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VONS REPORTS 23 PERCENT INCREASE IN OPERATING EARNINGS IN THIRD QUARTER 1992

 VONS REPORTS 23 PERCENT INCREASE IN
 OPERATING EARNINGS IN THIRD QUARTER 1992
 ARCADIA, Calif., Nov. 12 /PRNewswire/ -- The Vons Companies Inc. (NYSE: VON) announced today third quarter results for the 16 weeks ended Oct. 4, 1992. Operating earnings (earnings before extraordinary items) were $22.3 million in the third quarter of 1992, compared with $18.1 million in the year-ago quarter, a 23.2 percent increase. Operating earnings per share in the third quarter were $.51, compared with $.42 in the 1991 quarter, a 21.4 percent increase.
 Operating cash flow (defined as operating income plus depreciation and amortization of goodwill and other assets and LIFO charge) was $92.1 million, or 5.5 percent of sales in the third quarter of 1992, compared with $83.7 million or 5.1 percent of sales in the year-ago quarter. The year-over-year increase in operating cash flow was 10 percent.
 "We are proud of our ability to generate significant improvement in earnings and cash flow in this difficult economy. These results reflect the efforts of the entire Vons organization in controlling costs and expanding margins while successfully carrying out an aggressive capital expenditure program," said Roger E. Stangeland, chairman and chief executive officer.
 Sales in the third quarter of 1992 increased 2.8 percent, primarily reflecting the acquisition of 18 Williams Bros. stores in January of this year. Sales on a same-store basis decreased 1.8 percent, reflecting the ongoing impact of the recession and cautious consumer spending in many of the regions served by the company.
 Gross margin in the third quarter expanded to 24.8 percent of sales, an 80 basis point improvement over the 1991 third quarter results. Results reflect the impact of the company's ongoing remodel and new store programs, as well as the ability to pass through cost increases, optimize buying opportunities and increase margins where competitive conditions allow.
 Selling and administrative expenses as a percent of sales increased to 20.9 percent in the quarter, compared with 20.2 percent in the year-ago quarter. The increase largely reflects the impact of market-wide negotiated union wage increases as well as higher blended wage rates and hourly costs which tend to occur in a soft sales environment. These wage cost increases were partially offset by improved sales per labor hour. Expenses were also adversely impacted by higher workers' compensation costs associated primarily with the new law which took effect in 1990.
 Interest expense decreased to $20.0 million in the third quarter of 1992, compared with $25.4 million in the year-ago quarter. This decrease reflects the benefit of the company's debt refinancing program as well as lower interest rates.
 During the quarter, as part of its debt refinancing program, the company issued $100 million of 8 3/8 percent senior subordinated notes. Proceeds from the offering were used to pay down debt under the company's revolving credit facility.
 Net income for the third quarter of 1992 was $22.3 million, or $.51 per share, compared with $22.5 million, or $.52 per share in the 1991 quarter. Third quarter 1991 results included a $7.3 million, or $.17 per share benefit relating to utilization of net operating loss and investment tax credit carryforwards which was partially offset by a $2.9 million, or $.07 per share charge relating to debt refinancing.
 At Oct. 4, 1992, the company's revolving debt borrowings totaled $216.8 million, and the company had available unused credit of $173.8 million. For the 16 weeks ended Oct. 14, 1992, the weighted average interest cost on the revolving credit facility was 4.5 percent.
 During the third quarter the company opened one Vons Supermarket and one Vons Food and Drug Store and completed seven major remodels. Total square footage at the end of the third quarter was 8.3 million. The company anticipates opening two additional stores prior to year- end 1992.
 In the third quarter of 1992, the company invested $48.8 million in store projects. Third quarter 1992 total cash capital expenditures were $53.9 million. Year-to-date cash capital expenditures were $140.4 million, excluding $49.1 million relating to the acquisition of Williams Bros.
 "We continue to invest heavily in our future with total capital spending for 1992 expected to exceed 4 percent of sales. This represents one of the highest levels of capital investment in our industry," Stangeland said.
 For the 40 weeks ended Oct. 4, 1992, sales were $4.2 billion compared with $4.1 billion in the same period a year ago. Same-store sales for the 40-week period declined 1.3 percent. Operating earnings for the 40-week period in 1992 were $54.7 million, or $1.26 per share, compared with $46.6 million, or $1.14 per share in the same period a year ago.
 "While pleased with our progress, we continue to be concerned about our regional economies which include the counties of Los Angeles and Orange; San Diego; Riverside and San Bernardino; Fresno and Kern; Santa Barbara and Ventura; and Clark County, Nev. Same- store sales continue to run negative, and we have experienced additional softening in the last few weeks. Although we are confident in our ability to produce solid earnings in the remainder of 1992, the outlook for earnings increases in 1993 is a cautious one which will be largely determined by the timing of economic recovery throughout our various regions," Stangeland said.
 "Our performance in 1992 has demonstrated management's ability to react successfully to economic changes affecting customer attitudes in our differing regions. While 1993 results will largely be driven by the economies of these six regions, we have in place the resources, the commitment and the capital to position the company for growth and improved profitability in the long run," Stangeland said.
 Vons is the largest supermarket in Southern California. The company operates 343 stores under the names Vons, Pavilions, Tianguis and Williams Bros.
 THE VONS COMPANIES INC.
 Results of Operations
 (In millions of dollars, except share data)
 (Unaudited)
 16 Weeks Ended 40 Weeks Ended
 Oct. 4, Oct. 6, Oct. 4, Oct. 6,
 1992 1991 1992 1991
 Sales $1,681.7 $1,636.5 $4,235.9 $4,110.6
 Costs and
 expenses:
 Cost of sales,
 buying and
 occupancy 1,265.3 1,243.1 3,189.3 3,131.5
 Selling and
 administrative
 expenses 350.9 331.4 878.5 817.3
 Amortization of
 excess cost over
 net assets
 acquired 4.4 4.4 11.1 10.8
 Operating income 61.1 57.6 157.0 151.0
 Interest expense,
 net 20.0 25.4 56.6 68.3
 Income before
 income tax
 provision and
 extraordinary
 items 41.1 32.2 100.4 82.7
 Income tax
 provision 18.8 14.1 45.7 36.1
 Income before
 extraordinary
 items 22.3 18.1 54.7 46.6
 Extraordinary
 items:
 Utilization of
 net operating loss
 and investment
 tax credit
 carryforwards --- 7.3 --- 24.4
 Debt refinancing,
 net of income tax
 benefit of
 $2.0 million,
 $8.6 million, and
 $2.0 million,
 respectively --- (2.9) (12.7) (2.9)
 Net income $22.3 $22.5 $42.0 $68.1
 Income per common share:
 Income before
 extraordinary
 items $.51 $.42 $1.26 $1.14
 Extraordinary
 items --- .10 (.29) .52
 Net income $.51 $.52 $.97 $1.66
 Weighted average
 common shares
 and common
 share equiva-
 lents 43,459,410 43,572,568 43,509,155 41,012,926
 Certain Non-Cash Charges
 LIFO charge $2.0 $1.8 $4.9 $5.4
 Depreciation and
 amortization of
 property and
 capital leases 23.0 18.7 54.5 46.1
 Amortization of
 excess cost over
 net assets
 acquired and
 other assets 6.0 5.6 14.9 13.9
 Amortization of
 debt discount
 and deferred
 financing costs 1.8 2.4 4.8 6.1
 Total non-cash
 charges $32.8 $28.5 $79.1 $71.5
 THE VONS COMPANIES INC.
 Consolidated Balance Sheets
 (In millions of dollars)
 (Unaudited)
 Oct. 4, Dec. 29,
 1992 1991
 Assets
 Current Assets:
 Cash $5.9 $6.7
 Accounts receivable 46.2 36.2
 Inventories 340.7 359.2
 Other 45.8 45.5
 Total current assets 438.6 447.6
 Property and equipment, net 907.5 795.0
 Excess of cost over net
 assets acquired 518.5 505.4
 Other 57.5 54.6
 Total assets $1,922.1 $1,802.6
 Liabilities and
 shareholders' equity
 Current liabilities:
 Current maturities of
 long-term debt and
 capital lease obligations $7.7 $5.5
 Accounts payable 302.7 312.6
 Accrued liabilities 233.6 205.2
 Total current liabilities 544.0 523.3
 Accrued self-insurance and
 non-current liabilities 116.2 110.3
 Senior debt and capital
 lease obligations 395.1 314.5
 Subordinated debt, net 347.0 376.8
 Shareholders' equity 519.8 477.7
 Total liabilities and
 shareholders' equity $1,922.1 $1,802.6
 -0- 11/12/92
 /CONTACT: Mary McAboy of The Vons Companies, 818-821-7897/
 (VON) CO: The Vons Companies Inc. ST: California IN: REA SU: ERN


LS-JL -- LA007 -- 0009 11/12/92 08:32 EST
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Date:Nov 12, 1992
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