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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) March 31, 1999
THE LOEWEN GROUP INC.
(Exact name of registrant as specified in its charter)
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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
(Former name or former address, if changed since last report)
Exhibit Index is on page 3
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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
Exhibit 99 The Loewen Group Inc. Press Release dated March 31, 1999
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: April 1, 1999
THE LOEWEN GROUP INC.
By: /s/ BRADLEY D. STAM
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Name: Bradley D. Stam
Title: Senior Vice President, Law
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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 March 31, 1999
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THE LOEWEN GROUP INC.
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(NYSE, TSE, ME: LWN)
NEWS
Contact:
Thomas C. Franco
Broadgate Consultants, Inc.
Tel: (212) 232-2222
FOR IMMEDIATE RELEASE
LOEWEN GROUP REPORTS 1998 YEAR END AND FOURTH
QUARTER RESULTS OF OPERATIONS
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VANCOUVER, BC, March 31, 1999 -- The Loewen Group Inc. (NYSE, TSE, ME: LWN)
today announced that revenues for the year ended December 31, 1998 were $1,136.2
million, an increase of 2.1 percent from $1,114.1 million in 1997. The Company
reported a net loss of $599.0 million, representing $8.22 per share compared
with net earnings of $41.8 million in 1997 or $0.48 per share.
The 1998 results include a pre-tax asset impairment loss of $333.9 million as a
result of actual and probable sales of properties in early 1999. The 1998
results also include a pre-tax charge of $315.2 million for the writedown of a
significant portion of the Company's investments in Prime Succession and Rose
Hills and an accrual of contingent losses related to potential future purchase
obligations thereon.
1998 Review
Funeral home revenues for the year were $631.2 million, up 4.8 percent from
$602.1 million in 1997, reflecting 163,000 funerals performed, compared with
153,000 a year earlier. Funeral home gross margins in 1998 were 35.5 percent,
down from 37.9 percent in 1997. On a same store basis the year over year
funerals performed were down 5.2 percent.
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Overall, cemetery revenues for the year were $408.5 million, down 3.2 percent
from $422.0 million a year ago. Gross sales for 1998 increased by 9.8 percent to
$421.8 million from $384.1 million in 1997. Cemetery gross margins in 1998 were
12.6 percent, compared with 28.2 percent in 1997.
1998 Fourth Quarter Review
Total revenues for the 1998 fourth quarter of $260.7 million, down 10.0 percent
from $289.6 million in the same period in 1997, were negatively impacted by a
decline in preneed cemetery sales and an increase in the cancellation allowance
for preneed cemetery accounts receivable.
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Funeral home revenues for the fourth quarter of 1998 were $157.7 million, down
1.2 percent from $159.6 million in the prior year period. Funeral home gross
margins decreased to 29.6 percent from 39.8 percent in the fourth quarter of
1997, reflecting a decrease in the number of funerals performed on a same store
basis of 6.8 percent.
Cemetery gross sales before trust income and cancellation provisions were down
slightly compared with the fourth quarter of 1997. However, reported cemetery
revenue, which includes trust income and the cancellation provision of cemetery
preneed accounts receivable decreased 27.1 percent to $78.8 million from $108.0
million in 1997.
Lending Agreements and Asset Sale
On March 31, 1999, the Company entered into revised lending agreements with the
lenders under its bank credit agreement, MEIP bank term credit agreement and
certain other notes. The amendments change and add certain financial covenants,
waive defaults that would have occurred with respect to the Company's financial
results as of December 31, 1998, suspend all common, preferred and MIPS
dividends, provide no further borrowings under its bank credit agreement except
for certain letters of credit, and require refinancing of the $300 million PATS
senior notes by September 15, 1999. On the same day, the Company completed the
sale of 124 cemeteries and three funeral homes for gross proceeds of $193
million, $103 million of which was applied as a permanent paydown under the
revised lending agreements. The asset disposition will result in an estimated
pre-tax loss of approximately $302 million, which is reflected in the Company's
1998 financial results as an asset impairment. The Company has identified other
packages of assets that are being offered for sale and, if they are sold,
losses, if any, could be small or significant depending on the specifics of the
transaction.
Going Concern Basis of Presentation
The Company's attached unaudited consolidated statement of operations has been
prepared on a going concern basis in accordance with Canadian generally accepted
accounting principles. The going concern basis of presentation assumes that the
Company will continue in operation for the foreseeable future and will be able
to realize its assets and discharge its liabilities and commitments in the
normal course of business. If the "going concern" assumption basis was not
appropriate for the consolidated statement of operations, then significant
adjustments would be necessary in the reported revenue and expenses.
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There is substantial doubt about the appropriateness of the going concern
assumption because the Company has experienced in 1998 both a significant net
loss and negative cash flow. The ability of the Company to continue as a going
concern and to realize the carrying value of its assets and discharge its
liabilities when due is dependent on the successful completion of actions that
the Company has taken or plans to take which management believes will mitigate
the adverse conditions and events which raise doubt about the validity of the
"going concern" assumption. However, there is no certainty that these actions or
other strategies will be sufficient to permit
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the Company to continue and to refinance the PATS senior notes by September 15,
1999. In the event that such actions and strategies are not successful, either
the Company or its creditors may initiate proceedings for the liquidation or
reorganization of the Company under Canadian or U.S.
bankruptcy laws.
Audited Financial Statements
Due primarily to the lateness of the revised lending agreements on March 30,
1999 and the asset disposal closing on March 31, 1999, the Company was unable to
deliver financial statements to its independent auditors in a timely manner, and
the auditors were therefore unable to complete their audit procedures by March
31, 1999. The Company is continuing to work diligently with its auditors, and
expects to release its audited financial statements and file its annual report
on Form 10-K on or before April 15, 1999. As a result of this delay, the
Company's annual general meeting has been postponed to June 4, 1999.
Board of Directors
The Company also announced that the Board of Directors is in the process of
downsizing its membership from 14 members to seven, of which six will be
independent. This will better streamline the Board to be in a position to act
promptly and effectively on strategic challenges in the months ahead.
At a Board meeting on March 30, 1999, the resignations of the following six
directors were accepted: Kenneth Stevenson, Albert Lineberry, Sr., Hon. J.
Carter Beese, Jr., Kenneth Bagnell, Ernest G. Penner and Dr. Earl Grollman. The
Board size was then reduced to eight members.
The Board accepted these resignations with gratitude and respect for the six
individual directors who have served the Company loyally through challenging
times.
The Loewen Group Inc. is one of the largest funeral home and cemetery operators
in North America. The Company employs approximately 16,000 people and owns or
operates more than 1,100 funeral homes and over 400 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
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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.
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