Back to GetFilings.com
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 October 2, 2004
---------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _____________ to _______________
Commission file number: 002-94984
---------
Roundy's, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Wisconsin 39-0854535
- -------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
875 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202
- --------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (414)231-5000
----------------
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
---
Indicate by checkmark whether the Registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2)
Yes No X
--- ---
As of November 12, 2004 there were 1,000 shares of the Registrant's
common stock outstanding, all of which were held by Roundy's
Acquisition Corporation ("RAC"). RAC is a corporation formed at the
direction of Willis Stein & Partners, III, L.P. ("Willis Stein") for
the purposes of acquiring Roundy's. 90% of RAC's common and preferred
stock is owned by investment funds controlled by Willis Stein (the "Willis
Stein Funds") and certain associated investors. Approximately 100% of
RAC's common stock may be deemed to be beneficially owned by certain
officers and directors of the Registrant, all of whom are or may be
deemed to be affiliates of the Registrant. There is no established
public trading market for such stock.
ROUNDY'S, INC.
FORM 10-Q
For the period ended October 2, 2004
INDEX
Page No.
--------
PART I. - Financial Information
Item 1. Financial Statements (unaudited)
Consolidated Statements of Income 1
Consolidated Balance Sheets 2
Consolidated Statements of Cash Flows 3
Notes to Unaudited Consolidated Financial
Statements 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 18
Item 4. Controls and Procedures 18
PART II. - Other Information
Item 1. Legal Proceedings 19
Item 2. Unregistered Sales of Equity Securities and Use
of Proceeds 19
Item 3. Defaults Upon Senior Securities 19
Item 4 Submission of Matters to a Vote of Security
Holders 19
Item 5. Other Information 19
Item 6. Exhibits 19
SIGNATURES 20
EXHIBIT 21
INDEX
PART I. Item 1. FINANCIAL STATEMENTS
ROUNDY'S, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands)
(Unaudited)
Thirteen Weeks Ended Thirty-nine Weeks Ended
--------------------------- -------------------------
October 2, September 27, October 2, September 27,
2004 2003 2004 2003
----------- ------------- ---------- -------------
Revenues:
Net sales and service fees $1,181,844 $1,153,631 $3,606,380 $3,046,206
Other - net 427 476 1,166 1,774
---------- ---------- ---------- ----------
1,182,271 1,154,107 3,607,546 3,047,980
---------- ---------- ---------- ----------
Costs and Expenses:
Cost of sales 930,843 913,639 2,840,733 2,429,409
Operating and 217,100 202,847 658,479 514,501
administrative
Interest:
Interest expense 10,427 10,673 30,676 30,189
Amortization of deferred
financing costs 674 853 2,000 2,481
---------- ---------- ---------- ----------
1,159,044 1,128,012 3,531,888 2,976,580
---------- ---------- ---------- ----------
Income Before Income Taxes 23,227 26,095 75,658 71,400
Provision for Income Taxes 9,755 10,438 31,776 28,560
---------- ---------- ---------- ----------
Net Income $ 13,472 $ 15,657 $ 43,882 $ 42,840
========== ========== ========== ==========
See notes to unaudited consolidated financial statements.
ROUNDY'S, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
October 2, January 3,
Assets 2004 2004
----------- ------------
(Unaudited)
Current Assets:
Cash and cash equivalents $ 97,564 $ 90,006
Notes and accounts receivable, less
allowance for losses of $4,015 and
$5,012, respectively 68,688 81,929
Merchandise inventories 249,184 251,888
Prepaid expenses 8,588 12,429
Deferred income tax benefits 18,253 17,745
---------- ----------
Total current assets 442,277 453,997
---------- ----------
Property and Equipment - Net 328,292 320,149
Other Assets:
Deferred income tax benefits 24,479 28,161
Notes receivable 1,954 2,877
Other assets - net 81,158 85,211
Goodwill 694,042 639,995
---------- ----------
Total other assets 801,633 756,244
---------- ----------
Total assets $1,572,202 $1,530,390
========== ==========
Liabilities and Shareholder's Equity
Current Liabilities:
Accounts payable $ 276,025 $ 296,733
Accrued expenses 137,951 129,499
Current maturities of long-term debt and
capital lease obligations 4,404 4,229
Income taxes 28,598 11,782
---------- ----------
Total current liabilities 446,978 442,243
---------- ----------
Long-term Debt and Capital Lease Obligations 597,372 597,750
Other Liabilities 94,364 100,791
---------- ----------
Total liabilities 1,138,714 1,140,784
---------- ----------
Shareholder's Equity:
Common stock (1,500 shares authorized,
1,000 shares issued and outstanding
at $0.01 par value)
Additional paid-in capital 314,500 314,500
Retained earnings 118,988 75,106
---------- ----------
Total shareholder's equity 433,488 389,606
---------- ----------
Total liabilities and shareholder's equity $1,572,202 $1,530,390
========== ==========
See notes to unaudited consolidated financial statements.
ROUNDY'S, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Thirty-nine Weeks Ended
--------------------------
October 2, September 27,
2004 2003
------------ -------------
Cash Flows From Operating Activities:
Net income $ 43,882 $ 42,840
Adjustments to reconcile net income to net
cash flows provided by operating activities:
Depreciation and amortization, including deferred
financing costs 48,300 35,180
Loss (gain) on sale of equipment 332 (240)
Changes in operating assets and liabilities, net of the
effect of business acquisitions:
Notes and accounts receivable 13,241 10,493
Merchandise inventories 9,683 (1,099)
Prepaid expenses 3,841 5,089
Other assets (1) (8,672)
Accounts payable (20,834) 15,931
Accrued expenses 8,131 8,109
Income taxes 17,990 2,961
Other liabilities (6,427) (6,511)
--------- ---------
Net cash flows provided by operating activities 118,138 104,081
--------- ---------
Cash Flows From Investing Activities:
Capital expenditures (48,845) (38,953)
Proceeds from sale of equipment 798 301
Payment for business acquisitions, net of cash acquired (62,867) (132,577)
Decrease in notes receivable, net 923 500
--------- ---------
Net cash flows used in investing activities (109,991) (170,729)
--------- ---------
Cash Flows From Financing Activities:
Proceeds from long-term borrowings 3,000
Debt issuance costs (386) (506)
Payments of debt and capital lease obligations (3,203) (2,459)
--------- ---------
Net cash flows used in financing activities (589) (2,965)
--------- ---------
Net increase (decrease) in Cash and Cash Equivalents 7,558 (69,613)
Cash and Cash Equivalents, Beginning of Period 90,006 139,778
--------- ---------
Cash and Cash Equivalents, End of Period $ 97,564 $ 70,165
========= =========
Supplemental Cash Flow Information:
Cash paid during the period:
Interest $ 26,441 $ 24,758
Income taxes 13,785 25,609
See notes to unaudited consolidated financial statements.
ROUNDY'S, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS AND BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Roundy's,Inc.
("Roundy's" or the "Company") as of October 2, 2004, and for the thirteen and
thirty-nine week periods ended October 2, 2004 and September 27, 2003 reflect
all adjustments (consisting only of normal recurring adjustments) that are,
in the opinion of management, necessary for a fair presentation of the financial
position and operating results for the interim periods. The unaudited
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States for interim
financial information, in accordance with the instructions for Form 10-Q and
Article 10 of Regulation S-X and do not include all of the information and
footnotes required for complete, audited financial statements. The unaudited
consolidated financial statements should be read in conjunction with the
consolidated financial statements and related notes hereto, together with
Management's Discussion and Analysis of Financial Condition and Results of
Operations, contained in the Roundy's, Inc. Annual Report on Form 10-K for the
fiscal year ended January 3, 2004. The results of operations for the thirteen
and thirty-nine week periods ended October 2, 2004 may not necessarily be
indicative of the results that may be expected for the entire fiscal year
ending January 1,2005.
2. ACQUISITIONS
In June 2003, the Company acquired 32 Rainbow Foods retail grocery stores from
Fleming Companies, Inc. and simultaneously sold one store to an independent
licensed Pick 'n Save operator (the "Rainbow Minneapolis Acquisition"). During
the second quarter of 2004, the Company finalized the purchase price allocation
of the Rainbow Minneapolis Acquisition, resulting in a decrease to fixed assets
and a $2.1 million increase in goodwill from the amount recorded at January 3,
2004.
In October 2003, the Company acquired the equipment, fixtures and leasehold
improvements of seven former Kohl's Foods Stores from the Great Atlantic &
Pacific Tea Company, Inc. ("Kohl's Acquisition") and reopened two of these
stores in the fourth quarter 2003. During the first quarter 2004, the Company
reopened three more of these stores. The Company opened the sixth store in the
second quarter 2004 and the seventh store in the third quarter 2004. All seven
of these stores were reopened under the Pick 'n Save banner. Six of these
stores are located in the Milwaukee area and one store is located in Racine,
Wisconsin.
In September 2004, the Company acquired the inventory, equipment, fixtures and
leasehold improvements of seven retail grocery stores from McAdams, Inc.
("McAdams") for approximately $62.9 million (the "McAdams Acquisition"). All
of these stores are located in Waukesha County, which is a part of the greater
Milwaukee metropolitan area. Goodwill of approximately $52.0 million resulted
from the acquisition, which was accounted for as a purchase. The transaction
closed on September 27, 2004 and the operating results of the acquired stores
are included in the consolidated statements of income after that date. The
consolidated financial statements reflect the preliminary allocation of the
purchase price to the assets acquired and liabilities assumed based on their
fair value.
3. RECENTLY ISSUED ACCOUNTING STANDARDS
The Company has applied Emerging Issues Task Force No. 03-10 ("EITF 03-10"),
"Application of EITF Issue No. 02-16, "Accounting by a Customer (including a
Reseller) for Certain Consideration Received from a Vendor," by Resellers to
Sales Incentives Offered to Customers by Manufacturers" to its 2004 and 2003
results. Pursuant to EITF 03-10, vendor-funded coupon reimbursements are
considered part of net sales at the point of sale. Accordingly, $10.9 million
and $31.4 million of such reimbursements for the thirteen and thirty-nine weeks
of 2003 have been classified within net sales to conform to EITF 03-10.
4. EMPLOYEE BENEFIT PLANS
Net periodic benefit costs in the thirteen and thirty-nine weeks ended
October 2, 2004 and September 27, 2003 included the following
components (in thousands):
Thirteen Weeks Ended Thirty-nine Weeks Ended
-------------------------- ---------------------------
October 2, September 27 October 2, September 27,
2004 2003 2004 2003
------------ ------------ ------------ -------------
Components of net periodic
benefit costs:
Service costs $ 1,863 $ 1,814 $ 5,497 $ 5,449
Interest costs 1,993 1,958 5,881 5,882
Expected return on plan assets (1,301) (1,397) (3,839) (4,190)
Amortization of net actuarial
loss/(gain) 35 (12) 103 (37)
--------- ---------- --------- ----------
Net periodic benefit cost $ 2,590 $ 2,363 $ 7,642 $ 7,104
========= ========== ========= ==========
During the third quarter 2004, the Company made $8.6 million of contributions
to its pension plans. Year-to-date, the Company made $14.0 million of
contributions to its pension plans. The Company expects its total pension plan
contributions for the year ending January 1, 2005 to approximate $16.8 million.
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 - retail and wholesale. The Company's retail segment
sells directly to the consumer while the wholesale distribution segment sells
to both Company-owned and independent retail food stores. Eliminations
represent the activity between wholesale and Company-owned retail stores.
Inter-segment revenues are recorded at amounts consistent with those charged
to independent retail stores.
Identifiable assets are those used exclusively by that industry segment.
Corporate assets are principally cash and cash equivalents, supply contracts,
trademarks, deferred financing costs and certain property and equipment.
Reportable segments, as defined by SFAS No. 131, "Disclosure about Segments
of an Enterprise and Related Information," are components of an enterprise
about which separate financial information is available that is evaluated
regularly by the chief operating decision-maker in deciding resource
allocation and assessing performance.
(in thousands) Thirteen Weeks Ended Thirty-nine Weeks Ended
----------------------------- ----------------------------
October 2, September 27, October 2, September 27,
2004 2003 2004 2003
------------ -------------- ------------- -------------
NET SALES AND SERVICE FEES
Retail $ 748,023 $ 679,225 $ 2,233,890 $1,671,146
Wholesale 822,994 844,314 2,541,949 2,328,958
Eliminations (389,173) (369,908) (1,169,459) (953,898)
----------- ---------- ----------- ----------
Consolidated $ 1,181,844 $1,153,631 $ 3,606,38 $3,046,206
=========== ========== =========== ==========
INCOME BEFORE INCOME TAXES
Retail $ 18,090 $ 18,862 $ 50,389 $ 48,356
Wholesale 23,505 24,925 81,656 70,883
Corporate (18,368) (17,692) (56,387) (47,838)
----------- ---------- ---------- ----------
Consolidated $ 23,227 $ 26,095 $ 75,658 $ 71,400
=========== ========== ========== ==========
DEPRECIATION AND AMORTIZATION
Retail $ 10,866 $ 6,552 $ 30,035 $ 16,209
Wholesale 1,390 1,539 4,257 4,619
Corporate 3,962 3,986 12,008 11,871
----------- ---------- ---------- ----------
Consolidated $ 16,218 $ 12,077 $ 46,300 $ 32,699
=========== ========== ========== ==========
INTEREST
Retail $ 4,888 $ 5,058 $ 14,766 $ 13,792
Wholesale 933 560 2,773 1,731
Corporate 5,280 5,908 15,137 17,147
----------- ---------- ---------- ----------
Consolidated $ 11,101 $ 11,526 $ 32,676 $ 32,670
=========== ========== ========== ==========
CAPITAL EXPENDITURES
Retail $ 19,332 $ 11,277 $ 35,112 $ 27,235
Wholesale 1,083 910 1,480 3,898
Corporate 5,204 4,101 12,253 7,820
----------- ---------- ---------- ----------
Consolidated $ 25,619 $ 16,288 $ 48,845 $ 38,953
=========== ========== ========== ==========
IDENTIFIABLE ASSETS (AT
PERIOD-END)
Retail $ 745,994
Wholesale 626,742
Corporate 199,466
-----------
Consolidated $ 1,572,202
===========
GOODWILL (AT PERIOD-END)
Retail $ 341,729
Wholesale 352,313
-----------
Consolidated $ 694,042
===========
7. CONDENSED CONSOLIDATING INFORMATION
The following presents condensed consolidating financial statements of Roundy's
and its subsidiaries. All subsidiaries are 100% owned by Roundy's. All of
the domestic subsidiaries are guarantors of the Company's $300 million 8 7/8%
senior subordinated notes due 2012 (the "Notes").
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
Thirteen Weeks Ended October 2, 2004
(In thousands)
Combined
Roundy's Subsidiaries Eliminations Total
---------- ------------- ------------ ----------
Revenues:
Net sales and service fees $ 409,375 $1,017,083 $(244,614) $1,181,844
Other-net 200 227 427
--------- ---------- --------- ----------
409,575 1,017,310 (244,614) 1,182,271
--------- ---------- --------- ----------
Costs and Expenses:
Cost of sales 384,323 786,248 (239,728) 930,843
Operating and administrative 34,058 187,928 (4,886) 217,100
Interest expense 4,921 6,180 11,101
--------- ---------- --------- ----------
423,302 980,356 (244,614) 1,159,044
--------- ---------- --------- ----------
Income Before Income Taxes (13,727) 36,954 23,227
Provision for Income Taxes (5,765) 15,520 9,755
Equity in Earnings of Subsidiaries 21,434 (21,434)
--------- ---------- --------- ----------
Net Income $ 13,472 $ 21,434 $ (21,434) $ 13,472
========= ========== ========= ==========
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
Thirty-nine Weeks Ended October 2, 2004
(In thousands)
Combined
Roundy's Subsidiaries Eliminations Total
--------- ------------ ------------ ---------
Revenues:
Net sales and service fees $1,233,074 $3,103,627 $(730,321) $3,606,38
Other-net 493 673 1,166
---------- ---------- --------- ---------
1,233,567 3,104,300 (730,321) 3,607,54
---------- ---------- --------- ---------
Costs and Expenses: 1,124,132 2,431,644 (715,043) 2,840,733
107,066 566,691 (15,278) 658,479
14,049 18,627 32,676
---------- ---------- --------- ---------
1,245,247 3,016,962 (730,321) 3,531,888
---------- ---------- --------- ---------
Income Before Income Taxes (11,680) 87,338 75,658
Provision for Income Taxes (4,906) 36,682 31,776
Equity in Earnings of Subsidiaries 50,656 (50,656)
---------- ---------- --------- ---------
Net Income $ 43,882 $ 50,656 $ (50,656) $ 43,882
========== ========== ========= =========
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
Thirteen Weeks Ended September 27, 2003
(In thousands)
Combined
Roundy's Subsidiaries Eliminations Total
---------- ------------ ------------ ---------
Revenues:
Net sales and service fees $ 421,737 $ 957,435 $(225,541) $1,153,631
Other-net 28 448 476
--------- ----------- ---------- ----------
421,765 957,883 (225,541) 1,154,107
--------- ----------- ---------- ----------
Costs and Expenses:
Cost of sales 398,055 736,666 (221,082) 913,639
Operating and administrative 15,839 191,467 (4,459) 202,847
Interest expense 5,499 6,027 11,526
--------- ----------- ---------- ----------
419,393 934,160 (225,541) 1,128,012
--------- ----------- ---------- ----------
Income Before Income Taxes 2,372 23,723 26,095
Provision for Income Taxes 949 9,489 10,438
Equity in Earnings of Subsidiaries 14,234 (14,234)
--------- ----------- ---------- ----------
Net Income $ 15,657 $ 14,234 $ (14,234) $ 15,657
========= =========== ========== ==========
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
Thirty-nine Weeks Ended September 27, 2003
(In thousands)
Combined
Roundy's Subsidiaries Eliminations Total
---------- ------------ ------------ ----------
Revenues:
Net sales and service fees $1,179,336 $2,511,531 $(644,661) $3,046,206
Other-net 513 1,261 1,774
---------- ----------- ---------- ----------
1,179,849 2,512,792 (644,661) 3,047,980
---------- ----------- ---------- ----------
Costs and Expenses:
Cost of sales 1,077,839 1,983,106 (631,536) 2,429,409
Operating and administrative 75,860 451,766 (13,125) 514,501
Interest expense 15,916 16,754 32,670
---------- ----------- ---------- ----------
1,169,615 2,451,626 (644,661) 2,976,580
---------- ----------- ---------- ----------
Income Before Income Taxes 10,234 61,166 71,400
Provision for Income Taxes 4,094 24,466 28,560
Equity in Earnings of Subsidiaries 36,700 (36,700)
---------- ----------- ---------- ----------
Net Income $ 42,840 $ 36,700 $ (36,700) $ 42,840
========== =========== ========== ==========
CONDENSED CONSOLIDATING BALANCE SHEETS
As of October 2, 2004
(In thousands)
Combined
Assets Roundy's Subsidiaries Eliminations Total
----------- ------------ ------------ ----------
Current Assets:
Cash and cash equivalents $ 63,982 $ 33,582 $ 97,564
Notes and accounts receivable-net 21,837 58,516 $ (11,665) 68,688
Merchandise inventories 47,698 201,486 249,184
Prepaid expenses 4,727 3,861 8,588
Deferred income tax benefits (2,231) 20,484 18,253
---------- ---------- ---------- ----------
Total current assets 136,013 317,929 (11,665) 442,277
---------- ---------- ---------- ----------
Property and Equipment-Net 24,829 303,463 328,292
Other Assets:
Investment in subsidiaries 290,295 (290,295)
Intercompany receivables 470,693 (470,693)
Deferred income tax benefits 24,479 24,479
Notes receivable 505 1,449 1,954
Goodwill and other assets 260,516 514,684 775,200
---------- ---------- ---------- ----------
Total other assets 1,046,488 516,132 (760,988) 801,633
---------- ---------- ---------- ----------
Total assets $1,207,330 $1,137,525 $ (772,653) $1,572,202
========== ========== ========== ==========
Liabilities and Shareholder's Equity
Current Liabilities:
Accounts payable $ 139,105 $ 140,752 $ (3,832) $ 276,025
Accrued expenses 69,720 76,064 (7,833) 137,951
Current maturities of long-term debt
and capital lease obligations 2,665 1,739 4,404
Intercompany payable 470,693 (470,693)
Income taxes (2,738) 31,336 28,598
---------- ---------- ---------- ----------
Total current liabilities 208,751 720,585 (482,358) 446,978
---------- ---------- ---------- ----------
Long-term Debt and Capital Lease Obligations 544,353 53,019 597,372
Other Liabilities 20,737 73,627 94,364
---------- ---------- ---------- ----------
Total liabilities 773,842 847,230 (482,358) 1,138,714
---------- ---------- ---------- ----------
Shareholder's Equity 433,488 290,295 (290,295) 433,488
---------- ---------- ---------- ----------
Total liabilities and shareholder's equity $1,207,330 $1,137,525 $ (772,653) $1,572,202
========== ========== ========== ==========
CONDENSED CONSOLIDATING BALANCE SHEETS
As of January 3, 2004
(In thousands)
Combined
Assets Roundy's Subsidiaries Eliminations Total
----------- ------------ ------------ ----------
Current Assets:
Cash and cash equivalents $ 49,059 $ 40,947 $ 90,006
Notes and accounts receivable-net 33,129 59,004 $ (10,204) 81,929
Merchandise inventories 53,363 198,525 251,888
Prepaid expenses 4,532 7,897 12,429
Deferred income tax benefits (3,160) 20,905 17,745
---------- ---------- ----------- ----------
Total current assets 136,923 327,278 (10,204) 453,997
---------- ---------- ----------- ----------
Property and Equipment-Net 19,784 300,365 320,149
Other Assets:
Investment in subsidiaries 249,422 (249,422)
Intercompany receivables 476,528 (476,528)
Deferred income tax benefits 28,161 28,161
Notes receivable 615 2,262 2,877
Goodwill and other assets 266,722 458,484 725,206
---------- ---------- ----------- ----------
Total other assets 1,021,448 460,746 (725,950) 756,244
---------- ---------- ----------- ----------
Total assets $1,178,155 $1,088,389 $(736,154) $1,530,390
========== ========== =========== ==========
Liabilities and Shareholder's
Equity
Current Liabilities:
Accounts payable $ 150,376 $ 154,087 $ (7,730) $ 296,733
Accrued expenses 60,387 71,586 (2,474) 129,499
Current maturities of long-term debt and
capital lease obligations 2,500 1,729 4,229
Intercompany payable 476,528 (476,528)
Income taxes 12,221 (439) 11,782
---------- ---------- ----------- ----------
Total current liabilities 225,484 703,491 (486,732) 442,243
---------- ---------- ----------- ----------
Long-term Debt and Capital Lease Obligations 543,417 54,333 597,750
Other Liabilities 19,648 81,143 100,791
---------- ---------- ----------- ----------
Total liabilities 788,549 838,967 (486,732) 1,140,784
Shareholder's Equity 389,606 249,422 (249,422) 389,606
---------- ---------- ----------- ----------
Total liabilities and Shareholder's Equity $1,178,155 $1,088,389 $ (736,154) $1,530,390
========== ========== =========== ==========
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the period ended October 2, 2004
(In thousands)
Combined
Roundy's Subsidiaries Total
----------- ------------ ---------
Net Cash Flows Provided by Operating Activities $ 16,827 $ 101,311 $ 118,138
----------- ---------- ---------
Cash Flows From Investing Activities:
Capital expenditures-net of proceeds (8,564) (39,483) (48,047)
Payment for business acquisitions, net of cash acquired (62,867) (62,867)
Notes receivable 110 813 923
----------- ---------- ---------
Net cash flows used in investing activities (8,454) (101,537) (109,991)
----------- ---------- ---------
Cash Flows From Financing Activities:
Proceeds from long-term borrowings 3,000 3,000
Payments of debt and capital lease obligations (1,899) (1,304) (3,203)
Intercompany receivables-net 5,835 (5,835)
Debt issuance costs (386) (386)
--------- --------- ---------
Net cash flows provided by (used in) financing activities 6,550 (7,139) (589)
--------- --------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents 14,923 (7,365) 7,558
Cash And Cash Equivalents, Beginning Of Period 49,059 40,947 90,006
--------- ---------- ----------
Cash And Cash Equivalents, End Of Period $ 63,982 $ 33,582 $ 97,564
========= ========== ==========
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the period ended September 27, 2003
(In thousands)
Combined
Roundy's Subsidiaries Total
---------- ------------ ---------
Net Cash Flows (Used in) Provided by Operating Activities: $ (15,934) $ 120,015 $ 104,081
---------- ------------ ---------
Cash Flows From Investing Activities:
Capital expenditures-net of proceeds (5,732) (32,920) (38,652)
Payment for business acquisitions, net of cash acquired (132,577) (132,577)
Notes receivable 140 360 500
--------- --------- ---------
Net cash flows used in investing activities (138,169) (32,560) (170,729)
--------- --------- ---------
Cash Flows From Financing Activities:
Payments of debt and capital lease obligations (1,230) (1,229) (2,459)
Intercompany receivables-net 78,254 (78,254)
Debt issuance costs (506) (506)
--------- --------- ---------
Net cash flows provided by (used in) financing activies 76,518 (79,483) (2,965)
--------- --------- ---------
Net (Decrease) Increase in Cash and Cash Equivalents (77,585) 7,972 (69,613)
Cash And Cash Equivalents, Beginning Of Period 117,307 22,471 139,778
--------- --------- ---------
Cash And Cash Equivalents, End Of Period $ 39,722 $ 30,443 $ 70,165
========= ========= =========
Results of Operations
The following table sets forth each category of statement of income data as a
percentage of net sales and service fees.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Thirteen Weeks Ended Thirty-nine Weeks Ended
------------------------------------------ ---------------------------------------
October 2, 2004 September 27, 2003 October 2, 2004 September 27, 2003
------------------- ------------------- ------------------- ------------------
Statement of Income Data
(Dollars in thousands):
Revenues:
Net sales and service fees $1,181,84 100.0% $1,153,63 100.0% $3,606,380 100.0% $3,046,206 100.0%
Other-net 427 0.0 476 0.1 1,166 0.0 1,774 0.1
--------- ----- --------- ----- ---------- ----- ---------- -----
Total 1,182,271 100.0 1,154,107 100.1 3,607,546 100.0 3,047,980 100.1
--------- ----- --------- ----- ---------- ----- ---------- -----
Cost and Expenses:
Cost of sales 930,843 78.8 913,639 79.2 2,840,733 78.8 2,429,409 79.7
Operating and administrative 217,100 18.4 202,847 17.6 658,479 18.2 514,501 16.9
Interest expense 11,101 0.9 11,526 1.0 32,676 0.9 32,670 1.1
-------- ----- --------- ----- ---------- ----- ---------- -----
1,159,044 98.1 1,128,012 97.8 3,531,888 97.9 2,976,580 97.7
--------- ----- --------- ----- ---------- ----- ---------- -----
Income before income taxes 23,227 1.9 26,095 2.3 75,658 2.1 71,400 2.4
Provision for income taxes 9,755 0.8 10,438 0.9 31,776 0.9 28,560 1.0
--------- ----- --------- ----- ---------- ----- ---------- -----
Net income $ 13,472 1.1% $ 15,657 1.4% $ 43,882 1.2% $ 42,840 1.4%
========= ===== ========= ===== ========== ===== ========== =====
Net Sales and Service Fees
Net sales and service fees represent product sales less returns and allowances.
The Company derives its net sales and service fees from the operation of retail
grocery stores and the wholesale distribution of food and non-food products.
In addition, the Company provides certain support services for retail grocers,
including promotional merchandising and advertising programs, store development
and financing.
The table below indicates the portion of the Company's net sales and service
fees attributable to retail sales and wholesale distribution for the periods
indicated. Eliminations represent the intercompany activity between the
Company's wholesale operations and its Company-owned retail operations
(in thousands):
Thirteen Weeks Ended Thirty-nine Weeks Ended
------------------------------- ----------------------------
October 2, September 27, October 2, September 27,
2004 2003 2004 2003
-------------- -------------- ------------ -------------
Net Sales and Service Fees
Retail $ 748,023 $ 679,225 $ 2,233,890 $1,671,146
Wholesale 822,994 844,314 2,541,949 2,328,958
Eliminations (389,173) (369,908) (1,169,459) (953,898)
---------- ---------- ----------- ----------
Total $1,181,844 $1,153,631 $ 3,606,380 $3,046,206
========== ========== =========== ==========
Costs and Expenses
Costs and expenses consist of cost of sales, operating and administrative
expenses and interest expense.
- Cost of sales includes product costs and inbound freight, but excludes
depreciation.
- Operating and administrative expenses consist primarily of personnel
costs, sales and marketing expenses, warehousing and distribution costs,
the internal costs of purchasing, receiving and inspecting products
for resale, shipping and handling, depreciation and amortization
expenses, expenses associated with the Company's facilities, internal
management expenses, business development expenses, and expenses for
finance, legal, human resources and other administrative departments.
Certain retailers may include some of these costs (including warehouse
and distribution costs,and the internal costs of purchasing, receiving
and inspecting products for resale) in cost of sales, which may result
in the Company's presentation being incomparable to such retailers.
- Interest expense includes interest on the Company's outstanding
indebtedness and amortization of deferred financing costs.
Thirteen Weeks Ended October 2, 2004 Compared With Thirteen Weeks Ended
September 27, 2003
Net Sales and Service Fees
Net sales and service fees were $1,181.8 million for the third quarter 2004, an
increase of $28.2 million, or 2.4%, from $1,153.6 million for the third quarter
2003. Retail sales were $748.0 million for the third quarter 2004, an increase
of $68.8 million, or 10.1%, from $679.2 million for the third quarter 2003.
This increase in retail sales was primarily due to the effect of three acquired
store groups, consisting of 15 additional stores in total, which operated under
the Company's ownership during all or part of the third quarter 2004 but were
not operated by the Company for the third quarter 2003 (collectively, the "15
Acquired Stores"). The 15 Acquired Stores contributed approximately $43.2
million to the third quarter 2004 retail sales increase. As of October 2, 2004,
Roundy's operated 126 retail grocery stores including 65 Pick 'n Save stores,
30 Copps Food Stores ("Copps") and 31 Rainbow Foods ("Rainbow") stores.
Same-store sales at the Company's retail stores (including the results of
Pick 'n Save-licensed stores operated by their prior owners in 2003) improved
1.8% over the comparable thirteen-week period of 2003.
Wholesale sales were $823.0 million for the third quarter 2004, a decrease of
$21.3 million, or 2.5%, from $844.3 million for the third quarter 2003. This
decrease was primarily attributable to lost business associated with the closure
of the Company's Eldorado, Illinois and Evansville, Indiana distribution
facilities (the "Southern Division") in early September 2004.
Gross Profit
Gross profit was $251.0 million for the third quarter 2004, an increase of
$11.0 million, or 4.6%, from $240.0 million for the third quarter 2003. Gross
profit, as a percentage of net sales and service fees, for the third quarter
2004 and 2003 was 21.2% and 20.8%, respectively. The increase in gross profit
and gross profit percentage for the quarter was primarily due to the growth of
the Company's retail segment, which has a higher gross profit percentage than
its wholesale segment. Retail sales for the third quarter 2004 represented
63.3% of net sales and service fees compared with 58.9% for the third quarter
2003. The increase in retail sales concentration was primarily due to the 15
Acquired Stores. Retail gross profit, as a percentage of retail net sales and
service fees, was 25.1% and 25.4% for the third quarter of 2004 and 2003,
respectively. The decrease in retail gross profit percentage was attributable
to (1) increased promotional activity to support and drive continued sales
growth and (2) higher levels of inventory shrink. Third quarter 2004 wholesale
gross profit, as a percentage of wholesale net sales and service fees, was 8.6%
compared with 8.8% in the third quarter 2003. The decrease in wholesale gross
profit percentage was primarily due to an increased concentration of
lower-margin sales to certain of the Company's larger customers.
Operating and Administrative Expenses
Operating and administrative expenses were $217.1 million for the third quarter
2004, an increase of $14.3 million, or 7.0%, from $202.8 million for the third
quarter 2003. Operating and administrative expenses, as a percentage of net
sales and service fees, increased to 18.4% for the third quarter 2004 compared
with 17.6% for the third quarter 2003. The percentage increase was primarily
attributable to the growth of the Company's retail segment, which has a
significantly higher ratio of operating costs to sales than the Company's
wholesale segment. Retail operating and administrative expenses increased
to 22.1% of retail sales for the third quarter 2004 compared with 21.9% for the
third quarter 2003. The increase was primarily due to increased depreciation
expense attributable to a higher depreciable asset base. Wholesale operating
and administrative expenses decreased to 5.6% of wholesale sales for the third
quarter 2004 compared with 5.8% for the third quarter 2003. This decrease was
primarily due to operational and productivity improvements in the Company's
wholesale operations, which was partially offset by one-time expenses
associated with the Company's close-down of its Southern Division. In
addition, corporate and other operating expenses (excluding depreciation
and amortization) were $9.1 million for the third quarter 2004 compared
with $7.8 million for the third quarter 2003. This increase was primarily
due to higher unallocated corporate administrative expenses.
Interest Expense
Interest expense (excluding the amortization of deferred financing costs) was
$10.4 million and $10.7 million for the third quarter 2004 and 2003,
respectively. The decrease was primarily due to a 50 basis point interest
rate reduction effective April 1, 2004 on the Company's term loan.
Income Taxes
Provision for income taxes was $9.8 million for the third quarter 2004, a
decrease of $0.6 million from $10.4 million for the third quarter 2003. The
effective income tax rate for the third quarter 2004 and 2003 was 42.0% and
40.0%, respectively.
Net Income
Net income was $13.5 million for the third quarter 2004, a decrease of $2.2
million from $15.7 million for the third quarter 2003. This decrease was
primarily attributable to increased depreciation expense for the third quarter
2004, as previously discussed. The net income margin was 1.2% and 1.4%,
respectively, for the third quarter 2004 and 2003.
Thirty-nine Weeks Ended October 2, 2004 compared with Thirty-nine Weeks Ended
September 27, 2003
Net Sales and Service Fees
Net sales and service fees totaled $3,606.4 million for the nine months ended
October 2, 2004, an increase of $560.2 million, or 18.4%, from $3,046.2 million
for the nine months ended September 27, 2003. Retail sales were $2,233.9
million for 2004, an increase of $562.8 million, or 33.7%, from $1,671.1
million in 2003. This increase in retail sales was primarily due to the effect
of seven acquired store groups, consisting of 62 additional stores, in total,
which operated under the Company's ownership during all or part of the
thirty-nine weeks ended October 2, 2004, but were not operated by the Company
for the entirety of the comparable prior year period (collectively, the "62
Acquired Stores"). The 62 Acquired Stores include the 15 Acquired Stores
described in the discussion of Net Sales and Service Fees for the Thirteen
Weeks Ended October 2, 2004. The 62 Acquired Stores contributed approximately
$505.5 million to the year-to-date 2004 retail sales increase.
Year-to-date 2004 same-store sales at the Company's retail stores (including
the results of Pick 'n Save licensed stores operated by their prior owners)
improved 2.4% over the comparable thirty-nine week period of 2003.
Wholesale sales were $2,541.9 million for the nine months ended October 2,
2004, an increase of $212.9 million, or 9.1%, from $2,329.0 million in 2003.
This increase was primarily due to increased sales to Company-owned stores.
Gross Profit
Gross profit was $765.6 million for 2004, a $148.8 million, or 24.1% increase
from $616.8 million in 2003. The gross profit percentage for the same periods
of 2004 and 2003 was 21.2% and 20.3%, respectively. The increase in gross
profit percentage was primarily due to the growth of the Company's retail
segment, which has a higher gross profit percentage than its wholesale
segment. Retail sales for the nine months ended October 2, 2004 represented
61.9% of net sales and service fees compared with 54.9% for the same period
in 2003. The retail gross profit percentage was 25.1% for 2004 and 2003.
Year-to-date 2004 wholesale gross profit percentage was 9.0% as compared
with 9.2% in 2003. The decrease in wholesale gross profit percentage was
primarily due to an increased concentration of lower margin sales to certain
of the Company's larger customers.
Operating and Administrative Expenses
Operating and administrative expenses were $658.5 million for 2004, a $144.0
million, or 28.0% increase from $514.5 million in 2003. Operating and
administrative expenses, as a percentage of net sales and service fees,
increased to 18.3% for 2004 compared with 16.9% for 2003. The percentage
increase as attributable to the 62 Acquired stores and the resulting increased
concentration of sales in the Company's retail operating segment in 2004, which
has a significantly higher ratio of operating costs to sales than the Company's
wholesale operations. Retail operating and administrative expenses increased
to 22.2% of retail sales for 2004 compared with 21.4% for 2003. This increase
was primarily due to certain of the Acquired Stores, which have higher operating
costs as a percentage of sales than the Company's other stores, as well as
pre-opening expenses associated with the Kohl's Acquisition. Wholesale
operating and administrative expenses decreased to 5.6% of wholesale sales for
2004 as compared with 6.1% for the same period in 2003. This decrease was due
to operational and productivity improvements in the Company's wholesale
operations.
Interest Expense
Interest expense (excluding amortization of deferred financing costs) was $30.7
million for 2004, a $0.5 million increase from $30.2 million in 2003. This
increase was primarily due to the interest component of capitalized leases
assumed in connection with the Rainbow Minneapolis Acquisition, partially
offset by a 50 basis point interest rate reduction effective April 1, 2004
on the Company's term loan.
Income Taxes
Provision for income taxes was $31.8 million for 2004, an increase of $3.2
million from $28.6 million in 2003. The effective income tax rates for the
first nine months of 2004 and 2003 were 42.0% and 40.0%, respectively. The
increase in the effective income tax rate was primarily due to a higher state
income tax in Minnesota where the Company began operating following the Rainbow
Minneapolis Acquisition.
Net Income
Net income was $43.9 million for 2004, a $1.1 million increase from $42.8
million in the prior year. The net income margin was 1.2% and 1.4%,
respectively, for 2004 and 2003.
Liquidity and Capital Resources
The Company's cash and cash equivalents totaled $97.6 million at October 2,
2004, compared with $90.0 million at January 3, 2004. Cash flows provided
by operating activities were $118.1 million for the 39 weeks ended October 2,
2004 compared with $104.1 million for the 39 weeks ended September 27, 2003.
Net cash used in investing activities was $110.0 million for the 39 weeks
ended October 2, 2004 compared with $170.7 million for the 39 weeks ended
September 27, 2003. The 39 weeks ended October 2, 2004 included business
acquisition consideration of $62.9 million, net of cash acquired, related
to the Company's acquisition of seven retail grocery stores formerly owned
by McAdams, Inc. The 39 weeks ended September 27, 2003 included business
acquisition consideration of $132.6 million related to the Rainbow
Minneapolis Acquisition, the Kohl's Acquisition, as well as the Company's
acquisition of Prescott's Supermarkets, Inc.
Capital expenditures were $48.8 million for the 39 weeks ended October 2,
2004. Capital expenditures consisted primarily of new stores, remodels of
newly acquired and existing stores, maintenance of retail stores and the
purchase of transportation equipment. Capital expenditures for the full
year 2004 are expected to be approximately $80.0 to $90.0 million.
As of October 2, 2004, the Company had a working capital deficit of $4.7
million compared with an $11.8 million surplus at January 3, 2004. The
change was due primarily to an increase in income taxes payable and
accrued expenses and a decrease in notes and accounts receivable.
The Company is subject to a credit agreement with various lenders, allowing it
to borrow $250.0 million under a term loan, and up to $125.0 million under a
revolving line of credit. There were no outstanding borrowings under the
revolving line of credit at October 2, 2004. The term loan is repayable
in quarterly installments of $625,000 through June 30, 2008 followed by
four quarterly payments of $58.8 million through June 30, 2009. In addition,
the Company has issued and outstanding $300.0 million in aggregate principal
amount of 8 7/8% Senior Subordinated Notes due 2012 (the "Notes").
The Company's senior credit facility contains various restrictive covenants
which: (i) prohibit it from prepaying other indebtedness, (ii) require it to
maintain specified financial ratios, such as (a) a minimum fixed charge
coverage ratio, (b) a maximum ratio of senior debt to earnings before interest,
taxes, depreciation and amortization ("EBITDA") and (c) a maximum ratio of
total debt to EBITDA; and (iii) require it to satisfy financial condition
tests including limitations on capital expenditures. In addition, the senior
credit facility prohibits the Company from declaring or paying any dividends
and prohibits it from making any payments with respect to the Notes if the
Company fails to perform its obligations under or fails to meet the conditions
of, the senior credit facility or if payment creates a default under the senior
credit facility. Failure to comply with these covenants could have a material
adverse impact upon the Company's financial condition. The Company was in
compliance with its quarterly covenants at October 2, 2004.
The indenture governing the Notes, among other things, (i) restricts the
Company's ability, and the ability of its subsidiaries, to incur additional
indebtedness, issue shares of preferred stock, incur liens, pay dividends or
make certain other restricted payments and enter into certain transactions
with affiliates; (ii) prohibits certain restrictions on the ability of certain
of its subsidiaries to pay dividends or make certain payments to it; and (iii)
places restrictions on the Company's ability and the ability of its
subsidiaries to merge or consolidate with any other person or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of
its assets.
The Company's principal source of liquidity is cash flow generated from
operations and borrowings under its revolving line of credit. The Company's
principal use of cash is to meet debt service requirements, finance its capital
expenditures, make acquisitions and provide for working capital. The Company
expects that current excess cash and cash available from operations, and funds
available under its $125.0 million revolving line of credit, will be sufficient
to fund its operations, debt service requirements and capital expenditures for
at least the next 12 months.
The Company's ability to make payments on and to refinance its debt, and to
fund planned capital expenditures will depend on its ability to generate
sufficient cash in the future. This, to some extent, is subject to general
economic, financial, competitive and other factors that are beyond the
Company's control. The Company believes that, based upon current levels
of operations, it will be able to meet its debt service obligations when due.
Significant assumptions underlie this belief, including, among other things,
that the Company will continue to be successful in implementing its business
strategy and that there will be no material adverse developments in its
business, liquidity or capital requirements. If the Company's future cash
flow from operations and other capital resources are insufficient to pay its
obligations as they mature or to fund its liquidity needs, it may be forced
to reduce or delay its business activities and capital expenditures, sell
assets, obtain additional debt or equity capital or restructure or refinance
all or a portion of its debt, on or before maturity. There can be no assurance
that the Company would be able to accomplish any of these alternatives on a
timely basis or on satisfactory terms, if at all. In addition, the terms of
the Company's existing and future indebtedness may limit its ability to pursue
any of these alternatives. See "Forward-Looking Statements," below.
Critical Accounting Policies and Estimates
The preparation of the Company's financial statements in conformity with
accounting principles generally accepted in the United States requires
the Company to make estimates, assumptions and judgments that affect amounts
of assets and liabilities reported in the consolidated financial statements,
the disclosure of contingent assets and liabilities as of the date of the
financial statements and reported amounts of revenues and expenses during
the year. The Company believes its estimates and assumptions are reasonable;
however, future results could differ from those estimates under different
assumptions or conditions.
Critical accounting policies are policies that reflect material judgment and
uncertainty and may result in materially different results using different
assumptions or conditions. The Company identified the following critical
accounting policies and estimates: discounts and vendor allowances, allowance
for losses on receivables, closed facility lease commitments, reserves for
self-insurance and pension costs and impairment of long-lived assets. For a
detailed discussion of accounting policies, refer to the notes to the
consolidated financial statements and Management's Discussion and Analysis
contained in the Company's Annual Report on Form 10-K for the year ended
January 3, 2004.
Forward-Looking Statements
This Form 10-Q filing contains forward-looking statements within the meaning of
Section 27A of the Securities Exchange Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All statements other
than statements of historical facts included herein or therein are forward-
looking statements. In particular, without limitation, terms such as
"anticipate," "believe," "estimate," "expect," "goal," "indicate," "may be,"
"objective," "plan," "predict," "should," "will" or similar words are intended
to identify forward-looking statements. Forward-looking statements are
subject to certain risks, uncertainties and assumptions which could cause
actual results to differ materially from those predicted. Important factors
that could cause actual results to differ materially from such expectations
("Risk Factors") are disclosed in the Company's Annual Report on Form 10-K for
the year ended January 3, 2004 filed on March 29, 2004 (SEC File No. 002-94984)
under the caption "Item 1. Business - Risk Factors." Although the Company
believes that the expectations reflected in such forward-looking statements
are reasonable,it can give no assurance that such expectations will prove to
have been correct. All subsequent written or oral forward-looking statements
attributable to the Company or persons acting on behalf of the Company are
expressly qualified in their entirety by the Risk Factors. Additional
information concerning factors that could cause actual results to differ
materially from those in the forward-looking statements is contained from
time to time in the Company's SEC filings,including, but not limited to
information under the caption "Risk Factors" contained in the prospectus
filed on February 6, 2003 forming a part of the Company's Registration
Statement on Form S-4 under the Securities Act of 1933
(Registration No. 333-102779).
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in the Company's market risk since January
3, 2004. See the discussion under Part II Item 7A in the Company's Annual
Report on Form 10-K for the year ended January 3, 2004.
Item 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures.
-------------------------------------------------
The Company maintains disclosure controls and procedures that are
designed to ensure that information required to be disclosed in the
Company's reports under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and
forms, and that such information is accumulated and communicated to
management, including the Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure. Management necessarily applies its judgment in assessing
costs and benefits of such controls and procedures, which can provide
only reasonable assurance regarding management's control objectives.
Prior to the filing of this report the Company carried out an
evaluation, under the supervision and with the participation of the
Company's management, including the Company's chief executive officer
and its chief financial officer, of the effectiveness of the design
and operation of the Company's disclosure controls and procedures
pursuant to Rule 15d-14 of the Securities Exchange Act of 1934 (the
"Exchange Act"). Based upon that evaluation, the chief executive
officer and chief financial officer believe that as of the end of
the period covered by this report, the Company's disclosure controls
and procedures (as defined in Rule 15d-14 under the Exchange Act)
were effective to ensure that information required to be disclosed
by the Company in reports that it files or submits under the Exchange
Act is recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules and
forms.
It should be noted that any system of controls, however well-
designed and operated, can provide only reasonable, and not
absolute, assurance that the objectives of the system are met.
In addition, the design of any control system is based in part
upon certain assumptions about the likelihood of future events.
Because of these and other inherent limitations of control
systems, there can be no assurance that any design will succeed
in achieving its stated goals under all potential future
conditions, regardless of how remote.
(b) Changes in internal controls.
There were no significant changes in the Company's internal
controls or in other factors that could significantly affect
these controls subsequent to the date of their most recent
evaluation nor were there any significant deficiencies or
material weaknesses in the Company's internal controls.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is a party to routine litigation incidental to its
business. Management believes that none of this litigation is
likely to have a material adverse effect on the Company's
consolidated financial position and results of operations. There
have been no material changes to the information contained in
Item 3. Legal Proceedings in the Company's Annual Report filed on
Form 10-K for the year ended January 3, 2004.
Item 2. Unregistered Sales of Equity 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
The Exhibit Index contained in this report immediately following
the signature pages to this report are incorporated herein by
this reference.
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: November 12, 2004 /s/ROBERT A. MARIANO
----------------- -----------------------------------
Robert A. Mariano, Chairman of the
Board, Chief Executive Officer and
President
(Principal Executive Officer)
ROUNDY'S, INC.
-----------------------------------
(Registrant)
Date: November 12, 2004 /s/DARREN W. KARST
----------------- -----------------------------------
Darren W. Karst, Executive Vice
President and Chief Financial Officer
(Principal Financial Officer)
Roundy's, Inc.
Quarterly Report on Form 10-Q under the Securities Exchange Act of 1934
for the quarter ended October 2, 2004
EXHIBIT INDEX
The following exhibits to the Quarterly Report are filed herewith or, where
noted, are incorporated by reference herein:
Exhibit
No. Description
----- ------------
2.1 Stock Purchase Agreement by and among Roundy's, Inc. and
the Shareholders of Prescott's Supermarkets, Inc. dated
as of December 10, 2002 (1)
2.2 Asset Purchase Agreement dated October 18, 2002, by and
among B&H Gold Corporation, Gold's, Inc., Gold's Market,
Inc., Gold's of Mequon, LLC, Mega Marts, Inc. and
Roundy's, Inc. (2)
2.3 Share Exchange Agreement dated April 8, 2002 by and
between Roundy's Acquisition Corp. and Roundy's, Inc.(3)
2.4 Asset Purchase Agreement dated February 21, 2003 among
Roundy's, Inc., The Copps Corporation, Kohl's Food
Stores, Inc. and The Great Atlantic & Pacific Tea
Company, Inc. (4)
2.5 Asset Purchase Agreement dated May 2, 2003, by and
between Fleming Companies, Inc., Rainbow Foods Group,
Inc., RBF Corp., and Roundy's, Inc. (5)
2.6 First Amendment dated June 4, 2003 to Asset Purchase
Agreement dated May 2, 2003 by and between Fleming
Companies, Inc., Rainbow Foods Group, Inc., RBF Corp.,
and Roundy's, Inc. (6)
2.7 Asset Purchase Agreement dated July 9, 2004 by and
between McAdams, Inc., certain shareholders of McAdams,
Inc., Ultra Mart Foods, Inc. and Roundy's, Inc. (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 Form of Deferred Compensation Agreement between the
Registrant and certain executive officers including
Messrs. Schmitt and Kitz(20)
10.8 Amendment dated March 31, 1998 to Form of Deferred
Compensation Agreement between the Registrant and
certain executive officers including Messrs. Schmitt and
Kitz(21)
10.9 Second Amendment dated June 3, 1998 to Form of Deferred
Compensation Agreement for certain executive officers
including Messrs. Kitz and Schmitt(22)
10.10 Directors and Officers Liability and Corporation
Reimbursement Policy issued by American Casualty Company
of Reading, Pennsylvania (CNA Insurance Companies) as of
June 13, 1986(23)
10.11 Declarations page for renewal through May 1, 2004 of
Directors and Officers Liability and Corporation
Reimbursement Policy(24)
10.12 Employment Agreement dated June 6, 2002 between
Registrant and Robert F. Mariano(25)
10.13 Employment Agreement dated June 6, 2002 between
Registrant and Darren W. Karst(26)
10.14 Employment Contract between the Registrant and Gary L.
Fryda dated March 31, 2000(27)
10.15 Employment Agreement dated December 27, 2002 between
Registrant and Donald S. Rosanova(28)
10.16 Excerpts from Roundy's, Inc. Board of Directors
resolution adopted March 19, 2002 relating to group term
carve-out, executive extension on COBRA continuation
rights and professional outplacement services for
Company Officers, including Messrs. Fryda, Schmitt and
Kitz(29)
10.17 Confidentiality and Noncompete Agreement dated June 6,
2002 between the Registrant and Gerald F. Lestina(30)
10.18 Roundy's, Inc. Deferred Compensation Plan Amended and
Restated August 13, 2002(31)
10.19 Investor Rights Agreement dated June 6, 2002 by and
among Roundy's Acquisition Corp., Willis Stein &
Partners III, L.P., Willis Stein & Partners III-C, L.P.,
Willis Stein & Partners Dutch III-A, L.P., and Willis
Stein & Partners Dutch III-B, L.P., the investors listed
on the Schedule of Coinvestors, and certain executive
employees of Roundy's, Inc.(32)
10.20 First Amendment dated October 28, 2002 to Investor
Rights Agreement dated June 6, 2002, including form of
Transfer Notice and Joinder Agreement(33)
10.21 Second Amendment dated May 12, 2003 to $375,000,000
Credit Agreement dated as of June 6, 2002 among Roundy's
Acquisition Corp., Roundy's Inc., as Borrower, The
Several Lenders from Time to Time Parties Hereto, Bear
Stearns Corporate Lending Inc., as Administrative Agent,
Canadian Imperial Bank of Commerce, as Syndication
Agent, Bank One, Wisconsin, Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland",
New York Branch, LaSalle Bank National Association,
Associated Bank, N.A., Harris Trust and Savings Bank,
M&I Marshall & Ilsley Bank, U.S. Bank, National
Association, as Documentation Agents dated as of June 6,
2002.(34)
10.22 Third Amendment dated as of March 29, 2004, to
$375,000,000 Credit Agreement dated as of June 6, 2002
and amended as of December 10, 2002 and May 12, 2003
among Roundy's Acquisition Corp., Roundy's, Inc., as
Borrower, the several banks, financial institutions and
other entities from time to time parties thereto, Bear
Stearns & Co., Inc., as sole lead arranger and sole
bookrunner, Bear Stearns Corporate Lending, Inc., as
administrative agent, Canadian Imperial Bank of
Commerce, as syndication agent, and the institutions
listed in the Credit Agreement as documentation agents.(35)
10.23 Net Lease Agreement dated May 19, 2004 between
Registrant and Pabst Farms-RDC, LLC (36)
31.1 Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (FILED
HEREWITH)
31.2 Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (FILED
HEREWITH)
32.1 Certification of Principal Executive Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (FILED
HEREWITH)
32.2 Certification of Principal Financial Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (FILED
HEREWITH)
- ------
(1) Incorporated by reference to Exhibit 2.1 to Registrant's Registration
Statement on Form S-4 filed on January 28, 2003 (Commission File No. 333-
102779)
(2) Incorporated by reference to Exhibit 2.2 to Registrant's Registration
Statement on Form S-4 filed on January 28, 2003 (Commission File No. 333-
102779)
(3) Incorporated by reference to Exhibit 2.1 to Registrant's Registration
Statement on Form S-4 filed on August 2, 2002 (Commission File No. 333-
97623)
(4) Incorporated by reference to Exhibit 2.5 to Registrant's Quarterly
Report on Form 10-Q for the period ended March 29, 2003 filed with the
Commission on May 9, 2003 (Commission File No. 002-94984)
(5) Incorporated by reference to Exhibit 2.9 to Registrant's Current
Report on Form 8-K filed with the Commission on June 23, 2003 (File No.
002-94984)
(6) Incorporated by reference to Exhibit 2.10 to Registrant's Current
Report on Form 8-K filed with the Commission on June 23, 2003 (File No.
002-94984)
(7) Incorporated by reference to Exhibit 2.7 to Registrant's Quarterly
Report on Form 10-Q for the period ended July 3, 2004, filed with the
Commission on August 13, 2004 (Commission 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 10.1 of Registrant's
Registration Statement on Form S-2 (File No. 33-57505) dated April 24, 1997
(21) 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)
(22) 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)
(23) 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)
(24) Incorporated by reference to Exhibit 10.11 to Registrant's Annual
Report on Form 10-K for the fiscal year ended January 3, 2004 filed with
the Commission on March 29, 2004 (Commission File No. 002-94984)
(25) 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)
(26) 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)
(27) 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)
(28) 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)
(29) 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)
(30) 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)
(31) 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)
(32) 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)
(33) 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)
(34) 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)
(35) Incorporated by reference to Exhibit 10.22 to Registrant's Annual
Report on Form 10-K for the fiscal year ended January 3, 2004 filed with
the Commission on March 29, 2004 (Commission File No. 002-94984)
(36) Incorporate by reference to Exhibit 10.23 to Registrant's Quarterly
Report on Form 10-Q for the period ended July 3, 2004, filed with the
Commission on August 13, 2004 (Commission File No. 002-94984)