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FRED MEYER REPORTS SALES AND NET INCOME FOR THE SECOND QUARTER AND FIRST HALF OF 1993

 PORTLAND, Ore., Sept. 1 /PRNewswire/ -- Fred Meyer Inc. (NYSE: FMY) announced today record sales and net income results for its 1993 second quarter (12 weeks) and 28 weeks ended Aug. 14, 1993.
 Net sales for the 1993 second quarter increased 5.1 percent to $674.7 million compared with the $641.7 million reported in the second quarter of last year. Comparable store sales increased 3.8 percent for the quarter. Comparable food sales increased 5.0 percent, and comparable nonfood sales increased 3.0 percent.
 Net income increased 13.9 percent to $17.0 million in the second quarter of 1993, compared with $14.9 million for the second quarter of 1992. Net earnings per share were 60 cents for the second quarter of 1993 based on 28,338,000 shares outstanding, compared with 54 cents for the prior year's second quarter based on 27,711,000 shares outstanding.
 Net income for the second quarter was affected by the following items: (i) an adjustment to the company's LIFO reserve, resulting in an increase in net income of $3.9 million ($6.2 million pretax), or 14 cents per share; (ii) an accrual for paid and anticipated taxes and related interest payments which may be required as a result of the recent resolution of an IRS audit, resulting in a decrease to net income of $3.6 million, or 13 cents per share; and (iii) the recently enacted higher federal statutory tax rates applied retroactively to Jan. 31, 1993, resulting in a decrease to net income of $0.8 million, or 3 cents per share. Without these items, net income and earnings per share for the quarter would have been $17.4 million and 62 cents, respectively, assuming the prior tax rate of 37 percent. The company anticipates that its provision for taxes for the third and fourth quarters will be 38 percent, compared with 37 percent in 1992's last two quarters.
 Income from operations for 1993's second quarter was $35.6 million, a 38.5-percent increase over the $25.7 million reported in the prior year's second quarter. Excluding the pretax effect of the LIFO adjustment described above, income from operations increased 14.4 percent to $29.4 million in 1993's second quarter.
 Net sales for the first 28 weeks of 1993 rose 4.1 percent to $1.53 billion from the $1.47 billion reported in 1992. Comparable store sales increased 3.1 percent for the 28-week period. Comparable food sales increased 4.6 percent, and comparable nonfood sales increased 2.3 percent.
 In addition to the factors affecting net income for 1993's second quarter described above, net income for the first 28 weeks of 1993 was affected by the adoption of Statement of Financial Accounting Standards No. 109, entitled "Accounting for Income Taxes," which resulted in a one- time reduction in net income of $2.6 million, or 9 cents per share.
 Net income, after reflecting the effects of the accounting change and the three adjustments described above, increased 7.4 percent to $28.4 million for the first 28 weeks of 1993 from $26.4 million in 1992. Earnings per share were $1.01 for the first 28 weeks of 1993 based on 28,239,000 shares outstanding, compared with 98 cents for the prior year's period based on 26,941,000 shares outstanding. Excluding the effects of the accounting change and three adjustments, net income increased 19.0 percent to $31.4 million from $26.4 million reported for the first 28 weeks of 1992. Earnings per share excluding these same items were $1.11 in 1993's first half, compared with 98 cents last year.
 Income from operations for the first 28 weeks of 1993 was $60.1 million, a 26.7-percent increase over the $47.4 million reported in the comparable period the prior year. Excluding the adjustment for the pretax LIFO adjustment described above, income from operations increased 13.7 percent to $53.9 million from the $47.4 million reported last year.
 Robert G. Miller, chairman of the board and chief executive officer, said, "We are very pleased with our second quarter record sales and net income, especially when considering the continued cool and wet weather we experienced during the quarter. Our success in lowering our cost structure, combined with continued strong food sales, have helped offset the negative effects weather has had on the apparel portion of our nonfood business.
 "Excluding the effect of the LIFO adjustment, gross margins decreased as a percent of sales primarily due to lower pricing resulting from our expense control efforts and a shift in the overall sales mix to food sales, partially due to the softness in our apparel business. Expense control efforts were highlighted by reductions as a percent of sales in store occupancy expenses, store labor costs, corporate administrative and support department expenses, and supply costs.
 "Interest expense was down 17.1 percent from the $2.1 million reported in 1992's second quarter to $1.7 million in this year's quarter. The decrease primarily reflects lower interest rates.
 "During fiscal 1993 we will open five new multidepartment stores and complete seven major remodels. The new stores are located in Spokane, Burlington, and Vancouver (Orchards), Wash.; Anchorage, Alaska; and Medford, Ore. Two of the remodels include the addition of new food departments to existing stores in Anchorage and Spokane," Miller said.
 Fred Meyer Inc., with 1992 sales of $2.85 billion and headquartered in Portland, is a leading regional retailer of a wide range of food, apparel, products for the home, and fine jewelry. The company currently operates 125 stores, including 94 multidepartment stores, in Oregon, Washington, Utah, Alaska, Idaho, California, and Montana. Fred Meyer employs approximately 24,000 people, and its common stock is traded on the New York Exchange.
 FRED MEYER INC.
 CONSOLIDATED STATEMENT OF OPERATIONS
 (In thousands, except per share amounts)
 12 weeks ended Aug. 14, Aug. 15, Percent
 1993 1992 Change
 Net Sales $674,719 $641,748 5.14
 Cost of merchandise sold(a) 467,856 448,220 4.38
 Gross margin 206,863 193,528 6.89
 Operating and administrative
 expenses 171,296 167,839 2.06
 Income from operations 35,567 25,689 38.45
 Interest expense (net) 1,709 2,061 (17.08)
 Income before income taxes 33,858 23,628 43.30
 Provision for income taxes(b) 16,896 8,742 93.27
 Net income before the effect of
 an accounting change 16,962 14,886 13.95
 Effect of accounting change(c) --- --- ---
 Net income $16,962 $14,886 13.95
 Earnings per common share on:
 Net income before the effect of
 an accounting change $0.60 $0.54 11.11
 Effect of an accounting change --- ---
 Net income $0.60 $0.54
 Weighted average number of
 common shares outstanding 28,338 27,711 2.26
 (a)Includes LIFO charge to cost
 of merchandise sold(1) ?$(3,871) $2,307
 (1)Pretax adjustment to LIFO
 charge included) $(6,178) ---
 (b)Includes effect of tax settlement,
 tax on LIFO adjustment, and
 enactment of new tax law $6,654 ---
 (c)Adoption of Statement of Financial
 Accounting Standards No. 109 --
 Accounting for Income Taxes
 28 weeks ended Aug. 14, Aug. 15, Percent
 1993 1992 Change
 Net Sales $1,526,778 $1,466,575 4.11
 Cost of merchandise sold(a) 1,073,792 1,030,453 4.21
 Gross margin 452,986 436,122 3.87
 Operating and administrative
 expenses 392,913 388,706 1.08
 Income from operations 60,073 47,416 26.69
 Interest expense (net) 3,976 5,453 (27.09)
 Income before income taxes 56,097 41,963 33.68
 Provision for income taxes(b) 25,124 15,526 61.82
 Net income before the effect
 of an accounting change 30,973 26,437 17.16
 Effect of accounting change(c) (2,588) --- ---
 Net income $28,385 $26,437 7.37
 Earnings per common share on:
 Net income before the effect
 of an accounting change $1.10 $0.98 12.24
 Effect of an accounting change (0.09) ---
 Net income $1.01 $0.98
 Weighted average number of
 common shares outstanding 28,239 26,941 4.82
 (a)Includes LIFO charge to cost of
 merchandise sold(1) $(795) $5,383
 (1)Pretax adjustment to LIFO
 charge included) $(6,178) ---
 (b)Includes effect of tax settlement,
 tax on LIFO adjustment, and
 enactment of new tax law $6,654 ---
 (c)Adoption of Statement of Financial
 Accounting Standards No. 109 --
 Accounting for Income Taxes
 (PERCENT TABLE BELOW IS BASED ON RESULTS BEFORE THE
 EFFECT OF ACCOUNTING CHANGE, TAX SETTLEMENT, LIFO ADJUSTMENT,
 AND NEW TAX LAW)
 12 weeks ended 28 weeks ended
 Aug. 14 Aug. 15 Aug. 14 Aug. 15
 1993 1992 1993 1992
 As a percent of sales:
 Food sales 38.40 37.60 38.70 37.80
 Nonfood sales 61.60 62.40 61.30 62.20
 Gross margin-LIFO 29.74 30.16 29.26 29.74
 Gross margin-FIFO 30.09 30.52 29.62 30.10
 Operating and
 administrative
 expenses 25.39 26.15 25.73 26.50
 Income from
 operations 4.36 4.00 3.53 3.23
 Net income 2.58 2.32 2.06 1.80
 Comparable store sales:
 Total company 3.80 1.60 3.10 2.80
 Food sales 5.00 2.30 4.60 2.70
 Nonfood sales 3.00 1.30 2.30 2.80
 FRED MEYER INC.
 CONDENSED BALANCE SHEETS
 (Unaudited, in thousands)
 Aug. 14 Aug. 15
 1993 1992
 Assets
 Current assets:
 Cash $ 33,845 $ 26,596
 Inventories 447,341 429,727
 Receivables (net) 18,828 14,484
 Prepaid and other 46,582 32,173
 Total current assets 546,596 502,980
 Property and equipment (net) 600,998 508,130
 Other assets 7,818 6,844
 Total assets $1,155,412 $1,017,954
 Liabilities and shareholders' equity
 Current liabilities:
 Accounts payable/
 outstanding checks $ 281,318 $ 245,439
 Income taxes 16,551 20
 Accrued expenses/other 69,230 72,226
 Total current liabilities 367,099 317,685
 Long-term debt including mortgages 228,397 205,627
 Capital lease and lease obligations
 related to the restructuring charge 22,034 24,907
 Deferred lease transactions 46,654 42,587
 Deferred income taxes 8,330 16,565
 Other long-term liabilities 1,545 833
 Shareholders' equity 481,353 409,750
 Total liabilities and
 shareholders' equity $1,155,412 $1,017,954
 -0- 9/1/93
 /CONTACT: Ken Thrasher, senior vice president-finance, of Fred Meyer Inc., 503-232-8844, ext. 7900/
 (FMY)


CO: Fred Meyer, Inc. ST: Oregon IN: REA SU:

RB-JH -- SE002 -- 7803 09/01/93 09:07 EDT
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