SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 9, 1994
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 1-8140
FLEMING COMPANIES, INC.
(Exact name of registrant as specified in its charter)
OKLAHOMA 48-0222760
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6301 Waterford Boulevard, Box 26647
Oklahoma City, Oklahoma 73126
(Address of principal executive offices) (Zip Code)
(405) 840-7200
(Registrant's telephone number, including area code)
_____________________________________________________________________
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes X No ___
The number of shares outstanding of each of the issuer's classes of
common stock, as of August 6, 1994 is as follows:
Class Shares Outstanding
Common stock, $2.50 par value 37,285,000
FLEMING COMPANIES, INC.
INDEX
Page No.
Part I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Condensed Statements of Earnings -
12 Weeks Ended July 9, 1994,
and July 10, 1993 3
Consolidated Condensed Statements of Earnings -
28 Weeks Ended July 9, 1994,
and July 10, 1993 4
Consolidated Condensed Balance Sheets -
July 9, 1994, and December 25, 1993 5
Consolidated Condensed Statements of Cash Flows -
28 Weeks Ended July 9, 1994,
and July 10, 1993 6
Notes to Consolidated Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Consolidated Condensed Statements of Earnings
For the 12 weeks ended July 9, 1994, and July 10, 1993
(In thousands, except per share amounts)
- - --------------------------------------------------------------
Second Interim Period 1994 1993
- - --------------------------------------------------------------
Net sales $2,883,648 $2,964,655
Costs and expenses:
Cost of sales 2,699,029 2,787,087
Selling and administrative 144,157 121,366
Interest expense 16,365 17,804
Interest income (11,811) (14,469)
Equity investment results 2,640 805
Facilities consolidation --- 6,500
--------- ---------
Total costs and expenses 2,850,380 2,919,093
--------- ---------
Earnings before taxes 33,268 45,562
Taxes on income 14,671 18,726
---------- ----------
Net earnings $ 18,597 $ 26,836
---------- ----------
Net earnings per share $.50 $.73
Dividends paid per share $.30 $.30
Weighted average shares
outstanding 37,247 36,780
Sales to customers accounted for under the equity method were
approximately $403 million and $375 million in 1994 and 1993,
respectively.
Fleming Companies, Inc. See notes to consolidated condensed financial
statements.
Consolidated Condensed Statements of Earnings
For the 28 weeks ended July 9, 1994, and July 10, 1993
(In thousands, except per share amounts)
______________________________________________________________
Year to Date 1994 1993
______________________________________________________________
Net sales $6,915,629 $7,009,549
Costs and expenses:
Cost of sales 6,476,997 6,590,632
Selling and administrative 345,692 292,259
Interest expense 38,194 41,285
Interest income (28,064) (33,017)
Equity investment results 5,897 2,872
Facilities consolidation --- 6,500
---------- ----------
Total costs and expenses 6,838,716 6,900,531
---------- ----------
Earnings before taxes 76,913 109,018
Taxes on income 33,919 44,807
---------- ----------
Net earnings $ 42,994 $ 64,211
========== ==========
Net earnings per share $1.16 $1.75
Dividends paid per share $.60 $.60
Weighted average shares
outstanding 37,149 36,747
Sales to customers accounted for under the equity method were
approximately $838 million and $839 million in 1994 and 1993,
respectively.
Fleming Companies, Inc. See notes to consolidated condensed financial
statements.
Consolidated Condensed Balance Sheets
(In thousands)
______________________________________________________________
July 9, December 25,
Assets 1994 1993
______________________________________________________________
Current assets:
Cash and cash equivalents $ 6,689 $ 1,634
Receivables 272,745 301,514
Inventories 804,583 923,280
Other current assets 97,582 134,229
---------- ----------
Total current assets 1,181,599 1,360,657
Investments and notes
receivable 344,450 309,237
Investment in direct
financing leases 236,958 235,263
Property and equipment 1,034,001 1,061,905
Less accumulated depreciation
and amortization 416,110 426,846
---------- ---------
Property and equipment, net 617,891 635,059
Other assets 106,478 90,633
Goodwill 462,242 471,783
---------- ----------
Total assets $2,949,618 $3,102,632
========== ==========
Liabilities and Shareholders' Equity
______________________________________________________________
Current liabilities:
Accounts payable $ 706,412 $ 682,988
Current maturities of long-term
debt 42,823 61,329
Current obligations under capital
leases 14,167 13,172
Other current liabilities 138,798 161,043
---------- ----------
Total current liabilities 902,200 918,532
Long-term debt 507,484 666,819
Long-term obligations under capital
leases 349,588 337,009
Deferred income taxes 16,599 27,500
Other liabilities 88,318 92,366
Shareholders' equity:
Common stock, $2.50 par value
per share 93,208 92,350
Capital in excess of
par value 491,574 489,044
Reinvested earnings 513,053 492,250
Cumulative currency translation
adjustment (359) (288)
---------- ----------
1,097,476 1,073,356
Less guarantee of ESOP debt 12,047 12,950
---------- ----------
Total shareholders'
equity 1,085,429 1,060,406
---------- ----------
Total liabilities and shareholders'
equity $2,949,618 $3,102,632
========== ==========
Receivables include $43 million and $48 million in 1994 and 1993,
respectively, due from customers accounted for under the equity method.
Fleming Companies, Inc. See notes to consolidated condensed financial
statements.
Consolidated Condensed Statements of Cash Flows
For the 28 weeks ended July 9, 1994, and July 10, 1993
(In thousands)
______________________________________________________________
1994 1993
______________________________________________________________
Net cash provided by operating
activities $277,710 $130,064
Cash flows from investing
activities:
Collections on notes
receivable 41,319 57,462
Notes receivable funded (66,677) (81,727)
Proceeds from sale of
business 6,682 ---
Purchase of property and
equipment (38,164) (23,136)
Proceeds from sale of property
and equipment 4,535 1,301
Investments in customers (12,764) (26,057)
Proceeds from sale of
investments 4,082 5,566
Other investing activities (2,992) (607)
-------- --------
Net cash used in investing
activities (63,979) (67,198)
-------- --------
Cash flows from financing
activities:
Proceeds from long-term
borrowings 155,000 260,502
Principal payments on
long-term debt (331,938) (290,857)
Principal payments on capital
lease obligations (6,629) (5,943)
Sale of common stock under
incentive stock and stock
ownership plans 3,388 3,635
Dividends paid (22,192) (22,039)
Other financing activities (6,305) (1,298)
-------- --------
Net cash used in
financing activities (208,676) (56,000)
-------- --------
Net increase in cash and cash
equivalents 5,055 6,866
Cash and cash equivalents,
beginning of period 1,634 4,712
-------- --------
Cash and cash equivalents,
end of period $ 6,689 $ 11,578
______________________________________________________________
Supplemental information:
Cash paid for interest $38,553 $41,614
Cash paid for taxes $28,123 $53,558
Fleming Companies, Inc. See notes to consolidated condensed financial
statements.
Notes to Consolidated Condensed Financial Statements
1. The consolidated condensed balance sheet as of July 9, 1994,
and the consolidated condensed statements of earnings and cash flows
for the 12- and 28-week periods ended July 9, 1994, and July 10, 1993,
have been prepared by the company, without audit. In the opinion of
management, all adjustments necessary to present fairly the company's
financial position at July 9, 1994, and the results of operations and
cash flows for the periods presented have been made. All such
adjustments are of a normal, recurring nature. Primary earnings per
share are calculated using the weighted average shares outstanding.
The impact of outstanding stock options on primary earnings per share
is not material.
2. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. These
consolidated condensed financial statements should be read in
conjunction with the consolidated financial statements and related
notes included in the company's 1993 annual report on Form 10-K.
3. The LIFO method of inventory valuation is used for
determining the cost of substantially all grocery and certain
perishable inventories. The excess of current cost of LIFO
inventories over their stated value was $10.1 million at July 9, 1994,
and $12.5 million at December 25, 1993.
4. A subsidiary of the company has been named among numerous
defendants in two suits filed in U.S. District Court in Miami in
December 1993. The plaintiffs allege liability as a consequence of an
alleged fraudulent scheme conducted by Premium Sales Corporation and
others in which unspecified but large losses in the Premium-related
entities occurred to the detriment of a purported class of investors
which has brought one of the suits. The other suit is by the
receiver/trustee of the estates of Premium and certain of its
affiliated entities.
Both actions are in their early procedural stages and the
ultimate outcome cannot presently be determined. Accordingly, no
provision for liability, if any, has been made in the accompanying
financial statements.
5. On July 19, 1994, Fleming acquired Haniel Corporation, the
parent of Scrivner, Inc. Fleming paid $388 million in cash for the
stock of Haniel and refinanced substantially all of Haniel's and
Scrivner's pre-existing debt of approximately $680 million. The
acquisition will be accounted for under the purchase method of
accounting, and results of operations and the financial position of
Scrivner will be reflected in the third quarter.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
On July 19, 1994 Fleming acquired Haniel Corporation ("Haniel"),
the owner of all the outstanding stock of Scrivner, Inc. ("Scrivner").
Scrivner is the third largest food wholesaler and the 26th largest
food retailer in the United States, serving approximately 2,900
supermarkets and 1,900 convenience stores in 28 states. Scrivner also
owns and operates 183 corporate retail food stores, of which 29 are
convenience stores. The acquisition will add facilities and inventory
of 21 distribution centers with seven million square feet of storage,
plus two million square feet of outside storage. The acquired
transportation fleet consists of 900 tractors and 1,500 trailers,
principally owned.
Fleming paid $388 million in cash for the equity of Haniel and
refinanced approximately $680 million of Haniel and Scrivner debt.
Fleming also refinanced approximately $400 million of its own debt.
The refinancing will be completed during the approximately 60-day
period following the purchase date. Acquisition transaction expenses
are estimated at $40 million. The acquisition was financed through a
$2.2 billion credit agreement with a group of banks led by Morgan
Guaranty Trust Company of New York as the Managing Agent. The credit
agreement has three components: a $900 million five-year revolving
credit facility, an $800 million six-year amortizing term loan and a
$500 million two-year loan. Current borrowings under the credit
agreement total $1.47 billion - the $800 million and $500 million
facilities are fully drawn, with $170 million drawn on the $900
million facility. When the new credit agreement was signed, Fleming
terminated its $400 million and $200 million credit agreements.
The credit facility required the company to pledge the stock of
its subsidiaries, including Scrivner, and substantially all of the
inventory and accounts receivable of Fleming and its subsidiaries.
Release of the collateral is conditioned upon the earlier of repayment
of the debt and the cancellation of the commitments thereunder, or
Fleming's senior unsecured debt returning to investment grade as rated
by Standard and Poor's and Moody's. These credit ratings were recent-
ly downgraded from investment grade as a result of the additional debt
incurred in the acquisition.
The company's principal sources of liquidity are cash flows from
operating activities and the credit agreement described above.
Operating activities generated $277.7 million of cash flows for the
first 28 weeks of 1994. The increase compared to 1993 is principally
due to cash provided by a larger reduction of inventory and accounts
payable during the 1994 period compared to 1993. Management believes
that cash flows from operating activities and the company's access to
debt and equity capital markets, including its ability to borrow under
the credit agreement, will be adequate to meet working capital needs.
Working capital was $279 million at quarter end, a decrease of
$163 million from year-end 1993. The current ratio decreased to 1.31
to 1 at quarter end compared to 1.48 to 1 at year end. The
debt-to-capital ratio decreased slightly to 46%, below the company's
long-term target ratio of approximately 50%. Total debt and capital
leases were essentially the same as 1993 year end at $1.08 billion.
The Scrivner group acquisition will increase the debt-to-capital ratio
to approximately 66% as a result of additional debt required to fund
the acquisition and debt assumed.
Capital expenditures year to date were approximately $39
million. Management expects that 1994 capital expenditures, excluding
acquisitions, will approximate $135 million. The higher estimated
spending compared to the first quarter estimate of $90 million to $100
million is due to estimated capital expenditures required for the
Scrivner group during the balance of the year.
The company's long-term debt agreements contain various
covenants and restrictions including restrictions on additional
indebtedness, payment of cash dividends and acquisition of the
company's common stock. None of these covenants negatively impacts
the company's liquidity or capital resources at this time. Under the
most restrictive covenants, reinvested earnings of approximately $98
million were available at quarter end for cash dividends and
acquisition of the company's stock.
Results of Operations
Results beginning with the third quarter 1994 will be materially
affected by the acquisition of Scrivner as discussed above. In 1993,
Scrivner had annual sales of $6 billion, with earnings of $22 million.
Interest expense also will increase materially as a result of the
additional indebtedness related to the acquisition. Amortization of
goodwill created by the acquisition will significantly increase
compared to previous levels of amortization. Pro forma financial
statements required to be filed as part of Form 8-K will be filed as
soon as practicable.
Management has determined that up to eight distribution centers
of the 52 facilities now operated by Fleming will be closed due to the
acquisition. The operations of closed locations will be assimilated
into other distribution centers. The facilities that will be closed
are likely to consist of both Scrivner and existing Fleming centers.
Management has announced that three Scrivner distribution centers,
located in Donna and Victoria, Texas and Montgomery, Alabama, will be
closed in 1994. The charge related to the closing of the distribution
centers operated by Scrivner is considered a direct cost of the
acquisition and will increase goodwill. If a closed distribution
center was operated by Fleming before the acquisition, the charge will
be to current period earnings. Management has not yet determined the
cost of closing the facilities or the related charge to earnings.
Assimilation of the Scrivner group is expected to occur as soon
as possible. An executive vice-president of Fleming has been given
the responsibility of combining the two companies into a single
entity. The process is expected to take approximately eighteen months
and eliminate overlapping functions.
Net sales for the second quarter and year-to-date periods in
1994 compared to the respective periods in 1993 declined by 2.7% and
1.3%, respectively. The decrease in sales was caused by the
anticipated loss of the Albertson's business as its distribution
center came on line, the sale of the Royal New Jersey facility, and
the loss of a large customer at one of the company's distribution
centers. These losses were partially offset by the addition of
business from Kmart, Megafoods in the San Antonio area (see "Recent
events") and Randall's/Tom Thumb and Florida retail operations
acquired in the fourth quarter of 1993.
Sales performance was adversely impacted by declines of 6.7% and
4.3% for the quarter and year to date, respectively, in the tonnage of
food products handled by the company, due to the difficult retail
environment.
Gross margin for the quarter was 6.40% of total sales, compared
to 5.99% in 1993, representing an improvement of $7.1 million. For
the year-to-date period, gross margin improved by $19.7 million, or 36
basis points, rising to 6.34% of total sales. The principal reasons
for the increase are consistent for both quarter and year-to-date
results. Retail food stores' gross margin contribution is higher than
the comparable periods in 1993, with higher sales generating the
increase. Retail operations typically have a higher gross margin
than wholesale operations. Product handling expenses, which consist
of warehouse, truck and building expenses, also improved in both
periods compared to 1993. This is due in part to the positive impact
of the company's facilities consolidation program. Transportation
fees charged to customers increased compared to prior year periods.
Revenue generated by transportation operations also improved due to
higher recovery for freight fees charged in some of the company's
arrangements with customers. Credits to income resulting from the
LIFO method of inventory valuation were lower in both periods. The
margin on product sales declined in both periods.
Sales of perishable products, such as meats, produce, dairy and
deli products, and frozen foods were 42.1% of the sales mix during the
second quarter, down slightly from 1993. Year to date, the percentage
increased somewhat from 1993 to 42.5%. Perishable products typically
provide a higher gross margin both for the company and retailers.
Selling and administrative expenses increased by $22.8 million
and $53.4 million for the quarter and year-to-date periods in 1994
compared to 1993. These increases were due primarily to higher retail
expenses related to more retail operations. The acquisition of
Florida retail operations is the principal contributor to the increase
since they were not in last year's results. This effect will continue
through the third quarter of 1994. Also contributing to the increase
is the absence in 1994 of certain nonrecurring income items, netting
to approximately $12.6 million, recorded in 1993.
As more fully described in its 1993 Annual Report on Form 10-K,
the company has a significant amount of credit extended to its
customers through various methods. These methods include customary
and extended credit terms for inventory purchases, secured loans with
terms generally up to ten years, and equity investments in and secured
and unsecured loans to certain customers. In addition, the company
guarantees debt and lease obligations of certain customers. Usually
these capital investments are made in and guarantees extended to
customers with whom the company enjoys long-term supply agreements.
Credit loss expense included in selling and administrative
expenses was $12.8 million and $27.8 million, or 44 and 40 basis
points for the 12- and 28-week periods, respectively, in 1994. When
compared to the respective periods in 1993, this represents an
increase of 14 and 13 basis points. Increased credit losses are
consistent with the first quarter's experience, with retailers being
affected by the difficult retail environment. Management has begun to
implement plans to de-emphasize credit extensions to and investments
in customers. Credit loss experience for the full year 1994 before
the effects of the Scrivner acquisition, is expected to be only
slightly lower than that experienced in 1993.
Interest expense decreased 8.1% and 7.5% during the quarter and
year to date versus the respective periods in 1993. The improvement
is primarily due to lower average borrowing levels. The indebtedness
incurred to finance the Scrivner acquisition, the existing Scrivner
debt assumed by Fleming and the recent downgrade in the company's
credit rating will cause a material increase in interest expense.
The company enters into financial instrument derivatives as a
method of hedging its interest rate exposure. During July 1994,
management terminated all of its outstanding derivatives at an
immaterial net gain, which will be amortized over the term of the
related derivative instrument. As part of the credit agreement,
management is required to provide interest rate protection on a
substantial portion of outstanding indebtedness under that agreement.
As part of its program to manage interest rate exposure across a range
of maturities, management has entered into interest rate swaps and
caps covering $700 million of floating-rate debt.
Interest income in 1994 declined by $2.7 million and $5 million
for the 12- and 28-week periods, respectively, compared to 1993. The
interest charged is generally a variable rate. The decreases are due
to a lower average level of notes receivable and direct financing
leases in 1994, combined with lower average interest rates. The
company has sold certain notes receivable with limited recourse and
may do so again in the future.
Equity investment results generated losses of $2.6 million and
$5.9 million compared to $.8 million and $2.9 million for the 12- and
28-week periods in 1994 compared to the respective periods in 1993.
Business development ventures continued to show improved results, but
losses from retail stores accounted for under the equity method that
are part of the company's equity store program more than offset this
improvement.
The company's effective tax rate increased to 44.1%, primarily
as a result of a higher federal tax rate due to the tax law enacted in
1993. The annual effective tax rate is expected to increase to 47.1%
beginning in the third quarter. The increase is due to lower than
planned earnings for the remainder of 1994, Scrivner group operations
in states with higher tax rates, and increased goodwill amortization
with no related tax deduction. The 47.1% annual rate will result in a
third quarter rate of approximately 50%.
Earnings for the 12 weeks were $18.6 million, down 30.7% from
the same period in 1993. Year to date, earnings were $43 million, a
decrease of 33% compared to 1993. Earnings per share for the 12- and
28-week periods were $.50 and $1.16 in 1994 compared to $.73 and
$1.75, respectively, in 1993.
The company's facilities consolidation and restructuring plan is
progressing as anticipated. As previously disclosed, regional
operations were eliminated in early 1994, and the five regional
offices have been closed, with approximately 100 jobs eliminated.
Facilities consolidation efforts have resulted in closing of four of
the five planned distribution centers: Ft. Worth, Texas; Topeka,
Kansas; Joplin, Missouri and Tupelo, Mississippi. The closures have
resulted in approximately 550 associate terminations. No material
reduction of revenues has resulted. The increases in gross margin,
specifically a reduction in product handling expenses, have resulted
from the facilities consolidation actions. It is not practical to
separately quantify the benefit resulting from the plan.
The schedule for implementation of the re-engineering component
of the plan has been altered. The plan is complex and, principally in
light of the Scrivner group acquisition, management has slowed re-
engineering implementation by six months. Management is continuing
implementation despite the magnitude of the effort that will be
required to integrate operations of the Scrivner group. It is
possible that all the actions contemplated by re-engineering may not
be completed within the time frame originally planned by management
due to the acquisition. Management believes that the benefits to
operating results that will be realized by re-engineering also will
apply to the Scrivner group. However, re-engineering efforts with
respect to the Scrivner group will not begin until their operations
are fully integrated in 1995.
Cash payments related to the facilities consolidation and
restructuring plan have been approximately $9 million year to date in
1994.
A subsidiary of the company has been named among numerous
defendants in two lawsuits filed in U.S. District Court in Miami in
December 1993. The litigation is in its preliminary stages.
Management has been unable to conclude that an adverse resolution is
not reasonably likely or predict the potential liability, if any, to
the company. However, management does not believe that an adverse
outcome is likely that would materially affect the company's
consolidated financial position.
During the second quarter, the company completed the sale of
substantially all of the assets of its Royal Foods dairy and deli
distribution business located in New Jersey. The sale did not result
in a material gain or loss, and the operations of this business were
not material.
On August 1, 1994 the company acquired for $4.5 million an
additional 39% interest in Consumers Markets, the operator of 24
supermarkets located in Missouri, Arkansas and Kansas with annual
sales of $225 million. The company previously owned a 40% interest.
Results of operations and financial position of Consumers are not
material.
Recent event. On August 17, a customer of the company, Megafoods
Stores, Inc., and certain of its affiliates, filed Chapter 11
bankruptcy proceedings. Based on this event the company currently
estimates a potential loss contingency of $6.5 million. A credit loss
for the matter will be reflected in the third quarter operating
results; however, the exact amount may vary depending upon future
developments in the bankruptcy proceedings including collateral
values, priority issues and the company's ultimate exposure, if any,
on certain customer store leases.
As a result the company announced on August 17 that it was
lowering 1994 earnings estimates by 10 cents per share.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- - -----------------------------------------
(a) Exhibits:
Exhibit Number Page Number
12 Computation of Ratio of Earnings
to Fixed Charges 15
(b) Reports on Form 8-K
Form 8-K dated July 19, 1994 disclosed the completion of the
company's acquisition of all of the outstanding stock of Haniel
Corporation, the holding company for Scrivner, Inc. Pro forma
financial statements related to this acquisition will be filed as soon
as practicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
FLEMING COMPANIES, INC.
(Registrant)
Date August 22, 1994 /s/ Donald N. Eyler
Donald N. Eyler
Senior Vice President - Controller
(Chief Accounting Officer)
EXHIBIT INDEX
Paper (P) or
Exhibit Electronic (E)
- - ------- --------------
12. Computation of Ratio of Earnings
to Fixed Charges E
Exhibit 12
- - ----------
FLEMING COMPANIES, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Fiscal Year Ended the Last Saturday in December
--------------------------------------------------
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
(In thousands of dollars)
Earnings:
Pretax income $139,480 $164,501 $104,329 $194,941 $ 72,078
Fixed charges, net 120,769 117,877 117,865 105,726 102,303
-------- -------- -------- -------- --------
Total earnings $260,249 $282,378 $222,194 $300,667 174,381
======== ======== ======== ======== ========
Fixed charges:
Interest expense $ 96,425 $ 93,643 $ 93,353 $ 81,102 $ 78,029
Portion of rental
charges deemed to
be interest 22,945 22,836 22,907 23,027 22,969
Capitalized interest
and debt issuance
cost amortization 2,163 1,250 1,464 1,287 1,005
-------- -------- -------- -------- --------
Total fixed
charges $121,533 $117,729 $117,724 $105,416 $102,003
======== ======== ======== ======== ========
Ratio of earnings
to fixed charges 2.14 2.40 1.89 2.85 1.71
======== ======== ======== ======== ========
28 Weeks Ended
July 10, July 9,
1993 1994
-------- --------
(In thousands of dollars)
Earnings:
Pretax income $109,018 $ 76,913
Fixed charges, net 54,612 50,728
-------- --------
Total earnings $163,630 $127,641
======== ========
Fixed charges:
Interest expense $ 41,285 $ 38,194
Portion of rental
charges deemed to
be interest 12,708 11,815
Capitalized interest
and debt issuance
cost amortization 469 569
-------- --------
Total fixed
charges $ 54,462 $ 50,578
======== ========
Ratio of earnings
to fixed charges 3.00 2.52
======== ========
"Earnings" consists of income before income taxes and fixed charges
excluding capitalized interest. Capitalized interest amortized during
the respective periods is added back to earnings.
"Fixed charges, net" consists of interest expense, an estimated amount
of rental expense which is deemed to be representative of the interest
factor and amortization of capitalized interest and debt issuance cost.
The pro forma ratio of earnings to fixed charges is omitted as it is not
applicable.