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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):
February 25, 1999 (February 17, 1999)
____________________
SMART & FINAL INC.
(Exact name of registrant specified in its charter)
Delaware Commission File Number 95-4079584
(State or other jurisdiction of 001-10811 (IRS Employer
incorporation or organization) Identification No.)
600 The Citadel Drive
City of Commerce, California 90040
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (323) 869-7500
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Item 5. Other Events.
On February 17, 1999 Smart & Final Inc. ("the Company") issued a press release
with respect to its fourth quarter and full year 1998 results. The press
release relating to such matters is attached as an exhibit to this report and
is incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
EXHIBIT 99.3 Press Release relating to quarter and year end results.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Los
Angeles, State of California, on February 25, 1999.
Smart & Final Inc.
By: /s/ Martin A. Lynch
----------------------
Martin A. Lynch
Executive Vice President,
Chief Financial Officer and
Principal Accounting Officer
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EXHIBIT INDEX
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Exhibit Sequentially
Number Description of Exhibit Numbered Pages
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99.3 Press release relating to quarter and year
end results.
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EXHIBIT 99.3
FOR IMMEDIATE RELEASE
Leanne Reynolds Lisa van Velthuyzen
(323) 869-7607 (323) 869-7608
SMART & FINAL REPORTS LOSS FOR FOURTH QUARTER AND YEAR
Early 1999 Operating Results Showing Improvement
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LOS ANGELES, CA, February 17, 1999 - Smart & Final Inc. (NYSE-SMF) today
reported a fourth quarter 1998 loss of $13.6 million in the twelve week period
ended January 3, 1999, versus a loss of $12.0 million reported in the thirteen
week fourth quarter of 1997. The net loss for the fourth quarter of 1998 was 60
cents per diluted share, compared to a loss of 54 cents per diluted share in the
prior year fourth quarter. Net loss for the fiscal year ended January 3, 1999
was $8.7 million, or 38 cents per diluted share compared to earnings of $6.6
million, or 29 cents per diluted share in fiscal 1997.
The fourth quarter results were negatively impacted by the Company's
foodservice operations. Management has taken a number of actions to reduce
costs and improve profitability, which are demonstrating early favorable
results.
Northern California foodservice operations were refocused from a strategy
of high sales growth to one that concentrates on increased margins and improved
customer credit quality. As a result, additional reserves were provided for
losses on accounts receivable and inventories that had been stocked for specific
customers. Certain warehouse assets were also written off in connection with re-
racking the distribution center. A pension liability was also incurred as a
result of the adoption of a retirement plan for certain northern California
employees. The sum of the charges in the northern California unit aggregated
$6.7 million. New senior management was assigned to the unit in the third
quarter of 1998.
Also, in the fourth quarter actions were taken in the Florida foodservice
operations, including the elimination of certain operations and consolidation of
administrative functions, resulting in $3.2 million of pretax charges.
The decision was also made to sell West Coast real estate properties that
were not essential to core operations and to cease unprofitable in-store bakery
operations, resulting in pretax charges of approximately $5.0 million. In
addition, a $3.2 million reserve was provided for a program to downsize
corporate management functions.
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The majority of the charges related to these actions, which total $18.1
million, were non-cash and non-recurring.
The Company also announced, as part of a program to reduce debt levels
and interest expense, that dividends on its common stock are being suspended
indefinitely.
Fourth quarter 1998 sales of $400.3 million increased 8.6% over the prior
year period. For fiscal 1998, sales were $1,661.6 million, up 14.4%. Same
store sales increased 2.3% in the fourth quarter, continuing a favorable trend,
but declined 0.2% for the full year. Foodservice operations reported a sales
decline of 11.4% in the fourth quarter and sales growth of 12.9% for the full
year. For comparison purposes, the fourth quarter in fiscal 1997 included 13
weeks, compared to 12 in the fourth quarter of 1998 and the full year 1997
included 53 weeks, compared to 52 in fiscal 1998.
Two new stores were opened during the fourth quarter of 1998 in Los
Angeles and Long Beach, California. In 1998, nine new stores were opened,
including one in Mexico. In addition, 39 stores were acquired in the Pacific
Northwest in May 1998 with the acquisition of the Cash & Carry retail store
operation from United Grocers, Inc. Five stores were closed, including three
that were relocated and opened as new stores, and two that were consolidated
with acquired Cash & Carry stores.
Ross E. Roeder was elected to the position of chairman and chief executive
officer effective January 4, 1999, following the retirement of Robert J. Emmons
from that office and his resignation from the Company's Board of Directors.
Roeder has been a member of the Board since 1983.
Roeder stated, "fourth quarter earnings were disappointing and do not
reflect the earnings potential of Smart & Final. We are determined that the
Company will be the low cost operator in its markets, while providing high value
to the customer. The recent actions taken by the new management team began the
process to achieve those goals and we are already seeing results, with operating
expenses down sharply in our foodservice distribution business. We are also
encouraged by the strong sales growth in our core business. Same store sales
growth in the first month of 1999 was up 4.8%. Although there is much work to
be done to restore the company to an acceptable level of profitability, we are
optimistic about the resumption of strong earnings growth."
Roeder added, "the previously announced common stock rights offering
planned for early in the second quarter will significantly improve the Company's
capitalization and reduce interest expense."
The fourth quarter loss will result in a technical default under the
Company's bank credit agreements and the note obligation to Casino USA, its
majority shareholder. Casino has notified the Company that it will waive the
default until release of the second quarter 1999 earnings. The Company will be
negotiating with the bank lenders for a similar waiver.
Founded in 1871 in Los Angeles, Smart & Final operates 215 non-
membership grocery warehouses in California, Oregon, Washington, Florida,
Arizona, Nevada, Idaho and Mexico and two foodservice distributors located in
northern California and Florida. For additional company information, visit our
Web site at www.smartandfinal.com
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This press release contains forward-looking statements that are based upon
the Company's estimates and expectations concerning future events and are
subject to certain risks and uncertainties that could cause actual results to
differ materially. These risks and uncertainties include factors described in
the Company's filings with the Securities and Exchange Commission, all of which
are difficult or impossible to predict accurately and many of which are beyond
the Company's control. In light of the significant uncertainties inherent in
forward-looking information, the inclusion of such information should not be
regarded as a representation by the Company or any other person that the
Company's objectives or plans will be realized
A conference call with senior management to discuss these results will be
held at 8:00 a.m. Eastern Standard Time on Thursday, February 18, 1999. To
participate, call 415-908-4710. A replay call will be available for 24 hours by
calling 800-633-8284, and entering reservation number 11595989.
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SMART & FINAL INC.
Earnings Release Highlights
(000s Omitted Except for Per Share Data)
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<CAPTION>
Twelve Weeks Ended Thirteen Weeks Ended
January 3, 1999 January 4, 1998 Percent Change
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<S> <C> <C> <C>
Sales
Stores $298,367 $253,518 17.7%
Foodservice $101,973 $115,048 (11.4)%
Total $400,340 $368,566 8.6%
Income (Loss) from
Operations (16,842) (19,891) 15.3%
Net Income (Loss) (13,596) (12,027) (13.0)%
Earnings (Loss) per common $(0.60) $(0.54) (11.1)%
share, assuming dilution
Weighted Average Common
Shares and Common
Share Equivalents 22,527,179 22,359,055 0.8%
<CAPTION>
Fifty-Two Weeks Ended Fifty-Three Weeks Ended
January 3, 1999 January 4, 1998 Percent Change
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<S> <C> <C> <C>
Sales
Stores $ 1,205,618 $ 1,048,966 14.9%
Foodservice $ 456,011 $ 404,054 12.9%
Total $ 1,661,629 $ 1,453,020 14.4%
Income from
Operations 1,151 15,930 (92.8)%
Net Income (Loss) (8,659) 6,636 (230.5)%
Earnings (loss) per common
share, assuming dilution,
before cumulative effect of
accounting change $ (0.33) $ 0.29 (213.8)%
Cumulative
effect of accounting change $ (0.05) -- --
Earnings (loss) per common
share, assuming dilution $ (0.38) $ 0.29 (231.0)%
Weighted Average Common
Shares and Common
Shares equivalents 22,595,705 22,753,333 (0.7)%
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