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BUTTREY FOOD AND DRUG STORES CO. ANNOUNCES 62 PERCENT INCREASE IN FIRST QUARTER INCOME BEFORE EXTRAORDINARY ITEMS

 BUTTREY FOOD AND DRUG STORES CO. ANNOUNCES 62 PERCENT INCREASE
 IN FIRST QUARTER INCOME BEFORE EXTRAORDINARY ITEMS
 GREAT FALLS, Mont., May 29 /PRNewswire/ -- Buttrey Food and Drug Stores Co. today reported that net income before extraordinary items for the 13 weeks ended May 2, 1992, increased $695,000, or 62 percent, from $1,116,000 or $0.17 per share in the first quarter of 1991 to $1,811,000 or $0.23 per share in the first quarter of 1992. As anticipated, the company recorded two significant extraordinary charges that reduced net income by a total of $3,435,000 or $0.43 per share in the first quarter. These charges are the result of the early retirement of debt and the refinancing of the company's bank agreement. After giving effect to these extraordinary charges, the company reported a net loss from the quarter of $1,624,000 or $0.20 per share.
 Sales for the 13 weeks ended May 2, 1992, decreased $2,112,000, or 1.8 percent, from $116,286,000 in the first quarter of 1991 to $114,174,000 in the first quarter of 1992. The decrease reflects a 2.9 percent decrease in comparable store sales as the company was impacted by competitive activity in certain markets and general economic conditions including deflation in certain food categories.
 Gross profit for the 13 weeks ended May 2, 1992, decreased $1,885,000 from $30,839,000, or 26.5 percent of sales, in the first quarter of 1991 to $28,954,000, or 25.4 percent of sales, in the first quarter of 1992. Gross profit was adversely impacted by price reductions on various grocery items made by the company in order to maintain market share in response to competitive store openings, price reductions and promotional activities by competitors.
 Earnings before interest, income taxes and depreciation and amortization ("EBITDA") for the 13 weeks ended May 2, 1992, decreased $1,020,000 from $8,825,000, or 7.6 percent of sales, in the first quarter of 1991 to $7,805,000 or 6.8 percent of sales, in the first quarter of 1992. The decrease in EBITDA of 0.8 percentage points reflects a 1.1 percentage point decrease in gross profit offset by 0.3 percentage point improvement in operating expenses.
 "The company continues to be challenged by a difficult retail environment," said Ed Agnew, president and chief executive officer. "We expect that the softness in comparable store sales may continue through the summer months in light of new store openings by competitors. The company is focused on improving net income vs. the prior year despite the decline in comparable store sales by reducing expenses and obtaining operating efficiencies. Additionally, the company's capital investment program is on track with the construction of our new store in Billings, Mont., and our replacement store in Miles City, Mont., both of which are expected to be open during the fourth quarter of this year."
 On Feb. 13, 1992, the company completed its initial public offering of common stock. The net proceeds of the offering were used to retire $28,000,000 of 13.25 percent senior subordinated notes and $9,000,000 of senior bank debt. In connection with the early retirement of debt, the company recorded an extraordinary loss of $4,137,000 ($2,545,000 on an after-tax basis) consisting of a premium on the redemption of the senior subordinated notes and a non-cash write-off of unamortized deferred debt issuance costs.
 On April 13, 1992, Bankers Trust Co. (agent bank under the company's credit agreement) notified the Board of Governors of the Federal Reserve System that it was delisting its loan to the company as a "highly leveraged transaction" as a result of the significant reduction in the company's long-term debt. As of May 2, 1992, the company has a total debt/total capitalization ratio of 42 percent.
 On April 28, 1992, the company refinanced $42,200,000 of senior bank debt. Under the new credit agreement, the company will benefit from a reduced interest rate on company borrowings and a modification or elimination of certain financial covenants. In connection with the refinancing of senior bank debt, the company recorded an extraordinary loss of $1,448,000 ($890,000 on an after-tax basis) consisting of the noncash write-off of unamortized deferred debt issuance costs and settlement costs related to the early termination of interest rate SWAP agreements.
 The board of directors at its quarterly meeting on May 28, 1992, appointed Robert P. Gannon to the board of directors. Gannon is a director of the Montana Power Co. and president of its Utility Division. Montana Power Co. is based in Butte, Mont.
 Buttrey Food and Drug Stores Co. is headquartered in Great Falls and currently operates 43 stores in Montana, Washington, Wyoming, North Dakota and three distribution centers in Montana (1) and Utah (2).
 BUTTREY FOOD AND DRUG STORES CO.
 Financial Highlights
 (In thousands, except per share data)
 13 weeks ended
 May 2, May 4,
 1992 1991
 Sales $114,174 $116,286
 Cost of sales and related
 occupancy expenses 85,220 85,447
 Gross profit 28,954 30,839
 Marketing, general and
 administrative expenses 24,469 25,654
 Operating income 4,485 5,185
 Interest expense 1,540 3,656
 Income before taxes and
 extraordinary loss 2,945 1,529
 Income taxes 1,134 413
 Income before extraordinary loss 1,811 1,116
 Extraordinary loss (net of tax) 3,435 ---
 Net income (loss) ($1,624) $1,116
 Net income (loss) per common
 share and common share equivalent:
 Income before extraordinary loss $0.23 $0.17
 Extraordinary loss (net of tax) 0.43 ---
 Net income (loss) per share ($0.20) $0.17
 Weighted average common and
 common equivalent shares
 outstanding 8,056.8 6,444.3
 Certain non-cash charges:
 Depreciation and amortization of
 property and capital leases $2,271 $1,723
 Loss on disposal of
 owned property 3 ---
 Amortization of excess cost
 over net assets acquired
 and other assets 1,046 1,917
 Amortization of deferred debt
 issuance costs (included under
 interest expense) 127 771
 Total non-cash charges $3,447 $4,411
 -0- 5/29/92
 /CONTACT: Wayne Peterson, VP and CFO of Buttrey Food and Drug Stores, 406-454-7280/ CO: Buttrey Food and Drug Stores Co. ST: Montana IN: REA SU: ERN


AL-JL -- LA002 -- 5067 05/29/92 09:02 EDT
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Date:May 29, 1992
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