UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) March 12, 1998
FRED MEYER, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-13339 91-1826443
- --------------------------------------------------------------------------------
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File No.) Identification No.)
3800 SE 22nd Avenue, Portland, Oregon 97202
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(503) 232-8844
----------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events
On March 12, 1998 the Company announced financial results for the fourth
quarter of fiscal 1997 and the 1997 fiscal year. The press release announcing
the results is included as Exhibit 23.1 and incorporated herein by reference.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
23.1 Press Release of Fred Meyer, Inc., dated March 12, 1998.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Dated: March 19, 1998
FRED MEYER, INC.
By: ROGER A. COOKE
-------------------------------------
Roger A. Cooke
Senior Vice President, General
Counsel and Secretary
2
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Sequential Page No.
- ----------- ----------- -------------------
23.1 Press Release of Fred Meyer dated
March 12, 1998
[Fred Meyer, Inc. Letterhead]
CONTACT: David R. Jessick, Senior Vice President - Finance
Chief Financial Officer
Portland, Oregon
(503) 797-7900
FOR IMMEDIATE RELEASE
SYMBOL: "FMY" (N.Y.S.E.)
FRED MEYER REPORTS FOURTH QUARTER EPS OF $.56 WITH A 7.9% COMPARABLE STORE
SALES INCREASE; FISCAL YEAR EPS OF $1.46 BEFORE EXTRAORDINARY CHARGES
Portland, Oregon, March 12, 1998 -- Fred Meyer, Inc. announced significant
improvement in sales and operating earnings for its 1997 fourth quarter (12
weeks) and year ended January 31, 1998 ("1997").
Results include Smith's Food & Drug Centers, Inc. ("Smith's") from September 9,
1997, the date of the Smith's acquisition.
FOURTH QUARTER RESULTS:
Net sales for the fourth quarter of 1997 rose 87.8 percent to $1.9 billion from
$1.0 billion reported in the fourth quarter of last year. Excluding Smith's,
sales increased 13.3 percent.
Comparable store sales (excluding Smith's) increased 7.9 percent for 1997's
fourth quarter, with comparable food sales increasing 7.9 percent and comparable
nonfood sales increasing 8.0 percent.
Income from operations for 1997's fourth quarter was $123.9 million, up 131.7
percent from the $53.4 million reported in the prior year's fourth quarter.
Without the contribution from Smith's of $56.4 million, income from operations
was up $14.0 million or 26.3 percent.
Fourth quarter net income was $52.6 million, versus $27.6 million in the prior
year. Diluted earnings per share were $.56 on 93.9 million shares outstanding,
up 7.7 percent from the prior year's $.52 on 53.3 million shares outstanding.
FISCAL 1997 RESULTS:
For the 1997 year, net sales rose 47.2 percent to $5.5 billion from $3.7 billion
reported last year. Smith's sales accounted for $1.3 billion of the increase.
Comparable store sales (excluding Smith's) increased 7.4 percent, with
comparable food sales increasing 6.6 percent and comparable nonfood sales
increasing 8.6 percent.
Income from operations for the year was $259.8 million, up 93.6 percent from the
$134.2 million reported in the prior year. Without the contribution from Smith's
of $91.7 million, income from operations was up $33.9 million or 25.2 percent.
Fiscal year results were effected by an extraordinary charge of $91.2 million,
net of taxes, for early extinguishment of debt which was recorded during the
third fiscal quarter. The charge covered premiums paid and the write-off of
financing costs related to debt refinanced in the Smith's acquisition.
<PAGE>
Income before the extraordinary charge was $103.3 million, up 76.5 percent from
the prior year's $58.5 million. Including the extraordinary charge, net income
of $12.1 million was reported for 1997.
Diluted earnings per share before the extraordinary charge were $1.46 on 70.6
million shares outstanding, up 39.0 percent from the prior year's $1.05 on 55.8
million shares outstanding. Including the effect of the extraordinary charge,
diluted earnings per share of $.17 were reported. Weighted average shares
outstanding were effected by the issuance of shares for the Smith's acquisition.
COMMENTARY
Robert G. Miller, President and Chief Executive Officer, said, "We are very
pleased with our fourth quarter results. Comparable store sales trends at the
Fred Meyer stores showed strong increases again in both food and nonfood
categories. As well, we are encouraged by the positive contribution to earnings
from Smith's in the fourth quarter and pleased that the Smith's integration plan
continues on schedule.
We also are excited to have completed our mergers with Quality Food Centers and
Ralphs Grocery Company this week and look forward to realizing the synergies and
operating leverage of these fine supermarket companies. In conjunction with the
mergers, we refinanced the majority of the company's debt and now benefit from
an average annual interest rate of approximately 7 percent."
Fred Meyer, Inc., headquartered in Portland, Oregon, is one of the nation's
largest food and drug retailers. The Company's four subsidiaries -- Fred Meyer
Stores, Quality Food Centers, Ralphs Grocery Company and Smith's Food & Drug
Centers -- operate more than 800 stores in a variety of food and drug and
multidepartment one-stop-shopping formats located primarily in 11 western states
from Alaska to Texas. In addition, the company operates 259 fine jewelry stores
across the United States under the banners of Fred Meyer, Fox's and Merksamer
Jewelers.
WEB SITE: http://www.fredmeyer.com
-- Three tables follow --
<PAGE>
<TABLE>
<CAPTION>
FRED MEYER, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts) (unaudited)
12 weeks 12 weeks 52 weeks 52 weeks
ended ended ended ended
Jan. 31, Feb. 1, Percent Jan. 31, Feb. 1, Percent
1998 1997 Change 1998 1997 Change
---------- --------- ------ ----------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Net sales $1,869,764 $995,755 87.77% $5,481,087 $3,724,839 47.15%
Cost of merchandise sold 1,310,818 692,113 89.39% 3,845,536 2,619,312 46.81%
---------- --------- ----------- -----------
Gross margin 558,946 303,642 84.08% 1,635,551 1,105,527 47.94%
Operating and administrative expenses 435,073 250,170 73.91% 1,375,796 971,359 41.64%
---------- --------- ----------- -----------
Income from operations 123,873 53,472 131.66% 259,755 134,168 93.60%
Interest expense (net) 29,064 8,826 229.30% 75,504 39,432 91.48%
Amortization of goodwill 5,886 71 10,482 308
---------- --------- ----------- -----------
Income before income taxes
and extraordinary charge 88,923 44,575 99.49% 173,769 94,428 84.02%
Provision for income taxes 36,275 16,939 114.15% 70,465 35,883 96.37%
---------- --------- ----------- -----------
Income before extraordinary charge 52,648 27,636 90.51% 103,304 58,545 76.45%
Extraordinary charge, net of taxes --- --- (91,210) ---
---------- --------- ----------- -----------
Net income $ 52,648 $ 27,636 $ 12,094 $ 58,545
========== ========= =========== ===========
Basic earnings per common share:1
Income before extraordinary charge $ .60 $ .55 9.09% $ 1.54 $ 1.12 37.50%
Extraordinary charge --- --- 1.36 ---
---------- --------- ----------- -----------
Net income $ .60 $ .55 $ .18 $ 1.12
========== ========= =========== ===========
Weighted average number of
common shares outstanding1 88,376 50,576 74.74% 67,168 52,155 28.79%
========== ========= =========== ===========
Diluted earnings per common share:1
Income before extraordinary charge $ .56 $ .52 7.69% $ 1.46 $ 1.05 39.05%
Extraordinary charge --- --- (1.29) ---
---------- --------- ----------- -----------
Net income $ .56 $ .52 $ .17 $ 1.05
========== ========= =========== ===========
Weighted average number of
common shares outstanding1 93,894 53,337 76.04% 70,609 55,781 26.58%
========== ========= =========== ===========
1/ Shares outstanding and earnings per share amounts have been adjusted for
the 100 percent stock dividend which was effective September 30, 1997.
Table 1 of 3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FRED MEYER, INC.
Supplemental Operating Data
(unaudited)
12 weeks 12 weeks 52 weeks 52 weeks
ended ended ended ended
Jan. 31, Feb. 1, Jan. 31, Feb. 1,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Earnings before interest, taxes,
depreciation and amortization (EBITDA) $158,974 $75,188 $413,645 $249,548
LIFO income $9,417 $5,386 $4,257 $1,166
As a percent of sales:
Food sales 71.70% 55.80% 67.40% 59.00%
Nonfood sales 28.30% 44.20% 32.60% 41.00%
Gross margin -- LIFO 29.89% 30.49% 29.84% 29.68%
Gross margin -- excluding LIFO income 29.39% 29.95% 29.76% 29.65%
Operating and administrative expenses 23.27% 25.12% 25.10% 26.08%
Income from operations 6.63% 5.37% 4.74% 3.60%
Interest expense (net) 1.55% .89% 1.38% 1.06%
Amortization of goodwill .31% .01% .19% .01%
Income before extraordinary charge 2.82% 2.78% 1.88% 1.57%
Net income 2.82% 2.78% .22% 1.57%
EBITDA 8.50% 7.55% 7.55% 6.70%
LIFO .50% .54% .08% .03%
Comparable store sales (excluding Smith's):
Total company 7.90% 2.90% 7.40% 3.80%
Food sales 7.90% 4.70%/1 6.60% 5.80%/1
Nonfood sales 8.00% .50%/1 8.60% 1.00%/1
1/ Sales for Pharmacy, Nutrition, Health and Beauty Aids, Candy, Cards and
Books are included in Food sales to conform to current year reporting.
Table 2 of 3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FRED MEYER, INC.
Condensed Consolidated Balance Sheets
(In thousands)
January 31, February 1,
1998 1997
------------- ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 72,609 $ 48,769
Inventories 1,117,989 604,910
Receivables (net) 83,194 23,729
Prepaid expenses and other 50,034 43,149
Current deferred taxes 90,804 17,226
------------- ------------
Total current assets 1,414,630 737,783
Property and equipment (net) 1,951,750 929,765
Goodwill (net) 1,005,476 4,599
Other assets 58,950 19,873
------------- ------------
Total assets $ 4,430,806 $ 1,692,020
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable/outstanding checks $ 679,612 $ 398,430
Income taxes --- 5,115
Accrued expenses/other 316,045 99,998
Current portion long-term debt/capital leases 4,282 1,038
-------------- ------------
Total current liabilities 999,939 504,581
Long-term debt 1,835,168 521,512
Capital lease obligations 52,385 13,227
Deferred lease transactions 38,556 46,318
Deferred income taxes 41,250 35,176
Other long-term liabilities 112,933 5,302
Shareholders' equity 1,350,575 565,904
-------------- ------------
Total liabilities and shareholders' equity $ 4,430,806 $ 1,692,020
============== ============
Table 3 of 3
</TABLE>
