SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d) of the
- ---- Securities Exchange Act of 1934 for the quarterly period
ended March 22, 1997 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 254,001,326 shares of Common Stock ($1 par value)
outstanding as of April 22, 1997.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited information for the quarters ended March 22, 1997 and
March 23, 1996 includes the results of operations of The Kroger Co.
for the 12 week periods ended March 22, 1997 and March 23, 1996,
and of its wholly owned subsidiary Dillon Companies, Inc. for the
13 week periods ended March 29, 1997 and March 30, 1996. 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>
<CAPTION>
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Quarter Ended
------------------------
March 22, March 23,
1997 1996
---------- ----------
<S> <C> <C>
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,139,413 $5,784,254
Costs and expenses ---------- ----------
Merchandise costs, including warehousing and transportation. . . 4,626,390 4,367,967
Operating, general and administrative. . . . . . . . . . . . . . 1,132,042 1,075,915
Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,845 69,729
Depreciation and amortization. . . . . . . . . . . . . . . . . . 85,373 75,643
Interest expense, including interest on obligations
under capital leases, net . . . . . . . . . . . . . . . . . . . 69,747 70,626
---------- ----------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,989,397 5,659,880
---------- ----------
Earnings before tax expense and extraordinary loss. . . . . . . . 150,016 124,374
Tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,756 47,884
---------- ----------
Earnings before extraordinary loss. . . . . . . . . . . . . . . . 92,260 76,490
Extraordinary loss (net of income tax credit) . . . . . . . . . . (5,210) (1,084)
---------- ----------
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . $ 87,050 $ 75,406
========== ==========
Fully diluted earnings per common share:
Earnings from operations . . . . . . . . . . . . . . . . . . . . $ .35 $ .29
Extraordinary loss . . . . . . . . . . . . . . . . . . . . . . . (.02) .00
------ ------
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . $ .33 $ .29
====== ======
Average number of common shares used in per share calculations. . 267,176 261,221
</TABLE>
- -------------------------------------------------------------------
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
(in thousands of dollars)
(unaudited)
March 22, December 28,
1997 1996
---------- ------------
<S> <C> <C>
ASSETS
Current assets
Receivables . . . . . . . . . . . . . . . . . . . . . . $ 305,218 $ 324,050
Inventories:
FIFO cost . . . . . . . . . . . . . . . . . . . . . . 2,148,902 2,175,630
Less LIFO reserve . . . . . . . . . . . . . . . . . . (466,189) (461,689)
----------- ----------
1,682,713 1,713,941
Property held for sale. . . . . . . . . . . . . . . . . 31,923 38,333
Prepaid and other current assets. . . . . . . . . . . . 264,259 276,440
----------- ----------
Total current assets. . . . . . . . . . . . . . . . 2,284,113 2,352,764
Property, plant and equipment, net. . . . . . . . . . . . 3,113,725 3,063,534
Investments and other assets. . . . . . . . . . . . . . . 437,443 409,115
---------- ----------
Total Assets. . . . . . . . . . . . . . . . . . . . $5,835,281 $5,825,413
========== ==========
LIABILITIES
Current liabilities
Current portion of long-term debt . . . . . . . . . . . $ 11,819 $ 11,642
Current portion of obligations under
capital leases. . . . . . . . . . . . . . . . . . . . 9,607 9,501
Accounts payable. . . . . . . . . . . . . . . . . . . . 1,469,184 1,650,256
Other current liabilities . . . . . . . . . . . . . . . 1,124,297 1,041,521
---------- ----------
Total current liabilities . . . . . . . . . . . . . 2,614,907 2,712,920
Long-term debt. . . . . . . . . . . . . . . . . . . . . . 3,521,893 3,478,743
Obligations under capital leases. . . . . . . . . . . . . 178,301 180,748
Deferred income taxes . . . . . . . . . . . . . . . . . . 160,228 151,036
Other long-term liabilities . . . . . . . . . . . . . . . 475,156 483,672
---------- ----------
Total Liabilities . . . . . . . . . . . . . . . . . 6,950,485 7,007,119
---------- ----------
SHAREOWNERS' DEFICIT
Common capital stock, par $1, at stated value
Authorized: 350,000,000 shares
Issued: 1997 - 274,175,780 shares
1996 - 272,923,042 shares. . . . . . . . . . . 672,065 658,230
Accumulated deficit . . . . . . . . . . . . . . . . . . . (1,509,000) (1,596,050)
Common stock in treasury, at cost
1997 - 20,499,728 shares
1996 - 19,163,712 shares . . . . . . . . . . . (278,269) (243,886)
---------- ----------
Total Shareowners' Deficit (1,115,204) (1,181,706)
---------- ----------
Total Liabilities and Shareowners' Deficit. . . . . . $5,835,281 $5,825,413
========== ==========
</TABLE>
- -------------------------------------------------------------------
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands of dollars)
(unaudited)
Quarter Ended
------------------------------
March 22, March 23,
1997 1996
----------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings. . . . . . . . . . . . . . . . . . . . . . . . . . $ 87,050 $ 75,406
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Extraordinary loss . . . . . . . . . . . . . . . . . . . . . 5,210 1,084
Depreciation and amortization. . . . . . . . . . . . . . . . 85,373 75,643
Amortization of deferred financing costs . . . . . . . . . . 3,249 3,445
LIFO charge. . . . . . . . . . . . . . . . . . . . . . . . . 4,500 3,500
Other changes, net . . . . . . . . . . . . . . . . . . . . . (220) 44
Net increase (decrease) in cash from changes in operating
assets and liabilities, detail below . . . . . . . . . . . 123,813 (124,092)
----------- ----------
Net cash provided by operating activities . . . . . . . . 308,975 35,030
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures. . . . . . . . . . . . . . . . . . . . . . (136,685) (173,649)
Proceeds from sale of assets. . . . . . . . . . . . . . . . . . 2,600 1,475
Decrease in property held for sale. . . . . . . . . . . . . . . 6,094 2,183
Increase in other investments . . . . . . . . . . . . . . . . . (29,632) (986)
----------- ----------
Net cash used by investing activities . . . . . . . . . . . (157,623) (170,977)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt prepayment costs . . . . . . . . . . . . . . . . . . . . . (6,999) (1,583)
Financing charges incurred. . . . . . . . . . . . . . . . . . . (4,314) (127)
Principal payments under capital lease obligations. . . . . . . (2,341) (2,272)
Proceeds from issuance of long-term debt. . . . . . . . . . . . 418,798 127,496
Reductions in long-term debt. . . . . . . . . . . . . . . . . . (375,471) (20,648)
Increase (decrease) in outstanding checks . . . . . . . . . . . (159,897) 25,528
Proceeds from issuance of capital stock . . . . . . . . . . . . 13,255 7,553
Capital stock reacquired. . . . . . . . . . . . . . . . . . . . (34,383)
----------- ----------
Net cash provided (used) by financing activities . . . . (151,352) 135,947
----------- ----------
Net increase in cash and temporary cash investments . . . . . . . 0 0
Cash and temporary cash investments:
Beginning of year . . . . . . . . . . . . . . . . . . . . . . 0 0
---------- ----------
End of quarter. . . . . . . . . . . . . . . . . . . . . . . . $ 0 $ 0
========== ==========
INCREASE (DECREASE) IN CASH FROM CHANGES IN OPERATING ASSETS AND LIABILITIES:
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . $ 26,728 $ 57,961
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . 18,832 31,811
Prepaid and other current assets. . . . . . . . . . . . . . . 18,850 (45,272)
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . (21,175) (196,025)
Deferred income taxes . . . . . . . . . . . . . . . . . . . . 2,476 357
Other liabilities . . . . . . . . . . . . . . . . . . . . . . 78,102 27,076
---------- ----------
$ 123,813 $ (124,092)
========== ==========
</TABLE>
- -------------------------------------------------------------------
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE>
Supplemental disclosures of cash flow information:
Quarter Ended
--------------------------
March 22, March 23,
1997 1996
---------- ----------
Cash paid during the period for:
Interest (net of amount capitalized) $ 64,945 $ 51,240
Income taxes 7,805 30,610
- -------------------------------------------------------------------
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------
1. BASIS OF PRESENTATION
---------------------
The year-end condensed balance sheet data was derived from
audited financial statements, but does not include all
disclosures required by generally accepted accounting
principles.
2. INCOME TAXES
-------------
The effective income tax rate differs from the expected
statutory rate primarily due to the effect of certain state
taxes.
3. EXTRAORDINARY LOSS
------------------
The extraordinary loss for the quarters ended March 22, 1997
and March 23, 1996 of $5.2 million and $1.1 million,
respectively (net of income tax credit of $3.3 million and $.7
million, respectively) is related to the early retirement of
long-term debt. During the first quarter of 1997 the Company
repurchased or redeemed $151.2 million of its various
subordinated debt issues.
4. EARNINGS PER COMMON SHARE
-------------------------
Earnings per common share equals net earnings divided by the
weighted average number of common shares outstanding, after
giving effect to dilutive stock options.
On March 20, 1997, the Company's Board of Directors declared a
2-for-1 stock split to shareholders of record at the close of
business on April 4, 1997. In compliance with APB15 earnings
per share are presented showing the effect of the split. If
the split had not occurred earnings per share would have been
$.69 versus $.59 last year. Shares were distributed on April
22, 1997.
5. SUBSEQUENT EVENTS
-----------------
On April 14, 1997, Standard & Poor's Corporation upgraded its
rating on the Company's most senior debt to BBB-.
On April 23, 1997, the Company approved a term sheet for a new
credit facility to replace the existing Credit Agreement and
the $110 million Credit Agreement dated December 13, 1996.
The new facility will provide for a five year term facility in
the amount of $1.5 billion and a 364 day facility in the
amount of $.5 billion. The new bank facility will have
reduced pricing and more flexible terms as compared to the
current agreements, and is expected to close in May 1997.
On April 23, 1997, the Company issued its $200 million 7.65%
Senior Notes due 2007. Proceeds from this issue were used to
repay amounts under the Credit Agreement.
6. RECENTLY ISSUED ACCOUNTING STANDARDS
------------------------------------
In March 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings
Per Share". The Company will implement the Statement in the
fourth quarter 1997. Diluted Earnings Per Shares, as defined
by the Statement, is expected to approximate the Company's
fully diluted Earnings Per Share, as currently calculated.
The Company will also be required to present basic earnings
per share, which will be based on the weighted average shares
of common stock outstanding for the reporting period without
giving effect to options, warrants or other potentially
dilutive securities.
<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 1997 increased 6.1% from the
first quarter 1996 to a record $6.14 billion. Food store sales
increased 5.6% over the 1996 first quarter. Solid sales in the
Company's existing units were coupled with sales from 123 stores
opened or expanded since the first quarter of 1996. By the end of
the first quarter of 1997, food stores square footage had increased
7.6% over the same period last year. Sales in identical food
stores, units that have been in operation for one full year and
have not been expanded during that period, increased .4% versus a
2.0% increase in 1996. In addition, 1997's first quarter includes
the Easter holiday selling for the Dillon divisions of the Company
which occurred in the second quarter of 1996. First quarter
comparable store sales, which include results of expanded and
relocated stores, increased 4.1%. A review of sales trends by
lines of business is as follows:
(in thousands of dollars)
1st Quarter
% of 1997 ----------------------
Lines of Business Sales 1997 1996 Change
--------------------- --------- ---------- ---------- -------
Food Stores ........ 93.4% $5,736,235 $5,432,754 +5.6%
Convenience Stores .. 3.8% 233,653 203,275 +14.9%
Other sales ........ 2.8% 169,525 148,225 +14.4%
--------- ---------- ----------
Total sales ........ 100.0% $6,139,413 $5,784,254 +6.1%
Convenience stores' identical grocery sales increased 1.9%,
identical gasoline sales increased 8.4%, and identical gas gallons
decreased 2.4%. Total sales for the six company convenience store
group were strengthened by on 11.3% increase in the average retail
price per gallon of gasoline as compared to the first quarter of
1996. Total gallons sold declined during this period.
Other sales, consisting of non-retail sales to unaffiliated third
parties, increased 12% over the first quarter 1996. These included
sales of product manufactured or packaged to the customer's
specifications.
The Company's strategy continues to be to obtain sales growth from
new square footage, as well as from increased productivity from
existing locations. During 1997, the Company is expected to open,
acquire, relocate or expand 105 stores and remodel another 65
units. Full year square footage growth is expected to equal 6 to
6.5%. The Company expects to continue to realize savings from
technology and logistics improvements, some of which may be
reinvested in retail price reductions to increase sales volume.
EBITD
The Company's Senior Competitive Advance and Revolving Credit
Facility Agreement (the "Credit Agreement"), as amended, and the
indentures underlying approximately $1.1 billion of publicly issued
debt contain various restrictive covenants, many of which are based
on earnings before interest, taxes, depreciation, LIFO charge, and
unusual and extraordinary items ("EBITD"). All such 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 22, 1997 the Company was in
compliance with all covenants of its Credit Agreement. The Company
believes it has adequate coverage of its debt covenants to continue
to respond effectively to competitive conditions.
EBITD after non-cash expenses associated with FASB 106, increased
12.9% to $309.6 million compared to $274.1 million in the first
quarter of 1996. EBITD growth was generated by sales gains,
increased gross profit and reduced operating, general and
administrative expenses as a percent of sales. The Company's
storing program continued to produce incremental EBITD increases as
well.
MERCHANDISE COSTS
Merchandise costs, including warehousing and transportation expense
and LIFO charges, for the first quarter 1997 declined to 75.4% of
sales compared to 75.5% in the first quarter 1996. Merchandise
costs were positively affected by the Company's efforts in
coordinated purchasing, and strong private label sales. The food
stores' profit rates were favorable to last year. Convenience
stores grocery margins were flat while gasoline margins were
favorable to last year. The Company will continue to invest
capital in technology focusing on improved store operation,
procurement, and distribution practices which are expected to
continue to positively effect merchandising cost as a percent of
sales.
OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES
Operating, general and administrative expenses as a percent of
sales in the first quarter 1997 were 18.44% compared to 18.60% in
1996. Operating, general and administrative expenses were
adversely affected by store opening costs from the opening of 31
new or expanded stores in 1997 as compared to 25 in 1996's first
quarter. Operating, general and administrative costs improved from
declines in total employee costs, including workers compensation
and incentive pay for both store and management employees.
NET INTEREST EXPENSE
Net interest expense decreased to $69.7 million in the first
quarter 1997 as compared to $70.6 million in last year's first
quarter. The Company expects 1997 net interest expense to total
approximately $295 million.
To reduce its effective interest expense, the Company has purchased
a portion of the debt under certain of its structured financings
which cannot by its terms be retired early. 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 $3.49 billion, down from $3.57 billion at the end of
the 1996 first quarter. The Company does not expect a material
change in its debt balance during 1997.
NET EARNINGS
The Company's net earnings in the first quarter 1997 were $87.0
million or $.33 per share as compared to net earnings in the first
quarter 1996 of $75.4 million or $.29 per share. Net earnings in
1997 were negatively affected by an extraordinary loss of $5.2
million or $.02 per share as compared to an extraordinary loss of
$1.1 million or less than $.01 per share in 1996. See footnote on
earnings per common share for explanation of stock split.
The extraordinary loss in both years resulted from the early
retirement of long term debt. The Company expects to incur an
extraordinary loss in each quarter of 1997 as it continues to
retire high-cost debt.
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter 1997 the Company repurchased or redeemed
$151.2 million of its various subordinated debt issues.
At the end of the first quarter 1997 the Company had $546.7 million
available under its Credit Agreement to meet short-term liquidity
needs.
Capital expenditures for the first quarter 1997 totaled $136.7
million as compared to $173.6 million for the first quarter 1996.
Capital expenditures for the year are expected to total $800-$850
million as compared to $733.8 million during all of 1996. The
increase reflects the Company's strategy of growth through
expansion as well as the Company's emphasis, whenever possible, on
self-development and ownership of store real estate. The planned
capital expenditures will allow the Company to open or expand
approximately 105 stores and remodel 65 additional stores during
1997. Capital expenditures will also be made in the areas of
logistics and technology projects.
CONSOLIDATED STATEMENT OF CASH FLOWS
The Company generated $309.0 million of cash from operating
activities during the first quarter 1997 compared to $35.0 million
in last year's first quarter. The increase from 1996 is primarily
due to a decrease in operating assets and liabilities that provided
$123.8 million of cash in the first quarter of 1997 compared to
using cash of $124.1 million, a net change of $247.9 million. The
largest component of the change in operating assets and liabilities
was net owned inventory, which decreased $5.6 million in the first
quarter versus an increase in the first quarter of 1996.
Investing activities used $157.6 million in cash during the first
quarter of 1997 as compared to $171.0 million last year. The
Company's capital investment in the first quarter of 1997 decreased
$37.0 million from the first quarter of 1996, which contributed to
the net decrease in the use of cash for investment activities
compared to last year. $29.6 million of cash was used for the
purchase of other investments.
Financing activities during the first quarter used $151.4 million
in cash as compared to providing cash of $135.9 million last year.
The Company's net debt borrowings in the first quarter of 1997
equaled $43.3 million as compared to $106.8 million in the first
quarter of 1996. Additionally, debt prepayment costs and new
financing charges used $11.3 million of cash as compared to $1.7
million in 1996. The change in the balance of outstanding checks
used an additional $159.9 million of cash in 1997 compared to
providing $25.5 million in 1996.
SUBSEQUENT EVENTS
On April 14, 1997, Standard & Poor's Corporation upgraded its
rating on the Company's most senior debt to BBB-.
On April 23, 1997, the Company approved a term sheet for a new
credit facility to replace the existing Credit Agreement and the
$110 million Credit Agreement dated December 13, 1996. The new
facility will provide for a five year term facility in the amount
of $1.5 billion and a 364 day facility in the amount of $.5
billion. The new bank facility will have reduced pricing and more
flexible terms as compared to the current agreements, and is
expected to close in May 1997.
On April 23, 1997, the Company issued its $200 million, 7.65%
Senior Notes due 2007. Proceeds from this issue were used to repay
amounts under the Credit Agreement.
SPECIAL NOTE
The foregoing Management's Discussion and Analysis contains certain
forward-looking statements about the future performance of the
Company which are based on management's assumptions and beliefs in
light of the information currently available to it. These forward-
looking statements are subject to uncertainties and other factors
that could cause actual results to differ materially from those
statements including, but not limited to: competitive practices and
pricing in the food and drug industries generally and particularly
in the Company's principal markets; changes in the financial
markets related to the cost of the Company's capital; the ability
of the Company to access the public debt and equity markets to
refinance indebtedness and fund the Company's capital expenditure
program on satisfactory terms; supply or quality control problems
with the Company's vendors; labor disputes and material shortages;
and changes in economic conditions that affect the buying patterns
of the Company's customers.
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None.
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 3.1 - Amended Articles of Incorporation of the
-----------
Company are hereby incorporated by reference to
Exhibit 3(a) of the Company's Current Report on Form 8-K
as filed with the Securities and Exchange Commission on
April 16, 1997. The Company's Regulations are
incorporated by reference to Exhibit 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 1996
and fiscal year 1996 earnings release in its Current
Report on Form 8-K dated January 23, 1997.
<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 5, 1997 By: (Joseph A. Pichler)
--------------------
Joseph A. Pichler
Chairman of the Board and
Chief Executive Officer
Dated: May 5, 1997 By: (J. Michael Schlotman)
--------------------
J. Michael Schlotman
Vice President and
Corporate Controller
<PAGE>
Exhibit Index
--------------
Exhibit
- -------
Exhibit 3.1 - Amended Articles of Incorporation of the Company are
hereby incorporated by reference to Exhibit 3(a) of
the Company's Current Report on Form 8-K as filed
with the Securities and Exchange Commission
on April 16, 1997. The Company's Regulations are
incorporated by reference to Exhibit 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>
<CAPTION>
COMPUTATION OF CONSOLIDATED EARNINGS PER SHARE
(in thousands, except per share amounts)
(unaudited)
Quarter Ended
----------------------
March 22, March 23,
1997 1996
---------- ----------
(12 weeks) (12 weeks)
<S> <C> <C>
Earnings before extraordinary loss . . . . . . . . $ 92,260 $ 76,490
Extraordinary loss . . . . . . . . . . . . . . . . (5,210) (1,084)
---------- ----------
Net earnings . . . . . . . . . . . . . . . . . . . $ 87,050 $ 75,406
========== ==========
FULLY DILUTED EARNINGS PER SHARE
- --------------------------------
Weighted average common shares
and all other dilutive securities:
Common stock outstanding . . . . . . . . . . . 254,078 248,794
Stock options. . . . . . . . . . . . . . . . . 13,098 12,427
--------- --------
267,176 261,221
========= ========
Fully diluted earnings from
continuing operations per share. . . . . . . . . $ .35 $ .29
Fully diluted results of extraordinary
loss per share . . . . . . . . . . . . . . . . . (.02) .00
--------- --------
Fully diluted net earnings per share. . . . . . . . $ .33 $ .29
========= ========
</TABLE>
<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 28, 1996 and for the one quarter ended March
22, 1997 and March 23, 1996.
<TABLE>
Quarter Ended Fiscal Years Ended
--------------------- --------------------------------------------------------------
March 22, March 23, December 28, December 30, December 31, January 1, January 2,
1997 1996 1996 1995 1994 1994 1993
(12 Weeks) (12 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (52 weeks) (53 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 . . . . . . . $150,016 $124,374 $567,313 $509,638 $421,363 $283,938 $173,415
Fixed charges. . . . . . 115,002 113,076 482,680 489,939 500,599 556,008 640,004
Capitalized interest . . (2,866) (2,818) (10,887) (6,785) (2,521) 230 (960)
-------- -------- ---------- -------- -------- -------- --------
$262,152 $234,632 $1,039,106 $992,792 $919,441 $840,176 $812,459
======== ======== ========== ======== ======== ======== ========
Fixed Charges
Interest . . . . . . . . $ 72,074 $ 73,609 $311,958 $320,236 $331,097 $391,693 $476,932
Portion of rental
payments deemed to be
interest. . . . . . . . 42,928 39,467 170,722 169,703 169,502 164,315 163,072
-------- -------- ---------- -------- -------- -------- --------
$115,002 $113,076 $ 482,680 $489,939 $500,599 $556,008 $640,004
======== ======== ========== ======== ======== ======== ========
Ratio of Earnings to
Fixed Charges . . . . . 2.3 2.1 2.2 2.0 1.8 1.5 1.3
</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 22, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-END> MAR-22-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 305,218
<ALLOWANCES> 0
<INVENTORY> 1,682,713
<CURRENT-ASSETS> 2,284,113
<PP&E> 5,840,954
<DEPRECIATION> (2,727,229)
<TOTAL-ASSETS> 5,835,281
<CURRENT-LIABILITIES> 2,614,907
<BONDS> 3,521,893
<COMMON> 672,065
0
0
<OTHER-SE> (1,509,000)
<TOTAL-LIABILITY-AND-EQUITY> 5,835,281
<SALES> 6,139,413
<TOTAL-REVENUES> 6,139,413
<CGS> 4,626,390
<TOTAL-COSTS> 4,626,390
<OTHER-EXPENSES> 1,363,007
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 69,747
<INCOME-PRETAX> 150,016
<INCOME-TAX> 57,756
<INCOME-CONTINUING> 92,260
<DISCONTINUED> 0
<EXTRAORDINARY> (5,210)
<CHANGES> 0
<NET-INCOME> 87,050
<EPS-PRIMARY> .33
<EPS-DILUTED> .33
</TABLE>
