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Roundy’s, Inc. Reports Fourth Quarter And Full Year 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, costs incurred in connection with the Company’s IPO (or subsequent offerings of Roundy’s common stock), loss on debt extinguishment, certain non-recurring or unusual employee and pension related costs and goodwill impairment charges. 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 December 29, 2012
(Unaudited)
Assets
Current Assets:
Cash and cash equivalents $ 87,068 $ 72,889
Notes and accounts receivable, less allowance for losses 32,467 33,118
Merchandise inventories 286,537 292,673
Prepaid expenses 18,880 9,706
Deferred income taxes   6,038     5,259  
Total current assets   430,990     413,645  
 
Property and Equipment, net 309,575 314,044
 
Other Assets:
Other assets - net 45,238 46,410
Goodwill   726,879     605,986  
Total other assets   772,117     652,396  
 
Total assets $ 1,512,682   $ 1,380,085  
 
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 245,216 $ 240,392
Accrued wages and benefits 48,876 39,540
Other accrued expenses 42,089 40,594
Current maturities of long-term debt and capital lease obligations 10,789 10,918
Income taxes   4,265     2,292  
Total current liabilities   351,235     333,736  
 
Long-term Debt and Capital Lease Obligations 809,352 685,644
Deferred Income Taxes 66,438 59,112
Other Liabilities   108,482     108,327  
Total liabilities   1,335,507     1,186,819  
 
Shareholders' Equity:
Preferred stock 1,044 -
Common stock (150,000 shares authorized, $0.01 par value, 27,072 shares
and 45,654 shares at 12/31/11 and 12/29/12, respectively, issued and outstanding) 271 457
Additional paid-in capital - 114,120
Retained earnings 221,365 125,649
Accumulated other comprehensive loss   (45,505 )   (46,960 )
Total shareholders' equity   177,175     193,266  
 
Total liabilities and shareholders' equity $ 1,512,682   $ 1,380,085  
 
Roundy's, Inc.
Consolidated Statements of Cash Flows
(In thousands)
 
Year Ended
December 31, 2011 December 29, 2012
(Unaudited)
Cash Flows From Operating Activities:
Net income (loss) $ 48,048 $ (69,249 )
 
Adjustments to reconcile net income to net cash flows provided by operating activities:
Goodwill impairment charge - 120,800
Depreciation and amortization, including deferred financing costs 72,949 68,549
Gain on sale of property and equipment (542 ) (438 )
LIFO charges 4,262 1,343
Deferred income taxes 18,030 (5,659 )
Interest earned on shareholder notes receivable (187 ) -
Loss on debt extinguishment - 13,304

Amortization of debt discount
500 1,381
Stock-based compensation expense - 1,431

Forgiveness of shareholder notes receivable
75 -
Changes in operating assets and liabilities:
Notes and accounts receivable 4,609 (651 )
Merchandise inventories (32,565 ) (7,479 )
Prepaid expenses (2,061 ) 9,174
Other assets 532 329
Accounts payable 79,744 (4,824 )
Accrued expenses and other liabilities (19,725 ) (21,458 )
Income taxes   8,348     (819 )
Net cash flows provided by operating activities   182,017     105,734  
 
Cash Flows From Investing Activities:
Capital expenditures (66,497 ) (62,004 )
Proceeds from sale of property and equipment   629     450  
Net cash flows used in investing activities   (65,868 )   (61,554 )
 
Cash Flows From Financing Activities:
Borrowings on revolving credit facility - 117,500
Payments made on revolving credit facility - (117,500 )
Proceeds from long-term borrowings - 664,875
Payments of debt and capital lease obligations (64,367 ) (791,610 )
Dividends paid to common shareholders - (25,998 )
Purchase of common stock (439 ) -
Issuance of common stock, net of issuance costs - 112,540
Payment of equity issuance costs in advance of stock issuance (710 ) -
Debt issuance and refinancing fees and related expenses   -     (18,166 )
Net cash flows used in financing activities   (65,516 )   (58,359 )
 
Net increase (decrease) in Cash and Cash Equivalents 50,633 (14,179 )
 
Cash and Cash Equivalents, Beginning of Period   36,435     87,068  
Cash and Cash Equivalents, End of Period $ 87,068   $ 72,889  
 
Supplemental Cash Flow Information:
Cash paid for interest $ 71,122 $ 53,484
Cash paid for income taxes 3,663 17,237
Shareholder notes cancelled in exchange for common stock 4,203 -

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