SALT LAKE CITY, Aug. 25 /PRNewswire/ -- American Stores Company
(NYSE: ASC) today announced second quarter 1998 diluted earnings per share of
$0.32 compared to $0.33 in the second quarter of 1997. Total sales increased
3.9 percent to $5.0 billion for the quarter and comparable store sales
increased 1.8 percent over the prior year second quarter.
Basic and diluted earnings per share for the first twenty-six weeks of
1998 were $0.56 compared to $0.44 in the prior year. The prior year first
quarter included 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. For the first twenty-six weeks of 1998, total sales increased
3.3 percent and comparable store sales increased 1.4 percent over the prior
year.
Comparable store sales in the Company's pharmacies increased 18.4 percent
for the second quarter 1998 and 15.9 percent for the twenty-six weeks
year-to-date.
Gross profit margin in the second quarter decreased 30 basis points to
26.7 percent compared to 27.0 percent in the prior year. The decrease was
primarily due to continued promotional spending in the Company's food stores.
The Company has continued its aggressive pricing and promotional strategy in
several of its key supermarket and combination store markets. In pharmacy,
increased sales of branded drugs and inflation reduced gross profit percentage
but gross profit dollars increased from a year ago.
Operating and administrative expenses as a percent of sales for the second
quarter decreased 10 basis points to 22.4 percent compared to 22.5 percent in
the prior year. The decrease is attributable to the Company's expense
reduction initiatives and the leveraging effect of a higher sales base.
Interest expense increased to $59.0 million for the second quarter of 1998
from $56.7 million in the prior year.
Victor L. Lund, chairman and chief executive officer of American Stores
Company, said, "Our total and comparable store sales continued to show solid
increases in the quarter. Comparable store sales in our food stores improved
from last quarter, reflecting the effects of our marketing and capital
spending programs. Comparable store sales in our drug stores were out
standing and reflected strong pharmacy sales."
Mr. Lund went on to say, "The supermarket competition remained strong in
our Acme and Lucky markets and low food inflation persists. However, our
Jewel Food division reported excellent results and the positive effects of our
expense control initiatives in our drug stores are beginning to take hold and
should help to improve profitability going forward."
Looking ahead to the third and fourth quarters of 1998, Mr. Lund said, "We
estimate our earnings per share for the entire 1998 fiscal year will be
between $1.26 and $1.32, or 10 to 15 percent above the comparable prior year.
We believe we will see continued positive momentum in both our food and drug
stores sales and profits as we cycle into softer prior year comparisons,
continue to control costs and realize increased profits in our newer stores."
The Company opened 13 new stores, completed 13 remodels and closed 13
stores during the quarter. Compared to the end of the prior year second
quarter, retail square footage increased by 7.9 percent before closures and
4.2 percent on a net basis after closures.
As previously announced, American Stores Company entered into a definitive
merger agreement with Albertson's, Inc. (NYSE: ABS) on August 2, 1998.
American Stores Company is one of the nation's largest food and drug
retailers. It operates 1,558 stores in 26 states including 269 food and drug
combination stores, 535 supermarkets and 754 stand-alone drug stores. The
Company operates 1,117 pharmacies within its stores. Its stores operate under
the names Acme Markets, Jewel Food Stores, Lucky Stores, Osco Drug and Sav-on
drugs.
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 26 Weeks Ended
August 1, August 2, August 1, August 2,
1998 1997 1998 1997
Sales $4,950,016 $4,763,174 $9,822,702 $9,510,818
Cost of merchandise
sold (3,631,046) (3,476,725) (7,237,190) (6,973,564)
Gross profit 1,318,970 1,286,449 2,585,512 2,537,254
26.7% 27.0% 26.3% 26.7%
Operating and
administrative
expenses (1,106,478) (1,074,029) (2,198,505) (2,143,903)
-22.4% -22.5% -22.4% -22.5%
Restructuring and
impairment 0 0 0 (13,400)a
Total operating
expense (1,106,478) (1,074,029) (2,198,505) (2,157,303)
-22.4% -22.5% -22.4% -22.7%
Operating profit 212,492 212,420 387,007 379,951
4.3% 4.5% 3.9% 4.0%
Interest income 855 2,109 1,819 2,853
Interest expense (58,956) (56,709) (119,088) (107,505)
Shareholder related
expense 0 0 0 (33,913)b
Earnings before
income taxes 154,391 157,820 269,738 241,386
Federal & state
income taxes (66,231) (67,863) (115,717) (117,204)
Net earnings $88,160 $89,957 $154,021 $124,182
Basic earnings
per share $0.32 $0.33 $0.56 $0.44
Diluted earnings
per share $0.32 $0.33 $0.56 $0.44
Average shares -
basic 274,437 272,535 274,189 279,386
Average shares -
diluted 275,905 274,257 275,752 280,808
Dividends per share $0.09 $0.09 $0.18 $0.17
CONSOLIDATED CONDENSED BALANCE SHEETS
August 1, 1998 August 2, 1997
Assets
Inventory $1,549,924 $1,560,445
Other current assets 486,271 470,902
Property, plant and
equipment and capital
leases, net 4,300,317 3,897,211
Goodwill, net 1,600,195 1,638,527
Other assets 482,696 360,839
$8,419,403 $7,927,924
Liabilities and Shareholders' Equity
Current maturities of
long-term debt and
capital leases $40,287 $96,112
Accounts payable 1,074,624 951,480
Other current liabilities 722,819 777,252
Long-term debt and
obligations under capital
leases, less current
maturities 3,261,042 2,988,888
Other liabilities 888,305 927,447
Shareholders' equity 2,432,326 2,186,745
$8,419,403 $7,927,924
Shares issued and
outstanding 274,519 273,022
(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)
26 Weeks Ended
August 1, 1998 August 2, 1997
Cash Flows From Operating
Activities:
Net earnings $154,021 $124,182
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation and amortization 244,834 228,059
Net (gain) on asset sales (6,887) (3,820)
Changes in operating assets
and liabilities (124,706) 81,292
Net cash provided by operating
activities 267,262 429,713
Cash Flows From Investing
Activities:
Proceeds from the sale of assets 81,486 23,658
Capital expenditures (a) (330,861) (388,069)
Net cash used in investing
activities (249,375) (364,411)
Cash Flows From Financing
Activities:
Issuance of debt 145,000 500,000
Other (decreases) in borrowing (145,524) (98,804)
Cash dividends (49,310) (47,868)
Net repurchase of common stock 0 (454,086) b
Other changes in equity 18,533 29,090
Net cash used in financing
activities (31,301) (71,668)
Net (decrease) in cash and
cash equivalents (13,414) (6,366)
Cash and cash equivalents at
beginning of period 47,794 37,467
Cash and cash equivalents at
end of period $34,380 $31,101
(a) Total capital expenditures, including the present value of new leases,
were $188.3 million for the quarter and $398.5 million year-to-date
ended August 1, 1998, and $240.9 million for the quarter and $496.6
million for year-to-date ended August 2, 1997.
(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.
STORE COUNT
Quarter Ended Stores Stores
August 1, Beginning Opened/ Closed/ Format End of
1998 of Quarter Acquired Sold Conversions Quarter Remodels
Supermarkets 540 2 (8) 1 535 3
Stand-alone
drug stores 751 7 (4) 0 754 5
Combination food
& drug stores 267 4 (1) (1) 269 5
Net store count 1,558 13 (13) 0 1,558 13
Year-to-date Stores Stores 1998
August 1, Beginning Opened/ Closed/ Format Year-
1998 of Year Acquired Sold Conversions to-date Remodels
Supermarkets 543 3 (11) 0 535 8
Stand-alone drug
stores 752 13 (12) 1 754 5
Combination food
& drug stores 262 10 (2) (1) 269 6
Net store count 1,557 26 (25) 0 1,558 19
SOURCE American Stores Company
 back to top
Company News On-Call: http://www.prnewswire.com or
fax, 800-758-5804, ext. 048750
Related links:
http//www.americanstores.com
CONTACT:
Dan Zvonek, Director - Investor and Public
Relations of American Stores Company, 801-539-0112
|
