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SMITH'S FOOD & DRUG CENTERS REPORTS INCREASED SALES AND NET INCOME FOR SECOND QUARTER 1993

 SALT LAKE CITY, July 21 /PRNewswire/ -- Smith's Food & Drug Centers Inc. (NYSE: SFD) today reported increased sales and net income for the second quarter 1993.
 Second Quarter Results:
 Sales for the second quarter ended July 3, 1993, totaled $706 million, compared to $640 million for the same quarter last year, an increase of 10 percent. Net income was $14.0 million, or $.46 per common share, up 3 percent over the $13.5 million, or $.45 per common share, reported last year. Sales in comparable stores were down .3 percent compared to the second quarter last year. Net income as a percent to sales decreased from 2.12 percent to 1.98 percent during the second quarter.
 Six Month Results:
 Adjusting for the additional week (26 weeks this year compared to 27 weeks last year), sales for the first six months of $1.39 billion were up 10 percent over a year ago. Net income was $28.0 million, or $.92 per common share, up 5 percent over last year's $26.7 million, or $.89 per common share. Sales in comparable stores were up .7 percent compared to the first six months of the prior year. Net income as a percent to sales decreased from 2.04 percent to 2.01 percent for the first six months.
 Sales during the first half of 1993 were affected by consumers purchasing lower priced items, increased competition and the weak economy in general. Gross margins continued to improve as a result of more efficient operations in maturing stores, distribution economies and higher private label sales. However, the increase was mitigated by the company's aggressive efforts to improve sales in a very competitive environment. Additionally, the improvement in gross margins was offset by higher operating costs from the entry into California.
 LIFO:
 In 1992, the company adopted the last-in, first-out (LIFO) cost method for valuing inventories. The adoption of LIFO did not have a material effect on the 1992 financial statements. The LIFO method will more fairly present the company's results of operations by matching current costs with current sales and by recognizing the effects of inflation in the period in which it occurs. Also, adopting LIFO will allow investors to compare the company's results with the many other companies in the supermarket industry using LIFO. The LIFO charge before income taxes for the second quarter of 1993 totaled $750,000 and $1,500,000 for the first six months. There were no LIFO charges or credits in 1992.
 Expansion Program:
 During the first six months of fiscal 1993 two combination centers were opened in Lakewood, Calif., and South Jordan, Utah, and one store remodel was completed. At July 3, 1993, the company operated 121 stores totaling 7.8 million square feet, compared to 111 stores totaling 7.0 million square feet at the end of prior-year's second quarter. The expansion plan for the remainder of fiscal 1993 is to complete two stores in the third quarter and 10 stores in the fourth quarter totaling approximately 925,000 square feet including 10 stores in Southern California. The increase in square footage will be approximately 15 percent for the year.
 The company is continuing to expand its backstage operations. A new million square foot, fully integrated distribution center, including a dairy processing plant, is currently under construction in Riverside, Calif. This center will serve the stores in the California Region and is expected to begin operations at the end of 1993.
 New Aggressive Pricing Program:
 Recognizing the importance of maintaining store sales volume and market share, the company has kicked-off a more aggressive pricing program in the Utah area. To reinforce the company's Every Day Low Price (EDLP) program, advertisements announced today the lowering of more than 10,000 prices on grocery, meat and produce items. Jeff Smith, chairman and chief executive officer, reiterated that the company has always felt strongly that sales must be protected in both recession periods and unusual competitive situations.
 Although this program could reduce earnings expectations somewhat during the remainder of the year, the company feels it will enhance earnings potential in future years. The reduction in prices currently, however, will be partially offset by increased sales volume and by the company's successful program to reduce operating costs.
 Smith's is a leading regional supermarket chain operating 121 stores in eight western states. Of these stores, 106 are large combination food and drug centers.
 SMITH'S FOOD & DRUG CENTERS, INC.
 Condensed Consolidated Statements of Income
 (Unaudited)
 (Amounts in thousands except per share data)
 13 Weeks Ended 26 Weeks 27 Weeks
 July 3, July 4, July 3, July 4,
 1993 1992 1993 1992
 Net sales $705,520 $640,096 $1,393,759 $1,309,607
 Cost of goods sold 542,982 492,799 1,070,871 1,011,081
 TOTAL 162,538 147,297 322,888 298,526
 Expenses:
 Operating, selling
 and administrative 109,740 100,570 218,213 207,469
 Depreciation and
 amortization 18,962 15,363 36,987 29,669
 Interest 10,837 9,020 21,582 17,496
 TOTAL 139,539 124,953 276,782 254,634
 INCOME BEFORE
 INCOME TAXES 22,999 22,344 46,106 43,892
 Income taxes 9,000 8,800 18,100 17,200
 NET INCOME $13,999 $13,544 $28,006 $26,692
 Net income per
 common share $.46 $.45 $.92 $.89
 Average common
 shares outstanding 30,318 29,962 30,379 29,962
 Condensed Consolidated Balance Sheets
 (Unaudited)
 (In thousands)
 July 3, July 4,
 1993 1992
 ASSETS
 CURRENT ASSETS
 Cash and cash equivalents $12,977 $18,224
 Receivables 17,668 9,762
 Inventories 333,133 293,733
 Other current assets 51,637 28,259
 TOTAL CURRENT ASSETS 415,415 349,978
 PROPERTY AND EQUIPMENT
 Land 309,929 228,558
 Buildings 614,260 491,873
 Leasehold improvements 35,423 29,914
 Fixtures and equipment 474,780 382,051
 TOTAL 1,434,392 1,132,396
 Less allowances 244,688 182,679
 TOTAL PROPERTY
 AND EQUIPMENT 1,189,704 949,717
 OTHER ASSETS 13,562 11,801
 TOTAL ASSETS $1,618,681 $1,311,496
 LIABILITIES AND STOCKHOLDERS' EQUITY
 CURRENT LIABILITIES
 Trade accounts payable $156,669 $158,774
 Accrued taxes 45,653 37,850
 Other accrued liabilities 62,596 57,786
 Current maturities 22,591 23,008
 TOTAL CURRENT LIABILITIES 287,509 277,418
 LONG-TERM DEBT 711,252 479,920
 DEFERRED INCOME TAXES 81,050 52,000
 REDEEMABLE PREFERRED STOCK 6,462 7,401
 COMMON STOCKHOLDERS' EQUITY 532,408 494,757
 TOTAL LIABILITIES
 AND STOCKHOLDERS'
 EQUITY $1,618,681 $1,311,496
 Condensed Consolidated Statements of Cash Flows
 (Unaudited)
 (In thousands)
 OPERATING ACTIVITIES:
 Net income $28,006 $26,692
 Adjustments to reconcile net
 income to net cash provided
 by operating activities:
 Depreciation and
 amortization 39,421 31,823
 Deferred income taxes 6,300 5,800
 Other 342 271
 TOTAL 74,069 64,586
 Changes in operating assets
 and liabilities:
 Receivables (868) 5,312
 Inventories 8,283 (3,306)
 Other current assets (25,071) (24,404)
 Trade accounts payable (27,437) (21,609)
 Accrued taxes 13,515 7,008
 Other accrued
 liabilities (2,864) (3,196)
 CASH PROVIDED BY
 OPERATING ACTIVITIES 39,627 24,391
 INVESTING ACTIVITIES:
 Additions to property and
 equipment (153,601) (120,976)
 Proceeds from sale of
 property and equipment 2,114 786
 Other 527 (212)
 CASH USED BY
 INVESTING ACTIVITIES (150,960) (120,402)
 FINANCING ACTIVITIES:
 Additions to long-term debt 130,000 116,042
 Payments on long-term debt (9,473) (9,295)
 Redemptions of Preferred Stock (414) (314)
 Purchases of Treasury Stock (8,408) ---
 Proceeds from sale of
 Treasury Stock 4,843 ---
 Payment of dividends (7,764) (6,592)
 CASH PROVIDED BY
 FINANCING ACTIVITIES 108,784 99,841
 NET INCREASE (DECREASE) IN
 CASH AND CASH EQUIVALENTS (2,549) 3,830
 Cash and cash equivalents
 at beginning of year 15,526 14,394
 CASH AND CASH EQUIVALENTS
 AT END OF PERIOD $12,977 $18,224
 -0- 7/21/93
 /CONTACT: Robert D. Bolinder or Matthew G. Tezak, both of Smith's Food & Drug Centers, 801-974-1400/
 (SFD)


CO: Smith's Food & Drug Centers Inc. ST: Utah IN: REA SU: ERN

JB-JL -- LA008 -- 3706 07/21/93 07:32 EDT
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Date:Jul 21, 1993
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