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THE LOEWEN GROUP INC.
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(TSE: LWN) NEWS
All amounts shown in US Dollars
Media Contact: James Hoggan & Associates Inc.
Karen Cook Boas or Anna Wright
(604) 739-7500 or
Email [email protected]
Email [email protected]
Investor Contact: (800) 347-7010
FOR IMMEDIATE RELEASE
THE LOEWEN GROUP REPORTS THIRD QUARTER 2000 RESULTS
o Reorganization Progress Continues towards Emergence
o Loewen expects to file Plan of Reorganization by November 15, 2000
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VANCOUVER, BC -- October 30, 2000 -- THE LOEWEN GROUP INC. (TSE: LWN), today
announced its unaudited results for the quarter ended September 30, 2000 and
commented on the progress of its reorganization since the Company was granted
court protection from creditors on June 1, 1999. Earnings from operations were
$16.6 million in the third quarter, down $4.3 million from the same quarter of
1999. After pre-tax reorganization costs of $11.0 million, the Company reported
a net loss of $3.0 million on gross revenue of $206.2 million for the quarter
ended September 30, 2000. This compares with a net income of $1.9 million after
pre-tax reorganization costs of $11.2 million on gross revenue of $234.0 million
for the quarter ended September 30, 1999.
For the nine months ended September 30, 2000, earnings from operations, before
deducting non-cash provisions for asset impairment, were $87.6 million compared
with $109.5 million for the same period in 1999. For the nine months ended
September 30, 2000, the Company reported a net loss of $56.5 million after a
pre-tax asset impairment of $92.0 million on gross revenue of $681.9 million
compared to a net loss of $96.5 million on gross revenue of $800.3 million for
the nine months ended September 30, 1999. The Company's cash position as of
September 30, 2000 was $138.5 million, an increase of $83.3 million from
December 31, 1999.
REORGANIZATION PROGRESS
John S. Lacey, Chairman of the Board, stated "We are continuing to make
excellent progress in the reorganization of the Company. The restructuring of
operations management has now been completed in all of our U.S. markets. Each of
the new market management teams is focused on establishing Loewen as a leader in
customer service in every region in which the Company does business. Over the
longer term, the efforts of our new market management teams should result in
improved customer service and should strengthen the Company's competitive
position."
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Mr. Lacey added, "Looking back over the past nine months, I am impressed by the
way in which Loewen's employees have embraced change and have committed
themselves to reinventing our business. Much has been accomplished, but there is
considerable work still to be done. We are improving our information systems,
enhancing purchasing functions and continuing to re-engineer our administrative
processes. The Company's efforts to reduce general and administrative expenses
are ahead of schedule."
The Company continues its intensive efforts to evaluate and resolve claims and
to address other issues presented by the Chapter 11 and CCAA proceedings. Over
the past two months, the Company has engaged in extensive discussions with major
creditor groups relating to the terms of the Company's reorganization. "As we
have stated before," Mr. Lacey said, "we are committed to emerging from Chapter
11 and the CCAA proceedings at the earliest feasible time. To that end, the
Company expects to file with the U.S. Bankruptcy Court on or before November 15,
2000, a Plan of Reorganization and Disclosure Statement that will describe the
proposed structure and business operations of the reorganized company and will
provide a proposed schedule of creditor recoveries. The Plan will propose that
the Company's 7.75% Series 3 Senior Notes, 8.25% Series 4 Senior Notes, 7.20%
Series 6 Senior Notes, 7.60% Series 7 Senior Notes and 6.70% Pass-Through Asset
Trust Certificates (collectively, the "Subject Debt") all be treated as secured
debt of the Company. This Plan, which is subject to Court and creditor approval,
will represent a major step forward in the restructuring of the Company. There
can be no assurance, however, that the Bankruptcy Court will approve the Plan of
Reorganization in the form proposed, including the Company's proposal to treat
the Subject Debt as secured debt of the Company. Further, the Company
anticipates that certain creditors of the Company are likely to challenge the
proposed Plan. Moreover, it is regrettable that it is not expected that there
will be any value distributed to existing shareholders."
DISPOSITION PROGRAM
Our program to divest non-strategic assets is also moving forward at an
accelerated pace. Transactions involving sales proceeds of more than $46 million
have either already been approved by the Bankruptcy Court or have been signed
and submitted for approval.
BASIS OF PRESENTATION
The Company's attached unaudited interim consolidated statement of operations
and deficit, balance sheet and cash flow statement 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. As a result of the creditor protection proceedings and
circumstances relating to this event, including the Company's debt structure,
recent losses and level of cash flow, such realization of assets and discharge
of liabilities are subject to significant uncertainty.
The interim consolidated financial statements do not reflect adjustments that
would be necessary if the going concern basis was not appropriate. If the going
concern basis was not appropriate for these interim consolidated financial
statements, then significant adjustments would be necessary in the carrying
value of assets and liabilities, the reported revenues and expenses, and the
balance sheet classifications used. Additionally, the amounts reported could
materially change as part of
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a plan of reorganization, since the reported amounts in these interim
consolidated financial statements do not give effect to all adjustments to the
carrying value of the underlying assets or amounts of liabilities that may
ultimately result. The appropriateness of the going concern basis is dependent
upon, among other things, confirmation of a plan of reorganization, future
profitable operations, the ability to renegotiate and comply with the terms of
the DIP financing facility and the ability to generate sufficient cash from
operations and financing arrangements to meet obligations.
Based in Vancouver, The Loewen Group Inc. currently 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 13,000 people
and derives approximately 90 percent of its revenue from its U.S. operations.
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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 status and progress of the Company's
reorganization, the plans and objectives of the Company's management and the
Company's assumptions regarding such performance and plans, are forward-looking
in nature. Factors that could cause actual results to differ from the
forward-looking information contained in this release include but are not
limited to uncertainty relating to the continued progress and timing of the
Company's reorganization, the resolution of issues relating to certain
indebtedness of the Company and other issues presented by the reorganization,
the acceptance of the Company's proposed plan of reorganization, the Company's
future competitive position and the continued progress of our disposition
program.
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THE LOEWEN GROUP INC.
DISCUSSION OF OPERATING RESULTS
THIRD QUARTER OPERATING RESULTS
Funeral home revenues were $135.2 million, a decrease of 0.6 percent from $136.0
million in the third quarter of 1999. On a same store basis, the number of
funerals performed was down 0.3 percent compared with the third quarter of 1999.
The Company experienced an average revenue per funeral service during the
quarter that was 1.8 percent lower than that of 1999. Overall funeral home
operating margin in the third quarter of 2000 was 25.9 percent compared with
27.3 percent in the same quarter in 1999. The Company performed approximately
36,300 funeral services during the third quarter of 2000, a comparable amount to
the same period a year earlier.
Third quarter cemetery revenues were down 37.2 percent to $46.5 million,
compared with $74.1 million in the same quarter in 1999. This continues to
reflect changes to the Company's commission structure and pre-need sales program
effected in the second quarter of both 2000 and 1999. These changes contributed
to the continuing positive cemetery cash flow of $12.3 million for the quarter
ended September 30, 2000, compared with cash flow of $18.6 million in the same
period last year. Cemetery operating margin was $7.6 million for the quarter
compared with $12.9 million for the same period last year.
General and administrative expenses were reduced by $2.1 million or 11.3 percent
in the third quarter of 2000 from the same period in 1999, as part of a
continuing program to operate more efficiently.
The Company incurred $11.0 million in reorganization costs during the quarter
arising from expenses related to the June 1, 1999 filings under Chapter 11 of
the U.S. Bankruptcy Code and under the Canadian Companies' Creditors Arrangement
Act.
NINE-MONTH OPERATING RESULTS
Funeral home revenues for the nine-month period ended September 30, 2000 were
$435.8 million, a decrease of 4.9 percent from $458.1 million in the first nine
months of 1999. On a same store basis, the number of funerals performed was down
4.1 percent compared with the same period of 1999. The Company experienced an
average revenue per funeral service during the nine months ended September 30,
2000 that was consistent with the same period in 1999. Overall funeral home
operating margins in the nine months ended September 30, 2000 were 29.5 percent
compared with 32.5 percent in 1999. The Company performed approximately 117,100
funeral services during 2000 compared with 122,000 in the same period a year
earlier.
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Cemetery revenues in the first nine months of 2000 were down 36.1 percent to
$172.9 million, compared with $270.7 million in 1999. This reflects the sale of
124 cemeteries on March 31, 1999 and the Company's changes to its commission
structure and pre-need sales program effected in the second quarters of both
1999 and 2000. These changes contributed to the improved cemetery cash flow of
$53.1 million for the nine months ended September 30, 2000 compared with cash
flow of $30.4 million in the same period last year. Cemetery operating margin
was $39.9 million for the nine months ended September 30, 2000 compared with
$61.4 million for the same period last year.
