transaction costs.
On February 2, 2000, we consummated the acquisition of
substantially all of the assets of Ultra Mart, Inc., an operator
of seven retail grocery stores in Southeast Wisconsin, which we
intend to consolidate into our existing business, for a purchase
price of approximately $37.7 million.
For additional information about the Mega Marts/NDC acquisition
and the credit agreement, you should refer to our report on Form
8-K which was filed on April 14, 2000 and is described under
"Where You Can Find More Information" on page 3.
<PAGE>
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. As of January 1, 2000, we own and
operate 23 retail warehouse food stores and service 822 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 "RECENT DEVELOPMENTS" on page 4 and "THE
COMPANY" beginning on page 19.
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 73%) 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 9,700 shares of Class A common
issued and outstanding, which are held by a total of 55
stockholder-customers who owned 97 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 33.
Class B Common. There are no provisions restricting who may own
Class B common. As of the date of this prospectus, there are
1,036,668 shares of Class B common issued and outstanding,
approximately 64% 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.
<PAGE>
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.
<PAGE>
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 31 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 22.
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 29.
<PAGE>
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
1999 1998 1997
(dollars in thousands)
Earnings Statement Data:
Net Sales and Service Fees $2,717,216 $2,576,222 $2,610,697
Earnings Before Patronage
Dividends and Income Taxes 36,066 26,022 25,206
Patronage Dividends 6,447 5,976 5,687
Net Earnings 17,609 11,898 11,204
Balance Sheet Data (at year-end):
Total Assets 497,325 462,412 440,310
Working Capital 67,937 84,743 84,074
Long-term Debt (less current 48,564 73,298 83,458
maturities)
Stockholders' Equity (1) 153,919 134,811 122,460
__________________________________
(1)Includes redeemable common stock. Also includes patronage
dividends payable in Class B common of $3,078, $4,060 and
$3,738 in 1999, 1998 and 1997, respectively.
For more information, see "SELECTED FINANCIAL INFORMATION" and
"INDEX TO FINANCIAL STATEMENTS" on pages 15 and F-1,
respectively. Also see "RECENT DEVELOPMENTS" on page 4 and the
information in our Form 8-K filed on April 14, 2000 to report our
acquisition of 17 retail grocery stores from Mega Marts, Inc. and
NDC, Inc. which is described under "WHERE YOU CAN FIND MORE
INFORMATION" on page 3.
<PAGE>
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 your
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 31 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 27.
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.
<PAGE>
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 33.
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 29.
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 STATUS; PATRONAGE DIVIDENDS-
Operation as a Cooperative" beginning on page 26.
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 STATUS; PATRONAGE DIVIDENDS - Payment of Patronage
Dividends" beginning on page 27.
<PAGE>
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.
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.
<PAGE>
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 provides 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 33.
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 "THE
COMPANY-Stockholder-Customers-Buying Deposit; Application of
Deposited Funds" on page 21, 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 "COOPERATIVE STATUS; PATRONAGE DIVIDENDS-Payment
of Patronage Dividends" on page 27.
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" beginning on page
30.
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 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.
<PAGE>
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 2000 with respect to
purchases from Roundy's during 1999, shares of Class B common
distributed in 2000 as patronage dividends will be valued at the
book value of outstanding shares determined as of the end of
fiscal 1999.
The book value of outstanding Roundy's stock (including both
Class A common and Class B common) at the end of fiscal 1999 was
$129.95 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 "COOPERATIVE STATUS;
PATRONAGE DIVIDENDS-Payment of Patronage Dividends" on page 27.
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.
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated
capitalization of Roundy's and our subsidiaries as of January 1, 2000:
At January 1, 2000
To Be
Outstanding
If All Stock
Offered
Outstanding is Sold (1)
SHORT-TERM INDEBTEDNESS:
Current maturities of long-term debt $ 24,734,500 $ 24,734,500
------------ -------------
Total short-term debt $ 24,734,500 $ 24,734,500
LONG-TERM INDEBTEDNESS:
Senior unsecured notes payable:
9.26%, due 2001 $ 2,500,000 $ 2,500,000
7.57% to 8.26%, due 2001 to 2008 5,100,000 5,100,000
6.94%, due 2001 to 2003 19,285,700 19,285,700
7.86%, due 2001 to 2006 21,428,500 21,428,500
Other long-term debt 249,400 249,400
------------ -------------
Total long-term debt $ 48,563,600 $ 48,563,600
============ =============
Redeemable Common Stock (2) $ 9,948,800 $ 9,948,800
STOCKHOLDERS' EQUITY:
Common Stock:
Voting (Class A), $1.25 par value, 60,000
shares authorized, 12,000 issued and
outstanding, 16,000 as adjusted (4) 15,000 20,000
Non-Voting (Class B), $1.25 par value,
2,400,000 shares authorized, 1,085,289
issued, 1,385,289 as adjusted (4) 1,356,600 1,731,600
------------ -------------
Total Common Stock 1,371,600 1,751,600
Patronage dividends payable in
common stock (3) 3,078,000 3,078,000
Additional paid-in capital 36,305,800 75,430,600
Reinvested earnings 104,346,400 104,346,400
------------ -------------
145,101,800 184,606,600
Less treasury stock, at cost (4) 1,131,200 1,131,200
------------ -------------
Total Stockholders' Equity $143,970,600 $ 183,475,400
============ =============
(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) As of January 1, 2000, 76,559 shares were subject to redemption.
(3) Over the past several years, we have issued shares of
Roundy's Class B common as a portion of our patronage dividends.
See "COOPERATIVE STATUS; PATRONAGE DIVIDENDS" beginning on page 26.
(4) Due to the acquisitions noted in "RECENT DEVELOPMENTS" on
page 4, 2,400 shares of Class A common were exchanged for Class B
common. In addition, as part of the Mega Marts, Inc. purchase,
132,330 shares of Class B common were purchased and hence, will
now be classified as treasury shares.
<PAGE>
SELECTED FINANCIAL INFORMATION
The selected financial information for the five-year period
ended January 1, 2000 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)
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net sales and service fees $2,717,216 $2,576,222 $2,610,697 $2,579,010 $2,488,196
Earnings before patronage dividends
and income taxes 36,066 26,022 25,206 23,466 20,251
Patronage dividends 6,447 5,976 5,687 5,568 5,129
Earnings before income taxes 29,619 20,046 19,519 17,898 15,122
Net earnings 17,609 11,898 11,204 10,267 9,022
Total assets 497,325 462,412 440,310 434,641 407,337
Long-term debt, less current maturities 48,564 73,298 83,458 93,615 78,850
Stockholders' equity(1) 153,919 134,811 122,460 109,945 100,033
Book value per share 129.95 114.80 104.35 94.30 85.15
Ratio of current assets to current liabilities 1.25:1 1.36:1 1.39:1 1.42:1 1.43:1
Ratio of long-term debt to stockholders' equity 0.32:1 0.54:1 0.68:1 0.85:1 0.79:1
(1) Includes redeemable common stock. Also includes patronage
dividends payable in Class B common of $3,078, $4,060, $3,738,
$3,779 and $3,405 for 1999, 1998, 1997, 1996 and 1995,respectively.
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
The final year of the millennium - 1999, proved to be a year of
challenges and opportunities for Roundy's. The challenges
included industry-wide consolidations, intense competition within
our marketing area from both retail chains and super-centers and
the avoidance of Y2K problems which would impact operations.
Within this year of trepidation, the Company achieved record
sales and earnings and also posted a record patronage dividend.
Yet, there are still opportunities. Specifically, the Company
continues to experience a growing demand for capital. This
demand is fueled by the many acquisition opportunities available
to us. In conjunction with our Strategic Plan, the Company
reacted positively to certain acquisition opportunities.
Moreover, the Board of Directors approved two acquisitions which
will make Roundy's a stronger retail player in the new
millennium. The acquisitions will not be completed until the end
of the first quarter of 2000. The Company will incur additional
long-term debt to fund the acquisitions.
Essential to the attainment of Roundy's strategic planning
goals is the continued availability of capital. As in the past,
a key element of our capital is Roundy's cash position. The
Company completed 1999 on a strong note with over $68 million in
cash at year-end. This is $3.7 million less than at the end of
1998, but $16.0 million greater than at the end of 1997.
Significant to the modest decline in the 1999 balance is the
increase in capital expenditures in 1999. Total capital
expenditures, net of insurance proceeds, were $10.9 million
greater than 1998 and $13.1 million greater than 1997. The
construction of a new freezer addition to the Westville warehouse
accounted for over $8.3 million of the increase. With the
current growth in the market, Management decided to movefrom the
antiquated South Bend freezer and build a freezer at the
Westville warehouse. This will enable the division to expand its
produce and meat offerings, as well as supply all frozen products
from the same facility. The Company financed the capital
expenditures through operating cash flow.
Other factors, which impacted the change in cash, included a
$9.6 million increase in accounts receivable and an $9.0 million
increase in accounts payable. Receivables are a function of
credit sales. Accounts receivable increased compared to the
prior year due to the record sales in 1999. The Company
continues to monitor its receivables closely and focus on quality
accounts. Moreover, Roundy's 1999 ratio of "accounts receivable
days outstanding" improved slightly to 8.5 average days
outstanding versus 8.6 average days outstanding for 1998 and 9.2
in 1997. Accounts payable are impacted by inventory growth and
turns. Management has continued to strive to improve average
inventory turns, thereby controlling the growth in inventory.
The major reason for the increase in year-end inventories and
payables was due to a build-up in wholesale inventories in
selected categories to offset potential product shortages because
of Y2K problems. An analysis was made of all key commodities and
planned inventory increases were made in each category to insure
that customers would have a continuous supply in the first three
weeks of 2000. Inventories and accounts payable balances
reflected more normal levels at the end of January 2000.
The Company believes that its cash flow from operations
together with other available sources of funds will be adequate
to meet its financing requirements. In the event, the Company
makes significant future capital expenditures or acquisitions, it
may raise funds through additional borrowings.
<PAGE>
As a result of its strong cash flow, the Company was able to
decrease its average outstanding debt. Average outstanding debt
for 1999 was $81.7 million versus $91.9 million for 1998 and
$102.1 million for 1997. The Company had a $60 million borrowing
line available during the year, but none was used in 1999. With
the positive trend of lower debt, Roundy's long-term debt to
equity ratio declined to 0.32:1 at the end of 1999 versus 0.54:1
in 1998 and 0.68:1 in 1997. The average interest rate applicable
to borrowings during 1999, 1998 and 1997 was 7.7%. On March 31,
2000 we restructured our long-term indebtedness under a new
credit agreement which also provided us with the funds we needed
to acquire substantially all the assets of Mega Marts, Inc. and
NDC, Inc. For more information see "RECENT DEVELOPMENTS" on page 4.
With improved management controls and positive cash flows, the
Company was able to invest excess funds in various interest
earning vehicles during 1999. Daily investments averaged $45.8
million in 1999 versus $41.9 million in 1998 and $26.7 million in
1997.
The Company's 1999 and 1998 capital structure is summarized
below (dollars in millions):
1999 1998
-------------- -------------
Long-term debt $ 48.6 24.0% $ 73.3 35.2%
Stockholders' equity (1) 153.9 76.0% 134.8 64.8%
-------------- -------------
Total $202.5 100.0% $208.1 100.0%
============== =============
(1) including redeemable common stock
<PAGE>
RESULTS OF OPERATIONS
NET SALES AND SERVICE FEES
Net sales and service fees for 1999 were $141 million greater
than 1998 and $107 million greater than 1997. The 5.5% increase
in 1999 sales and fees can be attributed to strong sales at
wholesale aided by the acquisition of seven new Corporate stores
and the replacement of a large portion of the business lost due
to a 1998 fire which destroyed the Evansville, Indiana warehouse.
The warehouse has been rebuilt and became fully operational in
January 1999, which enabled the Company to aggressively grow the
business. Further, the Company continued to evolve its "frequent
shopper card" which has served as a significant, positive factor
in helping to combat the growth of retail chains and super-
centers in Roundy's service territories. Finally, the potential
that Y2K problems would cause product shortages has contributed
to the sales increase for the year, with December sales attaining
record levels. Net sales and service fees for 1998 were off
approximately $34.5 million or 1.3% compared to 1997. 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.
GROSS PROFITS
Gross profits for the year were 9.8% versus 9.5% for 1998 and
9.5% for 1997. The modest increase in gross profits was due
mainly to the increase in retail stores owned by Roundy's. This
segment of the business has a significantly higher gross profit
level than wholesale. Retail sales represented 11.9% of total
Roundy's sales and service fees in 1999 compared to 11.0% in 1998
and 11.2% in 1997. Wholesale gross profit levels continued to
reflect the competitiveness of the industry remaining at 7.7% for
1999 versus 7.5% for 1998 and 7.7% for 1997. With the continued
growth of super-centers within Roundy's markets and the
consolidation of retail chains, opportunities for significant
increases in gross profits at the wholesale level are limited.
The Company continues to keep price increases at minimum levels
and has made a strategic decision to increase the number of
corporate owned retail stores. With the ongoing changes in the
industry and vendor funding being directed more and more to
retail, Roundy's long-term financial strength is in increasing
this segment of its business.
<PAGE>
OPERATING AND ADMINISTRATIVE EXPENSES
Total operating and administrative expenses increased in 1999
to 8.6% of net sales and service fees compared to 8.3% in 1998
and 8.4% in 1997. The 0.3% increase over 1999 is primarily
attributable to the growth in retail operations. In accordance
with the Company's Strategic Plan to grow its Corporate retail
operations, Roundy's acquired seven Corporate stores during 1999.
Retail operations have higher wage expense and operating cost as
a percent of net sales and service fees. Accordingly, total 1999
retail operating costs were 15.4% greater than 1998 and 12.6%
more than 1997. In contrast, wholesale operating costs remained
flat compared to 1998 and were 0.2% below 1997 levels. A key
element of Roundy's Strategic Plan is improving efficiencies and
eliminating costs from the systems. Specific programs include
standardizing all major systems and centralizing computer
operations. In conjunction with the efforts to identify and
rectify any potential Y2K problems, standardization efforts were
implemented and significant progress was achieved. A second
major undertaking was to increase sales in Roundy's warehouses
with the goal of improving customer service, improving throughput
and reducing costs through greater efficiency and reduced
overhead. Another major effort in 1999 was the construction of a
126,000 square foot freezer addition to the Westville warehouse
and the planned closing of the South Bend facility. A $1.7
million provision was made for the closedown of the South Bend
facility and the related costs associated with the closing. The
Westville warehouse, with the new addition, handles all
commodities except non-food products.
INTEREST EXPENSE
Interest expense in 1999 decreased $0.8 million from 1998 and
by $0.9 million from 1998 to 1997. This expense, as a percent to
net sales and service fees, decreased to 0.24% from 0.28% in 1998
and 0.31% in 1997. With the positive trend in sales, earnings
and cash flow, the Company did not have to utilize any of its
borrowing capacity and, in fact, reduced total debt by $10.2
million. Debt reductions in 1999 were comparable to 1998 and
1997 levels. With additional long-term debt necessary to fund
the acquisitions, interest expense will increase in 2000 and
future years.
<PAGE>
TAXES
The effective income tax rates for 1999, 1998 and 1997 were
40.5%, 40.7% and 42.6%, respectively. The improvement from 1997
to 1998 is due to the Company's efforts to reduce state and local
income taxes.
NET EARNINGS
Net earnings, as a percent of net sales and service fees,
attained a record level at 0.65% compared to 0.46% for 1998 and
0.43% for 1997. Several factors contributed to the increased
earnings including record sales, reduced debt, higher investment
income and the recording of $5.5 million gain which resulted from
the insurance settlement on the Evansville fire. However,
excluding this gain and adjusting for the provision for closing
the South Bend warehouse, earnings, as a percent of net sales and
service fees, would still reflect a record level of 0.51%. The
continued adherence to the fundamentals of the Company's
Strategic Plan - acquisitions, cost containment and standardized
systems continue to serve as the basis for the strong net
earnings growth.
OTHER MATTERS
In February 1998, the Company lost its Evansville Division
warehouse to a fire. Roundy's erected a new building on the same
site and the facility was in full operation by January 30, 1999.
The Company has been in negotiations with its insurance carrier
since the fire. Due to the extent of the fire, the total claim
is multi-phased including a building claim, an inventory claim,
equipment claim, a claim for the added costs to service customers
during the period the building was being reconstructed and the
business interruption element of the claim addressing lost
business and profits while the facility was being rebuilt.
In the fourth quarter of 1998, a settlement was reached on the
claim for inventory lost in the fire. In 1999, settlements were
also reached with the insurance carrier on the building and
equipment claims, which resulted in a gain of $5.5 million, which
is included in Other-net revenues.
The issues that still remained unsettled at year-end are
related to (1) the extra costs incurred to service the business
and (2) the business interruption aspect of the claim that
addresses the income lost due to the fire.
YEAR 2000
Many computer programs used only two digits to identify years.
These programs were designed without consideration for the effect
of the change in century, and if not corrected, could have failed
or created erroneous results at the year 2000. Essentially all
of the Company's information technology-based systems, as well as
many non-information-based systems, were potentially affected by
the Year 2000 issue.
In order to prepare for the Year 2000 issue, the Company
implemented the following remediation plan for technology-based
systems:
1. Identification of all applications and hardware with
potential Year 2000 issues.
2. For each item identified, perform an assessment to determine
an appropriate action plan and timetable for remediation of each
item.
3. Implementation of the specific action plan.
4. Test each application upon completion.
5. Place the new process into production and conduct system
integration testing.
The Company successfully implemented the above remediation plan
for all affected information technology-based systems and other
remediation plans related to non-Management Information Systems
before the turn of the century. Following the arrival of the
Year 2000, the Company has not experienced any problems. There
was no interruption in the Company's ability to deliver its
products and transact business with its suppliers and customers.
The Company continues to monitor its systems, suppliers and
products for any unanticipated issues that may not yet have
manifested.
The total cost of achieving Year 2000 compliance was approximately
$8.3 million.
<PAGE>
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 (262) 953-7999.
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, Minnesota, Pennsylvania, Arkansas, Tennessee
and West Virginia. At the end of fiscal 1999, we also owned and
operated 14 retail warehouse food stores under the names "Pick 'n
Save" or "Park & Save" and nine conventional food stores under
the names "Park & Shop," "Orchard Foods," "Village Market," 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 822
grocery stores. On February 2, 2000, we acquired an additional
seven retail grocery stores and on March 31, 2000 we acquired an
additional 17 retail grocery stores. For additional information
on these acquisitions, see "RECENT DEVELOPMENTS" on page 4.
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 1999.
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
$182,855,000, $173,339,000, and $179,032,000 of our sales during
fiscal 1999, 1998 and 1997, respectively.
We have historically operated on a cooperative basis with
respect to our wholesale food distribution business. Our
cooperative operations accounted for approximately 40%, 39% and
37% of the Company's consolidated net sales and service fees for
fiscal 1999, 1998 and 1997, respectively. The balance of our
sales were to independent grocers or through our corporate-owned
stores. At January 1, 2000, we had 58 stockholder-customers
actively engaged in our retail business, operating a total of 120
retail grocery stores. Our cooperative wholesale food business
is focused primarily in Wisconsin, where 117 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.
<PAGE>
Our primary marketing objective is to be the principal source
of supply to both our stockholder-customers and other independent
grocers. In 1999, we serviced 120 retail grocery stores operated
by our stockholder-customers, 702 grocery stores operated by non-
stockholders and 23 corporate-owned food stores. These stores
are located in 12 states.
Of our consolidated net sales and service fees in 1999,
$727,576,000 (26.8%) was attributable to our five largest
customers, with one customer, Mega Marts, Inc., accounting for
$330,686,800 (12.2%) of such sales. Approximately 643 stores
purchased less than $3,000,000 each from us in 1999. 107
customers owned more than one store, with one customer (Mega
Marts, Inc.) owning 17 retail food stores. On March 31, 2000, we
acquired these 17 retail grocery stores from Mega Marts, Inc.
For more information on this acquisition, see "RECENT
DEVELOPMENTS" on page 4.
We generally distribute our products by a fleet of 272 tractor
cabs and 664 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:
analysis of and recommendation on store facilities and equipment;
1. development of programs and objectives for establishing
efficient methods and procedures for receipt, handling,
processing, checkout and other operations;
2. informing customers on latest industry trends;
3. assisting and dealing with training needs of customers; and
4. 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.
<PAGE>
We render statements to our customers on a weekly basis to
coincide with regular delivery schedules. Our accounts of single
storeowners are considered delinquent if not paid on the
statement date. Accounts of multiple storeowners 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 ClearingHouse ("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
0.1% of sales. The Company's bad debt expense was $1,596,100,
$2,189,300, and $2,389,100 in 1999, 1998 and 1997, respectively.
Corporate-Owned Food Stores
We own and operate two types of corporate stores: high volume-
limited service food stores, which are 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. Conventional stores operated under the names "Park & Shop,"
"Orchard Foods," "Village Market," 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 1999 1998 1997
Warehouse Food Stores 14 13 14
Conventional Retail grocery stores 9 6 7
Sales (in thousands) $323,857 $284,128 $291,613
Employees
At January 1, 2000, we employed 1,140 full-time executive,
administrative and clerical employees, 1,517 warehouse and
processing employees and drivers, and 980 retail employees, as
well as 1,980 part-time employees. Substantially all of our
warehouse employees, drivers and retail employees are represented
by unions, with contracts expiring in 2000 through 2003. 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.
<PAGE>
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 Sentinel Consumer Analysis
Survey taken in the fall of 1999.
In competing for customers, emphasis is placed on high quality
and a wide assortment of products, 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.
<PAGE>
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" on page 31.
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.
<PAGE>
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 11.
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 "Stockholder-Customers" on page 21
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 11.
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 30.
<PAGE>
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 1, 2000
are summarized in the following table:
Inventory and Equipment Loans (1)
---------------------------------
Number of Loans 74
Original Amount $43,045,400
Outstanding Balance as of
January 1, 2000 $21,838,300
Range of Interest Rates Variable (2)
Range of Maturity Dates 2000-2011
(1) We have guaranteed customer bank loans and customer leases
amounting to $53,300 and $170,800, respectively at January 1,
2000. These amounts are not included in the table above.
(2) Variable rates based on our cost of borrowing.
<PAGE>
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 2000 to 2023. Aggregate lease rentals
received under this program were $23,312,300, $23,207,000 and
$21,249,900 in fiscal 1999, 1998 and 1997, respectively.
Real Estate
Our principal executive offices are located in Pewaukee,
Wisconsin on a 7-acre site, which we own. 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, 683,000 (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 384,000 (O)
Evansville, Indiana Frozen food, meat and 136,000 (O)
dairy products
Van Wert, Ohio Nonfood products 115,000 (L)
Muskegon, Michigan All product lines, 215,000 (O)
except produce
In addition to the above, as of January 1, 2000, the Company
operates 23 retail grocery stores ranging from 9,000 to 73,000
square feet. These facilities are primarily leased. As of the
date of this prospectus, the Company owns and operates 29 retail
grocery stores and on March 31, 2000 we acquired an additional 17
retail grocery stores. For additional information on these
acquisitions, see "RECENT DEVELOPMENTS" on page 4.
<PAGE>
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 1, 2000 consisted of 272 tractor cabs, 664 trailers and 5
straight delivery trucks. The fleet is primarily owned. In
addition, we own 26 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
statements.
<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 57 President and Chief Executive Officer since 1995;
Director since 1991 (term expires 2002)
Roger W. Alswager 51 Vice President of Real Estate since 1989
Londell J. Behm 49 Vice President of Advertising since 1987
Ralph D. Beketic 53 Vice President-Wholesale since 1996; President of Milwaukee
Division 1993-1995
David C. Busch 51 Vice President of Administration since 1993
Edward G. Kitz 46 Vice President, Secretary & Treasurer since 1995
Charles H. Kosmaler, Jr. 57 Vice President of Planning and Information Services since
1999; Vice President of Logistics and Planning 1993-1998
Debra A. Lawson 44 Vice President of Human Resources since 1997; Vice
President Administration Milwaukee Division 1994-1996
John E. Paterson 52 Vice President-Distribution since 1997; Vice President of
Operations-Milwaukee Division 1993-1996
Robert D. Ranus 59 Vice President and Chief Financial Officer since 1987;
Director since 1987 (term expires 2003)
Michael J. Schmitt 51 Vice President-Sales and Development since 1995
Marion H. Sullivan 53 Vice President of Marketing since 1989
Robert E. Bartels 62 Director since 1994 (term expires 2003); President and Chief
Executive Officer of Martin's Super Markets,Inc., South Bend,
Indiana
Charles R. Bonson 53 Director since 1994 (term expires 2003); President of Bonson's
Foods, Inc., Eagle River, Wisconsin
Robert S. Gold 57 Director since 1998 (term expires 2001); President and
stockholder of B.& H. Gold Corporation, Gold's Market,Inc.,
Gold's, Inc., and Gold's ofMequon, LLC, in Brown Deer,
Grafton, Milwaukee, and Mequon, Wisconsin
George C. Kaiser 67 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
Henry Karbiner, Jr. 59 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 50 Director since 1995 (term expires 2001); General Manager and
Treasurer of McAdams, Inc., Wales, Wisconsin
George E. Prescott 52 Director since 1999 (term expires 2002); President and Chief
Executive Officer of Prescott's Supermarkets, Inc., West Bend,
Wisconsin
Gary R. Sarner 53 Director since 1997 (term expires 2001); Chairman, Total
Logistic Control, LLC since 1996, President and Chief
Operating Officer, Christiana Companies, Inc. 1992 - 1997
</TABLE>
<PAGE>
Our directors are elected by Class A common stockholders 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 33.
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 to 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 29 and "VOTING
TRUST" beginning on page 33.
As of the date of this prospectus, all of our outstanding
Class A common is owned by our stockholder-customers who own 97
retail grocery stores serviced by Roundy's. Stockholder-
customers, who own approximately 64% 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
702 grocery stores as of January 1, 2000. 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.
<PAGE>
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.
<PAGE>
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 1, 2000 was $129.95 per
share. No patronage dividends may be paid for 2000 unless at
least $10.40 (8% of $129.95) per share is added to such book
value as of the close of fiscal 2000. Any increase in book value
over $10.40 that 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 1, 2000, we must retain earnings of
$12,069,900 in 2000 before patronage dividends may be paid in 2001.
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) are 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.
<PAGE>
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.
1999 1998 1997
Increase in book
value per share 13.2% 10.0% 10.7%
Minimum increase
required by By-Laws 8.0% 8.0% 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. During the last three fiscal years,
most shareholders were paid their Patronage Dividend 70% in stock
and 30% in cash.
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.
<PAGE>
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" on pages 29 and 33,
respectively.)
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:
1999 1998 1997
Total Dividend $6,446,900 $5,975,700 $5,687,000
Amount in Cash $3,403,500 $1,997,200 $1,890,100
Number of Shares 23,420 34,656 36,386
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.
<PAGE>
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.
<PAGE>
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. As of the
date of this prospectus, there are 9,700 shares of Class A common
issued and outstanding and 1,036,668 shares of Class B common
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 33.
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 27. 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 31.
<PAGE>
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 owed to 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.
<PAGE>
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 26.
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.
<PAGE>
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" below.
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 ceases 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.
<PAGE>
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, 1995 would have had his shares
repurchased as follows:
1. 160 shares (20%) on May 25, 1996 for $85.15 per share (book
value at the end of fiscal 1995),
2. 160 shares (20%) on May 25, 1997 for $94.30 per share (book
value at the end of fiscal 1996),
3. 160 shares (20%) on May 25, 1998 for $104.35 per share (book
value at the end of fiscal 1997),
4. 160 shares (20%) on May 25, 1999 for $114.80 per share (book
value at the end of fiscal 1998), and
5. 160 shares (20%) on May 25, 2000 for $129.95 per share (book
value at the end of fiscal 1999).
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.
<PAGE>
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 that fell during the
suspension period, regardless of the dates the repurchase
requests were received. Such suspended repurchases will be prior
to redemption's 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 30.
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.
<PAGE>
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 1999, we expect to
repurchase 26,586 shares of Class B common in 2000 at $129.95 per
share (book value at January 1, 2000), for a total repurchase
obligation of $3,454,900. In addition, based upon these requests
(assuming the stock redemption policy remains unchanged), we
presently expect to repurchase 17,324 shares in 2001, 15,960
shares in 2002, 12,143 shares in 2003, and 4,546 shares in 2004,
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 1, 2000, 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 2000 may change based upon receipt of additional
repurchase requests after January 1, 2000, or if we should
exercise our discretion to redeem stock other than on the terms
prescribed by the stock redemption policy, as discussed above.
<PAGE>
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).
<PAGE>
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.
<PAGE>
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.
<PAGE>
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" beginning on page 25;
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, Sun Prairie
and Madison, 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.
<PAGE>
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 1, 2000 and January 2, 1999 and for each
of the three years in the period ended January 1, 2000 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.
Ernst & Young LLP, independent auditors, have audited the
combined financial statements of Mega Marts, Inc./Tri City Pick
`n Save included in the Current Report on Form 8-K of Roundy's,
Inc. dated April 14, 2000, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the
registration statement. These financial statements are
incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and
auditing.
<PAGE>
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.
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Roundy's, Inc. and Subsidiaries Audited Financial Statements:
Page
----
Independent Auditors' Report ............................... F-2
Statements of Consolidated Earnings for each of the
three years in the period ended January 1, 2000 ........ F-3
Consolidated Balance Sheets at January 1, 2000 and
January 2, 1999 ........................................ F-4
Statements of Consolidated Stockholders' Equity for each
of the three years in the period ended January 1, 2000 . F-6
Statements of Consolidated Cash Flows for each of the three
years in the period ended January 1, 2000 ............... F-7
Notes to Financial Statements ............................... F-8
<PAGE>
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 1, 2000 and January 2, 1999 and
the related consolidated statements of earnings, stockholders' equity and
cash flows for each of the three years in the period ended January 1, 2000.
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 auditing standards generally
accepted in the United States of America. 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 1, 2000 and January 2, 1999, and the results of their operations
and their cash flows for each of the three years in the period ended
January 1, 2000 in conformity with accounting principles generally accepted
in the United States of America.
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
February 25, 2000
F-2
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CONSOLIDATED EARNINGS
For the Years Ended
January 1, 2000, January 2, 1999 and January 3, 1998
1999 1998 1997
-------------- -------------- -------------
<S> <C> <C> <C>
Revenues:
Net sales and service fees........... $2,717,216,400 $2,576,222,100 $2,610,696,700
Other - net ......................... 10,117,900 2,428,500 3,695,700
-------------- -------------- --------------
2,727,334,300 2,578,650,600 2,614,392,400
-------------- -------------- --------------
Costs and Expenses:
Cost of sales........................ 2,450,462,300 2,330,300,800 2,362,355,200
Operating and administrative ........ 234,302,800 215,034,300 218,610,500
Interest............................. 6,503,600 7,293,100 8,220,900
-------------- -------------- --------------
2,691,268,700 2,552,628,200 2,589,186,600
-------------- -------------- --------------
Earnings Before Patronage Dividends.. 36,065,600 26,022,400 25,205,800
Patronage Dividends ................. 6,446,900 5,975,700 5,687,000
-------------- -------------- --------------
Earnings Before Income Taxes ........ 29,618,700 20,046,700 19,518,800
-------------- -------------- --------------
Provision (Credit) for Income Taxes:
Current-Federal ................... 10,544,600 8,400,000 7,786,000
-State ..................... 2,407,700 1,539,000 1,722,300
Deferred .......................... (943,000) (1,790,000) (1,193,100)
-------------- -------------- --------------
12,009,300 8,149,000 8,315,200
-------------- -------------- --------------
Net Earnings ........................ $ 17,609,400 $ 11,897,700 $ 11,203,600
============== ============== ==============
See notes to consolidated financial statements.
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
As of January 1, 2000 and January 2, 1999
1999 1998
------------- ------------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents .................................. $ 68,385,800 $ 72,094,500
Notes and accounts receivable, less allowance for losses,
$5,509,800 and $6,361,600, respectively ................. 87,659,000 78,489,000
Merchandise inventories .................................... 166,514,000 159,743,100
Prepaid expenses ........................................... 5,362,000 5,347,000
Future income tax benefits ................................. 8,026,800 6,373,800
------------ ------------
Total current assets ............................... 335,947,600 322,047,400
Other Assets:
Notes receivable, less allowance for losses,
$7,137,000 and $6,015,000, respectively ................. 10,650,600 11,013,000
Goodwill and other assets .................................. 9,532,000 10,140,600
Other real estate .......................................... 5,705,000 4,081,300
Deferred income tax benefit ................................ 3,782,000 4,492,000
------------ ------------
Total other assets .................................. 29,669,600 29,726,900
------------ ------------
Property and Equipment - At Cost:
Land ....................................................... 6,017,500 5,640,500
Buildings .................................................. 87,899,000 75,843,500
Equipment .................................................. 136,621,600 120,581,900
Leasehold improvements ..................................... 13,872,700 12,526,400
------------ ------------
244,410,800 214,592,300
Less accumulated depreciation and amortization ............. 112,703,300 103,955,000
------------ ------------
Property and equipment-net ............................ 131,707,500 110,637,300
------------ ------------
$497,324,700 $462,411,600
============ ============
See notes to consolidated financial statements.
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
As of January 1, 2000 and January 2, 1999
1999 1998
------------- ------------
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities:
Current maturities of long-term debt ...................... $ 24,734,500 $ 10,159,700
Accounts payable .......................................... 174,893,000 165,801,200
Accrued expenses .......................................... 62,981,000 52,824,600
Income taxes .............................................. 5,402,600 4,418,600
------------ ------------
Total current liabilities ............................ 268,011,100 233,204,100
------------ ------------
Long-Term Debt, Less Current Maturities ...................... 48,563,600 73,298,100
Other Liabilities ............................................ 26,830,600 21,098,100
------------ ------------
Total liabilities .................................... 343,405,300 327,600,300
------------ ------------
Commitments and Contingencies (Note 10)
Redeemable Common Stock ...................................... 9,948,800 9,007,700
------------ ------------
Stockholders' Equity:
Common stock:
Voting (Class A) ........................................ 15,000 14,900
Non-voting (Class B) .................................... 1,356,600 1,327,300
------------ ------------
Total common stock ................................... 1,371,600 1,342,200
Patronage dividends payable in common stock ............... 3,078,000 4,060,000
Additional paid-in capital ................................ 36,305,800 31,582,600
Reinvested earnings ....................................... 104,346,400 89,950,000
------------ ------------
145,101,800 126,934,800
Less:
Treasury stock, at cost ................................ 1,131,200 1,131,200
------------ ------------
Total stockholders' equity ........................... 143,970,600 125,803,600
------------ ------------
$497,324,700 $462,411,600
============ ============
See notes to consolidated financial statements
</TABLE>
F-5
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JANUARY 1, 2000, JANUARY 2, 1999 AND JANUARY 3, 1998
Common Stock Patronage
---------------------------------------- Dividends Additional
Class A Class B Payable in Paid-in Reinvested
Shares Amount Shares Amount Common Stock Capital Earnings
---------------------------------------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 28, 1996 ................. 13,000 $16,300 1,060,180 $1,325,000 $ 3,779,000 $24,920,000 $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
Net earnings ............................ 17,609,400
Common stock issued ..................... 700 900 52,546 65,700 (4,060,000) 5,955,200
Common stock purchased .................. (600) (800) (6,743) (8,400) (426,000) (1,137,600)
Redeemable common stock ................. (22,388) (28,000) (806,000) (2,075,400)
Patronage dividends
payable in common stock 3,078,000
------- ------- --------- ---------- ----------- ----------- ------------
Balance, January 1, 2000 ................... 12,000 $15,000 1,085,289 $1,356,600 $ 3,078,000 $36,305,800 $104,346,400
======= ======= ========= ========== =========== =========== ============
Treasury Stock, January 1, 2000,
January 2, 1999 and January 3, 1998 ...... 13,285 $1,131,200
========= ==========
See notes to consolidated financial statements.
</TABLE>
F-6
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Years Ended January 1, 2000, January 2, 1999, and January 3, 1998
1999 1998 1997
------------- ------------- ------------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net Earnings .............................................. $ 17,609,400 $ 11,897,700 $ 11,203,600
Adjustments to reconcile net earnings to net
cash flows provided by operating activities:
Depreciation and amortization .......................... 18,823,400 18,782,300 17,132,300
Allowance for losses ................................... 1,596,100 2,189,300 2,389,100
Loss on sale of property and equipment ................. 426,000 2,527,300 612,900
Patronage dividends payable in common stock ............ 3,078,000 4,060,000 3,738,000
(Increase) decrease in operating assets net of
the effects of business acquisitions
and disposition:
Notes and accounts receivable .......................... (9,644,100) 6,899,000 8,975,000
Merchandise inventories ................................ (3,723,000) (8,398,300) 5,808,200
Prepaid expenses ....................................... 6,300 (129,100) (2,450,300)
Future income tax benefits ............................. (1,653,000) (146,000) 1,589,600
Other assets ........................................... (269,100) (433,900) (76,500)
Deferred income tax benefit ............................ 710,000 (1,644,000) (1,087,000)
Increase (decrease) in operating liabilities
net of the effects of business acquisitons
and disposition:
Accounts payable ....................................... 9,045,300 10,804,400 (4,036,600)
Accrued expenses ....................................... 10,009,400 6,877,200 6,092,900
Income taxes ........................................... 984,000 2,091,500 1,391,000
Other liabilities ...................................... 5,732,500 240,100 235,300
------------ ------------ ------------
Net cash flows provided by operating activities ........... 52,731,200 55,617,500 51,517,500
------------ ------------ ------------
Cash Flows From Investing Activities:
Capital expenditures - net of insurance proceeds .......... (35,868,500) (24,936,000) (22,726,700)
Proceeds from sale of property and equipment .............. 1,363,000 4,004,700 1,740,200
Payment for business acquisition net of cash acquired ..... (7,812,100) (4,586,300) (3,967,400)
Other real estate ......................................... (1,623,800) 3,071,200 (2,712,800)
(Increase) decrease in notes receivable ................... (759,600) 320,000 1,059,000
------------ ------------ ------------
Net cash flows used in investing activities ............... (44,701,000) (22,126,400) (26,607,700)
------------ ------------ ------------
Cash Flows From Financing Activities:
Reductions in debt ........................................ (10,159 700) (10,156,800) (10,225,800)
Proceeds from sale of common stock ........................ 1,961,800 1,487,100 1,043,100
Common stock purchased .................................... (3,541,000) (5,093,800) (3,702,500)
------------ ------------ ------------
Net cash flows used in financing activities ............... (11,738,900) (13,763,500) (12,885,200)
Net (Decrease) Increase in Cash and Cash Equivalents ......... (3,708,700) 19,727,600 12,024,600
Cash And Cash Equivalents, Beginning Of Year ................. 72,094,500 52,366,900 40,342,300
------------ ------------ ------------
Cash And Cash Equivalents, End Of Year ....................... $ 68,385,800 $ 72,094,500 $ 52,366,900
============ ============ ============
Cash Paid During The Year For:
Interest .................................................. $ 6,574,600 $ 7,487,600 $ 8,084,600
Income Taxes .............................................. 11,965,700 7,853,400 6,433,100
Supplemental Noncash Financing Activities-Patronage Dividends
Payable in Common Stock ................................... 3,078,000 4,060,000 3,738,000
See notes to consolidated financial statements.
</TABLE>
F-7
<PAGE>
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 1,
2000 and January 2, 1999 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.
Revenue recognition-Wholesale revenues are recognized at the time
product is shipped and retail revenues are recognized at the point of
sale.
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
1, 2000 and January 2, 1999 was $6,440,600 and $5,714,000, 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 1999, 1998 and 1997 for
the present value of these remaining future liabilities were not
significant.
Reclassifications-Certain reclassifications were made to prior year's
financial statements to conform with the current year financial
presentation.
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 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 on enacted tax laws and rates applicable to the
periods in which the differences are expected to affect taxable income.
Related Parties-During fiscal 1999, 1998 and 1997 the Company had
wholesale sales to related party retailers in the amounts of
$981,870,700, $918,547,800 and $827,749,000, respectively. In
addition, the Company had received sublease payments from related
party retailers of $11,819,900, $10,477,400 and $11,262,000 in
fiscal 1999, 1998 and 1997, respectively.
2. ACQUISITIONS
On April 12, 1999, the Company purchased a grocery retailer for
$5,682,500 in cash. On August 24, 1999, the Company purchased a
grocery retailer for $2,129,600 in cash. 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. 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 1999, 1998 and 1997 results of operations.
F-8
<PAGE>
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 the year 1997, 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 1, 2000,
January 2, 1999 and January 3, 1998 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 $4,050,700 and $6,357,000 at January 1, 2000 and January
2, 1999, 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:
1999 1998
Senior unsecured notes payable:
9.26%, due 2001 .................... $ 2,500,000 $ 5,000,000
7.57% to 8.26%, due 2001 to 2008 ... 5,100,000 17,300,000
6.94%, due 2001 to 2003 ............ 19,285,700 25,714,300
7.86%, due 2001 to 2006 ............ 21,428,500 25,000,000
Other long-term debt .................. 249,400 283,800
----------- -----------
Total .............................. $48,563,600 $73,298,100
=========== ===========
At January 1, 2000, $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 ($103,038,000 at January 1,2000) and limit
stock repurchases and total debt outstanding.
Repayment of principal on long-term debt outstanding is as follows:
2000 .................................... $ 24,734,500
2001 .................................... 13,738,000
2002 .................................... 11,242,000
2003 .................................... 11,246,400
2004 .................................... 4,122,700
Thereafter .............................. 8,214,500
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 cash, accounts and notes receivable, accounts payable,
accrued liabilities and long-term debt. The carrying amounts for cash,
accounts and notes receivable, accounts payable and accrued liabilities
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 $71,979,000 and $83,950,000 as of
January 1, 2000 and January 2,1999, respectively.
F-9
<PAGE>
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
$129.95, $114.80 and $104.35 for 1999, 1998 and 1997, 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 1, 2000 and January 2, 1999, 76,559 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. The Company expects
to repurchase shares of 26,586, 17,324, 15,960, 12,143 and 4,546 in
2000, 2001, 2002, 2003 and 2004, respectively.
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
Average
Options SARs Price Price
------- ------ --------------- --------
<S> <C> <C> <C> <C>
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, 19998 .................. 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
------ ------ ---------------
Outstanding, January 1, 2000 ................... 50,000 21,000 $53.10 -$104.35 67.96
====== ====== ===============
Excercisable at January , 2000 ................. 46,516 19,483 $53.10 -$104.35 65.91
====== ====== ===============
Available for grant after January 1, 2000 ...... 1,000 184
====== ======
</TABLE>
Options exercisable at January 1, 2000, January 2, 1999 and January
3, 1998 were 46,516, 43,966 and 39,880 with a weighted average price
of $65.91, $64.92 and $62.97, respectively.
The following table summarizes information concerning currently
outstanding and excercisable options:
<TABLE>
<CAPTION>
Stock Options Outstanding
-------------------------------------
Weighted
Average Weighted Weighted
Number Remaining Average Number Average
of Contractual Excercise of Excercise
Shares Life Price Shares Price
------ ----------- ---------- ------ ---------
<S> <C> <C> <C> <C> <C>
Range of Exercise Price
-----------------------
$50.00 - 65.00 24,500 2.3 $ 55.06 24,150 $ 55.01
$65.01 - 80.00 17,000 4.9 70.89 16,600 71.03
$80.01 - 95.00 4,300 7.3 94.30 4,300 94.30
$95.01 - 110.00 4,200 8.3 104.35 1,466 104.35
------ ------- ------ -------
50,000 $ 67.96 46,516 65.91
====== ======= ====== =======
</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 1999, 1998
and 1997. 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 1999,
1998 and 1997. 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 1999, 1998 and 1997 net earnings would have been less
than $80,000.
F-10
<PAGE>
8. EMPLOYEE BENEFIT PLANS
Substantially all non-union employees of the Company and employees
of its subsidiaries are covered by defined benefit pension plans.
Benefits are based on either years of service and the employee's
highest compensation during five of the most recent ten years of
employment or on stated amounts for each year of service. The
Company intends to annually contribute only the minimum contributions
required by applicable regulations.
The following tables, set forth pension obligations and plan
assets as of January 1, 2000 and January 2, 1999:
1999 1998
Change in benefit obligation: ------------ ------------
Benefit Obligation-Beginning of Year .... $ 52,579,100 $ 45,893,300
Service cost ............................ 3,099,300 2,811,400
Interest cost ........................... 3,604,300 3,272,400
Plan amendments ......................... 284,300
Acturial (gain) loss .................... (8,619,000) 2,282,200
Benefits paid ........................... (1,769,000) (1,680,200)
------------ ------------
Benefit Obligation-End of Year .......... $ 49,179,000 $ 52,579,100
============ ============
Change in plan assets:
Fair Value-Beginnig of Year ............. $ 42,521,600 $ 37,631,100
Actual return on plan assets ............ 6,887,900 3,247,100
Company contribution .................... 309,300 3,323,600
Benefits paid ........................... (1,769,000) (1,680,200)
------------ ------------
Fair Value-End of Year .................. $ 47,949,800 $ 42,521,600
============ ============
Funded status
As of year end .......................... $ (1,229,200) $(10,057,500)
Unrecognized cost:
Acturarial and investment (gains)losses, net (4,266,600) 7,295,700
Prior service cost ..................... 216,300 252,200
Transition asset ....................... (373,300) (547,300)
------------ ------------
Accrued benefit cost .................... $ (5,652,800) $ (3,056,900)
============ ============
The componets of pension cost are as folows:
<TABLE>
<CAPTION> 1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Benefits earned during the year ................. $ 3,099,300 $ 2,811,400 $ 2,238,700
Interest cost on projected benefit obligation ... 3,604,300 3,272,400 2,937,100
Expected return on plan assets .................. (3,771,100) (3,444,100) (2,993,000)
Net amortization and deferral
Unrecognized net loss .......................... 110,900 23,900
Unrecognized prior service cost ................ 35,900 35,900 35,900
Unrecognized net asset ......................... (174,100) (174,100) (174,100)
----------- ----------- -----------
Net pension cost ................................ $ 2,905,200 $ 2,525,400 $ 2,044,600
=========== =========== ===========
</TABLE>
The assumptions used in accounting were as follows:
1999 1998 1997
----- ----- -----
Discount Rate .............................. 8.00% 7.00% 7.25%
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%
The change in the discount rate in 1999 resulted in a $8,200,000
decrease in the projected benefit obligation in 1999 and is
expected to result in a decrease in the 2000 pension expense of
approximately $800,000.
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 $5,093,900, $4,655,000 and $4,530,300
in 1999, 1998 and 1997, 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 $1,251,500, $1,181,400
and $858,400 in 1999, 1998 and 1997, respectively.
F-11
<PAGE>
9. INCOME TAXES
Federal income tax at the statutory rate of 35% in 1999, 1998
and 1997 and income tax expense as reported are reconciled as
follows:
<TABLE>
<CAPTION> 1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Federal income tax at statutory rate ............. $10,366,500 $ 7,016,400 $ 6,831,600
State income taxes, net of federal tax benefits .. 1,565,000 1,000,300 1,119,500
Other-net ........................................ 77,800 132,300 364,100
----------- ----------- -----------
Income tax expense ............................... $12,009,300 $ 8,149,000 $ 8,315,200
=========== =========== ===========
</TABLE>
The approximate tax effects of temporary differences at January 1, 2000
and January 2, 1999 are as follows:
<TABLE>
<CAPTION>
1999 1998
-------------------------------------- -------------------------------------
Assets Liabilities Total Assets Liabilities Total
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Allowance for doubtful accounts............... $ 1,287,000 $ 1,287,000 $ 1,084,000 $ 1,084,000
Inventories .................................. $(1,209,200) (1,209,200) $(1,419,200) (1,419,200)
Employee benefits ............................ 6,914,000 6,914,000 5,764,000 5,764,000
Accrued expenses not currently deductible .... 1,035,000 1,035,000 945,000 945,000
----------- ----------- ----------- ----------- ----------- -----------
Current ...................................... 9,236,000 (1,209,200) 8,026,800 7,793,000 (1,419,200) 6,373,800
----------- ----------- ----------- ----------- ----------- -----------
Allowance for doubtful accounts .............. 2,431,000 2,431,000 2,431,000 2,431,000
Depreciation and amortization ................ (9,287,000) (9,287,000) (6,602,000) (6,602,000)
Employee benefits ............................ 5,837,000 5,837,000 5,067,000 5,067,000
Accrued expenses not currently deductible .... 5,033,000 5,033,000 3,828,000 3,828,000
Other ........................................ (232,000) (232,000) (232,000) (232,000)
----------- ----------- ----------- ----------- ----------- -----------
Noncurrent ................................... 13,301,000 (9,519,000) 3,782,000 11,326,000 (6,834,000) 4,492,000
----------- ----------- ----------- ----------- ----------- -----------
Total ........................................ $22,537,000 $(10,728,200) $11,808,800 $19,119,000 $(8,253,200) $10,865,800
=========== ============ =========== =========== =========== ===========
F-12
</TABLE>
<PAGE>
10.LEASE OBLIGATIONS AND CONTINGENT LIABILITIES
Rental payments and related subleasing rentals under operating
leases are as follows:
<TABLE>
<CAPTION>
RENTAL PAYMENTS
------------------------
SUBLEASING
MINIMUM CONTINGENT RENTALS
------------ ---------- ------------
<S> <C> <C> <C>
1997 ... $ 28,625,700 $ 406,600 $ 21,249,900
1998 ... 29,883,200 414,300 23,207,000
1999 ... 30,083,100 445,900 23,312,300
</TABLE>
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 1, 2000:
2000 ............... $ 30,486,000
2001 ............... 28,597,000
2002 ............... 27,810,600
2003 ............... 26,606,900
2004 ............... 25,921,600
Thereafter ......... 162,955,900
------------
$302,378,000
============
Total minimum rentals to be received in the future under non-
cancelable subleases as of January 1, 2000 are $228,599,100.
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. Settlements have been reached on the
inventory, building and equipment. Discussions are in process with
the insurance carrier relating to the business interruption losses
incurred.
Through January 1, 2000, cash advances aggregating $15.3 million
were received from the insurance carrier relative to (1) the cost
of the inventory destroyed in the fire ($4.1 million), (2) the cost
of the destroyed building and equipment ($8.3 million) and (3)
certain costs of demolishing the building and removing debris from
the site, transportation costs and a partial advance on the
business interruption losses incured ($2.9 million). During
fiscal 1999 the Company recorded a $5.5 million gain. This amount
is reflected in Other-net revenues in the Company's Consolidated
Statements of Earnings.
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.
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
<PAGE>
13. SEGMENT REPORTING
The Company and its subsidiaries sell and distribute food and
nonfood products that are typically found in supermarkets
primarily located in the Midwest. The Company's wholesale
distribution segment sell to both corporately and independently
owned retail food stores, while the retail segment sells directly
to the consumer.
During fiscal 1999, 1998 and 1997 the Company had one
customer which accounted for 12.2%, 11.4% and 10.4%, respectively,
of the Company's net sales and service fees.
Gross profit represents net sales, less cost of sales.
Eliminations represent the activity between wholesale and
Company owned retail stores. Inter-segment revenues are recorded
at amounts consistent with those charged to independent retail
stores.
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>
1999 1998 1997
--------------- --------------- --------------
<S> <C> <C> <C>
NET SALES AND SERVICE FEES
Wholesale ............................... $ 2,610,159,300 $ 2,512,268,000 $ 2,503,067,600
Retail .................................. 323,857,300 284,127,500 291,612,600
Eliminations ............................ (216,800,200) (220,173,400) (183,983,500)
--------------- --------------- ---------------
Total ................................. $ 2,717,216,400 $ 2,576,222,100 $ 2,610,696,700
=============== =============== ===============
GROSS PROFIT
Wholesale ............................... $ 199,829,500 $ 188,767,200 $ 191,931,500
Retail .................................. 70,048,900 60,132,300 59,048,700
Eliminations ............................ (3,124,300) (2,978,200) (2,638,700)
--------------- --------------- ---------------
Total ................................. $ 266,754,100 $ 245,921,300 $ 248,341,500
=============== =============== ===============
IDENTIFIABLE ASSETS
Wholesale ............................... $ 319,419,500 $ 304,322,200 $ 296,886,900
Retail .................................. 62,525,700 54,856,500 59,645,800
Eliminations ............................ 115,379,500 103,232,900 83,777,100
--------------- --------------- ---------------
Total ................................. $ 497,324,700 $ 462,411,600 $ 440,309,800
=============== =============== ===============
DEPRECIATION AND AMORTIZATION
Wholesale ............................... $ 7,432,200 $ 8,311,100 $ 7,393,000
Retail .................................. 4,961,400 4,296,800 4,070,700
Eliminations ............................ 6,429,800 6,174,400 5,668,600
--------------- --------------- ---------------
Total ................................. $ 18,823,400 $ 18,782,300 $ 17,132,300
=============== =============== ===============
CAPITAL EXPENDITURES
Wholesale ............................... $ 17,846,700 $ 12,942,400 $ 6,266,000
Retail .................................. 3,365,200 3,353,400 5,565,700
Eliminations ............................ 14,656,600 8,640,200 10,895,000
--------------- --------------- ---------------
Total ................................. $ 35,868,500 $ 24,936,000 $ 22,726,700
=============== =============== ===============
</TABLE>
14. SUBSEQUENT EVENTS
On February 2, 2000, the Company purchased seven grocery
retail stores for approximately $37 million. In addition, on
October 25, 1999 the Company entered into a letter of intent to
purchase 17 grocery retail stores.
F-14
<PAGE>
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: $___________________
<PAGE>
Agreement Accepted:
Roundy's, Inc.
By:________________________________ Date:_____________________________
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.
<PAGE>
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.
<PAGE>
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 1,050
Over $200,000 _____ 1,000 1,250 1,500
Payment beginning (nearest 15th day of month following down payment)
Approved:_____________________________________________
Retail Counselor, Roundy's, Inc.
Accepted:_____________________________________________
Sales Manager, Roundy's, Inc.
<PAGE>
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 cor
poration, 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.
<PAGE>
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.
<PAGE>
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 condi
tions 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.
<PAGE>
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.
<PAGE>
1.09 Adjustments. For all purposes hereof, in the event of a
stock split or similar capital change (excluding regular stock
issuances associated with the Corporation's patronage dividends),
equitable adjustment will be made to the number of shares to be
repurchased and the repurchase price.
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.
<PAGE>
(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.
(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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
(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 obligated 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.
<PAGE>
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
<PAGE>
Buying Deposit over the number of shares of Stock that 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 the
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.
<PAGE>
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.
(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
increase 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).
<PAGE>
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.
(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.
<PAGE>
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.
2.1 Asset Purchase Agreement by and between the Registrant and
Ultra Mart, Inc. dated December 23, 1999, incorporated herein by
reference to Exhibit 2.1 of the Registrant's Annual Report on
Form 10-K for fiscal year ended January 1, 2000, filed with the
Commission on March 21, 2000, Commission File No.
33-57505.
2.2 Stock Purchase Agreement dated March 31, 2000, by and among
Roundy's, Inc. and the record and beneficial owners of all of
the issued and outstanding shares of capital stock of Mega
Marts, Inc. incorporated herein by reference to Exhibit 2.2 of
Registrant's Form 8-K dated April 14, 2000 filed with the
Commission on April 14, 2000, Commission File No. 002-94984.
2.3 Asset Purchase Agreement dated March 31, 2000, by and among
Roundy's, Inc., NDC, Inc. and Mega Marts, Inc. incorporated
herein by reference to Exhibit 2.3 of Registrant's Form 8-K
dated April 14, 2000, filed with the Commission on April 14,
2000, Commission File No. 002-94984.
<PAGE>
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 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).
4.3 Form of Subscription Agreement
FILED HEREWITH (included as Exhibit A to the Prospectus, which
forms a part of this Registration Statement).
4.4 Form of Buying Deposit Agreement
FILED HEREWITH (included as Exhibit B to the Prospectus,
which forms a part of this Registration Statement).
4.5 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).
4.6 $170,000,000 Revolving Loans, $80,000,000 Term Loans Credit
Agreement among Roundy's, Inc., The Lenders, Bank One, Wisconsin, As
Agent, Harris Trust and Savings Bank and National City Bank as Co-
Syndication Agents, and Banc One Capital Markets, Inc. as Lead
Arranger and Sole Book Runner, dated as of March 31, 2000
incorporated herein by reference to Exhibit 4.6 of Registrant's Form
8-K dated April 14, 2000, filed with the Commission on April 14,
2000, Commission File No. 002-94984.
5.1 Opinion of Whyte Hirschboeck Dudek S.C. as to legality of
issuance of securities. PREVIOUSLY FILED.
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.
<PAGE>
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, 2001 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 1, 2000, filed with the Commission on March 21,
2000, 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.
<PAGE>
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.
10.9 Roundy's, Inc. Supplemental Employee Retirement Plan for certain
executive officers including Lestina, Ranus, Beketic and
Sullivan, incorporated herein by reference to Exhibit 10.9 of
Registrant's Form 10-Q for the quarterly period ended July 3,
1999, filed with the Commission on August 9, 1999, Commission
No. 33-57505.
10.10 Asset Purchase Agreement by and between the Registrant and
Ultra Mart, Inc. dated December 23, 1999, incorporated herein by
reference to Exhibit 2.1 to the Registrant's Annual Report on Form 10-
K for fiscal year ended January 1, 2000, filed with the Commission on
March 21, 2000, Commission File
No. 002-94984.
10.11 Employment Contract between the Resitrant and Gary L. Fryda
dated March 21, 2000, incorporated herein by reference to
Exhibit 10.11 of registrant's Form 8-K dated April 14, 2000,
filed with the Commission on April 14, 2000, Commission File No.
002-94984.
23.1 Consent of Deloitte & Touche LLP.
FILED HEREWITH.
23.2 Consent of Ernst & Young LLP
FILED HEREWITH.
24.1 Powers of Attorney of Certain Officers and Directors of
Registrant
PREVIOUSLY FILED.
27.1 Financial Data Schedule
PREVIOUSLY FILED.
<PAGE>
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.
<PAGE>
(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.
(b) 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) 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) 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.
<PAGE>
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 Amendment No. 1 to its Registration Statement to
be signed on its behalf by the undersigned, thereunto duly
authorized, in the town of Pewaukee, State of Wisconsin, on April
26, 2000.
ROUNDY'S, INC.
* ROBERT D. RANUS
By _______________
Robert D. Ranus
Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed 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
<PAGE>
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
*Signature is affixed as of April 26, 2000.
**By: ROBERT D. RANUS
Robert D. Ranus, Attorney-in-fact
<PAGE>
ROUNDY'S, INC.
FORM S-2
REGISTRATION STATEMENT
UNDER THE SECUTITIES ACT OF 1933
INDEX TO EXHIBITS
Exhibit Desccription and Incorporation by Reference
- ------- -------------------------------------------
2.1 Asset Purchase Agreement by and between the Registrant and
Ultra Mart, Inc. dated December 23, 1999, incorporated herein by
reference to Exhibit 2.1 of the Registrant's Annual Report on
Form 10-K for fiscal year ended January 1, 2000, filed with the
Commission on March 21, 2000, Commission File No.
33-57505.
2.2 Stock Purchase Agreement dated March 31, 2000, by and among
Roundy's, Inc. and the record and beneficial owners of all of
the issued and outstanding shares of capital stock of Mega
Marts, Inc. incorporated herein by reference to Exhibit 2.2 of
Registrant's Form 8-K dated April 14, 2000 filed with the
Commission on April 14, 2000, Commission File No. 002-94984.
2.3 Asset Purchase Agreement dated March 31, 2000, by and among
Roundy's, Inc., NDC, Inc. and Mega Marts, Inc. incorporated
herein by reference to Exhibit 2.3 of Registrant's Form 8-K
dated April 14, 2000, filed with the Commission on April 14,
2000, Commission File No. 002-94984.
<PAGE>
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 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).
4.3 Form of Subscription Agreement
FILED HEREWITH (included as Exhibit A to the Prospectus, which
forms a part of this Registration Statement).
4.4 Form of Buying Deposit Agreement
FILED HEREWITH (included as Exhibit B to the Prospectus,
which forms a part of this Registration Statement).
4.5 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).
4.6 $170,000,000 Revolving Loans, $80,000,000 Term Loans Credit
Agreement among Roundy's, Inc., The Lenders, Bank One, Wisconsin, As
Agent, Harris Trust and Savings Bank and National City Bank as Co-
Syndication Agents, and Banc One Capital Markets, Inc. as Lead
Arranger and Sole Book Runner, dated as of March 31, 2000
incorporated herein by reference to Exhibit 4.6 of Registrant's Form
8-K dated April 14, 2000, filed with the Commission on April 14,
2000, Commission File No. 002-94984.
5.1 Opinion of Whyte Hirschboeck Dudek S.C. as to legality of
issuance of securities. PREVIOUSLY FILED.
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.
<PAGE>
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, 2001 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 1, 2000, filed with the Commission on March 21,
2000, 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.
<PAGE>
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.
10.9 Roundy's, Inc. Supplemental Employee Retirement Plan for certain
executive officers including Lestina, Ranus, Beketic and
Sullivan, incorporated herein by reference to Exhibit 10.9 of
Registrant's Form 10-Q for the quarterly period ended July 3,
1999, filed with the Commission on August 9, 1999, Commission
No. 33-57505.
10.10 Asset Purchase Agreement by and between the Registrant and
Ultra Mart, Inc. dated December 23, 1999, incorporated herein by
reference to Exhibit 2.1 to the Registrant's Annual Report on Form 10-
K for fiscal year ended January 1, 2000, filed with the Commission on
March 21, 2000, Commission File
No. 002-94984.
10.11 Employment Contract between the Resitrant and Gary L. Fryda
dated March 21, 2000, incorporated herein by reference to
Exhibit 10.11 of registrant's Form 8-K dated April 14, 2000,
filed with the Commission on April 14, 2000, Commission File No.
002-94984.
23.1 Consent of Deloitte & Touche LLP.
FILED HEREWITH.
23.2 Consent of Ernst & Young LLP
FILED HEREWITH.
24.1 Powers of Attorney of Certain Officers and Directors of
Registrant
PREVIOUSLY FILED.
27.1 Financial Data Schedule
PREVIOUSLY FILED.
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-33222 of Roundy's, Inc. on Form S-2 of our
reports dated February 25, 2000, included and incorporated by reference in
the Annual Report on Form 10-K of Roundy's, Inc. for the year ended
January 1, 2000, and to the use of our report dated February 25, 2000,
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 25, 2000
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Amendment No. 1 to Form S-2 No. 333-33222)
and related Prospectus of Roundy's, Inc. for the registration of 304,000
shares of its common stock and to the incorporation by reference therein
of our report dated February 18, 2000 (except Note 9, as to which the date
is March 31, 2000), with respect to the combined financial statements of
Mega Marts, Inc./Tri City Pick 'n Save (not presented separately in the
Registration Statement) which report appears in the Current Report on
Form 8-K of Roundy's, Inc. dated April 14, 2000.
ERNST & YOUNG LLP
Ernst & Young LLP
Milwaukee, WI
April 24, 2000
