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Roundy’s, Inc. Reports Second Quarter 2012 Financial Results

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

Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. The limitations of Adjusted EBITDA include: (i) it does not reflect the Company’s cash expenditures or future requirements for capital expenditures or contractual commitments; (ii) it does not reflect changes in, or cash requirements for, the Company’s working capital needs; (iii) it does not reflect income tax payments the Company may be required to make; and (iv) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements.
Roundy's, Inc.
Consolidated Balance Sheets
(In thousands, except per share data)
December 31, 2011 June 30, 2012
Assets (Unaudited)
Current Assets:
Cash and cash equivalents $ 87,068 $ 64,745
Notes and accounts receivable, less allowance for losses 32,467 35,311
Merchandise inventories 286,537 318,723
Prepaid expenses 18,880 18,102
Deferred income taxes   6,038     6,038  
Total current assets   430,990     442,919  
Property and Equipment, net 309,575 296,342
Other Assets:
Other assets - net 45,238 48,999
Goodwill   726,879     726,879  
Total other assets   772,117     775,878  
Total assets $ 1,512,682   $ 1,515,139  
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 245,216 $ 253,346
Accrued wages and benefits 48,876 40,675
Other accrued expenses 42,089 42,447
Current maturities of long-term debt and capital lease obligations 10,789 10,925
Income taxes   4,265     5,867  
Total current liabilities   351,235     353,260  
Long-term Debt and Capital Lease Obligations 809,352 690,406
Deferred Income Taxes 66,438 67,876
Other Liabilities   108,482     101,914  
Total liabilities   1,335,507     1,213,456  
Shareholders' Equity:
Preferred Stock 1,044 -


Common stock (150,000 shares authorized, $0.01 par value, 27,072 sharesand 45,657 shares at 12/31/11 and 6/30/12, respectively, issued and outstanding)
271 457
Additional paid-in capital - 113,345
Retained earnings 221,365 232,045
Accumulated other comprehensive loss   (45,505 )   (44,164 )
Total shareholders' equity   177,175     301,683  
Total liabilities and shareholders' equity $ 1,512,682   $ 1,515,139  
Roundy's, Inc.
Consolidated Statements of Cash Flows
(In thousands)
Twenty-six Weeks Ended
July 2, 2011 June 30, 2012
Cash Flows From Operating Activities:
Net income $ 26,518 $ 21,182
Adjustments to reconcile net income to net cash flows provided by (used in) operating activities:
Depreciation and amortization, including deferred financing costs 36,211 33,477
Gain on sale of property and equipment (203 ) (97 )
LIFO charges 1,000 1,250
Amortization of debt discount 250 634
Stock-based compensation expense - 657
Interest earned on shareholder notes receivable (93 ) -
Loss on debt extinguishment - 13,304
Deferred income taxes - 59
Changes in operating assets and liabilities:
Notes and accounts receivable (2,832 ) (2,844 )
Merchandise inventories (26,474 ) (33,436 )
Prepaid expenses (982 ) 778
Other assets 98 35
Accounts payable 78,917 8,130
Accrued expenses and other liabilities (10,524 ) (11,945 )
Income taxes   19,854     1,662  
Net cash flows provided by operating activities   121,740     32,846  
Cash Flows From Investing Activities:
Capital expenditures (26,564 ) (16,351 )
Proceeds from sale of property and equipment   246     102  
Net cash flows used in investing activities   (26,318 )   (16,249 )
Cash Flows From Financing Activities:
Proceeds from long-term borrowings - 664,875
Payments of debt and capital lease obligations (5,452 ) (787,873 )
Dividends paid - (10,309 )
Issuance of common stock, net of issuance costs - 112,540
Debt issuance and refinancing fees and related expenses   -     (18,153 )
Net cash flows used in financing activities   (5,452 )   (38,920 )
Net increase (decrease) in Cash and Cash Equivalents 89,970 (22,323 )
Cash and Cash Equivalents, Beginning of Period   36,435     87,068  
Cash and Cash Equivalents, End of Period $ 126,405   $ 64,745  
Supplemental Cash Flow Information:
Cash paid for interest $ 36,001 $ 30,201
Cash paid (refunded) for income taxes (2,177 ) 11,206

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