<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended February 3, 1994 Commission file number 1-6187
ALBERTSON'S, INC.
______________________________________________________
(Exact name of Registrant as specified in its Charter)
Delaware 82-0184434
________________________ ________________________________
(State of Incorporation) (Employer Identification Number)
250 Parkcenter Boulevard, P.O. Box 20, Boise, Idaho 83726
(208) 385-6200
SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT:
Name of each exchange
Title of each class on which registered
__________________________________________ _______________________
Common Stock, $1.00 par value, 253,545,783 New York Stock Exchange
shares outstanding on March 31, 1994 Pacific Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes x . No .
_____ _____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (17 CFR section 405) is not contained herein, and will not
be contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. ( )
The aggregate market value of the voting stock held by nonaffiliates of the
Registrant, computed by reference to the price at which the stock was sold as
of the close of business on March 31, 1994: $5,490,233,064.
Documents Incorporated by Reference
___________________________________
Listed hereunder are the documents, any portions of which are incorporated by
reference, and the Parts of this Form 10-K into which such portions are
incorporated:
1. The Registrant's Annual Report to Stockholders for the fiscal year
ended February 3, 1994, portions of which are incorporated by
reference into Part II and Part IV of this Form 10-K; and
2. The Registrant's definitive proxy statement for use in connection with
the Annual Meeting of Stockholders to be held on May 27, 1994,(the
"Proxy Statement") to be filed within 120 days after the Registrant's
fiscal year ended February 3, 1994, portions of which are incorporated
by reference into Part III of this Form 10-K.
<PAGE>
Documents Incorporated by Reference
___________________________________
Part II
_______
Item 5 - Market for the Registrant's Inside back cover of the Annual Report
Common Equity and Related to Stockholders for the year ended
Stockholder Matters February 3, 1994
Item 6 - Selected Financial Data Page 40 of the Annual Report to
Stockholders for the year ended
February 3, 1994
Item 7 - Management's Discussion and Pages 17 to 19 of the Annual
Analysis of Financial Report to Stockholders for the
Condition and Results of year ended February 3, 1994
Operations
Item 8 - Financial Statements and Pages 20 to 39 and page 41 of the
Supplementary Data Annual Report to Stockholders for
the year ended February 3, 1994
Part III
________
Item 10 - Directors and Executive The material contained under the
Officers of the Registrant headings "Election of Directors",
"Nominees for Election as Class II
Directors", "Continuing Class III
Directors", "Continuing Class I
Directors" and "Filing of Forms
Pursuant to Section 16 of the
Securities Exchange Act of 1934" in
the Proxy Statement
Item 11 - Executive Compensation The material contained under the
headings "Compensation of Executive
Officers" and "Retirement Benefits" in
the Proxy Statement
Item 12 - Security Ownership of The material contained under the
Certain Beneficial Owners heading "Voting Securities and
and Management Principal Holders Thereof" in the
Proxy Statement
Item 13 - Certain Relationships and The material contained under the
Related Transactions heading "Certain Transactions" in
the Proxy Statement
Part IV
_______
Item 14 - Exhibits, Financial Pages 20 to 39 and page 41 of the
Statement Schedules and Annual Report to Stockholders for
Reports on Form 8-K the year ended February 3, 1994
<PAGE>
ALBERTSON'S, INC.
TABLE OF CONTENTS
Item Page
____ ____
PART I
1. Business 4
2. Properties 6
3. Legal Proceedings 8
4. Submission of Matters to a Vote of Security Holders 8
PART II
5. Market for the Registrant's Common Equity and Related
Stockholder Matters 9
6. Selected Financial Data 9
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
8. Financial Statements and Supplementary Data 9
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 9
PART III
10. Directors and Executive Officers of the Registrant 10
11. Executive Compensation 12
12. Security Ownership of Certain Beneficial Owners
and Management 12
13. Certain Relationships and Related Transactions 12
PART IV
14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 13
<PAGE>
PART I
______
Item 1. Business
_________________
General
The Registrant, Albertson's, Inc. (the "Company"), is incorporated under
the laws of the State of Delaware and is the successor to a business founded
by J. A. Albertson in 1939. The Company is the fourth largest retail food and
drug chain in the United States with operations in 19 Western, Midwestern and
Southern states. As of February 3, 1994, the Company operated 676 stores
consisting of 536 combination food-drug stores, 96 conventional supermarkets
and 44 warehouse stores. Retail operations are supported by eleven Company-
owned distribution centers.
During 1993, the Company changed the classification of its store types to
better reflect the store formats the Company is developing today.
Consequently, the superstore format has been eliminated and the Company now
classifies all stores over 35,000 square feet (except warehouse stores) as
combination food-drug stores.
The Company's combination food-drug stores are super grocery/super
drugstores under one roof and range in size from 35,000 to 75,000 square feet.
Most of these stores offer prescription drugs and an expanded section of
cosmetics and nonfoods in addition to specialty departments such as service
seafood and meat, salad bar, bakery, lobby/video, service delicatessen and
floral. Food and nonfood shopping areas are served by a common set of
checkstands and approximately equal amounts of selling space are devoted to
each area.
The Company's conventional supermarkets range in size from 15,000 to
35,000 square feet. These stores offer a full selection in the basic
departments of grocery, meat, produce, dairy and limited nonfood lines. Many
locations have an in-store bakery and service delicatessen.
The Company's warehouse stores are operated primarily under the name "Max
Food and Drug". These no-frills stores range in size from 17,000 to 73,000
square feet and offer significant savings with special emphasis on discounted
meat and produce.
The Company's retail operations are organized into regions with each
region comprised of three to five divisions. A senior vice president who also
serves as a regional manager directs the operating divisions in retail
strategies, planning, marketing approaches and employee development. Each
operating division is managed by a division vice president or manager. The
division staff includes district sales managers responsible for an average of
19 stores and merchandising specialists in areas such as grocery, produce,
pharmacy, liquor, general merchandise, bakery, meat and delicatessen.
District sales managers, as well as store directors, are responsible for
overall store operations, and merchandising specialists serve as advisors to
help maintain adherence to overall division pricing and merchandising
policies.
The Company's business is highly competitive. Competition is based
primarily on price, product quality and variety, service and location. There
is direct competition from many supermarkets, including independent stores and
local outlets of regional and national chains. Competition also exists with
respect to particular products from such retailers as convenience stores,
warehouse stores, drugstores and nonfood superstores.
<PAGE>
The Company has been able to efficiently supply its stores with
merchandise through various means. Stores are provided with merchandise from
the Company's distribution centers, outside wholesalers or directly from
manufacturers in an effort to obtain merchandise at the lowest possible cost.
With the opening of the Company's Plant City, Florida Distribution Center,
which became fully operational in March 1994, the Company now services all of
its retail stores from company-owned distribution centers.
All of the Company's stores carry a broad range of national brands and
offer private label products in many merchandise categories. The Company's
stores emphasize everyday low prices and provide consumer information such as:
nutritional signing in the meat and produce departments, freshness code
dating, unit pricing and food information pamphlets. The Company also offers
a choice of recyclable paper or plastic bags and collection bins for plastic
bag recycling.
As of February 3, 1994, the Company employed approximately 75,000 people.
Approximately 43% of the employees are covered by collective bargaining
agreements. During 1994, local area agreements covering approximately 9% of
the Company's employees will be renegotiated in the normal course of business.
The Company considers its present relations with employees to be satisfactory
and intends to continue employee development, training, employee benefit, wage
and salary administration programs.
Albertson's stores are located in the Western, Midwestern and Southern
areas of the United States. The following is a summary of the stores by state
as of February 3, 1994:
Albertson's Retail Stores
_________________________
Arizona 21
Arkansas 1
California 150
Colorado 40
Florida 78
Idaho 28
Kansas 4
Louisiana 14
Montana 7
Nebraska 6
Nevada 24
New Mexico 18
Oklahoma 16
Oregon 43
South Dakota 1
Texas 120
Utah 32
Washington 65
Wyoming 8
___
Total 676
<PAGE>
Item 2. Properties
___________________
As of year end, the Company operated 676 stores in the states discussed
in Item 1. An analysis of stores by division is as follows:
Number
of Stores
_________
Idaho (Southern Idaho (25), Northern Nevada (7),
Eastern Oregon (4) and Wyoming (1)) 37
Inland Empire (Eastern Washington (17),
Montana (7) and Northern Idaho (2)) 26
Utah (Utah (32) and Wyoming (1)) 33
Western Washington 46
Oregon (Western Oregon (39) and Washington (2)) 41
Southern California (California (87) and
Southern Nevada (17)) 104
Northern California 38
Rocky Mountain (Colorado (31), Wyoming (5),
and South Dakota (1)) 37
Southwest (Arizona (21), New Mexico (17), Texas (3)
and California (1)) 42
Midwest (Oklahoma (16), Nebraska (6) and Kansas (4)) 26
South Texas 31
North Texas (Texas (78), Louisiana (14)
and Arkansas (1)) 93
Florida 78
Max Food & Drug (California (24), Colorado (9),
Texas (8), Idaho (1), New Mexico (1) and Wyoming (1)) 44
___
676
The Company has actively pursued an expansion program of adding new
retail stores, enlarging and remodeling existing stores and replacing old
stores. During the past ten years, the Company has built or acquired 397
stores. Approximately 94% of the Company's current square footage has been
opened or remodeled during the same period. The Company continues to follow
the policy of closing stores that are obsolete or lack satisfactory profit
potential.
The following is a summary of stores, by classification, as of the
indicated fiscal year end:
1993 1992 1991 1990 1989
____ ____ ____ ____ ____
Combination Food-Drug 536 506 407 364 334
Conventional Stores 96 106 123 136 157
Warehouse Stores 44 44 32 31 32
___ ___ ___ ___ ___
Total . 676 656 562 531 523
The following table summarizes the Company's square footage by store type
as of the indicated fiscal year end (in thousands):
1993 1992 1991 1990 1989
______ ______ ______ ______ ______
Combination Food-Drug 26,602 25,159 19,647 17,589 16,155
Conventional Stores 2,741 3,009 3,471 3,800 4,277
Warehouse Stores 2,031 1,959 1,383 1,345 1,379
______ ______ ______ ______ ______
Total 31,374 30,127 24,501 22,734 21,811
The Company has expanded and improved its distribution facilities in
areas where opportunities exist to improve service to the retail stores and
generate an adequate return on investment. During 1993, approximately 70% of
the merchandise purchased for resale in Company retail stores was received
from Company-operated distribution facilities.
<PAGE>
Albertson's distribution system consists of eleven owned centers located
strategically throughout the Company's operating area. These units operate as
separate profit centers. The following is a summary of the Company's
distribution and manufacturing facilities as of February 3, 1994:
Location Square Footage
________ ______________
Fort Worth, Texas
Groceries, Frozen Food, Produce, Meat and Deli 1,100,000
Brea, California
Groceries, Frozen Food, Produce, Liquor,
Bakery, Meat and Deli 1,059,000
Plant City, Florida
Groceries, Frozen Food, Produce, Liquor, Meat,
Deli and high volume Health and Beauty Care 954,000
Phoenix, Arizona
Groceries, Frozen Food, Produce, Liquor, Meat,
Deli and high volume Health and Beauty Care 687,000
Portland, Oregon
Groceries, Frozen Food, Produce, Meat and Deli 576,000
Ponca City, Oklahoma
Health and Beauty Care, General Merchandise
and Pharmaceuticals 419,000
Salt Lake City, Utah
Groceries, Frozen Food, Produce, Meat and Deli 406,000
Denver, Colorado
Groceries, Frozen Food, Produce, Meat and Deli 355,000
Sacramento, California
Groceries, Frozen Food, Produce, Liquor, Meat
and Deli 302,000
Boise, Idaho
Health and Beauty Care and General Merchandise 158,000
Ice Cream Plant 11,000
_________
Total 6,027,000
Prior to 1984 the Company financed a major portion of its stores under
sale and leaseback arrangements. The leases normally require the Company to
pay for property taxes, insurance and general maintenance. Some of the leases
provide for contingent rent in addition to minimum rent if sales exceed
specified amounts. Typically such leases contain renewal options which allow
the Company the right to extend the lease for varying additional periods.
Since 1984 the Company has financed most retail store construction
internally, rather than through sale and leaseback arrangements, thus
retaining ownership of its land and buildings. The Company plans to use
future cash to be provided by operating activities and short or medium-term
financing to continue expansion plans in the foreseeable future.
As of February 3, 1994, the Company held title to the land and buildings
of 42% of the Company's stores and held title to the buildings on leased land
of an additional 6% of the Company's stores. The Company also holds title to
the land and buildings of the corporate headquarters in Boise, Idaho and all
of the distribution centers.
<PAGE>
Item 3. Legal Proceedings
__________________________
On March 30, 1992, Super Food Services, Inc. filed a complaint against
the Company in Florida state court (Circuit Court of the Ninth Judicial
Circuit, Orange County, Florida, Case No. CI 92-2636) originally seeking
specific performance of an alleged agreement for the purchase of Super Food's
existing Orlando distribution facilities. Super Food also sought an
injunction to force the Company to maintain its business relationship with
Super Food pending resolution of the litigation. The trial court denied such
injunctive relief, and the court's ruling has been upheld on appeal. Super
Food filed an amended complaint in January of 1993 and is seeking damages of
approximately $97 million for the breach of an alleged oral requirements
contract between Super Food and the Company or, in the alternative,
approximately $27 million in damages for the Company's breach of an alleged
agreement to purchase Super Food's Florida facilities. On March 29, 1994, a
final judgment was granted by the trial court in favor of Albertson's on the
$97 million claim, which final judgment has essentially the same legal effect
as the granting of summary judgment in favor of Albertson's as to that claim.
In addition, after a hearing on March 31, 1994, the trial court indicated that
Albertson's motion for summary judgment on the $27 million claim will be
granted, and an order to that effect will be entered shortly. It is
anticipated that Super Food intends to appeal the foregoing judgments. The
Company continues to believe it has substantial and meritorious defenses to
the claims and will vigorously defend against any appeals that may be taken.
The outcome of any appeals cannot be determined at this time.
The Company is also involved in other routine litigation incidental to
operations. In the opinion of management, the ultimate resolution of the
above described lawsuit and other pending legal proceedings will not have a
material adverse effect on the Company's financial condition or results of
operations.
Item 4. Submission of Matters to a Vote of Security Holders
____________________________________________________________
No matters were submitted during the fourth quarter of 1993 to a vote of
security holders through the solicitation of proxies or otherwise.
<PAGE>
PART II
_______
Item 5. Market for the Registrant's Common Equity and Related
_______________________________________________________________
Stockholder Matters
___________________
The principal markets in which the Company's common stock is traded and
the related security holder matters are set forth under the caption "Company
Stock Information" on the inside back cover of the Company's 1993 Annual
Report to Stockholders. This information is incorporated herein by this
reference thereto. The market value of the Company's common stock on
March 31, 1994 was $28.625 per share.
Item 6. Selected Financial Data
________________________________
Selected financial data of the Company for the fiscal years 1989 through
1993 is included under the caption "Five Year Summary of Selected Financial
Data" on page 40 of the Company's 1993 Annual Report to Stockholders. This
information is incorporated herein by this reference thereto.
Item 7. Management's Discussion and Analysis of Financial Condition and
________________________________________________________________________
Results of Operations
_____________________
The information required under this item is included under the caption
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" on pages 17 to 19 of the Company's 1993 Annual Report to
Stockholders. This information is incorporated herein by this reference
thereto.
Item 8. Financial Statements and Supplementary Data
____________________________________________________
The Company's consolidated financial statements and related notes
thereto, together with the Independent Auditors' Report and the selected
quarterly financial data of the Company are presented on pages 20 to 39 and
page 41 of the Company's 1993 Annual Report to Stockholders and are
incorporated herein by this reference thereto.
Item 9. Changes in and Disagreements with Accountants on Accounting and
________________________________________________________________________
Financial Disclosure
____________________
There have been no reports on Form 8-K filed within 24 months prior to
the date of the most recent financial statements reporting a change of
accountants or reporting disagreements on any matter of accounting principle,
practice, financial statement disclosure or auditing scope or procedure.
<PAGE>
PART III
________
Item 10. Directors and Executive Officers of the Registrant
____________________________________________________________
Directors
_________
The information regarding directors and nominees for directors of the
Company is presented under the headings "Election of Directors", "Nominees for
Election as Class II Directors", "Continuing Class III Directors", "Continuing
Class I Directors" and "Filings of Forms Pursuant to Section 16 of the
Securities Exchange Act of 1934" in the Company's definitive proxy statement
for use in connection with the 1994 Annual Meeting of Stockholders (the "Proxy
Statement") to be filed within 120 days after the Company's fiscal year ended
February 3, 1994, and is incorporated herein by this reference thereto.
Executive Officers
__________________
Age Date First Appointed
as of as an Executive
Name 3/31/94 Position Officer
____ _______ ________ ____________________
Warren E. McCain 68 Chairman of the Executive 06/30/72
Committee of the Board
Gary G. Michael 53 Chairman of the Board and 12/02/74
Chief Executive Officer
John B. Carley 60 President and Chief Operating 04/05/76
Officer
Michael F. Reuling 47 Executive Vice President, 12/30/79
Store Development
Thomas R. Saldin 47 Executive Vice President, 12/26/83
Administration and
General Counsel
Thomas E. Brother 52 Senior Vice President, 07/30/89
Distribution
A. Craig Olson 42 Senior Vice President, Finance 12/22/86
and Chief Financial Officer
Carl W. Pennington 56 Senior Vice President and 08/02/87
Regional Manager
Allen R. Rowland 49 Senior Vice President and 08/07/89
Regional Manager
Ronald P. Schiff 55 Senior Vice President, 07/01/91
Merchandising
Patrick S. Steele 44 Senior Vice President, 06/10/90
Information Systems and Technology
Ronald D. Walk 50 Senior Vice President and 05/28/84
Regional Manager
Steven D. Young 45 Senior Vice President, Human 12/02/91
Resources
David G. Dean 43 Group Vice President, 12/02/91
Procurement
<PAGE>
Executive Officers (continued)
______________________________
Age Date First Appointed
as of as an Executive
Name 3/31/94 Position Officer
____ _______ ________ ____________________
Peggy Jo Jones 41 Group Vice President, Employee 11/29/93
Development and Communications
Richard L. King 44 Group Vice President, 01/01/94
Merchandising
Richard J. Navarro 41 Group Vice President and 11/29/93
Controller
Warren E. McCain became Chairman of the Executive Committee of the Board
on February 1, 1991. Previously, he served as Chairman of the
Board and Chief Executive Officer from December 6, 1976.
Gary G. Michael assumed the position of Chairman of the Board and Chief
Executive Officer on February 1, 1991. Previously, he held the
positions of Vice Chairman of the Board from 1984 and Executive
Vice President and Chief Financial and Corporate Development
Officer from 1983.
John B. Carley assumed additional responsibilities as Chief Operating
Officer on February 1, 1991. He has served as President since
1984.
Michael F. Reuling has served as Executive Vice President, Store
Development since 1986.
Thomas R. Saldin was promoted to Executive Vice President, Administration
and General Counsel in 1991. Previously, he served as Senior Vice
President and General Counsel from 1983.
Thomas E. Brother was promoted to Senior Vice President, Distribution in 1991.
Previously he served as Group Vice President, Distribution from 1989.
A. Craig Olson was promoted to Senior Vice President, Finance and Chief
Financial Officer on February 1, 1991. Previously, he served as Group
Vice President, Finance from 1986.
Carl W. Pennington was promoted to Senior Vice President and Regional Manager
in 1988. Previously he served as Senior Vice President, Corporate
Merchandising from 1987.
Allen R. Rowland was promoted to Senior Vice President and Regional Manager in
1989. Previously, he served as Vice President, Florida Division from
1987.
Ronald P. Schiff, Senior Vice President, Merchandising joined Albertson's
in 1991 as Senior Vice President, Non-Foods Merchandising. Prior
to joining the Company he was associated with Payless Drugstores
from 1960 where he served in various management positions, including
President and CEO.
Patrick S. Steele was promoted to Senior Vice President, Information Systems
and Technology in 1993. Previously he served as Group Vice President,
Management Information Systems from 1990 and Vice President, Management
Information Systems from 1983.
<PAGE>
Ronald D. Walk has held the position of Senior Vice President and Regional
Manager since 1984.
Steven D. Young was promoted to Senior Vice President, Human Resources in
1993. Previously he served as Group Vice President, Human Resources
from 1991 and Vice President, Personnel from 1983.
David G. Dean was promoted to Group Vice President, Procurement in 1991.
Previously, he served as Vice President, Private Label Operations from
1988.
Peggy Jo Jones was promoted to Group Vice President, Employee Development and
Communications in 1993. Previously she served as Vice President,
Employee Development and Communications from 1993, Vice President,
Retail Accounting from 1992, Assistant Vice President, Retail Accounting
from 1990 and Director of Retail Store Automation from 1989.
Richard L. King was promoted to Group Vice President, Merchandising in 1994.
Previously he served as Vice President of the Rocky Mountain Division
from 1992, and Division Manager, Rocky Mountain Division from 1991.
Prior to that time he served as Director of Operations, Texas Division
since 1990, and District Sales Manager, Texas and Idaho Divisions, since
1987.
Richard J. Navarro was promoted to Group Vice President and Controller in
1993. Previously he served as Vice President and Controller from 1989
and Vice President, Property and Tax Accounting since 1986.
Item 11. Executive Compensation
________________________________
Information concerning executive compensation is presented under the
headings "Compensation of Executive Officers" and "Retirement Benefits" in the
Proxy Statement. Such information is incorporated herein by this reference
thereto.
Item 12. Security Ownership of Certain Beneficial Owners and Management
________________________________________________________________________
Information with respect to security ownership of certain beneficial
owners and management is set forth under the heading "Voting Securities and
Principal Holders Thereof" in the Proxy Statement. Such information is
incorporated herein by this reference thereto.
Item 13. Certain Relationships and Related Transactions
________________________________________________________
Information concerning related transactions is presented under the
heading "Certain Transactions" in the Proxy Statement. This information is
incorporated herein by this reference thereto.
<PAGE>
PART IV
_______
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
_________________________________________________________________________
(a)1. Financial Statements:
The Independent Auditors' Report, together with the Consolidated
Financial Statements and the related notes thereto, are listed
below and are incorporated herein by this reference thereto from
pages 20 to 39 of the Company's Annual Report to Stockholders for
the year ended February 3, 1994:
Consolidated Earnings -- years ended February 3, 1994;
January 28, 1993; January 30, 1992.
Consolidated Balance Sheets -- February 3, 1994;
January 28, 1993; January 30, 1992.
Consolidated Cash Flows -- years ended February 3, 1994;
January 28, 1993; January 30, 1992.
Consolidated Stockholders' Equity -- years ended
February 3, 1994; January 28, 1993; January 30, 1992.
Notes to Consolidated Financial Statements.
Independent Auditors' Report.
Quarterly Financial Data:
Quarterly Financial Data for the years ended February 3, 1994,
January 28, 1993 and January 30, 1992 is set forth on page 41 of
the Annual Report to Stockholders for the year ended February 3,
1994, and is incorporated herein by this reference thereto.
(a)2. Schedules:
Page of
Form 10-K
_________
Schedule V - Property, Plant and Equipment 16
Schedule VI - Accumulated Depreciation, Depletion 17
and Amortization of Property,
Plant and Equipment
Schedule IX - Short-Term Borrowings 18
All other schedules are omitted because they are not required,
or because the required information is included in the consolidated
financial statements or notes thereto.
(a)2(3). Exhibits:
A list of the exhibits required to be filed as part of this
report
is set forth in the Index to Exhibits on page 20 hereof.
<PAGE>
(b) Reports on Form 8-K:
There were no reports on Form 8-K during the quarter ended
February 3, 1994.
For the purposes of complying with the amendments to the rules governing
Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the
Company hereby undertakes as follows, which undertaking shall be incorporated
by reference into Company's Registration Statements on Form S-8 Nos. 2-53959,
2-80776, 33-2139, 33-7901, 33-15062 and 33-43635.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the Act) may be permitted to directors, officers and controlling
persons of the Company, the Company has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Company will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
<PAGE>
INDEPENDENT AUDITORS' REPORT
____________________________
The Board of Directors and Stockholders
Albertson's, Inc.:
We have audited the consolidated financial statements of Albertson's,
Inc. and subsidiaries as of February 3, 1994, January 28, 1993 and January 30,
1992 and for the years then ended, and have issued our report thereon dated
March 23, 1994; such financial statements and report are included in your 1993
Annual Report to Stockholders and are incorporated herein by reference. Our
audits also included the financial statement schedules of Albertson's, Inc.
and subsidiaries, listed in Item 14. These financial statement schedules are
the responsibility of the Company's management. Our responsibility is to
express an opinion based on our audits. In our opinion, such financial
statement schedules, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
DELOITTE & TOUCHE
Boise, Idaho
March 31, 1994
INDEPENDENT AUDITORS' CONSENT
_____________________________
We consent to the incorporation by reference in Registration Statements
numbered 2-53959, 2-80776, 33-2139, 33-7901, 33-15062, and 33-43635 on Form
S-8 and Registration Statements numbered 33-46436 and 33-49329 on Form S-3 of
Albertson's, Inc. and subsidiaries of our reports dated March 23, 1994,
appearing in and incorporated by reference in the Annual Report on Form 10-K
of Albertson's, Inc. and subsidiaries for the year ended February 3, 1994.
DELOITTE & TOUCHE
Boise, Idaho
April 4, 1994
<PAGE>
<TABLE>
ALBERTSON'S, INC.
_________________
<CAPTION>
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
__________________________________________
(in thousands)
Col. A Col. B Col. C Col. D Col. E Col. F
Balance Other Balance
at Beg. Additions Increase at End
Classification of Period at Cost Retirements (Decrease) of Period
______________ _________ _________ ___________ __________ _________
Year Ended February 3, 1994
___________________________
<S> <C> <C> <C> <C> <C>
Land $ 415,911 $ 60,481 $ 9,300 $ 300 $ 467,392
Buildings 930,883 167,195 4,291 3,894 1,097,681
Fixtures & Equipment 1,001,627 180,362 51,254 1,130,735
Leasehold Improvements 231,533 33,078 2,851 (4,194) 257,566
Capitalized Leases 147,316 15,048 6,566 155,798
__________ ________ _______ ________ __________
$2,727,270 $456,164 $74,262 $ -0- $3,109,172
Year Ended January 28, 1993
___________________________
Land $ 289,526 $137,095 $10,710 $ 415,911
Buildings 721,280 210,975 2,173 $ 801 930,883
Fixtures & Equipment 835,592 225,003 58,968 1,001,627
Leasehold Improvements 180,034 55,802 3,502 (801) 231,533
Capitalized Leases 139,773 13,982 6,439 147,316
__________ ________ _______ ______ __________
$2,166,205 $642,857 $81,792 $ -0- $2,727,270
Year Ended January 30, 1992
___________________________
Land $ 259,897 $ 34,171 $ 4,864 $ 322 $ 289,526
Buildings 637,225 89,559 8,672 3,168 721,280
Fixtures & Equipment 763,645 118,390 46,443 835,592
Leasehold Improvements 158,054 26,404 2,281 (2,143) 180,034
Capitalized Leases 140,623 4,471 3,974 (1,347) 139,773
__________ ________ _______ ________ __________
$1,959,444 $272,995 $66,234 $ -0- $2,166,205
</TABLE>
<PAGE>
<TABLE>
ALBERTSON'S, INC.
_________________
<CAPTION>
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION
_________________________________________________
AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
_________________________________________________
(in thousands)
Col. A Col. B Col. C Col. D Col. E Col. F
Balance Charged to Other Balance
at Beg. Costs and Increase at End
Classification of Period Expenses Retirements (Decrease) of Period
______________ _________ _________ ___________ __________ _________
Year Ended February 3, 1994
___________________________
<S> <C> <C> <C> <C> <C>
Buildings $187,791 $ 50,834 $ 1,121 $ 1,778 $ 239,282
Fixtures & Equipment 530,647 119,653 43,359 606,941
Leasehold Improvements 91,637 19,850 1,688 (1,778) 108,021
Capitalized Leases 72,176 6,462 5,564 73,074
________ ________ _______ ________ __________
$882,251 $196,799 $51,732 $ -0- $1,027,318
Year Ended January 28, 1993
___________________________
Buildings $144,743 $ 42,837 $ 482 $ 693 $187,791
Fixtures & Equipment 480,659 106,163 56,175 530,647
Leasehold Improvements 78,067 17,135 2,872 (693) 91,637
Capitalized Leases 70,058 6,329 4,211 72,176
________ ________ _______ ______ ________
$773,527 $172,464 $63,740 $ -0- $882,251
Year Ended January 30, 1992
___________________________
Buildings $112,843 $ 33,213 $ 2,241 $ 928 $144,743
Fixtures & Equipment 441,607 82,178 43,126 480,659
Leasehold Improvements 68,939 12,138 2,306 (704) 78,067
Capitalized Leases 67,601 6,343 3,662 (224) 70,058
________ ________ _______ ______ ________
$690,990 $133,872 $51,335 $ -0- $773,527
</TABLE>
Depreciation and amortization is provided on the straight-line method.
Buildings and equipment are depreciated over the estimated useful life of the
asset. Leasehold improvements are amortized over the shorter of the life of
the applicable lease or the life of the asset. Capitalized leases are
amortized over their primary term. The principal rates used in computing the
annual depreciation and amortization are as follows:
Buildings 2.86 - 4.00% Leasehold improvements 6.67 - 10.00%
Fixtures and equipment 12.50 - 33.33% Capitalized leases 3.33 - 33.33%
<PAGE>
<TABLE>
ALBERTSON'S, INC.
_________________
<CAPTION>
SCHEDULE IX - SHORT-TERM BORROWINGS
___________________________________
(in thousands)
Col. A Col. B Col. C Col. D Col. E Col. F
Weighted
Average Average
Category of Maximum Amount Interest
Aggregate Weighted Amount Outstanding Rate
Short-Term Balance Average Outstanding During the During the
Borrowings at End Interest During the Period Period
(Note 1) of Period Rate Period (Note 2) (Note 3)
___________ _________ ________ ___________ ___________ __________
Year Ended February 3, 1994
___________________________
<S> <C> <C> <C> <C> <C>
Bank Borrowings $10,000 3.32% $15,000 $229 3.28%
Year Ended January 28, 1993
___________________________
Bank Borrowings $5,000 3.17% $40,000 $4,102 3.47%
Year Ended January 30, 1992
___________________________
Bank Borrowings $30,000 5.14% $30,000 $5,481 5.20%
</TABLE>
Note 1 Bank borrowings consist of overnight borrowings under line of
credit agreements with banks and borrowings under the
Company's revolving credit agreement which consist of notes
with maturities up to six months.
Note 2 Average amount outstanding during the period was computed by
dividing the total of daily outstanding principal balances by
the number of days in the fiscal year.
Note 3 Weighted average interest rate during the period was computed
by dividing the actual short-term interest expense by the
average amount outstanding during the period as described in
Note 2 above.
<PAGE>
Signatures
__________
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, Albertson's, Inc. has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ALBERTSON'S, INC.
By GARY G. MICHAEL
___________________________
Gary G. Michael
(Chairman of the Board and
Chief Executive Officer)
Date: April 4, 1994
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities indicated as of April 4,
1994.
WARREN E. McCAIN
_________________________________
Warren E. McCain
(Chairman of the Executive
Committee of the Board and
Director)
JOHN B. CARLEY
_________________________________
John B. Carley
(President and Chief Operating
Officer and Director)
RICHARD J. NAVARRO
_________________________________
Richard J. Navarro
(Group Vice President and
Controller)
(Chief Accounting Officer)
A. GARY AMES
_________________________________
A. Gary Ames
(Director)
PAUL I. CORDDRY
_________________________________
Paul I. Corddry
(Director)
CLARK A. JOHNSON
_________________________________
Clark A. Johnson
(Director)
WILL M. STOREY
_________________________________
Will M. Storey
(Director)
GARY G. MICHAEL
_________________________________
Gary G. Michael
(Chairman of the Board and
Chief Executive Officer and
Director)
A. CRAIG OLSON
_________________________________
A. Craig Olson
(Senior Vice President, Finance
and Chief Financial Officer)
KATHRYN ALBERTSON
_________________________________
Kathryn Albertson
(Director)
JOHN B. FERY
________________________________
John B. Fery
(Director)
CHARLES D. LEIN
_________________________________
Charles D. Lein
(Director)
J. B. SCOTT
_________________________________
J. B. Scott
(Director)
STEVEN D. SYMMS
_________________________________
Steven D. Symms
(Director)
<PAGE>
Index to Exhibits
Filed with the Annual Report
on Form 10-K for the
Year Ended February 3, 1994
Number Description
______ ___________
3.1 Restated Certificate of Incorporation(1)
3.2 By-Laws dated September 1, 1993
4.1 Stockholder Rights Plan Agreement(2)
4.1.1 First Amendment to Stockholder Rights Plan Agreement (dated
August 31, 1987)(3)
4.1.2 Second Amendment to Stockholder Rights Plan Agreement (dated
November 28, 1988)(4)
4.1.3 Third Amendment to Stockholder Rights Plan Agreement (dated
September 6, 1989)(5)
4.2 Indenture, dated as of May 1, 1992, between Albertson's, Inc.,
and Morgan Guaranty Trust Company of New York as Trustee (6)
9 Inapplicable
10.2 Kathryn Albertson Stock Agreement(7)*
10.5 Form of Beneficiary Agreement for Key Executive Life Insurance(8)*
10.6 Executive Deferred Compensation Plan (amended and restated
February 1, 1989)(9)*
10.6.1 Amendment to Executive Deferred Compensation Plan (dated
December 4, 1989)(10)*
10.7 1975 Employees' Stock Option Plan (amended September 6, 1983)(11)*
10.8 Form of 1975 Nonstatutory Stock Option Agreement(7)*
10.9 Description of Bonus Incentive Plans (amended December 3,
1984)(12)*
10.10 Agreement Among Albertson's, Inc., Theo Albrecht Stiftung and
Theo Albrecht dated as of February 15, 1980(7)
10.10.1 Letter Amendment of October 13, 1982 regarding Exhibit 10.10(13)
10.10.2 First Amendment dated April 11, 1984 to Agreement among
Albertson's, Inc., Theo Albrecht Stiftung and Theo Albrecht(14)
10.10.3 Second Amendment dated September 25, 1989 to Agreement among
Albertson's, Inc., Markus Stiftung and Theo Albrecht(10)
10.11 1982 Incentive Stock Option Plan (amended March 4, 1991)(15)*
10.12 Form of 1982 Incentive Stock Option Agreement (amended
November 30, 1987)(3)*
10.12.1 Form of 1982 Incentive Stock Option Agreement (used in connection
with certain options granted pursuant to the 1982 Incentive
Stock Option Plan on or after September 5, 1989)(5)*
<PAGE>
Number Description
______ ___________
10.13 Executive Pension Makeup Plan (amended and restated February 1,
1989)(9)*
10.13.1 First Amendment to Executive Pension Makeup Plan (dated June 8,
1989)(16)*
10.13.2 Second Amendment to Executive Makeup Plan (dated January 12,
1990)(17)*
10.13.3 Third Amendment to Executive Makeup Plan (dated January 31,
1990)(18)*
10.14 Credit Agreement (dated March 31, 1992)(19)
10.15 Senior Executive Deferred Compensation Plan (amended and
restated February 1, 1989)(9)*
10.15.1 Amendment to Senior Executive Deferred Compensation Plan (dated
December 4, 1989)(10)*
10.16 1986 Nonqualified Stock Option Plan (amended March 4, 1991)(15)*
10.17 Form of 1986 Nonqualified Stock Option Plan Stock Option Agreement
(amended November 30, 1987)(3)
10.18 Executive Pension Makeup Trust (dated February 1, 1989)(9)*
10.19 Executive Deferred Compensation Trust (dated February 1, 1989)(9)*
10.20 1990 Deferred Compensation Plan(15)*
10.21 Non-Employee Directors' Deferred Compensation Plan(15)*
10.22 1990 Deferred Compensation Trust (dated November 20, 1990)(15)*
10.23 Letter Agreement with Warren E. McCain (dated December 3, 1990)(15)*
11 Inapplicable
12 Inapplicable
13 Exhibit 13 consists of pages 17 to 41 and the inside back cover of
Albertson's, Inc. 1993 Annual Report to Stockholders which are
numbered as pages 1 to 25 of Exhibit 13. Such report, except to the
extent incorporated hereby by reference, has been sent to and
furnished for the information of the Securities and Exchange
Commission only and is not to be deemed filed as part of this Annual
Report on Form 10-K. The references to the pages incorporated by
reference are to the printed Annual Report. The references to the
pages of Exhibit 13 are as follows: Item 5--page 25; Item 6--page
23; Item 7--pages 1 through 3; and Item 8--pages 4 through 22 and
page 24.
14 Inapplicable
15 Inapplicable
16 Inapplicable
17 Inapplicable
18 Inapplicable
<PAGE>
Number Description
______ ___________
19 Inapplicable
20 Inapplicable
21 Inapplicable
22 Inapplicable
23 Inapplicable
24 Inapplicable
25 Inapplicable
26 Inapplicable
27 Financial Data Schedule
28 Inapplicable
* Identifies management contracts or compensatory plans or arrangements
required to be filed as an exhibit hereto.
<PAGE>
(1) Exhibit 3.1 is incorporated herein by reference to Exhibit 3.1 of the
Form 10-Q for the quarter ended May 2, 1991.
(2) Exhibit 4.1 is incorporated herein by reference to Exhibit 1 of
Albertson's, Inc. Form 8-A Registration Statement filed with the
Commission on March 3, 1987.
(3) Exhibits 4.1.1, 10.12 and 10.17 are incorporated herein by reference to
Exhibits 4.1.1, 10.12 and 10.17, respectively, of the Form 10-Q for the
quarter ended October 29, 1987.
(4) Exhibit 4.1.2 is incorporated herein by reference to Exhibit 4.1.2 of
the Form 10-Q for the quarter ended October 27, 1988.
(5) Exhibits 4.1.3 and 10.12.1 are incorporated herein by reference to
Exhibits 4.1.3 and 10.12.1, respectively, of the Form 10-Q for the
quarter ended August 3, 1989.
(6) Exhibit 4.2 is incorporated herein by reference to Exhibit 4.1 of
Registration Statement 33-49329. In reliance upon Item
601(b)(4)(iii)(A) of Regulation S-K, various other instruments defining
the rights of holders of long-term debt of the Registrant and its
subsidiaries are not being filed herewith, because the total amount of
securities authorized under each such instrument does not exceed 10% of
the total assets of the Registrant and its subsidiaries on a
consolidated basis. The Registrant hereby agrees to furnish a copy of
any such instrument to the Commission upon request.
(7) Exhibits 10.2, 10.8 and 10.10 are incorporated herein by reference
to Exhibits 10.2, 10.8 and 10.10, respectively, of the Form 10-K for
the year ended January 29, 1981.
(8) Exhibit 10.5 is incorporated herein by reference to Exhibit 10.5.1 of
the Form 10-K for the year ended January 30, 1986.
(9) Exhibits 10.6, 10.13, 10.15, 10.18 and 10.19 are incorporated herein
by reference to Exhibits 10.6, 10.13, 10.15, 10.18 and 10.19,
respectively, of the Form 10-K for the year ended February 2, 1989.
(10) Exhibits 10.6.1, 10.10.3 and 10.15.1 are incorporated herein by
reference to Exhibits 10.6.1, 10.10.3 and 10.15.1, respectively, of
the Form 10-Q for the quarter ended November 2, 1989.
(11) Exhibit 10.7 is incorporated herein by reference to Exhibit 10.7 of the
Form 10-K for the year ended February 2, 1984. Exhibit 10.7 expired by
its terms April 6, 1985. Notwithstanding such expiration, certain
agreements for options granted under this option plan remain
outstanding.
(12) Exhibit 10.9 is incorporated herein by reference to Exhibit 10.9 of
the Form 10-K for the year ended January 31, 1985.
(13) Exhibit 10.10.1 is incorporated herein by reference to
Exhibit 10.10.1 of the Form 10-K for the year ended February 3, 1983.
(14) Exhibit 10.10.2 is incorporated herein by reference to
Exhibit 10.10.2 of the Company's Form 10-Q for the quarter ended
May 3, 1984.
(15) Exhibits 10.11, 10.16, 10.20, 10.21, 10.22 and 10.23 are incorporated
herein by reference to Exhibits 10.11, 10.16, 10.20, 10.21, 10.22 and
10.23, respectively, of the Form 10-K for the year ended January 31,
1991. Exhibit 10.11 expired by its terms February 29, 1992.
Notwithstanding such expiration, certain agreements for the options
granted under this option plan remain outstanding.
<PAGE>
(16) Exhibit 10.13.1 is incorporated herein by reference to
Exhibit 10.13.1 of the Company's Form 10-Q for the quarter ended
May 4, 1989.
(17) Exhibit 10.13.2 is incorporated herein by reference to Exhibit 10.13.2
of the Company's Form 10-K for the year ended February 1, 1990.
(18) Exhibit 10.13.3 is incorporated herein by reference to Exhibit 10.13.3
of the Company's Form 10-Q for the quarter ended August 2, 1990.
(19) Exhibit 10.14 is incorporated herein by reference to Exhibit 10.14
of the Company's Form 10-K for the year ended January 30, 1992.
23
<TABLE>
VOLUNTARY SCHEDULE
<CAPTION>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ALBERTSON'S ANNUAL
REPORT TO STOCKHOLDERS FOR THE FISCAL YEAR ENDED FEBRUARY 3, 1994 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxx xxxxxxxxxxxxxxx xxxxxxxxxxxxxx
REGULATION STATEMENT CAPTION 02-03-94 01-28-93 01-30-92
<S> <C> <C> <C> <C>
5-02(1) Cash and Cash Items $ 62,463,000 $ 39,541,000 $ 34,404,000
5-02(3)(a)(1) Notes and Accounts Receivable - Trade 115,526,000 92,052,000 56,490,000
5-02(4) Allowances for Doubtful Accounts 1,033,000 1,107,000 655,000
5-02(6) Inventory 871,719,000 830,086,000 613,233,000
5-02(9) Total Current Assets 1,122,231,000 1,013,463,000 751,286,000
5-02(13) Property, Plant and Equipment 3,109,172,000 2,727,270,000 2,166,205,000
5-02(14) Accumulated Depreciation 1,027,318,000 882,251,000 773,527,000
5-02(18) Total Assets 3,294,895,000 2,945,573,000 2,216,247,000
5-02(21) Total Current Liabilities 990,062,000 812,980,000 652,247,000
5-02(22) Bonds, Mortgages and Similar Debt 665,011,000 508,240,000 151,669,000
5-02(30) Common Stock 253,407,000 132,330,000 132,131,000
5-02(31) Other Stockholders' Equity 1,135,972,000 1,256,098,000 1,067,321,000
5-02(32) Total Liabilities and Stockholders' Equity 3,294,895,000 2,945,573,000 2,216,247,000
5-03(b)(1)(a) Net Sales of Tangible Products 11,283,678,000 10,173,676,000 8,680,467,000
5-03(b)(1) Total Revenues 11,287,184,000 10,182,748,000 8,695,805,000
5-03(b)(2)(a) Cost of Tangible Goods Sold 8,492,524,000 7,720,824,000 6,598,950,000
5-03(b)(2) Total Costs and Expenses Applicable to
Sales and Revenues 8,492,524,000 7,720,824,000 6,598,950,000
5-03(b)(4) Selling, General and Administrative Expenses 2,161,561,000 1,975,079,000 1,667,355,000
5-03(b)(8) Interest and Amortization of Debt Discount 50,984,000 43,124,000 23,106,000
5-03(b)(9) Non-Operating Expenses 29,900,000
5-03(b)(10) Income Before Taxes and Other Items 552,215,000 443,721,000 406,394,000
5-03(b)(11) Income Tax Expense 212,534,000 167,646,000 148,600,000
5-03(b)(14) Income From Continuing Operations 339,681,000 276,075,000 257,794,000
5-03(b)(18) Cumulative Effect - Changes in Accounting
Principles (6,858,000)
5-03(b)(19) Net Income 339,681,000 269,217,000 257,794,000
5-03(b)(20) Earnings Per Share 1.34 1.02 0.97
</TABLE>
<PAGE>
EXHIBIT 3.2
ALBERTSON'S, INC.
BY-LAWS
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The Corporation may also have offices at such other places
both within and without the State of Delaware as the Board of Directors may
from time to time determine or the business of the Corporation may require.
ARTICLE II
MEETING OF THE STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of
directors shall be held in the City of Boise, State of Idaho, at such place
as may be fixed from time to time by the Board of Directors, or at such
other place either within or without the State of Delaware as shall be
designated from time to time by the Board of Directors and stated in the
notice of the meeting. Meetings of the stockholders for any other purpose
may be held at such time and place, within or without the State of Delaware,
as shall be stated in the notice of the meeting or in a duly executed waiver
of notice thereof.
Section 2. Annual meetings of stockholders shall be held on the fourth
Friday of May, if not a legal holiday and, if a legal holiday, then on the
next secular day following, at 10:00 o'clock A.M., or at such other date and
time as shall be designated from time to time by the Board of Directors and
stated in the notice of the meeting, at which they shall elect by written
ballot a Board of Directors, and transact such other business as may be
properly brought before the meeting.
Section 3. Written notice of the annual meetings, stating the place,
date, and hour of the meeting, shall be given to each stockholder entitled
to vote at such meeting not less than ten nor more than sixty days before
the date of the meeting.
Section 4. The officer who has charge of the stock ledger of the
Corporation shall prepare and make, or shall cause to be prepared and made,
at least ten days before every meeting of stockholders a complete list of
the stockholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to
the meeting, either at a place within the city where the meeting is to be
<PAGE>
held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall
also be produced and kept at the time and place of the meeting during the
whole time thereof and may be inspected by any stockholder who is present;
provided, however, the failure to do so shall not offset the validity of any
meeting.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called only (i) by the chairman of the board, vice
chairman of the board, or president, or (ii) by the chairman, vice chairman,
president, or secretary at the request in writing of a majority of the Board
of Directors. Such request shall state the purpose or purposes of the
proposed meeting.
Section 6. Written notice of a special meeting, stating the place,
date and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be given not less than ten nor more than sixty days
before the date of the meeting to each stockholder entitled to vote at such
meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented
by proxy, shall constitute a quorum at all meetings of the stockholders for
the transaction of business except as otherwise provided by statute or by
the certificate of incorporation. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall
have the power to adjourn the meeting from time to time without notice other
than announcement at the meeting until a quorum shall be present or
represented. Before any proxy is voted, it shall be filed with the
secretary. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted
at the meeting as originally notified. If the adjournment is for more than
thirty days or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjournment shall be given to each
stockholder of record entitled to vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power, present in person or
represented by proxy, shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes
or of the certificate of incorporation a different vote is required, in
which case such express provision shall govern and control the decision of
such question.
Section 10. Each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of
the capital stock having voting power held by such stockholder, but no proxy
shall be voted on or after three years from its date, unless the proxy
provides for a longer period.
<PAGE>
The voting rights of preferred shares shall be only as provided in the
certificate of incorporation, by-laws, resolution of the Board of Directors
or by law.
Section 11. Whenever the vote of stockholders at a meeting thereof is
required or permitted to be taken for or in connection with any corporate
action by any provision of the certificate of incorporation or statutes, the
meeting and vote of stockholders may be dispensed with if all of the
stockholders who would have been entitled to vote upon the action if such
meeting were held shall consent in writing to such corporate action being
taken, or if the certificate of incorporation authorizes the action to be
taken with the written consent of the holders of less than all of the stock
who would be have been entitled to vote upon the action if a meeting were
held, then on the written consent of the stockholders having not less than
such percentage of the number of votes as may be authorized in the
certificate of incorporation; provided that in no case shall the written
consent be by the holders of stock having less than the minimum percentage
of the vote required by statute for the proposed corporate action, and
provided that prompt notice must be given to all stockholders of the taking
of corporate action without a meeting and by less than unanimous written
consent.
No corporate action taken by written consent in accordance with this
Section 11 shall be valid unless at least 30 days prior to any stockholder
signing such written consent a written notice of such proposed corporate
action is delivered to the Secretary of the Corporation at the principal
executive offices of the Corporation. Such notice shall contain (i) a copy
of the resolution proposed to be adopted by written consent, (ii) the name
or names of the stockholders proposing such corporate action and those known
by the proposing stockholders to support such proposal (collectively
referred to herein as the "Proponents"), and (iii) the number of voting
shares held by each Proponent.
Section 12. With respect solely to any solicitation of proxies subject
to the filing requirements of Regulation 14A or any successor rule
promulgated by the Securities and Exchange Commission, no form of proxy
distributed by mail to stockholders of record shall have any validity or
effectiveness, whether or not it purports to bear a signature, unless such
proxy form, prior to mailing to stockholders of record bears a label or
imprint, typewritten or otherwise mechanically or electronically applied,
legibly setting forth the name and address of the stockholder of record
solicited.
Section 13. Nominations of persons for election to the Board of
Directors of the Corporation shall be made at a meeting of stockholders at
which directors are to be elected exclusively in accordance with this
Section. Nominations of persons for such elections shall be deemed properly
made if (i) set forth in proxy materials prepared for such a meeting by or
at the direction of the Board of Directors, (ii) made by a stockholder at
such a meeting at the direction of the Board of Directors, or (iii) made by
a stockholder at such a meeting (other than at the direction of the Board of
Directors) if timely notice has been given to the secretary of the
Corporation at the principal executive offices of the Corporation of such
<PAGE>
intent to make a nomination. To be timely, such stockholder's notice must
be received by the Corporation not less than 50 days nor more than 75 days
prior to the stockholder meeting; provided, however, that if less than 60
days' notice or prior public disclosure of the date is given or made to the
stockholders by the Corporation, then notice by the stockholder of intent to
make a nomination must be received by the Corporation no later than the
close of business on the 10th day following the day on which the Corporation
mailed the notice of the date of the meeting or public disclosure of such
meeting date.
Such stockholder's notice shall set forth (a) as to each person whom
the stockholder proposes to nominate for election as a director, (i) the
name, age, business address and residence address of such person, (ii) the
principal occupation or employment of the person, (iii) the class and number
of shares of the Corporation which are beneficially owned by such person, if
any, and (iv) any other information relating to such person which is
required to be disclosed in solicitations for proxies for election of
directors pursuant to Regulation 14A under the Securities and Exchange Act
of 1934, as amended, or any successor act or Regulation; and (b) as to the
stockholder giving the notice (i) the name and record address of the
stockholder and (ii) the class and number of shares of the Corporation which
are beneficially owned by the stockholder. The Corporation may require any
proposed nominee to furnish such other information as may be reasonably
required by the Corporation to determine the qualifications of such proposed
nominee to serve as a director of the Corporation.
No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth in
this Section 13. The chairman of a stockholder meeting may, if the facts
warrant, determine and declare to the meeting that a nomination has not been
made in accordance with the foregoing procedure and that such defective
nomination shall be disregarded.
Section 14. At a meeting of stockholders, only such proposals that
have been properly brought before the meeting shall be voted upon. A
proposal shall be properly brought before the meeting only if (i) such
proposal is specified in the notice of the meeting (or any supplement
thereto) given by the Corporation to the stockholders, (ii) such proposal is
otherwise lawfully brought before the meeting by or at the direction of the
Board of Directors of the Corporation, or (iii) such proposal is otherwise
lawfully brought before the meeting by a stockholder entitled to vote at
such meeting who has given the notice required in this Section 14. A
stockholder desiring to make a proposal before the meeting and which is not
contained in the notice of the meeting given to stockholders by the
Corporation must give timely notice thereof to the secretary of the
Corporation at the principal executive offices of the Corporation. To be
timely, such stockholder's notice must be received by the Corporation not
less than 50 days nor more than 75 days prior to the stockholder meeting;
provided, however, that if less than 60 days' notice or prior public
disclosure of the date of the meeting is given or made to the stockholders
by the Corporation, then notice by the stockholder of intent to make such
proposal must be received by the Corporation no later than the close of
business on the 10th day following the day on which the Corporation mailed
<PAGE>
the notice of the date of the meeting or public disclosure of such meeting
date.
Such stockholder's notice shall set forth as to each matter the
stockholder proposes to bring before the meeting (i) a brief description of
the proposal desired to be brought before the meeting and the reasons for
making such proposal at the meeting, (ii) the name and record address of the
stockholder making such proposal, (iii) the class and number of shares of
the Corporation which are beneficially owned by the stockholder, and (iv)
any material interest of the stockholder in such proposal.
The Chairman of a meeting shall, if the facts warrant, determine and
declare to the meeting that a proposal has not been properly brought before
the meeting in accordance with the provisions of this Section 14 and that,
accordingly, such proposal cannot and shall not be acted upon.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole
Board shall be not less than three nor more than twenty-one. Within the
limits above specified, the number of directors shall be determined by
resolution of the Board or by the vote at the annual meeting of the holders
of at least three-fourths of the outstanding shares of stock then entitled
to vote in elections of directors. The Board shall be divided into three
classes. Any increase or decrease in the number of directors shall be
apportioned among the classes so as to make all classes as nearly equal in
number as possible. No decrease in the authorized number of directors shall
shorten the term of any incumbent director. Unless and until otherwise
determined, the first and third classes shall each consist of five
directors, and the second class shall consist of four directors. A separate
election shall be held for each class of directors at the 1980 annual
meeting of stockholders. At the 1980 annual meeting of stockholders the
directors elected to the first class shall hold office for a term of one
year and until their respective successors are elected and qualified; the
directors elected to the second class shall hold office for a term of two
years and until their respective successors are elected and qualified, and
the directors elected to the third class shall hold office for a term of
three years and until their respective successors are elected and qualified.
At each annual meeting thereafter the successors to the class of directors
whose term is then expiring shall be elected to hold office for a term of
three years and until their respective successors are elected. Directors
need not be stockholders.
Section 2. Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by a
majority of the directors then in office, although less than a quorum, or by
a sole remaining director. Any director so chosen shall hold office until
the next election of the class for which such director has been chosen, and
until his successor has been elected, unless sooner displaced. If there are
no directors in office, then an election of directors may be held in the
manner provided by statute. If at the time of filling any vacancy or any
<PAGE>
newly created directorship the directors then in office shall constitute
less than a majority of the whole Board (as constituted immediately prior to
any such increase), the Court of Chancery may upon application of any
stockholder or stockholders holding at least ten percent of the total number
of shares at the time outstanding having the right to vote for such
directors, summarily order an election to be held to fill any such vacancies
or newly created directorships, or to replace the directors chosen by the
directors then in office.
Section 3. Any director may be removed by a majority of the quorum of
the directors at any meeting only for cause. The entire Board of Directors
may be removed by the stockholders only for cause. Cause shall mean (i)
conviction of a crime involving moral turpitude, (ii) administrative agency
determination of conduct involving moral turpitude, or (iii) with respect to
removal by the directors, a determination, in good faith, by a majority of
the quorum of the Board of Directors after a hearing before a quorum of the
Board of Directors, of conduct involving moral turpitude materially adverse
to the interests of the Corporation; and with respect to removal by the
stockholders, such a determination by a majority of a quorum of the
stockholders eligible to vote after a hearing before a quorum of the
stockholders.
Section 4. The business of the Corporation shall be managed by its
Board of Directors which may exercise all such powers of the Corporation and
do all such lawful acts and things as are not by statute or by the
certificate of incorporation or by these by-laws directed or required to be
exercised or done by the stockholders.
Section 5.
A. Indemnification
(a) The Corporation shall indemnify any person who was or is
a party or is threatened with being made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, including all appeals (other than an
action, suit or proceeding by or in the right of the Corporation) by reason
of the fact that he is or was a director, officer or employee of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer or employee of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, decrees, fines, penalties and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit
or proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgement, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not of itself create a
presumption that the person did not act in good faith or in a manner which
he reasonably believed to be in or not opposed to the best interest of the
Corporation or, with respect to any criminal action, suit or proceeding,
that he had reasonable cause to believe that his conduct was unlawful.
<PAGE>
(b) The Corporation shall indemnify any person who was or is
a party or is threatened with being made a party to any threatened, pending
or completed action, suit or proceeding, including all appeals, by or in the
right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer or employee of the Corporation,
or is or was serving at the request of the Corporation as a director,
officer or employee of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action, suit or proceeding. The Corporation shall also
indemnify any such person against amounts paid in settlement of such action,
suit or proceeding up to the amount that would reasonably have been expended
in his defense (determined in the manner provided for in subsection (d)) if
such action, suit or proceeding had been prosecuted to a conclusion.
However, indemnification under this subsection shall be made only if the
person to be indemnified acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation
and no such indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been finally adjudged to be liable
to the Corporation unless, and only to the extent that, the court or body in
or before which such action, suit or proceeding was finally determined, or
any court of competent jurisdiction, shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for
such expenses or other amounts paid as such court shall deem proper.
(c) Without limiting the right of any director, officer or
employee of the Corporation to indemnification under any other subsection
hereof, if such person has been substantially and finally successful on the
merits or otherwise in defense of any action, suit or proceeding referred to
in subsections (a) and (b), he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Except in a situation governed by subsection (c), any
indemnification under subsection (a) and (b) (unless ordered by a court)
shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer or
employee is proper in the circumstances because he has met the applicable
standard of conduct set forth in subsections (a) and (b). Such
determination shall be made (1) by the Board of Directors by a majority vote
of a quorum consisting of directors who are not or were not parties to or
threatened with such action, suit or proceeding, or any other action, suit
or proceeding arising from the same or similar operative facts, or (2) if
such a quorum is not obtainable, or even if obtainable, if a majority of
such quorum of disinterested directors so directs, by independent legal
counsel (compensated by the Corporation) in a written opinion, or (3) if
there be no disinterested directors, or if a majority of the disinterested
directors, whether or not a quorum, so directs, by vote in person or by
proxy of the holders of a majority of the shares entitled to vote in the
election of directors.
(e) Expenses of each person indemnified hereunder incurred in
defending a civil, criminal, administrative or investigative action, suit or
<PAGE>
proceeding (including all appeals) or threat thereof, may be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding, upon receipt of an undertaking by or on behalf of the director,
officer or employee to repay such expenses if it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation.
(f) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other subsections of this Article shall not
be deemed exclusive of or in any way to limit any other rights to which any
person seeking indemnification or advancement of expenses may become
entitled as a matter of law, by the Articles, regulations, agreements,
insurance, vote of stockholders or otherwise, with respect to action in his
official capacity and with respect to action in another capacity while
holding such office.
(g) The indemnification and advancement of expenses provided
by, or granted pursuant to, this section shall continue as to a person who
has ceased to be a director, officer or employee and shall inure to the
benefit of the heirs, executors and administrators of such a person.
(h) Subsections (a) through (g) of this Article shall apply
to such agents of the Corporation as are designated at any time by the Board
of Directors.
(i) If any part of this Article shall be found, in any
action, suit or proceeding, to be invalid or ineffective, the validity and
the effect of the remaining parts shall not be affected.
B. Liability Insurance
The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or
designated agent of the Corporation or is or was serving at the request of
the Corporation as a director, officer, employee or designated agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability
under the provisions of this Article or of applicable statutes.
Section 6. No director after having attained the age of 70 years shall
be allowed to run for re-election or reappointment on the Board of
Directors, excepting, however, that such retirement age shall not apply to
directors over the age of 65 years who were serving on such board on
September 9, 1974.
MEETINGS OF THE BOARD OF DIRECTORS
Section 7. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 8. The first meeting of each newly elected Board of Directors
shall be held at such time and place as shall be fixed by the vote of the
<PAGE>
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of
the stockholders to fix the time or place of such first meeting of the newly
elected Board of Directors or in the event such meeting is not held at the
time and place so fixed by the stockholders, the meeting may be held at such
time and place as shall be specified in a notice given as hereinafter
provided for special meetings of the Board of Directors, or as shall be
specified in a written waiver signed by all of the directors.
Section 9. Regular meetings of the Board of Directors may be held
without notice at such time and at such place as shall be from time to time
determined by the Board.
Section 10. Special meetings of the Board may be called by the
chairman, vice chairman or president on whatever notice he deems reasonable
to each director, either personally (oral or written) or by mail or by
telegram; special meetings shall be called by the chairman, vice chairman,
president or secretary in like manner and on like notice on the written
request of two directors.
Section 11. At all meetings of the Board not less than a majority of
the total number of the Board shall constitute a quorum for the transaction
of business and the act of a majority of the directors present at any
meeting at which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specifically provided by statute or by
the certificate of incorporation. If a quorum shall not be present at any
meeting of the Board of Directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 12. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken
at any meeting of the Board of Directors or of any committee thereof may be
taken without a meeting if all members of the Board or committee, as the
case may be, consent thereto in writing and the writing or writings are
filed with the minutes of proceedings of the Board or committee.
COMMITTEES OF DIRECTORS
Section 13. The Board of Directors may from time to time, by
resolution passed by a majority of the whole Board, designate one or more
committees, each committee to consist of two or more of the directors of the
Corporation. The Board may designate one or more directors as alternate
members of any committee who may replace any absent or disqualified member
at any meeting of the committee. Any such committee, to the extent provided
in the resolution, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation,
and may authorize the seal of the Corporation to be affixed to all papers
which may require it; provided, however, that in the absence or
disqualification of any member of such committee or committees, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place
<PAGE>
of any such absent or disqualified member. Such committee or committees
shall have such name or names as may be determined from time to time by
resolution adopted by the Board of Directors.
Section 14. Each committee shall keep regular minutes of its meetings
and proceedings and report them for approval to the Board of Directors at
its next regular or special meeting.
COMPENSATION OF DIRECTORS
Section 15. The directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed
sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
PRESUMPTION OF ASSENT
Section 16. A director of the corporation who is present at a meeting
of the Board of Directors at which action on any corporate matter is taken
shall be presumed to have assented to the action taken unless his dissent
shall be entered in the minutes of the meeting or unless he shall file his
written dissent to such action with the person acting as the secretary of
the meeting before the adjournment thereof or shall forward such dissent by
registered mail to the secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a
director who voted in favor of such action.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be
given to any director or stockholder, it shall not be construed to mean
personal notice, but such notice may be given orally to any director, or in
writing, by mail (postage prepaid) or telegraph, addressed to any director
or stockholder, at his address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be deemed
to be given at the time when the same shall be deposited in the United
States Mail.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of
these by-laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein,
shall be deemed equivalent thereto.
<PAGE>
ARTICLE V
OFFICERS
Section 1. The following officers of the Corporation shall be chosen
by the Board of Directors: a chairman of the board, a chairman of the
executive committee, a vice chairman of the board and a president. The
Board of Directors shall designate the chairman of the board to be the chief
executive officer and the president to be the chief operating officer. The
Board of Directors may also choose such other officers as they deem
desirable. Any number of offices may be held by the same person, unless the
certificate of incorporation or these by-laws otherwise provide.
Section 2. The Board of Directors at its first meeting after each
annual meeting of stockholders shall choose a chairman of the board, a vice
chairman of the board and a president. The chairman of the executive
committee shall serve for such term as the Board of Directors shall
designate.
Section 3. The chief executive officer may appoint any vice
presidents, the secretary, the treasurer and such other officers and agents
as he shall deem necessary, who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined
from time to time by the chief executive officer and he may remove any such
officers from office at any time.
Section 4. The salaries of the officers of the Corporation chosen by
the Board of Directors shall be fixed by said Board of Directors.
Section 5. The officers of the Corporation chosen by the Board of
Directors shall hold office until their successors are chosen and qualify.
Any officer elected or appointed by the Board of Directors may be removed at
any time by the affirmative vote of a majority of the Board of Directors.
CHAIRMAN OF THE BOARD
Section 6. The chairman of the board shall preside at all meetings of
the Board of Directors and shall possess the power to sign all certificates,
contracts and other instruments of the Corporation which may be authorized
by the Board of Directors.
CHAIRMAN OF THE EXECUTIVE COMMITTEE
Section 7. The chairman of the executive committee shall preside at
all meetings of the executive committee of the Board of Directors, shall be
available for advice and consultation as to operations and administrative
matters of significance and shall perform such other duties and have such
other powers as the Board of Directors may from time to time determine.
CHIEF OPERATING OFFICER
Section 8. The chief operating officer shall have responsibility for
the operations of the Corporation as authorized by the Board of Directors.
<PAGE>
VICE CHAIRMAN OF THE BOARD
Section 9. The vice chairman of the board shall in the absence of the
chairman of the board, preside at meetings of the Board of Directors and
shall possess the power to sign all certificates, contracts and other
instruments of the Corporation which may be authorized by the Board of
Directors.
PRESIDENT
Section 10. The president shall possess the power to sign all
certificates, contracts and other instruments of the Corporation which may
be authorized by the Board of Directors.
CHIEF EXECUTIVE OFFICER
Section 11. The chief executive officer shall preside at, or shall
designate such other officer of the Corporation to preside at meetings of
stockholders. He shall have general and active management of the business
affairs of the Corporation, including the right to appoint such officers as
provided for in Section 3 hereof, and shall see that all orders and
resolutions of the Board of Directors are carried into effect.
THE VICE PRESIDENTS
Section 12. The executive or senior vice presidents shall be vested
with all powers and shall perform all the duties of the president in the
absence or the disability of the latter. The Board of Directors may grant
to or impose upon any of the executive or senior vice presidents additional
powers and duties, including those concurrently exercised by or imposed upon
other officers. The executive and senior vice presidents shall perform such
other duties and have such other powers as the Board of Directors may from
time to time determine.
The vice presidents shall be vested with all powers and shall perform
all duties granted or imposed upon them by the Board of Directors or by the
chief executive officer at the time of their appointment to office or as the
Board of Directors or the chief executive officer may from time to time
determine.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 13. The secretary shall attend all meetings of the Board of
Directors and all meetings of the stockholders and record all the
proceedings of the meetings of the Corporation and of the Board of Directors
in a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the Board
of Directors, and shall perform such other duties as may be prescribed by
the Board of Directors or chief executive officer, under whose supervision
he shall be. He shall have custody of the corporate seal of the Corporation
and he, or an assistant secretary, shall have authority to affix the same to
any instrument requiring it and, when so affixed, it may be attested by his
<PAGE>
signature or by the signature of such assistant secretary. The Board of
Directors may give general authority to any other officer to affix the seal
of the Corporation and to attest the affixing by his signature.
Section 14. The assistant secretary or, if there be more than one, the
assistant secretaries in the order determined by the Board of Directors (or
if there by no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as the Board
of Directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 15. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts
and disbursements in books belonging to the Corporation and shall deposit
all moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of
Directors.
Section 16. He shall disburse the funds of the corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements and shall render to the chief executive officer and the Board
of Directors at its regular meetings, or when the Board of Directors so
requires an account of all his transactions as treasurer and of the
financial condition of the Corporation.
Section 15. The assistant treasurer or, if there shall be more than
one, the assistant treasurers, in the order determined by the Board of
Directors (or if there be no such determination, then in the order of their
election) shall, in the absence of the treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers as
the Board of Directors may from time to time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the Corporation shall be entitled
to have a certificate signed by, or in the name of the Corporation by, the
chairman of the board of directors, or the vice chairman of the board, or
the president, or the vice president and the treasurer, or an assistant
treasurer, or the secretary, or an assistant secretary, of the Corporation
certifying the number of shares owned by him in the Corporation. The
Corporation shall be authorized to issue more than one class of stock or
more than one series of any class, and the designations, preferences and
relative, participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions
of such preferences or rights shall be set forth in full or summarized on
the face or back of the certificate which the Corporation shall issue to
represent such class or series of stock, provided that, except as otherwise
provided in Section 202 of the General Corporation Laws of the State of
<PAGE>
Delaware in lieu of the foregoing requirements, there may be set forth on
the face or back of the certificate a statement that the Corporation will
furnish without charge to each stockholder who so requests the designations,
preferences and relative, participating, optional or other specific rights
of each class of stock or series thereof and the qualifications, limitations
or restrictions of such preferences or rights.
Section 2. Where a certificate is countersigned (1) by a transfer
agent other than the Corporation or its employee, or (2) by a registrar
other than the Corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer, transfer agent
or registrar at the date of issue.
The Board of Directors may issue any treasury stock.
LOST CERTIFICATES
Section 3. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation alleged to have been lost, stolen or
destroyed upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such
manner as it shall require and/or to give the Corporation a bond in such sum
as it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost,
stolen or destroyed.
TRANSFERS OF STOCK
Section 4. Upon surrender to the Corporation or the transfer agent of
the Corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall
be the duty of the Corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon
its books.
FIXING RECORD DATE
Section 5. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
right in respect to any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date which shall not be more than sixty nor less than ten
<PAGE>
days before the date of such meeting, nor more than sixty days prior to any
other action. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of
the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 6. The Corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares
to receive dividends and to vote as such owner, and to hold liable for calls
and assessments a person registered on it books as the owner of shares, and
shall not be bound to recognize any equitable or other claim to or interest
in such share or shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the Corporation,
subject to the provisions of the certificate of incorporation, if any, may
be declared by the board of Directors at any regular or special meeting,
pursuant to law. Dividends may be paid in cash, in property or in shares of
the capital stock, subject to the provisions of the certificate of
incorporation.
SEAL
Section 2. The corporate seal shall have inscribed thereon the name of
the Corporation, and the words "Corporate Seal, Delaware". The seal may be
used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
ELECTION NOT TO BE SUBJECT TO
IDAHO BUSINESS COMBINATION LAW
Section 3. The Corporation expressly elects not to be subject to the
provisions of the Idaho Business Combination Law, codified as Chapter 17 of
Title 30 of the Idaho Code.
ELECTION NOT TO BE SUBJECT TO
IDAHO CONTROL SHARE ACQUISITION LAW
Section 4. The Corporation expressly elects not to be subject to the
provisions of the Idaho Control Share Acquisition Law, codified as Chapter
16 of Title 30 of the Idaho Code.
<PAGE>
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted by the stockholders or by the Board of Directors at
any regular meeting of the stockholders or of the Board of Directors or at
any special meeting of the stockholders or of the Board of Directors if
notice of such alteration, amendment, repeal or adoption of new by-laws be
contained in the notice of such special meeting.
I, Kaye L. O'Riordan, do hereby certify that the foregoing are the By-
Laws of the Corporation as of September 1, 1993.
KAYE L. O'RIORDAN
____________________________
Kaye L. O'Riordan, Secretary
7400N1 16
<PAGE>
EXHIBIT 13
Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of Operations
The Company has reported record sales and earnings for 24 consecutive years.
Sales for 1993 (a 53-week year) were $11.3 billion compared to $10.2 billion
in 1992 and $8.7 billion in 1991. Sales for 1993 increased 8.8% when
compared on a 52-week basis to 1992. Increases in sales are attributable to
a number of factors including: identical store sales increases, the purchase
of 74 Jewel Osco stores on April 13, 1992, the continued expansion of net
square footage from new stores and inflation. Identical store sales, stores
that have been in operation for two full fiscal years, increased 2.8% (on a
comparable 53-week basis) in 1993, 1.8% in 1992 and 1.1% in 1991. Identical
store sales continued to increase through higher average ticket sales per
customer. Management estimates that inflation accounted for approximately
0.6% of the 1993 identical store sales increase, compared to 1.7% in 1992
and 0.7% in 1991. During 1993, the Company opened 39 stores (6 of which were
acquired), remodeled 42 stores and closed 19 stores for a net square footage
increase of 1,246,000 square feet. Net square footage increased 4.1% in 1993
as compared to 23.0% in 1992 and 7.8% in 1991.
The following table sets forth certain income statement components expressed
as a percent to sales and the year-to-year percentage changes in the amounts
of such components:
<TABLE>
<CAPTION>
Percent to sales Percentage change
__________________________ ___________________
1993 1992 1991
vs. vs. vs.
1993 1992 1991 1992 1991 1990
________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Sales 100.00% 100.00% 100.00% 10.9% 17.2% 5.6%
Gross profit 24.74 24.11 23.98 13.8 17.8 8.1
Operating and
administrative
expenses 19.16 19.41 19.21 9.4 18.5 7.6
Operating profit 5.58 4.70 4.77 31.8 15.4 10.3
Net interest expense 0.45 0.42 0.27 18.2 86.6 (6.9)
Nonrecurring charge 0.26
Earnings before income
taxes and cumulative
effects of
accounting changes 4.89 4.36 4.68 24.5 9.2 11.0
Net earnings 3.01 2.65 2.97 26.2 4.4 10.3
</TABLE>
Gross profit, as a percent to sales, increased due primarily to the
expansion and increased utilization of Company-operated distribution
facilities. During 1993, the Company's distribution system provided 70% of
all products purchased by retail stores as compared to 66% in 1992 and 65%
in 1991. Utilization of the Company's distribution system has enabled
the Company to improve its control over product costs and product
distribution. The pre-tax LIFO adjustment, as a percent to sales, reduced
gross margin by 0.06% in 1993, 0.12% in 1992 and 0.13% in 1991.
The 1992 increase in operating and administrative expenses, as a percent to
sales, was due primarily to one-time costs associated with the Jewel Osco
Acquisition. The Company continues to emphasize cost containment programs as
well as increased productivity in an effort to reduce operating expenses as
a percent to sales. In addition, the Company expects to benefit from the
enhanced productivity and continued expansion of retail automation systems,
such as Time and Attendance, Direct Store Delivery, Electronic Data
Capturing, Electronic Mail and Electronic Payment.
Net interest expense for 1993 included a reduction of approximately $9.7 million
due to the successful resolution of a tax issue for which interest expense had
previously been accrued. Excluding this adjustment, net interest expense, as a
percent to sales, would have increased to 0.54%. This increase
<PAGE>
resulted from borrowings associated with the Company's purchase of its
common stock from the estate of J. A. Albertson on March 10, 1993. The 1992
increase in net interest expense resulted from new borrowings associated
with the Jewel Osco Acquisition.
Net earnings for 1993 included adjustments for a nonrecurring charge to
cover the settlement of the Babbitt v. Albertson's lawsuit, an employment
discrimination class action lawsuit filed in 1992, and a decrease in
interest expense due primarily to the successful resolution of a tax issue,
both of which were recognized in the third quarter of 1993. Net earnings for
1992 included certain one-time costs primarily associated with the Jewel
Osco Acquisition and two accounting changes, all of which were recognized in
the first quarter of 1992. The following comparisons of 1993 and 1992
exclude these adjustments:
- Gross margin increased to 24.74% from 24.33%.
- Operating and administrative expenses, as a percent to sales, decreased
to 19.16% from 19.19%.
- Operating profit increased 21.2% to $629.6 million from $519.5 million.
- Net earnings increased 14.7% to $352.1 million from $307.1 million.
- Net earnings, as a percent to sales, increased to 3.12% from 3.04%.
- Earnings per share increased 19.8% to $1.39 from $1.16.
In November 1992, the Financial Accounting Standards Board issued SFAS No.
112, "Employers' Accounting for Postemployment Benefits." This new statement
is effective for fiscal years beginning after December 15, 1993 and requires
an accrual for certain benefits paid to former or inactive employees after
employment but before retirement. Based on the Company's evaluation of the
Statement's requirements, adoption in the first quarter of 1994 is expected
to reduce net earnings by approximately $6.4 million.
Liquidity and Capital Resources
The Company's operating results continue to enhance its financial position
and ability to continue its planned expansion program. Cash provided by
operating activities during 1993 was $585 million as compared to $498
million in 1992 and $406 million in 1991. These amounts have enabled the
Company to fund its capital expansion program (aside from the 1992 Jewel
Osco Acquisition), pay dividends and purchase shares of its common stock on
the open market. During 1993, the Company spent $436 million on capital
expenditures, $32 million to reduce long-term debt and $90 million for the
payment of dividends (which represents 26.4% of current net earnings). The
Company also utilizes its commercial paper program to supplement cash
requirements resulting from seasonal fluctuations created by the Company's
capital expenditure program and changes in working capital. Accordingly,
commercial paper borrowings will fluctuate between the Company's quarterly
reporting periods. The Company had $79.9 million of commercial paper
borrowings outstanding at February 3, 1994 compared to $110 million at
January 28, 1993. As of February 3, 1994, the Company had available lines of
credit of $235 million, of which $200 million was reserved as alternative
funding for the Company's commercial paper program.
On March 10, 1993, pursuant to a 1979 agreement, the Company purchased
21,976,320 shares of its common stock from the estate of J. A. Albertson,
the Company's founder, at a cost of $518 million or $23.55 per share. This
purchase was financed through the reissuance of 10,400,000 shares of
treasury stock at $26.25 per share, netting $265 million, and the issuance
of $252 million in medium-term notes. The effect of these transactions was
to retire the remaining 11,576,320 treasury shares at a net cost to the
Company of $21.85 per share.
Since 1987, the Board of Directors has continuously adopted or renewed plans
under which the Company is authorized, but not required, to purchase shares
of its common stock on the open market. The current plan was adopted by the
Board on March 7, 1994 and authorizes the Company to purchase up to 2.5
million shares through March 31, 1995. The Company did not purchase any
shares during 1993 or 1992 and purchased and retired an equivalent of
approximately 4.2 million shares during 1991 under these programs.
<PAGE>
The following leverage ratios demonstrate the Company's levels of long-term
financing as of the indicated year end:
February 3, January 28, January 30,
1994 1993 1992
______________________________________________________________________________
Long-term debt (including capitalized
lease obligations) to equity 47.9% 36.6% 12.6%
Long-term debt (including capitalized
lease obligations) to total assets 20.2% 17.3% 6.8%
During 1993, the Company changed the classification of its store types to
better reflect the store formats the Company is developing today.
Consequently, the superstore format has been eliminated and the Company now
classifies all stores over 35,000 square feet (except warehouse stores) as
combination food-drug stores.
During 1993, the Company opened 35 combination food-drug stores, 2 warehouse
stores and 2 conventional stores. The average size of these stores, 48,300
square feet, increased the Company's average store size to 46,400 square
feet. At February 3, 1994, 91% of the Company's square footage consisted of
stores over 35,000 square feet. Square footage has also increased because of
the Company's remodel program. In 1993, 8 of the 42 remodeled stores were
expanded in size. The Company continues to retain ownership of real estate
when possible.
During the past five years the Company has invested $295 million (excluding
inventory) into its distribution operations and has added 3.6 million square
feet of new or expanded facilities. A new 687,000 square-foot full-line
distribution center in Tolleson, Arizona, located in the Phoenix
metropolitan area, became fully operational in August 1993. The Company also
purchased an existing 818,000 square-foot warehouse in Plant City, Florida
in February 1993. This center was remodeled and expanded to approximately
954,000 square feet to add frozen and perishable storage areas. It began
limited operations in December 1993 and became fully operational in March
1994. With the opening of the Plant City, Florida Distribution Center, the
Company now services all of its retail stores from company-owned
distribution centers.
Capital expenditures for 1994 (excluding amounts anticipated to be financed
by operating leases of approximately $29 million) are expected to be
approximately $460 million. New stores and remodeling will continue to be
the most significant part of planned capital expenditures. The Company is
committed to keeping its stores up to date. In the last three years the
Company has opened and remodeled 304 stores representing 14.7 million square
feet. The following is a summary of capital expenditures excluding operating
leases but including the Jewel Osco Acquisition in 1992, capital leases and
assets acquired with related debt (in thousands):
<TABLE>
<CAPTION>
1994
(Projected) 1993 1992 1991 1990
________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
New and acquired stores $267,000 $246,052 $466,246 $163,072 $169,170
Remodels 93,000 82,409 74,914 55,803 49,277
Retail replacement equip-
ment and technological
upgrades 49,000 20,804 10,793 8,341 8,814
Distribution facilities
and equipment 39,000 100,936 81,024 27,465 9,115
Other 12,000 5,963 9,880 18,315 21,200
____________________________________________________
$460,000 $456,164 $642,857 $272,996 $257,576
____________________________________________________
</TABLE>
Note: Share and per share data adjusted to reflect the two-for-one stock
split distributed October 4, 1993.
<PAGE>
<TABLE>
Consolidated Earnings
(In thousands except per share data)
<CAPTION>
53 Weeks 52 Weeks 52 Weeks
February 3, January 28, January 30,
1994 1993 1992
_______________________________________________________________________________
<S> <C> <C> <C>
Sales $11,283,678 $10,173,676 $8,680,467
Cost of sales 8,492,524 7,720,824 6,598,950
_____________________________________
Gross profit 2,791,154 2,452,852 2,081,517
Operating and administrative expenses 2,161,561 1,975,079 1,667,355
_____________________________________
Operating profit 629,593 477,773 414,162
Other (expenses) income:
Interest, net (50,984) (43,124) (23,106)
Other, net 3,506 9,072 15,338
Nonrecurring charge (29,900)
_____________________________________
Earnings before income taxes and
cumulative effects of accounting
changes 552,215 443,721 406,394
Income taxes 212,534 167,646 148,600
_____________________________________
Earnings before cumulative effects of
accounting changes 339,681 276,075 257,794
Cumulative effects of accounting changes:
Postretirement health care benefits (4,093)
Accounting for income taxes (2,765)
_____________________________________
Net Earnings $ 339,681 $ 269,217 $ 257,794
_____________________________________
Earnings per share before cumulative
effects of accounting changes $ 1.34 $ 1.04 $ .97
Cumulative effects of accounting changes:
Postretirement health care benefits (0.01)
Accounting for income taxes (0.01)
_____________________________________
Earnings Per Share $ 1.34 $ 1.02 $ .97
_____________________________________
Average number of shares outstanding 254,227 264,418 266,339
See Notes to Consolidated Financial Statements.
</TABLE
<PAGE>
<TABEL>
Consolidated Cash Flows
(In thousands)
<CAPTION>
53 Weeks 52 Weeks 52 Weeks
February 3, January 28, January 30,
1994 1993 1992
_______________________________________________________________________________
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net earnings $ 339,681 $ 269,217 $ 257,794
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 196,427 171,724 132,813
Net deferred income taxes (12,016) 8,462 (12,912)
Cumulative effects of accounting
changes 6,858
Changes in operating assets and
liabilities, net of acquisition:
Receivables and prepaid expenses (24,194) (36,114) (2,572)
Inventories (41,633) (72,955) (50,520)
Accounts payable 84,601 104,614 8,572
Other current liabilities 23,836 38,570 17,103
Self-insurance 10,192 4,788 14,890
Unearned income (609) (7,859) 31,667
Other long-term liabilities 8,230 10,671 8,747
___________________________________
Net cash provided by operating
activities 584,515 497,976 405,582
Cash Flows From Investing Activities:
Acquisition of business, net of
cash acquired (428,860)
Capital expenditures excluding
noncash items (435,526) (331,160) (268,500)
Proceeds from disposals of land,
buildings and equipment 20,874 18,053 12,696
Increase in other assets (3,719) (14,808) (4,618)
___________________________________
Net cash used in investing activities (418,371) (756,775) (260,422)
Cash Flows From Financing Activities:
Net line of credit activity 5,000 (25,000) 20,000
Proceeds from long-term borrowings 252,075 443,000
Payments on long-term borrowings (32,158) (43,497) (10,403)
Net commercial paper activity (30,090) (33,000)
Proceeds from stock options exercised 4,484 4,390 8,028
Purchase of treasury shares (517,526)
Net proceeds from issuance of
treasury shares 264,527
Cash dividends paid (89,534) (81,957) (72,008)
Stock purchases (79,806)
___________________________________
Net cash (used in) provided by
financing activities (143,222) 263,936 (134,189)
___________________________________
Net Increase in Cash and Cash
Equivalents 22,922 5,137 10,971
Cash and Cash Equivalents at
Beginning of Year 39,541 34,404 23,433
___________________________________
Cash and Cash Equivalents at End
of Year $ 62,463 $ 39,541 $ 34,404
___________________________________
See Notes to Consolidated Financial Statements.
</TABLE
<PAGE>
</TABLE>
<TABLE>
Consolidated Balance Sheets
(Dollars in thousands)
<CAPTION>
February 3, January 28, January 30,
1994 1993 1992
_______________________________________________________________________________
ASSETS
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 62,463 $ 39,541 $ 34,404
Accounts and notes receivable 114,493 90,945 55,835
Inventories 871,719 830,086 613,233
Prepaid expenses 13,589 12,943 10,602
Deferred income taxes 59,967 39,948 37,212
____________________________________
Total Current Assets 1,122,231 1,013,463 751,286
Other Assets 90,810 87,091 72,283
Land, Buildings and Equipment:
Land 467,392 415,911 289,526
Buildings 1,097,681 930,883 721,280
Fixtures and equipment 1,130,735 1,001,627 835,592
Leasehold improvements 257,566 231,533 180,034
Capitalized leases 155,798 147,316 139,773
____________________________________
3,109,172 2,727,270 2,166,205
Less accumulated depreciation
and amortization 1,027,318 882,251 773,527
____________________________________
2,081,854 1,845,019 1,392,678
____________________________________
$3,294,895 $2,945,573 $2,216,247
____________________________________
See Notes to Consolidated Financial Statements.
</TABLE
<PAGE>
</TABLE>
<TABLE>
Consolidated Balance Sheets
(Dollars in thousands)
<CAPTION>
February 3, January 28, January 30,
1994 1993 1992
_______________________________________________________________________________
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C> <C>
Current Liabilities:
Accounts payable $ 600,376 $ 515,775 $ 400,417
Notes payable 10,000 5,000 30,000
Salaries and related liabilities 101,443 95,820 80,719
Taxes other than income taxes 38,095 41,522 37,807
Income taxes 48,622 29,592 9,589
Self-insurance 58,436 51,870 47,238
Unearned income 19,927 15,567 16,429
Other 30,277 26,033 20,826
Current maturities of long-term debt 76,692 25,757 3,588
Current capitalized lease obligations 6,194 6,044 5,634
____________________________________
Total Current Liabilities 990,062 812,980 652,247
Long-Term Debt 554,092 404,476 52,510
Capitalized Lease Obligations 110,919 103,764 99,159
Other Long-Term Liabilities and
Deferred Credits:
Deferred compensation 31,684 28,016 24,755
Deferred income taxes 28,766 20,763 9,219
Deferred rents payable 72,251 69,864 66,575
Self-insurance 83,857 80,231 80,075
Unearned income 10,825 15,794 22,791
Other 23,060 21,257 9,464
____________________________________
250,443 235,925 212,879
Stockholders' Equity:
Preferred stock - $1.00 par value;
authorized - 10,000,000 shares;
issued - none
Common stock - $1.00 par value;
authorized - 600,000,000 shares;
issued - 253,406,983 shares,
132,329,428 shares and 132,130,528
shares, respectively 253,407 132,330 132,131
Capital in excess of par value 2,117 4,909 718
Retained earnings 1,133,855 1,251,189 1,066,603
____________________________________
1,389,379 1,388,428 1,199,452
____________________________________
$3,294,895 $2,945,573 $2,216,247
____________________________________
See Notes to Consolidated Financial Statements.
</TABLE
<PAGE>
</TABLE>
<TABLE>
Consolidated Stockholders'
Equity
(In thousands except per share data)
<CAPTION>
Common Capital
Stock in Excess
$1.00 Par of Par Retained Treasury
Value Value Earnings Stock Total
_______________________________________________________________________________
<S> <C> <C> <C> <C>
Balance at Jan. 31, 1991 $133,820 $ 2,131 $ 951,931 $1,087,882
Exercise of stock
options 395 3,097 3,492
Tax benefits related to
stock options 4,536 4,536
Cash dividends, $.28 per
share (74,446) (74,446)
Stock purchases (2,084) (9,046) (68,676) (79,806)
Net earnings 257,794 257,794
_____________________________________________________
Balance at Jan. 30, 1992 132,131 718 1,066,603 1,199,452
Exercise of stock
options 199 1,475 1,674
Tax benefits related to
stock options 2,716 2,716
Cash dividends, $.32 per
share (84,631) (84,631)
Net earnings 269,217 269,217
_____________________________________________________
Balance at Jan. 28, 1993 132,330 4,909 1,251,189 1,388,428
Exercise of stock
options 245 1,700 1,945
Tax benefits related to
stock options 2,538 2,538
Purchase treasury shares $(517,526) (517,526)
Issue treasury shares 19,615 244,912 264,527
Retire treasury shares (5,788) (25,010) (241,816) 272,614
Two-for-one stock split 126,620 (1,635) (124,985)
Other 953 953
Cash dividends, $.36 per
share (91,167) (91,167)
Net earnings 339,681 339,681
_____________________________________________________
Balance at Feb. 3, 1994 $253,407 $ 2,117 $1,133,855 $1,389,379
_____________________________________________________
See Notes to Consolidated Financial Statements.
</TABLE
<PAGE>
Notes to Consolidated Financial Statements
Summary of Significant Accounting Policies
Fiscal Year End The Company's fiscal year ends on the Thursday nearest to
January 31 each year. Unless the context otherwise indicates, reference to a
fiscal year of the Company refers to the calendar year in which such fiscal
year commences.
Consolidation The consolidated financial statements include the results of
operations, account balances and cash flows of the Company and its wholly
owned subsidiaries. All material intercompany balances have been eliminated.
Cash and Cash Equivalents The Company considers all highly liquid
investments with a maturity of three months or less at the time of purchase
to be cash equivalents.
Inventories The Company values inventories at the lower of cost or market.
Cost of substantially all inventories is determined on a last-in, first-out
(LIFO) basis. Cost of remaining inventories is determined on a first-in,
first-out (FIFO) basis.
Capitalization, Depreciation and Amortization Land, buildings and equipment
are recorded at cost. Depreciation is provided on the straight-line method
over the estimated useful life of the asset.
The costs of major remodeling and improvements on leased stores are
capitalized as leasehold improvements. Leasehold improvements are amortized
on the straight-line method over the shorter of the life of the applicable
lease or the useful life of the asset. Capital leases are recorded at the
lower of fair market value or the present value of future minimum lease
payments. These leases are amortized on the straight-line method over their
primary term.
Beneficial lease rights and lease liabilities are recorded on purchased
leases based on differences between contractual rents under the respective
lease agreements and prevailing market rents at the date of the acquisition
of the lease. Beneficial lease rights are amortized over the lease term
using the straight-line method. Lease liabilities are amortized over the
lease term using the interest method.
Upon disposal of fixed assets, the appropriate property accounts are reduced
by the related costs and accumulated depreciation and amortization. The
resulting gains and losses are reflected in the consolidated earnings.
Store Opening and Closing Costs Noncapital expenditures incurred in opening
new stores or remodeling existing stores are expensed in the year in which
they are incurred. When a store is closed the remaining investment in fixed
assets, net of expected salvage value, is expensed. For properties under
lease agreements, the present value of any remaining liability under the
lease, net of expected sublease recovery, is also expensed.
Self-Insurance The Company is primarily self-insured for property loss,
workers' compensation and general liability costs. Self-insurance
liabilities are based on claims filed and estimates for claims incurred but
not reported. These liabilities are not discounted.
Stock Options Proceeds from the sale of newly issued stock to employees
under the Company's stock option plans are credited to common stock to the
extent of par value and the excess to capital in excess of par value. With
respect to nonqualified stock options, the difference between the option
exercise price and market value of the stock at date of grant is charged to
operations over the vesting period. Income tax benefits attributable to
stock options exercised are credited to capital in excess of par value.
<PAGE>
Income Taxes The Company provides for deferred income taxes resulting from
timing differences in reporting certain income and expense items for income
tax and financial accounting purposes. The major timing differences and
their net effect are shown in the "Income Taxes" note.
The 1993 and 1992 tax provisions were computed in accordance with SFAS No.
109, "Accounting for Income Taxes." The 1991 tax provision was computed in
accordance with APB Opinion No. 11.
Investment tax credits have been deferred and are being amortized over the
remaining useful life of the related asset.
Earnings Per Share Earnings per share are computed by dividing consolidated
net earnings by the weighted average number of shares outstanding.
Equivalent shares in the form of stock options are excluded from the
calculation since they are not materially dilutive.
Stock Split On August 30, 1993, the Board of Directors approved a two-for-
one stock split, effected in the form of a 100% stock dividend payable to
stockholders of record at the close of business on September 17, 1993 and
distributed on October 4, 1993. All references in the financial statements
to the number of shares (except outstanding shares at year end), related
prices and per share amounts have been restated to reflect the split.
Reclassifications Certain reclassifications have been made in prior years'
financial statements to conform to classifications used in the current year.
Nonrecurring Charge
During the third quarter of 1993 a $29.9 million nonrecurring charge was
recorded to cover a $29.5 million settlement of the Babbitt v. Albertson's
lawsuit, an employment discrimination class action lawsuit filed in 1992.
The nonrecurring charge covers the full cost of the settlement including
compliance with the consent decree and plaintiffs' attorney fees, as well as
all expenses associated with its implementation. This nonrecurring charge
does not reflect possible recovery from insurance coverage, which the
Company is pursuing in litigation against several carriers. The Company
expects to recover a portion of the overall settlement from its insurance
carriers, although any recovery amount has not been determined.
Supplemental Cash Flow Information
Selected cash payments and noncash activities were as follows (in thousands):
1993 1992 1991
______________________________________________________________________________
Cash payments for income taxes $202,472 $143,045 $158,377
Cash payments for interest,
net of amounts capitalized 36,311 27,819 15,037
Noncash investing and financing activities:
Liabilities assumed in connection with
business acquisition 12,385
Liabilities assumed in connection with
asset acquisitions 5,590 25
Capitalized lease obligations incurred 15,048 12,647 4,471
Capitalized lease obligations terminated 1,656 2,203
Acquisition
On April 13, 1992, the Company purchased 74 Jewel Osco combination food-drug
stores, a general merchandise warehouse in Ponca City, Oklahoma and related
assets, including potential store locations, from American Stores Company
(the Acquisition). The Acquisition included stores located in Texas (52
<PAGE>
stores), Oklahoma (14 stores), Florida (7 stores) and Arkansas (1 store).
The majority of the acquired stores are located in existing operating areas
of the Company, and the Company is continuing to operate most of these
stores as combination food-drug stores under the Albertson's name. The
Acquisition was accounted for using the purchase method of accounting.
The purchase price, based upon the book value of fixed assets and cost of
inventory, was approximately $442 million, including approximately $144
million for inventory. The purchase price included real estate for 41
operating stores and the general merchandise warehouse. The remaining 33
operating stores are subject to leases that have been assumed by the
Company. The Acquisition was ultimately financed through proceeds from
commercial paper borrowings and offerings of senior unsecured debt
securities. The results of operations of the acquired properties have been
included in the consolidated financial statements from the date of
acquisition.
Accounts and Notes Receivable
Accounts and notes receivable consist of the following (in thousands):
February 3, January 28, January 30,
1994 1993 1992
_____________________________________________________________________________
Trade accounts receivable $113,335 $86,239 $54,832
Trade notes receivable 2,191 5,813 1,658
Allowance for doubtful accounts (1,033) (1,107) (655)
___________________________________
$114,493 $90,945 $55,835
___________________________________
Inventories
Approximately 96% of the Company's inventories are valued using the last-in,
first-out (LIFO) method. If the first-in, first-out (FIFO) method had been
used, inventories would have been $191,592,000, $185,150,000 and
$172,470,000 higher at the end of 1993, 1992 and 1991, respectively. Net
earnings would have been higher by $3,962,000 ($.02 per share) in 1993,
$7,964,000 ($.03 per share) in 1992 and $7,354,000 ($.03 per share) in 1991.
The replacement cost of inventories valued at LIFO approximates FIFO cost.
Indebtedness
Long-term debt includes the following (in thousands):
February 3, January 28, January 30,
1994 1993 1992
_____________________________________________________________________________
Unsecured 6.375% notes due May 1995 $150,000 $150,000
Medium-term notes, unsecured:
Due May 1993 (4.29% interest) 25,000
Due May 1994 (5.49% interest) 75,000 75,000
Due May 1995 (6.15% interest) 50,000 50,000
Due March 1996 (4.86% interest) 77,000
Due March 1998 (5.68% interest) 85,425
Due March 2000 (6.14% interest) 89,650
Commercial paper 79,910 110,000
Industrial revenue bonds 17,305 18,040 $18,590
Mortgage notes 6,083 1,807 24,252
Other unsecured notes payable 411 386 13,256
___________________________________
630,784 430,233 56,098
Less current maturities (76,692) (25,757) (3,588)
___________________________________
$554,092 $404,476 $52,510
___________________________________
<PAGE>
In connection with the Company's purchase of its common stock from the
estate of J.A. Albertson, the Company's founder, $252.1 million of medium-
term notes due from 1996 to 2000 were issued under a shelf registration
statement filed with the Securities and Exchange Commission in 1993.
Interest on these notes is paid semiannually.
In connection with the 1992 Jewel Osco Acquisition and subsequent issuance
of the 6.375% notes and medium-term notes due from 1993 to 1995, a shelf
registration statement was filed with the Securities and Exchange Commission
in 1992 covering debt securities in the amount of $500 million available for
issuance from time to time. As of February 3, 1994, $200 million of the debt
remained available for issuance in the form of medium-term notes. Interest
on the 6.375% notes and medium-term notes is paid semiannually.
The Company has in place a $200 million commercial paper program. Interest
on the outstanding commercial paper borrowings ranges from 3.10% to 3.17%
with an effective weighted average rate of 3.13%. The Company has
established the necessary credit facilities, through its revolving credit
agreement, to refinance the commercial paper borrowings on a long-term
basis. These borrowings have been classified as noncurrent because it is the
Company's intent to refinance these obligations on a long-term basis.
The industrial revenue bonds are payable in varying annual installments
through 2011, with interest paid semiannually at 3.3% to 10.875%.
The Company has pledged real estate with a cost of $14,008,000 as collateral
for the mortgage notes, which are payable monthly, quarterly and semi-
annually, including interest at 7.5% to 16.5%. The notes mature from 1994 to
2011.
The scheduled maturities of long-term debt outstanding at February 3, 1994
are summarized as follows: $76,692,000 in 1994, $201,146,000 in 1995,
$78,281,000 in 1996, $80,942,000 in 1997, $86,560,000 in 1998 and
$107,163,000 thereafter.
In March 1992, the Company amended its revolving credit agreement with
several banks, whereby the Company may borrow principal amounts up to $200
million at varying interest rates any time prior to April 1, 1997. The
agreement contains certain covenants, the most restrictive of which requires
the Company to maintain consolidated tangible net worth, as defined, of at
least $750 million.
In addition to amounts available under the revolving credit agreement, the
Company had available lines of credit from banks at prevailing interest
rates in the amount of $35 million at February 3, 1994. The cash balances
maintained at these banks are not legally restricted.
Interest expense, net, was as follows (in thousands):
1993 1992 1991
______________________________________________________________________________
Debt $32,164 $26,862 $10,876
Capitalized leases 12,233 11,560 12,278
Capitalized interest (4,219) (4,617) (5,013)
_______________________________
Interest expense 40,178 33,805 18,141
Net bank service charges 10,806 9,319 4,965
_______________________________
Interest expense, net $50,984 $43,124 $23,106
_______________________________
Interest expense, net for 1993 included a reduction of approximately $9.7
million due to the successful resolution of a tax issue for which interest
had previously been accrued.
<PAGE>
Capital Stock
On March 10, 1993, pursuant to a 1979 agreement, the Company purchased
21,976,320 shares of its common stock from the estate of J.A. Albertson, the
Company's founder, at a cost of $517.5 million or $23.55 per share. This
purchase was financed through the reissuance of 10,400,000 shares of
treasury stock at $26.25 per share, netting $264.5 million, and the issuance
of $252.1 million in medium-term notes. The remaining 11,576,320 treasury
shares were retired.
On March 2, 1987, the Board of Directors adopted a stockholder rights plan,
which was amended on August 31, 1987, November 28, 1988 and September 6,
1989. Under the plan, stockholders of record on March 23, 1987 received a
dividend distribution of one nonvoting right for each share of common stock.
Subject to certain exceptions, one right has been or will be issued with
each share of common stock issued after March 23, 1987. The rights are
attached to all common stock certificates and no separate rights certificate
will be distributed. Each right entitles the holder to purchase one share of
the Company's common stock at a price of $32.50. The rights are exercisable
for shares of common stock upon the earlier of the tenth business day
following (i) the public announcement that a person or group has acquired,
or has obtained the right to acquire, beneficial ownership of 20% or more of
the outstanding common stock, or (ii) the commencement of, or public
announcement of an intention to make, a tender offer or exchange offer if,
upon consummation, such person or group would be the beneficial owner of 20%
or more of the then outstanding common stock.
Additionally, if any person or group becomes the beneficial owner of more
than 20% of the outstanding common stock, each right will entitle its
holder, other than such person or group, upon payment of the $32.50 exercise
price, to purchase common stock with a deemed market value of twice the
exercise price. The purchase rights for common stock will not be exercisable
if the 20% acquisition is made pursuant to a tender or exchange offer for
all outstanding common stock which a majority of certain directors of the
Company deem to be in the best interests of the Company and its
stockholders. If there is a merger with an acquirer of 20% or more of the
Company's common stock and the Company is not the surviving corporation, or
more than 50% of the Company's assets or earning power is transferred or
sold, each right will entitle its holder, other than the acquirer, to
purchase, or in certain instances to receive the cash value of, the
acquiring company's common stock with a deemed market value of twice the
exercise price.
All of the rights may be redeemed by the Board of Directors, and under
certain circumstances, with the approval of a majority of the continuing
directors (as defined in the plan), at a price of $.00625 per right until
the earlier of (i) ten business days after the public announcement that a
person or group has acquired beneficial ownership of 20% or more of the
outstanding common stock or (ii) the date the stockholder rights plan
expires. The rights, which are not entitled to dividends, expire on March
23, 1997.
Since 1987, the Board of Directors has continuously adopted or renewed plans
under which the Company is authorized, but not required, to purchase shares
of its common stock on the open market. The current plan was adopted by the
Board on March 7, 1994 and authorizes the Company to purchase up to 2.5
million shares through March 31, 1995. The Company has purchased and retired
an equivalent of approximately 12.4 million shares of its common stock for
approximately $156.2 million under these plans.
Income Taxes
At the beginning of 1992, the Company elected early adoption of the
provisions of SFAS No. 109, "Accounting for Income Taxes." This Statement
requires that the liability method of accounting for income taxes be used
rather than the deferred method previously used. The Company elected not to
restate prior years' consolidated financial statements. The cumulative
effect of this accounting change was to decrease 1992 net earnings by $2.8
million or $.01 per share.
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Deferred tax assets and liabilities consist of the following (in thousands):
February 3, January 28,
1994 1993
_______________________________________________________________________________
<S> <C> <C>
Deferred tax assets:
Nondeductible accruals for:
Self-insurance $ 54,811 $ 49,446
Lease accounting 21,626 20,335
Vacations 17,129 14,332
Litigation 11,968
Property valuation 8,828 5,197
Deferred compensation 5,742 5,007
Pension costs 2,133 1,683
Other 5,955 5,652
Income unearned for financial reporting purposes 11,846 11,739
Costs capitalized for tax purposes 10,803 5,808
_______________________
Total deferred tax assets 150,841 119,199
Deferred tax liabilities:
Accelerated depreciation for tax purposes (103,219) (86,441)
Pension costs expensed for tax purposes (13,312) (10,000)
Other (3,109) (3,573)
_______________________
Total deferred tax liabilities (119,640) (100,014)
_______________________
Net deferred tax assets $ 31,201 $ 19,185
_______________________
No valuation allowances were considered necessary in the calculation of
deferred tax assets.
Income tax expense on continuing operations consists of the following (in
thousands):
1993 1992 1991
_______________________________________________________________________________
Current:
Federal $191,343 $133,872 $139,793
State 33,580 26,052 22,778
________________________________
224,923 159,924 162,571
Deferred:
Federal (10,222) 7,193 (11,270)
State (1,794) 1,269 (1,642)
________________________________
(12,016) 8,462 (12,912)
Amortization of deferred investment
tax credits (373) (740) (1,059)
________________________________
$212,534 $167,646 $148,600
________________________________
Deferred taxes resulted from:
Income unearned for financial reporting
purposes $ (107) $ 1,871 $(13,198)
Accelerated depreciation for tax purposes 16,778 9,682 4,834
Self-insurance (5,365) (2,179) (5,457)
Litigation (11,968)
Costs capitalized for tax purposes (4,994) (129) (559)
Property valuation (3,631) (152) 836
Other (2,729) (631) 632
________________________________
$(12,016) $ 8,462 $(12,912)
________________________________
</TABLE>
Total tax expense for 1992 was $167,992,000 consisting of taxes on
continuing operations of $167,646,000, tax expense of $2,765,000 for the
cumulative effect of a change in accounting for income taxes and tax
<PAGE>
benefits of $2,419,000 attributed to the cumulative effect of a change in
accounting for postretirement health care benefits.
The reconciliations between the federal statutory tax rate and the Company's
effective tax rates are as follows (in thousands):
<TABLE>
<CAPTION>
1993 % 1992 % 1991 %
________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Taxes computed at statutory rate $193,275 35.0 $150,865 34.0 $138,174 34.0
State income taxes net of
federal income tax benefit 20,612 3.8 16,364 3.7 14,047 3.5
Amortization of deferred
investment tax credits (373) (0.1) (740) (0.2) (1,059) (0.3)
Other (980) (0.2) 1,157 0.3 (2,562) (0.6)
______________________________________________
$212,534 38.5 $167,646 37.8 $148,600 36.6
______________________________________________
</TABLE>
Stock Options
The Company has stock options outstanding under plans adopted in 1986, 1982
and 1975. The 1986 plan authorized the granting of options with respect to
8,000,000 shares of the Company's common stock. The 1982 plan expired on
February 29, 1992 and the 1975 plan expired on April 6, 1985. Expiration of
the 1982 plan and 1975 plan did not affect the rights of optionees for any
options outstanding and not exercised in full.
The changes in the number of shares reserved for outstanding options under
the plans are summarized as follows:
Option Number
Price Per Share of Shares
______________________________________________________________________________
Balance at January 31, 1991 $ .88 to $16.56 4,075,800
Granted 16.88 to 22.63 1,480,000
Exercised .88 to 13.56 (792,600)
Forfeited 1.88 to 22.63 (371,800)
Canceled 22.63 to 22.63 (159,000)
_____________________________
Balance at January 30, 1992 .88 to 22.63 4,232,400
Granted 24.31 to 24.31 344,000
Exercised .88 to 6.25 (398,400)
Forfeited 2.95 to 16.88 (128,200)
_____________________________
Balance at January 28, 1993 1.88 to 24.31 4,049,800
Granted 25.13 to 25.13 479,000
Exercised 1.88 to 8.69 (327,947)
Forfeited 2.95 to 24.31 (145,200)
Canceled 24.31 to 24.31 (4,000)
_____________________________
Balance at February 3, 1994 $ 1.88 to $25.13 4,051,653
_____________________________
Options on 262,053 shares were exercisable at February 3, 1994. In addition,
there were 3,942,400 shares of common stock under the 1986 plan reserved for
the granting of additional options.
Employee Benefit Plans
Substantially all employees working over 20 hours per week are covered by
retirement plans. Union employees participate in multi-employer retirement
plans under collective bargaining agreements. The Company sponsors two
funded plans, Albertson's Salaried Employees Pension Plan and Albertson's
Employees Corporate Pension Plan, which are defined benefit, noncontributory
plans for eligible employees who are 21 years of age with one or more years
of service and (with certain exceptions) are not covered by collective
bargaining agreements. Benefits paid to retirees are based upon age at
retirement, years of credited service and average compensation. The
<PAGE>
Company's funding policy for these plans is to contribute amounts deductible
for federal income tax purposes.
Assets of the two funded Company plans are invested in directed trusts.
Assets in the directed trusts are invested in common stocks (including
$28,937,000, $26,802,000 and $21,565,000 of the Company's common stock at
February 3, 1994, January 28, 1993 and January 30, 1992, respectively), U.S.
Government obligations, corporate bonds, international equity funds, real
estate and money market funds.
The Company also sponsors an unfunded Executive Pension Makeup Plan. This
plan is nonqualified and provides certain key employees defined pension
benefits which supplement those provided by the Company's other retirement
plans.
Net periodic pension cost for the Company plans was as follows (in
thousands):
1993 1992 1991
______________________________________________________________________________
Service cost - benefits earned during
the period $ 12,726 $ 10,983 $ 8,560
Interest cost on projected benefit obligations 12,687 10,805 8,956
Actual return on assets (27,696) (15,596) (17,668)
Net amortization and deferral 11,515 1,809 6,076
________________________________
Net periodic pension cost $ 9,232 $ 8,001 $ 5,924
________________________________
Assumptions used in the computation of net periodic pension cost for all
Company-sponsored plans were as follows:
1993 1992 1991
______________________________________________________________________________
Weighted-average discount rate 7.0% 8.0% 8.5%
Annual salary increases 4.5% 4.5% 5.5%
Expected long-term rate of return on assets 9.0% 9.0% 9.0%
The following table sets forth the funding status of Albertson's Salaried
Employees Pension Plan and Albertson's Employees Corporate Pension Plan and
the amounts included in other assets in the Company's consolidated balance
sheets (in thousands):
<TABLE>
<CAPTION>
February 3, January 28, January 30,
1994 1993 1992
_______________________________________________________________________________
<S> <C> <C> <C>
Plan assets at fair value $218,284 $177,825 $150,603
Actuarial present value of:
Vested benefits 155,087 101,858 91,924
Nonvested benefits 15,797 7,581 5,136
___________________________________
Accumulated benefit obligation 170,884 109,439 97,060
Effect of projected future salary
increases 38,508 32,308 25,475
___________________________________
Projected benefit obligation 209,392 141,747 122,535
___________________________________
Plan assets in excess of projected benefit
obligation 8,892 36,078 28,068
Unrecognized net loss (gain) 19,713 (15,975) (15,077)
Unrecognized prior service cost 7,123 7,972 8,154
Unrecognized net transition assets (1,171) (1,358) (1,545)
___________________________________
Prepaid pension cost $ 34,557 $ 26,717 $ 19,600
___________________________________
</TABLE
<PAGE>
The following table sets forth the status of the unfunded Executive Pension
Makeup Plan and the amounts included in other long-term liabilities in the
Company's consolidated balance sheets (in thousands):
</TABLE>
<TABLE>
<CAPTION>
February 3, January 28, January 30,
1994 1993 1992
_______________________________________________________________________________
<S> <C> <C> <C>
Actuarial present value of:
Vested benefits $ 6,493 $ 5,490 $ 4,613
Nonvested benefits 9 1 1
__________________________________
Accumulated benefit obligation 6,502 5,491 4,614
Effect of projected future salary
increases 1,861 2,564 2,684
__________________________________
Projected benefit obligation 8,363 8,055 7,298
__________________________________
Actuarial present value of projected benefit
obligations in excess of plan assets (8,363) (8,055) (7,298)
Unrecognized net (gain) loss (7) 458 458
Unrecognized prior service cost 1,136 1,231 1,326
Unrecognized net transition liability 1,688 1,869 2,050
Additional minimum liability (956) (994) (1,150)
__________________________________
Accrued pension cost $(6,502) $(5,491) $(4,614)
__________________________________
</TABLE>
The Company also contributes to various plans under industrywide collective
bargaining agreements which provide for pension benefits. Total
contributions to these plans were $16,025,000 for 1993, $19,295,000 for 1992
and $17,705,000 for 1991.
The Company has bonus plans for store management personnel and other key
management personnel. Amounts charged to earnings under all bonus plans were
$53,907,000 for 1993, $52,301,000 for 1992 and $36,205,000 for 1991.
Most retired employees of the Company are eligible to remain in its health
and life insurance plans. Retirees who elect to remain in the Company-
sponsored plans are charged a premium which is equal to the difference
between the estimated costs of the benefits for the retiree group and a
fixed contribution amount made by the Company.
At the beginning of 1992, the Company elected early adoption of the
provisions of SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." In prior years, the Company charged expenses
relating to postretirement benefits to earnings under the pay-as-you-go
method. The Company elected immediate recognition of a transition obligation
equal to the accumulated and vested postretirement benefit obligations to
existing retirees and active employees as of the date of adoption. The
cumulative effect of this accounting change (net of $2.4 million in tax
benefits) was to decrease 1992 net earnings by $4.1 million or $.01 per
share.
Net periodic postretirement benefit cost was as follows (in thousands):
1993 1992
______________________________________________________________________________
Service cost $ 574 $ 528
Interest cost 605 549
__________________
Net periodic postretirement benefit cost $1,179 $1,077
__________________
<PAGE>
The following table sets forth the Accrued Postretirement Benefit
Liabilities included in other long-term liabilities in the Company's
consolidated balance sheets (in thousands):
February 3, January 28,
1994 1993
_____________________________________________________________________________
Existing retired employees $1,613 $1,355
Active employees fully eligible 1,800 1,526
Other active employees 5,645 4,354
___________________
Accumulated Postretirement Benefit Obligation (APBO) 9,058 7,235
Unrecognized net loss and effects of changes in
assumptions (963)
_____________________
Accrued postretirement benefit liabilities $8,095 $7,235
_____________________
Assumed discount rate 7.0% 8.0%
Annual rates of increases in health care costs are not applicable in the
calculation of the APBO because the Company's contribution is a fixed
amount.
The Company also contributes to various plans under industrywide collective
bargaining agreements which provide for health care benefits to both active
employees and retirees. Total contributions to these plans were $90,613,000
for 1993 and $83,754,000 for 1992.
In November 1992, the Financial Accounting Standards Board issued SFAS No.
112, "Employers' Accounting for Postemployment Benefits." This new statement
is effective for fiscal years beginning after December 15, 1993 and requires
an accrual for certain benefits paid to former or inactive employees after
employment but before retirement. Based on the Company's evaluation of the
Statement's requirements, adoption in the first quarter of 1994 is expected
to reduce net earnings by approximately $6.4 million.
Leases
The Company leases a portion of its real estate. The typical lease period is
25 to 30 years and most leases contain renewal options. Exercise of such
options is dependent on the level of business conducted at the location. In
addition, the Company leases certain equipment. Some leases contain
contingent rental provisions based on sales volume at retail stores or miles
traveled for trucks.
Capitalized leases are calculated using interest rates appropriate at the
inception of each lease. Contingent rents associated with capitalized leases
were $2,716,000 in 1993, $2,428,000 in 1992 and $2,570,000 in 1991.
Following is an analysis of the Company's capitalized leases (in thousands):
February 3, January 28, January 30,
1994 1993 1992
_____________________________________________________________________________
Real estate $154,157 $145,548 $138,116
Equipment 1,641 1,768 1,657
___________________________________
$155,798 $147,316 $139,773
___________________________________
Accumulated amortization $ 73,074 $ 72,176 $ 70,058
___________________________________
<PAGE>
Future minimum lease payments for capitalized lease obligations at February
3, 1994 are as follows (in thousands):
Real Estate Equipment Total
______________________________________________________________________________
1994 $ 18,232 $ 374 $ 18,606
1995 18,321 367 18,688
1996 18,094 316 18,410
1997 18,196 175 18,371
1998 17,703 12 17,715
Remainder 137,817 137,817
__________________________________
Total minimum obligations 228,363 1,244 229,607
Less interest (112,253) (241) (112,494)
__________________________________
Present value of net minimum obligations 116,110 1,003 117,113
Less current portion (5,929) (265) (6,194)
__________________________________
Long-term obligations at February 3, 1994 $ 110,181 $ 738 $ 110,919
__________________________________
Minimum obligations have not been reduced by minimum capitalized sublease
rentals of $5,327,000 receivable in the future under noncancelable
capitalized subleases.
Rent expense under operating leases was as follows (in thousands):
1993 1992 1991
_______________________________________________________________________________
Minimum rent $ 66,506 $ 66,130 $ 56,664
Contingent rent 4,641 5,003 4,335
________________________________
71,147 71,133 60,999
Less sublease rent (17,232) (16,511) (14,372)
________________________________
$ 53,915 $ 54,622 $ 46,627
________________________________
Future minimum lease payments for all noncancelable operating leases and
related subleases having a remaining term in excess of one year at February
3, 1994 are as follows (in thousands):
Real Estate Subleases
_______________________________________________________________________________
1994 $ 58,634 $ (14,696)
1995 60,228 (14,880)
1996 60,407 (14,354)
1997 61,216 (13,812)
1998 63,603 (13,264)
Remainder 607,139 (29,712)
_______________________
Total minimum obligations (receivables) $911,227 $(100,718)
_______________________
The present value of minimum rent payments under operating leases using an
assumed interest rate of 9.5% was approximately $429 million at February 3,
1994.
Financial Instruments
Financial instruments with off-balance-sheet risk to the Company include
lease guarantees whereby the Company is contingently liable as a guarantor
of certain leases that were assigned to third parties in connection with
various store closures and outstanding letters of credit primarily
associated with the Company's self-insurance programs. Minimum rentals
guaranteed under assigned leases are $5.1 million in 1994 and aggregate
$65.6 million for the remaining lease terms, which expire at various dates
through 2012. The Company believes the likelihood of a significant loss from
these agreements is remote because of the wide dispersion among third
parties and remedies available to the Company should the primary party fail
<PAGE>
to perform under the agreements. As of February 3, 1994, the Company had
letters of credit outstanding of $48.7 million.
Financial instruments which potentially subject the Company to concentration
of credit risk consist principally of cash equivalents and trade
receivables. The Company limits the amount of credit exposure to any one
financial institution and places its temporary cash into investments of high
credit quality. Concentrations of credit risk with respect to trade
receivables are limited due to the dispersion of the Company's customer base
across different industries and geographies.
The estimated fair value of cash and cash equivalents, short-term debt and
commercial paper borrowings approximates their carrying amount. The
estimated fair value of all long-term debt borrowings as of February 3, 1994
was approximately $645.3 million as compared to its carrying amount of
$630.8 million. These fair values were estimated using discounted cash flow
analyses, based on the Company's current incremental borrowing rates for
similar types of borrowing arrangements, when quoted market values were not
available. The Company has not determined the fair value of lease guarantees
due to the inherent difficulty in evaluating the credit worthiness of each
tenant.
Legal Proceedings
On March 30, 1992, Super Food Services, Inc. filed a complaint against the
Company in Florida state court (Circuit Court of the Ninth Judicial Circuit,
Orange County, Florida) originally seeking specific performance of an
alleged agreement for the purchase of Super Food's existing Orlando
distribution facilities. Super Food also sought an injunction to force the
Company to maintain its business relationship with Super Food pending
resolution of the litigation. The trial court denied such injunctive relief,
and the court's ruling has been upheld on appeal. Super Food filed an
amended complaint in January of 1993 and is seeking damages of approximately
$97 million for the breach of an alleged oral requirements contract between
Super Food and the Company or, in the alternative, approximately $27 million
in damages for the Company's breach of an alleged agreement to purchase
Super Food's Florida facilities. On March 29, 1994, a final judgment was
granted by the trial court in favor of Albertson's on the $97 million claim,
which final judgment has essentially the same legal effect as the granting
of summary judgment in favor of Albertson's as to that claim. In addition,
after a hearing on March 31, 1994, the trial court indicated that
Albertson's motion for summary judgment on the $27 million claim will be
granted, and an order to that effect will be entered shortly. It is
anticipated that Super Food intends to appeal the foregoing judgments. The
Company continues to believes it has substantial and meritorious defenses to
the claims and will vigorously defend against any appeals that may be taken.
The outcome of any appeals cannot be determined at this time.
The Company is also involved in other routine litigation incidental to
operations. In the opinion of management, the ultimate resolution of the
above described lawsuit and other pending legal proceedings will not have a
material adverse effect on the Company's financial condition or results of
operations.
<PAGE>
Responsibility for Financial Reporting
The management of Albertson's, Inc. is responsible for the preparation and
integrity of the consolidated financial statements of the Company. The
accompanying consolidated financial statements have been prepared by the
management of the Company, in accordance with generally accepted accounting
principles, using management's best estimates and judgment where necessary.
Financial information appearing throughout this Annual Report is consistent
with that in the consolidated financial statements.
To help fulfill its responsibility, management maintains a system of
internal controls designed to provide reasonable assurance that assets are
safeguarded against loss or unauthorized use and that transactions are
executed in accordance with management's authorizations and are reflected
accurately in the Company's records. The concept of reasonable assurance is
based on the recognition that the cost of maintaining a system of internal
accounting controls should not exceed benefits expected to be derived from
the system. The Company believes that its long-standing emphasis on the
highest standards of conduct and ethics, set forth in comprehensive written
policies, serves to reinforce its system of internal controls.
Deloitte & Touche, independent auditors, audited the consolidated financial
statements in accordance with generally accepted auditing standards to
independently assess the fair presentation of the Company's financial
position, results of operations and cash flows.
The Audit Committee of the Board of Directors, comprised entirely of outside
directors, oversees the fulfillment by management of its responsibilities
over financial controls and the preparation of financial statements. The
Committee meets with internal and external auditors at least three times per
year to review audit plans and audit results. This provides internal and
external auditors direct access to the Board of Directors.
Management recognizes its responsibility to conduct Albertson's business in
accordance with high ethical standards. This responsibility is reflected in
key policy statements that, among other things, address potentially
conflicting outside business interests of Company employees and specify
proper conduct of business activities. Ongoing communications and review
programs are designed to help ensure compliance with these policies.
Gary G. Michael A. Craig Olson
Chairman of the Board and Senior Vice President, Finance and
Chief Executive Officer Chief Financial Office
<PAGE>
Independent Auditors' Report
The Board of Directors and Stockholders of Albertson's, Inc.:
We have audited the accompanying consolidated balance sheets of Albertson's,
Inc. and subsidiaries as of February 3, 1994, January 28, 1993 and January
30, 1992, and the related consolidated statements of earnings, stockholders'
equity and cash flows for the years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Albertson's, Inc. and
subsidiaries at February 3, 1994, January 28, 1993 and January 30, 1992, and
the results of their operations and their cash flows for the years then
ended in conformity with generally accepted accounting principles.
As discussed in the Notes to the Consolidated Financial Statements, in
fiscal year 1992 the Company changed its method of accounting for
postretirement benefits other than pensions and for income taxes to conform
with Statements of Financial Accounting Standards No. 106 and 109.
Deloitte & Touche
Boise, Idaho
March 31, 1994
<PAGE>
<TABLE>
Five Year Summary of Selected Financial Data
(Dollars in thousands except per share data)
<CAPTION>
53 Weeks 52 Weeks 52 Weeks 52 Weeks 52 Weeks
February 3, January 28, January 30, January 31, February 1,
1994 1993 1992 1991 1990
____________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Operating Results:
Sales $11,283,678 $10,173,676 $8,680,467 $8,218,562 $7,422,663
Gross profit 2,791,154 2,452,852 2,081,517 1,924,681 1,700,627
Interest expense:
Debt 27,945 22,245 5,863 9,351 5,257
Capitalized lease
obligations 12,233 11,560 12,278 11,786 13,162
Earnings before income
taxes and cumulative
effects of accounting
changes 552,215 443,721 406,394 366,009 309,776
Income taxes 212,534 167,646 148,600 132,235 113,225
Earnings before cumulative
effects of accounting
changes 339,681 276,075 257,794 233,774 196,551
Cumulative effects of
accounting changes (6,858)
Net earnings 339,681 269,217 257,794 233,774 196,551
Net earnings as a percent
to sales 3.01% 2.65% 2.97% 2.84% 2.65%
________________________________________________________________
Common Stock Data:
Earnings per share before
cumulative effects of
accounting changes $1.34 $1.04 $ .97 $ .87 $ .73
Cumulative effects of
accounting changes (.02)
Earnings per share 1.34 1.02 .97 .87 .73
Cash dividends per share .36 .32 .28 .24 .20
Book value per share 5.48 5.25 4.54 4.06 3.47
________________________________________________________________
Financial Position:
Total assets $3,294,895 $2,945,573 $2,216,247 $2,013,510 $1,862,689
Working capital 132,169 200,483 99,039 91,824 113,122
Long-term debt 554,092 404,476 52,510 56,056 111,503
Capitalized lease
obligations 110,919 103,764 99,159 103,039 106,949
Stockholders' equity 1,389,379 1,388,428 1,199,452 1,087,882 929,492
________________________________________________________________
Other Year End Statistics:
Number of stores 676 656 562 531 523
Number of employees:
Total 75,000 71,000 60,000 58,000 55,000
Full-time equivalents 58,000 54,000 45,000 44,000 42,000
________________________________________________________________
</TABLE>
Refer to the "Nonrecurring Charge" and "Indebtedness" notes in Notes to
Consolidated Financial Statements regarding the 1993 charge to cover the
settlement of the Babbitt v. Albertson's lawsuit and the reduction of
interest expense due to the successful resolution of a tax issue for which
interest expense had previously been accrued.
Refer to the "Acquisition" note in Notes to Consolidated Financial Statements
regarding the 1992 acquisition from American Stores Company.
Refer to the "Income Taxes" and "Employee Benefit Plans" notes in Notes to
Consolidated Financial Statements regarding the 1992 adoption of two new
accounting standards.
Common stock data has been adjusted for the two-for-one stock splits
distributed October 4, 1993 and June 29, 1990.
<PAGE>
<TABLE>
Quarterly Financial Data
(Dollars in thousands except per share data - Unaudited)
<CAPTION>
First Second Third Fourth Year
____________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
1993
Sales $2,719,633 $2,768,242 $2,733,773 $3,062,030 $11,283,678
Gross profit 661,487 672,577 668,057 789,033 2,791,154
Net earnings 74,137 75,870 62,712 126,962 339,681
Earnings per share .29 .30 .25 .50 1.34
___________________________________________________________
1992
Sales $2,296,848 $2,604,203 $2,585,137 $2,687,488 $10,173,676
Gross profit 534,459 621,392 622,469 674,532 2,452,852
Net earnings 26,053 65,962 71,495 105,707 269,217
Earnings per share .10 .25 .27 .40 1.02
___________________________________________________________
1991
Sales $2,160,211 $2,191,815 $2,129,775 $2,198,666 $8,680,467
Gross profit 500,381 518,579 509,501 553,056 2,081,517
Net earnings 58,690 58,652 59,519 80,933 257,794
Earnings per share .22 .22 .22 .31 .97
___________________________________________________________
The Company estimates the quarterly LIFO reserves which cannot be accurately
determined until year end. The LIFO method of valuing inventories increased
(decreased) net earnings as follows (in thousands except per share data):
First Second Third Fourth Year
____________________________________________________________________________________________
1993
Net earnings $(6,978) $(6,479) $9,495 $(3,962)
Earnings per share (.03) (.03) .04 (.02)
________________________________________________________
1992
Net earnings $(6,788) $(5,091) $(1,508) $5,423 $(7,964)
Earnings per share (.02) (.02) (.01) .02 (.03)
________________________________________________________
1991
Net earnings $(6,604) $(5,715) $ (381) $5,346 $(7,354)
Earnings per share (.03) (.02) .02 (.03)
________________________________________________________
</TABLE>
The fourth quarter of 1993 was a 14-week quarter.
Net earnings and earnings per share for the third quarter of 1993 were
reduced by a net of approximately $12.4 million or $.05 per share for a
nonrecurring charge to cover the settlement of the Babbitt v. Albertson's
lawsuit and reduced interest expense for the successful resolution of a tax
issue for which interest expense had previously been accrued. Refer to the
"Nonrecurring Charge" and "Indebtedness" notes in Notes to Consolidated
Financial Statements.
Net earnings and earnings per share for the first quarter of 1992 were
reduced by approximately $37.9 million or $.14 per share for one-time
costs primarily associated with the Jewel Osco Acquisition and accounting
changes. Refer to the "Income Taxes" and "Employee Benefit Plans" notes
in Notes to Consolidated Financial Statements for effects of adopting two new
accounting standards.
Earnings per share have been adjusted to reflect the two-for-one stock split
distributed October 4, 1993.
<PAGE>
Stockholders' Information
General Information
Address
ALBERTSON'S, INC.
General Offices
250 Parkcenter Boulevard
P.O. Box 20
Boise, Idaho 83726
Telephone: 208-385-6200
Auditors
Deloitte & Touche
Boise, Idaho
Stock Transfer Agent and
Registrar
Chemical Trust Company of
California (Chemical Trust)
Securityholder Relations
Department
50 California Street, 10th
Floor
San Francisco, California
94111
Co-Transfer Agent and
Registrar
West One Bank, Idaho
Boise, Idaho
Stockholders of Record
There were 16,000 stockholders
of record at March 31, 1994.
Annual Meeting
The 1994 Annual Meeting of the
Stockholders will be held at
10:00 a.m., Mountain Time on
Friday, May 27, 1994 in the
Eyries Room, Boise Centre on
the Grove, 850 Front Street,
Boise, Idaho.
Information Contact
Chemical Trust may be reached
toll free at 800-356-2017
between the hours of 8:30 a.m.
and 8:30 p.m., Eastern Time.
Personnel will perform the
following functions over the
telephone when a stockholder
identifies his or her account
by providing a taxpayer
identification number, the
registration name on the
securities and the address of
record:
1. Information regarding
stock transfer requirements.
2. Replacement of dividend
checks.
3. Duplicate 1099 forms and
W-9 tax certification forms
4. Transcripts of stockholder
accounts.
Requests for information on
topics not covered above
should be sent in writing to
Chemical Trust at the address
shown. Stockholders are
remided to include a reference
to Albertson's, Inc. in the
correspondence and that
changes of address must be
submitted in writing.
Form 10-K Available
A copy of Form 10-K Annual
Report filed with the
Securities and Exchange
Commission for Albertson's,
Inc. fiscal year ended
February 3, 1994 is available
to stockholders upon request
to the Secretary of
Albertson's, Inc.
Company Stock Information
The Company's stock is traded on the New York and Pacific Stock Exchanges
under the symbol ABS. An analysis of high and low stock prices by quarter
is as follows:
<TABLE>
<CAPTION>
First Second Third Fourth Year
_____________________________________________________________________________________________________
High Low High Low High Low High Low High Low
_____________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1993 29 23-3/8 29-3/4 25-1/4 29-1/4 24-1/8 28 23-3/8 29-3/4 23-3/8
1992 22-1/2 19-5/8 21-3/4 18-1/2 23-3/4 19-5/8 26-3/4 22-1/8 26-3/4 18-1/2
1991 25-3/4 18-3/8 24-1/4 18-3/4 22-1/4 17-7/8 19-7/8 16-3/8 25-3/4 16-3/8
Cash dividends per share were:
First Second Third Fourth Year
_____________________________________________________________________________________________________
1993 $.09 $.09 $.09 $.09 $.36
1992 .08 .08 .08 .08 .32
1991 .07 .07 .07 .07 .28
</TABLE>
* Stock prices and dividend information have been adjusted to reflect the
two-for-one stock split distributed October 4, 1993.
* In March 1994, the Board of Directors increased dividends to an annual
rate of $.44 per share, an increase of 22.2% over 1993. The new
quarterly rate of $.11 per share will be paid on May 25, 1994 to
stockholders of record on May 6, 1994.
25
