Generates Approximately $175 Million in New Distribution Business And
Introduces Price-Impact Rainbow Stores to the Market
DALLAS, Sept. 4 /PRNewswire/ -- Fleming (NYSE: FLM) today announced that
it has completed the series of transactions that places former Furrs
Supermarkets locations into the hands of new retail operators and creates
approximately $175 million in distribution revenue for its Lubbock, Texas
distribution facility. In total, Fleming facilitated the purchase of
36 stores located in the Albuquerque and Las Cruces, New Mexico and El Paso,
Texas markets by a variety of independent and chain food store operators.
Furrs has closed the remaining 30 locations that were not selected by buyers.
In a separate transaction, Fleming finalized the acquisition of five Smith's
Food & Drug Stores in El Paso and Las Cruces that will be operated by Fleming
as price-impact stores under the Rainbow banner. In total, the transactions
will generate approximately $175 million in combined distribution revenue for
Fleming.
"This is an extremely innovative transaction and, more importantly, it is
representative of the growth opportunities we see nationwide," said Mark
Hansen, chairman of the board and chief executive officer of Fleming. "By
facilitating the sale of the Furrs stores to a group of outstanding existing
and new customers, we provided a powerful growth vehicle -- by our estimates,
approximately $125 million per year -- to our Lubbock operations.
Additionally, through our purchase of the five Smith's Food & Drug Stores, we
will quickly gain entry into the El Paso and Las Cruces markets for our price-
impact stores while adding an incremental $50 million in volume for our
Lubbock distribution center. And finally, through careful analysis of the
Furrs store locations and potential buyers, we identified the retailers who
were eager buyers of key locations and helped drive our return on invested
capital."
After the purchases by chain and independent store buyers as well as
savings related to the elimination of construction costs for its price-impact
stores in the El Paso and Las Cruces markets, Fleming believes its net
investment in the transactions is approximately $39 million, with an expected
cash-on-cash return on its investment of approximately 30 percent.
Independent retail customers that acquired 16 of the former Furrs
Supermarket locations and will be supplied by the Fleming distribution
operations are:
-- Big 8 Supermarkets -- six locations.
-- Food Basket IGA -- six locations.
-- Lawrence Brothers IGA -- two locations.
-- Jim Nennich, a new Fleming customer -- two locations.
"Fleming is pleased to offer this growth opportunity for independent
retail customers," said Steve Davis, Executive Vice President and President,
Wholesale. "We appreciate their business and are happy to serve these
successful supermarket retailers with these additional store locations. We
are confident that consumers in these communities will be pleased with the
local ownership and customer focus provided by these quality retailers."
Retailers who have taken ownership of the remaining locations are:
-- Smith's Food & Drug -- seven locations.
-- Pay and Save -- five locations.
-- Raley's -- three locations.
-- Safeway -- two locations.
-- Whole Foods -- one location.
Fleming is still determining the disposition of one store in El Paso.
The five El Paso and Las Cruces-area stores, which were acquired from
Smith's in a separate transaction, will be operated by Fleming under the
Rainbow banner. Fleming re-opened the stores on Saturday, September 1, 2001.
"Lowering prices right away and getting the stores re-opened was a top
priority," said Tom Dahlen, President of the Fleming Retail Group. "Working
with the outstanding associates in these stores, we will continue to make
other improvements to the stores over the coming months so that shoppers can
get the full benefits of the Rainbow retail shopping experience. We are very
excited about entering the El Paso and Las Cruces markets and look forward to
earning the business of value-conscious customers in these communities."
Fleming is the industry leader in distribution and has a growing presence
in value retailing. Fleming's primary business is buying and selling
merchandise. The company serves approximately 3,000 supermarkets including
more than 700 North American stores of global supermarketer IGA and other
regional banners, 5,000 convenience stores and more than 2,000 supercenters,
discount, limited assortment, drug, specialty, and other businesses across the
country. To learn more about Fleming, visit our website at http://www.fleming.com .
Safe-Harbor Statement: This release includes forward-looking statements
that (a) project or offer guidance regarding earnings, revenues, or other
financial results, (b) depend on future events for their accuracy, or (c) rely
upon projections and assumptions which may prove to be inaccurate. The
projections were not prepared with a view to compliance with the guidelines
established by the American Institute of Certified Public Accountants
regarding projections. These forward-looking statements and the company's
business and prospects are subject to a number of factors that could cause
actual results to differ materially, including: the ability to achieve the
expected synergies and anticipated cost savings from the Kmart alliance;
unanticipated transition and start-up costs related to the Kmart alliance; the
ability to obtain capital or obtain it on acceptable terms; unanticipated
problems with product procurement; adverse effects of the changing industry
environment and increased competition; sales declines and loss of customers;
exposure to litigation and other contingent losses; unanticipated charges
related to the strategic initiatives plan or failure to achieve the expected
results of such plan; the inability to integrate acquired companies and to
achieve operating improvements at those companies; increases in labor costs
and disruptions in labor relations with union bargaining units representing
the company's employees; and negative effects of the company's substantial
indebtedness and the limitations imposed by restrictive covenants contained in
the company's debt instruments. These and other risk factors are described in
the company's Securities and Exchange Commission reports, including but not
limited to the 10-K Report for the 2000 fiscal year. The company undertakes
no obligation to update forward-looking statements to reflect developments or
information obtained after the date hereof. Adjusted earnings are defined as
earnings excluding strategic plan charges and one-time items.
CONTACTS:
(Media) Shane Boyd 972.906.8824
(Media) Randy Hatcher 972.906.8823
(Investors-Equity) Meredith Anderson 972.906.8592
(Investors-Debt) Matt Hildreth 972.906.8126
SOURCE Fleming
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Related links:
http://www.fleming.com
CONTACT:
media, Shane Boyd, +1-972-906-8824, or Randy
Hatcher, +1-972-906-8823, or investors-equity, Meredith Anderson,
+1-972-906-8592, or investors-debt, Matt Hildreth,
+1-972-906-8126, all of Fleming
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