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8-K - 8-K - Roundy's, Inc.d884317d8k.htm

Exhibit 99.1

 

LOGO

Roundy’s, Inc. Reports Fourth Quarter and Full Year 2014 Financial Results

MILWAUKEE – March 4, 2015 – Roundy’s, Inc. (“Roundy’s”) (NYSE: RNDY), a leading grocer in the Midwest, today reported financial results for the fourth quarter and full year ended January 3, 2015.

Q4 20141

 

    Net sales from continuing operations increased 26.1% to $1,075.8 million

 

    Net income from continuing operations was $7.5 million, or $0.16 diluted net earnings per common share, compared to net income from continuing operations of $3.2 million, or $0.07 diluted net earnings per common share

 

    Adjusted net income from continuing operations2 was $3.5 million, or $0.07 adjusted diluted net earnings per common share2, compared to adjusted net income from continuing operations2 of $5.8 million, or $0.13 adjusted diluted net earnings per common share2

 

    Adjusted EBITDA from continuing operations2 was $37.0 million compared to $35.0 million

Year-to-Date 20141

 

    Net sales from continuing operations increased 15.0% to $3,855.2 million

 

    Net loss from continuing operations was $252.9 million, or $5.30 net loss per diluted common share, compared to net income from continuing operations of $25.8 million, or $0.57 diluted net earnings per common share

 

    $247.1 million after-tax, non-cash goodwill impairment charge incurred

 

    Adjusted net loss from continuing operations2 was $2.1 million, or $0.04 adjusted net loss per diluted common share2, compared to adjusted net income from continuing operations2 of $27.8 million, or $0.61 adjusted diluted net earnings per common share2

 

    Adjusted EBITDA from continuing operations2 was $119.4 million compared to $146.1 million

“We are pleased with our improvement in net sales and EBITDA in the fourth quarter of 2014 from the prior year,” said Robert A. Mariano, chairman, president and chief executive officer of Roundy’s. “The fourth quarter was also our second consecutive quarter of improved same-store sales. Overall, 2014 was a transition year for the Company with our investments in Illinois growth and our transition out of the Twin Cities market. Each successive quarter was another building block in creating a solid foundation for the future.”

 

 

1  All comparisons are to the thirteen and fifty-two weeks ended December 28, 2013. See “Discontinued Operations” for a discussion of the 27 Rainbow stores that are included in discontinued operations for the thirteen and fifty-two weeks ended December 28, 2013 and the fourteen and fifty-three weeks ended January 3, 2015.
2 Adjusted Net Income (Loss) from Continuing Operations, Adjusted Net Earnings (Loss) per Common Share from Continuing Operations and Adjusted EBITDA are non-GAAP financial measures. See the tables herein for important information about these measures and a full reconciliation to the most comparable GAAP measure.

 

1


Mr. Mariano concluded, “While the current operating environment still presents challenges near-term, we remain confident in our ability to implement our strategic operational initiatives designed to optimize our long-term performance.”

Financial Results for Fourth Quarter of 2014

Results from Continuing Operations

Net sales from continuing operations for the fourth quarter of 2014 were $1,075.8 million, an increase of $222.7 million, or 26.1%, from $853.0 million for the fourth quarter of 2013. The increase primarily reflects the benefit of new and acquired stores in Illinois and the impact of an additional week in 2014, partially offset by a decrease in same-store sales. The additional week in 2014 provided a benefit of approximately $80 million in net sales. Same-store sales from continuing operations declined 2.3%, which was due to a 3.7% decrease in the number of customer transactions, partially offset by a 1.4% increase in average transaction size. Same-store sales continue to be negatively impacted by competitive store openings in our Wisconsin markets.

Gross profit for the fourth quarter of 2014 increased 21.0% to $275.6 million, from $227.8 million in the same period last year. Gross profit as a percentage of net sales was 25.6% for the fourth quarter of 2014, compared to 26.7% in the same period last year. The decrease in gross profit as a percentage of net sales primarily reflects increased shrink (including the effect of the start-up impact of new or acquired Illinois stores) and increased promotional and pricing investments, partially offset by an increased perishable sales mix.

Operating and administrative expenses for the fourth quarter of 2014 increased to $265.0 million, from $208.7 million in the same period last year. Operating and administrative expenses as a percentage of net sales increased to 24.6% in the fourth quarter of 2014, from 24.5% in the same period last year. The slight increase in the rate as a percentage of net sales was primarily due to a $7.0 million facility charge for two Wisconsin stores closed during the quarter (which had material remaining lease payments) and increased occupancy and labor costs in new or acquired Illinois stores relative to the chain average, partially offset by the benefit of the additional week in 2014 which allowed for greater leveraging of fixed expenses.

For the fourth quarter of 2014, net income from continuing operations was $7.5 million, or $0.16 diluted net earnings per common share, compared to net income from continuing operations of $3.2 million, or $0.07 diluted net earnings per common share, for the fourth quarter of 2013. Adjusted net income from continuing operations for the fourth quarter of 2014 was $3.5 million, or $0.07 adjusted diluted net earnings per common share, compared to adjusted net income from continuing operations of $5.8 million, or $0.13 adjusted diluted net earnings per common share, for the fourth quarter of 2013. See “Reconciliation of Non-GAAP Amounts” for important information about Adjusted Net Income from Continuing Operations and Adjusted Net Earnings Per Common Share from Continuing Operations, which are non-GAAP financial measures, and for a full reconciliation of the most comparable GAAP measures.

 

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Adjusted EBITDA from continuing operations for the fourth quarter of 2014 was $37.0 million, compared to $35.0 million in the fourth quarter of 2013. The increase was primarily due to the additional week in fiscal 2014, partially offset by the effect of decreased same-store sales in the Company’s Wisconsin markets.

Financial Results for Fiscal 2014

Results from Continuing Operations

Net sales were $3,855.2 million for the fifty-three weeks ended January 3, 2015, an increase of $502.2 million, or 15.0%, from $3,352.9 million for the fifty-two weeks ended December 28, 2013. The increase primarily reflects the benefit of new and acquired stores in Illinois and the impact of an additional week in 2014, partially offset by a decrease in same-store sales. Same-store sales from continuing operations declined 2.9%, which was due to a 4.8% decrease in the number of customer transactions, partially offset by a 2.0% increase in average transaction size. Same-store sales continue to be negatively impacted by competitive store openings in the Company’s Wisconsin markets.

For the fifty-three weeks ended January 3, 2015, net loss from continuing operations was $252.9 million, or $5.30 net loss per diluted common share, compared to net income from continuing operations of $25.8 million, or $0.57 diluted net earnings per common share, for the fifty-two weeks ended December 28, 2013. Adjusted net loss from continuing operations for the fifty-three weeks ended January 3, 2015 was $2.1 million, or $0.04 adjusted net loss per diluted common share, compared to adjusted net income from continuing operations of $27.8 million, or $0.61 adjusted diluted net earnings per common share, for the fifty-two weeks ended December 28, 2013. See “Reconciliation of Non-GAAP Amounts” for important information about Adjusted Net Income (Loss) from Continuing Operations and Adjusted Net Earnings (Loss) Per Common Share from Continuing Operations, which are non-GAAP financial measures, and for a full reconciliation of the most comparable GAAP measures.

Adjusted EBITDA from continuing operations for the fifty-three weeks ended January 3, 2015 was $119.4 million, compared to $146.1 million in the fifty-two weeks ended December 28, 2013. The decrease was primarily due to the effect of a decrease in same-store sales in the Company’s Wisconsin markets and start-up costs related to the Dominick’s stores acquired from Safeway, partially offset by the impact of the additional week in fiscal 2014.

Net cash flows provided by operating activities for the fifty-three weeks ended January 3, 2015 were $48.0 million, compared to $104.0 million during the fifty-two weeks ended December 28, 2013. The decrease in cash provided by operating activities was due primarily to lower operating income, timing of payments for accounts payable and increased interest payments, partially offset by reduced payments for income taxes.

Stevens Point

During the fourth quarter of 2014, the Company sold its Stevens Point distribution facility (“Stevens Point Warehouse”) for $15.0 million, resulting in a gain of $10.1 million ($6.5 million after-tax). The Company recorded severance and other one-time charges of $2.0 million related to the closure of the Stevens Point Warehouse during fiscal 2014.

 

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Discontinued Operations

During the second quarter of 2014, the Company entered into definitive agreements to sell 18 Rainbow stores in the Minneapolis / St. Paul market to a group of local grocery retailers (the “Buyers”), including SUPERVALU INC. (“Rainbow Store Sale”). The Rainbow Store Sale closed during the third quarter of 2014. The remaining nine Rainbow stores which were not included in the Rainbow Store Sale were closed during the third quarter of 2014 as the Company exited the Minneapolis / St. Paul market entirely. The 27 Rainbow stores are included in discontinued operations in the Consolidated Statement of Comprehensive Income (Loss) for the thirteen and fifty-two weeks ending December 28, 2013 and the fourteen and fifty-three weeks ending January 3, 2015.

Fiscal 2015 Guidance

The Company issued guidance for the first quarter and the full year 2015 in January. The Company expects the following results from continuing operations for its 2015 first quarter and fiscal year:

 

     Q1 2015   Fiscal 2015

Net Sales

   $980 to $990 million   $4.00 to $4.08 billion

Same-store Sales Growth

   (0.25%) to (1.25%)   (0.75%) to (2.75%)

Adjusted EBITDA

   $27.5 to $32.5 million   $115 to $125 million

Interest Expense

    

Cash

   $12.6 to $13.1 million   $50.3 to $51.3 million

Non-Cash (1) 

   $1.2 million   $4.7 million

Income Tax Rate

   40.0%   40.0%

Capital Expenditures

   $10 to $15 million   $68 to $73 million

New Store Openings

   1   5

Net (Loss) Per Diluted Share from Continuing Operations

   $0.00 to ($0.05)   ($0.07) to ($0.18)

 

(1) Includes amortization of deferred financing fees and original issue discount.

 

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Conference Call

The Company will host a conference call and audio webcast today, March 4, 2015 at 4:30 p.m. ET (3:30 p.m. CT) to discuss financial results for the fourth quarter of fiscal 2014. To access the conference call, participants should dial (888) 949-2791; passcode is 6486936. Participants are encouraged to dial in to the conference call ten minutes prior to the scheduled start time. The call will be also broadcast live over the Internet and accessible through the Investor Relations section of the Company’s website at www.roundys.com, where it will be archived and accessible through March 18, 2015. A telephone replay will be available through March 18, 2015 by calling (888) 567-0389 to access the playback.

About Roundy’s

Roundy’s is a leading grocer in the Midwest with nearly $4 billion in sales and more than 22,000 employees. Founded in Milwaukee in 1872, Roundy’s operates 149 retail grocery stores and 99 pharmacies under the Pick ’n Save, Copps, Metro Market and Mariano’s retail banners in Wisconsin and Illinois. Roundy’s is committed to helping the communities its stores serve through the Roundy’s Foundation. Chartered in 2003, the Roundy’s Foundation mission is to support organizations working to relieve hunger and helping families in crisis due to domestic abuse, neglect and other at-risk situations.

Non-GAAP Financial Measures

This press release presents Adjusted Net Income (Loss), Adjusted Net Earnings (Loss) Per Common Share and Adjusted EBITDA, which are non-GAAP financial measures within the meaning of applicable SEC rules and regulations, as defined under “Consolidated Statements of Comprehensive Income (Loss).” For a reconciliation of Adjusted Net Income (Loss) from Continuing Operations and Adjusted EBITDA to Net Income (Loss) from Continuing Operations under generally accepted accounting principles and for a discussion of the reasons why the Company believes that these non-GAAP financial measures provide information that is useful to investors see the tables below under “Reconciliation of Non-GAAP Amounts.”

Forward-Looking Statements

This release contains forward-looking statements about the Company’s future performance, which are based on Management’s assumptions and beliefs in light of the information currently available to it. The Company assumes no obligation to update the information contained herein. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements including, but not limited to: competitive practices and pricing in the food industry generally and particularly in the Company’s principal markets; employee relationships and the terms of future collective bargaining agreements; the costs and other effects of legal and administrative cases and proceedings; the nature and extent of continued consolidation in the food industry; changes in the financial markets which may affect the cost of capital and our ability to access capital; supply or quality control problems with vendors; and changes in economic conditions which affect the buying patterns of customers. Additional factors that could cause actual results to differ materially from such statements are discussed in the Company’s periodic reports and filings with the Securities and Exchange Commission.

 

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Contact:

James J. Hyland

Vice President, Investor Relations, Corporate Communications and Public Affairs

james.hyland@roundys.com

414-231-5811

 

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Roundy’s, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(In thousands, except per share data)

 

     Thirteen and Fourteen Weeks
Ended
    Fifty-two and Fifty-three
Weeks Ended
 
     December 28,
2013
     January 3,
2015
    December 28,
2013
     January 3,
2015
 
     (Unaudited)      (Unaudited)            (Unaudited)  

Net Sales

   $ 853,048       $ 1,075,752      $ 3,352,947       $ 3,855,156   

Costs and Expenses:

          

Cost of sales

     625,274         800,201        2,468,062         2,841,922   

Operating and administrative

     208,665         265,024        798,731         970,691   

Goodwill impairment charge

     —           —          —           280,014   

Asset impairment charge

     —           —          —           5,050   

Gain on sale of distribution facility

     —           (10,084     —           (10,084

Interest:

          

Interest expense, net

     11,944         14,395        41,761         54,013   

Amortization of deferred financing costs

     2,479         572        4,036         2,259   

Loss on debt extinguishment

     —           —          —           8,576   
  

 

 

    

 

 

   

 

 

    

 

 

 
  848,362      1,070,108      3,312,590      4,152,441   
  

 

 

    

 

 

   

 

 

    

 

 

 

Income (Loss) from Continuing Operations before Income Taxes

  4,686      5,644      40,357      (297,285

Provision (Benefit) for Income Taxes

  1,470      (1,862   14,525      (44,432
  

 

 

    

 

 

   

 

 

    

 

 

 

Net Income (Loss) from Continuing Operations

  3,216      7,506      25,832      (252,853

Net Income (Loss) from Discontinued Operations, Net of Tax

  5,436      (1,370   8,706      (57,014
  

 

 

    

 

 

   

 

 

    

 

 

 

Net Income (Loss)

$ 8,652    $ 6,136    $ 34,538    $ (309,867
  

 

 

    

 

 

   

 

 

    

 

 

 

Basic net earnings (loss) per common share:

Continuing operations

$ 0.07    $ 0.16    $ 0.57    $ (5.30

Discontinued operations

$ 0.12    $ (0.03 $ 0.20    $ (1.19

Diluted net earnings (loss) per common share:

Continuing operations

$ 0.07    $ 0.16    $ 0.57    $ (5.30

Discontinued operations

$ 0.12    $ (0.03 $ 0.19    $ (1.19

Weighted average number of common shares outstanding:

Basic

  44,977      48,168      44,949      47,743   

Diluted

  45,444      48,226      45,299      47,743   

Dividends declared per share

$ 0.12    $ —      $ 0.48    $ —     

Comprehensive Income (Loss)

$ 24,949    $ (20,608 $ 53,038    $ (335,488

 

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Reconciliation of Non-GAAP Amounts

Adjusted Net Income (Loss) from Continuing Operations and Adjusted Net Earnings (Loss) Per Common Share from Continuing Operations (Unaudited)

The following is a summary of the calculation of Adjusted Net Income (Loss) from Continuing Operations and Adjusted Net Earnings (Loss) Per Common Share from Continuing Operations for the thirteen and fifty-two weeks ended December 28, 2013 the fourteen and fifty-three weeks ended and January 3, 2015 (in thousands, except per share amounts):

 

     Thirteen and Fourteen Weeks
Ended
    Fifty-two and Fifty-three Weeks
Ended
 
     December 28,
2013
     January 3, 2015     December 28,
2013
    January 3, 2015  

Net Income (Loss) from continuing operations

   $ 3,216      $ 7,506     $ 25,832     $ (252,853 )

Goodwill impairment charge, net of tax

     —           —          —          247,062  

Loss on disposition of assets, net of tax

     —           —          —          277  

Stevens Point severance and one-time costs, net of tax

     —           152       —          1,204  

Asset impairment charge, net of tax

     —           —          —          3,032  

Gain on sale of distribution facility, net of tax

     —           (6,490 )     —          (6,490 )

Closed facility charge, net of tax

     —           4,193       —          4,193  

Employee severance costs, net of tax

     —           —          —          751  

Stevens Point LIFO benefit, net of tax

     —           —          —          (3,083 )

Deferred taxes valuaton allowance

     —           (460 )     —          548  

State income tax settlement

        (1,442 )       (1,442 )

Loss on debt extinguishment, net of tax

     —           —          —          4,728  

Write-off of unamortized loan costs related to prepayment of term loan, net of tax

     2,017        —          2,017       —     

Acquisition and term loan amendment fees, net of tax

     592        —          592       —     

Reversal of pension withdrawal liability, net of tax

     —           —          (608 )     —     
  

 

 

    

 

 

   

 

 

   

 

 

 

Adjusted Net Income (Loss) from continuing operations

$ 5,825   $ 3,459   $ 27,833   $ (2,073 )
  

 

 

    

 

 

   

 

 

   

 

 

 

Net earnings (loss) per common share:

Basic

$ 0.07   $ 0.16   $ 0.57   $ (5.30 )

Diluted

$ 0.07   $ 0.16   $ 0.57   $ (5.30 )

Adjustments per common share, diluted:

Goodwill impairment charge, net of tax

  —        —        —        5.17  

Loss on acquired assets, net of tax

  —        —        —        0.01  

Stevens Point severance and one-time costs, net of tax

  —        —        —        0.03  

Asset impairment charge, net of tax

  —        —        —        0.06  

Gain on sale of distribution facility, net of tax

  —        (0.13 )   —        (0.14 )

Closed facility charge, net of tax

  —        0.09     —        0.09  

Employee severance costs, net of tax

  —        —        —        0.02  

Stevens Point LIFO benefit, net of tax

  —        —        —        (0.06 )

Deferred taxes valuaton allowance

  —        (0.01 )   —        0.01  

State income tax settlement

  (0.03 )   (0.03 )

Loss on debt extinguishment, net of tax

  —        —        —        0.10  

Write-off of unamortized loan costs related to prepayment of term loan, net of tax

  0.04     —        0.05     —     

Acquisition and term loan amendment fees, net of tax

  0.01     —        0.01     —     

Reversal of pension withdrawal liability, net of tax

  —        —        (0.01 )   —     

Adjusted net earnings (loss) per common share: (1)

Basic

$ 0.13   $ 0.07   $ 0.62   $ (0.04 )

Diluted

$ 0.13   $ 0.07   $ 0.61   $ (0.04 )

The Company presents Adjusted Net Income (Loss) and Adjusted Net Earnings (Loss) Per Common Share, non-GAAP measures, to provide investors with a view of operating performance excluding significant and non-recurring items.

 

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Adjusted EBITDA (Unaudited)

The following is a summary of the calculation of Adjusted EBITDA for the thirteen and fifty-two weeks ended December 28, 2013 and the fourteen and fifty-three weeks ended January 3, 2015 (in thousands):

 

     Thirteen Weeks Ended      Fourteen Weeks Ended  
     December 28, 2013      January 3, 2015  
     Continuing
Operations
     Discontinued
Operations
    Total      Continuing
Operations
    Discontinued
Operations
    Total  

Net income (loss)

   $ 3,216      $ 5,436     $ 8,652      $ 7,506     $ (1,370 )   $ 6,136  

Interest expense

     11,944        1,468       13,412        14,395       643       15,038  

Provision (benefit) for income taxes

     1,470        (1,387 )     83        (1,862 )     1,268       (594 )

Depreciation and amortization expense

     14,061        2,128       16,189        17,431       —          17,431  

LIFO charge

     76        —          76        810       —          810  

Amortization of deferred financing costs

     2,479        154       2,633        572       —          572  

Non-cash stock compensation expense

     791        —          791        1,009       —          1,009  

Gain on sale of distribution facility

     —           —          —           (10,084 )     —          (10,084 )

Stevens Point severance and one-time costs

     —           —          —           253       —          253  

Closed facility charge

     —           —          —           6,989       —          6,989  

Acquisition costs

     375        —          375        —          —          —     

Credit agreement amendment fees

     604        —          604        —          —          —     
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

$ 35,016   $ 7,799   $ 42,815   $ 37,019   $ 541   $ 37,560  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

     Fifty-two Weeks Ended     Fifty-three Weeks Ended  
     December 28, 2013     January 3, 2015  
     Continuing
Operations
    Discontinued
Operations
     Total     Continuing
Operations
    Discontinued
Operations
    Total  

Net income (loss)

   $ 25,832     $ 8,706      $ 34,538     $ (252,853 )   $ (57,014 )   $ (309,867 )

Interest expense

     41,761       6,114        47,875       54,013       3,275       57,288  

Provision (benefit) for income taxes

     14,525       2,178        16,703       (44,432 )     (21,274 )     (65,706 )

Depreciation and amortization expense

     56,264       8,719        64,983       65,496       3,471       68,967  

LIFO charge (benefit)

     976       —           976       (3,263 )     —          (3,263 )

Amortization of deferred financing costs

     4,036       318        4,354       2,259       50       2,309  

Non-cash stock compensation expense

     2,765       —           2,765       3,854       —          3,854  

Employee severance costs

     —          —           —          1,251       2,196       3,447  

Asset impairment charges

     —          —           —          5,050       11,143       16,193  

Goodwill impairment charge

     —          —           —          280,014       —          280,014  

Gain on sale of distribution facility

     —          —           —          (10,084 )     —          (10,084 )

Loss (gain) on disposition of assets

     —          —           —          464       (1,654 )     (1,190 )

Stevens Point severance and one-time costs

     —          —           —          2,016       —          2,016  

Closed facility charge

     —          —           —          6,989       9,950       16,939  

Multi-employer pension withdrawal charges

     —          —           —          —          49,697       49,697  

Reversal of pension withdrawal liability

     (1,006 )     —           (1,006 )     —          —          —     

Acquisition costs

     375       —           375       —          —          —     

Credit agreement amendment fees

     604       —           604       —          —          —     

Loss on debt extinguishment

     —          —           —          8,576       472       9,048  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

$ 146,132   $ 26,035   $ 172,167   $ 119,350   $ 312   $ 119,662  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

The Company presents Adjusted EBITDA, a non GAAP measure, to provide investors with a supplemental measure of its operating performance. The Company believes that Adjusted EBITDA is a useful performance measure and is used by the Company to facilitate a comparison of its operating performance on a consistent basis from period-to-period and to provide for a more complete understanding of factors and trends affecting the Company’s business than measures under U.S. generally accepted accounting principles (‘‘GAAP’’) can provide alone. The Company’s

 

9


board of directors and management also use Adjusted EBITDA as one of the primary methods for planning and forecasting overall expected performance and for evaluating on a quarterly and annual basis actual results against such expectations, and as a performance evaluation metric in determining achievement of certain compensation programs and plans for employees, including its senior executives.

The Company defines Adjusted EBITDA as earnings before interest expense, provision for income taxes, depreciation and amortization, LIFO charges, amortization of deferred financing costs, non-cash compensation expenses arising from the issuance of stock, costs incurred in connection with the Company’s IPO (or subsequent offerings of Roundy’s common stock), loss on debt extinguishment, certain non-recurring or unusual employee and pension related costs, costs related to acquisitions, costs related to debt financing activities, goodwill and asset impairment charges, gain or loss on the disposition of assets, one-time charges due to the closing of stores or a distribution facility and Adjusted EBITDA from discontinued operations. Omitting interest, taxes and the other items provides a financial measure that facilitates comparisons of the Company’s results of operations with those of companies having different capital structures. Since the levels of indebtedness, tax structures, and methodologies in calculating LIFO expense that other companies have are different from the Company’s, it omits these amounts to facilitate investors’ ability to make these comparisons. Similarly, the Company omits depreciation and amortization because other companies may employ a greater or lesser amount of owned property, and because in the Company’s experience, whether a store is new or one that is fully or mostly depreciated does not necessarily correlate to the contribution that such store makes to operating performance. The Company believes that investors, analysts and other interested parties consider Adjusted EBITDA an important measure of the Company’s operating performance. Adjusted EBITDA should not be considered as an alternative to net income as a measure of the Company’s performance. Other companies in the Company’s industry may calculate Adjusted EBITDA differently than the Company does, limiting its usefulness as a comparative measure.

Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. The limitations of Adjusted EBITDA include: (i) it does not reflect the Company’s cash expenditures or future requirements for capital expenditures or contractual commitments; (ii) it does not reflect changes in, or cash requirements for, the Company’s working capital needs; (iii) it does not reflect income tax payments the Company may be required to make; and (iv) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements.

 

10


Roundy’s, Inc.

Consolidated Balance Sheets

(In thousands, except per share data)

 

     December 28, 2013     January 3, 2015  
           (Unaudited)  
Assets             

Current Assets:

    

Cash and cash equivalents

   $ 78,214      $ 58,576   

Notes and accounts receivable, less allowance for losses

     36,700        39,009   

Merchandise inventories

     268,281        275,457   

Prepaid expenses

     9,219        21,536   

Income taxes receivable

     1,704        14,818   

Deferred income taxes

     8,086        4,439   

Current assets of discontinued operations

     46,343        6,518   
  

 

 

   

 

 

 

Total current assets

  448,547      420,353   
  

 

 

   

 

 

 

Property and Equipment, net

  301,926      320,263   

Other Assets:

Other assets, net of amortization of certain intangible assets

  59,846      53,244   

Long-term assets of discontinued operations

  75,239      27,971   

Goodwill

  577,537      297,523   
  

 

 

   

 

 

 

Total other assets

  712,622      378,738   
  

 

 

   

 

 

 

Total assets

$ 1,463,095    $ 1,119,354   
  

 

 

   

 

 

 
Liabilities and Shareholders’ Equity

Current Liabilities:

Accounts payable

$ 221,014    $ 234,572   

Accrued wages and benefits

  31,240      37,141   

Other accrued expenses

  42,541      51,861   

Current maturities of long-term debt and capital lease obligations

  1,322      1,459   

Income taxes

  127      —     

Current liabilities of discontinued operations

  46,182      20,135   
  

 

 

   

 

 

 

Total current liabilities

  342,426      345,168   
  

 

 

   

 

 

 

Long-term Debt and Capital Lease Obligations

  717,997      641,197   

Deferred Income Taxes

  77,826      40,444   

Other Liabilities

  69,502      106,940   

Long-term Liabilities of Discontinued Operations

  28,917      71,993   
  

 

 

   

 

 

 

Total liabilities

  1,236,668      1,205,742   
  

 

 

   

 

 

 

Commitments and Contingencies

Shareholders’ Equity (Deficit):

Preferred stock (5,000 shares authorized at 12/28/13 and 1/3/15, respectively, $0.01 par value, 0 shares at 12/28/13 and 1/3/15, respectively, issued and outstanding)

  —        —     

Common stock (150,000 shares authorized, $0.01 par value, 46,777 shares and 49,334 shares at 12/28/13 and 1/3/15, respectively, issued and outstanding)

  468      493   

Additional paid-in capital

  116,874      140,004   

Retained earnings (accumulated deficit)

  137,545      (172,804

Accumulated other comprehensive loss

  (28,460   (54,081
  

 

 

   

 

 

 

Total shareholders’ equity (deficit)

  226,427      (86,388
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

$ 1,463,095    $ 1,119,354   
  

 

 

   

 

 

 

 

11


Roundy’s, Inc.

Consolidated Statements of Cash Flows

(In thousands)

 

     Fifty-two Weeks
Ended
    Fifty-three Weeks
Ended
 
     December 28, 2013     January 3, 2015  
           (Unaudited)  

Cash Flows From Operating Activities:

    

Net income (loss)

   $ 34,538      $ (309,867

Adjustments to reconcile net income (loss) to net cash flows provided by operating activities:

    

Goodwill impairment charge

     —          280,014   

Asset impairment charges

     —          16,193   

Multi-employer pension withdrawal charge

     —          49,697   

Depreciation of property and equipment and amortization of intangible assets

     64,983        68,967   

Amortization of deferred financing costs

     4,354        2,309   

Gain on sale of distribution facility

     —          (10,084

Gain on sale of discontinued operations

     —          (1,654

(Gain) loss on sale of property and equipment and other assets

     125        (300

LIFO charge (benefit)

     976        (3,263

Deferred income taxes

     3,894        (42,132

Loss on debt extinguishment

     —          9,048   

Amortization of debt discount

     3,040        2,476   

Stock-based compensation expense

     2,765        3,854   

Changes in operating assets and liabilities:

    

Notes and accounts receivable

     (5,720     (338

Merchandise inventories

     (10,425     17,713   

Prepaid expenses

     (161     (8,579

Other assets

     360        78   

Accounts payable

     11,194        (22,185

Accrued expenses and other liabilities

     2,312        16,005   

Income taxes

     (8,196     (20,001
  

 

 

   

 

 

 

Net cash flows provided by operating activities (1)

  104,039      47,951   
  

 

 

   

 

 

 

Cash Flows From Investing Activities:

Capital expenditures

  (67,109   (91,757

Proceeds from Rainbow Store Sale

  —        76,907   

Proceeds from sale of distribution facility

  —        14,988   

Proceeds from sale of property and equipment

  531      1,195   

Payment for business acquisitions

  (36,000   —     
  

 

 

   

 

 

 

Net cash flows (used in) provided by investing activities (1)

  (102,578   1,333   
  

 

 

   

 

 

 

Cash Flows From Financing Activities:

Dividends paid to common shareholders

  (21,676   (150

Payments of withholding taxes for vesting of restricted stock shares

  (390   (719

Borrowings on revolving credit facility

  54,750      478,000   

Payments made on revolving credit facility

  (54,750   (478,000

Proceeds from long-term borrowings

  —        450,800   

Issuance of notes

  193,998      —     

Payments of debt and capital lease obligations

  (158,902   (536,432

Issuance of common stock, net of issuance costs

  —        19,301   

Debt issuance and refinancing fees and related expenses

  (4,566   (5,686

Credit agreement amendment fees and expenses

  (636   —     
  

 

 

   

 

 

 

Net cash flows provided by (used in) financing activities (1)

  7,828      (72,886
  

 

 

   

 

 

 

Net increase (decrease) in Cash and Cash Equivalents

  9,289      (23,602

Cash and Cash Equivalents, Beginning of Period (2)

  72,889      82,178   
  

 

 

   

 

 

 

Cash and Cash Equivalents, End of Period (2)

$ 82,178    $ 58,576   
  

 

 

   

 

 

 

Supplemental Cash Flow Information:

Cash paid for interest

$ 44,195    $ 59,480   

Cash paid (refunded) for income taxes

  21,005      (3,573

 

(1)  Includes activities from continuing operations and discontinued operations.
(2)  Includes cash and cash equivalents included in assets of discontinued operations.

 

12