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Kroger Annual Report, Year Ended Dec 31, 1994

Filing Date
Filed March 30, 1995
Period End
December 31, 1994
Security
KR
In the record · 2016–202610-K1210-Q328-K137

KR filed 12 annual reports (10-K), 32 quarterly reports (10-Q) and 137 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Oct ’17Oct ’17
  2. Leadership change8-K · Dec ’19Dec ’19
  3. FY2022 annual report10-K · Mar ’22Mar ’22
  4. Impairment8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed March 30, 1995. Cited figures are marked; the original filing is the authoritative source.

The Kroger Co. reported fiscal 1994 (52 weeks ended December 31, 1994) sales of $22.96 billiona, up from $22.38 billion in 1993, and net earnings of $242.2 million, or $1.98 per fully diluted share, compared with a net loss of $12.2 million in 1993.

Earnings before extraordinary loss and the 1993 accounting change rose to $268.9 millionb from $170.8 million. The company describes itself as the nation's largest supermarket operator by 1994 total sales, operating 1,301 supermarkets in 24 states and 789 company-owned plus 143 franchised convenience stores. EBITD, the measure tied to its debt covenants, increased 9.0% to $1.065 billion.

Net interest expense fell to $327.6 millionc from $390.0 million, reflecting refinancing and debt reduction, and the company reported a shareowners' deficit of $2.15 billion at year-end. The company expects capital expenditures of approximately $600 million in 1995, aimed at about 5.5% food store square footage growth through roughly 90 food store openings, expansions or acquisitions. It sold its Time Savers convenience store division in early 1995 and is prohibited from paying cash dividends under its Credit Agreement, which provides a $1.75 billion revolving facility expiring July 19, 2001.

Management cites the combination food and drug store format as the primary vehicle for future sales growth. Investors should also note the company's ongoing litigation involving Fry's Food Stores of Arizona, which management does not expect to have a material adverse effect, and its expected $3.2 milliond after-tax extraordinary loss from open-market debt repurchases.

02—Key points

Key Highlights

  1. Sales of $22.96 billion in 1994, up 2.6% from $22.38 billion in 1993; food stores accounted for $21.44 billion.
  2. Net earnings of $242.2 million ($1.98 per fully diluted share) versus a net loss of $12.2 million in 1993.
  3. EBITD rose 9.0% to $1.065 billion; the company was in compliance with all debt covenants at December 31, 1994.
  4. Net interest expense declined to $327.6 million from $390.0 million, aided by refinancing of high-cost subordinated debt.
  5. Capital expenditures totaled $534.0 million in 1994 and are expected to be about $600 million in 1995.
  6. No cash dividends paid in the past two fiscal years, and the Credit Agreement prohibits dividend payments.
  7. Shareowners' deficit narrowed to $2.15 billion, with total assets of $4.71 billion at year-end 1994.

03—Questions

Frequently Asked Questions

  1. Why did Kroger report a large swing from a 1993 loss to 1994 profit?

    The 1993 results included a $159.2 million after-tax cumulative effect charge for adopting SFAS No. 106 on postretirement benefits. In 1994, earnings before extraordinary loss and accounting change rose to $268.9 million from $170.8 million, driven by higher sales, cost reductions in procurement and distribution, and lower interest expense.

  2. Does Kroger pay dividends, and when might that change?

    No. The company has not paid dividends on its common stock for the past two fiscal years, and its Credit Agreement prohibits cash dividends. The agreement does permit dividends paid in the form of company stock.

  3. What is the company's plan for growth in 1995?

    Kroger expects capital expenditures of approximately $600 million in 1995, which it says will allow food store square footage growth of about 5.5% by opening, expanding or acquiring roughly 90 food stores. It also plans 60 to 70 within-the-wall remodels and emphasizes the combination food and drug store format.

  4. What debt risks should investors watch?

    Long-term debt including capital leases was $3.906 billion at year-end 1994, and the bank debt is variable-rate. A 1% upward change in market rates would increase estimated 1995 net interest expense by about $4.8 million. The company's Credit Agreement and indentures contain restrictive covenants, and the company has interest rate hedges aggregating $2.3 billion.

  5. Are there material legal proceedings?

    Management said various claims, including antitrust and civil rights suits, are not expected to have a material adverse effect on financial position. Fry's Food Stores of Arizona, a subsidiary, is a defendant in Florida federal actions seeking unspecified damages, which it says it will defend vigorously and believes it has substantial meritorious defenses against.

04—Continue

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