<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: January 28, 1999
THE KROGER CO.
(Exact name of registrant as specified in its charter)
An Ohio Corporation No. 1-303 31-0345740
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Number)
1014 Vine Street
Cincinnati, OH 45201
(Address of principal
executive offices)
Registrant's telephone number: (513) 762-4000
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Item 5. Other Events
- ------- ------------
On January 28, 1999, the Company released its earnings for the
Fourth Quarter and Fiscal Year 1998 in the form attached
hereto as Exhibit 99.1.
Item 7. Financial Statements and Exhibits
- ------- ---------------------------------
(c) Exhibits
99.1 Other Exhibits--Earnings Release for Fourth
Quarter and Fiscal Year 1998
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SIGNATURE
---------
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 hereto duly authorized.
THE KROGER CO.
January 28, 1999 By: /s/ Paul W. Heldman
-----------------------------------
Paul W. Heldman
Senior Vice President, Secretary
and General Counsel
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EXHIBIT INDEX
-------------
Exhibit
- -------
99.1 Other Exhibits--Earnings Release for Fourth Quarter and
Fiscal Year 1998
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Exhibit 99.1
MEDIA CONTACT: LYNN MARMER, THE KROGER CO. (513) 762-4441
INVESTOR CONTACT: KATHY KELLY, THE KROGER CO. (513) 762-4969
KROGER 4TH QTR OPER EARNS PER SHARE:
RECORD 68 CENTS VS. 56 CENTS
CINCINNATI, Ohio, January 28, 1999 --- The Kroger Co. (NYSE: KR) said
today that 1998 fourth quarter earnings before an extraordinary item rose 21.9
percent to a record $179.5 million from $147.2 million in the 1997 fourth
quarter. On a diluted per share basis, earnings before the extraordinary item
rose 21.4 percent to 68 cents from 56 cents.
Kroger's fourth quarter results, which include an extra week as
compared to 1997, set records for sales, operating cash flow, net earnings, and
earnings per share.
Fourth quarter operating cash flow - pretax earnings before interest,
depreciation and LIFO - rose 16.8 percent to $444.6 million from $380.8 million.
Total Company sales in the fourth quarter increased 12.9 percent to
$7.3 billion from $6.5 billion in the 1997 fourth quarter. Identical food store
sales rose 0.4 percent. Comparable store sales, which include relocations and
expansions, were up 2.4 percent for the quarter.
For 1998, excluding onetime expenses incurred in the first half of
1998, earnings before extraordinary items were a record $537.9 million, or $2.03
per diluted share, compared to $444.2 million, or $1.69 per share, in 1997. Full
year operating cash flow rose to a record $1.556 billion from $1.385 billion.
Total Company sales were $28.2 billion, a 6.2 percent increase over 1997.
Kroger Chairman and Chief Executive Officer Joseph A. Pichler said he
was "elated" with the fourth quarter performance and with the total 1998
results. "Our retail operations benefited from improvements in product
purchasing and coordinated merchandising in selected key categories. Kroger's
private label business, manufacturing operations, and convenience stores were
also strong contributors," Pichler said.
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- -2-
Kroger's financial structure continued to improve in 1998. Net interest
expense for the year declined 6.7 percent to $266.9 million. Net total debt
decreased by $66 million to $3.1 billion.
During 1998, Kroger opened, expanded, relocated or acquired 96 food
stores, increasing overall square footage by 4.25 percent. For 1999, the Company
said it expects to complete approximately 90-100 store projects, which will
enable Kroger to increase retail square footage by approximately 4.5 - 5.0
percent.
At the end of the fourth quarter, the Company operated 1,410 food
stores and 797 convenience stores.
In October, 1998, the Company announced plans to merge with Fred Meyer,
Inc. The date for a shareholders' meeting to consider the merger has not been
set.
The foregoing statements regarding 1999 plans are forward looking
statements, based on information available to the Company as of the date of this
release. The Company's actual results could differ materially due to competitive
action, changes in the capital markets, labor disputes, material shortages, or
delays in completing projects. More specific information is available from the
Company's SEC filings.
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<TABLE>
<CAPTION>
The Kroger Co.
Sales and Earnings
(in millions except per share amounts)
4th Qtr 4th Qtr Percent
1998 1997 Change
1/2/99 12/27/97
----------- ----------- ---------
<S> <C> <C> <C>
Sales $ 7,349.0 $ 6,509.5 12.90
=========== =========== =======
EBITD (1) $ 444.6 $ 380.8 16.75
LIFO $ 9.0 $ 4.8
Interest $ (62.8) $ (62.6)
Depreci-
ation $ (114.0) $ (94.6)
----------- -----------
Pre-tax
earnings
before
extraordinary
item $ 276.8 $ 228.4 21.19
Tax
expense $ (97.3) $ (81.2)
----------- -----------
Earnings
before
extraordinary
item $ 179.5 $ 147.2 21.94
Extraordinary
item (2) $ (28.3) $ (23.3)
----------- -----------
Net
earnings $ 151.2 $ 123.9
=========== ===========
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Diluted
earnings
per common
share:
From
operations $ 0.68 $ 0.56 21.43
From extra-
ordinary
item $ (0.11) $ (0.09)
------------ ------------
Diluted net
earnings
per common
share $ 0.57 $ 0.47
============ ============
Number of
shares
used in
per share
calculation 265.9 263.7
<FN>
(1) EBITD represents pretax earnings before interest, depreciation and LIFO as
defined in the Company's Bank Credit Agreement.
(2) Represents the after-tax loss from early retirement of debt.
</TABLE>
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<TABLE>
<CAPTION>
The Kroger Co.
Sales and Earnings
Without One Time Expenses or Accounting Change
(in millions except per share amounts)
4 Qtrs 4 Qtrs Percent
1998 1997 Change
1/2/99 12/27/97
----------- ---------- ------
<S> <C> <C> <C>
Sales $ 28,203.3 $ 26,567.3 6.16
=========== =========== =====
EBITD (1) $ 1,555.9 $ 1,384.8 12.36
LIFO $ (4.0) $ (6.2)
Interest $ (266.9) $ (285.9)
Depreci-
ation $ (430.0) $ (380.2)
----------- -----------
Pre-tax
earnings
before
extraordinary
item $ 855.0 $ 712.5 20.00
Tax
expense $ (317.1) $ (268.3)
----------- -----------
Earnings
before
extraordinary
item $ 537.9 $ 444.2 21.09
Extraordinary
item (2) $ (39.1) $ (32.4)
----------- -----------
Net
earnings $ 498.8 $ 411.8
=========== ===========
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Diluted
earnings
per common
share:
From
operations $ 2.03 $ 1.69 20.12
From extra-
ordinary
item (2) $ (0.15) $ (0.12)
----------- -----------
Diluted net
earnings
per common
share $ 1.88 $ 1.57
=========== ===========
Number of
shares
used in
per share
calculation 265.4 262.9
<FN>
(1) EBITD represents pretax earnings before interest, depreciation and LIFO as
defined in the Company's Bank Credit Agreement.
(2) Represents the after-tax loss from early retirement of debt.
</TABLE>
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<TABLE>
<CAPTION>
The Kroger Co.
Sales and Earnings
With One Time Expenses or Accounting Change
(in millions except per share amounts)
4 Qtrs 4 Qtrs Percent
1998 1997 Change
1/2/99 12/27/97
------------ ------------ -------
<S> <C> <C> <C>
Sales $ 28,203.3 $ 26,567.3 6.16
============ ============ ======
EBITD
(1)(2) $ 1,413.8 $ 1,384.8 2.09
LIFO $ (4.0) $ (6.2)
Interest $ (266.9) $ (285.9)
Depreci-
ation $ (430.0) $ (380.2)
------------ ------------
Pre-tax
earnings
before
extra-
ordinary
item $ 712.9 $ 712.5 0.06
Tax
expense $ (263.1) $ (268.3)
Earnings
before
extra-
ordinary
item $ 449.8 $ 444.2 1.26
Extraordinary
item (3) $ (39.1) $ (32.4)
------------ ------------
Net
earnings $ 410.7 $ 411.8
============ ============
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Diluted
earnings
per common
share:
From
operations $ 1.70 $ 1.69
From extra-
ordinary
item (3) $ (0.15) $ (0.12)
------------- -------------
Diluted net
earnings
per common
share $ 1.55 $ 1.57
============= =============
Number of
shares
used in
per share
calculation 265.4 262.9
<FN>
(1) 1998 EBITD includes the effect of one time expenses totaling $52.4 million,
$32.5 million after tax or 12 cents per diluted share. These expenses
relate to logistics initiatives which became operational in the 2nd
Quarter, $40.8 million, and expenses primarily due to closing facilities
resulting from the consolidation of the Company's Texas operations, $11.6
million.
(2) In addition to the expenses described in footnote (1), 1998 EBITD includes
expenses totaling $89.7 million ($55.6 million after tax, or 21 cents per
diluted share) related to a change in the method of accounting for
inventory.
(3) Represents the after-tax loss from the early retirement of debt.
</TABLE>
