ITEM 1. Business.
GENERAL
Roundy's, Inc. and its subsidiaries (collectively the "Company") are engaged principally in the wholesale distribution of food and nonfood products to supermarkets and warehouse food stores located in Wisconsin, Illinois, Michigan, Indiana, Ohio, Kentucky, Missouri, Arkansas, Pennsylvania, Tennessee and West Virginia. The Company also owns and operates 13 retail warehouse food stores under the name "Pick 'n Save" or "Park & Save," three limited assortment food stores under the name "Mor For Less" and 11 conventional food stores under the name "Cardinal Foods," "Village Market," "Park & Shop," "Price Less" or "Buy Low Foods." The Company offers its retail customers a complete line of nationally-known name brand merchandise, as well as a number of its own private and controlled labels. The Company services 890 retail grocery stores.
In addition to the distribution and sale of food and nonfood products, the Company provides specialized support services for retail grocers, including promotional merchandising and advertising programs, accounting and inventory control, store development and financing and assistance with other aspects of store management. The Company maintains a staff of trained retail counselors who advise and assist individual owners and managers with store operations.
Roundy's, Inc. was incorporated in 1952 under the Wisconsin Business Corporation Law. The Company's executive offices are located at 23000 Roundy Drive, Pewaukee, Wisconsin 53072, and its telephone number is (414) 547-7999. Unless the context indicates otherwise, as used herein, the term "Company" refers to Roundy's, Inc. and its subsidiaries and the term "Roundy's" refers to Roundy's, Inc. without its subsidiaries.
OPERATION AS A COOPERATIVE
Roundy's has historically operated its food wholesale business on a cooperative basis, and therefore determined its Federal income tax liabilities under Subchapter T of the Internal Revenue Code, which governs the taxation of corporations operating on a cooperative basis. Substantially all of Roundy's outstanding Class A (Voting) Common Stock is owned by the owners ("stockholder- customers") of 130 retail grocery stores serviced by Roundy's. These stockholder-customers, who own approximately 70% of the combined total of Class A Common and Class B Common, may receive patronage dividends from Roundy's based on the sales of Roundy's to such stockholder- customers. The patronage dividend is payable at least 20% in cash and the remainder in Class B Common. Patronage dividends for the years ended December 28, 1996 and December 30, 1995 were payable 30% in cash and 70% in Class B Common. There were no patronage dividends paid for the year ended December 31, 1994 because the Company did not meet the requirement imposed under its By-Laws which provides that the book value per share of its common stock must increase by 10% before any patronage dividends may be paid. Under Subchapter T of the Internal Revenue Code, patronage dividends are deducted by Roundy's in determining taxable income, and are generally taxable to the stockholder- customers (including the value of the Class B Common), for Federal income tax purposes.
Roundy's anticipates that in the future it will continue to operate on a cooperative basis in substantially this manner, although it is not required to do so and its operation on this basis, as well as its practice of paying patronage dividends, could be terminated at any time by action of the Board of Directors.
The applicable laws, regulations, rulings and judicial decisions affecting the determination of whether a corporation is operating on a cooperative basis for Federal income tax purposes under Subchapter T of the Internal Revenue Code are subject to interpretation. Although management believes that Roundy's qualifies as a cooperative for such purposes, Roundy's has not obtained, and does not intend to seek a ruling or other assurance from the IRS that this is the case. If the Internal Revenue Service were to challenge the cooperative status of Roundy's, and if Roundy's were to be unsuccessful in defending such status, Roundy's might incur a Federal income tax liability with respect to patronage dividends previously paid to stockholder-customers during the tax years in question and reflected as tax deductions by Roundy's. Roundy's thereafter might incur significantly increased consolidated Federal income tax liabilities in future tax years.
The subsidiaries of Roundy's do not operate as cooperatives. The customers serviced by these subsidiaries are independent grocers, operating 760 retail stores. They do not receive patronage dividends. In addition, approximately 30% of the outstanding combined Class A Common and Class B Common Stock is held by employees or former customers of Roundy's and, although they participate in the accumulation of equity in the Company, they do not receive patronage dividends and do not own any Class A Common.
WHOLESALE FOOD DISTRIBUTION
The Company distributes a broad range of food and nonfood products to its customers and to corporate-owned retail stores. The Company has seven product lines: dry grocery, frozen food, fresh produce, meat, dairy products, bakery goods and nonfood products. The Company has no long-term purchase commitments and management believes that the Company is not dependent upon any single source of supply. No source of supply accounted for more than 5% of the Company's purchases in fiscal 1996.
The Company sells brand name merchandise of unrelated manufacturers, including most nationally advertised brands. In addition, the Company sells numerous products under private and controlled labels, including but not limited to "Roundy's," "Old Time," "Shurfine" and "Buyers' Choice." Private label product sales for the Company accounted for $175,459,000, $166,045,000 and $153,699,000 of the Company's sales during the fiscal years ended December 28, 1996, December 30, 1995 and December 31, 1994, respectively.
As described above, Roundy's, exclusive of its subsidiaries, has historically operated on a cooperative basis with respect to its wholesale food distribution business. Roundy's cooperative operations accounted for approximately 37% of the Company's consolidated net sales and service fees for each of fiscal 1996, 1995 and 1994. At December 28, 1996, Roundy's had 70 stockholder-customers actively engaged in the retail grocery business, operating a total of 130 retail grocery stores. Roundy's cooperative wholesale food business is focused primarily in Wisconsin, where all but 6 of the 130 retail grocery stores are located (6 are in Illinois). At December 28, 1996 the Company (including its subsidiaries) had 760 independent retail food store customers. Sales by the Company to the independent retail food stores accounted for 52%, 54% and 54% of the Company's consolidated net sales and service fees for fiscal 1996, 1995 and 1994, respectively.
The Company's primary marketing objective is to be the principal source of supply to both its stockholder-customers and other independent retailers. In an 11 state area the Company serviced 130 retail grocery stores operated by its stockholder-customers, 760 retail stores operated by non- stockholders and 27 Company-owned and operated retail stores during fiscal 1996. Of the Company's consolidated net sales and service fees for this period, $582,278,000 or 22.6% were attributable to five customers, with one customer accounting for $242,679,000 or 9.4% of such sales. Approximately 80% or 733 retail stores purchased less than $3,000,000 each from the Company in fiscal 1996. 116 customers owned more than one retail food store, with one customer owning 14 retail food stores.
Services to Customers
Stockholder-customers are provided, and independent retailers are offered, a variety of services to help them maintain a competitive position within the retail grocery industry. These services include pricing services, ordering assistance, point-of-sale host-computer support, detailed reports of purchases, store engineering, retail accounting, group advertising, centralized bakery purchasing, merchandising, insurance, real estate services and retail training. The Company charges its stockholder-customers for some of these services, however, the income generated by such charges is not material. The foregoing services are also available to the Company's independent retailers on a fee basis.
Customer Loans, Guarantees and Leases
The Company has maintained a continuous effort to assist qualified stockholder-customers and independent retailers to remodel and expand existing retail locations and to develop new retail outlets, and has made various loans to these individuals and entities for such purposes.
Loans outstanding as of December 28, 1996 are as follows:
Outstanding Number Balance Range of Range of of Original as of Interest Maturity Loans Amount Dec. 28,1996 Rates Dates ------- ---------- ------------ ---------- --------- Inventory, Equipment Loans 145 $38,263,000 $28,152,500 Variable(1) 1997-2011 ________________
(1) Variable rates based on the Company's cost of borrowing.
The Company has guaranteed customer bank loans and customer leases amounting to $645,700 and $983,500, respectively at December 28, 1996.
The Company has a lease program under which it may in its discretion lease store sites and equipment for sublease to qualified customers. This enables customers to compete with large grocery store chains for store sites at favorable rates. The Company presently has such real estate and equipment leases with lease terms from 1997 to 2018. Aggregate lease rentals received under this program were $21,628,300, $22,045,500 and $22,329,500 in fiscal 1996, 1995 and 1994, respectively.
Marketing and Distribution of Products
The Company generally distributes its various product lines by a fleet of 280 tractor cabs and 670 trailers and some products are shipped direct from manufacturers to customer locations. Most customers order for their stores on a weekly basis and receive deliveries from one to five days a week. Orders are generally transmitted directly to a warehouse computer center for prompt assembly and dispatch of shipments.
The Company has retail counselors and merchandising specialists who serve its customers in a variety of ways, including the analysis of and recommendation on store facilities and equipment; development of programs and objectives for establishing efficient methods and procedures for receipt, handling, processing, checkout and other operations; informing customers on latest industry trends; assisting and dealing with training needs of customers; and, if the need arises, acting as liaison or problem solver between the Company and the customers. The retail counselors and specialists are assigned a specific geographic area and periodically visit each customer within their assigned area.
Terms of Sales and Bad Debt Experience
The Company renders statements to its customers on a weekly basis to coincide with regular delivery schedules. Roundy's accounts of single store owners are considered delinquent if not paid on the statement date. Accounts of multiple store owners are considered delinquent if not paid within three days of the statement date. Accounts of Roundy's subsidiaries are considered delinquent if not paid within seven days of the statement date. The majority of accounts are collected via the Automated Clearing House ("ACH") system. Delinquent accounts are charged interest at the rate of prime plus 5%, computed on a daily basis. During each of the past three fiscal years, the Company's bad debt expense has been less than .38% of sales. In 1996, 1995 and 1994, the Company's bad debt expense was $5,302,600, $5,871,500 and $9,166,600, respectively.
Roundy's stockholder-customers are required to maintain buying deposits with Roundy's equal to the greater of the average amount of a stockholder-customer's purchases over a two-week period or $20,000. The book value of Class A and Class B Common Stock of Roundy's owned by a stockholder- customer is credited against the buying deposit requirement, and Roundy's has a lien against all such stock to secure any indebtedness to Roundy's.
RETAIL FOOD STORES
The Company operates three types of corporate stores (high volume-limited service retail "warehouse" stores, high value- limited assortment retail stores and conventional retail stores). The high volume-limited service warehouse stores are designated as "Pick 'n Save" or "Park & Save" which generally offer, at discount prices, complete food and general merchandise lines to the customer, emphasizing higher demand items, with stores ranging from 33,000 to 73,000 square feet per store. The high value-limited assortment retail stores are designated as "Mor For Less" which emphasize low cost, high value lines to the customer, with stores ranging from 12,800 to 24,000 square feet per store. Conventional retail stores operated under the name "Cardinal Foods," "Village Market," "Park & Shop," "Price Less" or "Buy Low Foods" generally emphasize full service to the customer at competitive prices. These stores range from 9,000 to 42,000 square feet. The number of stores operated by the Company at the end of its three most recent fiscal years was as follows:
Type of Store 1996 1995 1994 ------------- ---- ---- ---- High Value-Limited Assort- ment and High Volume-Limited Service Stores (Warehouse food stores)..................... 16 15 11 Conventional Retail Stores....... 11 7 4
Sales of Company-operated stores during the three most recent fiscal years were $275,761,000, $226,513,000 and $231,364,000 for fiscal 1996, 1995 and 1994, respectively. The additional volume of wholesale sales generated by the retail stores owned and operated by the Company helps to reduce the overhead of the business and increases the Company's return to its stockholders.
EMPLOYEES
At December 28, 1996, the Company had employed full-time 1,144 executive, administrative and clerical employees, 1,324 warehouse and processing employees and drivers and 813 retail employees and had employed 2,200 part-time employees. Substantially all of the Company's warehouse employees, drivers and retail employees are represented by unions, with contracts expiring in 1997 through 2001. The Company considers its employee relations to be normal. There have been no significant work stoppages during the last five years. Substantially all full-time employees are covered by group life, accident, and health and disability insurance.
COMPETITION
The grocery industry, including the wholesale food distribution business, is characterized by intense competition and low profit margins. The shifting of market share among competitors is typical of the wholesale food business as competitors attempt to increase sales in any given market. In order to compete effectively, the Company must have the ability to meet rapidly fluctuating competitive market prices, provide a wide range of perishable and nonperishable products, make prompt and efficient delivery, and provide the related services which are required by modern supermarket operations.
The Company competes with a number of local and regional grocery wholesalers and with a number of major businesses which market their products directly to retailers, including companies having greater assets and larger sales volume than the Company. The Company's customers and the Company's corporate stores also compete at the retail level with several chain store organizations which have integrated wholesale and retail operations. The Company's competitors range from small local businesses to large national and international businesses. The Company's success is in large part dependent upon the ability of its independent retail customers to compete with larger grocery store chains.
In the Milwaukee area, the "Pick 'n Save" group, which consists of both independently-owned and Company-owned stores, continues to be the market share leader with 50% of households in the Milwaukee metropolitan statistical area purchasing "most of their groceries" from "Pick 'n Save" as reported in the Milwaukee Journal Consumer Analysis Survey taken in the Fall of 1996.
In competing for customers, emphasis is placed on high quality and a wide assortment of product, low service fees and reliability of scheduled deliveries. The Company believes that the range and quality of other business services provided to retail store customers by the wholesaler are increasingly important factors, and that success in the wholesale food industry is dependent upon the success of the Company's customers who are also engaged in an intensely competitive, low profit margin industry.
CAUTIONARY FACTORS
This report and other documents or oral statements which have been and will be prepared or made in the future contain or may contain forward-looking statements by or on behalf of the Company. Such statements are based on management's expectations at the time they are made. In addition to the assumptions and other factors referred to specifically in connection with such statements, the following factors, among others, could cause actual results to differ materially from those contemplated. These factors are in addition to any other cautionary statements, written or oral, which may be made or referred to in connection with any such forward-looking statement.
Factors that could cause actual results to differ materially from those contemplated include:
Wholesale Business Risks - The Company's sales and earnings at wholesale are dependent on the Company's ability to retain existing customers and attract new customers, as well as its ability to control costs. Certain factors could adversely impact the Company's results, including: decline of its independent retailer customer base due to competition and other factors; loss of corporate retail sales due to increased competition and other risks detailed more fully below; consolidations of retailers or competitors; increased self- distribution by chain retailers; increase in operating costs; the possibility that the Company will incur additional costs and expenses due to further rationalization or consolidation of distribution centers; entry of new or non-traditional distribution systems into the industry.
Retail Business Risks - The Company's retail segment faces risks which may prevent the Company from maintaining or increasing retail sales and earnings including: competition from other retail chains, supercenters, non-traditional competitors, and emerging alternative formats; operating risks of certain strategically important retail operations; and adverse impact from the entry of other retail chains, supercenters and non-traditional or emerging competitors into markets where the Company has a retail concentration.
Litigation - While the Company believes that it is currently not subject to any material litigation, the costs and other effects of legal and administrative cases and proceedings and settlements are impossible to predict with certainty. The current environment for litigation involving food wholesalers may increase the risk of litigation being commenced against the Company. The Company would incur the costs of defending any such litigation whether or not any claim had merit.
THE FOREGOING SHOULD NOT BE CONSTRUED AS EXHAUSTIVE AND THE COMPANY DISCLAIMS ANY OBLIGATION SUBSEQUENTLY TO REVISE ANY FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE OF SUCH STATEMENTS OR TO REFLECT THE OCCURRENCE OF ANTICIPATED OR UNANTICIPATED EVENTS.
ITEM 2.
ITEM 2. Properties.
The Company's principal executive offices are located in Pewaukee, Wisconsin. These offices are on a 5-acre site. A portion of these facilities are owned by Roundy's and the remainder are leased from a third party.
Wholesale activities are conducted by the Company from the following warehouses:
Approximate Warehouse Location Products Distributed Square Footage - -------- -------------------- -------------- Wauwatosa, Wisconsin All product lines, 745,000 (O) except nonfood products
Mazomanie, Wisconsin Dry groceries and 225,000 (L) nonfood products
Westville, Indiana All product lines, 557,000 (O) except nonfood products
Lima, Ohio All product lines, 460,000 (O) except produce and nonfood products
Eldorado, Illinois Dry groceries and 384,000 (O) dairy products
Van Wert, Ohio Nonfood products 115,000 (L)
Evansville, Indiana Frozen foods and 94,000 (O) meat
South Bend, Indiana Frozen foods 84,000 (L)
Muskegon, Michigan All product lines, 215,000 (O) except produce
O = Owned L = Leased
The Company believes its current properties are well maintained and, in general, are adequately sized to house existing operations. The Company is subject to regulation by the United States Food and Drug Administration and to certain state and local health regulations in connection with the operations of its facilities and its wholesale food business. The Company has not been subject to any actions brought under such regulations in the past five years.
Transportation
The Company's transportation fleet for distribution operations as of December 28, 1996 consisted of 280 tractor cabs, 670 trailers and 10 straight delivery trucks. In addition, the Company owns 45 automobiles. Approximately 93% of the fleet is owned by the Company and the balance is leased.
Computers
The Company owns most of its computer and related peripheral equipment. The computers are used for inventory control, billing and all other general accounting purposes. The computer systems are adequate for the Company's operations.
ITEM 3.
ITEM 3. Legal Proceedings.
The Company is not involved in any material litigation as either a plaintiff or defendant, nor is any other material litigation contemplated by Roundy's or, to the best of its knowledge, threatened against it.
ITEM 4.
ITEM 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the fourth quarter of fiscal 1996.
PART II
ITEM 5.
ITEM 5. Market for the Registrant's Common Equity and Related Stockholder Matters.
The transfer of shares of Roundy's Class A Common and Roundy's Class B Common is substantially restricted and there is no established public trading market for Roundy's stock. As of December 28, 1996, all of the outstanding shares of Roundy's Class A (voting) Common Stock were held of record by the Roundy's, Inc. Voting Trust. Further information on the Voting Trust is found in Item 12 of this report. There is also no established public trading market for Roundy's Voting Trust Certificates and there were 70 holders of such Certificates on December 28, 1996. On December 28, 1996 an aggregate of 214 persons held shares of Roundy's Class B Common Stock and/or Voting Trust Certificates. Except for patronage dividends (see Item 1, Business, and Note 3 to Roundy's financial statements), no dividends have ever been paid on the Common Stock of Roundy's. There is no intention of paying dividends, other than patronage dividends, in the foreseeable future.
ITEM 6.
ITEM 6. Selected Financial Data.
The information required by this Item is incorporated by reference from the Registrant's Annual Report to Stockholders for the fiscal year ended December 28, 1996 (the "Annual Report") under the caption "Selected Financial Data."
ITEM 7.
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operation.
The information required by this Item is incorporated by reference from the Annual Report under the caption "Financial and Operational Review."
ITEM 8.
ITEM 8. Financial Statements and Supplementary Data.
The required Financial Statements are incorporated by reference from the Annual Report; see response to Item 14(a)(1), of this report. The required financial statement schedules are filed with this report; see the response to Item 14(a)(2) of this report. Supplementary data is not furnished pursuant to Item 30(a)(5) of Regulation S-K.
ITEM 9.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.
PART III
ITEM 10.
ITEM 10. Directors and Executive Officers of the Registrant.
The Directors and Executive Officers of Roundy's are as follows:
Position(s) Held with Roundy's Name Age and Business Experience - --------------------- ---- ------------------------------- Gerald F. Lestina 54 President and Chief Executive Officer since 1995; President and Chief Operating Officer 1993-1995; Vice President of Wisconsin Region 1992-1993; President of Milwaukee Division 1986-1993; Director since 1991 (term expires 1999)
Roger W. Alswager 48 Vice President of Real Estate since 1989
Londell J. Behm 46 Vice President of Advertising since 1987
Ralph D. Beketic 50 Vice President-Wholesale since 1996; Vice President-Wisconsin Region 1996; President of Milwaukee Division since 1993; Vice President of Sales-Milwaukee Division 1991-1993
David C. Busch 48 Vice President of Administration since 1993; Vice President of Human Resources 1990-1993
Edward G. Kitz 43 Vice President, Secretary & Treasurer since 1995; Vice President & Treasurer since 1989
Charles H. 54 Vice President of Logistics and Planning Kosmaler, Jr. since 1993; Vice President of Adminis- trative Efficiencies 1992-1993
Debra A. Lawson 41 Vice President of Human Resources since 1997; Vice President Administration- Milwaukee Division 1994-1996; Director of Consumer Affairs, Training and Development 1991-1993
John E. Paterson 49 Vice President-Distribution since 1997; Vice President of Operations-Milwaukee Division 1993-1996; Vice President of Distribution for Quincy, Florida Division of Super Value Stores, Inc. 1991-1993
Robert D. Ranus 56 Vice President and Chief Financial Officer since 1987; Director since 1987 (term expires 1997)
Michael J. Schmitt 48 Vice President-Sales and Development since 1995; Vice President, Northern Region 1992-1995
Marion H. Sullivan 50 Vice President of Marketing since 1989
Robert E. Bartels 59 Director since 1994 (term expires 1997); President and Chief Executive Officer of Martin's Super Markets, Inc., South Bend, Indiana
Charles R. Bonson 50 Director since 1994 (term expires 1997); President of Bonson's Foods, Inc., Eagle River, Wisconsin
Lloyd E. Coppersmith 56 Director since 1995 (term expires 1998); President of Ron & Lloyd's, Inc., New London, Wisconsin
Gary N. Gundlach 53 Director since 1990 (term expires 1999); Owner of Pick 'n Save retail grocery stores in Columbus, DeForest, McFarland, Stoughton and Sun Prairie, Wisconsin
George C. Kaiser 64 Director since 1986 (term expires 1998); Chairman and Chief Executive Officer, Hanger Tight Company since 1988; Chief Executive Officer, George C. Kaiser and Co. since 1988; Director of The Baird Funds, Inc. since 1992
Henry Karbiner, Jr. 56 Director since 1995 (term expires 1998); President and Chief Operating Officer, Tri City National Bank; Vice President and Chief Financial Officer and Director, Tri City Bankshares Corporation, Oak Creek, Wisconsin
Patrick D. McAdams 47 Director since 1995 (term expires 1998); General Manager and Treasurer of McAdams, Inc., Oconomowoc, Wisconsin
Brenton H. Rupple 72 Director since 1993 (term expires 1999); Retired Chairman of Robert W. Baird & Co., Milwaukee, Wisconsin
Directors of Roundy's are elected by class and generally serve three- year terms; approximately one-third of the Board of Directors is elected annually. Of the ten current members of the Board of Directors, two are currently Executive Officers of Roundy's (Messrs. Lestina and Ranus) and four are "Retailer Directors" (Messrs. Bonson, Coppersmith, Gundlach and McAdams). The terms of the Roundy's, Inc. Voting Trust provide that each year the Trustees will vote to elect one stockholder-customer, chosen by a plurality vote of the Voting Trust Certificate Holders, to serve a three-year term as Director; however, the Roundy's, Inc. Voting Trust provides that in every third year, Voting Trust Certificate Holders will choose two Retailer Directors. Therefore, at any time there should be four Retailer Directors serving.
ITEM 11.
ITEM 11. Executive Compensation.
The following table shows the compensation for the past three years of Roundy's five most highly compensated executive officers performing policy making functions for Roundy's, including the Chief Executive Officer (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Other Compensation Annual Securities All Other Name and Compen- Underlying Compen- Principal sation (A)Options sation Position Year Salary Bonus (1)(2) (B)SARs (3) - ------------------- ----- -------- ------ --------- ------------ -------- (A) (B) ----- ----- Gerald F. Lestina 1996 $338,000 $95,316 - - - $8,645 President and Chief 1995 304,231 93,600 - 6,000 - 8,138 Executive Officer 1994 235,000 - $10,148 - - 7,697
Robert D. Ranus 1996 213,000 60,066 - - - 9,812 Vice President and 1995 207,000 59,616 - - - 9,659 Chief Financial 1994 200,000 - 14,668 - - 9,604 Officer
Marion H. Sullivan 1996 146,000 41,172 - - - 7,211 Vice President of 1995 135,846 40,320 - - 500 7,105 Marketing 1994 125,000 15,625 7,298 - - 7,181
Michael J. Schmitt 1996 138,174 39,010 - - - 7,093 Vice President of 1995 125,846 37,440 - - - 7,068 Sales & Development 1994 115,000 - 7,049 - - 7,114
Ralph D. Beketic 1996 137,096 38,775 - - - 1,937 Vice President- 1995 120,000 35,280 - 1,500 500 1,797 Wholesale 1994 110,000 38,750 - - - 1,879
(1) Shown in this column are amounts reimbursed during the fiscal year for the payment of income taxes for Messrs. Lestina, Ranus, Sullivan and Schmitt. (2) Pursuant to applicable SEC regulations, perquisites and other personal benefits are omitted because they did not exceed the lesser of either $50,000 or 10% of the total of salary and bonus. (3) The amounts shown in this column for 1996, 1995, and 1994, respectively, were derived from the following figures. Term life insurance premiums paid by Roundy's and Roundy's contributions to the 401(k) plan, respectively, for the named executive officers are shown below. For 1996 - Mr. Lestina: $6,270 and $2,375. Mr. Ranus: $7,732 and $2,080. Mr. Sullivan: $5,851 and $1,360. Mr. Schmitt: $5,911 and $1,182. Mr. Beketic: $666 and $1,271. For 1995 - Mr. Lestina: $5,828 and $2,310. Mr. Ranus: $7,589 and $2,070. Mr. Sullivan: $5,747 and $1,358. Mr. Schmitt: $5,810 and $1,258. Mr. Beketic: $597 and $1,200. For 1994 - Mr. Lestina: $5,518 and $2,179. Mr. Ranus: $7,425 and $2,179. Mr. Sullivan: $5,667 and $1,514. Mr. Schmitt: $5,721 and $1,393. Mr. Beketic: $546 and $1,333.
The executive officers of Roundy's are each covered by $250,000 of executive equity life insurance. In addition, executives are covered by a group life carve-out plan in the amount of three times salary, which is in lieu of the group term life insurance provided to substantially all nonunion employees under a Roundy's-sponsored Plan. The executive officers of Roundy's are also covered by an executive disability income insurance wrap-around plan which is in addition to the disability income insurance provided to substantially all nonunion employees under a Roundy's- sponsored Plan.
The Board of Directors of the Company has authorized the Company to guarantee the repayment of any loans incurred by senior executives and key employees for the purpose of exercising certain stock options granted by the Company. The guarantee is limited to a total aggregate principal amount of loans of $2,000,000. There were no employee guarantees outstanding as of December 28, 1996.
The Company has Deferred Compensation Agreements with certain executive officers, including Messrs. Lestina, Ranus and Sullivan. The Deferred Compensation Agreements provide generally that upon the occurrence of a change in control of the Company, the Company shall pay to the employee deferred compensation equal to the sum of the employee's then current annual salary plus any bonus which may have been paid to the employee within the fiscal year of the Company preceding the change in control plus any other deferred compensation which may accrue to the employee for the fiscal year of the Company preceding the change in control under any deferred compensation plan or agreement plus the value of any health or life insurance benefits. The deferred compensation amount must be paid in a single payment six months following the date of occurrence of the change in control or, if employee should be terminated following the change in control, within thirty days of the date of such termination, whichever occurs earlier.
The Company established a Deferred Compensation Plan, applicable to the Officers who have been elected by the Board of Directors, ("Elected Officers"), to assist the Elected Officers in deferring income until their retirement, death, or other termination of employment. The Plan participants may make deferral commitments that are not less than $10,000 over a period of not more than 7 years and not less than $2,000 in any one year. The aggregate annual deferral may not exceed $100,000 per calendar year for all participants combined unless the Company's Board of Director approves an amount in excess of that limit. For 1996, the Board of Directors approved an annual deferral of $108,000. Monthly interest is credited to each participant's account based on the Moody's Long Term Bond Rate in effect on January 1 of each year plus 2%. The Company established a Trust to hold assets to be used to pay benefits under the Plan, however, the rights of any participant, beneficiary or estate to benefits under the Plan are solely those of an unsecured creditor of the Company. Upon death of a participant prior to termination of employment and before any periodic payments have started, the Company will pay to the participant's Designated Beneficiary a pre-retirement death benefit equal to five times the total aggregate deferral commitment of the participant payable in equal annual installments over a ten-year period. The Company has purchased life insurance policies on the lives of the participants to fund its liabilities under the Plan.
Roundy's has a severance and non-competition agreement with Gerald F. Lestina. This agreement continues in effect until October 10, 2007. Upon Roundy's termination of Mr. Lestina's employment (other than for "good cause" as defined in the agreement), or Mr. Lestina's termination of his employment (for "good reason" as defined in the agreement), Roundy's will pay Mr. Lestina pro rata over the non-compete period, an "applicable benefit." The "applicable benefit" shall mean the "monthly benefit amount" times the greater of (A) the number of months remaining between the termination date and June 1, 1998, and (B) twelve (12). The "monthly benefit amount" means the sum of: (i) 1/12 of the amount of Mr. Lestina's current salary; (ii) 1/12 of the amount of Mr. Lestina's bonus paid or payable; and the fair value of any health and/or life insurance benefits, on a monthly basis, to which Mr. Lestina is entitled. If Mr. Lestina ceases to be employed by Roundy's (including by reason of his death) at any time after attaining age 55 and while he is then an officer and a director of Roundy's (unless employment is terminated for "good cause"), Roundy's will provide coverage for Mr. Lestina and his spouse under the employee health, medical and life insurance plans maintained by Roundy's for its executive personnel, until, in addition to other parameters, Mr. Lestina attains age 65. For a period of one year following the termination of employment of Mr. Lestina, which occurs under circumstances giving rise to Roundy's obligation to pay the severance benefit under this agreement, Mr. Lestina agrees not to compete with Roundy's in the states of Wisconsin, Michigan, Illinois, Indiana and Ohio, plus to the extent not included in those states, the area encompassed within a radius of 400 miles of any warehouse or distribution facility operated by Roundy's, or any affiliate of Roundy's, as of the termination date.
Effective November 1, 1991, the Board of Directors adopted the 1991 Stock Incentive Plan (the "Plan") under which up to 75,000 shares of Class B Common Stock may be issued pursuant to the exercise of stock options. The Plan also authorizes the grant of up to 25,000 stock appreciation rights ("SARs"). Options and SARs may be granted to senior executives and key employees of the Company by the Executive Compen-sation Committee of the Board of Directors. No options or SARs may be granted under the Plan after November 30, 2001. Options granted become exercisable based on a vesting schedule which ranges from 20% at the date of grant to 100% eight years from the date of grant. SAR holders are entitled, upon exercise of a SAR, to receive cash in an amount equal to the excess of the book value per share of the Company's common stock as of the last day of the Company's fiscal year immediately preceding the date the SAR is exercised over the base price of the SAR. SARs granted become exercisable based on the vesting rate which ranges from 20% on the last day of the fiscal year of the grant to 100% eight years from the last day of the fiscal year of the grant. In the event of a change in control of the Company, all options and SARs previously granted and not exercised, become exercisable.
The following table provides information on the Named Executive Officers' option and SAR exercises in 1996 and the value of unexercised options at December 28, 1996.
Aggregated Option/SAR Exercises in 1996 and 1996 Year-End Option Values
Number of Unexercised Shares (A)Options Value ($) of Acquired (B)SARs Unexercised In-The- on Exercise at 12/28/96 Money (A)Options (A)Options Value($) Exercisable/ (B)SARs at 12/28/96 Name (B)SARs Realized Unexercisable Exercisable/Unexercisable - ------------------ ---------- -------- ------------- ------------------------- Gerald F. Lestina (A) - - 15,500/2,000 $479,278/$33,797 (B) - - - -
Robert D. Ranus (A) - - 10,500/ - 382,475/ - (B) - - - -
Marion H. Sullivan (A) - - 1,000/500 39,505/19,470 (B) - - 1,583/917 52,433/29,592
Michael J. Schmitt (A) - - 2,000/1,500 68,705/48,670 (B) - - 1,000/500 39,505/19,470
Ralph D. Beketic (A) - - 1,300/700 27,566/15,559 (B) - - 1,133/867 30,893/24,532
Benefits under the Roundy's, Inc. Retirement Plan are, in general, an amount equal to 50% of average compensation minus 50% of the participant's primary Social Security benefit; provided, however, that if the employee has fewer than 25 years of credited service, the monthly amount so determined is multiplied by a fraction, the numerator of which is the years of credited service and the denominator of which is 25. In addition, if credited service is greater than 25 years, the benefit is increased by 1% of average compensation for each year of credited service in excess of 25 years to a maximum of 10 additional years.
The following table sets forth the estimated annual pensions (before deduction of the Social Security offset described below) which persons in specified categories would receive if they had retired on December 28, 1996, at the age of 65:
Average Annual Compensation During Last Annual Pension After Specified Five Completed Years of Credited Service Calendar Years 15 Years 20 Years 25 Years 30 Years 35 Years
$100,000 $30,000 $40,000 $50,000 $55,000 $60,000 125,000 37,500 50,000 62,500 68,800 75,000 150,000 43,700 58,200 72,800 80,100 87,300 175,000 45,300 60,400 75,500 83,100 90,700 200,000 50,500 67,700 85,000 94,300 103,000 225,000 55,600 75,100 94,500 105,600 115,300 250,000 60,700 82,300 103,900 116,600 120,000 300,000 61,600 83,500 105,500 118,500 120,000 400,000 61,600 83,500 105,500 119,100 120,000 450,000 61,600 83,500 105,500 120,000 120,000 500,000 61,600 83,500 115,100 120,000 120,000
All of the Named Executive Officers are covered by the Roundy's, Inc. Retirement Plan. Their average annual compensation would be the combined amount listed under Salary and Bonus shown in the Summary Compensation Table. The estimated credited years of service for each of the Named Executive Officers is as follows: Mr. Lestina: 27 years, Mr. Ranus: 10 years, Mr. Sullivan: 9 years, Mr. Schmitt: 19 years, and Mr. Beketic: 6 years.
Directors who are employees of Roundy's receive no fees for serving as Directors. Customer-directors each received $500 per meeting during 1996; outside Directors each received $12,500, prorated on an annual basis, plus $500 per Board of Directors meeting plus $250 per committee meeting not held the same day as a Board of Directors meeting for their services during 1996.
ITEM 12.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management.
Roundy's is authorized by its Articles of Incorporation to issue 60,000 shares of Class A Common, $1.25 par value, and 2,400,000 shares of Class B Common, $1.25 par value. On December 28, 1996, 13,000 shares of Class A Common and 1,112,824 shares of Class B Common were outstanding.
Roundy's has a Voting Trust (the "Trust") which was established in August, 1971 (was amended and restated in 1983 and was further amended in 1986 and 1995), as the successor to an initial voting trust created at the time of the organization of Roundy's. The Trust has an indefinite term, although it may be terminated upon the vote of the Voting Trust Certificate Holders as provided therein. The main purpose for the establishment of the Trust, and its predecessor, was to insure the stability of management necessary to obtain long-term warehouse and other financing. On December 28, 1996, all of the outstanding shares of Roundy's Class A Common held by current stockholder- customers were on deposit in the Trust. The Voting Trust Agreement authorizes the Trustees to vote all shares deposited in the Trust, in their discretion, for the election of all but four of the Directors (there are currently ten Directors). On other matters submitted to a vote of stockholders (including the election of one Director each year), the Trustees are required to vote the shares deposited in the Trust as a block as directed by a vote of the holders of outstanding Voting Trust Certificates (with each share of Class A Common in the Trust entitling the depositor thereof to one vote).
The Trustees of the Trust currently are Robert S. Gold, Edward G. Kitz, Gerald F. Lestina, Gary R. Sarner, Robert R. Spitzer and David A. Ulrich. Mr. Lestina is President and Chief Executive Officer of Roundy's, Inc., and is a member of Roundy's Board of Directors. Mr. Kitz is Vice President, Secretary and Treasurer of Roundy's, Inc. Mr. Gold is President and Stockholder of B. & H. Gold Corporation, a stockholder-customer of Roundy's. Mr. Sarner is President and Chief Operating Officer of Christiana Companies, Inc. and President and Chief Executive Officer of its subsidiary, Total Logistic Control, Inc. (see Item 13.
ITEM 13. Certain Relationships and Related Transactions.
Messrs. Bartels, Bonson, Coppersmith, Gundlach and McAdams, directors of Roundy's, and Messrs. Gold and Ulrich, Trustees of the Voting Trust, each own and/or operate retail food stores which purchase merchandise from the Company as a supplier in the ordinary course of business. Retail food stores owned by directors or Retailer Trustees purchase from the Company on the same basis and conditions as all other stockholder- customers of Roundy's. During the last three years, the aggregate amount of purchases from the Company for each of the foregoing were as follows:
1996 1995 1994 ------------ ------------ ------------ Robert E. Bartels $ 96,608,000 $ 81,542,000 $ 77,898,000 Charles R. Bonson 7,616,000 7,094,000 6,644,000 Lloyd E. Coppersmith 22,819,000 21,499,000 20,808,000 Robert S. Gold 48,212,000 46,770,000 44,090,000 Gary N. Gundlach 45,680,000 39,253,000 31,960,000 Patrick D. McAdams 63,003,000 63,598,000 64,185,000 David A. Ulrich 242,679,000 219,310,000 196,627,000
Woodman's Food Market, Inc., owner of 9.25% of Roundy's Class B Common Stock, had aggregate purchases from Roundy's of $52,805,000, $58,484,000 and $53,981,000 for 1996, 1995 and 1994, respectively.
Ultra Mart, Inc., owner of 5.38% of Roundy's Class A Common Stock had aggregate purchases from Roundy's of $90,722,000, $81,399,000 and $79,497,000 for 1996, 1995 and 1994, respectively.
Ron & Lloyd's, Inc. agreed to sublease land and buildings from the Company for a period of 17 years at one store site, for an aggregate annual rental of approximately $457,000.
Gary N. Gundlach has agreed to sublease land and buildings from the Company for periods of 12 to 18 years at four store sites, for an aggregate annual rental of approximately $935,000.
McAdams, Inc. agreed to sublease land and buildings from the Company for periods of five to 14 years at three store sites, for an aggregate annual rental of approximately $624,000.
Mega Marts, Inc. agreed to sublease land and buildings from the Company for periods of three to 18 years at ten store sites and one additional storage site, for an aggregate annual rental of approximately $3,792,000.
B. & H. Gold Corporation, Gold's Market, Inc., and Gold's, Inc. have agreed to sublease land and buildings from the Company for periods of nine to 22 years at three store sites, for an aggregate annual rental of approximately $1,184,000.
Ultra Mart, Inc. agreed to sublease land and buildings from the Company for a period of seven to 17 years at seven store sites, for an aggregate annual rental of approximately $2,345,000.
In January, 1993, Ultra Mart, Inc. issued promissory notes to Roundy's, Inc. in the amount of $393,600. The amount outstanding as of February 22, 1997 was $78,700.
The Company has made payments in fiscal 1996 aggregating $1,357,900 for handling, order selecting and storage of frozen food, meat and ice cream to Total Logistic Control, Inc. of which Mr. Sarner is President and Chief Executive Officer.
PART IV
ITEM 14.
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a)(1) Financial Statements
The following consolidated financial statements of the Company are incorporated by reference from its Annual Report to Stockholders for the year ended December 28, 1996, filed as an exhibit hereto:
Independent Auditors' Report Statements of Consolidated Earnings for each of the three years in the period ended December 28, 1996 Consolidated Balance Sheets at December 28, 1996 and December 30, 1995 Statements of Consolidated Stockholders' Equity for each of the three years in the period ended December 28, 1996 Statements of Consolidated Cash Flows for each of the three years in the period ended December 28, 1996 Notes to Financial Statements
(a)(2) Financial Statement Schedules as of December 28, 1996
Page
Independent Auditors' Report....................... 23
Schedule VIII - Valuation and qualifying accounts.. 24
All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or the notes thereto.
(a)(3) Exhibits
3.1 Articles of Incorporation of the Registrant, as amended, incorporated herein by reference to Exhibit 4.1 of Registrant's Registration Statement on Form S-2 (File No. 2-94485) dated December 5, 1984. 3.2 By-Laws of the Company as amended December 9, 1986, incorporated herein by reference to Exhibit 3.2 of Registrant's Annual Report on Form 10-K for fiscal year ended January 3, 1987, filed with the Commission on April 3, 1987, Commission File No. 2-66296. 3.3 1988-1 By-Law Amendments, incorporated herein by reference to Exhibit 3.3 of Registrant's Annual Report on Form 10-K for the fiscal year ended January 2, 1988, filed with the Commission on April 1, 1988, Commission File No. 2-66296. 3.4 Amendment of By-Law Section 5.01, incorporated herein by reference to Exhibit 3.4 of Registrant's Annual Report on Form 10-K for the fiscal year ended December 30, 1989, filed with the Commission on March 30, 1990, Commission File No. 2-66296. 3.5 Amendment of By-Law Section 7.10, 7.11 and 7.12, incorporated herein by reference to Exhibit 3.5 of Registrant's Annual Report on Form 10-K for the fiscal year ended December 29, 1990, filed with the Commission on March 28, 1991, Commission File No. 2-66296.
3.6 Amendment to By-Laws Relating to Number of Directors, adopted April 12, 1995, incorporated herein by reference to Exhibit 3.6 of Registrant's Registration Statement on Form S-2 (File No. 33-57505), dated May 1, 1995. 4.1 Policy Relating to Redemption of Stock by Inactive Customer Shareholders and Former Employees. FILED HEREWITH (included as Exhibit D to the prospectus which forms a part of the Registration Statement). 4.2 Note Agreement dated December 15, 1991 (effective December 30, 1991), between Roundy's, Inc. and Massachusetts Mutual Life Insurance Company and United of Omaha Life Insurance Company, incorporated herein by reference to Exhibit 4.9 of Registrant's Annual Report on Form 10-K for the fiscal year ended December 28, 1991, filed with the Commission on March 26, 1992, Commission File No. 2-66296. 4.3 Note Agreement dated December 15, 1992 between Roundy's, Inc. and Connecticut Mutual Life Insurance Company, The Ohio National Life Insurance Company, Provident Mutual Life Insurance Company of Philadelphia, Providentmutual Life and Annuity Company of America, Guarantee Mutual Life Company, Woodmen Accident and Life Company and United of Omaha Life Insurance Company, incorporated herein by reference to Exhibit 4.11 of Registrant's Annual Report on Form 10-K for the fiscal year ended January 2, 1993, filed with the Commission on March 30, 1993, Commission File No. 2-66296. 4.4 Policy Regarding Issuance and Sales of Roundy's, Inc. Stock, incorporated herein by reference to Exhibit 4.11 of Registrant's Registration Statement on Form S-2 (File No. 33-57505) filed with the Commission on January 30, 1995 (included as Exhibit E to the prospectus which forms a part of the Registration Statement). 4.5 Note Agreement dated December 22, 1993 (effective December 22, 1993), between Roundy's, Inc. and The Variable Annuity Life Insurance Company, The Life Insurance Company of Virginia, Phoenix Home Life Mutual Insurance Company, Phoenix American Life Insurance Company, Washington National Insurance Company, and TMG Life Insurance Company, incorporated herein by reference to Exhibit 4.14 of Registrant's Annual Report on Form 10-K for the fiscal year ended January 1, 1994, filed with the Commission on March 31, 1994, Commission File No. 2-66296. 4.6 Form of Subscription Agreement, incorporated by reference to Exhibit 4.14 of Registrant's Registration Statement on Form S-2 (File No. 33- 57505) filed with the Commission on January 30, 1995 (included as Exhibit A to the prospectus which forms a part of the Registration Statement). 4.7 Form of Buying Deposit Agreement, incorporated by reference to Exhibit 4.15 of Registrant's Registration Statement on Form S-2 (File No. 33- 57505) filed with the Commission on January 30, 1995 (included as Exhibit B to the prospectus which forms a part of the Registration Statement). 4.8 Article V of Registrant's By-Laws "Fiscal Year Accounting and Patronage Rebates," as amended on December 12, 1989, incorporated by reference to Exhibit 4.16 of Registrant's Registration Statement on Form S-2 (File No. 33-57505) filed with the Commission on January 30, 1995 (included as Exhibit C to the prospectus which forms a part of the Registration Statement). 4.9 First Amendment dated May 1, 1996 to Note Agreements dated December 15, 1991 and Note Agreements dated December 15, 1992 and Note Agreements dated December 22, 1993, incorporated herein by reference to Exhibit 4.16 of Registrant's Form 10-Q for the quarterly period ended June 29, 1996, filed with the Commission on August 13, 1996, Commission File No. 33-57505. 4.10 Note Agreement dated May 15, 1996 between Roundy's, Inc. and The Ohio National Life Insurance, Phoenix American Life Insurance Company, Provident Mutual Life Insurance, Providentmutual Life and Annuity Company of America, United of Omaha Life Insurance Company, John Alden Life Insurance Company, Oxford Life Insurance Company, The Security Mutual Life Insurance Company of Lincoln, Nebraska and Woodman Accident and Life Company, incorporated herein by reference to Exhibit 4.17 of Registrant's Form 10-Q for the quarterly period ended June 29, 1996, filed with the Commission on August 13, 1996, Commission File No. 33-57505. 4.11 Credit Agreement dated December 13, 1996, between Roundy's, Inc. and PNC Bank, NA (as agent). FILED HEREWITH. 9 Amended and Restated Voting Trust Agreement dated September 16, 1983, incorporated herein by reference to Exhibit 9 of Registrant's Annual Report on Form 10- K for the year ended December 31, 1983, filed with the Commission on March 30, 1984, Commission File No. 2-66296. 9(a) Amendments No. 1 and 2, dated April 8, 1986 to Amended and Restated Voting Trust Agreement, incorporated herein by reference to Exhibit 9(a) of Registrant's Registration Statement on Form S-2 (File No. 2-66296), dated April 29, 1986. 9(b) Amendment No. 1987-1 to Amended and Restated Voting Trust Agreement, incorporated herein by reference to Exhibit 9(b) of Registrant's Registration Statement on Form S-2 (File No. 2-66296), dated April 29, 1987. 9(c) Amendment 1995-1 to the Roundy's, Inc. Voting Trust Agreement, incorporated herein by reference to Exhibit 9(c) of Registrant's Registration Statement on Form S-2 (File No. 33-57505), dated May 1, 1995. 9(d) Amendment 1995-2 to the Roundy's, Inc. Voting Trust Agreement, incorporated herein by reference to Exhibit 9(d) of Registrant's Registration Statement on Form S-2 (File No. 33-57505), dated April 26, 1996. 10.1 Deferred Compensation Agreement plan between the Registrant and certain executive officers including Messrs. Lestina, Ranus and Sullivan, incorporated herein by reference to Exhibit 10.4 of Registrant's Annual Report on Form 10-K for the fiscal year ended December 30, 1989 filed with the Commission on March 30, 1990, Commission File No. 2-66296. 10.2 Directors and Officers Liability and Corporation Reimbursement Policy issued by American Casualty Company of Reading, Pennsylvania (CNA Insurance Companies) as of June 13, 1986, incorporated herein by reference to Exhibit 10.3 of 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 No. 2-66296. 10.2(a) Declarations page for renewal through November 1, 1997 of Directors and Officers Liability and Corporation Reimbursement Policy. 10.3 1991 Stock Incentive Plan, revised February 9, 1993, incorporated herein by reference to Exhibit 10.6 of Registrant's Annual Report on Form 10-K for the fiscal year ended January 2, 1993, filed with the Commission on March 30, 1993, Commission File No. 2- 66296. 10.4 Severance and Non-Competition Agreement between the Registrant and Gerald F. Lestina, incorporated herein by reference to Exhibit 10.4 of Registrant's Annual Report on Form 10-K for the fiscal year ended December 30, 1995, filed with the Commission on March 28, 1996, Commission File No. 33-57505.
10.5 Roundy's, Inc. Deferred Compensation Plan, effective March 19, 1996, incorporated herein by reference to Exhibit 10.5 of Registrant's Registration Statement on Form S-2 (File No. 33-57505), dated April 26, 1996. 13. 1996 Annual Report to Stockholders of Roundy's, Inc. 21. Subsidiaries of Roundy's, Inc. 27. Financial Data Schedule. (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the last quarter of 1996.
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Directors of Roundy's, Inc.:
We have audited the consolidated financial statements of Roundy's, Inc. and its subsidiaries as of December 28, 1996 and December 30, 1995, and for each of the three years in the period ended December 28, 1996, and have issued our report thereon dated February 21, 1997; such financial statements and reports are included in your 1996 Annual Report to Stockholders and are incorporated herein by reference. Our audits also included the financial statement schedule of Roundy's, Inc., listed in Item 14(a)(2). This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin February 21, 1997
SCHEDULE VIII
ROUNDY'S, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
______________________________________________________________________________
COLUMN COLUMN COLUMN COLUMN COLUMN A B C D E ______________________________________________________________________________
ADDITIONS
Balance (1) (2) at Charged Charged Balance Beginning to Costs to Other at End Description of Period & Expenses Accounts Deductions(A) of Period
YEAR ENDED December 28, 1996: Allowance for Losses: Current receivables $8,431,300 $4,367,600 $6,484,200 $6,314,700 Notes receivable, long-term .......... 4,641,000 935,000 - 5,576,000
YEAR ENDED December 30, 1995: Allowance for Losses: Current receivables $11,000,400 $2,146,500 $4,715,600 $8,431,300 Notes receivable, long-term .......... 916,000 3,725,000 - 4,641,000
YEAR ENDED December 31, 1994: Allowance for Losses: Current receivables $8,766,500 $9,166,600 $6,932,700 $11,000,400 Notes receivable, long-term .......... 1,483,000 - 567,000 916,000
(A) Amounts in Column D represent accounts written off less recoveries.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, Roundy's, Inc. has duly caused this report to be signed on its behalf of the undersigned, thereunto duly authorized.
ROUNDY'S, INC.
GERALD F. LESTINA ROBERT D. RANUS - ----------------------------- --------------------- By: Gerald F. Lestina By: Robert D. Ranus (Principal Executive Officer) (Principal Financial Officer and Principal Accounting Officer)
Date: March 21, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons (constituting a majority of the Board of Directors) on behalf of the Registrant and in the capacities and on the dates indicated:
GERALD F. LESTINA PATRICK D. MCADAMS - ------------------------ ---------------------- Gerald F. Lestina Patrick D. McAdams March 21, 1997 March 21, 1997 (Director) (Director)
GEORGE C. KAISER ROBERT D. RANUS - ------------------------ ---------------------- George C. Kaiser Robert D. Ranus March 21, 1997 March 21, 1997 (Director) (Director)
BRENTON H. RUPPLE GARY N. GUNDLACH - ------------------------ ---------------------- Brenton H. Rupple Gary N. Gundlach March 21, 1997 March 21, 1997 (Director) (Director)
CHARLES R. BONSON _______________________ ---------------------- Charles R. Bonson Robert E. Bartels March 21, 1997 March 21, 1997 (Director) (Director)
LLOYD E. COPPERSMITH HENRY KARBINER, JR. - ----------------------- ---------------------- Lloyd E. Coppersmith Henry Karbiner, Jr. March 21, 1997 March 21, 1997 (Director) (Director)
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT
Registrant's annual report to securityholders for the year ended December 28, 1996 is incorporated by reference in this report.
Registrant does not furnish proxy soliciting material to its securityholders.
INDEX TO EXHIBITS
Exhibit Description
3.1 Articles of Incorporation of the Registrant, as amended, incorporated herein by reference to Exhibit 4.1 of Registrant's Registration Statement on Form S-2 (File No. 2-94485) dated December 5, 1984. 3.2 By-Laws of the Company as amended December 9, 1986, incorporated herein by reference to Exhibit 3.2 of Registrant's Annual Report on Form 10-K for fiscal year ended January 3, 1987, filed with the Commission on April 3, 1987, Commission File No. 2-66296. 3.3 1988-1 By-Law Amendments, incorporated herein by reference to Exhibit 3.3 of Registrant's Annual Report on Form 10-K for the fiscal year ended January 2, 1988, filed with the Commission on April 1, 1988, Commission File No. 2-66296. 3.4 Amendment of By-Law Section 5.01, incorporated herein by reference to Exhibit 3.4 of Registrant's Annual Report on Form 10-K for the fiscal year ended December 30, 1989, filed with the Commission on March 30, 1990, Commission File No. 2-66296. 3.5 Amendment of By-Law Section 7.10, 7.11 and 7.12, incorporated herein by reference to Exhibit 3.5 of Registrant's Annual Report on Form 10-K for the fiscal year ended December 29, 1990, filed with the Commission on March 28, 1991, Commission File No. 2-66296. 3.6 Amendment to By-Laws Relating to Number of Directors, adopted April 12, 1995, incorporated herein by reference to Exhibit 3.6 of Registrant's Registration Statement on Form S-2 (File No. 33-57505), dated May 1, 1995. 4.1 Policy Relating to Redemption of Stock by Inactive Customer Shareholders and Former Employees. FILED HEREWITH (included as Exhibit D to the prospectus which forms a part of the Registration Statement). 4.2 Note Agreement dated December 15, 1991 (effective December 30, 1991), between Roundy's, Inc. and Massachusetts Mutual Life Insurance Company and United of Omaha Life Insurance Company, incorporated herein by reference to Exhibit 4.9 of Registrant's Annual Report on Form 10-K for the fiscal year ended December 28, 1991, filed with the Commission on March 26, 1992, Commission File No. 2-66296. 4.3 Note Agreement dated December 15, 1992 between Roundy's, Inc. and Connecticut Mutual Life Insurance Company, The Ohio National Life Insurance Company, Provident Mutual Life Insurance Company of Philadelphia, Providentmutual Life and Annuity Company of America, Guarantee Mutual Life Company, Woodmen Accident and Life Company and United of Omaha Life Insurance Company, incorporated herein by reference to Exhibit 4.11 of Registrant's Annual Report on Form 10-K for the fiscal year ended January 2, 1993, filed with the Commission on March 30, 1993, Commission File No. 2-66296. 4.4 Policy Regarding Issuance and Sales of Roundy's, Inc. Stock, incorporated herein by reference to Exhibit 4.11 of Registrant's Registration Statement on Form S- 2 (File No. 33-57505) filed with the Commission on January 30, 1995 (included as Exhibit E to the prospectus which forms a part of the Registration Statement). 4.5 Note Agreement dated December 22, 1993 (effective December 22, 1993), between Roundy's, Inc. and The Variable Annuity Life Insurance Company, The Life Insurance Company of Virginia, Phoenix Home Life Mutual Insurance Company, Phoenix American Life Insurance Company, Washington National Insurance Company, and TMG Life Insurance Company, incorporated herein by reference to Exhibit 4.14 of Registrant's Annual Report on Form 10-K for the fiscal year ended January 1, 1994, filed with the Commission on March 31, 1994, Commission File No. 2-66296. 4.6 Form of Subscription Agreement, incorporated by reference to Exhibit 4.14 of Registrant's Registration Statement on Form S-2 (File No. 33- 57505) filed with the Commission on January 30, 1995 (included as Exhibit A to the prospectus which forms a part of the Registration Statement). 4.7 Form of Buying Deposit Agreement, incorporated by reference to Exhibit 4.15 of Registrant's Registration Statement on Form S-2 (File No. 33- 57505) filed with the Commission on January 30, 1995 (included as Exhibit B to the prospectus which forms a part of the Registration Statement). 4.8 Article V of Registrant's By-Laws "Fiscal Year Accounting and Patronage Rebates," as amended on December 12, 1989, incorporated by reference to Exhibit 4.16 of Registrant's Registration Statement on Form S-2 (File No. 33-57505) filed with the Commission on January 30, 1995 (included as Exhibit C to the prospectus which forms a part of the Registration Statement). 4.9 First Amendment dated May 1, 1996 to Note Agreements dated December 15, 1991 and Note Agreements dated December 15, 1992 and Note Agreements dated December 22, 1993, incorporated herein by reference to Exhibit 4.16 of Registrant's Form 10-Q for the quarterly period ended June 29, 1996, filed with the Commission on August 13, 1996, Commission File No. 33-57505. 4.10 Note Agreement dated May 15, 1996 between Roundy's, Inc. and The Ohio National Life Insurance, Phoenix American Life Insurance Company, Provident Mutual Life Insurance, Providentmutual Life and Annuity Company of America, United of Omaha Life Insurance Company, John Alden Life Insurance Company, Oxford Life Insurance Company, The Security Mutual Life Insurance Company of Lincoln, Nebraska and Woodman Accident and Life Company, incorporated herein by reference to Exhibit 4.17 of Registrant's Form 10-Q for the quarterly period ended June 29, 1996, filed with the Commission on August 13, 1996, Commission File No. 33-57505. 4.11 Credit Agreement dated December 13, 1996, between Roundy's, Inc. and PNC Bank, NA (as agent). FILED HEREWITH. 9 Amended and Restated Voting Trust Agreement dated September 16, 1983, incorporated herein by reference to Exhibit 9 of Registrant's Annual Report on Form 10- K for the year ended December 31, 1983, filed with the Commission on March 30, 1984, Commission File No. 2-66296. 9(a) Amendments No. 1 and 2, dated April 8, 1986 to Amended and Restated Voting Trust Agreement, incorporated herein by reference to Exhibit 9(a) of Registrant's Registration Statement on Form S-2 (File No. 2-66296), dated April 29, 1986. 9(b) Amendment No. 1987-1 to Amended and Restated Voting Trust Agreement, incorporated herein by reference to Exhibit 9(b) of Registrant's Registration Statement on Form S-2 (File No. 2-66296), dated April 29, 1987. 9(c) Amendment 1995-1 to the Roundy's, Inc. Voting Trust Agreement, incorporated herein by reference to Exhibit 9(c) of Registrant's Registration Statement on Form S-2 (File No. 33-57505), dated May 1, 1995. 9(d) Amendment 1995-2 to the Roundy's, Inc. Voting Trust Agreement, incorporated herein by reference to Exhibit 9(d) of Registrant's Registration Statement on Form S-2 (File No. 33-57505), dated April 26, 1996. 10.1 Deferred Compensation Agreement plan between the Registrant and certain executive officers including Messrs. Lestina, Ranus and Sullivan, incorporated herein by reference to Exhibit 10.4 of Registrant's Annual Report on Form 10-K for the fiscal year ended December 30, 1989 filed with the Commission on March 30, 1990, Commission File No. 2-66296. 10.2 Directors and Officers Liability and Corporation Reimbursement Policy issued by American Casualty Company of Reading, Pennsylvania (CNA Insurance Companies) as of June 13, 1986, incorporated herein by reference to Exhibit 10.3 of 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 No. 2-66296. 10.2(a) Declarations page for renewal through November 1, 1997 of Directors and Officers Liability and Corporation Reimbursement Policy. FILED HEREWITH. 10.3 1991 Stock Incentive Plan, revised February 9, 1993, incorporated herein by reference to Exhibit 10.6 of Registrant's Annual Report on Form 10-K for the fiscal year ended January 2, 1993, filed with the Commission on March 30, 1993, Commission File No. 2- 66296. 10.4 Severance and Non-Competition Agreement between the Registrant and Gerald F. Lestina, incorporated herein by reference to Exhibit 10.4 of Registrant's Annual Report on Form 10-K for the fiscal year ended December 30, 1995, filed with the Commission on March 28, 1996, Commission File No. 33-57505. 10.5 Roundy's, Inc. Deferred Compensation Plan, effective March 19, 1996, incorporated herein by reference to Exhibit 10.5 of Registrant's Registration Statement on Form S-2 (File No. 33-57505), dated April 26, 1996. 13 1996 Annual Report to Stockholders of Roundy's, Inc. FILED HEREWITH. 21 Subsidiaries of Roundy's, Inc. FILED HEREWITH. 27 Financial Data Schedule. FILED HEREWITH. (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the last quarter of 1996.