01—Abstract
Summary
Summary of the 10-K/A filed April 28, 1995. Cited figures are marked; the original filing is the authoritative source.
The Kroger Co. reported 1994 total sales of $22,959 milliona, up 2.6% from $22,384 million in 1993, with food stores sales of $21,442 million (up 4.9%) making up 93.4% of sales.
Identical food store sales increased 2.2% for the full year, and the company attributed much of the growth to a 4.7% increase in food store square footage and to its combination food and drug store format. Net earnings were $242.2 millionb in 1994, compared with a loss of $(12.2) million in 1993, and EBITD increased 9.0% to $1.065 billion. The effective income tax rate was 36.2%, and net interest expense fell to $327.6 million from $390.0 million in 1993.
Debt reduction was a major theme. Long-term debt including capital leases fell $300 million to $3.906 billionc at year-end 1994, and the weighted average cost of long-term debt was reduced to 8.5%, versus 11.6% at the beginning of 1990. Management expects 1995 net interest expense of approximately $330 million and capital expenditures of approximately $600 million, which would support food store square footage growth of about 5.5%.
The company also sold its Time Saver Stores convenience store subsidiary in January 1995 and reported that it was in compliance with all covenants of its Credit Agreement and publicly issued debt at December 31, 1994. Management cited competitive pressure, including supercenter openings in Indiana, as a challenge, but noted that multi-regional operations helped offset it.
Labor risk was also flagged: the company negotiated 63 labor contracts in 1994 without work stoppages, and major union contracts in Memphis, Houston, Indianapolis, and Columbus, Ohio are scheduled for negotiation in 1995. This amended 10-K/A primarily supplements Part II financial discussion and includes savings plan financial statements.
02—Key points
Key Highlights
- Total 1994 sales were $22.96 billion, up 2.6% from $22.38 billion in 1993; food stores accounted for 93.4% of sales.
- Net earnings were $242.2 million in 1994, versus a net loss of $(12.2) million in 1993.
- EBITD rose 9.0% to $1.065 billion in 1994, compared with $977 million in 1993.
- Net interest expense declined to $327.6 million from $390.0 million, and the weighted average cost of long-term debt fell to 8.5%.
- Long-term debt, including capital leases and current portion, decreased $300 million to $3.906 billion at year-end 1994.
- Capital expenditures totaled $534.0 million in 1994 and are expected to approximate $600 million in 1995, supporting about 5.5% food store square footage growth.
- The company sold its Time Saver Stores, Inc. convenience store subsidiary to E-Z Serve Convenience Stores in January 1995.
03—Questions
Frequently Asked Questions
How did Kroger's sales and earnings perform in 1994?
Total sales rose 2.6% to $22,959 million, with identical food store sales up 2.2% for the year. Net earnings were $242.2 million, a sharp improvement from a $(12.2) million loss in 1993, and EBITD increased 9.0% to $1.065 billion.
What drove the improvement in interest expense and debt levels?
The company refinanced high-cost debt and repurchased or redeemed $3.3 billion of high-yield subordinated debt. Net interest expense fell to $327.6 million, and long-term debt decreased $300 million to $3.906 billion at year-end 1994.
What is management's outlook for 1995?
Management expects 1995 to be another year of improved performance from existing stores. It projects net interest expense of about $330 million and capital expenditures of about $600 million, including opening, expanding, or acquiring approximately 90 food stores.
What competitive and labor risks does the filing identify?
The filing cites new competition in several markets, including supercenter openings in Indiana, and notes that a prolonged work stoppage could have a material adverse effect. Major union contracts in Memphis, Houston, Indianapolis, and Columbus, Ohio are scheduled for negotiation in 1995.
04—Continue