<PAGE> 1
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) August 6, 1998
THE LOEWEN GROUP INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
British Columbia, Canada 0-18429 98-0121376
- ------------------------------- ----------------------- --------------------------------
(State or other jurisdiction of (Commission File Number) (IRS Employer Identification No.)
incorporation)
</TABLE>
4126 Norland Avenue, Burnaby, British Columbia V5G 3S8
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code 604-299-9321
N/A
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
Exhibit Index is on page 3
Page 1 of 6
<PAGE> 2
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
Exhibit 99 The Loewen Group Inc. Press Release dated August
6, 1998
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: August 6, 1998
THE LOEWEN GROUP INC.
By: /s/ BRADLEY D. STAM
-------------------------------------
Name: Bradley D. Stam
Title: Senior Vice-President, Law
<PAGE> 3
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential
Number Exhibit Page Number
- ------ ------- -----------
<S> <C> <C>
99 The Loewen Group Inc. 4
Press Release dated August 6, 1998
</TABLE>
<PAGE> 1
THE LOEWEN GROUP INC.
- ---------------------------------------------------------
(NYSE, TSE, ME: LWN) NEWS
Investor contacts: Media Contact:
Chris Hunter, Director, Investor Relations Dave Laundy, Vice President
The Loewen Group Inc. Corp. Communications
Tel: (800) 347-7010 Tel: (604) 293-7857
FOR IMMEDIATE RELEASE
LOEWEN GROUP REPORTS 1998 SECOND QUARTER RESULTS
---------------------------------------------
VANCOUVER, BC, August 6, 1998 -- The Loewen Group Inc. today reported revenues
for the second quarter ended June 30, 1998 increased 10 percent to $302.9
million compared to revenues of $275.7 million in the same quarter last year.
Net earnings in the period were $11.6 million compared to $26.3 million in 1997.
Fully diluted earnings per share were $0.13 compared to $0.38 for the second
quarter of 1997.
As previously announced, earnings in the quarter were impacted by second quarter
industry-wide funeral home volume declines, lower than expected pre-need
cemetery sales and an increase in cemetery accounts receivable reserves.
Raymond L. Loewen, Chairman and Chief Executive Officer, said, "We do not
believe the second quarter results are indicative of the Company's strong
earnings potential. Management's highest priority is to improve the Company's
financial performance and to maximize the long-term value of the Company's
operations for our shareholders."
Funeral home division revenues increased four percent to $152.1 million for the
quarter compared to revenues of $146.6 million in 1997. Revenues from
acquisitions more than offset the second quarter decline in revenues from same
store locations. Funeral home profits were $56.6 million compared to $58.2
million in the same quarter a year ago. Funeral home gross margins for the
quarter were 37.2 percent compared to 39.7 percent in the previous year,
reflecting the high fixed cost nature of the funeral business.
The Company's cemetery division contributed revenues of $124.5 million, an
increase of 16 percent compared to $107.0 million in the second quarter a year
ago, as revenues from acquisitions more than offset a decline in same store
<PAGE> 2
revenues. Profits from cemetery operations were $34.1 million in the second
quarter of 1998 compared to $36.0 million a year earlier, and cemetery gross
margins were 27.4 percent, compared to 33.6 percent for the second quarter of
1997. Cemetery gross margins were lower, partly due to an increase in the
allowance for pre-need cemetery accounts receivable, reflecting greater
experience with the receivables portfolio.
Insurance revenue increased 18.6 percent to $26.2 million in the second quarter,
compared to $22.1 million in the same quarter a year ago. As expected, gross
margins declined due to costs associated with the continued rollout of Loewen's
proprietary life insurance products.
As previously announced, Loewen agreed to sell its First Capital Life Insurance
Company subsidiary. First Capital's value to Loewen had diminished since Loewen
funeral homes directly compete with many of the funeral homes that represent
First Capital's customer base. Proceeds from the sale will be approximately $24
million resulting in a $5 million pre-tax gain in the second half of 1998. The
Company continues to focus its insurance activities on internally generated
opportunities to build revenues and profits with minimal incremental investment.
Prime Succession Holdings, Inc. experienced a decline in same-store volumes
similar to that of Loewen which resulted in a larger than expected loss after
preferred dividends. Rose Hills Holding Corp. performed within the company's
expectations. Loewen's investment in Prime and Rose Hills continue to be
attractive for eventual purchase by Loewen. In the second quarter of 1998, the
Company recognized $3.0 million in equity and other earnings from associated
companies compared with $3.7 million in the second quarter of 1997.
Year-to-date, the Company has acquired 81 funeral homes and 61 cemeteries for
approximately $236 million. These acquisitions are expected to produce
annualized revenues of $88 million. The Company has signed agreements for a
further 49 funeral homes and 28 cemeteries aggregating $131 million. All of
these acquisitions were located in North America and the U.K. Executive Vice
President of Finance and Chief Financial Officer, Paul Wagler said, "Although we
have continued to purchase quality assets, we have encountered gradually higher
prices for properties in the United States. With the inherent opportunities in
our over 1,600 locations, the management team is increasingly focused on
reducing costs and improving efficiencies at existing locations. As a result, we
expect our 1998 and 1999 acquisition pace to be lower than 1997." Mr. Wagler
also indicated that the Company has recently reduced its corporate development
staff and expenses by more than half, which will produce annualized savings next
year of a further $4 million.
The Company also announced expanded management roles for two senior executives,
Mr. Wagler and Michael Weedon. Messrs. Wagler and Weedon will assume additional
responsibilities for the oversight and management of the Company's corporate
development, operations and administration.
<PAGE> 3
"Loewen has taken a number of steps to create more cost effective operations,"
said Mr. Wagler. "For example, we believe a sizeable portion of the $25 million
annual operating budget to run the Philadelphia office can be saved by our
consolidation initiative, although the benefits will phase in gradually."
During the second quarter, the Company continued to implement a number of
initiatives to streamline its operations and reduce costs company-wide. Loewen
recently announced plans to substantially reduce its ongoing cost structure by
consolidating management and certain administrative functions from its
Philadelphia office to corporate headquarters in Vancouver. Any costs associated
with this transition during the second half of 1998 are expected to be more than
offset by the gain on the sale of First Capital Life Insurance Company.
For the first six months of 1998, revenues were $612.9 million, compared to
revenues of $550.4 in the same period in 1997 and net earnings were $42.0
million compared to net earnings of $50.0 million for the comparable period one
year ago. Fully diluted earnings per share for the six months were $0.51
compared with fully diluted earnings per share of $0.74 in 1997.
The Loewen Group Inc. is the second largest funeral home and cemetery operator
in North America. The Company employs approximately 16,000 people and owns or
operates more than 1,100 funeral homes and over 500 cemeteries across the United
States, Canada and the United Kingdom. Over 90 percent of the Company's revenue
is derived from the United States.
Note: Certain of the statements contained in the 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
- 30 -
