<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 12, 2000
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 12, 2000, representatives of the Company met with
analysts. During those meetings, the Company advised that it
continues to remain comfortable with its fourth quarter
earnings per share estimate of $0.37-0.40, representing a
19-29% increase over the estimated pooled fourth quarter 1998
earnings per share, and its targeted 16-18% EPS growth rate
for the fiscal years 2000- 2002, and that its fourth quarter
1999 sales-to-date currently are running slightly ahead of
budget. The Company also reaffirmed its belief that it will
meet or exceed the previously announced synergy savings from
the prior Fred Meyer mergers and the Kroger/Fred Meyer merger
of $155 million in fiscal year 1999; $260 million in fiscal
year 2000; $345 million in fiscal year 2001; and $380 million
in fiscal year 2002.
In its Current Report on Form 8-K dated December 6, 1999, the
Company estimated that its sales for the fourth quarter 1998,
taking into account the change in its fiscal year and the
merger with Fred Meyer would have been approximately $11.1
billion. In its Current Report on Form 8-K dated September 14,
1999, the Company estimated that its earnings per share for
that same quarter, and on the same basis, would have been
approximately $0.34. Adjusting for the 53rd week calendar in
1998 for pre-merger Kroger, and the normalization of Ralphs'
depreciation and amortization adjustment during the fourth
quarter of 1998, sales would have been approximately $10.6
billion and earnings per share would have been approximately
$0.31. Fred Meyer made the adjustments to depreciation and
amortization in the fourth quarter of 1998 in connection with
its accounting for the acquisition of Ralphs.
For purposes of completing models, the Company furnished to
analysts its best estimates, excluding acquisitions, of
reasonable assumptions for fiscal year 2000, a 53 week year
containing an extra week in the fourth quarter:
Square footage growth - 4.5-5.0%
Identical store sales growth goal - at least 1% over
food cost
inflation
Capital expenditures - $1.6 billion
Depreciation - $925-940 million
Amortization of goodwill - $100 million
Interest expense - $620-640 million, based on current
rates
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Tax rate - 40% (including amortization of goodwill)
38.5% (excluding amortization of goodwill)
Average shares outstanding - 862 million
LIFO charge - $25 million
Attached as Exhibit 99.1 hereto are detailed income statements
for the first three quarters of 1999, excluding costs related
to mergers, which statements were furnished to analysts on
January 12, 2000.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(c) Exhibits:
99.1 Detailed income statements.
- --------------------
Our ability to achieve the expected increases in sales and earnings could be
adversely affected by the increasingly competitive environment in which we
operate. In addition any labor dispute, delays in opening new stores, or changes
in the economic climate could cause us to fall short of our sales and earnings
targets. Our capital expenditures could fall outside of the expected range if we
are unsuccessful in acquiring suitable sites for new stores, if development
costs exceed those budgeted, or if our logistics and technology projects are not
completed in the time frame expected or on budget. Square footage growth is
dependent upon our ability to acquire desirable sites for construction of new
facilities, as well as the timing of completion of projects. Our ability to
increase same store sales could be adversely affected by increased competition
and sales shifts to other stores that we operate. Depreciation and amortization
may vary from our estimates due to the timing of new store openings. Interest
expense will vary with changes in capital markets and the amount of debt that we
have outstanding. LIFO will be affected by vendor promotions and changes in the
cost of inventory. While we expect to achieve benefits through logistics and
technology, development of new systems and integration of systems due to our
merger with Fred Meyer carry inherent uncertainties, and we may not achieve the
expected benefits. Unforeseen difficulties in integrating Fred Meyer with
Kroger, or any other acquired entity could cause us to fail to achieve the
anticipated synergy savings, and could otherwise adversely affect our ability to
meet our other expectations.
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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 12, 2000 By: (Paul Heldman)
Paul Heldman
Senior Vice President, Secretary
and General Counsel
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EXHIBIT INDEX
Exhibit No. Exhibit
- ----------- -------
99.1 Detailed income statements.
<PAGE> 1
Exhibit 99.1
CONSOLIDATED STATEMENT OF EARNINGS
YEAR TO DATE
1999
<TABLE>
<CAPTION>
% %
1Q TO SLS 2Q TO SLS
-------------- -------------
<S> <C> <C> <C> <C>
SALES........................................ 13,493,100,231 10,288,898,585
-------------- -------------
COSTS AND EXPENSES:
MERCHANDISE COSTS,INCLUDING WAREHOUSING
AND TRANSPORTATION....................... 9,956,846,538 73.79% 7,577,495,603 73.65%
OPERATING GENERAL AND ADMINISTRATIVE....... 2,469,533,284 18.30% 1,864,034,196 18.12%
RENT....................................... 199,339,407 1.48% 142,775,073 1.39%
DEPRECIATION............................... 251,483,029 1.86% 197,801,464 1.92%
AMORTIZATION OF GOODWILL................... 29,473,000 0.22% 23,194,000 0.23%
DIVIDEND AND INTEREST INCOME............... (2,733,694) -0.02% (2,590,696) -0.03%
INTEREST EXPENSE INCL. CAPITAL LEASES...... 201,609,559 1.49% 150,636,345 1.46%
-------------- -------------
TOTAL.................................... 13,105,551,123 97.13% 9,953,345,985 96.74%
-------------- -------------
EARNINGS BEFORE TAX EXPENSE AND
EXTRAORDINARY ITEM......................... 387,549,108 2.87% 335,552,600 3.26%
TAX EXPENSE.................................. 156,569,845 1.16% 133,516,380 1.30%
-------------- -------------
EARNINGS BEFORE EXTRAORDINARY ITEM........... 230,979,263 1.71% 202,036,220 1.96%
EXTRAORDINARY ITEM........................... (19,000) 0.00% (9,817,634) -0.10%
-------------- -------------
NET EARNINGS ................................ 230,960,263 1.71% 192,218,586 1.87%
============== =============
EBITDA....................................... 879,381,002 6.52% 704,593,713 6.85%
LIFO......................................... 12,000,000 0.09% 0 0.00%
NET INTEREST................................. 198,875,865 1.47% 148,045,649 1.44%
EARNINGS PER COMMON SHARE:
BASIC FROM OPERATIONS........................ 0.28 0.24
EXTRAORDINARY ITEM.......................... 0.00 -0.01
----------- -----------
NET EARNINGS PER COMMON SHARE................ 0.28 0.23
=========== ===========
NUMBER OF COMMON SHARES USED IN
PER SHARE CALCULATION.................... 827,303,506 828,589,780
EARNINGS PER COMMON SHARE:
DILUTED FROM OPERATIONS...................... 0.27 0.24
EXTRAORDINARY ITEM.......................... 0.00 -0.01
----------- -----------
NET EARNINGS PER COMMON SHARE................ 0.27 0.23
=========== ===========
NUMBER OF COMMON SHARES USED IN
PER SHARE CALCULATION.................... 863,349,210 859,647,707
</TABLE>
<TABLE>
<CAPTION>
% %
2Q YTD TO SLS 3Q TO SLS
-------------- -------------
<S> <C> <C> <C> <C>
SALES........................................ 23,781,998,816 10,329,158,726
-------------- -------------
COSTS AND EXPENSES:
MERCHANDISE COSTS,INCLUDING WAREHOUSING
AND TRANSPORTATION....................... 17,534,342,141 73.73% 7,587,755,050 73.46%
OPERATING GENERAL AND ADMINISTRATIVE....... 4,333,567,480 18.22% 1,882,887,265 18.23%
RENT....................................... 342,114,480 1.44% 155,873,080 1.51%
DEPRECIATION............................... 449,284,493 1.89% 198,027,394 1.92%
AMORTIZATION OF GOODWILL................... 52,667,000 0.22% 23,335,205 0.23%
DIVIDEND AND INTEREST INCOME............... (5,324,390) -0.02% (3,168,937) -0.03%
INTEREST EXPENSE INCL. CAPITAL LEASES...... 352,245,904 1.48% 151,094,884 1.46%
-------------- -------------
TOTAL.................................... 23,058,897,108 96.96% 9,995,803,941 96.77%
-------------- -------------
EARNINGS BEFORE TAX EXPENSE AND
EXTRAORDINARY ITEM......................... 723,101,708 3.04% 333,354,785 3.23%
TAX EXPENSE.................................. 290,086,225 1.22% 131,439,916 1.27%
-------------- -------------
EARNINGS BEFORE EXTRAORDINARY ITEM........... 433,015,483 1.82% 201,914,869 1.95%
EXTRAORDINARY ITEM........................... (9,836,634) -0.04% 0 0.00%
-------------- -------------
NET EARNINGS ................................ 423,178,849 1.78% 201,914,869 1.95%
============== =============
EBITDA....................................... 1,583,974,715 6.66% 696,143,331 6.74%
LIFO......................................... 12,000,000 0.05% (6,500,000) -0.06%
NET INTEREST................................. 346,921,514 1.46% 147,925,947 1.43%
EARNINGS PER COMMON SHARE:
BASIC FROM OPERATIONS........................ 0.52 0.24
EXTRAORDINARY ITEM.......................... -0.01 0.00
----------- -----------
NET EARNINGS PER COMMON SHARE................ 0.51 0.24
=========== ===========
NUMBER OF COMMON SHARES USED IN
PER SHARE CALCULATION.................... 827,870,690 831,707,607
EARNINGS PER COMMON SHARE:
DILUTED FROM OPERATIONS...................... 0.50 0.24
EXTRAORDINARY ITEM.......................... -0.01 0.00
----------- -----------
NET EARNINGS PER COMMON SHARE................ 0.49 0.24
=========== ===========
NUMBER OF COMMON SHARES USED IN
PER SHARE CALCULATION.................... 861,422,505 857,421,407
</TABLE>
<TABLE>
<CAPTION>
%
3Q YTD TO SLS
--------------
<S> <C> <C>
SALES........................................ 34,111,157,542
--------------
COSTS AND EXPENSES:
MERCHANDISE COSTS,INCLUDING WAREHOUSING
AND TRANSPORTATION....................... 25,122,097,191 73.65%
OPERATING GENERAL AND ADMINISTRATIVE....... 6,216,454,746 18.22%
RENT....................................... 497,987,560 1.46%
DEPRECIATION............................... 647,311,887 1.90%
AMORTIZATION OF GOODWILL................... 76,002,205 0.22%
DIVIDEND AND INTEREST INCOME............... (8,493,327) -0.02%
INTEREST EXPENSE INCL. CAPITAL LEASES...... 503,340,788 1.48%
--------------
TOTAL.................................... 33,054,701,050 96.90%
--------------
EARNINGS BEFORE TAX EXPENSE AND
EXTRAORDINARY ITEM......................... 1,056,456,492 3.10%
TAX EXPENSE.................................. 421,526,140 1.24%
--------------
EARNINGS BEFORE EXTRAORDINARY ITEM........... 634,930,352 1.86%
EXTRAORDINARY ITEM........................... (9,836,634) -0.03%
--------------
NET EARNINGS ................................ 625,093,718 1.83%
==============
EBITDA....................................... 2,280,118,045 6.68%
LIFO......................................... 5,500,000 0.02%
NET INTEREST................................. 494,847,461 1.45%
EARNINGS PER COMMON SHARE:
BASIC FROM OPERATIONS........................ 0.77
EXTRAORDINARY ITEM.......................... -0.01
-----------
NET EARNINGS PER COMMON SHARE................ 0.76
===========
NUMBER OF COMMON SHARES USED IN
PER SHARE CALCULATION.................... 829,089,603
EARNINGS PER COMMON SHARE:
DILUTED FROM OPERATIONS...................... 0.74
EXTRAORDINARY ITEM.......................... -0.01
-----------
NET EARNINGS PER COMMON SHARE................ 0.73
===========
NUMBER OF COMMON SHARES USED IN
PER SHARE CALCULATION.................... 860,028,747
</TABLE>
