SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 30, 1995
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-549
SCHULTZ SAV-O STORES, INC.
(Exact name of registrant
as specified in its charter)
Wisconsin 39-0600405
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2215 Union Avenue
Sheboygan, Wisconsin 53081
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (414) 457-4433
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of Class
Common Stock, $0.05 par value
Common Stock Purchase Rights
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 check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Aggregate market value of voting stock held by non-affiliates of the
registrant as of March 20, 1996: $63,838,987*
Number of shares outstanding of the registrant's Common Stock as of March
20, 1996: 4,653,598
PORTIONS OF THE FOLLOWING DOCUMENTS ARE INCORPORATED HEREIN BY REFERENCE:
1995 Annual Report to Shareholders (incorporated by reference into
Parts II and IV to the extent indicated therein).
Definitive Proxy Statement for 1996 annual meeting of shareholders
(incorporated by reference into Part III to the extent indicated
therein).
_______________
* Only excludes shares beneficially owned by directors and officers of
the registrant.
PART I
Item 1. Business.
General
Schultz Sav-O Stores, Inc. ("Company") is engaged in distributing
food and related products at wholesale and retail. As of December 30,
1995, the Company franchised 66 and owned 19 retail supermarkets under the
Piggly Wiggly/R/ name in its Eastern Wisconsin and Northeastern Illinois
market area. While the Company has a presence in some larger metropolitan
areas, it has attempted to develop a niche for serving the food shopping
needs of customers in smaller and suburban communities within its market
areas.
The Company is the primary supplier to its 85 franchised and
corporate owned Piggly Wiggly supermarkets. The Company also serves as a
wholesaler to a number of small, independently operated retail
supermarkets in its market area.
The Company supplies a variety of products to its franchised and
corporate supermarkets and other wholesale customers primarily from its
warehouse and distribution center in Sheboygan, Wisconsin. The Company
also provides its franchised and corporate supermarkets and other
customers with fresh, frozen and processed meat, eggs and deli products
from a third-party distribution facility in Milwaukee, Wisconsin on a
contract basis. Additionally, the Company bottles carbonated soft drinks,
fruit drinks and drinking and distilled water under its Springtime label
and supplies these products to its franchised and corporate supermarkets
and other wholesale customers.
The Company is a Wisconsin corporation organized in 1912.
Wholesale Operations
For several years the Company has been emphasizing its more
profitable wholesale distribution business and the associated expansion of
its franchise store base, while also effecting changes to its corporate
retail operations to improve profitability. As part of implementing this
corporate strategy, the Company has sold and converted 11 underperforming
corporate retail supermarkets into franchise units and added 12 new
replacement or new market franchise supermarkets since 1991. In 1995,
there were 7 franchise expansion projects in process, resulting in 6
completed expansions and 1 expansion that will be completed in early 1996.
Additionally, in 1995, 3 replacement stores were completed and 3
replacement stores are expected to be completed in 1996. Finally, in
1995, 1 new market franchise unit was completed and 2 new market franchise
units are projected to be completed in 1996. These expansion, replacement
and new market franchise projects added approximately 98,000 square feet
of store space in 1995, and are projected to add approximately 87,000
square feet in 1996 if all scheduled projects are completed.
The following table shows the Company's development of, and changes
in, its franchised and corporate retail supermarkets for the periods
presented:
Franchised Supermarkets Corporate Supermarkets
Number of
Supermarkets 1991 1992 1993 1994 1995 1991 1992 1993 1994 1995
Beginning of Year 53 51 59 64 65 33 32 26 21 20
New Market
Supermarkets(a) 1 2 1 -- 1 1 -- -- -- --
Replacement
Supermarkets(b) 1 3 1 1 3 1 -- -- -- --
Converted to
Franchise(c) 1 6 4 1 -- (1) (6) (4) (1) --
Terminated Operations(d) (3) (4) (3) (1) (3) (2) -- (1) -- (1)
Terminated Franchises(e) (4) -- -- -- -- -- -- -- -- --
New Franchises(f) 2 1 2 -- -- -- -- -- -- --
End of Year 51 59 64 65 66 32 26 21 20 19
=== === === === === === === === === ===
Remodeled
Supermarkets(g) 2 3 1 5 6 2 1 3 -- --
<FN>
_______________
(a) New market supermarkets are newly constructed supermarkets in market areas not
recently served by the Company.
(b) Replacement supermarkets are newly constructed supermarkets whose opening
corresponds with the closure of a nearby franchised or corporate supermarket of
the Company.
(c) Corporate supermarkets which become franchise units are included as reductions
to corporate supermarket totals and additions to franchised supermarket totals
in this category.
(d) Terminated operations represent supermarkets which are no longer going
concerns, including replaced supermarkets.
(e) Terminated franchises are existing supermarkets which are no longer parties to
franchise relationships with the Company.
(f) New franchises are additions to the Company's franchise group, other than
through conversion from corporate supermarkets.
(g) Remodeled supermarkets represent supermarkets which have undergone substantial
expansion and/or remodeling totaling at least $250,000.
During 1995, the Company established new earnings records, but sales
decreased from the previous year. The increase in earnings was
principally the result of continued improvements in the Company's
wholesale operations, where the lower gross margins associated with
wholesale sales were offset by the decreased operating and administrative
expenses associated with previously sold retail operations.
The Company believes one of the competitive advantages it provides to
its franchised supermarkets is its value-oriented customer merchandising
and community-specific marketing support program, pursuant to which
franchisees participate with corporate stores in systemwide promotions and
other merchandising events. Through a variety of partnering,
merchandising and marketing programs, the Company benefits its franchisees
through additional sales resulting from heightened consumer name
recognition and in-store merchandising programs, combined with special
promotional pricing. Additional services include retail accounting,
preparation of store payrolls, preparation of print, electronic and
outdoor media advertising (including various point-of-sale materials),
assistance in the selection and analysis of store locations, lease
negotiations, store design, floor layout, merchandising planning,
equipment selection, engineering and architectural services, retail
technology implementation and support, labor planning and scheduling and
product category supervision. Certain of such services are provided as
part of the franchise relationship, and other services are provided for a
separate fee intended to cover the Company's costs.
To maintain and improve its ability to be a low-cost supplier, in
1995 the Company installed a new computer-assisted buying system,
implemented a truck routing system and installed on-board truck computers.
The Company is the primary supplier to all of its franchised and
corporate supermarkets. The Company is also a wholesaler to a number of
small, independently operated retail supermarkets in its market area,
although less than 3% of the Company's 1995 net sales was derived from
such operations. The volume provided by the Company's wholesale
operations benefits its retail operations by enhancing the Company's
purchasing power and enabling it to improve the efficiency of its
distribution system.
Franchisees pay fees to the Company determined by the retail sales of
their supermarkets. The Company does not charge an initial fee to the
franchisee for granting a franchise. Consistent with industry practice,
in certain situations, the Company provides credit enhancements to certain
qualified franchisees by (i) leasing the franchisee's supermarket premises
and/or equipment and, in turn, subleasing the premises and/or equipment to
the franchisee and/or (ii) guaranteeing a portion of the franchisee's bank
borrowings.
The Company owns the right to grant Piggly Wiggly franchises in its
market areas, which includes designated counties in Eastern Wisconsin,
Northeastern Illinois and the Upper Peninsula of Michigan. The Company's
right to grant franchises is exclusive in these areas, except that if
there are less than 40 supermarkets in the franchise territory operated
under the Piggly Wiggly and certain other names, the current franchisor
has the right to operate for its own account, or to franchise,
supermarkets in the territory under those names. As of December 30, 1995,
there were 85 supermarkets operated in the Company's territory that
satisfied this requirement. The Company's franchise rights are of
unlimited duration and are not subject to any specific termination
provision. The Company is not required to pay any additional franchise or
other fees to the current franchisor. The only material obligation
imposed on the Company is that the supermarkets operated under the Piggly
Wiggly and other names must comply with the standards imposed on
supermarkets in the Piggly Wiggly system. The Company believes its own
franchised and corporate store standards exceed the Piggly Wiggly system
standards.
Retail Operations
During 1995, a number of the Company's corporate retail stores
continued not to meet financial performance goals. The Company closed its
underperforming Palatine, Illinois corporate supermarket in February 1995.
In order to improve the Company's results of operations, the Company
continues to evaluate various business alternatives relating to these
underperforming operations, including the sale and subsequent conversion
of these stores into franchise units, closing the stores or implementing
other operational changes.
The Company's franchised and corporate supermarkets stock a
comprehensive selection of groceries, frozen foods, prepared foods, fresh
produce, meat, poultry, eggs and dairy products. The Company's franchised
and corporate supermarkets also allocate display space to non-food items,
such as health and beauty aids, housewares, periodicals, video cassette
rentals, flowers and plants, greeting cards and general merchandise. The
Company's franchised and corporate supermarkets carry a broad range of
branded merchandise and private label product alternatives to branded
merchandise. In general, the private label products carried by the
Company's franchised and corporate supermarkets have lower selling prices,
but higher gross profit margins, than branded merchandise. Consistent
with trends generally within the industry, the Company continues to
experience increases in retail customer demand for private label store
brands and believes its Topco line of private label products is satisfying
this consumer trend. See "Purchasing and Distribution." Pricing
differentials between 1995 and 1994 did not materially effect net sales.
In 1995, the Company introduced the Piggly Wiggly Preferred Club
Card/R/, a new customer-friendly card-based marketing program. The Piggly
Wiggly Preferred Club Card is intended to reward current customers and
attract new customers by offering "clipless coupons" on weekly advertised
specials and "automatic" savings on monthly store specials. The card also
doubles as a check-cashing and video rental identification card. Initial
test results have been very favorable for the Company's retail stores, and
11 of the Company's corporate and franchise stores are already operating
with the program, with 54 additional stores currently planned for
installation in 1996. The program was developed by the Company's
Marketing and Retail Technology Groups and the Company currently plans to
install the program in all of its corporate and franchise stores.
The Company's franchised supermarkets range in size from 8,340 square
feet to 47,000 square feet, with an average of 23,720 square feet. The
Company's corporate supermarkets range in size from 14,900 square feet to
46,250 square feet, with an average of 29,600 square feet. All of the
Company's franchised and corporate supermarkets contain several perishable
or specialty service departments, such as fresh and processed meat; take-
home entrees and snacks; produce; fresh seafood; delicatessen; flowers and
plants; and baked goods. A number of supermarkets also contain or provide
for one or more of the following: wine and spirit sales; video rentals;
TicketMaster/R/ ticket centers; in-house banking services; automated
teller machines; and on-line debit and credit card check-out services.
Purchasing and Distribution
The Company purchases groceries in sufficient volume to qualify for
favorable price brackets for most items. The Company purchases brand name
grocery merchandise directly from the manufacturers or processors and
purchases substantially all of its private label items through Topco
Associates, Inc. ("Topco"). The Company purchases produce, meat and
seafood from a variety of sources. Topco is a national purchasing
cooperative whose member-owners consist of 42 regional supermarket chains
who collectively operate approximately 3,500 stores. According to Topco
data, its member-owners accounted for approximately 14% of United States
grocery store sales volume in 1995. In 1995, purchases through Topco
accounted for approximately 14% of the Company's total inventory
purchases. The Company also purchases store and warehouse equipment and
supplies, primarily bags and packaging material, through Topco. Topco's
size and purchasing power enable it to employ large-volume, low-cost
purchasing techniques on behalf of its member-owners, including the
Company.
Approximately 77% of the products supplied to the Company's stores in
1995 were supplied from the Company and its direct contract third-party
distribution centers. The remainder were supplied by direct store
delivery vendors. The Company owns its 364,000 square foot warehouse and
distribution center in Sheboygan, Wisconsin. With the exception of fresh,
frozen and processed meat, eggs and deli products, all products supplied
by the Company are distributed from its Sheboygan facility. While the
Company performs the buying function, a third-party contractor in
Milwaukee, Wisconsin performs the warehousing and transportation for the
Company's meat operations. The Company believes this arrangement has
provided it with operating cost efficiencies and has enabled it to expand
its wholesale product offerings and better satisfy wholesale customer
delivery schedules through improved capacity.
As described above under "Wholesale Operations," the Company believes
one of its competitive advantages is its community-oriented marketing
programs. High visibility outdoor billboard advertising stress the value
and customer service provided by the Company's local Piggly Wiggly
supermarkets. The Company also sponsors local events and festivals
throughout the marketing area to improve its Piggly Wiggly name
recognition, such as the Midwest's largest fireworks display at
Milwaukee's Summerfest lakefront music festival.
The Company operates a leased, full service trucking fleet, which
consists of 25 tractors, 40 refrigerated trailers and 6 dry trailers. The
Company augments its transportation requirements with temporary leasing
arrangements as conditions warrant. On January 1, 1996, the Company
formed PW Trucking, Inc., a wholly-owned subsidiary, to provide contract
and common carrier services throughout a seven-state Midwest territory for
the Company and other companies. Revenues from unrelated parties
generated by this business are expected to be nominal in 1996.
Bottling Operations
The Company bottles carbonated soft drinks, fruit drinks and drinking
and distilled water under its Springtime label. The Company also bottles
soft drinks for several regional beverage distributors on a contract
basis. The Company supplies these products to its franchised and
corporate supermarkets and independent supermarket customers. The
Company's bottling facility occupies approximately 5,000 square feet
within its Sheboygan warehouse and distribution center. The sale of these
products accounted for less than 1% of the Company's 1995 net sales.
Competition
The wholesale and retail food industry is highly competitive. At the
wholesale level, the Company competes with regional and national
wholesalers, such as Fleming Companies, Inc., SuperValu Inc., Roundy's,
Inc. and Nash Finch Co. In addition to price, product quality and
variety, competitive factors include credit support to customers and the
provision of various support services, such as advertising; accounting and
financial services; merchandising; facilities engineering, design and
project management; and retail technology support. The Company believes
that the location of its Sheboygan warehouse and distribution facility and
the wide range of support and marketing services provided to its
franchised and corporate retail supermarkets allow it to provide prompt
and efficient low-priced, high-quality products and important supplemental
services to its franchised and corporate supermarkets and other customers.
The degree of competition at the retail level varies with store
location. In most of its franchised and corporate supermarket locations,
the Company competes primarily with local retail operators, virtually all
of whom are affiliated with competing wholesalers through arrangements
similar to the Company's franchisees. In its remaining supermarket
locations, the Company competes with national and regional retail chain
stores, such as Sentry Food Stores, Pick 'N Save, Cub Foods, Jewel Food
Stores, Dominicks Finer Foods, Copp's Supermarkets and Kohl's Food Stores.
Other competitors include the general merchandise, wholesale club and
supercenter format stores of Wal-Mart Stores, Inc., K Mart Corp. and
ShopKo. Principal retail competitive factors include price, product
quality and variety, store location and appearance and the extent of a
store's perishable product and service departments. The Company believes
its supermarkets' emphasis on low-cost, high-quality products, community-
based multi-media marketing and merchandising programs and a high degree
of in-store customer service and friendliness provide its franchised and
corporate supermarkets with a competitive advantage in many of their
retail market areas.
Certain of the Company's competitors at both the wholesale and retail
level may have a competitive advantage resulting from utilizing
lower-cost, non-union workforces. Certain of the Company's competitors
have greater financial resources and marketing budgets than the Company.
Also, certain competitors using the general merchandise, wholesale club
format or supercenter format may choose to carry and market a less
extensive variety of products for which they may choose to sell such items
at a lower per unit cost than the Company.
Employees
As of December 30, 1995, the Company employed approximately 1,600
persons, of whom approximately 1,150 were employed in the operation of the
Company's corporate retail supermarkets. A majority of the Company's
corporate retail employees are employed on a part-time basis. Of the
Company's remaining employees, approximately 225 are engaged in
warehousing and trucking activities and the remainder are corporate and
administrative personnel. The Company is currently negotiating new
collective bargaining agreements covering approximately 75 retail clerks
and meat cutters to replace agreements that expired in November 1995. The
Company and employees are continuing to operate under the terms of the
expired contract while the new contract is negotiated. Four separate
collective bargaining agreements covering approximately 120 total retail
clerks and meat cutters expire at different times throughout 1996. The
Company's collective bargaining agreement covering the approximately 225
warehouse and trucking employees at its Sheboygan distribution facility
expires in February 1997. The Company does not currently anticipate any
strikes, work stoppages or slowdowns in connection with renewing such
agreements.
Item 1A. Executive Officers of the Company.
Positions and Offices with the
Name and Age Company
James H. Dickelman, 48 . . . . Chairman of the Board, President
and Chief Executive Officer
John H. Dahly, 55 . . . . . . . Executive Vice President, Chief
Financial Officer, Treasurer and
Secretary
Michael R. Houser, 44 . . . . . Senior Vice President--Marketing
and Merchandising
William K. Jacobson, 45 . . . . Senior Vice President--Retail
Operations
Kenneth S. Folberg, 35 . . . . Vice President--Logistics
Larry D. Hayes, 53 . . . . . . Vice President--Meat, Bakery and
Deli Operations
John S. Kwas, 56 . . . . . . . Vice President--Grocery Procurement
Thomas J. Timler, 38 . . . . . Vice President--Business Systems
Support Group
Frank D. Welch, 55 . . . . . . Vice President--Engineering and
Assistant Secretary
Messrs. Dickelman, Dahly, Houser and Jacobson are also members of the
Company's Board of Directors.
Executive officers are generally elected annually at the annual
meeting of the Board of Directors held on the date of the Company's annual
meeting of shareholders. Each executive officer holds office until his
successor has been elected or until his prior death, resignation or
removal.
All of the Company's executive officers have served in the positions
indicated or in other management positions with the Company for more than
the last five years.
Thomas H. Fox, formerly Senior Vice President--Director of Retail
Operations and Robert A. Hobart, formerly Vice President--Director of
Management Information Services, retired from the Company in March and
January 1996, respectively.
Item 2. Properties.
As is customary in the Company's industry, a substantial portion of
the Company's capital assets are leased. As of December 30, 1995, the
Company leased 17 of its corporate supermarkets and owned 2 supermarkets.
The leased supermarkets range in size from 14,900 to 41,200 square feet,
with an average of 29,060 square feet.
The Company generally leases its supermarkets from nonaffiliated real
estate developers under long-term leases. Such leases generally contain
initial terms of 15 to 20 years with several five-year renewal options.
None of such existing lease arrangements contain Company repurchase
options nor is the land underlying any of such supermarkets owned by the
Company. No leases are scheduled to expire in 1996. As of December 30,
1995, the Company subleased 47 of its leased supermarkets, and leased 2
owned supermarkets, to independent operators who are wholesale customers
of the Company and, except for one, are also franchisees.
Renovations and expansions continue at 3 franchise retail operations.
These renovations involve 1 addition to an existing franchise store, and 2
replacement franchise units. Additionally, two new market franchise
retail operations are expected to be completed in 1996. These projects
are expected to add approximately 49,000 square feet of store space.
The Company owns its warehouse/distribution center and headquarters
complex in Sheboygan, Wisconsin which occupies approximately nine acres of
a 16-acre site owned by the Company. The facility provides approximately
30,500 square feet of space for offices and related activities,
approximately 364,000 square feet of warehouse space and approximately
5,000 square feet for the Company's bottling facility. The Company also
leases approximately 4,500 square feet of office space in Sheboygan under
a five-year lease expiring at the end of 1997, which is used for customer
support services.
The Company owns approximately 22 acres of commercially zoned
property in two Wisconsin communities. The Company has entered into
brokerage arrangements for the development and sale of these properties.
Item 3. Legal Proceedings.
There are no material legal proceedings to which the Company is a
party or to which any of its property is subject, other than ordinary
routine litigation incidental to the Company's business. No material
legal proceedings were terminated during the fourth quarter of 1995.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of the Company's shareholders
during the fourth quarter of 1995.
PART II
Item 5. Market for the Company's Common Stock and Related Shareholder
Matters.
Pursuant to General Instruction G to Form 10-K ("Instruction G"), the
information required by this Item is incorporated herein by reference from
information included under the caption entitled "Company Business" set
forth in the Company's 1995 Annual Report to Shareholders ("Annual
Report").
Item 6. Selected Financial Data.
Pursuant to Instruction G, the information required by this Item is
incorporated herein by reference from information included under the
caption entitled "Selected Five-Year Financial Highlights" set forth in
the Annual Report.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Pursuant to Instruction G, the information required by this Item is
incorporated herein by reference from information included under the
caption entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" set forth in the Annual Report.
Item 8. Financial Statements and Supplementary Data.
Pursuant to Instruction G, the Balance Sheets of the Company as of
December 30, 1995 and December 31, 1994, the Statements of Shareholders'
Investment, Earnings and Cash Flows for each of the three fiscal years in
the period ended December 30, 1995, together with the related Notes to
Financial Statements (including supplementary financial data), are
incorporated herein by reference from information included under the
captions having substantially the same titles as set forth in the Annual
Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Company.
Pursuant to Instruction G, the information required by this Item
(other than such information regarding executive officers which appears in
Item 1A hereof and information required by Item 405 of Regulation S-K,
which is inapplicable) is incorporated by reference from information
included under the caption entitled "Election of Directors" set forth in
the Company's definitive Proxy Statement for its 1995 annual meeting of
shareholders ("Proxy Statement").
Item 11. Executive Compensation.
Pursuant to Instruction G, the information required by this Item is
incorporated by reference from information included under the caption
entitled "Executive Compensation" set forth in the Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Pursuant to Instruction G, the information required by this Item is
incorporated by reference from information included under the captions
entitled "Principal Shareholders" and "Election of Directors" set forth in
the Proxy Statement.
Item 13. Certain Relationships and Related Transactions.
Pursuant to Instruction G, the information required by this Item is
incorporated by reference from information under the caption entitled
"Compensation and Stock Option Committee Interlocks and Insider
Participation" set forth in the Proxy Statement.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) The following documents are filed as a part of this Form 10-K:
Page Reference
Page 1995 Annual
Reference Report
1. Financial Statements. Form 10-K to Shareholders
Balance Sheets as of December
30, 1995 and December 31, 1994 -- 10-11
Statements of Shareholders'
Investment, Earnings and Cash
Flows for the fiscal years
1995, 1994 and 1993 -- 10-12
Notes to Financial Statements -- 13-19
Report of Independent Public
Accountants -- 23
The additional information referred to under "Financial Statement
Schedules" below is filed as part of this Form 10-K and should be read in
conjunction with the financial statements referred to above.
2. Financial Statement Schedules.
Report of Independent Public F-1 --
Accountants
Schedule VIII - Valuation and F-2 --
Qualifying Accounts and Reserves
All other schedules have been omitted as not required or not
applicable or the information required to be shown thereon is included in
the financial statements and related notes.
3. Exhibits.
(a) The Exhibits filed or incorporated by reference herewith
are as specified in the Exhibit Index included herein.
(b) No reports on Form 8-K were filed by the Company during the
fourth quarter of 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
SCHULTZ SAV-O STORES, INC.
Date: March 22, 1996 By /s/ John H. Dahly
John H. Dahly
Executive Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
Company in the capacities indicated as of the date indicated above.
/s/ James H. Dickelman /s/ Bernard S. Kubale
James H. Dickelman, Chairman of Bernard S. Kubale, Director
Board, President, Chief
Executive Officer and Director
(Principal Executive Officer)
/s/ John H. Dahly /s/ Martin Crneckiy, Jr.
John H. Dahly, Executive Vice Martin Crneckiy, Jr., Director
President, Chief Financial Officer
and Director (Principal Financial
and Accounting Officer)
/s/ Howard C. Dickelman /s/ R. Bruce Grover
Howard C. Dickelman, Director R. Bruce Grover, Director
/s/ William K. Jacobson /s/ Michael R. Houser
William K. Jacobson, Director Michael R. Houser, Director
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
TO SCHULTZ SAV-O STORES, INC.:
We have audited in accordance with generally accepted auditing standards,
the financial statements included in Schultz Sav-O Stores, Inc.'s annual
report to shareholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated February 7, 1996. Our audit was made
for the purpose of forming an opinion on those statements taken as a
whole. The schedule listed in the index to financial statements is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, fairly states
in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
February 7, 1996.
SCHULTZ SAV-O STORES, INC.
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE FISCAL YEARS 1995, 1994 AND 1993
Allowance for Doubtful Accounts--
Changes in the allowance for doubtful accounts are summarized as
follows:
1995 1994 1993
Balance, beginning of
year $1,750,000 $1,750,000 $3,050,000
Provision charged to
earnings 2,079,000 526,000 4,143,000
(Writeoffs), net of
recoveries (1,264,000) (526,000) (5,443,000)
---------- ---------- ---------
Balance, end of year $2,565,000 $1,750,000 $1,750,000
========= ========= ==========
EXHIBIT INDEX
SCHULTZ SAV-O STORES, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 30, 1995
Exhibit
No. Description
3.1 Restated Articles of Incorporated, as amended.
[Incorporated by reference to Exhibit 3.2 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1988.]
3.2 By-Laws, as amended and restated as of January
24, 1991. [Incorporated by reference to Exhibit
3.2 to the Company's Annual Report on Form 10-K
for the year ended December 29, 1990.]
4.1 Restated Articles of Incorporation, as amended
(included as Exhibit 3.1). [Incorporated by
reference to Exhibit 4.2 to the Company's Annual
Report on Form 10-K for the year ended December
31, 1988.]
4.2 Rights Agreement dated December 20, 1988 between
the Company and First Bank (N.A.), Milwaukee,
Wisconsin. [Incorporated by reference to
Exhibit 4 to the Company's Current Report on
Form 8-K dated December 21, 1988.]
4.3 Amendment to Rights Agreement dated February 2,
1989 between the Company and First Bank (N.A.),
Milwaukee, Wisconsin. [Incorporated by
reference to Exhibit 2 to the Company's Form 8
dated February 20, 1989.]
4.4 Letter dated June 30, 1992 constituting
appointment of Firstar Trust Company (f/k/a
First Wisconsin Trust Company) as the successor
rights agent under the Rights Agreement dated
December 20, 1988, as amended. [Incorporated by
reference to Exhibit 4.4 to the Company's Annual
Report on Form 10-K dated March 31, 1994.]
As summarized in Notes (3) and (8) of the Notes
to Financial Statements incorporated by
reference from the Company's 1995 Annual Report
to Shareholders, as part of Parts II and IV of
this Form 10-K, the Company has various
outstanding long-term debt and capital lease
obligations. None of such obligations
individually exceeds 10% of the Company's total
assets. The Company hereby agrees to furnish to
the Commission, upon its request, a copy of each
instrument with respect to such obligations.
10.1 Master Franchise Agreement, dated April 23,
1982, between Commodores Point Terminal
Corporation and Piggly Wiggly Corporation.
[Incorporated by reference to Exhibit 10.1 to
the Company's Annual Report on Form 10-K for the
year ended January 1, 1982.]
10.2 Agreement, dated August 1, 1982, between the
Company and Commodores Point Terminal
Corporation. [Incorporated by reference to
Exhibit 10.2 to the Company's Annual Report on
Form 10-K for the year ended January 1, 1982.]
10.3 Amendment to Master Franchise Agreement, dated
October 15, 1982, between the Company and Piggly
Wiggly Corporation. [Incorporated by reference
to Exhibit 10.3 to the Company's Annual Report
on Form 10-K for the year ended January 1,
1982.]
10.4 Form of Director/Officer Indemnity Agreement.
[Incorporated by reference to Exhibit 10.4 to
the Company's Annual Report on Form 10-K for the
year ended January 2, 1988.] This Agreement is
required to be filed as an exhibit to this
Form 10-K pursuant to Item 14(c) of Form 10-K.
10.5 Form of Key Executive Employment and Severance
Agreement, dated as of October 19, 1990, between
the Company and each of James H. Dickelman, John
H. Dahly, and Michael R. Houser, and dated as of
January 31, 1996, between the Company and
William K. Jacobson. [Incorporated by reference
to Exhibit 10.5 to the Company's Annual Report
on Form 10-K for the year ended December 29,
1990.] This Agreement is required to be filed
as an exhibit to this Form 10-K pursuant to
Item 14(c) of Form 10-K.
10.6 Membership and Licensing Agreement dated August
1, 1973 by and between Topco Associates, Inc.
(Cooperative) and the Company
10.7 Articles of Incorporation of Topco Associates,
Inc. (Cooperative). [Incorporated by reference
to Exhibit 10.12 to the Company's Annual Report
on Form 10-K for the year ended December 31,
1988.]
10.8 Bylaws of Topco Associates, Inc. (Cooperative),
as amended through June 7, 1995.
10.9 1990 Stock Option Plan, as amended as of March
17, 1993. [Incorporated by reference to exhibit
10.10 to the Company's Annual Report on Form 10-
K for the year ended January 2, 1993.] This
Plan is required to be filed as an exhibit to
this Form 10-K pursuant to Item 14(c) of
Form 10-K.
10.10 1995 Equity Incentive Plan. [Incorporated by
reference to Exhibit 10.9 to the Company's
Annual Report on Form 10-K for the year December
31, 1994.] This Plan is required to be filed as
an exhibit to this Form 10-K pursuant to
Item 14(c) of Form 10-K.
10.11 Schultz Sav-O Stores, Inc. Executive Benefit
Restoration Plan. [Incorporated by reference to
Exhibit 10.10 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1994.]
This Plan is required to be filed as an exhibit
to this Form 10-K pursuant to Item 14(c) of
Form 10-K.
10.12 Schultz Sav-O Stores, Inc. Officer Annual
Incentive Plan. [Incorporated by reference to
Exhibit 10.11 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1994.]
This Plan is required to be filed as an exhibit
to this Form 10-K pursuant to Item 14(c) of
Form 10-K.
13 Portions of the 1995 Annual Report to
Shareholders expressly incorporated by reference
into this Form 10-K.
23 Consent of Independent Public Accountants.
27 Financial Data Schedule (EDGAR version only).
99 Definitive Proxy Statement for 1995 Annual
Meeting of Shareholders (filed with the
Commission under Regulation 14A and incorporated
by reference herein to the extent indicated in
this Form 10-K).