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SOUTHLAND REPORTS 1992 SECOND QUARTER, SIX MONTHS RESULTS

 SOUTHLAND REPORTS 1992 SECOND QUARTER, SIX MONTHS RESULTS
 DALLAS, Aug. 11 /PRNewswire/ -- The Southland Corporation today reported revenues of $1.98 billion for the quarter ended June 30, 1992, down 6.82 percent from the same period last year due to about 250 fewer convenience stores, lower same-store merchandise sales resulting from reduced discounting and continued competition, and lower outside sales at its five distribution and food centers.
 The company reported a net loss for the quarter of $17.9 million ($.04 per share)(A), which includes a $17.5 million expense associated with a company-wide reorganization, the overall goal of which is to improve the company's flexibility in responding to rapidly changing customer needs and preferences. Second-quarter earnings during 1991 were $19.6 million ($.05 per share)(A), which included an extraordinary gain of $13 million ($.03 per share)(A) related to the company's financial restructuring consummated on March 5, 1991.
 For the six months ended June 30, Southland revenues were $3.76 billion, compared to $4.01 billion during the prior year. The company reported a net loss of $62.9 million ($.15 per share)(A) compared to a gain of $110.8 million ($.41 per share)(A) last year that included an extraordinary gain of $156.8 million ($.58 per share)(A).
 Clark Matthews, Southland's president and CEO, said, "During the third quarter, we expect to complete the refinancing that we announced last March. We're currently negotiating an amendment to our senior term loan credit agreement that will extend our $275 million revolving credit facility to Dec. 31, 1995, modify certain financial covenants and lower the remaining amortizations. As a condition to the amendment, Southland will prepay $350 million or almost half of the term loan balance, and issue up to $400 million of unsecured commercial paper that will be guaranteed by Ito-Yokado Co., Ltd."
 Matthews also said that Southland is beginning the implementation of the next phase of a previously announced, ongoing company-wide reorganization, from which the company now expects estimated savings of about $50 million in 1993. In addition to the reorganization of various internal functions and reporting relationships, approximately 1,800 non- store jobs throughout Southland will be eliminated as a result of the plan.
 "We are making steady progress toward implementing new merchandising and other programs that will help us respond more quickly and creatively to what our customers need and expect from 7-Eleven today," said Matthews. "In order to derive the maximum possible benefit from these programs, however, we must reduce our costs to levels more consistent with today's operating environment, and reorganize to better support the new course we're setting for 7-Eleven's future."
 He added, "As anticipated, because of the reduced-discounting strategy introduced this year, our merchandise gross profit margins have improved while sales have declined." During the second quarter, the merchandise gross profit margin at the company's 7-Eleven and other convenience stores increased .91 percentage points, while same-store merchandise sales (sales at stores open more than one year) decreased 5.2 percent.
 "We're quite pleased with gasoline performance at our 2,360 stores that sell fuel. During the second quarter, gallons sold per store increased 2.6 percent, while the gross profit per gallon increased by more than a penny to 10.1 cents. This produced a very nice increase in total gasoline gross profits, despite the fact that about 175 fewer locations sell fuel than at this same time last year," Matthews noted.
 "This month we began the roll-out of our new merchandising system to our stores across the country. The introduction of an increasing number of products every month, combined with an item-by-item inventory management system aimed at eliminating slow-moving products and increasing availability of the most popular items, is going to inject a new energy into our stores. We're going to give our customers many reasons to choose to shop at 7-Eleven rather than at another store, and we firmly believe that these new strategies will pay off long-term in increased sales and profitability, although the start-up costs of some of the new programs will continue to affect earnings negatively in 1993," he said.
 Southland is required to prepare its financial statements since completing its reorganization in accordance with Statement of Financial Accounting Standards No. 15 (SFAS No. 15). Under SFAS No. 15, the liability for the company's restructured public debt as recorded on the balance sheet includes all future undiscounted cash payments, both principal and interest. For that reason, no interest expense will be recognized over the life of these securities, although the interest payments are tax deductible. The liability is reduced by the amount of the interest payments at the time they are disbursed. Those cash interest payments will total about $65 million annually for 1992 through 1996.
 With over 13,000 convenience stores around the world, 7-Eleven is the premier name and largest chain in the convenience retailing industry. Over 6,300 7-Eleven stores are operated or franchised in the United States and Canada by The Southland Corporation. Southland is 64- percent owned by IYG Holding Company, a wholly owned subsidiary of Ito-Yokado Co., Ltd., and Seven-Eleven Japan Co., Ltd. Seven-Eleven Japan operates approximately 4,800 7-Eleven stores under an area license agreement with Southland. Another 2,400 7-Eleven stores are operated by area licensees and affiliates of Southland in parts of the United States and 17 other countries.
 (A) -- Per-share amounts are both primary and fully diluted.
 THE SOUTHLAND CORPORATION AND SUBSIDIARIES
 Consolidated Statements of Operations
 (Unaudited; dollars In thousands, except per-share data)
 Periods ended June 30 Three Months Six Months
 1992 1991 1992 1991
 Total revenues $1,983,443 $2,128,638 $3,760,468 $4,012,565
 Cost of sales
 and expenses:
 Cost of goods
 sold 1,539,745 1,667,433 2,951,224 3,170,654
 Selling, general
 and admn. expenses 424,193 408,053 795,401 785,183
 Interest expense 31,819 42,884 65,675 95,456
 Contributions to
 employees' savings
 & profit sharing
 plan 4,326 3,631 8,431 7,260
 Total 2,000,083 2,122,001 3,820,731 4,058,553
 Loss bef. inc. taxes
 & extraord. item (16,640) 6,637 (60,263) (45,988)
 Income taxes 1,300 -- 2,600 --
 Loss before
 extraord. item (17,940) 6,637 (62,863) (45,988)
 Extraordinary
 gain on debt
 restructuring -- 13,000 -- 156,824
 Net earnings (loss) ($17,940) $19,637 ($62,863) $110,836
 Earns. (loss) per avg.
 com. share outstanding
 (primary & fully diluted):
 Before extraordinary
 item ($0.04) $0.02 ($0.15) ($0.17)
 Extraordinary item -- 0.03 -- 0.58
 Net earnings (loss) ($0.04) $0.05 ($0.15) $0.41
 Average primary &
 diluted shares 410,022 409,617 410,022 271,536
 Consolidated Balance Sheets
 (Dollars in Thousands, Except Per-Share Data)
 Assets
 6/30/92 12/31/91
 (Unaudited)
 Current assets:
 Cash and cash equivalents $227,319 $238,561
 Accounts and notes receivable 107,221 125,631
 Inventories 269,246 227,215
 Deposits and prepaid expenses 44,511 48,582
 Total current assets 648,297 639,989
 Property, plant and equipment 1,500,461 1,575,614
 Other assets 355,572 380,184
 Total $2,504,330 $2,595,787
 Liabilities and shareholders'
 equity (deficit)
 Current liabilities:
 Accounts payable and accrued
 expenses $617,448 $594,200
 Income taxes 11,922 5,230
 Long-term debt due within
 one year 261,763 168,246
 Total current liabilities 891,133 767,676
 Deferred credits and other
 liabilities 137,715 138,655
 Long-term debt 2,723,551 2,873,603
 Redeemable common stock
 purchase warrants 26,136 26,136
 Commitments and contingencies
 Shareholders' equity (deficit):
 Common stock, $.0001 par value 41 41
 Additional capital 599,588 599,588
 Accumulated deficit (1,873,834) (1,809,912)
 Total shareholders' equity
 (deficit) (1,274,205) (1,210,283)
 Total $2,504,330 $2,595,787
 -0- 8/11/92
 /CONTACT: Cecilia Stubbs Norwood, 214-828-7272, or Markeeta McNatt, 214-828-7209, both of Southland, or recorded update, 214-828-7587/ CO: Southland Corporation ST: Texas IN: REA SU: ERN


CK -- NY042 -- 8932 08/11/92 11:48 EDT
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Date:Aug 11, 1992
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