SALT LAKE CITY, May 27 /PRNewswire/ -- American Stores Company (NYSE: ASC)
today announced first quarter 1998 diluted earnings per share of $0.24
compared to $0.12 in the first quarter of 1997. The prior year includes non-
recurring 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.
Total sales increased 2.6 percent to $4.9 billion for the quarter and
comparable store sales increased 0.9 percent over the prior year first
quarter. Comparable store sales in the Company's pharmacies increased 13.6
percent for the first quarter 1998.
Gross profit margin in the first quarter decreased 30 basis points to 26.0
percent compared to 26.3 percent in the prior year. The decrease was
primarily due to more aggressive promotional spending in response to increased
competition.
Operating and administrative expenses as a percent of sales decreased 10
basis points to 22.4 percent compared to 22.5 percent in the prior year. The
decrease is attributed to the Company's expense reduction initiatives.
Interest expense increased to $60.1 million for the first quarter from
$50.8 million in the prior year due to higher debt levels primarily due to the
Company's financing of the repurchase of shares from its former chairman and
related parties.
Victor L. Lund, chairman and chief executive officer of American Stores
Company, said, "I am pleased with our increase in both total and comparable
store sales for the quarter. We are sharpening our focus on our customers
through our new marketing structure, improvement in our loyalty card programs
and store development plans. We believe our continued execution of this
strategy will serve to offset low food inflation and the effects of increased
competition, which are pressuring our sales and margins."
Mr. Lund went on to say, "We made progress in reducing operating expenses
as a percent of sales. Our operations management team did an excellent job in
keeping customer service levels high while controlling expenses."
The Company opened or acquired 13 new stores, completed 6 remodels and
closed 12 stores during the quarter. Compared to the end of the prior year
first quarter, retail square footage increased by 7.3 percent before closures
and 3.7 percent on a net basis after closures.
American Stores Company is one of the nation's largest food and drug
retailers. It operates 1,558 stores in 25 states including 267 food and drug
combination stores, 540 supermarkets and 751 stand-alone drug stores. The
Company operates 1,105 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 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; and the ability
of the Company and its vendors, financial institutions and others to resolve
Year 2000 processing issues in a timely manner.
AMERICAN STORES COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands except per share amounts)
(Unaudited)
13 Weeks Ended
May 2, 1998 May 3, 1997
Sales $4,872,686 $4,747,644
Cost of merchandise sold (3,606,144) (3,496,839)
Gross Profit 1,266,542 1,250,805
26.0% 26.3%
Operating and administrative expenses (1,092,027) (1,069,874)
(22.4%) (22.5%)
Restructuring and impairment 0 (13,400)(a)
Total operating expenses (1,092,027) (1,083,274)
(22.4%) (22.8%)
Operating Profit 174,515 167,531
3.6% 3.5%
Interest income 964 744
Interest expense (60,132) (50,796)
Shareholder related expense 0 (33,913)(b)
Earnings before income taxes 115,347 83,588
Federal & state income taxes (49,488) (49,341)
Net earnings $65,861 $34,225
Basic earnings per share $0.24 $0.12
Diluted earnings per share $0.24 $0.12
Average shares - basic 273,942 286,237
Average shares - diluted 275,600 287,495
Dividends per share $0.09 $0.08
CONSOLIDATED CONDENSED BALANCE SHEETS
May 2, 1998 May 3, 1997
Assets
Inventory $1,646,881 $1,657,423
Other current assets 561,983 515,455
Property, plant and equipment
and capital leases, net 4,259,117 3,787,650
Goodwill, net 1,598,455 1,651,884
Other assets 429,035 327,495
$8,495,471 $7,939,907
Liabilities and Shareholders' Equity
Current maturities of long-term debt
and capital leases $48,619 $79,014
Accounts payable 1,114,672 943,550
Other current liabilities 704,189 697,598
Long-term debt and obligations under
capital leases, less current maturities 3,354,108 3,196,733
Other liabilities 913,888 925,681
Shareholders' equity 2,359,995 2,097,351
$8,495,471 $7,939,907
Shares issued and outstanding 274,290 272,298
(a) Charges related to the sale of a division of the Company's
communications subsidiary.
(b) 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)
13 Weeks Ended
May 2, 1998 May 3, 1997
Cash Flows From Operating Activities:
Net earnings $65,861 $34,225
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 122,090 113,372
Net (gain) loss on asset sales (474) 242
Changes in operating assets and liabilities (175,572) (21,907)
Net cash provided by operating activities 11,905 125,932
Cash Flows From Investing Activities:
Proceeds from the sale of assets 58,763 5,467
Capital expenditures(a) (169,163) (165,567)
Net cash used in investing activities (110,400) (160,100)
Cash Flows From Financing Activities:
Issuance of debt 145,000 300,000
Other (decrease) increases in borrowing (44,985) 292,002
Cash dividends (24,631) (23,348)
Repurchase of common stock (b) 0 (454,086)
Other changes in equity 9,684 5,133
Net cash provided by financing activities 85,068 119,701
Net (decrease) increase in cash
and cash equivalents (13,427) 85,533
Cash and cash equivalents
at beginning of period 47,794 37,467
Cash and cash equivalents at end of period $34,367 $123,000
(a) Total capital expenditures, including the present value of new leases,
were $210.2 million for the quarter ended May 2, 1998 and $190.3 million for
the quarter ended May 3, 1997.
(b) Repurchased 24.4 million shares from the family of Mr. L.S. Skaggs and
certain family and charitable trusts and issued a 4.6 million shares for
overallotments related to the secondary offering in April, 1997.
STORE COUNT
Stores Stores
Beginning of Opened/ Closed/ Format End of
QuarterAcquired Sold ConversionsQuarter Remodels
Quarter Ended May 2, 1998
Supermarkets 543 1 (3) (1) 540 5
Stand-alone drug stores 752 6 (8) 1 751 0
Combination food
& drug stores 262 6 (1) 0 267 1
Net store count 1,557 13 (12) 0 1,558 6
SOURCE American Stores Company
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Related links:
http://www.americanstores.com
Company News On-Call: http://www.prnewswire.com or
fax, 800-758-5804, ext. 048750
CONTACT:
Dan Zvonek, Director, Investor and Public
Relations of American Stores, 801-539-0112
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