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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended July 3, 2004
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _____________ to _______________
Commission file number: 002-94984
Roundy's, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Wisconsin 39-0854535
- -------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
875 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202
- -----------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (414)231-5000
----------------
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: None.
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 checkmark whether the Registrant is an accelerated filer (as defined
in Exchange Act Rule 12b-2) Yes No X
-- --
As of August 13, 2004 there were 1,000 shares of the Registrant's common stock
outstanding, all of which were held by Roundy's Acquisition Corporation ("RAC").
RAC is a corporation formed at the direction of Willis Stein & Partners, III,
L.P. ("Willis Stein") for the purposes of acquiring Roundy's. 90% of RAC's
common and preferred stock is owned by investment funds controlled by Willis
Stein (the "Willis Stein Funds") and certain associated investors. Approximately
100% of RAC's common stock may be deemed to be beneficially owned by certain
officers and directors of the Registrant, all of whom are or may be deemed to be
affiliates of the Registrant. There is no established public trading market for
such stock.
ROUNDY'S, INC.
FORM 10-Q
For the period ended July 3, 2004
INDEX
Page No.
--------
PART I. - Financial Information
Item 1. Financial Statements (unaudited)
Consolidated Statements of Income 1
Consolidated Balance Sheets 2
Consolidated Statements of Cash Flows 3
Notes to Unaudited Consolidated Financial
Statements 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 18
Item 4. Controls and Procedures 18
PART II. - Other Information
Item 1. Legal Proceedings 19
Item 2. Changes in Securities and Use of Proceeds 19
Item 3. Defaults Upon Senior Securities 19
Item 4 Submission of Matters to a Vote of Security
Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
SIGNATURES 20
EXHIBIT INDEX 21
PART I. Item 1. FINANCIAL STATEMENTS
ROUNDY'S, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands)
(Unaudited)
Thirteen Weeks Ended Twenty-six Weeks Ended
---------------------------- ------------------------
July 3, 2004 June 28, 2003 July 3, 2004 June 28, 2003
---------- ---------- ------------ -------------
Revenues:
Net sales and service fees $1,250,599 $ 995,414 $2,424,536 $1,892,575
Other - net 369 561 739 1,298
---------- ---------- ---------- ----------
1,250,968 995,975 2,425,275 1,893,873
---------- ---------- ---------- ----------
Costs and Expenses:
Cost of sales 993,610 794,670 1,909,890 1,515,770
Operating and administrative 220,600 166,943 441,379 311,654
Interest:
Interest expense 10,306 9,639 20,249 19,516
Amortization of deferred
financing costs 668 809 1,326 1,628
---------- ---------- ---------- ----------
1,225,184 972,061 2,372,844 1,848,568
---------- ---------- ---------- ----------
Income Before Income Taxes 25,784 23,914 52,431 45,305
Provision for Income Taxes 10,829 9,566 22,021 18,122
---------- ---------- ---------- ----------
Net Income $ 14,955 $ 14,348 $ 30,410 $ 27,183
========== ========== ========== ==========
See notes to unaudited consolidated financial statements.
ROUNDY'S, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
July 3, January 3,
Assets 2004 2004
---------- ----------
(Unaudited)
Current Assets:
Cash and cash equivalents $ 119,295 $ 90,006
Notes and accounts receivable, less allowance
for losses of $4,756 and $5,012, respectively 83,818 81,929
Merchandise inventories 252,062 251,888
Prepaid expenses 8,294 12,429
Deferred income tax benefits 18,253 17,745
---------- ----------
Total current assets 481,722 453,997
---------- ----------
Property and Equipment - Net 313,439 320,149
Other Assets:
Deferred income tax benefits 24,479 28,161
Notes receivable 2,316 2,877
Other assets - net 84,274 85,211
Goodwill 642,138 639,995
---------- ----------
Total other assets 753,207 756,244
---------- ----------
Total assets $1,548,368 $1,530,390
========== ==========
Liabilities and Shareholder's Equity
Current Liabilities:
Accounts payable $ 277,269 $ 296,733
Accrued expenses 132,523 129,499
Current maturities of long-term debt and
capital lease obligations 4,239 4,229
Income taxes 19,539 11,782
---------- ----------
Total current liabilities 433,570 442,243
---------- ----------
Long-term debt and capital lease obligations 598,615 597,750
Other liabilities 96,167 100,791
---------- ----------
Total liabilities 1,128,352 1,140,784
---------- ----------
Shareholder's Equity:
Common stock (1,500 shares authorized,
1,000 shares issued and outstanding
at $0.01 par value)
Additional paid-in capital 314,500 314,500
Retained earnings 105,516 75,106
---------- ----------
Total shareholder's equity 420,016 389,606
---------- ----------
Total liabilities and shareholder's equity $1,548,368 $1,530,390
========== ==========
See notes to unaudited consolidated financial statements
ROUNDY'S, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Twenty-six Weeks Ended
----------------------------
July 3, 2004 June 28, 2003
------------ -------------
Cash Flows From Operating Activities:
Net income $ 30,410 $ 27,183
Adjustments to reconcile net income to net
cash flows provided by operating activities:
Depreciation and amortization, including deferred
financing costs 31,408 22,250
Loss on sale of equipment 11
Changes in operating assets and liabilities, net
of the effect of business acquisitions:
Notes and accounts receivable (1,889) 15,512
Merchandise inventories (101) (113)
Prepaid expenses 4,135 3,787
Other assets (724) (5,760)
Accounts payable (19,464) 11,746
Accrued expenses 3,091 (2,480)
Income taxes 8,931 (2,535)
Other liabilities (4,624) (3,328)
--------- ---------
Net cash flows provided by operating activities 51,184 66,262
--------- ---------
Cash Flows From Investing Activities:
Capital expenditures (23,226) (22,664)
Proceeds from sale of equipment 280 37
Payment for business acquisitions, net of cash acquired (131,387)
Decrease in notes receivable, net 561 719
--------- ---------
Net cash flows used in investing activities (22,385) (153,295)
--------- ---------
Cash Flows From Financing Activities:
Proceeds from long-term borrowings 3,000
Debt issuance costs (386) (506)
Payments of debt and capital lease obligations (2,124) (1,459)
--------- ---------
Net cash flows provided by (used in) financing activities 490 (1,965)
--------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents 29,289 (88,998)
Cash and Cash Equivalents, Beginning of Period 90,006 139,778
--------- ---------
Cash and Cash Equivalents, End of Period $ 119,295 $ 50,780
========= =========
Supplemental Cash Flow Information:
Cash paid during the period:
Interest $ 22,317 $ 21,080
Income taxes 13,090 21,516
See notes to unaudited consolidated financial statements.
ROUNDY'S, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS AND BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Roundy's, Inc.
("Roundy's" or the "Company") as of July 3, 2004, and for the thirteen and
twenty-six week periods ended July 3, 2004 and June 28, 2003 reflect all
adjustments (consisting only of normal recurring adjustments) that are, in the
opinion of management, necessary for a fair presentation of the financial
position and operating results for the interim periods. The unaudited
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States for interim
financial information, in accordance with the instructions for Form 10-Q and
Article 10 of Regulation S-X and do not include all of the information and
footnotes required for complete, audited financial statements. The unaudited
consolidated financial statements should be read in conjunction with the
consolidated financial statements and related notes thereto, together with
Management's Discussion and Analysis of Financial Condition and Results of
Operations, contained in the Roundy's, Inc. Annual Report on Form 10-K for the
fiscal year ended January 3, 2004. The results of operations for the thirteen
and twenty-six week periods ended July 3, 2004 may not necessarily be indicative
of the results that may be expected for the entire fiscal year ending January 1,
2005.
2. ACQUISITIONS
In June 2003, the Company acquired 32 Rainbow Foods retail grocery stores from
Fleming Companies, Inc. and simultaneously sold one store to an independent
licensed Pick 'n Save operator (the "Rainbow Minneapolis Acquisition"). During
the second quarter of 2004, the Company decreased the fixed asset purchase price
allocation of the Rainbow Minneapolis Acquisition which resulted in a $5.1
million increase in goodwill. During the twenty-six weeks ended July 3, 2004,
the Company decreased the fixed asset purchase price allocation of the Rainbow
Minneapolis Acquisition by $2.1 million.
In October 2003, the Company acquired the equipment, fixtures and leasehold
improvements of seven former Kohl's Foods Stores from the Great Atlantic &
Pacific Tea Company, Inc. ("Kohl's Acquisition") and reopened two of these
stores in the fourth quarter 2003. During the first quarter 2004, the Company
reopened three more of these stores. In April 2004, the Company reopened an
additional store. All six of these stores were reopened under the Pick 'n Save
banner. The Company plans to reopen the one remaining store in the third quarter
2004. Six of these stores are located in the Milwaukee area and one store is
located in the Racine, Wisconsin area.
3. RECENTLY ISSUED ACCOUNTING STANDARDS
The Company has applied Emerging Issues Task Force No. 03-10 ("EITF 03-10"),
"Application of EITF Issue No. 02-16, "Accounting by a Customer (including a
Reseller) for Certain Consideration Received from a Vendor," by Resellers to
Sales Incentives Offered to Customers by Manufacturers" to its 2004 and 2003
results. Pursuant to EITF 03-10, vendor-funded coupon reimbursements are
considered part of net sales at the point of sale. Accordingly, $10.4 million
and $20.4 million of such reimbursements for the thirteen and twenty-six weeks
of 2003 have been classified within net sales to conform to EITF 03-10.
4. EMPLOYEE BENEFIT PLANS
Net periodic benefit costs in the thirteen and twenty-six weeks ended July 3,
2004 and June 28, 2003 included the following components (in thousands):
Thirteen Weeks Ended Twenty-six Weeks Ended
---------------------------------- ----------------------------------
July 3, 2004 June 28, 2003 July 3, 2004 June 28, 2003
------------ ------------- ------------ -------------
Components of net periodic
benefit costs:
Service costs $ 1,817 $ 1,817 $ 3,634 $ 3,637
Interest costs 1,944 1,961 3,888 3,926
Expected return on plan assets (1,269) (1,399) (2,538) (2,797)
Amortization of net actuarial
loss/(gain) 34 (12) 68 (25)
------- ------- -------- --------
Net periodic benefit cost $ 2,526 $ 2,367 $ 5,052 $ 4,741
======= ======= ======== ========
During the second quarter 2004, the Company made $4.0 million of contributions
to its pension plans. Year-to-date, the Company made $5.4 million of
contributions to its pension plans. The Company expects its total pension plan
contributions for the year ending January 1, 2005 to approximate $13.5 million.
5. SUBSEQUENT EVENTS
On July 9, 2004, the Company signed an agreement to purchase all of the retail
grocery stores owned by McAdams, Inc. ("McAdams"). McAdams operates seven Pick
'n Save grocery stores located in southeastern Wisconsin. The aggregate
consideration expected to be paid for the transaction is approximately $63
million, which includes an estimated $8 million of inventory. The transaction is
expected to close in late September or early October 2004.
On July 14, 2004, the Company announced its decision to close its Eldorado,
Illinois and Evansville, Indiana distribution centers. The Company expects to
continue to supply a portion of the current Eldorado and Evansville customer
base from its Lima, Ohio distribution center. The Company is planning a
transition period and expects the two facilities to close in the fourth quarter
2004. The financial effect of the closures and consolidation is not expected to
be material to the Company's current or future results of operations or
financial position.
6. SEGMENT REPORTING
The Company and its subsidiaries sell and distribute food and nonfood products
that are typically found in supermarkets. The Company's stores and those of its
wholesale customers are located primarily in the Midwest. The Company has two
reportable segments - retail and wholesale. The Company's retail segment sells
directly to the consumer while the wholesale distribution segment sells to both
Company-owned and independent retail food stores. Eliminations represent the
activity between wholesale and Company-owned retail stores. Inter-segment
revenues are recorded at amounts consistent with those charged to independent
retail stores.
Identifiable assets are those used exclusively by that industry segment.
Corporate assets are principally cash and cash equivalents, supply contracts,
trademarks, deferred financing costs and certain property and equipment.
Reportable segments, as defined by SFAS No. 131, "Disclosure about Segments of
an Enterprise and Related Information," are components of an enterprise about
which separate financial information is available that is evaluated regularly by
the chief operating decision-maker in deciding resource allocation and assessing
performance.
(in thousands) Thirteen Weeks Ended Twenty-six Weeks Ended
--------------------------- ----------------------------
July 3, 2004 June 28, 2003 July 3, 2004 June 28, 2003
------------- ------------- ------------ -------------
NET SALES AND SERVICE FEES
Retail $ 768,039 $ 532,198 $ 1,485,867 $ 991,921
Wholesale 882,503 775,865 1,718,955 1,484,644
Eliminations (399,943) (312,649) (780,286) (583,990)
----------- ----------- ----------- -----------
Consolidated $ 1,250,599 $ 995,414 $ 2,424,536 $ 1,892,575
=========== =========== =========== ===========
INCOME BEFORE INCOME TAXES
Retail $ 15,890 $ 16,758 $ 32,299 $ 29,494
Wholesale 29,037 22,560 58,151 45,958
Corporate (19,143) (15,404) (38,019) (30,147)
----------- ----------- ----------- -----------
Consolidated $ 25,784 $ 23,914 $ 52,431 $ 45,305
=========== =========== =========== ===========
DEPRECIATION AND AMORTIZATION
Retail $ 9,795 $ 5,309 $ 19,169 $ 9,657
Wholesale 1,411 1,520 2,867 3,080
Corporate 3,988 3,945 8,046 7,885
----------- ----------- ----------- -----------
Consolidated $ 15,194 $ 10,774 $ 30,082 $ 20,622
=========== =========== =========== ===========
INTEREST
Retail $ 4,938 $ 4,523 $ 9,878 $ 8,734
Wholesale 903 606 1,840 1,171
Corporate 5,133 5,319 9,857 11,239
----------- ----------- ----------- -----------
Consolidated $ 10,974 $ 10,448 $ 21,575 $ 21,144
=========== =========== =========== ===========
CAPITAL EXPENDITURES
Retail $ 8,615 $ 8,233 $ 15,781 $ 16,047
Wholesale 376 2,632 396 2,899
Corporate 2,372 2,794 7,049 3,718
----------- ----------- ----------- -----------
Consolidated $ 11,363 $ 13,659 $ 23,226 $ 22,664
=========== =========== =========== ===========
IDENTIFIABLE ASSETS (AT
PERIOD-END)
Retail $ 707,482
Wholesale 625,898
Corporate 214,988
-----------
Consolidated $ 1,548,368
===========
GOODWILL (AT PERIOD-END)
Retail $ 315,825
Wholesale 326,313
-----------
Consolidated $ 642,138
===========
7. CONDENSED CONSOLIDATING INFORMATION
The following presents condensed consolidating financial statements of Roundy's
and its subsidiaries. All subsidiaries are 100% owned by Roundy's. All of the
domestic subsidiaries are guarantors of the Company's $300 million 8 7/8% senior
subordinated notes due 2012 (the "Notes").
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
Thirteen Weeks Ended July 3, 2004
(In thousands)
Combined
Roundy's Subsidiaries Eliminations Total
----------- ------------ ------------ -----------
Revenues:
Net sales and service fees $ 421,072 $ 1,086,998 $ (257,471) $ 1,250,599
Other-net 141 228 369
----------- ----------- ----------- -----------
421,213 1,087,226 (257,471) 1,250,968
----------- ----------- ----------- -----------
Costs and Expenses:
Cost of sales 379,705 866,195 (252,290) 993,610
Operating and administrative 36,707 189,074 (5,181) 220,600
Interest expense 4,758 6,216 10,974
----------- ----------- ----------- -----------
421,170 1,061,485 (257,471) 1,225,184
----------- ----------- ----------- -----------
Income Before Income Taxes 43 25,741 25,784
Provision for Income Taxes 18 10,811 10,829
Equity in earnings of subsidia 14,930 (14,930)
----------- ----------- ----------- -----------
Net Income $ 14,955 $ 14,930 $ (14,930) $ 14,955
=========== =========== =========== ===========
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
Twenty-six Weeks Ended July 3, 2004
(In thousands)
Combined
Roundy's Subsidiaries Eliminations Total
---------- ------------ ------------ -----------
Revenues:
Net sales and service fees $ 823,699 $ 2,086,544 $ (485,707) $ 2,424,536
Other-net 293 446 739
----------- ----------- ----------- -----------
823,992 2,086,990 (485,707) 2,425,275
----------- ----------- ----------- -----------
Costs and Expenses:
Cost of sales 739,809 1,645,396 (475,315) 1,909,890
Operating and administrative 73,008 378,763 (10,392) 441,379
Interest expense 9,128 12,447 21,575
----------- ----------- ----------- -----------
821,945 2,036,606 (485,707) 2,372,844
----------- ----------- ----------- -----------
Income Before Income Taxes 2,047 50,384 52,431
Provision for Income Taxes 860 21,161 22,021
Equity in earnings of subsidiaries 29,223 (29,223)
----------- ----------- ----------- -----------
Net Income $ 30,410 $ 29,223 $ (29,223) $ 30,410
=========== =========== =========== ===========
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
Thirteen Weeks Ended June 28, 2003
(In thousands)
Combined
Roundy's Subsidiaries Eliminations Total
--------- ------------ ------------ --------
Revenues:
Net sales and service fees $ 381,129 $ 831,562 $(217,277) $ 995,414
Other-net 169 392 561
--------- --------- --------- ---------
381,298 831,954 (217,277) 995,975
--------- --------- --------- ---------
Costs and Expenses:
Cost of sales 342,048 665,480 (212,858) 794,670
Operating and administrative 31,169 140,193 (4,419) 166,943
Interest expense 4,848 5,600 10,448
--------- --------- --------- ---------
378,065 811,273 (217,277) 972,061
--------- --------- --------- ---------
Income Before Income Taxes 3,233 20,681 23,914
Provision for Income Taxes 1,294 8,272 9,566
Equity in earnings of subsidiaries 12,409 (12,409)
--------- --------- --------- ---------
Net Income $ 14,348 $ 12,409 $ (12,409) $ 14,348
========= ========= ========= =========
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
Twenty-six Weeks Ended June 28, 2003
(In thousands)
Combined
Roundy's Subsidiaries Eliminations Total
----------- ------------ ------------ -----------
Revenues:
Net sales and service fees $ 757,599 $ 1,554,096 $ (419,120) $ 1,892,575
Other-net 485 813 1,298
----------- ----------- ----------- -----------
758,084 1,554,909 (419,120) 1,893,873
----------- ----------- ----------- -----------
Costs and Expenses:
Cost of sales 679,784 1,246,440 (410,454) 1,515,770
Operating and administrative 60,021 260,299 (8,666) 311,654
Interest expense 10,417 10,727 21,144
----------- ----------- ----------- -----------
750,222 1,517,466 (419,120) 1,848,568
----------- ----------- ----------- -----------
Income Before Income Taxes 7,862 37,443 45,305
Provision for Income Taxes 3,145 14,977 18,122
Equity in earnings of subsidiaries 22,466 (22,466)
------------ ----------- ----------- -----------
Net Income $ 27,183 $ 22,466 $ (22,466) $ 27,183
=========== =========== =========== ===========
CONDENSED CONSOLIDATING BALANCE SHEETS
As of July 3, 2004
(In thousands)
Combined
Assets Roundy's Subsidiaries Eliminations Total
-------- ------------ ------------ ----------
Current Assets:
Cash and cash equivalents $ 80,454 $ 38,841 $ 119,295
Notes and accounts receivable-net 29,312 64,665 $ (10,159) 83,818
Merchandise inventories 51,447 200,615 252,062
Prepaid expenses 3,881 4,413 8,294
Deferred income tax benefits (2,231) 20,484 18,253
----------- ----------- ----------- -----------
Total current assets 162,863 329,018 (10,159) 481,722
----------- ----------- ----------- -----------
Property and Equipment-Net 21,711 291,728 313,439
Other Assets:
Investment in subsidiaries 277,785 (277,785)
Intercompany receivables 429,038 (429,038)
Deferred income tax benefits 24,479 24,479
Notes receivable 542 1,774 2,316
Goodwill and other assets 263,505 462,907 726,412
----------- ----------- ----------- -----------
Total other assets 995,348 464,682 (706,823) 753,207
----------- ----------- ----------- -----------
Total assets $ 1,179,922 $ 1,085,428 $ (716,982) $ 1,548,368
=========== =========== =========== ===========
Liabilities and Shareholder's Equity
Current Liabilities:
Accounts payable $ 131,756 $ 149,100 $ (3,587) $ 277,269
Accrued expenses 62,372 76,723 (6,572) 132,523
Current maturities of long-term debt
and capital lease obligations 2,500 1,739 4,239
Intercompany payable 429,038 (429,038)
Income taxes (2,043) 21,582 19,539
----------- ----------- ----------- -----------
Total current liabilities 194,585 678,182 (439,197) 433,570
----------- ----------- ----------- -----------
Long-term debt and capital lease
obligations 545,160 53,455 598,615
Other liabilities 20,161 76,006 96,167
----------- ----------- ----------- -----------
Total liabilities 759,906 807,643 (439,197) 1,128,352
----------- ----------- ----------- -----------
Shareholder's Equity 420,016 277,785 (277,785) 420,016
----------- ----------- ----------- -----------
Total liabilities and
shareholder's equity $ 1,179,922 $ 1,085,428 $ (716,982) $ 1,548,368
=========== =========== =========== ===========
CONDENSED CONSOLIDATING BALANCE SHEETS
As of January 3, 2004
(In thousands)
Combined
Assets Roundy's Subsidiaries Eliminations Total
---------- ------------- ------------ -----------
Current Assets:
Cash and cash equivalents $ 49,059 $ 40,947 $ 90,006
Notes and accounts receivable-net 33,129 59,004 $ (10,204) 81,929
Merchandise inventories 53,363 198,525 251,888
Prepaid expenses 4,532 7,897 12,429
Deferred income tax benefits (3,160) 20,905 17,745
----------- ----------- ----------- -----------
Total current assets 136,923 327,278 (10,204) 453,997
----------- ----------- ----------- -----------
Property and Equipment-Net 19,784 300,365 320,149
Other Assets:
Investment in subsidiaries 249,422 (249,422)
Intercompany receivables 476,528 (476,528)
Deferred income tax benefits 28,161 28,161
Notes receivable 615 2,262 2,877
Goodwill and other assets 266,722 458,484 725,206
----------- ----------- ----------- -----------
Total other assets 1,021,448 460,746 (725,950) 756,244
----------- ----------- ----------- -----------
Total assets $ 1,178,155 $ 1,088,389 $ (736,154) $ 1,530,390
=========== =========== =========== ===========
Liabilities and Shareholder's Equity
Current Liabilities:
Accounts payable $ 150,376 $ 154,087 $ (7,730) $ 296,733
Accrued expenses 60,387 71,586 (2,474) 129,499
Current maturities of long-term debt and
capital lease obligations 2,500 1,729 4,229
Intercompany payable 476,528 (476,528)
Income taxes 12,221 (439) 11,782
----------- ----------- ----------- -----------
Total current liabilities 225,484 703,491 (486,732) 442,243
----------- ----------- ----------- -----------
Long-term debt and capital lease obligations 543,417 54,333 597,750
Other liabilities 19,648 81,143 100,791
----------- ----------- ----------- -----------
Total liabilities 788,549 838,967 (486,732) 1,140,784
Shareholder's Equity 389,606 249,422 (249,422) 389,606
----------- ----------- ----------- -----------
Total liabilities and shareholder's equity $ 1,178,155 $ 1,088,389 $ (736,154) $ 1,530,390
=========== =========== =========== ===========
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the period ended July 3, 2004
(In thousands)
Combined
Roundy's Subsidiaries Total
--------- ------------ ---------
Net Cash Flows Provided by (Used in) Operating Activities: $ (13,243) $ 64,427 $ 51,184
--------- --------- ---------
Cash Flows From Investing Activities:
Capital expenditures-net of proceeds (4,282) (18,664) (22,946)
Notes receivable 73 488 561
--------- --------- ---------
Net cash flows used in investing activities (4,209) (18,176) (22,385)
--------- --------- ---------
Cash Flows From Financing Activities:
Proceeds from long-term borrowings 3,000 3,000
Payments of debt and capital lease obligations (1,257) (867) (2,124)
Intercompany receivables-net 47,490 (47,490)
Debt issuance costs (386) (386)
--------- --------- ---------
Net cash flows (used in) provided by financing
activities 48,847 (48,357) 490
--------- --------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents 31,395 (2,106) 29,289
Cash And Cash Equivalents, Beginning Of Period 49,059 40,947 90,006
--------- --------- ---------
Cash And Cash Equivalents, End Of Period $ 80,454 $ 38,841 $ 119,295
========= ========= =========
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the period ended June 28, 2003
(In thousands)
Combined
Roundy's Subsidiaries Total
-------- ------------ ---------
Net Cash Flows Provided by (Used in) Operating Activities: $ 5,077 $ 61,185 $ 66,262
--------- --------- ---------
Cash Flows From Investing Activities:
Capital expenditures-net of proceeds (2,740) (19,887) (22,627)
Payment for business acquisitions, net of cash acquired (131,387) (131,387)
Notes receivable 113 606 719
--------- --------- ---------
Net cash flows used in investing activities (2,627) (150,668) (153,295)
--------- --------- ---------
Cash Flows From Financing Activities:
Payments of debt and capital lease obligations (1,230) (229) (1,459)
Intercompany receivables-net (97,522) 97,522
Debt issuance costs (506) (506)
--------- --------- ---------
Net cash flows (used in) provided by financing activities (99,258) 97,293 (1,965)
--------- --------- ---------
Net (Decrease) Increase in Cash and Cash Equivalents (96,808) 7,810 (88,998)
Cash And Cash Equivalents, Beginning Of Period 117,307 22,471 139,778
--------- --------- ---------
Cash And Cash Equivalents, End Of Period $ 20,499 $ 30,281 $ 50,780
========= ========= =========
Results of Operations
The following table sets forth each category of statement of income data as a
percentage of net sales and service fees.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Thirteen Weeks Ended Twenty-six Weeks Ended
---------------------------------------------------------------------------------------
July 3, 2004 June 28, 2003 July 3, 2004 June 28, 2003
--------------------- ------------------- -------------------- ---------------------
Statement of Income Data
(Dollars in thousands):
Revenues:
Net sales and service fees $1,250,599 100.0% $995,414 100.0% $2,424,536 100.0% $1,892,575 100.0%
Other-net 369 0.0 561 0.1 739 0.0 1,298 0.1
---------- ----- -------- ----- ---------- ----- ---------- ------
Total 1,250,968 100.0 995,975 100.1 2,425,275 100.0 1,893,873 100.1
---------- ----- ---------- ----- ---------- ----- ---------- ------
Cost and Expenses:
Cost of sales 993,610 79.4 794,670 79.8 1,909,890 78.8 1,515,770 80.1
Operating and administrative 220,600 17.6 166,943 16.8 441,379 18.2 311,654 16.5
Interest expense 10,974 0.9 10,448 1.1 21,575 0.9 21,144 1.1
---------- ----- -------- ----- ---------- ----- ---------- ------
1,225,184 97.9 972,061 97.7 2,372,844 97.9 1,848,568 97.7
---------- ----- -------- ----- ---------- ----- ---------- ------
Income before income taxes 25,784 2.1 23,914 2.4 52,431 2.1 45,305 2.4
Provision for income taxes 10,829 0.9 9,566 1.0 22,021 0.9 18,122 1.0
---------- ----- -------- ----- ---------- ----- ---------- ------
Net income $ 14,955 1.2% $ 14,348 1.4% $ 30,410 1.3% $ 27,183 1.4%
========== ===== ======== ====== ========== ===== ========== ======
Net Sales and Service Fees
Net sales and service fees represent product sales less returns and allowances.
The Company derives its net sales and service fees from the operation of retail
grocery stores and the wholesale distribution of food and non-food products. In
addition, the Company provides specialized support services for retail grocers,
which include promotional merchandising and advertising programs, inventory
control, store development, financing and assistance with other aspects of store
management.
The table below indicates the portion of the Company's net sales and service
fees attributable to retail sales and wholesale distribution for the periods
indicated. Eliminations represent the intercompany activity between the
Company's wholesale operations and its Company-owned retail operations (in
thousands):
Thirteen Weeks Ended Twenty-six Weeks Ended
---------------------------- ----------------------------
July 3, 2004 June 28, 2003 July 3, 2004 June 28, 2003
------------ ------------- ------------ -------------
Net Sales and Service Fees
Retail $ 768,039 $ 532,198 $ 1,485,867 $ 991,921
Wholesale 882,503 775,865 1,718,955 1,484,644
Eliminations (399,943) (312,649) (780,286) (583,990)
----------- ----------- ----------- -----------
Total $ 1,250,599 $ 995,414 $ 2,424,536 $ 1,892,575
=========== =========== =========== ===========
Costs and Expenses
Costs and expenses consist of cost of sales, operating and administrative
expenses and interest expense.
o Cost of sales includes product costs and inbound freight, but excludes
depreciation.
o Operating and administrative expenses consist primarily of personnel
costs, sales and marketing expenses, warehousing and distribution
costs, the internal costs of purchasing, receiving and inspecting
products for resale, shipping and handling, depreciation and
amortization expenses, expenses associated with the Company's
facilities, internal management expenses, business development
expenses, and expenses for finance, legal, human resources and other
administrative departments. Certain retailers may include some of these
costs (including warehouse and distribution costs, and the internal
costs of purchasing, receiving and inspecting products for resale) in
cost of sales, which may result in the Company's presentation being
incomparable to such retailers.
o Interest expense includes interest on the Company's outstanding indebtedness
and amortization of deferred financing costs.
Thirteen Weeks Ended July 3, 2004 Compared With Thirteen Weeks Ended
June 28, 2003
Net Sales and Service Fees
Net sales and service fees were $1,250.6 million for the second quarter 2004, an
increase of $255.2 million, or 25.6%, from $995.4 million for the second quarter
2003. Retail sales were $768.0 million for the second quarter 2004, an increase
of $235.8 million, or 44.3%, from $532.2 million for the second quarter 2003.
This increase in retail sales was primarily due to the effect of four acquired
store groups, consisting of 44 additional stores in total, which operated under
the Company's ownership during the second quarter 2004 but were not operated by
the Company for the entire second quarter 2003 (collectively, the "44 Acquired
Stores"). The 44 Acquired Stores contributed approximately $195.7 million to the
second quarter 2004 retail sales increase. As of July 3, 2004, Roundy's operated
120 retail grocery stores including 56 Pick 'n Save stores, 33 Copps Food Stores
("Copps") and 31 Rainbow Foods ("Rainbow") stores.
Same store sales at the Company's retail stores (including the results of Pick
'n Save licensed stores operated by their prior owners in 2003) improved 3.9%
over the comparable thirteen week period of 2003.
Wholesale sales were $882.5 million for the second quarter 2004, an increase of
$106.6 million, or 13.7%, from $775.9 million for the second quarter 2003. This
increase was primarily due to increased sales to Company-owned stores and new
independent customer sales volume.
Gross Profit
Gross profit was $257.0 million for the second quarter 2004, an increase of
$56.2 million, or 28.0%, from $200.7 million for the second quarter 2003. Gross
profit, as a percentage of net sales and service fees, for the second quarter
2004 and 2003 was 20.6% and 20.2%, respectively. The increase in gross profit
and gross profit percentage for the quarter was primarily due to the growth of
the Company's retail segment, which has a higher gross profit percentage than
its wholesale segment. Retail sales for the second quarter 2004 represented
61.4% of net sales and service fees compared with 53.5% for the second quarter
2003. The increase in retail sales concentration was primarily due to the
Acquired Stores, as previously discussed. Retail gross profit, as a percentage
of retail net sales and service fees, was 24.3% and 25.5% for the second quarter
of 2004 and 2003, respectively. The decrease in retail gross profit percentage
was attributable to increased promotional pricing to support and drive continued
sales growth as well as higher levels of inventory shrinkage. Second quarter
2004 wholesale gross profit, as a percentage of wholesale net sales and service
fees, was 8.9% as compared with 9.1% in the second quarter 2003.
Operating and Administrative Expenses
Operating and administrative expenses were $220.6 million for the second quarter
2004, an increase of $53.7 million, or 32.1%, from $166.9 million for the second
quarter 2003. Operating and administrative expenses, as a percentage of net
sales and service fees, increased to 17.6% for the second quarter 2004 compared
with 16.8% for the second quarter 2003. The percentage increase was attributable
to the growth of the Company's retail segment, which has a significantly higher
ratio of operating costs to sales than the Company's wholesale segment. Retail
operating and administrative expenses increased to 21.6% of retail sales for the
second quarter 2004 compared with 21.5% for the second quarter 2003. Wholesale
operating and administrative expenses decreased to 5.5% of wholesale sales for
the second quarter 2004 as compared with 6.1% for the second quarter 2003. This
decrease was due to operational and productivity improvements in the Company's
wholesale operations as well as increased leverage of fixed costs over a higher
wholesale sales base. In addition, corporate and other operating expenses
(excluding depreciation and amortization) were $10.0 million for the second
quarter 2004 compared with $6.1 million for the second quarter 2003. This
increase was primarily due to higher unallocated corporate administrative
expenses.
Interest Expense
Interest expense (excluding the amortization of deferred financing costs) was
$10.3 million and $9.6 million for the second quarter 2004 and 2003,
respectively. The increase was primarily due to the interest component of
capitalized leases assumed in connection with the June 2003 acquisition of
Rainbow, partially offset by a 50 basis point interest rate reduction on the
Company's term loan effective April 1, 2004.
Income Taxes
Provision for income taxes was $10.8 million for the second quarter 2004, an
increase of $1.2 million from $9.6 million for the second quarter 2003. The
effective income tax rate for the second quarter 2004 and 2003 was 42.0% and
40.0%, respectively. The increase in the effective income tax rate was primarily
due to a higher state income tax rate in Minnesota where the Company began
operating following the acquisition of Rainbow.
Net Income
Net income was $15.0 million for the second quarter 2004, an increase of $0.7
million from $14.3 million for the second quarter 2003. This improvement was
driven by the factors discussed above. The net income margin was 1.2% and 1.4%,
respectively, for the second quarter 2004 and the second quarter 2003.
Twenty-six Weeks Ended July 3, 2004 compared with Twenty-six Weeks Ended
June 28, 2003
Net Sales and Service Fees
Net sales and service fees totaled $2,424.5 million for the six months ended
July 3, 2004, an increase of $532.0 million, or 28.1%, from $1,892.6 million for
the six months ended June 28, 2003. Retail sales were $1,485.9 million for 2004,
an increase of $493.9 million, or 49.8%, from $991.9 million in 2003. This
increase in retail sales was primarily due to the effect of six acquired store
groups, consisting of 54 additional stores, in total, which operated under the
Company's ownership during the twenty-six weeks ended July 3, 2004, but were not
operated by the Company for the entire comparable prior year period ("54
Acquired Stores"). The 54 Acquired Stores included the 44 Acquired Stores
described in the discussion of Net Sales and Service Fees for the Thirteen Weeks
Ended July 3, 2004. The 54 Acquired Stores contributed approximately $435.2
million to the year-to-date 2004 retail sales increase.
Year-to-date 2004 same store sales at the Company's retail stores (including the
results of Pick 'n Save licensed stores operated by their prior owners) improved
2.8% over the comparable twenty-six week period of 2003.
Wholesale sales were $1,719.0 million for 2004, an increase of $234.3 million,
or 15.8%, from $1,484.6 million in 2003. This increase was primarily due to
increased sales to Company-owned stores.
Gross Profit
Gross profit was $514.6 million for 2004, a $137.8 million, or 36.6% increase
from $376.8 million in 2003. The gross profit percentage for the same periods of
2004 and 2003 was 21.2% and 19.9%, respectively. The increase in gross profit
percentage was primarily due to the growth of the Company's retail segment,
which has a higher gross profit percentage than its wholesale segment. Retail
sales for the six months ended July 3, 2004 represented 61.3% of net sales and
service fees compared with 52.4% for the same period in 2003. The retail gross
profit percentage was 25.1% and 24.9% for 2004 and 2003, respectively.
Year-to-date 2004 wholesale gross profit percentage was 9.1% as compared with
9.4% in 2003. The decrease in wholesale gross profit percentage was primarily
due to an increased concentration of lower margin sales to certain of the
Company's larger customers.
Operating and Administrative Expenses
Operating and administrative expenses were $441.4 million for 2004, a $129.7
million, or 41.6% increase from $311.7 million in 2003. Operating and
administrative expenses, as a percentage of net sales and service fees,
increased to 18.2% for 2004 compared with 16.5% for 2003. The percentage
increase was attributable to the 54 Acquired Stores and the resulting increased
concentration of sales in the Company's retail operating segment in 2004, which
has a significantly higher ratio of operating costs to sales than the Company's
wholesale operations. Retail operating and administrative expenses increased to
22.3% of retail sales for 2004 compared with 21.1% for 2003. This increase was
primarily due to the fact that certain of the Acquired Stores have higher
operating costs as a percentage of sales than the Company's other stores, as
well as pre-opening expenses associated with the Kohl's Acquisition. Wholesale
operating and administrative expenses decreased to 5.7% of wholesale sales for
2004 as compared with 6.2% for the same period in 2003. This decrease was due to
operational and productivity improvements in the Company's wholesale operations.
Interest Expense
Interest expense (excluding amortization of deferred financing costs) was $20.2
million for 2004, a $0.7 million increase from $19.5 million in 2003. This
increase was primarily due to the interest component of capitalized leases
assumed in connection with the June 2003 acquisition of Rainbow, partially
offset by a 50 basis point interest rate reduction on the Company's term loan
effective April 1, 2004.
Income Taxes
Provision for income taxes was $22.0 million for 2004, an increase of $3.9
million from $18.1 million in 2003. The effective income tax rates for the first
six months of 2004 and 2003 were 42.0% and 40.0%, respectively. The increase in
the effective income tax rate was primarily due to a higher state income tax in
Minnesota where the Company began operating following the acquisition of
Rainbow.
Net Income
Net income was $30.4 million for 2004, a $3.2 million increase from $27.2
million in the prior year. The net income margin was 1.3% and 1.4%,
respectively, for 2004 and 2003.
Liquidity and Capital Resources
The Company's cash and cash equivalents totaled $119.3 million at July 3, 2004,
compared with $90.0 million at January 3, 2004. Cash flows provided by operating
activities were $50.8 million for the 26 weeks ended July 3, 2004 compared with
$66.3 million for the 26 weeks ended June 28, 2003. Net cash used in investing
activities was $22.4 million for the 26 weeks ended July 3, 2004 compared with
$153.3 million for the 26 weeks ended June 28, 2003. The 26 weeks ended June 28,
2003 included business acquisition consideration of $131.4 million related to
the Rainbow Minneapolis Acquisition, the Kohl's Acquisition, as well as the
Company's acquisition of Prescott's Supermarkets, Inc.
Capital expenditures were $23.2 million for the 26 weeks ended July 3, 2004.
Capital expenditures consisted primarily of new stores, remodels of newly
acquired and existing stores, maintenance of retail stores and transportation
fleet.
Working capital amounted to $48.2 million at July 3, 2004, compared with $11.8
million at January 3, 2004. The increase was due primarily to an increase in
cash and a decrease in accounts payable.
The Company is subject to a credit agreement with various lenders, allowing it
to borrow $250.0 million under a term loan, and up to $125.0 million under a
revolving line of credit. There were no outstanding borrowings under the
revolving line of credit at July 3, 2004. The term loan is repayable in
quarterly installments of $625,000 through June 30, 2008 followed by four
quarterly payments of $58.8 million through June 30, 2009. In addition, the
Company has issued and outstanding $300.0 million in aggregate principal amount
of 8 7/8% Senior Subordinated Notes due 2012 (the "Notes").
The Company's senior credit facility contains various restrictive covenants
which: (i) prohibit it from prepaying other indebtedness, (ii) require it to
maintain specified financial ratios, such as (a) a minimum fixed charge coverage
ratio, (b) a maximum ratio of senior debt to earnings before interest, taxes,
depreciation and amortization ("EBITDA") and (c) a maximum ratio of total debt
to EBITDA; and (iii) require it to satisfy financial condition tests including
limitations on capital expenditures. In addition, the senior credit facility
prohibits the Company from declaring or paying any dividends and prohibits it
from making any payments with respect to the Notes if the Company fails to
perform its obligations under or fails to meet the conditions of, the senior
credit facility or if payment creates a default under the senior credit
facility. Failure to comply with these covenants could have a material adverse
impact upon the Company's financial condition. The Company was in compliance
with its quarterly covenants at July 3, 2004.
The indenture governing the Notes, among other things, (i) restricts the
Company's ability, and the ability of its subsidiaries, to incur additional
indebtedness, issue shares of preferred stock, incur liens, pay dividends or
make certain other restricted payments and enter into certain transactions with
affiliates; (ii) prohibits certain restrictions on the ability of certain of its
subsidiaries to pay dividends or make certain payments to it; and (iii) places
restrictions on the Company's ability and the ability of its subsidiaries to
merge or consolidate with any other person or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its assets.
The Company's principal source of liquidity is cash flow generated from
operations and borrowings under its revolving line of credit. The Company's
principal use of cash is to meet debt service requirements, finance its capital
expenditures, make acquisitions and provide for working capital. The Company
expects that current excess cash and cash available from operations, and funds
available under its $125.0 million revolving line of credit, will be sufficient
to fund its operations, debt service requirements and capital expenditures for
at least the next 12 months.
The Company's ability to make payments on and to refinance its debt, and to fund
planned capital expenditures will depend on its ability to generate sufficient
cash in the future. This, to some extent, is subject to general economic,
financial, competitive and other factors that are beyond the Company's control.
The Company believes that, based upon current levels of operations, it will be
able to meet its debt service obligations when due. Significant assumptions
underlie this belief, including, among other things, that the Company will
continue to be successful in implementing its business strategy and that there
will be no material adverse developments in its business, liquidity or capital
requirements. If the Company's future cash flow from operations and other
capital resources are insufficient to pay its obligations as they mature or to
fund its liquidity needs, it may be forced to reduce or delay its business
activities and capital expenditures, sell assets, obtain additional debt or
equity capital or restructure or refinance all or a portion of its debt, on or
before maturity. There can be no assurance that the Company would be able to
accomplish any of these alternatives on a timely basis or on satisfactory terms,
if at all. In addition, the terms of the Company's existing and future
indebtedness may limit its ability to pursue any of these alternatives. See
"Forward-Looking Statements," below.
Critical Accounting Policies and Estimates
The preparation of the Company's financial statements in conformity with
accounting principles generally accepted in the United States requires the
Company to make estimates, assumptions and judgments that affect amounts of
assets and liabilities reported in the consolidated financial statements, the
disclosure of contingent assets and liabilities as of the date of the financial
statements and reported amounts of revenues and expenses during the year. The
Company believes its estimates and assumptions are reasonable; however, future
results could differ from those estimates under different assumptions or
conditions.
Critical accounting policies are policies that reflect material judgment and
uncertainty and may result in materially different results using different
assumptions or conditions. The Company identified the following critical
accounting policies and estimates: discounts and vendor allowances, allowance
for losses on receivables, closed facility lease commitments, reserves for
self-insurance and pension costs and impairment of long-lived assets. For a
detailed discussion of accounting policies, refer to the notes to the
consolidated financial statements and Management's Discussion and Analysis
contained in the Company's Annual Report on Form 10-K for the year ended January
3, 2004.
Forward-Looking Statements
This Form 10-Q filing contains forward-looking statements within the meaning of
Section 27A of the Securities Exchange Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended. All statements other than
statements of historical facts included herein or therein are forward-looking
statements. In particular, without limitation, terms such as "anticipate,"
"believe," "estimate," "expect," "goal," "indicate," "may be," "objective,"
"plan," "predict," "should," "will" or similar words are intended to identify
forward-looking statements. Forward-looking statements are subject to certain
risks, uncertainties and assumptions which could cause actual results to differ
materially from those predicted. Important factors that could cause actual
results to differ materially from such expectations ("Risk Factors") are
disclosed in the Company's Annual Report on Form 10-K for the year ended January
3, 2004 filed on March 29, 2004 (SEC File No. 002-94984) under the caption "Item
1. Business - Risk Factors." Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to have been correct. All subsequent
written or oral forward-looking statements attributable to the Company or
persons acting on behalf of the Company are expressly qualified in their
entirety by the Risk Factors. Additional information concerning factors that
could cause actual results to differ materially from those in the
forward-looking statements is contained from time to time in the Company's SEC
filings, including, but not limited to information under the caption "Risk
Factors" contained in the prospectus filed on February 6, 2003 forming a part of
the Company's Registration Statement on Form S-4 under the Securities Act of
1933 (Registration No. 333-102779).
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in the Company's market risk since January
3, 2004. See the discussion under Part II Item 7A in the Company's Annual Report
on Form 10-K for the year ended January 3, 2004.
Item 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures.
The Company maintains disclosure controls and procedures that
are designed to ensure that information required to be
disclosed in the Company's reports under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") is
recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms, and that such
information is accumulated and communicated to management,
including the Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding
required disclosure. Management necessarily applies its
judgment in assessing costs and benefits of such controls and
procedures, which can provide only reasonable assurance
regarding management's control objectives.
Prior to the filing of this report the Company carried out an
evaluation, under the supervision and with the participation
of the Company's management, including the Company's chief
executive officer and its chief financial officer, of the
effectiveness of the design and operation of the Company's
disclosure controls and procedures pursuant to Rule 15d-14 of
the Securities Exchange Act of 1934 (the "Exchange Act").
Based upon that evaluation, the chief executive officer and
chief financial officer believe that as of the end of the
period covered by this report, the Company's disclosure
controls and procedures (as defined in Rule 15d-14 under the
Exchange Act) were effective to ensure that information
required to be disclosed by the Company in reports that it
files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and
forms.
It should be noted that any system of controls, however
well-designed and operated, can provide only reasonable, and
not absolute, assurance that the objectives of the system are
met. In addition, the design of any control system is based in
part upon certain assumptions about the likelihood of future
events. Because of these and other inherent limitations of
control systems, there can be no assurance that any design
will succeed in achieving its stated goals under all potential
future conditions, regardless of how remote.
(b) Changes in internal controls.
There were no significant changes in the Company's internal
controls or in other factors that could significantly affect
these controls subsequent to the date of their most recent
evaluation nor were there any significant deficiencies or
material weaknesses in the Company's internal controls.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is a party to routine litigation incidental to its
business. Management believes that none of this litigation is
likely to have a material adverse effect on the Company's
consolidated financial position and results of operations. There
have been no material changes to the information contained in Item
3. Legal Proceedings in the Company's Annual Report filed on Form
10-K for the year ended January 3, 2004.
Item 2. Changes in Securities and Use of Proceeds
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The Exhibit Index contained in this report immediately following
the signature pages to this report are incorporated herein by this
reference.
(b) Reports on Form 8-K
The following report on Form 8-K was filed during the quarter
ended July 3, 2004:
Date Filed Date of Report Item
May 14, 2004 May 12, 2004 The Company reported (and filed as an
Exhibit a press release announcing)
financial results for the
three-month period ended April 3, 2004.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ROUNDY'S, INC.
-----------------------------------------
(Registrant)
Date: August 13, 2004 /s/ROBERT A. MARIANO
--------------- -----------------------------------------
Robert A. Mariano, Chairman of the Board,
Chief Executive Officer and President
(Principal Executive Officer)
ROUNDY'S, INC.
-----------------------------------------
(Registrant)
Date: August 13, 2004 /s/DARREN W. KARST
--------------- -----------------------------------------
Darren W. Karst, Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
Roundy's, Inc.
Quarterly Report on Form 10-Q under the Securities Exchange Act of 1934
for the quarter ended July 3, 2004
EXHIBIT INDEX
The following exhibits to the Quarterly Report are filed herewith or, where
noted, are incorporated by reference herein:
Exhibit
No.
- ------- Description
-----------
2.1 Stock Purchase Agreement by and among Roundy's, Inc. and the Shareholders
of Prescott's Supermarkets, Inc. dated as of December 10, 2002 (1)
2.2 Asset Purchase Agreement dated October 18, 2002, by and among B&H Gold
Corporation, Gold's, Inc., Gold's Market, Inc., Gold's of Mequon, LLC,
Mega Marts, Inc. and Roundy's, Inc. (2)
2.3 Share Exchange Agreement dated April 8, 2002 by and between Roundy's
Acquisition Corp. and Roundy's, Inc.(3)
2.4 Asset Purchase Agreement dated February 21, 2003 among Roundy's, Inc.,
The Copps Corporation, Kohl's Food Stores, Inc. and The Great Atlantic &
Pacific Tea Company, Inc. (4)
2.5 Asset Purchase Agreement dated May 2, 2003, by and between Fleming
Companies, Inc., Rainbow Foods Group, Inc., RBF Corp., and
Roundy's, Inc. (5)
2.6 First Amendment dated June 4, 2003 to Asset Purchase Agreement dated
May 2, 2003 by and between Fleming Companies, Inc., Rainbow Foods
Group, Inc., RBF Corp., and Roundy's, Inc. (6)
2.7 Asset Purchase Agreement dated July 9, 2004 by and between McAdams, Inc.,
certain shareholders of McAdams, Inc., Ultra Mart Foods, Inc. and
Roundy's, Inc. (FILED HEREWITH)
3.1 Roundy's, Inc. Amended and Restated Articles of Incorporation(7)
3.2 Amended and Restated By-Laws of Roundy's, Inc.(8)
4.1 Indenture of Trust dated June 6, 2002 between Roundy's, Inc. and BNY
Midwest Trust Company, as Trustee(9)
4.2 Form of $225,000,000 Roundy's, Inc. 8 7/8% Senior Subordinated Notes due
2012(10)
4.3 Form of $75,000,000 Roundy's, Inc. 8 7/8% Senior Subordinated Notes
due 2012(10)
4.4 Form of Guaranty issued by Cardinal Foods, Inc., Holt Public Storage,
Inc., Insurance Planners, Inc., I.T.A., Inc., Jondex Corp., Kee Trans,
Inc., Mega Marts, Inc., Midland Grocery of Michigan, Inc., Pick 'n Save
Warehouse Foods, Inc., Ropak, Inc., Rindt Enterprises, Inc., Scot Lad
Foods, Inc., Scot Lad-Lima, Inc., Shop-Rite, Inc., Spring Lake
Merchandise, Inc., The Copps Corporation, The Midland Grocery Company,
Ultra Mart Foods, Inc., and Village Market, LLC as Guarantors of the
Registrant's $225,000,000 Roundy's, Inc. 8 7/8% Senior Subordinated Notes
due 2012 and $75,000,000 Roundy's, Inc. 8 7/8% Senior Subordinated Notes
due 2012(11)
10.1 A/B Exchange Registration Rights Agreement dated as of June 6, 2002 by and
among Roundy's, Inc. as Issuer, the subsidiary guarantors of Roundy's,
Inc. listed on Schedule A thereto, and Bear, Stearns & Co. Inc., CIBC
World Markets Corp. as Initial Purchasers(12)
10.2 A/B Exchange Registration Rights Agreement dated as of December 17, 2002
by and among Roundy's, Inc. as Issuer, the subsidiary guarantors of
Roundy's, Inc. listed on Schedule A thereto, and Bear, Stearns & Co. Inc.,
CIBC World Markets Corp. as Initial Purchasers(13)
10.3 $375,000,000 Credit Agreement among Roundy's Acquisition Corp., Roundy's,
Inc., as Borrower, The Several Lenders from Time to Time Parties Hereto,
Bear Stearns Corporate Lending Inc., as Administrative Agent, Canadian
Imperial Bank of Commerce, as Syndication Agent Bank One, Wisconsin,
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
"Rabobank Nederland", New York Branch, LaSalle Bank National Association,
Associated Bank, N.A., Harris Trust and Savings Bank, M&I Marshall &
Ilsley Bank, U.S. Bank, National Association, as Documentation Agents
Dated as of June 6, 2002(14)(15)
10.4 First Amendment to the Credit Agreement, dated as of December 10, 2002,
among Roundy's Acquisition Corp., Roundy's Inc., as Borrower, the several
banks, financial institutions and other entities from time to time parties
thereto, Bear Stearns & Co. Inc., as sole lead arranger and sole
bookrunner, Bear Stearns Corporate Lending Inc., as administrative agent,
Canadian Imperial Bank of Commerce, as syndication agent, and the
institutions listed in the Credit Agreement as documentation agents (16)
10.5 Guarantee and Collateral Agreement made by Roundy's Acquisition Corp.,
Roundy's, Inc. and certain of its Subsidiaries in favor of Bear Stearns
Corporate Lending Inc., as Administrative Agent Dated as of
June 6, 2002(17)
10.6 Consulting Agreement dated July 1, 2002 between the Registrant and
Gerald F. Lestina(18)
10.7 Form of Deferred Compensation Agreement between the Registrant and certain
executive officers including Messrs. Schmitt and Kitz(19)
10.8 Amendment dated March 31, 1998 to Form of Deferred Compensation Agreement
between the Registrant and certain executive officers including Messrs.
Schmitt and Kitz(20)
10.9 Second Amendment dated June 3, 1998 to Form of Deferred Compensation
Agreement for certain executive officers including Messrs. Kitz and
Schmitt(21)
10.10 Directors and Officers Liability and Corporation Reimbursement Policy
issued by American Casualty Company of Reading, Pennsylvania (CNA
Insurance Companies) as of June 13, 1986(22)
10.11 Declarations page for renewal through May 1, 2004 of Directors and
Officers Liability and Corporation Reimbursement Policy(23)
10.12 Employment Agreement dated June 6, 2002 between Registrant and
Robert F. Mariano(24)
10.13 Employment Agreement dated June 6, 2002 between Registrant and
Darren W. Karst(25)
10.14 Employment Contract between the Registrant and Gary L. Fryda dated
March 31, 2000(26)
10.15 Employment Agreement dated December 27, 2002 between Registrant and
Donald S. Rosanova(27)
10.16 Excerpts from Roundy's, Inc. Board of Directors resolution adopted
March 19, 2002 relating to group term carve-out, executive extension on
COBRA continuation rights and professional outplacement services for
Company Officers, including Messrs. Fryda, Schmitt and Kitz(28)
10.17 Confidentiality and Noncompete Agreement dated June 6, 2002 between the
Registrant and Gerald F. Lestina(29)
10.18 Roundy's, Inc. Deferred Compensation Plan Amended and Restated
August 13, 2002(30)
10.19 Investor Rights Agreement dated June 6, 2002 by and among Roundy's
Acquisition Corp., Willis Stein & Partners III, L.P., Willis Stein &
Partners III-C, L.P., Willis Stein & Partners Dutch III-A, L.P., and
Willis Stein & Partners Dutch III-B, L.P., the investors listed on the
Schedule of Coinvestors, and certain executive employees of
Roundy's, Inc.(31)
10.20 First Amendment dated October 28, 2002 to Investor Rights Agreement dated
June 6, 2002, including form of Transfer Notice and Joinder Agreement(32)
10.21 Second Amendment dated May 12, 2003 to $375,000,000 Credit Agreement
dated as of June 6, 2002 among Roundy's Acquisition Corp., Roundy's Inc.,
as Borrower, The Several Lenders from Time to Time Parties Hereto,
Bear Stearns Corporate Lending Inc., as Administrative Agent, Canadian
Imperial Bank of Commerce, as Syndication Agent, Bank One, Wisconsin,
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
"Rabobank Nederland", New York Branch, LaSalle Bank National
Association, Associated Bank, N.A., Harris Trust and Savings
Bank, M&I Marshall & Ilsley Bank, U.S. Bank, National
Association, as Documentation Agents dated as of June 6,
2002.(33)
10.22 Third Amendment dated as of March 29, 2004, to $375,000,000
Credit Agreement dated as of June 6, 2002 and amended as of
December 10, 2002 and May 12, 2003 among Roundy's Acquisition
Corp., Roundy's, Inc., as Borrower, the several banks,
financial institutions and other entities from time to time
parties thereto, Bear Stearns & Co., Inc., as sole lead
arranger and sole bookrunner, Bear Stearns Corporate Lending,
Inc., as administrative agent, Canadian Imperial Bank of
Commerce, as syndication agent, and the institutions listed in
the Credit Agreement as documentation agents.(34)
10.23 Net Lease Agreement dated May 19, 2004 between Registrant and Pabst
Farms-RDC, LLC (FILED HEREWITH)
31.1 Certification of Principal Executive
Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(FILED HEREWITH)
31.2 Certification of Principal Financial Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 (FILED HEREWITH)
32.1 Certification of Principal Executive Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (FILED HEREWITH)
32.2 Certification of Principal Financial Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (FILED HEREWITH)
- ------
(1) Incorporated by reference to Exhibit 2.1 to Registrant's Registration
Statement on Form S-4 filed on January 28, 2003 (Commission File No. 333-102779)
(2) Incorporated by reference to Exhibit 2.2 to Registrant's Registration
Statement on Form S-4 filed on January 28, 2003 (Commission File No. 333-102779)
(3) Incorporated by reference to Exhibit 2.1 to Registrant's Registration
Statement on Form S-4 filed on August 2, 2002 (Commission File No. 333-97623)
(4) Incorporated by reference to Exhibit 2.5 to Registrant's Quarterly Report on
Form 10-Q for the period ended March 29, 2003 filed with the Commission on May
9, 2003 (Commission File No. 002-94984)
(5) Incorporated by reference to Exhibit 2.9 to Registrant's Current Report on
Form 8-K filed with the Commission on June 23, 2003 (File No. 002-94984)
(6) Incorporated by reference to Exhibit 2.10 to Registrant's Current Report on
Form 8-K filed with the Commission on June 23, 2003 (File No. 002-94984)
(7) Incorporated by reference to Exhibit 3.1 to Registrant's Registration
Statement on Form S-4 filed with the Commission on August 2, 2002 (File No.
333-97623)
(8) Incorporated by reference to Exhibit 3.2 to Registrant's Registration
Statement on Form S-4 filed with the Commission on August 2, 2002 (File No.
333-97623)
(9) Incorporated by reference to Exhibit 4.1 to Registrant's Registration
Statement on Form S-4 filed with the Commission on August 2, 2002 (File No.
333-97623)
(10) Incorporated by reference to Exhibits A-1 and A-2 to the Indenture of
Trust, Exhibit 4.1 to Registrant's Registration Statement on Form S-4 filed with
the Commission on August 2, 2002 (File No. 333-97623)
(11) Incorporated by reference to Exhibit E to the Indenture of Trust, Exhibit
4.1 to Registrant's Registration Statement on Form S-4 filed with the Commission
on August 2, 2002 (File No. 333-97623)
(12) Incorporated by reference to Exhibit 10.1 to Registrant's Registration
Statement on Form S-4 filed with the Commission on August 2, 2002 (File No.
333-97623)
(13) Incorporated by reference to Exhibit 10.1 to Registrant's Registration
Statement on Form S-4 filed with the Commission on January 28, 2003 (Commission
File No. 333-102779)
(14) Incorporated by reference to Exhibit 10.2 to Registrant's Registration
Statement on Form S-4 filed with the Commission on August 2, 2002 (File No.
333-97623)
(15) The Exhibits listed on page v of the Credit Agreement, Exhibit 10.2,
consist of the form of Guarantee and Collateral Agreement and the exhibits
thereto which are included as part of Exhibit 10.5.
(16) Incorporated by reference to Exhibit 10.3 to Registrant's Registration
Statement on Form S-4 filed with the Commission on January 28, 2003 (File No.
333-102779)
(17) Incorporated by reference to Exhibit 10.3 to Registrant's Registration
Statement on Form S-4 filed with the Commission on August 2, 2002 (File No.
333-97623)
(18) Incorporated by reference to Exhibit 10.6 to Registrant's Registration
Statement on Form S-4 filed with the Commission on August 2, 2002 (File No.
333-97623)
(19) Incorporated by reference to Exhibit 10.1 of Registrant's Registration
Statement on Form S-2 (File No. 33-57505) dated April 24, 1997
(20) Incorporated by reference to Exhibit 10.1(a) to Registrant's Registration
Statement on Form S-2 filed with the Commission on April 28, 1998 (Commission
File No. 33-57505)
(21) Incorporated by reference to Exhibit 10.9 to Registrant's Quarterly Report
on Form 10-Q for the period ended October 3, 1998, filed with the Commission on
November 10, 1998 (Commission File No. 002-94984)
(22) Incorporated by reference to Exhibit 10.3 to Registrant's Annual Report on
Form 10-K for the fiscal year ended January 3, 1987, filed with the Commission
on April 3, 1987 (Commission File Nos. 002-66296 and 002-94984)
(23) Incorporated by reference to Exhibit 10.11 to Registrant's Annual Report on
Form
10-K for the fiscal year ended January 3, 2004 filed with the Commission on
March 29, 2004 (Commission File No. 002-94984)
(24) Incorporated by reference to Exhibit 10.18 to Registrant's Registration
Statement on Form S-4 filed with the Commission on August 2, 2002 (File No.
333-97623)
(25) Incorporated by reference to Exhibit 10.19 to Registrant's Registration
Statement on Form S-4 filed with the Commission on August 2, 2002 (File No.
333-97623)
(26) Incorporated by reference to Exhibit 10.11 to Registrant's Form 8-K dated
April 14, 2000, filed with the Commission on April 14, 2000 (Commission File No.
002-94984)
(27) Incorporated by reference to Exhibit 10.30 to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 28, 2002 filed with the Commission
on March 27, 2003 (Commission File No. 002-94984)
(28) Incorporated by reference to Exhibit 10.23 to Registrant's Registration
Statement on Form S-4 filed with the Commission on August 2, 2002 (File No.
333-97623)
(29) Incorporated by reference to Exhibit 10.25 to Registrant's Registration
Statement on Form S-4 filed with the Commission on August 2, 2002 (File No.
333-97623)
(30) Incorporated by reference to Exhibit 10.27 to Amendment No. 1 to
Registrant's Registration Statement on Form S-4 filed with the Commission on
October 18, 2002 (File No. 333-97623)
(31) Incorporated by reference to Exhibit 10.31 to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 28, 2002 filed with the Commission
on March 27, 2003 (Commission File No. 002-94984)
(32) Incorporated by reference to Exhibit 10.32 to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 28, 2002 filed with the Commission
on March 27, 2003 (Commission File No. 002-94984)
(33) Incorporated by reference to Exhibit 10.24 to Registrant's Current Report
on Form 8-K filed with the Commission on June 23, 2003 (File No. 002-94984)
(34) Incorporated by reference to Exhibit 10.22 to Registrant's Annual Report on
Form 10-K for the fiscal year ended January 3, 2004 filed with the Commission on
March 29, 2004 (Commission File No. 002-94984)