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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 June 28, 2003
-------------
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.)
23000 Roundy Drive
Pewaukee, Wisconsin 53072
- ---------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (262)953-7999
------------
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 check mark whether the Registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2) Yes No X
---- ----
As of August 8, 2003 there were 1,000 shares of the Registrant's common
stock outstanding, all of which were held by Roundy's Acquisition Corp.
("RAC").
RAC is controlled by the Willis Stein Funds (as defined in Note 2 to
the financial statements contained in this report) and certain
associated investors, and 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 June 28, 2003
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 4
Statements
Item 2. Management's Discussion and Analysis of 13
Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Discussion about 22
Market Risk
Item 4. Controls and Procedures 22
PART II. - Other Information
Item 1. Legal Proceedings 23
Item 2. Changes in Securities and Use of Proceeds 23
Item 3. Defaults Upon Senior Securities 23
Item 4 Submission of Matters to a Vote of Security
Holders 23
Item 5. Other Information 23
Item 6. Exhibits and Reports on Form 8-K 23
SIGNATURES 24
EXHIBIT INDEX 25
PART I. Item 1. FINANCIAL STATEMENTS
ROUNDY'S, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands)
(Unaudited)
Successor Predecessor Successor Predecessor
------------------- ----------- ---------- ---------
Thirteen June 7, March 31, Twenty-six December
Weeks 2002 2002 Weeks 30, 2001
Ended to to Ended to
June 28, June 29, June 6, June 28, June 6,
2003 2002 2002 2003 2002
-------- -------- ---------- --------- ---------
Revenues:
Net sales and service fees $985,044 $ 225,820 $ 673,505 $1,872,140 $1,545,647
Other - net 561 161 307 1,298 694
------- ------- -------- --------- ---------
985,605 225,981 673,812 1,873,438 1,546,341
------- ------- -------- --------- ---------
Costs and Expenses:
Cost of sales 784,300 184,871 555,906 1,495,335 1,271,228
Operating and
administrative 166,943 32,666 102,110 311,654 235,607
SARS and other termination costs 7,400 7,400
Interest
Interest 9,639 2,375 2,418 19,516 6,144
Amortization of deferred
financing costs 809 11 874 1,628 969
Interest rate swap termination
costs 6,652 6,652
-------- -------- -------- ---------- ---------
961,691 219,923 675,360 1,828,133 1,528,000
-------- -------- -------- ---------- ---------
Income Before Income Taxes 23,914 6,058 (1,548) 45,305 18,341
Provision for Income Taxes 9,566 2,484 (742) 18,122 7,413
------- -------- ------- -------- -------
Net Income $ 14,348 $ 3,574 $ (806) $ 27,183 $ 10,928
====== ======= ======== ======== =======
See notes to unaudited consolidated financial statements.
ROUNDY'S, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
Successor
-----------------------
June 28, December 28,
Assets 2003 2002
---------- -----------
(Unaudited)
Current Assets:
Cash and cash equivalents $ 50,780 $ 139,778
Notes and accounts receivable, less
allowance for losses of $5,365 and $5,577,
respectively 73,303 87,344
Merchandise inventories 269,976 236,465
Prepaid expenses 7,297 9,756
Deferred income tax benefits 16,169 15,871
------- --------
Total current assets 417,525 489,214
------- --------
Property and Equipment - Net 308,569 214,548
Other Assets:
Deferred income tax benefits 25,938 25,231
Notes receivable, less allowance for
losses of $1,475 2,804 3,523
Other assets - net 90,917 91,344
Goodwill 623,543 556,894
-------- --------
Total other asset 743,202 676,992
-------- --------
Total assets $1,469,296 $ 1,380,754
========= =========
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 261,393 $ 240,845
Accrued expenses 139,406 137,416
Current maturities of long-term debt 3,627 2,961
Income taxes 8,120 13,370
------- -------
Total current liabilities 412,546 394,592
------- -------
Long-Term Debt 593,867 559,824
Other Liabilities 100,742 91,380
--------- ---------
Total liabilities 1,107,155 1,045,796
--------- ---------
Shareholders' Equity:
Common stock (1,000 shares issued and
outstanding at $0.01 par value)
Additional paid-in capital 314,500 314,500
Retained earnings 47,641 20,458
------- -------
Total shareholders' equity 362,141 334,958
------- -------
Total liabilities and shareholders'
equity $1,469,296 $ 1,380,754
========= =========
See notes to unaudited consolidated financial statements.
ROUNDY'S, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Successor Predecessor
------------------- -----------
Twenty-six June 7, December 30,
Weeks 2002 2001
Ended to to
June 28, June 29, June 6,
2003 2002 2002
-------- ------- ----------
Cash Flows From Operating Activities:
Net income $ 27,183 $3,574 $ 10,928
Adjustments to reconcile net income to
net cash flows provided by operating
activities:
Depreciation and amortization,
including deferred financing costs 22,250 3,200 18,670
Loss (gain) on sale of property and
equipment 41
Deferred income taxes 2,715 294 (2,268)
Changes in operating assets and
liabilities, net of the effect
of business acquisitions:
Notes and accounts receivable 15,512 7,884 (7,079)
Merchandise inventories (3,113) (5,469) 13,767
Prepaid expenses 3,787 2,127 1,743
Other assets (5,760) (1,741) (1,371)
Accounts payable 11,746 (1,265) (27,541)
Accrued expenses (2,870) 362 18,062
Income taxes (5,250) (485) 19,731
Other liabilities 62 (1,556) 161
------ ------ ------
Net cash flows provided by operating
activities 66,262 6,925 44,844
------ ------ ------
Cash Flows From Investing Activities:
Capital expenditures (22,664) (4,731) (10,642)
Proceeds from sale of property and
equipment and other assets 37 70 478
Acquisition consideration (539,996)
Payment for business acquisitions net of
cash acquired (131,387)
Decrease in notes receivable, net 719 230 879
Net cash flows used in investing --------- -------- -------
activities (153,295) (544,427) (9,285)
--------- -------- -------
Cash Flows From Financing Activities:
Proceeds from long-term borrowings 475,000
Settlement of interest rate swap
liability (6,652)
Debt issuance costs (506) (23,022)
Contributed capital 314,500
Payments of debt (1,459) 165,939) (48,618)
Common stock purchased (56)
-------- --------- -------
Net cash flows provided by (used in)
financing activities (1,965) 593,887 (48,674)
-------- -------- ------
Net (Decrease) Increase in Cash and Cash
Equivalents (88,998) 56,385 (13,115)
Cash and Cash Equivalents, Beginning of
Period 139,778 45,516
-------- ------- -------
Cash and Cash Equivalents, End of Period $ 50,780 $ 56,385 $ 32,401
======== ======= =======
Supplemental Cash Flow Information:
Cash paid during the period:
Interest $ 21,080 $ 531 $ 6,351
Income taxes 21,516 1,872
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 as of June 28,
2003, and for the three-month and six-month periods ended June 28, 2003
(successor) and the period from March 31, 2002 to June 6, 2002
(predecessor), the period from June 7, 2002 to June 29, 2002 (successor)
and the period from December 30, 2001 to June 6, 2002 (predecessor) 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 year ended December 28,
2002. The results of operations for the three-month and six-month periods
ended June 28, 2003 may not necessarily be indicative of the results that
may be expected for the entire fiscal year ending January 3, 2004. For
purposes of comparison, the results of operations for the period June 7,
2002 to June 29, 2002 will be combined with the results of operations of
Roundy's for the period March 31, 2002 to June 6, 2002 and then compared to
the results of operations of Roundy's for the thirteen weeks ended June 28,
2003. For purposes of comparison, the results of operations for the period
June 7, 2002 to June 29, 2002 will be combined with the results of
operations of Roundy's for the period December 30, 2001 to June 6, 2002 and
then compared with the results of operations of Roundy's for the twenty-six
weeks ended June 28, 2003.
2. TRANSACTIONS
Transactions - On June 6, 2002, all of the issued and outstanding capital
stock of Roundy's, Inc. ("Roundy's" or the "Company") was purchased by
Roundy's Acquisition Corp. ("RAC") from its former owners. This purchase
is referred to throughout these financial statements as the "Transactions."
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 equity
investors.
Purchase Accounting - The acquisition of Roundy's by RAC was accounted for
as a purchase. As a result, all financial statements for periods
subsequent to June 6, 2002, the date the Transactions were consummated,
reflect the new reporting entity after adjustment of the carrying value of
assets and liabilities to their fair values as of June 7, 2002.
Predecessor/Successor - For purposes of the financial statement
presentation set forth herein, the Predecessor Company refers to the
Company prior to the consummation of the Transactions and Successor Company
refers to the Company after the consummation of the Transactions.
3. ACQUISITIONS
In November 2002, the Company entered into a definitive agreement to
acquire the capital stock of Prescott's Supermarkets, Inc. ("Prescott's")
for approximately $47.8 million (the "Prescott's Acquisition"). Prescott's
primarily owned and operated seven licensed Pick 'n Save stores located in
the Wisconsin cities of Fond du Lac (three stores), Oshkosh (two stores)
and West Bend (two stores). Goodwill of approximately $44.0 million
resulted from the acquisition which was accounted for as a purchase. The
transaction closed on January 21, 2003 and the operating results of
Prescott's are included in the consolidated statements of income after this
date. The consolidated financial statements reflect the preliminary
allocation of the purchase price to the assets acquired and liabilities
assumed based on their fair values.
In April 2003, the Company acquired seven Kohl's grocery stores in the
Madison area from The Great Atlantic & Pacific Tea Company, Inc. ("A & P")
for approximately $19.0 million in cash for the non-inventory assets plus
net payments of approximately $1.1 million for acquired inventory (the
"Copps Madison Acquisition"). Goodwill of approximately $15.0 million
resulted from the acquisition, which was accounted for as a purchase. In
May 2003, the Company converted six stores to Copps stores and consolidated
the volume of the seventh store into an existing Company-owned Copps store.
These six new Copps stores opened in late May and early June 2003. The
consolidated financial statements reflect the preliminary allocation of the
purchase price to the assets acquired and liabilities assumed based on
their fair values.
In June 2003, the Company acquired 32 Rainbow Foods Stores ("Rainbow") from
Fleming Companies, Inc. ("Fleming"). The Company paid approximately $103.3
million consisting of (i) $67.1 million in cash ($44.3 million plus $22.8
million for usable store level inventory) and (ii) the assumption of $36.2
million of capitalized leases. The Company sold the one store located
outside the Minneapolis-St. Paul metropolitan area (located near Wausau,
Wisconsin) to an independent licensed Pick 'n Save operator in the area.
Collectively these transactions are referred to throughout these financial
statements as the "Rainbow Minneapolis Acquisition." Goodwill of
approximately $7.0 million resulted from the acquisition, which was
accounted for as a purchase. The Rainbow Minneapolis Acquisition closed on
a rolling schedule from June 7 to June 27, 2003 and the operating results
of each acquired store are included in the consolidated statements of
income after each store's respective closing date. The consolidated
financial statements reflect the preliminary allocation of the purchase
price to the assets acquired and liabilities assumed based on their fair
values.
The proforma effect of the 2003 acquisitions was not material.
4. RECENTLY ISSUED ACCOUNTING STANDARDS
The Company adopted Emerging Issues Task Force Issue No. 02-16 (EITF 02-
16), "Accounting by a Customer (including a Reseller) for Certain
Consideration Received from a Vendor," effective December 29, 2002.
Pursuant to EITF 02-16, vendor consideration related to vendor funded
coupons and certain advertising and other programs have been reclassified
in the consolidated statements of income and prior periods have also been
consistently reclassified. Specifically, vendor funded coupon
reimbursements, previously considered part of net sales at the point of
sale, are now reflected as a reduction to cost of sales. Accordingly,
$10.4 million and $7.7 million of such reimbursements in second quarter
2003 and second quarter 2002, respectively, and $20.4 million and $15.8
million for the six months ended June 28, 2003 and June 29, 2002,
respectively, have been classified as a reduction in cost of sales with a
corresponding decrease in net sales. Vendor reimbursements previously
classified as offsets to advertising and other expenses, have now also been
reflected as reductions in cost of sales pursuant to EITF 02-16.
Accordingly, $9.8 million and $8.0 million of such reimbursements in second
quarter 2003 and second quarter 2002, respectively, and $19.3 million and
$15.4 million for the six months ended June 28, 2003 and June 29, 2002,
respectively, have been classified as a reduction in cost of sales with a
corresponding increase in operating and administrative expenses.
5. 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 - wholesale and retail. 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, notes receivable,
transportation equipment, corporate office facilities 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.
Successor Predecessor Successor Predecessor
--------------------- ----------- ---------- -----------
(In thousands) Thirteen June 7, March 31, Twenty-six December
Weeks 2002 2002 Weeks 30, 2001
Ended to to Ended to
June 28, June 29, June 6, June 28, June 6,
2003 2002 2002 2003 2002
--------- ---------- --------- --------- ---------
NET SALES AND SERVICE FEES
Retail $ 521,828 $ 125,783 $ 255,930 $ 971,486 $ 632,586
Wholesale 775,865 176,048 576,112 1,484,644 1,303,749
Eliminations (312,649) (76,011) (158,537) (583,990) (390,688)
--------- ------- ------- --------- ---------
Consolidated $ 985,044 $ 225,820 $ 673,505 $1,872,140 $1,545,647
========= ======= ======= ========= ==========
INCOME BEFORE INCOME TAXES
Retail $ 16,758 $ 4,573 $ 6,258 $ 29,494 $ 16,113
Wholesale 22,560 4,109 12,752 45,958 28,959
Corporate (15,404) (2,624) (20,558) (30,147) (26,731)
-------- ------ ------- ------- --------
Consolidated $ 23,914 $ 6,058 $ (1,548) $ 45,305 $ 18,341
======== ====== ======= ====== =======
DEPRECIATION AND AMORTIZATION
Retail $ 5,309 $ 1,716 $ 3,950 $ 9,657 $ 9,105
Wholesale 1,520 789 1,836 3,080 4,405
Corporate 3,945 684 1,812 7,885 4,191
------ ----- ----- ------ -------
Consolidated $ 10,774 $ 3,189 $ 7,598 $ 20,622 $ 17,701
====== ===== ===== ====== =======
CAPITAL EXPENDITURES
Retail $ 8,233 $ 2,168 $ 3,647 $15,958 $ 5,273
Wholesale 2,632 787 902 2,899 1,426
Corporate 2,794 1,776 2,391 3,718 3,943
------ ----- ----- ------ ------
Consolidated $ 13,659 $ 4,731 $ 6,940 $22,664 $ 10,642
====== ===== ===== ====== ======
IDENTIFIABLE ASSETS (AT
PERIOD END)
Retail $708,231
Wholesale 559,873
Corporate 201,192
---------
Consolidated $1,469,296
=========
6. 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 June 28, 2003 (Successor)
(In thousands)
Combined
Roundy's Subsidiaries Eliminations Total
-------- ------------ ------------ ------
Revenues:
Net sales and service fees $ 381,129 $ 821,192 $(217,277) $ 985,044
Other-net 169 392 561
------- ------- --------- -------
381,298 821,584 (217,277) 985,605
------- ------- --------- -------
Costs and Expenses:
Cost of sales 342,048 655,110 (212,858) 784,300
Operating and administrative 31,169 140,193 (4,419) 166,943
Interest 4,848 5,600 10,448
------- ------- -------- -------
378,065 800,903 (217,277) 961,691
------- ------- -------- -------
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 (Successor)
(In thousands)
Combined
Roundy's Subsidiaries Eliminations Total
--------- ------------ ------------ ---------
Revenues:
Net sales and service fees $757,599 $ 1,533,661 $(419,120) $1,872,140
Other-net 485 813 1,298
------- --------- --------- ---------
758,084 1,534,474 (419,120) 1,873,438
------- --------- --------- ---------
Costs and Expenses:
Cost of sales 679,784 1,226,005 (410,454) 1,495,335
Operating and administrative 60,021 260,299 (8,666) 311,654
Interest 10,417 10,727 21,144
------- --------- ------- ---------
750,222 1,497,031 (419,120) 1,828,133
------- --------- ------- ---------
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 STATEMENTS OF INCOME
Period from June 7, 2002 to June 29, 2002 (Successor)
(In thousands)
Combined
Roundy's Subsidiaries Eliminations Total
--------- ------------ ------------ --------
Revenues:
Net sales and service fees $ 94,445 $ 171,474 $ (40,099) $ 225,820
Other-net (12) 173 161
------ ------- ------- -------
94,433 171,647 (40,099) 225,981
------ ------- ------- -------
Costs and Expenses:
Cost of sales 85,960 138,220 (39,309) 184,871
Operating and administrative 6,098 27,358 (790) 32,666
Interest 1,071 1,315 2,386
------ ------- ------ -------
93,129 166,893 (40,099) 219,923
Income Before Income Taxes 1,304 4,754 6,058
Provision for Income Taxes 535 1,949 2,484
Equity in earnings of
subsidiaries 2,805 (2,805)
----- ----- ----- -----
Net Income $ 3,574 $ 2,805 $ (2,805) $ 3,574
===== ===== ===== =====
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
Period from March 31, 2002 to June 6, 2002 (Predecessor)
(In thousands)
Combined
Roundy's Subsidiaries Eliminations Total
--------- ------------ ------------ -------
Revenues:
Net sales and service fees $ 279,355 $ 513,658 $(119,508) $ 673,505
Other-net (20) 327 307
------- ------- ------- -------
279,335 513,985 (119,508) 673,812
------- ------- ------- -------
Costs and Expenses:
Cost of sales 254,554 418,616 (117,264) 555,906
Operating and administrative 21,490 82,864 (2,244) 102,110
SARS and other termination
costs 7,400 7,400
Interest 7,015 2,929 9,944
------- ------- ------- -------
290,459 504,409 (119,508) 675,360
------- ------- ------- -------
Income (Loss) Before Income
Taxes (11,124) 9,576 (1,548)
Provision (Benefit) for
Income Taxes (5,332) 4,590 (742)
Equity in earnings of
subsidiaries 4,986 (4,986)
------- ------ ----- -----
Net Income (Loss) $ (806) $ 4,986 $ (4,986) $ (806)
======= ====== ===== =====
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
December 30, 2001 to June 6, 2002 (Predecessor)
(In thousands)
Combined
Roundy's Subsidiaries Eliminations Total
--------- ------------ ------------- --------
Revenues:
Net sales and service fees $ 642,969 $1,179,623 $ (276,945) $1,545,647
Other-net (51) 745 694
------- --------- --------- ----------
642,918 1,180,368 (276,945) 1,546,341
------- --------- -------- ----------
Costs and Expenses:
Cost of sales 584,157 958,648 (271,577) 1,271,228
Operating and administrative 49,276 191,699 (5,368) 235,607
SARs and other termination
costs 7,400 7,400
Interest 6,498 7,267 13,765
------- --------- -------- ---------
647,331 1,157,614 (276,945) 1,528,000
------- --------- -------- ---------
Income (Loss) Before Income
Taxes (4,413) 22,754 18,341
Provision (Benefit) for
Income Taxes (1,783) 9,196 7,413
Equity in earnings of
subsidiaries 13,558 (13,558)
------ -------- -------- -------
Net Income $ 10,928 $ 13,558 $ (13,558) $ 10,928
====== ======== ======== =======
CONDENSED CONSOLIDATING BALANCE SHEETS
As of June 28, 2003 (Successor)
(In thousands)
Combined
Roundy's Subsidiaries Eliminations Total
-------- ------------ ------------ ------
Assets
Current Assets:
Cash and cash equivalents $ 20,499 $ 30,281 $ 50,780
Notes and accounts
receivable-net 23,918 60,604 $(11,219) 73,303
Merchandise inventories 61,420 208,556 269,976
Prepaid expenses and other (5,869) 29,335 23,466
------- -------- ---------- --------
Total current assets 99,968 328,776 (11,219) 417,525
------- ------- ---------- --------
Property and Equipment-Net 11,813 296,756 308,569
Other Assets:
Investment in subsidiaries 216,251 (216,251)
Intercompany receivables 507,283 (507,283)
Deferred income tax
benefits 25,938 25,938
Notes receivable 526 2,278 2,804
Goodwill and other assets 262,368 452,092 714,460
---------- ---------- --------- ---------
Total other assets 1,012,366 454,370 (723,534) 743,202
---------- ---------- --------- ---------
Total assets $ 1,124,147 $ 1,079,902 $ (734,753) $1,469,296
========== ========== ========== =========
Liabilities and
Shareholders' Equity
Current Liabilities:
Accounts payable $ 123,020 $ 145,122 $ (6,749) $ 261,393
Accrued expenses and other 67,118 84,878 (4,470) 147,526
Current maturities of long-
term debt 2,500 1,127 3,627
Intercompany payable 507,283 (507,283)
----------- --------- ---------- --------
Total current liabilities 192,638 738,410 (518,502) 412,546
----------- --------- ---------- --------
Long-Term Debt 545,272 48,595 593,867
Other Liabilities 24,096 76,646 100,742
----------- --------- ---------- ---------
Total liabilities 762,006 863,651 (518,502) 1,107,155
----------- --------- ---------- ---------
Shareholders' Equity 362,141 216,251 (216,251) 362,141
----------- --------- ---------- ---------
Total liabilities and
shareholders' equity $ 1,124,147 $ 1,079,902 $ (734,753) $1,469,296
========== ========== ========== =========
CONDENSED CONSOLIDATING BALANCE SHEETS
As of December 28, 2002 (Successor)
(In thousands)
Combined
Roundy's Subsidiaries Elimination Total
Assets
Current Assets:
Cash and cash equivalents $ 117,307 $ 22,471 $ 139,778
Notes and accounts receivable-
net 35,543 56,317 $ (4,516) 87,344
Merchandise inventories 63,386 173,079 236,465
Prepaid expenses and other (4,649) 30,276 25,627
---------- ------- --------- ----------
Total current assets 211,587 282,143 (4,516) 489,214
---------- ------- --------- ----------
Property and Equipment-Net 10,873 203,675 214,548
Other Assets:
Investment in subsidiaries 190,732 (190,732)
Intercompany receivables 409,761 (409,761)
Deferred income tax benefits 25,231 25,231
Notes receivable 640 2,883 3,523
Goodwill and other assets 258,896 389,342 648,238
--------- ------- --------- ---------
Total other assets 885,260 392,225 (600,493) 676,992
--------- ------- --------- ---------
Total assets $1,107,720 $ 878,043 $ (605,009) $1,380,754
========== ========= =========== ==========
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 127,742 $ 116,146 $ (3,043) $ 240,845
Accrued expenses and other 81,314 70,945 (1,473) 150,786
Current maturities of long-
term debt 2,500 461 2,961
Intercompany payable 409,761 (409,761)
--------- --------- --------- ---------
Total current liabilities 211,556 597,313 (414,277) 394,592
--------- ---------- --------- ---------
Long-Term Debt 546,502 13,322 559,824
Other Liabilities 14,704 76,676 91,380
--------- --------- ---------- ---------
Total liabilities 772,762 687,311 (414,277) 1,045,796
--------- -------- ---------- ---------
Shareholders' Equity 334,958 190,732 (190,732) 334,958
--------- -------- ---------- ---------
Total liabilities and
shareholders' equity $1,107,720 $ 878,043 $ (605,009) $1,380,754
========== ========= =========== ==========
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the twenty-six weeks ended June 28, 2003 (Successor)
(In thousands)
Combined
Roundy's Subsidiaries Total
--------- ------------ --------
Net Cash Flows From Operating Activities: $ (58,580) $ 124,842 $ 66,262
--------- -------- --------
Cash Flows From Investing Activities:
Capital expenditures-net of proceeds (2,740) (19,887) (22,664)
Payment for business acquisitions net of
cash acquired (131,387) (131,387)
Notes receivable 113 606 719
--------- --------- ---------
Net cash flows used in investing
activities (134,014) (19,281) (153,295)
---------- --------- ---------
Cash Flows From Financing Activities:
Proceeds from long-term borrowings
Settlement of interest rate swap liability
Debt issuance cost (506) (506)
Contributed capital
Payments of debt (1,230) (229) (1,459)
Intercompany receivables-net 97,522 (97,522)
--------- ---------- --------
Net cash flows (used in) provided by
financing activities 95,786 (97,751) (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
========== ========== =========
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the period from June 7, 2002 to June 29, 2002 (Successor)
(In thousands)
Combined
Roundy's Subsidiaries Total
--------- ------------ --------
Net Cash Flows From Operating Activities: $ (31,578) $ 38,503 $ 6,925
--------- -------- --------
Cash Flows From Investing Activities:
Capital expenditures-net of proceeds (517) (4,144) (4,661)
Acquisition consideration (539,996) (539,996)
Notes receivable 76 154 230
-------- -------- --------
Net cash flows used in investing activities (540,437) (3,990) (544,427)
-------- -------- --------
Cash Flows From Financing Activities:
Proceeds from long-term borrowings 475,000 475,000
Settlement of interest rate swap liability (6,652) (6,652)
Debt issuance cost (23,022) (23,022)
Contributed capital 314,500 314,500
Payments of debt (165,900) (39) (165,939)
Intercompany receivables-net 8,195 (8,195)
-------- --------- --------
Net cash flows (used in) provided by
financing activities 602,121 (8,234) 593,887
-------- --------- --------
Net Increase in Cash and Cash Equivalents 30,106 26,279 56,385
Cash And Cash Equivalents, Beginning Of
Period
-------- --------- --------
Cash And Cash Equivalents, End Of Period $ 30,106 $ 26,279 $ 56,385
========= ======== ========
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the period from December 30, 2001 to June 6, 2002 (Predecessor)
(In thousands)
Combined
Roundy's Subsidiaries Total
-------- ----------- -------
Net Cash Flows From Operating Activities: $ (5,620) $ 50,464 $ 44,844
-------- ----------- --------
Cash Flows From Investing Activities:
Capital expenditures-net of proceeds (4,007) (6,157) (10,164)
Notes receivable 443 436 879
-------- ----------- --------
Net cash flows used in investing
activities (3,564) (5,721) (9,285)
-------- ----------- --------
Cash Flows From Financing Activities:
Payments of debt (48,450) (168) (48,618)
Common stock purchased (56) (56)
Intercompany receivables-net 39,915 (39,915)
-------- ---------- --------
Net cash flows (used in) provided by
financing activities (8,591) (40,083) (48,674)
-------- ---------- --------
Net Increase (Decrease) in Cash and Cash
Equivalents (17,775) 4,660 (13,115)
Cash And Cash Equivalents, Beginning Of
Period 23,137 22,379 45,516
--------- ----------- ---------
Cash And Cash Equivalents, End Of Period $ 5,362 $ 27,039 $ 32,401
========= =========== =========
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
On April 8, 2002, Roundy's and RAC entered into a share exchange agreement
pursuant to which, among other things and subject to the terms and
conditions contained therein, RAC consummated the Transactions by acquiring
all of the issued and outstanding capital stock of Roundy's on June 6, 2002.
Results of Operations
The following table sets forth each category of statement of income data as
a percentage of net sales and service fees. The results of operations for
the thirteen weeks ended June 29, 2002 includes the results of the Company
for the period from March 31, 2002 through June 6, 2002 (predecessor) and
the period from June 7, 2002 through June 29, 2002 (successor). The
results of operations for the twenty-six weeks ended June 29, 2002 includes
the results of the Company for the period from December 30, 2001 to June 6,
2002 (predecessor) and the period from June 7, 2002 through June 29, 2002
(successor). As part of the Transactions, the Company entered into various
financing arrangements and as a result, the Company now has a different
capital structure. In addition, as a result of the Transactions, the
Company's assets and liabilities were adjusted to reflect their estimated
fair market values, and the purchase price in excess of fair market value
was recorded as goodwill. Accordingly, the results of operations for
periods subsequent to the consummation of the Transactions and related
financing transactions will not necessarily be comparable to prior periods.
Statement of Income Data
Thirteen Weeks Ended Twenty-six Weeks Ended
------------------------------------ -------------------------------------
June 28, 2003 June 29, 2002 June 28, 2003 June 29, 2002
---------------- ----------------- ----------------- ------------------
(Dollars in thousands):
Revenues:
Net sales and service fees $985,044 100.0% $899,325 100.0% $1,872,140 100.0% $1,771,467 100.0%
Other-net 561 0.1 468 0.1 1,298 0.1 855 0.1
-------- ------ -------- ------ ---------- ----- ---------- ----
Total 985,605 100.1 899,793 100.1 1,873,438 100.1 1,772,322 100.1
-------- ----- -------- ----- --------- ----- --------- -----
Cost and Expenses:
Cost of sales 784,300 79.6 740,777 82.5 1,495,335 79.9 1,456,099 82.2
Operating and
administrative 166,943 16.9 134,776 15.0 311,654 16.6 268,273 15.1
SARS and other termination
costs 7,400 0.8 7,400 0.4
Interest 9,639 1.0 4,793 0.5 19,516 1.0 8,519 0.5
Amortization of deferred
financing costs 809 0.1 885 0.1 1,628 0.1 980 0.1
Interest rate swap
termination costs 6,652 0.7 6,652 0.4
--------- ---- -------- ---- --------- ---- --------- -----
961,691 97.6 895,283 99.6 1,828,133 97.6 1,747,923 98.7
--------- ---- -------- ---- --------- ---- --------- -----
Income before income taxes 23,914 2.5 4,510 0.5 45,305 2.5 24,399 1.4
Provision for income tax 9,566 1.0 1,742 0.2 18,122 1.0 9,897 0.6
------- ---- -------- --- ---------- --- ---------- ----
Net income $ 14,348 1.5% $ 2,768 0.3% $ 27,183 1.5% $ 14,502 0.8%
======== ==== ======== ==== ========== ==== ========== ====
Net Sales and Service Fees
Net sales and service fees represent product sales less returns and
allowances and sales promotions. 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, accounting and
inventory control, store development and 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. The results of operations for the thirteen weeks
ended June 29, 2002 includes the results of the Company for the period from
March 31, 2002 through June 6, 2002 (predecessor) and the period from June
7, 2002 through June 29, 2002 (successor). The results of operations for
the twenty-six weeks ended June 29, 2002 include the results of the Company
for the period from December 30, 2001 through June 6, 2002 (predecessor)
and the period from June 7, 2002 through June 29, 2002 (successor).
Eliminations represent the intercompany activity between the Company's
wholesale operations and its retail operations (in thousands):
Period Ended
-----------------------------------------------
Thirteen Weeks Twenty-six Weeks
Ended Ended
---------------------- ----------------------
June 28, June 29, June 28, June 29,
2003 2002 2003 2002
------- ---------- -------- ---------
Net Sales and Service
Fees
Retail $ 521,828 $ 381,713 $ 971,486 $ 758,369
Wholesale 775,865 752,160 1,484,644 1,479,797
Eliminations (312,649) (234,548) (583,990) (466,699)
-------- -------- --------- ---------
Total $ 985,044 $ 899,325 $1,872,140 $1,771,467
======= ======= ========= =========
Costs and Expenses
Costs and expenses consist of cost of sales, operating and administrative
expenses, SARs and other termination costs and interest expense.
- Cost of sales includes product costs and freight.
- Operating and administrative expenses consist primarily of personnel
costs, sales and marketing expenses, 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.
- Interest expense includes interest on the Company's outstanding
indebtedness and amortization of deferred financing costs. In the
predecessor company, interest expense also includes interest rate swap
termination costs and the write off of deferred financing costs.
Three Months Ended June 28, 2003 Compared With Three Months Ended June 29,
2002
Net Sales and Service Fees
Net sales and service fees totaled $985.0 million in the second quarter
2003, an $85.7 million, or 9.5%, increase from $899.3 million in the second
quarter 2002. Retail sales were $521.8 million for the second quarter
2003, a $140.1 million, or 36.7%, increase from $381.7 million in the
second quarter 2002. This increase in retail sales was primarily due to
the effect of five acquired store groups consisting of 51 stores in total
that now operate under the Company's ownership (collectively, the "Acquired
Stores"). These Acquired Stores now operate as: (i) 31 Rainbow retail
grocery stores in the Minneapolis-St. Paul area acquired from Fleming on a
rolling close schedule from June 7 to June 27 and reopened immediately by
the Company; (ii) 14 Pick 'n Save retail grocery stores acquired in three
separate transactions (as discussed in the Company's first quarter 2003
press release and Form 10-Q); and (iii) six Copps Food Stores in the
Madison, Wisconsin area acquired from A & P on April 30, 2003 and reopened
in late May and early June 2003. None of the Acquired Stores were owned or
operated by the Company in the second quarter 2002. The Acquired Stores
contributed approximately 131.0 million to the second quarter retail sales
increase. As of June 28, 2003, the Company operated 111 retail grocery
stores including 49 Pick 'n Save stores, 31 Copps stores and 31 Rainbow
stores.
Second quarter 2003 same store sales at the Company's retail stores
(including Pick 'n Save licensed stores operated in 2002 by their prior
owners) improved 2.2% from the second quarter 2002. The same store sales
results were positively impacted by Easter sales recorded in the second
quarter 2003 versus the first quarter 2002. Excluding the Easter week of
sales from the second quarter 2003 and the same calendar week of fiscal
2002, same store sales improved 1.4%.
Wholesale sales were $775.9 million for the second quarter 2003, a $23.7
million, or 3.2%, increase from $752.2 million in the second quarter 2002.
This improvement was primarily due to increased sales to Company-owned
stores in Wisconsin partially offset by lower sales to independent
customers in the Company's non-Wisconsin divisions due to heightened
competition for retail sales.
Gross Profit
Gross profit was $200.7 million for the second quarter 2003, a $42.2
million, or 26.6%, increase from $158.5 million in the second quarter 2002.
The increase in the Company's gross profit for the quarter was primarily
due to the Acquired Stores. The gross profit percentage for the same
periods of 2003 and 2002 was 20.4% and 17.6%, respectively. The increase
in the gross profit percentage for the quarter was primarily due to the
increase in profits derived from a higher sales mix attributable to Company-
owned retail stores. Retail sales for the second quarter 2003 represented
53.0% of net sales and service fees compared with 42.4% for the same period
in 2002. The increase in retail sales concentration was primarily due to
the Acquired Stores. The retail gross profit percentage was 26.0% and
25.0% for the second quarter of 2003 and 2002, respectively. The increase
in retail gross profit percentage was due to an increased mix of higher
margin perishable department sales. Second quarter wholesale gross profit
percentage was 9.1% as compared with 8.9% in the second quarter 2002.
Operating and Administrative Expenses
Operating and administrative expenses were $166.9 million for the second
quarter 2003, a $32.2 million, or 23.9%, increase from $134.8 million in
the second quarter 2002. Operating and administrative expenses, as a
percentage of net sales and service fees, increased to 17.0% for the second
quarter of 2003 compared with 15.0% in the second quarter of 2002. The
percentage increase was attributable to the Acquired Stores and the
resulting increased concentration of sales in the Company's retail
operating segment, which has a significantly higher ratio of operating
costs to sales than its wholesale operations. Retail operating and
administrative expenses increased to 21.9% of retail sales for the second
quarter 2003 compared with 21.3% for second quarter 2002 primarily due to
pre-opening expenses associated with the Copps Madison Acquisition and the
Rainbow Minneapolis Acquisition. Wholesale operating and administrative
expenses decreased to 6.1% of wholesale sales for the second quarter 2003
as compared with 6.6% for the same period in 2002. 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 and
interest rate swap termination costs) was $9.6 million for second quarter
2003, a $4.8 million increase from $4.8 million in second quarter 2002.
The increase was primarily due to increased borrowings associated with the
purchase of the Company's stock by RAC in June 2002.
Income Taxes
Provision for income taxes was $9.6 million for second quarter 2003, an
increase of $7.8 million from $1.7 million in second quarter 2002. The
effective income tax rates for the second quarters of 2003 and 2002 were
40.0% and 38.6%, respectively.
Net Income
Net income was $14.3 million for the second quarter 2003, an $11.6 million
increase from $2.8 million in the second quarter 2002. In the second
quarter 2002, the Company recorded pre-tax one-time charges of $6.7 million
relating to the termination of an interest rate swap and $7.4 million
relating to stock appreciation rights ("SARs") of the predecessor company's
SARs program and termination of employment agreements associated with
certain former officers of the predecessor company. The net income margin
was 1.5% and 0.3%, respectively, for second quarter 2003 and 2002.
Adjusted EBITDA
Adjusted EBITDA (as defined under "Segment Data") was $45.1 million for the
second quarter 2003, a $10.1 million, or 28.9%, increase from $35.0 million
for the second quarter 2002. Retail Adjusted EBITDA for the second quarter
2003 was $26.6 million, an increase of $7.5 million, or 39.4%, from $19.1
million for the second quarter 2002. The increase in Adjusted EBITDA at
the retail segment was primarily due to the Acquired Stores (which was
offset somewhat by pre-opening expenses related to the Copps Madison
Acquisition and Rainbow Minneapolis Acquisition) as well as improvements in
retail gross profit percentage as discussed above. Wholesale Adjusted
EBITDA for the second quarter 2003 was $24.7 million, an increase of $4.4
million, or 21.6%, from $20.3 million for the second quarter 2002. This
increase was primarily due to gross profit percentage and operational and
labor productivity improvements as discussed above. For a discussion of
the reasons why the Company believes that Adjusted EBITDA provides
information that is useful to investors and a reconciliation of Adjusted
EBITDA to net income under generally accepted accounting principles, see
Note (1) to the Table under "Segment Data."
Six Months Ended June 28, 2003 Compared With Six Months Ended June 29, 2002
Net Sales and Service Fees
Net sales and service fees totaled $1,872.1 million for the six months
ended June 28, 2003, a $100.7 million, or 5.7%, increase from $1,771.5
million for the first six months of 2002.
Retail sales were $971.5 million for 2003, a $213.1 million, or 28.1%,
increase from $758.4 million in 2002. This increase in retail sales was
primarily due to the effect of the Acquired Stores, which contributed
approximately $200.8 million of the increase. As of June 28, 2003, the
Company operated 111 retail grocery stores including 49 Pick 'n Save
stores, 31 Copps stores and 31 Rainbow stores.
Year-to-date 2003 same store sales at Company-owned retail stores
(including Pick 'n Save licensed stores operated in 2002 by their prior
owners) improved 1.5% from 2002.
Wholesale sales were $1,484.6 million for 2003, a $4.8 million, or 0.3%,
increase from $1,479.8 million in 2002. This increase was primarily due to
increased sales to Company-owned stores in Wisconsin partially offset by
lower sales to customers in the Company's non-Wisconsin divisions due to
heightened retail competition.
Gross Profit
Gross profit was $376.8 million for 2003, a $61.4 million, or 19.5%,
increase from $315.4 million in 2002. The increase in the Company's gross
profit was due to the Acquired Stores and an increase in sales mix
attributable to higher profits derived by Company-owned retail stores. The
gross profit percentage for the same periods of 2003 and 2002 was 20.1% and
17.8%, respectively. The increase in gross profit percentage for 2003 was
primarily due to the increase in profits derived from a higher sales mix
attributable to Company-owned retail stores. Retail sales for 2003
represented 51.9% of net sales and service fees compared with 42.8% for the
same period in 2002. The retail gross profit percentage was 25.5% and
25.0% for 2003 and 2002, respectively. Year-to-date 2003 wholesale gross
profit percentage was 9.4% as compared with 9.0% in 2002. The increase in
retail gross profit percentage was due to an increased mix of higher margin
perishable department sales. The increase in wholesale gross profit
percentage was primarily due to stronger vendor promotional allowances in
the Company's Wisconsin divisions.
Operating and Administrative Expenses
Operating and administrative expenses were $311.7 million for 2003, a $43.4
million, or 16.2%, increase from $268.3 million in 2002. Operating and
administrative expenses, as a percentage of net sales and service fees,
increased to 16.6% for 2003 compared with 15.1% in 2002. The percentage
increase was attributable to the Acquired Stores and the resulting
increased concentration of sales in the Company's retail operating segment
in 2003, which has a significantly higher ratio of operating costs to sales
than its wholesale operations. Retail operating and administrative
expenses increased to 21.5% of retail sales for 2003 compared with 21.4%
for 2002. Wholesale operating and administrative expenses decreased to
6.2% of wholesale sales for 2003 as compared with 6.7% for the same period
in 2002. 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 and
interest rate swap termination costs) was $19.5 million for 2003, an $11.0
million increase from $8.5 million in 2002. The increase was primarily due
to increased borrowings associated with the purchase of the Company's stock
by RAC in June 2002.
Income Taxes
Provision for income taxes was $18.1 million for 2003, an increase of $8.2
million from $9.9 million in 2002. The effective income tax rates for the
first six months of 2003 and 2002 were 40.0% and 40.6%, respectively.
Net Income
Net income was $27.2 million for 2003, a $12.7 million increase from $14.5
million in the prior year. In 2002, the Company recorded pre-tax one-time
charges of $6.7 million relating to the termination of an interest rate
swap and $7.4 million relating to the termination of the predecessor
company's SARs program and termination of employment agreements associated
with certain former officers of the predecessor company. The net income
margin was 1.5% and 0.8%, respectively, for 2003 and 2002.
Adjusted EBITDA
Adjusted EBITDA (as defined below under "Segment Data") was $87.1 million
for the six months ended June 28, 2003, an $18.2 million, or 26.5%,
increase from $68.8 million for 2002. The increase in Adjusted EBITDA was
due to the positive effects of consolidating the Company's prior
acquisitions, the greater mix of higher-margin retail sales to total sales,
continued labor productivity improvements and positive trends in gross
margins. Retail Adjusted EBITDA for 2003 was $47.9 million, a $10.8
million, or 29.2%, increase from $37.1 million for 2002. The increase in
Adjusted EBITDA at the retail segment was primarily due to the Acquired
Stores, partially offset by pre-opening expenses associated with certain
Acquired Stores. Wholesale Adjusted EBITDA for 2003 was $50.2 million, a
$10.0 million, or 25.0%, increase from $40.2 million for 2002. This
increase was primarily due to operational and labor productivity
improvements and positive trends in wholesale gross profit percentage.
Year-to-date Adjusted EBITDA margin was 4.7% compared with 3.9% for the
comparable period in 2002. For a discussion of the reasons why the Company
believes that Adjusted EBITDA provides information that is useful to
investors and a reconciliation of Adjusted EBITDA to net income under
generally accepted accounting principles, see Note (1) to the Table under
"Segment Data."
ADJUSTED EBITDA Successor Predecessor Combined Successor Predecessor Combined
RECONCILIATION ----------------- ----------- -------- --------- --------- ----------
(Subject to Thirteen June 7, March 31, Thirteen Twenty- December Twenty-six
Reclassifications) Weeks 2002 2002 Weeks six 30, Weeks
(in thousands) Ended to to Ended Weeks Ended 2001 to Ended
June 28, June 29, June 6, June 29, June 28, June 6, June 29,
2003 2002 2002 2002 2003 2002 2002
------- ------- -------- -------- ---------- -------- --------
ADJUSTED EBITDA (1):
Retail operations $26,590 $19,072 $47,885 $37,072
Wholesale operations 24,687 20,295 50,209 40,175
Corporate and other (6,141) (4,340) (11,023) (8,407)
------ ----- ------ -----
Total $45,136 $35,027 $87,071 $68,840
====== ====== ====== ======
Adjusted EBITDA
RECONCILIATION:
Net income $14,348 $ 3,574 $ (806) $ 2,768 $27,183 $10,928 $14,502
Interest expense 10,448 2,386 9,944 12,330 21,144 13,765 16,151
Income taxes 9,566 2,484 (742) 1,742 18,122 7,413 9,897
SARs and other
termination costs 7,400 7,400 7,400 7,400
Depreciation and
amortization
expense 10,774 3,189 7,598 10,787 20,622 17,701 20,890
------ ------ ------ ------ ------ ------ ------
Total $45,136 $11,633 $23,394 $35,027 $87,071 $57,207 $68,840
====== ====== ====== ====== ====== ====== ======
(1) Adjusted EBITDA represents net income plus interest, income taxes, SARs and
other termination costs, depreciation and amortization. Adjusted EBITDA is
presented because the Company believes Adjusted EBITDA is frequently used by
securities analysts, investors and other interested parties in the evaluation of
companies in its industry. However, other companies in the Company's industry
may calculate Adjusted EBITDA differently than the Company. Adjusted EBITDA may
be relevant or useful to investors as the Company understands that securities
analysts and others use measures like Adjusted EBITDA to value securities like
the Company's Notes, and therefore investors may wish to consider Adjusted
EBITDA because it is likely that the Notes are being valued in part based on
that measure. The Company uses Adjusted EBITDA primarily as a measure of
performance and it is used to calculate compliance with the terms of a number of
covenants contained in the indenture governing the Notes and the Company's bank
credit agreement. Adjusted EBITDA is not a measurement of financial performance
under generally accepted accounting principles and should not be considered as
an alternative to cash flow from operating activities or as a measure of
liquidity or an alternative to net income as indicators of the Company's
operating performance or any other measures of performance derived in accordance
with generally accepted accounting principles.
Liquidity and Capital Resources
The Company's cash and cash equivalents totaled $50.8 million at June 28,
2003, compared with $139.8 million at December 28, 2002. Cash flows
provided by operating activities were $66.1 million for the six months
ended June 28, 2003. Net cash used in investing activities totaled $153.3
million primarily due to the Prescott's Acquisition of $47.8 million, the
cash portion of the Rainbow Minneapolis Acquisition of $67.1 million and
the Copps Madison Acquisition of $21.1 million. Net cash used in financing
activities for the six months ended June 28, 2003 totaled $1.5 million.
Capital spending totaled $22.7 million for the six months ended June 28,
2003. Capital expenditures consisted primarily of remodeling of newly
acquired and existing retail stores and maintenance of retail stores and
the wholesale distribution network. Total capital expenditures for fiscal
2003, excluding any acquisitions, are estimated to be approximately $75.0
million. The Company's senior credit facility was amended to approve the
Rainbow Foods acquisition and increase capital expenditure limits to allow
for the remodel of the Company's expanded store base and upgrade the
Wisconsin distribution facilities that service these stores.
Working capital amounted to $5.0 million at June 28, 2003, compared with
$94.6 million at December 28, 2002. The decrease was primarily related to
the Prescott's Acquisition, the Copps Madison Acquisition, the Rainbow
Minneapolis Acquisition and capital expenditures that were funded with cash
on hand.
As a result of the Transactions, the Company has significant debt service
obligations, including interest, in future years. On June 6, 2002, in
connection with the Transactions, the Company entered into 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 are no outstanding borrowings under the revolving line of credit. The
term loan will be repayable in 28 consecutive quarterly installments, the
first 24 of which will each be in the amount of $625,000 and the last four
of which will each be in the amount of $58.8 million. In addition, the
Company issued $300.0 million in aggregate principal amount of the Notes of
which $225.0 million was issued as of the date of the Transactions and
$75.0 million was issued in December 2002.
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 Adjusted 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.
The Company was in compliance with these covenants at June 28, 2003.
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 incurred $36.2 million of additional capitalized lease
obligations associated with seven stores from the Rainbow Minneapolis
Acquisition. Under the Company's senior credit facility, capitalized lease
obligations are included in senior indebtedness for the purpose of
calculating the Company's credit statistics. The Company's senior credit
facility was amended to allow this additional indebtedness to be incurred
in connection with the Rainbow Minneapolis Acquisition.
The Company's principal source of liquidity is cash flow generated from
operations and borrowings under its revolving credit facility. 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, combined with funds available under its $125.0 million
revolving line of credit, will be sufficient to fund its operations, debt
service 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. Also see "Forward-Looking Statements," below.
Critical Accounting Policies and Estimates
The preparation of the Company's financial statements in conformity with
accounting principals generally accepted in the United States require 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. 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 December 28,
2002.
The following policy reflects certain updates relating to the Company's
adoption of EITF 02-16.
Discounts and Vendor Allowances
- -------------------------------
Purchases of product at discounted pricing are recorded in inventory at the
discounted price until sold. Volume and other program allowances are
accrued as a receivable when it is reasonably assured they will be earned
and reduce the cost of the related inventory for product on hand or cost of
sales for product already sold. Vendor monies received for slotting are
initially deferred and recognized as a reduction to cost of sales after
completion of an estimated slotting cycle of approximately nine months.
Vendor allowances received to fund specific, identifiable, incremental
advertising and certain other expenses are recorded as a reduction of the
Company's related advertising or other expense. Any excess reimbursement
above the Company's cost reduces cost of sales.
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 December 28,
2002 filed on March 27, 2003 (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
December 28, 2002. See the discussion under Part II Item 7A in the
Company's Annual Report on Form 10-K for the year ended December 28, 2002.
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.
Within 90 days prior to the filing date of this report (the
"Evaluation Date"), 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 and Exchange Act of
1934 (the "Exchange Act"). Based upon that evaluation, the chief
executive officer and chief financial officer concluded that as
of the Evaluation Date, the Company's disclosure controls and
procedures (as defined in Rule 15d-14 under the Exchange Act) are
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.
(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 December 28, 2002.
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 is incorporated herein by this
reference.
(b) Reports on Form 8-K
--------------------
The following reports on Form 8-K were filed during the quarter
ended June 28, 2003:
Date of
Date Filed Report Item
----------- ----------- -----
May 8, 2003 May 8, 2003 The Company reported (and filed as
an Exhibit a press release
announcing) financial results for
the three months ended March 29,
2003.
May 13, 2003 May 13, 2003 The Company reported (and filed as
an Exhibit a press release
announcing) that it had entered
into a definitive agreement to
acquire 31 Rainbow Foods Stores in
the Minneapolis-St. Paul,
Minnesota metropolitan area.
June 23, 2003 June 7, 2003 The Company reported (and filed as
an Exhibit a press release
announcing) bankruptcy court
approval of the acquisition of 31
Rainbow Foods Stores, and filed
the Asset Purchase Agreement
relating thereto as an Exhibit.
The Company also reported that it
had entered into the Second
Amendment to its $375,000,000
Credit Agreement and filed such
Second Amendment as an Exhibit.
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 8, 2003 /s/ROBERT A. MARIANO
-------------- -----------------------------------------
Robert A. Mariano, Chairman of the Board,
Chief Executive Officer and President
(Principal Executive Officer)
Date: August 8, 2003 /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 June 28, 2003
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 Share Exchange Agreement dated May 18, 2001, by and
between Roundy's, Inc. and The Copps Corporation(4)
2.5 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. (5)
2.6 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 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. (7)
3.1 Roundy's, Inc. Amended and Restated Articles of
Incorporation(8)
3.2 Amended and Restated By-Laws of Roundy's, Inc.(9)
4.1 Indenture of Trust dated June 6, 2002 between Roundy's,
Inc. and BNY Midwest Trust Company, as Trustee(10)
4.2 Form of $225,000,000 Roundy's, Inc. 8 7/8% Senior
Subordinated Notes due 2012(11)
4.3 Form of $75,000,000 Roundy's, Inc. 8 7/8% Senior
Subordinated Notes due 2012(11)
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(12)
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(13)
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(14)
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(15)(16)
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 (17)
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(18)
10.6 Consulting Agreement dated July 1, 2002 between the
Registrant and Gerald F. Lestina(19)
10.7 Roundy's, Inc. Supplemental Employee Retirement Plan for
certain executive officers including Mr. Lestina(20)
10.8 Board of Directors Resolution dated March 19, 2002
adopting Amendment to Supplemental Employee Retirement
Plan(21)
10.9 Excerpts from Board of Directors Consent Resolution
adopting Amendment to Supplemental Employee Retirement
Plan effective June 7, 2002(22)
10.10 Form of Deferred Compensation Agreement between the
Registrant and certain executive officers including
Messrs. Schmitt and Kitz(23)
10.11 Amendment dated March 31, 1998 to Form of Deferred
Compensation Agreement between the Registrant and
certain executive officers including Messrs. Schmitt and
Kitz(24)
10.12 Second Amendment dated June 3, 1998 to Form of Deferred
Compensation Agreement for certain executive officers
including Messrs. Kitz and Schmitt(25)
10.13 Directors and Officers Liability and Corporation
Reimbursement Policy issued by American Casualty Company
of Reading, Pennsylvania (CNA Insurance Companies) as of
June 13, 1986(26)
10.14 Declarations page for renewal through November 1, 2003
of Directors and Officers Liability and Corporation
Reimbursement Policy(27)
10.15 Employment Agreement dated June 6, 2002 between
Registrant and Robert F. Mariano(28)
10.16 Employment Agreement dated June 6, 2002 between
Registrant and Darren W. Karst(29)
10.17 Employment Contract between the Registrant and Gary L.
Fryda dated March 31, 2000(30)
10.18 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. Lestina, Fryda,
Schmitt and Kitz(31)
10.19 Confidentiality and Noncompete Agreement dated June 6,
2002 between the Registrant and Gerald F. Lestina(32)
10.20 Roundy's, Inc. Deferred Compensation Plan Amended and
Restated August 13, 2002(33)
10.21 Employment Agreement dated December 27, 2002 between
Registrant and Donald S. Rosanova (34)
10.22 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. (35)
10.23 First Amendment dated October 28, 2002 to Investor
Rights Agreement dated June 6, 2002, including form of
Transfer Notice and Joinder Agreement (36)
10.24 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. (37)
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 2.4 to Registrant's Current
Report on Form 8-K filed with the Commission on June 1, 2001 (Commission
File No. 002-94984)
(5) 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)
(6) 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)
(7) 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)
(8) 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)
(9) 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)
(10) 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)
(11) 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)
(12) 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)
(13) 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)
(14) 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)
(15) 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)
(16) 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.
(17) 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)
(18) 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)
(19) 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)
(20) Incorporated by reference to Exhibit 10.9 to Registrant's Form 10-Q
for the quarterly period ended July 3, 1999, filed with the Commission on
August 9, 1999 (Commission File No. 002-94984)
(21) Incorporated by reference to Exhibit 10.8 to Registrant's
Registration Statement on Form S-4 filed with the Commission on August 2,
2002 (File No. 333-97623)
(22) Incorporated by reference to Exhibit 10.9 to Registrant's
Registration Statement on Form S-4 filed with the Commission on August 2,
2002 (File No. 333-97623)
(23) Incorporated by reference to Exhibit 10.1 of Registrant's
Registration Statement on Form S-2 (File No. 33-57505) dated April 24, 1997
(24) 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)
(25) 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)
(26) 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)
(27) Incorporated by reference to Exhibit 10.16 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 10.18 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 10.19 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 10.11 to Registrant's Form 8-K
dated April 14, 2000, filed with the Commission on April 14, 2000
(Commission File No. 002-94984)
(31) 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)
(32) 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)
(33) 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)
(34) 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)
(35) 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)
(36) 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)
(37) 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)