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 April 2, 2005
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 May 16, 2005 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. 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 April 2, 2005
INDEX
Page No.
--------
PART I. - Financial Information
Item 1. Financial Statements
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 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk 19
Item 4. Controls and Procedures 19
PART II. - Other Information
Item 1. Legal Proceedings 20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 20
Item 3. Defaults Upon Senior Securities 20
Item 4 Submission of Matters to a Vote of Security Holders 20
Item 5. Other Information 20
Item 6. Exhibits 20
SIGNATURES 21
EXHIBIT INDEX 22
PART I. Item 1. FINANCIAL STATEMENTS
ROUNDY'S, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands)
(Unaudited)
Thirteen Weeks Ended
------------------------------
April 2, 2005 April 3, 2004
------------- ------------
Net Sales and Service Fees $ 911,404 $ 937,506
Costs and Expenses:
Cost of sales 691,488 720,741
Operating and administrative 191,618 185,502
Interest:
Interest expense 9,531 8,814
Amortization of deferred financing costs 679 658
--------- ----------
893,316 915,715
--------- ----------
Income from Continuing Operations before
Income Taxes 18,088 21,791
Provision for Income Taxes 7,416 9,366
--------- ----------
Income from Continuing Operations 10,672 12,425
Discontinued Operations, net of tax of
$1,876 and $1,826, respectively 3,195 3,030
Gain on Sale of Discontinued Operations, net of
tax of $57,454 49,051
--------- ----------
Net Income $ 62,918 $ 15,455
========= ==========
See notes to unaudited consolidated financial statements.
ROUNDY'S, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
April 2, January 1,
Assets 2005 2005
------------ ----------
(Unaudited)
Current Assets:
Cash and cash equivalents $ 203,058 $ 105,633
Notes and accounts receivable, less allowance
for losses 28,287 32,302
Merchandise inventories 200,229 207,740
Prepaid expenses 9,506 13,759
Deferred income tax benefits 14,474 14,474
Assets of discontinued operations 5,263 172,167
---------- ----------
Total current assets 460,817 546,075
---------- ----------
Property and Equipment - Net 313,419 302,832
Other Assets:
Deferred income tax benefits $ 3,038 3,039
Notes receivable 433 469
Other assets - net 65,223 71,686
Goodwill 652,979 647,253
---------- ----------
Total other assets 721,673 722,447
---------- ----------
Total assets $1,495,909 $1,571,354
========== ==========
Liabilities and Shareholder's Equity
Current Liabilities:
Accounts payable $ 231,462 $ 262,373
Accrued expenses 105,068 104,986
Current maturities of long-term debt and
capital lease obligations 4,567 4,565
Income taxes 75,080 9,875
Liabilities of discontinued operations 4,660 175,972
---------- ----------
Total current liabilities 420,837 557,771
---------- ----------
Long-term Debt and Capital Lease Obligations 470,615 471,113
Other Liabilities 91,676 92,270
---------- ----------
Total liabilities 983,128 1,121,154
---------- ----------
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 198,281 135,700
---------- ----------
Total shareholder's equity 512,781 450,200
---------- ----------
Total liabilities and shareholder's equity $1,495,909 $1,571,354
========== ==========
See notes to unaudited consolidated financial statements.
ROUNDY'S, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Thirteen Weeks Ended
-----------------------------
April 2, 2005 April 3, 2004
------------- -------------
Cash Flows From Operating Activities:
Net income $ 62,918 $ 15,455
Adjustments to reconcile net income to net
cash flows provided by operating activities:
Depreciation and amortization, including deferred
financing costs 19,323 15,546
Gain on sale of discontinued operations, net of tax (49,051)
Loss (gain) on sale of property and equipment 959 (85)
Changes in operating assets and liabilities, net of the
effect of business acquisitions and dispositions:
Notes and accounts receivable (977) 192
Merchandise inventories 14,426 7,140
Prepaid expenses 4,138 2,978
Other assets 825 (564)
Accounts payable (33,868) (42,498)
Accrued expenses (1,874) 9,464
Income taxes 7,751 9,419
Other liabilities (605) (1,357)
--------- ---------
Net cash flows provided by operating activities 23,965 15,690
--------- ---------
Cash Flows From Investing Activities:
Capital expenditures (23,602) (11,863)
Proceeds from sale of property and equipment 4,604 118
Proceeds from sale of discontinued operations 225,715
Payment for business acquisitions, net of cash acquired (7,740)
Decrease in notes receivable, net 217 29
--------- ---------
Net cash flows provided by (used in) investing activities 199,194 (11,716)
--------- ---------
Cash Flows From Financing Activities:
Payments of debt and capital lease obligations (125,505) (1,049)
Payment of dividend to RAC (337)
--------- ---------
Net cash flows used in financing activities (125,842) (1,049)
--------- ---------
Net Increase in Cash and Cash Equivalents 97,317 2,925
Cash and Cash Equivalents, Beginning of Period 105,741* 90,006
--------- ---------
Cash and Cash Equivalents, End of Period $ 203,058 $ 92,931
========= =========
Supplemental Cash Flow Information:
Cash paid during the period:
Interest $ 4,251 $ 4,544
Income taxes 1,505 1,772
See notes to unaudited consolidated financial statements.
*Includes $108 of cash included in assets of discontinued operations.
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 April 2, 2005, and for the thirteen-week
periods ended April 2, 2005 and April 3, 2004 reflect all adjustments
(consisting only of normal recurring adjustments) that are, in the opinion of
management, necessary for a fair presentation of the financial position and
operating results for the interim periods. The unaudited consolidated financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States for interim financial information, in accordance
with the instructions for Form 10-Q and Article 10 of Regulation S-X and do not
include all of the information and footnotes required for complete, audited
financial statements. The unaudited consolidated financial statements should be
read in conjunction with the consolidated financial statements and related notes
thereto, together with Management's Discussion and Analysis of Financial
Condition and Results of Operations, contained in the Roundy's, Inc. Annual
Report on Form 10-K for the fiscal year ended January 1, 2005. The results of
operations for the thirteen-week period ended April 2, 2005 may not necessarily
be indicative of the results that may be expected for the entire fiscal year
ending December 31, 2005.
2. ACQUISITIONS
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. for approximately $9.0 million plus the assumption of
an estimated $3.7 million closed store liability (the "Kohl's Acquisition"). Six
of these stores are located in the Milwaukee area while the seventh store is
located in the Racine, Wisconsin area. The Company reopened two of these stores
in 2003 and five of the stores in 2004. All seven of these stores were reopened
under the Pick 'n Save banner. Goodwill of approximately $3.1 million resulted
from the acquisition which was accounted for as a purchase.
In September 2004, the Company acquired the inventory, equipment, fixtures and
leasehold improvements of seven licensed Pick 'n Save retail grocery stores from
McAdams, Inc. ("McAdams") for approximately $61.8 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 $54.5
million resulted from the acquisition, which was accounted for as a purchase.
The operating results of these stores are included in the consolidated
statements of income after the acquisition 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.
On February 27, 2005, the Company acquired the inventory, equipment, fixtures
and leasehold improvements of one licensed Pick 'n Save store from West Side
Pick 'n Save, Inc. ("State Street") for approximately $7.7 million (the "State
Street Acquisition"). This store is located in the Milwaukee area. Goodwill of
approximately $6.0 million resulted from the acquisition, which was accounted
for as a purchase. The operating results of this store are included in the
consolidated statements of income after the acquisition 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.
3. DISCONTINUED OPERATIONS
On March 31, 2005, the Company sold two distribution centers in Lima, Ohio and
Westville, Indiana, the related operations and two retail stores located in Ohio
(collectively, the "Ohio and Indiana Operations") to Nash-Finch Company ("Nash
Finch") for approximately $226 million in cash, subject to certain post-closing
adjustments (the "Nash Finch Transaction"). The assets sold consist primarily of
inventory, accounts receivable, land, buildings and equipment. The Company
realized a preliminary after-tax gain on sale of $49.1 million, which is subject
to post-closing adjustments. In accordance with Statement of Financial
Accounting Standard ("SFAS") No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Assets", the results of the Ohio and Indiana Operations, which
have historically been included in Roundy's, Inc. financial results, have been
reported as discontinued operations in the consolidated statement of income and
consolidated balance sheets for all periods presented.
The Company utilized a portion of the proceeds received from the Nash Finch
Transaction to pay down $125 million of its term loan on March 31, 2005.
Interest expense associated with this $125 million portion of the term loan is
classified as discontinued operations in all periods presented.
As of January 1, 2005, the Lima, Ohio and Westville, Indiana distribution
centers served approximately 480 of the Company's 580 independent retail
customers. For the fiscal year ended January 1, 2005, the Ohio and Indiana
Operations had annual revenues of approximately $950 million.
4. EMPLOYEE BENEFIT PLANS
Net periodic benefit costs in the thirteen weeks ended April 2, 2005 and April
3, 2004 included the following components (in thousands):
Thirteen Weeks Ended
----------------------------------
April 2, 2005 April 3, 2004
------------- -------------
Components of net periodic
benefit costs:
Service costs $ 1,497 $ 1,817
Interest costs 1,826 1,944
Expected return on plan assets (1,970) (1,269)
Amortization of net actuarial
loss/(gain) (329) 34
------- --------
Net periodic benefit cost $ 1,024 $ 2,526
======= ========
Prior to January 1, 2005, benefits were based on either years of service and the
employee's highest compensation during five of the most recent ten years of
employment or on stated amounts for each year of service. Effective January 1,
2005, the Company amended the benefit formula in its retirement plans to provide
a pension benefit equal to 1% of a participant's annual compensation for each
year of service after January 1, 2005. For all service prior to January 1, 2005
the pension benefit was calculated based on the prior formula.
During the first quarter 2005, the Company made $0.3 million of contributions to
its pension plans. The Company expects its total pension plan contributions for
the year ending December 31, 2005 to approximate $4.6 million.
5. SUBSEQUENT EVENTS
On April 14, 2005, the Company signed an agreement to purchase all of the retail
grocery stores owned by Gary and Sharon Gundlach and Maple Grove Supermarkets,
L.L.C. ("Gundlach"). Gundlach operates seven Pick 'n Save grocery stores located
in the greater Madison, Wisconsin area. The aggregate consideration to be paid
for the stores is approximately $27.3 million, plus the value of useable
inventory and cash on hand as of the closing date. The transaction is expected
to close in the next 30 days.
On May 11, 2005, the Company's board of directors approved a dividend payment by
Roundy's, to its parent company, RAC, in an amount not to exceed the limitation
under the restricted payments covenant in the Company's 8 7/8% senior
subordinated notes due 2012 ("Notes") indenture, which is approximately $84
million. Roundy's intends to seek an amendment to its credit agreement to permit
this dividend payment. RAC intends to use the proceeds of this dividend to
satisfy a substantial portion of the outstanding accrued dividends on its
preferred stock, which will enable the Company and RAC to lower their
consolidated weighted average cost of capital by reducing higher cost preferred
stock capital with excess cash on hand.
6. SEGMENT REPORTING
The Company revised its segment reporting as of January 2, 2005 as reflected in
its first quarter financial results. Prior to January 2, 2005, the Company's two
reportable segments were "retail" and "wholesale." Effective January 2, 2005,
the Company's new reportable segments are "retail" and "independent
distribution." Prior periods are reclassified for comparison purposes.
These changes align the Company's segments with the operating results reviewed
by its senior management team to assess segment performance and make decisions
regarding resource allocations. Since being acquired by RAC in June 2002, the
Company has transitioned from a wholesale-oriented business to a retail-oriented
business. As a result, the income and expenses attributable to supplying the
Company's corporate retail stores that were previously reported in the wholesale
segment have been reclassified to the retail segment. In addition, freight and
other distribution network expenses (including related depreciation and
amortization expenses), associated with supplying the Company's corporate retail
stores have been reclassified from operating expenses to retail cost of sales in
order to present the Company's results in a manner consistent with other retail
supermarket operators. The "wholesale" segment has been renamed "independent
distribution" to reflect that it now represents only the supply business related
to third-party retail stores.
The Company and its subsidiaries sell and distribute food and nonfood products
that are typically found in supermarkets. The Company's retail segment sells
these products directly to the consumer through Company-owned retail food stores
while the independent distribution segment sells these products to independent
retail food stores. The Company's stores and those of its independent
distribution customers are located primarily in Wisconsin, Minnesota and
Illinois.
Identifiable assets are those generally used exclusively by that segment except
that substantially all of the Company's distribution network assets are included
in the independent distribution 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
--------------------------------
April 2, 2005 April 3, 2004
------------- -------------
NET SALES AND SERVICE FEES FROM
CONTINUING OPERATIONS
Retail $ 777,251 $ 700,483
Independent distribution 134,153 237,023
----------- -----------
Consolidated $ 911,404 $ 937,506
=========== ===========
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
Retail $ 36,123 $ 34,019
Independent distribution 2,080 5,241
Corporate and other (20,115) (17,469)
----------- -----------
Consolidated $ 18,088 $ 21,791
=========== ===========
DEPRECIATION AND AMORTIZATION FROM
CONTINUING OPERATIONS
(including amortization of deferred
financing costs)
Retail $ 13,109 $ 9,888
Independent distribution 180 290
Corporate and other 4,972 3,611
----------- ----------
Consolidated $ 18,261 $ 13,789
=========== ==========
INTEREST FROM CONTINUING OPERATIONS
(excluding amortization of deferred
financing costs)
Retail $ 5,080 $ 5,132
Independent distribution 632 745
Corporate and other 3,819 2,937
----------- -----------
Consolidated $ 9,531 $ 8,814
=========== ===========
CAPITAL EXPENDITURES
Retail $ 10,666 $ 7,166
Independent distribution 7,532
Corporate and other 5,198 4,677
Discontinued operations 206 20
----------- -----------
Consolidated $ 23,602 $ 11,863
=========== ===========
IDENTIFIABLE ASSETS (AT
PERIOD-END)
Retail $ 1,044,852
Independent distribution 127,726
Corporate and other 323,331
-----------
Consolidated $ 1,495,909
===========
GOODWILL (AT PERIOD-END)
Retail $ 642,490
Independent distribution 10,489
-----------
Consolidated $ 652,979
===========
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 Notes.
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
Thirteen Weeks Ended April 2, 2005
(In thousands)
Combined
Roundy's Subsidiaries Eliminations Total
--------- ------------ ------------ ----------
Net Sales and Service Fees $ 405,679 $ 788,535 $(282,810) $ 911,404
Costs and Expenses:
Cost of sales 378,439 590,778 (277,729) 691,488
Operating and administrative 21,786 174,913 (5,081) 191,618
Interest expense 5,461 4,749 10,210
--------- --------- --------- ---------
405,686 770,440 (282,810) 893,316
--------- --------- --------- ---------
Income from Continuing Operations
Before Income Taxes (7) 18,095 18,088
Provision for Income Taxes 7,416 7,416
--------- --------- --------- ---------
Income from Continuing Operations (7) 10,679 10,672
Equity in Earnings of Subsidiaries 62,925 (62,925)
Discontinued Operations, net of tax 3,195 3,195
Gain on Sale of Discontinued
Operations, net of tax 49,051 49,051
--------- --------- --------- ---------
Net Income $ 62,918 $ 62,925 $ (62,925) $ 62,918
========= ========= ========= =========
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
Thirteen Weeks Ended April 3, 2004
(In thousands)
Combined
Roundy's Subsidiaries Eliminations Total
--------- ------------ ------------ ---------
Net Sales and Service Fees $ 402,627 $ 763,115 $(228,236) $ 937,506
Costs and Expenses:
Cost of sales 370,571 573,195 (223,025) 720,741
Operating and administrative 25,682 165,031 (5,211) 185,502
Interest expense 4,370 5,102 9,472
--------- --------- --------- ---------
400,623 743,328 (228,236) 915,715
--------- --------- --------- ---------
Income from Continuing Operations
Before Income Taxes 2,004 19,787 21,791
Provision for Income Taxes 842 8,524 9,366
--------- --------- --------- ---------
Income from Continuing Operations 1,162 11,263 12,425
Equity in Earnings of Subsidiaries 14,293 (14,293)
Discontinued Operations, net of tax 3,030 3,030
--------- --------- --------- ---------
Net Income $ 15,455 $ 14,293 $ (14,293) $ 15,455
========= ========= ========= =========
CONDENSED CONSOLIDATING BALANCE SHEETS
As of April 2, 2005
(In thousands)
Combined
Roundy's Subsidiaries Eliminations Total
----------- ------------ ----------- ----------
Assets
Current Assets:
Cash and cash equivalents $ 174,930 $ 28,128 $ 203,058
Notes and accounts receivable-net 14,889 13,398 28,287
Merchandise inventories 53,109 147,120 200,229
Prepaid expenses 6,350 3,156 9,506
Deferred income tax benefits 13,832 642 14,474
Assets of discontinued operations 5,263 5,263
---------- ---------- ---------- ----------
Total current assets 268,373 192,444 460,817
---------- ---------- ---------- ----------
Property and Equipment-Net 43,341 270,078 313,419
Other Assets:
Investment in subsidiaries 361,203 $ (361,203)
Intercompany receivables 284,811 (284,811)
Deferred income tax benefits 3,038 3,038
Notes receivable 273 160 433
Goodwill and other assets 270,882 447,320 718,202
---------- ---------- ---------- ----------
Total other assets 920,207 447,480 (646,014) 721,673
---------- ---------- ---------- ----------
Total assets $1,231,921 $ 910,002 $ (646,014) $1,495,909
========== ========== ========== ==========
Liabilities and Shareholder's Equity
Current Liabilities:
Accounts payable $ 142,763 $ 88,699 $ 231,462
Accrued expenses 63,037 42,031 105,068
Current maturities of long-term debt
and capital lease obligations 2,665 1,902 4,567
Intercompany payable 284,811 $ (284,811)
Income taxes 65,049 10,031 75,080
Liabilities of discontinued operations 4,660 4,660
---------- ---------- ---------- ----------
Total current liabilities 278,174 427,474 (284,811) 420,837
---------- ---------- ---------- ----------
Long-term Debt and Capital Lease Obligations 418,669 51,946 470,615
Other Liabilities 22,297 69,379 91,676
---------- ---------- ---------- ----------
Total liabilities 719,140 548,799 (284,811) 983,128
---------- ---------- ---------- ----------
Shareholder's Equity 512,781 361,203 (361,203) 512,781
---------- ---------- ---------- ----------
Total liabilities and shareholder's equity $1,231,921 $ 910,002 $ (646,014) $1,495,909
========== ========== ========== ==========
CONDENSED CONSOLIDATING BALANCE SHEETS
As of January 1, 2005
(In thousands)
Combined
Assets Roundy's Subsidiaries Eliminations Total
----------- ------------ ------------ ----------
Current Assets:
Cash and cash equivalents $ 70,941 $ 34,692 $ 105,633
Notes and accounts receivable-net 19,253 16,398 $ (3,349) 32,302
Merchandise inventories 61,960 145,780 207,740
Prepaid expenses 5,642 8,117 13,759
Deferred income tax benefits 1,773 12,701 14,474
Assets of discontinued operations 172,167 172,167
----------- ----------- ----------- -----------
Total current assets 159,569 389,855 (3,349) 546,075
----------- ----------- ----------- -----------
Property and Equipment-Net 35,227 267,605 302,832
Other Assets:
Investment in subsidiaries 397,943 (397,943)
Intercompany receivables 270,116 (270,116)
Deferred income tax benefits 3,039 3,039
Notes receivable 341 128 469
Goodwill and other assets 248,871 470,068 718,939
----------- ----------- ----------- -----------
Total other assets 920,310 470,196 (668,059) 722,447
----------- ----------- ----------- -----------
Total assets $ 1,115,106 $ 1,127,656 $ (671,408) $ 1,571,354
=========== =========== =========== ===========
Liabilities and Shareholder's Equity
Current Liabilities:
Accounts payable $ 150,012 $ 113,288 $ (927) $ 262,373
Accrued expenses 63,945 43,463 (2,422) 104,986
Current maturities of long-term debt
and capital lease obligations 2,665 1,900 4,565
Intercompany payable 270,116 (270,116)
Income taxes 9,875 9,875
Liabilities of discontinued operations 175,972 175,972
----------- ----------- ----------- -----------
Total current liabilities 226,497 604,739 (273,465) 557,771
----------- ----------- ----------- -----------
Long-Term Debt and Capital Lease Obligations 416,786 (54,327) 471,113
Other Liabilities 21,623 70,647 92,270
----------- ----------- ----------- -----------
Total liabilities 664,906 729,713 (273,465) 1,121,154
----------- ----------- ----------- -----------
Shareholder's Equity 450,200 397,943 (397,943) 450,200
----------- ----------- ----------- -----------
Total liabilities and shareholder's equity $ 1,115,106 $ 1,127,656 $ (671,408) $ 1,571,354
=========== =========== =========== ===========
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the period ended April 2, 2005
(In thousands)
Combined
Roundy's Subsidiaries Total
--------- ------------ ---------
Net Cash Flows (Used in) Provided by Operating Activities: $ (965) $ 24,930 $ 23,965
--------- --------- ---------
Cash Flows From Investing Activities:
Capital expenditures-net of proceeds (10,129) (8,869) (18,998)
Proceeds from sale of discontinued operations 225,715 225,715
Payment for business acquisitions, net of cash acquired (7,740) (7,740)
Notes receivable 36 181 217
--------- --------- ---------
Net cash flows provided by (used in) investing activities 215,622 (16,428) 199,194
--------- --------- ---------
Cash Flows From Financing Activities:
Payments of debt and capital lease obligations (125,026) (479) (125,505)
Payment of dividend to RAC (337) (337)
Intercompany receivables-net 14,695 (14,695)
--------- --------- ---------
Net cash flows used in financing activities (110,668) (15,174) (125,842)
--------- --------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents 103,989 (6,672) 97,317
Cash And Cash Equivalents, Beginning Of Period 70,941 34,800 105,741
--------- --------- ---------
Cash And Cash Equivalents, End Of Period $ 174,930 $ 28,128 $ 203,058
========= ========= =========
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the period ended April 3, 2004
(In thousands)
Combined
Roundy's Subsidiaries Total
-------- ------------ --------
Net Cash Flows Provided by (Used in) Operating Activities: $ 26,237 $(10,547) $ 15,690
-------- -------- --------
Cash Flows From Investing Activities:
Capital expenditures-net of proceeds (2,091) (9,654) (11,745)
Notes receivable 37 (8) 29
-------- -------- --------
Net cash flows used in investing activities (2,054) (9,662) (11,716)
-------- -------- --------
Cash Flows From Financing Activities:
Payments of debt and capital lease obligations (615) (434) (1,049)
Intercompany receivables-net (12,103) 12,103
-------- -------- --------
Net cash flows (used in) provided by financing activities (12,718) 11,669 (1,049)
-------- -------- --------
Net Increase (Decrease) in Cash and Cash Equivalents 11,465 (8,540) 2,925
Cash And Cash Equivalents, Beginning Of Period 49,059 40,947 90,006
-------- -------- --------
Cash And Cash Equivalents, End Of Period $ 60,524 $ 32,407 $ 92,931
======== ======== ========
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
---------------------------------------
Statement of Income Data April 2, 2005 April 3, 2004
------------------ -----------------
(Dollars in thousands):
Net Sales and Service Fees $911,404 100.0% $937,506 100.0%
Cost and Expenses:
Cost of sales 691,488 75.9 720,741 76.9
Operating and administrative 191,618 21.0 185,502 19.8
Interest expense (including amortization of
deferred financing costs) 10,210 1.1 9,472 1.0
-------- ----- -------- -----
893,316 98.0 915,715 97.7
-------- ----- -------- -----
Income from continuing operations
before income taxes 18,088 2.0 21,791 2.3
Provision for income taxes 7,416 0.8 9,366 1.0
-------- ----- -------- -----
Income from continuing operations 10,672 1.2 12,425 1.3
Discontinued operations, net of tax 3,195 0.3 3,030 0.3
Gain on sale of discontinued operations, net 49,051 5.4
-------- ----- -------- ------
Net income $ 62,918 6.9% $ 15,455 1.6%
======== ===== ======== ======
Change in Segment Reporting
The Company revised its segment reporting as of January 2, 2005 as reflected in
its first quarter financial results. Prior to January 2, 2005, the Company's two
reportable segments were "retail" and "wholesale." Effective January 2, 2005,
the Company's new reportable segments are "retail" and "independent
distribution." Prior periods are reclassified for comparison purposes.
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 independent distribution of food and non-food products.
The table below indicates the portion of the Company's net sales and service
fees attributable to its retail and independent distribution segments for the
periods indicated.
(in thousands) Thirteen Weeks Ended
--------------------------
April 2, April 3,
2005 2004
---------- ---------
Net Sales and Service Fees
Retail $ 777,251 $ 700,483
Independent distribution 134,153 237,023
--------- ---------
Total $ 911,404 $ 937,506
========= =========
Costs and Expenses
Costs and expenses consist of cost of sales, operating and administrative
expenses and interest expense. Effective January 2, 2005, the Company has
reclassified freight and other distribution center expenses associated with its
retail segment from operating expenses to retail cost of sales (including
depreciation and amortization expenses) in order to be more comparable with
other supermarket operators.
o Cost of sales includes product costs and inbound freight. In addition,
for the retail segment it also includes warehousing costs, receiving
and inspection costs, distribution costs, and depreciation and
amortization expenses associated with the Company's distribution
network.
o Operating and administrative expenses consist primarily of personnel
costs, sales and marketing expenses, depreciation and amortization
expenses as well as other expenses associated with facilities unrelated
to the Company's distribution network, internal management expenses and
expenses for finance, legal, business development, human resources,
purchasing and other administrative departments. In addition, for the
independent distribution segment, operating and administrative expenses
include warehousing and distribution costs, including receiving and
inspection costs and depreciation and amortization expenses associated
with the Company's distribution network.
o Interest expense includes interest on the Company's outstanding
indebtedness and amortization of deferred financing costs.
Thirteen Weeks Ended April 2, 2005 Compared With Thirteen Weeks Ended
April 3, 2004
Continuing Operations
Net Sales and Service Fees
Net sales and service fees were $911.4 million for the first quarter 2005, a
decrease of $26.1 million, or 2.8%, from $937.5 million for the first quarter
2004. Retail sales were $777.3 million for the first quarter 2005, an increase
of $76.8 million, or 11.0%, from $700.5 million for the first quarter 2004. This
increase in retail sales was primarily due to the effect of three acquired store
groups, consisting of 13 additional stores in total, which operated under the
Company's ownership during all or part of the first quarter 2005 but were not
operated by the Company for the entire first quarter 2004 (collectively, the "13
Acquired Stores"). The 13 Acquired Stores contributed approximately $66.2
million to the first quarter 2005 retail sales increase. As of April 2, 2005,
Roundy's operated 125 retail grocery stores including 67 Pick 'n Save stores, 26
Copps Food Stores ("Copps") and 32 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) increased 1.1% from the
comparable thirteen-week period of 2004. The increase was partially attributable
to the Easter holiday falling in the first quarter of 2005 while the Easter
holiday in 2004 fell in the second quarter. Same-store sales in the first
quarter of 2005, excluding the effect of the Easter holiday, increased 0.8%.
Independent distribution sales were $134.2 million for the first quarter 2005, a
decrease of $102.8 million, or 43.4%, from $237.0 million for the first quarter
2004. 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 and
the loss of independent distribution sales due to the acquisition of seven
former independent licensed Pick 'n Save stores from McAdams, Inc. ("McAdams")
in September 2004 (the "McAdams Acquisition"). Sales and profitability
associated with supplying the McAdams stores were previously reflected in the
Company's independent distribution segment prior to the McAdams Acquisition.
Gross Profit
Gross profit was $219.9 million for the first quarter 2005, an increase of $3.1
million, or 1.5%, from $216.8 million for the first quarter 2004. Gross profit,
as a percentage of net sales and service fees, for the first quarter 2005 and
2004 was 24.1% and 23.1%, respectively. The increase in gross profit and gross
profit percentage was primarily due to an increased concentration of sales in
the retail segment, which has a higher gross profit percentage than its
independent distribution segment. Retail sales for the first quarter 2005
represented 85.3% of net sales and service fees compared with 74.7% for the
first quarter 2004. The increase in retail sales concentration was primarily due
to the 13 Acquired Stores and the effect of the Southern Division closure. The
retail gross profit percentage was 26.9% and 27.9% for the first quarter of 2005
and 2004, respectively. The decrease in retail gross profit percentage was
primarily attributable to increased promotional activity in the first quarter
2005 as compared with the prior year quarter. The first quarter 2005 independent
distribution segment gross profit percentage was 8.3% compared with 9.1% in the
first quarter 2004. The decrease in independent distribution gross profit
percentage was primarily attributable to decreased vendor allowances as compared
with the prior year quarter.
Operating and Administrative Expenses
Operating and administrative expenses were $191.6 million for the first quarter
2005, an increase of $6.1 million, or 3.3%, from $185.5 million for the first
quarter 2004. Operating and administrative expenses, as a percentage of net
sales and service fees, increased to 21.0% for the first quarter 2005 compared
with 19.8% for the first quarter 2004. 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
independent distribution segment. While retail operating and administrative
expenses increased by $11.6 million due to the growth of the Company's retail
segment, these expenses decreased to 21.6% of retail sales for the first quarter
2005 compared with 22.3% for the first quarter 2004. This decrease in retail
operating and administrative expenses as a percentage of net sales was primarily
attributable to improved operating expense control. Independent distribution
operating and administrative expenses decreased to 6.3% of independent
distribution sales for the first quarter 2005 compared with 6.6% for the first
quarter 2004. This decrease was primarily due to operational and productivity
improvements in the Company's independent distribution operations. In addition,
corporate and other operating expenses (excluding depreciation and amortization)
were $11.3 million for the first quarter 2005 compared with $10.9 million for
the first quarter 2004.
Interest Expense
Interest expense (excluding the amortization of deferred financing costs) was
$9.5 million and $8.8 million for the first quarter 2005 and 2004, respectively.
The increase was primarily due to a net increase in interest rates on the
Company's variable rate term loan as compared to last year.
Income Taxes
Provision for income taxes was $7.4 million for the first quarter 2005, a
decrease of $2.0 million from $9.4 million for the first quarter 2004. The
effective income tax rate for the first quarter 2005 and 2004 was 41.0% and
43.0%, respectively.
Income From Continuing Operations
Income from continuing operations was $10.7 million for the first quarter 2005,
a decrease of $1.7 million from $12.4 million for the first quarter 2004. This
decrease was primarily attributable to higher depreciation expense and, as
previously discussed, higher interest expense in the first quarter 2005 as
compared with the first quarter 2004. The income margin was 1.2% and 1.3% for
2005 and 2004, respectively.
Discontinued Operations
On March 31, 2005, the Company sold the Ohio and Indiana Operations to Nash
Finch for approximately $226 million in cash, subject to certain post-closing
adjustments. The activity related to the Ohio and Indiana Operations is
classified as discontinued operations in all periods presented. Income from
discontinued operations for the first quarter 2005 was $3.2 million, an increase
of $0.2 million, from $3.0 million for the first quarter 2004. In addition, the
Company realized a preliminary after-tax gain on the sale of approximately $49.1
million, which is subject to post-closing adjustments. The higher tax rate on
the gain is reflective of non-deductible book goodwill. The Company utilized a
portion of the proceeds received from the Nash Finch Transaction to pay down
$125 million of its term loan on March 31, 2005. Interest expense associated
with this $125 million portion of the term loan is classified as discontinued
operations in all periods presented.
Net Income
Net income was $62.9 million for 2005, a $47.4 million increase from $15.5
million in the prior year. The increase was primarily due to the $49.1 million
after-tax gain on the sale of the Ohio and Indiana Operations.
Liquidity and Capital Resources
The Company's principal sources of cash are operating activities and borrowings.
The Company's cash and cash equivalents totaled $203.1 million at April 2, 2005,
compared with $105.7 million at January 1, 2005. Cash flows provided by
operating activities were $24.0 million for the first quarter 2005, compared
with $15.7 million for the first quarter 2004.
Net cash provided by investing activities was $199.2 million for the first
quarter 2005 compared with $11.7 million of cash used in investing activities
for the first quarter 2004. First quarter 2005 includes cash received from the
sale of the Company's Ohio and Indiana Operations to Nash Finch for
approximately $226 million. First quarter 2005 also includes cash paid for a
business acquisition of $7.7 million related to the Company's acquisition of
State Street in February 2005.
Total capital expenditures were $23.6 million for the first quarter 2005
compared with $11.9 million for the first quarter 2004. The 2005
expenditures were primarily related to the Company's new distribution center
facility in Oconomowoc, Wisconsin and spending on new retail stores. Total
capital expenditures for Fiscal 2005, excluding any acquisitions, are estimated
to be approximately $100.0 million.
Net cash used in financing activities were $125.8 million for the first quarter
2005 compared with $1.0 million for the first quarter 2004. Cash used in
financing activities in both years was primarily related to repayment of
outstanding debt, which included a $125 million payment on the Company's term
loan on March 31, 2005 funded with a portion of the proceeds from the Nash Finch
Transaction.
As of April 2, 2005, the Company had a working capital surplus of $40.0 million
compared with a $11.7 million deficit at January 2, 2005. The change was due
primarily to increased cash attributable to proceeds received from the Nash
Finch Transaction, net of the $125 million term loan payment previously
discussed.
On May 11, 2005, the Company's board of directors approved a dividend payment by
Roundy's, to its parent company, RAC, in an amount not to exceed the limitation
under the restricted payments covenant in the Notes indenture, which is
approximately $84 million. Roundy's intends to seek an amendment to its credit
agreement to permit this dividend payment. RAC intends to use the proceeds of
this dividend to satisfy a substantial portion of the outstanding accrued
dividends on its preferred stock, which will enable the Company and RAC to lower
their consolidated weighted average cost of capital by reducing higher cost
preferred stock capital with excess cash on hand.
The Company has significant debt service obligations, including interest, in
future years. 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 are no outstanding borrowings under the
revolving line of credit, except for outstanding letters of credit of $18.7
million. On March 31, 2005, the Company repaid $125 million of its term loan.
The outstanding balance on the Company's term loan at April 2, 2005 was $118.8
million. As a result of the $125 million payment on the Company's term loan on
March 31, 2005, the amortization schedule on the Company's term loan was
amended. Beginning in the second quarter of 2005, the term loan is repayable in
quarterly installments of $305,270 through June 30, 2008 followed by four
quarterly payments of $28.7 million through June 30, 2009. In addition, the
Company issued $300.0 million in aggregate principal amount of Notes, of which
$225.0 million was issued in June 2002 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 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. The Company was in compliance with its quarterly covenants at April 2,
2005.
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 credit facility. The Company's
principal uses of cash are to meet debt service requirements, finance 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
1, 2005.
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
1, 2005 filed on March 25, 2005 (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
1, 2005. See the discussion under Part II Item 7A in the Company's Annual Report
on Form 10-K for the year ended January 1, 2005.
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 1, 2005.
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 is 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: May 16, 2005 /s/ROBERT A. MARIANO
------------ -----------------------------------------
Robert A. Mariano, Chairman of the Board,
Chief Executive Officer and President
(Principal Executive Officer)
ROUNDY'S, INC.
-----------------------------------------
(Registrant)
Date: May 16, 2005 /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 April 2, 2005
EXHIBIT INDEX
The following exhibits to the Annual 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)
2.8 Asset Purchase Agreement dated as of February 24, 2005 between
Roundy's, Inc. and Nash-Finch Company. Exhibits and schedules are
omitted pursuant to Item 601(b)(2) of Regulation S-K. The exhibits
consist of form ancillary agreements and conveyance documents, while
the schedules contain information relating to the representations and
warranties in the Asset Purchase Agreement. The Registrant agrees to
furnish supplementally any omitted exhibit or schedule to the United
States Securities and Exchange Commission upon request. (8)
3.1 Roundy's, Inc. Amended and Restated Articles of Incorporation. (9)
3.2 Amended and Restated By-Laws of Roundy's, Inc. (10)
4.1 Indenture of Trust dated June 6, 2002 between Roundy's, Inc. and BNY
Midwest Trust Company, as Trustee. (11)
4.2 Form of $225,000,000 Roundy's, Inc. 8 7/8% Senior Subordinated Notes
due 2012. (12)
4.3 Form of $75,000,000 Roundy's, Inc. 8 7/8% Senior Subordinated Notes
due 2012. (12)
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. (13)
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. (14)
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. (15)
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 thereto, 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. (16)(17)
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. (18)
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. (19)
10.6 Form of Deferred Compensation Agreement between the Registrant and
certain executive officers including Messrs. Schmitt and Kitz. (20)
10.7 Amendment dated March 31, 1998 to Form of Deferred Compensation
Agreement between the Registrant and certain executive officers
including Messrs. Schmitt and Kitz. (21)
10.8 Second Amendment dated June 3, 1998 to Form of Deferred Compensation
Agreement for certain executive officers including Messrs. Kitz and
Schmitt. (22)
10.9 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)
10.10 Employment Agreement dated June 6, 2002 between Registrant and
Robert F. Mariano. (24)
10.11 Employment Agreement dated June 6, 2002 between Registrant and
Darren W. Karst. (25)
10.12 Employment Agreement dated December 27, 2002 between Registrant and
Donald S. Rosanova. (26)
10.13 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. (27)
10.14 Confidentiality and Noncompete Agreement dated June 6, 2002 between
the Registrant and Gerald F. Lestina. (28)
10.15 Roundy's, Inc. Deferred Compensation Plan Amended and Restated
August 13, 2002. (29)
10.16 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 Co-investors, and certain executive employees of
Roundy's, Inc. (30)
10.17 First Amendment dated October 28, 2002 to Investor Rights Agreement
dated June 6, 2002, including form of Transfer Notice and Joinder
Agreement. (31)
10.18 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
thereto, 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. (32)
10.19 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. (33)
10.20 Fourth Amendment dated as of March 10, 2005, to $375,000,000 Credit
Agreement dated as of June 6, 2002 and amended as of December 10,
2002, May 12, 2003 and March 29, 2004 among Roundy's Acquisition
Corp., Roundy's, Inc., as Borrower, the several banks, financial
institutions and other entities from time to time parties thereto,
Bear Stearns & Co., Inc., as sole lead arranger and sole bookrunner,
Bear Stearns Corporate Lending, Inc., as administrative agent,
Canadian Imperial Bank of Commerce, as syndication agent, and the
institutions listed in the Credit Agreement as documentation
agents. (34)
10.21 Net Lease Agreement dated May 19, 2004 between Registrant and Pabst
Farms-RDC, LLC. (35)
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 2.8 to Registrant's Annual
Report on Form 10-K for the fiscal year ended January 1, 2005
(Commission File No. 002-94984)
(9) 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)
(10) 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)
(11) 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)
(12) 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)
(13) 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)
(14) 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)
(15) 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)
(16) 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)
(17) 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.
(18) 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)
(19) 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)
(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 10.18 to Registrant's
Registration Statement on Form S-4 filed with the Commission on
August 2, 2002 (File No. 333-97623)
(25) Incorporated by reference to Exhibit 10.19 to Registrant's
Registration Statement on Form S-4 filed with the Commission on
August 2, 2002 (File No. 333-97623)
(26) Incorporated by reference to Exhibit 10.30 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)
(27) 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)
(28) 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)
(29) 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)
(30) 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)
(31) 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)
(32) 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)
(33) 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)
(34) Incorporated by reference to Exhibit 10.21 to Registrant's Annual
Report on Form 10-K for the fiscal year ended January 1, 2005
(Commission File No. 002-94984)
(35) Incorporated 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)