<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JULY 2, 1994
------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM N/A
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COMMISSION FILE NUMBER 1-6068
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RINI-REGO SUPERMARKETS, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
OHIO 34-0222970
- - - --------------------------------------- ---------------------------------
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
5300 RICHMOND ROAD, BEDFORD HEIGHTS, OHIO 44146
- - - ----------------------------------------- --------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (216) 292-7000
-------------------------
--------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
9.75% SUBORDINATED DEBENTUES DUE
DECEMBER 30, 2001 CINCINNATI STOCK EXCHANGE
------------------------------------ -------------------------
(TITLE OF EACH CLASS) (NAME OF EACH EXCHANGE
ON WHICH REGISTERED)
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
6.5% CONVERTIBLE SUBORDINATED DEBENTURES DUE JUNE 1, 1994
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(TITLE OF CLASS)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL
REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
----- -----
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO
ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED,
TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K. [X]
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THE TOTAL MARKET VALUE OF REGISTRANT'S COMMON STOCK, WITHOUT PAR
VALUE, HELD BY PERSONS WHO ARE NOT AFFILIATES OF REGISTRANT WAS $263.63.*
THE REGISTRANT HAD 3,536,577 SHARES OF COMMON STOCK, WITHOUT PAR
VALUE, ISSUED AND OUTSTANDING ON SEPTEMBER 16, 1994.
________________________________
* This value assumes that the Common Stock, without par value has the
same market value as the Class A Common Stock, $.01 par value of
Riser Foods, Inc. of $7-1/8 per share.
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PART I
ITEM 1. BUSINESS
Rini-Rego Supermakets, Inc ("RRS" or the "Company") was incorporated
under the laws of the State of Ohio on May 25, 1908. The Company and its
subsidiaries are engaged in the distribution of groceries and related items.
All references to RRS or the Company include RRS and its consolidated
subsidiaries.
Retail Supermarket Operations
- - - -----------------------------
As of July 2, 1994 the Company operated 42 stores in the greater
Cleveland area, 40 of which operate under the "Rini-Rego Stop-N-Shop" format,
one as an "Apple's Supermarket" and one as a "Jax Deep Discounts and
Closeouts".
The Company's merchandising strategy is to offer a broad selection of
quality products at competitive prices with an emphasis on superior customer
service, quality and convenience. The Company sells most nationally known
brands of merchandise, regional brands and a variety of private label products.
The private label products are generally sold at prices lower than those of
nationally known products.
The Company-owned retail stores offer a large selection of food items,
including dry groceries, meat, dairy, produce and frozen foods, as well as a
number of non-food items such as greeting cards and health and beauty care
items. Many of the Company's stores also contain specialty departments such as
delicatessens, in-store bakeries, and certain locations offer "fresh to go"
prepared foods, service meat, service seafood, floral and general merchandise
departments. Services including, video tape rental, pharmacies, banking and
debit and credit card payment options are also available in certain locations.
During the past fiscal year, the Company introduced its "Marketplace"
format with the opening of three new or expanded supermarket locations. The
Company's Marketplace stores are larger than the Company's conventional stores,
ranging in size from approximately 60,000 to 70,000 square feet, and feature
updated decor packages and fixturing with broader selections of traditional
merchandise and additional emphasis on fresh, high quality perishables,
prepared food items and a variety of service departments such as one-hour photo
processing and full service in-store banking. The Company is currently in the
process of converting two of its conventional Rini-Rego Stop-N-Shop stores to
the Marketplace format.
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Advertising and promotion are important factors in the Company's
merchandising strategy. The Company's stores affiliated with the Association
of Stop-N-Shop Supermarkets, an association of independent grocery retailers
established as a cooperative advertising and purchasing organization
("Stop-N-Shop Association"), advertise primarily through joint advertisements.
The Stop-N-Shop Association advertises in newspapers, circulars, and television
and radio advertising comparable to the other supermarket companies which
operate in the northeast Ohio market area. This advertising generally features
high demand products at competitive prices.
The Company acquired two supermarket locations in May 1994 and one
supermarket location in June 1994 from an unaffiliated company. Two of these
locations are currently operated by the Company and a sale is pending to a
wholesale customer for one location. In connection with the opening of these
two larger stores, (82,000 and 75,000 square feet) the Company closed three
smaller stores as part of the Company's long range retail restructuring plan
which, in general, involves the closing of certain underperforming smaller
outdated retail stores and replacing them with fewer larger stores operated by
the Company or its wholesale customers.
Wholesale Operations
- - - --------------------
The Company operates one of the largest wholesale grocery distribution
operations in the Midwest doing business as "Seaway". The Company supplies
national brand, regional brand and private label products to Company-owned
stores, other independently-owned retail grocery chains and independent grocers
in northeastern and central Ohio and western Pennsylvania.
The Company is continually in the process of expanding its wholesale
customer base by upgrading its available product lines to include a wider
assortment of grocery, frozen foods, dairy, meat, produce and bakery items.
The Company offers its wholesale customers a wide variety of operational
support services which include advertising, promotion, marketing and
merchandising services, retail operations counseling, and technical and
information systems support. In addition, the Company assists wholesale
customers in the upgrading and/or enlargement of their stores by providing
inventory and equipment financing, store layout, equipment planning and design,
and engineering and construction services.
The Company utilizes an on-line computerized buying and inventory
control system for the purchase and sale of its inventory. The Company
purchases the majority of its products from large, national manufacturers of
consumer foods and grocery-related products and the remainder of its products
from several other suppliers. The Company is also a member of several
purchasing cooperatives which provide the Company with enhanced purchasing
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opportunities and assistance with the development of its private label program.
In August 1993, the Company purchased from an unaffiliated company
certain inventory, equipment and a warehouse facility which it now uses in the
operation of its own health and beauty care/general merchandise ("HBC/GM")
distribution facility. This facility supplies the Company-owned retail stores,
other independently-owned retail grocery chains, independent grocers and a mass
merchandising chain.
The Company also operates the Eagle Ice Cream Company, which
manufactures branded ice cream and distributes purchased ice cream and novelty
products to Company-owned retail stores, other independently-owned retail
grocery chains, independent stores and a national food service distribution
company.
Consistent with the industry practices of other food distribution
retailers and wholesalers, the Company maintains inventory levels at its
distribution centers and retail locations at levels which minimize out of stock
products for its customers. The Company permits the return of damaged or
defective products from customers.
Competition
- - - -----------
The supermarket industry is highly competitive. During the past
several years, competition in the northeast Ohio market area has been extremely
intense due in part to a stagnant or declining consumer population and the
entry of a number of significant new competitors. The Company estimates that
it is one of the largest retailers, in terms of grocery sales, in the northeast
Ohio market area.
Company-owned retail stores principally compete with regional
supermarket chains and voluntary supermarket associations. The Company also
competes with warehouse/wholesale clubs, convenience stores, deep discount drug
stores and general merchandise stores that also sell grocery products. The
principal areas of competition pertain to price, selection and quality of
perishables and other food products, customer service and store location.
In addition to competition from two national "price-cutting"
competitors, which operate superstores containing grocery departments and
conventional supermarkets in the northeast Ohio market, the Company may
encounter competition from a regional company which has announced plans to
develop superstores containing grocery departments in the area. These
companies compete with the Company-owned stores at the retail level and the
Company's wholesale customers on the wholesale level.
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Since demographic trends reflect a shift in consumer population from
those heavy-industry based regions of the U.S., like northeastern Ohio, to
service oriented and sun-belt regions, the Company must continually emphasize
customer service and value to maintain its market share and compensate for the
lack of population growth in the Company's market area.
The wholesale food distribution industry is also highly competitive in
the market area served by the Company. Management believes that the principal
competitive factors include price, breadth of product line and the availability
of support services to its wholesale customers. The Company competes directly
with regional and national wholesalers.
Corporate Background
- - - --------------------
On June 2, 1988, the Company's common and preferred shareholders
approved a Plan and Agreement of Merger dated as of April 7, 1988 providing for
the merger of Cleveland Food Sub, Inc., a wholly owned subsidiary of Riser
Foods, Inc. ("Riser"), with and into the Company (then known as Fisher Foods,
Inc. ("Fisher")), wherein the Company became the surviving corporation and a
subsidiary of Riser (the "Merger"). Simultaneously with the Merger, Riser also
became the parent company of Rini Holding Company ("Rini"), Rego Supermarkets,
Inc. ("Rego"), and American Seaway Foods, Inc. and two of its affiliated
partnerships ("Seaway"), through the exchange of Riser stock for the stock of
Fisher, Rini, Rego and Seaway, and a merger which was effective June 8, 1988
(the "Effective Date").
On June 8, 1988, the Company's Common Stock, without par value
("Common Stock") ceased trading on the New York Stock Exchange. Each share of
Fisher Common Stock issued and outstanding at the Effective Date was exchanged
for one share of Riser Class A Common Stock, $.01 par value, and each share of
Fisher Preferred Stock, without par value, was exchanged for one share of Riser
Series A Cumulative Convertible Preferred Stock, $100 par value. Following the
Effective Date, the Company consolidated the wholesale operations of Seaway and
Fisher into one operating unit and consolidated its retail operations through
the merger of Rini and Rego into Fisher and changed Fisher's name to Rini-Rego
Supermarkets, Inc.
In connection with the Company's sale of certain assets of its food
service division in May 1992, the Company purchased for $9,000,000 a portion of
the former Seaway warehouse complex which the Company had leased from Seaway
Development Company ("Seaway Development"), an Ohio general partnership whose
partners were shareholders of Seaway prior to the Combination. Simultaneously
with the purchase of this complex, the Company resold this property along with
certain assets of the Company's food service division for $11,750,000 to Sysco
Food Services of Cleveland, Inc.
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Employees
- - - ---------
As of July 2, 1994, the Company employed approximately 5,000 persons,
on both a full and part-time basis. The majority of the Company's work force
is unionized and are members of either the United Food and Commercial Workers
Union, Local No. 880 (retail) ("Local 880") or the International Brotherhood of
Teamsters, Local No. 507 (wholesale) ("Local 507"). The Company's contract
with Local 880, which is negotiated through the Cleveland Food Industry
Committee whose members include other members of the Stop-N-Shop Association
and the Company's primary competitors, First National Supermarkets, Inc. and
Heinen's, is in effect until September 8, 1996. A contract between the Company
and Local 507 which expired on April 1, 1994 has been extended indefinitely
during the pendency of contract renegotiations. This contract can be terminated
by Local 507 upon seven days' notice. Wholesale operations have not been
negatively impacted by this situation.
ITEM 2. PROPERTIES
The Company owns a warehouse and office facility in Bedford Heights,
Ohio containing approximately 850,000 square feet which serves as the Company's
corporate headquarters and principal distribution center. The Company also
owns the following properties: a warehouse, office facility and garage in
Maple Heights, Ohio containing approximately 356,000 square feet, approximately
349,000 square feet of which is used in its HBC/GM operations and approximately
7,000 square feet is subleased to an unaffiliated company; a warehouse and
office facility in Cuyahoga Heights, Ohio containing approximately 187,000
square feet of which approximately 140,000 square feet is leased to others and
the remainder used in its wholesale operations and an ice cream plant in
Bedford, Ohio containing approximately 39,000 square feet. A warehouse
facility owned by the Company in Cleveland, Ohio containing approximately
68,200 square feet is currently leased by an unaffiliated party which has
notified the Company that it intends to exercise its option to purchase such
facility in fiscal 1995. The Company leases approximately 305,000 square feet
of a warehouse facility in Bedford Heights, Ohio, 245,000 square feet of which
is subleased to unaffiliated parties.
Five retail store properties are owned by the Company. Most of the
Company's leased properties are under long-term leases of varying terms, the
majority of which obligate the Company to pay certain increases in property
taxes and insurance and to pay additional rent based on a percentage of sales
at that particular location. As of July 2, 1994, the aggregate minimum annual
rentals of all operating and capital leases with initial noncancellable terms
of more than one year were approximately $18,635,000.
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ITEM 3. LEGAL PROCEEDINGS
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Market Information
- - - ------------------
The Company's Common Stock ceased trading on the New York Stock
Exchange on June 8, 1988. As such, the Company's Common Stock has no market
value.
Shareholders
- - - ------------
As of August 25, 1994 there were 2 shareholders of record of the
Company's Common Stock.
Dividends
- - - ---------
It is the Company's current policy to retain earnings of the Company
in order to fund capital expenditures, which have primarily been used to expand
or remodel its existing retail store locations. The Company has not paid any
dividends on its Common Stock in the last two fiscal years. The payment of
dividends is prohibited by the Company's credit facility if the Company does
not meet certain financial and other covenants contained therein and limits the
amount of common stock dividends to $2,424,000, $2,828,000 and $3,232,000
during the fiscal years ending in 1995, 1996 and 1997, respectively.
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<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
(in millions, except per share data, locations & ratios)
<CAPTION>
7-2-94 7-3-93 6-27-92 6-29-91 6-30-90
(52 Weeks) (53 Weeks) (52 Weeks) (52 Weeks) (52 Weeks)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Operations
- - - ----------
Net sales $ 1,121.6 $ 1,108.2 $ 979.3 $ 1,022.0 $ 1,054.5
Net income before
extraordinary
item and cumulative
effect of change in
accounting principle 1.5 6.2 8.1 9.7 5.6
Extraordinary item:
Utilization of net
operating loss
carryforwards - .3 - - 2.7
Net income before
cumulative effect of
change in accounting
principle 1.5 6.5 8.1 9.7 8.3
Cumulative effect of
change in accounting
principle:
Accounting
for income taxes 6.9 - - - -
Net income 8.4 6.5 8.1 9.7 8.3
Per share data:
Net income from
continuing operations .18 .75 .99 1.20 .68
Extraordinary item - .03 - - .34
Cumulative effect of
change in accounting
principle .85 - - - -
---------- ---------- ---------- ---------- ----------
Net income $ 1.03 $ .78 $ .99 $ 1.20 $ 1.02
========== ========== ========== ========== ==========
Dividends per common
share - - - - -
Retail locations - avg. 44 48 51 51 51
Financial Position
- - - ------------------
Working capital $ 43.0 $ 24.3 $ 24.2 $ 30.1 $ 26.3
Property, equipment &
capital leases, net 108.5 101.1 91.0 79.6 77.9
Total assets 257.5 233.4 204.8 200.6 196.7
Long-term obligations
Debt 71.3 56.3 51.9 53.1 58.8
Capital leases 12.4 10.6 10.7 10.9 11.8
Liabilities-to-equity
ratio 3.0 3.1 3.1 3.8 5.2
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
<TABLE>
RESULTS OF OPERATIONS
The following table sets forth items from the Company's Consolidated
Statements of Income as a percentage of net sales:
<CAPTION>
1994 1993 1992
(52 Weeks) (53 Weeks) (52 Weeks)
-------- -------- --------
<S> <C> <C> <C>
Net sales 100.00 100.00 100.00
Cost of goods sold 80.73 80.47 78.31
-------- -------- --------
Gross profit 19.27 19.53 21.69
SG&A 17.35 17.60 19.54
Restructuring charge 1.07 .45 .10
-------- -------- --------
Operating income .85 1.48 2.05
Interest expense, net .63 .57 .65
-------- -------- --------
Income before taxes .22 .91 1.40
Provision for income taxes .08 .35 .57
-------- -------- --------
Net income before extraordinary
item and accounting change .14 .56 .83
======== ======== ========
</TABLE>
The Company's results of operations for the past three fiscal years are
indicative of the pressures that many food distributors face under the current
economic climate. The food distribution industry has encountered little or no
inflation over the past three years while operating costs, particularly labor
and occupancy, have contractually risen. This, coupled with increased
competition from non-traditional sources, has squeezed overall industry
operating margins.
The Company's primary market area, northeast and central Ohio and
western Pennsylvania, has seen new non-union competitors enter the marketplace
which has negatively impacted both Company-owned retail store sales and sales
to independently-owned retail stores. The Company has been able to more than
offset sales declines attributed to competition with additional sales gained as
a result of the acquisition of a new health and beauty care/general merchandise
(HBC/GM) distribution facility and the expansion of its wholesale distribution
territory.
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Net Sales
- - - ---------
Net sales increased 1.2% to $1.122 billion in 1994, 13.2% to $1.108
billion in 1993 and decreased 4.2% to $.979 billion in 1992. Sales in 1993
included an extra week of sales giving that year two Fourth of July sell-weeks.
The Company has embarked on programs to enhance its overall sales. These
programs include consolidation and modernization of Company-owned retail
distribution points and expansion of sales to independently-owned retail
stores. The following details the number of Company-owned retail stores over
the last three years:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Open at beginning of year 45 51 50
Opened 2 1 2
Closed (5) (7) (1)
------ ------ ------
Open at end of year 42 45 51
====== ====== ======
</TABLE>
Adjusted for the 53rd week of sales in 1993, sales to
independently-owned retail stores rose 13.9% in 1994, 40.3% in 1993 and
declined 3.1% in 1992. Sales declines in 1992 were attributed to the general
economic climate in the Company's primary market area. Sales increases in 1993
were primarily attributed to new customers gained as a result of a major
competitor closing its northeast Ohio distribution center in the spring of
1992. This offset the loss of sales attributed to the Company's closing of its
food service distribution center, also in the spring of 1992. Sales increases
in 1994 were primarily due to new customers and expanded product lines
resulting from the Company's acquisition of an HBC/GM distribution facility
from its former HBC/GM supplier.
The Company is continuing to seek new wholesale customers, many of whom
are outside existing distribution channels, to expand its distribution
territory. The Company also seeks to increase sales to existing wholesale
customers by increasing perishable and HBC/GM sales penetration. Concurrent
with the acquisition of the HBC/GM distribution facility, the Company began
servicing approximately 150 Hills Department Stores throughout the eastern
third of the United States.
Total sales in Company-owned retail stores have declined in each of the
last three years because of same-store sales declines and less units in
operation in each year. Adjusted for the 53rd week of sales in 1993, total
sales in Company-owned retail stores declined 5.4% in 1994, 5.3% in 1993 and
4.8% in 1992. During that same period, same-store sales also declined; .39% in
1994, 2.6% in
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1993 and 4.7% in 1992. Same-store sales declines in Company owned retail
stores are primarily attributed to increased competition, particularly
non-union and non-traditional grocery retailers. Contributing to the Company's
same-store sales declines is an overall lack of inflation related to food
products, with certain categories experiencing deflation.
Programs to remodel and remerchandise Company-owned retail stores have
been successful at increasing same-store sales in these locations and such
programs are continuing. The Company plans to have a core group of 35 to 40
new or newly remodeled Company-owned retail stores by the end of fiscal 1997.
Gross Profit
- - - ------------
Gross profit, as a percentage of sales, declined in each of the last
three years: 21.69% in 1992, 19.53% in 1993 and 19.27% in 1994. These
decreases reflect the Company's shift in sales mix from sales in Company-owned
retail stores to sales to independently-owned retail stores. Sales to
independently-owned retail stores carry a lower gross profit percentage than
sales in Company-owned retail stores. The percentage of Company sales
generated by sales to independently-owned retail stores has grown from 35.3% in
1992, to 44.7% in 1993 and 49.4% in 1994.
The Company has been able to maintain both retail and wholesale gross
profit percentages despite recent competitive pressures. During the third
quarter of 1994, the Company's primary retail competitor initiated a price
reduction program targeted at certain retail sales categories. Although this
strategy was targeted principally at warehouse clubs, discount and drug stores,
it has impacted the Company's retail gross profits. The impact of this pricing
strategy was to lower overall retail gross profits within the northeast Ohio
market.
The Company has been able to mitigate the impact of these factors on its
gross profits through remerchandising Company-owned retail stores and improved
buying opportunities resulting from its increased wholesale customer base. The
Company's provision for Last-in, First-out (LIFO) inventories was as follows
over the last three years: income of $486,000, in 1994 and expense of $211,000
and $988,000, in 1993 and 1992, respectively. This decrease in the Company's
LIFO provision is due to lack of inflation and the lowering of certain LIFO
inventory levels.
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Selling, General and Administrative (SG&A) Expenses
- - - ---------------------------------------------------
SG&A expenses, as a percentage of sales, also declined in each of the
last three years: 19.54% in 1992, 17.60% in 1993 and 17.35% in 1994. These
decreases again reflect the shift in sales mix to independent retail customers.
While providing lower gross profits, these sales also require lower SG&A
expenses. Additionally, the Company-owned retail stores which were closed
between years operated at relatively higher SG&A percentages and their
disposition benefited the Company's overall SG&A percentage. These trends
offset the impact of increased labor and occupancy costs in the Company's
operating stores.
Restructuring Charge
- - - --------------------
The Company has recorded charges in the last three years reflecting
costs associated with the Company's long range strategic plans to restructure
its Company-owned retail store operations. These plans included the
disposition of non-core stores, increased capital expenditures to expand and/or
modernize core stores (Rini-Rego Stop-N-Shop) and the consolidation of certain
Company owned retail store locations in larger retail facilities.
In 1994, the Company recorded a $12 million restructuring charge to
account for its store consolidation plan. This charge included a $4 million
non-cash charge to write down net assets to their net realizable value and $8
million charge for future cash expenditures, principally occupancy costs net of
expected sublease income related to the closing of five stores in fiscal 1994
and plans to close nine additional Company-owned retail stores over the next
three to four years. This reflected the Company's plan to close and
consolidate Company-owned retail stores replacing them with new or expanded
Company-owned retail stores or new or remodeled stores to be operated by
independently-owned wholesale customers. The plan will replace approximately
456,000 square feet of small, outdated retail locations with 431,000 square
feet of new, modernized facilities. The Company's plan is to operate
approximately 35 to 40 expanded or newly remodeled Company-owned retail stores
by the end of fiscal 1997 which is expected to result in a limited reduction of
overall employee levels.
The Company also acquired two grocery store locations in May 1994 from a
competitor which was exiting the Cleveland market. These locations (82,000 and
75,000 square feet) met the Company's long range strategic plan of operating
larger stores. The stores were converted to Rini-Rego Stop-N-Shop stores and
replaced three small, outdated Rini-Rego Stop-N-Shop stores closed in
conjunction with this acquisition. Additionally, the Company also closed a
small, outdated Company-owned retail store which was replaced by a new, larger
store operated by an independently-owned wholesale customer and one other
non-Rini-Rego store.
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<PAGE> 14
The $5 million restructuring charge recorded in 1993 reflected the
Company's plan to dispose of other non-core store formats. The 1993 charge
included a $1.8 million non-cash charge to write down net assets to their net
realizable value and a $3.8 million charge for future cash expenditures,
principally occupancy costs net of expected sublease income and pension
withdrawal liabilities. The Company decided to close its remaining five Carl's
stores in the Akron-Canton area along with a former Carl's location. The
Company also declined to renew its lease on a Food Centre location. The
Company was able to sell four of the Akron-Canton locations to
independently-owned wholesale customers who now operate the locations under the
Apple's name. Overall employee levels were reduced as a result of the
Company's decision to exit the Akron-Canton market.
The 1992 restructuring charge reflected the costs, primarily expected
future cash expenditures for occupancy costs, associated with the closing of
one of the Company's former Carl's locations.
Taken as a whole, the Company's restructuring charges reflect the
Company's overall plan to restructure its Company-owned retail stores focusing
on its core-store format. This restructuring included the disposition of
non-core stores and expansion and consolidation of its Rini-Rego stores. The
Company does not currently anticipate any future restructuring charges.
Interest Expense, Net
- - - ---------------------
Interest expense, net, increased $646,000 to $7.0 million in 1994 and
$82,000 to $6.4 million in 1993 after declining $1.6 million to $6.3 million in
1992. The 1992 decline was primarily attributed to lower debt levels due to
scheduled debt repayments and a reduction in the bank's prime rate. Increases
in 1994 and 1993 are attributed to planned increased borrowings required to
fund the Company's capital expenditure programs and fluctuations in the bank's
prime rate. The bank's prime rate at the end of each of the last four years
was as follows: 1991-8.50%, 1992-6.00%, 1993-6.00% and 1994-7.25%. The
Company earned .25% interest rate reductions in 1993 and 1992. The Company's
current borrowing rate under its bank credit facility is prime plus .5%
Income Taxes
- - - ------------
The Company provided taxes at an effective tax rate of 37.0% in 1994,
38.3% in 1993 and 40.9% in 1992. The lowering of the Company's effective tax
rate represents a lower provision for state income taxes associated with the
Company's lower book income. The Company accounts for the franchise tax
portion of the Company's state income tax provision as an operating expense.
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<PAGE> 15
Accounting Change
- - - -----------------
The Company currently accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" (SFAS No. 109). This statement requires that the liability method of
accounting for income taxes be used rather than the deferred method previously
used. The Company adopted the provision of SFAS No. 109 in 1994. The Company
elected not to restate prior year's financial statements and recorded the
cumulative effect of the accounting change. As a result, the Company has
recorded a one-time income item of $6.9 million to reflect the cumulative
effect of the change in accounting for income taxes. The one-time income item
is principally the result of benefiting the expected utilization of tax net
operating loss carryforwards (NOL) and the adjustment of deferred tax balances
to reflect changes in statutory rates. See Note 4 of the Notes to Consolidated
Financial Statements for a further discussion.
Extraordinary Item
- - - ------------------
The Company recorded an extraordinary income item of $253,000 in 1993
benefiting a portion of its pre-acquisition NOL. In prior years, utilization
of its pre-acquisition NOL was used to reduce the values assigned to
non-current assets in purchase accounting. In 1993, a portion of the
pre-acquisition NOL was used to write-off the remaining values assigned to
non-current assets in purchase accounting with the remainder benefited as an
extraordinary item. The amount of utilization of NOL was $627,000 in 1994,
$736,000 in 1993 and $1,541,000 in 1992. See Note 4 of the Notes to
Consolidated Financial Statements for a further discussion.
CAPITAL RESOURCES AND LIQUIDITY
The Company's primary source of capital has traditionally come from
internally generated funds. Greater working capital requirements associated
with higher levels of capital expenditures, the Company's HBC/GM acquisition
and new wholesale customer financing increased the Company's utilization of its
bank credit facilities during 1994.
Operating activities generated $13.6 million of cash, compared to $16.5
million in 1993 and $26.1 million in 1992. This decrease is attributed to
lower earnings between years coupled with increased working capital
requirements. Net income of $8.6 million contained a non-cash credit related
to the adoption of SFAS No. 109 of $6.9 million and included non-cash charges
for depreciation and amortization of $14.8 million and a restructuring charge
of $12 million. Significant balance sheet changes included decreases in
accounts payable of $1.6 million and increases in accounts and notes receivable
of $6.7 million and FIFO inventories of $1.3 million.
14
<PAGE> 16
The food distribution industry requires a significant investment in
receivables and inventories to meet customer needs. Increased levels of
inventory were required to support the new HBC/GM distribution facility and
forward buy opportunities. Additional wholesale customer financing was also
made available to support the acquisition by two independently-owned wholesale
customers of four former Company-owned retail stores in the Akron-Canton area.
Increased retail store size associated with Company programs to remodel and
expand existing retail locations also increased working capital requirements.
Working capital, exclusive of deferred income taxes, increased from
$24.3 million at the end of 1993 to $36.4 million at the end of 1994. The
Company's ratio of current assets to current liabilities, exclusive of deferred
income taxes, increased from 1.26:1 at the end of 1993 to 1.43:1 at the end of
1994. These increases reflect the increased working capital demands noted
above.
The Company's ratio of liabilities to equity decreased from 3.14:1 at
the end of 1993 to 2.98:1 at the end of 1994. This ratio was favorably
impacted by the Company's adoption of SFAS No. 109.
The Company utilized $27.1 million of 1994 cash flow for capital
expenditures. This amount is comparable to 1993 and 1992 levels of capital
expenditures and reflect Company programs to enhance its retail core-store
format ($22.3 million), upgrade its data processing systems and equipment ($1.4
million), acquire a warehouse facility and improve distribution equipment ($3.4
million)
Retail capital expenditures were made to acquire, modernize and expand
retail locations. At the end of 1994, the Company operated 42 retail locations
compared to 45 retail locations at the same time last year. During 1994, the
Company acquired three new retail locations, of which sale is pending on one
store to a wholesale customer, and closed five other Company-owned stores. The
stores which were closed continue the Company's plans to focus on its
core-store format.
The level of capital expenditures for 1995 is expected to be slightly
higher than the 1994 level. The Company plans to expand or remodel six
Company-owned retail stores during 1995. Additionally, the Company is
required, pursuant to the terms of its leases, to purchase its Aurora Road
warehouse facility and Cash-N-Carry branch in June 1995. The Company believes
that cash flow from operations and the unused portion of the bank credit
facilities will supply adequate funds for planned capital expenditures, normal
ongoing business activities, and debt principal repayments. Available unused
borrowing capacity under the Company's bank credit facility was approximately
$10.1 million at the end of 1994.
15
<PAGE> 17
IMPACT OF INFLATION
Inflation increases the Company's major costs: inventory and labor.
Because of the high velocity of inventory turnover in the food distribution
industry and the Company's use of the LIFO valuation method for a majority of
its inventory, the impact of inflation is normally reflected very quickly in
results of operations. The impact of inflation on cost of sales has been
relatively insignificant in recent years. Experience indicates that highly
competitive market conditions may prevent the Company from fully recovering
inflation-driven costs through retail pricing alone.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements of the Company are set forth in Item
14 of this Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
16
<PAGE> 18
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a description of the directors and executive officers
of the Company:
CHARLES A. RINI, SR., 56, has served as President of the Company since
February 4, 1994 and as a Director of the Company since July 16, 1988. From
July 16, 1988 until February 4, 1994, Mr. Rini served as Secretary of the
Company. Mr. Rini is also the President, Chief Operating Officer and a
Director of Riser.
ANTHONY C. REGO, 53, has served as Vice President and Secretary of the
Company since February 4, 1994 and as a Director of the Company since July 16,
1988. From July 16, 1988 until February 4, 1994, Mr. Rego served as President
of the Company. Mr. Rego is also Chairman of the Board of Directors and Chief
Executive Officer to Riser.
RONALD W. OCASEK, 48, has served as Chief Financial Officer and
Treasurer of the Company since June, 1989. From September, 1988 through May,
1989 he served as Vice President-Financial Operations of Riser. Mr. Ocasek is
also a Senior Vice President, Chief Financial Officer, Treasurer and a Director
of Riser.
ITEM 11. EXECUTIVE COMPENSATION
For the fiscal year ended July 2, 1994, none of the Company's executive
officers or directors were compensated by RRS. As a result, pursuant to Rule
402(a)(6) promulgated under the Securities Exchange Act of 1934, the summary
compensation table, option/SAR grants and exercises tables, long term incentive
plans table and defined benefit or actuarial plan disclosure are not included
in this report. The Company's executive officers and directors are paid by
Riser in their capacities as Riser executives.
17
<PAGE> 19
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth the number of shares and percentage of
shares of RRS Common Stock owned by persons beneficially owning more than five
percent and the shares owned by the directors and officers as a group, as of
September 16, 1994.
<TABLE>
<CAPTION>
Percentage of
Name and Address Number of Shares Shares
---------------- ---------------- ------
<S> <C> <C>
Riser Foods, Inc. 3,536,540 99.99%
5300 Richmond Road
Bedford Heights, OH 44146
Directors and Officers
as a group (3 persons) -0- -0-
</TABLE>
The following table sets forth certain information, as of September 16,
1994, regarding beneficial ownership of Riser's Class A Common Stock ("Class A
Common Stock") and Class B Common Stock owned by each director and officer of
RRS:
<TABLE>
<CAPTION>
Number of Percentage Number of Percentage
Class A of Class A Class B of Class B
Name of Beneficial Owner Shares Shares Shares Shares
- - - ------------------------ --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Anthony C. Rego(1) 187,212 2.2% 36,583 3.8%
Charles A. Rini, Sr. (2) 199,657 2.3% 264,495 27.7%
Ronald W. Ocasek (3) 11,000 .1% 0 0%
Directors and Officers
as a group (3 persons) 397,869 4.6% 301,078 31.5%
<F/N>
_________________________________
(1)Includes 100 shares of Class A Common Stock owned by Mr. Rego's wife,
64,497 shares of Class A Common Stock owned by his children and assumes the
exercise of options to purchase 9,000 shares of Class A Common Stock at
$7.31 per share beginning July 28, 1994.
(2)Includes 173,558 shares of Class A Common Stock owned by 11 trusts of
which Mr. Rini has sole power as trustee to direct the voting and
disposition of such shares, 3,599 shares of Class A Common Stock owned by
Mr. Rini's wife and assumes the exercise of options to purchase 9,000
shares of Class A Common Stock at $7.31 per share beginning July 28, 1994.
Business address is Riser Foods, Inc., 5300 Richmond Road, Bedford Heights,
Ohio 44146.
(3)Assumes the exercise of options to purchase 5,000 shares of Class A
Common Stock at $10.31 per share beginning October 4, 1993 and the exercise
of options to purchase 6,000 shares of Class A Common Stock at $7.31 per
share beginning July 28, 1994.
</TABLE>
18
<PAGE> 20
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since the Effective Date, the Company has continued to lease from Seaway
Development a warehouse on Aurora Road and its Cash-n-Carry facility on
Woodland Avenue upon lease terms which were amended in April 1992 reducing the
term of the leases to end on July 14, 1995 and granting the Company the right
to purchase and Seaway Development the right to put to the Company these
properties. Monthly base rental is $58,477.88 and $6,608.79 for the Aurora
Road and Woodland Avenue properties, respectively. Payments under such leases,
on an annual basis, total $781,040. The Company believes the terms and
conditions of the leases from Seaway Development reflect current market rental
rates and are at least as favorable to the Company as could be obtained from
persons not related to the Company. Seaway Development has notified the
Company of its intent to put these buildings to the Company pursuant to the
lease terms for each property in the current fiscal year.
Since the Effective Date, the Company has leased five retail supermarket
locations from Rini Realty Company ("Rini Realty"), an Ohio corporation which
is owned by affiliates of RRS, which include Charles A. Rini, Sr., a Director
and President of RRS and a Director, President and Chief Operating Officer of
Riser, Anthony Rini, a Director of Riser, Charles A. Rini, a Director of
Riser and Charles A. Rini, Jr., a Director of Riser. Since the Effective Date,
the Company has also leased two retail supermarket locations from Rego Realty
Company ("Rego Realty Company"), an Ohio limited partnership, which is owned by
affiliates of RRS and Riser, including Anthony C. Rego, the Vice President and
Secretary of RRS and the Chairman and Chief Executive Officer of Riser, Thomas
A. Rego, Senior Vice President and a Director of Riser, Joseph E. Crimaldi,
Senior Vice President, Secretary and a Director of Riser and Charles A. Rego,
Senior Vice President and a Director of Riser. The Company's management
believes that the terms and provisions of such leases reflect terms and
conditions which are customary in the retail grocery industry and are at least
as favorable to RRS as could be obtained from persons unrelated to RRS. Each
of the leases provides for a base rent plus additional percentage rent based on
the lessee's gross sales from such location and allows for an adjustment in the
base rent every five years. Each lease provides that the tenant will pay real
estate taxes, assessments, common area maintenance charges, insurance charges
and utility expenses. During the fiscal year ended July 2, 1994, the Company
paid Rini Realty and Rego Realty annual fixed rent of $1,344,091 and $399,384,
respectively.
19
<PAGE> 21
As of September 24, 1994 the Company had accounts and notes receivable
of approximately $3,146,000 due from other members of the Stop-N-Shop
Association. The Company has a 69% ownership and 38% voting interest in the
Stop-N-Shop Association. The accounts and notes receivable are primarily
related to arms length purchases of grocery related products and gift
certificates from other members of the Stop-N-Shop Association.
During the fiscal year ended July 2, 1994, the Company engaged Kohrman
Jackson & Krantz as legal counsel. S. Lee Kohrman, a former director of the
Company and director of Riser, is a partner in such law firm. In addition,
Kohrman Jackson & Krantz serves as legal counsel to Riser and its subsidiaries.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(A) LIST OF DOCUMENTS FILED AS PART OF THIS REPORT:
<TABLE>
<CAPTION>
1. Financial Statements Page
--------------------
<S> <C> <C>
Report of Independent Public Accountants 25
Consolidated Balance Sheets as of July 2, 1994
and July 3, 1993 26
Consolidated Statements of Income for the
three fiscal years ended July 2, 1994 28
Consolidated Statements of Stockholders' Equity
for the three fiscal years ended July 2, 1994 30
Consolidated Statements of Cash Flows for the
three fiscal years ended July 2, 1994 31
Notes to Consolidated Financial Statements 33
</TABLE>
2. Financial Statement Schedules
-----------------------------
Financial Statement Schedules of the Company and its
subsidiaries as required at the appropriate dates above are
contained in the Notes to Financial Statements herein at the
indicated locations.
20
<PAGE> 22
All other Financial Statement Schedules to the Consolidated
Financial Statements required by Article 12 of Regulation S-X are not
required under the related instruction or are inapplicable and therefore
have been omitted.
<TABLE>
<CAPTION>
<S> <C> <C>
Schedule II- Amounts Receivable from
Related Parties and
Underwriters, Promoters
and Employees other than
Related Parties 50
Schedule V- Property, Plant and
Equipment 51
Schedule VI- Accumulated Depreciation,
Depletion, and Amortization
of Property, Plant and
Equipment 52
Schedule VIII- Valuation and Qualifying
Accounts 53
</TABLE>
<TABLE>
<CAPTION>
3. Exhibits
--------
<S>> <C>
3.1 Articles of Incorporation (1)
3.2 Code of Regulations (1)
4.2 6-1/2% Convertible Subordinated Debentures due June 1, 1994
of Rini-Rego Supermarkets, Inc. ("Rini-Rego") (2)
4.3 9-3/4% Subordinated Debentures due December 30, 2001 of
Rini-Rego (2)
4.4 Trust Indenture between American Seaway Foods, Inc.
("American") and Ameritrust Company National Association
("Ameritrust") as Trustee dated as of December 1, 1991 (2)
10.38 Purchase Agreement between Seaway Development Company,
American and Riser dated April 2, 1992 (2)
</TABLE>
21
<PAGE> 23
10.39 Asset Purchase Agreement between Sysco Food Services
of Cleveland, Inc., Sysco Corporation, Seaway Food
Service, Inc. ("Seaway") and Riser dated April 1,
1992 (2)
10.40 Note Purchase Agreement between Automated Cash
Management Trust and American dated December 30,
1991 (2)
10.41 Remarketing Agreement between American and Ameritrust
dated as of December 1, 1991 (2)
10.42 Amended and Restated Credit Agreement by and among
Rini-Rego, Society National Bank as agent ("Society")
for Society, The Bank of New York Commercial
Corporation, PNC Bank, National Association and Star
Bank, N.A. (collectively, the "Banks") dated as of
May 27, 1993 (3)
10.43 Amended and Restated Credit Agreement by and among
American, Society and the Banks dated as of May 27,
1993 (3)
10.44 Amended and Restated Security Agreement by and among
Rini-Rego, Society and the Banks dated as of May 27,
1993 (3)
10.45 Amended and Restated Security Agreement by and among
American, Society and the Banks dated as of May 27,
1993 (3)
10.46 Amended and Restated Security Agreement by and among
Seaway, Society and the Banks dated as of May 27,
1993 (3)
10.47 Amended and Restated Security Agreement by and among
Fisher Properties, Inc. ("Fisher"), Society and the
Banks dated as of May 27, 1993 (3)
10.48 Amended and Restated Guaranty Agreement by Riser
dated as of May 27, 1993 (3)
22
<PAGE> 24
10.49 Amended and Restated Guaranty Agreement by Rini-Rego
dated as of May 27, 1993 (3)
10.50 Amended and Restated Guaranty Agreement by American
dated as of May 27, 1993 (3)
10.51 Amended and Restated Guaranty Agreement by Seaway
dated as of May 27, 1993 (3)
10.52 Amended and Restated Guaranty Agreement by Fisher
dated as of May 27, 1993 (3)
10.53 Amendment No. 1 to Amended and Restated Guaranty
Agreement by Riser dated May 16, 1994
10.54 Amendment No. 1 to Amended and Restated Credit
Agreement by and among Rini-Rego, Society and
the Banks dated May 16, 1994
21 Subsidiaries of the Registrant
27 Financial Data Schedules (submitted to SEC for
informational purposes only)
(B) REPORTS ON FORM 8-K:
None
___________________________
(1) Incorporated by reference from the Company's Annual Report on Form
10-K as filed with the Securities and Exchange Commission on October
17, 1988.
(2) Incorporated by reference from the Company's Annual Report on Form
10-K of Riser Foods, Inc. (Commission File No. 1-9914) as filed with
the Securities and Exchange Commission on September 25, 1992.
(3) Incorporated by reference from the Company's Annual Report on Form
10-K of Riser Foods, Inc. (Commission File No. 1-9914) as filed with
the Securities and Exchange Commission on October 1, 1993.
23
<PAGE> 25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
RINI-REGO SUPERMARKETS, INC.
By: /s/ Charles A. Rini, Sr.
------------------------------
Charles A. Rini, Sr.
President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ Charles A. Rini, Sr. President September 23, 1994
- - - ------------------------ and Director
Charles A. Rini, Sr.
/s/ Anthony C. Rego Vice President, Secretary September 23, 1994
- - - ------------------------ and Director
Anthony C. Rego
/s/ Ronald W. Ocasek Chief Financial September 23, 1994
- - - ------------------------ Officer and Treasurer
Ronald W. Ocasek (Principal Accounting
Officer)
</TABLE>
24
<PAGE> 26
Report of Independent Public Accountants
To Rini-Rego Supermarkets, Inc. and Subsidiaries:
We have audited the accompanying consolidated balance sheets of RINI-
REGO SUPERMARKETS, INC. (an Ohio corporation and subsidiary of Riser Foods,
Inc.) AND SUBSIDIARIES as of July 2, 1994 and July 3, 1993, and the related
consolidated statements of income, shareholders' equity and cash flows for
each of the three fiscal years in the period ended July 2, 1994. These
financial statements and the schedules referred to below are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Rini-Rego
Supermarkets, Inc. and Subsidiaries as of July 2, 1994, and July 3, 1993, and
the results of their operations and their cash flows for each of the three
fiscal years in the period ended July 2, 1994, in conformity with generally
accepted accounting principles.
As explained in Note 4 to the financial statements, effective July 4,
1993 the Company changed its method of accounting for income taxes as required
by Statement of Financial Accounting Standards No. 109.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules contained in Note 14 to
the financial statements are presented for purposes of complying with the
Securities and Exchange Commission's rules and are not a required part of the
basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Cleveland, Ohio,
September 12, 1994
25
<PAGE> 27
<TABLE>
RINI-REGO SUPERMARKETS, INC.
----------------------------
AND SUBSIDIARIES
----------------
CONSOLIDATED BALANCE SHEETS
---------------------------
(dollars in thousands)
ASSETS
------
<CAPTION>
July 2, July 3,
1994 1993
--------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 4,376 $ 4,394
Trade accounts receivable, net 38,460 36,039
Inventories 74,279 72,482
Prepaid expenses 4,854 4,607
Deferred income taxes 6,583 -
--------- ---------
Total current assets 128,552 117,522
PROPERTY, EQUIPMENT AND CAPITAL LEASES:
Land 4,255 4,128
Buildings and improvements 42,408 44,012
Equipment 71,723 63,218
Leasehold improvements 55,455 45,685
--------- ---------
173,841 157,043
Less - Allowances for depreciation,
amortization and loss on disposal
of fixed assets 65,308 55,965
--------- ---------
108,533 101,078
OTHER ASSETS:
Notes receivable 10,851 6,529
Deferred income taxes 7,062 5,921
Other 2,519 2,379
--------- ---------
20,432 14,829
--------- ---------
TOTAL ASSETS $257,517 $233,429
========= =========
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these consolidated balance sheets.
</TABLE>
26
<PAGE> 28
RINI-REGO SUPERMARKETS, INC.
----------------------------
AND SUBSIDIARIES
----------------
CONSOLIDATED BALANCE SHEETS
---------------------------
(dollars in thousands, except share data)
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
July 2, July 3,
1994 1993
--------- ---------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 45,614 $ 47,188
Accrued expenses 29,911 31,675
Current portion of-
Debt 4,306 8,601
Capital lease obligations 1,979 1,569
Self insurance reserves 3,750 4,147
--------- ---------
Total current liabilities 85,560 93,180
LONG-TERM PORTION OF:
Debt 71,274 56,318
Capital lease obligations 12,404 10,591
Self insurance reserves 10,531 9,660
--------- ---------
94,209 76,569
OTHER LIABILITIES 13,067 6,349
DEFERRED INCOME TAXES - 952
SHAREHOLDERS' EQUITY:
Series A Preferred Shares - $100 par value;
$8.00 cumulative convertible, nonvoting;
30,000 shares authorized; 18,044
shares outstanding in 1994 and 1993. 1,804 1,804
Common Shares - $.01 par value:
Class A - 20,000,000 shares authorized;
7,125,287 and 7,125,288 shares
outstanding in 1994 and 1993,
respectively. 71 71
Class B - 5,000,000 shares authorized;
955,613 shares outstanding in
1994 and 1993. 10 10
Paid-in capital 35,546 35,546
Retained earnings 27,250 18,948
--------- ---------
64,681 56,379
--------- ---------
$257,517 $233,429
========= =========
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these consolidated balance sheets.
</TABLE>
27
<PAGE> 29
RINI-REGO SUPERMARKETS, INC.
----------------------------
AND SUBSIDIARIES
----------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
Fiscal Year Ended
------------------------------------------------
July 2, July 3, June 27,
1994 1993 1992
(52 Weeks) (53 Weeks) (52 Weeks)
---------- ---------- ---------
<S> <C> <C> <C>
NET SALES $1,121,604 $1,108,178 $ 979,277
COST OF GOODS SOLD 905,456 891,666 766,896
---------- ---------- ---------
Gross profit 216,148 216,512 212,381
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 194,626 195,079 191,390
RESTRUCTURING CHARGE 12,000 5,000 960
---------- ---------- ---------
Operating income 9,522 16,433 20,031
OTHER INCOME (EXPENSE):
Interest expense (7,802) (6,879) (7,034)
Interest income 788 511 748
---------- ---------- ---------
NET INCOME BEFORE INCOME TAXES,
EXTRAORDINARY ITEM AND
CHANGE IN ACCOUNTING PRINCIPLE 2,508 10,065 13,745
PROVISION FOR INCOME TAXES:
State and local 46 520 1,017
Federal 882 3,335 4,605
---------- ---------- ---------
928 3,855 5,622
NET INCOME BEFORE EXTRAORDINARY
ITEM AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE $ 1,580 $ 6,210 $ 8,123
</TABLE>
28
<PAGE> 30
<TABLE>
<CAPTION>
Fiscal Year Ended
---------------------------------------------------
July 2, July 3, June 27,
1994 1993 1992
(52 Weeks) (53 Weeks) (52 Weeks)
---------- ---------- ----------
<S> <C> <C> <C>
NET INCOME BEFORE EXTRAORDINARY
ITEM AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE 1,580 6,210 8,123
EXTRAORDINARY ITEM:
Utilization of net operating loss
carryforwards - 253 -
---------- ---------- ----------
NET INCOME BEFORE CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE 1,580 6,463 8,123
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE:
Accounting for income taxes 6,866 - -
---------- ---------- ----------
NET INCOME 8,446 6,463 8,123
LESS PREFERRED STOCK DIVIDENDS 144 144 144
---------- ---------- ----------
NET INCOME FOR COMMON SHAREHOLDERS $ 8,302 $ 6,319 $ 7,979
========== ========== ==========
NET INCOME PER COMMON SHARE:
Net income before extraordinary
item and cumulative effect
of change in accounting
principle $ .18 $ .75 $ .99
Extraordinary item:
Utilization of net operating
loss carryforwards - .03 -
Cumulative effect of change in
accounting principle:
Accounting for income taxes .85 - -
---------- ---------- ----------
NET INCOME PER COMMON SHARE $ 1.03 $ .78 $ .99
========== ========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 8,080,901 8,080,901 8,080,885
========== ========== ==========
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</TABLE>
29
<PAGE> 31
RINI-REGO SUPERMARKETS, INC.
----------------------------
AND SUBSIDIARIES
----------------
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
-----------------------------------------------
(in thousands)
<TABLE>
<CAPTION>
Preferred Class A Class B Paid-In Retained
Stock Common Common Capital Earnings
--------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE AT JUNE 29, 1991 $ 1,805 $ 71 $ 10 $ 35,546 $ 4,650
Net income - - - - 8,123
Preferred stock
dividends of
$8 per share - - - - (144)
Stock conversions (1) - - - -
--------- -------- --------- -------- --------
BALANCE AT JUNE 27, 1992 1,804 71 10 35,546 12,629
Net income - - - - 6,463
Preferred stock
dividends of
$8 per share - - - - (144)
--------- -------- --------- -------- --------
BALANCE AT JULY 3, 1993 1,804 71 10 35,546 18,948
Net Income - - - - 8,446
Preferred stock
dividends of
$8 per share - - - - (144)
--------- -------- --------- -------- --------
BALANCE AT JULY 2, 1994 $ 1,804 $ 71 $ 10 $ 35,546 $ 27,250
========= ======== ========= ======== ========
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</TABLE>
30
<PAGE> 32
RINI-REGO SUPERMARKETS, INC.
----------------------------
AND SUBSIDIARIES
----------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(in thousands)
<TABLE>
<CAPTION>
Fiscal Year Ended
-------------------------------------------------
July 2, June 27, June 27,
1994 1993 1992
(52 Weeks) (53 Weeks) (52 Weeks)
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 8,446 $ 6,463 $ 8,123
Adjustments to reconcile net income
to net cash provided by
operating activities:
Cumulative effect of change in
accounting principle (6,866) - -
Depreciation and amortization 14,804 13,585 12,198
Utilization of pre-acquisition
NOL carryforward 627 483 1,541
Loss on sale of assets 639 82 131
Deferred income taxes (3,896) (1,765) (1,335)
Changes in assets and liabilities:
Decrease (increase) in accounts
and notes receivable (6,743) (10,278) 513
Decrease (increase) in
inventories (1,797) (5,985) 6,905
Decrease (increase) in
prepaid expenses (247) (602) 1,637
Increase in other assets (763) (477) (259)
Increase (decrease) in accounts
payable (1,574) 6,298 (2,271)
Increase (decrease) in self
insurance reserves 474 731 (656)
Increase (decrease) in accrued
expenses and other liabilities 10,395 7,786 (497)
Change in other 95 136 109
--------- ---------- ----------
Net cash provided by
operating activities $ 13,594 $ 16,457 $ 26,139
--------- --------- ---------
</TABLE>
31
<PAGE> 33
<TABLE>
<CAPTION>
Fiscal Year Ended
----------------------------------------------
July 2, July 3, June 27,
1994 1993 1992
(52 Weeks) (53 Weeks) (52 Weeks)
---------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed assets $ (27,132) $ (25,807) $ (25,849)
Proceeds from sale of fixed assets 876 1,003 3,445
Purchase of intangibles - - (2,064)
---------- ---------- ----------
Net cash used for investing activities (26,256) (24,804) (24,468)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on revolving lines of credit 917,069 633,021 437,451
Repayments of revolving lines of credit (900,290) (630,821) (437,258)
Repayment of term loans - - (13,123)
Borrowings through term loan - 12,000 -
Issuance of Variable Rate Demand Notes - - 15,000
Additions to mortgage notes payable 2,896 - -
Additions to notes payable - - 648
Debt repayments (9,180) (5,034) (4,045)
Additions to capital lease obligations 4,018 1,498 1,019
Repayment of capital lease obligations (1,725) (1,234) (983)
Preferred stock dividends (144) (144) (144)
Other - - (474)
---------- ---------- ----------
Net cash provided by (used for)
financing activities 12,644 9,286 ( 1,909)
---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (18) 939 (238)
CASH AND CASH EQUIVALENTS, AT BEGINNING
OF YEAR 4,394 3,455 3,693
---------- ---------- ----------
CASH AND CASH EQUIVALENTS, AT END
OF YEAR $ 4,376 $ 4,394 $ 3,455
========== ========== ==========
SUPPLEMENTAL DATA:
Interest paid $ 7,627 $ 7,585 $ 6,528
========== ========== ==========
Income taxes paid $ 6,417 $ 4,334 $ 5,287
========== ========== ==========
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</TABLE>
32
<PAGE> 34
RINI-REGO SUPERMARKETS, INC.
----------------------------
AND SUBSIDIARIES
----------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(1) Summary of Significant Accounting Policies:
-------------------------------------------
PRESENTATION -- Rini-Rego Supermarkets, Inc. (RRS or the Company),
formerly known as Fisher Foods, Inc. (Fisher), is a wholly-owned subsidiary of
Riser Foods, Inc. (Riser). The accompanying financial statements of the
Company are presented on the "push down accounting" basis, for financial
reporting purposes only, with the equity section of the accompanying balance
sheet reflecting the equity of Riser.
The separate financial statements of the Company would reflect the
following shareholder equity amounts (in thousands):
July 2, July 3,
1994 1993
------- -------
Preferred stock $ 1,811 $ 1,811
Common Stock 1,403 1,403
Paid-in capital 22,714 22,714
Retained earnings 37,279 28,977
------- -------
$63,207 $54,905
======= =======
SEGMENT INFORMATION -- The Company is engaged in one business segment,
the food distribution industry. The Company distributes national brand and
private label products through Company-owned and other independently-owned
retail stores throughout northeast and central Ohio and western Pennsylvania.
The Company operates 42 retail locations in northeast Ohio. The following is
a detail of the number of Company-owned stores by year:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Beginning of year 45 51 50
Opened 2 1 2
Closed (5) (7) (1)
---- ---- ----
End of year 42 45 51
==== ==== ====
</TABLE>
33
<PAGE> 35
PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements
include the accounts of RRS and its subsidiaries. All material intercompany
accounts and transactions have been eliminated.
FISCAL YEAR -- The Company's fiscal year ends on the Saturday closest
to June 30. Fiscal 1994 consists of the 52 weeks ended July 2, 1994. Fiscal
1993 consists of the 53 weeks ended July 3, 1993. Fiscal 1992 consists of the
52 weeks ended June 27, 1992.
CASH EQUIVALENTS -- The Company considers all highly liquid
investments with an initial maturity of three months or less to be cash
equivalents.
INVENTORIES-- Inventories are stated at the lower of cost or market.
Cost is determined through the use of the last-in, first-out (LIFO) method for
a majority of consolidated inventories: 72% at July 2, 1994 and 83% at July 3,
1993. The first-in, first-out (FIFO) method is used to determine cost for the
remaining inventories which consist principally of perishable products and
warehouse health and beauty care and general merchandise products.
If the FIFO method had been used to determine cost for all Company
inventories, total inventories would have been higher than reported by
approximately $6,383,000 at July 2, 1994 and $6,869,000 at July 3, 1993.
PROPERTY, EQUIPMENT AND CAPITAL LEASES-- Property and equipment are
recorded at cost and depreciated using the straight-line method at annual rates
sufficient to amortize the cost of the assets during their estimated useful
lives. Accelerated depreciation methods are used for income tax purposes.
Amortization of property under capital leases is computed using the
straight-line method over the shorter of the estimated life of the asset or the
term of the lease. The following range of depreciable lives are used:
Buildings and Improvements 19 to 40 years
Leasehold Improvements 5 to 20 years
Equipment 3 to 15 years
34
<PAGE> 36
SELF INSURANCE RESERVES -- The Company is primarily self insured for
property loss, general liability costs and workers' compensation. Estimated
costs of these self insurance programs are accrued at current cost based on
projected settlements for claims and include estimates for claims incurred but
not reported. Any adjustments made to previously recorded reserves are
reflected in current operating results. Amounts charged to expense for self
insured liabilities were $4,209,000, $4,529,000 and $3,029,000 in 1994, 1993
and 1992, respectively.
REVENUE RECOGNITION -- Revenues from product sales are recognized upon
shipment of the product from warehouse distribution to independently-owned
retail stores and at the point of sale for Company-owned retail stores.
STORE PRE-OPENING COSTS -- Store pre-opening costs, primarily employee
training, inventory stocking and advertising, are charged to expense concurrent
with store openings.
RECLASSIFICATIONS -- Certain reclassifications have been made to prior
year financial statements to conform with current year presentation. These
reclassifications did not affect results of operations previously reported.
NET INCOME PER SHARE -- Net income per share is computed by dividing
net income less preferred stock dividends by the weighted average number of
common shares outstanding. Outstanding stock options do not have a significant
dilutive effect on net income per share.
(2) Trade Accounts and Notes Receivable:
------------------------------------
The Company's trade accounts and notes receivable are primarily with
various wholesale customers which are engaged in retail food distribution in
northeast and central Ohio and western Pennsylvania.
The Company's notes receivable principally arise from the financing
of store leaseholds, inventory and fixed assets related to the operations of
the Company's independently-owned wholesale customers. Loans to independent
retailers, as well as trade accounts receivable, are primarily collateralized
by the retailers' inventory, equipment and fixtures. The notes range in length
from 1 to 7 years and primarily bear interest at prime plus 1.0% or 1.5%. The
estimated fair market value of the notes approximates their net carrying value
at July 2, 1994 and July 3, 1993.
35
<PAGE> 37
Trade accounts receivable include $4,664,000 and $3,736,000 of the
current portion of notes receivable at July 2, 1994 and July 3, 1993,
respectively. Trade accounts receivable were net of an allowance for doubtful
accounts of $3,295,000 at July 2, 1994 and $3,985,000 at July 3, 1993,
respectively.
(3) Accrued Expenses:
-----------------
Accrued expenses included the following (in thousands):
<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Accrued payroll and related
expenses $ 8,742 $ 8,658
State and local taxes 5,496 5,151
Accrued income taxes 1,498 4,591
Closed facilities reserve,
current portion 2,125 1,720
Other accrued expenses 12,050 11,555
--------- ---------
$ 29,911 $ 31,675
========= =========
</TABLE>
(4) Income Taxes:
-------------
At the beginning of 1994, the Company adopted the provisions
of SFAS No. 109 "Accounting for Income Taxes". This statement requires that
the liability method of accounting for income taxes be used rather than the
deferred method previously used. The Company elected not to restate prior
years' financial statements and the cumulative effect of this accounting change
was to increase 1994 net income by $6,866,000 or $.85 per share. The
cumulative effect is principally the result of benefiting the expected
utilization of tax net operating loss carryforwards (NOL) and the adjustment of
deferred tax balances to reflect changes in statutory rates.
36
<PAGE> 38
The income tax provision in the accompanying consolidated
statements of income differs from the provision at statutory rates as
follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Income before income taxes,
extraordinary item and
change in accounting principle $ 2,508 $ 10,065 $ 13,745
========= ========= =========
Tax provision at federal
statutory rate - 34% $ 853 $ 3,422 $ 4,673
State and local income taxes, net of
federal income tax benefit 30 341 671
Difference in financial reporting and
tax basis of net assets acquired - 270 120
Excise tax on pension curtailment - - 144
Stock option exercised - (165) -
Other 45 (13) 14
--------- --------- ---------
Provision for income taxes $ 928 $ 3,855 $ 5,622
========= ========= =========
</TABLE>
The Company's income tax provision consists of the following components
(in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Current:
Federal $ 3,351 $ 4,364 $ 4,399
State and local 846 520 1,017
--------- --------- ---------
4,197 4,884 5,416
Deferred:
Federal (3,096) (1,765) (1,335)
State and local (800) - -
--------- --------- ---------
(3,896) (1,765) (1,335)
Utilization of NOL 627 736 1,541
--------- --------- ---------
Provision for income taxes $ 928 $ 3,855 $ 5,622
========= ========= =========
</TABLE>
37
<PAGE> 39
<TABLE>
<CAPTION>
Deferred Taxes Resulted from:
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Property depreciation and amortization $ 94 $ (124) $ (476)
Closed facilities reserve (3,820) (856) (163)
Self insurance reserves (170) (254) 337
Accruals not currently deductible (183) (273) (382)
Reserves currently (not currently)
deductible 252 (223) (184)
Other (69) (35) (467)
--------- --------- ---------
$ (3,896) $ (1,765) $ (1,335)
--------- --------- ---------
</TABLE>
Significant components of the Company's net deferred tax
asset at July 2, 1994 and July 3, 1993, after giving effect to SFAS
No. 109, are as follows (in thousands):
<TABLE>
<CAPTION>
At
1994 Adoption
--------- ---------
<S> <C> <C>
DEFERRED TAX LIABILITIES:
Property, equipment and capital
leases $ (5,619) $ (5,459)
State and local taxes other
than income (459) (402)
Other - (9)
--------- ---------
(6,078) (5,870)
DEFERRED TAX ASSETS:
Reserve for uncollectible accounts 1,280 1,440
Closed facilities reserve 6,123 2,303
Self insurance reserves 4,858 4,688
Employees' retirement benefits 1,058 1,123
Accruals not currently deductible 2,296 2,085
Net operating loss carryforwards 7,782 8,409
Other 974 814
--------- ---------
24,371 20,862
VALUATION ALLOWANCE (4,648) (4,648)
--------- ---------
NET DEFERRED TAX ASSET $ 13,645 $ 10,344
========= =========
</TABLE>
38
<PAGE> 40
The Company has gross NOL totaling $22,890,000 which expire as follows
(in thousands):
<TABLE>
<CAPTION>
Year NOL
---- --------
<S> <C>
2000 $ 643
2001 16,859
2002 5,388
--------
$22,890
========
</TABLE>
SFAS No. 109 requires that the tax benefit of such NOL be recognized as an
asset to the extent the Company assesses the utilization of such NOL to be
"more likely than not". Based upon the Company's history of prior earnings,
expectations for future earnings and tax regulations which limit the annual
amount of NOL available for deduction, the Company does not currently believe
it is more likely than not that the entire amount of NOL will be utilized
before they expire. As such, a valuation allowance of $4,648,000 has been
established due to the uncertainty of future NOL realization.
Prior to the Company's adoption of SFAS No. 109, realization of these
NOL was recognized as a reduction of purchase accounting for non-current
assets until such time as the carrying values were written off. The Company
utilized $2,166,000 and $4,532,000 of NOL in 1993 and 1992. On an after tax
basis, $253,000 of the 1993 utilization was recognized as an extraordinary item
after $483,000 was utilized to write-off the remaining balance of non-current
purchase price assets. All of the 1992 utilization reduced non-current
purchase price assets.
39
<PAGE> 41
(5) Long-Term Debt:
---------------
Long-term debt is comprised of the following (in thousands):
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Borrowings under bank credit facility:
Revolving lines of credit $37,802 $21,024
Term loan 9,857 12,000
Taxable Variable Rate Demand Notes 11,000 13,000
9.75% Subordinated Debentures, less
unamortized issuance discount of
$1,362,000 and $1,484,000 at 1994
and 1993, respectively, $655,000
due annually beginning December 30,
1997, with remainder due in 2001 11,730 11,608
6.5% Convertible Subordinated
Debentures due in June, 1994 - 4,486
Real estate mortgages at rates
ranging from 7% to 10% 4,588 2,074
Other Notes Payable 603 727
------- -------
75,580 64,919
Less - Current maturities 4,306 8,601
------- -------
$71,274 $56,318
-------- -------
</TABLE>
The Company's bank credit facilities (Facilities) provide for
revolving lines of credit, letters of credit and a term loan up to an aggregate
of $75 million. Borrowings under the revolving lines of credit are due in June
1996 but may be extended to June 1998 upon consent of the banks. The term loan
is payable in quarterly installments of $428,571 over five years with a balloon
payment due in April 1998. Borrowings under the lines of credit and term loan
accrue interest at .5% over the Bank's Prime Interest Rate and are paid
monthly. Commitment fees representing .25% per annum of the unused facilities
plus agency fees of $2,500 per month are also paid monthly. Available unused
borrowing capacity under these Facilities at July 2, 1994 was approximately
$10.1 million.
The Facilities consist of separate credit agreements for each of the
Company's significant operating entities (collectively the Consolidated Credit
Agreement). Borrowings under each individual facility cannot exceed 85% of the
respective entities qualified receivables, plus from 55% to 65% of eligible
inventory and 100% of
40
<PAGE> 42
eligible cash and cash equivalents, less certain reserves and obligations, all
as defined in the Consolidated Credit Agreement. The Facilities are secured by
substantially all the assets of RRS and each individual credit facility is
cross-guaranteed by all other subsidiaries and guaranteed by Riser.
Among other covenants, the Consolidated Credit Agreement requires that
the Company maintain, on a consolidated basis, minimum levels of tangible net
worth and cash flows and minimum ratios of liabilities to tangible net worth
and capital expenditures to cash flows, which vary each fiscal year. The
agreement further provides for limitations on dividends and capital
expenditures. The Company is in compliance with or has obtained Bank waiver
for all covenants at July 2, 1994.
The Company's Taxable Variable Rate Demand Notes (Notes) bear interest
at a variable rate based on the higher of the average 30-day or 90-day
commercial paper rate, plus a market increment which at July 2, 1994 was .125%,
payable monthly. Principal under the Notes is payable in annual installments
of $2,000,000 through December 1, 1997 and $3,000,000 on December 1, 1998. The
Notes are secured by a bank letter of credit. The bank letter of credit
expires in June 1996, has an annual fee of 1% on the outstanding note balance,
and is secured by the Facilities.
Concurrent with the issuance of the Notes, the Company entered into an
exchange transaction which fixed the higher of the 30-day or 90- day commercial
paper rate at 6.50% through December 1, 1994 at dollar amounts which correspond
to the Notes outstanding. The Company records interest expense on the Notes as
if the interest rate was fixed at 6.5% and charges expense currently.
The 9.75% Subordinated Debentures are recorded net of an original
issue discount, based on an imputed interest rate of 12%, which is being
amortized over the term of the indebtedness using the effective interest
method. These debentures, originally issued by a subsidiary of the Company,
require semiannual interest payments and may be redeemed at the Company's
option at 100% of the principal amount.
The Company redeemed the entire outstanding principal balance of the
6.5% Convertible Subordinated Debentures at their maturity date, June 1, 1994.
One bondholder exercised the option to convert the debenture into 37 shares of
the Company's common stock.
Certain property and equipment, with an aggregate net value for
financial reporting purposes of $25,284,000, was pledged to secure real estate
first mortgages on July 2, 1994.
41
<PAGE> 43
Future maturities of long-term debt as of July 2, 1994, are
summarized as follows (in thousands):
<TABLE>
<S> <C>
1995 $ 4,306
1996 42,140
1997 4,343
1998 8,025
1999 3,355
2000 and thereafter 13,411
-------
$75,580
=======
</TABLE>
No quoted market prices are available for any of the Company's long-term
debt as it is not actively traded. Management, however believes the carrying
values of the Company's borrowings under its bank credit facility, the notes
and real estate mortgages approximate their fair values as all bear interest at
current market rates. It was not practical to estimate the fair value of the
Company's 9.75% subordinated debentures because of the inability to estimate
fair value without incurring excessive costs.
(6) Leases:
------
The Company leases many of its retail store locations, warehouse
facilities and certain operating equipment under capital and operating leases.
Most of the retail store leases contain contingent rent clauses based on sales
levels. In most instances, the Company has the option to extend the term of
the lease. Some of the retail store locations and the warehouse facilities are
leased from parties that are related through common ownership and control.
Leased property under capital leases, which is included in property,
equipment and capital leases, consisted of the following amounts (in
thousands):
<TABLE>
<S> <C>
Building $11,916
Equipment 6,535
-------
18,451
Less - Allowance for amortization (8,106)
-------
$10,345
=======
</TABLE>
42
<PAGE> 44
The following is a schedule of future minimum lease payments under
noncancelable operating and capital leases as of July 3, 1993 (in thousands):
<TABLE>
<CAPTION>
Operating Leases Capital Leases
Related Unrelated Related Unrelated
------- --------- ------- ---------
<S> <C> <C> <C> <C>
1995 $ 3,940 $ 11,166 $ 166 $ 3,363
1996 3,052 10,865 166 3,209
1997 2,999 10,543 166 2,942
1998 2,794 9,445 180 2,393
1999 2,553 8,766 193 2,082
Thereafter 8,747 57,867 1,646 5,869
------- -------- ------- --------
$24,085 $108,652 2,517 19,858
======= ========
Less -
Amounts representing
executory costs - 624
Imputed interest 1,684 5,684
------- --------
Present value of net minimum
lease payments 833 13,550
Less - Current portion - 1,979
------- --------
$ 833 $ 11,571
======= ========
</TABLE>
The Company also subleases certain of its leased retail store
locations and a portion of its warehouses. Future minimum rental
income under subleases of operating and capital leases at July 2, 1994
and July 3, 1993 amounted to $21,059,000 and $19,708,000,
respectively.
Total rental expense for unrelated operating leases was as
follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- --------
<S> <C> <C> <C>
Minimum rental $ 8,656 $ 8,184 $ 6,211
Contingent rental 141 322 638
Sublease rental income (1,976) (1,538) (1,386)
--------- --------- --------
$ 6,821 $ 6,968 $ 5,463
========= ========= ========
</TABLE>
43
<PAGE> 45
<TABLE>
Total rental expense for related operating leases was as follows (in
thousands):
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Minimum rental $ 2,211 $ 2,557 $ 2,723
Contingent rental 35 72 69
Sublease rental income (591) (464) (395)
--------- --------- --------
$ 1,655 $ 2,165 $ 2,397
========= ========= ========
</TABLE>
(7) Disposition of Facilities:
--------------------------
The Company provides for the estimated costs of closing facilities
concurrent with making the decision to close. The types of costs provided
include expected losses on disposal of assets, employee severance payments and
other benefits for terminated employees, estimated withdrawal liabilities from
multi-employer pension plans, certain fixed costs and future lease payments net
of estimated sublease income.
An analysis of the activity in the closed facilities reserve is as
follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
-------- ------- --------
<S> <C> <C> <C>
Beginning balance $ 5,923 $ 3,566 $ 3,483
Restructuring charges 12,000 5,000 960
Payments and other
deductions (3,036) (2,643) (877)
-------- ------- --------
Ending balance $ 14,887 $ 5,923 $ 3,566
======== ======= ========
</TABLE>
The 1994 restructuring charge represents estimated costs associated
with the Company's retail store consolidation plan in which the Company plans
to close 14 small, outdated Company-owned retail stores representing
approximately 456,000 square feet. These stores will be replaced by seven
newer, larger stores representing approximately 431,000 square feet. Two of
these newer stores will be operated by wholesale customers and the remaining
five stores will be new or expanded Company-owned retail stores. At July 2,
1994, the Company had closed five of the stores included in the 1994
restructuring charge with the remaining nine stores to be closed over the next
four years.
44
<PAGE> 46
The 1993 restructuring charge represented the estimated costs
associated with the closing of seven retail stores including six Carl's or
former Carl's stores. The 1992 restructuring charge represented the
estimated costs associated with the closing of a former Carl's location.
These closings were the result of the Company's decision to focus efforts on
its core store format, Rini-Rego Stop-N-Shop.
At July 2, 1994 the net book value of fixed assets and property
pertaining to closed facilities was $7,741,000. An allowance to reduce
these assets to their estimated net realizable value is included in the
allowance for depreciation, amortization and loss on disposal, while the
long-term portion of the reserve for closing facilities is classified in
other liabilities on the accompanying balance sheets.
(8) Employee Benefit Plans:
-----------------------
The Company sponsors an employee savings plan (401(k)) for all
non-union employees. Contributions to the plan are in the form of employee
salary deferrals and Company matching funds. Amounts contributed and
expensed for Company matching funds was $229,000 in 1994 and $65,000 in
1993. There were no Company matching funds in 1992.
The Company also participates in various multi-employer pension
plans. The plans provide for defined benefits to substantially all of the
Company's union employees. Amounts charged to pension cost and contributed
to the plans were approximately $4,789,000, $4,860,000, and $4,932,000 for
1994, 1993 and 1992, respectively. At the dates of the latest actuarial
valuations, the aggregate withdrawal liability for the multi-employer
pension plans totaled approximately $1,495,000.
In December 1990, Statement of Financial Accounting Standards No.
106 "Accounting for Post-retirement Benefits other than Pensions" was
issued. This standard requires that the expected cost of these benefits
must be charged to expense during the years the employees render service.
The Company does not have any significant post retirement benefits other
than those disclosed in Note 11 which have been fully accrued.
(9) Capital Stock:
--------------
Each share of Series A Preferred stock is convertible, at the option
of the holder, into 9.79 shares of Class A Common Stock and is redeemable,
at the option of Riser, at $105 per share.
The holders of Class A Common Stock are entitled to one vote per
share and holders of Class B Common Stock are entitled to 10 votes per
share, except with respect to the election of Riser directors, at which time
holders of Class A Common Stock will vote as a
45
<PAGE> 47
separate class and be entitled to elect 25% of the total number of Riser
directors and the Class B Common Stockholders will elect the remaining
Riser directors. Amounts shown on the balance sheet are net of 1,553,630
shares of Class A Common stock outstanding that are held by a Riser
subsidiary.
Riser has a Stock Incentive Plan which provides for both
qualified and non-qualified stock options, as well as stock appreciation
rights and restricted stock grants for employees, officers and directors
of Riser. Under the terms of the plan, up to 500,000 Class A Common
Shares may be the subject of options, stock appreciation rights or
restricted stock grants. Stock options must be issued at not less than
fair value of the Class A Common Stock at the date of grant and are
exercisable for up to ten years from the date of grant. Options
outstanding under this plan are as follows:
<TABLE>
<CAPTION>
Class A
Common Option Price
Shares Per Share
-------- ------------
<S> <C> <C>
Balance - June 29, 1991 -
Granted 91,600 $10.31
Forfeited (11,700) $10.31
Exercised - -
--------
Balance - June 27, 1992 79,900 $10.31
Granted 184,700 $ 7.31
Forfeited (10,600) $7.31-$10.31
Exercised - -
--------
Balance - July 3, 1993 254,000 $7.31-$10.31
Granted - -
Forfeited (20,400) $7.31-$10.31
Exercised - -
--------
Balance - July 2, 1994 233,600
=======
Available for future grants 266,400
=======
</TABLE>
The options granted in 1993 and 1992 are non-qualified options for
federal income tax purposes and are not exercisable until two years after
grant.
At the date of Riser's business combination, options to purchase
shares of RRS common stock, issued pursuant to the RRS Stock Option Plan,
were converted into options to acquire Riser Class A Common Stock. These
outstanding options, totaling 7,000 at July 2, 1994, are at option prices
ranging from $9.25 to $15.13.
46
<PAGE> 48
(10) Investment in Stop-N-Shop Supermarkets:
---------------------------------------
The Company has a 69% ownership and 38% voting interest in the
Association of Stop-N-Shop Supermarkets (Association), an association of
Cleveland grocery retailers that provides combined advertising and other
services to members. The Company accounts for this investment using the equity
method of accounting.
Amounts paid to the Association for services provided to the Company
totaled approximately $7,265,000, $6,604,000, and $4,161,400 for 1994, 1993 and
1992, respectively. The trade accounts payable balance in the accompanying
balance sheet includes amounts due the Association of approximately $895,000 at
July 2, 1994 and $994,000 at July 3, 1993. The trade accounts receivable
balance in the accompanying balance sheet includes amounts due from the
Association of approximately $744,000 at July 2, 1994 and $216,000 at July 3,
1993.
(11) Employees' Retirement Benefit:
------------------------------
The Company maintains retirement benefit arrangements for certain
former key executives of the Company. The plans primarily provide for payments
to these executives for life with a three-year extension for surviving spouses.
The Company recorded expense of $472,000 in 1993 and no expense in 1994 and
1992 related to these agreements. The amount accrued for these plans was
$2,711,000 at July 2, 1994 and $2,898,000 at July 3, 1993.
(12) Contingent Liabilities:
----------------------
The Company is the guarantor of certain lease obligations and
mortgages of Dominick's Finer Foods, Inc., a former subsidiary. The lease
obligations covered total approximately $17,106,000 over the noncancelable
term of the obligations, some of which extend to the year 2006. The Company
has no collateral or security interests in the lease obligations or mortgages.
Management believes that the contingent liability, if any, resulting from the
guarantee of the obligations will not have a material adverse effect on the
Company's consolidated financial position.
47
<PAGE> 49
Effective September 1988, Riser entered into an agreement with
Electronic Data Systems Corporation (EDS) for the management and operation of
the Company's data center. This agreement provides for minimum payments
summarized as follows (in thousands):
1995 $ 3,259
1996 3,423
1997 3,584
1998 3,750
1999 1,948
--------
$15,964
========
The agreement expires in December, 1998 and may be terminated by
either party upon six months notice and upon the payment of certain fees for
termination.
The Company is also involved in a number of other legal proceedings
incidental to its business. Management believes that the liability, if any,
resulting from all pending legal proceedings will not have a material adverse
effect on the Company's consolidated financial position or the results of its
operations.
(13) Quarterly Financial Data (Unaudited):
-------------------------------------
(in thousands, except per share data)
<TABLE>
<CAPTION>
Quarter Ended
-----------------------------------------------------------
October January April 9, July 2,
23, 1993 15, 1994 1994 1994
(16 Weeks) (12 Weeks) (12 Weeks) (12 Weeks)
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $327,973 $270,765 $259,490 $263,376
Gross profit 63,061 51,330 49,214 52,543
Income (loss) before taxes
accounting change 3,436 3,944 (9,564) 4,692
Net income (loss)
before accounting change 2,086 2,394 (5,874) 2,974
Accounting change 6,866 - - -
Net income (loss) 8,952 2,394 (5,874) 2,974
Net income (loss) per common
share:
Before accounting change .25 .29 (.73) .37
Accounting change .85 - - -
--------- --------- --------- ---------
Net income (loss) per common
share $ 1.10 $ .29 $ (.73) $ .37
========= ========= ======== =========
</TABLE>
48
<PAGE> 50
<TABLE>
<CAPTION>
Quarter Ended
----------------------------------------------------------
October January April 3, July 3,
17, 1992 9, 1993 1993 1993
(16 Weeks) (12 Weeks) (12 Weeks) (13 Weeks)
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $330,780 $263,626 $245,980 $267,792
Gross profit 65,042 50,978 47,423 53,069
Income (loss) before taxes
and extraordinary item 3,434 (1,707) 2,490 5,848
Net income (loss)
before extraordinary item 2,034 (1,007) 1,490 3,693
Extraordinary item - - - 253
Net income (loss) 2,034 (1,007) 1,490 3,946
Net income (loss) per common
share:
Before extraordinary item .25 (.13) .18 .45
Extraordinary item - - - .03
--------- --------- --------- ---------
Net income (loss) per common
share $ .25 $ (.13) $ .18 $ .48
========= ======== ======== =========
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
-----------------------------------------------------------
October January April 4, June 27,
19, 1991 11, 1992 1992 1992
(16 Weeks) (12 Weeks) (12 Weeks) (12 Weeks)
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $303,096 $230,641 $223,518 $222,022
Gross profit 65,613 50,004 47,779 48,985
Income before income taxes 4,276 3,779 2,233 3,457
Net income 2,476 2,179 1,333 2,135
Net income per common share .30 .27 .16 .26
</TABLE>
49
<PAGE> 51
<TABLE>
(14) Form 10-K Financial Schedules:
------------------------------
A. Amounts Receivable from Related Parties, Underwriters, Promoters
-----------------------------------------------------------------
and Employees other than Related Parties (Form 10-K, Schedule II)
-----------------------------------------------------------------
<CAPTION>
Balance Balance
July 3, July 2,
Name of debtor 1993 Additions Deductions 1994
- - - -------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Rego Realty Company $ 985,000 $ 8,000 $ 209,000 $ 784,000
Association of
Stop-N-Shop
Supermarkets 650,000 10,000 660,000 -
---------- ---------- ---------- ----------
$1,635,000 $ 18,000 $ 869,000 $ 784,000
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Balance Balance
June 27, July 3,
Name of debtor 1992 Additions Deductions 1993
- - - -------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Rego Realty Company $1,124,000 $ 15,000 $ 154,000 $ 985,000
Association of
Stop-N-Shop
Supermarkets 1,107,000 57,300 514,300 650,000
---------- ---------- ---------- ----------
$2,231,000 $ 72,300 $ 668,300 $1,635,000
========== ========== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
Balance Balance
June 29, June 27,
Name of debtor 1991 Additions Deductions 1992
- - - -------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Rini Realty Company $ 318,000 $ 14,000 $ 332,000 $ -
Rego Realty Company 1,203,000 89,000 168,000 1,124,000
Association of
Stop-N-Shop
Supermarkets - 1,355,000 248,000 1,107,000
---------- ---------- ---------- ----------
$1,521,000 $1,458,000 $ 748,000 $2,231,000
========== ========== ========== ==========
<FN>
In all years, these amounts have been classified in other assets.
</TABLE>
50
<PAGE> 52
B. Property, Plant and Equipment (Form 10-K, Schedules V and VI)
-------------------------------------------------------------
(dollars in thousands)
----------------------
Capitalized leases and construction in progress have been grouped with
the appropriate asset classifications.
<TABLE>
<CAPTION>
Balance Balance
July 3, Additions Retire- Other July 2,
Classification 1993 at Cost ments Changes 1994
- - - --------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Land $ 4,128 $ 127 $ - $ - $ 4,255
Buildings 44,012 1,273 2,877 - 42,408
Equipment 63,218 15,093 6,588 - 71,723
Leasehold
improvements 45,685 10,639 869 - 55,455
-------- -------- -------- -------- --------
$157,043 $ 27,132 $ 10,334 $ - $173,841
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Balance Balance
June 27, Additions Retire- Other July 3,
Classification 1992 at Cost ments Changes 1993
- - - --------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Land $ 4,089 $ 418 $ 379 $ - $ 4,128
Buildings 45,118 55 1,161 - 44,012
Equipment 54,885 10,188 1,855 - 63,218
Leasehold
improvements 30,688 15,146 149 - 45,685
-------- -------- -------- -------- --------
$134,780 $ 25,807 $ 3,544 $ - $157,043
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Balance Balance
June 29, Additions Retire- Other June 27,
Classification 1991 at Cost ments Changes 1992
- - - --------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Land $ 3,654 $ 926 $ 491 $ - $ 4,089
Buildings 44,120 3,611 2,613 - 45,118
Equipment 50,915 14,030 10,060 - 54,885
Leasehold
improvements 27,130 7,282 3,724 - 30,688
-------- -------- -------- -------- --------
$125,819 $ 25,849 $ 16,888 $ - $134,780
======== ======== ======== ======== ========
</TABLE>
51
<PAGE> 53
Accumulated depreciation and amortization of property, plant and equipment
were as follows:
<TABLE>
<CAPTION>
Additions
Charged
Balance to Costs Balance
July 3, and Retire- Other July 2,
Classification 1993 Expenses ments Changes 1994
- - - --------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Buildings $ 16,523 $ 1,865 $ 3,852 $ - $ 14,536
Equipment 26,432 7,896 4,051 - 30,277
Leasehold
improvements 10,747 5,126 546 - 15,327
-------- -------- -------- ------- --------
$ 53,702 $ 14,887 $ 8,449 $ - $ 60,140
======== ======== ======== ======= ========
</TABLE>
<TABLE>
<CAPTION>
Additions
Charged
Balance to Costs Balance
June 27, and Retire- Other July 3,
Classification 1992 Expenses ments Changes 1993
- - - --------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Buildings $ 14,523 $ 2,577 $ 577 $ - $ 16,523
Equipment 20,902 7,122 1,592 - 26,432
Leasehold
improvements 7,460 3,287 - - 10,747
-------- -------- -------- ------- --------
$ 42,885 $ 12,986 $ 2,169 $ - $ 53,702
======== ======== ======== ======= ========
</TABLE>
<TABLE>
<CAPTION>
Additions
Charged
Balance to Costs Balance
June 29, and Retire- Other June 27,
Classification 1991 Expenses ments Changes 1992
- - - --------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Buildings $ 12,950 $ 2,669 $ 1,096 $ - $ 14,523
Equipment 24,078 6,427 9,603 - 20,902
Leasehold
improvements 7,959 1,814 2,313 - 7,460
-------- -------- -------- ------- --------
$ 44,987 $ 10,910 $ 13,012 $ - $ 42,885
======== ======== ======== ======= ========
</TABLE>
Allowance for depreciation, amortization and loss on disposal of fixed
assets included a reserve for loss on disposal of fixed assets of $5,168,000 at
July 2, 1994 and $2,263,000 at July 3, 1993.
52
<PAGE> 54
C. Valuation and Qualifying Accounts (Form 10-K, Schedule VIII)
-------------------------------------------------------------
(dollars in thousands)
<TABLE>
<CAPTION>
Balance Additions Recov-
at Charged eries Balance
Beginning to Costs Charged at End
of and to Other of
Description Period Expenses Accounts Deductions Period
- - - -------------------------- -------- -------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Year Ended July 2, 1994
Reserves deducted from
asset accounts -
Allowance for doubtful
accounts $ 3,985 $ 1,898 $ - $ 2,588 $ 3,295
Year Ended July 3, 1993
Reserves deducted from
asset accounts -
Allowance for doubtful $ 3,339 $ 1,269 $ - $ 623 $ 3,985
accounts
Year Ended June 27, 1992
Reserves deducted from
asset accounts -
Allowance for doubtful
accounts $ 2,432 $ 1,316 $ - $ 409 $ 3,339
</TABLE>
53
<PAGE> 55
EXHIBIT INDEX
10.53 Amendment No. 1 to Amended and Restated Guaranty Agreement by
Riser dated May 16, 1994
10.54 Amendment No. 1 to Amended and Restated credit Agreement by and
among Rini-Rego, Society and the Banks dated May 16, 1994
21 Subsidiaries of the Registrant
27 Financial Data Schedule (Submitted to SEC for informational purposes
only)
<PAGE> 1
EXHIBIT 10.53
<PAGE> 2
AMENDMENT NO. 1
TO
AMENDED AND RESTATED
GUARANTY AGREEMENT
This Amendment No. 1 to Amended and Restated Guaranty Agreement (this
"Amendment"), made as of the 16th day of May, 1994, among RISER FOODS, INC., a
Delaware corporation (herein the "Guarantor"), the Banks (as hereinafter
defined), and SOCIETY NATIONAL BANK, as agent for the Banks (herein the
"Agent"),
WITNESSETH:
-----------
WHEREAS, the Guarantor has executed and delivered to the financial
institutions which are a party to the Credit Agreements (as defined below) (the
"Banks"), that certain Amended and Restated Guaranty Agreement, dated as of May
27, 1993 (the "Guaranty Agreement"), pursuant to which the Guarantor
unconditionally guaranteed the payment of all of the Obligations (as defined in
the Guaranty Agreement); and
WHEREAS, Rini-Rego Supermarkets, Inc. (formerly known as Fisher Foods,
Inc.), an Ohio corporation ("Rini-Rego"), the Banks and the Agent have entered
into that certain Amended and Restated Credit Agreement, dated as of May 27,
1993, as amended by that certain Amendment No. 1 to Amended and Restated Credit
Agreement (the "Amendment No. 1"), dated as of the date hereof (the "Rini-Rego
Agreement"), pursuant to which the Banks have made certain financial
accommodations available to Rini-Rego; and
WHEREAS, American Seaway Foods, Inc., an Ohio corporation ("American"), the
Banks and the Agent have entered into that certain Amended and Restated Credit
Agreement, dated as of May 27, 1993 (the "American Agreement" and, together
with the Rini-Rego Agreement, the "Credit Agreements");
WHEREAS, the Banks which are signatories hereto constitute Majority Banks
for the purpose of amending the Guaranty Agreement pursuant to Section 8.22 of
the American Agreement and Section 8.21 of the Rini-Rego Agreement;
WHEREAS, the Guarantor, the Banks and the Agent desire further to amend the
Guaranty Agreement as set forth herein;
<PAGE> 3
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Guarantor, the Banks and the
Agent do hereby agree as follows:
SECTION 1. DEFINED TERMS.
--------------------------
Each defined term used herein and not otherwise defined herein shall have
the meaning ascribed to such term in the Guaranty Agreement.
SECTION 2. AMENDMENTS TO THE GUARANTY AGREEMENT.
-------------------------------------------------
The Guarantor, the Banks and the Agent hereby agree that Section 14 of the
Guaranty Agreement shall be amended, effective as of the date hereof and
subject to the terms and conditions hereof, as follows:
AMENDMENT TO SECTION 14. Section 14 shall be amended to delete the
definitions of "Consolidated Net Income" and "MetLife Agreement" each in its
entirety to substitute in lieu thereof the following:
"CONSOLIDATED NET INCOME" means, for any period, the aggregate net income of
the Guarantor and its Subsidiaries for such period (after taxes and after
extraordinary items, but without giving effect to any gain from any
re-appraisal or write-up of any asset after December 31, 1992), as
determined on a consolidated basis in accordance with generally accepted
accounting principles; PROVIDED, HOWEVER, that, solely with respect to the
Fiscal Quarter of the Guarantor ending October 23, 1993, the "Consolidated
Net Income" of the Guarantor shall be calculated giving effect to the
Guarantor's adoption of Statement of Financial Accounting Standard No. 109.
"METLIFE AGREEMENT" means each loan and security agreement, each in form and
substance reasonably satisfactory to the Agent and the Majority Banks,
entered into between Rini-Rego and MetLife Capital Corporation evidencing
indebtedness in the aggregate principal amount not to exceed Six Million
Dollars ($6,000,000), pursuant to which Rini-Rego will finance the purchase
of Capital Expenditures.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
-------------------------------------------
The Guarantor hereby represents and warrants to the Banks and the Agent as
follows:
-2-
<PAGE> 4
3.1 THE AMENDMENT. This Amendment has been duly and validly executed by an
authorized executive officer of the Guarantor and constitutes the legal, valid
and binding obligation of the Guarantor enforceable against the Guarantor in
accordance with its terms.
3.2 GUARANTY AGREEMENT. The Guaranty Agreement, as amended by this
Amendment, remains in full force and effect and remains the valid and binding
obligation of the Guarantor enforceable against the Guarantor in accordance
with its terms. The Guarantor hereby ratifies and confirms the Guaranty
Agreement, as amended by this Amendment.
3.3 NONWAIVER. The execution, delivery, performance and effectiveness of
this Amendment shall not operate nor be deemed to be nor construed as a waiver
(i) of any right, power or remedy of the Banks or the Agent under the Guaranty
Agreement, nor (ii) of any term, provision, representation, warranty or
covenant contained in the Guaranty Agreement or any other documentation
executed in connection therewith. Further, none of the provisions of this
Amendment shall constitute, be deemed to be or construed as, a waiver of any
Default or Event of Default under the Guaranty Agreement as amended by this
Amendment.
3.4 REFERENCE TO AND EFFECT ON THE GUARANTY AGREEMENT. Upon the
effectiveness of this Amendment, each reference in the Guaranty Agreement to
"this Agreement", "hereunder", "hereof", "herein", or words of like import
shall mean and be a reference to the Guaranty Agreement, as amended hereby and
each reference to the Guaranty Agreement in any other document, instrument or
agreement executed and/or delivered in connection with the Guaranty Agreement
shall mean and be a reference to the Guaranty Agreement, as amended by this
Amendment.
SECTION 4. CONDITIONS PRECEDENT TO EFFECTIVENESS
-------------------------------------------------
OF THIS AMENDMENT NO. 1.
------------------------
In addition to all of the other conditions and agreements set forth herein,
the effectiveness of this Amendment is subject to the following conditions
precedent:
4.1 THE AMENDMENT. The Banks and the Agent shall have received this
Amendment No. 1 to Amended and Restated Guaranty Agreement, executed and
delivered by a duly authorized officer of the Guarantor.
4.2 AMENDMENT NO. 1 TO RINI-REGO AGREEMENT. The Banks and the Agent shall
have received an Amendment No. 1 to Amended and Restated Credit Agreement from
Rini-Rego, executed and delivered by a duly authorized officer of Rini-Rego,
and all of the respective conditions precedent to such Amendment shall have
been satisfied.
-3-
<PAGE> 5
4.3 ACKNOWLEDGEMENT OF BORROWERS. The Banks and the Agent shall have
received the Acknowledgement of Borrowers attached to this Amendment, executed
and delivered by a duly authorized officer of each of Rini-Rego and American
Seaway Foods, Inc.
4.4 GUARANTOR'S CERTIFICATE. The Banks and the Agent shall have received a
certificate, in form and substance satisfactory to the Agent, executed for and
on behalf of the Guarantor by the Chief Executive Officer and the Secretary of
the Guarantor and dated as of the date of this Amendment, certifying (i) the
Director's Resolutions of the Guarantor, authorizing this Amendment, and each
document or other instrument executed in connection with the Amendment, (ii)
the names and signatures of the officers of the Guarantor, and (iii) compliance
by the Guarantor with all representations, warranties, covenants and conditions
under the Guaranty, as amended by this Amendment.
4.5 OTHER DOCUMENTS. The Banks and the Agent shall have received each
additional document, instrument or piece of information reasonably requested by
the Agent, including, without limitation, any financing statements as may be
necessary to continue the perfection of the security interests created by the
Security Agreements.
SECTION 5. MISCELLANEOUS.
--------------------------
5.1 GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of Ohio.
5.2 SEVERABILITY. In the event any provision of this Amendment should be
invalid, the validity of the other provisions hereof and of the Guaranty
Agreement shall not be affected thereby.
5.3 COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which, when taken together, shall constitute but one and
the same agreement.
-4-
<PAGE> 6
IN WITNESS WHEREOF, the Guarantor has caused this Amendment No. 1 to Amended
and Restated Guaranty Agreement to be duly executed and delivered by its duly
authorized officer as of the date first above written.
RISER FOODS, INC.
/s/ Ronald W. Ocasek
-----------------------------------
By: Ronald W. Ocasek
--------------------------------
Title: Senior V.P., CFO & Treasurer
-----------------------------
ACCEPTED AND AGREED as of this
16 day of May, 1994:
- - - ---
SOCIETY NATIONAL BANK, as a Bank and as Agent
/s/ Todd B. Boney
- - - -------------------------------
By: Todd B. Boney
----------------------------
Title: Vice President
-------------------------
NATIONAL CITY BANK, as a Bank
/s/ Terry Wolford
- - - -------------------------------
By: Terry Wolford
----------------------------
Title: Vice President
-------------------------
NBD BANK, N.A., as a Bank
_______________________________
By:____________________________
Its:___________________________
-5-
<PAGE> 7
PNC BANK, NATIONAL ASSOCIATION
_______________________________
By:____________________________
Title:_________________________
STAR BANK, N.A.
_______________________________
By:____________________________
Its:___________________________
-6-
<PAGE> 8
ACKNOWLEDGEMENT OF BORROWERS
----------------------------
Each of the undersigned, RINI-REGO SUPERMARKETS, INC. (formerly known as
Fisher Foods, Inc.), and AMERICAN SEAWAY FOODS, INC. (formerly known as
Heritage Wholesalers, Inc.), each of which being a borrower of certain sums
from the Banks under the Agreements (as defined in the Guaranty Agreement),
hereby acknowledges and agrees to the terms of the foregoing Amendment No. 1 to
Amended and Restated Guaranty Agreement. Each of the undersigned represents
and warrants to the Banks and the Agent that the respective Agreements (as
amended), executed and delivered by each of the undersigned, each dated as of
May 27, 1993, remain the valid and binding obligations of each of the
undersigned, respectively, enforceable against it in accordance with their
terms.
RINI-REGO SUPERMARKETS, INC. (formerly known
as Fisher Foods, Inc.)
By: /s/ Ronald W. Ocasek
------------------------------
Title: CFO & Treasurer
---------------------------
AMERICAN SEAWAY FOODS, INC. (formerly
known as Heritage Wholesalers, Inc.)
By: /s/ Ronald W. Ocasek
------------------------------
Title: CFO & Treasurer
---------------------------
Executed: May 16, 1994
--
-7-
<PAGE> 1
EXHIBIT 10.54
<PAGE> 2
AMENDMENT NO. 1
TO
AMENDED AND RESTATED
CREDIT AGREEMENT
This Amendment No. 1 to Amended and Restated Credit Agreement (this
"Amendment"), made as of the 16th day of May, 1994, between RINI-REGO
SUPERMARKETS, INC. (formerly known as Fisher Foods, Inc.), an Ohio corporation
(herein the "Borrower"), the Banks (as hereinafter defined) and SOCIETY
NATIONAL BANK, as agent for the Banks (in such capacity, the "Agent"),
WITNESSETH:
-----------
WHEREAS, the Borrower has been extended certain financial accommodations
pursuant to that certain Amended and Restated Credit Agreement, dated as of May
27, 1993 (the "Credit Agreement"), among the Borrower, the financial
institutions which are a party thereto (the "Banks") and the Agent; and
WHEREAS, the Borrower, the Banks and the Agent desire to amend the Credit
Agreement as set forth herein to permit the Borrower to increase the amount of
the Borrower's permitted indebtedness to MetLife Capital Corporation;
WHEREAS, the Banks which are the signatories hereto constitute Majority
Banks for the purposes of amending the Credit Agreement pursuant to Section
8.21 thereof;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Borrower, the Banks and the
Agent do hereby agree as follows:
SECTION 1. DEFINED TERMS.
--------------------------
Each defined term used herein and not otherwise defined herein shall have
the meaning ascribed to such term in the Credit Agreement.
SECTION 2. AMENDMENTS TO THE CREDIT AGREEMENT.
-----------------------------------------------
<PAGE> 3
The Borrower, the Banks and the Agent hereby agree that the Credit
Agreement shall be amended, effective as of the date hereof and subject to the
terms and conditions hereof, as follows:
2.1 AMENDMENT TO SECTION 1.01. The following definition found in
Section 1.01 shall be amended in its entirety to read as follows:
"METLIFE INDEBTEDNESS" means the indebtedness incurred by the Borrower
and guaranteed by Riser, in the principal amount not to exceed Six
Million Dollars ($6,000,000), pursuant to certain loan and security
agreements to be executed by the Borrower and Riser in favor of MetLife
Capital Corporation from time to time which loan and security agreements
shall be in form and substance reasonably satisfactory to the Agent and the
Majority Banks.
2.2 AMENDMENT TO SECTION 5.02(b)(iii). Section 5.02(b) shall be
amended to delete clause (iii) in its entirety and to substitute the following
in lieu thereof:
"(iii) the MetLife Indebtedness, so long as the aggregate
principal amount of such Indebtedness shall not at any time exceed Six
Million Dollars ($6,000,000),"
SECTION 3. REPRESENTATIONS AND WARRANTIES.
-------------------------------------------
The Borrower hereby represents and warrants to the Banks and the Agent as
follows:
3.1 THE AMENDMENT. This Amendment has been duly and validly executed
by an authorized executive officer of the Borrower and constitutes the legal,
valid and binding obligation of the Borrower enforceable against the Borrower
in accordance with its terms.
3.2 CREDIT AGREEMENT. The Credit Agreement, as amended by this
Amendment, remains in full force and effect and remains the valid and binding
obligation of the Borrower enforceable against the Borrower in accordance with
its terms. The Borrower hereby ratifies and confirms the Credit Agreement, as
amended by this Amendment.
3.3 NONWAIVER. The execution, delivery, performance and
effectiveness of this Amendment shall not operate nor be deemed to be nor
construed as a waiver (i) of any right, power or remedy of the Banks or the
Agent under the Credit Agreement, nor (ii) of any term, provision,
representation, warranty or covenant contained in the Credit Agreement or any
other documentation executed in connection therewith. Further, none of the
provisions of this Amendment shall constitute, be deemed to be or construed as,
-2-
<PAGE> 4
a waiver of any Default or Event of Default under the Credit Agreement as
amended by this Amendment.
3.4 REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT. Upon the
effectiveness of this Amendment, each reference in the Credit Agreement to
"this Agreement", "hereunder", "hereof", "herein", or words of like import
shall mean and be a reference to the Credit Agreement, as amended hereby and
each reference to the Credit Agreement in any other document, instrument or
agreement executed and/or delivered in connection with the Credit Agreement
shall mean and be a reference to the Credit Agreement, as amended hereby.
SECTION 4. CONDITIONS PRECEDENT TO EFFECTIVENESS
-------------------------------------------------
OF THIS AMENDMENT NO. 1.
------------------------
In addition to all of the other conditions and agreements set forth
herein, the effectiveness of this Amendment is subject to the following
conditions precedent:
4.1 THE AMENDMENT. The Banks and the Agent shall have received this
Amendment No. 1 to Amended and Restated Credit Agreement, executed and
delivered by a duly authorized officer of the Borrower.
4.2 AMENDMENT NO. 1 TO RISER GUARANTY. The Banks and the Agent shall
have received Amendment No. 1 to Amended and Restated Guaranty Agreement,
executed and delivered by a duly authorized officer of Riser Foods, Inc., and
all of the conditions precedent to such Amendment shall have been satisfied.
4.3 ACKNOWLEDGEMENT OF GUARANTORS. The Banks and the Agent shall have
received the Acknowledgement of Guarantors attached to this Amendment, executed
and delivered by a duly authorized officer of each of the Guarantors of the
indebtedness of the Borrower to the Banks and the Agent.
4.4 BORROWER'S CERTIFICATE. The Banks and the Agent shall have
received a certificate, in form and substance satisfactory to the Agent,
executed for and on behalf of the Borrower by the Chief Executive Officer and
the Secretary of the Borrower and dated as of the date of this Amendment,
certifying (i) the Director's Resolutions of the Borrower, authorizing this
Amendment, and each document or other instrument executed in connection with
the Amendment, (ii) the names and signatures of the officers of the Borrower,
and (iii) compliance by the Borrower with all representations, warranties,
covenants and conditions under the Credit Agreement, as amended by this
Amendment.
4.5 OTHER DOCUMENTS. The Banks and the Agent shall have received each
additional document, instrument or piece of information reasonably requested by
the Agent, including, without limitation, any financing statements as may be
necessary to continue the perfection of the security interests created by the
Security Agreements.
-3-
<PAGE> 5
SECTION 5. MISCELLANEOUS.
--------------------------
5.1 GOVERNING LAW. This Amendment shall be governed by and construed
in accordance with the laws of the State of Ohio.
5.2 SEVERABILITY. In the event any provision of this Amendment should
be invalid, the validity of the other provisions hereof and of the Credit
Agreement shall not be affected thereby.
5.3 COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which, when taken together, shall constitute but one and
the same agreement.
IN WITNESS WHEREOF, the Borrower has caused this Amendment No. 1 to
Amended and Restated Credit Agreement to be duly executed and delivered by its
duly authorized officer as of the date first above written.
RINI-REGO SUPERMARKETS, INC. (formerly known
as Fisher Foods, Inc.)
/s/ Ronald W. Ocasek
-----------------------------------
By: Ronald W. Ocasek
--------------------------------
Title: CFO & Treasurer
-----------------------------
ACCEPTED AND AGREED as of this
16 day of May, 1994:
- - - ----
SOCIETY NATIONAL BANK, as a Bank and as Agent
/s/ Todd B. Boney
- - - -------------------------------
By: Todd B. Boney
----------------------------
Title: Vice President
-------------------------
NATIONAL CITY BANK, as a Bank
/s/ Terry Wolford
- - - -------------------------------
By: Terry Wolford
----------------------------
Title: Vice President
-------------------------
-4-
<PAGE> 6
NBD BANK, N.A., as a Bank
_______________________________
By:____________________________
Its:___________________________
PNC BANK, NATIONAL ASSOCIATION
_______________________________
By:____________________________
Title:_________________________
STAR BANK, N.A.
_______________________________
By:____________________________
Its:___________________________
-5-
<PAGE> 7
ACKNOWLEDGEMENT OF GUARANTORS
-----------------------------
Each of the undersigned, RISER FOODS, INC., SEAWAY FOOD SERVICE, INC.
(formerly known as American Seaway Foods, Inc.), FISHER PROPERTIES, INC., and
AMERICAN SEAWAY FOODS, INC. (formerly known as Heritage Wholesalers, Inc.),
each of which being a guarantor of indebtedness of the Borrower to the Banks
and the Agent, hereby acknowledges and agrees to the terms of the foregoing
Amendment No. 1 to Amended and Restated Credit Agreement. Each of the
undersigned represents and warrants to the Banks and the Agent that the
respective Amended and Restated Guaranty Agreements (as amended), executed and
delivered by each of the undersigned, each dated as of May 27, 1993, remain the
valid and binding obligations of each of the undersigned, respectively,
enforceable against it in accordance with their terms.
RISER FOODS, INC.
/s/ Ronald W. Ocasek
--------------------------------
By: Ronald W. Ocasek
-----------------------------
Title: Sr. V.P., CFO & Treasurer
--------------------------
SEAWAY FOOD SERVICE, INC.
(formerly known as American Seaway Foods, Inc.)
/s/ Ronald W. Ocasek
---------------------------------
By: Ronald W. Ocasek
------------------------------
Title: CFO & Treasurer
---------------------------
AMERICAN SEAWAY FOODS, INC.
(formerly known as Heritage Wholesalers, Inc.)
/s/ Ronald W. Ocasek
---------------------------------
By: Ronald W. Ocasek
------------------------------
Title: CFO & Treasurer
---------------------------
-6-
<PAGE> 8
FISHER PROPERTIES, INC.
/s/ Ronald W. Ocasek
----------------------------------
By: Ronald W. Ocasek
-------------------------------
Title: CFO & Treasurer
----------------------------
Executed: May __, 1994
-7-
<PAGE> 1
EXHIBIT 21
<PAGE> 2
SUBSIDIARIES OF RINI-REGO SUPERMARKETS, INC.
(fka Fisher Foods, Inc.), an Ohio corporation
--------------------------------------------
American Seaway Foods, Inc. (fka Heritage Wholesalers, Inc.), an Ohio
corporation.
Seaway Food Service, Inc. (fka American Seaway Foods, Inc.), an Ohio
corporation.
Fisher Properties, Inc. (fka Fisher Auto Leasing, Inc.), an Ohio corporation.
5300 Richmond Road Corp., a Delaware corporation.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
RINI-REGO SUPERMARKETS, INC. CONSOLIDATED BALANCE SHEET, CONSOLIDATED
STATEMENT OF INCOME AND THE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE
FISCAL YEAR ENDED JULY 2, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FORM 10-K FOR THE FISCAL YEAR ENDED JULY 2, 1994.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-02-1994
<PERIOD-END> JUL-02-1994
<CASH> 4,376
<SECURITIES> 0
<RECEIVABLES> 41,755
<ALLOWANCES> 3,295
<INVENTORY> 74,279
<CURRENT-ASSETS> 128,552
<PP&E> 173,841
<DEPRECIATION> 65,308
<TOTAL-ASSETS> 257,517
<CURRENT-LIABILITIES> 85,560
<BONDS> 94,209
0
1,804
<COMMON> 81
<OTHER-SE> 62,796
<TOTAL-LIABILITY-AND-EQUITY> 257,517
<SALES> 1,121,604
<TOTAL-REVENUES> 1,121,604
<CGS> 905,456
<TOTAL-COSTS> 905,456
<OTHER-EXPENSES> 203,940
<LOSS-PROVISION> 1,898
<INTEREST-EXPENSE> 7,802
<INCOME-PRETAX> 2,508
<INCOME-TAX> 928
<INCOME-CONTINUING> 1,580
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 6,866
<NET-INCOME> 8,446
<EPS-PRIMARY> 1.03
<EPS-DILUTED> 1.03
</TABLE>
