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Kroger Annual Report (Amendment), Year Ended Jan 1, 1994

Filing Date
Filed May 2, 1994
Period End
January 1, 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/A filed May 2, 1994. Cited figures are marked; the original filing is the authoritative source.

The Kroger Co. reported a fiscal 1993 year ended January 1, 1994 with total sales of $22.384 billiona, up 1.1% from $22.145 billion in 1992.

Results were shaped by a $159.2 millionb after-tax charge for the cumulative effect of adopting SFAS No. 106 on retiree benefits, which produced a net loss of $(12.2) million for 1993 versus a $(5.9) million loss in 1992 and net earnings of $79.9 million in 1991. Excluding the San Antonio stores sold in August 1993 and the extra week in 1992, full-year sales increased 3.6%. EBITD, the measure tied to the Company's debt covenants, rose 7.5% to $976.8 million, and the Company stated it was in compliance with all covenants at January 1, 1994.

The balance sheet and cash flow story centers on debt reduction. Long-term debt including capital leases and current portions fell $348 million to $4.206 billionc, and the weighted average cost of long-term debt declined to 8.2% from 11.6% at the beginning of 1990. Net interest expense was $390.0 million in 1993 versus $474.8 million in 1992, and the Company expects 1994 net interest expense of $330-$340 million.

Cash from operating activities was $617.3 milliond, and capital expenditures were $376.1 million. The Company expects capital spending of about $1.5 billion over the next three years. Key risks noted in the filing include a union contract cycle covering about 110,000 employees, where a prolonged work stoppage could have a material adverse effect, and intense competition from new supermarket entries and supercenters.

Gross profit improved as a percent of sales, with merchandise costs at 76.43% of sales in 1993 versus 77.12% in 1992, while operating, general and administrative expenses rose to 17.98% of sales from 17.51%. This 10-K/A also includes financial statements for the Kroger Co. Savings Plan and the Dillon Companies, Inc. Employees' Stock Ownership and Savings Plan.

02—Key points

Key Highlights

  1. Total 1993 sales of $22.384 billion, up 1.1% from $22.145 billion in 1992; food stores were $20.443 billion, or 91.3% of sales.
  2. Net loss of $(12.2) million in 1993, driven by a $159.2 million after-tax charge for the cumulative effect of SFAS No. 106 retiree benefit accounting.
  3. EBITD increased 7.5% to $976.8 million in 1993 from $908.2 million in 1992; the Company was in compliance with all debt covenants at January 1, 1994.
  4. Long-term debt including capital leases fell $348 million to $4.206 billion; weighted average cost of long-term debt reduced to 8.2% from 11.6% at the beginning of 1990.
  5. Net interest expense declined to $390.0 million in 1993 from $474.8 million in 1992; 1994 net interest expense is expected at $330-$340 million.
  6. Cash from operating activities was $617.3 million in 1993, versus $532.8 million in 1992; capital expenditures were $376.1 million.
  7. Gross margin improved, with merchandise costs at 76.43% of sales versus 77.12% in 1992, though operating, general and administrative expenses rose to 17.98% of sales from 17.51%.

03—Questions

Frequently Asked Questions

  1. Did Kroger remain in compliance with its debt covenants?

    Yes. The filing states that at January 1, 1994 the Company was in compliance with all covenants of its Credit Agreement and publicly issued debt, and that it believes it has adequate coverage of its debt covenants. EBITD, the covenant-related measure, was $976.8 million in 1993.

  2. Why did Kroger report a net loss in 1993?

    The net loss of $(12.2) million reflects a $159.2 million after-tax charge for the cumulative effect of adopting SFAS No. 106, which requires retiree health benefits to be expensed as employees render service. The year also included a $23.8 million extraordinary loss on early debt retirement and a $15 million after-tax charge tied to the San Antonio store disposition.

  3. How is Kroger reducing its debt and interest costs?

    The Company placed $1.6 billion of senior subordinated or senior secured debt in 1992 and 1993 at an average rate of 9.39%, issued $200 million of 6.375% convertible junior subordinated notes, and issued 13,275,000 common shares for $203.5 million net. Proceeds were used to redeem high-yield subordinated debt averaging 14.2%. Long-term debt fell $348 million during 1993.

  4. What labor risks does the filing disclose?

    The Company is party to more than 200 collective bargaining agreements covering approximately 110,000 employees. Several contracts expired or will expire in 1994, including those in Charleston (WV), Nashville, Louisville, Cincinnati, Phoenix and Tucson. The filing states there can be no assurance agreements will be reached without work stoppage, and a prolonged stoppage affecting many stores could have a material adverse effect on results.

  5. What are Kroger's capital spending plans?

    Capital expenditures totaled $376.1 million in 1993. The Company expects capital expenditures of approximately $1.5 billion over the next three years and plans to increase food store square footage by 4 1/2% to 5% in 1994 by opening, expanding or acquiring about 70 food stores, along with 60 to 70 within-the-wall remodels.

04—Continue

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