SALT LAKE CITY, May 25 /PRNewswire/ -- American Stores Company (NYSE: ASC)
today announced first quarter 1999 diluted earnings per share of $0.30 before
merger-related stock option income of $0.06 per share compared to $0.24
per share in the first quarter of 1998, an increase of 25.0 percent. First
quarter 1999 diluted earnings per share including the merger-related income
were $0.36.
Total sales increased 3.6 percent to $5.0 billion for the quarter and
comparable store sales increased 2.4 percent over the prior year's first
quarter. Pharmacy department total sales increased 22.4 percent and
comparable sales increased 20.2 percent.
Gross profit margin improved 60 basis points to 26.6 percent for the
quarter compared to 26.0 percent in the prior year. Operating and
administrative expenses increased 20 basis points to 22.6 percent of sales
from 22.4 percent of sales. Excluding the merger-related income, operating
profit improved 13.7 percent to $198.4 million (3.9 percent of sales) from
$174.5 million (3.6 percent of sales) in the prior year. Net earnings
increased 27.7 percent to $84.1 million, excluding the merger-related income,
from $65.9 million in the 1998 first quarter.
Commenting on the Company's performance in the first quarter, Victor L.
Lund, chairman and chief executive officer said, "I am pleased with our
increase in both sales and earnings for the quarter. This is the third
consecutive quarter of earnings growth in excess of 20 percent over the prior
year on a comparable basis. Our drug stores performed particularly well in
both the pharmacies and front-end business."
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 by
June 30, 1999, subject to regulatory approvals and other customary closing
conditions.
The first quarter results include a pretax gain of $28.9 million
($17.3 million after tax, or $0.06 per diluted share) related to stock
options, which vested upon shareholder approval of the transaction. The stock
options are marked to market quarterly and the income, which is non-cash,
results from changes in the share price since the fourth quarter of 1998. The
nature of these stock options was previously described in the Joint Proxy
Statement and Prospectus. An additional pretax charge of approximately $85
million related to the remaining stock options will be recognized upon
regulatory approval of the merger transaction.
The Company opened or acquired 15 new stores, completed 23 remodels and
closed 10 stores during the quarter. Compared with the prior year's first
quarter, retail square footage increased by 4.3 percent before closures and
2.3 percent on a net basis after closures.
American Stores Company is one of the nation's largest food and drug
retailers. It operates 1,585 stores in 26 states including 288 food and drug
combination stores, 514 supermarkets and 783 stand-alone drug stores. The
Company operates 1,162 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 contains 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 industry
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 which may affect the Company's cost
of capital and 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
May 1, 1999 May 2, 1998
Sales $5,047,723 $4,872,686
Cost of merchandise sold (3,702,679) (3,601,144)
LIFO charge (4,000) (5,000)
Gross profit 1,341,044 1,266,542
26.6% 26.0%
Operating and administrative expenses (1,142,614) (1,092,027)
-22.6% -22.4%
Merger related stock option income(a) 28,864 0
Total operating expense (1,113,750) (1,092,027)
-22.1% -22.4%
Operating profit 227,294 174,515
4.5% 3.6%
Interest income 2,432 964
Interest expense (55,220) (60,132)
Earnings before income taxes 174,506 115,347
Federal & state income taxes (73,086) (49,486)
Net earnings $101,420 $65,861
Basic earnings per share $0.37 $0.24
Unusual items (0.06) 0.00
Basic earnings per share $0.31 $0.24
excluding unusual items
Diluted earnings per share $0.36 $0.24
Unusual items (0.06) 0.00
Diluted earnings per share $0.30 $0.24
excluding unusual items
Average shares - basic 276,997 273,942
Average shares - diluted 280,100 275,600
Dividends per share $0.09 $0.09
Unusual items:
(a) Merger related stock option income of $28,864 pre-tax, $11,546 tax
expense and $17,318 net earnings impact.
AMERICAN STORES COMPANY
CONSOLIDATED CONDENSED CASH FLOWS
(Amounts in thousands)
(Unaudited)
13 Weeks Ended
May 1, 1999 May 2, 1998
Cash Flows From Operating Activities:
Net earnings $101,420 $65,861
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 125,898 122,090
Merger related stock option income (28,864) 0
Net gain on asset sales (1,440) (474)
Changes in operating assets and liabilities (81,387) (142,790)
Net cash provided by operating activities 115,627 44,687
Cash Flows From Investing Activities:
Proceeds from the sale of assets 5,441 58,763
Capital expenditures (a) (199,304) (192,828)
Increase in other assets (6,880) (9,117)
Net cash used in investing activities (200,743) (143,182)
Cash Flows From Financing Activities:
Issuance of debt 0 145,000
Other increases (decreases) in borrowing 111,223 (44,985)
Cash dividends (24,932) (24,631)
Other changes in equity 4,492 9,684
Net cash provided by financing activities 90,783 85,068
Net increase (decrease) in cash and
cash equivalents 5,667 (13,427)
Cash and cash equivalents at
beginning of period 35,493 47,794
Cash and cash equivalents at end of period $41,160 $34,367
(a) Total capital expenditures, including the present value of new leases,
were $216.0 million for the quarter ended May 1, 1999 and
$233.8 million for the quarter ended May 2, 1998.
Prior financial information has been reclassified to conform to current
year presentation.
AMERICAN STORES COMPANY
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
May 1, 1999 May 2, 1998
Assets
Inventory $1,734,785 $1,646,881
Other current assets 580,050 561,983
Property, plant and equipment and
capital leases, net 4,706,782 4,359,876
Goodwill, net 1,577,305 1,598,455
Other assets 331,857 328,276
$8,930,779 $8,495,471
Liabilities and Shareholders' Equity
Current maturities of long-term debt
and capital leases $51,730 $48,619
Accounts payable 1,119,584 1,114,672
Other current liabilities 736,889 704,189
Long-term debt and obligations under
capital leases, less current maturities 3,531,023 3,354,108
Other liabilities 740,241 913,888
Shareholders' equity 2,751,312 2,359,995
$8,930,779 $8,495,471
Shares issued and outstanding 277,030 274,117
Prior financial information has been reclassified to conform to current
year presentation.
STORE COUNT
Stores Stores
Quarter Ended Beginning Opened/ Closed/ Format End of
May 1, 1999 of Quarter Acquired Sold Conversions Quarter Remodels
Supermarkets 524 0 (9) (1) 514 9
Stand-alone
drug stores 773 11 (1) 0 783 11
Combination food
& drug stores 283 4 0 1 288 3
Net store count 1,580 15 (10) 0 1,585 23
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:
Teresa Beck, President, or Meredith C.
Anderson, Vice President, both of American Stores Company,
801-539-0112
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