01—Abstract
Summary
Summary of the 10-K filed May 1, 2002. Cited figures are marked; the original filing is the authoritative source.
The Kroger Co. reported fiscal 2001 (52 weeks ended February 2, 2002) sales of $50.1 billiona, up from $49.0 billion in the 53-week fiscal 2000, with net earnings of $1,043 million, or $1.26 per diluted share, compared with $877 million, or $1.04 per diluted share, the prior year.
Gross profit rose to 27.35% of sales from 26.93%, and EBITDA increased to $3,742 millionb from $3,536 million. Net earnings excluding merger-related costs, one-time expenses, impairment charges and restructuring charges were $1,217 million, or $1.48 per diluted share, versus $1.34 in 2000. Kroger operated 2,418 supermarkets at year-end and reported that the weak economy and competitive pressures affected 2001 sales, with identical food store sales up 0.9%.
Cash from operations was $2,347 millionc, roughly flat with 2000, and capital expenditures were $2,139 million, leaving the company dependent on borrowing and working capital efforts to fund growth. Total debt rose $302 million to $8.8 billion, and the company repurchased $732 million of treasury stock during the year. Kroger did not pay cash dividends in the past three fiscal years and is prohibited from doing so under its Credit Agreement.
Total long-term obligations were $10.1 billiond and shareowners' equity was $3,502 million at year-end. Management announced a Strategic Growth Plan in December 2001 targeting reductions of more than $500 million in merchandising and operating, general and administrative costs over two years, with a long-term EPS growth target of 13%-15% beginning in fiscal 2004 and 10%-12% expected for fiscal 2002 and 2003.
Kroger estimated fiscal 2002 free cash flow of approximately $550-$650 million, reflecting capital spending of $2.1 billion. The company also disclosed an $81 million pre-tax charge for energy contracts and a $91 million impairment charge in 2001.
02—Key points
Key Highlights
- Sales of $50.1 billion in fiscal 2001 (52 weeks), up from $49.0 billion in the 53-week fiscal 2000
- Diluted EPS of $1.26 versus $1.04 in 2000; EPS excluding merger-related costs, one-time items, impairments and restructuring was $1.48 versus $1.34
- EBITDA rose 5.8% to $3,742 million; gross profit improved to 27.35% of sales from 26.93%
- Strategic Growth Plan targets more than $500 million in cost reductions over two years and long-term EPS growth of 13%-15% beginning fiscal 2004
- Total debt increased $302 million to $8.8 billion; treasury stock purchases were $732 million
- Kroger has paid no cash dividends for three fiscal years and its Credit Agreement prohibits cash dividends
- Recorded an $81 million pre-tax energy contract charge and $91 million in asset impairment charges during 2001
03—Questions
Frequently Asked Questions
How did Kroger's profitability change in fiscal 2001?
Net earnings rose to $1,043 million, or $1.26 per diluted share, from $877 million, or $1.04 per diluted share, in fiscal 2000. Excluding merger-related costs, one-time expenses, impairment charges and restructuring charges, diluted EPS was $1.48 versus $1.34. The effective tax rate fell to 39.1% from 41.6%.
What is Kroger's Strategic Growth Plan?
Announced December 11, 2001, the plan aims to support additional investment in the core business, grow sales and increase market share. Kroger intends to achieve identical supermarket sales growth of 2% to 3% above product cost inflation and reduce merchandising and operating, general and administrative costs by more than $500 million over two years. Total pre-tax cost is estimated at $75 million to $90 million, and about 1,500 positions are to be eliminated.
Does Kroger pay dividends, and what are its growth targets?
Kroger has not paid cash dividends on common stock for the past three fiscal years, and its Credit Agreement prohibits cash dividends during its term. Dividends may be paid in the form of company stock. For fiscal 2002 and 2003, Kroger expects annual EPS growth of 10%-12% before one-time items, with a long-term target of 13%-15% beginning in fiscal 2004.
How is Kroger funding its capital spending and what is its debt position?
Capital expenditures excluding acquisitions were $2,139 million in 2001, while cash from operations was $2,347 million. Total debt, including capital leases, increased $302 million to $8.8 billion. Kroger had available lines of credit of approximately $3.5 billion, with borrowings of about $1.4 billion, and $1.25 billion of securities available under a shelf registration. Kroger also issued $500 million of 6.75% Senior Notes due 2012 on March 26, 2002.
04—Continue