<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For 26 Weeks Ended: August 3, 1995 Commission File Number: 1-6187
ALBERTSON'S, INC.
______________________________________________________
(Exact name of Registrant as specified in its charter)
Delaware 82-0184434
_______________________________ ___________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
250 Parkcenter Blvd., P.O. Box 20, Boise, Idaho 83726
_______________________________________________ __________
(Address) (Zip Code)
Registrant's telephone number, including area code: (208) 385-6200
______________
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
_____ _____
Number of Registrant's $1.00 par value
common shares outstanding at September 1, 1995: 252,671,435
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ALBERTSON'S, INC.
CONSOLIDATED EARNINGS
(in thousands except per share data)
(unaudited)
<CAPTION>
13 WEEKS ENDED 26 WEEKS ENDED
________________________ ________________________
<S> <C> <C> <C> <C>
August 3, August 4, August 3, August 4,
1995 1994 1995 1994
____________ ___________ ____________ ___________
Sales $3,119,216 $2,987,680 $6,202,640 $5,897,488
Cost of sales 2,323,420 2,236,768 4,631,629 4,423,821
__________ __________ __________ __________
Gross profit 795,796 750,912 1,571,011 1,473,667
Selling, general and
administrative expenses 610,895 584,491 1,212,363 1,151,169
__________ __________ __________ __________
Operating profit 184,901 166,421 358,648 322,498
Other (expenses) income:
Interest, net (13,573) (15,327) (27,966) (31,473)
Other, net 1,966 1,227 4,560 (237)
__________ __________ __________ __________
Earnings before income taxes
and cumulative effect of
accounting change 173,294 152,321 335,242 290,788
Income taxes 67,065 58,644 129,739 111,954
__________ __________ __________ __________
Earnings before cumulative
effect of accounting change 106,229 93,677 205,503 178,834
Cumulative effect of
accounting change:
Postemployment benefits (17,006)
__________ __________ __________ __________
NET EARNINGS $ 106,229 $ 93,677 $ 205,503 $ 161,828
Earnings per share before
cumulative effect of
accounting change $ .42 $ .37 $ .81 $ .71
Cumulative effect of accounting
change:
Postemployment benefits (.07)
__________ __________ __________ __________
EARNINGS PER SHARE $ .42 $ .37 $ .81 $ .64
DIVIDENDS DECLARED PER SHARE $ .13 $ .11 $ .26 $ .22
Average number of shares
outstanding 253,218 253,572 253,612 253,535
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
ALBERTSON'S, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<CAPTION>
August 3, 1995 February 2,
(unaudited) 1995
______________ ____________
ASSETS
______
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 83,820 $ 50,224
Accounts and notes receivable 85,611 109,324
Inventories 909,694 948,561
Prepaid expenses 34,297 19,257
Deferred income taxes 59,910 62,223
__________ __________
TOTAL CURRENT ASSETS 1,173,332 1,189,589
OTHER ASSETS 148,147 122,781
LAND, BUILDINGS AND EQUIPMENT 3,722,102 3,496,257
Less accumulated depreciation and amortization 1,263,366 1,186,898
__________ __________
2,458,736 2,309,359
__________ __________
$3,780,215 $3,621,729
LIABILITIES AND STOCKHOLDERS' EQUITY
____________________________________
CURRENT LIABILITIES:
Accounts payable $ 600,779 $ 575,551
Salaries and related liabilities 131,982 114,906
Taxes other than income taxes 59,004 38,212
Income taxes 15,619 37,913
Self-insurance 67,292 63,905
Unearned income 28,913 22,092
Other current liabilities 38,958 34,810
Current maturities of long-term debt 78,187 201,146
Current capitalized lease obligations 7,115 6,904
__________ _________
TOTAL CURRENT LIABILITIES 1,027,849 1,095,439
LONG-TERM DEBT 505,476 382,775
CAPITALIZED LEASE OBLIGATIONS 130,313 129,573
DEFERRED INCOME TAXES 26 2,017
OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS 328,136 324,032
STOCKHOLDERS' EQUITY:
Preferred stock - $1 par value; authorized -
10,000,000 shares; issued - none
Common stock - $1 par value; authorized -
600,000,000 shares; issued - 252,637,135
shares and 253,984,381 shares, respectively 252,637 253,984
Capital in excess of par value 11,322
Retained earnings 1,535,778 1,422,587
__________ __________
1,788,415 1,687,893
__________ __________
$3,780,215 $3,621,729
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
ALBERTSON'S, INC.
CONSOLIDATED CASH FLOWS
(in thousands)
(unaudited)
<CAPTION>
26 WEEKS ENDED
______________________________
August 3, August 4,
1995 1994
_____________ _____________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 205,503 $ 161,828
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 121,280 108,878
Net deferred income taxes 322 (14,077)
Cumulative effect of accounting change 17,006
Changes in operating assets and liabilities 101,993 26,412
__________ __________
Net cash provided by operating activities 429,098 300,047
CASH FLOWS FROM INVESTING ACTIVITIES:
Net capital expenditures excluding
noncash activities (266,439) (188,846)
Increase in other assets (25,366) (23,550)
__________ __________
Net cash used in investing activities (291,805) (212,396)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net line of credit activity (10,000)
Proceeds from long-term borrowings 200,000
Payments on long-term borrowings (203,523) (78,308)
Net commercial paper activity (98) 64,939
Proceeds from stock options exercised 1,013 3,020
Stock purchases (40,127)
Cash dividends (60,962) (50,700)
__________ __________
Net cash used in financing activities (103,697) (71,049)
__________ __________
NET INCREASE IN CASH AND CASH EQUIVALENTS 33,596 16,602
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 50,224 62,463
__________ __________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 83,820 $ 79,065
NONCASH ACTIVITIES:
Capital lease obligations incurred $ 4,999 $ 4,574
Capital lease obligations terminated 685 2,658
CASH PAYMENTS FOR:
Income taxes 151,306 155,076
Interest, net of amounts capitalized 23,295 27,461
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
ALBERTSON'S, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Basis of Presentation
_____________________
The accompanying unaudited 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.
In the opinion of management, the accompanying unaudited consolidated
financial statements include all adjustments necessary to present
fairly, in all material respects, the results of operations of the
Company for the periods presented. Such adjustments consisted only of
normal recurring items. The statements have been prepared by the
Company pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. It is suggested that these
consolidated financial statements be read in conjunction with the
consolidated financial statements and the accompanying notes included in
the Company's 1994 Annual Report.
The balance sheet at February 2, 1995 has been taken from the audited
financial statements at that date.
Restatement
___________
The results for the 26 weeks ended August 4, 1994 have been restated
to give effect to a correction of the cumulative effect of the adoption
of Statement of Financial Accounting Standards (SFAS) No. 112,
"Employers' Accounting for Postemployment Benefits" recorded in the
first quarter of 1994. The cumulative effect (net of tax) of the
adoption of SFAS No. 112 amounted to $17.0 million, or $.07 per share,
compared to $6.4 million, or $.03 per share, as previously reported.
Indebtedness
____________
In June 1995, the Company issued $200 million of 6.375% notes under a
shelf registration statement filed with the Securities and Exchange
Commission in 1992. The notes are due June 1, 2000 and interest is paid
semiannually. Proceeds from the issuance was used to reduce borrowings
under the Company's commercial paper program. No more debt is available
for issuance under the 1992 shelf registration statement.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
_____________________
Results for the quarter:
Sales for the 13 weeks ended August 3, 1995 increased by $132 million
(4.4%) over sales for the 13 weeks ended August 4, 1994. This increase
was due to the continued expansion of net square footage and was
partially offset by a decrease in identical store sales. Identical
store sales, sales in stores that have been in operation for the
equivalent 13 week periods of both years, decreased by 0.3% and
comparable store sales (which include replacement stores) decreased
0.1%. Management estimates that annual sales inflation in the products
the Company sold was approximately 2.0%. During the quarter eleven
stores were opened, six stores were closed and eight store remodels were
completed. Net retail square footage increased 6.4% from August 4,
1994.
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:
Percent to Sales Percentage Incr.(Decr.)
___________________ _________________________
13 weeks ended Second Quarter
___________________ _________________________
8-03-95 8-04-94 1995/1994 1994/1993
_______ ________ ___________ __________
Sales 100.00% 100.00% 4.4% 7.9%
Gross profit 25.51 25.13 6.0 11.6
Selling, general and
administrative
expenses 19.58 19.56 4.5 8.3
Operating profit 5.93 5.57 11.1 25.1
Net interest
expense 0.44 0.51 (11.4) 0.8
Earnings before
income taxes 5.56 5.10 13.8 25.1
Net earnings 3.41 3.14 13.4 23.5
Gross profit, as a percent to sales, increased due to improved gross
margins at retail stores and increased utilization of the Company's
distribution system. Improvements in retail gross margins resulted from
tight controls and better sales mix (improved sales in departments with
higher gross profit). Increased utilization of the Company's
distribution system enabled the Company to improve efficiencies at the
respective centers. The pre-tax LIFO charge reduced gross profit by
$11,100,000 (0.36% to sales) for the 13 weeks ended August 3, 1995 and
$9,700,000 (0.32% to sales) for the 13 weeks ended August 4, 1994.
Selling, general and administrative (SG&A) expenses, as a percent to
sales, remained relatively flat. Increases in depreciation and
amortization were offset by reductions in workers' compensation and
employee benefit costs. The Company continues to emphasize its cost
containment programs as well as increased productivity to control SG&A
expenses as a percent to sales.
<PAGE>
Net interest expense decreased due to the reduction of average
outstanding debt during the respective quarters and increased
capitalized interest associated with the Company's capital expenditure
program.
Year-to-date results:
Sales for the 26 weeks ended August 3, 1995 increased by $305 million
(5.2%) over sales for the 26 weeks ended August 4, 1994. This increase
was due primarily to the continued expansion of net square footage.
Identical store sales, sales in stores that have been in operation for
the equivalent 26 week periods of both years, increased 0.1% and
comparable store sales (which include replacement stores) increased
0.3%. Management estimates that annual sales inflation in the products
the Company sold was approximately 2.0%. During the 26 weeks 13 stores
were opened, eight stores were closed, and 15 store remodels were
completed. Net retail square footage increased 6.4% from August 4,
1994.
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:
Percent to Sales Percentage Incr.(Decr.)
___________________ _________________________
26 weeks ended Year-to-date
___________________ _________________________
8-03-95 8-04-94 1995/1994 1994/1993
_______ ________ ___________ __________
Sales 100.00% 100.00% 5.2% 7.5%
Gross profit 25.33 24.99 6.6 10.5
Selling, general and
administrative
expenses 19.55 19.52 5.3 7.9
Operating profit 5.78 5.47 11.2 20.5
Net interest
expense 0.45 0.53 (11.1) 6.8
Earnings before income
taxes and cumulative
effect of accounting
change 5.40 4.93 15.3 20.8
Net earnings 3.31 2.74 27.0 7.9
Gross profit, as a percent to sales, increased due primarily to
increased utilization of the Company's distribution system. Increased
utilization of the Company's distribution system enabled the Company to
improve efficiencies at the respective centers. The pre-tax LIFO charge
reduced gross profit by $22,200,000 (0.36% to sales) for the 26 weeks
ended August 3, 1995 and $21,700,000 (0.37% to sales) for the 26 weeks
ended August 4, 1994.
Selling, general and administrative (SG&A) expenses for the 26 weeks
ended August 4, 1994, as a percent to sales, remained relatively flat.
Increases in depreciation and amortization were offset by reductions in
workers' compensation and employee benefit costs. The Company continues
to emphasize its cost containment programs as well as increased
productivity to control SG&A expenses as a percent to sales.
<PAGE>
Net interest expense decreased due to the reduction of average
outstanding debt during the respective periods and increased capitalized
interest associated with the Company's capital expenditure program.
Net earnings for the 26 weeks ended August 4, 1994, as a percent to
sales, increased due to improvements in gross margin and reductions of
net interest expense discussed previously. In addition, the cumulative
effect of adopting SFAS No. 112, "Employers' Accounting for
Postemployment Benefits" reduced net earnings for the 26 weeks ended
August 4, 1994 by $17 million (.29% to sales).
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 the 26 weeks ended August 3,
1995 was $429 million as compared to $300 million in the prior year.
During the 26 weeks ended August 3, 1995 the Company spent $266 million
for net capital expenditures, $40 million to purchase shares of the
Company's common stock, $61 million for the payment of dividends and
$204 million to reduce debt. The Company also issued new notes totaling
$200 million. Proceeds from the issuance was used to reduce borrowings
under the Company's commercial paper program. The Company's commercial
paper program is utilized 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.
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 6, 1995 and authorizes the
Company to purchase up to 5 million shares through March 31, 1996.
During the 26 weeks ended August 3, 1995, 1.4 million shares were
purchased and immediately retired pursuant to this program.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
__________________________
There have not been any material developments in the routine
litigation referred to in the Form 10-K for the fiscal year ended
February 2, 1995.
Item 2. Changes in Securities
______________________________
In October 1994, the Company entered into a revolving credit
agreement with several banks, whereby the Company may borrow, from time
to time, principal amounts up to $400 million at any time prior to
October 5, 1999. In accordance with this revolving credit agreement,
the Company's consolidated tangible net worth, as defined, shall not be
less than $750 million.
Item 3. Defaults upon Senior Securities
________________________________________
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
____________________________________________________________
Information regarding the Company's Annual Meeting of Stockholders
held on May 26, 1995 was included under Item 4 of Form 10-Q for the
quarter ended May 4, 1995.
Item 5. Other Information
__________________________
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
_________________________________________
a. Exhibits
10.26 Agreement between Alscott Limited Partnership #2 and
Albertson's, Inc. dated August 3, 1995.*
10.27 Stockholders' Agreement among Kathryn Albertson,
Albertson's, Inc. and Alscott Limited Partnership #2
dated August 3, 1995.*
27 Financial data schedule for the 26 weeks ended
August 3, 1995
* Identifies management contracts or compensatory plans or
arrangements required to be filed as an exhibit hereto.
b. The following reports on Form 8-K were filed during the
quarter:
None.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
ALBERTSON'S, INC.
_________________________________
(Registrant)
Date: September 6, 1995 A. Craig Olson
_____________________ _________________________________
A. Craig Olson
Senior Vice President, Finance
and Chief Financial Officer
FORM 10-Q
1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ALBERTSON'S
QUARTERLY REPORT TO STOCKHOLDERS FOR THE QUARTER ENDED AUGUST 3, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-01-1996
<PERIOD-START> FEB-03-1995
<PERIOD-END> AUG-03-1995
<CASH> 83,820
<SECURITIES> 0
<RECEIVABLES> 87,111
<ALLOWANCES> 1,500
<INVENTORY> 909,694
<CURRENT-ASSETS> 1,173,332
<PP&E> 3,722,102
<DEPRECIATION> 1,263,366
<TOTAL-ASSETS> 3,780,215
<CURRENT-LIABILITIES> 1,027,849
<BONDS> 635,789
<COMMON> 252,637
0
0
<OTHER-SE> 1,535,778
<TOTAL-LIABILITY-AND-EQUITY> 3,780,215
<SALES> 6,202,640
<TOTAL-REVENUES> 6,202,640
<CGS> 4,631,629
<TOTAL-COSTS> 4,631,629
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,966
<INCOME-PRETAX> 335,242
<INCOME-TAX> 129,739
<INCOME-CONTINUING> 205,503
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 205,503
<EPS-PRIMARY> .81
<EPS-DILUTED> .81
</TABLE>
<PAGE>
A G R E E M E N T
THIS AGREEMENT made and executed this 3rd day of
August, 1995, by and between Alscott Limited Partnership
#2, a Texas limited partnership (the "Partnership") and
ALBERTSON'S, INC., a Delaware corporation.
WHEREAS, concurrently herewith, Kathryn Albertson
and the Partnership are entering into an agreement, dated
of even date herewith (the "Contribution Agreement"),
pursuant to which Kathryn Albertson is contributing to
the Partnership 20,840,446 shares of common stock of
Albertson's, Inc. owned by her; and
WHEREAS, the parties hereto are concurrently
entering into a Stockholders' Agreement (the
"Stockholders' Agreement") in order to provide, among
other things, for the coordination and aggregation of the
actions by Kathryn Albertson and the Partnership under
this Agreement and under the Agreement, dated December
31, 1979, between Albertson's, Inc. and Kathryn
Albertson;
NOW, THEREFORE, IN CONSIDERATION OF the mutual
covenants herein set forth and other valuable
considerations by each party received from each other
party, the adequacy of which is hereby acknowledged, IT
IS AGREED:
<PAGE>
Section 1. Definitions. As used in this agreement:
1.1. The term "corporation" shall refer to
Albertson's, Inc., a Delaware corporation.
1.2. The term "stock" shall refer to shares of
common stock issued by the corporation.
1.3. The term "business day" shall refer to any
Monday, Tuesday, Wednesday, Thursday or Friday which is
not a legal holiday under the laws of the State of Idaho.
1.4. The term "market value", as used in Sections
3, 4 and 5 shall refer to an amount equivalent to the
average of the closing prices per share of stock on the
composite tape for thirty consecutive business days upon
which shares of stock were traded upon any stock exchange
whose prices are incorporated in the composite tape
preceding the date of determination.
1.5. The term "personal representative" shall refer
to the duly appointed personal representative of the
estate of Kathryn Albertson, acting in that capacity
following the death of Kathryn Albertson. Should a
special administrator be appointed to administer the
estate of Kathryn Albertson until such time as a personal
representative of that estate is appointed, the term
"personal representative" shall also refer to that
special administrator.
<PAGE>
1.6. The term "Shares" means (i) all stock
transferred to the Partnership by Kathryn Albertson and
(ii) all stock received by the Partnership as a dividend
or other distribution as a result of its ownership of the
stock referred to in clause (i).
Section 2. Recognition. The parties hereto
recognize that:
2.1. Kathryn Albertson has contributed today
20,840,446 shares of stock to the Partnership pursuant to
the terms of the Contribution Agreement. The aggregate
number of shares of stock contributed to the Partnership
pursuant to the terms of the Contribution Agreement is
26,842,046.
2.2. The provisions of this agreement and the
covenants of the respective parties contained in this
agreement are in their best interests in providing for an
orderly sale and purchase of stock under the
circumstances and in the manner provided in this
agreement.
Section 3. Sale of Stock - Right of First Refusal.
3.1. The provisions of subsection 3.2 shall remain
in force and effect during the lifetime of Kathryn
Albertson. The provisions of subsection 3.3 shall remain
in effect and binding upon a donee although the death of
Kathryn Albertson shall have occurred.
<PAGE>
3.2. In the event that during the lifetime of
Kathryn Albertson the Partnership proposes to sell or
dispose of (other than through gift) all or any part of
the Shares to a person or entity other than Kathryn
Albertson, it shall give notice in writing to the
corporation stating its desire to sell such Shares. If
its proposal to sell such Shares is based upon a bona
fide offer by a third party to purchase, the notice
delivered to the corporation shall state its intention to
sell the Shares, the identity of the prospective
purchaser, the price per share offered, the number of
Shares to be sold and other terms of the proposed sale.
If its proposal to sell is not based upon a bona fide
offer to purchase, then the notice to the corporation
shall state its intention to sell Shares, the number of
Shares to be sold, the proposed price per share therefor
and other terms of sale.
For a period of thirty (30) days following delivery
of that notice to the corporation, the corporation shall
have an irrevocable and exclusive option to purchase all
(but not less than all) of the Shares proposed to be sold
at the price and upon the terms set forth in the notice.
Should the corporation determine to exercise its
option to purchase those Shares, notice in writing of
<PAGE>
that decision shall be delivered to the Partnership
within the thirty day option period. A closing shall
take place on the ninetieth business day following the
date of delivery to the Partnership of the corporation's
notice that it is exercising its option. The closing
shall take place at the office of the corporation. At
the closing the corporation shall pay to the Partnership
such part of or the entire purchase price for those
Shares as is required to be paid at closing by the terms
of sale, and, if payment of a part of the purchase price
is deferred, the corporation shall deliver to the
Partnership such other instruments as are contemplated by
the terms of sale. Simultaneously therewith the
Partnership shall deliver to the corporation certificates
evidencing its ownership of the number of Shares
purchased by the corporation with proper assignments in
blank thereof duly executed by it with its signature
guaranteed.
Should the corporation fail, refuse or decline to
exercise its option to purchase all of the Shares offered
for sale within the thirty day option period at the price
and upon the terms set forth in the notice delivered to
the corporation, within a period of nine (9) months
thereafter the Partnership may sell those Shares at a
price equivalent to or exceeding that which was stated in
<PAGE>
the notice to the corporation (and which was available to
the corporation), but the Partnership shall not sell
those Shares upon different terms or at a purchase price
less than that which was stated in the notice to the
corporation (and available to the corporation) or sell a
part, only, of those Shares, or sell those Shares after
the expiration of said nine month period without again
offering those Shares for purchase by the corporation
under the procedure set forth in this subsection.
3.3. The provisions of this section shall not be
interpreted to deprive the Partnership of the privilege
to make gifts of Shares during Kathryn Albertson's
lifetime; providing that as a condition to each gift the
donee shall agree in writing to grant to the corporation
an option to purchase all of the Shares so received as a
gift from the Partnership utilizing the procedure set
forth in this subsection.
That agreement by the donee shall require the donee,
its successors, assigns and personal representative
within a period of one year following the date of the
gift to deliver to the corporation an offer to sell to
the corporation all of the Shares received as a gift from
the Partnership.
<PAGE>
For a period of ninety days following delivery of
that notice to sell Shares the corporation shall have an
exclusive and irrevocable option to purchase all (but not
less than all) of the Shares so offered for sale by the
donee at the purchase price and on the terms set forth in
this subsection.
Should the corporation determine to exercise its
option to purchase those Shares, notice in writing of
that decision shall be delivered to the donee within said
ninety day option period; and having determined to
exercise its option to purchase those Shares, the
purchase price shall be equivalent to ninety-six percent
(96%) of the market value per share determined as
provided in subsection 1.4 as of the date of delivery of
the written notice by which the corporation exercised its
option to purchase the Shares, multiplied by the number
of Shares to be purchased.
The corporation having given notice of its decision
to purchase Shares, a closing shall take place at the
general office of the corporation on the 150th day after
the date of delivery of the notice by the corporation
exercising its option to purchase the Shares or if such
day is not a business day, on the first business day
thereafter.
<PAGE>
At the closing, the donee shall deliver to the
corporation the certificates evidencing ownership by it
of the number of Shares purchased by the corporation with
proper assignments thereof in blank duly executed by or
on behalf of the donee with its signature guaranteed; and
simultaneously therewith the corporation shall pay to the
donee the entire purchase price for those Shares.
Should the corporation fail, refuse or decline to
exercise its option to purchase all of the Shares
(received by the donee from the Partnership as a gift)
within the option period stated in this subsection, from
and after the expiration of that option period the donee
shall hold those Shares, deal with them and exercise all
rights of ownership thereof free from the provisions of
this subsection and free from the provisions of the
agreement entered into by the donee at the time of the
gift of stock.
Following a gift by the Partnership of Shares, upon
the new certificate evidencing ownership by the donee of
those Shares the Secretary of the corporation shall be
authorized to endorse a legend corresponding to that set
forth in Section 7 and further incorporating by reference
the agreement of the donee contemplated in this
subsection.
<PAGE>
Section 4. Option to Purchase.
4.1. Following the death of Kathryn Albertson, the
corporation is hereby granted an irrevocable and
exclusive option to purchase all of the Shares (not a
part thereof) owned by the Partnership at the time of
Kathryn Albertson's death as provided in this section.
4.2. Within thirty days following the date of death
of Kathryn Albertson the Partnership shall deliver to the
corporation an offer to sell to the corporation all of
the Shares owned by the Partnership at the time of
Kathryn Albertson's death.
For a period of ninety days following delivery of
that offer to sell Shares, the corporation shall have an
irrevocable and exclusive option to purchase all (but not
less than all) of the Shares owned by the Partnership at
the time of Kathryn Albertson's death at the purchase
price and on the terms set forth in this section.
Should the corporation determine to exercise its
option to purchase those Shares, notice in writing of
that decision shall be delivered to the Partnership
within said ninety day option period; and having
determined to exercise its option to purchase those
Shares, the purchase price shall be equivalent to ninety-
six percent (96%) of the market value per share
determined as
<PAGE>
provided in subsection 1.4 as of the date of delivery of
the written notice by which the corporation exercised its
option to purchase the Shares, multiplied by the number
of Shares to be purchased.
The corporation having given notice of its decision
to purchase the Shares, the closing shall take place at
the general office of the corporation on the 150th day
after the date of delivery of the notice by the
corporation exercising its option to purchase the Shares,
or if such day is not a business day, on the first
business day thereafter.
At the closing:
(a) The Partnership shall deliver to the
corporation (1) such instrument or instruments as may be
required under the laws of the State of Idaho to
establish its authority to sell those Shares, and (2) the
certificates evidencing the ownership by the Partnership
of the number of Shares purchased by the corporation with
proper assignments thereof in blank duly executed by the
Partnership with its signature guaranteed.
(b) The corporation shall pay to the
Partnership the entire purchase price for the Shares
being purchased.
<PAGE>
(c) Should the closing occur more than nine
months after the date of death of Kathryn Albertson, in
addition to the purchase price for the Shares being
purchased, upon demand the corporation shall pay to the
personal representative an amount equivalent to the
aggregate of (i) interest upon that purchase price
computed at a rate equivalent to that then chargeable by
the United States of America under the applicable
provisions of the Internal Revenue Code for delinquent
estate taxes computed for the period from the date which
is nine months after the date of death of Kathryn
Albertson to the date of closing, and (ii) all penalties
and other charges levied and imposed by the Internal
Revenue Service by reason of the late payment of those
estate taxes.
4.3. Should the corporation fail, refuse or decline
to exercise its option to purchase all of the Shares
owned by the Partnership at the time of Kathryn
Albertson's death within the option period stated in
subsection 4.2, then and in that event the Partnership
shall be obligated to sell those Shares through a
secondary public offering utilizing the procedure set
forth in Section 5.
<PAGE>
Section 5. Public Offering of Shares.
5.1. Should the corporation have failed, refused or
declined to purchase all of the Shares owned by the
Partnership at the time of Kathryn Albertson's death in
the manner and within the option period stated in
subsection 4.2, promptly following the expiration of that
option period or notice in writing by the corporation
that it declines to exercise the option the Partnership
shall proceed expeditiously through the exercise of its
best efforts to cause those Shares to be registered under
the Securities Act of 1933 for public distribution and
sale through an underwriter and to consummate an
agreement for sale of those Shares to or through an
underwriter. The corporation may designate the
underwriter. The amount of the underwriter's commissions
shall require approval by the corporation. The gross
price per Share (before deducting the underwriter's
commissions) at which the Shares shall be offered through
the underwriter for distribution and sale shall be fixed
and established by the Partnership. Unless a greater
gross price per Share is approved by the corporation,
that gross price as fixed and established by the
Partnership shall not exceed the market value per Share
determined as at the date of the offering.
<PAGE>
5.2. All expenses and costs associated with the
registration of those Shares and such public distribution
or sale, including (without limitation) registration
fees, fees and expenses of counsel for the Partnership,
fees and expenses of accountants, printing costs and the
underwriter's commissions shall be assumed and paid by
the corporation. Accordingly, upon demand by the
Partnership, the corporation agrees to reimburse and pay
to the Partnership all expenditures by the Partnership
for those purposes.
5.3. The Partnership may delegate to the
corporation and to its employees or persons designated by
the corporation the actual preparation of the
registration statement, prospectus and offering circular
and other instruments required to effect a registration
under the Securities Act of 1933, retaining the privilege
to approve the final form thereof. In such event, the
Partnership shall furnish to the corporation in writing
such information known to the Partnership as shall
reasonably be required by the corporation for use in such
registration statement, prospectus or offering circular.
In any event, the form and content of those instruments
shall require approval by both the Partnership and the
corporation.
<PAGE>
5.4. The corporation agrees to indemnify, to the
extent permitted by law, the Partnership and each person,
if any, who controls the Partnership within the meaning
of Section 15 of the Securities Act of 1933, as amended,
jointly or severally, against all losses, claims,
damages, liabilities or expenses (under such Act or
common law or otherwise) arising from or caused by any
untrue statement or alleged untrue statement of a
material fact which was furnished by any employee of the
corporation and incorporated in the registration
statement or any offering circular or prospectus (as
amended or supplemented) or if the corporation or any
employee thereof was responsible for any omission or
alleged omission to state in the registration statement
or the offering circular or prospectus a material fact
required to be stated therein or necessary to make the
statements therein not misleading; excepting insofar as
such losses, claims, damages, liabilities or expenses are
caused by any untrue statement of or an omission in the
information furnished and provided by the Partnership
expressly for use therein; and the corporation shall
reimburse the Partnership and its controlling persons for
any legal or other expenses reasonably incurred by them
in investigating or defending
<PAGE>
against such alleged losses, claims, damages, liabilities
or expenses.
Although the underwriting agreement will be entered
into between the Partnership and the underwriter, the
corporation agrees to indemnify the underwriter, its
officers and directors, and each person who controls the
underwriter within the meaning of the Securities Act of
1933, as amended, if then in effect or any similar
Federal statute then in force to the same extent as
herein above provided with respect to indemnification of
the Partnership.
Should the Partnership delegate to the corporation
and to its employees the actual preparation of the
registration statement, prospectus, offering circular or
other instruments required to effect a registration under
the Securities Act of 1933, the Partnership agrees to
indemnify, to the extent permitted by law, the
corporation, its directors and officers and each person,
if any, who controls the corporation within the meaning
of such Act, against any losses, claims, damages,
liabilities and expenses resulting from any untrue
statement of a material fact incorporated in the
registration statement or prospectus which was furnished
in writing by the Partner-ship expressly for use therein.
<PAGE>
Should the Partnership, promptly following the
expiration of the option period stated in subsection 4.2
or promptly following receipt of notice in writing by the
corporation that it declines to exercise the option
granted to it in Section 4, have delegated to the
corporation and to its employees or persons designated by
the corporation the actual preparation of the
registration statement, prospectus, offering circular and
other instruments required to effect a registration under
the Securities Act of 1933 and should the preparation and
filing of those instruments be so delayed that the
closing with the underwriter contemplated in subsection
5.5 does not occur within a period of nine months
following the date of death of Kathryn Albertson, upon
demand the corporation shall be obligated to pay to the
personal representative an amount equivalent to the
aggregate of (i) interest at a rate equivalent to that
then chargeable by the United States of America under
applicable provisions of the Internal Revenue Code for
delinquent estate taxes computed upon that portion of the
gross offering price of all Shares sold through the
secondary public offering by the Partnership and which
the personal representative was required to pay as estate
taxes payable to the Internal Revenue Service for the
period from the date
<PAGE>
which is nine months after the date of death of Kathryn
Albertson to the date of closing under subsection 5.5,
and (ii) all penalties and other charges levied and
imposed by the Internal Revenue Service by reason of the
late payment of those estate taxes.
5.5. Promptly following the date of the sale under
the public offering, there shall be a closing in the
office of the underwriter. At that closing, the
underwriter shall pay to the Partnership the gross
offering price per share for all shares of the stock
sold; the corporation shall pay to the underwriter its
commission on all of the Shares sold; and simultaneously
therewith the Partnership shall deliver to the
underwriter certificates evidencing the Shares for which
payment was received by it with proper assignments in
blank thereof duly executed by the Partnership with its
signature guaranteed.
Section 6. General.
6.1. The Partnership agrees that it will not pledge
or create a security interest in the Shares to secure
payment of any obligation, and that it will not sell,
assign, transfer or create an interest in any of the
Shares except as provided in this agreement. The
provisions of this subsection shall not be interpreted to
<PAGE>
limit or in any respect restrict the authority of the
Partnership to borrow funds, incur obligations or
establish lines of credit based upon its general net
worth as disclosed by a balance sheet listing the Shares
owned by it as an asset.
6.2. [INTENTIONALLY LEFT BLANK]
6.3. This agreement and the endorsement of the
legend contemplated in Section 7 upon certificates
evidencing its ownership of Shares shall not in any
respect deprive the Partnership of all rights of
ownership of the Shares owned by it, including (without
limitation thereto) unrestricted voting rights and the
right to receive and retain all dividends (either in cash
or in the form of shares of stock) declared thereon,
subject only to the specific provisions of Sections 3, 4,
5 and 6.
Section 7. Endorsement of Stock Certificates.
7.1. Immediately following the execution of this
agreement, the Partnership agrees to deliver to the
corporation all certificates evidencing ownership by the
Partnership of Shares in order that there may be endorsed
upon the face of each such certificate a legend reading
substantially as follows:
<PAGE>
"The shares of stock evidenced by this
certificate are subject to an Agreement entered
into on the 3rd day of August, 1995, between
Alscott Limited Partnership #2 and Albertson's,
Inc. which restricts and controls any sale,
assignment, transfer, pledge or other disposition
of the shares of stock evidenced by this
certificate. A copy of such Agreement is on
file with the Secretary of Albertson's, Inc."
After endorsement of that legend, each certificate shall
be returned to the Partnership. So long as this
agreement is in force, a legend substantially as above
stated shall be endorsed on each certificate representing
Shares hereafter issued by the corporation to the
Partnership.
7.2. A copy of this agreement shall remain on file
with the Secretary of the corporation.
7.3. In either of these events:
(i) As authorized in subsection 3.2, should
the Partnership sell Shares to a purchaser other than the
corporation or Kathryn Albertson; or
(ii) as contemplated in subsection 3.3, should
the corporation fail, refuse or decline to purchase
Shares from a donee within the option period provided in
that subsection,
upon request by the Partnership or by the donee (as the
case may be) the corporation agrees to replace the
certificates evidencing the Shares involved (and upon
which the legend contemplated in subsection 7.1 or
subsection
<PAGE>
3.3 appears) by a certificate or certificates duly
executed and issued evidencing ownership by the
Partnership or by the donee (as the case may be) of an
equivalent number of Shares upon which no legend of the
nature contemplated in subsection 7.1 or subsection 3.3
shall appear.
Section 8. Notices.
All notices, offers, acceptances, demands, requests
and other communications contemplated in this agreement
shall be in writing and shall be deemed delivered either
(a) by personal delivery to the party to whom it is
addressed or (b) upon the expiration of three (3) days
following the date of mailing (as shown by the postmark
on the envelope) through United States Certified Mail,
postage prepaid, return receipt requested, addressed to
the respective parties hereto at the following addresses:
In the case of the Partnership:
Alscott Limited Partnership #2
Suite 100
380 E. Parkcenter Blvd.
Boise, Idaho 83706
Attention: Thomas Wilford
In the case of Albertson's, Inc., a separate notice
addressed to each:
<PAGE>
Thomas R. Saldin Kaye L. O'Riordan
Executive Vice President, Corporate Secretary and
Administration and Senior Attorney
General Counsel Albertson's, Inc.
Albertson's, Inc. 250 E. Parkcenter Blvd.,
250 E. Parkcenter Blvd. Boise, Idaho 83706
Boise, Idaho 83706
The Partnership may change its address above stated by
notice in writing to the corporation. The corporation
may change individual officers or the address above
stated by notice in writing to the Partnership.
Section 9. Succession.
9.1. It is agreed that neither party to this
agreement shall assign the agreement or its rights
thereunder to any third party without the express
approval in writing of the other party. This agreement
shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and
assigns (to the extent approved by the other party).
9.2. The provisions of this agreement to be
performed following the death of Kathryn Albertson shall
be binding upon the personal representative of the estate
of Kathryn Albertson, then deceased, and her heirs and
devisees.
<PAGE>
Section 10. Enforcement - Attorneys Fees.
10.1 Each party hereto recognizes that its
obligations hereunder are unique and that the breach of
any obligation could not be adequately compensated by
monetary damages; therefore, each party directs that
specific performance of each such obligation shall be the
remedy available to the other party for any such breach.
10.2. In the event suit or action be instituted by
either party to enforce performance by the other party of
the terms and provisions of this agreement incumbent upon
the other party to be kept or performed, the prevailing
party in such suit or action shall be entitled to recover
a reasonable sum as attorneys fees and all courts costs
incurred on behalf of that party and that amount shall be
included in the judgment made and entered in that action.
Section 11. Other Agreements.
This agreement together with the Stockholders'
Agreement shall supersede any prior agreements between
the parties and any other written or oral understanding
between the parties with respect to the sale and purchase
of the Shares of stock.
Section 12. Validity - Legality.
In the event that any provision of this agreement
shall be held invalid or illegal or unenforceable in
<PAGE>
whole or in part, the validity of any other provision of
this agreement shall not in any manner be affected
thereby.
Section 13. Governing Law.
The provisions of this agreement and the
interpretation thereof shall be governed and construed in
accordance with the laws of the State of Idaho.
IN WITNESS WHEREOF, this agreement has been
duly executed by and on behalf of each party hereto the
day and year herein first above written.
ALBERTSON'S, INC.
(Corporate Seal)
Thomas R. Saldin
By:_____________________________
Thomas R. Saldin
Its: Executive Vice President,
Administration and General
Counsel
Kaye L. O'Riordan
_____________________
Kaye L. O'Riordan
Secretary
ALSCOTT LIMITED PARTNERSHIP #2
By: Alscott, Inc.
General Partner
Thomas Wilford
By: ____________________________
Thomas Wilford
Treasurer and Secretary
(..continued)
28
<PAGE>
STOCKHOLDERS' AGREEMENT
This Agreement (the "Stockholders' Agreement"),
dated as of August 3, 1995, is by and among KATHRYN
ALBERTSON, ALBERTSON'S, INC., a Delaware corporation (the
"Corporation"), and Alscott Limited Partnership #2, a Texas
limited partnership (the "Partnership").
RECITALS
WHEREAS, the Corporation and Kathryn Albertson
entered into an agreement, dated December 31, 1979 (the "Old
Agreement"), pursuant to which Kathryn Albertson granted to
the Corporation, among other things, a right of first
refusal to the shares of common stock of the Corporation
("Common Stock") owned or thereafter acquired by her; and
WHEREAS, concurrently herewith, Kathryn Albertson
and the Partnership are entering into an agreement, dated of
even date herewith (the "Contribution Agreement"), pursuant
to which Kathryn Albertson is contributing to the
Partnership 20,840,446 shares of Common Stock owned by her;
and
WHEREAS, concurrently herewith, the Corporation
and the Partnership are entering into an agreement, dated of
even date herewith (the "New Agreement"), pursuant to which
the Partnership is granting to the Corporation, among other
things, a right of first refusal to the shares of Common
Stock of the Corporation contributed, presently or
hereafter, to the Partnership by Kathryn Albertson
(including any stock dividends and the like related to such
Common Stock); and
WHEREAS, the parties hereto desire to enter into
this Stockholders' Agreement in order to provide, among
other things, (i) that the transactions contemplated by the
Contribution Agreement shall not cause any of the provisions
of Sections 3 or 4 of the Old Agreement to be activated and
(ii) for the coordination of the actions by Kathryn
Albertson and the Partnership
<PAGE>
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing
and the mutual covenants and obligations set forth in this
Stockholders' Agreement, the parties hereto agree as
follows:
1. Non-Application and Waiver. Each of Kathryn
Albertson and/or the Corporation waives, with respect to the
contribution of the shares of Common Stock to the
Partnership as contemplated by the Contribution Agreement,
each of their rights they have under Sections 3 and 4 of the
Old Agreement, and Sections 3 and 4 of the Old Agreement
shall have no application to the contribution of the Common
Stock contemplated by the Contribution Agreement.
2. Continuing Effect of Old Agreement. All terms
and provisions of the Old Agreement shall continue to apply
to (i) the shares of Common Stock now owned by Kathryn
Albertson and not contributed to the Partnership and (ii)
any shares of Common Stock hereafter acquired by Kathryn
Albertson.
3. Cooperation With Respect to Public Offerings.
If the provisions of Section 5 of the Old Agreement and of
the New Agreement are activated so that the shares of Common
Stock subject to the Old Agreement and New Agreement are to
be sold by the personal representative of Kathryn Albertson
(the "Personal Representative") and by the Partnership,
respectively, upon the death of Kathryn Albertson, the
Personal Representative and the Partnership shall cooperate
in all respects with regard to the public offering of the
shares of Common Stock to be sold pursuant to the terms of
such Sections 5. In the event that the Personal
Representative and the Partnership shall not agree as to the
terms of the sale of the shares of Common Stock as provided
in such Sections 5, the terms of the sale of the Common
Stock shall be determined by the Personal Representative.
4. Exercise of Options. In the event of the death
of Kathryn Albertson, the Corporation shall either (i)
exercise both of its options to purchase shares of Common
Stock pursuant to Section 4 of the New Agreement and Section
4 of the Old Agreement, respectively, or (ii) refrain from
exercising each such option to purchase shares of Common
Stock, but in no event shall the Corporation exercise one of
such options without exercising the other.
<PAGE>
5. Notices. All notices, offers, acceptances,
demands, requests and other communications contemplated in
this Stockholders' Agreement shall be in writing and shall
be deemed delivered either (a) by personal delivery to the
party to whom it is addressed or (b) upon the expiration of
three (3) days following the date of mailing (as shown by
the postmark on the envelope) through United States
Certified Mail, postage prepaid, return receipt requested,
addressed to the respective parties hereto at the following
addresses:
In the case of Kathryn Albertson:
Kathryn Albertson
Suite 100
380 E. Parkcenter Blvd.
Boise, Idaho 83706
In the case of the Partnership:
Alscott Limited Partnership #2
Suite 100
380 E. Parkcenter Blvd.
Boise, Idaho 83706
Attention: Thomas Wilford
In the case of the Corporation, a separate notice
addressed to each of:
Thomas R. Saldin Kaye L. O'Riordan
Executive Vice President, Corporate Secretary
Administration and and Senior Attorney
General Counsel Albertson's, Inc.
Albertson's, Inc. 250 E. Parkcenter Blvd.
250 E. Parkcenter Blvd. Boise, Idaho 83706
Boise, Idaho 83706
Kathryn Albertson or the Partnership may change her/its
address above stated by notice in writing to the
Corporation. The Corporation may change individual officers
or the address above stated by notice in writing to both
Kathryn Albertson and the Partnership.
All notices required to be given by the Corporation
to Kathryn Albertson under the Old Agreement or this
Stockholders' Agreement shall simultaneously be given to the
Partnership, and all notices required to be given by the
<PAGE>
Corporation to the Partnership under the New Agreement or
this Stockholders' Agreement shall simultaneously be given
to Kathryn Albertson, in each case pursuant to the
respective provisions of such agreements.
6. Succession.
6.1. It is agreed that no party to this
Stockholders' Agreement shall assign this Stockholders'
Agreement or its rights hereunder to any third party without
the express approval in writing of each other party hereto.
This Stockholders' Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their
respective successors and assigns (to the extent approved by
each other party hereto).
6.2. The provisions of this Stockholders'
Agreement to be performed following the death of Kathryn
Albertson shall be binding upon the personal representative
of the estate of Kathryn Albertson, then deceased, and her
heirs and devisees.
7. Enforcement - Attorneys Fees.
7.1. Each party hereto recognizes that her/its
obligations hereunder are unique and that the breach of any
obligation could not be adequately compensated by monetary
damages; therefore, each party directs that specific
performance of each such obligation shall be available to
the other party for any such breach.
7.2. In the event suit or action be instituted by
any party to enforce performance by another party of the
terms and provisions of this Stockholders' Agreement
incumbent upon the other party to be kept or performed, the
prevailing party in such suit or action shall be entitled to
recover a reasonable sum as attorneys fees and all courts
costs incurred on behalf of that party and that amount shall
be included in the judgment made and entered in that action.
8. Other Agreements.
This Stockholders' Agreement together with the New
Agreement shall supersede any prior oral understanding
between the parties with respect to the sale and purchase of
shares of Common Stock. Except to the extent specifically
<PAGE>
otherwise provided in this Stockholders' Agreement, the Old
Agreement shall remain in full force and effect.
9. Validity - Legality.
In the event that any provision of this
Stockholders' Agreement shall be held invalid or illegal or
unenforceable in whole or in part, the validity of any other
provision of this Stockholders' Agreement shall not in any
manner be affected thereby.
10. Governing Law.
The provisions of this Stockholders' Agreement and
the interpretation thereof shall be governed and construed
in accordance with the laws of the State of Idaho.
IN WITNESS WHEREOF, the parties hereto have
executed this Stockholders' Agreement as of the date and
year set forth first above.
ALBERTSON'S, INC.
Thomas R. Saldin
_______________________________
By: Thomas R. Saldin
Title: Executive Vice President,
Administration and General
Counsel
Kathryn Albertson
_______________________________
Kathryn Albertson
ALSCOTT LIMITED PARTNERSHIP #2
By: Alscott, Inc.
General Partner
Thomas Wilford
By: __________________________
Thomas Wilford
Treasurer and Secretary
(..continued)
