SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x Quarterly report pursuant to Section 13 or 15(d) of the
- --- Securities Exchange Act of 1934 for the quarterly period ended
March 25, 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 1-303
THE KROGER CO.
An Ohio Corporation I.R.S. Employer Identification
No. 31-0345740
1014 Vine Street, Cincinnati, OH 45202
- --------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (513) 762-4000
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 .
----------- ---------
There were 111,411,248 shares of Common Stock ($1 par value)
outstanding as of April 21, 1995.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited information for the quarters ended March 25, 1995 and
March 26, 1994 includes the results of operations of The Kroger Co.
for the 12 week periods ended March 25, 1995 and March 26, 1994,
and of Dillon Companies, Inc. for the 13 week periods ended April
1, 1995 and April 2, 1994. In the opinion of management, the
information reflects all adjustments (consisting only of normal
recurring adjustments) which are necessary for a fair presentation
of results of operations for such periods but should not be
considered as indicative of results for a full year.
<TABLE>
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
<CAPTION>
Quarter Ended
------------------------
March 25, March 26,
1995 1994
---------- ----------
<S> <C> <C>
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,464,954 $5,328,804
---------- ----------
Costs and expenses
Merchandise costs, including warehousing and transportation. . . 4,129,439 4,052,901
Operating, general and administrative. . . . . . . . . . . . . . 1,015,665 974,290
Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69,934 72,066
Depreciation and amortization. . . . . . . . . . . . . . . . . . 68,841 62,310
Interest expense, including interest on obligations
under capital leases, net . . . . . . . . . . . . . . . . . . . 75,324 76,031
---------- ----------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,359,203 5,237,598
---------- ----------
Earnings before tax expense, extraordinary loss and
cumulative effect of change in accounting. . . . . . . . . . . . 105,751 91,206
Tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,275 35,516
---------- ----------
Earnings before extraordinary loss and cumulative
effect of change in accounting . . . . . . . . . . . . . . . . . 64,476 55,690
Extraordinary loss (net of income tax credit) . . . . . . . . . . (5,336) (8,332)
---------- ----------
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . $ 59,140 $ 47,358
========== ==========
Primary earnings per common share:
Earnings from operations . . . . . . . . . . . . . . . . . . . . $ .56 $ .50
Extraordinary loss . . . . . . . . . . . . . . . . . . . . . . . (.05) (.07)
---------- ----------
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . $ .51 $ .43
========== ==========
Average number of common shares used in per share calculations. . 114,992 111,923
Fully diluted earnings per common share:
Earnings from operations . . . . . . . . . . . . . . . . . . . . $ .53 $ .46
Extraordinary loss . . . . . . . . . . . . . . . . . . . . . . . (.04) (.06)
---------- ---------
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . $ .49 $ .40
========== =========
Average number of common shares used in per share calculations. . 126,216 129,654
- ---------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEET
(in thousands of dollars)
(unaudited)
March 25, December 31,
1995 1994
<S> <C> <C>
ASSETS
Current assets
Cash and temporary cash investments . . . . . . . . . . $ 48,421 $ 27,223
Receivables . . . . . . . . . . . . . . . . . . . . . . 243,989 270,811
Inventories:
FIFO cost . . . . . . . . . . . . . . . . . . . . . . 1,933,670 2,053,207
Less LIFO reserve . . . . . . . . . . . . . . . . . . (438,560) (438,184)
---------- ----------
1,495,110 1,615,023
Property held for sale. . . . . . . . . . . . . . . . . 44,649 39,631
Prepaid and other current assets. . . . . . . . . . . . 236,948 199,437
---------- ----------
Total current assets. . . . . . . . . . . . . . . . 2,069,117 2,152,125
Property, plant and equipment, net. . . . . . . . . . . . 2,266,663 2,252,663
Investments and other assets. . . . . . . . . . . . . . . 297,408 302,886
---------- ----------
Total Assets. . . . . . . . . . . . . . . . . . . . $4,633,188 $4,707,674
========== ==========
LIABILITIES
Current liabilities
Current portion of long-term debt . . . . . . . . . . . $ 8,201 $ 7,926
Current portion of obligations under
capital leases. . . . . . . . . . . . . . . . . . . . 8,506 8,467
Accounts payable. . . . . . . . . . . . . . . . . . . . 1,297,221 1,425,612
Other current liabilities . . . . . . . . . . . . . . . 981,276 952,963
---------- ----------
Total current liabilities . . . . . . . . . . . . . 2,295,204 2,394,968
Long-term debt. . . . . . . . . . . . . . . . . . . . . . 3,679,760 3,726,343
Obligations under capital leases. . . . . . . . . . . . . 160,703 162,851
Deferred income taxes . . . . . . . . . . . . . . . . . . 159,623 172,690
Other long-term liabilities . . . . . . . . . . . . . . . 426,975 404,506
---------- ----------
Total Liabilities . . . . . . . . . . . . . . . . . 6,722,265 6,861,358
---------- ----------
SHAREOWNERS' DEFICIT
Common capital stock, par $1, at stated value
Authorized: 350,000,000 shares
Issued: 1995 - 120,934,581 shares
1994 - 120,573,148 shares. . . . . . . . . . . 344,015 338,568
Accumulated deficit . . . . . . . . . . . . . . . . . . . (2,189,596) (2,248,736)
Common stock in treasury, at cost
1995 - 9,575,183 shares
1994 - 9,576,231 shares . . . . . . . . . . . (243,496) (243,516)
---------- ----------
Total Shareowners' Deficit (2,089,077) (2,153,684)
---------- ----------
Total Liabilities and Shareowners' Deficit. . . . . . $4,633,188 $4,707,674
========== ==========
</TABLE>
- -------------------------------------------------------------------------------
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands of dollars)
(unaudited)
<CAPTION>
Quarter Ended
------------------------------
March 25, March 26,
1995 1994
----------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings. . . . . . . . . . . . . . . . . . . . . . . . . . $ 59,140 $ 47,358
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Extraordinary loss . . . . . . . . . . . . . . . . . . . . . 5,336 8,332
Depreciation and amortization. . . . . . . . . . . . . . . . 68,841 62,310
Amortization of deferred financing costs . . . . . . . . . . 3,367 3,889
LIFO charge. . . . . . . . . . . . . . . . . . . . . . . . . 3,500 3,500
(Loss) gain on sale of fixed assets. . . . . . . . . . . . . 444 (48)
Net increase (decrease) in cash from changes in operating
assets and liabilities, net of effects from sale of
subsidiary, detail below . . . . . . . . . . . . . . . . . (4,238) 39,409
Other changes, net . . . . . . . . . . . . . . . . . . . . . (750) (9)
---------- ----------
Net cash provided by operating activities . . . . . . . . 135,640 164,741
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures. . . . . . . . . . . . . . . . . . . . . . (93,858) (84,097)
Proceeds from sale of assets. . . . . . . . . . . . . . . . . . 35,784 1,158
Increase in property held for sale. . . . . . . . . . . . . . . (4,412) (7,910)
Decrease (increase) in other investments. . . . . . . . . . . . 396 (5,268)
Net cash used by investing activities . . . . . . . . . (62,090) (96,117)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt prepayment costs . . . . . . . . . . . . . . . . . . . . . (7,340) (11,222)
Financing charges incurred. . . . . . . . . . . . . . . . . . . (1,777) (4,491)
Principal payments under capital lease obligations. . . . . . . (2,109) (1,950)
Proceeds from issuance of long-term debt. . . . . . . . . . . . 78,408 130,351
Reductions in long-term debt. . . . . . . . . . . . . . . . . . (124,716) (218,678)
Proceeds from sale of treasury stock. . . . . . . . . . . . . . 20 13,553
Proceeds from issuance of capital stock . . . . . . . . . . . . 5,162 12,628
-------- --------
Net cash used by financing activities. . . . . . . . . . (52,352) (79,809)
-------- --------
Net increase (decrease) in cash and temporary cash investments. . 21,198 (11,185)
Cash and temporary cash investments:
Beginning of year . . . . . . . . . . . . . . . . . . . . . . 27,223 121,253
-------- --------
End of quarter. . . . . . . . . . . . . . . . . . . . . . . . $ 48,421 $ 110,068
======== ==========
INCREASE (DECREASE) IN CASH FROM CHANGES IN OPERATING ASSETS AND
LIABILITIES, NET OF EFFECTS FROM SALE OF SUBSIDIARY:
<S> <C> <C>
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . $ 111,606 $ 55,034
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . 25,871 45,656
Prepaid and other current assets. . . . . . . . . . . . . . . (38,625) (39,709)
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . (125,531) (84,833)
Deferred income taxes . . . . . . . . . . . . . . . . . . . . (13,067) (6,771)
Other liabilities . . . . . . . . . . . . . . . . . . . . . . 35,508 70,032
-------- ----------
$ (4,238) $ 39,409
======== ==========
- --------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
Supplemental disclosures of cash flow information:
Quarter Ended
------------------------
March 25, March 26,
1995 1994
---------- ----------
Cash paid during the period for:
Interest (net of amount capitalized) $ 69,267 $ 69,304
Income taxes 29,311 19,756
- ----------------------------------------------------------------
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------
1. INCOME TAXES
------------
The effective income tax rate differs from the expected
statutory rate primarily due to the effect of certain state
taxes.
2. EXTRAORDINARY LOSS
------------------
The extraordinary loss for the quarters ended March 25, 1995
and March 26, 1994 of $5.3 million and $8.3 million,
respectively (net of income taxes of $3.4 million and $5.3
million, respectively) is related to the early retirement of
long-term debt. During the first quarter of 1995 the Company
repurchased $120.1 million of its senior subordinated debt
issues. Purchases of debt were funded by excess cash from
operations, proceeds from miscellaneous asset sales, proceeds
from new issuances of debt, and funds borrowed under the
Company's Credit Agreement.
3. EARNINGS PER COMMON SHARE
-------------------------
Primary earnings per common share equals net earnings divided
by the weighted average number of common shares outstanding,
after giving effect to dilutive stock options. Fully diluted
earnings per common share for the first quarter 1994 are
computed by adjusting both net earnings and shares outstanding
for the effect of the conversion of the Convertible Junior
Subordinated Debentures issued in March 1991 and the
Convertible Junior Subordinated Notes issued in December 1992.
The Convertible Junior Subordinated Debentures were not
included for the first quarter of 1995 because they were
redeemed on October 24, 1994.
4. LONG-TERM DEBT ISSUANCES
------------------------
In the first quarter of 1995 the Company issued $6.2 million
General Term Notes , Series B, with initial interest rates,
either fixed or variable, ranging from 9% to 9-1/4% and
maturities ranging from 2004 through 2005. The Company also
issued 9.27% First Mortgage Bonds in the amount of $35.6
million due in the year 2010. The net proceeds of the
offerings were initially used to repay amounts outstanding
under the Company's Credit Agreement and, thereafter, the
Company used amounts available under the Credit Agreement to
purchase, on the open market, portions of its high-cost long-
term debt.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SALES
Total sales for the first quarter of 1995 were 2.6% ahead of the
first quarter 1994 and set a first quarter company record. Food
store sales increased 4.0% over the 1994 first quarter. Solid
sales in the Company's existing units were coupled with sales from
new stores opened subsequent to the first quarter of 1994. Square
footage increased 3.8% over the first quarter of 1994. Sales in
identical food stores, units that have been in operation for one
full year and have not been expanded, increased 1.1% versus a 2.3%
increase in 1994. Identical store sales increased 2.0% in February
and March following a .5% decline in January when identical store
comparisons were unusually affected by severe winter weather in
January 1994.
A review of sales trends by lines of business includes:
(in thousands of dollars)
1st Quarter
% of 1995 ----------------------
Lines of Business Sales 1995 1994 Change
--------------------- --------- ---------- ---------- ------
Food Stores ........ 94.2% $5,149,145 $4,952,643 +4.0%
Convenience Stores .. 3.4% 187,053 197,204 (5.2%)
Other sales ........ 2.4% 128,756 178,957 (28.0%)
--------- ---------- ----------
Total sales ........ 100.0% $5,464,954 $5,328,804 +2.6%
The decrease in total convenience stores sales is due to the sale
of Time Saver Stores, Inc., which operated 116 convenience stores.
Adjusting 1994 first quarter sales to exclude Time Saver's sales
would result in a 9.9% increase in convenience store sales in the
first quarter of 1995. Convenience stores' identical grocery sales
increased 4.2% and identical gasoline sales increased 6.5%. Sales
for the six company convenience store group were strengthened by
strong identical in-store sales combined with a 6.1% increase in
the average retail price per gallon of gasoline.
Other sales include outside sales by the Company's manufacturing
divisions and sales of general merchandise to Hook-SupeRx, Inc.
(HSI). HSI completed an expansion of its warehouse in early 1994
and discontinued its purchases from the Company. In 1994, sales to
the drug store company were $47.8 million. Adjusting first quarter
1994 sales to eliminate these sales would produce a 1.8% decline in
other sales.
Total sales increased 4.0% after adjusting for the other sales to
HSI and the sale of Time Saver Stores, Inc.
The Company's strategy in an environment of low food price
inflation is to obtain sales growth from new square footage, as
well as from existing store locations. The Company currently
expects to increase square footage by 5% to 6% in 1995. Some of
the savings that will be realized from technology and logistics
improvements will allow more competitive pricing and improved
service to increase sales.
EBITD
The Company's Credit Agreement and the indentures underlying
approximately $1.4 billion of publicly issued debt contain various
restrictive covenants, many of which are based on earnings before
interest, taxes, depreciation, LIFO charge, unusual and
extraordinary items ("EBITD"). All EBITD based covenants are
based, among other things, upon generally accepted accounting
principles ("GAAP") as applied on a date prior to January 3, 1993.
The ability to generate EBITD at levels sufficient to satisfy the
requirements of these agreements is a key measure of the Company's
financial strength. The presentation of EBITD is not intended to
be an alternative to any GAAP measure of performance but rather to
facilitate an understanding of the Company's performance compared
to its debt covenants. At March 25, 1995 the Company was in
compliance with all covenants of its Credit Agreement and publicly
issued debt. The Company believes it has adequate coverage of its
debt covenants to continue to respond effectively to competitive
conditions.
During the first quarter 1995, EBITD, which does not include the
effect of Statement of Financial Accounting Standards ("SFAS") No.
106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions", increased 8.1% to $256.9 million from $237.5 million.
The increase in EBITD was the result of many factors, including the
increase in food store sales from existing and new stores combined
with improvements in gross profit rates from productivity gains and
cost reductions in procurement, distribution, and store operations.
MERCHANDISE COSTS
Merchandise costs, including warehousing and transportation expense
and LIFO charges, for the first quarter 1995 declined to 75.6% of
sales compared to 76.1% in the first quarter 1994. Excluding LIFO
charges, these costs were 75.5% of sales in 1995 and 76.0% in 1994.
Merchandise costs were positively affected by the Company's
advances in consolidated distribution and coordinated purchasing.
There has been virtually no inflation in the cost of product, with
the exception of a few commodities. Increased costs in these
products, such as coffee and pharmaceuticals, have generally been
reflected in increased retail prices.
Merchandise costs were favorably influenced by the discontinuance
of the low-margin sales to HSI. Merchandise costs as a percent of
sales adjusted for these sales improved from 75.9% in 1994 to
75.6%.
OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES
Operating, general and administrative expenses in the first quarter
1995 increased to 18.6% of sales from 18.3% last year. Operating,
general and administrative expenses were up .1%, 18.6% compared to
18.5%, after adjusting 1994 sales to exclude sales to HSI.
Approximately one fourth of the adjusted increase in operating,
general and administrative expense is due to January 1st holiday
pay which was included in the first quarter of 1995 but not in the
first quarter of 1994. Additionally, the Company's aggressive
capital expansion program is impacting operating, general and
administrative expenses as costs are incurred to open and expand
new stores.
NET INTEREST EXPENSE
Net interest expense declined to $75.3 million in the first quarter
1995 from $76.0 million in last year's first quarter. The Company
expects 1995 net interest expense to total approximately $320 to
$325 million.
The Company has purchased a portion of the debt issued by the
lenders of certain of its structured financings, which cannot be
retired early, in an effort to effectively further reduce the
Company's interest expense. Excluding the debt incurred to make
these purchases, which are classified as investments, the Company's
long-term debt at the end of the first quarter was $3.789 billion,
down from $4.096 billion at the end of the 1994 first quarter.
NET EARNINGS
The Company's net earnings in the first quarter 1995 were $59.1
million or $.49 per share on a fully diluted basis compared to net
earnings in the first quarter 1994 of $47.4 million or $.40 per
share. Net earnings in 1995 were negatively affected by an
extraordinary loss of $5.3 million or $.04 per share compared to an
extraordinary loss of $8.3 million or $.06 per share in 1994. The
extraordinary loss in both years resulted from the early retirement
of the Company's high-cost debt. The Company expects to incur an
extraordinary loss in each quarter of 1995 as it continues to
retire high-cost debt.
Earnings before the extraordinary loss totalled $64.5 million in
1995 compared to $55.7 million in 1994.
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter 1995 the Company purchased $120.1 million
of its various senior subordinated debt issues.
At the end of the first quarter 1995 the Company had $554.5 million
available under its Credit Agreement facility to meet short-term
liquidity needs.
Capital expenditures for the first quarter 1995 totaled $93.9
million compared to $84.1 million for the first quarter 1994.
Capital expenditures for the year are expected to total
approximately $625 million compared to $534.1 million during all of
1994. This will enable the Company to open or expand approximately
90 stores and remodel 65 additional stores. Capital expenditures
will also be made in the areas of logistics and technology
projects.
During the first quarter of 1995 the Company issued $6.2 million of
senior subordinated notes with interest rates ranging from 9% to 9-
1/4% and maturities ranging from 2004 through 2005. The Company
also issued 9.27% First Mortgage Bonds in the amount of $35.6
million due in the year 2010. The net proceeds of the offerings
were initially used to repay amounts outstanding under the Credit
Agreement and thereafter the Company used amounts available
thereunder to purchase, on the open market, portions of its high-
cost long-term debt.
CONSOLIDATED STATEMENT OF CASH FLOWS
The Company generated $135.6 million of cash from operating
activities during the first quarter compared to $164.7 million last
year. The decrease is due in part to changes in operating assets
and liabilities that used $4.2 million of cash in 1995 compared to
generating $39.4 million in 1994. This was offset by additional
1995 operating income before depreciation of $15.3 million over
1994.
Investing activities used $62.1 million in cash during the first
quarter of 1995 compared to $96.1 million last year. The net
decrease in the use of cash is due to additional cash proceeds from
the sale of assets of $34.6 million and a decrease of $5.7 million
in the use of cash for the purchase of investments offset by
additional outlays of cash for capital expenditures of $9.8
million.
Financing activities used $52.4 million in cash compared to $79.8
million last year. The decrease is due to a decline of $42.0
million in the use of cash for the net reduction in long-term debt
and a $6.6 million decline in cash outlays for debt prepayment and
financing charges during the first quarter. This was offset by a
$21.0 million reduction in cash proceeds from the sale of stock.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 3.1 - Amended Articles of Incorporation and
-----------
Regulations of the Company are hereby incorporated by
reference to Exhibits 4.1 and 4.2 of the Company's
Registration Statement on Form S-3 as filed with the
Securities and Exchange Commission on January 28, 1993, and
bearing Registration No. 33-57552.
Exhibit 4.1 - Instruments defining the rights of holders of
-----------
long-term debt of the Company and its subsidiaries are not
filed as Exhibits because the amount of debt under each
instrument is less than 10% of the consolidated assets of
the Company. The Company undertakes to file these
instruments with the Commission upon request.
Exhibit 11.1 - Statement of Computation of Consolidated
------------
Earnings (Loss) Per Share.
Exhibit 27.1 - Financial Data Schedule.
------------
Exhibit 99.1 - Additional Exhibits - Statement of
------------
Computation of Ratio of Earnings to Fixed Charges.
(b) The Company disclosed and filed its fourth quarter and
fiscal year 1994 earnings release in its Current Report on
Form 8-K dated January 31, 1995.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements 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.
THE KROGER CO.
Dated: May 8, 1995 (Joseph A. Pichler)
Joseph A. Pichler
Chairman of the Board and
Chief Executive Officer
Dated: May 8, 1995 (W. Rodney McMullen)
W. Rodney McMullen
Vice President - Control
and Financial Services
Principal Accounting Officer
<PAGE>
Exhibit Index
-------------
Exhibit
- -------
Exhibit 3.1 - Amended Articles of Incorporation and Regulations of
the Company are hereby incorporated by reference to Exhibits 4.1
and 4.2 of the Company's Registration Statement on Form S-3 as
filed with the Securities and Exchange Commission on January 28,
1993, and bearing Registration No. 33-57552.
Exhibit 4.1 - Instruments defining the rights of holders of long-
term debt of the Company and its subsidiaries are not filed as
Exhibits because the amount of debt under each instrument is less
than 10% of the consolidated assets of the Company. The Company
undertakes to file these instruments with the Commission upon
request.
Exhibit 11.1 - Statement of Computation of Consolidated Earnings
(Loss) Per Share.
Exhibit 27.1 - Financial Data Schedule.
Exhibit 99.1 - Additional Exhibits - Statement of Computation of
Ratio of Earnings to Fixed Charges.
<PAGE>
EXHIBIT 11.1
<TABLE>
COMPUTATION OF CONSOLIDATED EARNINGS PER SHARE
(in thousands, except per share amounts)
(unaudited)
<CAPTION>
Quarter Ended
---------- ----------
March 25, March 26,
1995 1994
---------- ----------
(12 weeks) (12 weeks)
<S> <C> <C>
Earnings before extraordinary loss and
cumulative effect of change in accounting . . . . $ 64,476 $ 55,690
Extraordinary loss . . . . . . . . . . . . . . . . (5,336) (8,332)
--------- ---------
Net earnings . . . . . . . . . . . . . . . . . . . $ 59,140 $ 47,358
========= =========
PRIMARY <F1>
- ------------
Weighted average common and dilutive
common equivalent shares:
Common stock outstanding . . . . . . . . . . . 111,130 108,259
Stock options. . . . . . . . . . . . . . . . . 3,862 3,664
--------- ---------
114,992 111,923
========= =========
Primary earnings from continuing
operations per share . . . . . . . . . . . . . . $ .56 $ .50
Primary results of extraordinary loss per share . . (.05) (.07)
--------- ---------
Primary net earnings per share. . . . . . . . . . . $ .51 $ .43
========= =========
FULLY DILUTED <F1>
- ------------------
Weighted average common shares
and all other dilutive securities:
Common stock outstanding . . . . . . . . . . . 111,130 108,259
Stock options. . . . . . . . . . . . . . . . . 4,379 4,321
Convertible debt . . . . . . . . . . . . . . . 10,707 17,074
126,216 129,654
Fully diluted earnings from
continuing operations per share <F2> . . . . . . $ .53 $ .46
Fully diluted results of extraordinary
loss per share . . . . . . . . . . . . . . . . . (.04) (.06)
--------- --------
Fully diluted net earnings per share <F2> . . . . . $ .49 $ .40
========= ========
<F1> The Convertible Junior Subordinated Notes issued in December
1992 are not included in the computation of primary earnings
per share since they are not common stock equivalents. They
are included in the fully diluted earnings per share
calculation for the quarters ended March 25, 1995 and March
26, 1994.
<F2> Earnings for 1995 and 1994 used to calculate fully diluted
earnings per share have been adjusted to reflect the tax
effected interest expense of $1.8 million and $3.6 million,
respectively, that would have been avoided in connection with
the assumed conversion of the convertible debt issue as of
the beginning of each year.
<PAGE>
EXHIBIT 99.1
Schedule of computation of ratio of earnings to fixed charges of
The Kroger Co. and consolidated subsidiary companies and
unconsolidated companies as if consolidated for the five fiscal
years ended December 31, 1994 and for the one quarter ended March
25, 1995 and March 26, 1994.
</TABLE>
<TABLE>
Quarter Ended Fiscal Years Ended
-------------------- -------------------------------------------------------------
March 25, March 26, December 31, January 1, January 2, December 28, December 29,
1995 1994 1994 1994 1993 1991 1990
(12 Weeks) (12 Weeks) (52 Weeks) (52 Weeks) (53 Weeks) (52 weeks) (52 weeks)
---------- ---------- ------------ ---------- ---------- ------------ ------------
(in thousands of dollars)
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings
Earnings from continuing
operations before tax
expense, extraordinary
loss and cumulative
effect of change in
accounting . . . . . . . $105,751 $ 91,206 $421,363 $283,938 $173,415 $168,595 $142,203
Fixed charges. . . . . . 115,584 117,370 500,599 556,008 640,004 687,226 708,455
Capitalized interest . . (435) (228) (2,521) 230 (960) 122 (39)
-------- -------- -------- -------- -------- -------- --------
$220,900 $208,348 $919,441 $840,176 $812,459 $855,943 $850,619
======== ======== ======== ======== ======== ======== ========
Fixed Charges
Interest . . . . . . . . $ 76,001 $ 76,581 $331,097 $391,693 $476,932 $536,485 $565,540
Portion of rental
payments deemed to be
interest. . . . . . . . 39,583 40,789 169,502 164,315 163,072 150,741 142,915
-------- -------- -------- -------- -------- -------- --------
$115,584 $117,370 $ 500,599 $556,008 $640,004 $687,226 $708,455
======== ======== ========= ======== ======== ======== ========
Ratio of Earnings to
Fixed Charges . . . . . 1.9 1.8 1.8 1.5 1.3 1.2 1.2
</TABLE>
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF OPERATIONS, CONSOLIDATED BALANCE SHEET AND
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE QUARTER ENDED MARCH 25, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> MAR-25-1995
<CASH> 48,421
<SECURITIES> 0
<RECEIVABLES> 243,989
<ALLOWANCES> 0
<INVENTORY> 1,495,110
<CURRENT-ASSETS> 2,069,117
<PP&E> 4,635,119
<DEPRECIATION> 2,368,456
<TOTAL-ASSETS> 4,633,188
<CURRENT-LIABILITIES> 2,295,204
<BONDS> 3,857,170
<COMMON> 100,519
0
0
<OTHER-SE> (2,189,596)
<TOTAL-LIABILITY-AND-EQUITY> 4,633,188
<SALES> 5,464,954
<TOTAL-REVENUES> 5,464,954
<CGS> 4,129,439
<TOTAL-COSTS> 4,129,439
<OTHER-EXPENSES> 1,154,440
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 75,324
<INCOME-PRETAX> 105,751
<INCOME-TAX> 41,275
<INCOME-CONTINUING> 64,476
<DISCONTINUED> 0
<EXTRAORDINARY> (5,336)
<CHANGES> 0
<NET-INCOME> 59,140
<EPS-PRIMARY> .51
<EPS-DILUTED> .49
</TABLE>
