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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) May 12, 1999
THE LOEWEN GROUP INC.
(Exact name of registrant as specified in its charter)
British Columbia, Canada 0-18429 98-0121376
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(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
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 6
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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 May 12, 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: May 12, 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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99 The Loewen Group Inc. 4
Press Release dated May 12, 1999
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THE LOEWEN GROUP INC.
(NYSE, TSE, ME: LWN) NEWS
Contact: Linda Press
Sitrick and Company
(310) 788-2850
FOR IMMEDIATE RELEASE
LOEWEN GROUP REPORTS FIRST QUARTER 1999 RESULTS
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VANCOUVER, BC, May 12, 1999 -- THE LOEWEN GROUP INC. (NYSE, TSE, ME: LWN), one
of the largest funeral home and cemetery operators in North America, today
announced revenues for the first quarter ended March 31, 1999, of $311 million,
compared to $310 million in the same period last year. Net income for the first
quarter of 1999 was $7 million or $0.06 per share, versus $30 million or $0.38
per share in the first quarter of 1998.
Funeral home revenues for the quarter were $175 million, an increase of 2.2
percent from $172 million in the first quarter of 1998. The Company performed
46,000 funerals compared to 45,000 in the same period a year earlier. Funeral
home gross margin in the first quarter of 1999 was virtually equal to that of
1998 at 42.0 percent. On a same-store basis, the number of funerals performed
decreased 2.4 percent, while the average revenue per funeral remained stable.
Related same-store costs decreased 2.5 percent.
First quarter cemetery revenues were down 3.2 percent to $112 million, compared
to $115 million in the first quarter of 1998. Cemetery pre-need gross sales for
the quarter were $91 million, an increase of 8.8 percent. Income recognized on
merchandise and perpetual care trust funds during the quarter decreased by $1
million or 11.1 percent due to lower market investment returns. Cemetery gross
margins have declined to 27.1 percent for the quarter versus 32.3 percent for
the same period last year. The gross margin was impacted by the decline in
cemetery gross sales, lower trust income and higher operating costs.
"While our core funeral business is fundamentally sound and we have taken steps
to improve the negative cash flow from the cemetery division," said Loewen Group
Chairman John S. Lacey, "we are facing extreme difficulties with our highly
leveraged balance sheet and the resulting negative cash flow, which is impeding
our ability to improve the operations of our Company."
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During the past three years, the Company said its growth plan had emphasized
cemetery acquisitions versus a historical emphasis on funeral home acquisitions.
The Company experienced difficulties in integrating new cemeteries and was
impacted by recently declining cemetery and funeral home valuations.
"We have refocused our strategy away from acquisitions to improving existing
operations. The Company is making progress in resolving its obstacles;
nevertheless, many critical issues remain outstanding at this time. We continue
to examine various courses of action which would enable us to alleviate both
financial and operational hurdles. However, we are uncertain that these efforts
will be sufficient," continued Mr. Lacey.
The Company said the negative cash flow from operations was primarily
attributable to the rapid increase in poorly structured cemetery pre-need sales.
The pre-need program required significant cash outflows including sales
commissions, but yielded minimal short-term inflows. The Company has improved
the structure of its pre-need sales and has implemented other corrective actions
which the Company expects will reduce negative cashflow in the cemetery
division.
"Our reorganized operational management is working towards enhancing funeral and
cemetery operations, revamping the pre-need sales program, reducing overhead and
achieving greater accountability for cemetery profitability and cash flow. We
are implementing new information systems, primarily in cemeteries, to monitor
and evaluate site-specific results," concluded Mr. Lacey.
As previously announced on March 31, 1999, the Company entered into revised
lending agreements with the lenders under its bank credit agreement, Management
Equity Investment Plan bank term credit agreement and certain other notes. The
amendments change and add certain financial covenants, suspend all Common,
Preferred and Monthly Income Preferred Security dividends, provide no further
borrowings under its bank credit agreement except for certain letters of credit,
and require refinancing of the $300 million pass-through asset trust guaranteed
notes ("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, $127 million of which was used
to reduce indebtedness. The asset disposition resulted in an estimated pre-tax
loss of approximately $302 million, which was reflected in the Company's 1998
financial results as an asset impairment. Gains or losses on other groups of
assets sold, if any, could be small or significant depending upon the specifics
of the transaction.
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The Company's attached unaudited interim consolidated financial statements have
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" basis was not appropriate
for the interim consolidated financial statements, then significant adjustments
would be necessary in the carrying value of assets and liabilities, and the
reported revenues and expenses, and the balance sheet classifications used.
There is substantial doubt about the appropriateness of the going concern
assumption because of recent losses and continued negative cash flows. There is
also uncertainty as to the Company's ability to refinance the PATS senior notes
which may be redeemed on October 1, 1999 and which require refinancing by
September 15, 1999 under the terms of amended credit agreements. In the event
that the Company cannot mitigate the adverse conditions and events which raise
doubt about the validity of the "going concern" assumption, the Company or its
creditors may initiate proceedings for the liquidation or reorganization of the
Company under Canadian and/or U.S. bankruptcy laws.
Based in Vancouver, the Loewen Group Inc. owns or operates more than 1,100
funeral homes and more than 400 cemeteries across the United States, Canada, and
the United Kingdom. The Company employs approximately 16,000 people and derives
approximately 90 percent of its revenue from its US operations.
Safe Harbor: Certain 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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