Safeway Inc. Announces Fourth Quarter 1997 Earnings.PLEASANTON Pleasanton, city (1990 pop. 50,553), Alameda co., W Calif., a suburb of the San Francisco–Oakland area, in a vineyard and dairy region; inc. 1894. Wine and cheese are produced, and there are publishing and stone-quarrying industries. , Calif.--(BUSINESS WIRE)--Jan. 29, 1998--Safeway Inc. (NYSE NYSE See: New York Stock Exchange :SWY SWY Safeway, Inc. (stock symbol) ) today reported net income of $214.9 million for the 17 week fourth quarter of 1997 compared to $151.6 million for the 16 week fourth quarter of 1996. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of increased 35% to $0.85 in 1997 from $0.63 in 1996. Fourth quarter sales increased 42% to $7.79 billion in 1997 from $5.49 billion in 1996, due primarily to the merger with Vons and the additional week in 1997. Identical-store sales (which exclude replacement stores) increased 2.4%, while comparable-store sales (which include replacement stores) increased 3.2%. These same-store sale comparisons are based on 17 week periods for the fourth quarter of both years. Gross profit increased 62 basis points to 28.40% of sales in the fourth quarter of 1997 from pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma combined gross profit of 27.78% in the same quarter of 1996, primarily due to improvements in buying practices and product mix. In addition, the company recorded $8.4 million of LIFO (Last In-First Out) A queueing method in which the next item to be retrieved is the item most recently placed in the queue. Contrast with FIFO. LIFO - stack income this quarter, reflecting slight deflation deflation: see inflation. deflation Contraction in the volume of available money or credit that results in a general decline in prices. A less extreme condition is known as disinflation. for the full year. Operating and administrative expense was 22.76% of sales in the fourth quarter of 1997, down 14 basis points from pro forma combined operating and administrative expense of 22.90% in 1996, reflecting increased sales and efforts to reduce or control expenses. Pro forma information is based on the 1996 combined historical financial statements of Safeway Safeway is a brand name used by several companies around the world: Supermarket chains
Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. rose to 7.49% of sales in the fourth quarter of 1997 compared to 7.04% in the same quarter of 1996. For the year, operating cash flow was 7.70% in 1997 compared to 7.18% in 1996. Interest expense was $77.5 million for the fourth quarter of 1997 compared to $52.2 million last year. Interest expense increased because of debt incurred to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. stock in conjunction with the Vons merger and because of the additional week in 1997. Despite the large increase in interest expense, the quarterly interest coverage ratio (operating cash flow divided by interest expense) improved to 7.53 times in 1997 from 7.40 times in 1996. During the year Safeway reduced the average interest rate on debt by refinancing Refinancing An extension and/or increase in amount of existing debt. a significant portion of higher cost debt, entering the commercial paper market, and negotiating a new bank credit agreement. Safeway's equity in the earnings of Casa Ley Casa Ley is a Mexican Grocery Store chain. Most of its stores are located in western Mexico states of Baja California, Sonora, Sinaloa, Nayarit, Jalisco, Colima, Michoacán, Coahuila, Chihuahua, Durango, Aguascalientes, Guanajuato and Baja California Sur. , its unconsolidated affiliate, was $9.3 million for the fourth quarter of 1997, up from $6.3 million in 1996. Fourth-quarter 1996 equity in affiliates' earnings also included $9.4 million for Safeway's 35% share of Vons' earnings. Results for the year largely reflect the same positive trends seen in the fourth quarter. Income was $621.5 million ($2.50 per share) before extraordinary loss in 1997 compared to $460.6 million ($1.94 per share) in 1996. Sales were $22.5 billion in 1997 compared to $17.3 billion in 1996. The company's 1997 income statement includes Vons' operating results since the beginning of the second quarter, while the 1996 income statement reflects Safeway's 35% equity interest in Vons. Labor disputes reduced net income by an estimated $0.08 per share in 1997 and $0.14 per share in 1996. During 1997, Safeway and Vons together invested $829 million in capital expenditures while opening 37 new stores, completing 181 remodels and beginning construction of a new distribution center in Maryland Maryland (mâr`ələnd), one of the Middle Atlantic states of the United States. It is bounded by Delaware and the Atlantic Ocean (E), the District of Columbia (S), Virginia and West Virginia (S, W), and Pennsylvania (N). . During 1998, the company expects to spend in excess of $950 million and plans to open 40 to 45 new stores, complete more than 200 remodels and finish the construction of the Maryland distribution center. Safeway Inc. is the second largest food and drug retailer in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. based on sales. The company operates 1,368 stores in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Canada. The company's common stock is traded on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the symbol SWY. -0-
SAFEWAY INC. AND SUBSIDIARIES
OPERATING RESULTS
(Dollars in millions, except per-share amounts)
(Unaudited)
Quarter Ended Year Ended
17 weeks 16 weeks 53 weeks 52 weeks
Jan. 3, Dec. 28, Jan. 3, Dec. 28,
1998 1996 1998 1996
Sales $ 7,785.4 $ 5,486.9 $ 22,483.8 $ 17,269.0
Gross profit $ 2,211.3 $ 1,493.0 $6,414.7 $ 4,774.2
Operating and
administrative
expense (1,771.7) (1,209.3) (5,135.0) (3,882.5)
Operating profit 439.6 283.7 1,279.7 891.7
Interest expense (77.5) (52.2) (241.2) (178.5)
Equity in earnings of
unconsolidated
affiliates 9.3 15.7 34.9 50.0
Other income, net 0.8 1.0 2.9 4.4
Income before income
taxes and
extraordinary loss 372.2 248.2 1,076.3 767.6
Income taxes (157.3) (96.6) (454.8) (307.0)
Income before
extraordinary loss 214.9 151.6 621.5 460.6
Extraordinary loss
related to early
retirement of debt,
net of income tax
benefit of $41.1 - - (64.1) -
Net income $ 214.9 $ 151.6 $557.4 $ 460.6
Diluted earnings
per share:
Income before
extraordinary loss $0.85 $0.63 $ 2.50 $1.94
Extraordinary loss - - (0.26) -
Net income $0.85 $0.63 $2.24 $1.94
Weighted average
common and
common equivalent
shares 252.2 240.5 248.9 237.8
Operating cash flow:
Income before
extraordinary loss $214.9 $151.6 $ 621.5 $460.6
Add (subtract):
Income taxes 157.3 96.6 454.8 307.0
Interest expense 77.5 52.2 241.2 178.5
Depreciation 135.6 100.5 414.0 328.1
Goodwill amortization 15.8 3.2 41.8 10.4
LIFO expense (income) (8.4) (2.0) (6.1) 4.9
Equity in earnings of
unconsolidated
affiliates (9.3) (15.7) (34.9) (50.0)
Total operating
cash flow $ 583.4 $386.4 $ 1,732.3 $ 1,239.5
As a percent of sales 7.49% 7.04% 7.70% 7.18%
As a multiple of
interest expense 7.53x 7.40x 7.18x 6.94x
CONTACT: Safeway Inc. Melissa Plaisance, 510/467-3136 |
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