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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) November 6, 1997
THE LOEWEN GROUP INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
British Columbia, Canada 0-18429 98-0121376
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(State or other jurisdiction of (Commission File Number) (IRS Employer Identification No.)
incorporation)
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4126 Norland Avenue, Burnaby, British Columbia V5G 3S8
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code 604-299-9321
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N/A
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(Former name or former address, if changed since last report)
Exhibit Index is on page 3
Page 1 of 7
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ITEM 5. OTHER EVENTS.
Pursuant to Form 8-K, General Instructions F, registrant hereby incorporates by
reference the press release attached hereto as Exhibit 99.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
Exhibit No. Description
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Exhibit 99 The Loewen Group Inc. Press Release dated November 6, 1997
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 hereunto duly authorized.
Dated: November 6, 1997
THE LOEWEN GROUP INC.
By: /s/ PETER S. HYNDMAN
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Name: Peter S. Hyndman
Title: Corporate Secretary
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EXHIBIT INDEX
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Sequential
Number Exhibit Page Number
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99 The Loewen Group Inc. 4
Press Release dated November 6, 1997
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THE LOEWEN GROUP INC.
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(NYSE, TSE, ME: LWN) NEWS
Investor contacts:
Paul Wagler, Senior Vice President, Finance Media Contact:
Dave Laundy, Vice President,
Dwight Hawes, Vice President, Finance Corporate Communications
The Loewen Group Inc. Tel: (604) 293-7857
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THE LOEWEN GROUP INC.
(NYSE, TSE, ME: LWN) NEWS
FOR IMMEDIATE RELEASE
LOEWEN GROUP REPORTS THIRD QUARTER RESULTS
VANCOUVER, BC, November 6, 1997 -- The Loewen Group Inc. today reported a loss
for the third quarter of 1997 as the result of the restructuring, strategic
initiatives and other charges totaling $81 million announced earlier. The
restructuring and strategic initiatives are designed to streamline operations
and reduce costs.
The Company reported a loss of $0.59 per share for the quarter on a fully
diluted basis compared with earnings of $0.25 for the same period in 1996. For
the nine months ended September 30, 1997, the Company reported earnings per
share on a fully diluted basis of $0.03 compared with $0.84 for the same period
in 1996.
Before the restructuring, strategic
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initiatives and other charges recorded in the third quarter of 1997, the Company
had net earnings of $13.4 million, or $0.15 per share on a fully-diluted basis.
This compares with $19.4 million in the third quarter of 1996, or $0.29 per
share before costs associated with the hostile takeover bid by Service
Corporation International.
"We have fallen far short of our financial goals for this quarter, and that is
clearly unacceptable," said Chairman and Chief Executive Officer Raymond L.
Loewen. "In addition to strengthening our management team, we have taken
important steps to reduce expenses and improve gross margins in each of our
businesses. More must and will be done to reduce our cost structure and improve
long-term efficiency. We believe the result of management's intensive focus on
operations will result in a stronger foundation on which to deliver sustainable,
profitable growth."
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The restructuring and strategic initiatives are expected to provide annual
pre-tax cost savings of approximately $25 to $30 million or $0.25 to $0.30 per
share by the end of 1998. The strategic initiatives include repayment of
high-cost debt, the closing of the Cincinnati corporate office, staff reductions
and other initiatives to lower overhead costs and increase efficiency.
Senior Vice-President and Chief Financial Officer Paul Wagler said the decision
to implement the restructuring and strategic initiatives followed a management
review of the Company's operating performance for the first six months of 1997
and its budgets for the balance of the year. It was determined that changes were
necessary to improve long-term financial performance. As a result, the Company
recorded pre-tax charges of $81 million ($55 million after-tax) in the third
quarter of 1997.
"The majority of the anticipated future savings from the restructuring and
strategic initiatives are associated with our efforts to more effectively
integrate our field and administrative operations, including clustering of
funeral home and cemetery locations," he said. "We look to a positive influence
on both funeral and cemetery gross margins as well as savings in general and
administrative and interest costs as a percentage of revenue. We believe these
initiatives will gain momentum in the fourth quarter of 1997."
The following discussion of operating results is before the effect of the
restructuring, strategic initiatives and other charges recorded in the third
quarter of 1997.
Revenues for the quarter were $277.2 million, up 20 per cent compared with
$231.5 million in the same quarter of 1996. For the first nine months of the
year, revenues were $827.5 million, an increase of 28 per cent over $647.6
million last year. "We have pulled together a superior collection of funeral
home and cemetery assets and now the priority is to bring cost efficiencies and
organizational improvements to translate our revenue growth into strong profit
growth," said Mr.
Wagler.
Funeral home revenues in the third quarter were $140.4 million, up 7 per cent
from last year's $130.8 million, reflecting the 35,556 funeral services
performed, up from 34,449 in 1996. Funeral home margins, at 34.2 per cent
compared to 38.5 per cent in the third quarter of 1996, were negatively impacted
by flat revenues on a same-store basis and moderate cost increases. Reflecting
the decline in death rates and other industry trends, same-store funeral home
volumes were down 4.5 per cent which was partially offset by an increase of 3.6
per cent in average revenue per service.
Nine-month funeral home revenues were $442.5 million, up 11 per cent from last
year's $397.7 million, reflecting the 112,525 services performed during the
period. Funeral home margins were 38.3 per cent compared with 40.2 per cent in
the nine months of 1996.
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Cemetery revenues for the third quarter increased 45 per cent to $112.6 million
from $77.7 million. Margins decreased from 33.2 per cent to 31.3 per cent, still
within the normal operating range.
Nine-month cemetery revenues were $317.0 million, up 59 per cent from last
year's $198.9 million. Cemetery margins were 33.0 per cent compared to 31.5 per
cent for the same period in 1996.
General and administrative expenses for the third quarter of 1997 as a
percentage of revenue was 7.9 per cent compared with 7.8 per cent for the same
period in 1996.
Mr. Loewen noted that the Company continues to be the consolidator of choice in
the industry and is sharpening the focus of its acquisition program, pursuing
transactions on a selective and disciplined basis. He said the Company has
agreements in place or closed acquisitions this year representing an aggregate
purchase price of some $633 million. Since the beginning of the year, the
Company has closed transactions to acquire 109 funeral homes and 159 cemeteries
for $446 million, which are expected to generate approximately $210 million of
annualized revenue. In addition, the Company has in place signed agreements for
the acquisition of 57 funeral homes and 55 cemeteries for an estimated total
purchase price of $187 million which are expected to generate annualized
revenues of approximately $78 million.
On August 8, 1997 the Company announced that it had entered into an agreement
with Service Corporation International to sell its shareholdings in Arbor
Memorial Services Inc., for a gain of approximately $25 million, subject to
certain conditions. The Canadian Competition Bureau's review of this transaction
has been completed with a favorable opinion, requiring certain commitments from
SCI. The Company is actively pursuing completion of the transaction.
Also during the quarter, the Company expanded its bank credit facility to US $1
billion and completed two debt financings, a public offering in Canada for Cdn
$200 million a private placement in the United States for US $300 million.
Yesterday, the company announced the appointment of Michael G. Weedon as
Executive Vice-President and Chief Administrative Officer and F. Andrew Scott
as Senior Vice-President, Corporate Development. Both will join Paul Wagler,
Senior Vice-President and Chief Financial Officer and Larry Miller, Executive
Vice-President, Operations on the company's newly established Executive
Committee. Mr. Loewen said, "While the first round of strategic initiatives has
been implemented, we believe there are additional opportunities to improve
operating
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efficiencies and long-term profitability. The Executive Committee's
role is, on an on-going basis, to review the Company's operations to achieve
additional cost efficiencies, more effectively integrate our field and
administrative operations and identify additional strategic initiatives in order
to improve profitability and enhance shareholder value."
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With corporate offices in Vancouver and Philadelphia, The Loewen Group Inc. is
the second largest and fastest growing funeral home and cemetery operator in
North America in terms of revenues and assets. The Company employs approximately
17,000 people and owns or operates some 1,000 funeral homes and over 420
cemeteries across the United States and Canada. Over 90 per cent of the
Company's revenue is derived from the United States.
Note: Certain of the statements contained in this press release, including, but
not limited to information regarding the future economic performance and
financial condition of the company, the plans and objectives of the company's
management, and the company's assumptions regarding such performance and plans,
are forward-looking in nature. Additional information concerning important
factors that could cause actual results to differ from the forward-looking
information contained in this release is included in the company's publicly
filed quarterly and annual reports.
The Loewen Group's website is located at http://www.loewengroup.com
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