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Kroger Annual Report, Year Ended Dec 27, 1997

Filing Date
Filed March 23, 1998
Period End
December 27, 1997
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 23, 1998. Cited figures are marked; the original filing is the authoritative source.

The Kroger Co. reported fiscal 1997 (52 weeks ended December 27, 1997) sales of $26.57 billiona, up from $25.17 billion in 1996, with net earnings of $411.7 million, or $1.57 per diluted share, compared with $349.9 million, or $1.35 per diluted share, in 1996.

EBITD rose 13.2% to $1.385 billionb. Food store sales were $24.80 billion, and identical food store sales were flat for the full year. The company operated 1,392 supermarkets in 24 states and 697 company-owned plus 119 franchised convenience stores, and it has not paid cash dividends in three years because its Credit Agreement prohibits them.

The balance sheet shows total assets of $6.30 billionc and a shareowners' deficit of $784.8 million, improved from $1.18 billion a year earlier. Long-term debt including capital leases was $3.49 billion, down from $3.66 billion. During 1997 the company redeemed $316.2 million of senior subordinated debt and issued $200 million of senior debt.

Operating cash flow was $853.6 milliond and capital expenditures were $612.2 million. Management's 1998 outlook calls for capital expenditures of approximately $775 million, 90 to 100 store openings or expansions, and net interest expense of approximately $280 million.

The filing notes unresolved IRS tax issues for tax years 1987 through 1992, which management says are provided for, and a year 2000 remediation effort that management does not expect to have a material adverse impact. Management describes the 1998 outlook as positive, while the filing lists competition, labor disputes and construction delays as risks.

02—Key points

Key Highlights

  1. Sales of $26.57 billion in 1997, up 5.5% from $25.17 billion in 1996.
  2. Net earnings of $411.7 million, or $1.57 per diluted share, versus $349.9 million, or $1.35 per diluted share, in 1996.
  3. EBITD increased 13.2% to $1.385 billion, driven by higher sales and lower operating, general and administrative expense rates.
  4. Identical food store sales were flat for the full year 1997 and rose 0.7% in the fourth quarter.
  5. Shareowners' deficit narrowed to $784.8 million from $1.18 billion, while long-term obligations fell to $3.49 billion from $3.66 billion.
  6. No cash dividends paid for three years; the Credit Agreement prohibits them.
  7. The 1998 plan calls for approximately $775 million in capital expenditures and 90 to 100 food store openings or expansions.

03—Questions

Frequently Asked Questions

  1. How did Kroger perform in fiscal 1997?

    Sales rose to $26.57 billion from $25.17 billion, and net earnings increased to $411.7 million from $349.9 million. Diluted earnings per share were $1.57, compared with $1.35 in 1996. EBITD grew 13.2% to $1.385 billion.

  2. Does Kroger pay dividends?

    No. The company has not paid cash dividends on its common stock for the past three fiscal years, and its Credit Agreement prohibits cash dividends during the agreement's term. The company is permitted to pay dividends in the form of stock.

  3. How is Kroger's debt position changing?

    Long-term obligations including capital leases declined to $3.49 billion from $3.66 billion. During 1997 the company redeemed $316.2 million of senior subordinated debt and prepaid $178.0 million of mortgage loans, financed partly by $200 million of new senior debt. Its revolving credit facilities total $2.0 billion, with $709.6 million available at year-end.

  4. What does Kroger expect for 1998?

    Management describes its 1998 outlook as positive. It expects net interest expense of about $280 million, capital expenditures of about $775 million, square footage growth of about 5%, and 90 to 100 store openings or expansions.

  5. What are the main risks identified in the filing?

    Risks include inflation, increased competition from other food retailers, supercenters, mass merchandisers and restaurants, construction delays, labor disputes, and possible work stoppages, which the filing says could have a material adverse effect. The company also cites unresolved IRS tax issues for 1987 through 1992 and year 2000 processing issues, though management does not expect the year 2000 costs to have a material adverse impact.

04—Continue

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