LOS ANGELES, Sept. 14 /PRNewswire-FirstCall/ -- Smart & Final Inc.
(NYSE: SMF) today announced that it has reached an agreement in principle to
settle a class action lawsuit involving the compensation of hourly employees
in its California stores. The lawsuit, Olivas v. Smart & Final, alleged that
the company failed to properly calculate overtime pay, failed to pay employees
for all hours worked including meal and rest periods, and failed to pay
certain other compensation. The lawsuit was certified as a class action in
January 2004 with approximately 13,000 potential class members representing
former and current store employees, and covering a period of over six years.
Under the terms of the proposed settlement, Smart & Final will compensate
class members who make verified claims to a third party claims administrator
appointed by the court. The proposed settlement is anticipated to be
submitted for preliminary court approval on October 5, 2005. The company
currently estimates that it will record a pre-tax charge of approximately
$19 million in its 2005 third quarter, to account for the class member
compensation, attorney fees and administrative expenses.
Smart & Final has denied that it had liability for the class action
matters, and the settlement specifically disclaims any liability or wrongdoing
by the company.
Etienne Snollaerts, president and chief executive officer, commented
"Unfortunately, similar class action lawsuits have been filed against many
California retailers, restaurants, and other employers in recent years. While
we believe that we have defenses to the claims in this action, we have agreed
to the proposed settlement to resolve all of the plaintiffs' claims and avoid
the continuing distraction and expense, together with the risks, of protracted
Separately, Smart & Final today announced that its Board of Directors has
authorized the repurchase of up to $20 million of the company's common stock.
The repurchases will be made in the open market or in privately negotiated
transactions, at management's discretion according to market conditions and
the price of Smart & Final stock.
"The stock repurchase plan reflects our belief that Smart & Final stock,
at current market prices, is undervalued based on recent performance and our
growth prospects. Having the authority to repurchase shares provides us with
an additional opportunity to provide value to our shareholders and to offset
the dilutive effect of stock option exercises," Snollaerts said.
The company's majority shareholder, Casino Guichard-Perrachon, has
indicated that it does not currently plan to tender any shares under the
proposed repurchase program, but that it reserves the right to do so.
Under the terms of the company's current credit agreements, it is
anticipated that the litigation charge when recorded will result in a
violation of certain financial covenants. The company has applied to its
lenders for a waiver of the litigation charge in the calculation of these
covenants. The company has also requested an amendment of the current credit
facilities' provisions permitting the payment of dividends, to also permit
common stock repurchases. The company believes that its lenders will approve
Founded in 1871 in downtown Los Angeles, Smart & Final Inc. currently
operates 238 non-membership warehouse stores for food and foodservice supplies
in California, Oregon, Washington, Arizona, Nevada, Idaho and northern Mexico.
For more information, visit the company's website at www.smartandfinal.com.
Forward-Looking and Cautionary Statements
This Smart & Final press release contains "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934 and other expressions of
management's belief or opinion which reflect its current understanding or
belief with respect to such matters. Such statements are subject to certain
risks and uncertainties, including known and unknown factors as included in
the company's periodic filings with the Securities and Exchange Commission
that could cause actual results to differ materially and adversely from those
projected. All of these forward-looking statements are based on estimates and
assumptions made by management of the company, which although believed to be
reasonable, are inherently uncertain and difficult to predict; therefore,
undue reliance should not be placed upon such statements. There can be no
assurance that the company will not incur new or additional unforeseen costs
in connection with the ongoing conduct of its business. Accordingly, any
forward-looking statements included herein do not purport to be predictions of
future events or circumstances and may not be realized. Except as
specifically set forth herein, the company undertakes no obligation to update
any such forward-looking or other statement.
SOURCE Smart & Final Inc.