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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 4, 1998
QUALITY FOOD CENTERS, INC.
(Exact name of registrant as specified in its charter)
WASHINGTON 0-15590 91-1330075
(State of other jurisdiction (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
10112 N.E. 10TH STREET
BELLEVUE, WASHINGTON
(Address of principal executive offices)
(206) 455-3761
(Registrant's telephone number,
including area code)
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Item 5. Other Events.
On February 4, 1998, Quality Food Centers, Inc. ("QFC") issued a press
release summarizing certain financial data released by QFC, a copy of which is
attached hereto as exhibit 99.1 and incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
99.1 Press release dated February 4, 1998 announcing the release
of QFC's Consolidated Financial Highlights
2
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: February 5, 1998 QUALITY FOOD CENTERS, INC.
By /s/ Marc W. Evanger
---------------------
Marc W. Evanger
Senior Vice President
3
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Ex. No. Description
- ------- -----------
<S> <C>
99.1 Press release dated February 4, 1998 announcing the
release of QFC's Consolidated Financial Highlights
</TABLE>
4
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ANALYST CONTACT MEDIA CONTACT
Marc Evanger MWW/Savitt
Sr. Vice President, Chief Financial Officer Kerry Sturgill
(425) 462-2177 (206) 689-8505
===============================================================================
QFC REPORTS RECORD FOURTH QUARTER & YEAR END RESULTS
Bellevue, Washington - February 4, 1998 - Quality Food Centers, Inc. (QFC)
(NYSE:XQ) announced today that the company's record growth continued in the
fourth quarter of 1997. The company reported record sales, operating income,
net earnings and earnings per share for the 16 and 52 weeks ended December 27,
1997.
QFC's fourth quarter sales were $652.8 million, a 152.9% increase over the
prior year. Same store sales increased approximately 1% in the fourth quarter
versus a year ago, in spite of approximately 0.5% food price deflation. Sales
for the year were $1.9 billion, a 133.2% increase over 1996, with same-store
sales increasing 2.0%.
"Our total sales increase reflects the acquisition of Hughes Markets in
Southern California in March 1997 and strong increases in the Pacific
Northwest. In addition to strong same store sales, QFC sales in the Pacific
Northwest reflected the addition of two Food Giant stores acquired in the
fourth quarter of 1996, 25 Keith Uddenberg, Inc. (KUI) stores acquired in
February 1997, the acquisition of a store in Port Hadlock in June 1997, the
opening of the new Harvard Market store in April 1997, and 20 store remodels
completed in 1997," said Marc Evanger, Senior Vice President and CFO.
Net earnings for the quarter were $13.7 million, a 58.6% increase over the
fourth quarter last year. Net earnings for the year were $40.0 million, a
57.4% increase versus the same period of 1996. Earnings per share (EPS) in the
fourth quarter were 62 cents, compared to 57 cents in the same period of 1996,
reflecting approximately seven million additional shares outstanding in 1997
due to QFC's secondary stock offering in March 1997 and $1 million in one-time
expenses associated with the merger with Fred Meyer, Inc. announced on
November 7, 1997. EPS for the 52 weeks ended December 27, 1997, were $1.95,
an increase of 14.0% over 1996 EPS of $1.71. Excluding the
- more -
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merger expenses, 1997 EPS would have been 64 cents and $1.98 for the fourth
quarter and 52 weeks, respectively.
Operating income increased 96.2% to $31.8 million for the 16 weeks ending
December 27, 1997, and increased 88.9% to $92.6 million for the year compared
to the same period in 1996. Earnings before interest, taxes, depreciation,
amortization and LIFO (EBITDA) were $47.1 million, up 108.5% for the quarter
versus the prior year. As a percentage of sales, EBITDA was 7.2% for the
fourth quarter of 1997 compared to 8.7% for the same period in 1996. The
reduction in EBITDA margin was expected with the addition in 1997 of lower
margin KUI and Hughes stores. EBITDA for the year was $136.3 million, an
increase of 97.1% over 1996.
"These results reflect continued progress toward integrating our acquisitions.
We are seeing margin growth in the acquired stores and are beginning to see the
benefits of our larger scale," Evanger noted. "Our strong results reflect the
outstanding efforts of 11,000 people in the Pacific Northwest and Southern
California, continually improving merchandising and customer service to
ever-higher standards."
The Fred Meyer merger is expected to close by mid-March 1998. At that point,
QFC will become a wholly owned subsidiary of Fred Meyer, Inc. and will continue
to be operated by QFC's current management team. Dan Kourkoumelis, President
and CEO, commented, "We look forward to creating a quality partnership that
rewards our customers, employees and shareholders through two distinct and
complementary formats."
Kourkoumelis continued, "The merger will support our plans to continue our
growth in the Pacific Northwest. We expect to open six to nine new stores and
remodel 10 -15 stores over the next year. Our expansion of QFC into the
southern and western areas of the Puget Sound region continues with new and
remodeled stores in major markets such as Olympia, and on the Olympic
peninsula. Expansion into the greater Portland, Oregon area also is continuing
as planned. We have two stores under construction in West Portland that will
open in April 1998," added Kourkoumelis.
QFC is the second-largest supermarket chain in the Puget Sound region of
Washington state, with 89 stores and more than 6,000 employees. QFC also owns
and operates Hughes Family Markets, a 56-store supermarket chain serving
Southern California, with more than 5,000 employees based in Irwindale,
California. QFC has become a leading regional operator of premium supermarkets
by providing customers with a high value shopping experience through superior
quality, service and convenience at a fair price.
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QFC's press releases are available at no charge by calling PR Newswire at
1-800-758-5804, ext. 134257, or visiting PR Newswire's web site at
http://www.prnewswire.com.
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QUALITY FOOD CENTERS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
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<CAPTION>
16 WEEKS ENDED
======================================================
DEC 27, % OF DEC 28, % OF %
1997 SALES 1996 SALES CHANGE
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<S> <C> <C> <C> <C> <C>
Sales $652,854 100.0% $258,115 100.0% 152.9%
Cost of sales and related
occupancy expenses 490,619 75.1% 193,398 74.9% 153.7%
Marketing, general and
administrative expenses 130,392 20.0% 48,487 18.8% 168.9%
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Operating Income 31,843 4.9% 16,230 6.3% 96.2%
Interest Income 990 0.1% 166 0.1% 496.4%
Interest Expense (10,395) -1.6% (2,989) -1.2% 247.8%
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Earnings before income taxes 22,438 3.4% 13,407 5.2% 67.4%
Income taxes 8,760 1.3% 4,784 1.9% 83.1%
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Net earnings $13,678 2.1% $8,623 3.3% 58.6%
======================================================
EBITDA $47,092 7.2% $22,584 8.7% 108.5%
======================================================
Earnings per share $0.62 $0.57 8.8%
======== ======== ========
Weighted average shares 22,169 15,140 46.4%
======== ======== ========
Consolidated Balance Sheet Information:
Total Cash and Cash Equivalents: $44,702 $14,571
Total Assets 984,570 304,017
Long-term Debt, including current
portion 364,293 145,000
Capitalized Lease Obligations 31,098
Shareholders' Equity 351,785 76,798
<CAPTION>
52 WEEKS ENDED
=========================================================
DEC 27, % OF DEC 28, % OF %
1997 SALES 1996 SALES CHANGE
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<S> <C> <C> <C> <C> <C>
Sales $1,878,115 100.0% $805,281 100.0% 133.2%
Cost of sales and related
occupancy expenses 1,417,081 75.5% 603,947 75.0% 134.6%
Marketing, general and
administrative expenses 368,457 19.6% 152,337 18.9% 141.9%
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Operating Income 92,577 4.9% 48,997 6.1% 88.9%
Interest Income 2,591 0.1% 467 0.1% 454.8%
Interest Expense (29,181) -1.5% (9,890) -1.3% 195.1%
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Earnings before income taxes 65,987 3.5% 39,574 4.9% 66.7%
Income taxes 25,980 1.4% 14,156 1.7% 83.5%
---------------------------------------------------------
Net earnings $40,007 2.1% $25,418 3.2% 57.4%
=========================================================
EBITDA $136,287 7.3% $69,150 8.6% 97.1%
=========================================================
Earnings per share $1.95 $1.71 14.0%
=========== ======== =========
Weighted average shares 20,517 14,888 37.8%
=========== ======== =========
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