SALT LAKE CITY, May 28 /PRNewswire/ -- American Stores Company (NYSE: ASC)
today announced 1997 first quarter earnings of $0.52 per share before non-
recurring items, compared to $0.44 per share in 1996, an 18.2 percent increase
over the prior year. Reported earnings were $0.24 per share for the quarter.
Total sales were $4.7 billion, 3.7 percent above the prior year.
Comparable store sales in the first quarter were up 1.8 percent. Operating
profit increased 18.7 percent in 1997 to $186.2 million (3.9 percent of sales)
from $156.8 million (3.4 percent of sales) in 1996. Gross profit and
operating expenses as a percent of sales improved from the prior year in spite
of the added cost of more new store openings in the current year than in the
prior year.
During the quarter, the Company recorded non-recurring charges totaling
$47.3 million or $0.28 per share primarily for expenses related to the
secondary stock offering to the public of shares owned by the family of former
chairman L.S. Skaggs and certain family and charitable trusts. Also included
are non-recurring charges related to the Company's sale of its communications
subsidiary.
Operating profit at the Food Store Operations was $153.2 million, up
16.8 percent over the prior year. As a percent of sales, operating profit
increased to 4.6 percent compared with 3.9 percent in the prior year.
Operating profit at the Drug Store Operations increased in the first
quarter to $59.6 million, up 12.6 percent over the prior year. As a percent
of sales, operating profit increased to 4.3 percent compared with 4.2 percent
in the prior year.
Comparable store sales for the Drug Store Operations were up 6.8 percent
on strong pharmacy and general merchandise sales. Food Store Operations
comparable store sales, if restated to include the drug side of combination
stores, increased 0.6 percent. Food Store operations reported comparable
store sales, which generally include only the grocery side of the Company's
combination stores, were down 0.1 percent.
Outstanding debt totaled $3.3 billion at the end of the quarter compared
with $2.7 billion at the end of the 1996 fiscal year. The increase in debt
was due primarily to the financing of the repurchase of 12.2 million shares
from the Skaggs' group. Interest expense was $50.8 million in the first
quarter of 1997, up from $39.7 million in 1996. The increase was due to
higher debt levels and higher average interest rates. Near the end of the
first quarter, the Company completed a $300 million bond offering, the
proceeds of which were used to pay down variable rate debt. The repurchase
transaction also increased debt to capitalization to 61.0 percent as of the
end of the first quarter.
During the quarter, the Company implemented a series of working capital
reduction initiatives that improved its inventories, receivables and accounts
payable.
Earnings before interest, income taxes, depreciation and amortization,
nonrecurring charges and LIFO charges ("FIFO EBITDA") as a percent of sales
increased to 6.4 percent from 5.8 percent in the prior year.
Victor L. Lund, chairman and chief executive officer, said, "We are very
pleased with our accomplishments this quarter. We turned in a strong quarter
in both sales and earnings and successfully completed the repurchase and
secondary offering of shares owned by the Skaggs' interests. The results are
a testament to the ability of our entire management group to stay focused on
our operations during times of change."
The Company opened 17 new stores (including 4 food and drug combination
stores each of which is counted as two stores), completed 6 remodels and
closed 13 stores during the quarter. Compared to the first quarter of the
prior year, retail square footage increased by 8.1 percent before store
closures and 4.8 percent on a net basis after closures.
American Stores Company is one of the nation's largest food and drug
retailers. It operates 1,699 stores in 27 states, including 170 jointly
operated combination stores each of which is counted in both Food Store and
Drug Store totals. 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 contains 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. 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 ability of the Company to
implement its Delta initiatives in accordance with the currently contemplated
schedule and budget; 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
May 3, 1997 May 4, 1996
Sales $4,747,644 $4,580,028
Cost of sales (3,488,839) (3,376,852)
LIFO provision (8,000) (8,000)
Gross profit 1,250,805 1,195,176
26.3% 26.1%
Operating expenses (1,064,647) (1,038,362)
-22.4% -22.7%
Operating profit 186,158 156,814
3.9% 3.4%
Interest expense (50,796) (39,733)
Other (51,796) (a) (5,747)
Earnings before
income taxes 83,566 111,334
Federal & state
income taxes (49,341)(b) (47,094)
Net earnings $34,225 $64,240
Average shares outstanding 143,119 146,326
Earnings per share $0.24 $0.44
Dividends per share $0.16 $0.16
(a) Includes one-time charges of $47.3 million Pre-tax ($.28 per share
after-tax) related to the secondary stock offering and a reserve for the sale
of the Company's communications subsidiary.
(b) Excluding the one-time charges, the effective federal and state income
tax rate was 43%.
CONSOLIDATED CONDENSED BALANCE SHEETS
May 3, 1997 May 4, 1996
Assets
Inventory $1,657,423 $1,517,713
Other current assets 515,455 503,217
Property, plant and equipment, net 3,719,017 3,199,946
Property under capital leases, net 68,633 73,765
Goodwill, net 1,651,884 1,709,534
Other assets 327,495 332,069
$7,939,907 $7,336,244
Liabilities and Shareholders' Equity
Current maturities of long-term debt
and capital leases $79,014 $179,345
Accounts payable 943,550 920,433
Other current liabilities 697,598 754,823
Long-term debt and obligations under capital
leases, less current maturities 3,196,733 2,205,445
Other liabilities 925,661 895,299
Shareholders' equity 2,097,351 2,380,899
$7,939,907 $7,336,244
Shares issued and outstanding 136,148 145,875
AMERICAN STORES COMPANY
SALES AND OPERATING PROFIT DETAIL
(Dollars in thousands)
(Unaudited)
13 Weeks Ended
May 3, 1997 May 4, 1996
Comparable Store Sales:
Eastern food operations -1.4% 3.7%
Western food operations 1.0% 3.8%
Total food store
operations -0.1% (a) 3.7%
Drug store operations 6.8% (a) 5.1%
Total 1.8% 4.1%
Sales:
Food store operations $3,341,980 $3,321,758 0.6%
Drug store operations 1,396,305 1,252,266 11.5%
Other 9,359 6,004
Total sales $4,747,644 $4,580,028 3.7%
Operating Profit:
Food store operations $153,220 $131,201 16.8%
Drug store operations 59,633 52,960 12.6%
LIFO (8,000) (8,000)
Purchase accounting
amortization (19,340) (19,421)
Other 645 74
Total operating profit $186,158 $156,814 18.7%
Food Store Operations
Sales $3,341,980 $3,321,758
Gross profit 886,961 868,826
% sales 26.5% 26.2%
Operating expenses (733,741) (737,625)
% sales -22.0% -22.2%
Operating profit $153,220 $131,201
% sales 4.6% 3.9%
Drug Store Operations
Sales $1,396,305 $1,252,266
Gross profit 368,580 331,745
% sales 26.4% 26.5%
Operating expenses (308,947) (278,785)
% sales -22.1% -22.3%
Operating profit $59,633 $52,960
% sales 4.3% 4.2%
NOTES:
Comparable store sales include stores opened one year or more and
replacement stores.
Food store operations include Acme Markets, Jewel Food Stores, Lucky
Northern California Division, Lucky Southern California Division, and Jewel
Osco Southwest Drug store operations include Osco Drug and Sav-on.
(a) Food store operations comparable store sales are .6% and drug store
operations are 6.8% after restatement to include the drug side of combination
stores with the food store operations.
AMERICAN STORES COMPANY
CONSOLIDATED CONDENSED CASH FLOWS
(Amounts in thousands)
(Unaudited)
13 Weeks Ended
May 3, 1997 May 4, 1996
Cash Flows From Operating Activities:
Net earnings $34,225 $64,240
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 113,372 107,700
Net loss on asset sales 242 3,541
Changes in operating assets and liabilities 43,543 (143,193)
Net cash provided by operating activities 191,382 32,288
Cash Flows From Investing Activities:
Proceeds from the sale of assets 5,467 12,802
Capital expenditures(a) (231,017) (169,553)
Net cash (used in) investing activities (225,550) (156,751)
Cash Flows From Financing Activities:
New public debt 300,000 0
Other increases in borrowing 292,002 144,622
Cash dividends (23,348) (23,428)
Repurchase of common stock (454,086)(b) (23,916)
Other changes in equity 5,133 9,507
Net cash provided by financing activities 119,701 106,785
Net increase (decrease) in cash and cash equivalents $8,533 (17,678)
Cash and cash equivalents at beginning of period 37,467 102,422
Cash and cash equivalents at end of period $123,000 $84,744
(a) Total capital expenditures, including the present value of new leases,
were $255.7 million for the quarter ended May 3, 1997, and $181.3 million for
the quarter ended May 4, 1996.
(b) Repurchased 12.2 million shares from the family of Mr. L.S. Skaggs and
certain family and charitable trusts and issued 2.3 million shares for
overallotments related to the secondary offering.
STORE COUNT
Stores Stores
Beginning of Opened/ Closed/ End of
Quarter Ended May 3, 1997 Quarter Acquired Sold Quarter Remodels
Food store operations 813 11 (10) 814 4
Drug store operations 882 6 (3) 885 2
Gross store count 1,695 17 (13) 1,699 6
Less combination stores (a) (166) (4) -- (170) --
Net store count 1,529 13 (13) 1,529 6
(a) Jointly operated combination stores are counted in both the food and
drug store operations.
SOURCE American Stores Company
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CONTACT:
Dan Zvonek, Director of Investor and Public
Relations for American Stores Company, 801-539-0112
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