-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FuwoUk1aGssJtrIGMnUYYYOA8MRKajQPFy0ObvYffDQBGBxgxahn4yku2cynUTZ0 KsABHfEeng+JX76vArnoiA== /in/edgar/work/0000909334-00-000133/0000909334-00-000133.txt : 20001019 0000909334-00-000133.hdr.sgml : 20001019 ACCESSION NUMBER: 0000909334-00-000133 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20001018 ITEM INFORMATION: FILED AS OF DATE: 20001018 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLEMING COMPANIES INC /OK/ CENTRAL INDEX KEY: 0000352949 STANDARD INDUSTRIAL CLASSIFICATION: [5141 ] IRS NUMBER: 480222760 STATE OF INCORPORATION: OK FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-08140 FILM NUMBER: 742070 BUSINESS ADDRESS: STREET 1: 6301 WATERFORD BLVD STREET 2: P O BOX 26647 CITY: OKLAHOMA CITY STATE: OK ZIP: 73126 BUSINESS PHONE: 4058407200 MAIL ADDRESS: STREET 1: P O BOX 26647 CITY: OKLAHOMA CITY STATE: OK ZIP: 73216-0647 8-K 1 0001.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 October 18, 2000 Date of Report (Date of earliest event reported) FLEMING COMPANIES, INC. (Exact name of registrant as specified in its charter) Oklahoma 1-8140 48-0222760 (State or other (Commission File (I.R.S. Employer jurisdiction of Number) Identification Number) incorporation or organization) 1945 Lakepointe Drive, Box 299013 Lewisville, Texas 75029 (Address of Principal Executive Offices) (972) 906-8000 (Registrant's telephone number, including area code) Item 5. Other Events The press release of Fleming Companies, Inc. dated October 18, 2000, filed herewith as Exhibit 99.1, announcing the company's net earnings for the third quarter 2000. Item 7. Financial Statements and Exhibits (c) Exhibits 99.1 Press Release dated October 18, 2000 announcing the company's net earnings for the third quarter 2000. 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 hereunto duly authorized. FLEMING COMPANIES, INC. By: KEVIN TWOMEY Kevin Twomey Senior Vice President Finance and Controller Date: October 18, 2000 EXHIBIT INDEX Exhibit No. Description Method of Filing - ------- ----------- ---------------- 99.1 Press Released dated October 18, 2000 Filed herewith electronically EX-99.1 2 0002.txt Exhibit 99.1 FOR IMMEDIATE RELEASE CONTACT: Media-Kris Sundberg 972-906-8625 Investors-Alan McIntyre 972-906-8126 FLEMING REPORTS 41 PERCENT HIGHER ADJUSTED NET EARNINGS AND INCREASED COMPANY SALES FOR THIRD QUARTER 2000 7.7 Percent Increase in Distribution Sales Repositioning Retail Operations into Growth Formats Dallas, October 18, 2000 - Fleming (NYSE: FLM) announced today a 41 percent increase in third quarter 2000 adjusted net earnings to $15.0 million or $0.37 per share, after adjustments to exclude strategic plan charges and one-time items, compared to $10.6 million or $0.27 per share in the third quarter of 1999. The company previously announced an expected $0.35 per share for the third quarter of 2000. "We are pleased with our performance in the third quarter and credit our differentiated strategic plan which builds competitive distribution advantage and grows our value retail business," said Mark Hansen, chairman and CEO of Fleming. "Our distribution segment achieved an impressive increase in sales from new and existing customer growth." The company continues to improve operating margins with the ongoing implementation of its strategic plan including cost reduction initiatives. "We have exceeded our previous earnings guidance and, given the tight market conditions, that's quite an accomplishment," said Hansen. The company announced earlier this year that it expected adjusted net earnings for the last half of 2000 to be at least 30 percent greater than 1999, or $1.52 per share for the year. The company continues to expect an increase of at least 30 percent for the fourth quarter of 2000 or $0.52 per share for the quarter and $1.54 for the year. Third quarter 2000 net sales increased to $3.28 billion compared to $3.24 billion for the same period in 1999, a nominal increase mainly due to the offset of lost sales from discontinued retail operations. Distribution segment net sales, however, increased 7.7 percent to $2.59 billion in the third quarter of 2000 versus $2.40 billion in the same period of 1999. The distribution sales growth, the highest gain since second quarter 1995, resulted from new business from independent retailers and other non-traditional retail channels. This growth is especially significant as it occurred while consolidating four and opening two new distribution centers, establishing the new Customer Support and Shared Services Centers and implementing the planned reduction of company owned conventional retail stores. Adjusted EBITDA for the third quarter 2000 was $106.7 million, or 10.2 percent higher, compared to $96.9 million for the same period last year. Third quarter adjusted EBITDA as a percent of sales was 3.25 percent compared to 2.99 percent in the third quarter of 1999. Adjusted EBITDA is defined as earnings before interest expense, income taxes, depreciation and amortization, equity investment results, LIFO and one-time adjustments (i.e., strategic plan charges). Strategic plan charges for the third quarter 2000 totaled $101 million pre-tax, including $16 million of cash-related charges and $85 million of non-cash charges, most of which related to the completion of the recent strategic evaluation of the conventional retail stores (see attached Tables). Before giving effect to the adjustments, the company reported a net loss of $45.6 million or $1.17 per share for the third quarter of 2000. Segment Results for the Quarter Distribution net sales increased 7.7 percent to $2.59 billion in the third quarter of 2000 compared to $2.40 billion in the same period in the previous year. Operating earnings continued to improve with an increase of 13.1 percent to $79.4 million in the third quarter compared to $70.1 million last year. Operating earnings improved due primarily to higher sales, operating cost reductions and the benefits of distribution center consolidation. "This is now the fourth consecutive quarter with improved year-over-year distribution sales, which shows continuing momentum from our strategic initiatives in distribution," said Hansen. "Ten distribution center consolidations were completed since the beginning of 1999 with the establishment of high volume, super-regional distribution centers which take advantage of economies of scale and leverage the fixed costs associated with operating a distribution center." The distribution segment achieved the 2000 goal of adding over $1 billion in gross annualized new business in just three quarters. This is the second year in a row Fleming has exceeded $1 billion in new business added. Expansion of convenience store business has been a significant part of this growth and is supported by the new piece pick distribution facility recently opened near Chicago. A full line case pick distribution facility was also opened in Northeast, Maryland. "This quarters' results are even more impressive considering they reflect the start up costs associated with opening these facilities," said Hansen. "Our focus on the distribution growth strategy continues to bring favorable results, as evidenced by these sales results." Retail segment operating earnings were $19.4 million compared to $5.5 million in 1999. Retail segment sales of $693.6 million were down 17.0 percent from last year as a result primarily of the planned divestiture of under- performing and non-strategic stores. Same-store-sales declined by 3.5 percent for the quarter. Operating expenses for support services of $36.5 million for the third quarter 2000 were higher, compared to 1999, due primarily to the continuing consolidation of accounting, human resources and information technology into the Shared Services Center and the centralization of national procurement functions into the new Customer Support Center. The consolidation and centralization of these functions are reducing system-wide expenses. Results for Year-To-Date Net earnings after excluding the strategic plan charges and one-time items for the first three quarters of 2000 were $41.0 million, or $1.03 per share compared to $27.9 million or $0.72 per share for 1999. On a year-to-date basis, adjusted net earnings for 2000 were 47 percent higher than in 1999. For the first three quarters of 2000, Fleming reported a net loss of $84.8 million or $2.19 per share, compared to a net loss of $40.9 million or $1.07 per share for the same period last year. Net sales for the first three quarters of 2000 were $11.11 billion compared to $11.05 billion in the same period last year. Evaluation of Conventional Retail Completed The review of strategic alternatives for the conventional retail business was substantially completed in the third quarter with the decision to reposition certain retail operations into the Food 4 Less type value retail format. The Rainbow Foods division has shown significant improvements in sales and earnings. Consequently, 38 of these stores will be retained with two converted to the value retail format and three closed. Fleming is in discussions to sell 53 ABCO stores to other retailers and three will be converted to the value retail format. Ten Sentry stores will be converted to the value retail format and steps are being taken to sell the remaining 24 to existing and new distribution customers. The company is continuing to explore alternatives for the 16 Baker's Supermarkets. Fleming expects to retain a substantial level of the distribution business for these operations and expects to receive approximately $100 million in net cash proceeds from the sale of ABCO and Sentry stores. Additionally, the Minneapolis distribution center will be dedicated to supplying the Rainbow operation, and Minnesota independent retailer customers will be served from the LaCrosse and Superior divisions. "This decision will bring even greater efficiencies of size to the LaCrosse and Superior divisions and allow the Minneapolis division to significantly improve productivity and profitability with reduced SKUs," said Hansen. Webcast of Third Quarter Results A teleconference hosted by Mr. Hansen to review third quarter results will be webcast on Wednesday, October 18, 2000 at 10:00 a.m. CDT. Interested participants may listen to the conference call over the internet through Investor Broadcast Networks Vcall website at http//www.vcall.com. To listen to the live call, go to the website at least 15 minutes early to register, download and install any necessary audio software. For those who can not listen to the live broadcast, a replay will be available after the call. Fleming is an 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, 3,000 convenience stores and nearly 1,000 supercenters, discount, limited assortment, drug, specialty, e-tailing and other businesses across the country. 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 2000 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 which could cause actual results to differ materially, including: 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, failure to implement strategic initiatives according to plan or 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. Fleming Companies, Inc. Recent Achievements in 2000 Total Company o 41% increase in third quarter 2000 adjusted net earnings compared to the previous year, to $0.37 per share, exceeding the $0.35 per share estimate for the quarter. o Expect to continue at least a 30 % increase in adjusted net earnings for the fourth quarter of 2000, or $0.52 per share for the quarter and $1.54 per share for the year. Distribution: o Distribution to new non-traditional customers include: o Fleming signed a major contract with a leading convenience food store and gasoline retailer, Clark Retail Enterprises, Inc. Service began to 693 company-operated gasoline and convenience stores. Fleming now serves over 3,000 convenience stores and intends to continue penetration of the 98,000 stores currently comprising the convenience store industry. o A new piece pick distribution center was established near Chicago to supply the Clark Retail convenience store business. o Positive net sales growth of 7.7 % for the third quarter compared to the same period last year. This is the highest gain since second quarter 1995. o Over $1 billion in annualized gross new sales through the first three quarters of 2000, already exceeding the new sales goal for the entire year. o Ten distribution center consolidations have been completed since the beginning of 1999 with the establishment of high volume, super-regional distribution centers, which take advantage of economies of scale and leverage the fixed costs associated with operating a distribution center. o Distribution operations now consist of 22 case pick distribution centers and 9 piece pick distribution centers (3 convenience store and 6 general merchandise and specialty foods distribution centers). Retail: o The administrative consolidation for the company's mid- west retail chains was completed and over 100 positions were eliminated. o One new conventional retail store was opened and 24 were closed/divested in the third quarter. Year-to-date, four stores were added and 65 stores have been closed/divested. o The Yes!Less value retail prototype opened one additional store in the third quarter in Longview, Texas, bringing the total to four. Yes!Less stores feature very low prices for private label grocery products, a broad selection of low price general merchandise products and a special, periodic offering of deep discount "wow" specials. o An agreement was signed to purchase two Food 4 Less stores, and another store will be opened in November. This will increase the number of Food 4 Less stores operated to 29 by year end. o The review of strategic alternatives for the conventional retail business was substantially completed in the third quarter with the decision to reposition retail operations into growth formats. o The growth of the Food 4 Less division will be escalated by converting 15 of the conventional retail stores to this high-performance format. The Rainbow Foods division has shown significant improvements in sales and earnings. Consequently, 38 of these stores will be retained with two converted to the Food 4 Less type format. o Fleming is in discussions to sell 53 ABCO stores to other retailers and three will be converted to the Food 4 Less type format. o Ten Sentry stores will be converted to the Food 4 Less type format and steps are being taken to sell the remaining 24 stores to existing and new distribution customers. o The company is continuing to explore the alternatives for the 16 Baker's Supermarkets. o Fleming expects to retain a substantial level of the distribution business for these operations. o The Minneapolis distribution center will be dedicated to supplying the Rainbow operation and Minnesota independent retailer customers will be served from the LaCrosse and Superior divisions. This will bring even greater efficiencies of size of these divisions and allow the Minneapolis division to significantly improve productivity and profitability with reduced SKUs. Support Services: o The Customer Support Center in Dallas is up and running; the centralization of procurement is on going; and progress is being made on this important initiative. o The establishment of the Shared Services Center is well underway in Oklahoma City and the consolidation of administrative functions such as accounting and information technology continues. Fleming Companies, Inc. 1945 Lakepointe Drive, Box 299013 Lewisville, Texas 75029 www.fleming.com NEWS RELEASE Fleming Companies, Inc. (NYSE: FLM) Consolidated Condensed Statements of Operations For the 12 weeks ended September 30, 2000, and October 2, 1999 (In thousands, except per share amounts) 2000 1999
Reported Adjustments Adjusted Reported Adjustments Adjusted Net sales $3,288,102 ($8,327) $3,279,775 $3,243,192 ($5,554) $3,237,638 % change 1.3% Costs and expenses: Cost of sales 2,984,788 (10,969) 2,973,819 2,906,749 (2,743) 2,904,006 Selling and administrative 258,103 (14,348) 243,755 291,990 (6,915) 285,075 Interest expense 40,111 40,111 36,987 36,987 Interest income (6,322) (6,322) (7,075) (7,075) Equity investment results 2,097 (31) 2,066 2,431 (30) 2,401 Impairment/restructuring charge 83,356 (83,356) 0 36,151 (36,151) 0 Total costs and expenses 3,362,133 (108,704) 3,253,429 3,267,233 (45,839) 3,221,394 Income (loss) before taxes (74,031) 100,377 26,346 (24,041) 40,285 16,244 Taxes on income (loss) (28,472) 39,792 11,320 (9,695) 15,311 5,616 Net income (loss) ($45,559) $60,585 $15,026 ($14,346) $24,974 $10,628 Earnings (loss) per share: Basic ($1.17) $1.56 $0.39 ($0.37) $0.65 $0.28 Diluted ($1.17) $0.37 ($0.37) $0.27 % change 37.0% Dividends paid per share $0.02 $0.02 $0.02 $0.02 Weighted average shares outstanding: Basic 38,902 38,902 38,459 38,459 Diluted 38,902 40,364 38,459 39,040 Additional information: Depreciation/amortization, net of amounts in interest expense $38,070 ($350) $37,720 $38,546 $38,546 Goodwill amortization (included above) $4,784 $4,784 $4,697 $4,697 EBITDA $6,747 $99,996 $106,743 $56,598 $40,285 $96,883 % of sales 3.25% 2.99% % change 10.2% - -------------- -Adjustments relate to the strategic plan which was announced in December, 1998 and one-time adjustments. One-time adjustments for 2000 include: an $8.6 million gain from the sale of a facility, $10.2 million in charges relating to closing certain company-owned retail stores, and $1.9 million net income from litigation settlements. The tax affect of these one-time adjustments was an expense of $1.3 million. The one-time adjustment for 1999 was a gain of $5.6 million from the sale of a facility with a related tax expense of $2.2 million. All remaining charges relate to the strategic plan which includes non-cash impairments of asset values and cash restructuring costs for severance, lease termination, real estate disposition costs for discontinued operations and other related expenses. -EBITDA is earnings before interest expense, income taxes, depreciation and amortization, equity investment results, and LIFO charge ($500 in 2000 and $2,675 in 1999). TABLE 1
Fleming Companies, Inc. (NYSE: FLM) Segment Information For the 12 weeks ended September 30, 2000, and October 2, 1999 Income (Loss) (In thousands, except per share amounts) 2000 1999
Reported Adjustments Adjusted Reported Adjustments Adjusted Distribution Gross sales $2,977,534 ($8,327) $2,969,207 $2,897,076 ($5,554) $2,891,522 Intersegment elimination (383,058) (383,058) (489,423) (489,423) Net sales $2,594,476 ($8,327) $2,586,149 $2,407,653 ($5,554) $2,402,099 % change 7.7% Gross margin $147,620 ($1,784) $145,836 $148,344 ($3,628) $144,716 % of distribution gross sales 4.91% 5.00% Selling and administrative (54,725) 1,599 (53,126) (66,285) 5,431 (60,854) % of distribution gross sales -1.79% -2.10% Intersegment elimination (13,359) (13,359) (13,723) (13,723) Operating earning $79,536 ($185) $79,351 $68,336 $1,803 $70,139 % of distribution net sales 3.07% 2.92% EBITDA $101,966 ($261) $101,705 $90,493 $1,014 $91,507 % of distribution net sales 3.93% 3.81% % change 11.1% Retail Net sales $693,626 $693,626 $835,539 $835,539 % change -17.0% Gross margin $160,929 $2,230 $163,159 $188,495 $813 $189,308 % of retail sales 23.52% 22.66% Selling and administrative (168,461) 11,323 (157,138) (197,981) 490 (197,491) % of retail sales -22.65% -23.64% Intersegment profit 13,359 13,359 13,723 13,723 Operating earnings $5,827 $13,553 $19,380 $4,237 $1,303 $5,540 % of retail sales 2.79% 0.66% EBITDA ($48,904) $87,214 $38,310 ($6,805) $33,937 $27,132 % of retail sales 5.52% 3.25% % change 41.2% Support Services Operating earnings ($40,152) $3,622 ($36,530) ($28,120) $998 ($27,122) % of total company sales -1.11% -0.84% EBITDA ($46,315) $13,043 ($33,272) ($27,090) $5,334 ($21,756) % of total company sales -1.01% -0.67% TABLE 2
Fleming Companies, Inc. (NYSE: FLM) Consolidated Condensed Statements of Operations For the 40 weeks ended September 30, 2000, and October 2, 1999 (In thousands, except per share amounts) 2000 1999
Reported Adjustments Adjusted Reported Adjustments Adjusted Net sales $11,118,959 ($6,672) $11,112,287 $11,057,800 ($5,530) $11,052,270 % change 0.5% Costs and expenses: Cost of sales 10,107,717 (46,300) 10,061,417 9,965,771 (15,471) 9,950,300 Selling and administrative 891,784 (24,015) 867,769 955,550 (12,289) 943,261 Interest expense 131,659 131,659 127,240 127,240 Interest income (25,167) (25,167) (23,319) (23,319) Equity investment results 5,682 (315) 5,367 8,402 (119) 8,283 Impairment/restructuring charge 146,514 (146,514) 0 79,356 (79,356) 0 Total costs and expenses 11,258,189 (217,144) 11,041,045 11,113,000 (107,235) 11,005,765 Income (loss) before taxes (139,230) 210,472 71,242 (55,200) 101,705 46,505 Taxes on income (loss) (54,449) 84,692 30,243 (14,275) 32,864 18,589 Net income (loss) ($84,781) $125,780 $40,999 ($40,925) $68,841 $27,916 Earnings (loss) per share: Basic ($2.19) $3.25 $1.06 ($1.07) $1.80 $0.73 Diluted ($2.19) $1.03 ($1.07) $0.72 % change 43.1% Dividends paid per share $0.06 $0.06 $0.06 $0.06 Weighted average shares outstanding: Basic 38,651 38,651 38,256 38,256 Diluted 38,651 39,897 38,256 38,597 Additional information: Depreciation/amortization, net of amounts in interest expense $130,074 ($6,662) $123,412 $119,799 $119,799 Goodwill amortization (included above) $15,857 $15,857 $15,218 $15,218 EBITDA $134,085 $203,495 $337,580 $208,916 $101,705 $310,621 % of sales 3.04% 2.81% % change 8.7% - --------------- -Adjustments relate to the strategic plan which was announced in December, 1998 and one-time adjustments. One-time adjustments for 2000 include: an $8.6 million gain from the sale of a facility, $10.2 million in charges relating to closing certain company-owned retail stores, and $1.9 million net income from litigation settlements. The tax affect of these one-time adjustments was an expense of $1.3 million. The one-time adjustment for 1999 was a gain of $5.6 million from the sale of a facility with a related tax expense of $2.2 million. All remaining charges relate to the strategic plan which includes non-cash impairments of asset values and cash restructuring costs for severance, lease termination, real estate disposition costs for discontinued operations and other related expenses. -EBITDA is earnings before interest expense, income taxes, depreciation and amortization, equity investment results, and LIFO charge ($5,900 in 2000 and $8,675 in 1999). TABLE 3
Fleming Companies, Inc. (NYSE: FLM) Segment Information For the 40 weeks ended September 30, 2000, and October 2, 1999 Income (Loss) (In thousands, except per share amounts) 2000 1999
Reported Adjustments Adjusted Reported Adjustments Adjusted (C> Distribution Gross sales $9,970,072 ($6,672) $9,963,400 $9,880,954 ($5,530) $9,875,424 Intersegment elimination (1,366,991) (1,366,991) (1,670,824) (1,670,824) Net sales $8,603,081 ($6,672) $8,596,409 $8,210,130 ($5,530) $8,204,600 % change 4.8% Gross margin $449,284 $21,843 $471,127 $468,090 $2,797 $470,887 % of distribution gross sales 4.73% 4.77% Selling and administrative (177,400) 2,286 (175,114) (207,229) 7,361 (199,868) % of distribution gross sales -1.76% -2.02% Intersegment elimination (47,753) (47,753) (47,338) (47,338) Operating earnings $224,131 $24,129 $248,260 $213,523 $10,158 $223,681 % of distribution net sales 2.89% 2.73% EBITDA $270,354 $52,280 $322,634 $257,018 $37,376 $294,394 % of distribution net sales 3.75% 3.59% % change 9.6% Retail Net sales $2,515,878 $2,515,878 $2,847,670 $2,847,670 % change -11.7% Gross margin $576,921 $8,799 $585,720 $636,156 $7,126 $643,282 % of retail sales 23.28% 22.59% Selling and administrative (589,239) 13,720 (575,519) (662,263) 3,130 (659,133) % of retail sales -22.88% -23.15% Intersegment profit 47,753 47,753 47,338 47,338 Operating earning $35,435 $22,519 $57,954 $21,231 $10,256 $31,487 % of retail sales 2.30% 1.11% EBITDA $6,049 $114,245 $120,294 $46,984 $49,279 $96,263 % of retail sales 4.78% 3.38% % change 25.0% Support Services Operating earning ($140,108) $16,995 ($123,113) ($98,275) $1,816 ($96,459) % of total company sales -1.11% -0.87% EBITDA ($142,318) $36,970 ($105,348) ($95,086) $15,050 ($80,036) % of total company sales -0.95% -0.72% TABLE 4
Fleming Companies, Inc. (NYSE: FLM) Analysis of Impairment and Restructuring Charges (In millions, except per share amounts)
1998 1999 2000 Total for yrs Full Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Full Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Full Year 2001 2002 1998 - 2002 Impairment of Assets Goodwill $372 $22 $0 $14 $0 $36 $0 $0 $3 $0 $3 $0 $0 $411 Other assets 218 2 1 16 7 26 2 1 78 0 81 0 0 325 Total impairment of assets 590 24 1 30 7 62 2 1 81 0 84 0 0 736 Other restructuring charges 63 13 5 6 17 41 41 20 2 2 65 14 3 186 Total impairment and restructuring charges 653 37 6 36 24 103 43 21 83 2 149 14 3 922 Other periodic disposition and exit costs affecting: Net sales 0 0 0 0 0 0 0 1 1 0 2 0 0 2 Cost of sales 9 6 7 3 2 18 13 22 11 6 52 5 1 85 Selling and administrative 6 3 3 6 4 16 8 2 6 7 23 1 0 46 Total 15 9 10 9 6 34 21 25 18 13 77 6 1 133 Total charges before taxes 668 46 16 45 30 137 64 46 101 15 226 20 4 1,055 Income tax benefit 125 14 4 17 10 45 26 19 41 6 92 8 2 272 Total charges after taxes $543 $32 $12 $28 $20 $92 $38 $27 $60 $9 $134 $12 $2 $783 Negative effect on EPS $14.33 $0.84 $0.31 $0.73 $0.50 $2.39 $0.98 $0.71 $1.53 $0.23 $3.45 $0.30 $0.06 $20.53 Non-cash charges (pre-tax) $594 $29 $6 $35 $9 $79 $12 $6 $85 $0 $103 $0 $0 $776 Cash Charges (pre-tax) 74 17 10 10 21 58 52 40 16 15 123 20 4 279 Total $668 $46 $16 $45 $30 $137 $64 $46 $101 $15 $226 $20 $4 $1,055 Cash Expended $10 $16 $16 $10 $15 $57 $35 $46 $26 $22 $129 $32 $21 $249 - --------------- -Net increase of $82 million from $973 million at the end of the second quarter is due to the impairment of long-lived assets for ABCO and Sentry stores ($76 million) to be sold or converted and changes in estimates ($6 million) for impairment and restructuring charges and disposition costs. Table 5
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