SALT LAKE CITY, Aug. 26 /PRNewswire/ -- American Stores Company
(NYSE: ASC) today announced 1997 second quarter earnings of $0.33 per share
compared to $0.28 per share in the second quarter of 1996, an increase of 17.9
percent. Earnings for the first twenty-six weeks of 1997 were $0.59 per share
before non-recurring charges compared to $0.50 per share in 1996. Reported
earnings for the first twenty-six weeks of 1997 were $0.45 per share.
Comparable store sales increased 0.9 percent during the 1997 second
quarter and 1.3 percent for the first twenty-six weeks of 1997. Total sales
increased 3.0 percent to $4.8 billion for the quarter and 3.3 percent to $9.5
billion for the year-to-date.
Total operating profit increased 13.2 percent in the second quarter of
1997 to $212.4 million (4.5 percent of sales) from $187.7 million (4.1 percent
of sales) in the second quarter of 1996. Operating profit for the twenty-six
weeks of 1997 increased 15.7 percent to $398.6 million compared to $344.5
million for the same period in 1996.
Operating profit at the Food Store Operations for the second quarter of
1997 was $169.9 million, up 14.5 percent over the prior year second quarter.
As a percent of sales, operating profit for the Food Store Operations
increased to 5.1 percent compared with 4.4 percent in the prior year.
Operating profit at the Drug Store Operations for the second quarter of
1997 was $66.8 million, up 4.8 percent over the prior year second quarter. As
a percent of sales, operating profit for the Drug Store Operations was 4.8
percent compared to 5.0 percent in the prior year.
Interest expense increased to $56.7 million for the second quarter from
$42.4 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.
Total debt at the end of the second quarter of $3.1 billion was down $191
million from prior quarter end. The decrease is largely attributable to the
Company's working capital reduction efforts. The Company's debt to
capitalization ratio decreased to 58.5 percent as of the end of the second
quarter compared to 61.0 percent as of the end of the first quarter.
Earnings before interest, income taxes, depreciation and amortization and
LIFO charges ("FIFO EBITDA") as a percent of sales increased to 7.0 percent
for the second quarter of 1997 from 6.6 percent in the prior year.
Victor L. Lund, chairman and chief executive officer of American Stores
Company, said, "Our earnings growth and margin improvement were attained in
spite of slower comparable sales brought on principally by a deflationary
environment. Through careful pricing, effective customer loyalty card
promotions and procurement improvements we drove a profitable sales mix that
kept our loyal customers satisfied."
Regarding the Company's Delta Project, Mr. Lund went on to say, "The
centralization of our buying groups is now complete. During the quarter, we
successfully completed the final transition of our grocery and general
merchandise procurement groups to Salt Lake City. We remain on target with
our Delta Project and its related benefits."
The Company opened 6 new stores during the quarter, completed 12 remodels
and closed 16 stores during the quarter. Compared to the second quarter of
the prior year, retail square footage increased by 7.7 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 1,689 stores in 27 states, including 169 jointly
operated combination stores each of which is counted in both the 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 26 Weeks Ended
August 2, August 3, August 2, August 2
1997 1996 (b) 1997 (b) 1996 (b)
Sales $4,763,174 $4,625,066 $9,510,818 $9,205,094
Cost of sales (3,470,725) (3,390,738) (6,959,564) (6,767,590)
LIFO provision (6,000) (8,000) (14,000) (16,000)
Gross profit 1,286,449 1,226,328 2,537,254 2,421,504
27.0% 26.5% 26.7% 26.3%
Operating expenses (1,074,017) (1,038,674) (2,138,664) (2,077,036)
-22.5% -22.4% -22.5% -22.6%
Operating profit 212,432 187,654 398,590 344,468
4.5% 4.1% 4.2% 3.7%
Interest expense (56,709) (42,421) (107,505) (82,154)
Other 2,097 (1,163) (49,699)(a) (6,910)
Earnings before
income taxes 157,820 144,070 241,386 255,404
Federal & state
income taxes (67,863) (60,941) (117,204) (108,035)
Net earnings $89,957 $83,129 $124,182 $147,369
Average shares
outstanding 272,539 291,429 279,388 292,041
Earnings per share $0.33 $0.28 $0.45 $0.50
Dividends per share $0.09 $0.08 $0.17 $0.16
(a) includes one-time charges of $47.3 million ($.14 per share after tax)
related to the secondary stock offering of shares held by L.S. Skaggs and
related parties and a reserve for the sale of the Company's communications
subsidiary.
CONSOLIDATED CONDENSED BALANCE SHEETS
August 2, 1997 (b) August 3, 1996 (b)
Assets
Inventory $1,560,445 $1,483,023
Other current assets 470,902 449,384
Property, plant and
equipment and capital
leases, net 3,897,211 3,404,508
Goodwill, net 1,638,527 1,697,011
Other assets 360,839 325,165
$7,927,924 $7,359,091
Liabilities and
Shareholders' Equity
Current maturities of
long-term debt
and capital leases $96,112 $56,849
Accounts payable 951,480 888,800
Other current liabilities 777,252 728,135
Long-term debt and
obligations under capital
leases, less current
maturities 2,988,888 2,336,109
Other liabilities 927,447 916,303
Shareholders' equity 2,186,745 2,432,895
$7,927,924 $7,359,091
Shares issued and outstanding 273,022 291,300
(b) Restated as necessary to reflect the July 1997 two-for-one stock
split.
AMERICAN STORES COMPANY
SALES AND OPERATING PROFIT DETAIL
(Dollars in thousands)
(Unaudited)
13 Weeks Ended 26 Weeks Ended
August 2, August 3, August 2, August 3,
1997 1996(a) 1997(b) 1996(a)
Comparable Store Sales:
Eastern food
operations -1.3% 2.6% -1.3% 3.1%
Western food
operations -0.5% 1.5% 0.2% 2.6%
Total food store
operations -0.9%(a) 2.0% -0.5%(a) 2.8%
Drug store
operations 5.4%(a) 5.8% 6.1%(a) 5.4%
Total 0.9% 3.0% 1.3% 3.5%
Sales:
Food store
operations $3,358,569 $3,354,756 0.1% $6,700,549 $6,676,514 0.4%
Drug store
operations 1,396,092 1,262,522 10.6% 2,792,397 2,514,788 11.0%
Other 8,513 7,788 17,872 13,792
Total sales $4,763,174 $4,625,066 3.0% $9,510,818 $9,205,094 3.3%
Operating Profit:
Food store
operations $169,934 $148,368 14.5% $323,154 $279,569 15.6%
Drug store
operations 66,808 63,743 4.8% 126,441 116,703 8.3%
LIFO (6,000) (8,000) (14,000) (16,000)
Purchase
accounting
amortization (19,338) (19,723) (38,678) (39,144)
Other 1,028 3,266 1,673 3,340
Total operating
profit $212,432 $187,654 13.2% $398,590 $344,468 15.7%
Food Store
0perations
Sales $3,358,569 $3,354,756 $6,700,549 $6,676,514
Gross profit 923,636 882,839 1,810,597 1,751,665
% sales 27.5% 26.3% 27.0% 26.2%
Operating
expenses (753,702) (734,471) (1,487,443) (1,472,096)
% sales -22.4% -21.9% -22.2% -22.0%
Operating profit $169,934 $148,368 $323,154 $279,569
% sales 5.1% 4.4% 4.8% 4.2%
Drug Store
Operations
Sales $1,396,092 $1,262,522 $2,792,397 $2,514,788
Gross profit 366,456 348,452 735,036 680,197
% sales 26.2% 27.6% 26.3% 27.0%
Operating
expenses (299,648) (284,709) (608,595) (563,494)
% sales -21.4% -22.6% -21.8% -22.4%
Operating profit $66,808 $63,743 $126,441 $116,703
% sales 4.8% 5.0% 4.5% 4.6%
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) If food store operations comparable store sales are modified to
include the drug side of combination stores, comparable store sales would have
been -0.5% and drug store operations would have been 6.3% for the quarter and
for the year-to-date, food store operations would have been flat and drug
store comparable store sales would have been 6.7%.
AMERICAN STORES COMPANY
CONSOLIDATED CONDENSED CASH FLOWS
(Amounts in thousands)
(Unaudited)
26 Weeks Ended
August 2, 1997 August 3, 1996
Cash Flows From Operating
Activities:
Net earnings $124,182 $147,369
Adjustments to reconcile
net earnings to net cash
provided by operating activities:
Depreciation and amortization 228,059 219,156
Net (gain) loss on asset sales (3,820) 3,861
Changes in operating
assets and liabilities 146,742 (61,246)
Net cash provided by
operating activities 495,163 309,140
Cash Flows From
Investing Activities:
Proceeds from the sale of assets 23,658 13,428
Capital expenditures (a) (453,519) (395,889)
Net cash (used in) investing
activities (429,861) (382,461)
Cash Flows From
Financing Activities:
New public debt 500,000 350,000
Other decreases in borrowing (98,804) (197,210)
Cash dividends (47,868) (46,713)
Repurchase of common stock (464,086) (b) (37,798)
Other changes in equity 29,090 15,541
Net cash (used in) provided
by financing activities (71,668) 83,820
Net (decrease) increase in
cash and cash equivalents (6,366) 10,499
Cash and cash equivalents
at beginning of period 37,467 102,422
Cash and cash equivalents
at end of period $31,101 $112,921
(a) Total capital expenditures, including the present value of new leases,
were $240.9 million for the quarter and $496.6 million year-to-date ended
August 2, 1997, and $256.2 million for the quarter and $437.5 million for
year-to-date ended August 3, 1996.
(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/ End of
Quarter Acquired Sold Quarter Remodels
Quarter-Ended
August 2, 1997
Food store
operations 814 2 (9) 807 4
Drug store
operations 885 4 (7) 882 8
Gross store
count 1,699 6 (16) 1,689 12
Less combination
stores (a) (170) -- 1 (169) (5)
Net store count 1,529 6 (15) 1,520 7
Stores Stores 1997
Beginning of Opened/ Closed/ Year-to-
Year Acquired Sold date Remodels
Year-to-date
August
Food store
operations 813 13 (19) 807 8
Drug store
operations 882 10 (10) 882 10
Gross store
count 1,695 23 (29) 1,689 18
Less combination
stores (a) (166) (4) 1 (169) (5)
Net store count 1,529 19 (28) 1,520 13
(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, Investor and Public
Relations, 801-539-0112
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