<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) November 5, 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
November 5, 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: November 5, 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 November 5, 1998
</TABLE>
<PAGE> 1
THE LOEWEN GROUP INC.
(NYSE, TSE, ME: LWN)
NEWS
Contact:
Thomas C. Franco
Broadgate Consultants, Inc.
Tel: (212) 232-2222
FOR IMMEDIATE RELEASE
LOEWEN GROUP REPORTS 1998 THIRD QUARTER RESULTS
-------------------------------------------------------------
VANCOUVER, BC, November 5, 1998 -- The Loewen Group Inc. (NYSE, TSE, ME: LWN)
today reported that revenues for the third quarter ended September 30, 1998 were
$265.2 million, a decrease of 3.3 percent from revenues of $274.1 million in the
same quarter last year. The Company reported a net loss of $32.4 million,
compared to a net loss of $40.3 million in the prior comparable quarter. On a
fully diluted basis, the Company reported a loss of $0.47 per share, compared to
a fully diluted loss per share of $0.58 in the third quarter of 1997. The third
quarter of 1997 included restructuring, strategic initiative and other charges
aggregating to $0.74 per share. The results for the third quarter of 1998
included a number of adjustments and write-offs aggregating $57.9 million on a
pre-tax basis or $0.53 per share. The significant components of these
adjustments and write-offs are discussed below.
"The Company's financial and operating performance has clearly failed to meet
our expectations and those of our shareholders," said Robert B. Lundgren, the
recently appointed President, Chief Executive Officer and Co-Chairman of the
Company. "I am determined that this will change, and that the change will begin
immediately," he said.
"The main reason for the weak performance has been the Company's aggressive
<PAGE> 2
acquisition strategy in recent years, which did not allow enough time to fully
integrate new properties," Mr. Lundgren noted. "As a result, we have reduced
acquisitions to an absolute minimal level to focus management attention on cost
reductions, efficiency gains and general improvement in cash flow from the
Company's existing assets," he said.
In the third quarter ended September 30, 1998, funeral home division revenues
increased 8.3 percent to $152.1 million compared to revenues of $140.4 million
in the comparable 1997 quarter. The increase in revenues as a result of
acquisitions was offset by a 3.8 percent decline in revenues from same store
locations, reflecting the 4.3 percent decline in volumes at same store
locations. Same store gross margin for the quarter increased to 33.5 percent in
1998 from 29.0 percent in 1997 as costs decreased 9.9 percent.
Funeral home gross profits were $50.4 million compared to $42.8 million in the
same quarter a year ago. Overall, funeral home gross margin increased to 33.1
percent compared to 30.5 percent in the quarter last year, reflecting the impact
of lower operating costs.
Although gross cemetery sales increased to $113.7 million in the third quarter
of 1998 from $101.1 million in 1997, cemetery revenues decreased to $89.9
million from $109.6 million as a result of an increase in the allowance for
preneed cemetery receivables, an increase in imputed interest and lower than
expected realization of investment income from the perpetual care and
merchandise trust funds. Sales were also lower than expected because the number
of preneed sales employees was less than planned. Gross profits from cemetery
operations were $9.5 million in the third quarter of 1998 compared to $26.4
million in the comparable quarter a year ago, and cemetery gross margin was 10.6
percent, compared to 24.1 percent for the third quarter of 1997. The Company has
still not reached its desired level of preneed salesforce.
The Company's cemetery results were also affected by (i) a further increase to
the allowance for pre-need cemetery receivables as indicated by a worsening
trend in the third quarter on both acquired receivables and Loewen generated
sales and (ii) an increase in imputed interest on low interest contracts. These
additional items reduced cemetery gross profits by approximately $25.7 million.
Insurance revenue decreased 3.8 percent to $23.3 million in the third quarter,
compared to $24.2 million in the same quarter a year ago. In accordance with its
agreement to sell First Capital Life Insurance Company of Louisiana to Life Re,
results of First Capital have been excluded in the third quarter. The sale is
expected to close in the fourth quarter for cash proceeds of approximately $24
million. The decrease in insurance revenue was partially offset by an increase
in sales of pre-need
<PAGE> 3
funeral insurance generated through Company owned funeral homes. Insurance gross
margin increased to 15.8 percent compared to 13.6 percent a year ago, due to
lower commission and other operating costs.
General and administrative expenses were $44.5 in the third quarter of
1998 compared to $46.2 in 1997. The 1998 expenses included the write-off of
$14.9 million of previously capitalized costs for acquisitions and planned
construction that are no longer being pursued. The 1997 expenses included costs
for litigation and various asset write-downs aggregating $24.0 million.
Depreciation and amortization expense increased to $29.8 million in the
third quarter of 1998 from $17.9 million in 1997. The increase is primarily due
to the write-off and accelerated amortization of various assets aggregating $8.1
million.
During the third quarter of 1998, the Company changed its policy for accounting
for income taxes in accordance with the new standard of the Canadian Institute
of Chartered Accountants. The provisions were applied retroactively with
restatement of prior period financial statements such that at January 1, 1997,
the cumulative effect on retained earnings was a decrease of $21.8 million. The
effect of the change on the third quarter of 1998 was not significant.
During the third quarter of 1998, the Company has closed transactions to acquire
17 funeral homes and 14 cemeteries for approximately $44 million. Currently, the
Company has in place signed agreements for the acquisition of 16 funeral homes
and 10 cemeteries for an estimated total purchase price of $21 million.
Mr. Lundgren said, "Although the Company is implementing a number of operating
improvements necessary for long-term growth, Salomon Smith Barney, under the
oversight of a Special Advisory Committee to the Board of Directors, continues
the process of identifying and evaluating opportunities to maximize shareholder
value". He indicated such opportunities might include a sale of the company,
strategic partnerships, combinations, dispositions or capital investments.
For the first nine months of 1998, revenues were $878.2 million, compared to
revenues of $824.5 million in the same period in 1997 and net earnings were $7.8
million compared to net earnings of $11.0 million for the nine-month period one
year ago. Fully diluted earnings per share for the nine months were $0.01
compared with fully diluted earnings per share of $0.06 in 1997.
The Loewen Group Inc. is the second largest funeral home and cemetery operator
-more-
<PAGE> 4
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.
The Loewen Group's website is located at http://www.loewengroup.com
# # #
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.
-more-
