SALT LAKE CITY, March 2 /PRNewswire/ -- American Stores Company
(NYSE: ASC) today announced fourth quarter 1998 diluted earnings per share of
$0.47 before a merger-related stock option charge, compared to $0.35 in the
fourth quarter of 1997, an increase of 34.3 percent. Earnings per share
including the merger-related stock option charge of $0.47 per share were
$0.00 for the fourth quarter 1998.
Comparable store sales increased 2.0 percent over the prior year fourth
quarter and total sales increased 4.3 percent to $5.2 billion for the fourth
quarter.
Diluted earnings per share before the merger-related charge were $1.32 for
the fiscal year ended January 30, 1999 compared to $1.15 before unusual items
in the prior year, an increase of 14.8 percent. The prior year amount
excludes charges of $0.14 per share related to the secondary offering of
shares owned by the Company's former chairman and related parties and the sale
of a division of the Company's communications subsidiary. Reported diluted
earnings per share for the fiscal year ended January 30, 1999, including
merger-related charges and other unusual items, were $0.84 compared to
$1.01 in the prior year. For the year, comparable store sales increased
1.5 percent over the prior year and total sales increased 3.8 percent to
$19.9 billion.
Comparable store sales in the Company's pharmacies increased 18.4 percent
for the fourth quarter 1998 and 17.1 percent for the year. Total pharmacy
sales in the Company's 1,146 pharmacies increased by 21.0 percent for the
fourth quarter and 20.2 percent for the year.
Gross profit margin in the fourth quarter increased 60 basis points to
27.3 percent compared to 26.7 percent in the prior year. Operating and
administrative expenses as a percent of sales, excluding the merger-related
charge, decreased 20 basis points to 21.9 percent compared to 22.1 percent in
the prior year's fourth quarter. Operating profit as a percent of sales
improved to 5.5 percent, excluding the merger-related charge, from 4.6 percent
in the prior year fourth quarter.
As previously announced, American Stores Company entered into a definitive
merger agreement with Albertson's, Inc. (NYSE: ABS) on August 2, 1998.
Shareholders of American Stores and Albertson's approved the merger on
November 12, 1998. The Company currently expects to complete the merger
during the first fiscal quarter or early in the second fiscal quarter of 1999,
subject to regulatory approvals and other customary closing conditions.
Shareholder approval of the merger on November 12, 1998 resulted in the
Company recognizing a fourth quarter 1998 pre-tax charge of $195.3 million
related to stock options, the nature of which was previously described in the
Joint Proxy Statement and Prospectus. The charge will be non-cash, assuming
the merger is consummated. The charge is $132.6 million on an after-tax basis
or $0.47 per diluted share for the quarter. Another similar charge of
approximately $100 million pre-tax related to additional stock options would
be recognized upon regulatory approval of the merger transaction.
For the year, the Company's total capital expenditures, including the
present value of new leases, were $959 million. The Company opened or
acquired 67 new stores, completed 77 remodels and closed or sold 44 stores.
Compared to the end of the prior year, retail square footage increased by
5.0 percent before closures and 2.6 percent on a net basis after closures.
Victor L. Lund, chairman and chief executive officer of American Stores
Company, said, "We finished our fourth quarter and fiscal year with
outstanding results. As we expected, our fourth quarter sales and margins
were much stronger than a year ago. All of our operating divisions
demonstrated unwavering commitment to the business and our customers.
They did an excellent job of staying focused on execution while planning for
the upcoming merger."
Mr. Lund also said, "As we move into the first quarter of 1999, we expect
our positive momentum to continue. I am confident that our management and
associate teams will continue to drive our operations forward in the months
ahead."
American Stores Company is one of the nation's largest food and drug
retailers. It operates 1,580 stores in 26 states including 283 food and drug
combination stores, 524 supermarkets and 773 stand-alone drug stores.
The Company operates 1,146 pharmacies within its stores. Its stores operate
under the names Acme Markets, Jewel Food Stores, Lucky Stores, Osco Drug and
Sav-on drugs.
http://www.americanstores.com
Cautionary Note: This press release may contain certain forward-looking
statements about the future performance of the Company and about its pending
merger transaction which are based on management's assumptions and beliefs in
light of the information currently available to it. The Company assumes no
obligation to update the information contained herein. These forward-looking
statements are subject to uncertainties and other factors that could cause
actual results to differ materially from such statements including, but not
limited to: competitive practices and pricing in the food and drug industries
generally and particularly in the Company's principal markets; the
implementation of the Company's re-engineering initiatives in accordance with
the currently contemplated schedule and budget; the Company's relationship
with its employees and the terms of future collective bargaining agreements;
the costs and other effects of legal and administrative cases and proceedings;
the nature and extent of continued consolidation of the food and drug
industry; changes in the financial markets related to the cost of the
Company's capital; the ability of the Company to access the public debt and
equity markets to refinance indebtedness and fund the Company's capital
expenditure program on satisfactory terms; supply or quality control problems
with the Company's vendors; changes in the rate of inflation; changes in
economic conditions which affect the buying patterns of the Company's
customers; the ability of the Company and its vendors, financial institutions
and others to resolve Year 2000 processing issues in a timely manner; changes
in state or federal legislation or regulation; diversion of management's
attention from other business concerns to the assimilation of the merged
operations as contemplated by the pending merger transaction; uncertainties
and difficulties relating to the integration of the merged companies including
the assimilation and retention of employees, challenges in retaining customers
and potential adverse short-term effects on operating results; and delays or
obstacles in obtaining required regulatory approvals and/or other conditions
necessary to satisfactorily close the pending merger transaction.
AMERICAN STORES COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands except per share amounts)
(Unaudited)
13 Weeks Ended 52 Weeks Ended
Jan. 30, Jan. 31, Jan. 30, Jan. 31,
1999 1998 1999 1998
Sales $5,196,267 $4,980,597 $19,866,725 $19,138,880
Cost of
merchandise
sold (3,781,322) (3,664,500) (14,553,517) (14,036,830)
LIFO credit
(charge) 5,618 11,567 (7,382) (2,433)
Gross profit 1,420,563 1,327,664 5,305,826 5,099,617
27.3% 26.7% 26.7% 26.6%
Operating and
administrative
expenses (1,137,271) (1,100,442) (4,437,804) (4,317,576)
-21.9% -22.1% -22.3% -22.6%
Merger related
stock option
charge(A) (195,252) 0 (195,252) 0
Restructuring
and impairment(B) 0 0 0 (13,400)
Total
operating
expense (1,332,523) (1,100,442) (4,633,056) (4,330,976)
-25.6% -22.1% -23.3% -22.6%
Operating profit 88,040 227,222 672,770 768,641
1.7% 4.6% 3.4% 4.0%
Interest income 781 1,538 3,337 5,647
Interest expense (56,514) (54,773) (232,652) (216,710)
Shareholder
related
expense(C) 0 0 0 (33,913)
Earnings
before income
taxes 32,307 173,987 443,455 523,665
Federal &
state income
taxes (33,329) (77,824) (209,711) (243,045)
Net earnings ($1,022) $96,163 $233,744 $280,620
Basic earnings
per share $0.00 $0.35 $0.85 $1.02
Unusual items 0.48 0.00 0.48 0.14
Basic earnings
per share
excluding
unusual items $0.48 $0.35 $1.33 $1.16
Diluted earnings
per share $0.00 $0.35 $0.84 $1.01
Unusual items 0.47 0.00 0.48 0.14
Diluted earnings
per share
excluding
unusual items $0.47 $0.35 $1.32 $1.15
Average shares
- basic 275,952 273,573 274,790 276,409
Average shares
- diluted 279,779 274,607 277,562 277,769
Dividends
per share $0.09 $0.09 $0.36 $0.35
Unusual items:
(A) Merger related stock option charge of $195,252 pre-tax, $62,624 tax
impact and $132,628 net earnings impact.
(B) Charges related to the sale of a division of the Company's
communications subsidiary.
(C) Charges related to the secondary stock offering of shares held by the
former Chairman and related parties.
AMERICAN STORES COMPANY
CONSOLIDATED CONDENSED CASH FLOWS
(Amounts In thousands)
(Unaudited)
52 Weeks Ended
January 30, 1999 January 31, 1998
Cash Flows From
Operating Activities:
Net earnings $233,744 $280,620
Adjustments to reconcile
net earnings to net cash
provided by operating
activities:
Depreciation and
amortization 487,304 468,869
Merger related stock
option charge 195,252 0
Net (gain) on asset sales (15,818) (772)
Changes in operating
assets and liabilities (272,910) 128,388
Net cash provided
by operating activities 627,572 877,105
Cash Flows From Investing
Activities:
Proceeds from the sale
of assets 115,450 39,447
Capital expenditures(A) (830,376) (974,724)
Increase in other assets (56,813) (43,638)
Net cash used in investing
activities (771,739) (978,915)
Cash Flows From Financing
Activities:
Issuance of debt 145,000 500,000
Other increases in borrowing 25,748 119,101
Cash dividends (98,843) (97,042)
Net repurchase of
common stock(B) 0 (454,086)
Other changes in equity 59,961 44,164
Net cash provided by
financing activities 131,866 112,137
Net (decrease) increase
in cash and cash equivalents (12,301) 10,327
Cash and cash equivalents
at beginning of period 47,794 37,467
Cash and cash equivalents
at end of period $35,493 $47,794
(A) Total capital expenditures, including the present value of new leases,
were $266.7 million for the quarter and $959.3 million for the fiscal year
ended January 30, 1999, and $382.3 million for the quarter and
$1,136 million for the fiscal year ended January 31, 1998.
(B) Repurchased 24.4 million shares from the family of Mr. L.S. Skaggs and
certain family and charitable trusts and issued 4.6 million shares for
overallotments related to the secondary offering in April 1997.
Prior financial information has been reclassified to conform to current
year presentation.
AMERICAN STORES COMPANY
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
Jan. 30, 1999 Jan. 31, 1998
Assets
Inventory $1,726,015 $1,714,229
Other current assets 614,388 547,551
Property, plant
and equipment
and capital
leases, net 4,624,075 4,338,015
Goodwill, net 1,589,614 1,611,812
Other assets 331,207 324,408
$8,885,299 $8,536,015
Liabilities and
Shareholders' Equity
Current maturities
of long-term debt
and capital leases $49,651 $100,935
Accounts payable 1,147,510 1,186,845
Other current
liabilities 787,794 833,554
Long-term debt and
obligations under
capital leases, less
current maturities 3,423,029 3,201,970
Other liabilities 778,119 903,629
Shareholders' equity 2,699,196 2,309,082
$8,885,299 $8,536,015
Shares issued and
outstanding 276,676 273,607
STORE COUNT
Stores Stores
Beginning of Opened/ Closed/
Quarter Ended Jan. 30, 1999 Quarter Acquired Sold
Supermarkets 530 0 (3)
Stand-alone drug stores 763 14 (4)
Combination food
& drug stores 275 6 (1)
Net store count 1,568 20 (8)
Stores Stores
Beginning of Opened/ Closed/
Year Ended Jan. 30, 1999 Year Acquired Sold
Supermarkets 543 4 (21)
Stand-alone drug stores 752 41 (21)
Combination food
& drug stores 262 22 (2)
Net store count 1,557 67 (44)
STORE COUNT
Format End of
Quarter Ended Jan. 30, 1999 Conversions Quarter Remodels
Supermarkets (3) 524 5
Stand-alone drug stores 0 773 8
Combination food
& drug stores 3 283 15
Net store count 0 1,580 28
Format 1998
Year Ended Jan. 30, 1999 Conversions Year Ended Remodels
Supermarkets (2) 524 18
Stand-alone drug stores 1 773 32
Combination food
& drug stores 1 283 27
Net store count 0 1,580 77
SOURCE American Stores Company
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Related links:
http://www.americanstores.com
Company News On-Call:
http://www.prnewswire.com/comp/048750.html or fax,
800-758-5804, ext. 048750
CONTACT:
Dan Zvonek, Director of Investor and Public
Relations of American Stores Company, 801-539-0112
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