<PAGE> 1
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 1, 1996 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:
<TABLE>
<CAPTION>
Name of each exchange
Title of each class on which registered
------------------------------------------ -----------------------
<S> <C>
Common Stock, $1.00 par value, 251,928,976 New York Stock Exchange
shares outstanding on March 28, 1996 Pacific Stock Exchange
</TABLE>
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 28, 1996: $7,193,667,067.
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 1, 1996, 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 24, 1996,(the "Proxy
Statement") to be filed within 120 days after the Registrant's fiscal
year ended February 1, 1996, portions of which are incorporated by
reference into Part III of this Form 10-K.
1
<PAGE> 2
Documents Incorporated by Reference
-----------------------------------
<TABLE>
<S> <C>
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 1, 1996
Item 6 - Selected Financial Data Page 40 of the Annual Report to
Stockholders for the year ended
February 1, 1996
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 1, 1996
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 1, 1996
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 I
Directors," "Continuing Class II
Directors," "Continuing Class III
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 "Summary Compensation Table,"
"Option Grants in Last Fiscal Year,"
"Aggregated Option Exercises in
Last Fiscal Year and Fiscal Year-End
Option Values" 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 1, 1996
</TABLE>
2
<PAGE> 3
ALBERTSON'S, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item Page
- ---- ----
<S> <C> <C>
PART I
1. Business 4
2. Properties 5
3. Legal Proceedings 7
4. Submission of Matters to a Vote of Security Holders 7
PART II
5. Market for the Registrant's Common Equity and Related
Stockholder Matters 8
6. Selected Financial Data 8
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
8. Financial Statements and Supplementary Data 8
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 8
PART III
10. Directors and Executive Officers of the Registrant 9
11. Executive Compensation 11
12. Security Ownership of Certain Beneficial Owners
and Management 11
13. Certain Relationships and Related Transactions 11
PART IV
14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 12
</TABLE>
3
<PAGE> 4
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-drug chain
in the United States with operations in 19 Western, Midwestern and Southern
states. As of February 1, 1996, the Company operated 764 stores consisting of
646 combination food-drug stores, 78 conventional supermarkets and 40 warehouse
stores. Retail operations are supported by 12 Company-owned distribution
centers.
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, 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 a 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 four or 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 20 stores and
merchandising specialists in areas such as grocery, produce, pharmacy, liquor,
general merchandise, bakery, meat and service delicatessen. Merchandising
specialists serve as advisors to help maintain adherence to overall division
pricing and merchandising policies. Front-end managers are responsible for
service levels and efficiencies in the stores' checkstand operations. District
sales managers as well as store directors, are responsible for overall store
operations.
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.
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 suppliers or directly from manufacturers in an
effort to obtain merchandise at the lowest possible cost. The Company
services all of its retail stores from Company-owned distribution centers.
4
<PAGE> 5
All of the Company's stores carry a broad range of national brands and offer
"Albertson's Brands" 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 1, 1996, the Company employed approximately 80,000 people.
More than 40% of the employees are covered by collective bargaining
agreements. The Company considers its present relations with employees to be
satisfactory.
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 1, 1996:
<TABLE>
<CAPTION>
Albertson's Retail Stores
-------------------------
<S> <C>
Arizona 29
Arkansas 1
California 164
Colorado 46
Florida 85
Idaho 30
Kansas 4
Louisiana 15
Montana 8
Nebraska 7
Nevada 26
New Mexico 18
Oklahoma 19
Oregon 47
South Dakota 1
Texas 146
Utah 36
Washington 73
Wyoming 9
---
Total 764
===
</TABLE>
Item 2. Properties
The Company has actively pursued an expansion program of adding new retail
stores, enlarging and remodeling existing stores and replacing smaller stores.
During the past ten years, the Company has built or acquired 464 stores.
Approximately 95% of the Company's current retail 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.
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 all 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's future expansion plans are
expected to be financed primarily from cash provided by operating activities.
The Company will continue to finance a portion of its new stores through lease
transactions when it does not have the option to own the property.
5
<PAGE> 6
As of February 1, 1996, the Company operated 764 stores in the states
discussed in Item 1. The following is an analysis of stores listed by the
current division alignment:
<TABLE>
<CAPTION>
Number
of Stores
---------
<S> <C>
Idaho (Southern Idaho (28), Northern Nevada (9),
Eastern Oregon (4) and Wyoming (1)) 42
Inland Empire (Eastern Washington (18),
Montana (8) and Northern Idaho (2)) 28
Utah (Utah (36) and Wyoming (1)) 37
Western Washington 51
Oregon (Western Oregon (43) and Washington (4)) 47
Southern California (California (118) and
Southern Nevada (17)) 135
Northern California 45
Rocky Mountain (Colorado (46), Wyoming (7)
and South Dakota (1)) 54
Southwest (Arizona (29), New Mexico (18), Texas (4)
and California (1)) 52
Midwest (Oklahoma (19), Nebraska (7) and Kansas (4)) 30
Houston (Texas (17) and Louisiana (12)) 29
San Antonio (Texas (28)) 28
Dallas/Ft. Worth (Texas (97), Louisiana (3)
and Arkansas (1)) 101
Florida 85
---
764
===
</TABLE>
The following is a summary of stores, by classification, as of the indicated
fiscal year end:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Combination Food-Drug 646 588 536 506 407
Conventional Stores 78 88 96 106 123
Warehouse Stores 40 44 44 44 32
--- --- --- --- ---
Total 764 720 676 656 562
=== === === === ===
</TABLE>
The following table summarizes the Company's retail square footage by store
type as of the indicated fiscal year end (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Combination Food-Drug 32,217 29,217 26,602 25,159 19,647
Conventional Stores 2,261 2,524 2,741 3,009 3,471
Warehouse Stores 1,881 2,037 2,031 1,959 1,383
------ ------ ------ ------ ------
Total 36,359 33,778 31,374 30,127 24,501
====== ====== ====== ====== ======
</TABLE>
The Company has expanded and improved its distribution facilities when
opportunities exist to improve service to the retail stores and generate an
adequate return on investment. During 1995 approximately 77% of the
merchandise purchased for resale in Company retail stores was received from
Company-owned distribution facilities.
Albertson's distribution system consists of 12 Company-owned centers
located strategically throughout the Company's operating markets. These units
operate as separate profit centers.
6
<PAGE> 7
The following is a summary of the Company's distribution and manufacturing
facilities as of February 1, 1996:
<TABLE>
<CAPTION>
Location Square Footage
-------- --------------
<S> <C>
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
Houston, Texas
Groceries, Frozen Food, Produce, Meat and Deli 698,000
Phoenix, Arizona
Groceries, Frozen Food, Produce, Liquor, Meat,
Deli and high-volume Health and Beauty Care 687,000
Salt Lake City, Utah
Groceries, Frozen Food, Produce, Meat and Deli 647,000
Portland, Oregon
Groceries, Frozen Food, Produce, Meat and Deli 622,000
Sacramento, California
Groceries, Frozen Food, Produce, Liquor, Meat
and Deli 421,000
Ponca City, Oklahoma
Health and Beauty Care, General Merchandise
and Pharmaceuticals 419,000
Denver, Colorado
Groceries, Frozen Food, Produce, Meat and Deli 355,000
Boise, Idaho
Health and Beauty Care and General Merchandise 158,000
Ice Cream Plant 11,000
---------
Total 7,131,000
=========
</TABLE>
As of February 1, 1996, the Company held title to the land and buildings of
48% of the Company's stores and held title to the buildings on leased land of
an additional 8% 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.
Item 3. Legal Proceedings
- --------------------------
The Company is involved in routine litigation incidental to operations. In
the opinion of management, the ultimate resolution of these 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 1995 to a vote of
security holders through the solicitation of proxies or otherwise.
7
<PAGE> 8
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 1995 Annual Report to
Stockholders. This information is incorporated herein by this reference
thereto. The market value of the Company's common stock on March 28, 1996, was
$37.75 per share.
Item 6. Selected Financial Data
- --------------------------------
Selected financial data of the Company for the fiscal years 1991 through
1995 is included under the caption "Five Year Summary of Selected Financial
Data" on page 40 of the Company's 1995 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
"Financial Review" on pages 17 to 19 of the Company's 1995 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 1995 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.
8
<PAGE> 9
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 I Directors," "Continuing Class II Directors," "Continuing
Class III Directors" and "Filing 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 1996 Annual Meeting of Stockholders (the "Proxy
Statement") to be filed within 120 days after the Company's fiscal year ended
February 1, 1996, and is incorporated herein by this reference thereto.
Executive Officers
- ------------------
<TABLE>
<CAPTION>
Age Date First Appointed
as of as an Executive
Name 3/28/96 Position Officer
---- ------- -------- --------------------
<S> <C> <C> <C>
Gary G. Michael 55 Chairman of the Board and 12/02/74
Chief Executive Officer
John B. Carley 62 Chairman of the Executive 04/05/76
Committee of the Board
Richard L. King 46 President and Chief Operating 01/01/94
Officer
Carl W. Pennington 58 Executive Vice President, 08/02/87
Corporate Merchandising
Michael F. Reuling 49 Executive Vice President, 12/30/79
Store Development
Thomas R. Saldin 49 Executive Vice President, 12/26/83
Administration and
General Counsel
Ronald D. Walk 52 Executive Vice President, 05/28/84
Retail Operations
Thomas E. Brother 54 Senior Vice President, 07/30/89
Distribution
William H. Emmons 46 Senior Vice President and 02/02/96
Regional Manager
Dennis C. Lucas 48 Senior Vice President and 02/02/96
Regional Manager
A. Craig Olson 44 Senior Vice President, Finance 12/22/86
and Chief Financial Officer
David G. Simonson 49 Senior Vice President and 02/02/96
Regional Manager
Patrick S. Steele 46 Senior Vice President, 06/10/90
Information Systems and
Technology
</TABLE>
9
<PAGE> 10
<TABLE>
<CAPTION>
Age Date First Appointed
as of as an Executive
Name 3/28/96 Position Officer
---- ------- -------- --------------------
<S> <C> <C> <C>
Steven D. Young 47 Senior Vice President, Human 12/02/91
Resources
David G. Dean 45 Group Vice President, 12/02/91
Procurement
Peggy Jo Jones 43 Group Vice President, Employee 11/29/93
Development and Communications
Richard J. Navarro 43 Group Vice President and 11/29/93
Controller
</TABLE>
Gary G. Michael has served as Chairman of the Board and Chief Executive
Officer since February 1, 1991.
John B. Carley became Chairman of the Executive Committee of the Board on
February 2, 1996. Previously he served as President and Chief Operating
Officer from February 1, 1991.
Richard L. King was promoted to President and Chief Operating Officer on
February 2, 1996. Previously he served as Senior Vice President and Regional
Manager from November 1994; Group Vice President, Merchandising from January
1994; Vice President, Rocky Mountain Division from 1992; and Division
Manager, Rocky Mountain Division from 1991.
Carl W. Pennington was promoted to Executive Vice President, Corporate
Merchandising on February 2, 1996. Previously he served as Senior Vice
President, Corporate Merchandising from 1994 and Senior Vice President and
Regional Manager from 1988.
Michael F. Reuling has served as Executive Vice President, Store Development
since 1986.
Thomas R. Saldin has served as Executive Vice President, Administration and
General Counsel since 1991.
Ronald D. Walk was promoted to Executive Vice President, Retail Operations
on February 2, 1996. Previously he served as Senior Vice President and
Regional Manager from 1984.
Thomas E. Brother has served as Senior Vice President, Distribution since
1991.
William H. Emmons was promoted to Senior Vice President and Regional Manager
on February 2, 1996. Previously he served as Vice President, North Texas
Division from 1993 and Vice President, Texas Division from 1988.
Dennis C. Lucas was promoted to Senior Vice President and Regional Manager
on February 2, 1996. Previously he served as Vice President, Oregon Division
from 1995; Vice President, Midwest Division from 1993; Division Manager,
Midwest Division from July 1992; Director of Operations, Southern California
Division from February 1992; District Sales Manager, Southern California
Division from 1991; and District Sales Manager, Oregon Division from 1987.
A. Craig Olson has served as Senior Vice President, Finance and Chief
Financial Officer since February 1, 1991.
10
<PAGE> 11
David G. Simonson was promoted to Senior Vice President and Regional Manager
on February 2, 1996. Previously he served as Vice President, Southern
California Division from 1991 and Director of Operations, Southern California
Division from 1987.
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.
Steven D. Young was promoted to Senior Vice President, Human Resources in
1993. Previously he served as Group Vice President, Human Resources from 1991.
David G. Dean has served as Group Vice President, Procurement since 1991.
Peggy Jo Jones was promoted to Group Vice President, Employee Development
and Communications in November 1993. Previously she served as Vice President,
Employee Development and Communications from September 1993; Vice President,
Retail Accounting from 1992; and Assistant Vice President, Retail Accounting
from 1990.
Richard J. Navarro was promoted to Group Vice President and Controller in
1993. Previously he served as Vice President and Controller from 1989.
Item 11. Executive Compensation
- --------------------------------
Information concerning executive compensation is presented under the
headings "Summary Compensation Table," "Option Grants in Last Fiscal Year,"
"Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End
Option Values" and "Retirement Benefits" in the Proxy Statement. This
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. This 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.
11
<PAGE> 12
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 1, 1996:
Consolidated Earnings -- years ended February 1, 1996;
February 2, 1995; February 3, 1994.
Consolidated Balance Sheets -- February 1, 1996;
February 2, 1995; February 3, 1994.
Consolidated Cash Flows -- years ended February 1, 1996;
February 2, 1995; February 3, 1994.
Consolidated Stockholders' Equity -- years ended
February 1, 1996; February 2, 1995; February 3, 1994.
Notes to Consolidated Financial Statements.
Independent Auditors' Report.
Quarterly Financial Data:
Quarterly Financial Data for the years ended February 1, 1996 and
February 2, 1995 is set forth on page 41 of the Annual Report to
Stockholders for the year ended February 1, 1996, and is incorporated
herein by this reference thereto.
(a)2 Schedules:
All schedules are omitted because they are not required or
because the required information is included in the consolidated
financial statements or notes thereto.
(a)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 16 hereof.
(b) Reports on Form 8-K:
There were no reports on Form 8-K during the quarter ended
February 1, 1996.
12
<PAGE> 13
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, 33-43635, 33-62799 and 33-59803.
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.
13
<PAGE> 14
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements
numbered 2-53959, 2-80776, 33-2139, 33-7901, 33-15062, 33-43635, 33-62799 and
33-59803 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 20, 1996, 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
1, 1996.
DELOITTE & TOUCHE LLP
Deloitte & Touche LLP
Boise, Idaho
April 5, 1996
14
<PAGE> 15
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 5, 1996
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 5, 1996.
<TABLE>
<S> <C>
GARY G. MICHAEL JOHN B. CARLEY
--------------------------------- ---------------------------------
Gary G. Michael John B. Carley
(Chairman of the Board and (Chairman of the Executive
Chief Executive Officer and Committee of the Board and
Director) Director)
A. CRAIG OLSON RICHARD J. NAVARRO
--------------------------------- ---------------------------------
A. Craig Olson Richard J. Navarro
(Senior Vice President, Finance (Group Vice President and
and Chief Financial Officer) Controller)
(Chief Accounting Officer)
KATHRYN ALBERTSON A. GARY AMES
--------------------------------- ---------------------------------
Kathryn Albertson A. Gary Ames
(Director) (Director)
CECIL D. ANDRUS PAUL I. CORDDRY
-------------------------------- ---------------------------------
Cecil D. Andrus Paul I. Corddry
(Director) (Director)
JOHN B. FERY CLARK A. JOHNSON
-------------------------------- ---------------------------------
John B. Fery Clark A. Johnson
(Director) (Director)
CHARLES D. LEIN WARREN E. McCAIN
--------------------------------- ---------------------------------
Charles D. Lein Warren E. McCain
(Director) (Director)
BEATRIZ RIVERA J.B. SCOTT
--------------------------------- ---------------------------------
Beatriz Rivera J.B. Scott
(Director) (Director)
WILL M. STOREY STEVEN D. SYMMS
--------------------------------- ---------------------------------
Will M. Storey Steven D. Symms
(Director) (Director)
</TABLE>
15
<PAGE> 16
Index to Exhibits
Filed with the Annual Report
on Form 10-K for the
Year Ended February 1, 1996
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
3.1 Restated Certificate of Incorporation(1)
3.2 By-Laws dated September 1, 1993(2)
4.1 Stockholder Rights Plan Agreement(3)
4.1.1 First Amendment to Stockholder Rights Plan Agreement (dated
August 31, 1987)(4)
4.1.2 Second Amendment to Stockholder Rights Plan Agreement (dated
November 28, 1988)(5)
4.1.3 Third Amendment to Stockholder Rights Plan Agreement (dated
September 6, 1989)(6)
4.1.4 Fourth Amendment to Stockholder Rights Plan Agreement (dated
September 6, 1994)(7)
4.2 Indenture, dated as of May 1, 1992, between Albertson's, Inc.,
and Morgan Guaranty Trust Company of New York as Trustee(8)
9 Inapplicable
10.2 Kathryn Albertson Stock Agreement (dated December 31, 1979)(9)*
10.3 Alscott Limited Partnership #1 Stock Agreement (dated
February 2, 1996)*
10.4 Stockholders' Agreement among Kathryn Albertson, Albertson's, Inc.
and Alscott Limited Partnership #1 (dated February 2, 1996)*
10.5 Form of Beneficiary Agreement for Key Executive Life Insurance(10)*
10.6 Executive Deferred Compensation Plan (amended and restated
February 1, 1989)(11)*
10.6.1 Amendment to Executive Deferred Compensation Plan (dated
December 4, 1989)(12)*
10.7 1975 Employees' Stock Option Plan (amended September 6, 1983)(13)*
10.8 Form of 1975 Nonstatutory Stock Option Agreement(9)*
10.9 Description of Bonus Incentive Plans (amended December 3,
1984)(14)*
10.10 Agreement Among Albertson's, Inc., Theo Albrecht Stiftung and
Theo Albrecht dated as of February 15, 1980(9)
10.10.1 Letter Amendment of October 13, 1982 regarding Exhibit 10.10(15)
10.10.2 First Amendment dated April 11, 1984 to Agreement among
Albertson's, Inc., Theo Albrecht Stiftung and Theo Albrecht(16)
10.10.3 Second Amendment dated September 25, 1989 to Agreement among
Albertson's, Inc., Markus Stiftung and Theo Albrecht(12)
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
10.10.4 Third Amendment dated December 5, 1994 to Agreement among
Albertson's, Inc., Markus Stiftung and Theo Albrecht(17)
10.11 1982 Incentive Stock Option Plan (amended March 4, 1991)(18)*
10.12 Form of 1982 Incentive Stock Option Agreement (amended
November 30, 1987)(4)*
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)(6)*
10.13 Executive Pension Makeup Plan (amended and restated February 1,
1989)(11)*
10.13.1 First Amendment to Executive Pension Makeup Plan (dated June 8,
1989)(19)*
10.13.2 Second Amendment to Executive Pension Makeup Plan (dated January 12,
1990)(20)*
10.13.3 Third Amendment to Executive Pension Makeup Plan (dated January 31,
1990)(21)*
10.13.4 Fourth Amendment to Executive Pension Makeup Plan (effective
January 1, 1995)(17)*
10.13.5 Amendment to Executive Pension Makeup Plan (retroactive to
January 1, 1990)*
10.14 Credit Agreement (dated October 5, 1994)(22)
10.14.1 Amendment No. 1 to Credit Agreement (dated October 25, 1995)(23)
10.15 Senior Executive Deferred Compensation Plan (amended and
restated February 1, 1989)(11)*
10.15.1 Amendment to Senior Executive Deferred Compensation Plan (dated
December 4, 1989)(12)*
10.16 1986 Nonqualified Stock Option Plan (amended March 4, 1991)(18)*
10.17 Form of 1986 Nonqualified Stock Option Plan Stock Option Agreement
(amended November 30, 1987)(4)
10.18 Executive Pension Makeup Trust (dated February 1, 1989)(11)*
10.19 Executive Deferred Compensation Trust (dated February 1, 1989)(11)*
10.20 1990 Deferred Compensation Plan(18)*
10.20.1 Amendment to 1990 Deferred Compensation Plan (dated April 12,
1994)(7)*
10.21 Non-Employee Directors' Deferred Compensation Plan(18)*
10.22 1990 Deferred Compensation Trust (dated November 20, 1990)(18)*
10.23 Letter Agreement with John B. Carley (dated December 4, 1995)*
10.24 1995 Stock-Based Incentive Plan (dated May 26, 1995)(24)*
</TABLE>
17
<PAGE> 18
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
10.24.1 Form of 1995 Stock-Based Incentive Plan Stock Option Agreement
(dated December 4, 1995)*
10.25 1995 Stock Option Plan for Non-Employee Directors (dated
May 26, 1995)(24)*
10.25.1 Form of 1995 Stock Option Plan for Non-Employee Directors Agreement
(dated May 30, 1995)(24)*
11 Inapplicable
12 Inapplicable
13 Exhibit 13 consists of pages 17 to 41 and the inside back cover of
Albertson's, Inc. 1995 Annual Report to Stockholders which are
numbered as pages 1 to 26 of Exhibit 13. Such report, except to the
extent incorporated herein 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 26; Item 6--page
24; Item 7--pages 1 through 3; and Item 8--pages 4 through 23 and
page 25.
14 Inapplicable
15 Inapplicable
16 Inapplicable
17 Inapplicable
18 Inapplicable
19 Inapplicable
20 Inapplicable
21 Inapplicable
22 Inapplicable
23 Inapplicable
24 Inapplicable
25 Inapplicable
26 Inapplicable
27 Financial Data Schedule
28 Inapplicable
</TABLE>
* Identifies management contracts or compensatory plans or arrangements
required to be filed as an exhibit hereto.
(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.
18
<PAGE> 19
(2) Exhibit 3.2 is incorporated herein by reference to Exhibit 3.2 of the
Form 10-K for the year ended February 3, 1994.
(3) 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.
(4) 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.
(5) 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.
(6) 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.
(7) Exhibits 4.1.4 and 10.20.1 are incorporated herein by reference to
Exhibits 4.1.4 and 10.20.1, respectively, of the Form 10-Q for the
quarter ended August 4, 1994.
(8) 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.
(9) 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.
(10) 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.
(11) 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.
(12) 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.
(13) 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 remained
outstanding during the fiscal year.
(14) Exhibit 10.9 is incorporated herein by reference to Exhibit 10.9 of the
Form 10-K for the year ended January 31, 1985.
(15) 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.
(16) 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.
(17) Exhibits 10.10.4 and 10.13.4 are incorporated herein by reference to
Exhibits 10.10.4 and 10.13.4 of the Company's Form 10-K for the year ended
February 2, 1995.
19
<PAGE> 20
(18) Exhibits 10.11, 10.16, 10.20, 10.21 and 10.22 are incorporated
herein by reference to Exhibits 10.11, 10.16, 10.20, 10.21 and 10.22,
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.
(19) 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.
(20) 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.
(21) 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.
(22) Exhibit 10.14 is incorporated herein by reference to Exhibit 10.14 of the
Company's Form 10-Q for the quarter ended November 3, 1994.
(23) Exhibit 10.14.1 is incorporated herein by reference to Exhibit 10.14.1 of
the Company's Form 10-Q for the quarter ended November 2, 1995.
(24) Exhibits 10.24, 10.25 and 10.25.1 are incorporated herein by reference to
Exhibits 10.24, 10.25 and 10.25.1 of the Company's Form 10-Q for the
quarter ended May 4, 1995.
20
<PAGE> 1
Exhibit 10.3
A G R E E M E N T
THIS AGREEMENT made and executed this 2nd day of February, 1996, by
and between Alscott Limited Partnership #1, a Texas limited partnership (the
"Partnership"), and ALBERTSON'S, INC., a Delaware corporation.
WHEREAS, Albertson's, Inc. and Alscott Limited Partnership #2, a Texas
limited partnership, entered into an agreement on August 3, 1995 which
specifically provided that it was binding upon successors of Alscott Limited
Partnership #2;
WHEREAS, effective January 1, 1996, all of the assets of Alscott
Limited Partnership #2, including the Common Stock of Albertson's, Inc. held
by Alscott Limited Partnership #2, were transferred to the Partnership, and
Alscott Limited Partnership #2 has been liquidated and dissolved, all with the
express approval of Albertson's, Inc.; and
WHEREAS, the parties hereto desire to enter into this agreement as
well as a Stockholders' Agreement (the "Stockholders' Agreement") to formally
make the Partnership a party to the terms and conditions of these agreements;
1
<PAGE> 2
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:
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
2
<PAGE> 3
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.
1.6. The term "Shares" means (i) all stock now or hereafter
transferred to the Partnership by Kathryn Albertson; (ii) all stock transferred
to the Partnership by Alscott Limited Partnership #2 which was transferred to
that limited partnership by Kathryn Albertson; and (iii) all stock received by
the Partnership as a dividend or other distribution as a result of its
ownership of the stock referred to in clauses (i) and (ii).
Section 2. Recognition. The parties hereto recognize that:
2.1. Kathryn Albertson contributed 20,840,446 shares of Albertson's,
Inc. common stock to Alscott Limited Partnership #2 on August 3, 1995 pursuant
to the terms of a contribution agreement entered into between Kathryn Albertson
and Alscott Limited Partnership #2 on August 3, 1995 (the "Contribution
Agreement"). The aggregate number of shares of stock contributed to the
Partnership pursuant to the terms of the Contribution Agreement was 26,842,046.
In August of 1995, an additional 2,000 shares of stock were contributed to
Alscott Limited
3
<PAGE> 4
Partnership #2 as a result of the exercise of a stock option pursuant to the
Albertson's, Inc. 1995 Stock Option Plan for Non-Employee Directors by Kathryn
Albertson. Also, in August of 1995, an additional 2,000 shares of stock were
contributed to Alscott Limited Partnership #2 as a result of the exercise of a
stock option pursuant to the Albertson's, Inc. 1995 Stock Option Plan for
Non-Employee Directors by J. B. Scott. Effective January 1, 1996, the
26,846,046 shares of stock held by Alscott Limited Partnership #2 were
transferred to the Partnership, and Alscott Limited Partnership #2 was
liquidated and dissolved. As of the date of this agreement, Kathryn Albertson
has contributed a total of 20,842,446 shares of Albertson's, Inc. common stock
to the Partnership.
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
4
<PAGE> 5
in effect and binding upon a donee although the death of Kathryn Albertson
shall have occurred.
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.
5
<PAGE> 6
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 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
6
<PAGE> 7
thereafter the Partnership may sell those Shares at a price equivalent to or
exceeding that which was stated in 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 life-time; 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
7
<PAGE> 8
the corporation all of the Shares received as a gift from the Partnership.
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
8
<PAGE> 9
day is not a business day, on the first business day thereafter.
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
9
<PAGE> 10
the agreement of the donee contemplated in this subsection.
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,
10
<PAGE> 11
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 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.
11
<PAGE> 12
(b) The corporation shall pay to the Partnership the entire
purchase price for the Shares being purchased.
(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
12
<PAGE> 13
public offering utilizing the procedure set forth in Section 5.
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
13
<PAGE> 14
market value per Share determined as at the date of the offering.
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
14
<PAGE> 15
require approval by both the Partnership and the corporation.
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
15
<PAGE> 16
reasonably incurred by them in investigating or defending 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 hereinabove 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
16
<PAGE> 17
prospectus which was furnished in writing by the Partnership expressly for use
therein.
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 repre-
17
<PAGE> 18
sentative was required to pay as estate taxes payable to the Internal Revenue
Service for the period from the date 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 the
18
<PAGE> 19
Shares except as provided in this agreement. The provisions of this subsection
shall not be interpreted to 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
19
<PAGE> 20
upon the face of each such certificate a legend reading substantially as
follows:
"The shares of stock evidenced by this certificate are subject
to an Agreement entered into on the ___ day of February, 1996, between
Alscott Limited Partnership #1 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 cer-
20
<PAGE> 21
tificates evidencing the Shares involved (and upon which the legend
contemplated in subsection 7.1 or subsection 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 #1
Suite 100
380 E. Parkcenter Blvd.
Boise, Idaho 83706
Attention: Thomas Wilford
21
<PAGE> 22
In the case of Albertson's, Inc., a separate notice addressed to each:
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 Partnership and upon the
personal representative of the estate of Kathryn Albertson, then deceased, and
her heirs and devisees.
22
<PAGE> 23
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
23
<PAGE> 24
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)
By: THOMAS R. SALDIN
-------------------------------
Thomas R. Saldin
Executive Vice President
KAYE L. O'RIORDAN Administration & General
- --------------------------------------- Counsel
Kaye L. O'Riordan
Secretary
ALSCOTT LIMITED PARTNERSHIP #1
By: Alscott, Inc.
General Partner
By: THOMAS WILFORD
-------------------------------
Thomas Wilford
Treasurer and Secretary
24
<PAGE> 1
Exhibit 10.4
STOCKHOLDERS' AGREEMENT
This Agreement (the "Stockholders' Agreement"), dated as of
February 2nd, 1996, is by and among KATHRYN ALBERTSON, ALBERTSON'S, INC., a
Delaware corporation (the "Corporation"), and Alscott Limited Partnership #1, 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, on August 3, 1995, Kathryn Albertson and Alscott
Limited Partnership #2, a Texas Limited Partnership, entered into an
agreement(the "Contribution Agreement"), pursuant to which Kathryn Albertson
contributed 20,840,446 shares of Common Stock owned by her to Alscott Limited
Partnership #2, and, in August of 1995, an additional 2,000 shares of Common
Stock were contributed to Alscott Limited Partnership #2 as a result of the
exercise of a stock option pursuant to the Albertson's, Inc. 1995 Stock Option
Plan for Non-Employee Directors by Kathryn Albertson. Effective January 1,
1996, the 26,846,046 shares of Common Stock held by Alscott Limited Partnership
#2 (including the 20,842,446 shares of Common Stock contributed by Kathryn
Albertson), were transferred to the Partnership, and Alscott Limited
Partnership #2 was liquidated and dissolved, all with the express approval of
Albertson's, Inc.; 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 parties thereto are formally making the
Partnership a party to the terms and conditions of an agreement entered into on
August 3, 1995 between the Corporation and Alscott Limited Partnership #2 and
pursuant to which the Partnership is granting to the
1
<PAGE> 2
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 formally make the Partnership a party to
the terms and conditions of an agreement entered into on August 3, 1995 among
Kathryn Albertson, the Corporation and Alscott Limited Partnership #2 which
specifically provided that it was binding upon successors of Alscott Limited
Partnership #2 and to provide, among other things, (i) that the transactions
pursuant to the Contribution Agreement and the transfer to the Partnership
effective January 1, 1996, 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.
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 pursuant to the Contribution
Agreement and the transfer to the Partnership effective January 1, 1996, 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 pursuant to the Contribution Agreement and the
transfer to the Partnership effective January 1, 1996.
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.
2
<PAGE> 3
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.
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
3
<PAGE> 4
In the case of the Partnership:
Alscott Limited Partnership #1
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 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
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 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).
4
<PAGE> 5
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 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.
5
<PAGE> 6
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 & General
Counsel
KATHRYN ALBERTSON
------------------------------------
Kathryn Albertson
ALSCOTT LIMITED PARTNERSHIP #1
By: Alscott, Inc.
General Partner
By: THOMAS WILFORD
-------------------------------
Thomas Wilford
Treasurer and Secretary
6
<PAGE> 1
Exhibit 10.13.5
AMENDMENT
TO
ALBERTSON'S, INC. EXECUTIVE PENSION MAKEUP PLAN
WHEREAS, the Albertson's, Inc. Executive Pension Makeup Plan (the
"Plan"), was originally established effective on June 1, 1988 and was amended
November 27, 1989 to be effective January 1, 1990; and
WHEREAS, Albertson's, Inc. desires to amend the Plan retroactively to
January 1, 1990 to clarify certain provisions;
NOW, THEREFORE, effective January 1, 1990, the plan is amended as
follows:
1. Section 2.01 of the Plan is amended and restated to read in its
entirety as follows:
2.01 Eligibility to Participate. An Employee shall be
eligible to participate in the Plan only if specified, either by name
or by class of employees, by resolution of the Board of Directors of
the Employer. Once an Employee becomes a Participant, the Employee
shall remain a Participant until the earlier of the Participant's
death or the complete distribution of the Participant's Accrued
Benefit.
2. Section 3.01 (a) of the Plan is amended to add a new sentence at
the end thereof to read as follows:
If an Officer Participant becomes a Non-Officer Participant or
otherwise ceases to be in the eligible class of employees under
Section 2.01 without retiring or terminating employment with the
Employer, the Participant's benefit shall continue to accrue and be
calculated pursuant to this Section 3.01(a).
3. Section 3.01(b) of the Plan is amended to add a new sentence at
the end thereof to read as follows:
If a Non-Officer Participant ceases to be in the eligible class of
employees under Section 2.01 without retiring or terminating
employment with the Employer, the Participant's benefit shall continue
to accrue and be calculated pursuant to this Section 3.01(b).
<PAGE> 2
IN WITNESS WHEREOF, Albertson's, Inc. has caused this instrument to be
executed by its officer, duly authorized by its Board of Directors, this 4th
day of March, 1996.
ALBERTSON'S, INC.
By: THOMAS R. SALDIN
------------------------------
Thomas R. Saldin
Its: Executive Vice President,
-----------------------------
Administration and General
Counsel
ATTEST:
KAYE L. O'RIORDAN
- --------------------------
Kaye L. O'Riordan
Corporate Secretary
<PAGE> 1
Exhibit 10.23
December 4, 1995
John B. Carley
President and Chief Operating Officer
Albertson's, Inc.
250 Parkcenter Blvd.
Boise, ID 83706
Dear John:
The purpose of this letter is to formally set forth your employment
relationship with Albertson's, Inc. effective February 2, 1996 when your
resignation as President and Chief Operating Officer becomes effective.
Pursuant to resolutions adopted December 3, 1995 at a Special Meeting
of the Board of Directors, you will be employed by Albertson's commencing
February 2, 1996 as Chairman of the Executive Committee of the Board of
Directors and until January 28, 1999. You will be paid an annual salary of
$500,000 for each of these three years which will be paid weekly.
You shall receive all perquisites provided by Albertson's to senior
executive officers. In addition, the annual $22,000 base pay contribution to
deferred compensation shall continue to be made by Albertson's for the three
year period. No bonus shall be paid for services rendered during the three
year period.
Sincerely,
ALBERTSON'S, INC.
JOHN B. FERY
----------------------------------
John B. Fery
Chairman, Compensation Committee
ACCEPTED:
JOHN B. CARLEY
- --------------
John B. Carley
<PAGE> 1
Exhibit 10.24.1
FORM OF
ALBERTSON'S, INC.
1995 STOCK-BASED INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
THIS ALBERTSON'S, INC. 1995 STOCK-BASED INCENTIVE PLAN NONQUALIFIED STOCK
OPTION AGREEMENT ("Agreement") is made between ALBERTSON'S, INC., a Delaware
corporation ("Company"), and _________________ ("Optionee"), an employee of the
Company or of one of the Company's subsidiaries.
1. The Company, pursuant to its 1995 Stock-Based Incentive Plan
("Plan"), a copy of which is attached hereto and incorporated herein by
reference, hereby confirms the grant to the Optionee on _______________ of an
option ("Option") to purchase _____ shares of the Company's Common Stock
("Common Stock") at a price of $______ per share, subject to the terms and
conditions of the Plan including, but not limited to, the acceleration
provisions of Section 13 and the antidilution provisions of Section 14 thereof.
This Option is a Nonqualified Option as defined in the Plan. The Company has
determined that the Optionee holds a position of substantial responsibility,
has demonstrated special capabilities and has contributed substantially to
fiscal performance. The Option granted pursuant to this Agreement is granted
with the expectation that the Optionee will continue to hold a comparable or
higher position, demonstrate such capabilities and contribute substantially to
fiscal performance during the entire ten-year term of this Agreement.
2. This Option will expire on ________________ and, subject to the
provisions of the Plan, is only exercisable prior to expiration of the Option
as follows: (a) no portion of the Option may be exercised until five years
after the date of this Agreement; (b) notwithstanding anything to the contrary
in this Agreement, no portion of the Option may be exercised unless the
Optionee shall have been continuously employed by the Company from the date of
this Agreement to the date of such exercise or, after termination of the
Optionee's employment by the Company, in accordance with Subsection C.3. of
Section 7 of the Plan; (c) after five years from the date of this Agreement,
the Optionee or the Optionee's "Successor" (as defined in Subsection C.3.(d) of
Section 7 of the Plan), as the case may be, shall have the right, in accordance
with Section 7 of the Plan, to purchase the shares covered by the Option in
five annual twenty percent (20%) installments, the first of which installments
may be purchased on the fifth anniversary of this Agreement and the second,
third, fourth and fifth of which may be purchased on the sixth, seventh, eighth
and ninth anniversaries of this Agreement, respectively; and (d) the right to
purchase the shares under this Agreement shall be cumulative from year to year,
to the extent previously unexercised, until the expiration of the Option. For
the purposes of this Agreement, "continuously employed" shall mean the absence
of any interruption or termination of employment with the
-1-
<PAGE> 2
Company or with one of the Company's subsidiaries. Continuous employment shall
not be considered interrupted or terminated in the case of sick leave, military
leave or any other leave of absence approved by the Company or in the case of
transfers between locations of the Company or its subsidiaries.
3. This Option or any part thereof may only be exercised by giving
written notice of exercise to the Corporate Secretary of the Company,
specifying the number of shares to be purchased. This notice shall be
accompanied by payment of the aggregate purchase price for the number of shares
purchased. Such exercise, subject to Paragraph 5 hereof, shall be effective
upon the actual receipt of such payment and written notice by the Corporate
Secretary of the Company. The aggregate option price for all shares purchased
pursuant to an exercise of this Option shall be paid by one or any combination
of the following: cash, personal check, wire transfer, certified or cashier's
check or delivery of Common Stock certificates in accordance with the Plan at
the time of such purchase and prior to issuance of such shares. Any such
Common Stock delivered to the Company in payment of the option price hereunder,
if acquired by the Optionee from the Company upon the exercise of a stock
option, shall consist of Mature Stock as defined in Section 2(q) of the Plan.
For purposes of this Agreement, "Mature Stock" shall mean Common Stock which
was obtained through the exercise of an option under the Plan or any other plan
of the Company, which is delivered to the Company in order to exercise an
Option and which has been held continuously by an Optionee for the longer of:
(i) six months or more, or (ii) any other period that may in the future be
recognized under Generally Accepted Accounting Principles for purposes of
defining the term "Mature Stock" in connection with such an option exercise.
The Optionee shall furnish with each notice of exercise of any portion of the
Option such documents as the Company in its discretion may deem necessary to
assure compliance with applicable regulations of any stock exchange or
governmental authority. The Optionee or Optionee's Successor shall have no
rights as a stockholder with respect to any share covered by the Option until
the Optionee or Successor shall have become the holder of record of such share,
and except as provided in Section 14 of the Plan, no adjustments shall be made
for dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights in respect of such share for which
the record date is prior to the date on which the Optionee or Successor shall
have become the holder of record thereof.
4. The Option confirmed hereby is nontransferable by the Optionee
except by will or the laws of descent or distribution and may be exercised only
in accordance with the terms of the Plan and only by execution and delivery to
the Company of the documents prescribed by the Compensation Committee of the
Board of Directors of the Company.
5. The Optionee agrees to pay to the Company, on demand, the amount of
any taxes that may become applicable upon exercise of this Option. The Company
shall not be required to issue any shares unless and until the
-2-
<PAGE> 3
Optionee's obligations under this Paragraph 5 have been satisfied. The
Compensation Committee of the Board of Directors may, prior to the time period
in which the Option becomes exercisable, establish such rules and procedures as
may be considered desirable pursuant to Section 16 of the Plan and which may
provide for the satisfaction of the tax withholding obligation by the Optionee
instructing the Company to withhold shares of stock otherwise issuable upon
exercise of this Option in order to satisfy the minimum tax withholding amount
permissible under the method that results in the least amount withheld.
6. If at any time the Board of Directors of the Company shall
determine, in its discretion, that the listing, registration or qualification
of the shares covered by this Agreement upon any securities exchange or under
any state or Federal law, or the consent or approval of any governmental
regulatory authority, or evidence of the investment intent of the Optionee or
Successor, is necessary or desirable as a condition of the exercise of this
Option, the Option may not be exercised, in full or in part, unless and until
such listing, registration, qualification, consent or approval or evidence
shall have been effected or obtained free of any conditions not legally
acceptable to the Company.
7. This Agreement shall not be construed as giving the Optionee any
right to be retained in the employ of the Company or of a subsidiary, or to
affect or limit in any way the right of the Company or of a subsidiary to
demote the Optionee or to terminate the employment of the Optionee.
8. By execution of this Agreement, the Optionee acknowledges receipt
of a copy of the Plan and the related Prospectus, and the Optionee has reviewed
such documents. The Optionee agrees to comply with all of the terms and
conditions of this Agreement and the Plan.
IN WITNESS WHEREOF, this Agreement has been executed this ___th day of
______________, 199_.
ALBERTSON'S, INC., OPTIONEE
A DELAWARE CORPORATION
BY: ____________________________ ______________________________
Chairman of the Board
BY: ____________________________
Secretary
-3-
<PAGE> 1
EXHIBIT 13
ALBERTSON'S, INC.
FINANCIAL REVIEW
Results of Operations
The Company has reported increased sales and earnings for 26 consecutive years.
Sales for 1995 were $12.6 billion compared to $11.9 billion in 1994 and $11.3
billion in 1993 (a 53-week year). Increases in sales are primarily attributable
to identical store sales increases (including inflation) and the continued
expansion of net retail square footage. Identical store sales, stores that have
been in operation for two full fiscal years, increased 0.8% in 1995, 2.3% (on a
comparable 52-week basis) in 1994 and 2.8% (on a comparable 53-week basis) in
1993. Identical store sales continued to increase through higher average ticket
sales per customer. Management estimates that inflation accounted for
approximately 0.6% of the 1995 identical store sales increase, compared to 0.7%
in 1994 and 0.6% in 1993. During 1995 the Company opened 58 stores (including 10
stores in the Company's new Houston, Texas market), remodeled 53 stores and
closed 14 stores for a net retail square footage increase of 2.6 million square
feet. Net retail square footage increased 7.6% in 1995, 7.7% in 1994 and 4.1% in
1993.
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
- ----------------------------------------------------------------------------------------------------------
1995 1994 1993
1995 1994 1993 vs. 1994 vs. 1993 vs. 1992
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales 100.00 100.00 100.00 5.8 5.4(1) 10.9(2)
Gross profit 25.61 25.33 24.74 7.0 7.9 13.8
Selling, general and
administrative expenses 19.19 19.08 19.07 6.5 5.4 9.5
Operating profit 6.41 6.25 5.66 8.6 16.3 31.2
Net interest expense 0.44 0.52 0.45 (10.5) 21.9 18.2
Earnings before income taxes
and cumulative effect
of accounting change 6.03 5.71 4.89 11.8 22.9 24.5
Net earnings 3.69 3.37 3.01 16.1 17.9 26.2
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Increase is 7.4% when compared on a 52-week basis to 1993
(2) Increase is 8.8% when compared on a 53-week basis to 1992
Gross profit, as a percent to sales, increased due primarily to the expansion
and increased utilization of Company-owned distribution facilities. During 1995
and 1994, the Company's distribution system provided 77% of all products
purchased by retail stores, compared to 70% in 1993 and 66% in 1992. Utilization
of the Company's distribution system has enabled the Company to improve its
control over product costs and product distribution. Since March 1994, all of
the Company's retail stores have been serviced by Company-owned distribution
centers. The pre-tax LIFO adjustment, as a percent to sales, reduced gross
margin by 0.14% in 1995, 0.08% in 1994 and 0.06% in 1993.
The 1995 increase in selling, general and administrative (SG&A) expenses, as a
percent to sales, was due primarily to increased depreciation expense associated
with the Company's capital expansion program. The Company will focus on
increasing sales, implementing new technologies that increase productivity and
emphasizing cost containment programs in an effort to reduce SG&A expenses as a
percent to sales.
The 1995 reduction in net interest expense resulted from increased capitalized
interest associated with the Company's capital expenditure program and reduced
average outstanding debt balances. Net interest expense for 1993 included a
reduction of $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 for 1993, as a percent to sales, would have been 0.54% and
the 1993 percentage increase over 1992 would have been 40.6% due to additional
borrowings in 1993 and 1992.
1
<PAGE> 2
ALBERTSON'S, INC.
Net earnings for 1994 were reduced by $17.0 million (0.14% to sales) for the
cumulative effect of the adoption of Statement of Financial Accounting Standards
No. 112, "Employers' Accounting for Postemployment Benefits." Net earnings for
1993 included a nonrecurring charge to cover the settlement of a lawsuit and a
decrease in interest expense due primarily to the successful resolution of a tax
issue. Net earnings excluding these adjustments would have been $417.4 million
(3.51% to sales) in 1994 and $352.1 million (3.12% to sales) in 1993.
The 1993 percentage increases over 1992 in operating profit and earnings were
impacted by the 1993 adjustments, costs recognized in 1992 associated with the
purchase of 74 Jewel Osco stores on April 13, 1992 and two accounting changes
adopted in 1992. Increases for 1993 over 1992 in operating profit and net
earnings excluding the 1993 and 1992 adjustments would have been 21.2% and
14.7%, respectively.
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 1995 was $793 million compared to $612 million in 1994 and
$587 million in 1993. These amounts have enabled the Company to fund its capital
expansion program, purchase and retire common stock and pay dividends. During
1995 the Company spent $656 million on capital expenditures, $78 million to
purchase and retire stock and $127 million for the payment of dividends (which
represents 27.2% of 1995 net earnings).
In 1995 the Company issued $200 million of 6.375% notes under a shelf
registration statement filed with the Securities and Exchange Commission in
1992. Proceeds from the issuance were used to reduce borrowings under the
Company's commercial paper program. All debt available for issuance under the
1992 shelf registration statement has been issued.
The Company utilizes its commercial paper program to supplement cash
requirements from seasonal fluctuations in working capital resulting from
operations and the Company's capital expenditure program. Accordingly,
commercial paper borrowings will fluctuate between the Company's quarterly
reporting periods. The Company had $209 million of commercial paper borrowings
outstanding at February 1, 1996, compared to $110 million at February 2, 1995
and $80 million at February 3, 1994. As of February 1, 1996, the Company had
committed lines of credit for $435 million, of which $400 million was reserved
as alternative funding for the Company's commercial paper program. The Company
also had one uncommitted line of credit for $10 million as of February 1, 1996.
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 programs
under which the Company is authorized, but not required, to purchase shares of
its common stock on the open market. The current program was adopted by the
Board on March 4, 1996, and authorizes the Company to purchase and immediately
retire up to 7 million shares from April 1, 1996 through March 31, 1997. Under
these programs, 2.6 million shares were purchased and retired in fiscal 1995 and
no shares were purchased in 1994 or 1993.
The following leverage ratios demonstrate the Company's levels of long-term
financing as of the indicated year end:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
February 1, February 2, February 3,
1996 1995 1994
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Long-term debt (including capitalized lease obligations)
to equity 37.5% 30.4% 47.9%
Long-term debt (including capitalized lease obligations)
to total assets 17.7% 14.1% 20.2%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
ALBERTSON'S, INC.
During 1995 the Company opened 58 combination food-drug stores, of which 32 were
opened during the fourth quarter. The average size of these stores, 51,400
square feet, increased the Company's average store size to 47,600 square feet.
At February 1, 1996, 93% of the Company's retail square footage consisted of
stores over 35,000 square feet. Retail square footage has also increased due to
the Company's remodel program. In 1995 nine of the 53 remodeled stores were
expanded in size. The Company continues to retain ownership of real estate when
possible.
During the past three years, the Company has invested $238 million (excluding
inventory) in its distribution operations and has added 2.8 million square feet
of new or expanded facilities. A new 698,000 square foot full-line distribution
center in Katy, Texas, located near the Company's new Houston, Texas market,
began limited operations in February 1996 and became fully operational on March
18, 1996. The Company purchased an existing 818,000 square foot warehouse in
Plant City, Florida in February 1993. This center was remodeled and expanded to
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. 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.
Capital expenditures for 1996 (excluding amounts anticipated to be financed by
operating leases) are expected to be approximately $630 million. New stores and
remodels will continue to be the most significant portion 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 293 stores representing
14.1 million square feet. The following summary of capital expenditures includes
capital leases, assets acquired with related debt and the estimated fair value
of property financed by operating leases (in thousands):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
1996
(PROJECTED) 1995 1994 1993
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New and acquired stores $400,000 $412,868 $320,479 $246,052
Remodels 95,000 120,709 86,381 82,409
Retail replacement equipment and
technological upgrades 60,000 15,692 36,464 20,804
Distribution facilities and equipment 40,000 98,731 38,490 100,936
Other 35,000 16,257 17,119 5,963
- -----------------------------------------------------------------------------------------
Total capital expenditures 630,000 664,257 498,933 456,164
Estimated fair value of property
financed by operating leases 29,000 30,000 18,000 32,000
- -----------------------------------------------------------------------------------------
$659,000 $694,257 $516,933 $488,164
-----------------------------------------------
- -----------------------------------------------------------------------------------------
</TABLE>
The Company's strong financial position provides the flexibility for the Company
to grow through future acquisitions or to purchase and retire its common stock
if it so chooses. The Board of Directors at its March 1996 meeting increased the
annual dividend rate to $.60 per share.
New Accounting Standard
In March 1995 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." This new
standard requires long-lived assets to be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of the
assets may not be recoverable. This statement will be effective for the
Company's 1996 fiscal year. The Company's existing accounting policies are such
that this pronouncement is not expected to have a material effect on the
Company's financial position or results of operations.
3
<PAGE> 4
ALBERTSON'S, INC.
CONSOLIDATED EARNINGS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
52 Weeks 52 Weeks 53 Weeks
February 1, February 2, February 3,
(In thousands except per share data) 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SALES $12,585,034 $11,894,621 $11,283,678
Cost of sales 9,362,266 8,882,294 8,492,524
- ------------------------------------------------------------------------------------------------------------------
Gross profit 3,222,768 3,012,327 2,791,154
Selling, general and administrative expenses 2,415,552 2,269,189 2,152,145
- ------------------------------------------------------------------------------------------------------------------
Operating profit 807,216 743,138 639,009
Other (expenses) income:
Interest, net (55,633) (62,141) (50,984)
Other, net 6,918 (2,345) (5,910)
Nonrecurring charge (29,900)
- ------------------------------------------------------------------------------------------------------------------
Earnings before income taxes and cumulative effect
of accounting change 758,501 678,652 552,215
Income taxes 293,540 261,281 212,534
- ------------------------------------------------------------------------------------------------------------------
Earnings before cumulative effect of accounting change 464,961 417,371 339,681
Cumulative effect of accounting change:
Postemployment benefits (17,006)
- ------------------------------------------------------------------------------------------------------------------
NET EARNINGS $ 464,961 $ 400,365 $ 339,681
---------------------------------------------------
Earnings per share before cumulative effect
of accounting change $ 1.84 $ 1.65 $ 1.34
Cumulative effect of accounting change:
Postemployment benefits (.07)
- ------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE $ 1.84 $ 1.58 $ 1.34
---------------------------------------------------
Average number of common shares outstanding 253,080 253,633 254,227
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE> 5
ALBERTSON'S, INC.
CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
52 Weeks 52 Weeks 53 Weeks
February 1, February 2, February 3,
(In thousands) 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 464,961 $ 400,365 $ 339,681
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 251,450 226,467 196,427
Net deferred income taxes (590) (18,956) (12,016)
Cumulative effect of accounting change 17,006
Changes in operating assets and liabilities:
Receivables and prepaid expenses 7,386 (499) (24,194)
Inventories (81,685) (76,842) (41,633)
Accounts payable 73,412 (24,825) 84,601
Other current liabilities 18,482 3,999 26,374
Self-insurance 9,406 31,125 10,192
Unearned income 34,960 51,318 (609)
Other long-term liabilities 15,682 3,059 8,230
- -----------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 793,464 612,217 587,053
- -----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (656,331) (470,589) (435,526)
Proceeds from disposals of land, buildings and equipment 23,267 42,094 20,874
Increase in other assets (32,646) (31,971) (3,719)
- -----------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (665,710) (460,466) (418,371)
- -----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net line of credit activity (10,000) 5,000
Proceeds from long-term borrowings 200,000 252,075
Payments on long-term borrowings (208,938) (83,013) (32,158)
Net commercial paper activity 99,657 29,828 (30,090)
Proceeds from stock options exercised 4,902 5,697 1,945
Cash dividends paid (126,672) (106,502) (89,533)
Stock purchased and retired (77,814)
Purchase of treasury shares (517,526)
Net proceeds from issuance of treasury shares 264,527
- -----------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (108,865) (163,990) (145,760)
- -----------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 18,889 (12,239) 22,922
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 50,224 62,463 39,541
- -----------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 69,113 $ 50,224 $ 62,463
---------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE> 6
ALBERTSON'S, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
February 1, February 2, February 3,
(Dollars in thousands) 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 69,113 $ 50,224 $ 62,463
Accounts and notes receivable 98,340 109,324 114,493
Inventories 1,030,246 948,561 871,719
Prepaid expenses 22,855 19,257 13,589
Deferred income taxes 62,448 62,223 59,967
- ---------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 1,283,002 1,189,589 1,122,231
OTHER ASSETS 155,427 122,781 90,810
LAND, BUILDINGS AND EQUIPMENT:
Land 611,588 527,125 467,392
Buildings 1,525,769 1,242,813 1,097,681
Fixtures and equipment 1,427,047 1,258,749 1,130,735
Leasehold improvements 315,658 287,544 257,566
Capitalized leases 183,316 180,026 155,798
- ---------------------------------------------------------------------------------------------------------
4,063,378 3,496,257 3,109,172
Less accumulated depreciation and amortization 1,365,896 1,186,898 1,027,318
- ---------------------------------------------------------------------------------------------------------
2,697,482 2,309,359 2,081,854
- ---------------------------------------------------------------------------------------------------------
$4,135,911 $3,621,729 $3,294,895
----------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
6
<PAGE> 7
ALBERTSON'S, INC.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
February 1, February 2, February 3,
(Dollars in thousands) 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts and notes payable $ 648,963 $ 575,551 $ 610,376
Salaries and related liabilities 134,096 114,906 101,443
Taxes other than income taxes 44,413 38,212 38,095
Income taxes 35,546 37,913 48,622
Self-insurance 68,899 63,905 58,436
Unearned income 32,208 22,092 19,927
Other 38,815 34,810 30,277
Current maturities of long-term debt 78,237 201,146 76,692
Current capitalized lease obligations 7,316 6,904 6,194
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 1,088,493 1,095,439 990,062
LONG-TERM DEBT 602,993 382,775 554,092
CAPITALIZED LEASE OBLIGATIONS 129,265 129,573 110,919
OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS:
Deferred compensation 33,354 36,396 31,684
Deferred income taxes 1,652 2,017 28,766
Deferred rents payable 71,468 69,381 72,251
Self-insurance 113,925 109,513 83,857
Unearned income 84,822 59,978 10,825
Other 57,416 48,764 23,060
- --------------------------------------------------------------------------------------------------------------------------------
362,637 326,049 250,443
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 - 251,918,576 shares, 253,984,381 shares
and 253,406,983 shares, respectively 251,919 253,984 253,407
Capital in excess of par value 3,269 11,322 2,117
Retained earnings 1,697,335 1,422,587 1,133,855
- --------------------------------------------------------------------------------------------------------------------------------
1,952,523 1,687,893 1,389,379
- --------------------------------------------------------------------------------------------------------------------------------
$4,135,911 $3,621,729 $3,294,895
----------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
7
<PAGE> 8
ALBERTSON'S, INC.
CONSOLIDATED STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Common Capital in
Stock $1.00 Excess of Retained Treasury
(In thousands except per share data) Par Value Par Value Earnings Stock Total
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 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 FEBRUARY 3, 1994 253,407 2,117 1,133,855 1,389,379
Exercise of stock options 577 5,120 5,697
Tax benefits related to stock options 4,085 4,085
Cash dividends, $.44 per share (111,633) (111,633)
Net earnings 400,365 400,365
- ---------------------------------------------------------------------------------------------------------------------
BALANCE AT FEBRUARY 2, 1995 253,984 11,322 1,422,587 1,687,893
Exercise of stock options 515 4,387 4,902
Tax benefits related to stock options 4,064 4,064
Stock purchased and retired (2,580) (16,504) (58,730) (77,814)
Cash dividends, $.52 per share (131,483) (131,483)
Net earnings 464,961 464,961
- ---------------------------------------------------------------------------------------------------------------------
BALANCE AT FEBRUARY 1, 1996 $251,919 $ 3,269 $1,697,335 $1,952,523
----------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
8
<PAGE> 9
ALBERTSON'S, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company
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.
Based on sales, the Company is the fourth largest retail food-drug chain in the
United States with operations in 19 Western, Midwestern and Southern states. As
of February 1, 1996, the Company operated 764 stores. Retail operations are
supported by 12 Company-owned distribution centers, strategically located in the
Company's operating markets.
Summary of Significant Accounting Policies
FISCAL YEAR END The Company's fiscal year is generally 52 weeks and periodically
consists of 53 weeks because the 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. Investments, which consist of government-backed money market funds
and repurchase agreements backed by government securities, are recorded at cost
which approximates market value.
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.
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. Estimated useful lives are generally as
follows: buildings and improvements--10 to 35 years; fixtures and equipment--3
to 8 years; leasehold improvements--10 to 15 years; and capitalized leases--25
to 30 years.
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 the fair
market value of the asset 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 consolidated earnings.
BUYING AND PROMOTIONAL ALLOWANCES Allowances and credits received from vendors
in connection with the Company's buying and merchandising activities are
recognized as earned.
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 recovery value, is expensed. For properties under operating 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.
9
<PAGE> 10
ALBERTSON'S, INC.
STOCK OPTIONS Proceeds from the sale of newly issued stock 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.
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. 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 common 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 common
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.
USE OF ESTIMATES The preparation of the Company's consolidated financial
statements, in conformity with generally accepted accounting principles,
requires management to make estimates and assumptions. These estimates and
assumptions affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
Nonrecurring Charge
During the third quarter of 1993, a $29.9 million nonrecurring charge was
recorded to cover a $29.5 million settlement of a lawsuit. 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.
Supplemental Cash Flow Information
Selected cash payments and noncash activities were as follows (in thousands):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
1995 1994 1993
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash payments for income taxes $284,383 $285,884 $202,472
Cash payments for interest,
net of amounts capitalized 45,131 51,103 36,311
Noncash investing and financing activities:
Capitalized lease obligations incurred 7,926 28,232 15,048
Capitalized lease obligations terminated 1,232 2,658 1,656
Liabilities assumed in connection with asset acquisitions 112 5,590
Tax benefits related to stock options 4,064 4,085 2,538
- -----------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 11
ALBERTSON'S, INC.
Accounts and Notes Receivable
Accounts and notes receivable consist of the following (in thousands):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
February 1, February 2, February 3,
1996 1995 1994
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Trade and other accounts receivable $95,112 $108,080 $113,335
Current portion of notes receivable 4,478 2,606 2,191
Allowance for doubtful accounts (1,250) (1,362) (1,033)
- ---------------------------------------------------------------------------------------
$98,340 $109,324 $114,493
-------------------------------------
- ---------------------------------------------------------------------------------------
</TABLE>
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 $217,831,000, $200,738,000 and $191,592,000 higher
at the end of 1995, 1994 and 1993, respectively. Net earnings would have been
higher by $10,478,000 ($.04 per share) in 1995, $5,625,000 ($.02 per share) in
1994 and $3,962,000 ($.02 per share) in 1993. The replacement cost of
inventories valued at LIFO approximates FIFO cost.
Indebtedness
Long-term debt includes the following (in thousands):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
February 1, February 2, February 3,
1996 1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial paper $209,395 $ 109,738 $ 79,910
Unsecured 6.375% notes due June 2000 200,000
Unsecured 6.375% notes due May 1995 150,000 150,000
Medium-term notes, unsecured:
Due March 2000 (6.14% interest) 89,650 89,650 89,650
Due March 1998 (5.68% interest) 85,425 85,425 85,425
Due March 1996 (4.86% interest) 77,000 77,000 77,000
Due May 1995 (6.15% interest) 50,000 50,000
Due May 1994 (5.49% interest) 75,000
Industrial revenue bonds 15,710 16,550 17,305
Mortgage notes and other unsecured notes payable 4,050 5,558 6,494
- -----------------------------------------------------------------------------------------------------
681,230 583,921 630,784
Less current maturities (78,237) (201,146) (76,692)
- -----------------------------------------------------------------------------------------------------
$602,993 $ 382,775 $554,092
-------------------------------------------
- -----------------------------------------------------------------------------------------------------
</TABLE>
The Company has in place a $400 million commercial paper program. Interest on
the outstanding commercial paper borrowings as of February 1, 1996, ranges from
5.27% to 5.55% with an effective weighted average rate of 5.45%. 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.
11
<PAGE> 12
ALBERTSON'S, INC.
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 were used to reduce borrowings under the Company's
commercial paper program. All debt available for issuance under the 1992 shelf
registration statement has been issued.
In connection with the Company's 1993 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, $300 million of debt was
issued in the form of 6.375% notes and medium-term notes due from 1993 to 1995
with interest paid semiannually. This debt was issued under a $500 million shelf
registration statement filed with the Securities and Exchange Commission in
1992.
The industrial revenue bonds are payable in varying annual installments through
2011, with interest paid semiannually at 4.55% to 7.875%.
The Company has pledged real estate with a cost of $14,850,000 as collateral for
the mortgage notes, which are payable semiannually, including interest at 7.875%
to 16.5%. The notes mature from 1996 to 2011.
The scheduled maturities of long-term debt outstanding at February 1, 1996, are
summarized as follows: $78,237,000 in 1996, $985,000 in 1997, $86,509,000 in
1998, $1,119,000 in 1999, $500,321,000 in 2000 and $14,059,000 thereafter.
The Company has in place a revolving credit agreement with several banks,
whereby the Company may borrow principal amounts up to $400 million at varying
interest rates any time prior to October 25, 2000. 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 committed lines of credit from banks at prevailing interest rates
for $35 million and one uncommitted line of credit for $10 million at February
1, 1996. The cash balances maintained at these banks are not legally restricted.
There were no amounts outstanding under the Company's lines of credit as of
February 1, 1996 and February 2, 1995. The weighted average interest rate on the
$10 million notes payable outstanding under the Company's lines of credit as of
February 3, 1994, was 3.32%.
Net interest expense was as follows (in thousands):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
1995 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Debt $39,323 $42,780 $32,164
Capitalized leases 15,234 13,412 12,233
Capitalized interest (7,428) (3,974) (4,219)
- ------------------------------------------------------------------------------
Interest expense 47,129 52,218 40,178
Net bank service charges 8,504 9,923 10,806
- ------------------------------------------------------------------------------
$55,633 $62,141 $50,984
-----------------------------------
- ------------------------------------------------------------------------------
</TABLE>
Net interest expense for 1993 included a reduction of $9.7 million due to the
successful resolution of a tax issue for which interest expense had previously
been accrued.
12
<PAGE> 13
ALBERTSON'S, INC.
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, September 6, 1989 and
September 6, 1994. 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 certificates will be
distributed. Each right entitles the holder to purchase one share of the
Company's common stock at a price of $60.00. 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 $60.00 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 programs
under which the Company is authorized, but not required, to purchase shares of
its common stock on the open market. The current program was adopted by the
Board on March 4, 1996, and authorizes the Company to purchase and immediately
retire up to 7 million shares through March 31, 1997. The Company has purchased
and retired an equivalent of 15 million shares of its common stock for $234
million under these programs.
13
<PAGE> 14
ALBERTSON'S, INC.
Income Taxes
Deferred tax assets and liabilities consist of the following (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
February 1, February 2, February 3,
1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred tax assets (no valuation allowances considered necessary):
Nondeductible accruals for:
Self-insurance $ 70,669 $ 66,884 $ 54,811
Lease accounting 20,601 20,689 21,626
Vacations 19,917 18,386 17,129
Deferred compensation 15,832 6,504 5,742
Postemployment benefits 13,224 10,447
Property valuation 10,300 8,867 8,828
Pension costs 2,930 2,485 2,133
Litigation 177 9,508 11,968
Other 7,237 6,219 5,955
Income unearned for financial reporting purposes 44,355 31,374 11,846
Costs capitalized for tax purposes 9,999 11,156 10,803
- --------------------------------------------------------------------------------------------------------------------------
Total deferred tax assets 215,241 192,519 150,841
Deferred tax liabilities:
Accelerated depreciation for tax purposes (116,267) (110,330) (103,219)
Pension costs expensed for tax purposes (23,803) (18,040) (13,312)
Inventory valuation (7,676) (778) (1,040)
Deferred gains (4,929) (3,146) (2,069)
Other (1,770) (19)
- --------------------------------------------------------------------------------------------------------------------------
Total deferred tax liabilities (154,445) (132,313) (119,640)
- --------------------------------------------------------------------------------------------------------------------------
Net deferred tax assets $ 60,796 $ 60,206 $ 31,201
---------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
Income tax expense on continuing operations consists of the following (in
thousands):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $252,587 $239,937 $191,343
State 41,729 40,508 33,580
- ---------------------------------------------------------------------------------------------------
294,316 280,445 224,923
Deferred:
Federal (506) (16,218) (10,222)
State (84) (2,738) (1,794)
- ---------------------------------------------------------------------------------------------------
(590) (18,956) (12,016)
Amortization of deferred investment tax credits (186) (208) (373)
- ---------------------------------------------------------------------------------------------------
$293,540 $261,281 $212,534
------------------------------------------
- ---------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 15
ALBERTSON'S, INC.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred taxes resulted from:
Income unearned for financial reporting purposes $(12,981) $(19,528) $ (107)
Accelerated depreciation for tax purposes 5,937 7,111 16,778
Self-insurance (3,785) (12,073) (5,365)
Litigation 9,331 2,460 (11,968)
Inventory valuation 6,898 (262) (410)
Costs capitalized for tax purposes 1,157 (353) (4,994)
Deferred compensation (9,328) (762) (735)
Property valuation (1,433) (39) (3,631)
Pension costs expensed for tax purposes 5,763 4,728 3,312
Other (2,149) (238) (4,896)
- ---------------------------------------------------------------------------------------------------------
$ (590) $(18,956) $(12,016)
----------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Total tax expense for 1994 was $250,635,000 consisting of taxes on continuing
operations of $261,281,000 and tax benefits of $10,646,000 for the cumulative
effect of a change in accounting for postemployment benefits.
The reconciliations between the federal statutory tax rate and the Company's
effective tax rates are as follows (in thousands):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
1995 Percent 1994 Percent 1993 Percent
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Taxes computed at statutory rate $265,476 35.0 $237,528 35.0 $193,275 35.0
State income taxes net of federal
income tax benefit 26,656 3.5 24,530 3.6 20,612 3.8
Amortization of deferred
investment tax credits (186) (208) (373) (0.1)
Other 1,594 0.2 (569) (0.1) (980) (0.2)
- -------------------------------------------------------------------------------------------------------------------
$293,540 38.7 $261,281 38.5 $212,534 38.5
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Stock Options
In October 1995 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation." This new standard defines a fair value based method of accounting
for an employee stock option or similar equity instrument. This statement gives
entities a choice of recognizing related compensation expense by adopting the
new fair value method or to continue to measure compensation using the intrinsic
value approach under Accounting Principles Board (APB) Opinion No. 25, the
former standard. If the former standard for measurement is elected, SFAS No. 123
requires supplemental disclosure to show the effects of using the new
measurement criteria. This statement will be effective for the Company's 1996
fiscal year. The Company intends to continue using the measurement prescribed by
APB Opinion No. 25, and accordingly, this pronouncement will not affect the
Company's financial position or results of operations.
The Company has issued stock under various stock option plans. The Company
granted stock options under plans approved in 1995 and 1986 which authorize the
granting of options with respect to 18,400,000 shares of
the Company's common stock.
15
<PAGE> 16
ALBERTSON'S, INC.
The following is a summary of stock option activity and number of shares
reserved for outstanding options:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Option Number
Price Per Share of Shares
- ------------------------------------------------------------------------------------
<S> <C> <C>
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
Granted 28.63 to 28.63 141,000
Exercised 1.88 to 16.88 (593,700)
Forfeited 6.25 to 25.13 (131,000)
- ------------------------------------------------------------------------------------
Balance at February 2, 1995 2.92 to 28.63 3,467,953
Granted 25.13 to 31.88 1,044,000
Exercised 2.92 to 27.88 (539,850)
Forfeited 16.56 to 28.63 (148,000)
- ------------------------------------------------------------------------------------
Balance at February 1, 1996 $2.92 to $31.88 3,824,103
---------------------------------
- ------------------------------------------------------------------------------------
</TABLE>
Options on 213,103 shares were exercisable at February 1, 1996. In addition,
there were 13,422,000 shares of common stock 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 Company's funding policy for these plans
is to contribute amounts deductible for federal income tax purposes.
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 Company plans was as follows (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
1995 1994 1993
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned during the period $ 16,172 $ 19,523 $ 12,726
Interest cost on projected benefit obligations 16,149 15,097 12,687
Actual return on assets (62,603) (145) (27,696)
Net amortization and deferral 39,972 (19,860) 11,515
- --------------------------------------------------------------------------------------------------------
$ 9,690 $ 14,615 $ 9,232
------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE> 17
ALBERTSON'S, INC.
The following table sets forth the funded 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 1, February 2, February 3,
1996 1995 1994
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Plan assets at fair value $321,758 $240,534 $218,284
Actuarial present value of:
Vested benefits 180,077 138,322 155,087
Nonvested benefits 17,639 13,460 15,797
- -------------------------------------------------------------------------------------------------
Accumulated benefit obligation 197,716 151,782 170,884
Effect of projected future salary increases 60,926 27,529 38,508
- -------------------------------------------------------------------------------------------------
Projected benefit obligation 258,642 179,311 209,392
- -------------------------------------------------------------------------------------------------
Plan assets in excess of projected benefit obligation 63,116 61,223 8,892
Unrecognized net (gain) loss (5,870) (19,535) 19,713
Unrecognized prior service cost 5,425 6,274 7,123
Unrecognized net transition assets (796) (983) (1,171)
- -------------------------------------------------------------------------------------------------
Prepaid pension cost $ 61,875 $ 46,979 $ 34,557
----------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
Assets of the two funded Company plans are invested in directed trusts. Assets
in the directed trusts are invested in common stocks (including $38,859,000,
$33,071,000 and $28,937,000 of the Company's common stock at February 1, 1996,
February 2, 1995 and February 3, 1994, respectively), U.S. Government
obligations, corporate bonds, international equity funds, real estate and money
market funds.
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>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
February 1, February 2, February 3,
1996 1995 1994
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Actuarial present value of:
Vested benefits $ 9,216 $ 6,734 $ 6,493
Nonvested benefits 5 23 9
- ---------------------------------------------------------------------------------------------------------
Accumulated benefit obligation 9,221 6,757 6,502
Effect of projected future salary increases 1,782 1,408 1,861
- ---------------------------------------------------------------------------------------------------------
Projected benefit obligation 11,003 8,165 8,363
- ---------------------------------------------------------------------------------------------------------
Projected benefit obligation in excess of plan assets (11,003) (8,165) (8,363)
Unrecognized net (gain) loss 1,115 (869) (7)
Unrecognized prior service cost 946 1,041 1,136
Unrecognized net transition liability 1,326 1,507 1,688
Additional minimum liability (1,605) (271) (956)
- ---------------------------------------------------------------------------------------------------------
Accrued pension cost $ (9,221) $(6,757) $(6,502)
-----------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 18
ALBERTSON'S, INC.
Net periodic pension cost is determined using assumptions as of the beginning of
each year. The projected benefit obligation and related funded status is
determined using assumptions as of the end of each year. Assumptions used at the
end of each year for all Company-sponsored plans were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Weighted-average discount rate 7.25% 8.50% 7.00%
Annual salary increases 4.50-5.00% 4.50-5.00% 4.50-4.70%
Expected long-term rate of return on assets 9.00% 9.00% 9.00%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
The Company also contributes to various plans under industrywide collective
bargaining agreements, primarily for defined benefit pension plans. Total
contributions to these plans were $23,777,000 for 1995, $17,354,000 for 1994 and
$16,025,000 for 1993. The Company's relative positions in these plans with
respect to the actuarial present value of the accumulated benefit obligation and
the projected benefit obligation, net assets available for benefits and the
assumed rates of return used by the plans are not readily available.
The Company sponsors a tax deferred savings plan which is a salary deferral plan
pursuant to Section 401(k) of the Internal Revenue Code. Employees eligible to
participate are those who are at least 21 years of age with one or more years of
service and (with certain exceptions) are not covered by collective bargaining
agreements. All contributions are determined and made by the employees and the
Company incurs no material costs in connection with this plan.
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. Net periodic postretirement benefit cost was as
follows (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 979 $ 812 $ 574
Interest cost 889 669 605
- --------------------------------------------------------------------------------
$1,868 $1,481 $1,179
----------------------------------
- --------------------------------------------------------------------------------
</TABLE>
The following table sets forth the actuarial present value of the accumulated
postretirement benefit obligation (APBO) and related liabilities included in
other long-term liabilities in the Company's consolidated balance sheets (in
thousands):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
February 1, February 2, February 3,
1996 1995 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Existing retired employees $ 2,176 $1,706 $1,613
Active employees fully eligible 3,402 1,871 1,800
Other active employees 6,908 4,639 5,645
- ---------------------------------------------------------------------------------------------------
Accumulated postretirement benefit obligation 12,486 8,216 9,058
Unrecognized net gain (loss) and effects
of changes in assumptions (1,503) 1,402 (963)
- ---------------------------------------------------------------------------------------------------
Accrued postretirement benefit liabilities $10,983 $9,618 $8,095
---------------------------------------
Assumed discount rate 7.25% 8.50% 7.00%
- ---------------------------------------------------------------------------------------------------
</TABLE>
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.
18
<PAGE> 19
ALBERTSON'S, INC.
At the beginning of 1994, the Company adopted the provisions of SFAS No. 112,
"Employers' Accounting for Postemployment Benefits." This statement requires
employers to recognize an obligation for benefits provided to former or inactive
employees after employment but before retirement. The Company is self-insured
for its employees' short-term and long-term disability plans which are the
primary benefits paid to inactive employees prior to retirement. In prior years,
expenses for disability benefits were charged to earnings under the
pay-as-you-go method. The total cumulative effect of this accounting change (net
of $10.6 million in tax benefits) was to decrease net earnings by $17.0 million
or $.07 per share. The impact of this change on 1994 operations was not
material. As of February 1, 1996, $30.0 million of the obligation for
postemployment benefits was included with other long-term liabilities and $4.4
million was included with current salaries and related liabilities in the
Company's consolidated balance sheets. As of February 2, 1995, $25.8 million of
the obligation for postemployment benefits was included with other long-term
liabilities and $3.0 million was included with current salaries and related
liabilities in the Company's consolidated balance sheets.
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 $84,709,000 for
1995, $106,439,000 for 1994 and $90,613,000 for 1993. The Company's relative
positions in these plans with respect to any accumulated benefit obligations are
not readily available.
The Company has bonus plans for store management personnel and other key
management personnel. Amounts charged to earnings under all bonus plans were
$58,782,000 for 1995, $58,406,000 for 1994 and $53,907,000 for 1993.
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 $1,948,000 in 1995, $2,141,000 in 1994 and $2,716,000 in 1993. Following is
an analysis of the Company's capitalized leases (in thousands):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
February 1, February 2, February 3,
1996 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Real estate $183,183 $179,893 $154,157
Equipment 133 133 1,641
- -------------------------------------------------------------------------------
$183,316 $180,026 $155,798
----------------------------------------
- -------------------------------------------------------------------------------
Accumulated amortization $ 81,938 $ 78,183 $ 73,074
- -------------------------------------------------------------------------------
</TABLE>
19
<PAGE> 20
ALBERTSON'S, INC.
Future minimum lease payments for capitalized lease obligations at February 1,
1996, are as follows (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Real Estate Equipment Total
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1996 $ 22,160 $ 36 $ 22,196
1997 22,262 36 22,298
1998 21,787 12 21,799
1999 21,085 21,085
2000 21,849 21,849
Remainder 184,289 184,289
- --------------------------------------------------------------------------------------------
Total minimum obligations 293,432 84 293,516
Less interest (156,919) (16) (156,935)
- --------------------------------------------------------------------------------------------
Present value of net minimum obligations 136,513 68 136,581
Less current portion (7,290) (26) (7,316)
- --------------------------------------------------------------------------------------------
Long-term obligations at February 1, 1996 $ 129,223 $ 42 $ 129,265
----------------------------------------
- --------------------------------------------------------------------------------------------
</TABLE>
Minimum obligations have not been reduced by minimum capitalized sublease
rentals of $4,200,000 receivable in the future under noncancelable capitalized
subleases.
Rent expense under operating leases was as follows (in thousands):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
1995 1994 1993
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Minimum rent $ 68,528 $ 65,566 $ 66,506
Contingent rent 4,088 4,634 4,641
- ------------------------------------------------------------------------
72,616 70,200 71,147
Less sublease rent (19,573) (19,055) (17,232)
- ------------------------------------------------------------------------
$ 53,043 $ 51,145 $ 53,915
------------------------------------------
- ------------------------------------------------------------------------
</TABLE>
Future minimum lease payments for all noncancelable operating leases and related
subleases having a remaining term in excess of one year at February 1, 1996, are
as follows (in thousands):
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Minimum Sublease
Lease Payment Rental Income Net
- ----------------------------------------------------------------------------------------
<C> <C> <C> <C>
1996 $ 68,429 $(11,848) $ 56,581
1997 70,665 (11,908) 58,757
1998 73,000 (11,245) 61,755
1999 74,056 (8,660) 65,396
2000 71,739 (5,774) 65,965
Remainder 634,586 (26,479) 608,107
- ----------------------------------------------------------------------------------------
Total minimum obligations (receivables) $992,475 $(75,914) $916,561
-----------------------------------------
- ----------------------------------------------------------------------------------------
</TABLE>
The present value of minimum lease payments under operating leases using an
assumed interest rate of 9.5% was approximately $485 million at February 1,
1996.
20
<PAGE> 21
ALBERTSON'S, INC.
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. Minimum rentals guaranteed under assigned leases are $5.3 million in
1996 and aggregate $57.2 million for the remaining lease terms, which expire at
various dates through 2020. 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 to
perform under the agreements.
Financial instruments which potentially subject the Company to concentration of
credit risk consist principally of cash equivalents and 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 receivables are limited due to their dispersion
across various companies and geographies.
The estimated fair values of cash and cash equivalents, accounts receivable,
accounts payable, short-term debt and commercial paper borrowings approximate
their carrying amount. The estimated fair values and carrying amounts of
long-term debt borrowings (excluding commercial paper) were as follows (in
millions):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
February 1, February 2, February 3,
1996 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Fair value $483.9 $463.0 $565.4
Carrying amount 471.8 474.2 550.9
- -------------------------------------------------------------------------------
</TABLE>
Substantially all of these fair values were determined from quoted market
prices. The Company has not determined the fair value of lease guarantees due to
the inherent difficulty in evaluating the credit worthiness of each tenant.
New Accounting Standard
In March 1995 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." This new
standard requires long-lived assets to be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of the
asset may not be recoverable. This statement will be effective for the Company's
1996 fiscal year. The Company's existing accounting policies are such that this
pronouncement is not expected to have a material effect on the Company's
financial position or results of operations.
Legal Proceedings
The Company is involved in routine litigation incidental to operations. In the
opinion of management, the ultimate resolution of these legal proceedings will
not have a material adverse effect on the Company's financial condition or
results of operations.
21
<PAGE> 22
ALBERTSON'S, INC.
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 LLP, 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, composed entirely of outside
directors, oversees the fulfillment by management of its responsibilities over
financial controls and the preparation of financial statements. The Audit
Committee meets with internal and external auditors four 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 the business of Albertson's,
Inc. 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.
/s/Gary G. Michael /s/ A. Craig Olson
Gary G. Michael A. Craig Olson
Chairman of the Board and Senior Vice President, Finance and
Chief Executive Officer Chief Financial Officer
22
<PAGE> 23
ALBERTSON'S, INC.
INDEPENDENT AUDITORS' REPORT
[DELOITTE & TOUCHE LLP LOGO]
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 1, 1996, February 2, 1995 and February 3,
1994, 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 1, 1996, February 2, 1995 and February 3, 1994, 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 Consolidated Financial Statements, in fiscal year
1994 the Company changed its method of accounting for postemployment benefits to
conform with Statement of Financial Accounting Standards No. 112.
/s/ Deloitte & Touche LLP
Boise, Idaho
March 20, 1996
23
<PAGE> 24
ALBERTSON'S, INC.
FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
52 WEEKS 52 WEEKS 53 WEEKS 52 WEEKS 52 WEEKS
FEBRUARY 1, FEBRUARY 2, FEBRUARY 3, JANUARY 28, JANUARY 30,
(Dollars in thousands except per share data) 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Sales $12,585,034 $11,894,621 $11,283,678 $10,173,676 $8,680,467
Gross profit 3,222,768 3,012,327 2,791,154 2,452,852 2,081,517
Interest expense:
Debt 31,895 38,806 27,945 22,245 5,863
Capitalized lease obligations 15,234 13,412 12,233 11,560 12,278
Earnings before income taxes and
cumulative effects of
accounting changes 758,501 678,652 552,215 443,721 406,394
Income taxes 293,540 261,281 212,534 167,646 148,600
Earnings before cumulative effects
of accounting changes 464,961 417,371 339,681 276,075 257,794
Cumulative effects of
accounting changes (17,006) (6,858)
Net earnings 464,961 400,365 339,681 269,217 257,794
Net earnings as a percent to sales 3.69% 3.37% 3.01% 2.65% 2.97%
- ------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK DATA:
Earnings per share before cumulative
effects of accounting changes $ 1.84 $ 1.65 $ 1.34 $ 1.04 $ .97
Cumulative effects of
accounting changes (.07) (.02)
Earnings per share 1.84 1.58 1.34 1.02 .97
Cash dividends per share .52 .44 .36 .32 .28
Book value per share 7.75 6.65 5.48 5.25 4.54
- ------------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION:
Total assets $ 4,135,911 $ 3,621,729 $ 3,294,895 $ 2,945,573 $2,216,247
Working capital 194,509 94,150 132,169 200,483 99,039
Long-term debt 602,993 382,775 554,092 404,476 52,510
Capitalized lease obligations 129,265 129,573 110,919 103,764 99,159
Stockholders' equity 1,952,523 1,687,893 1,389,379 1,388,428 1,199,452
- ------------------------------------------------------------------------------------------------------------------------------
OTHER YEAR END STATISTICS:
Number of stores 764 720 676 656 562
Number of employees:
Total 80,000 76,000 75,000 71,000 60,000
Full-time equivalents 66,000 60,000 58,000 54,000 45,000
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- - Refer to the "Employee Benefit Plans" note in Notes to Consolidated Financial
Statements regarding the 1994 adoption of Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Postemployment Benefits."
- - Refer to the "Nonrecurring Charge" and "Indebtedness" notes in Notes to
Consolidated Financial Statements regarding the 1993 charge to cover the
settlement of a lawsuit and the reduction of interest expense due to the
successful resolution of a tax issue for which interest expense had previously
been accrued.
- - In fiscal 1992 the Company adopted two Statements of Financial Accounting
Standards, SFAS No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions" and SFAS No. 109, "Accounting for Income Taxes."
- - On April 13, 1992, the Company purchased 74 Jewel Osco combination food-drug
stores, a general merchandise warehouse and related assets, including
potential store locations, from American Stores Company.
24
<PAGE> 25
ALBERTSON'S, INC.
QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
(Dollars in thousands except
per share data - Unaudited) First Second Third Fourth Year
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995
Sales $3,083,424 $3,119,216 $3,103,578 $3,278,816 $12,585,034
Gross profit 775,215 795,796 796,785 854,972 3,222,768
Net earnings 99,274 106,229 105,350 154,108 464,961
Earnings per share .39 .42 .42 .61 1.84
- -----------------------------------------------------------------------------------------------------------------
1994
Sales $2,909,808 $2,987,680 $2,928,012 $3,069,121 $11,894,621
Gross profit 722,755 750,912 740,410 798,250 3,012,327
Earnings before cumulative effect
of accounting change 85,157 93,677 94,326 144,211 417,371
Net earnings 68,151 93,677 94,326 144,211 400,365
Earnings per share before
cumulative effect of
accounting change .34 .37 .37 .57 1.65
Earnings per share .27 .37 .37 .57 1.58
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
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 and earnings per share as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
(Dollars in thousands except per
share data - Unaudited) First Second Third Fourth Year
- ----------------------------------------------------------------------------------------------------
1995
<S> <C> <C> <C> <C> <C>
Net earnings $(6,804) $(6,804) $(2,513) $5,643 $(10,478)
Earnings per share (.03) (.03) (.01) .03 (.04)
- ----------------------------------------------------------------------------------------------------
1994
Net earnings $(7,380) $(5,966) $(1,660) $9,381 $ (5,625)
Earnings per share (.03) (.02) (.01) .04 (.02)
- ----------------------------------------------------------------------------------------------------
</TABLE>
- - In 1994, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits." Refer to the "Employee Benefit Plans" note in Notes to Consolidated
Financial Statements.
25
<PAGE> 26
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>
1995 32 1/2 29 7/8 31 5/8 27 1/4 34 5/8 28 5/8 35 5/8 30 3/8 35 5/8 27 1/4
1994 30 7/8 25 1/8 28 3/4 25 3/4 30 1/4 26 1/8 30 5/8 27 5/8 30 7/8 25 1/8
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
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Cash dividends per share were:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
First Second Third Fourth Year
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995 $.13 $.13 $.13 $.13 $.52
1994 .11 .11 .11 .11 .44
1993 .09 .09 .09 .09 .36
- -------------------------------------------------------------------------------
</TABLE>
- - Stock prices and dividend information have been adjusted to reflect the
two-for-one stock split distributed October 4, 1993.
- - In March 1996, the Board of Directors increased dividends to an annual rate of
$.60 per share, an increase of 15.4% over 1995. The new quarterly rate of $.15
per share will be paid on May 25, 1996, to stockholders of record on May 3,
1996.
This annual report is printed on recycled paper.
26
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ALBERTSON'S
ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR ENDED FEBRUARY 1, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-01-1996
<PERIOD-START> FEB-03-1995
<PERIOD-END> FEB-01-1996
<CASH> 69,113
<SECURITIES> 0
<RECEIVABLES> 99,590
<ALLOWANCES> 1,250
<INVENTORY> 1,030,246
<CURRENT-ASSETS> 1,283,002
<PP&E> 4,063,378
<DEPRECIATION> 1,365,896
<TOTAL-ASSETS> 4,135,911
<CURRENT-LIABILITIES> 1,088,493
<BONDS> 732,258
<COMMON> 251,919
0
0
<OTHER-SE> 1,700,604
<TOTAL-LIABILITY-AND-EQUITY> 4,135,911
<SALES> 12,585,034
<TOTAL-REVENUES> 12,585,034
<CGS> 9,362,266
<TOTAL-COSTS> 9,362,266
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 55,633
<INCOME-PRETAX> 758,501
<INCOME-TAX> 293,540
<INCOME-CONTINUING> 464,961
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 464,961
<EPS-PRIMARY> 1.84
<EPS-DILUTED> 1.84
</TABLE>
