SALT LAKE CITY, March 3 /PRNewswire/ -- American Stores company
(NYSE: ASC) today announced fourth quarter 1997 diluted earnings per share of
$0.35 compared to $0.22 in the fourth quarter of 1996. Diluted earnings per
share for the 1997 fiscal year ended January 31, 1998, were $1.01 compared to
$0.98 per share in the prior year. The current fiscal year includes
non-recurring charges of $0.14 per share related to the secondary offering of
shares owned by former chairman L.S. Skaggs and related parties and the sale
of a communications subsidiary. The prior year fourth quarter and full year
results reflect special charges related primarily to the implementation of
certain Delta re-engineering initiatives aggregating $100 million before taxes
or $0.21 per share.
Comparable store sales increased 0.2 percent during the fourth quarter of
1997 and 0.9 percent for the year. Total sales increased 1.4 percent to $5.0
billion for the quarter and 2.5 percent to $19.1 billion for the year.
Comparable sales in the Company's pharmacies increased 11.7 percent for the
fourth quarter and 11.5 percent for the year.
Interest expense increased to $54.8 million for the fourth quarter from
$46.1 million in the prior year due to higher debt levels primarily due to the
Company's financing of the repurchase of shares from former chairman L.S.
Skaggs and related parties as well as increased capital expenditures.
Victor L. Lund, chairman and chief executive officer of American Stores
Company, said, "I am pleased with our control over operating expenses this
quarter. We achieved a slight reduction in expenses as a percent of sales in
spite of pressures from many new store openings and strong competition. I am
also pleased with our increase of $357 million in cash flows from operating
activities. This reflects our focused efforts to improve working capital."
Regarding the Company's drugstores, Mr. Lund went on to say, "Our
initiatives to improve operating profit by focusing on increasing margins and
reducing expenses in our drugstores are proceeding well on track."
The Company opened or acquired 41 new stores, completed 17 remodels and
closed 25 stores during the quarter. For the year, the Company opened or
acquired 96 new stores, completed 65 remodels and closed or sold 68 stores.
Compared to the end of the prior year, retail square footage increased by 7.9
percent before closures and 4.2 percent on a net basis after closures.
American Stores Company is one of the nation's largest food and drug
retailers. It operates 1,557 stores in 26 states including 263 food and drug
combination stores, 543 supermarkets and 751 stand-alone drug stores. The
Company operates 1,104 pharmacies within its stores. Its principal retail
operations include Acme Markets, Jewel Food Stores, Lucky Northern California
Division, Lucky Southern California Division, Jewel Osco Southwest, Osco Drug
and Sav-on.
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; and changes in economic conditions which affect the buying patterns
of the Company's customers.
AMERICAN STORES COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands except per share amounts)
(Unaudited)
13 Weeks Ended 52 Weeks Ended
Jan. 31, Feb. 1, Jan. 31, Feb. 1,
1998 1997(C) 1998 1997(C)
Sales $4,980,597 $4,909,673 $19,138,880 $18,678,129
Cost of merchandise sold (3,664,500) (3,593,757) (14,036,830) (13,701,743
LIFO credit (provision) 11,567 10,592 (2,433) (11,408)
Gross profit 1,327,664 1,326,508 5,099,617 4,964,978
26.7% 27.0% 26.6% 26.6%
Operating expense (1,100,442) (1,090,273) (4,317,576) (4,220,187)
(22.1%) (22.2%) (22.6%) (22.6%)
Restructuring and impairment 0 (77,151) (13,400)(A) (77,151)
Total Operating expense (1,100,442) (1,167,424) (4,330,976) (4,297,338)
(22.1%) (23.8%) (22.6%) (23.0%)
Operating profit 227,222 159,084 768,641 667,640
4.6% 3.2% 4.0% 3.6%
Interest Income 1,538 3,456 5,647 8,470
Interest Expense (54,773) (46,067) (216,710) (171,558)
Other 0 0 (33,913)(B) 0
Earnings before income taxes 173,987 116,473 523,665 504,552
Federal & State income taxes(77,824) (52,378) (243,045) (217,331)
Net earnings $96,163 $64,095 $280,620 $287,221
Average shares
outstanding (D) 273,573 291,658 276,409 291,776
Basic earnings per share (D) $0.35 $0.22 $1.02 $0.98
Average shares -
diluted (D) 274,607 292,762 277,769 292,651
Diluted earnings
per share (D) $0.35 $0.22 $1.01 $0.98
Dividends per share (D) $0.09 $0.08 $0.35 $0.32
CONSOLIDATED CONDENSED BALANCE SHEETS
Jan. 31, 1998 Feb. 1, 1997
Assets
Inventory $1,714,229 $1,725,542
Other current assets 547,551 440,954
Property, plant and equipment
and capital leases, net 4,260,921 3,653,713
Goodwill, net 1,611,812 1,665,242
Other assets 401,502 395,954
$8,536,015 $7,881,405
Liabilities and Shareholders' Equity
Current maturities of long-term
debt and capital leases $100,935 $66,003
Accounts payable 1,186,845 851,285
Other current liabilities 833,554 884,393
Long-term debt and obligations under
capital leases, less current
maturities 3,201,970 2,613,144
Other liabilities 903,629 931,153
Shareholders' equity 2,309,082 2,535,427
$8,536,015 $7,881,405
Shares issued and outstanding 273,607 291,829(D)
(A) Charges related to the sale of the Company's communications
subsidiary
(B) Charges related to the secondary stock offering of shares held by
L.S. Skaggs and related parties
(C) Includes special charges of $100.0 million, pre-tax ($.21 per share,
after tax) included in the cost of merchandise sold ($10.0 million),
operating expenses ($12.9 million) and restructuring and impairment
($77.1 million)
(D) Restated as necessary to reflect the July 1997 two-for-one stock
split.
Prior financial information has been reclassified to conform to the
current year presentation.
AMERICAN STORES COMPANY
CONSOLIDATED CONDENSED CASH FLOWS
(Amounts in thousands)
(Unaudited)
52 Weeks Ended
Jan. 31, 1998 Feb. 1, 1997
Cash Flows From Operating Activities:
Net earnings $280,620 $287,221
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 468,869 440,445
Net (gain) loss on asset sales (772) 265
Changes in operating assets and liabilities 106,314 (230,166)
Net cash provided by operating activities 855,031 497,765
Cash Flows From Investing Activities:
Proceeds from the sale of assets 39,447 47,670
Capital expenditures(A) (996,288) (943,080)
Net cash (used in) investing activities (956,841) (895,410)
Cash Flows From Financing Activities:
New public debt 500,000 350,000
Other increases in borrowing 119,101 88,979
Cash dividends (97,042) (93,351)
Repurchase of common stock (454,086)(B) (37,798)
Other changes in equity 44,164 24,860
Net cash provided by financing activities 112,137 332,690
Net increase (decrease) in cash and
cash equivalents 10,327 (64,955)
Cash and cash equivalents at beginning
of period 37,467 102,422
Cash and cash equivalents at end of period $47,794 $37,467
(A) Total capital expenditures, including the present value of new
leases, were $380.7 million for the quarter and $1,157 million for
the fiscal year ended January 31, 1998, and $324.6 million for the
quarter and $1,065 million for the fiscal year ended February 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 tot he secondary offering in April
1997.
STORE COUNT
Stores Stores
Beginning of Opened/ Closed/ End of
Quarter Ended Quarter Acquired Sold Quarter Remodels
January 31, 1998
Supermarkets 553 1 (11) 543 6
Stand-alone drug stores 740 23 (12) 751 9
Combination food &
drug stores 248 17 (2) 263 2
Net store count 1,541 41 (25) 1,557 17
Stores Stores
Beginning of Opened/ Closed/ 1997
Year-to-date Year Acquired Sold Year-to-date Remodels
January 31, 1998
Supermarkets 576 7 (40) 543 20
Stand-alone drug stores 721 56 (26) 751 26
Combination food &
drug stores 232 33 (2) 263 19
Net store count 1,529 96 (68) 1,557 65
SOURCE American Stores Company
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CONTACT:
Dan Zvonek, Director - Investor and Public
Relations for American Stores Company, 801-539-0112
CNOC: http://www.prnewswire.com or fax, 800-758-5804, ext.
048750
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