SALT LAKE CITY, Nov. 24 /PRNewswire/ -- American Stores Company
(NYSE: ASC) today announced third quarter 1998 diluted earnings per share of
$0.29 compared to $0.22 in the third quarter of 1997, an increase of
31.8 percent. Total sales increased 4.3 percent to $4.8 billion for the
quarter and comparable store sales increased 1.3 percent over the prior year
third quarter.
Diluted earnings per share for the first thirty-nine weeks of 1998 were
$0.85 compared to $0.66 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 thirty-nine weeks of 1998, total sales increased 3.6 percent and
comparable store sales increased 1.4 percent over the prior year.
Comparable store sales in the Company's pharmacies increased 17.9 percent
for the third quarter 1998 and 16.6 percent for the thirty-nine weeks
year-to-date. Total pharmacy sales increased by 22.1 percent for the third
quarter and 20.0 percent for the year-to-date.
Gross profit margin in the third quarter increased 20 basis points to
26.8 percent compared to 26.6 percent in the prior year. Operating and
administrative expenses as a percent of sales for the third quarter decreased
40 basis points to 22.7 percent compared to 23.1 percent in the prior year.
Operating profit as a percent of sales improved to 4.1 percent compared to
3.5 percent in the prior year third quarter.
The Company opened 47 new stores, completed 49 remodels and closed
36 stores during the first thirty-nine weeks of 1998. Compared to the end of
the prior year third quarter, retail square footage increased by 6.9 percent
before closures and 3.6 percent on a net basis after closures.
Victor L. Lund, chairman and chief executive officer of American Stores
Company, said, "I am very pleased with our earnings performance for the
quarter. We developed a comprehensive plan earlier this year designed to
deliver solid results in the second half. Through sound execution, our plans
to increase sales and expand operating margins were successful."
Mr. Lund also said, "We expect our fourth quarter to be strong. We
continue to believe we will achieve our previously stated goal of increasing
1998 full year comparable earnings per share by 10 to 15 percent over the
prior year."
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 merger transaction is expected to close in early
1999 pending regulatory approvals and is subject to customary closing
conditions. As described in the Joint Proxy Statement and Prospectus,
shareholder approval of the merger will result in the Company recognizing a
fourth quarter 1998 charge of approximately $150 million related to stock
options. An additional charge related to stock options would be recognized
upon regulatory approval. If the merger is consummated, the charges will be
non-cash.
American Stores Company is one of the nation's largest food and drug
retailers. It operates 1,568 stores in 26 states including 275 food and drug
combination stores, 530 supermarkets and 763 stand-alone drug stores. The
Company operates 1,134 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 39 Weeks Ended
October 31, November 1, October 31, November 1,
1998 1997 1998 1997
Sales $4,847,756 $4,647,465 $14,670,458 $14,158,283
Cost of merchandise
sold (3,543,005) (3,412,766) (10,772,195) (10,372,330)
LIFO provision (5,000) 0 (13,000) (14,000)
Gross profit 1,299,751 1,234,699 3,885,263 3,771,953
26.8% 26.6% 26.5% 26.6%
Operating and
administrative
expenses (1,102,028) (1,073,231) (3,300,533) (3,217,134)
-22.7% -23.1% -22.5% -22.7%
Restructuring and
Impairment 0 0 0 (13,400)(a)
Total operating
expense (1,102,028) (1,073,231) (3,300,533) (3,230,534)
-22.7% -23.1% -22.5% -22.8%
Operating profit 197,723 161,468 584,730 541,419
4.1% 3.5% 4.0% 3.8%
Interest income 737 1,256 2,556 4,109
Interest expense (57,050) (54,432) (176,138) (161,937)
Shareholder related
expense 0 0 0 (33,913)(b)
Earnings before
Income taxes 141,410 108,292 411,148 349,678
Federal & state
income taxes (60,665) (48,017) (176,382) (165,221)
Net earnings $80,745 $60,275 $234,766 $184,457
Basic earnings per
share $0.29 $0.22 $0.86 $0.67
Diluted earnings
per share $0.29 $0.22 $0.85 $0.66
Average shares -
basic 274,830 273,292 274,403 277,355
Average shares -
diluted 278,051 275,101 276,637 278,853
Dividends per share $0.09 $0.09 $0.27 $0.26
CONSOLIDATED CONDENSED BALANCE SHEETS
October 31, 1998 November 1, 1997
Assets
Inventory $1,753,633 $1,799,571
Other current assets 485,587 447,648
Property, plant and
equipment and capital
leases, net 4,362,267 4,081,304
Goodwill, net 1,586,651 1,625,169
Other assets 490,863 383,143
$8,679,001 $8,336,835
Liabilities and
Shareholders' Equity
Current maturities of
long-term debt and
capital leases $41,828 $108,924
Accounts payable 1,243,479 1,286,225
Other current liabilities 714,315 764,945
Long-term debt and
obligations under
capital leases, less
current maturities 3,335,799 3,022,962
Other liabilities 847,067 925,438
Shareholders' equity 2,496,513 2,228,341
$8,679,001 $8,336,835
Shares issued and
outstanding 274,920 273,320
(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)
39 Weeks Ended
October 31, 1998 November 1, 1997
Cash Flows From Operating
Activities:
Net earnings $234,766 $184,457
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation and amortization 367,042 347,561
Net (gain) on asset sales (12,935) (3,304)
Changes in operating assets
and liabilities (204,633) 174,825
Net cash provided by
operating activities 384,240 703,539
Cash Flows From Investing
Activities:
Proceeds from the sale of
assets 104,648 38,363
Capital expenditures(a) (522,147) (700,099)
Net cash used in investing
activities (417,499) (661,736)
Cash Flows From Financing
Activities:
Issuance of debt 145,000 500,000
Other (decreases) in
borrowing (69,226) (51,918)
Cash dividends (74,022) (72,443)
Net repurchase of common stock 0 (454,086)(b)
Other changes in equity 26,687 34,985
Net cash used in financing
activities 28,439 (43,462)
Net (decrease) in cash and
cash equivalents (4,820) (1,659)
Cash and cash equivalents at
beginning of period 47,794 37,467
Cash and cash equivalents at
end of period $42,974 $35,808
(a) Total capital expenditures, including the present value of new
leases, were $231.2 million for the quarter and $629.7 million year-
to-date ended October 31, 1998, and $345.5 million for the quarter
and $842.1 million for year-to-date ended November 1, 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
Stores Stores
Beginning of Opened/ Closed/ Format End of
Quarter Acquired Sold Conversions Quarter Remodels
Quarter Ended
October 31, 1998
Supermarkets 535 1 (7) 1 530 5
Stand-alone drug
stores 754 14 (5) 0 763 20
Combination food &
drug stores 270 6 0 (1) 275 6
Net store count 1,559 21 (12) 0 1,568 31
Stores Stores
Beginning of Opened/Closed/ Format 1998
Year Acquired Sold Conversions YTD Remodels
Year-to-date
October 31, 1998
Supermarkets 543 4 (18) 1 530 13
Stand-alone drug
Stores 752 27 (17) 1 763 24
Combination food &
drug stores 262 16 (1) (2) 275 12
Net store count 1,557 47 (36) 0 1,568 49
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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