EXHIBIT 99.1 ------------ NEWS MEDIA CONTACT: PAUL BERNISH, THE KROGER CO. (513) 762-1304 ANALYST CONTACT: KATHY KELLY, THE KROGER CO. (513) 762-4969 RELEASE AVAILABLE ON INTERNET AT WWW.CFONEWS.COM/KR KROGER REPORTS RECORD SECOND QUARTER CASH FLOW, EARNINGS, PER SHARE EARNINGS AND SALES CINCINNATI, Ohio, July 16, 1997 --- The Kroger Co. said today that earnings in the 1997 second quarter, before an extraordinary charge from the early retirement of debt, rose 38 percent to a record $108.1 million, or 41 cents per share, from $78.4 million, or 30 cents per share in the prior year second quarter. For the quarter, operating cash flow -- earnings before interest, taxes, depreciation, and LIFO -- totaled a record $335.8 million, a 19.2 percent increase over the 1996 second quarter. Excluding the effects of the 44-day strike during last year's second quarter at the Company's King Soopers division, operating cash flow increased 8.2 percent. On a strike-adjusted basis, earnings per share in the quarter, before the extraordinary charge, increased 13.9 percent to 41 cents from 36 cents. After the extraordinary charge, net earnings in the second quarter were a record $105.1 million, or 40 cents per share, versus $77.6 million, or 30 cents per share, in last year's second quarter. Total sales in the quarter increased 6.6 percent to a record $6.2 billion. Identical store sales, adjusted for the King Soopers strike, declined 0.1 percent, reflecting the absence of food price inflation and the continuing impact of competition. Comparable store sales, which include results from expanded and relocated stores, increased 3.2 percent, excluding the King Soopers strike. During the quarter, Kroger opened, acquired or expanded 22 stores compared to 21 openings and expansions in the 1996 second quarter. Joseph A. Pichler, Chairman and Chief Executive Officer, said the Company was very pleased with the second quarter performance. "Our results reflect the core strengths of the Company -- a leading share in our major markets, continuing working capital discipline and overall expense control, the favorable impact of Kroger's substantial investments in technology, and the strong performance of Kroger's store brands," Pichler stated. He added that Kroger's manufacturing plants and convenience store group contributed strong results. Net interest expense declined in the second quarter to $68.4 million from $70.5 million in the 1996 second quarter. Net long- term debt declined $227 million to $3.28 billion. THE KROGER CO. SALES AND EARNINGS 2nd QUARTER 2nd QUARTER PERCENT 1997 1996 CHANGE 6/14/97 6/15/96 Sales $6,231,794,078 $ 5,844,365,872 6.6 ============== =============== EBITD <F1> $ 335,835,187 $ 281,820,148 19.2 LIFO $ (3,500,000) $ (3,500,000) Interest $ (68,352,808) $ (70,522,642) Depreciation $ (88,202,769) $ (80,354,023) _______________ ________________ Pre-tax earnings before extraordinary loss $ 175,779,610 $ 127,443,483 37.9 Tax expense $ (67,642,505) $ (49,065,741) _______________ ________________ Earnings before extraordinary loss $ 108,137,105 $ 78,377,742 38.0 Extraordinary loss <F2> $ (3,032,848) $ (765,601) _______________ ________________ Net earnings $ 105,104,257 $ 77,612,141 =============== ================ Fully diluted earnings per common share: From operations $0.41 $0.30 36.7 From extraordinary loss <F2> ($0.01) ($0.00) _______________ __________________ Fully diluted net earnings per common share $0.40 $0.30 =============== ================== Number of common shares used in fully diluted per share calculation 266,947,041 262,288,598 <F1> EBITD represents pre-tax earnings before interest, depreciation and LIFO but after the costs associated with the adoption of FASB 106. <F2> Represents the after-tax loss from the early retirement of debt. 2 QUARTERS 2 QUARTERS PERCENT 1997 1996 CHANGE 6/14/97 6/15/96 Sales $12,371,206,735 $11,628,619,682 6.4 ============== =============== EBITD <F1> $ 645,470,990 $ 555,963,236 16.1 LIFO $ (8,000,000) $ (7,000,000) Interest $ (138,099,641) $ (141,148,561) Depreciation $ (173,575,767) $ (155,997,159) _______________ ________________ Pre-tax earnings before cumulative effect adjustment and extraordinary loss $ 325,795,582 $ 251,817,516 29.4 Tax expense $ (125,398,654) $ (96,949,743) _______________ ________________ Earnings before extraordinary loss $ 200,396,928 $ 154,867,773 29.4 Extraordinary loss <F2> $ (8,242,853) $ (1,849,715) _______________ ________________ Net earnings $ 192,154,075 $ 153,018,058 =============== ================ Fully diluted earnings (loss) per common share: From operations $0.75 $0.59 27.1 From extraordinary loss <F2> ($0.03) ($0.01) _______________ __________________ Fully diluted net earnings per common share $0.72 $0.58 =============== ================== Number of common shares used in fully diluted per share calculation 267,348,857 261,755,002 <F1> EBITD represents pre-tax earnings before interest, depreciation and LIFO but after the costs associated with the adoption of FASB 106. <F2> Represents the after-tax loss from the early retirement of debt.