<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 January 30, 1997 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) 395-6200
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange
Title of each class on which registered
-------------------- ----------------------
Common Stock, $1.00 par value, 250,754,624 New York Stock Exchange
shares outstanding on March 27, 1997 Pacific Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No
------ ------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (17 CFR section 405) is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. ( )
The aggregate market value of the voting stock held by nonaffiliates of the
Registrant, computed by reference to the price at which the stock was sold as
of the close of business on March 27, 1997: $6,487,509,919.
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
January 30, 1997, 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 23, 1997,(the "Proxy
Statement") to be filed within 120 days after the Registrant's fiscal
year ended January 30, 1997, portions of which are incorporated by
reference into Part III of this Form 10-K.
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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 January 30, 1997
Item 6 - Selected Financial Data Page 44 of the Annual Report to
Stockholders for the year ended
January 30, 1997
Item 7 - Management's Discussion and Pages 19 to 22 of the Annual
Analysis of Financial Report to Stockholders for the
Condition and Results of year ended January 30, 1997
Operations
Item 8 - Financial Statements and Pages 23 to 43 and page 45 of the
Supplementary Data Annual Report to Stockholders for
the year ended January 30, 1997
Part III
- --------
Item 10 - Directors and Executive The material contained under the
Officers of the Registrant headings "Election of Directors,"
"Nominees for Election as Class II
Directors," "Nominee for Election as
Class I Director," "Continuing
Class III Directors," "Continuing
Class I Directors" and "Section 16(a)
Beneficial Ownership Reporting
Compliance" 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 23 to 43 and page 45 of the
Statement Schedules and Annual Report to Stockholders for
Reports on Form 8-K the year ended January 30, 1997
</TABLE>
2
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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 8
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 9
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 12
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 one of the largest retail food-drug
chains in the United States with operations in 20 Western, Midwestern and
Southern states. As of January 30, 1997, the Company operated 826 stores
consisting of 715 combination food-drug stores, 72 conventional supermarkets
and 39 warehouse stores. Retail operations are supported by 11 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.
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 provide consumer information such as: nutritional signing in the meat
and produce departments, freshness code dating, unit pricing and food
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information pamphlets. The Company also offers a choice of recyclable paper or
plastic bags and collection bins for plastic bag recycling.
As of January 30, 1997, the Company employed approximately 88,000 people.
Approximately 40% of the employees are covered by collective bargaining
agreements. The Company considers its present relations with employees to be
good.
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
January 30, 1997:
<TABLE>
<CAPTION>
Albertson's Retail Stores
-------------------------
<S> <C>
Arizona 34
Arkansas 1
California 170
Colorado 49
Florida 95
Idaho 32
Kansas 5
Louisiana 18
Mississippi 1
Montana 8
Nebraska 7
Nevada 26
New Mexico 20
Oklahoma 22
Oregon 48
South Dakota 1
Texas 167
Utah 38
Washington 75
Wyoming 9
---
Total 826
===
</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 513 stores and
approximately 95% of the Company's current retail square footage has been
opened or remodeled during this 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.
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As of January 30, 1997, the Company operated 826 stores in the states
discussed in Item 1. An analysis of stores listed by division is as follows:
<TABLE>
<CAPTION>
Number
of Stores
---------
<S> <C>
Idaho (Southern Idaho (30), Northern Nevada (9),
Eastern Oregon (4) and Wyoming (1)) 44
Inland Empire (Eastern Washington (18),
Montana (8) and Northern Idaho (2)) 28
Utah (Utah (38) and Wyoming (1)) 39
Western Washington 52
Oregon (Western Oregon (44) and Washington (5)) 49
Southern California (California (123) and
Southern Nevada (17)) 140
Northern California 46
Rocky Mountain (Colorado (49), Wyoming (7),
New Mexico (1) and South Dakota (1)) 58
Southwest (Arizona (34), New Mexico (19), Texas (4)
and California (1)) 58
Midwest (Oklahoma (22), Nebraska (7) and Kansas (5)) 34
Houston (Texas (24) and Louisiana (15)) 39
San Antonio (Texas (37)) 37
Dallas/Ft. Worth (Texas (102), Louisiana (3),
Arkansas (1) and Mississippi (1)) 107
Florida 95
---
826
===
</TABLE>
The following is a summary of stores, by classification, as of the indicated
fiscal year end:
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Combination Food-Drug 715 646 588 536 506
Conventional Stores 72 78 88 96 106
Warehouse Stores 39 40 44 44 44
--- --- --- --- ---
Total 826 764 720 676 656
=== === === === ===
</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>
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Combination Food-Drug 35,886 32,217 29,217 26,602 25,159
Conventional Stores 2,113 2,261 2,524 2,741 3,009
Warehouse Stores 1,841 1,881 2,037 2,031 1,959
------ ------ ------ ------ ------
Total 39,840 36,359 33,778 31,374 30,127
====== ====== ====== ====== ======
</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 1996 approximately 77% of the
merchandise purchased for resale in Company retail stores was received from
Company-owned distribution centers.
Albertson's distribution system consists of 11 Company-owned centers located
strategically throughout the Company's operating markets. These units operate
as separate profit centers.
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The following is a summary of the Company's distribution and manufacturing
facilities as of January 30, 1997:
<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,
Meat and Deli 1,018,000
Central Bakery 41,000
Plant City, Florida
Groceries, Frozen Food, Produce, Liquor, Meat,
Deli and high-volume Health and Beauty Care 954,000
Portland, Oregon
Groceries, Frozen Food, Produce, Meat and Deli 790,000
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
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 238,000
Ice Cream Plant 11,000
---------
Total 7,379,000
=========
</TABLE>
As of January 30, 1997, the Company held title to the land and buildings of
50% of the Company's stores and held title to the buildings on leased land of
an additional 9% 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 facilities.
Item 3. Legal Proceedings
Three civil lawsuits, covering the States of California, Florida and
Washington and each filed as a purported class action, have been brought
against the Company alleging that the Company permits its hourly-paid employees
to work "off-the-clock" without being paid for their work. Choate v.
Albertson's, Inc. was filed on September 11, 1996 in Washington state court
(Superior Court of King County, Washington); Gloege v. Albertson's, Inc. was
filed on September 17, 1996 in federal court in California (United States
District Court for the Northern District of California); and Mitchell v.
Albertson's, Inc. was filed on September 19, 1996 in federal court in Florida
(United States District Court for the Southern District of Florida).
The Company has firm and long-standing policies in place prohibiting
off-the-clock work. Although these lawsuits are still in their preliminary
stages, the Company believes it has strong defenses and intends to vigorously
defend against these lawsuits. The Company further believes that these
lawsuits are part of a broader and continuing effort by the United Food &
7
<PAGE> 8
Commercial Workers, International Union and some of its locals to pressure the
Company to unionize employees who have not expressed a desire to be represented
by a union.
In the opinion of management, the ultimate resolution of these actions will
not have a material adverse effect on the Company's financial condition or
results of operations.
The Company is also 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 1996 to a vote of
security holders through the solicitation of proxies or otherwise.
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 captions "Company Stock
Information" and "Stockholders of Record" on the inside back cover of the
Company's 1996 Annual Report to Stockholders. This information is incorporated
herein by this reference thereto. The market value of the Company's common
stock on March 27, 1997, was $34.25 per share.
Item 6. Selected Financial Data
Selected financial data of the Company for the fiscal years 1992 through
1996 is included under the caption "Five Year Summary of Selected Financial
Data" on page 44 of the Company's 1996 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 19 to 22 of the Company's 1996 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 23 to 43 and page 45 of
the Company's 1996 Annual Report to Stockholders and are incorporated herein by
this reference thereto.
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<PAGE> 9
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.
PART III
Item 10. Directors and Executive Officers of the Registrant
Directors
The information regarding directors and nominees for directors of the
Company is presented under the headings "Election of Directors," "Nominees for
Election as Class II Directors," "Nominee for Election as Class I Director,"
"Continuing Class III Directors," "Continuing Class I Directors" and "Section
16(a) Beneficial Ownership Reporting Compliance" in the Company's definitive
proxy statement for use in connection with the 1997 Annual Meeting of
Stockholders (the "Proxy Statement") to be filed within 120 days after the
Company's fiscal year ended January 30, 1997, and is incorporated herein by
this reference thereto.
Executive Officers
<TABLE>
<CAPTION>
Age Date First Appointed
as of as an Executive
Name 3/27/97 Position Officer
---- ------- -------- --------------------
<S> <C> <C> <C>
Gary G. Michael 56 Chairman of the Board and 12/02/74
Chief Executive Officer
John B. Carley 63 Chairman of the Executive 04/05/76
Committee of the Board
Richard L. King 47 President and Chief Operating 01/01/94
Officer
Carl W. Pennington 59 Executive Vice President, 08/02/87
Corporate Merchandising
Michael F. Reuling 50 Executive Vice President, 12/30/79
Store Development
Thomas R. Saldin 50 Executive Vice President, 12/26/83
Administration and
General Counsel
Ronald D. Walk 53 Executive Vice President, 05/28/84
Retail Operations
Thomas E. Brother 55 Senior Vice President, 07/30/89
Distribution
William H. Emmons 47 Senior Vice President and 02/02/96
Regional Manager
</TABLE>
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<PAGE> 10
<TABLE>
<CAPTION>
Age Date First Appointed
as of as an Executive
Name 3/27/97 Position Officer
---- ------- -------- --------------------
<S> <C> <C> <C>
Dennis C. Lucas 49 Senior Vice President and 02/02/96
Regional Manager
A. Craig Olson 45 Senior Vice President, Finance 12/22/86
and Chief Financial Officer
David G. Simonson 50 Senior Vice President and 02/02/96
Regional Manager
Patrick S. Steele 47 Senior Vice President, 06/10/90
Information Systems and
Technology
Steven D. Young 48 Senior Vice President, Human 12/02/91
Resources
Robert K. Banks 47 Group Vice President, 12/02/96
Real Estate
David G. Dean 46 Group Vice President, 12/02/91
Procurement
Peggy Jo Jones 44 Group Vice President, Employee 11/29/93
Development and Communications
Richard J. Navarro 44 Group Vice President and 11/29/93
Controller
</TABLE>
Gary G. Michael has served as Chairman of the Board and Chief Executive
Officer since 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 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; and Vice President, Rocky Mountain Division from 1992.
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.
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<PAGE> 11
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; and Director of Operations, Southern
California Division from February 1992.
A. Craig Olson has served as Senior Vice President, Finance and Chief
Financial Officer since 1991.
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.
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.
Robert K. Banks was promoted to Group Vice President, Real Estate on
December 2, 1996. Previously he served as Vice President, Real Estate from
1990.
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; and Vice
President, Retail Accounting from 1992.
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.
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<PAGE> 12
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.
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 23
to 43 of the Company's Annual Report to Stockholders for the year
ended January 30, 1997:
Consolidated Earnings -- years ended January 30, 1997; February 1,
1996; February 2, 1995.
Consolidated Balance Sheets -- January 30, 1997;
February 1, 1996; February 2, 1995.
Consolidated Cash Flows -- years ended January 30, 1997; February
1, 1996; February 2, 1995.
Consolidated Stockholders' Equity -- years ended
January 30, 1997; February 1, 1996; February 2, 1995.
Notes to Consolidated Financial Statements.
Independent Auditors' Report.
Quarterly Financial Data:
Quarterly Financial Data for the years ended January 30, 1997 and
February 1, 1996 is set forth on page 45 of the Annual Report to
Stockholders for the year ended January 30, 1997, 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 17 hereof.
(b) Reports on Form 8-K:
There were no reports on Form 8-K during the quarter ended
January 30, 1997.
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. 2-80776,
33-2139, 33-7901, 33-15062, 33-43635, 33-62799 and 33-59803.
12
<PAGE> 13
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.
Cautionary Statement for Purposes of "Safe Harbor Provisions"
of the Private Securities Litigation Reform Act of 1995
From time to time, information provided by the Company, including written or
oral statements made by its representatives, may contain forward-looking
information as defined in the Private Securities Litigation Reform Act of 1995.
All statements, other than statements of historical facts, which address
activities, events or developments that the Company expects or anticipates will
or may occur in the future, including such things as expansion and growth of
the Company's business, future capital expenditures and the Company's business
strategy, contain forward-looking information. In reviewing such information
it should be kept in mind that actual results may differ materially from those
projected or suggested in such forward-looking information. This
forward-looking information is based on various factors and was derived
utilizing numerous assumptions. Many of these factors have previously been
identified in filings or statements made by or on behalf of the Company.
Important assumptions and other important factors that could cause actual
results to differ materially from those set forth in the forward- looking
information include: changes in the general economy, changes in consumer
spending, competitive factors and other factors affecting the Company's
business in or beyond the Company's control. These factors include changes in
the rate of inflation, changes in state or federal legislation or regulation,
adverse determinations with respect to litigation or other claims, labor
negotiations, ability to recruit and develop employees, ability to develop new
stores or complete remodels as rapidly as planned and stability of product
costs.
Other factors and assumptions not identified above could also cause the
actual results to differ materially from those set forth in the forward-looking
information. The Company does not undertake to update forward-looking
information to reflect actual results, changes in assumptions or changes in
other factors affecting such forward-looking information.
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<PAGE> 14
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements
numbered 2-80776, 33-2139, 33-7901, 33-15062, 33-43635, 33-62799 and 33-59803
on Form S-8 and Registration Statements numbered 33-49329 and 333-2837 on Form
S-3 of Albertson's, Inc. and subsidiaries of our reports dated March 19, 1997,
appearing in and incorporated by reference in the Annual Report on Form 10-K of
Albertson's, Inc. and subsidiaries for the year ended January 30, 1997.
Deloitte & Touche LLP
Boise, Idaho
April 8, 1997
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)
15
<PAGE> 16
Date: April 8, 1997
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 8, 1997.
<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)
THOMAS L. STEVENS, JR. WILL M. STOREY
--------------------------------- ---------------------------------
Thomas L. Stevens, Jr. Will M. Storey
(Director) (Director)
STEVEN D. SYMMS
---------------------------------
Steven D. Symms
(Director)
</TABLE>
16
<PAGE> 17
Index to Exhibits
Filed with the Annual Report
on Form 10-K for the
Year Ended January 30, 1997
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
2 Inapplicable
3.1 Restated Certificate of Incorporation(1)
3.1.1 Certificate of Designation Preferences and Rights
3.2 By-Laws dated December 2, 1996(2)
4.1 Stockholder Rights Plan Agreement(3)
4.2 Indenture, dated as of May 1, 1992, between Albertson's, Inc.,
and Morgan Guaranty Trust Company of New York as Trustee(4)
9 Inapplicable
10.2 Kathryn Albertson Stock Agreement (dated December 31, 1979)(5)*
10.3 Alscott Limited Partnership #1 Stock Agreement (dated
February 2, 1996)(6)*
10.4 Stockholders' Agreement among Kathryn Albertson, Albertson's, Inc.
and Alscott Limited Partnership #1 (dated February 2, 1996)(6)*
10.5 Form of Beneficiary Agreement for Key Executive Life Insurance(7)*
10.6 Executive Deferred Compensation Plan (amended and restated
February 1, 1989)(8)*
10.6.1 Amendment to Executive Deferred Compensation Plan (dated
December 4, 1989)(9)*
10.7 Senior Operations Executive Bonus Plan*
10.9 Description of Bonus Incentive Plans (amended December 3,
1984)(10)*
10.10 Agreement Among Albertson's, Inc., Theo Albrecht Stiftung and
Theo Albrecht dated as of February 15, 1980(5)
10.10.1 Letter Amendment of October 13, 1982 regarding Exhibit 10.10(11)
10.10.2 First Amendment dated April 11, 1984 to Agreement among
Albertson's, Inc., Theo Albrecht Stiftung and Theo Albrecht(12)
10.10.3 Second Amendment dated September 25, 1989 to Agreement among
Albertson's, Inc., Markus Stiftung and Theo Albrecht(9)
10.10.4 Third Amendment dated December 5, 1994 to Agreement among
Albertson's, Inc., Markus Stiftung and Theo Albrecht(13)
10.11 1982 Incentive Stock Option Plan (amended March 4, 1991)(14)*
10.12 Form of 1982 Incentive Stock Option Agreement (amended
November 30, 1987)(15)*
</TABLE>
17
<PAGE> 18
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
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)(16)*
10.13 Executive Pension Makeup Plan (amended and restated February 1,
1989)(8)*
10.13.1 First Amendment to Executive Pension Makeup Plan (dated June 8,
1989)(17)*
10.13.2 Second Amendment to Executive Pension Makeup Plan (dated January 12,
1990)(18)*
10.13.3 Third Amendment to Executive Pension Makeup Plan (dated January 31,
1990)(19)*
10.13.4 Fourth Amendment to Executive Pension Makeup Plan (effective
January 1, 1995)(13)*
10.13.5 Amendment to Executive Pension Makeup Plan (retroactive to
January 1, 1990)(6)*
10.14 Credit Agreement (dated October 5, 1994)(20)
10.14.1 Amendment No. 1 to Credit Agreement (dated October 25, 1995)(21)
10.14.2 Amended and Restated Credit Agreement (dated December 17, 1996)
10.15 Senior Executive Deferred Compensation Plan (amended and
restated February 1, 1989)(8)*
10.15.1 Amendment to Senior Executive Deferred Compensation Plan (dated
December 4, 1989)(9)*
10.16 1986 Nonqualified Stock Option Plan (amended March 4, 1991)(14)*
10.17 Form of 1986 Nonqualified Stock Option Plan Stock Option Agreement
(amended November 30, 1987)(15)
10.18 Executive Pension Makeup Trust (dated February 1, 1989)(8)*
10.19 Executive Deferred Compensation Trust (dated February 1, 1989)(8)*
10.20 1990 Deferred Compensation Plan(14)*
10.20.1 Amendment to 1990 Deferred Compensation Plan (dated April 12,
1994)(22)*
10.21 Non-Employee Directors' Deferred Compensation Plan(14)*
10.22 1990 Deferred Compensation Trust (dated November 20, 1990)(14)*
10.23 Letter Agreement with John B. Carley (dated December 4, 1995)(6)*
10.24 1995 Stock-Based Incentive Plan (dated May 26, 1995)(23)*
10.24.1 Form of 1995 Stock-Based Incentive Plan Stock Option Agreement
(dated December 4, 1995)(6)*
10.25 1995 Stock Option Plan for Non-Employee Directors (dated
May 26, 1995)(23)*
</TABLE>
18
<PAGE> 19
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
10.25.1 Form of 1995 Stock Option Plan for Non-Employee Directors Agreement
(dated May 30, 1995)(23)*
11 Inapplicable
12 Inapplicable
13 Exhibit 13 consists of pages 19 to 45 and the inside back cover of
Albertson's, Inc. 1996 Annual Report to Stockholders which are
numbered as pages 1 to 28 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 28; Item 6--page
27; Item 7--pages 1 through 4; and Item 8--pages 5 through 26 and
page 28.
16 Inapplicable
18 Inapplicable
21 Inapplicable
22 Inapplicable
23 Inapplicable
24 Inapplicable
27 Financial Data Schedule
99 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.
(2) Exhibit 3.2 is incorporated herein by reference to Exhibit 3.2 of the
Form 10-Q for the quarter ended October 31, 1996.
(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 4, 1997.
(4) 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.
(5) Exhibits 10.2 and 10.10 are incorporated herein by reference to Exhibits
10.2 and 10.10, respectively, of the Form 10-K for the year ended January
29, 1981.
19
<PAGE> 20
(6) Exhibits 10.3, 10.4, 10.13.5, 10.23 and 10.24.1 are incorporated herein
by reference to Exhibits 10.3, 10.4, 10.13.5, 10.23 and 10.24.1,
respectively of the Form 10-K for the year ended February 1, 1996.
(7) 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.
(8) 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.
(9) 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.
(10) Exhibit 10.9 is incorporated herein by reference to Exhibit 10.9 of the
Form 10-K for the year ended January 31, 1985.
(11) 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.
(12) 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, 1994.
(13) 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.
(14) 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.
(15) Exhibits 10.12 and 10.17 are incorporated herein by reference to Exhibits
10.12 and 10.17, respectively, of the Form 10-Q for the quarter ended
October 29, 1987.
(16) Exhibit 10.12.1 is incorporated herein by reference to Exhibit 10.12.1 of
the Form 10-Q for the quarter ended August 3, 1989.
(17) 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.
(18) 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.
(19) 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.
(20) 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.
(21) 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.
(22) Exhibit 10.20.1 is incorporated herein by reference to Exhibit 10.20.1 of
the Form 10-Q for the quarter ended August 4, 1994.
(23) 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 3.1.1
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES A JUNIOR
PARTICIPATING PREFERRED STOCK
OF
ALBERTSON'S INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, Gary G. Michael, Chairman of the Board, and Kaye L.
O'Riordan, Secretary, of Albertson's, Inc., a corporation organized and existing
under the General Corporation Law of the State of Delaware, in accordance with
the provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Amended and Restated Certificate of Incorporation of the said
Corporation, the said Board of Directors on December 2, 1996 adopted the
following resolution creating a series of 3,000,000 shares of Preferred Stock
designated as Series A Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the provisions of its
Certificate of Incorporation, a series of Preferred Stock of the Corporation be
and it hereby is created, and that the designation and amount thereof and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock" and the
number of shares constituting such series shall be 3,000,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Junior Participating Preferred Stock with respect to
dividends, the holders of shares of Series A Junior
1
<PAGE> 2
Participating Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the fifteenth day of March,
June, September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Junior Participating Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $100.00 or (b)
subject to the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock, par value $1.00 per share, of the
Corporation (the "Common Stock") since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series A
Junior Participating Preferred Stock. In the event the Corporation shall at any
time after December 2, 1996 (the "Rights Declaration Date") (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount to which holders of
shares of Series A Junior Participating Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Junior Participating Preferred Stock as provided in Paragraph
(A) above immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided that,
in the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $100.00 per share on
the Series A Junior Participating Preferred Stock shall nevertheless be payable
on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares
of Series A Junior Participating Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date
2
<PAGE> 3
or is a date after the record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no more
than 30 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Junior Participating Preferred Stock shall have the following voting rights:
(A) Each share of Series A Junior Participating Preferred
Stock shall entitle the holder thereof to one vote on all matters submitted to a
vote of the stockholders of the Corporation.
(B) Except as otherwise provided herein or by law, the holders
of shares of Series A Junior Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Junior
Participating Preferred Stock shall be in arrears in an amount equal to
six (6) quarterly dividends thereon, the occurrence of such contingency
shall mark the beginning of a period (herein called a "default period")
which shall extend until such time when all accrued and unpaid
dividends for all previous quarterly dividend periods and for the
current quarterly dividend period on all shares of Series A Junior
Participating Preferred Stock then outstanding shall have been declared
and paid or set apart for payment. During each default period, all
holders of Preferred Stock (including holders of the Series A Junior
Participating Preferred Stock) with dividends in arrears in an amount
equal to or greater than six (6) quarterly dividends thereon, voting as
a class, irrespective of series, shall have the right to elect two (2)
Directors.
(ii) During any default period, such voting right of
the holders of Series A Junior Participating Preferred Stock may be
exercised initially at a special meeting called pursuant to
subparagraph (iii) of this Section
3
<PAGE> 4
3(C) or at any annual meeting of stockholders, and thereafter at annual
meetings of stockholders, provided that such voting right shall not be
exercised unless the holders of ten percent (10%) in number of shares
of Preferred Stock outstanding shall be present in person or by proxy.
The absence of a quorum of the holders of Common Stock shall not affect
the exercise by the holders of Preferred Stock of such voting right. At
any meeting at which the holders of Preferred Stock shall exercise such
voting right initially during an existing default period, they shall
have the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to
two (2) Directors or, if such right is exercised at an annual meeting,
to elect two (2) Directors. If the number which may be so elected at
any special meeting does not amount to the required number, the holders
of the Preferred Stock shall have the right to make such increase in
the number of Directors as shall be necessary to permit the election by
them of the required number. After the holders of the Preferred Stock
shall have exercised their right to elect Directors in any default
period and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of the
holders of Preferred Stock as herein provided or pursuant to the rights
of any equity securities ranking senior to or pari passu with the
Series A Junior Participating Preferred Stock.
(iii) Unless the holders of Preferred Stock shall,
during an existing default period, have previously exercised their
right to elect Directors, the Board of Directors may order, or any
stockholder or stockholders owning in the aggregate not less than ten
percent (10%) of the total number of shares of Preferred Stock
outstanding, irrespective of series, may request, the calling of
special meeting of the holders of Preferred Stock, which meeting shall
thereupon be called by the President, a Vice-President or the Secretary
of the Corporation. Notice of such meeting and of any annual meeting at
which holders of Preferred Stock are entitled to vote pursuant to this
Paragraph (C)(iii) shall be given to each holder of record of Preferred
Stock by mailing a copy of such notice to him at his last address as
the same appears on the books of the Corporation. Such meeting shall be
called for a time not earlier than 20 days and not later than 60 days
after such order or request or in default of the calling of such
meeting within 60 days after such order or request, such meeting may be
called on similar notice by any stockholder or stockholders owning in
the aggregate not less than ten percent (10%) of the total number of
shares of Preferred Stock outstanding. Notwithstanding the provisions
of this Paragraph (C)(iii), no such special meeting shall be called
during the period
4
<PAGE> 5
within 60 days immediately preceding the date fixed for the next annual
meeting of the stockholders.
(iv) In any default period, the holders of Common
Stock, and other classes of stock of the Corporation if applicable,
shall continue to be entitled to elect the whole number of Directors
until the holders of Preferred Stock shall have exercised their right
to elect two (2) Directors voting as a class, after the exercise of
which right (x) the Directors so elected by the holders of Preferred
Stock shall continue in office until their successors shall have been
elected by such holders or until the expiration of the default period,
and (y) any vacancy in the Board of Directors may (except as provided
in Paragraph (C)(ii) of this Section 3) be filled by vote of a majority
of the remaining Directors theretofore elected by the holders of the
class of stock which elected the Director whose office shall have
become vacant. References in this Paragraph (C) to Directors elected by
the holders of a particular class of stock shall include Directors
elected by such Directors to fill vacancies as provided in clause (y)
of the foregoing sentence.
(v) Immediately upon the expiration of a default
period, (x) the right of the holders of Preferred Stock as a class to
elect Directors shall cease, (y) the term of any Directors elected by
the holders of Preferred Stock as a class shall terminate, and (z) the
number of Directors shall be such number as may be provided for in the
certificate of incorporation or by-laws irrespective of any increase
made pursuant to the provisions of Paragraph (C)(ii) of this Section 3
(such number being subject, however, to change thereafter in any manner
provided by law or in the certificate of incorporation or by-laws). Any
vacancies in the Board of Directors effected by the provisions of
clauses (y) and (z) in the preceding sentence may be filled by a
majority of the remaining Directors.
(D) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not
5
<PAGE> 6
declared, on shares of Series A Junior Participating Preferred Stock outstanding
shall have been paid in full, the Corporation shall not
(i) declare or pay dividends on, make any
other distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series
A Junior Participating Preferred Stock;
(ii) declare or pay dividends on or make
any other distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Junior Participating Preferred Stock, except
dividends paid ratably on the Series A Junior Participating Preferred
Stock and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise
acquire for consideration shares of any stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Junior Participating Preferred Stock, provided that
the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such parity stock in exchange for shares of any stock of
the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Junior
Participating Preferred Stock; or
(iv) purchase or otherwise acquire for
consideration any shares of Series A Junior Participating Preferred
Stock, or any shares of stock ranking on a parity with the Series A
Junior Participating Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under Paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
6
<PAGE> 7
Section 5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the Corporation
in any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and restrictions on issuance
set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon
any liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series A Junior Participating Preferred Stock
shall have received $16,000.00 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment (the "Series A Liquidation Preferred"). Following the payment of
the full amount of the Series A Liquidation Preferred, no additional
distributions shall be made to the holders of shares of Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the "Common Adjustment")
equal to the quotient obtained by dividing (i) the Series A Liquidation
Preferred by (ii) 100 (as appropriately adjusted as set forth in subparagraph
(C) below to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in clause (ii),
the "Adjustment Number"). Following the payment of the full amount of the Series
A Liquidation Preferred and the Common Adjustment in respect of all outstanding
shares of Series A Junior Participating Preferred Stock and Common Stock,
respectively, holders of Series A Junior Participating Preferred Stock and
holders of shares of Common Stock shall receive their ratable and proportionate
share of the remaining assets to be distributed in the ratio of the Adjustment
Number to 1 with respect to such Preferred Stock and Common Stock, on a per
share basis, respectively.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A Liquidation Preferred
and the liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series A Junior Participating Preferred Stock,
then such remaining assets shall be distributed ratably to the holders of such
parity shares in proportion to their respective liquidation preferences. In the
event, however, that there are not sufficient assets available to permit payment
in full of the Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.
7
<PAGE> 8
(C) In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to such event
shall be adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Junior Participating Preferred Stock shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. No shares of Series A Junior
Participating Preferred Stock shall be redeemable without the express consent of
the record holder thereof.
Section 9. Ranking. The Series A Junior Participating
Preferred Stock shall rank junior to all other series of the Corporation's
Preferred Stock as to the payment of dividends and the distribution of assets,
unless the terms of such series shall provide otherwise.
Section 10. Amendment. At any time when any shares of Series A
Junior Participating Preferred Stock are outstanding, neither the Amended and
Restated Certificate of Incorporation of the Corporation nor this Certificate of
Designation shall be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Junior
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the outstanding shares
of Series A Junior Participating Preferred Stock, voting separately as a class.
8
<PAGE> 9
Section 11. Fractional Shares. Series A Junior Participating
Preferred Stock may be issued in fractions of a share which shall entitle the
holder, in proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of Series A Junior Participating Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the penalties of perjury
this 9th day of December, 1996.
GARY G. MICHAEL
---------------
Gary G. Michael
Chairman of the Board and
Chief Executive Officer
Attest:
KAYE L. O'RIORDAN
- -----------------
Kaye L. O'Riordan
Secretary
9
<PAGE> 1
Exhibit 10.7
ALBERTSON'S, INC. SENIOR OPERATIONS EXECUTIVE OFFICER BONUS PLAN
1. Purposes.
The purposes of the Albertson's, Inc. Senior Operations Executive Officer
Bonus Plan (the "Plan)" are to attract and retain highly-qualified senior
operations executives by providing appropriate performance-based incentive
awards and to serve as a qualified performance-based compensation program under
Section 162(m) of the Code, in order to preserve the Company's tax deduction for
compensation paid under the Plan to Covered Employees.
2. Definitions.
The following terms, as used herein, shall have the following meanings:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Bonus" shall mean any annual incentive bonus award granted pursuant
to the Plan, the payment of which shall be contingent upon the attainment
of Performance Goals with respect to a Plan Year.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(d) "Committee" shall mean the Compensation Committee of the Board.
(e) "Company" shall mean Albertson's, Inc., a corporation organized under
the laws of the State of Delaware, or any successor corporation.
(f) "Covered Employee" shall have the meaning set forth in Section
162(m)(3) of the Code (or any successor provision).
(g) "Operations" shall mean the retail, merchandising and distribution
functions of the Company as distinguished from support functions such as
legal, finance, accounting, store development, human resources or
information systems and technology.
(h) "Participant" shall mean a Senior Operations Executive Officer.
(i) "Performance Goals" shall mean the criteria and objectives which must
be met during the Plan Year as a condition of the Participant's receipt of
payment with respect to a Bonus, as described in Section 3 hereof.
<PAGE> 2
(j) "Plan" shall mean the Albertson's, Inc. Senior Operations Executive
Officer Bonus Plan, as amended from time to time.
(k) "Plan Year" shall mean the Company's fiscal year.
(l) "Senior Operations Executive Officer" shall mean an officer of the
Company who is the Chief Executive Officer; the Vice Chairman; the
President; the Chief Operating Officer; an Executive Vice President
involved in Operations; or a Senior Vice President involved in Operations
and any other key employee(s) as designated by the Committee.
3. Performance Goals.
Performance goals for each Plan Year shall be established by the Committee
not later than the latest date permissible under Code Section 162(m). Such
Performance Goals may be expressed in terms of one or more financial or other
objective goals which may be Company-wide or otherwise, including on a division
basis, regional basis or on an individual basis. Financial goals may be
expressed, for example, in terms of sales, earnings per share, stock price,
return on equity, net earnings growth, net earnings, related return ratios, cash
flow, earnings before interest, taxes, depreciation and amortization (EBITDA),
return on assets or total stockholder return. Other objective goals may include
the attainment of various productivity and long-term growth objectives,
including, without limitation, reductions in the Company's overhead ratio and
expense to sales ratios. Any criteria may be measured in absolute terms or as
compared to another company or companies. To the extent applicable, any such
Performance Goal shall be determined (i) in accordance with the Company's
audited financial statements and generally accepted accounting principles and
reported upon by the Company's independent accountants or (ii) so that a third
party having knowledge of the relevant facts could determine whether such
Performance Goal is met. Performance Goals shall include a threshold level of
performance below which no Bonus payment shall be made, levels of performance at
which specified percentages of the target Bonus shall be paid and a maximum
level of performance above which no additional Bonus shall be paid. The
Performance Goals established by the Committee may be (but need not be)
different for each Plan Year and different Performance Goals may be applicable
to different Participants.
4. Bonuses.
(a) In General. For each Plan Year commencing with the Plan Year ending
January 29, 1998, the Committee shall, no later than the time specified in
paragraph 3 hereof, specify the Performance Goals applicable to such Plan
Year. The Committee may, in its discretion, reduce or eliminate the amount
payable to any Participant (including a Covered Employee), in each case
based upon such factors as the Committee may deem relevant, but shall not
(i) increase the amount payable to any Participant (including a Covered
Employee); (ii) accelerate the payment of compensation (unless such
payment is appropriately discounted to reflect the time value of money) or
(iii) defer the payment of compensation (unless any additional amounts
paid with respect to such compensation reflect crediting of not more than
a reasonable rate of interest or the rate of return on a predetermined
actual investment). Payment of a Bonus for a particular Plan Year shall be
Page -2-
<PAGE> 3
made only if and to the extent the Performance Goals with respect to such
Plan Year are attained and only if the Participant is employed by the
Company on the last day of such Plan Year.
(b) Time of Payment. Unless otherwise determined by the Committee, or
except as provided in Section 6(e) hereof, all payments in respect of
Bonuses granted under this Section 4 shall be made no later than two and
one-half months after the end of the Plan Year. In the case of
Participants who are Covered Employees, except as provided in Section 6(e)
hereof, such payments shall be made only after achievement of the
Performance Goals has been certified by the Committee.
(c) Form of Payment. Payment of a Participant's Bonus for any Plan Year
shall be made in cash or as otherwise determined by the Committee.
(d) Maximum Payment. No Bonus shall be paid to any Participant in excess
of $1,500,000 (valued as of the date of the award) for any Plan Year.
5. Administration.
The Plan shall be administered by the Committee. The Committee shall have
the authority in its sole discretion, subject to and not inconsistent with the
express provisions of the Plan, to administer the Plan and to exercise all the
powers either specifically granted to it under the Plan or necessary or
advisable in the administration of the Plan, including, without limitation, the
power to grant Bonuses; to determine the persons to whom and the time or times
at which Bonuses shall be granted; to determine the terms, conditions,
restrictions and performance criteria relating to any Bonus; to make adjustments
in the Performance Goals in response to changes in applicable laws, regulations,
or accounting principles to the extent not inconsistent with Section 162(m) of
the Code and the regulations thereunder; except as otherwise provided in Section
4(a) hereof, to adjust compensation payable upon attainment of Performance
Goals; to construe and interpret the Plan and any Bonus; to prescribe, amend and
rescind rules and regulations relating to the Plan; and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
The Committee shall consist of two or more persons each of whom is an
"outside director" within the meaning of Section 162(m) of the Code. All
determinations of the Committee shall be made by a majority of its members
either present in person or participating by conference telephone at a meeting
or by unanimous written consent. The Committee may delegate to one or more of
its members or to one or more agents such administrative duties as it may deem
advisable, and the Committee or any person to whom it has delegated duties as
aforesaid may employ one or more persons to render advice with respect to any
responsibility the Committee, or such person, may have under the Plan. All
decisions, determinations and interpretations of the Committee shall be final
and binding on all persons, including the Company, the Participants (or any
person claiming any rights under the Plan from or through any Participant) and
any stockholder.
Page -3-
<PAGE> 4
No member of the Board or the Committee shall be liable for any action
taken or determination made in good faith with respect to the Plan or any Bonus
granted hereunder.
6. General Provisions.
(a) Compliance With Legal Requirements. The Plan and the granting of
Bonuses, as well as the other obligations of the Company under the Plan,
shall be subject to all applicable federal and state laws, rules and
regulations, and to such approvals by any regulatory or governmental
agency as may be required.
(b) No Right To Continued Employment. Nothing in the Plan or in any Bonus
granted shall confer upon any Participant the right to continue in the
employ of the Company or any of its subsidiaries or to be entitled to any
remuneration or benefits not set forth in the Plan or to interfere with or
limit in any way the right of the Company to terminate such Participant's
employment.
(c) Withholding Taxes. The Company or Subsidiary employing any Participant
shall deduct from all payments and distributions under the Plan any taxes
required to be withheld by federal, state or local governments.
(d) Amendment and Termination of the Plan. The Board may at any time and
from time to time alter, amend, suspend, or terminate the Plan in whole or
in part; provided, however, that no amendment which requires stockholder
approval in order for the Plan to continue to comply with Code Section
162(m) shall be effective unless the same shall be approved by the
requisite vote of the shareholders of the Company. Additionally, the
Committee may make such amendments as it deems necessary to comply with
other applicable laws, rules and regulations. Notwithstanding the
foregoing, no amendment shall affect adversely any of the rights of any
Participant, without such Participant's consent, under any Bonus
previously paid under the Plan.
(e) Participant Rights. No Participant shall have any claim to be granted
any Bonus under the Plan, and there is no obligation for uniformity of
treatment among Participants.
(f) Unfunded Status of Bonuses. The Plan is intended to constitute an
"unfunded" plan for incentive compensation. With respect to any payments
which at any time are not yet made to a Participant pursuant to a Bonus,
nothing contained in the Plan or any Bonus shall give any such Participant
any rights that are greater than those of a general creditor of the
Company.
(g) Governing Law. The Plan and the rights of all persons claiming
hereunder shall be construed and determined in accordance with the laws of
the State of Delaware without giving effect to the choice of law
principles thereof.
Page -4-
<PAGE> 5
(h) Effective Date. The Plan shall first be effective with respect to the
Plan Year ending January 29, 1998, but only if the Plan shall have been
approved at the 1997 annual meeting by the requisite vote approval of the
shareholders of the Company.
(i) Interpretation. The Plan is designed and intended to comply with
Section 162(m) of the Code, to the extent applicable, and all provisions
hereof shall be construed in a manner to so comply.
Page -5-
<PAGE> 1
EXHIBIT 10.14.2
[CONFORMED COPY]
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of December 17, 1996 among
ALBERTSON'S, INC. (the "Borrower"), the BANKS listed on the signature pages
hereof (the "Banks"), NATIONSBANK OF TEXAS, N.A., as Co-Agent and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "Agent").
W I T N E S S E T H :
WHEREAS, certain of the parties hereto have heretofore entered into a
Credit Agreement dated as of October 5, 1994 (as heretofore amended by Amendment
No. 1 dated as of October 25, 1995, the "Agreement"); and
WHEREAS, the parties hereto desire to amend the Agreement as set forth
herein and to restate the Agreement in its entirety to read as set forth in the
Agreement with the amendments specified below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. (a) Unless otherwise specifically
defined herein, each capitalized term used herein which is defined in the
Agreement shall have the meaning assigned to such term in the Agreement. Each
reference to "hereof", "hereunder", "herein" and "hereby" and each other similar
reference and each reference to "this Agreement" and each other similar
reference contained in the Agreement shall from and after the date hereof refer
to the Agreement as amended and restated hereby. The term "Notes" defined in the
Agreement shall include from and after the date hereof the New Notes (as defined
below).
(b) Each of the following terms shall have the meaning given to such term
for purposes of this Amendment and Restatement:
"New Bank" means each Person listed on the signature pages hereof
which was not prior to the Restatement Effective Date a party to the
Agreement.
"New Note" means a Note issued hereunder to a New Bank.
"Restatement Effective Date" means the date this Amendment and
Restatement becomes effective in accordance with Section 9 hereof.
SECTION 2. Amendments to Definitions: Section 1.01 of the Agreement is
amended as follows:
1
<PAGE> 2
(a) The definition of "Borrower's 1994 Form 10-K" is replaced with the
following definition of "Borrower's 1995 Form 10-K":
"Borrower's 1995 Form 10-K" means the Borrower's Annual Report on
Form 10-K for 1995, as filed with the Securities and Exchange Commission
pursuant to the Securities and Exchange Act of 1934.
(b) The definition of "Termination Date" is amended by replacing the date
"October 25, 2000" with the date "December 17, 2001".
SECTION 3. New Pricing Schedule. The Pricing Schedule to the Agreement is
deleted and replaced by the Pricing Schedule attached hereto.
SECTION 4. Regulation D Compensation. (a) The following new Section 2.15
is added to Article II of the Agreement:
SECTION 2.15. Regulation D Compensation. Each Bank may require the
Borrower to pay, contemporaneously with each payment of interest on the
Euro-Dollar Loans, additional interest on the related Euro-Dollar Loan of
such Bank at a rate per annum determined by such Bank up to but not
exceeding the excess of (i) (A) the applicable London Interbank Offered
Rate divided by (B) one minus the Euro-Dollar Reserve Percentage over (ii)
the applicable London Interbank Offered Rate. Any Bank wishing to require
payment of such additional interest (x) shall so notify the Borrower and
the Agent, in which case such additional interest on the Euro-Dollar Loans
of such Bank shall be payable to such Bank at the place indicated in such
notice with respect to each Interest Period commencing at least three
Euro-Dollar Business Days after such Bank gives such notice and (y) shall
notify the Borrower at least five Euro-Dollar Business Days before each
date on which interest is payable on the Euro-Dollar Loans of the amount
then due it under this Section.
(b) The definitions of "Adjusted London Interbank Offered Rate" in
Sections 1.01 and 2.07(c) of the Agreement are deleted, and each other reference
in the Agreement to "Adjusted London Interbank Offered Rate" is changed to
"London Interbank Offered Rate".
(c) The last sentence of the definition of Euro-Dollar Reserve Percentage
in Section 2.07(c) of the Agreement is deleted.
(d) Clause (a)(ii)(B) of Section 8.03 of the Agreement is amended to read
as follows:
(B) With respect to any Euro-Dollar Loan any such requirement with respect
to which such Bank is entitled to compensation during the relevant
Interest Period under Section 2.15.
SECTION 5. Changes in Commitments. With effect from and including the
Restatement Effective Date, (i) each New Bank shall become a Bank party to the
Agreement and (ii) the
2
<PAGE> 3
Commitment of each Bank shall be the amount set forth opposite the name of such
Bank on the signature pages hereof. Any Bank whose Commitment is changed to zero
shall upon such effectiveness cease to be a Bank party to the Agreement, and all
accrued fees and other amounts payable under the Agreement for the account of
such Bank shall be due and payable on such date; provided that the provisions of
Sections 8.03, 8.04 and 9.03 of the Agreement shall continue to inure to the
benefit of each such Bank.
SECTION 6. Updated Representations. (a) Each reference to "February 2,
1995" in Section 4.04 of the Agreement is changed to "February 1, 1996".
(b) Each reference to "August 3, 1995" in Section 4.04 of the Agreement is
changed to "October 31, 1996".
(c) Each reference "twenty-six" in Section 4.04 is changed to
"thirty-nine."
(d) Each reference to "Borrower's 1993 Form 10-K" or "Borrower's 1994 Form 10-K"
in Sections 4.04(a) and 4.05 of the Agreement is changed to "Borrower's 1995
Form 10-K".
SECTION 7. Representations and Warranties. The Borrower hereby represents
and warrants that as of the Restatement Effective Date and after giving effect
thereto:
(a) no Default has occurred and is continuing; and
(b) each representation and warranty of the Borrower set forth in the
Agreement after giving effect to this Amendment and Restatement is true and
correct as though made on and as of such date.
SECTION 8. Governing Law. This Amendment and Restatement shall be governed
by and construed in accordance with the laws of the State of New York.
SECTION 9. Counterparts; Effectiveness. This Amendment and Restatement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Amendment and Restatement shall become effective on the date
that each of the following conditions shall have been satisfied:
(i) receipt by the Agent of duly executed counterparts hereof signed
by each of the parties hereto (or, in the case of any party as to which an
executed counterpart shall not have been received, the Agent shall have
received telegraphic, telex or other written confirmation from such party
of execution of a counterpart hereof by such party);
(ii) receipt by the Agent of a duly executed New Note for each of
the New Banks, dated on or before the date of effectiveness hereof and
otherwise in compliance with Section 2.05 of the Agreement;
3
<PAGE> 4
(iii) receipt by the Agent of an opinion of the General Counsel or
the Assistant General Counsel of the Borrower (or such other counsel for
the Borrower as may be acceptable to the Agent), substantially to the
effect of Exhibit E to the Agreement with reference to the New Notes, this
Amendment and Restatement and the Agreement as amended and restated
hereby; and
(iv) receipt by the Agent of all documents it may reasonably request
relating to the existence of the Borrower, the corporate authority for and
the validity of the Agreement as amended and restated hereby, the New
Notes and any other matters relevant hereto, all in form and substance
satisfactory to the Agent;
provided that this Amendment and Restatement shall not become effective or
binding on any party hereto unless all of the foregoing conditions are satisfied
not later than December 31, 1996. The Agent shall promptly notify the Borrower
and the Banks of the Restatement Effective Date, and such notice shall be
conclusive and binding on all parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
ALBERTSON'S, INC.
By /s/ A. Craig Olson
----------------------------------
Title: Senior Vice President, Finance &
Chief Financial Officer
250 Parkcenter Blvd.
Box 20
Boise, ID 83726
Attention: Finance Department
Telecopier: (208) 385-6631
4
<PAGE> 5
<TABLE>
<S> <C>
Commitments
- -----------
$90,000,000 MORGAN GUARANTY TRUST COMPANY OF NEW
YORK
By/s/ Adam J. Silver
--------------------------------------
Title: Associate
$75,000,000 NATIONSBANK OF TEXAS, N.A.
By/s/ Frank M. Johnson
--------------------------------------
Title: Senior Vice President
$75,000,000 WACHOVIA BANK OF GEORGIA, NATIONAL
ASSOCIATION
By/s/ John A. Whitner
--------------------------------------
Title: Vice President
$45,000,000 BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By/s/ James P. Johnson
--------------------------------------
Title: Managing Director
$45,000,000 FIRST SECURITY BANK, N.A.
By/s/ Mary G. Monroe
--------------------------------------
Title: Vice President
$45,000,000 SUN BANK, NATIONAL ASSOCIATION
By/s/ Janet P. Sammons
--------------------------------------
Title: Vice President
$45,000,000 WELLS FARGO BANK, N.A.
By/s/ William Hauck
--------------------------------------
Title: Vice President
</TABLE>
5
<PAGE> 6
<TABLE>
<S> <C>
$35,000,000 U.S. BANK OF IDAHO
By/s/ James W. Henken
--------------------------------------
Title: Vice President
$35,000,000 UNION BANK OF SWITZERLAND
By/s/ Michael J. Ahearn
--------------------------------------
Title: Managing Director
By/s/ Daniel R. Strickford
--------------------------------------
Title: Assistant Vice President
$30,000,000 ABN AMRO NORTH AMERICA
as Agent for ABN AMRO BANK N.V.
By/s/ Lee-Lee Miao
--------------------------------------
Title: Vice President & Director
By/s/ James J. Rice
--------------------------------------
Title: Vice President & Director
$30,000,000 CIBC INC.
By/s/ Daniel H. Hom
--------------------------------------
Title: Director, CIBC Wood Gundy
Securities Corp., AS AGENT
$25,000,000 THE DAI-ICHI KANGYO BANK, LIMITED SAN
FRANCISCO AGENCY
By/s/ Seigo Makino
--------------------------------------
Title: Joint General Manager
</TABLE>
6
<PAGE> 7
<TABLE>
<S> <C>
$25,000,000 THE BANK OF NOVA SCOTIA
By/s/ Maarten Van Otterloo
--------------------------------------
Title: Senior Relationship Manager
- -0- CREDIT SUISSE
By/s/ Marilou Palenzuela
--------------------------------------
Title: Member of Senior Management
By/s/ Kirk A. Strang
--------------------------------------
Title: Associate
Total Commitments
$600,000,000
============
</TABLE>
7
<PAGE> 8
MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as Agent
By/s/ Adam J. Silver
--------------------------------------
Title: Associate
NATIONSBANK OF TEXAS, N.A.,
as Co-Agent
By/s/ Frank M. Johnson
--------------------------------------
Title: Senior Vice President
8
<PAGE> 9
PRICING SCHEDULE
The "Facility Fee Rate", "Euro-Dollar Margin" and "CD Margin" for
any day are the respective percentages set forth below in the applicable row
under the column corresponding to the Status that exists on such day:
<TABLE>
<CAPTION>
=======================================================================================
Level Level Level Level Level Level
Status I II III IV V VI
=======================================================================================
<S> <C> <C> <C> <C> <C> <C>
Facility Fee Rate 0.050% 0.060% 0.070% 0.080% 0.1250% 0.250%
- ---------------------------------------------------------------------------------------
Euro-Dollar Margin 0.100% 0.1150% 0.1550% 0.1950% 0.250% 0.500%
- ---------------------------------------------------------------------------------------
CD Margin 0.2250% 0.240% 0.280% 0.3200% 0.3750% 0.6250%
=======================================================================================
</TABLE>
For purposes of this Schedule, the following terms have the
following meanings, subject to the concluding paragraphs of this Schedule:
"Level I Status" exists at any date if, at such date, the Borrower's
long-term debt is rated at least AA by S&P or Aa2 by Moody's.
"Level II Status" exists at any date if, at such date, (i) the
Borrower's long-term debt is rated at least AA- by S&P or Aa3 by Moody's and
(ii) Level I Status does not exist.
"Level III Status" exists at any date if, at such date, (i) the
Borrower's long-term debt is rated at least A by S&P or A2 by Moody's and (ii)
neither Level I Status nor Level II Status exists.
"Level IV Status" exists at any date if, at such date, (i) the
Borrower's long-term debt is rated at least A- by S&P and A3 by Moody's and (ii)
none of Level I Status, Level II Status and Level III Status exists.
"Level V Status" exists at any date if, at such date, (i) the
Borrower's long-term debt is rated at least BBB by S&P and Baa2 by Moody's and
(ii) none of Level I Status, Level II Status, Level III Status or Level IV
Status exists.
"Level VI Status" exists at any date if, at such date, no other
Status exists.
"Status" refers to the determination of which of Level I Status,
Level II Status, Level III Status, Level IV Status, Level V Status or Level VI
Status exists at any date.
The credit ratings to be utilized for purposes of this Schedule are those
assigned to the senior unsecured long-term debt securities of the Borrower
without third-party credit enhancement, and any rating assigned to any other
debt security of the Borrower shall be disregarded. The rating in effect at any
date is that in effect at the close of business on such date.
9
<PAGE> 10
The following provisions are applicable so long as the Borrower's long-term debt
is rated at least A- by S&P and at least A3 by Moody's: If the Borrower is
split-rated and the ratings differential is one level, the higher of the two
ratings will apply (e.g., A/A3 results in Level III Status). If the Borrower is
split-rated and the ratings differential is more than one level, the average of
the two ratings (or the higher of two intermediate ratings) shall be used (e.g.,
AA/Al results in Level II Status, while AA/A3 results in Level III Status).
If the Borrower's long-term debt is not rated at least A- by S&P and
at least A3 by Moody's, then either Level V Status or Level VI Status exists, as
determined in accordance with the respective definitions of such terms above.
10
<PAGE> 1
EXHIBIT 13
Albertson's, Inc.
Financial Review
RESULTS OF OPERATIONS
The Company has reported increased sales and earnings for 27 consecutive
years. Sales for 1996 were $13.8 billion, compared to $12.6 billion in 1995 and
$11.9 billion in 1994. The following table sets forth certain income statement
components expressed as a percent to sales and the year-to-year percentage
changes in the amounts of such components:
<TABLE>
<CAPTION>
Percent to Sales Percentage Change
1996 1995 1994
1996 1995 1994 VS. 1995 vs. 1994 vs. 1993
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales 100.00 100.00 100.00 9.5 5.8 5.4(1)
Gross profit 25.88 25.53 25.29 11.0 6.8 8.2
Selling, general and
administrative expenses 19.71 19.12 19.04 12.9 6.2 5.8
Operating profit 6.17 6.41 6.25 5.2 8.6 16.3
Net interest expense 0.47 0.44 0.52 16.1 (10.5) 21.9
Earnings before income taxes
and cumulative effect
of accounting change 5.77 6.03 5.71 4.8 11.8 22.9
Net earnings 3.58 3.69 3.37 6.2 16.1 17.9
</TABLE>
(1) Increase is 7.4% when compared on a 52-week basis to 1993, a 53-week year
Increases in sales are primarily attributable to comparable store sales
increases (including inflation) and the continued expansion of net retail square
footage. Comparable store sales, stores (including replacement stores) that have
been in operation for two full fiscal years, increased 2.1% in 1996, 1.0% in
1995 and 2.6% (on a comparable 52-week basis to 1993, a 53-week year) in 1994.
Comparable store sales continued to increase through higher average ticket sales
per customer. Management estimates that inflation accounted for approximately
0.6% of the comparable store sales increase in 1996 and 1995, and 0.7% in 1994.
During 1996 the Company opened 70 stores, remodeled 42 stores and closed 8
stores for a net retail square footage increase of 3.5 million square feet. Net
retail square footage increased 9.6% in 1996, 7.6% in 1995 and 7.7% in 1994. In
addition to new store development, the Company plans to increase sales through
its continued investment in specific programs initiated in 1996. Such programs
include the Front End Manager program, the home meal solutions process called
"Quick Fixin' Ideas(SM)," expansion of the Company's pharmacy business and
increased emphasis on training programs utilizing Computer Guided Training. The
Company also began a new advertising campaign in February 1997, supported by the
largest investment in broadcast media in the Company's history.
Beginning with the first quarter of 1996, the Company has classified
advertising expenses as cost of sales. Previously, advertising expenses were
included in selling, general and administrative expenses. Reclassifications have
been made in prior periods to conform to this new presentation.
Financial Section 19
<PAGE> 2
Albertson's, Inc.
Gross profit, as a percent to sales, increased due primarily to the
continued utilization and increased efficiencies of Company-owned distribution
facilities. The Company's distribution centers provided 77% of all products
purchased by retail stores during 1996, 1995 and 1994. Utilization of the
Company's distribution centers 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 0.11% in 1996, 0.14% in 1995 and 0.08% in 1994.
Selling, general and administrative (SG&A) expenses, as a percent to sales,
increased in 1996 due primarily to increased salary and related benefit costs
resulting from the Company's 1996 initiatives to increase sales; and increased
depreciation expense associated with the Company's expansion program. The 1995
increase was due primarily to increased depreciation expense associated with the
Company's expansion program. In addition to increasing sales, the Company will
continue to implement new technologies that increase productivity and emphasize
cost containment programs to control SG&A expenses as a percent to sales.
The 1996 increase in net interest expense resulted from additional
borrowings. 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. The 1994 increase in net interest
expense over 1993 resulted from adjustments taken in 1993.
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 excluding this adjustment would have been 3.51% to sales in 1994.
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 1996 was $657 million compared to $793 million in
1995 and $612 million in 1994. The 1996 decrease in cash provided by operating
activities was due primarily to changes in inventories and accounts payable.
During 1996 the Company spent $673 million on capital expenditures, $55 million
to purchase and retire stock and $146 million for the payment of dividends
(which represents 29.6% of 1996 net earnings).
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 $329 million of commercial paper borrowings
outstanding at January 30, 1997, compared to $209 million at February 1, 1996
and $110 million at February 2, 1995. As of January 30, 1997, the Company had a
revolving credit agreement for $600 million which was reserved as alternative
funding for the Company's commercial paper program. The Company also had bank
lines of credit for $45 million as of January 30, 1997.
In 1996 the Company issued $200 million of 30-year 7.75% debentures under a
shelf registration statement filed with the Securities and Exchange Commission
in May 1996. Proceeds from the issuance were used to reduce borrowings under the
Company's commercial paper program. Medium-term notes up to $300 million remain
available for issuance under the 1996 shelf registration statement.
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.
20 Financial Section
<PAGE> 3
Albertson's, Inc.
Since 1987 the Board of Directors has continuously adopted or renewed
programs under which the Company is authorized, but not required, to purchase
and retire shares of its common stock. The program adopted by the Board on March
3, 1997, authorizes the Company to purchase and retire up to 7 million shares
from April 1, 1997 through March 31, 1998. Under these programs, 1.6 million
shares were purchased and retired in 1996, 2.6 million shares were purchased and
retired in 1995 and no shares were purchased in 1994.
The following leverage ratios demonstrate the Company's levels of long-term
financing as of the indicated year end:
<TABLE>
<CAPTION>
JANUARY 30, February 1, February 2,
1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Long-term debt (including capitalized lease obligations) to capital(1) 31.9% 27.3% 23.3%
Long-term debt (including capitalized lease obligations) to total assets 22.3 17.7 14.1
</TABLE>
(1) Capital includes long-term debt, capitalized leases and stockholders' equity
The average size of stores opened in 1996, 52,300 square feet, increased
the Company's average store size to 48,200 square feet. At January 30, 1997, 94%
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 1996, six of the 42 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 $172 million
(excluding inventory) in its distribution operations and has added 1.4 million
square feet of new or expanded facilities. A new 698,000-square-foot full-line
distribution center in the Company's 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.
Capital expenditures for 1997 (excluding amounts anticipated to be financed
by operating leases) are expected to be approximately $615 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 324 stores representing
40% of the Company's retail square footage as of January 30, 1997. 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>
1997
(PROJECTED) 1996 1995 1994
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New and acquired stores $410,000 $460,188 $412,868 $320,479
Remodels 95,000 117,358 120,709 86,381
Retail replacement equipment and
technological upgrades 65,000 52,478 15,692 36,464
Distribution facilities and equipment 25,000 34,812 98,731 38,490
Other 20,000 21,171 16,257 17,119
- ---------------------------------------------------------------------------------------
Total capital expenditures 615,000 686,007 664,257 498,933
Estimated fair value of property
financed by operating leases 35,000 47,000 30,000 18,000
- ---------------------------------------------------------------------------------------
$650,000 $733,007 $694,257 $516,933
--------------------------------------------
</TABLE>
Financial Section 21
<PAGE> 4
Albertson's Inc.
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 1997 meeting
increased the regular quarterly cash dividend to $.16 per share, for an annual
rate of $.64 per share.
NEW ACCOUNTING STANDARD
In March 1997 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share." This new standard
requires dual presentation of basic and diluted earnings per share (EPS) on the
face of the earnings statement and requires a reconciliation of the numerators
and denominators of the basic and diluted EPS calculations. This statement will
be effective for the Company's 1997 fiscal year. The Company's current EPS
calculation conforms to basic EPS. Diluted EPS will not be materially different
from basic EPS since potential common shares in the form of stock options are
not materially dilutive.
CAUTIONARY STATEMENT FOR PURPOSES OF "SAFE HARBOR PROVISIONS" OF THE PRIVATE
SECURITIES
LITIGATION REFORM ACT OF 1995
From time to time, information provided by the Company, including written
or oral statements made by its representatives, may contain forward-looking
information as defined in the Private Securities Litigation Reform Act of 1995.
All statements, other than statements of historical facts, which address
activities, events or developments that the Company expects or anticipates will
or may occur in the future, including such things as expansion and growth of the
Company's business, future capital expenditures and the Company's business
strategy, contain forward-looking information. In reviewing such information, it
should be kept in mind that actual results may differ materially from those
projected or suggested in such forward-looking information. This forward-looking
information is based on various factors and was derived utilizing numerous
assumptions. Many of these factors have previously been identified in filings or
statements made by or on behalf of the Company.
Important assumptions and other important factors that could cause actual
results to differ materially from those set forth in the forward-looking
information include changes in the general economy, changes in consumer
spending, competitive factors and other factors affecting the Company's business
in or beyond the Company's control. These factors include changes in the rate of
inflation, changes in state or federal legislation or regulation, adverse
determinations with respect to litigation or other claims, labor negotiations,
ability to recruit and develop employees, ability to develop new stores or
complete remodels as rapidly as planned and stability of product costs.
Other factors and assumptions not identified above could also cause the
actual results to differ materially from those set forth in the forward-looking
information.
22 Financial Section
<PAGE> 5
Albertson's, Inc.
Consolidated Earnings
<TABLE>
<CAPTION>
52 WEEKS 52 Weeks 52 Weeks
JANUARY 30, February 1, February 2,
(In thousands except per share data) 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SALES $13,776,678 $12,585,034 $11,894,621
Cost of sales 10,211,348 9,371,736 8,886,727
- ---------------------------------------------------------------------------------------------------------------
Gross profit 3,565,330 3,213,298 3,007,894
Selling, general and administrative expenses 2,715,776 2,406,082 2,264,756
- ---------------------------------------------------------------------------------------------------------------
Operating profit 849,554 807,216 743,138
Other (expenses) income:
Interest, net (64,569) (55,633) (62,141)
Other, net 9,862 6,918 (2,345)
- ---------------------------------------------------------------------------------------------------------------
Earnings before income taxes and cumulative effect
of accounting change 794,847 758,501 678,652
Income taxes 301,068 293,540 261,281
- ---------------------------------------------------------------------------------------------------------------
Earnings before cumulative effect of accounting change 493,779 464,961 417,371
Cumulative effect of accounting change:
Postemployment benefits (17,006)
- ---------------------------------------------------------------------------------------------------------------
NET EARNINGS $ 493,779 $ 464,961 $ 400,365
Earnings per share before cumulative effect
of accounting change $ 1.96 $ 1.84 $ 1.65
Cumulative effect of accounting change:
Postemployment benefits (.07)
- ---------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE $ 1.96 $ 1.84 $ 1.58
-----------------------------------------------------
Average number of common shares outstanding 251,710 253,080 253,633
</TABLE>
See Notes to Consolidated Financial Statements.
Financial Section 23
<PAGE> 6
Albertson's, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
JANUARY 30, February 1, February 2,
(Dollars in thousands) 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 90,865 $ 69,113 $ 50,224
Accounts and notes receivable 98,364 98,340 109,324
Inventories 1,201,067 1,030,246 948,561
Prepaid expenses 42,823 22,855 19,257
Deferred income taxes 42,804 62,448 62,223
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 1,475,923 1,283,002 1,189,589
OTHER ASSETS 184,070 155,427 122,781
LAND, BUILDINGS AND EQUIPMENT, NET 3,054,640 2,697,482 2,309,359
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $4,714,633 $4,135,911 $3,621,729
----------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 682,305 $ 648,963 $ 575,551
Salaries and related liabilities 135,681 134,096 114,906
Taxes other than income taxes 67,086 44,413 38,212
Income taxes 14,409 35,546 37,913
Self-insurance 63,999 68,899 63,905
Unearned income 36,539 32,208 22,092
Other 46,161 38,815 34,810
Current maturities of long-term debt 975 78,237 201,146
Current capitalized lease obligations 7,938 7,316 6,904
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 1,055,093 1,088,493 1,095,439
LONG-TERM DEBT 921,704 602,993 382,775
CAPITALIZED LEASE OBLIGATIONS 130,050 129,265 129,573
OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS 360,768 362,637 326,049
STOCKHOLDERS' EQUITY:
Preferred stock - $1.00 par value; authorized - 10,000,000 shares;
designated - 3,000,000 shares of Series A Junior Participating;
issued - none
Common stock - $1.00 par value; authorized - 600,000,000
shares; issued - 250,690,105 shares, 251,918,576 shares
and 253,984,381 shares, respectively 250,690 251,919 253,984
Capital in excess of par value 92 3,269 11,322
Retained earnings 1,996,236 1,697,335 1,422,587
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 2,247,018 1,952,523 1,687,893
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,714,633 $4,135,911 $3,621,729
----------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
24 Financial Section
<PAGE> 7
Albertson's, Inc.
Consolidated Cash Flows
<TABLE>
<CAPTION>
52 WEEKS 52 Weeks 52 Weeks
JANUARY 30, February 1, February 2,
(In thousands) 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 493,779 $ 464,961 $ 400,365
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 294,341 251,450 226,467
Net deferred income taxes 33,868 (590) (18,956)
Cumulative effect of accounting change 17,006
Changes in operating assets and liabilities:
Receivables and prepaid expenses (19,992) 7,386 (499)
Inventories (170,821) (81,685) (76,842)
Accounts payable 33,342 73,412 (24,825)
Other current liabilities 14,716 18,482 3,999
Self-insurance (11,234) 9,406 31,125
Unearned income (10,735) 34,960 51,318
Other long-term liabilities (313) 15,682 3,059
- ----------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 656,951 793,464 612,217
- ----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (673,310) (656,331) (470,589)
Proceeds from disposals of land, buildings and equipment 31,095 23,267 42,094
Increase in other assets (28,643) (32,646) (31,971)
- ----------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (670,858) (665,710) (460,466)
- ----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net line of credit activity (10,000)
Proceeds from long-term borrowings 202,000 202,525 3,960
Payments on long-term borrowings (88,202) (211,463) (86,973)
Net commercial paper activity 119,601 99,657 29,828
Proceeds from stock options exercised 3,328 4,902 5,697
Cash dividends paid (146,060) (126,672) (106,502)
Stock purchased and retired (55,008) (77,814)
- ----------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 35,659 (108,865) (163,990)
- ----------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 21,752 18,889 (12,239)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 69,113 50,224 62,463
- ----------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 90,865 $ 69,113 $ 50,224
---------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
Financial Section 25
<PAGE> 8
Albertson's, Inc.
Consolidated Stockholders' Equity
<TABLE>
<CAPTION>
Common Capital in
Stock $1.00 Excess of Retained
(In thousands except per share data) Par Value Par Value Earnings Total
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
Exercise of stock options 351 2,977 3,328
Tax benefits related to stock options 3,310 3,310
Stock purchased and retired (1,580) (9,464) (43,964) (55,008)
Cash dividends, $.60 per share (150,914) (150,914)
Net earnings 493,779 493,779
- ------------------------------------------------------------------------------------------------------------------------
BALANCE AT JANUARY 30, 1997 $ 250,690 $ 92 $ 1,996,236 $ 2,247,018
-------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
26 Financial Section
<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 one of the largest retail food - drug
chains in the United States, with operations in 20 Western, Midwestern and
Southern states. As of January 30, 1997, the Company operated 826 stores. Retail
operations are supported by 11 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.
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.
BUYING AND PROMOTIONAL ALLOWANCES Allowances and credits received from vendors
in connection with the Company's buying and merchandising activities are
recognized as earned.
Financial Section 27
<PAGE> 10
Albertson's, Inc.
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.
STOCK OPTIONS Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation," encourages, but does not require, companies to
record compensation cost for stock-based employee compensation plans at fair
value. The Company has chosen to continue to account for stock-based
compensation using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and
related Interpretations. Accordingly, compensation cost of stock options is
measured as the excess, if any, of the quoted market price of the Company's
stock at the date of the grant over the option exercise price and 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.
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.
SUPPLEMENTAL CASH FLOW INFORMATION
Selected cash payments and noncash activities were as follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash payments for income taxes $288,590 $284,383 $285,884
Cash payments for interest,
net of amounts capitalized 59,284 45,131 51,103
Noncash investing and financing activities:
Capitalized lease obligations incurred 12,005 7,926 28,232
Capitalized lease obligations terminated 3,240 1,232 2,658
Tax benefits related to stock options 3,310 4,064 4,085
Liabilities assumed in connection with asset acquisitions 692 112
</TABLE>
28 Financial Section
<PAGE> 11
Albertson's, Inc.
ACCOUNTS AND NOTES RECEIVABLE
Accounts and notes receivable consist of the following (in thousands):
<TABLE>
<CAPTION>
JANUARY 30, February 1, February 2,
1997 1996 1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Trade and other accounts receivable $ 97,186 $ 95,112 $ 108,080
Current portion of notes receivable 2,178 4,478 2,606
Allowance for doubtful accounts (1,000) (1,250) (1,362)
- ----------------------------------------------------------------------------------------------
$ 98,364 $ 98,340 $ 109,324
-----------------------------------------------
</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 $232,849,000, $217,831,000 and
$200,738,000 higher at the end of 1996, 1995 and 1994, respectively. Net
earnings would have been higher by $9,329,000 ($.04 per share) in 1996,
$10,478,000 ($.04 per share) in 1995 and $5,625,000 ($.02 per share) in 1994.
The replacement cost of inventories valued at LIFO approximates FIFO cost.
LAND, BUILDINGS AND EQUIPMENT
Land, buildings and equipment consist of the following (in thousands):
<TABLE>
<CAPTION>
JANUARY 30, February 1, February 2,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Land $ 700,208 $ 611,588 $ 527,125
Buildings 1,799,976 1,525,769 1,242,813
Fixtures and equipment 1,607,454 1,427,047 1,258,749
Leasehold improvements 328,249 315,658 287,544
Capitalized leases 186,768 183,316 180,026
- -----------------------------------------------------------------------------------------------------------
4,622,655 4,063,378 3,496,257
Less accumulated depreciation and amortization 1,568,015 1,365,896 1,186,898
- -----------------------------------------------------------------------------------------------------------
$ 3,054,640 $ 2,697,482 $ 2,309,359
---------------------------------------------------
</TABLE>
Financial Section 39
<PAGE> 12
Albertson's, Inc.
INDEBTEDNESS
Long-term debt includes the following (in thousands):
<TABLE>
<CAPTION>
JANUARY 30, February 1, February 2,
1997 1996 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial paper $ 328,996 $ 209,395 $ 109,738
Unsecured 7.75% debentures due June 2026 200,000
Unsecured 6.375% notes due June 2000 200,000 200,000
Unsecured 6.375% notes due May 1995 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
Due May 1995 (6.15% interest) 50,000
Industrial revenue bonds 14,860 15,710 16,550
Mortgage notes and other unsecured notes payable 3,748 4,050 5,558
- --------------------------------------------------------------------------------------------------
922,679 681,230 583,921
Less current maturities (975) (78,237) (201,146)
- --------------------------------------------------------------------------------------------------
$ 921,704 $ 602,993 $ 382,775
----------------------------------------------
</TABLE>
The Company has in place a $600 million commercial paper program. Interest
rates on the outstanding commercial paper borrowings as of January 30, 1997,
ranged from 5.36% to 5.57% with an effective weighted average rate of 5.39%. 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.
In June 1996 the Company issued $200 million of 7.75% debentures under a
shelf registration statement filed with the Securities and Exchange Commission
in May 1996. The debentures are due June 15, 2026. Proceeds from the issuance
were used to repay borrowings under the Company's commercial paper program.
Medium-term notes up to $300 million remain available for issuance under the
1996 shelf registration statement.
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. 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.
Interest on the debentures and notes is paid semiannually.
The industrial revenue bonds are payable in varying annual installments
through 2011, with interest paid semiannually at rates ranging from 4.10% to
6.95%.
The Company has pledged real estate with a cost of $14,875,000 as
collateral for the mortgage notes, which are payable semiannually, including
interest at rates ranging from 7.875% to 16.5%. The notes mature from 1997 to
2011.
The scheduled maturities of long-term debt outstanding at January 30, 1997,
are summarized as follows: $975,000 in 1997, $86,499,000 in 1998, $1,109,000 in
1999, $290,911,000 in 2000, $330,423,000 in 2001 and $212,762,000 thereafter.
30 Financial Section
<PAGE> 13
Albertson's, Inc.
The Company has in place a revolving credit agreement with several banks,
whereby the Company may borrow principal amounts up to $600 million at varying
interest rates any time prior to December 17, 2001. 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 lines of credit from banks at prevailing interest rates for $45
million at January 30, 1997. 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 January 30, 1997, February 1, 1996 or February 2, 1995.
Net interest expense was as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
- --------------------------------------------------------------
<S> <C> <C> <C>
Debt $ 48,534 $ 39,323 $ 42,780
Capitalized leases 15,168 15,234 13,412
Capitalized interest (6,378) (7,428) (3,974)
- --------------------------------------------------------------
Interest expense 57,324 47,129 52,218
Net bank service charges 7,245 8,504 9,923
- --------------------------------------------------------------
$ 64,569 $ 55,633 $ 62,141
----------------------------------
</TABLE>
OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS
Other long-term liabilities and deferred credits consist of the following
(in thousands):
<TABLE>
<CAPTION>
JANUARY 30, February 1, February 2,
1997 1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred compensation $ 37,905 $ 33,354 $ 36,396
Deferred income taxes 15,876 1,652 2,017
Deferred rents payable 69,305 71,468 69,381
Self-insurance 107,591 113,925 109,513
Unearned income 69,756 84,822 59,978
Other 60,335 57,416 48,764
- ------------------------------------------------------------------------------
$360,768 $362,637 $326,049
--------------------------------------------
</TABLE>
CAPITAL STOCK
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,
Financial Section 31
<PAGE> 14
Albertson's, Inc.
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) 10 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.
On December 2, 1996, the Board of Directors adopted a stockholder rights
plan, under which all stockholders of record on March 21, 1997 receive a
dividend distribution of one nonvoting right for each share of common stock
held. Subject to certain exceptions, one right will also be issued with each
share of common stock issued after March 21, 1997. Each right will entitle the
holder to purchase, under certain circumstances, one one-hundredth of a share of
Series A Junior Participating Preferred Stock, par value $1.00 per share, of the
Company (the "preferred stock") at a price of $160.00. Subject to certain
exceptions, the rights will become exercisable for shares of preferred stock 10
business days (or such later date as may be determined by the Board of
Directors) following the commencement of a tender offer or exchange offer that
would result in a person or group beneficially owning 15% or more of the
outstanding shares of common stock.
Subject to certain exceptions, if any person or group becomes the
beneficial owner of 15% or more of the outstanding common stock, each right then
will entitle its holder, other than such person or group, upon payment of the
$160.00 exercise price, to purchase common stock (or, in certain circumstances,
cash, property or other securities of the Company) with a value equal to twice
the exercise price. However, the rights are not exercisable until such time as
the rights are no longer redeemable by the Company as set forth below.
All of the rights may be redeemed by the Board of Directors at a price of
$.001 per right until the earlier of (i) 10 days following the acquisition by
any person or group of 15% or more of the outstanding common stock or (ii) the
date the stockholder rights plan expires. Notwithstanding the foregoing, the
rights generally may not be redeemed for one hundred eighty (180) days following
a change in a majority of the Board of Directors as a result of a proxy contest
or consent solicitation. The rights, which are not entitled to dividends, will
expire at the close of business on March 21, 2007 unless earlier redeemed or
extended by the Company.
32 Financial Section
<PAGE> 15
Albertson's, Inc.
Since 1987, the Board of Directors has continuously adopted or renewed
programs under which the Company is authorized, but not required, to purchase
and retire shares of its common stock. The program adopted by the Board on March
3, 1997, authorizes the Company to purchase and retire up to 7 million shares
through March 31, 1998. The Company has purchased and retired an equivalent of
16.6 million shares of its common stock for $289 million under these programs,
at an average price of $17.41 per share.
INCOME TAXES
Deferred tax assets and liabilities consist of the following (in
thousands):
<TABLE>
<CAPTION>
JANUARY 30, February 1, February 2,
1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred tax assets (no valuation allowances considered necessary):
Nondeductible accruals for:
Self-insurance $ 67,547 $ 70,669 $ 66,884
Lease accounting 20,238 20,601 20,689
Vacations 17,057 19,917 18,386
Deferred compensation 15,406 15,832 6,504
Postemployment benefits 13,721 13,224 10,447
Property valuation 8,339 10,300 8,867
Pension costs 3,387 2,930 2,485
Litigation 22 177 9,508
Other 9,031 7,237 6,219
Income unearned for financial reporting purposes 30,741 44,355 31,374
Costs capitalized for tax purposes 5,615 9,999 11,156
- --------------------------------------------------------------------------------------------------------------------------------
Total deferred tax assets 191,104 215,241 192,519
Deferred tax liabilities:
Accelerated depreciation for tax purposes (120,975) (116,267) (110,330)
Pension costs expensed for tax purposes (20,264) (23,803) (18,040)
Inventory valuation (8,863) (7,676) (778)
Funded benefits (7,778) (1,647)
Deferred gains (6,103) (4,929) (3,146)
Other (193) (123) (19)
- --------------------------------------------------------------------------------------------------------------------------------
Total deferred tax liabilities (164,176) (154,445) (132,313)
- --------------------------------------------------------------------------------------------------------------------------------
Net deferred tax assets $ 26,928 $ 60,796 $ 60,206
---------------------------------------------------
</TABLE>
Financial Section 33
<PAGE> 16
Albertson's, Inc.
Income tax expense on continuing operations consists of the following (in
thousands):
<TABLE>
<CAPTION>
1996 1995 1994
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 229,006 $ 252,587 $ 239,937
State 38,367 41,729 40,508
- -------------------------------------------------------------------------------------------------------------
267,373 294,316 280,445
Deferred:
Federal 29,008 (506) (16,218)
State 4,860 (84) (2,738)
- -------------------------------------------------------------------------------------------------------------
33,868 (590) (18,956)
Amortization of deferred investment tax credits (173) (186) (208)
- -------------------------------------------------------------------------------------------------------------
$ 301,068 $ 293,540 $ 261,281
-------------------------------------------------
Deferred taxes resulted from:
Income unearned for financial reporting purposes $ 13,614 $ (12,981) $ (19,528)
Accelerated depreciation for tax purposes 4,708 5,937 7,111
Self-insurance 3,122 (3,785) (12,073)
Litigation 155 9,331 2,460
Inventory valuation 1,187 6,898 (262)
Costs capitalized for tax purposes 4,384 1,157 (353)
Deferred compensation 426 (9,328) (762)
Property valuation 1,961 (1,433) (39)
Pension costs expensed for tax purposes (3,539) 5,763 4,728
Funded benefits 6,131 1,647
Other 1,719 (3,796) (238)
- -------------------------------------------------------------------------------------------------------------
$ 33,868 $ (590) $ (18,956)
-------------------------------------------------
</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>
1996 PERCENT 1995 Percent 1994 Percent
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Taxes computed at statutory rate $ 278,196 35.0 $ 265,476 35.0 $ 237,528 35.0
State income taxes net of federal
income tax benefit 28,345 3.6 26,656 3.5 24,530 3.6
Amortization of deferred
investment tax credits (173) (186) (208)
Other (5,300) (0.7) 1,594 0.2 (569) (0.1)
- --------------------------------------------------------------------------------------------------------------
$ 301,068 37.9 $ 293,540 38.7 $ 261,281 38.5
-------------------------------------------------------------------------
</TABLE>
34 Financial Section
<PAGE> 17
Albertson's, Inc.
STOCK OPTIONS
The Company has two stock option plans currently in effect under which
grants may be issued with respect to 10,400,000 shares of the Company's common
stock. Under these plans, approved by the shareholders in 1995, options may be
granted to officers and key employees, and to directors, respectively, to
purchase the Company's common stock. Generally, options are granted with an
exercise price at not less than 100% of the closing market price on the date of
the grant, become exercisable in installments of 20% per year on each of the
fifth through ninth anniversaries of the grant date and have a maximum term of
10 years.
A summary of shares reserved for outstanding options as of the fiscal year
end, changes during the year and related weighted average exercise price is
presented below (shares in thousands):
<TABLE>
<CAPTION>
JANUARY 30, 1997 February 1, 1996 February 2, 1995
SHARES PRICE Shares Price Shares Price
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 3,824 $21.51 3,468 $16.50 4,052 $15.17
Granted 790 35.14 1,044 31.76 141 28.63
Exercised (376) 10.91 (540) 9.84 (594) 10.21
Forfeited (182) 18.35 (148) 19.05 (131) 16.77
- ---------------------------------------------------------------------------------------------------------------
Outstanding at end of year 4,056 $25.29 3,824 $21.51 3,468 $16.50
-----------------------------------------------------------------------
</TABLE>
As of January 30, 1997, there were 8,585,000 shares of common stock
reserved for the granting of additional options.
The following table summarizes options outstanding and options exercisable
as of January 30, 1997, and the related weighted average remaining contractual
life (years) and weighted average exercise price (shares in thousands):
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
-------------------------------------- -----------------------
Shares Remaining Shares
Option Price per Share Outstanding Life Price Exercisable Price
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 6.25 to $ 8.69 230 1.6 $ 8.39 101 $ 8.01
13.44 to 16.88 1,133 4.1 15.97 199 16.14
22.63 to 31.88 1,903 7.6 28.79 21 26.94
35.00 to 39.75 790 9.8 35.14 24 39.75
- --------------------------------------------------------------------------------------------------
$ 6.25 to $39.75 4,056 6.7 $25.29 345 $16.07
--------------------------------------------------------------
</TABLE>
The weighted average fair value at date of grant for options granted during
1996, 1995 and 1994 was $10.74, $9.39 and $10.50 per option, respectively. The
fair value of options at date of grant was estimated using the Black-Scholes
model with the following weighted average assumptions:
<TABLE>
<CAPTION>
1996 1995 1994
- -------------------------------------------------------
<S> <C> <C> <C>
Expected life (years) 7.0 6.9 7.0
Risk-free interest rate 6.24% 5.74% 7.84%
Volatility 22.06 22.26 22.74
Dividend yield 1.70 1.64 1.54
</TABLE>
Financial Section 35
<PAGE> 18
Albertson's, Inc.
The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." Accordingly, no compensation cost has been recognized for the
stock options granted in 1996 or 1995. Had compensation cost been determined
based on the fair value at the grant date consistent with the provisions of this
statement, the Company's pro forma net earnings and earnings per share would
have been as follows (in thousands, except per share data):
<TABLE>
<CAPTION>
1996 1995
- -----------------------------------------------------------------------------
<S> <C> <C>
Net earnings - as reported $493,779 $464,961
Net earnings - pro forma 492,558 464,687
Earnings per share - as reported 1.96 1.84
Earnings per share - pro forma 1.96 1.84
</TABLE>
The pro forma effect on net earnings for 1996 and 1995 is not
representative of the pro forma effect on net earnings in future years because
it does not take into consideration pro forma compensation expense related to
grants made prior to 1995.
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 qualified, 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 the larger of the amount required to fully fund the Plan's
current liability or the amount necessary to meet the funding requirements as
defined by the Internal Revenue Code.
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-sponsored pension plans was as
follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned during the period $ 24,138 $ 16,172 $ 19,523
Interest cost on projected benefit obligations 20,095 16,149 15,097
Actual return on assets (36,309) (62,603) (145)
Net amortization and deferral 6,686 39,972 (19,860)
- --------------------------------------------------------------------------------------
$ 14,610 $ 9,690 $ 14,615
----------------------------------
</TABLE>
36 Financial Section
<PAGE> 19
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>
---------------------------------------------
JANUARY 30, February 1, February 2,
1997 1996 1995
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Plan assets at fair value $ 354,806 $ 321,758 $ 240,534
Actuarial present value of:
Vested benefits 215,263 180,077 138,322
Nonvested benefits 23,861 17,639 13,460
- --------------------------------------------------------------------------------------------------------
Accumulated benefit obligation 239,124 197,716 151,782
Effect of projected future salary increases 42,957 60,926 27,529
- --------------------------------------------------------------------------------------------------------
Projected benefit obligation 282,081 258,642 179,311
- --------------------------------------------------------------------------------------------------------
Plan assets in excess of projected benefit obligation 72,725 63,116 61,223
Unrecognized net gain (24,195) (5,870) (19,535)
Unrecognized prior service cost 4,576 5,425 6,274
Unrecognized net transition assets (609) (796) (983)
- --------------------------------------------------------------------------------------------------------
Prepaid pension cost $ 52,497 $ 61,875 $ 46,979
---------------------------------------------
</TABLE>
Assets of the two funded Company plans are invested in directed trusts.
Assets in the directed trusts are invested in common stocks (including
$38,445,000, $38,859,000 and $33,071,000 of the Company's common stock at
January 30, 1997, February 1, 1996 and February 2, 1995, 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>
-------------------------------------------
JANUARY 30, February 1, February 2,
1997 1996 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Actuarial present value of:
Vested benefits $ 9,849 $ 9,216 $ 6,734
Nonvested benefits 6 5 23
- ------------------------------------------------------------------------------------------------------
Accumulated benefit obligation 9,855 9,221 6,757
Effect of projected future salary increases 1,906 1,782 1,408
- ------------------------------------------------------------------------------------------------------
Projected benefit obligation 11,761 11,003 8,165
- ------------------------------------------------------------------------------------------------------
Projected benefit obligation in excess of plan assets (11,761) (11,003) (8,165)
Unrecognized net (gain) loss 990 1,115 (869)
Unrecognized prior service cost 851 946 1,041
Unrecognized net transition liability 1,145 1,326 1,507
Additional minimum liability (1,080) (1,605) (271)
- ------------------------------------------------------------------------------------------------------
Accrued pension cost $ (9,855) $ (9,221) $(6,757)
-------------------------------------------
</TABLE>
Financial Section 37
<PAGE> 20
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>
--------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Weighted-average discount rate 7.50% 7.25% 8.50%
Annual salary increases 4.50 - 5.00 4.50 - 5.00 4.50 - 5.00
Expected long-term rate of return on assets 9.50 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 $24,884,000 for 1996, $23,777,000 for 1995
and $17,354,000 for 1994. 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>
-----------------------------
1996 1995 1994
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 1,304 $ 979 $ 812
Interest cost 989 889 669
Net amortization 22
- ------------------------------------------------------------------------------
$ 2,315 $ 1,868 $1,481
-----------------------------
</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>
--------------------------------------------
JANUARY 30, February 1, February 2,
1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Existing retired employees $ 2,391 $ 2,176 $1,706
Active employees fully eligible 3,247 3,402 1,871
Other active employees 8,515 6,908 4,639
- --------------------------------------------------------------------------------------------------------------------
Accumulated postretirement benefit obligation 14,153 12,486 8,216
Unrecognized net gain (loss) and effects of changes in assumptions (1,052) (1,503) 1,402
- --------------------------------------------------------------------------------------------------------------------
Accrued postretirement benefit liabilities $ 13,101 $ 10,983 $9,618
--------------------------------------------
Assumed discount rate 7.50% 7.25% 8.50%
</TABLE>
38 Financial Section
<PAGE> 21
Albertson's, Inc.
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.
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 under its employees' short-term and long-term disability plans
which are the primary benefits paid to inactive employees prior to retirement.
The total cumulative effect of this accounting change (net of $10.6 million in
tax benefits) decreased net earnings by $17.0 million or $.07 per share. The
impact of this change on 1994 operations was not material.
Following is a summary of the obligation for postemployment benefits
included in the Company's consolidated balance sheets (in thousands):
<TABLE>
<CAPTION>
----------------------------------------
JANUARY 30, February 1, February 2,
1997 1996 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Included with salaries and related liabilities $ 4,620 $ 4,427 $ 2,956
Included with other long-term liabilities 30,927 29,949 25,801
- -------------------------------------------------------------------------------------------
$35,547 $34,376 $28,757
----------------------------------------
</TABLE>
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 $100,043,000
for 1996, $84,709,000 for 1995 and $106,439,000 for 1994. 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
$66,142,000 for 1996, $58,782,000 for 1995 and $58,406,000 for 1994.
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 $1,781,000 in 1996, $1,948,000 in 1995 and $2,141,000 in 1994. Following
is an analysis of the Company's capitalized leases (in thousands):
<TABLE>
<CAPTION>
---------------------------------------------
JANUARY 30, February 1, February 2,
1997 1996 1995
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Real estate and equipment $ 186,768 $ 183,316 $ 180,026
Accumulated amortization (83,208) (81,938) (78,183)
- -----------------------------------------------------------------------------
$ 103,560 $ 101,378 $ 101,843
---------------------------------------------
</TABLE>
Financial Section 39
<PAGE> 22
Albertson's, Inc.
Future minimum lease payments for noncancelable operating leases, related
subleases and capital leases at January 30, 1997, are as follows (in
thousands):
<TABLE>
<CAPTION>
-----------------------------------------------
Operating Leases Subleases Capital Leases
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1997 $ 75,079 $(14,043) $ 23,046
1998 80,821 (13,860) 22,753
1999 81,258 (11,152) 22,070
2000 78,759 (7,998) 22,835
2001 77,037 (6,335) 23,825
Remainder 682,704 (22,998) 182,894
- ---------------------------------------------------------------------------------------------
Total minimum obligations (receivables) $1,075,658 $(76,386) 297,423
-----------------------------
Less interest (159,435)
- ---------------------------------------------------------------------------------------------
Present value of net minimum obligations 137,988
Less current portion (7,938)
- ---------------------------------------------------------------------------------------------
Long-term obligations at January 30, 1997 $ 130,050
--------------
</TABLE>
The present value of minimum lease payments under operating leases using an
assumed discount rate of 9.5% was approximately $528 million at January 30,
1997.
Rent expense under operating leases was as follows (in thousands):
<TABLE>
<CAPTION>
----------------------------------------
1996 1995 1994
- -----------------------------------------------------------------
<S> <C> <C> <C>
Minimum rent $ 77,214 $ 68,528 $ 65,566
Contingent rent 4,155 4,088 4,634
- -----------------------------------------------------------------
81,369 72,616 70,200
Less sublease rent (23,498) (19,573) (19,055)
- -----------------------------------------------------------------
$ 57,871 $ 53,043 $ 51,145
----------------------------------------
</TABLE>
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 $5.9
million in 1997 and aggregate $51.9 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.
40 Financial Section
<PAGE> 23
Albertson's, Inc.
The estimated fair values of cash and cash equivalents, accounts
receivable, accounts payable, short-term debt and commercial paper borrowings
approximate their carrying amounts. The estimated fair values and carrying
amounts of long-term debt borrowings (excluding commercial paper) were as
follows (in millions):
<TABLE>
<CAPTION>
---------------------------------------
JANUARY 30, February 1, February 2,
1997 1996 1995
- -------------------------------------------------------------
<S> <C> <C> <C>
Fair value $ 606.3 $ 483.9 $ 463.0
Carrying amount 593.7 471.8 474.2
</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 1997 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share." This new standard
requires dual presentation of basic and diluted earnings per share (EPS) on the
face of the earnings statement and requires a reconciliation of the numerators
and denominators of the basic and diluted EPS calculations. This statement will
be effective for the Company's 1997 fiscal year. The Company's current EPS
calculation conforms to basic EPS. Diluted EPS will not be materially different
from basic EPS since potential common shares in the form of stock options are
not materially dilutive.
LEGAL PROCEEDINGS
Three civil lawsuits, covering the States of California, Florida and
Washington and each filed as a purported class action, have been brought
against the Company alleging that the Company permits its hourly-paid employees
to work "off-the-clock" without being paid for their work. Choate v.
Albertson's, Inc. was filed on September 11, 1996 in Washington state court
(Superior Court of King County, Washington); Gloege v. Albertson's, Inc. was
filed on September 17, 1996 in federal court in California (United States
District Court for the Northern District of California); and Mitchell v.
Albertson's, Inc. was filed on September 19, 1996 in federal court in Florida
(United States District Court for the Southern District of Florida).
The Company has firm and long-standing policies in place prohibiting
off-the-clock work. Although these lawsuits are still in their preliminary
stages, the Company believes it has strong defenses and intends to vigorously
defend against these lawsuits. The Company further believes that these lawsuits
are part of a broader and continuing effort by the United Food & Commercial
Workers, International Union and some of its locals to pressure the Company to
unionize employees who have not expressed a desire to be represented by a
union.
In the opinion of management, the ultimate resolution of these actions will
not have a material adverse effect on the Company's financial condition or
results of operations.
The Company is also 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.
Financial Section 41
<PAGE> 24
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
42 Financial Section
<PAGE> 25
Albertson's, Inc.
Independent Auditors' Report
[DELOITTE & TOUCHE 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 January 30, 1997, February 1, 1996 and
February 2, 1995, 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 January 30, 1997, February 1, 1996 and February 2, 1995, 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 19, 1997
Financial Section 43
<PAGE> 26
Albertson's, Inc.
Five-Year Summary of Selected Financial Data
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
52 WEEKS 52 Weeks 52 Weeks 53 Weeks 52 Weeks
JANUARY 30, February 1, February 2, February 3, January 28,
(Dollars in thousands except per share data) 1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Sales $ 13,776,678 $ 12,585,034 $11,894,621 $11,283,678 $10,173,676
Gross profit 3,565,330 3,213,298 3,007,894 2,779,671 2,416,247
Interest expense:
Debt 42,156 31,895 38,806 27,945 22,245
Capitalized lease obligations 15,168 15,234 13,412 12,233 11,560
Earnings before income taxes
and cumulative effects of
accounting changes 794,847 758,501 678,652 552,215 443,721
Income taxes 301,068 293,540 261,281 212,534 167,646
Earnings before cumulative
effects of accounting changes 493,779 464,961 417,371 339,681 276,075
Cumulative effects of
accounting changes (17,006) (6,858)
Net earnings 493,779 464,961 400,365 339,681 269,217
Net earnings as a percent to sales 3.58% 3.69% 3.37% 3.01% 2.65%
- ------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK DATA:
Earnings per share before cumulative
effects of accounting changes $ 1.96 $ 1.84 $ 1.65 $ 1.34 $ 1.04
Cumulative effects of
accounting changes (.07) (.02)
Earnings per share 1.96 1.84 1.58 1.34 1.02
Cash dividends per share .60 .52 .44 .36 .32
Book value per share 8.96 7.75 6.65 5.48 5.25
- ------------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION:
Total assets $ 4,714,633 $ 4,135,911 $ 3,621,729 $ 3,294,895 $ 2,945,573
Working capital 420,830 194,509 94,150 132,169 200,483
Long-term debt 921,704 602,993 382,775 554,092 404,476
Capitalized lease obligations 130,050 129,265 129,573 110,919 103,764
Stockholders' equity 2,247,018 1,952,523 1,687,893 1,389,379 1,388,428
- ------------------------------------------------------------------------------------------------------------------------------
OTHER YEAR END STATISTICS:
Number of stores 826 764 720 676 656
Number of employees:
Total 88,000 80,000 76,000 75,000 71,000
Full-time equivalents 71,000 66,000 60,000 58,000 54,000
- ------------------------------------------------------------------------------------------------------------------------------
</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."
- - In fiscal 1993 a $29.9 million nonrecurring charge was recorded to cover
the settlement of a lawsuit and interest expense included a reduction of
$9.7 million 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.
44 Financial Section
<PAGE> 27
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>
1996
Sales $3,343,941 $3,481,131 $3,375,771 $3,575,835 $13,776,678
Gross profit 858,615 900,966 868,337 937,412 3,565,330
Net earnings 112,377 120,712 106,424 154,266 493,779
Earnings per share .45 .48 .42 .61 1.96
- -------------------------------------------------------------------------------------------------------------------
1995
Sales $3,083,424 $3,119,216 $3,103,578 $3,278,816 $12,585,034
Gross profit 770,987 793,253 794,284 854,774 3,213,298
Net earnings 99,274 106,229 105,350 154,108 464,961
Earnings per share .39 .42 .42 .61 1.84
- -------------------------------------------------------------------------------------------------------------------
</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
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996
Net earnings $ (7,651) $ (7,651) $ (3,331) $ 9,304 $ (9,329)
Earnings per share (.03) (.03) (.01) .03 (.04)
- -------------------------------------------------------------------------------------------------------------------
1995
Net earnings $ (6,804) $ (6,804) $ (2,513) $ 5,643 $ (10,478)
Earnings per share (.03) (.03) (.01) .03 (.04)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Financial Section 45
<PAGE> 28
Stockholders' Information
ADDRESS
ALBERTSON'S, INC.
General Offices
250 Parkcenter Boulevard
P.O. Box 20
Boise, Idaho 83726
Telephone: (208) 395-6200
AUDITORS
Deloitte & Touche LLP
Boise, Idaho
STOCK TRANSFER AGENT AND REGISTRAR
ChaseMellon Shareholder
Services, L.L.C.
Shareholder Relations Department
P.O. Box 469
Washington Bridge Station
New York, NY 10033
Telephone: (800) 356-2017
CO-TRANSFER AGENT AND REGISTRAR
U.S. Bank of Idaho
Boise, Idaho
STOCKHOLDERS OF RECORD
There were 18,000 stockholders of record at March 19, 1997.
ANNUAL MEETING
The 1997 Annual Meeting of Stockholders will be held at 10:00 a.m. Mountain
Daylight Time on Friday, May 23, 1997, in the Eyries Room, Boise Centre on the
Grove, 850 Front Street, Boise, Idaho.
DIVIDEND INVESTMENT PLAN
The Company's Dividend Investment Plan allows stockholders owning at least 15
shares of record to automatically invest the quarterly dividends or to
purchase additional shares under the Plan with voluntary cash payments. More
information may be obtained from ChaseMellon at (800) 982-7649 or from the
Corporate Secretary of Albertson's, Inc.
INFORMATION CONTACT
Information on individual accounts or on procedures necessary to make changes
in an account is provided by ChaseMellon at (800) 356-2017 between the hours of
8:00 a.m. and 8:00 p.m., Eastern Time, after a stockholder identifies his or
her account by providing a taxpayer identification number, the registration
name on the securities and the address of record.
When directing correspondence to ChaseMellon at the address shown,
stockholders are reminded to include a reference to Albertson's, Inc.
COMPANY PROFILE AVAILABLE
A copy of the Company Profile, which contains a discussion of our core
values, including equal opportunity, environmental quality and community
support, as well as statistical information about the Company, is available to
stockholders, without charge, upon request to the Corporate Secretary of
Albertson's, Inc.
FORM 10-K AVAILABLE
A copy of Form 10-K Annual Report filed with the Securities and Exchange
Commission for Albertson's, Inc. fiscal year ended January 30, 1997, is
available to stockholders, without charge, upon request to the Corporate
Secretary of Albertson's, Inc.
COMPANY STOCK INFORMATION
The Company's stock is traded on the New York and Pacific Stock Exchanges
under the symbol ABS. An analysis of high and low stock prices by quarter is as
follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
First Second Third Fourth Year
High Low High Low High Low High Low High Low
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 39 3/8 33 3/4 42 3/4 36 1/8 43 3/4 33 3/4 38 33 3/4 43 3/4 33 3/4
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
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Cash dividends declared per share:
<TABLE>
<CAPTION>
---------------------------------------------
First Second Third Fourth Year
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996 $ .15 $ .15 $ .15 $ .15 $ .60
1995 .13 .13 .13 .13 .52
1994 .11 .11 .11 .11 .44
- ------------------------------------------------------------------------------
</TABLE>
- - In March 1997, the Board of Directors increased the regular quarterly cash
dividend 6.7% to $.16 per share from $.15 per share, for an annual rate of
$.64 per share. The new quarterly rate will be paid on May 25, 1997, to
stockholders of record on May 2, 1997.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A)
ALBERTSON'S ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR ENDED JANUARY 30, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-30-1997
<PERIOD-START> FEB-02-1996
<PERIOD-END> JAN-30-1997
<CASH> 90,865
<SECURITIES> 0
<RECEIVABLES> 99,364
<ALLOWANCES> 1,000
<INVENTORY> 1,201,067
<CURRENT-ASSETS> 1,475,923
<PP&E> 4,622,655
<DEPRECIATION> 1,568,015
<TOTAL-ASSETS> 4,714,633
<CURRENT-LIABILITIES> 1,055,093
<BONDS> 1,051,754
0
0
<COMMON> 250,690
<OTHER-SE> 1,996,328
<TOTAL-LIABILITY-AND-EQUITY> 4,714,633
<SALES> 13,776,678
<TOTAL-REVENUES> 13,776,678
<CGS> 10,211,348
<TOTAL-COSTS> 10,211,348
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 64,569
<INCOME-PRETAX> 794,847
<INCOME-TAX> 301,068
<INCOME-CONTINUING> 493,779
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 493,779
<EPS-PRIMARY> 1.96
<EPS-DILUTED> 1.96
</TABLE>
