|
LOS ANGELES — Unified Western Grocers, Inc. announced today that it will exit its retail business and sell or close all 12 of the stores it owns. Presently, 5 of the 12 stores owned by Unified are operating.
The decision to exit and divest retail operations was the result of a strategic review of Unified's overall business and was based on a number of factors, including a desire to focus more resources and investments on the company's profitable wholesale distribution business. The company is seeking buyers for all of the stores.
"Although our retail operations experienced an improvement in 2002 over the previous year, the Board and management agreed that exiting our retail business was in the best interests of our membership and the company," said Alfred A. Plamann, president and chief executive officer, Unified Western Grocers. "Divesting retail will provide us with greater financial flexibility, such as investing in our profitable wholesale distribution business and reducing debt."
The company's continuing operations, which include its wholesale distribution, insurance, finance and other subsidiary activities, achieved significant profit improvement for the fiscal year ended September 28, 2002, over the prior year. "All of our non-retail business components have been profitable all year," said Plamann. "This wasn't the case in fiscal 2001 for some of our business components. Our wholesale distribution business has always been profitable and accounts for 95% of our volume. A few of our business units needed to be turned around, and we achieved that in fiscal 2002."
The company will account for its exit from retail operations as "discontinued operations," which means the results of the retail unit will be reclassified to discontinued operations in the company's financial reporting for the current and prior year's activity.
In addition, the company will adjust its balance sheet and utilize an accounting procedure called a "quasi-reorganization."
A quasi-reorganization is a long–established accounting procedure for qualifying companies that eliminates an accumulated deficit in retained earnings and permits the company to utilize "fresh start" accounting. One of the key components to the qualification is that the company must have achieved a turnaround in profitability. Specifically, it involves restating a company's assets and liabilities to their fair values with the net adjustment added or deducted from the retained earnings deficit. The residual balance in the retained earnings account is then eliminated by a transfer from paid-in capital.
"As a result of our overall positive performance in fiscal 2002, we have chosen to utilize an accounting treatment that is beneficial to the company's shareholders and establishes a solid foundation for the future," said Plamann.
Unified Western Grocers, Inc. is a retailer-owned grocery distributor that supplies independent retailers throughout the Western United States. Unified and its subsidiaries, which generated approximately $3 billion in sales during the 2002 fiscal year, offer independent retailers all the resources they need to compete in the supermarket industry.
|
