Printer Friendly

SAFEWAY INC. ANNOUNCES FIRST QUARTER, 1992 EARNINGS

 SAFEWAY INC. ANNOUNCES FIRST QUARTER, 1992 EARNINGS
 OAKLAND, Calif., April 13 /PRNewswire/ -- Safeway Inc. (NYSE: SWY) today reported income before extraordinary loss for the first quarter (12 weeks) ended March 21, 1992 of $22.9 million ($0.19 per share) compared with $26.7 million ($0.26 per share) in the first quarter of 1991.
 Sales were $3.4 billion in both the first quarter of 1992 and the first quarter of 1991. Same-store sales in the first quarter of 1992 were up slightly in the United States but declined 1.2 percent overall. Low food price inflation, heightened competition in certain markets and a low level of consumer confidence in the economy continue to hold back sales growth throughout the grocery industry.
 Gross profit was 27.4 percent of sales in the first quarter of 1992 compared to 27.0 percent for the first quarter of 1991. Safeway is continuing to benefit from additional store specialty departments and investments in inventory purchasing systems. In addition, LIFO expense declined to $3.9 million in the first quarter of 1992 compared to $8.1 million in the first quarter of 1991, reflecting an estimated decline in the annual inflation rate. These factors enabled the company to remain price competitive while strengthening gross profit margins.
 Operating and administrative expenses rose only 3.9 percent in the first quarter of 1992 compared to the same period of 1991 in spite of scheduled wage rate increases and increased fixed costs such as depreciation from Safeway's significant capital investments. The combination of moderately increased expenses and flat sales growth increased operating and administrative expenses to 24.37 percent of sales in 1992 compared to 23.42 percent in the first quarter of 1991.
 Flat sales and increased operating and administrative expenses, partly offset by improved gross profit margins, reduced operating profit to $102.4 million in the first quarter of 1992 from $122.8 million in the first quarter of 1991. The comparison between quarters reflects the strong results achieved in the first quarter of 1991 before recessionary sales trends had fully emerged in many of Safeway's markets.
 Operating cash flow (FIFO earnings before income taxes, interest expense, depreciation, amortization, income from unconsolidated affiliates and extraordinary loss) was $180.1 million or 5.30 percent of sales for the first quarter of 1992 compared to $198.2 million or 5.83 percent of sales in the first quarter of 1991. Operating cash flow provides a measure of the company's ability to generate cash to pay interest and fixed charges and facilitates the comparison of Safeway's results of operations with those of companies having divergent capital structures. Operating cash flow as a multiple of interest expense (a ratio measuring ability to service debt) improved to 2.56 in the first quarter of 1992 from 2.29 in the first quarter of 1991 as a result of lower interest expense.
 Interest expense fell to $70.3 million in the first quarter of 1992 from $86.5 million in the first quarter of 1991 as a result of a decline in short-term interest rates and the refinancing of high interest rate debt incurred in connection with the 1986 LBO. Since July of 1991, Safeway has redeemed or announced the redemption of $1.6 billion of LBO-related debt. These refinancings were funded with a combination of proceeds from the sale of $1 billion of new debt, bank borrowings and cash on hand. In addition to significantly reducing interest expense, these refinancings have extended debt maturities and increased Safeway's financial flexibility. The company expects interest expense to decline further throughout the year as a result of these refinancings.
 Equity in earnings of unconsolidated affiliates, recorded on a one-quarter delay basis, declined to $8.8 million in the first quarter of 1992 from $13.2 million in the first quarter of 1991 primarily because of reduced income from Safeway's 35 percent equity investment in Vons, the leading supermarket chain in southern California. Vons incurred a $3.4 million extraordinary loss on early debt retirement in the fourth quarter of 1991 compared to a $12 million extraordinary gain on the utilization of tax carryforwards in the fourth quarter of 1990.
 Safeway recorded an extraordinary loss of $27.8 million ($0.23 per share) after taxes in the first quarter of 1992 for the early retirement of the remaining $450 million of 11.75 percent Senior Subordinated Notes and the entire $250 million of 12 percent Subordinated Debentures. As a result of this extraordinary loss, Safeway incurred a net loss of $4.9 million ($0.04 per share) for the first quarter of 1992.
 A key component of Safeway's long-term strategy is its capital expenditure program. Safeway's capital expenditures are among the highest in the industry both in dollars and as a percent of sales. In 1991 Safeway invested $635 million in capital expenditures, including leases. During 1991 Safeway opened 33 new stores, completed 77 major remodels and continued construction of a major new distribution center in northern California. In 1992 Safeway expects to invest in excess of $600 million and complete slightly more new stores and remodels than last year. Capital expenditures totaled $76 million in the first quarter of 1992.
 Safeway Inc. is one of the world's largest food retailers, operating more than 1,100 stores in the United States and Canada. The company's common stock is traded on the New York Stock Exchange under the symbol SWY.
 SAFEWAY INC. AND SUBSIDIARIES
 Operating Results
 (In millions, except per share amounts)
 (Unaudited)
 12 weeks ended
 March 21, March 23,
 1992 1991
 Sales $ 3,395.9 $ 3,400.4
 Gross Profit $ 929.9 $ 919.3
 Operating and administrative
 expenses (827.5) (796.5)
 Operating profit 102.4 122.8
 Interest expense (70.3) (86.5)
 Equity in earnings of
 unconsolidated affiliates 8.8 13.2
 Other income, net 1.9 1.8
 Income before income taxes and
 extraordinary loss 42.8 51.3
 Income tax expense (19.9) (24.6)
 Income before extraordinary loss 22.9 26.7
 Extraordinary loss related to
 early retirement of debt,
 net of income tax benefit
 of $17.1 (27.8) --
 Net income (loss) $ (4.9) $ 26.7
 Primary and fully diluted
 earnings per common
 share and common share
 equivalent:
 Income before extraordinary
 loss $ 0.19 $ 0.26
 Extraordinary loss (0.23) --
 Net income (loss) $ (0.04) $ 0.26
 Weighted average common
 shares and common share
 equivalents (fully
 diluted) 120.8 102.8
 Operating cash flow (A) $ 180.1 $ 198.2
 (as a percent of sales) 5.30 percent 5.83 percent
 (as a multiple of
 interest expense) 2.56 2.29
 (A) FIFO earnings before income taxes, interest expense, depreciation, amortization, income from unconsolidated affiliates and extraordinary loss.
 -0- 4/13/92
 /CONTACT: Melissa C. Plaisance of Safeway Inc., 510-891-3136/
 (SWY) CO: Safeway Inc. ST: California IN: FOD SU: ERN


MM-DG -- SF006 -- 7596 04/13/92 09:16 EDT
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Apr 13, 1992
Words:1152
Previous Article:CONRAIL, PHILADELPHIA INDUSTRIAL DEVELOPMENT CORPORATION TO HOLD GROUND-BREAKING CEREMONY FOR $25 MILLION TECHNOLOGY CENTER
Next Article:OLYMPIA & YORK DEVELOPMENTS, THOMAS JOHNSON, ISSUE STATEMENT


Related Articles
SAFEWAY INC. ANNOUNCES 1991 EARNINGS
SIERRA ANNOUNCES EARNINGS, NEW SENIOR EXECUTIVE
SAFEWAY INC. ANNOUNCES 1991 EARNINGS
CANDY'S TORTILLA FACTORY'S FIRST QUARTER REVENUES INCREASE OVER 34 PERCENT
CANDY'S TORTILLA FACTORY SECOND QUARTER REVENUES INCREASE 30 PERCENT, EARNINGS UP 87 PERCENT
SAFEWAY CHAIRMAN ADDRESSES SHAREHOLDERS AT ANNUAL MEETING
CANDY'S TORTILLA FACTORY THIRD QUARTER EARNINGS TO BE BELOW EXPECTATIONS
SAFEWAY ANNOUNCES SECOND QUARTER 1992 EARNINGS
SAFEWAY ANNOUNCES THIRD QUARTER 1992 EARNINGS
SAFEWAY ANNOUNCES PRELIMINARY RESULTS FOR FIRST QUARTER OF 1993

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters