DALLAS, May 9 /PRNewswire/ -- Fleming Companies, Inc. (NYSE: FLM) today
reported a 44.2 percent increase in first quarter 2001 net earnings to
$17.2 million, or $0.41 per share after adjustments to exclude strategic plan
charges and one-time items, compared to $11.9 million, or $0.30 per share, in
the first quarter of 2000. First quarter adjusted operating earnings of
$76.5 million, or 1.84 percent of sales, increased 15.9 percent from
$66.0 million, or 1.52 percent of sales.
"We are off to an outstanding start for 2001," said Mark Hansen, chairman
of the board and chief executive officer of Fleming. "Our first quarter 2001
results are particularly satisfying because our 44 percent improvement comes
on top of a 56 percent increase in the prior year's first quarter. We
continue to successfully execute on our core strategies of high volume, low-
cost operations backed up with the scale and efficiencies generated by our
central procurement program."
Total company net sales for the 16-week first quarter were $4.16 billion,
compared to $4.33 billion in the prior year. Distribution segment net sales
increased 1.5% to $3.32 billion, up from $3.27 billion in the prior year. The
increase was attributable to growth in sales to both conventional food retail
and new retail channel customers and are on track with the company's growth
plans. "Our marketing teams have done an outstanding job generating growth in
our distribution business, especially in light of a generally soft retail
environment," said Mr. Hansen. "Our national footprint of distribution
centers, coupled with our highly-productive operations and the benefits of our
central procurement and high-quality private label brand, have created a
compelling offering."
As expected, retail segment sales declined to $842.6 million from
$1.06 billion in the prior year's first quarter as the company continued the
disposition of conventional retail stores in favor of its price-impact retail
operations. In the course of implementing its strategic initiatives, the
company has sold or closed 207 conventional supermarkets since the beginning
of 1999, with only 31 stores remaining to be sold or closed at the end of the
first quarter. Most of these stores are currently under contract to be sold.
Comparable store sales for the Food4Less and Rainbow Foods stores were up
1.1 percent.
Adjusted operating earnings were sharply higher for both the distribution
and retail segments of the business. Distribution earnings increased
21.9 percent to $114.6 million (3.45 percent of sales) from $94.0 million
(2.87 percent of sales), reflecting the increased efficiencies and
improvements resulting from the strategic initiatives undertaken by the
company. Retail earnings improved from $17.8 million to $34.5 million due to
the improved results in the company's Food4Less and Rainbow stores as well as
the disposition of underperforming conventional retail operations.
Gross margins increased in the distribution and retail segments by
34 basis points and 76 basis points, respectively. The gross margin increases
reflect the benefits of the company's central procurement and warehouse
productivity measures, both significant strategic initiatives undertaken
during the past year. "We initiated the implementation of our three-tier
distribution system model in our Minneapolis and La Crosse facilities during
the first quarter," said Mr. Hansen. "The efficiencies we now achieve with
our high-velocity case-pick center in Minneapolis, supplemented with our
super-regional facility in LaCrosse, are remarkable. We clearly have a
working blueprint now for the future roll-out of our very productive and
efficient three-tier distribution model throughout our operations."
Selling and administrative expenses declined in both the distribution and
retail businesses. In the distribution segment, selling and administrative
expenses decreased as efficiencies were gained and low-cost pursuit
initiatives were realized. Selling and administrative expenses in the retail
segment were also substantially improved as higher-cost retail operations were
disposed and the results principally reflected the lower cost structure of the
company's continuing retail operations. "Our retail operating results
demonstrate the advantage of our laser-like focus on the price-impact retail
proposition," said Mr. Hansen. "Positive comparable sales in both the
Food4Less and Rainbow Foods operations, backed up by the operating
efficiencies of these low-cost formats, confirm our decision to focus on
price-impact retail. What is perhaps most important is that our low-cost
distribution operations are a perfect match for our price-impact stores. The
same warehouses that serve the company's wholesale distribution customers are
capable of serving Food4Less, Rainbow, and Yes!Less at the low costs mandated
by these formats. This is unique in the industry." The company is on track
for the addition of approximately 20 price-impact supermarkets this year with
the recent acquisition of seven stores in northern California and the
conversion of four former Sentry stores currently underway and four more
scheduled to begin conversion this month. The company's Yes!Less limited
assortment concept continues to move forward with five new stores opened
during the quarter.
Administrative expenses from support services increased, representing the
continuing consolidation of accounting, human resources, and information
technology into the Shared Services Center and the centralization of
procurement into the Customer Support Center. These moves are consistent with
the company's stated strategic vision and have been substantially completed at
this time.
As expected, strategic plan charges and one-time items (excluding the
extraordinary charge for early retirement of debt) were down substantially for
the first quarter and totaled $2.4 million pre-tax compared to $63.8 million
pre-tax in the prior year. The company continues to expect a total of
$20 million in strategic plan charges in 2001, compared to $309 million in
2000.
The company provided new guidance for 2001 projected earnings of $1.96 per
share. "We are very pleased by the outstanding results we have achieved in
the first quarter and the upward revision in our guidance reflects the first
quarter's results while remaining mindful of the work that lies ahead
throughout 2001," said Mr. Hansen.
During the quarter the company successfully completed offerings of
$355 million of senior notes to mature on April 1, 2008, with a coupon of
10.125% and $150 million of senior subordinated convertible notes due
March 15, 2009, with a coupon of 5.25%. The new senior notes replaced
$300 million of senior notes that would have matured on December 15, 2001,
with a coupon of 10.625%. The company incurred an extraordinary charge from
the early retirement of debt (net of taxes) of $3.5 million, or $.08 per
share.
Unadjusted, the company had net earnings before the extraordinary charge
of $15.5 million, or $.37 per share, and net earnings after the extraordinary
charge of $12.0 million, or $.29 per share.
Conference Call and Webcast
A teleconference and webcast to review the first quarter's results will be
held on Wednesday, May 9, 2001, at 10:00 a.m. Central Standard Time. To
access the call, dial in to the conference line at 913.981.4900. Interested
parties may listen to the conference call over the Internet on the company's
website at http://www.fleming.com . Additionally, the teleconference will be
available for replay until May 23, 2001 at 5:00 p.m. Central Standard Time by
dialing 402.280.9273, confirmation code 530160.
About Fleming Companies, Inc.
Fleming is an industry leader in distribution and has a growing presence
in price-impact retail. Fleming's primary business is buying and selling
merchandise. Through our distribution group, we distribute products to
customers that operate approximately 3,000 supermarkets, 3,000 convenience
stores, and nearly 1,000 supercenters, discount, limited assortment, drug,
specialty, and other stores across the United States.
Safe-Harbor Statement
This release, including the attached tables, includes statements that (a)
predict or forecast future events or results, (b) depend on future events for
their accuracy, or (c) embody projections and assumptions which may prove to
have been inaccurate, including expectations for years 2001 and beyond. 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 projections, 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 in the supply chain due to the increased volumes from the Kmart
alliance; adverse effects of the changing industry environment and increased
competition; sales declines and loss of customers; disruption caused by
implementation of strategic alternatives regarding conventional retail;
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; failure of the company to achieve necessary cost
savings; 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 factors are described in the company's
periodic reports available from the Securities and Exchange Commission.
(Tables 1 through 3 follow)
Fleming Companies, Inc. (NYSE: FLM)
Consolidated Condensed Statements of Operations
For the 16 weeks ended April 21, 2001,
and April 15, 2000
(In thousands, except per share amounts)
2001
Reported Adjustments Adjusted
(A)
Net sales (B) $4,161,191 $1,661 $4,162,852
% change -3.9%
Costs and expenses:
Cost of sales (B) 3,794,947 (17,856) 3,777,091
Selling and administrative 317,313 (8,056) 309,257
Interest expense 57,502 (2,833) 54,669
Interest income (9,272) 1,102 (8,170)
Equity investment results 351 351
Impairment/restructuring charge (26,859) 26,859 ---
Total costs and expenses 4,133,982 (784) 4,133,198
Income (loss) before taxes 27,209 2,445 29,654
Taxes on income (loss) 11,743 713 12,456
Income (loss) before extraordinary
charge 15,466 1,732 17,198
Extraordinary charge from early
retirement of debt (net of taxes) (3,469) 3,469 ---
Net income (loss) $11,997 $5,201 $17,198
% change 44.2%
Basic income (loss) per share:
Income (loss) before extraordinary
charge $0.39 $0.04 $0.43
Extraordinary charge from early
retirement of debt (net of taxes) (0.09) 0.09 ---
Net income (loss) $0.30 $0.13 $0.43
Diluted income (loss) per share:
Income (loss) before extraordinary
charge $0.37 $0.04 $0.41
Extraordinary charge from early
retirement of debt (net of taxes) (0.08) 0.08 ---
Net income (loss) $0.29 $0.12 $0.41
% change 36.7%
Dividends paid per share $0.02 $0.02
Weighted average shares outstanding:
Basic 40,190 40,190
Diluted 42,245 42,245
Additional information:
Operating earnings $48,931 27,573 $76,504
% of sales 1.84%
% change 15.9%
Depreciation and amortization $50,667 --- $50,667
Goodwill amortization (included above) $6,281 --- $6,281
Diluted EPS effect $0.12
EBITDA (C) $136,729 (388) $136,341
% of sales 3.28%
% change 6.3%
Fleming Companies, Inc. (NYSE: FLM)
Consolidated Condensed Statements of Operations (Continued)
For the 16 weeks ended April 21, 2001,
and April 15, 2000
(In thousands, except per share amounts)
2000
Reported Adjustments Adjusted
(A)
Net sales (B) $4,331,498 $181 $4,331,679
% change
Costs and expenses:
Cost of sales (B) 3,914,824 (13,673) 3,901,151
Selling and administrative 372,307 (7,806) 364,501
Interest expense 53,101 53,101
Interest income (9,505) (9,505)
Equity investment results 1,891 (28) 1,863
Impairment/restructuring charge 42,145 (42,145) ---
Total costs and expenses 4,374,763 (63,652) 4,311,111
Income (loss) before taxes (43,265) 63,833 20,568
Taxes on income (loss) (17,392) 26,034 8,642
Income (loss) before extraordinary
charge (25,873) 37,799 11,926
Extraordinary charge from early
retirement of debt (net of taxes) --- ---
Net income (loss) $(25,873) $37,799 $11,926
% change
Basic income (loss) per share:
Income (loss) before extraordinary
charge $(0.67) $0.98 $0.31
Extraordinary charge from early
retirement of debt (net of taxes) --- --- ---
Net income (loss) $(0.67) $0.98 $0.31
Diluted income (loss) per share:
Income (loss) before extraordinary
charge $(0.67) $0.98 $0.30
Extraordinary charge from early
retirement of debt (net of taxes) --- --- ---
Net income (loss) $(0.67) $0.98 $0.30
% change
Dividends paid per share $0.02 $0.02
Weighted average shares outstanding:
Basic 38,515 38,515
Diluted 38,515 39,452
Additional information:
Operating earnings $44,367 21,660 $66,027
% of sales 1.52%
% change
Depreciation and amortization $53,749 (4,395) $49,354
Goodwill amortization (included above) $6,301 --- $6,301
Diluted EPS effect $0.13
EBITDA (C) $68,876 59,410 $128,286
% of sales 2.96%
% change
(A) Adjustments relate to the strategic plan which was announced in
December, 1998 and one-time adjustments. Charges related to the
strategic plan include non-cash impairments or impairment adjustments
of asset values and cash restructuring costs for severance, lease
termination, real estate disposition costs for discontinued
operations and other related expenses. The one-time adjustments for
2001 include $2.0 million in charges from litigation settlements and
net additional interest expense of $1.7 million due to the early
retirement of debt. There were no one-time adjustments for 2000.
(B) Sales of distribution and total company have been restated for
quarters prior to quarter 4, 2000 due to adoption of SAB 101 and
EITF 99-19. Offset is cost of sales; gross margin is not affected.
(C) EBITDA is earnings before interest expense, income taxes,
depreciation and amortization, equity investment results, and LIFO
charge ($1,000 in 2001 and $3,400 in 2000).
Fleming Companies, Inc. (NYSE: FLM)
For the 16 weeks ended April 21, 2001,
Segment Information and April 15, 2000
Income (Loss) (In thousands, except per share amounts)
2001
Reported Adjustments Adjusted
Distribution
Gross sales * $3,742,599 $3,203 $3,745,802
Intersegment elimination * (425,527) --- (425,527)
Net sales * $3,317,072 $3,203 $3,320,275
% change 1.5%
Gross margin $189,851 $4,207 $194,058
% of distribution gross sales 5.18%
Selling and administrative (64,106) 977 (63,129)
% of distribution gross sales -1.69%
Intersegment elimination (16,344) --- (16,344)
Operating earnings $109,401 $5,184 $114,585
% of distribution net sales 3.45%
% change 21.9%
EBITDA $141,612 $7,444 $149,056
% of distribution net sales 4.49%
% change 20.1%
Retail
Net sales $844,119 $(1,542) $842,577
% change -20.6%
Gross margin $186,422 $14,513 $200,935
% of retail sales 23.85%
Selling and administrative (186,458) 3,704 (182,754)
% of retail sales -21.69%
Intersegment profit 16,344 --- 16,344
Operating earnings $16,308 $18,217 $34,525
% of retail sales 4.10%
% change 94.3%
EBITDA $66,868 $(12,548) $54,320
% of retail sales 6.45%
% change 25.4%
Support Services
Gross margin $(10,029) $797 $(9,232)
% of total company sales -0.22%
Selling and administrative (66,749) 3,375 (63,374)
% of total company sales -1.52%
Operating earnings $(76,778) $4,172 $(72,606)
% of total company sales -1.74%
EBITDA $(71,751) $4,716 $(67,035)
% of total company sales -1.61%
Fleming Companies, Inc. (NYSE: FLM)
For the 16 weeks ended April 21, 2001,
Segment Information (Continued) and April 15, 2000
Income (Loss) (In thousands, except per share amounts)
2000
Reported Adjustments Adjusted
Distribution
Gross sales * $3,842,599 $181 $3,842,780
Intersegment elimination * (572,214) --- (572,214)
Net sales * $3,270,385 $181 $3,270,566
% change
Gross margin $177,870 $8,214 $186,084
% of distribution gross sales 4.84%
Selling and administrative (74,668) 2,564 (72,104)
% of distribution gross sales -1.88%
Intersegment elimination (19,968) --- (19,968)
Operating earnings $83,234 $10,778 $94,012
% of distribution net sales 2.87%
% change
EBITDA $89,834 $34,305 $124,139
% of distribution net sales 3.80%
% change
Retail
Net sales $1,061,113 $--- $1,061,113
% change
Gross margin $240,206 $4,768 $244,974
% of retail sales 23.09%
Selling and administrative (247,973) 798 (247,175)
% of retail sales -23.29%
Intersegment profit 19,968 --- 19,968
Operating earnings $12,201 $5,566 $17,767
% of retail sales 1.67%
% change
EBITDA $26,757 $16,576 $43,333
% of retail sales 4.08%
% change
Support Services
Gross margin $(1,402) $872 $(530)
% of total company sales -0.01%
Selling and administrative (49,666) 4,444 (45,222)
% of total company sales -1.04%
Operating earnings $(51,068) $5,316 $(45,752)
% of total company sales -1.06%
EBITDA $(47,715) $8,529 $(39,186)
% of total company sales -0.90%
* Sales of distribution and total company have been restated for quarters
prior to quarter 4, 2000 due to adoption of SAB 101 and EITF 99-19.
Offset is cost of sales; gross margin is not affected.
Fleming Companies, Inc. (NYSE: FLM)
Consolidated Condensed Balance Sheet Information
(In thousands)
April 21, December 30,
2001 2000
Assets
Cash and cash equivalents $27,273 $30,380
Receivables, net 490,671 509,045
Inventory 779,249 831,265
Other current assets 137,472 252,383
Total current assets 1,434,665 1,623,073
Property and equipment, net 695,518 716,457
Other assets 1,046,045 1,063,281
Total assets $3,176,228 $3,402,811
Liabilities and shareholders' equity
Accounts payable $730,081 $943,279
Other current liabilities 254,384 289,109
Total current liabilities 984,465 1,232,388
Long-term debt and capital lease
obligations 1,579,415 1,609,639
Other liabilities 118,454 133,592
Shareholders' equity 493,894 427,192
Total liabilities and
shareholders' equity $3,176,228 $3,402,811
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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