<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 9, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934)
(AMENDMENT NO. 1)
---------------
QUALITY FOOD CENTERS, INC.
(Name of Issuer and Person Filing Statement)
COMMON STOCK, PAR VALUE $.001 PER SHARE
(Title of Class of Securities)
747565109
(CUSIP Number of Class of Securities)
MARC W. EVANGER
VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER,
SECRETARY/TREASURER
QUALITY FOOD CENTERS, INC.
10112 NE 10TH STREET
BELLEVUE, WASHINGTON 98004
(206) 455-3761
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications
on Behalf of the Person Filing Statement)
------------------------
COPIES TO:
<TABLE>
<S> <C>
Edmund O. Belsheim, Jr. Robert L. Friedman
BOGLE & GATES SIMPSON THACHER & BARTLETT
Two Union Square 425 Lexington Avenue
601 Union Street New York, NY 10017
Seattle, WA 98101-2346 (212-455-2780)
(206-621-1465)
</TABLE>
------------------------
JANUARY 19, 1995
(Date Tender Offer First Published,
Sent or Given to Security Holders)
------------------------
CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Transaction Valuation* Amount of Filing Fee**
$175,000,000 $35,000
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* Assumes purchase of 7,000,000 shares at $25 per share.
**_Paid on January 19, 1995.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid: N/A Filing Party: N/A
Form or Registration No: N/A Date Filed: N/A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
This Amendment No. 1 amends and supplements the Issuer Tender Offer
Statement on Schedule 13E-4, dated January 19, 1995, of Quality Food Centers,
Inc. (the "Company") filed in connection with the offer by the Company to
purchase up to 7,000,000 outstanding shares of Common Stock, par value $.001 per
share, of the Company (the "Shares") at a price of $25 per Share, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated January 19, 1995 (the "Offer to Purchase") and the
related Letter of Transmittal.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The response to this Item is hereby supplemented and amended as
follows:
The information set forth in "Source and Amount of Funds" in Section 1 of
the Supplement to the Offer to Purchase is incorporated herein by reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
(a)-(j) The response to this Item is hereby supplemented and amended as
follows:
The information set forth in "Certain Information About the Company" in
Section 2 of the Supplement to the Offer to Purchase is incorporated herein by
reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
The response to this Item is hereby supplemented and amended as follows:
The information set forth in "Interests of Directors, Executive Officers and
Certain Shareholders; Transactions and Arrangements Concerning Common Stock" in
Section 3 of the Supplement to the Offer to Purchase is incorporated herein by
reference.
ITEM 7. FINANCIAL INFORMATION.
(a)-(b) The response to this Item is hereby supplemented and amended as
follows:
The financial information set forth in "Certain Information About the
Company" in Section 2 of the Supplement to the Offer to Purchase is incorporated
herein by reference.
On January 31, 1995, the Company issued a press release announcing certain
financial information of the Company for the 53 weeks ended December 31, 1994
and for the 17 weeks ended December 31, 1994. The press release is filed as
Exhibit (g) hereto and is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a)(9) Form of Supplement, dated March 9, 1995, to Offer to Purchase dated January 19, 1995.
(c)(10) Letter Agreement terminating the Voting Trust Agreement entered into as of March 6, 1987,
as supplemented as of May 31, 1991, by and among Quality Food Centers, Inc., Stuart M.
Sloan, Douglas D. Adkins, Ronald A. Weinstein, Stuart M. Sloan, as Voting Trustee, and
Marsha L. Sloan and the Shareholders' Agreement made as of March 6, 1987, as
supplemented as of May 31, 1991, by and among Douglas D. Adkins, Ronald A. Weinstein,
Stuart M. Sloan, Quality Food Centers, Inc. and Marsha L. Sloan.
(g) Form of Press Release dated January 31, 1995.
(h) Form of Press Release dated March 3, 1995.
</TABLE>
2
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
QUALITY FOOD CENTERS, INC.
By: ________/s/_MARC W. EVANGER_______
Marc W. Evanger
VICE PRESIDENT
Dated: March 9, 1995
3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NO. DESCRIPTION NUMBERED PAGE
- --------- --------------------------------------------------------------------------------------------------- --------------
<S> <C> <C>
(a)(9) Form of Supplement, dated March 9, 1995, to Offer to Purchase dated January 19, 1995.
(c)(10) Letter Agreement terminating the Voting Trust Agreement entered into as of March 6, 1987, as
supplemented as of May 31, 1991, by and among Quality Food Centers, Inc., Stuart M. Sloan, Douglas
D. Adkins, Ronald A. Weinstein, Stuart M. Sloan, as Voting Trustee, and Marsha L. Sloan and the
Shareholders' Agreement made as of March 6, 1987, as supplemented as of May 31, 1991, by and among
Douglas D. Adkins, Ronald A. Weinstein, Stuart M. Sloan and Quality Food Centers, Inc. and Marsha
L. Sloan.
(g) Form of Press Release dated January 31, 1995.
(h) Form of Press Release dated March 3, 1995.
</TABLE>
<PAGE>
SUPPLEMENT TO THE OFFER TO PURCHASE DATED JANUARY 19, 1995
QUALITY FOOD CENTERS, INC.
HAS AMENDED ITS
OFFER TO PURCHASE FOR CASH
7,000,000 SHARES OF ITS COMMON STOCK
AT
$25 NET PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON FRIDAY, MARCH 17, 1995 UNLESS EXTENDED.
------------------------
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. HOWEVER, THE OFFER IS SUBJECT TO CERTAIN OTHER CONDITIONS,
INCLUDING THE COMPANY HAVING OBTAINED SUFFICIENT FINANCING
TO ENABLE IT TO PURCHASE THE SHARES SOUGHT IN THE
OFFER. SEE SECTION 5 OF THE OFFER TO
PURCHASE.
IMPORTANT
Any shareholder desiring to tender all or any portion of his or her Shares
should either (1) complete and sign the Letter of Transmittal previously
delivered with the Offer to Purchase (or a facsimile copy thereof) in accordance
with the instructions in the Letter of Transmittal, mail or deliver it and any
other required documents to First Interstate Bank of Washington, N.A. (the
"Depositary") and either mail or deliver the stock certificates for such Shares
to the Depositary along with the Letter of Transmittal or tender such Shares
pursuant to the procedures for book-entry transfer set forth in Section 2 of the
Offer to Purchase, or (2) request his or her broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for him or her. Holders
of Shares registered in the name of a broker, dealer, commercial bank, trust
company or other nominee must contact such broker, dealer, commercial bank,
trust company or other nominee if they desire to tender such Shares.
Any shareholder who desires to tender Shares and whose certificates for
Shares are not immediately available or who cannot comply with the procedures
for book-entry transfer on a timely basis may tender Shares by following the
procedures for guaranteed delivery set forth in Section 2 of the Offer to
Purchase.
Questions and requests for assistance or for additional copies of the Offer
to Purchase, this Supplement, the Letter of Transmittal and the Notice of
Guaranteed Delivery may be directed to the Information Agent or the Dealer
Managers at their respective addresses and telephone numbers set forth on the
back cover of this Supplement.
NO PERSON HAS BEEN AUTHORIZED BY THE COMPANY TO MAKE ANY RECOMMENDATION ON
BEHALF OF THE COMPANY TO ANY SHAREHOLDER AS TO WHETHER TO TENDER SHARES PURSUANT
TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED BY THE COMPANY TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFER ON BEHALF
OF THE COMPANY OTHER THAN THOSE CONTAINED HEREIN, IN THE OFFER TO PURCHASE OR IN
THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION, INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
------------------------
The Dealer Managers for the Offer are:
GOLDMAN, SACHS & CO.
March 9, 1995
<PAGE>
To the Holders of Shares of Common Stock of Quality Food Centers, Inc.:
INTRODUCTION
The following information supplements the Offer to Purchase dated January
19, 1995 (the "Offer to Purchase") of Quality Food Centers, Inc., a Washington
corporation (the "Company"). The Company is offering to purchase up to 7,000,000
shares of its common stock, par value $.001 per share (the "Common Stock" or the
"Shares"), at $25 per Share, net to the seller in cash (the "Purchase Price"),
upon the terms and subject to the conditions set forth herein, in the Offer to
Purchase and in the related Letter of Transmittal (which collectively constitute
the "Offer").
Except as otherwise set forth in this Supplement, the terms and conditions
previously set forth in the Offer to Purchase remain applicable in all respects
to the Offer, and this Supplement should be read in conjunction with the Offer
to Purchase. Terms not defined herein shall have the meanings given to such
terms in the Offer to Purchase.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. HOWEVER, THE OFFER IS SUBJECT TO CERTAIN OTHER CONDITIONS, INCLUDING
THE COMPANY HAVING OBTAINED SUFFICIENT FINANCING TO ENABLE IT TO PURCHASE THE
SHARES SOUGHT IN THE OFFER. SEE SECTION 5 OF THE OFFER TO PURCHASE.
Procedures for tendering Shares are set forth in Section 2 of the Offer to
Purchase. Tendering shareholders should use the Letter of Transmittal or Notice
of Guaranteed Delivery previously circulated with the Offer to Purchase.
SHAREHOLDERS WHO PREVIOUSLY HAVE TENDERED THEIR SHARES PURSUANT TO THE OFFER ARE
NOT REQUIRED TO TAKE ANY FURTHER ACTION IN ORDER TO RECEIVE THE PURCHASE PRICE,
SUBJECT TO THE CONDITIONS OF THE OFFER. Procedures for withdrawing Shares
tendered pursuant to the Offer are set forth in Section 3 of the Offer to
Purchase. Shareholders will be allowed to withdraw tendered Shares at any time
prior to the acceptance for payment of Shares pursuant to the Offer.
The Offer, proration period and withdrawal rights will expire at 5:00 p.m.,
New York City time, on Friday, March 17, 1995, unless extended. THIS SUPPLEMENT
WILL NOT RESULT IN AN EXTENSION OF THE OFFER.
Shareholders are urged to read the Offer to Purchase, this Supplement and
the Letter of Transmittal carefully before deciding whether to tender their
Shares.
<PAGE>
THE TENDER OFFER
1. SOURCE AND AMOUNT OF FUNDS
On March 3, 1995, the Company accepted loan commitments of $220 million in
the aggregate from ten banks in connection with the Credit Facility to be used
to finance the Tender Offer.
2. CERTAIN INFORMATION ABOUT THE COMPANY
RECENT DEVELOPMENTS. On March 2, 1995, the Company consummated the merger
of the principal operations of Olson's Food Stores, Inc. into the Company. As
consideration for the merger, the Company (i) issued 752,941 shares of Common
Stock of the Company to the shareholders of Olson's, (ii) paid $18 million in
cash to such shareholders and (iii) assumed $24 million of Olson's long-term
debt. The consideration was revised from that previously negotiated and
described in the Offer to Purchase, which former consideration was to consist of
the issuance of 894,118 shares of Common Stock, a cash payment of $19 million
and the assumption of $20 million of long-term debt. The change in the
components of the consideration does not have a material effect on the Pro Forma
Condensed Balance Sheets or Pro Forma Condensed Statements of Earnings on pages
25 through 28 of the Offer to Purchase.
Notwithstanding the foregoing, as a result of the change in consideration,
the Pro Forma September 3, 1994 book value per share on page 25 of the Offer to
Purchase of $1.07 will become $0.86 and the Pro Forma December 25, 1993 book
value per share on page 27 of the Offer to Purchase of $(0.12) will become
$(0.33). Due to the aforementioned change in consideration, the cash
expenditures pursuant to the Offer, together with the cash consideration payable
in the Olson's merger, will require the Company to incur approximately $174
million of borrowings under the Credit Facility (in contrast to no long-term
debt outstanding at the present time) and will reduce shareholders' equity from
$150.6 million at September 3, 1994 ($7.73 per share) to $12.3 million on a pro
forma basis at that date ($0.86 per share). This is different from the $170
million of borrowings, $15.2 million of shareholders' equity on a pro forma
basis and $1.07 per share on a pro forma basis which appear under "Financial
Impact of the Offer" on page 3 of the Offer to Purchase and elsewhere in the
document.
The operations which were merged into the Company include twelve Olson's
supermarkets in Snohomish County and King County, Washington (seven of which
were either newly opened or extensively remodeled within the past five years),
three additional store sites in various stages of development and rights to
several other future sites in the same market. Such number of stores has been
revised from that previously negotiated and described in the Offer to Purchase,
which formerly was to include four stores in various stages of development
instead of three.
RELEASED UNAUDITED 1994 RESULTS. The actual fiscal year 1994 results and
the fourth quarter 1994 results released by the Company in its press release
dated January 31, 1995 are the same as the preliminary unaudited 1994 results
described in Section 10 of the Offer to Purchase.
EXPECTED FISCAL 1995 RESULTS. The Company's fiscal year 1995 projected net
earnings and earnings per share are $22.6 million and $1.45, respectively. This
is different from the projected net earnings of $22 million and earnings per
share of $1.48 which appear in the third and fourth lines under the subcaption
"Expected Fiscal 1995 Results" on page 31 of the Offer to Purchase due to a
clerical error in the calculation of projected weighted average shares
outstanding combined with the changes in the timing and components of the
consideration paid in connection with the Olson's merger.
Due to the same factors discussed in the immediately preceding paragraph,
the net earnings of $22 million and earnings per share of $1.48 which appear in
the fourth and sixth lines on page 5 of the Offer to Purchase under item 2. of
the subcaption "Certain Advantages of Not Tendering," are hereby amended to
$22.6 million and $1.45, respectively.
2
<PAGE>
3. INTERESTS OF DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN SHAREHOLDERS;
TRANSACTIONS AND ARRANGEMENTS CONCERNING COMMON STOCK
John W. Creighton, Jr., a director of the Company, has advised the Company
that he intends to tender 200 of his Shares in the Tender Offer. None of the
Company's other directors, executive officers or principal shareholders have
advised the Company of any change in their intentions with respect to tendering
Shares in the Offer.
The Voting Trust Agreement and the Shareholders' Agreement described in the
Offer to Purchase have been terminated.
4. MISCELLANEOUS
The Company has filed an amendment to its Issuer Tender Offer Statement on
Schedule 13E-4 with the Commission, which includes certain additional
information relating to the Offer. Such amendment to the Issuer Tender Offer
Statement, including exhibits, may be inspected and copies may be obtained from
the offices of the Commission in the manner set forth in the Offer to Purchase.
EXCEPT AS OTHERWISE SET FORTH IN THIS SUPPLEMENT, THE TERMS AND CONDITIONS
SET FORTH IN THE OFFER TO PURCHASE REMAIN APPLICABLE IN ALL RESPECTS TO THE
OFFER. THE INFORMATION SET FORTH HEREIN SHOULD BE READ IN CONJUNCTION WITH THE
OFFER TO PURCHASE.
QUALITY FOOD CENTERS, INC.
March 9, 1995
3
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted from Eligible Institutions. The Letter of
Transmittal, certificates for Shares and any other required documents should be
sent or delivered by each shareholder of the Company or his or her broker,
dealer, commercial bank, trust company or other nominee to the Depositary at one
of its addresses set forth below:
THE DEPOSITARY FOR THE OFFER IS:
FIRST INTERSTATE BANK OF WASHINGTON, N.A.
<TABLE>
<S> <C> <C>
BY MAIL: BY OVERNIGHT DELIVERY: BY HAND DELIVERY:
First Interstate Bank of First Interstate Bank of First Interstate Bank of
Washington, N.A. Washington, N.A. Washington, N.A.
c/o MSTS c/o MSTS 120 Broadway, 33rd Floor
P.O. Box 817 Attn.: Reorganization New York, New York 10271
Midtown Station Department or
New York, New York 10018 1st Floor First Interstate Bank of
85 Challenger Road Washington, N.A.
Ridgefield Park, New Jersey Stock Transfer Department
07660 14th Floor
999 Third Avenue
Seattle, Washington 98104
BY FACSIMILE:
(201) 296-4062
(For Eligible Institutions
Only)
</TABLE>
Any questions or requests for assistance may be directed to the Information
Agent or the Dealer Managers at their respective addresses and telephone numbers
set forth below. Additional copies of the Offer to Purchase, this Supplement,
the Letter of Transmittal or the Notice of Guaranteed Delivery may be obtained
from the Information Agent as set forth below, and will be furnished promptly at
the Company's expense. You may also contact your local broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
MACKENZIE
PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
Call Toll Free (800) 322-2885
THE DEALER MANAGERS FOR THE OFFER ARE:
GOLDMAN, SACHS & CO.
85 Broad Street
New York, New York 10004
(212) 902-1000 (call collect)
or
Call Toll Free (800) 323-5678
<PAGE>
TERMINATION LETTER
The undersigned, parties to (i) the VOTING TRUST AGREEMENT entered
into as of March 6, 1987, by and among Quality Food Centers, Inc., a Washington
corporation (the "Company"), Stuart M. Sloan ("Sloan"), Douglas D. Adkins
("Adkins"), and Ronald A. Weinstein ("Weinstein"), and Stuart M. Sloan as Voting
Trustee (the "Voting Trustee"), as supplemented by the Supplement entered into
as of May 31, 1991 among the Company, Sloan, Adkins, Weinstein, the Voting
Trustee and Marsha Sloan Glazer ("Glazer"), (the Voting Trust Agreement as
supplemented by the Supplement is hereinafter referred to as, the "Voting Trust
Agreement") and (ii) the SHAREHOLDERS' AGREEMENT entered into as of March 6,
1987, by and among Adkins, Weinstein, Sloan and the Company as supplemented by
the Supplement entered into as of May 31, 1991 among Adkins, Weinstein, Sloan,
Glazer and the Company, (the Shareholders' Agreement as supplemented by the
Supplement is hereinafter referred to as, the "Shareholders' Agreement"), hereby
agree as follows:
1. DEFINITIONS. Terms defined in the Voting Trust Agreement shall
have the same meaning when used herein unless otherwise defined herein.
2. TERMINATION. The Voting Trust Agreement and the Shareholders'
Agreement are each hereby terminated effective as of the date hereof.
3. EXCHANGE OF SHARES AND VOTING TRUST CERTIFICATES. (a) The Voting
Trustee, in exchange for or upon surrender of any outstanding Voting Trust
Certificates, shall, in accordance with the terms thereof and from the
certificates for shares of Common Stock received and held by it under the Voting
Trust Agreement, deliver to the holders of Voting Trust Certificates,
certificates endorsed in blank for shares of Common Stock representing the same
number of shares of Common Stock as are represented by such Voting Trust
Certificates, and thereupon all liability of the Voting Trustee for delivery of
such certificates shall terminate and (b) the Company, in exchange for or upon
surrender of any outstanding shares of Common Stock subject to the Shareholders'
Agreement, shall issue new shares of Common Stock without any references in the
legend thereon to the Shareholders' Agreement or the Voting Trust Agreement.
4. INDEMNIFICATION OF VOTING TRUSTEE. The indemnification provisions
contained in Section 5 of the Voting Trust Agreement shall survive the
termination of such Agreement.
<PAGE>
2
IN WITNESS WHEREOF, the respective parties have caused this
Termination Letter to be executed as of the date written below.
Dated as of March 1, 1995
QUALITY FOOD CENTERS, INC.
/s/ Marc Evanger
-------------------------------
Marc Evanger
/s/ Stuart M. Sloan
-------------------------------
Stuart M. Sloan, Voting Trustee
/s/ Stuart M. Sloan
-------------------------------
Stuart M. Sloan
/s/ Douglas D. Adkins
-------------------------------
Douglas D. Adkins
/s/ Ronald A. Weinstein
-------------------------------
Ronald A. Weinstein
/s/ Marsha Sloan Glazer
-------------------------------
Marsha Sloan Glazer
<PAGE>
CONSENT OF SPOUSES
Each of the undersigned acknowledges that she has read and is familiar
with the contents of the foregoing Termination Letter. Each of the undersigned
also authorizes, ratifies, confirms and approves the execution of the foregoing
Termination Letter by her respective spouse, with the same force and effect as
if she were a party thereto, and consents to the taking of any actions
contemplated therein.
Dated as of March 1, 1995
/s/ Susan Adkins
------------------------------
Susan Adkins
/s/ Devorah Weinstein
------------------------------
Devorah Weinstein
<PAGE>
[Logo] NEWS
Quality Food Centers RELEASE
- --------------------------------------------------------------------------------
For Immediate Release CONTACT:
Marc Evanger
Vice President, Chief Financial Officer
(206) 455-3761
- --------------------------------------------------------------------------------
QFC REPORTS RECORD FOURTH QUARTER AND YEAR-END RESULTS
BELLEVUE, WASHINGTON -- January 31, 1995 -- Quality Food Centers, Inc.
(NASDAQ:QFCI) today reported sales and earnings for the 17 and 53 weeks ended
December 31, 1994.
FOURTH QUARTER RESULTS
Net earnings for the fourth quarter were a record $8.4 million, compared with
$7.4 million for the corresponding 1993 quarter, an increase of 13.6%. Net
earnings per share were 43 cents, up from 38 cents per share for the fourth
quarter of 1993.
Sales for the fourth quarter increased 17.5% to $192.2 million, compared with
$163.6 million last year. Comparable store sales increased 0.08% with food
price deflation of approximately 1%.
According to Marc Evanger, vice president and chief financial officer, "Our
fourth quarter sales increase reflects the seven stores that were new or
acquired in 1994, as well as the additional week due to 1994 being a 53-week
year. These factors were offset by continued food price deflation of 1% and
lower sales in certain existing stores due to the opening and remodeling of
competitors' stores located near QFC stores. While we maintained gross margins
in the fourth quarter, operating margins were lower than a year ago due to lower
profitability levels in our newly acquired stores, four of which were undergoing
major remodeling during the quarter, and continued increases in labor costs and
other operating expenses."
YEAR-END RESULTS
For the 53 weeks ended December 31, 1994, net earnings were $26.4 million, or
$1.34 per share, compared with net earnings of $26 million, or $1.33 cents per
share, for the 52 weeks of 1993. Sales increased 11.1% in 1994 to $575.9
million, compared with $518.3 million in 1993. Comparable store sales were down
0.5% for the year, with food price deflation of approximately 1.4%.
Quality Food Centers, Inc. - P.O. Box 3967 - Bellevue, Washington 98009 -
(206) 455-3761 - Fax: (206) 462-2159
<PAGE>
According to Dan Kourkoumelis, president and chief operating officer, "We are
very pleased with our performance and the outstanding efforts of our employees
in 1994, which as expected was a challenging year. The Puget Sound economy
continued to be softer than it had been for the prior several years, with slower
growth, a more cautious consumer and continued deflation in retail food prices.
Further, comparisons early in the year were difficult due to unusually strong
results during the first part of 1993 arising from widespread power outages from
a major windstorm and an E.coli-bacteria outbreak in a local fast-food chain.
However, while we will face a challenging environment in a competitive industry
again in 1995, the fundamentals of our business remain strong and we believe the
long-term outlook for QFC is positive."
Stuart Sloan, chairman and chief executive officer, stated, "In addition to
producing solid results, we added a record seven new stores in 1994, adding
238,000 square feet, a 22% increase. Three of these stores are being remodeled
and we completed the remodeling of another of these stores earlier this month.
1995 promises to be an even more aggressive year in terms of our expansion. We
recently announced the Olson's merger which includes 12 stores and is expected
to be completed in mid-February, the acquisition of one Rainier Market store to
be completed this week, and the acquisition of three stores from Puget Sound
Marketing which is expected to be completed at the end of March. These stores
will increase our count by 16, or 561,000 square feet, a 42% increase. In
addition, we are continuing to actively pursue other new store sites and
acquisition opportunities." Sloan continued, "We are building our business for
the long term and we recognize that this significant growth will be challenging.
We remain focused on taking care of our customers and are pleased that we have
great depth in our management and outstanding systems to support our accelerated
growth. We believe the addition of Zell/Chilmark as a new shareholder as well
as their adding two representatives to our Board of Directors will make a
valuable contribution to our long-term profitable growth."
The Company also announced that its Board of Directors declared a regular
quarterly cash dividend of five cents per share of the Company's common stock
payable on February 24, 1995 to shareholders of record as of February 3, 1995.
Thereafter, dividends will be discontinued because the credit facility to be
obtained in connection with the Company's pending self tender offer will
prohibit the payment of dividends prior to 1997.
QFC is the largest independent supermarket chain in the Seattle/Puget Sound
region of Washington State. QFC has served this area for 40 years and today
operates 45 stores and employs 3,200 people. QFC's top priority is satisfying
the needs of its customers by providing superior service, high-quality
perishables and competitive prices at convenient store locations.
2
<PAGE>
QUALITY FOOD CENTERS, INC.
FINANCIAL HIGHLIGHTS
Fourth Quarter - 1994
(in thousands except per share amounts)
<TABLE>
<CAPTION>
17 Weeks Ended 16 Weeks Ended 53 Weeks Ended 52 Weeks Ended
-------------------- -------------------- -------------------- --------------------
December 31, % OF December 25, % OF December 31, % OF December 25, % OF
1994 SALES 1993 SALES 1994 SALES 1993 SALES
------------ ----- ------------ ----- ------------ ----- ------------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $192,239 100.0 $163,622 100.0 $575,879 100.0 $518,260 100.00
Cost of sales and related
occupancy expenses 144,401 75.1 122,777 75.1 430,711 74.8 386,896 74.7
Operating expenses 35,438 18.4 29,838 18.2 105,956 18.4 92,467 17.8
-------- ----- -------- ----- -------- ----- -------- ------
Operating income 12,400 6.5 11,007 6.7 39,212 6.8 38,897 7.5
Interest income 361 .2 243 .2 933 .2 880 .2
-------- ----- -------- ----- -------- ----- -------- ------
Earnings before taxes 12,761 6.7 11,250 6.9 40,145 7.0 39,777 7.7
Income taxes 4,362 2.3 3,856 2.4 13,768 2.4 13,783 2.7
-------- ----- -------- ----- -------- ----- -------- ------
Net earnings $ 8,399 4.4 $ 7,394 4.5 $ 26,377 4.6 $ 25,994 5.0
-------- ----- -------- ----- -------- ----- -------- ------
-------- ----- -------- ----- -------- ----- -------- ------
Earnings per share $0.43 $0.38 $1.34 $1.33
----- ----- ----- -----
----- ----- ----- -----
Average shares
outstanding 19,685 19,607 19,656 19,592
Cash and Cash Equivalents $ 35,163 $ 31,256
Total Assets 207,914 181,275
Shareholders' Equity 158,102 133,620
Depreciation and
Amortization 11,607 9,278
Number of Stores 45 38
</TABLE>
<PAGE>
[Logo] NEWS
Quality Food Centers RELEASE
- --------------------------------------------------------------------------------
For Immediate Release
CONTACT:
Marc Evanger, QFC, (206) 455-3761
Morrie Olson, Olson's, (206) 771-1266
- --------------------------------------------------------------------------------
QFC/OLSON'S MERGER COMPLETED
BELLEVUE, WASHINGTON -- March 3, 1995 -- Quality Food Centers, Inc.
(NASDAQ:QFCI) and Olson's Food Stores, Inc. jointly announced today the
consummation of their previously announced merger effective March 2, 1995.
Consideration for the Merger consisted of 752,941 shares of QFC Common Stock,
$18 million in cash and the assumption of $24 million in long-term debt.
"We are pleased to welcome Olson's outstanding people to the QFC team," said Dan
Kourkoumelis, QFC president and chief operating officer. "After working with
them over the last couple of months, we are very impressed with the quality of
their people. We also look forward to the opportunity to continue to provide
superior quality and service to the communities served by the Olson's stores."
Morrie Olson commented, "I look forward to being a part of the QFC organization.
Combining the best of both chains will create an even stronger operation which
will be a positive for both the associates and customers."
QFC is the largest independent supermarket chain in the Seattle/Puget Sound
region of Washington State. QFC has served this area for 40 years and today
operates 57 stores and employs 4,300 people. QFC's top priority is satisfying
the needs of its customers by providing superior service, high-quality
perishables and competitive prices at convenient store locations.
Quality Food Centers, Inc. - P.O. Box 3967 - Bellevue, Washington 98009 -
(206) 455-3761 - Fax: (206) 462-2159
