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 (Fee Required)
For the fiscal year ended: April 29, 1995
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period __________ to __________.
Commission file number 0-16900
RICHFOOD HOLDINGS, INC.
Incorporated under the laws I.R.S.Employer Identification
of Virginia No. 54-1438602
P.O. Box 26967
Richmond, Virginia 23261
Telephone Number (804) 746-6000
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, without par value.
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 the 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. _____
At June 30, 1995, the aggregate market value of all shares of voting stock
held by non-affiliates was $436,230,527 (based upon the last reported sale
price of the Common Stock on that date by the NASDAQ National Market System).
In determining this figure, the Registrant has assumed that all directors and
executive officers are affiliates. Such assumption shall not be deemed
conclusive for any other purpose. The number of shares outstanding of each
class of the Registrant's common stock, as of June 30, 1995, was as follows:
Common Stock, without par value: 21,431,058 shares.
Portions of the Registrant's Annual Report to Shareholders for the fiscal
year ended April 29, 1995, are incorporated by reference into Parts I, II and
IV of this Form 10-K. Portions of the Registrant's Joint Proxy
Statement/Prospectus prepared for use in connection with the 1995 annual
meeting of shareholders are incorporated by reference into Part III of this
Form 10-K.
<PAGE>
PART I
ITEM 1. BUSINESS
General
Richfood Holdings, Inc. (the "Company"), a Virginia corporation formed in
July 1987, is headquartered at 8258 Richfood Road, Mechanicsville, Virginia
23111. Richfood, Inc. ("Richfood"), the Company's primary operating
subsidiary, was formed in 1935 and is a full-service wholesale food
distributor headquartered in Mechanicsville, Virginia. Rotelle, Inc.
("Rotelle"), also a subsidiary of the Company, is a wholesale frozen food
distributor headquartered in West Point, Pennsylvania.
The Company is the largest wholesale food distributor in its Mid-Atlantic
operating region and the fifth largest publicly owned wholesale food
distributor in the United States. The Company supplies a complete
selection of national brand and private label grocery products, frozen
foods, dairy products, fresh produce items, meats, delicatessen and bakery
products, and non-food items to more than 1,500 retail grocery stores
throughout the Mid-Atlantic region. The Company offers its customers a
dependable supply and prompt delivery of over 28,500 grocery and non-
grocery items at competitive prices.
Since 1990, the Company's management team has pursued a strategy of
increasing profitability and enhancing shareholder value by increasing
sales to existing customers ("customer concentration"), attracting new
customers and pursuing strategic acquisitions. In addition, the management
team has focused on cost control and on the logistics and distribution
areas of the Company's business, with the objective of enhancing
profitability while offering lower prices and better service to customers.
See "Business Strategy."
The Company began a series of strategic acquisitions in fiscal 1991, with
the purchase of the Waynesboro, Virginia, division of Fleming Foods of
Virginia, Inc., which increased the Company's presence in the western
portion of its operating region. On January 22, 1993, the Company acquired
certain assets and assumed certain contracts of the Civilian Wholesale
Division (the "Civilian Division") of B. Green & Company, Inc., a wholesale
and retail grocery distributor headquartered in Baltimore, Maryland. The
acquisition of the Civilian Division increased significantly the Company's
presence in the Baltimore/Washington, DC market, while permitting the
Company to achieve greater efficiency and productivity from its existing
warehousing and delivery operations. On August 23, 1994, the Company
acquired all of the outstanding common shares of Rotelle, one of the
largest wholesale frozen food distributors in the United States. Rotelle,
through its state-of-the-art distribution facilities, distributes frozen
food, ice cream and frozen bakery products to its customers. In addition,
Rotelle operates a food service division, a USDA-inspected meat cutting
facility and an ice manufacturing facility. On April 3, 1995, the Company
acquired certain assets and assumed certain contracts of the wholesale
division of Camellia Food Stores, Inc. ("Camellia"). As a result of that
acquisition, the Company serves as wholesale supplier to Camellia's 46
retail stores, and most of the 120 independent retail stores, that previously
had been served by Camellia's wholesale division. The Camellia acquisition also
should permit the Company to achieve additional efficiencies and economies of
scale in its business. See note 2 to the Company's Consolidated Financial
Statements, appearing in the Company's Annual Report to Shareholders for fiscal
1995 (the "1995 Annual Report"). On June 26, 1995, the Company announced that
it had signed a definitive agreement to acquire Super Rite Corporation ("Super
Rite"), a full-service grocery wholesaler headquartered in Harrisburg,
Pennsylvania. See "Recent Developments."
Over this five year period, the Company also has rationalized product
purchasing and pricing systems within its operations, while significantly
increasing efficiency in its logistics and distribution functions. As a
result, the Company has increased sales and achieved record net earnings
for each year during the period, while offering lower prices and better
service to its customers. See "Purchasing and Production," "Product
Pricing" and the Selected Financial Data referred to in Item 6 of this Form
10-K.
Recent Developments
On June 26, 1995, the Company announced the signing of a definitive
agreement to acquire Super Rite, headquartered in Harrisburg, Pennsylvania,
through a tax-free merger. Super Rite is a full-service wholesale food
distributor supplying 238 supermarkets in Pennsylvania, New Jersey, Maryland,
Delaware, Virginia and West Virginia. Super Rite also operates a retail grocery
division consisting of eight METRO superstores and seven BASICS supermarkets.
The following description of the acquisition is qualified in its entirety by
reference to the Company's Current Report on Form 8-K dated June 26, 1995, which
is incorporated herein by reference.
Under the terms of the agreement, the Company will issue 1.0205 shares of
its Common Stock for each outstanding share of Super Rite common stock,
representing a value of $22.00 per Super Rite share based upon the
Company's average stock price for the thirty trading days preceding June
26, 1995. Super Rite had approximately 9.6 million shares of common stock
outstanding at March 4, 1995. Upon consummation of the merger, former Super
Rite shareholders will hold approximately 31% of the Company's total Common
Stock outstanding.
Prior to the execution of the definitive agreement, the transaction was
approved by the boards of directors of both companies, but remains subject
to regulatory approvals, approval by the shareholders of both companies and
other customary closing conditions. The transaction is expected to be
accounted for as a pooling of interests and is currently expected to be
completed by the end of calendar 1995.
After the merger is completed, Super Rite will operate as a separate,
wholly-owned subsidiary of the Company. The combined company is expected
to have annual net sales in excess of $3.0 billion, based on the most
recent fiscal year results for the Company and Super Rite. The combined
company is expected to serve over 1,700 retail grocery stores throughout
the Mid-Atlantic region.
Business Strategy
The Company's primary business objective is to pursue opportunities for
growth that increases profitability and enhances shareholder value. The
Company's strategy for achieving that objective is to increase customer
concentration and to attract new customers, while continuing to focus on
cost control and on the logistics and distribution aspects of its business.
This strategy is intended to enhance profitability while permitting the
Company to offer lower prices and better service to customers. In
addition, the Company may, from time to time, pursue strategic acquisitions
that complement the Company's existing operations.
The Company pursues its goals of increasing customer concentration and
attracting new customers by (i) providing products to its customers at the
lowest available prices, (ii) assisting its retail customers in adapting to
changes in consumer preferences and in the marketplace and (iii) offering
its customers a wide variety of retail support services typical of those
offered by large retail chains to their individual stores. See "Product
Pricing," "Purchasing and Production" and "Retail Support." The Company
provides its retail customers with the competitive advantages associated
with large purchasing power and extensive retail support services similar
to those of large supermarket chains, while each customer retains its
regional focus and flexibility to respond to local demographics and market
conditions.
Consolidation trends in the food distribution industry may present
opportunities for strategic acquisitions by the Company. The Company's
criteria for strategic acquisitions is to pursue well run, established
wholesale operations with modern facilities and capacity to accommodate
growth, that complement the Company's existing operations, and that are
expected to achieve an appropriate return on the Company's investment. The
Company will also commit capital resources as appropriate to increase the
efficiency and productivity of the Company's distribution and logistics
operations.
Purchasing and Production
The Company's business strategy involves assisting its retail customers in
adapting to changes in consumer preferences and in the marketplace so they
remain competitive. The Company continually changes and enhances its
product offerings to meet changing consumer demands.
The Company purchases products for resale from over 1,500 vendors in the
United States and overseas. Therefore, the Company is not substantially
dependent on any single supplier to meet customer demands. The Company
believes that its size enables it to purchase products at the lowest
available manufacturers' prices. The Company monitors manufacturers'
prices and uses its buying power to secure products at the best terms
available. See "Product Pricing."
The Company purchases long-term quantities of inventory items when
manufacturers' prices are advantageous. In particular, the Company
purchases sufficient quantities of certain staple items when offered at a
discount if justified after giving effect to carrying costs.
The Company offers national, regional and private label products. Private
labels include "RICHFOOD," "ECON," "IGA" and "FROSTY ACRES." The Company
also coordinates private labels for certain regional supermarket chains in
the Mid-Atlantic region. Private label products allow retail customers to
carry single labels on a store-wide basis similar to chain stores, while
providing consumers a lower-priced alternative to national brands. The
Company currently offers 1,330 products under the "RICHFOOD" label, 250
products under the budget-priced "ECON" label, 300 products under the "IGA"
label and 850 products under the "FROSTY ACRES" label. In fiscal 1995,
private label products, including private label products packaged for
certain customers, accounted for approximately 12% of the Company's total
sales.
The Company's fluid dairy, located in Richmond, Virginia, processes a full
line of milk products packaged in sizes from pints to gallons. The dairy
also processes and packages a full line of juices, drinks and water
products in plastic and carton containers.
The Company's Pennsylvania food service division sells most grocery items,
fresh and frozen seafood, meat, dairy, produce and paper products primarily
to supermarkets, schools, retirement facilities and recreational
facilities. Processed and pre-packaged meats are prepared by the Company's
USDA-inspected meat cutting facility. Packaged ice is produced at the
Pennsylvania distribution center and is sold primarily to supermarkets.
Inventories
At April 29, 1995, the Company's inventory levels were $87.8 million,
compared to $73.9 million at April 30, 1994. The Company remains committed
to effective inventory management, and increased its inventory turnover
rate from 15.43 times in fiscal 1994 to 17.14 times in fiscal 1995. See
"Purchasing and Production" and "Order Processing and Distribution."
Order Processing and Distribution
The Company produces and distributes catalogues with weekly updates
indicating manufacturers' prices and wholesale prices to customers for each
of its more than 28,500 products. Customers place orders either by
telephone or by direct computer links to the Company's two distribution
centers in Mechanicsville, Virginia, and West Point, Pennsylvania. In
addition, the Company's sales personnel use telemarketing to advise
customers of periodic special prices and product offerings.
Deliveries are made by the Company's drivers and contract carriers from the
Virginia and Pennsylvania distribution centers via trucks leased or owned
by the Company. In addition, "drop shipments" are sent directly to retailers by
suppliers under programs established by the Company. The Company currently
leases 125 tractors, 194 refrigerated trailers and 186 dry trailers. The Company
owns 80 tractors and 126 refrigerated trailers.
The Company's West Point, Pennsylvania, distribution center is a highly
automated, state-of-the-art facility with high-speed conveyor systems and
electronic scanning for automated product routing to delivery trucks. The
Company's Mechanicsville, Virginia, warehouse uses a computerized warehouse
locator/inventory control system which monitors product movement and
provides efficiency in the handling, storage and retrieval of products.
Goods sold to customers are billed on a weekly basis with payment generally
due the following week. The Company reviews customers' credit histories on
an individual basis and requires customers to provide collateral to secure
outstanding accounts when appropriate.
The following table reflects the changes in the composition of the
Company's gross sales over the past three fiscal years:
Gross Sales Summary
Fiscal
year Grocery Frozen Meat Other
1995 48.9% 24.4% 16.6% 10.1%
1994 54.9% 17.8% 19.9% 7.4%
1993 54.7% 17.3% 19.8% 8.2%
Product Pricing
The Company uses the "cost plus" method of pricing products sold to
customers. Under the "cost plus" method of pricing, products are sold to
the customer at landed vendor invoice cost. The customer is also charged a
service fee and a delivery fee based upon the characteristics of the order.
The fee structure includes incentives to encourage customers to increase
their purchases from the Company and to order and accept merchandise for
delivery more efficiently, thereby increasing the Company's efficiency.
Over the past several years, the Company's "cost plus" pricing system,
together with efficiencies in purchasing operations, have resulted in more
competitively-priced merchandise and have placed the Company and its retail
customers in a stronger market position.
Retail Support
The Company's largest customers generally perform their own retail support
services and have selected the Company as a supplier because of its
competitive prices. The Company's smaller customers, however, must compete
with the retail service resources of large national chains. The Company
provides a wide variety of retail support services to assist its smaller
customers in that effort. Customers decide individually which services to
use and are charged a fee for such services.
Services offered by the Company include retail development, retail sales
consulting, marketing and merchandising assistance, data processing and
customized software, and financial planning and analysis. The Company's
retail development services are focused on store planning and development,
and include advising retailers on site planning through construction, lease
negotiation, product display and promotion. This assistance also includes
demographic studies, engineering support, contracting assistance and layout
strategy. Retail sales counselors assist customers with detailed analyses
of their stores' operations, pricing, advertising, delivery schedules,
inventory control and merchandising plans, to help each customer maintain
its competitive advantage. Marketing services include developing marketing
strategies, designing and producing signs and flyers and coordinating print
and media campaigns. The Company provides data processing services and
customized software to many of its customers, which allows them to manage
accounting functions, time-and-attendance data and inventories. The
Company also assists customers in strategic planning and capital budgeting
as well as in cash management and overall financial planning.
A subsidiary of the Company, Market Improvement Corporation, provides
secured financing to retailers, primarily to finance store acquisitions,
construction and remodeling, generally at a variable interest rate equal to
the prime lending rate plus 2%. The Company has developed credit criteria
intended to ensure that such loans are made only with appropriate
collateral and in situations that are expected to contribute to the
Company's growth. The Company believes that its current financing
arrangements provide it with the necessary flexibility to use customer
financing as an important tool to expand its business. Information
regarding retailer financing activities appears in the Financial Review
referred to in Item 7 of this Form 10-K.
Outstanding amounts loaned to customers as of the end of the past five
fiscal years are as follows (in thousands):
April 29, April 30, May 1, May 2, April 27,
1995 1994 1993 1992 1991
Total amount
outstanding $33,873 $34,343 $43,910 $29,310 $5,685
The Company expects to continue to provide secured financing to
creditworthy retail customers as part of its strategy to retain existing
business and attract new business. The amount of customer financing that
may be provided by the Company in future years is not presently
determinable since such amount will depend upon, among other things, the
number of store sites that are offered for sale or available for
development in the Company's service area and the availability of
alternative sources of financing.
Customer Base; Principal Markets
Richfood is the principal source of supply for most of its customers, while
Rotelle is the principal source of frozen food supply for most of its
customers. The Company supplies approximately 1,500 retail grocery stores in
Virginia, the District of Columbia, North Carolina, Maryland, Pennsylvania,
New Jersey, West Virginia, New York and Delaware. The Company's retail
customers include single-store operators, multiple-store operators and
regional chains. Customer store sizes range from 4,500 square feet to
60,000 square feet.
The Company's three largest customers are Farm Fresh, Inc. ("Farm Fresh"),
headquartered in Norfolk, Virginia, Ukrop's Super Markets, Inc.
("Ukrop's"), headquartered in Richmond, Virginia, and Acme Markets, Inc.
("Acme"), headquartered in Malvern, Pennsylvania. These customers and
their affiliates accounted for 26%, 13% and 10%, respectively, of the
Company's sales in fiscal 1995. Farm Fresh has been a Richfood customer
for over 24 years, Ukrop's has been a customer of Richfood for over 48
years and Acme has been a Rotelle customer for over 20 years.
Richfood and Farm Fresh are parties to a supply agreement that secures the
Company's position as principal supplier to all stores owned by Farm Fresh
and its affiliates through December 2001. The supply agreement includes
minimum purchase requirements by dollar amount and category of goods and is
subject to adjustment as Farm Fresh acquires or disposes of stores. In July
1994, Rotelle entered into a supply agreement with Acme, pursuant to which
Acme agreed to purchase frozen foods and related products from Rotelle
through July 1997.
The Company also acquired or entered into supply agreements covering many
of the retail stores now being serviced as a result of the April 1995
acquisition of Camellia and the January 1993 acquisition of the Civilian
Division. In addition, customers to whom the Company provides secured
financing are generally required to enter into supply agreements with the
Company. Overall, sales to customers covered by supply agreements accounted
for approximately 56% of fiscal 1995 sales.
Competition
The Company's principal service areas are central and eastern Virginia,
Maryland and eastern Pennsylvania. The Company's principal wholesale
competitors include Fleming Companies, Inc., Supervalu Inc., Nash Finch,
Company, DiGiorgio Company, Nassau-Suffolk Frozen Food Co., Inc. and Burris
Foods, Inc. Within the Company's Mid-Atlantic service area, the primary
retail grocery competitors of its customers include Food Lion, Inc., Winn
Dixie Stores, Inc., Giant Food, Inc. (Landover, Maryland) and The Kroger
Co. (in western Virginia).
The Company believes that it can compete successfully on the wholesale
level while supporting the competitive efforts of its customers by offering
a large selection of goods at competitive prices and by continuing to
provide to its customers a wide variety of support services typical of
those offered by large chains to their individual stores. In addition, the
Company will continue to pursue opportunities for customers to acquire
additional stores as they become available, within and adjacent to, the
Company's principal service area. The Company intends to pursue these
strategies and to continue to improve operating efficiencies through its
focus on distribution and logistics.
Employee Relations
Management believes that relations with the Company's employees remain
excellent. At April 29, 1995, the Company employed approximately 411
salaried and 1,435 non-salaried associates, compared to 331 salaried and
1,162 non-salaried associates employed at April 30, 1994. This increase is
primarily due to the acquisition of Rotelle.
The Company is party to a five-year collective bargaining agreement that
expires in 1996 covering its transportation unit employees at the
Mechanicsville distribution center, and a four-year collective bargaining
agreement that expires in July 1998 covering warehouse employees at
Rotelle's West Point frozen food distribution center. The Company is not a
party to any other collective bargaining agreements, nor is it aware of any
pending union petitions related to its employees.
Regulation
The Company is subject to federal, state and local laws and regulations
governing the processing, purchase, handling, sale and transportation of
its products, and is subject to the jurisdiction of the Food and Drug
Administration ("FDA"), the Interstate Commerce Commission ("ICC") and the
United States Department of Agriculture ("USDA"). Management believes that
the Company is in material compliance with all FDA, ICC, USDA and other
federal, state and local laws and regulations governing its business.
Trademarks and Licenses
The Company owns or licenses various registered trademarks. Federal
registrations for the "RICHFOOD" and "ECON" trademarks have been obtained
by the Company for use on a variety of products distributed by the Company.
The Company licenses the "IGA" trademark from IGA, Inc., a Delaware non-
stock corporation. The IGA license authorizes the Company to supply "IGA"
brand products and to sublicense the "IGA" trademark to retailers that
desire to operate their retail stores under the "IGA" banner. IGA, Inc.
may terminate the license in the event the Company violates the terms of
IGA, Inc.'s bylaws and fails to cure the violation within the applicable
cure period.
Certain Financial Information
Information with respect to the Company's sales, operating profit and
financial condition for each of its past five fiscal years appears in the
"Selected Consolidated Financial Data" referred to in Item 6 of this Form
10-K. Information with respect to the Company's working capital practices
appears above under the captions "Inventories" and "Order Processing and
Distribution," and in the "Financial Review" referred to in Item 7 of this
Form 10-K.
ITEM 2. PROPERTIES
The Company's principal facility, which is owned by Richfood, is its 1.3
million square foot distribution center located in Mechanicsville,
Virginia. This distribution center, one of the largest single grocery
distribution centers in the country, is situated on a 400 acre site. The
wholesale operation utilizes approximately 100 acres of that site; 300
acres surrounding the facility are excess. The facility includes 775,000
square feet of dry grocery space, 167,000 square feet of frozen food space,
68,500 square feet of meat space, 62,000 square feet of produce space,
52,000 square feet of cheese/ dairy space and 100,000 square feet of office
space.
Rotelle owns and operates a highly automated frozen food distribution
facility in West Point, Pennsylvania. This facility includes 6.3 million
cubic feet of freezer space. In addition, there is approximately 185,000
square feet of warehouse (which includes the food service division), office
space and truck maintenance facilities at the Pennsylvania location.
Richfood's fluid dairy, located in Richmond, Virginia, is a 65,000 square
foot facility capable of processing and packaging over 500,000 gallons of
milk and other dairy products, fruit juices, bottled water and related
items on a weekly basis. This facility is owned by Richfood.
Richfood has a long-term lease for a 550,000 square foot warehouse in
Chester, Virginia. Richfood currently utilizes approximately 317,000 square
feet of the grocery storage space and 38,000 square feet of the freezer
storage space in this warehouse. Richfood subleases approximately 105,000
square feet of the warehouse to a third party. In addition, 32,000 square
feet of space at the warehouse is subleased to Ukrop's. Reference is made
to Item 13 of this Form 10-K.
Each of the foregoing facilities is well maintained and in good operating
condition. Company facilities are utilized at practical capacities that
vary in accordance with product mix and customer demands. The Company
believes that each of its facilities has adequate capacity to meet the
demands of anticipated growth. The Company's strategy with respect to
acquisitions includes obtaining modern facilities with capacity for growth,
as appropriate for the business acquired. See "Business Strategy."
ITEM 3. LEGAL PROCEEDINGS
The Company is party to various legal actions that are incidental to its
business. While the outcome of legal actions cannot be predicted with
certainty, the Company believes that the outcome of any of these
proceedings, or all of them combined, will not have a material adverse
effect on its consolidated financial position or business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS
The following persons are executive officers of the Company. Officers
serve at the discretion of the Company's Board of Directors and are elected
at each annual meeting of the Board of Directors.
Donald D. Bennett, age 59, was elected Chairman of the Board and Chief
Executive Officer of the Company and of Richfood in June 1995. Mr. Bennett
formerly served as President and Chief Executive Officer of the Company and
of Richfood from May 1990 to June 1995.
John E. Stokely, age 42, was elected President and Chief Operating Officer
of the Company and of Richfood in June 1995 after serving as Executive Vice
President-Finance and Administration of the Company and of Richfood from
August 1993 to June 1995. Mr. Stokely was formerly Senior Vice President-
Finance and Chief Financial Officer of the Company and of Richfood from
April 1991 to August 1993 and Vice President-Finance and Chief Financial
Officer (and, from August 1990 to January 1991, Secretary) of the Company
and of Richfood from August 1990 to April 1991.
Edgar E. Poore, age 62, was elected Executive Vice President of the Company
and of Richfood in June 1995. Mr. Poore formerly served as Executive Vice
President/Chief Operating Officer of the Company and of Richfood from July
1989 to June 1995.
Michael C. Bourgoine, age 45, was elected Executive Vice President, Sales,
Marketing and Retail Development of Richfood in June 1995. Mr. Bourgoine was
President of BDH Inc., which owns and operates Valu Land Food Stores in Laconia,
New Hampshire, from 1994 to 1995, and Vice President and Treasurer of, and a
Partner in, Farm Fare Supermarkets from 1988 to 1994.
Gary L. Conrad, age 50, was elected Executive Vice President-Distribution
and Logistics of Richfood in June 1995. Mr. Conrad formerly served as
Senior Vice President-Distribution and Logistics of Richfood from October
1994 to June 1995 and Vice President-Distribution of Richfood from January
1988 to October 1994.
Larry A. King, age 47, was elected Executive Vice President-Procurement of
Richfood in July 1995. Mr. King formerly served as Senior Vice President-
Procurement of Richfood from October 1994 to July 1995, Vice President-
Procurement of Richfood from September 1992 to October 1994 and Director of
Grocery and Frozen Food Procurement of Richfood from January 1990 to
September 1992.
John V. Marklin, age 39, was elected Senior Vice President-Finance and
Chief Financial Officer of the Company and of Richfood in June 1995 after
serving as Vice President-Controller of Richfood from August 1994 to June
1995. Mr. Marklin formerly was Vice President-Finance of Supervalu Inc.'s
Reading, Pennsylvania division from October 1991 to August 1994. Mr.
Marklin held the position of Assistant General Manager in Training at
Wetterau, Inc. from 1990 to 1991.
Daniel R. Schnur, age 35, was elected Senior Vice President, General
Counsel and Secretary of the Company and of Richfood in June 1995. Mr.
Schnur formerly served as the Company's and Richfood's Vice President,
General Counsel and Secretary from January 1992 to June 1995, General
Counsel and Secretary from January 1991 to January 1992, and General
Counsel from November 1990 to January 1991. Mr. Schnur previously was an
attorney with Hunton & Williams, a law firm, from 1986 to 1990.
William C. Stocker, age 48, was elected Senior Vice President-Marketing and
Advertising of Richfood in September 1993. Mr. Stocker formerly served as
Vice President-Marketing of Richfood from August 1990 to September 1993.
David W. Hoover, age 32, was elected Vice President-Finance of Richfood in
August 1993. Mr. Hoover formerly served as Director, Planning and Analysis
of Richfood from December 1990 to August 1993. Mr. Hoover previously
served as Audit Manager of KPMG Peat Marwick LLP, a public accounting firm,
from July 1990 to November 1990.
Chris S. Zubof, age 47, was elected Vice President-Human Resources of
Richfood in May 1992. Mr. Zubof was formerly President of Chris S. Zubof
and Associates, a human resources consulting firm, from 1991 to May 1992,
and Director of Human Resources of Hunton & Williams from 1990 to 1991.
Christopher A. Brown, age 32, was elected President and Chief Operating
Officer of Rotelle in July 1995. Mr. Brown was formerly Executive Vice
President and Chief Operating Officer of Rotelle from August 1994 to July
1995, and Richfood's Executive Vice President-Procurement and Marketing
from September 1993 to August 1994, Senior Vice President-Procurement from
September 1992 to September 1993, Vice President-Procurement from February
1991 to August 1992 and Vice President-Controlled Brands from June 1990 to
January 1991.
John F. Rotelle, age 59, was elected Chairman of Rotelle in July 1995. Mr.
Rotelle formerly served as President of Rotelle from 1959 to July 1995.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Common Stock of the Company is traded in the over-the-counter (OTC)
market and is quoted through the NASDAQ National Market System under the
symbol RCHF. As of June 30, 1995, there were 1,048 holders of record of
the Company's Common Stock. The information set forth under the headings
"Market Price Range" and "Cash Dividends Declared Per Common Share" and in
the final paragraph of note 13 to the Company's Consolidated Financial
Statements, which appears in the Company's 1995 Annual Report, is hereby
incorporated by reference.
During fiscal 1992, the Company reinstituted payment of cash dividends on
its Common Stock. The Company expects to continue paying cash dividends on
its Common Stock when justified by the Company's financial condition. The
amount of future dividends, if any, will depend on general business
conditions encountered by the Company, its earnings, financial condition
and capital requirements and such other factors as the Board of Directors
may deem relevant.
ITEM 6. SELECTED FINANCIAL DATA
The information appearing under the caption "Selected Consolidated Financial
Data," which appears in the 1995 Annual Report, is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information appearing under the caption "Financial Review," which
appears in the 1995 Annual Report, is incorporated herein by reference. See also
"Recent Developments" discussion under Item 1 of this Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and related notes of Richfood
Holdings, Inc. and its subsidiaries, together with the report of KPMG Peat
Marwick LLP thereon, which appear in the 1995 Annual Report, are incorporated
herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information contained in the Company's Joint Proxy Statement/Prospectus
prepared for use in connection with the 1995 annual meeting of shareholders
("1995 Joint Proxy Statement/Prospectus") under the captions "Nominees for
Election to the Richfood Board," "Richfood Board and Committees" and
"Section 16(a) Compliance" is incorporated herein by reference. See also
"Executive Officers" at the end of Part I of this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information contained in the 1995 Joint Proxy Statement/Prospectus
under the caption "Richfood Executive Compensation" is incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained in the 1995 Joint Proxy Statement/Prospectus
under the caption "Security Ownership of Certain Beneficial Owners and
Management of Richfood" is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained in the 1995 Joint Proxy Statement/Prospectus
under the captions "Certain Relationships and Related Transactions of
Richfood" and "Richfood Compensation Committee Interlocks and Insider
Participation" is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial statements, financial statement schedules and exhibits
included in this Form 10-K:
1. Financial Statements:
The following consolidated financial statements and independent
auditors' report, which appear on pages 12 through 24 of the 1995
Annual Report, are incorporated herein by reference:
Report of KPMG Peat Marwick LLP.
Richfood Holdings, Inc. Consolidated Statements of Earnings for
the fiscal years ended April 29, 1995, April 30, 1994 and May 1,
1993.
Richfood Holdings, Inc. Consolidated Balance Sheets at April 29,
1995, and April 30, 1994.
Richfood Holdings, Inc. Consolidated Statements of Stockholders'
Equity for the fiscal years ended April 29, 1995,April 30, 1994,
and May 1, 1993.
Richfood Holdings, Inc. Consolidated Statements of Cash Flows for
the fiscal years ended April 29, 1995, April 30, 1994, and May 1,
1993.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedules:
Report of KPMG Peat Marwick LLP.
Schedule I Condensed Financial Information of Registrant.
Schedule II Valuation and Qualifying Accounts.
Schedules other than those listed above have been omitted because
such schedules are not required or are not applicable.
3. Exhibits:
The exhibits that are required to be filed or incorporated by
reference herein are listed in the Exhibit Index. Exhibits 10.1
to 10.10 hereto constitute management contracts or compensatory
plans or arrangements required to be filed as exhibits hereto.
(b) Reports on Form 8-K:
None.
<PAGE>
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULES
The Board of Directors
Richfood Holdings, Inc.:
Under date of June 5, 1995, we reported on the consolidated balance sheets of
Richfood Holdings, Inc. and subsidiaries (the Company) as of April 29, 1995
and April 30, 1994, and the related consolidated statements of earnings,
stockholders' equity and cash flows for each of the fiscal years in the
three-year period ended April 29, 1995, which are included in the Company's
1995 annual report to stockholders. These consolidated financial statements
and our report thereon are incorporated by reference in the annual report on
Form 10-K of Richfood Holdings, Inc. for the fiscal year ended April 29,
1995. In connection with our audits of the aforementioned consolidated
financial statements, we also audited the related financial statement
schedules as listed in the accompanying index. These financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statement
schedules based on our audits.
In our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
Richmond, Virginia
June 5, 1995 /s/ KPMG PEAT MARWICK LLP
<PAGE>
SCHEDULE I-CONDENSED FINANCIAL INFORMATION OF REGISTRANT
RICHFOOD HOLDINGS, INC.
CONDENSED STATEMENTS OF EARNINGS
(dollar amounts in thousands)
Fiscal Year Ended
April 29, April 30, May 1,
1995 1994 1993
Interest expense $1,035 $ - -
Income tax benefit (399) - -
Net loss before equity in
net earnings of
subsidiaries (636) - -
Equity in net earnings
of subsidiaries 26,037 17,175 15,843
Net earnings $ 25,401 $ 17,175 $ 15,843
See notes to condensed financial information.
<PAGE>
SCHEDULE I continued
RICHFOOD HOLDINGS, INC.
CONDENSED BALANCE SHEETS
(dollar amounts in thousands)
April 29, April 30,
1995 1994
Assets
Current assets-intercompany receivables $ 1,708 $ 18,966
Investments in subsidiaries 156,919 79,682
Total assets $ 158,627 $ 98,648
Liabilities and Stockholders' Equity
Current liabilities:
Intercompany payables $ 36,135 $ -
Accrued expenses and other
current liabilities 183 427
Total current liabilities 36,318 427
Stockholders' equity:
Common stock 24,529 23,701
Retained earnings 97,780 74,520
Total stockholders' equity 122,309 98,221
Total liabilities and
stockholders' equity $ 158,627 $ 98,648
See notes to condensed financial information.
<PAGE>
SCHEDULE I continued
RICHFOOD HOLDINGS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(dollar amounts in thousands)
<TABLE>
<CAPTION>
Fiscal Years Ended
April 29, April 30, May 1,
1995 1994 1993
<S> <C> <C> <C>
Operating activities:
Net earnings $ 25,401 $ 17,175 $ 15,843
Adjustments to reconcile net
earnings to net cash used for
operating activities:
Equity in net earnings of
subsidiaries (26,037) (17,175) (15,843)
Net cash used for.
operating activities (636) - -
Investing activities: acquisitions (50,266) - -
Financing activities:
Proceeds from long-term debt 35,000 - -
Principal payments on long-term debt (35,000) - -
Proceeds from issuance of common
stock under employee stock incentive
plans 93 91 456
Borrowings from
subsidiaries, net 52,842 1,557 911
Cash dividends paid on
common stock (2,033) (1,648) (1,367)
Net cash provided by
financing activities 50,902 - -
Increase in cash and cash equivalents - - -
Cash and cash equivalents
at beginning of fiscal
year - - -
Cash and cash equivalents
at end of fiscal year $ - $ - $ -
</TABLE>
See notes to condensed financial information
<PAGE>
SCHEDULE I continued
RICHFOOD HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL INFORMATION
(dollar amounts in thousands)
1. Basis of Presentation
Pursuant to the rules and regulations of the Securities and Exchange
Commission, the Condensed Financial Statements of Richfood Holdings, Inc.
do not include all of the information and notes normally included with
financial statements prepared in accordance with generally accepted
accounting principles. Therefore, these Condensed Financial Statements
should be read in conjunction with the consolidated financial statements
and notes thereto included in the fiscal 1995 Annual Report as referenced
in Form 10-K, Part II, Item 8.
2. Long-term Debt
On August 23, 1994, Richfood Holdings, Inc. entered into a $35 million
revolving credit facility with a commercial bank to finance a portion of
the purchase price of its acquisition of Rotelle. See notes 2 and 7 to the
Consolidated Financial Statements on pages 17, 18, 20 and 21 of the
Company's 1995 Annual Report, incorporated herein by reference.
On September 1, 1994, Richfood Holdings, Inc. entered an unsecured revolving
credit facility pursuant to which Richfood Holdings, Inc. may borrow up to $50
million from a wholly owned subsidiary. The revolving credit facility expires
in December 1996 and bears interest at the prime rate plus 2%. At April 29,
1995 $3,770 was outstanding under this facility.
3. Related Party Transactions
Transactions between Richfood Holdings, Inc. and its subsidiaries are as
follows:
Fiscal year ended
April 29, April 30, May 1,
1995 1994 1993
Interest expense $169 - -
No dividends were paid to Richfood Holdings, Inc. by its subsidiaries
during the fiscal years in the three year period ended April 29, 1995.
<PAGE>
SCHEDULE I continued
RICHFOOD HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL INFORMATION
(dollar amounts in thousands
4. Supplemental Disclosures of Cash Flow information
Cash paid during the year for:
Fiscal year ended
April 29, April 30, May 1,
1995 1994 1993
Interest $862 - -
<PAGE>
SCHEDULE II
RICHFOOD HOLDINGS, INC.
VALUATION AND QUALIFYING ACCOUNTS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Balance at Charged to Balance at
Beginning of Costs and Deductions End of
Description Fiscal Year Expenses and other Fiscal
Year
<S> <C> <C> <C> <C>
For Fiscal Year Ended
April 29, 1995
Deducted for asset
accounts:
Allowance for doubtful
accounts $2,754 4,370 3,264 $3,860
For Fiscal Year Ended
April 30, 1994
Deducted for asset
accounts:
Allowance for doubtful
accounts $3,992 2,818 4,056 $2,754
For Fiscal Year Ended
May 1, 1993
Deducted for asset
accounts:
Allowance for doubtful
accounts $3,169 6,435 5,612 $3,992
</TABLE>
<PAGE>
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.
RICHFOOD HOLDINGS, INC.
(Registrant)
July 26, 1995 By /s/ Donald D. Bennett
Donald D. Bennett
Chairman of the Board and
Chief Executive Officer
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 indicated.
By /s/ Donald D. Bennett By /s/ John F. Rotelle
Donald D. Bennett John F. Rotelle
Chairman of the Board and Director
Chief Executive Officer
By /s/ Roger L. Gregory By /s/ Albert F. Sloan
Roger L. Gregory Albert F. Sloan
Director Director
By /s/ Grace E. Harris By /s/ John E. Stokely
Grace E. Harris John E. Stokely
Director Director, President and
Chief Operating Officer
By /s/ John C. Jamison By /s/ George H. Thomazin
John C. Jamison George H. Thomazin
Director Director
By /s/ Michael E. Julian, Jr. By /s/ James E. Ukrop
Michael E. Julian, Jr. James E. Ukrop
Director Director
By /s/ G. Gilmer Minor, III By /s/ Edward Villanueva
G. Gilmer Minor, III Edward Villanueva
Director Director
By /s/ Claude B. Owen, Jr. By /s/ John V. Marklin
Claude B. Owen, Jr. John V. Marklin
Director Senior Vice President -
Finance and Chief
Financial Officer
Each of the above signatures is affixed as of July 26, 1995.
<PAGE>
SIGNATURES CONTINUED
By /s/ David W. Hoover
David W. Hoover
Vice President-Finance
(Principal Accounting Officer)
The above signature is affixed as of July 26, 1995.
<PAGE>
EXHIBIT INDEX
2.1 Agreement and Plan of Reorganization, dated June 26, 1995, by and between
the Company and Super Rite Corporation. (11)
The Registrant agrees to furnish supplementary to the Securities and
Exchange Commission, upon request, copies of any exhibits to such
Agreement and Plan of Reorganization that were not filed in accordance
with Item 601(b)(2) of Regulation S-K.
3.1 Amended and Restated Articles of Incorporation of the Company. (1)
3.2 Bylaws of the Company, amended and restated as of June 8, 1995.
4.1 Second Amended and Restated Credit Agreement, dated November 1, 1993,
between the Company and Crestar Bank. (9)
4.2 Letter Agreement, dated July 31, 1994, between the Company
and Crestar Bank, amending the Second Amended and Restated
Credit Agreement.
4.3 Note Agreement, dated as of June 15, 1993, with respect to Richfood's
6.15% Senior Notes due 2000. (2)
The Registrant agrees to furnish to the Securities and Exchange
Commission, upon request, copies of those agreements defining the rights
of holders of long-term debt of the Registrant and its subsidiaries that
are not filed herewith pursuant to Item 601(b)(4)(iii) of Regulation S-K.
10.1 Employment and Severance Benefits Agreement, dated as of May 21, 1993,
between the Company and Donald D. Bennett. (2)
10.2 First Amendment to Employment and Severance Benefits Agreement, dated July
21, 1995, between the Company and Donald D. Bennett.
10.3 Employment and Severance Benefits Agreement, dated August 23, 1994,
between Rotelle, Inc. and John F. Rotelle.
10.4 Employment and Severance Benefits Agreement, dated June 8, 1995,
between the Company and John E. Stokely.
10.5 Amended and Restated Long-Term Incentive Plan. (9)
10.6 Amended and Restated Omnibus Stock Incentive Plan. (9)
10.7 Non-Employee Directors' Stock Option Plan.
10.8 Executive Profit Sharing Deferred Income Growth Program. (3)
10.9 Supplemental Executive Retirement Plan and related Trust Agreement. (4)
10.10 Executive Officer Performance Plan. (5)
10.11 Truck Lease and Service Agreement, dated January 23, 1988 between
Richfood and Ryder, Inc., as amended and supplemented. (5)
10.12 Amendments to Truck Lease and Service Agreement, dated December
10, 1993, between Richfood and Ryder, Inc. (6)
10.13 Truck Lease and Service Agreement, dated May 21, 1990, originally made
between B. Green & Company, Inc. and Lend Lease Trucks, Inc., as amended
and assigned to Richfood.(2)
10.14 Equipment Lease Agreement, dated May 21, 1990, originally made between B.
Green & Company, Inc. and Lend Lease Trucks, Inc., as amended and
subleased to Richfood. (2)
10.15 Bylaws of IGA, Inc., restated as of March 1, 1988. (2)
10.16 Promissory Note and Security Agreement, dated May 18, 1992, between
Market Improvement Corporation and Marketplace Acquisition Company. (2)
10.17 Supply Agreement, dated as of April 12, 1991, between Richfood
and Farm Fresh, Inc. (7)
10.18 First Amendment to Supply Agreement, dated December 7, 1993,
between Richfood and Farm Fresh, Inc. (6)
10.19 Stock Purchase Agreement, dated as of July 22, 1994, between the
Company, John F. Rotelle and Alfred F. Rotelle. (10)
10.20 Lease, dated November 1, 1977, originally made between Safe- Chester
Associates, as lessor, and Safeway Stores, Incorporated, as lessee, as
assigned to Richfood. (8)
11.1 Statement re computation of net earnings per common share.
12.1 Statement re computation of certain ratios.
13.1 Portions of Richfood Holdings, Inc.'s 1995 Annual Report to Stockholders.
21.1 Subsidiaries of the Company.
23.1 Consent of KPMG Peat Marwick LLP.
27.1 Financial Data Schedule.
_______________________________
(1) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the twelve week period ended July 24, 1993 (Commission File No.
0-16900).
(2) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended May 1, 1993 (Commission File No. 0-16900).
(3) Incorporated by reference to the Company's Registration Statement
on Form S-4 (Commission File No. 33-16174).
(4) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended May 2, 1992 (Commission File No. 0-16900).
(5) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended April 28, 1990 (Commission File No. 0-16900).
(6) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the twelve week period ended January 8, 1994 (Commission File No.
0-16900).
(7) Incorporated by reference to the Company's Current Report on Form 8-K
dated April 12, 1991 (Commission File No. 0-16900).
(8) Incorporated by reference to the Company's Annual Report on Form 10-K for
the thirteen week interim period ended April 30, 1988 (Commission File
No.0-16900)
(9) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended April 30, 1994. (Commission File No. 0-16900).
(10) Incorporated by reference to the Company's Current Report on Form 8-K
dated November 8, 1994. (Commission File No. 0-16900).
(11) Incorporated by reference to the Company's Current Report on Form 8-K
dated June 26, 1995. (Commission File No. 0-16900).
Exhibit 3.2
BYLAWS
OF
RICHFOOD HOLDINGS, INC.
(amended and restated as of June 8, 1995)
ARTICLE I.
Meetings of Shareholders.
1.1 Places of Meetings. All meetings of the shareholders shall be
held at such place, either within or without the Commonwealth of Virginia,
as from time to time may be fixed by the Board of Directors.
1.2 Annual Meetings. Subject to the Board of Directors' ability to
postpone a meeting under Virginia law, the annual meeting and all other
meetings of shareholders shall be held on such date and at such time and
place as may be fixed by the Board of Directors and stated in the notice of
the meeting. The annual meeting shall be held for the purpose of electing
Directors and for the transaction of only such other business as is
properly brought before the meeting in accordance with these bylaws. To be
properly brought before an annual meeting, business must be (i) specified
in the notice of annual meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (ii) otherwise properly brought
before the annual meeting by or at the direction of the Board of Directors,
or (iii) otherwise properly brought before the annual meeting by a
shareholder. In addition to any other applicable requirements for business
to be properly brought before an annual meeting by a shareholder, the
shareholder must have given timely notice thereof in writing to the
Secretary. To be timely, a shareholder's notice must be in writing and
delivered or mailed to and received by the Secretary not less than sixty
(60) days before the first anniversary of the date of the Corporation's
proxy statement in connection with the last annual meeting. A
shareholder's notice to the Secretary shall set forth as to each matter the
shareholder proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the annual meeting
and the reasons for conducting such business at the annual meeting, (ii)
the name and record address of the shareholder proposing such business,
(iii) the class, series and number of the Corporation's shares that are
beneficially owned by the shareholder, and (iv) any material interest of
the shareholder in such business. Notwithstanding anything in these bylaws
to the contrary, no business shall be conducted at the annual meeting
except in accordance with the procedures set forth in this Section 1.2;
provided, however, that nothing in this Section 1.2 shall be deemed to
preclude discussion by any shareholder of any business properly brought
before the annual meeting. In the event that a shareholder attempts to
bring business before an annual meeting without complying with the
provisions of this Section 1.2, the chairman of the meeting shall declare
to the shareholders present at the meeting that the business was not
properly brought before the meeting in accordance with the foregoing
procedures, and such business shall not be transacted.
1.3 Special Meetings. A special meeting of the shareholders for
any purpose or purposes may be called at any time by the Chairman of the
Board, the Vice-Chairman of the Board or the Chief Executive Officer or by
a majority of the Board of Directors. At a special meeting no business
shall be transacted and no corporate action shall be taken other than that
stated in the notice of the meeting.
1.4 Notice of Meetings. Written or printed notice stating the
place, day and hour of every meeting of the shareholders and, in case of a
special meeting, the purpose or purposes for which the meeting is called,
shall be mailed not less than ten nor more than sixty days before the date
of the meeting to each shareholder of record entitled to vote at such
meeting, at his address which appears in the share transfer books of the
Corporation. Such further notice shall be given as may be required by law,
but meetings may be held without notice if all the shareholders entitled to
vote at the meeting are present in person or by proxy or if notice is
waived in writing by those not present, either before or after the meeting.
1.5 Quorum. Any number of shareholders together holding at least a
majority of the votes entitled to be cast by a voting group with respect to
the business to be transacted, who shall be present in person or
represented by proxy at any meeting duly called, shall constitute a quorum
of that voting group for the transaction of business. If less than a
quorum shall be in attendance at the time for which a meeting shall have
been called, the meeting may be adjourned from time to time by a majority
of the shareholders present or represented by proxy without notice other
than by announcement at the meeting.
1.6 Voting. At any meeting of the shareholders each shareholder of
a class entitled to vote on any matter coming before the meeting shall, as
to such matter, have that number of votes specified in the Articles of
Incorporation, in person or by proxy, for each share of capital stock of
such class standing in his name on the books of the Corporation on the
date, not more than seventy days prior to such meeting, fixed by the Board
of Directors as the record date for the purpose of determining shareholders
entitled to vote. Every proxy shall be in writing, dated and signed by the
shareholder entitled to vote or his duly authorized attorney-in-fact.
1.7 Inspectors. An appropriate number of inspectors for any
meeting of shareholders may be appointed by the Chairman of such meeting.
Inspectors so appointed will open and close the polls, will receive and
take charge of proxies and ballots and will decide all questions as to the
qualifications of voters, validity of proxies and ballots and the number of
votes properly cast.
ARTICLE II.
Directors.
2.1 General Powers. The property, affairs and business of the
Corporation shall be managed under the direction of the Board of Directors,
and, except as otherwise expressly provided by law, the Articles of
Incorporation or these bylaws, all of the powers of the Corporation shall
be vested in such Board.
2.2 Number of Directors. The number of Directors constituting the
Board of Directors shall be thirteen (13), and shall be subject to change
as provided in the Articles of Incorporation.
2.3 Election and Removal of Directors; Quorum.
(a) Directors shall be elected at each annual meeting of
shareholders to succeed those Directors whose terms have expired and to
fill any vacancies then existing.
(b) Directors shall hold their offices for terms of one year
and until their successors are elected.
(c) Any vacancy occurring in the Board of Directors may be
filled by the affirmative vote of the majority of the remaining Directors
though less than a quorum of the Board, and the term of office of any
Director so elected shall expire at the next annual meeting of shareholders
and when his successor is elected.
(d) A majority of the number of Directors elected and serving
shall constitute a quorum for the transaction of meeting at which a quorum
is present shall be the act of the Board of Directors. Less than a quorum
may adjourn any meeting.
(e) Subject to any rights of holders of preferred shares, only
persons who are nominated in accordance with the procedures set forth in
this Section 2.3(e) shall be eligible for election as Directors. Notice of
nominations made by shareholders entitled to vote for the election of
Directors shall be received in writing by the Secretary not less than fifty
(50) nor more than seventy-five (75) days before the first anniversary of
the date of the Corporation's proxy statement in connection with the last
meeting of shareholders called for the election of Directors. Each notice
shall set forth (i) the name, age, business address and, if known,
residence address of each nominee proposed in such notice, (ii) the
principal occupation or employment of each such nominee, and (iii) the
number and class of capital shares of the Corporation beneficially owned by
each such nominee. The Secretary shall deliver all such notices to the
Corporation's Nominating Committee, or such other committee as may be
appointed by the Board of Directors from time to time for such propose, for
review. The Nominating Committee shall thereafter make its recommendation
with respect to nominees to the Board of Directors. The chairman of any
meeting of shareholders called for the election of Directors may, if the
facts warrant, determine that a nomination was not made in accordance with
the foregoing procedures, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be disregarded.
(f) No person shall be elected or re-elected as a Director
if at the time of any proposed election or re-election he or she shall have
attained the age of seventy (70) years.
2.4 Chairman and Vice Chairmen of the Board. The Board at its
annual meeting shall elect a Chairman of the Board and may elect one or
more Vice-Chairmen of the Board, each of whom shall hold office until the
next annual meeting and until their successors are elected. The Chairman
and any Vice-Chairman may be removed summarily with or without cause, at
any time, by the Board. Vacancies in such positions may be filled by the
Board of Directors.
2.5 Meetings of Directors. An annual meeting of the Board of
Directors shall be held as soon as practicable after the adjournment of the
annual meeting of shareholders at such place as the Board may designate.
Other meetings of the Board of Directors shall be held at places within or
without the Commonwealth of Virginia and at times fixed by resolution of
the Board, or upon call of the Chairman of the Board, any Vice-Chairman of
the Board, the Chief Executive Officer or any one of the Directors. The
Secretary or officer performing the Secretary's duties shall give not less
than twenty-four hours' notice by letter, telegraph or telephone (or in
person) of all meetings of the Board of Directors, provided that notice
need not be given of the annual meeting or of regular meetings held at
times and places fixed by resolution of the Board. Meetings may be held at
any time without notice if all of the Directors are present, or if those
not present waive notice in writing either before or after the meeting.
The notice of meetings of the Board need not state the purpose of the
meeting.
2.6 Compensation of Directors. Directors, as such, shall not
receive any stated salary for their services, except that, by resolution of
the Board of Directors, Directors may be paid (i) a retainer in an amount
determined by the Board of Directors for their services as such, (ii) an
additional retainer in an amount determined by the Board of Directors for
their services as Chairman of the Board of Directors or chairman of any
special or standing committee of the Board of Directors, and (iii) a fixed
sum and expenses for attendance at each regular, adjourned, or special
meeting of the Board of Directors or any special or standing committee
thereof. Nothing herein contained shall be construed to preclude any
Director from serving the Corporation in any other capacity and receiving
compensation therefor.
2.7 Director Emeritus. The Board of Directors may from time to
time elect one or more Directors Emeritus. Unless otherwise determined by
the Board of Directors, the election of a Director Emeritus shall continue
in effect for the remainder of his or her life. The Chairman of the Board
and the Chief Executive Officer may, at their election, call upon any
Director Emeritus from time to time for advice and consultation on matters
of importance to the Corporation and the Chairman of the Board or the Chief
Executive Officer may, on special occasions, invite any Director Emeritus
to attend meetings of the Board of Directors. In order that the position
may be solely an honorary one carrying with it no obligation for the
performance of any specific duties, the provisions pertaining to Directors
contained in the Articles of Incorporation of the Corporation and in these
Bylaws shall not apply to any Director Emeritus. Directors Emeritus shall
not be entitled to receive any compensation from the Corporation for
serving in such capacity.
ARTICLE III.
Committees.
3.1 Executive Committee. The Board of Directors, by resolution
adopted by a majority of the number of Directors fixed in accordance with
these bylaws, may elect an Executive Committee which shall consist of not
less than two Directors, including the Chief Executive Officer. When the
Board of Directors is not in session, the Executive Committee shall have
all power vested in the Board of Directors by law, by the Articles of
Incorporation or by these bylaws, provided that the Executive Committee
shall not have power to (i) approve or recommend to shareholders action
that the Virginia Stock Corporation Act requires to be approved by
shareholders; (ii) fill vacancies on the Board or on any of its committees;
(iii) amend the Articles of Incorporation pursuant to Section 13.1-706 of the
Virginia Code; (iv) adopt, amend, or repeal the bylaws; (v) approve a plan
of merger not requiring shareholder approval; (vi) authorize or approve a
distribution, except according to a general formula or method prescribed by
the Board of Directors; or (vii) authorize or approve the issuance or sale
or contract for sale of shares, or determine the designation and relative
rights, preferences, and limitations of a class or series of shares, other
than within limits specifically prescribed by the Board of Directors. The
Executive Committee shall report at the next regular or special meeting of
the Board of Directors all action which the Executive Committee may have
taken on behalf of the Board since the last regular or special meeting of
the Board of Directors.
3.2 Audit Committee. The Board of Directors, by resolution adopted
by a majority of the number of Directors fixed in accordance with these
bylaws, shall elect an Audit Committee which shall consist of not less than
three Directors; provided, however, that a majority (and not less than
three) of the Directors constituting the Audit Committee shall be neither
(i) officers or employees of the Corporation or any of its subsidiaries,
nor (ii) Affiliates of any of the Corporation's Customers or any such
Customers' subsidiaries. In addition, the composition of the Committee
shall comply with the requirements of any listing agreement of any
securities exchange or association to which the Corporation is a party. At
the time of election of the Committee, the Board of Directors shall
designate (or, in the absence of such designation by the Board, the members
of the Committee shall designate) one of the members of the Committee to be
its Chairman to serve until a successor is designated and serving. The
duties and responsibilities of the Audit Committee shall be set forth in an
Audit Committee Charter which shall be adopted by the Board of Directors
and which may be amended by the Board from time to time.
3.3 Other Committees. The Board of Directors, by resolution
adopted by a majority of the number of Directors fixed in accordance with
these bylaws, may establish such other standing or special committees of
the Board as it may deem advisable, consisting of not less than two
Directors. The members, terms and authority of such committees shall be as
set forth in the resolutions establishing the same.
3.4 Meetings. Regular and special meetings of any Committee
established pursuant to this Article may be called and held subject to the
same requirements with respect to time, place and notice as are specified
in these bylaws for regular and special meetings of the Board of Directors.
3.5 Quorum and Manner of Acting. A majority of the members of any
Committee serving at the time of any meeting thereof shall constitute a
quorum for the transaction of business at such meeting. The action of a
majority of those members present at a Committee meeting at which a quorum
is present shall constitute the act of the Committee.
3.6 Term of Office. Members of any Committee shall be elected as
above provided and shall hold office until their successors are elected by
the Board of Directors or until such Committee is dissolved by the Board of
Directors.
3.7 Resignation and Removal. Any member of a Committee may resign
at any time by giving written notice of his intention to do so to the Chief
Executive Officer or the Secretary of the Corporation, or may be removed,
with or without cause, at any time by such vote of the Board of Directors
as would suffice for his election.
3.8 Vacancies. Any vacancy occurring in a Committee resulting from
any cause whatever may be filled by a majority of the number of Directors
fixed by these bylaws.
ARTICLE IV.
Officers.
4.1 Election of Officers; Terms. The officers of the Corporation
shall consist of a Chief Executive Officer, a President, a Secretary and a
Treasurer or Chief Financial Officer. Other officers, including one or
more Vice-Presidents (whose seniority and titles, including Executive Vice-
Presidents and Senior Vice-Presidents, may be specified by the Board of
Directors), and assistant and subordinate officers, may from time to time
be elected by the Board of Directors. All officers shall hold office until
the next annual meeting of the Board of Directors and until their
successors are elected. The Chief Executive Officer shall be chosen from
among the Directors. The same individual may simultaneously hold more than
one office as the Board of Directors may determine.
4.2 Removal of Officers; Vacancies. Any officer of the Corporation
may be removed summarily with or without cause, at any time, by the Board
of Directors. Vacancies may be filled by the Board of Directors.
4.3 Duties. The officers of the Corporation shall have such duties
as generally pertain to their offices, respectively, as well as such powers
and duties as are prescribed by law or are hereinafter provided or as from
time to time shall be conferred by the Board of Directors. The Board of
Directors may require any officer to give such bond for the faithful
performance of his duties as the Board may see fit.
4.4 Duties of the Chief Executive Officer. The Chief Executive
Officer shall be primarily responsible for the implementation of policies
of the Board of Directors. He shall have authority over the general
management and direction of the business and operations of the Corporation
and its divisions, if any, subject only to the ultimate authority of the
Board of Directors. He shall be a director, and, except as otherwise
provided in these bylaws or in the resolutions establishing such
committees, he shall be ex officio a member of all Committees of the Board.
In the absence of the Chairman and any Vice-Chairman of the Board, or if
there are no such officers, the Chief Executive Officer shall preside at
all corporate meetings. He may sign and execute in the name of the
Corporation share certificates, deeds, mortgages, bonds, contracts or other
instruments except in cases where the signing and the execution thereof
shall be expressly delegated by the Board of Directors or by these bylaws
to some other officer or agent of the Corporation or shall be required by
law otherwise to be signed or executed. In addition, he shall perform such
other duties as from time to time may be assigned to him by the Board of
Directors.
4.5 Duties of the President. The President shall have such powers
and duties as may from time to time be assigned to him by the Chief
Executive Officer or the Board of Directors. The President may sign and
execute in the name of the Corporation deeds, mortgages, bonds, contracts
or other instruments authorized by the Board of Directors, except where the
signing and execution of such documents shall be expressly delegated by the
Board of Directors or the Chief Executive Officer to some other officer or
agent of the Corporation or shall be required by law otherwise to be signed
or executed. In addition, he shall perform such other duties as from time
to time may be assigned to him by the Board of Directors.
4.6 Duties of the Vice-Presidents. Each Vice-President, if any,
shall have such powers and duties as may from time to time be assigned to
him by the Chief Executive Officer, the President or the Board of
Directors. Any Vice-President may sign and execute in the name of the
Corporation deeds, mortgages, bonds, contracts or other instruments
authorized by the Board of Directors, except where the signing and
execution of such documents shall be expressly delegated by the Board of
Directors, the Chief Executive Officer or the President to some other
officer or agent of the Corporation or shall be required by law otherwise
to be signed or executed.
4.7 Duties of the Treasurer or Chief Financial Officer. The
Treasurer or Chief Financial Officer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit all monies and securities of the Corporation
in such banks and depositories as shall be designated by the Board of
Directors. He shall be responsible (i) for maintaining adequate financial
accounts and records in accordance with generally accepted accounting
practices; (ii) for the preparation of appropriate operating budgets and
financial statements; (iii) for the preparation and filing of all tax
returns required by law; and (iv) for the performance of all duties
incident to the office of treasurer and such other duties as from time to
time may be assigned to him by the Board of Directors, the Audit Committee,
the Chief Executive Officer or the President. The Treasurer or Chief
Financial Officer may sign and execute in the name of the Corporation share
certificates, deeds, mortgages, bonds, contracts or other instruments,
except in cases where the signing and the execution thereof shall be
expressly delegated by the Board of Directors or by these bylaws to some
other officer or agent of the Corporation or shall be required by law
otherwise to be signed or executed.
4.8 Duties of the Secretary. The Secretary shall act as secretary
of all meetings of the Board of Directors and shareholders of the
Corporation. When requested, he shall also act as secretary of the
meetings of the committees of the Board. He shall keep and preserve the
minutes of all such meetings in permanent books. He shall see that all
notices required to be given by the Corporation are duly given and served;
shall have custody of the seal of the Corporation and shall affix the seal
or cause it to be affixed to all share certificates of the Corporation and
to all documents the execution of which on behalf of the Corporation under
its corporate seal is duly authorized in accordance with law or the
provisions of these bylaws; shall have custody of all deeds, leases,
contracts and other important corporate documents; shall have charge of the
books, records and papers of the Corporation relating to its organization
and management as a Corporation; shall see that all reports, statements and
other documents required by law (except tax returns) are properly filed;
and shall in general perform all the duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him
by the Board of Directors, the Chief Executive Officer or the President.
4.9 Compensation. The Board of Directors shall have authority to
fix the compensation of all officers of the Corporation.
ARTICLE V.
Capital Stock.
5.1 Certificates. The shares of capital stock of the Corporation
shall be evidenced by certificates in forms prescribed by the Board of
Directors and executed in any manner permitted by law and stating thereon
the information required by law. Transfer agents and/or registrars for one
or more classes of shares of the Corporation may be appointed by the Board
of Directors and may be required to countersign certificates representing
shares of such class or classes. If any officer whose signature or
facsimile thereof shall have been used on a share certificate shall for any
reason cease to be an officer of the Corporation and such certificate shall
not then have been delivered by the Corporation, the Board of Directors may
nevertheless adopt such certificate and it may then be issued and delivered
as though such person had not ceased to be an officer of the Corporation.
5.2 Lost, Destroyed and Mutilated Certificates. Holders of the
shares of the Corporation shall immediately notify the Corporation of any
loss, destruction or mutilation of the certificate therefor, and the Board
of Directors may in its discretion cause one or more new certificates for
the same number of shares in the aggregate to be issued to such shareholder
upon the surrender of the mutilated certificate or upon satisfactory proof
of such loss or destruction, and the deposit of a bond in such form and
amount and with such surety as the Board of Directors may require.
5.3 Transfer of Shares. The shares of the Corporation shall be
transferable or assignable only on the books of the Corporation by the
holder in person or by attorney on surrender of the certificate for such
shares duly endorsed and, if sought to be transferred by attorney,
accompanied by a written power of attorney to have the same transferred on
the books of the Corporation. The Corporation will recognize, however, the
exclusive right of the person registered on its books as the owner of
shares to receive dividends and to vote as such owner.
5.4 Fixing Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or entitled to receive payment of
any dividend, or in order to make a determination of shareholders for any
other proper purpose, the Board of Directors may fix in advance a date as
the record date for any such determination of shareholders, such date in
any case to be not more than seventy days prior to the date on which the
particular action, requiring such determination of shareholders, is to be
taken. If no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or
shareholders entitled to receive payment of a dividend, the date on which
notices of the meeting are mailed or the date on which the resolution of
the Board of Directors declaring such dividend is adopted, as the case may
be, shall be the record date for such determination of shareholders. When
a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination
shall apply to any adjournment thereof unless the Board of Directors fixes
a new record date, which it shall do if the meeting is adjourned to a date
more than 120 days after the date fixed for the original meeting.
ARTICLE VI.
Miscellaneous Provisions.
6.1 Seal. The seal of the Corporation shall consist of a flat-faced
circular die, of which there may be any number of counterparts, on which
there shall be engraved the word "Seal" and the name of the Corporation.
6.2 Fiscal Year. The fiscal year of the Corporation shall end on
such date and shall consist of such accounting periods as may be fixed by
the Board of Directors.
6.3 Checks, Notes and Drafts. Checks, notes, drafts and other
orders for the payment of money shall be signed by such persons as the
Board of Directors from time to time may authorize. When the Board of
Directors so authorizes, however, the signature of any such person may be a
facsimile.
6.4 Amendment of Bylaws. Unless proscribed by the Articles of
Incorporation, these bylaws may be amended or altered at any meeting of the
Board of Directors by affirmative vote of a majority of the number of
Directors fixed by these bylaws. The shareholders entitled to vote in
respect of the election of Directors, however, shall have the power to
rescind, amend, alter or repeal any bylaws and to enact bylaws which, if
expressly so provided, may not be amended, altered or repealed by the Board
of Directors.
6.5 Voting of Shares Held. Unless otherwise provided by resolution
of the Board of Directors or of the Executive Committee, if any, the Chief
Executive Officer may from time to time appoint an attorney or attorneys or
agent or agents of the Corporation, in the name and on behalf of the
Corporation, to cast the vote which the Corporation may be entitled to cast
as a shareholder or otherwise in any other corporation, any of whose
securities may be held by the Corporation, at meetings of the holders of
the shares or other securities of such other corporation, or to consent in
writing to any action by any such other corporation; and the Chief
Executive Officer shall instruct the person or persons so appointed as to
the manner of casting such votes or giving such consent and may execute or
cause to be executed on behalf of the Corporation, and under its corporate
seal or otherwise, such written proxies, consents, waivers or other
instruments as may be necessary or proper in the premises. In lieu of such
appointment the Chief Executive Officer may himself attend any meetings of
the holders of shares or other securities of any such other corporation and
there vote or exercise any or all power of the Corporation as the holder of
such shares or other securities of such other corporation.
6.6 Charter Definition of "Customer". The term "Customer", as used
in Article III, Section (B)(3)(a)(vi) of the Company's Articles of
Incorporation, shall mean any person engaged in the sale of grocery
products that utilizes Richfood, Inc., a Virginia corporation, as its
primary source of supply for such products. The determination of whether a
person utilizes Richfood, Inc. as its primary source of supply shall
initially be made by the officers of the Company and shall be reflected in
the books and records of the Company; provided, that the Board of Directors
shall retain the power pursuant to Article III, Section (B)(3)(b) of the
Articles of Incorporation to determine whether any person is or has ceased
to be a Customer.
ARTICLE VII.
Emergency Bylaws.
The emergency bylaws provided in this Article VII shall be operative
during any emergency, notwithstanding any different provision in the
preceding Articles of these bylaws or in the Articles of Incorporation of
the Corporation or in the Virginia Stock Corporation Act (other than those
provisions relating to emergency bylaws). An emergency exists if a quorum
of the Corporation's Board of Directors cannot readily be assembled because
of some catastrophic event. To the extent not inconsistent with these
emergency bylaws, the bylaws provided in the preceding Articles shall
remain in effect during such emergency and upon the termination of such
emergency the emergency bylaws shall cease to be operative unless and until
another such emergency shall occur.
During any such emergency:
(a) Any meeting of the Board of Directors may be called by any
officer of the Corporation or by any Director. The notice thereof shall
specify the time and place of the meeting. To the extent feasible, notice
shall be given in accord with Section 2.5 above, but notice may be given
only to such of the Directors as it may be feasible to reach at the time,
by such means as may be feasible at the time, including publication or
radio, and at a time less than twenty-four hours before the meeting if
deemed necessary by the person giving notice. Notice shall be similarly
given, to the extent feasible, to the other persons referred to in (b)
below.
(b) At any meeting of the Board of Directors, a quorum shall
consist of a majority of the number of Directors fixed at the time in
accordance with Article II of the bylaws. If the Directors present at any
particular meeting shall be fewer than the number required for such quorum,
other persons present as referred to below, to the number necessary to make
up such quorum, shall be deemed Directors for such particular meeting as
determined by the following provisions and in the following order of
priority:
(i) the President, if not already serving as a Director;
(ii) Vice-Presidents not already serving as Directors, in
the order of their seniority of first election to such offices, or if two
or more shall have been first elected to such offices on the same day, in
the order of their seniority in age;
(iii) All other officers of the Corporation in the order
of their seniority of first election to such offices, or if two or more
shall have been first elected to such offices on the same day, in the order
of their seniority in age; and
(iv) Any other persons that are designated on a list
that shall have been approved by the Board of Directors before the
emergency, such persons to be taken in such order of priority and subject
to such conditions as may be provided in the resolution approving the list.
(c) The Board of Directors, during as well as before any such
emergency, may provide, and from time to time modify, lines of succession
in the event that during such an emergency any or all officers or agents of
the Corporation shall for any reason be rendered incapable of discharging
their duties.
(d) The Board of Directors, during as well as before any such
emergency, may, effective in the emergency, change the principal office, or
designate several alternative offices, or authorize the officers so to do.
No officer, Director or employee shall be liable for action taken in
good faith in accordance with these emergency bylaws.
These emergency bylaws shall be subject to repeal or change by
further action of the Board of Directors or by action of the shareholders,
except that no such repeal or change shall modify the provisions of the
next preceding paragraph with regard to action or inaction prior to the
time of such repeal or change. Any such amendment of these emergency
bylaws may make any further or different provision that may be practical
and necessary for the circumstances of the emergency.
July 31, 1994
Richfood, Inc.
2000 Richfood Road
Mechanicsville, Virginia 23111
Richfood Credit Agreement Amendments
Gentlemen:
Crestar Bank (the "Bank") and Richfood, Inc. (the "Borrower") entered into
a Second Amended and Restated Credit Agreement dated as of November 1, 1993 (the
"Agreement"). The Bank and the Borrower now wish to amend the Agreement as
follows:
1. The definition of "Alternate Rate" as set forth in Article 1 of the
Agreement is hereby deleted, and the following new definition thereof is hereby
substituted:
"Alternate Rate" shall mean the rate of interest per annum which shall be
offered by the Lender to the Borrower not later than 11:00 a.m. Richmond,
Virginia time on each Business Day, which rate shall not exceed LIBOR plus 0.45%
per annum.
2. The definition of "Commitment Termination Date" as set forth in
Article 1 of the Agreement is hereby deleted, and the following new definition
thereof is hereby substituted:
"Commitment Termination Date" shall mean (i) with respect to the
Revolving Credit Commitment, July 31, 1996, (ii) with respect to the Letter
of Credit Commitment, July 31, 1995 (or with respect to a Letter of Credit,
such later date as set forth in such Letter of Credit) or (iii) with
respect to either or both of the Commitments, such later date or dates to
which the Lender in its sole discretion may, at the request of the
Borrower, from time to time agree in writing.
3. Section 2.06(a) of the Agreement is hereby deleted, and the following
new Section 2.06(a) is hereby substituted:
(a) The Borrower shall pay to the Lender, on the 1st day of each
February, May, August and November in each year and on the Commitment
Termination Date, a commitment fee of 0.1875% per annum, on the average
daily unused amount of the Revolving Credit Commitment, as the Revolving
Credit Commitment may be reduced or increased in accordance with the
provisions hereof, for the immediately preceding period or quarter.
Except as expressly amended hereby, the Agreement remains in full force and
effect.
If the foregoing correctly states our agreement, please cause this letter
to be executed on the Borrower's behalf in the space provided below. The
amendments herein shall be effective as of July 31, 1994.
Very truly yours,
CRESTAR BANK
By /s/ Brad H. Booker
Brad H. Booker
Senior Vice President
ACCEPTED AND AGREED
RICHFOOD, INC.
By: /s/ John E. Stokely
John E. Stokely,
Executive Vice President -
Finance & Administration
EXHIBIT 10.2
July 25, 1995
Mr. Donald D. Bennett
Chairman and Chief Executive Officer
Richfood Holdings, Inc.
P. O. Box 26967
Richmond, Virginia 23261
Re: Amendment to Employment and
Severance Benefits Agreement
Dear Don:
Reference is made to the Employment and Severance Benefits Agreement,
dated as of May 21, 1993 (the "Agreement"), between you and Richfood Holdings,
Inc. (the "Company"). This is to confirm the understanding between you and the
Company that the Agreement is amended as follows:
1. Paragraph 3 of the Agreement hereby is amended by deleting the
word "President" as it appears throughout and replacing it with the words
"Chairman of the Board".
2. Paragraph 4(a) of the Agreement hereby is amended to read as
follows:
"(a) pay the Employee as compensation for his services the following
annual base salary ("Annual Base Salary"): for each of the Company's fiscal
years ending April 30, 1994 and April 29, 1995, the amount of Three Hundred
Fifty Thousand Dollars ($350,000.00) per year; and for each of the Company's
fiscal years ending April 27, 1996 and May 3, 1997, the amount of Four Hundred
Twenty-Five Thousand Dollars ($425,000.00) per year;".
3. The first sentence of paragraph 5(a) of the Agreement hereby is
amended to read as follows:
"(a) In addition to the foregoing compensation and benefits and subject
to Section 5(b) hereof, the Company agrees to pay the Employee annual incentive
compensation in an amount equal to the product of (i) Employee's Annual Base
Salary pursuant to Section 4(a) hereof, multiplied by (ii) the percentage that
corresponds to the applicable level of the Company's Pre-Tax FIFO Earnings as
follows: threshold-60%; target-100%; and maximum-150%".
Except as expressly amended above, all of the terms and conditions of
the Agreement shall continue in full force and effect.
If the foregoing accurately reflects our understanding, please execute
one copy of this Letter Agreement below and return it to me.
Very truly yours,
RICHFOOD HOLDINGS, INC.
By /S/ John E. Stokely
John E. Stokely, President
& Chief Operating Officer
Seen and Agreed to
as of June 8, 1995.
/s/ Donald D. Bennett
Donald D. Bennett
Exhibit 10.3
EMPLOYMENT AND SEVERANCE BENEFITS AGREEMENT
EMPLOYMENT AND SEVERANCE BENEFITS AGREEMENT (the "Agreement"), dated as
of August 23, 1994, between ROTELLE, INC., a Pennsylvania corporation (the
"Company"), and JOHN F. ROTELLE (the "Employee").
WHEREAS, Richfood Holdings, Inc., a Virginia corporation ("Richfood"),
expects that the Employee will make substantial contributions to the future
growth and prospects of the Company, a newly-acquired subsidiary of Richfood;
and
WHEREAS, Richfood desires to cause the Company to obtain the continued
services of the Employee; and
WHEREAS, the Employee desires to continue to be employed by the Company
and to remain in the employ of the Company during the term of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereto covenant and agree
as follows:
1. Definitions. When used in this Agreement, the following
terms shall have the meanings specified:
(a) Cause. "Cause", when referring to a termination
of employment, shall mean: (i) conviction by a court of competent jurisdiction
for a felony; (ii) breach of any material obligation to the Company under any
material agreement concerning any term of employment; or (iii) willful or gross
neglect of duties to the Company or willful or gross misconduct in the
performance of such duties. All determination as to whether termination is for
Cause shall be made in good faith by the Board of Directors of the Company and
shall be binding on the parties hereto.
(b) Change in Control. A "Change in Control" of the
Company shall be deemed to have occurred if: (i) any "person" (as such term is
used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended) becomes the beneficial owner, directly or indirectly, of securities of
Richfood representing more than 50% of the aggregate voting power of all classes
of Richfood's then-outstanding voting securities; or (ii) the shareholders of
Richfood approve (A) a plan of merger, consolidation or share exchange between
Richfood and an entity other than a direct or indirect wholly-owned subsidiary
of Richfood, or (B) a proposal with respect to the sale, lease, exchange or
other disposal of all, or substantially all, of Richfood's property; or (iii)
the Company ceases to be a majority-owned subsidiary of Richfood and its
affiliates.
(c) Disability. "Disability" shall mean a
condition, determined on the basis of medical evidence satisfactory to a
physician designated by the Board of Directors of the Company, rendering the
Employee, due to bodily injury or disease or mental illness, unable to perform
the duties pertaining to his employment with the Company on a full- time basis
for 180 consecutive days.
(d) Reduction in Service. A "Reduction in Service"
shall be deemed to have occurred if the job title, job description,
responsibilities or duties assigned to the Employee are materially reduced from
those assigned to him on the date hereof.
2. Term. This Agreement shall continue in full force and
effect for four (4) years following the date first above written.
3. Employment as President of the Company. The Company
agrees to employ the Employee throughout the term of this Agreement as its
President, with a job description, responsibilities and duties commensurate with
his position; provided, however, that the Company may terminate the Employee's
employment hereunder at any time, subject to the provisions of Section 5 hereof
(it being expressly understood that this Agreement is not intended to alter the
at-will nature of the Company's employment of the Employee). In consideration
of the Company's obligations under this Agreement, the Employee agrees that (i)
he will not voluntarily leave the employ of the Company during the term of this
Agreement, and (ii) he will devote his full business time and attention to
service to the Company and its subsidiaries commensurate with his position as
President throughout the term of this Agreement.
4. Compensation. During the term of this Agreement and
unless the Employee's employment has been earlier terminated, the Company agrees
to: (a) pay the Employee as compensation for his services an annual base salary
in the amount of Two Hundred Fifty Thousand Dollars ($250,000) per year; (b)
permit the Employee to participate in an annual incentive compensation plan that
will provide Employee with the opportunity to earn a bonus of up to 40% of his
base salary, based upon goals and objectives related to the performance of the
Company in particular and Richfood generally; (c) permit the Employee to
participate in such long-term incentive compensation programs as Richfood may
make generally available to its executive employees from time to time; (d)
provide for the benefit of the Employee vacation of six (6) weeks per year, and
such pension and disability benefits as are, and such coverage under life,
accident, medical and dental plans as is, generally provided from time to time
to executive employees of Richfood's subsidiaries; and (e) provide the Employee
with an automobile consistent with those provided by Richfood to its senior
executive officers.
5. Severance. In the event the Employee's employment is
terminated (a) by the Company during the term of this Agreement for any reason
other than for Cause or upon the Employee's death or Disability, or (b) by the
Company for any reason within one year after a Change in Control of the Company
other than upon the Employee's death or Disability, or (c) by the Employee
within one year after a Change in Control of the Company followed by a Reduction
in Service, then in each such instance the Company shall pay to the Employee, in
addition to any salary, annual incentive compensation or other incentive
compensation awards theretofore earned by, or awarded to, the Employee that have
not yet been paid to him, a severance benefit in the amount of Two Hundred Fifty
Thousand Dollars ($250,000). Such severance benefit shall be paid to the
Employee in a lump sum within sixty (60) days of the date of such termination.
The amount of such severance benefit shall not be reduced by any compensation
earned by the Employee as a result of employment by another employer after the
date of termination or otherwise.
6. Confidentiality. Except as specifically authorized by
the Company in writing, from the date hereof and continuing forever, the
Employee agrees not to (i) disclose any trade secrets or confidential
information to any individual or entity, or otherwise permit any person or
entity to obtain or disclose any trade secrets or confidential information, or
(ii) use any trade secrets or confidential information for the Employee's own
financial gain, whether individually or on behalf of another individual or
entity. For purposes hereof, the phrase "trade secrets and confidential
information" means any and all information relating to any part of the business
of the Company or the business of any affiliate of the Company, provided to the
Employee or to which the Employee has had access, which information is not a
matter of public record or generally known to the public, including, without
limitation: (i) financial information regarding the Company or any affiliate of
the Company; (ii) personnel data, including compensation arrangements, relating
to any employee of the Company or any affiliate of the Company; (iii) internal
plans, practices and procedures of the Company or any affiliate of the Company;
(iv) the names, addresses and requirements of any customers of the Company or
any affiliate of the Company; (v) any other information expressly deemed
confidential by the officers or directors of the Company; and (vi) the terms and
conditions of any supply agreements and other agreements, documents and
instruments to which the Company or any of its affiliates are parties. The
Employee acknowledges that he will have access to and will become familiar with
or obtain trade secrets and confidential information in the course of his
employment with the Company and that a violation of this Section 6 by the
Employee may cause irreparable harm to the Company. Accordingly, the Employee
hereby grants the Company the right to seek and be granted injunctive relief for
any such violation, in addition to any other legal remedies that may be
available to the Company.
7. Non-competition Agreement. In consideration of the Company's
agreement to employ the Employee upon the terms and conditions set forth in this
Agreement, the Employee covenants and agrees that during the term hereof, and
for a period of three (3) years following the termination of the Employee's
employment with the Company, the Employee shall not, directly or indirectly,
engage in or accept employment with (as a consultant or otherwise), own a
material interest in, or otherwise give assistance to, whether or not for
compensation, any person, firm or corporation (other than an affiliate of a
purchaser of, or successor to, the business of the Company) engaged in the
ownership or management of a business of the type conducted by the Company
within the geographical areas in which the Company competes on the date of such
termination; provided, however, that the Employee may continue to own his
existing interest in a frozen food and ice cream distribution company operating
in the Commonwealth of Puerto Rico. This non-competition agreement is in
addition to, not in substitution of, the non-competition agreement granted by
the Employee to Richfood in connection with the sale of the Company. In the
event that any provision of this Section 7 is determined to be invalid or
overbroad by any court or other entity of competent jurisdiction, the provisions
of this Section 7 shall be deemed to have been amended, and the parties hereto
agree to execute all documents necessary to evidence such amendment, so as to
eliminate or modify any such invalid or overbroad provision so as to carry out
the intent of this Section 7 as far as possible and to render the terms of this
Section 7 enforceable in all respects as so modified. The Employee acknowledges
that a violation of this Section 7 by the Employee may cause irreparable harm to
the Company. Accordingly, the Employee hereby grants the Company the right to
seek and be granted injunctive relief for any such violation, in addition to any
other legal remedies that may be available to the Company.
8. Successors; Binding Agreement. (a) The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company expressly to assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in this Agreement,
"Company" shall mean the Company as defined herein and any successor to its
business and/or assets that executes and delivers the agreement provided for in
this Section 8 or that otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law or otherwise.
(a) This Agreement shall inure to the benefit of and
be enforceable by the personal or legal representatives, executors,
administrators, successors, heirs, distributees, devises and legatees of the
Employee.
9. Notice. For purposes of this Agreement, notice and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Company:
Richfood Holdings, Inc.
P. O. Box 26967
Richmond, Virginia 23261
Attention: Executive Vice President - Finance and
Administration
with a copy to:
Gary E. Thompson, Esquire
Hunton & Williams
Riverfront Plaza - East Tower
951 E. Byrd Street
Richmond, VA 23219
If to the Employee, to his address as reflected from time-to-time in the
personnel records of the Company. Either party hereto may change its address
for purposes of this Section by furnishing written notice to the other party in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
10. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Employee and such officer as may be
specifically designated by the Board of Directors of the Company. No waiver by
either party hereto at any time of any breach by the other party hereof of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the Commonwealth
of Virginia.
11. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed on its behalf, and the Employee has duly executed this Agreement, all
as of the date first above written.
ROTELLE, INC.
By: /s/ Donald D. Bennett
Donald D. Bennett
Chairman of the Board
of Directors
EMPLOYEE:
/s/ John F. Rotelle
JOHN F. ROTELLE
Exhibit 10.4
EMPLOYMENT AND SEVERANCE BENEFITS AGREEMENT
EMPLOYMENT AND SEVERANCE BENEFITS AGREEMENT (the "Agreement"), dated as
of June 8, 1995, between RICHFOOD HOLDINGS, INC., a Virginia corporation (the
"Company"), and JOHN E. STOKELY (the "Employee").
WHEREAS, the Board of Directors and the Executive Compensation Committee
(the "Committee") of the Board of Directors of the Company expect that the
Employee will make substantial contributions to the future growth and prospects
of the Company; and
WHEREAS, the Board and the Committee desire to obtain for the Company
the continued services of the Employee; and
WHEREAS, the Employee desires to continue to be employed by the Company
and to remain in the employ of the Company during the term of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereto covenant and agree
as follows:
1. Definitions. When used in this Agreement, the following terms
shall have the meanings specified:
(a) Cause. "Cause", when referring to a termination of
employment, shall mean: (i) conviction by a court of competent jurisdiction for
a felony; (ii) breach of any material obligation to the Company under any
material agreement concerning any term of employment; or (iii) willful or gross
neglect of duties to the Company or willful or gross misconduct in the
performance of such duties. All determination as to whether termination is for
Cause shall be made in good faith by the Board of Directors of the Company and
shall be binding on the parties hereto.
(b) Change in Control. A "Change in Control" of the Company
shall be deemed to have occurred if: (i) any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended)
becomes the beneficial owner, directly or indirectly, of securities of the
Company representing more than 50% of the aggregate voting power of all classes
of the Company's then outstanding voting securities; or (ii) the shareholders of
the Company approve (A) a plan of merger, consolidation or share exchange
between the Company and an entity other than a direct or indirect wholly-owned
subsidiary of the Company, or (B) a proposal with respect to the sale, lease,
exchange or other disposal of all, or substantially all, of the Company's
property.
(c) Disability. "Disability" shall mean a condition,
determined on the basis of medical evidence satisfactory to a physician
designated by the Board of Directors of the Company, rendering the Employee, due
to bodily injury or disease or mental illness, unable to perform the duties
pertaining to his employment with the Company on a full-time basis for 180
consecutive days.
(d) Pre-Tax FIFO Earnings. The Company's "Pre-Tax FIFO
Earning" for any fiscal year shall be deemed to be the Company's consolidated
earnings before provision for income taxes as reflected on the Company's audited
consolidated Statement of Operations for such fiscal year, as adjusted by
valuing inventories using the first-in, first-out method; provided, however,
that in calculating Pre-Tax FIFO Earnings for purposes of this Agreement, the
Board of Directors of the Company may, at its option, exclude any non-recurring
or extraordinary items affecting the Company's earnings for such period.
(e) Reduction in Service. A "Reduction in Service" shall be
deemed to have occurred if the job title, job description, responsibilities or
duties assigned to the Employee are materially reduced from those assigned to
him on the date hereof.
2. Term. This Agreement shall continue in full force and effect
for three (3) years following the date first above written.
3. Employment as President and Chief Operating Officer; Election to
the Board of Directors. (a) The Company agrees to employ the Employee
throughout the term of this Agreement as its President and Chief Operating
Officer, with a job description, responsibilities and duties commensurate with
his position; provided, however, that the Company may terminate the Employee's
employment hereunder at any time, subject to the provisions of Section 6 hereof
(it being expressly understood that this Agreement is not intended to alter the
at-will nature of the Company's employment of the Employee). In consideration
of the Company's obligations under this Agreement, the Employee agrees that (i)
he will not voluntarily leave the employ of the Company during the term of this
Agreement, and (ii) he will devote his full business time and attention to
service to the Company and its subsidiaries commensurate with his position as
President and Chief Operating Officer throughout the term of this Agreement.
(b) The Board of Directors of the Company agrees to nominate
the Employee for election to such Board at each annual meeting of shareholders
during the term of this Agreement and to use its best efforts to cause the
Employee to be duly elected to such Board at such shareholders' meetings.
4. Compensation. During the term of this Agreement and unless the
Employee's employment has been earlier terminated, the Company agrees to: (a)
pay the Employee as compensation for his services an annual base salary in the
amount of Two Hundred Fifty Thousand Dollars ($250,000.00) per year ("Annual
Base Salary"); (b) permit the Employee to participate in such long-term
incentive compensation programs as the Committee may make generally available to
the Company's executive employees; (c) provide for the benefit of the Employee
such vacation, pension, and disability benefits as are, and such coverage under
life, accident, medical and dental plans as is, generally provided from time to
time to the Company's executive employees; provided, however, that the Company
agrees to pay the Employee's portion of the premiums for coverage under such
life, accident, medical and dental plans; (d) provide a car that is owned or
leased by the Company for the Employee's use, which car shall be of comparable
quality to the car currently provided to the Employee by the Company; and (e)
pay for the Employee's initiation and annual membership fees in a single
business club located in Richmond, Virginia.
5. Annual Incentive Compensation. (a) In addition to the foregoing
compensation and benefits and subject to Section 5(b) hereof, the Company agrees
to pay the Employee annual incentive compensation in an amount equal to the
product of (i) Employee's Annual Base Salary pursuant to Section 4(a) hereof,
multiplied by (ii) the percentage that corresponds to the applicable level of
the Company's Pre-Tax FIFO Earnings as follows: threshold-40%; target-70%; and
maximum-100%. The threshold, target and maximum levels of the Company's Pre-Tax
FIFO Earnings for purposes of calculating Employee's incentive compensation
hereunder for each of the Company's fiscal years ending April 27, 1996, May 3,
1997 and May 2, 1998 shall be identical to the threshold, target and maximum
levels of the Company's Pre-Tax FIFO Earnings established annually by the
Committee for the Company's Executive Officer Performance Plan. Such incentive
compensation shall be paid to the Employee in a lump sum within One Hundred
Twenty (120) days after the close of the fiscal year to which it relates.
(b) The Employee shall be entitled to receive the incentive
compensation specified in Section 5(a) hereof with respect to any fiscal year
completed before any termination of his employment with the Company. If the
Employee's employment with the Company is terminated after the completion of the
second fiscal quarter of any fiscal year for which incentive compensation is
specified in Section 5(a) hereof and such termination is made (i) by the Company
for any reason other than for Cause, or (ii) by the Company or the Employee
following the occurrence of a Change in Control of the Company, then the
Employee shall be entitled to receive the full amount of incentive compensation
specified in Section 5(a) with respect to such fiscal year. Except as provided
in the preceding sentence, the Employee shall not be entitled to receive
incentive compensation pursuant to Section 5(a) hereof with respect to any
fiscal year that was not completed before any termination of his employment with
the Company.
6. Severance. In the event the Employee's employment is terminated
(a) by the Company during the term of this Agreement for any reason other than
for Cause or upon the Employee's death or Disability, or (b) by the Company for
any reason within one year after a Change in Control of the Company other than
upon the Employee's death or Disability, or (c) by the Employee within one year
after a Change in Control of the Company followed by a Reduction in Service,
then in each such instance the Company shall pay to the Employee, in addition to
any compensation, annual incentive compensation or other incentive compensation
awards theretofore earned by, or awarded to, the Employee that have not yet been
paid to him, a severance benefit in the amount of Two Hundred Fifty Thousand
Dollars ($250,000.00). Such severance benefit shall be paid to the Employee in a
lump sum within sixty (60) days of the date of such termination. The amount of
such severance benefit shall not be reduced by any compensation earned by the
Employee as a result of employment by another employer after the date of
termination or otherwise.
7. Successors; Binding Agreement. (a) The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. As used in this Agreement, "Company"
shall mean the Company as defined herein and any successor to its business
and/or assets that executes and delivers the agreement provided for in this
Section 9 or that otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law or otherwise.
(b) This Agreement shall inure to the benefit of and be
enforceable by the personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees of the Employee.
8. Notice. For purposes of this Agreement, notice and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Company:
Richfood Holdings, Inc.
2000 Richfood Road
P. O. Box 26967
Richmond, Virginia 23261
Attention: Secretary
with a copy to:
Gary E. Thompson, Esquire
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219
If to the Employee, to his address as reflected from time-to-time in the
personnel records of the Company. Either party hereto may change its address
for purposes of this Section by furnishing written notice to the other party in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
9. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing an signed by the Employee and such officer as may be specifically
designated by the Board of Directors of the Company. No waiver by either party
hereto at any time of any breach by the other party hereof of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the Commonwealth
of Virginia.
10. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed on
its behalf, and the Employee has duly executed this Agreement, all as of the
date first above written.
RICHFOOD HOLDINGS, INC.
By: /s/ Donald D. Bennett
Donald D. Bennett
Chairman of the Board
and Chief Executive Officer
EMPLOYEE:
/s/ John E. Stokely
JOHN E. STOKELY
Exhibit 10.7
RICHFOOD HOLDINGS, INC.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
ARTICLE I
DEFINITIONS
1.01. Administrator means the President of the Company or his
designee.
1.02. Affiliate means any "subsidiary" or "parent" corporation
(within the meaning of Section 424 of the Code) of the Company.
1.03. Agreement means a written agreement (including any amendment
or supplement thereto) between the Company and a Participant specifying the
terms and conditions of an Option granted to such Participant.
1.04. Board means the Board of Directors of the Company.
1.05. Change in Control means the occurrence of either of the
following: (i) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended) becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing more than fifty percent (50%) of the aggregate voting power of
all classes of the Company's then outstanding voting securities; or (ii)
the shareholders of the Company approve (A) a plan of merger, consolidation
or share exchange between the Company and an entity other than a direct or
indirect wholly owned subsidiary of the Company, or (B) a proposal with
respect to the sale, lease, exchange or other disposal of all, or
substantially all, of the Company's property.
1.06. Code means the Internal Revenue Code of 1986, and any
amendments thereto.
1.07. Common Stock means the Common Stock, without par value, of
the Company.
1.08. Company means Richfood Holdings, Inc.
1.09. Disability means a condition, determined on the basis of
medical evidence satisfactory to a physician designated by the
Administrator, rendering a Participant, due to bodily injury or disease or
mental illness, unable to perform the essential duties of a member of the
Company's Board.
1.010.
1.10. Fair Market Value means, on any given date, the last sales
price of a share of Common Stock as reported on the NASDAQ over-the-counter
national reporting system of the National Association of Securities
Dealers, Inc. as reported by the National Quotation Bureau, Inc. The
preceding sentence to the contrary notwithstanding, if the Common Stock is
listed upon any established stock exchange, the Fair Market Value on any
given day shall be the closing price of the Common Stock on such exchange.
If the Common Stock was not traded on the NASDAQ over-the-counter national
market or on an established stock exchange on such day, then the Fair
Market Value is determined with reference to the next preceding day that
the Common Stock was so traded.
1.11. Option means a stock option that entitles the holder to
purchase from the Company a stated number of shares of Common Stock at the
price set forth in an Agreement.
1.12. Participant means a member of the Board who is not an
employee of the Company or an Affiliate on the applicable date of grant.
1.13. Plan means the Richfood Holdings, Inc. Non-Employee
Directors' Stock Option Plan.
1.14. Retirement means retirement pursuant to the retirement
policy adopted by the Company with respect to its directors as in effect
from time to time.
ARTICLE II
PURPOSES
The Plan is intended to promote a greater identity of interest between
the non-employee directors of the Company and the Company's shareholders,
and to assist the Company in attracting and retaining non-employee
directors by affording Participants an opportunity to share in the future
success of the Company and its Affiliates. The Plan is intended to permit
the grant of Options. The proceeds received by the Company from the sale
of Common Stock pursuant to this Plan shall be used for general corporate
purposes.
ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Administrator. The
Administrator shall have complete authority to interpret all provisions of
this Plan; to prescribe the form of Agreements; to adopt, amend, and
rescind rules and regulations pertaining to the administration of this
Plan; and to make all other determinations necessary or advisable for the
administration of this Plan. The express grant in the Plan of any specific
power to the Administrator shall not be construed as limiting any power or
authority of the Administrator. Any decision made, or action taken, by the
Administrator or in connection with the administration of this Plan shall
be final and conclusive. The Administrator shall not be liable for any act
done in good faith with respect to this Plan, any Agreement or Option. All
expenses of administering this Plan shall be borne by the Company.
ARTICLE IV
OPTIONS
4.01. Grant of Options. Subject to Section 4.07, each Participant
shall be granted an Option for 1,000 shares of Common Stock on September 1,
of each year during the term of this Plan. However, if there is an
insufficient number of shares to grant each Participant an Option for 1,000
shares in a given year, the available shares shall be used to grant an
Option to each Participant on a pro rata basis. All Options shall be
evidenced by Agreements which shall be subject to the applicable provisions
of this Plan and to such other provisions as the Administrator may adopt.
4.02. Option Price. The price per share for Common Stock
purchased on the exercise of an Option shall be the Fair Market Value on
the date that the Option is granted.
4.03. Maximum Option Period. The maximum period during which an
Option may be exercised shall be ten years from the date of grant. In the
event of the Participant's death, the Option may be exercised by the
Participant's estate or by such person or persons who succeed to the
Participant's rights by will or the laws of descent and distribution
following the Participant's death until the expiration of the Option
period.
4.04. Exercise. Subject to the provisions of Article VI, an
Option shall be exercisable with respect to twenty-five percent (25%) of
the shares subject to an Option on the first anniversary of the date of
grant and with respect to an additional twenty-five percent (25%) of the
shares subject to an Option on each anniversary of the date of grant so
that an Option shall be fully exercisable on the fourth anniversary of the
date of grant. However, if a Participant separates from service on the
Board by reason of death, Disability, Retirement or following a Change in
Control, his or her Options shall become immediately exercisable with
respect to all shares to which they relate and shall remain exercisable
throughout the terms thereof. An Option may be exercised with respect to
any number of whole shares less than the full number for which the Option
could be exercised. A partial exercise of an Option shall not affect the
right to exercise the Option from time to time in accordance with this Plan
and the applicable Agreement with respect to the remaining shares subject
to the Option.
4.05. Payment of Option Price. Payment of the Option price shall
be made in cash, a cash equivalent acceptable to the Administrator or by
surrender of shares of Common Stock. Payment of all or part of the Option
price also may be made by withholding or reducing the number of shares of
Common Stock otherwise issuable to the Participant upon the exercise of an
Option. The cash, cash equivalent or shares of Common stock must have an
aggregate Fair Market Value (determined as of the day preceding the date of
exercise) that is not less than the Option price for the number of shares
for which the Option is being exercised.
4.06. Shareholder Rights. No Participant shall have any rights as
a shareholder with respect to shares subject to his or her Option until the
date of exercise of such Option.
4.07. Stock Subject to Options. Upon the exercise of any Option,
the Company may deliver to the Participant (or the Participant's broker if
the Participant so directs), shares from its previously authorized but
unissued Common Stock. The maximum aggregate number of shares of Common
Stock that may be issued pursuant to the exercise of Options under this
Plan is seventy-five thousand (75,000), subject to adjustment as provided
in Article V.
ARTICLE V
ADJUSTMENT UPON CHANGE IN COMMON STOCK
The number of shares for which Options may be granted under Article
IV, and the terms of outstanding Options shall be adjusted as the
Administrator shall determine to be equitably required in the event that
(a) the Company (i) effects one or more stock dividends, stock split-ups,
subdivisions or consolidations of shares or (ii) engages in a transaction
to which Section 424 of the Code applies or (b) there occurs any other
event which in the judgment of the Administrator necessitates such action.
Any determination made under this Article V by the Administrator shall be
final and conclusive.
The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or
property, or for labor or services, either upon direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be
made with respect to, outstanding Options.
ARTICLE VI
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
No Option shall be exercisable, no Common Stock shall be issued and no
certificates for shares of Common Stock shall be delivered, except in
compliance with all applicable federal and state laws and regulations
(including, without limitation, withholding tax requirements), any listing
agreement to which the Company is a party, and the rules of all domestic
stock exchanges on which the Company's shares may be listed. The Company
shall have the right to rely on an opinion of its counsel as to such
compliance. Any share certificate issued to evidence Common Stock for
which an Option is exercised may bear such legends and statements as the
Administrator may deem advisable to assure compliance with federal and
state laws and regulations. No Option shall be exercisable, no Common
Stock shall be issued and no certificate for shares shall be delivered
until the Company has obtained such consent or approval as the
Administrator may deem advisable from regulatory bodies having jurisdiction
over such matters.
ARTICLE VII
GENERAL PROVISIONS
I. Effect on Service. Neither the adoption of this Plan, its
operation, nor any documents describing or referring to this Plan (or any
part thereof) shall confer upon any Participant any right to continue
service as a member of the Board.
II. Unfunded Plan. The Plan shall be unfunded and the Company shall
not be required to segregate any asset that may at any time be represented
by grants under this Plan. Any liability of the Company to any person with
respect to any grant under this Plan shall be based solely upon any
contractual obligations that may be created pursuant to this Plan. No such
obligation of the Company shall be deemed to be secured by any pledge of,
or other encumbrance on, any property of the Company or Affiliates.
III. Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision of
law.
IV. Nontransferability. A Participant may not transfer or assign any
rights he or she has under this Plan other than by will or the laws of
descent and distribution. During the lifetime of the Participant to whom
an Option is granted, the Option may be exercised only by the Participant.
No right or interest of a Participant under this Plan shall be liable for,
or subject to, any lien, obligation, or liability of such Participant.
ARTICLE VIII
AMENDMENT AND TERMINATION
The Board may amend or terminate this Plan at any time and from time
to time; provided, however, that no amendment may become effective until
shareholder approval is obtained if the amendment (a) materially increases
the aggregate number of shares of Common Stock that may be issued pursuant
to the Plan, (b) materially increases the benefits accruing to Participants
under the Plan or (c) materially changes the class of individuals who may
become participants. The preceding sentence to the contrary
notwithstanding, the Plan may not be amended more than once in any six
month period unless such amendment is required to comply with the Code or
the Employee Retirement Income Security Act of 1974, as amended, or the
rules and regulations promulgated thereunder. Neither an amendment nor the
termination of this Plan shall, without a Participant's consent, adversely
affect any rights of such Participant under any Option outstanding at the
time of such amendment or termination.
ARTICLE IX
DURATION OF PLAN
No Option may be granted under this Plan after September 1, 2000.
Options granted before that date shall remain valid in accordance with
their terms.
ARTICLE X
EFFECTIVE DATE OF PLAN
This Plan will be effective on September 1, 1994, provided that this
Plan is approved by a majority of the votes entitled to be cast by the
Company's shareholders, voting either in person or by proxy, at a duly held
shareholders' meeting.
Exhibit 11.1
EXHIBIT 11.1
RICHFOOD HOLDINGS, INC.
COMPUTATION OF NET EARNINGS PER COMMON SHARE
(Dollar amounts in thousands, except share and per share data)
Fiscal Year End
April 29, April 30, May 1,
1995 1994 1993
--------- --------- ------
NET EARNINGS:
Earnings from continuing
operations $25,401 $21,734 $15,843
Loss from discontinued
operations - (4,559) -
------- ------- -------
Net earnings $25,401 $17,175 $15,843
======= ======= =======
PRIMARY EARNINGS PER COMMON SHARE:
Weighted average number of
common shares outstanding 21,398,951 21,246,555 21,051,511
Net additional common shares
issuable upon exercise
of dilutive options,
determined by the treasury
stock method 218,261 283,653 327,612
------- ------- -------
Common shares and equivalents 21,617,212 21,530,208 21,379,123
========== ========== ==========
Earnings per common share
from continuing operations $1.18 $1.01 $0.74
Loss per common share
from discontinued
operations - (0.21) -
------- ------- -------
Net earnings per common share (a) $1.18 $0.80 $0.74
===== ===== =====
FULLY DILUTED EARNINGS PER
COMMON SHARE:
Common shares and equivalents 21,617,212 21,530,208 21,379,123
========== ========== ==========
Net additional common shares
issuable upon exercise
of dilutive options,
determined by the treasury
stock method using year
end market price, if
higher than average price 73,557 20,307 83,330
------- ------- -------
Common shares and equivalents (b) 21,690,769 21,550,515 21,462,453
========== ========== ==========
Earnings per common share
from continuing operations $1.17 $1.01 $0.74
===== ===== =====
Loss per common share from
discontinued operations - (.21) -
------- ------- -------
Net earnings per common share (a) $1.17 $0.80 $0.74
===== ===== =====
NOTE: (a) Dilution is less than 3%.
(b) The Company does not have any other potentially dilutive securities
EXHIBIT 12.1
RICHFOOD HOLDINGS, INC.
COMPUTATION OF RATIOS
The following relates to the ratio computations in the portions of the Company's
1995 Annual Report incorporated by reference herein.
Book Value Per Share = Total stockholders' equity divided by the number of
shares of Common Stock outstanding at fiscal year end.
Net Earnings as a Percent of Sales = Net earnings divided by sales.
Return on Average Stockholders' Equity = Net earnings divided by average
stockholders' equity.
Average stockholder's equity was computed by adding the total
stockholders' equity at the beginning of the fiscal year to the total
stockholders' equity at the end of the fiscal year and then dividing this sum by
two.
Current ratio = Current assets divided by current liabilities.
Institutional Debt to Equity = Institutional debt divided by total stockholders'
equity.
Institutional debt consists of outstanding borrowings from financial
institutions and institutional investors.
Working Capital = current assets minus current liabilities.
Inventory Turnover = Cost of goods sold divided by average inventories.
Average inventories was computed by adding the inventories at the
beginning of the fiscal year to the inventories at the end of the fiscal year
and then dividing this sum by two.
Return on Average Assets = Net earnings divided by average total assets.
Average total assets was computed by adding total assets at the
beginning of the fiscal year to the total at the end of the fiscal year and then
dividing this sum by two.
FINANCIAL REVIEW
The following discussion of the Company's consolidated results of operations and
financial position should be read in conjunction with the Consolidated Financial
Statements and notes thereto included in this annual report. References in the
following discussion are to the fiscal years ended April 29, 1995 (fiscal 1995),
April 30, 1994 (fiscal 1994) and May 1, 1993 (fiscal 1993).
Results of Operations
Fiscal 1995 results of operations include the effects of two acquisitions made
by the Company during the fiscal year - Rotelle, Inc. ("Rotelle") and the
wholesale division of Camellia Food Stores, Inc. ("Camellia"). On August 23,
1994, the Company acquired all of the outstanding common stock of Rotelle, a
wholesale frozen food distributor located near Philadelphia, Pennsylvania. On
April 3, 1995, the Company purchased certain assets and assumed certain
contracts of Camellia, a retail and wholesale food distributor located in
Norfolk, Virginia. See note 2 to the Consolidated Financial Statements for
further information on the acquisitions.
Sales for fiscal 1995 were $1.520 billion, an increase of 19.2% over sales of
$1.275 billion for fiscal 1994. This increase was primarily attributable to
sales of $235 million recorded by Rotelle after its acquisition by the Company,
and to sales of $13.6 million by the Company's principal operating subsidiary,
Richfood, Inc. ("Richfood"), to Camellia and its former customers. Excluding
sales volume associated with the Camellia acquisition and sales by Rotelle, the
Company's sales for fiscal 1995 remained approximately the same as 2% as
compared to sales for fiscal 1994. Sales for fiscal 1994 increased 16.8% over
sales of $1.091 billion for fiscal 1993. Increased sales for fiscal 1994
resulted primarily from the first full year of sales volume associated with the
Company's acquisition of the Civilian Wholesale Division (the "Civilian
Division") of B. Green & Company, Inc. in January 1993. Sales to former
customers of the Civilian Division were $207.7 million in fiscal 1994, compared
to $67.0 million in fiscal 1993. Sales for fiscal 1994 also included $19.6
million of sales to stores formerly operated by an affiliate of Safeway, Inc.
("Safeway") that were acquired by customers of the Company in December 1993.
Excluding sales to former customers of the Civilian Division and to the former
Safeway stores, sales for fiscal 1994 increased 2.2% compared to sales for
fiscal 1993, primarily due to increased sales to existing customers offset in
part by deflation in grocery product lines and the effects of continued weak
economic conditions.
Gross margin increased to 8.87% of sales for fiscal 1995, compared to 8.41% of
sales for fiscal 1994 and 8.26% of sales for fiscal 1993. Increased gross margin
in fiscal 1995 was primarily attributable to Rotelle's higher margin frozen food
sales. The effect of deflation in grocery product lines on the Company's LIFO
(last-in, first-out) reserve in fiscal 1994 resulted in a 0.07% increase in the
Company's fiscal 1994 gross margin percentage, as compared to fiscal 1993.
Operating and administrative expenses were 6.01% of sales in fiscal 1995,
compared to 5.57% of sales in fiscal 1994 and 5.99% of sales in fiscal 1993. The
higher percentage in fiscal 1995 was primarily attributable to the higher
operating expense ratio for Rotelle's frozen food wholesale operation and
expenses incurred in the transition of the Camellia sales volume to the
Company's Mechanicsville, Virginia warehouse. Lower operating and administrative
expenses as a percent of sales in fiscal 1994 were due to increasing
efficiencies and productivity in the Company's operations, as the Company's
associates adjusted to the additional sales volume attributable to the Civilian
Division acquisition, offset in part by higher amortization expense, primarily
as a result of fiscal 1994 including a full year of amortization expense related
to the supply agreements and noncompetition agreements purchased in connection
with the Civilian Division acquisition. Fiscal 1993 operating and administrative
expenses included a one-time $3.0 million payment made to B. Green & Company,
Inc. for warehouse services provided after the acquisition date and other
incremental costs associated with the Civilian Division acquisition.
Interest expense increased to $5.2 million in fiscal 1995, from $4.1 million in
fiscal 1994 and $3.2 million in fiscal 1993, due to increasing average interest
rates under the Company's variable rate borrowing facilities and additional
borrowings made by the Company, primarily to finance the Company's acquisitions
of Rotelle in fiscal 1995 and the Civilian Division in fiscal 1993.
Interest income was $3.1 million in fiscal 1995, $3.0 million in fiscal 1994 and
$3.3 million in fiscal 1993. Average notes receivable (relating primarily to
secured loans to the Company's retail customers) were $35.9 million, $41.9
million and $41.5 million for the fiscal years ended April 29, 1995, April 30,
1994 and May 1, 1993, respectively. The Company's effective interest rate earned
on its portfolio of retailer loans, most of which bear interest at variable
rates, increased during fiscal 1995 primarily due to increases in the prime
lending rate, which serves as the reference rate for a majority of the loans.
The Company's effective interest rate earned on its retailer loans declined in
fiscal 1994 from fiscal 1993 due to the suspension of interest payable on
certain retailer loans in the first half of fiscal 1994. During the third and
fourth quarters of fiscal 1994, the Company recorded $2.6 million of notes
receivable write-offs, with a corresponding reduction in the allowance for
doubtful accounts, primarily related to these customers.
The Company's effective income tax rate was 38.5% for fiscal 1995, 38.3% for
fiscal 1994 and 36.3% for fiscal 1993. The increase in the Company's effective
income tax rate in fiscal 1994 was primarily a result of the increase in the
statutory federal income tax rate for corporations from 34% to 35% effective
January 1, 1993.
The loss from discontinued operations during fiscal 1994 was due to the
Company's decision to discontinue operation of three retail grocery stores in
Raleigh, North Carolina. At April 30, 1994, the Company recorded a charge to
recognize the loss from operations of the stores and to write down the assets to
their estimated net realizable values. The assets related to these stores were
sold during fiscal 1995.
Liquidity and Capital Resources
The Company's cash and cash equivalents balance was $9.7 million at April 29,
1995 and $17.0 million at April 30, 1994. The Company continues to generate
significant capital for liquidity and to support the Company's growth. The
Company generated $67.6 million in net cash provided by operating activities
during fiscal 1995. Net earnings, adjusted for non-cash items, accounted for
$46.6 million in net cash provided by operating activities, and working capital
changes, net of the effects of the Company's acquisitions, accounted for $21.0
million in net cash provided by operating activities.
The Company financed its $50.7 million purchase of Rotelle in August 1994 with
borrowings under a $35.0 million revolving credit facility with a commercial
bank, together with internally generated funds and borrowings under an existing
revolving credit facility. Subsequent to the initial funding of the facility,
the Company elected to reduce the revolving credit commitment to $10.0 million.
The revolving credit facility expires in July 1996. There were no borrowings
outstanding under this facility at April 29, 1995.
In July 1993, the Company issued $45.0 million of its 6.15% Senior Notes due
July 1, 2000 ("Senior Notes"), the net proceeds of which were used to repay in
full the $40.0 million bridge loan facility incurred to finance the acquisition
of the Civilian Division and for general corporate purposes. The Senior Notes
require semi-annual interest payments and, commencing on July 1, 1996, five
annual sinking fund payments consisting of $9.0 million of principal plus
accrued interest.
The Company's working capital needs are financed primarily through an unsecured
$20.0 million revolving line of credit, increasing to $40.0 million at the
option of the Company. The revolving line of credit expires in July 1996. There
were no borrowings outstanding under this facility at April 29, 1995.
The Company's institutional debt was $49.8 million at April 29, 1995, compared
to $45.0 million at April 30, 1994. The Company's institutional debt to equity
ratio was 0.41 to 1 at April 29, 1995 and 0.46 to 1 at April 30, 1994.
Capital expenditures were $5.2 million in fiscal 1995, $8.4 million in fiscal
1994 and $5.4 million in fiscal 1993. Fiscal 1995 capital expenditures consisted
primarily of warehouse racking, material handling equipment, improvements at the
dairy plant and investments in computer systems. Capital expenditures in fiscal
1994 included $4.5 million to construct the 67,000 square foot freezer expansion
to the Mechanicsville, Virginia warehouse. Fiscal 1996 capital expenditures are
planned to be higher than fiscal 1995 expenditures by approximately $3.0
million, and are expected to include warehouse racking, material handling
equipment, improvements at the dairy plant, office renovation and further
investments in technology.
The Company remains committed to providing secured financing to retail
customers. During fiscal 1995, the Company issued $12.9 million in loans to
retail customers and collected $11.3 million in loan repayments from retail
customers. Loans totalling $3.9 million were issued during fiscal 1995 to the
purchasers of four retail grocery stores formerly operated under the "BASICS"
tradename. During fiscal 1994, the Company issued $16.6 million in loans to
retail customers and collected $14.1 million in loan repayments from retail
customers. Loans issued during fiscal 1994 included $3.4 million to the
purchasers of three former Safeway retail grocery stores.
The Company increased the cash dividend on its common stock to $0.10 per share
in fiscal 1995, from $0.08 per share in fiscal 1994 and $0.07 per share in
fiscal 1993. Cash dividends paid were $2.0 million in fiscal 1995, $1.6 million
in fiscal 1994 and $1.4 million in fiscal 1993. Stockholders' equity increased
to $122.3 million at April 29, 1995, up from $98.2 million at April 30, 1994.
The Company's capitalization at the end of the past two fiscal years is set
forth below:
April 29, April 30,
(dollars amounts in thousands) 1995 1994
Total debt, including
current maturities $ 53,357 30.4% $ 49,533 33.5%
Stockholders' equity 122,309 69.6 98,221 66.5
Total capitalization $175,666 100.0% $147,754 100.0%
The Company believes that it has the ability to continue to generate adequate
capital for liquidity from its operations and through borrowings under
long-term debt facilities to maintain its competitive position and to expand
its business.
Recent Accounting Pronouncements
Statement of Financial Accounting Standards (SFAS) No. 118, "Accounting by
Creditors for Impairment of a Loan - Income Recognition and
Disclosures," and SFAS No. 121, "Accounting for Impairment of Long-lived
Assets and for Long-lived Assets to be Disposed of," must be adopted by the
Company no later than the fiscal years ending April 27, 1996 and May 3, 1997,
respectively. The adoption of these accounting standards is not expected to
have a material impact on the Company's consolidated financial position or
results of operations.
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollar amounts in thousands, except per share data)
<TABLE>
<CAPTION>
April 29, 1995 April 30, 1994 May 1, 1993 May 2, 1992 April 27, 1991
Fiscal Year Ended (52 weeks) (52 weeks) (52 weeks) (53 weeks) (52 weeks)
<S> <C> <C> <C> <C> <C>
Operations:
Sales $1,520,450 $1,275,110 $1,091,438 $1,068,473 $1,016,722
Gross margin 134,809 107,285 90,131 84,193 77,599
Operating and administrative expenses 91,435 70,968 65,361 60,556 59,146
Interest expense 5,151 4,128 3,175 2,911 3,821
Interest income (3,098) (3,036) (3,278) (1,115) (459)
Earnings from continuing operations before income taxes 41,321 35,225 24,873 21,841 15,091
Income taxes 15,920 13,491 9,030 8,070 5,667
Earnings from continuing operations 25,401 21,734 15,843 13,771 9,424
Loss from discontinued operations, net of taxes - (4,559) - - -
Net earnings 25,401 17,175 15,843 13,771 9,424
Net earnings as a percent of sales 1.67% 1.35% 1.45% 1.29% 0.93%
Per Common Share Data:
Earnings per common share:
Continuing operations $ 1.19 $ 1.02 $0.75 $0.66 $0.45
Net earnings 1.19 0.81 0.75 0.66 0.45
Cash dividends declared 0.10 0.08 0.07 0.05 -
Book value 5.71 4.60 3.86 3.15 2.53
Market price range High 20 1/4 18 1/4 14 1/2 9 3/8 8
Low 13 12 3/4 7 7/8 6 1/8 2 7/16
Average common shares outstanding 21,398,951 21,246,555 21,051,511 20,874,550 20,864,902
Financial Position:
Working capital $ 43,521 $ 66,092 $ 45,429 $ 21,547 $ 39,195
Total assets 308,334 235,523 231,500 170,595 138,638
Institutional debt 49,801 45,000 47,222 6,750 10,000
Total liabilities 186,025 137,302 149,833 104,946 85,847
Stockholders equity 122,309 98,221 81,667 65,649 52,791
Financial Ratios and Other Data:
Current ratio 1.36 to 1 1.84 to 1 1.48 to 1 1.25 to 1 1.67 to 1
Inventory turnover 17.14 15.43 13.53 14.91 13.89
Return on average assets 9.3% 7.4% 7.9% 8.9% 6.1%
Institutional debt to equity ratio 0.41 to 1 0.46 to 1 0.58 to 1 0.10 to 1 0.19 to 1
Return on average stockholders equity 23.0% 19.1% 21.5% 23.3% 19.6%
Number of employees at fiscal year end 1,804 1,500 1,430 1,350 1,410
</TABLE>
Results for fiscal 1995 reflect the acquisitions of Rotelle, Inc. on August 23,
1994 and the wholesale division of Camellia Food Stores, Inc. on April 3, 1995
(see note 2 to the Consolidated Financial Statements).
Results for fiscal 1993 reflect the acquisition of the Civilian Wholesale
Division of B. Green & Company, Inc. on January 22, 1993 (see note 2 to the
Consolidated Financial Statements).
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Richfood Holdings, Inc.:
We have audited the accompanying consolidated balance sheets of Richfood
Holdings, Inc. and subsidiaries as of April 29, 1995 and April 30, 1994, and the
related consolidated statements of earnings, stockholders equity and cash flows
for each of the fiscal years in the three-year period ended April 29, 1995.
These consolidated financial statements are the responsibility of the Company s
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Richfood
Holdings, Inc. and subsidiaries as of April 29, 1995 and April 30, 1994, and the
results of their operations and their cash flows for each of the fiscal years in
the three-year period ended April 29, 1995, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Richmond, Virginia
June 5, 1995
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
The Board of Directors and Stockholders
Richfood Holdings, Inc.:
The integrity and objectivity of the consolidated financial statements and
related financial information in this report are the responsibility of the
management of the Company. The consolidated financial statements have been
prepared in conformity with generally accepted accounting principles and
include, when necessary, the best estimates and judgments of management.
Management is responsible for maintaining an internal control structure, at
appropriate cost, designed to provide reasonable assurance that assets are
safeguarded, transactions are executed in accordance with management s
authorization and financial records provide a reliable basis for the preparation
of the consolidated financial statements. The Company s year-end consolidated
financial statements are audited by our independent auditors, KPMG Peat Marwick
LLP. The annual audit includes consideration of the Company s internal control
structure to the extent required by generally accepted auditing standards to
enable our independent auditors to determine the nature, timing and extent of
their audit procedures. Management also maintains a staff of internal auditors
who evaluate the adequacy of, and investigate the adherence to, internal
controls and related policies and procedures.
The Audit Committee of the Board of Directors, consisting solely of outside
directors, meets periodically with the independent auditors, internal auditors
and management to review matters relating to the Company s financial reporting,
the adequacy of the internal control structure and the scope and results of
audit work. KPMG Peat Marwick LLP and the internal auditors have unrestricted
access to the Audit Committee.
(Signature)
Donald D. Bennett
Chairman of the Board and Chief Executive Officer
(Signature)
John E. Stokely
President and Chief Operating Officer
<PAGE>
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollar amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Fiscal Year Ended
April 29, 1995 April 30, 1994 May 1, 1993
(52 Weeks) % (52 Weeks) % (52 Weeks) %
<S> <C> <C> <C> <C> <C> <C>
Sales (note 11) $1,520,450 100.00 $1,275,110 100.00 $1,091,438 100.00
Costs and expenses, net:
Cost of goods sold 1,385,641 91.13 1,167,825 91.59 1,001,307 91.74
Operating and administrative expenses 91,435 6.01 70,968 5.57 65,361 5.99
Interest expense 5,151 0.34 4,128 0.32 3,175 0.29
Interest income (3,098) (0.20) (3,036) (0.24) (3,278) (0.30)
Earnings from continuing operations
before income taxes 41,321 2.72 35,225 2.76 24,873 2.28
Income taxes (note 8) 15,920 1.05 13,491 1.06 9,030 0.83
Earnings from continuing operations 25,401 1.67 21,734 1.70 15,843 1.45
Loss from discontinued operations, net
of tax (note 3) - - (4,559) (0.35) - -
Net earnings $ 25,401 1.67 $ 17,175 1.35 $ 15,843 1.45
Earnings (loss) per common share:
Continuing operations $ 1.19 $ 1.02 $ 0.75
Discontinued operations - (0.21) -
Net earnings per common share $ 1.19 $ 0.81 $ 0.75
Cash dividends declared per common share $ 0.10 $ 0.08 $ 0.07
Average common shares outstanding 21,398,951 21,246,555 21,051,511
</TABLE>
See accompanying notes to Consolidated Financial Statements.
<PAGE>
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
April 29, 1995 April 30, 1994
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents (note 1(c)) $ 9,678 $ 17,009
Receivables, less allowance for doubtful accounts
of $2,783 and $1,311 (note 5) 60,500 44,238
Inventories (note 4) 87,793 73,887
Other current assets (note 8) 6,046 10,041
Total current assets 164,017 145,175
Notes receivable, less allowance for doubtful accounts
of $1,077 and $1,443 (note 5) 25,769 27,200
Property and equipment, net (notes 6 and 7) 83,418 38,181
Other assets (notes 1(f), 2 and 10) 35,130 24,967
Total assets $308,334 $235,523
Liabilities and Stockholders Equity
Current liabilities:
Current installments of long-term debt and
capital lease obligations (notes 6 and 7) $ 3,052 $ 1,789
Accounts payable 95,379 65,966
Accrued expenses and other current liabilities 22,065 11,328
Total current liabilities 120,496 79,083
Long-term debt and capital lease obligations (notes 6 and 7) 50,305 47,744
Deferred credits and other (note 8) 15,224 10,475
Stockholders equity (note 9):
Preferred stock, without par value; authorized
5,000,000 shares; none issued or outstanding - -
Common stock, without par value; authorized 60,000,000
shares; issued and outstanding 21,424,459 and
21,331,748 shares 24,529 23,701
Retained earnings 97,780 74,520
Total stockholders equity 122,309 98,221
Commitments and contingent liabilities (notes 6, 7, 10 and 12)
Total liabilities and stockholders equity $308,334 $235,523
See accompanying notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollar amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Common Stock Retained
Shares Dollars Earnings Total
<S> <C> <C> <C> <C>
Balance at May 2, 1992 20,885,402 $20,965 $44,684 $ 65,649
Net earnings - - 15,843 15,843
Issuance of common stock under employee stock incentive plans 280,230 1,092 - 1,092
Tax benefit from stock issued - 560 - 560
Cash dividends declared ($0.07 per share) - - (1,477) (1,477)
Balance at May 1, 1993 21,165,632 22,617 59,050 81,667
Net earnings - - 17,175 17,175
Issuance of common stock under employee stock incentive plans 209,261 691 - 691
Tax benefit from stock issued - 1,039 - 1,039
Shares cancelled/surrendered (43,145) (646) - (646)
Cash dividends declared ($0.08 per share) - - (1,705) (1,705)
Balance at April 30, 1994 21,331,748 23,701 74,520 98,221
Net earnings - - 25,401 25,401
Issuance of common stock under employee stock incentive plans 110,750 748 - 748
Tax benefit from stock issued - 378 - 378
Shares cancelled/surrendered (18,039) (298) - (298)
Cash dividends declared ($0.10 per share) - - (2,141) (2,141)
Balance at April 29, 1995 21,424,459 $24,529 $97,780 $122,309
</TABLE>
See accompanying notes to Consolidated Financial Statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Fiscal Year Ended
April 29, 1995 April 30, 1994 May 1, 1993
(52 Weeks) (52 Weeks) (52 Weeks)
<S> <C> <C> <C>
Operating activities:
Net earnings $ 25,401 $ 17,175 $ 15,843
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Loss from discontinued operations, net of tax (note 3) - 4,559 -
Depreciation and amortization 13,763 10,382 7,330
Deferred income taxes 3,278 1,250 (313)
Provision for doubtful accounts 4,370 2,818 6,435
Other, net (175) (1,804) (520)
Changes in operating assets and liabilities, net of effects of
acquisitions and discontinued operations:
Receivables (162) (380) (7,102)
Inventories 6,694 5,873 8,728
Other current assets 725 686 (741)
Accounts payable, accrued expenses and other liabilities 13,734 (4,196) 3,547
Net cash provided by operating activities 67,628 36,363 33,207
Investing activities:
Acquisitions (note 2) (56,977) - (52,045)
Purchases of property and equipment (5,232) (8,416) (5,420)
Issuance of notes receivable (12,941) (16,581) (32,674)
Collections on notes receivable 11,279 14,081 23,533
Other, net (1,852) 310 (575)
Net cash used for investing activities (65,723) (10,606) (67,181)
Financing activities:
Proceeds from long-term debt 35,000 45,000 68,250
Principal payments on long-term debt and capital lease obligations (42,296) (54,483) (33,755)
Proceeds from issuance of common stock under employee
stock incentive plans 93 91 456
Cash dividends paid on common stock (2,033) (1,648) (1,367)
Net cash provided by (used for) financing activities (9,236) (11,040) 33,584
Increase (decrease) in cash and cash equivalents (7,331) 14,717 (390)
Cash and cash equivalents at beginning of fiscal year 17,009 2,292 2,682
Cash and cash equivalents at end of fiscal year $ 9,678 $ 17,009 $ 2,292
</TABLE>
See accompanying notes to Consolidated Financial Statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except per share data)
April 29, 1995, April 30, 1994 and May 1, 1993
(1) Summary of Significant Accounting Policies
(a) Principles of Consolidation and Presentation
The Consolidated Financial Statements of Richfood Holdings, Inc. and
subsidiaries ("the Company") as of April 29, 1995 and April 30, 1994, and for
the fiscal years ended April 29, 1995 ("fiscal 1995"), April 30, 1994 ("fiscal
1994") and May 1, 1993 ("fiscal 1993"), include the accounts of Richfood
Holdings, Inc. and all subsidiaries after the elimination of significant
intercompany transactions and balances.
(b) Fiscal Year
The Company reports on a 52-53 week fiscal year ending the Saturday nearest
April 30. Fiscal years 1995, 1994 and 1993 consist of 52 weeks.
(c) Cash and Cash Equivalents
Cash equivalents of $9,525 and $16,376 at April 29, 1995 and April 30, 1994,
respectively, consist of money market funds and certificates of deposit. For
purposes of the Consolidated Statements of Cash Flows, the Company considers all
highly liquid investments with initial maturities of three months or less to be
cash equivalents. Cash and cash equivalents at April 29, 1995 and April 30, 1994
include $752 and $1,481, respectively, of certificates of deposit that are
pledged under agreements related to certain insurance contracts of the Company's
captive insurance subsidiary. The carrying amounts for cash and cash equivalents
reported in the Consolidated Balance Sheets approximate fair value because of
the short-term maturity of these financial instruments.
(d) Inventories
The Company values inventories at the lower of cost or market with the cost of
the majority of inventories determined using the last-in, first-out (LIFO)
method. Cost for the remaining inventories is determined using the first-in,
first-out (FIFO) method.
(e) Property and Equipment
Property and equipment are stated at cost or, in the case of assets under
capital leases, at the lesser of the fair value of the leased property or the
present value of minimum lease payments at the inception of the lease, less
accumulated depreciation and amortization. Depreciation is computed using the
straight-line method over the estimated useful lives of the respective assets.
Assets under capital leases are amortized over the lesser of their estimated
useful lives or the terms of the respective leases using the straight-line
method. In general, the estimated useful lives for computing depreciation and
amortization are: 40 years for buildings; 3 to 15 years for fixtures and
equipment; and 2 to 9 years for assets under capital leases.
(f) Other Assets
Other assets primarily consist of supply agreements, goodwill (note 2) and the
prepaid pension asset (note 10). The supply agreements generally provide that
the Company will be the principal supplier for the customers and include minimum
purchase requirements by product category. Supply agreements are being amortized
on a straight-line basis over the terms of the respective supply agreements.
Supply agreements included in other assets were $14,304 (net of $7,803 of
accumulated amortization) and $15,455 (net of $4,006 of accumulated
amortization) at April 29, 1995 and April 30, 1994, respectively. Other assets
also include non-competition agreements that are being amortized on a
straight-line basis over the terms of the respective agreements.
(g) Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to the differences between the financial statement and
tax bases of existing assets and liabilities. Deferred tax assets and
liabilities are measured using income tax rates expected to apply to taxable
income in the years in which temporary differences are expected to be recovered
or settled.
(h) Earnings Per Common Share
Earnings per common share amounts are computed based on the weighted average
number of common shares outstanding during the respective years presented. Stock
options are not considered in the earnings per share calculations as common
stock equivalents because they have no material dilutive effect.
(2) Acquisitions
On August 23, 1994, the Company acquired all of the outstanding common stock of
Rotelle, Inc. ("Rotelle"), a wholesale frozen food distributor headquartered
near Philadelphia, Pennsylvania. The purchase price of the acquisition was
$50,700 and was funded by borrowings under a new $35,000 revolving credit
facility, together with internally generated funds and borrowings under an
existing revolving credit facility (note 7). The Company accounted for the
acquisition under the purchase method and, accordingly, the results of
operations of the acquired business have been included in the Company's
Consolidated Statement of Earnings since the date of the acquisition. Goodwill
acquired in the transaction is being amortized on a straight-line basis over 20
years.
The following unaudited pro forma financial information presents the results of
operations of the Company as if the acquisition had occurred as of the beginning
of fiscal 1994:
April 29, April 30,
Unaudited 1995 1994
Sales $1,613,075 $1,612,943
Net earnings 26,199 17,556
Net earnings per common share 1.22 0.83
Fair value of assets acquired and liabilities assumed in the purchase of Rotelle
are as follows:
Current assets $36,049
Noncurrent assets 55,957
Total assets 92,006
Current liabilities 25,040
Noncurrent liabilities 16,266
Total liabilities 41,306
Net cash paid $50,700
On April 3, 1995, the Company acquired certain assets and assumed certain
contracts of Camellia Food Stores, Inc. ("Camellia"), a wholesale and retail
grocery distributor headquartered in Norfolk, Virginia. In connection with the
transaction, the Company acquired Camellia's wholesale inventory, customer notes
and fluid dairy operation and assumed the lease for Camellia's truck fleet.
Additionally, in connection with this acquisition, the Company entered into
five-year supply agreements with Camellia and certain other independent retail
customers. The purchase price of the acquisition was approximately $7,100.
On January 22, 1993, the Company acquired certain assets and assumed certain
contracts of the Civilian Wholesale Division of B. Green & Company, Inc., a
wholesale and retail grocery distributor headquartered in Baltimore, Maryland.
In connection with the transaction, the Company acquired substantially all of
the inventory, customer supply agreements and certain customer notes and
accounts receivable of B. Green & Company, Inc.'s Civilian Wholesale Division.
The purchase price of the acquisition was $52,045.
(3) Discontinued Operations
During fiscal 1994, the Company adopted a formal plan to discontinue operations
of three retail Pack 'n Save grocery stores located in Raleigh, North Carolina.
As part of such plan, the Company decided to sell the assets of the stores,
which sale was completed in fiscal 1995. As a result, for the fiscal year ended
April 30, 1994, the Company recorded a fourth quarter charge of $4,012, net of
tax benefit of $2,161, to write down the assets of the Pack 'n Save stores to
their estimated net realizable values. In addition, the Company incurred a loss
from operations relating to the Pack 'n Save stores of $547, net of tax benefit
of $294, for the period from November 27, 1993, through April 30, 1994. Sales
for the Pack 'n Save stores were $12,292 for the period from November 27, 1993
through April 30, 1994.
(4) Inventories
At April 29, 1995 and April 30, 1994, approximately 73% and 91%, respectively,
of total inventories were valued using the LIFO method. Costs for the remaining
inventories were determined using the FIFO method. If all inventories were
valued at the lower of FIFO cost or market, inventories would have been higher
by approximately $2,031 at April 29, 1995 and $1,539 at April 30, 1994, and net
earnings would have been higher (lower) by approximately $303 for fiscal 1995,
$(126) for fiscal 1994 and $369 for fiscal 1993. The FIFO value of inventories
approximates their replacement cost.
(5) Notes Receivable
The Company's notes receivable are due principally from customers and relate
primarily to financing for store acquisitions and improvements. The related
operating profit generated from these financing activities is not significant.
The majority of such notes bear interest at the prime rate plus 2% (11% at April
29, 1995) and have remaining terms ranging from 1 to 7 years. Collateral
securing such notes varies, but may include inventory, equipment, fixtures,
accounts receivable, contract rights, personal assets and pledges of Company
stock. Receivables shown in current assets include $7,027 and $5,700 at April
29, 1995 and April 30, 1994, respectively, related to current maturities of
these notes receivable. The carrying amount of notes receivable at April 29,
1995 approximates fair value.
(6) Property and Equipment and Leases
Property and equipment are summarized as follows:
April 29, April 30,
1995 1994
Land $ 5,247 $ 1,047
Buildings 61,755 38,320
Fixtures and equipment 64,094 44,020
Assets under capital leases:
Truck fleet 5,502 5,598
Other (computer and office equipment) 2,288 4,258
Construction in progress 1,189 158
Total property and equipment 140,075 93,401
Less accumulated depreciation
and amortization 56,657 55,220
Property and equipment, net $ 83,418 $38,181
Capital lease obligations have imputed interest rates that are principally at
6.5% and are due in varying monthly amounts through fiscal 2002. Capital lease
payments generally include executory costs which cover taxes, maintenance,
insurance and other related expenses.
Capital lease assets and obligations incurred and satisfied are as follows:
Fiscal Year Ended
April 29, April 30, May 1,
1995 1994 1993
Capital lease assets and
obligations incurred $ 29 $ 53 $4,391
Capital lease obligations satisfied 1,799 2,079 1,765
Future minimum lease payments under capital leases at April 29, 1995 are as
follows:
Lease
Fiscal Year Obligations
1996 $2,316
1997 1,280
1998 370
1999 59
2000 59
Later years 67
Total future minimum lease payments 4,151
Less:
Executory costs 1,145
Imputed interest 243
Obligations under capital leases,
including current installments of $1,613 $2,763
The Company leases certain warehouse and office facilities, equipment and retail
stores under noncancellable operating leases that expire within 19 years from
April 29, 1995. The majority of the leases are renewable and provide for the
payment of taxes, insurance and maintenance by the Company. The Company
subleases certain warehouse space and substantially all retail stores to third
parties.
As of April 29, 1995, minimum rentals to be paid and minimum sublease rentals to
be received on noncancellable operating leases with remaining terms greater than
one year are as follows:
Minimum Minimum
Lease Sublease
Rentals To Rentals To Net
Fiscal Year Be Paid Be Received Rentals
1996 $ 14,687 $ 7,043 $ 7,644
1997 13,593 6,105 7,488
1998 12,534 5,911 6,623
1999 11,742 5,566 6,176
2000 9,632 5,193 4,439
Later years 48,109 39,573 8,536
Total $110,297 $69,391 $40,906
Total annual rental expense under noncancellable operating leases with terms
greater than one year are as follows:
Fiscal Year Ended
April 29, April 30, May 1,
1995 1994 1993
Minimum rentals $13,676 $11,564 $12,243
Less sublease income 7,566 7,080 6,703
Rental expense $ 6,110 $ 4,484 $ 5,540
In connection with various guarantees of certain customers' store leases, the
Company is contingently liable, in the event of customer nonperformance, for
future lease payments aggregating approximately $1,026 at April 29, 1995. The
related leases expire at varying dates over the next 7 years.
(7) Long-Term Debt
Long-term debt, including capital lease obligations, consists of the following:
April 29, April 30,
1995 1994
Senior Notes, interest rate of 6.15%,
unsecured, due July 1996 to July 2000 $45,000 $45,000
Commercial Term Note, interest
rate of 6.90%, due August 1998 4,125 -
Obligations under capital leases (note 6) 2,763 4,533
Other debt 1,469 -
Total long-term debt and capital
lease obligations 53,357 49,533
Less current installments 3,052 1,789
Long-term debt and capital lease obligations,
net of current installments $50,305 $47,744
On August 23, 1994, the Company entered into a $35,000 revolving credit facility
with a commercial bank to finance a portion of the purchase price for its
acquisition of Rotelle (note 2). Subsequent to the initial funding of the
facility, the Company elected to reduce the line of credit commitment from
$35,000 to $10,000. The revolving line of credit expires in July 1996 and is
secured by all personal property of Rotelle. Borrowings under the facility,
other than on an overnight basis, bear interest equal to the lower of (i) the
prime rate, or (ii) LIBOR (6.05% at April 29, 1995) plus 0.50%. Borrowings under
the facility, made on an overnight basis, bear interest as agreed upon between
the commercial bank and the Company. The facility includes a 0.25% fee on the
average daily unused portion of the $10,000 commitment. There were no borrowings
outstanding under this facility at April 29, 1995.
On July 16, 1993, the Company issued $45,000 aggregate principal amount of 6.15%
Senior Notes payable over a term of seven years. The Senior Notes require
semiannual interest payments and, commencing on July 1, 1996, five annual
sinking fund payments consisting of principal of $9,000 plus accrued interest
through July 2000. The Senior Notes also include an optional redemption
provision whereby the Company may elect to redeem all, or any portion, of the
debt prior to maturity subject to certain make-whole provisions.
In addition, the Company maintains an unsecured $20,000 revolving line of
credit, increasing to $40,000 at the option of the Company. The revolving line
of credit expires July 31, 1996. Borrowings under the facility bear interest at
a floating rate, reset daily, equal to the lower of (i) the prime rate, or (ii)
an alternative rate quoted daily by the commercial bank that will not exceed
LIBOR plus 0.45%, and includes a 0.25% fee on the average daily unused portion
of the facility. There were no borrowings outstanding under the revolving line
of credit facility at April 29, 1995 or April 30, 1994. This facility also
includes a $5,000 line of credit for the issuance of letters of credit ($3,690
outstanding at April 29, 1995).
The Company assumed a $5,000 Commercial Term Note in connection with its
purchase of Rotelle. The note is payable in monthly installments of $42 plus
accrued interest and is due and payable in full in August 1998. The note is
secured by the land, building and building improvements of Rotelle, which have a
net book value of $26,453 at April 29, 1995.
Future principal repayments on long-term debt, excluding obligations under
capital leases, for the five fiscal years subsequent to the fiscal year ended
April 29, 1995 are: fiscal 1996 - $1,439; fiscal 1997 - $9,923; fiscal 1998 -
$9,607; fiscal 1999 - $11,625; and fiscal 2000 - $9,000.
The Company's long-term debt facilities contain covenants that, among other
things: limit the incurrence of additional indebtedness; prohibit certain liens
on the Company's assets; require the Company to maintain a minimum net worth;
limit Richfood Inc.'s ability to transfer funds to Richfood Holdings, Inc. in
the form of loans, advances or cash dividends; and require the Company to meet
certain financial ratios as of each quarter end. Under the most restrictive of
these covenants, at April 29, 1995, (i) the Company had approximately $62.3
million of retained earnings available for cash dividends, and (ii)
approximately $38.3 million of Richfood, Inc.'s net assets of $98.2 million were
subject to restrictions on transfer to Richfood Holdings, Inc.
Based on the borrowing rates currently available to the Company for long-term
debt facilities with similar terms and average maturities, the fair value of
long-term debt approximates the carrying amount at April 29, 1995.
In connection with guarantees related to certain customer notes payable to third
parties, the Company is contingently liable, in the event of customer
nonperformance, for principal payments under the notes aggregating approximately
$7,917 at April 29, 1995. Collateral held by the third parties varies but may
include real property, inventory, equipment, fixtures, accounts receivable,
contract rights and pledged stock. Interest payments made under long-term debt,
including interest payments made under capital leases, were $4,038 for fiscal
1995, $3,314 for fiscal 1994 and $3,165 for fiscal 1993.
(8) Income Taxes
The components of income tax expense (benefit) related to earnings from
continuing operations before income taxes are as follows:
Fiscal Year Ended
April 29, April 30, May 1,
1995 1994 1993
Current:
Federal $10,479 $10,534 $ 7,828
State 2,163 1,930 1,551
12,642 12,464 9,379
Deferred:
Federal 3,037 881 (296)
State 241 146 (53)
3,278 1,027 (349)
Income taxes $15,920 $13,491 $ 9,030
Income tax payments $11,334 $10,904 $10,383
Income tax expense differs from the amounts resulting from applying the
statutory federal income tax rate to earnings from continuing operations before
income taxes as follows:
Fiscal Year Ended
April 29, April 30, May 1,
1995 1994 1993
Taxes computed using federal
statutory rate 35.00% 35.00% 34.00%
State income taxes, net of
federal income tax benefit 3.78 3.90 3.96
Federal fuel tax credit (0.37) (0.28) (0.29)
Other, net 0.12 (0.32) (1.36)
Effective tax rate 38.53% 38.30% 36.31%
Deferred income taxes for fiscal 1995 and fiscal 1994 reflect the net income tax
effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes. Significant components of deferred tax assets and liabilities at April
29, 1995 and April 30, 1994, are as follows:
April 29, April 30,
1995 1994
Deferred tax assets:
Allowance for doubtful accounts $ 1,225 $ 1,071
Inventory 1,138 478
Accrued expenses 3,224 654
Accrual for loss on discontinued
operations - 2,161
Other 734 571
Total deferred tax assets 6,321 4,935
Deferred tax liabilities:
Property and equipment - depreciation (8,021) (1,971)
Retirement plan (3,304) (3,038)
Other (345) (274)
Total deferred tax liabilities (11,670) (5,283)
Net deferred tax liability $ (5,349) $ (348)
Net current deferred tax asset $ 5,260 $ 4,725
Net noncurrent deferred tax liability (10,609) (5,073)
Net deferred tax liability $ (5,349) $ (348)
The Company has sufficient taxable income in the available carryback periods and
future taxable income from reversing taxable temporary differences to realize
substantially all of its deferred tax assets at April 29, 1995. Management
believes, based on the Company's history of generating earnings and expectations
of future earnings, that it is more likely than not that all deferred tax assets
will be realized. Therefore, no valuation allowance is necessary.
(9) Stock Option Plans
The Company's Omnibus Stock Incentive Plan (the Omnibus Plan) authorizes the
granting of a maximum of 900,000 shares of common stock (subject to adjustment
to reflect certain dilutive events), in the form of shares of restricted common
stock, incentive stock options and nonqualified stock options with or without
stock appreciation rights (SARs), to certain employees. Options to purchase the
Company's common stock are granted at a price no less than the fair market value
of the stock on the date of grant (if the option is an incentive stock option)
or 50% of the fair market value of the stock on the date of grant (if the option
is a nonqualified stock option). Options to purchase 534,950 shares remain
outstanding under the Omnibus Plan at April 29, 1995.
The Company's Long-Term Incentive Plan (the Incentive Plan) provided for the
granting of a maximum of 1,000,000 shares of common stock (subject to adjustment
to reflect certain dilutive events), in the form of shares of restricted common
stock, incentive stock options and nonqualified stock options with or without
SARs, to certain employees. Options to purchase the Company's common stock were
granted at a price no less than the fair market value of the stock on the date
of grant (if the option was an incentive stock option) or 85% of the fair market
value of the stock on the date of grant (if the option was a nonqualified stock
option). As a result of the adoption of the Omnibus Plan, no further grants may
be made under the Incentive Plan. Options to purchase 96,750 shares of common
stock remain outstanding under the Incentive Plan at April 29, 1995.
The Company's Non-Employee Directors' Stock Option Plan (the Directors' Stock
Plan) authorizes the granting of a maximum of 75,000 shares of common stock
(subject to adjustment to reflect certain dilutive events), in the form of
nonqualified stock options. The Directors' Stock Plan provides for each eligible
director to receive, on September 1 of each year, an option to purchase 1,000
shares of common stock. Options to purchase the Company's common stock are
granted at the fair market value of the stock on the date of grant. Options to
purchase 10,000 shares of common stock remain outstanding under the Directors'
Stock Plan at April 29, 1995.
The number of shares subject to outstanding stock options is as follows:
(Shares in thousands) Options Price Range
Outstanding at May 2, 1992 766 $ 2.63 - 6.56
Granted 186 8.56
Exercised (248) 2.63 - 6.56
Canceled (2) 8.56
Outstanding at May 1, 1993 702 2.63 - 8.56
Granted 108 15.50
Exercised (213) 2.63 - 8.56
Canceled (27) 3.83 -15.50
Outstanding at April 30, 1994 570 3.83 -15.50
Granted 202 14.75 -15.88
Exercised (110) 3.83 -15.50
Canceled (20) 3.83 -15.50
Outstanding at April 29, 1995 642 $ 3.83 -15.88
Exercisable at April 29, 1995 246 $ 3.83 -15.50
(10) Retirement Plans
Substantially all of the Company's employees are covered by defined benefit
plans. The majority of the Company's employees are covered by a noncontributory
defined benefit plan sponsored by the Company. In addition, the Company sponsors
a noncontributory defined benefit plan for union employees under collective
bargaining agreements with Rotelle.
The Richfood Employees' Retirement Plan covers employees who meet certain age
and service requirements. Retirement benefits vest after 5 years of service and
are based on years of service and average final compensation. The Company's
funding policy has been to contribute annually the maximum amount deductible for
income tax purposes. No contributions were permitted under this policy in any of
the fiscal years presented. Plan assets at April 29, 1995, consist primarily of
equity securities, U.S. government and agency obligations, mortgage-backed
securities and corporate obligations.
The Rotelle, Inc. Pension Plan covers hourly-paid union employees of Rotelle.
Hourly-paid union employees of Rotelle become participants in the Rotelle, Inc.
Pension Plan on their date of hire. Retirement benefits vest after 5 years of
service and are based on a fixed dollar payment per month and years of credited
service. The Company currently contributes to the plan on a monthly basis.
Assets held under the plan at April 29, 1995, consist primarily of equity
securities, U.S. government and agency obligations, guaranteed insurance
contracts and corporate obligations.
The funded status of the plans are as follows:
April 29, 1995 April 30, 1994
Assets Exceed Accumulated Assets Exceed
Accumulated Benefits Accumulated
Benefits Exceed Assets Benefits
Actuarial present value of
vested benefit obligation $21,236 $3,503 $19,457
Accumulated benefit obligation $22,398 $3,585 $20,570
Fair value of plan assets $47,708 $2,711 $44,843
Projected benefit obligation 34,782 3,625 31,771
Plan assets in excess of
(less than) projected
benefit obligation 12,926 (914) 13,072
Unrecognized net
transition asset (5,949) - (6,830)
Unrecognized net loss 1,525 201 1,568
Minimum liability - (161) -
Net pension asset (liability) $ 8,502 $ (874) $ 7,810
The following are the components of net retirement income related to the defined
benefit plans:
Fiscal Year Ended
April 29, April 30, May 1,
1995 1994 1993
Service cost - present
value of benefits earned
during the year $ 1,932 $ 1,537 $ 1,378
Interest cost on projected
benefit obligation 2,659 2,102 1,966
Expected return on
plan assets, net of
amount deferred (4,008) (2,914) (3,655)
Net amortization and deferral (1,044) (1,777) (792)
Net retirement income $ (461) $(1,052) $(1,103)
The Company assumed a weighted average discount rate of 7.75% and an expected
long-term rate of return of 9% for all years presented. The Company assumed a
projected increase in compensation of 6% for the Richfood Employees' Retirement
Plan for all years presented.
The Company maintains a nonqualified, unfunded supplemental retirement plan for
selected management personnel. Supplemental retirement plan benefits vest after
10 years of service and are based on years of service and average final
compensation. The Company established a trust that maintains life insurance
policies to act as a financing source for the plan. The cash surrender value of
the life insurance policies was $846 at April 29, 1995 and $644 at April 30,
1994. The projected benefit obligation for this plan was $831 at April 29, 1995
and $823 at April 30, 1994, and is included in deferred credits and other on the
accompanying consolidated balance sheets.
The Company maintains a defined contribution employee savings and stock
ownership plan. The plan is offered to substantially all employees who meet
certain age and service requirements and allows for participant pretax
contributions and employer matching contributions. The Company contributed $275,
$280 and $163 to the plan for fiscal 1995, fiscal 1994 and fiscal 1993,
respectively.
(11) Significant Customers
Sales to three customers accounted for 26%, 13% and 10% of the Company's sales
in fiscal 1995. Sales to two customers accounted for 29% and 15% of sales in
fiscal 1994, and 29% and 17% of sales in fiscal 1993.
(12) Litigation and Related Matters
The Company is party to various legal actions that are incidental to its
business. While the outcome of legal actions cannot be predicted with certainty,
the Company believes that the outcome of any of these proceedings, or all of
them combined, will not have a material adverse effect on its consolidated
financial position or business.
(13) Selected Quarterly Financial Data (unaudited)
Summarized quarterly financial information for the quarters indicated and market
price and dividend information for the Company's common stock are as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended April 29, 1995
First Second Third Fourth
(12 weeks) (12 weeks) (12 weeks) (16 weeks)
<S> <C> <C> <C> <C>
Sales $296,466 $344,618 $380,458 $498,908
Gross profit 24,789 31,081 34,454 44,485
Net earnings 4,868 5,403 6,330 8,800
Net earnings per common share 0.23 0.25 0.30 0.41
Cash dividends declared per common share 0.025 0.025 0.025 0.025
Market price range:
Low $ 13 $ 13 1/2 $ 14 1/2 $ 15 3/4
High 16 3/4 16 1/2 17 20 1/4
<CAPTION>
Fiscal Year Ended April 29, 1994
First Second Third Fourth
(12 weeks) (12 weeks) (12 weeks) (16 weeks)
<S> <C> <C> <C> <C>
Sales $293,367 $283,921 $294,556 $403,266
Gross profit 23,890 24,077 24,603 34,715
Earnings from continuing operations 4,410 4,458 5,405 7,461
Net earnings 4,410 4,458 5,016 3,291
Earnings per common share from continuing
operations 0.21 0.21 0.25 0.35
Net earnings per common share 0.21 0.21 0.24 0.15
Cash dividends declared per common share 0.02 0.02 0.02 0.02
Market price range:
Low $ 12 3/4 $ 15 1/16 $ 15 1/4 $ 15 1/4
High 15 5/8 16 3/4 17 1/2 18 1/4
</TABLE>
The Company's fiscal year consists of thirteen periods. In computing quarterly
financial data, the first, second and third quarters each include three periods
while the fourth quarter includes four periods. Market price information for the
Company's common stock reflects inter-dealer prices, without retail mark-up,
mark-down or commission, and may not necessarily represent actual transactions.
Exhibit 21.1
RICHFOOD CONSOLIDATED GROUP
Subsidiaries of Richfood Holdings, Inc. [Virginia]
Richfood, Inc. [Virginia]
Rotelle, Inc. [Pennsylvania]
Market Funding, Inc. [Delaware]
Market Insurance Company, Ltd. [Bermuda]
Market Transportation Services, Inc. [Delaware]
SR Acquisition, Inc. [Delaware]
Subsidiaries of Richfood, Inc.
Market Improvement Corporation [Virginia]
Market Insurance Agency, Inc. [Virginia]
G.W.M. Holdings, Inc. [Virginia]
Rich-Temps, Inc. [Virginia]
Maryland Retail Services, Inc. [Virginia]
Retail Funding Corporation [Virginia]
Market Leasing Company [Virginia]
MFFL, Inc. [Virginia]
Market Brands, Inc. [Delaware]
Subsidiaries of Rotelle, Inc.
Rotelle Management, Inc. [Pennsylvania]
Spring House Leasing, Inc. [Pennsylvania]
Exhibit 23.1
Consent of Independent Auditors
The Board of Directors
Richfood Holdings, Inc.:
We consent to incorporation by reference in the registration statements (Nos.
33-41210, 33-41570, 33-43652 and 33-55299) on Form S-8 of Richfood Holdings,
Inc. of our report dated June 5, 1995, relating to the consolidated balance
sheets of Richfood Holdings, Inc. and subsidiaries as of April 29, 1995 and
April 30, 1994, and the related consolidated statements of earnings,
stockholders' equity and cash flows for each of the fiscal years in the
three-year period ended April 29, 1995, which report is incorporated by
reference in the annual report on Form 10-K of Richfood Holdings, Inc. for the
fiscal year ended April 29, 1995.
Richmond, Virginia
July 24, 1995 /s/ KPMG Peat Marwick LLP
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-29-1995
<PERIOD-END> APR-29-1995
<CASH> 9,678
<SECURITIES> 0
<RECEIVABLES> 90,129
<ALLOWANCES> 3,860
<INVENTORY> 87,793
<CURRENT-ASSETS> 164,017
<PP&E> 140,075
<DEPRECIATION> 56,657
<TOTAL-ASSETS> 308,334
<CURRENT-LIABILITIES> 120,496
<BONDS> 50,305
<COMMON> 24,529
0
0
<OTHER-SE> 97,780
<TOTAL-LIABILITY-AND-EQUITY> 308,334
<SALES> 1,520,450
<TOTAL-REVENUES> 1,520,450
<CGS> 1,385,641
<TOTAL-COSTS> 1,385,641
<OTHER-EXPENSES> 91,435
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,151
<INCOME-PRETAX> 41,321
<INCOME-TAX> 15,920
<INCOME-CONTINUING> 25,401
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,401
<EPS-PRIMARY> 1.19
<EPS-DILUTED> 1.19
</TABLE>
