FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For 13 Weeks Ended: April 30, 1998 Commission File Number: 1-6187
ALBERTSON'S, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 82-0184434
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
250 Parkcenter Blvd., P.O. Box 20, Boise, Idaho 83726
- ----------------------------------------------- ----------
(Address) (Zip Code)
Registrant's telephone number, including area code: (208) 395-6200
--------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Number of Registrant's $1.00 par value
common shares outstanding at May 27, 1998: 245,821,986
Page 1
<PAGE>
PART I. FINANCIAL INFORMATION
ALBERTSON'S, INC.
CONSOLIDATED EARNINGS
(in thousands except per share data)
(unaudited)
<TABLE>
<CAPTION>
13 WEEKS ENDED
------------------------
April 30, May 1,
1998 1997
---------- ----------
<S> <C> <C>
Sales $3,848,253 $3,607,541
Cost of sales 2,823,783 2,678,835
---------- ----------
Gross profit 1,024,470 928,706
Selling, general and administrative expenses 803,508 731,988
Impairment - store closures 29,423
---------- ----------
Operating profit 191,539 196,718
Other (expenses) income:
Interest, net (23,504) (19,314)
Other, net 8,927 (311)
---------- ----------
Earnings before income taxes 176,962 177,093
Income taxes 66,361 67,827
---------- ----------
NET EARNINGS $ 110,601 $ 109,266
EARNINGS PER SHARE:
Basic $0.45 $0.44
Diluted $0.45 $0.43
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 245,770 250,633
Diluted 246,880 251,307
DIVIDENDS DECLARED PER SHARE $0.17 $0.16
</TABLE>
See Notes to Consolidated Financial Statements.
Page 2
<PAGE>
ALBERTSON'S, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
April 30, 1998 January 29,
(unaudited) 1998
-------------- ------------
ASSETS
------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 76,255 $ 108,083
Accounts and notes receivable 125,143 121,023
Inventories 1,281,867 1,308,578
Prepaid expenses 49,613 44,426
Deferred income taxes 52,563 45,747
---------- ----------
TOTAL CURRENT ASSETS 1,585,441 1,627,857
OTHER ASSETS 220,341 207,360
GOODWILL (net of accumulated amortization
of $500) 92,929
LAND, BUILDINGS AND EQUIPMENT (net of
accumulated depreciation and amortization
of $1,922,710 and $1,822,263, respectively) 3,506,678 3,383,373
---------- ----------
$5,405,389 $5,218,590
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 738,739 $ 742,557
Salaries and related liabilities 152,275 149,898
Taxes other than income taxes 66,187 80,842
Income taxes 96,014 37,657
Self-insurance 71,262 69,982
Unearned income 63,826 46,069
Other current liabilities 67,406 52,395
Current maturities of long-term debt 5,651 86,511
Current capitalized lease obligations 9,876 9,608
---------- ---------
TOTAL CURRENT LIABILITIES 1,271,236 1,275,519
LONG-TERM DEBT 1,117,718 989,650
CAPITALIZED LEASE OBLIGATIONS 141,403 140,957
OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS 385,429 393,008
STOCKHOLDERS' EQUITY:
Preferred stock - $1 par value; authorized -
10,000,000 shares; issued - none
Common stock - $1 par value; authorized -
600,000,000 shares; issued - 245,796,894
shares and 245,735,633 shares, respectively 245,797 245,736
Capital in excess of par value 5,542 4,271
Retained earnings 2,238,264 2,169,449
---------- ----------
2,489,603 2,419,456
---------- ----------
$5,405,389 $5,218,590
</TABLE>
See Notes to Consolidated Financial Statements.
Page 3
<PAGE>
ALBERTSON'S, INC.
CONSOLIDATED CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
13 WEEKS ENDED
--------------------------
April 30, May 1,
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 110,601 $ 109,266
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 88,601 79,136
Net deferred income taxes (17,620) (7,694)
Increase in cash surrender value of
Company-owned life insurance (9,275) (600)
Impairment - store closures 29,423
Changes in operating assets and liabilities:
Receivables and prepaid expenses (5,013) (7,063)
Inventories 44,126 49,245
Accounts payable (19,713) 13,674
Other current liabilities 52,318 70,301
Self-insurance 4,948 5,205
Unearned income 2,431 16,552
Other long-term liabilities 3,007 2,592
--------- ---------
Net cash provided by operating activities 283,834 330,614
CASH FLOWS FROM INVESTING ACTIVITIES:
Net capital expenditures (159,914) (138,486)
Business acquisitions, net of cash acquired (121,044)
Decrease in other assets 259 6,228
--------- ---------
Net cash used in investing activities (280,699) (132,258)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 161,000
Payments on long-term borrowings (119,729) (1,871)
Net commercial paper activity (37,633) (179,089)
Proceeds from stock options exercised 717 1,454
Cash dividends paid (39,318) (37,603)
Stock purchased and retired (21,759)
--------- ---------
Net cash used in financing activities (34,963) (238,868)
--------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (31,828) (40,512)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF QUARTER 108,083 90,865
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF QUARTER $ 76,255 $ 50,353
</TABLE>
See Notes to Consolidated Financial Statements.
Page 4
<PAGE>
ALBERTSON'S, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Basis of Presentation
- ---------------------
The accompanying unaudited consolidated financial statements include the
results of operations, account balances and cash flows of the Company and its
wholly owned subsidiaries. All material intercompany balances have been
eliminated.
In the opinion of management, the accompanying unaudited consolidated
financial statements include all adjustments necessary to present fairly, in all
material respects, the results of operations of the Company for the periods
presented. Such adjustments consisted only of normal recurring items. The
statements have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. It is suggested that these
consolidated financial statements be read in conjunction with the consolidated
financial statements and the accompanying notes included in the Company's 1997
Annual Report.
The balance sheet at January 29, 1998 has been taken from the audited
financial statements at that date.
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.
Historical operating results are not necessarily indicative of future
results.
Reclassifications
- -----------------
Certain reclassifications have been made in the prior year's financial
statements to conform to classifications used in the current year.
Impairment - Store Closures
- ---------------------------
The Company recorded a charge to earnings in the first quarter of 1998
related to management's decision to close 16 underperforming stores in 8 states
during the fiscal year. The charge includes impaired real estate and equipment,
as well as the present value of remaining liabilities under leases, net of
expected sublease recoveries.
Page 5
<PAGE>
Supplemental Cash Flow Information
- ----------------------------------
Selected cash payments and noncash activities were as follows (in thousands):
<TABLE>
<CAPTION>
13 Weeks Ended 13 Weeks Ended
April 30, 1998 May 1,1997
-------------- --------------
<S> <C> <C>
Cash payments for:
Income taxes $24,712 $2,481
Interest, net of amounts
capitalized 7,136 5,324
Noncash activities:
Capitalized leases incurred 2,900
Capitalized leases terminated 361
Note payable related to
business acquisition 8,000
Tax benefits related to stock
options 615 698
</TABLE>
Acquisitions
- ------------
On January 30, 1998, the Company acquired all of the outstanding shares of
Seessel's Holdings, Inc. (Seessel's), a wholly owned subsidiary of Bruno's, Inc.
for cash consideration of approximately $88 million. This acquisition included
10 grocery stores in the Memphis, Tennessee, area and a central bakery and
central kitchen which manufacture fresh bakery and prepared foods for
distribution to the Seessel's stores. The Company is continuing to operate these
stores under the Seessel's name.
On April 20, 1998, the Company acquired Smitty's Super Markets, Inc.
(Smitty's) for cash consideration of approximately $36 million plus an $8
million unsecured note. This acquisition included 10 combination stores and 3
fuel centers with convenience stores in the Springfield and Joplin, Missouri,
areas. The Company is continuing to operate these stores under the Smitty's
name.
Both acquisitions were accounted for using the purchase method of accounting.
The results of operations of the acquired businesses have been included in the
consolidated financial statements from their date of acquisition. Pro forma
results of operations have not been presented due to the immaterial effects of
these acquisitions on the Company's consolidated operations. The excess of the
purchase price over the fair market value of net assets acquired was allocated
to goodwill which is being amortized over 40 years. The Company has not
finalized its purchase price allocation relative to either acquisition, however,
the final purchase price allocation should not differ significantly from the
preliminary purchase price allocations recorded as of April 30, 1998.
Page 6
<PAGE>
Indebtedness
- ------------
The Company issued $84 million of medium-term notes in February 1998 and $77
million of medium-term notes in April 1998 under a shelf registration statement
filed with the Securities and Exchange Commission in 1997.
The $84 million of medium-term notes issued in February 1998 mature at
various dates between February 2013 and February 2028. Interest is paid
semiannually at rates ranging from 6.34% to 6.57%. The weighted average interest
rate is 6.47%.
The $77 million of medium-term notes issued in April 1998 mature in April
2028, of which $50 million contain a put option which would require the Company
to repay the notes in April 2008, if the holder of the note so elects by giving
the Company a 60 day notice. Interest is paid semiannually at rates ranging from
6.10% to 6.53%. The weighted average interest rate is 6.25%.
Proceeds from these issuances were used primarily to repay borrowings under
the Company's commercial paper program.
Subsequent Events
- -----------------
In June 1998, the Company issued $156 million of medium-term notes under a
shelf registration statement filed with the Securities and Exchange Commission
in 1997. Proceeds from the issuance were used to reduce borrowings under the
Company's commercial paper program. Medium-term notes up to $183 million remain
available for issuance under the 1997 registration statement.
Page 7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
The following table sets forth certain income statement components expressed
as a percent to sales and the percentage change from the previous year in the
amounts of such components:
<TABLE>
<CAPTION>
Percent to Sales Percentage
-------------------
13 weeks ended Increase
-------------------
4-30-98 5-1-97 (Decrease)
-------- -------- ----------
<S> <C> <C> <C>
Sales 100.00% 100.00% 6.7%
Gross profit 26.62 25.74 10.3
Selling, general and
administrative
expenses 20.88 20.29 9.8
Impairment - store
closures 0.76 N.A.
Operating profit 4.98 5.45 (2.6)
Net interest expense 0.61 0.54 21.7
Other income (expense) 0.23 (0.01) N.A.
Earnings before
income taxes 4.60 4.91 (0.1)
Net earnings 2.87 3.03 1.2
</TABLE>
Sales increased primarily as a result of the continued expansion of net
retail square footage. Identical store sales decreased 0.5% and comparable store
sales (which include replacement stores) decreased 0.2%. Management estimates
that there was a slight deflation in products the Company sells of approximately
0.1% (annualized). During the 13 weeks 35 stores were opened, 3 stores were
closed and 2 store remodels were completed. Included in store openings are 10
Seessel's grocery stores acquired on January 30, 1998, and 10 Smitty's
combination stores acquired on April 20, 1998. Retail square footage increased
to 44.7 million square feet, a net increase of 11.2% from May 1, 1997.
In addition to new store development, the Company plans to increase sales
through its continued investment in programs initiated in 1997 and 1996 which
are designed to provide solutions to customer needs. These programs include: the
Front End Manager program; the home meal solutions process called "Quick Fixin'
Ideas;" special destination categories such as Albertson's Better Care
pharmacies and baby care, pet care, snack and beverage centers; and increased
emphasis on training programs utilizing Computer Guided Training. To provide
additional solutions to customer needs, the Company has added new,
gourmet-quality bakery products and organic grocery and produce items. Other
solutions include neighborhood marketing, targeted advertising, and exciting new
and remodeled stores.
Page 8
<PAGE>
Gross profit, as a percent to sales, increased primarily as a result of
improvements made in retail stores, including improvements in under-performing
stores. Gross profit improvements were also realized through the continued
utilization of Company-owned distribution facilities and increased buying
efficiencies. The Company's distribution centers provided approximately 76% of
retail store purchases. Utilization of the Company's distribution centers has
enabled the Company to improve its control over product costs and product
distribution. The pre-tax LIFO charge reduced gross profit by $8.0 million
(0.21% to sales) for the 13 weeks ended April 30, 1998, as compared to $10.9
million (0.30% to sales) for the 13 weeks ended May 1, 1997.
Selling, general and administrative expenses, as a percent to sales,
increased due primarily to increased labor and related benefit costs resulting
from the Company's initiatives to increase sales and increased depreciation
expense associated with the Company's expansion program.
The Company recorded a charge to earnings (Impairment - store closures) in
the first quarter of 1998 related to management's decision to close 16
underperforming stores in 8 states during the fiscal year. The charge includes
impaired real estate and equipment, as well as the present value of remaining
liabilities under leases, net of expected sublease recoveries.
The increase in net interest expense resulted primarily from higher average
outstanding debt during the 13 weeks ended April 30, 1998, as compared to the
prior year.
Other income for the 13 weeks ended April 30, 1998, included noncash income
of $9.3 million for the increase in cash surrender value of Company-owned life
insurance as compared to income of $0.6 million for the 13 weeks ended May 1,
1997.
The Company's effective income tax rate for the 13 weeks ended April 30,
1998, was 37.5% as compared to 38.3% for the prior year. The reduction from the
prior year is primarily due to the effect of the increase in the cash surrender
value of Company-owned life insurance which is a non-taxable item.
Liquidity and Capital Resources
- -------------------------------
The Company's operating results continue to enhance its financial position
and ability to continue its planned expansion program. Cash provided by
operating activities during the 13 weeks ended April 30, 1998, was $284 million
compared to $331 million in the prior year. During the 13 weeks ended April 30,
1998, the Company invested $160 million for net capital expenditures and $121
million acquiring two businesses. The Company's financing activity for the 13
weeks ended April 30, 1998, included net new long-term borrowings of $41
million, a reduction of commercial paper borrowings of $38 million and $39
million for the payment of dividends.
The Company utilizes its commercial paper program primarily 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 $246 million of commercial paper borrowings
outstanding at April 30, 1998, compared to $283 million at January 29, 1998, and
$150 million at May 1, 1997.
Page 9
<PAGE>
The Company issued $161 million of medium-term notes during the 13 weeks
ended April 30, 1998, and $156 million of medium-term notes in June 1998. The
notes were issued under a shelf registration statement filed with the Securities
and Exchange Commission in 1997. Proceeds from the issuances were primarily used
to repay borrowings under the Company's commercial paper program. Medium-term
notes up to $183 million remain available for issuance under the 1997 shelf
registration statement.
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
2, 1998, authorizes the Company to purchase and retire up to 5 million shares
through March 31, 1999. No shares were purchased during the 13 weeks ended April
30, 1998, pursuant to these programs.
Year 2000 Compliance
- --------------------
The Year 2000 issue results from computer programs being written using two
digits rather than four to define the applicable year. As the year 2000
approaches, systems using such programs may be unable to accurately process
certain date-based information. Like many other companies, the Company is
continuing to assess and modify its computer applications and business processes
to provide for their continued functionality. The Company is also continuing its
assessment of the readiness of external entities, such as vendors, which
interface with the Company.
In addition, the Company is addressing the Year 2000 issue both by
augmenting previously scheduled computer maintenance with procedures designed to
locate and correct Year 2000 problems and by slightly accelerating its normal
equipment and software replacement schedules. The Company does not expect the
costs associated with these procedures to be material.
The Company believes that its efforts will result in Year 2000 compliance.
However, the impact on business operations of failure by the Company to achieve
compliance or failure by external entities which the Company cannot control,
such as vendors, to achieve compliance, could be material to the Company's
consolidated results of operations.
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.
Page 10
<PAGE>
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 (including
environmental matters), labor negotiations, adverse effects of failure to
achieve Year 2000 compliance, the Company's ability to recruit and develop
employees, its ability to develop new stores or complete remodels as rapidly as
planned, its ability to successfully implement new technology 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 contained herein or elsewhere to reflect actual results, changes in
assumptions or changes in other factors affecting such forward-looking
information.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
Three civil lawsuits filed in September 1996 as purported statewide class
actions in Washington, California and Florida and two civil lawsuits filed in
April 1997 in federal court in Boise, Idaho, as purported multi-state class
actions (including the remaining states in which the Company operated at the
time) have been brought against the Company raising various issues that include:
(i) allegations that the Company has a widespread practice of permitting its
employees to work "off-the-clock" without being paid for their work and (ii)
allegations that the Company's bonus and workers' compensation plans are
unlawful. Four of these suits are being sponsored and financed by the United
Food and Commercial Workers (UFCW) International Union. The five suits have been
consolidated in Boise, Idaho. In addition, three other similar suits have been
filed as purported class actions in Colorado, New Mexico and Nevada which, in
effect, duplicate the coverage of the UFCW-sponsored suits. These cases have
been transferred to the federal court in Boise, Idaho.
The Company is committed to full compliance with all applicable laws.
Consistent with this commitment, the Company has firm and long-standing policies
in place prohibiting off-the-clock work and has structured its bonus and
workers' compensation plans to comply with applicable law. The Company believes
that the UFCW-sponsored suits are part of a broader and continuing effort by the
UFCW and some of its locals to pressure the Company to unionize employees who
have not expressed a desire to be represented by a union. The Company intends to
vigorously defend against all of these lawsuits, and, at this stage of the
litigation, the Company believes that it has strong defenses against them.
Page 11
<PAGE>
Although these lawsuits are subject to the uncertainties inherent in the
litigation process, based on the information presently available to the Company,
management does not expect the ultimate resolution of these actions to have a
material adverse effect on the Company's financial condition, results of
operations or cash flows.
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, results of operations or cash flows.
Item 2. Changes in Securities
- ------------------------------
In accordance with the Company's $600 million revolving credit agreement,
the Company's consolidated tangible net worth, as defined, shall not be less
than $750 million.
Item 3. Defaults upon Senior Securities
- ----------------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
The Company held its Annual Meeting of Stockholders on May 22, 1998, and
transacted the following business:
(a) Election of Class III Directors:
<TABLE>
<CAPTION>
Nominee Votes For Votes Withheld
--------------------- ----------- --------------
<S> <C> <C>
Cecil D. Andrus 218,057,215 1,603,964
John B. Fery 217,993,520 1,667,659
Richard L. King 218,223,522 1,437,657
J.B. Scott 218,197,026 1,464,153
Will M. Storey 218,178,940 1,482,239
Continuing Class I Directors:
Clark A. Johnson Charles D. Lein Gary G. Michael
Thomas L. Stevens, Jr. Steven D. Symms
Continuing Class II Directors:
Kathryn Albertson A. Gary Ames John B. Carley
Paul I. Corddry Beatriz Rivera
</TABLE>
(b) Approval of amendment to Restated Certificate of Incorporation to
increase amount of authorized Common Stock from 600 million shares to
1.2 billion shares:
<TABLE>
<CAPTION>
Votes Broker
Votes For Against Abstentions Nonvotes
------------- ----------- ----------- ----------
<S> <C> <C> <C>
204,680,734 14,554,900 425,545 0
</TABLE>
Page 12
<PAGE>
(c) Ratification of Appointment of Independent Auditors:
<TABLE>
<CAPTION>
Votes Broker
Votes For Against Abstentions Nonvotes
------------- ----------- ----------- ----------
<S> <C> <C> <C>
219,089,011 215,519 356,649 0
(d) Stockholder proposal to declassify the Board of Directors:
Votes Broker
Votes For Against Abstentions Nonvotes
------------- ----------- ----------- ----------
64,886,582 130,425,432 3,219,445 21,129,720
</TABLE>
Item 5. Other Information
- --------------------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
a. Exhibits
3.1 Restated Certificate of Incorporation (as amended)
27 Financial data schedule for the 13 weeks ended April 30, 1998
b. The following reports on Form 8-K were filed during the quarter:
None.
Page 13
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALBERTSON'S, INC.
---------------------------------
(Registrant)
Date: June 5, 1998 /S/ A. Craig Olson
--------------------- ---------------------------------
A. Craig Olson
Senior Vice President, Finance
and Chief Financial Officer
Page 14
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED CERTIFICATE OF
"ALBERTSON'S, INC.", FILED IN THIS OFFICE ON THE TWENTY-SEVENTH DAY OF MAY, A.D.
1998, AT 2:45 O'CLOCK P.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
/SEAL/ /S/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
0708424 8100 AUTHENTICATION: 9104118
981202515 DATE: 05-27-98
Page 15
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
ALBERTSON'S, INC.
THOMAS R. SALDIN, Executive Vice President, Administration and General
Counsel, and KAYE L. O'RIORDAN, Vice President and Corporate Secretary, of
Albertson's, Inc., a Delaware corporation, ("Corporation"), do hereby certify
under the seal of said corporation as follows:
1. That the Corporation was originally incorporated in Delaware on April 3,
1969 under the name A F S, I N C.
2. That the original Certificate of Incorporation was restated on July 21,
1971 and again on June 2, 1980; that the Restated Certificate of Incorporation
was amended on June 1, 1983; that the Restated Certificate of Incorporation was
further restated on May 24, 1985, on May 28, 1987, on May 29, 1990 and on May
24, 1991 and that a Certificate of Designation, Preferences and Rights of
Participating Preferred Stock was filed on December 13, 1996 as set forth on
Exhibit A hereto.
3. That the restatement of the Restated Certificate of Incorporation sets
forth the Restated Certificate of Incorporation together with all amendments
thereto integrates and does not further amend the Restated Certificate of
Incorporation of Albertson's, Inc.
4. That the restatement of the Restated Certificate of Incorporation has
been duly adopted by the Board of Directors of the Corporation in accordance
with Section 245 of the General Corporation Law of Delaware.
5. That the text of Restated Certificate of Incorporation of said
Albertson's, Inc. is hereby restated to read in full as follows:
FIRST: The name of the Corporation is ALBERTSON'S, INC.
SECOND: The address of its registered office in the State of Delaware is
1209 Orange Street in the City of Wilmington 19801, County of New Castle. The
name of its registered agent as such address is The Corporation Trust Company.
THIRD: The purposes of the Corporation are:
(1) To establish, conduct and operate food stores, drug stores, variety
stores, department stores, restaurants, lunch counters and cafeterias.
Page 16
<PAGE>
To establish, construct, buy or otherwise acquire, lease, equip, maintain,
manage, operate, mortgage, sell or otherwise dispose of stores, shops,
buildings, structures, works and other properties, and all facilities,
equipment, and conveniences in connection therewith.
To manufacture, buy, sell, import, export, and deal in goods, wares,
merchandise, commodities, articles of trade and commerce, and personal property
of every class and description.
(2) To manufacture, design, construct, own, use, buy, sell, lease, hire and
deal in and with articles and properties of all kinds and to render services of
all kinds, and to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of the State of Delaware, or
by any other law of Delaware or by this Restated Certificate of Incorporation,
together with any powers incidental thereto, so far as such powers and
privileges are necessary or convenient to the conduct, promotion or attainment
of the business or purposes of the Corporation.
FOURTH: The aggregate number of shares of stock of all classes which this
Corporation has authority to issue is one billion two hundred and ten million
(1,210,000,000) of which one billion two hundred million (1,200,000,000) shares
shall be Common Stock with a par value of one dollar ($1.00) per share, and ten
million (10,000,000) shares shall be Peferred Stock with a par value of one
dollar ($1.00) per share.
The designations and powers, preferences, and rights, and the
qualifications, limitations or restrictions of each class of stock are
respectively set forth in the following provisions:
(1) Common Stock. Subject to all of the rights of the Preferred Stock and
except as may be expressly provided with respect to the Preferred Stock herein,
by law or by the Board of Directors pursuant to this Article FOURTH:
(a) The Board of Directors is authorized, subject to the provisions of
law, to provide by resolutions from time to time for issuance of the Common
Stock.
(b) Subject to the provisions of law, dividends may be paid on the
Common Stock of the Corporation at such time and in such amounts as the
Board of Directors may deem advisable.
(c) The Board of Directors of the Corporation is authorized to affect
the elimination of shares of its Common Stock purchased or otherwise
acquired by the Corporation from the authorized capital stock or number of
shares of the Corporation in the manner provided for in the General
Corporation Law of Delaware.
(d) No holder of Common Stock shall have any pre-emptive right to
subscribe to stock, obligations, warrants, rights to subscribe to stock or
other securities of any class, whether now or hereafter authorized unless
otherwise provided by resolution of the Board of Directors.
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(e) Subject to the provisions of law and the foregoing provisions of
this Restated Certificate of Incorporation, the Corporation may issue
shares of its Common Stock, from time to time, for such consideration (not
less than the par value or stated value thereof) as may be fixed by the
Board of Directors, which is expressly authorized to fix the same in its
absolute and uncontrolled discretion, subject as aforesaid. Shares so
issued, for which the consideration has been paid or delivered to the
Corporation, shall be deemed fully paid stock, and shall not be liable to
any further call or assessments thereon, and the holders of such shares
shall not be liable for any further payments in respect of such shares.
(f) In no event is the Corporation required to issue any fractional
shares of Common Stock, such being subject to the determination of the
Board of Directors.
(2) Preferred Stock. The Preferred Stock may be issued from time to time by
the Board of Directors as shares of one or more series. Subject to the
limitations prescribed by law, the Board of Directors is expressly authorized,
prior to issuance, by adopting resolutions providing for the issuance of, or
providing for a change in the number of, shares of any particular series and, if
and to the extent from time to time required by law, by filing a certificate
pursuant to the General Corporation Law of Delaware (or such other similar law
hereafter in effect), to establish or change the number of shares to be included
in each such series and to fix the designation and relative powers, preferences
and rights and the qualifications and limitations or restrictions thereof
relating to the shares of each such series. The authority of the Board of
Directors with respect to each series shall include, but not be limited to,
determination of the following:
(a) The distinctive serial designation of such series and the number
of shares constituting such series, provided that the aggregate number of
shares constituting all series of Preferred Stock shall not exceed ten
million (10,000,000);
(b) The annual dividend rate, if any, on shares of such series,
whether dividends shall be cumulative and, if so, from which date or dates;
(c) Whether the shares of such series shall be redeemable and, if so,
the terms and conditions of such redemption, including the date or dates
upon and after which such shares shall be redeemable, and the amount per
share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
(d) The obligation, if any, of the Corporation to retire shares of
such series, whether pursuant to a sinking fund or otherwise;
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(e) Whether shares of such series shall be convertible into, or
exchangeable for, shares of stock of any other class or classes and, if so,
the terms and conditions of such conversion or exchange, including the
price or prices or the rate or rates of conversion or exchange and the
terms of adjustment, if any;
(f) Whether the shares of such series shall have voting rights in
addition to any voting rights required by law and, if so, the terms of such
voting rights;
(g) The rights of the shares of such series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the Corporation;
and
(h) Any other relative rights, powers, preferences, qualifications,
limitations or restrictions thereof relating to such series.
The shares of Preferred Stock of any one series shall be identical with
each other in all respects except as to the dates from and after which dividends
thereon, if any, shall cumulate, if cumulative. To the extent one or more
directors may be elected by holders of Preferred Stock, the Provisions of
Article FIFTH hereof shall apply solely with respect to those directors that may
be elected by the holders of Common Stock.
In accordance with this Section FOURTH, the Board of Directors of the
Corporation has designated shares of Preferred Stock with the designation and
relative powers, preferences and rights and the qualifications and limitations
or restrictions set forth on Exhibit A hereto.
(3) Amendment and Repeal. Notwithstanding any other provisions of this
Restated Certificate of Incorporation or the By-Laws of the Corporation (and
notwithstanding the fact that a lesser percentage may be specified by law, this
Restated Certificate of Incorporation or the By-Laws of the Corporation), the
affirmative vote of eighty percent (80%) or more of the voting power of the
outstanding shares of the voting stock of the Corporation shall be required to
amend, modify or repeal, or to adopt any provisions inconsistent with this
Article FOURTH of this Restated Certificate of Incorporation; provided however,
that this Article FOURTH may be amended, modified or repealed, and any such new
provision may be added, upon the affirmative vote of the holders of not less
than a majority of the total voting power of all outstanding shares of the
voting stock of the Corporation, if such amendment, modification, repeal or
addition shall first have been approved and recommended by a resolution adopted
by an affirmative vote of at least three-fourths (3/4) of the members of the
Board of Directors.
FIFTH: Each holder of Common Stock shall be entitled to one vote for each
share of stock standing in his name on the books of the Corporation.
SIXTH: The Corporation shall have the power to create and issue rights,
warrants or options entitling the holders thereof to purchase from the
Corporation any shares of its capital stock of any class or classes, upon such
terms and conditions and at such times and prices as the Board of Directors may
provide, which terms and conditions shall be incorporated in an instrument or
instruments evidencing such rights. In the absence of fraud, the judgment of the
directors as to the adequacy of consideration for the issuance of such rights or
options and the sufficiency thereof shall be conclusive.
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SEVENTH: The following shall apply with respect to indemnification of
certain persons by the Corporation and with respect to elimination of certain
liability of directors:
(1) Indemnification of Certain Persons. The Corporation shall have power to
indemnify any person, including present or former directors, officers, employees
or agents of the Corporation or any person who is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, to the
extent permitted by the General Corporation Law of Delaware. Such right of
indemnification shall be in addition to all other rights to which those
indemnified may be entitled under any statue, by-law, agreement, vote of
stockholders or otherwise.
(2) Elimination of Certain Monetary Liabilities of Directors. No director
shall be personally liable to the Corporation or any stockholder for monetary
damages for breach of fiduciary duty by such director as a director, except for
any matter in respect of which such director shall be liable under Section 174
of the Delaware General Corporation Law or any amendment thereto or successor
provision thereof or shall be liable by reason that, in addition to any and all
other requirements for such liability such director (i) shall have breached his
or her duty of loyalty to the Corporation or its stockholders, (ii) in acting or
in failing to act, shall not have acted in good faith or shall have acted in a
manner involving intentional misconduct or a knowing violation of law or (iii)
shall have derived an improper personal benefit from the transaction in respect
of which such breach of fiduciary duty occurred. Neither the amendment nor
repeal of Section 2 of this Article SEVENTH shall eliminate or reduce the effect
of Section 2 of this Article SEVENTH in respect of any matter occurring, or any
cause of action, suit or claim that, but for Section 2 of this Article SEVENTH
would accrue or arise, prior to such amendment or repeal.
EIGHTH: For the management of the business, and for the conduct of the
affairs of the Corporation, and for the further definition, limitation, and
regulation of the powers of the Corporation and its directors and stockholders,
it is further provided:
(1) Size of Board. The number of directors shall be as specified in the
By-Laws of the Corporation, except the number shall never be less than three,
and such number of directors may from time to time be otherwise increased or
decreased (subject to the foregoing) in such manner as prescribed by the
By-Laws. Directors need not be stockholders. Election of directors shall not be
by written ballot unless the By-Laws provide otherwise.
(2) Powers of Board. In furtherance and not in limitation of the powers
conferred by the laws of the State of Delaware, the Board of Directors is
expressly authorized and empowered:
(a) To make, alter, amend, and repeal the By-Laws;
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(b) To authorize and issue, without stockholder consent, obligations
of the Corporation, secured and unsecured, under such terms and conditions
as the Board, in its sole discretion, may determine, and to pledge or
mortgage, as security therefor, any real or personal property of the
Corporation, including after-acquired property;
(c) To establish bonus, profit-sharing, stock option or other types of
incentive compensation plans for the employees, including officers and
directors, of the Corporation, and to fix the amount of profits to be
shared or distributed, and to determine the persons to participate in any
such plans and the amount of their respective participations;
(d) To designate, by resolution or resolutions passed by a majority of
the whole Board of Directors, one or more committees, each consisting of
two or more directors, which, to the extent permitted by law and authorized
by the resolution or the By-Laws shall have and may exercise the powers of
the Board of Directors;
(e) To provide for the reasonable compensation of its own members and
to fix the terms and conditions upon which such compensation will be paid;
(f) In addition to the powers and authority hereinbefore, or by
statute, expressly conferred upon it, the Board of Directors may exercise
all such powers and do all such acts and things as may be exercised or done
by the Corporation, subject nevertheless, to the provisions of the laws of
the State of Delaware, of this Restated Certificate of Incorporation, and
as may be provided for from time to time by the By-Laws of the Corporation.
NINTH: Subject to the laws of the State of Delaware, the stockholders and
the directors shall have power to hold their meetings, and the directors will
have the power to have an office or offices and to maintain books of the
Corporation outside the State of Delaware, at such place or places as may from
time to time be designated in the By-Laws or by appropriate resolution.
TENTH: The By-Laws of the Corporation may be altered, amended, suspended or
repealed, or new By-Laws may be adopted, (i) by resolution adopted by a majority
of the full Board of Directors at a meeting thereof, (ii) by unanimous written
consent of all the directors in lieu of a meeting, or (iii) by the affirmative
vote, at any annual or special meeting of the stockholders, of the holders of at
least a majority of the outstanding stock of the Corporation entitled to vote
thereon, except that the affirmative vote of the holders of at least
three-fourths (3/4) of the outstanding stock of the Corporation entitled to vote
thereon shall be required for the stockholders to amend any of the provisions of
Article III (Directors) of the By-Laws. The By-Laws may contain any provision
for the regulation and management of the affairs of the Corporation and rights
or powers of its stockholders, directors, officers or employees not inconsistent
with Delaware law or this Restated Certificate of Incorporation.
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ELEVENTH: In lieu of corporate action taken at a meeting of the
stockholders, the written consent of the holders of stock having no less than
the minimum percentage of the total vote that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted, may authorize such corporate action to be so taken.
TWELTH: The affirmative vote of at least eighty percent (80%) of the voting
power of the outstanding Voting Stock (as herein defined) shall be required for
the adoption or authorization of any Business Combination (as herein defined),
provided, that such eighty percent (80%) voting requirement shall not be
applicable if all of the conditions specified in paragraph (2) of this Article
TWELTH are met.
(1) Definitions. The following definitions shall apply for purposes of this
Article TWELTH:
(a) "Person" shall mean any individual, firm, corporation or other
entity.
(b) "Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on May 24, 1985,
provided, however, the term "registrant" as used in such definition of
"Associate" shall mean the Corporation.
(c) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security is owned, directly or indirectly, by the
Corporation, provided however, that for the purposes of the definition of
"Interested Stockholder" set forth below, the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity security is
owned, directly or indirectly, by the Corporation.
(d) "Voting Stock" shall mean capital stock of the Corporation
entitled to vote generally in the election of directors.
(e) A person shall be the "Beneficial Owner" with respect to any
Voting Stock:
/i/ which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; or
/ii/ which such person or any of its Affiliates or Associates has
(a) the right to acquire (whether such right is exercisable
immediately or only after passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (b) the
right to vote pursuant to any agreement, arrangement or understanding;
or
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/iii/ which are beneficially owned, directly or indirectly, by
any other person with which such person or any of its Affiliates or
Associates has any agreement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares of Voting Stock.
(f) "Interested Stockholder" shall mean any person (other than the
Corporation or any Subsidiary) who or which:
/i/ is the Beneficial Owner, directly or indirectly, of ten
percent (10%) or more of the voting power of the outstanding Voting
Stock; or
/ii/ is an Affiliate of the Corporation and at any time within
the two-year period immediately prior to the date in question was the
Beneficial Owner, directly or indirectly, of ten percent (10%) or more
of the voting power of the then outstanding Voting Stock; or
/iii/ is an assignee of or has otherwise succeeded to any shares
of Voting Stock which were at any time within the two-year period
immediately prior to the date in question beneficially owned by an
Interested Stockholder, if such assignment or succession shall have
occurred in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities Act
of 1933 or any successor securities law.
(g) "Business Combination" shall mean any one or more of the following
transactions:
/i/ Any merger or consolidation of the Corporation or any
Subsidiary with any Interested Stockholder or any other corporation
(whether or not itself an Interested Stockholder) which is, or after
such merger or consolidation would be, an Affiliate of an Interested
Stockholder.
/ii/ Any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to
or with any Interested Stockholder or any Affiliate of any Interested
Stockholder of any assets of the Corporation or any Subsidiary having
an aggregate Fair Market Value of $1,000,000 or more.
/iii/ The issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested Stockholder in exchange
for cash, securities or other property (or combination thereof) having
an aggregate Fair Market Value of $1,000,000 or more.
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/iv/ The adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an
Interested Stockholder or any Affiliate of any Interested Stockholder.
/v/ Any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
other transactions (whether or not with or into or otherwise involving
an Interested Stockholder) which has the effect, directly or
indirectly, of increasing the proportionate share of the outstanding
shares of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly
beneficially owned by any Interested Stockholder or any Affiliate of
any Interested Stockholder.
(h) "Continuing Director" shall mean any member of the Board of
Directors of the Corporation who is not an Interested Stockholder to which
this Article TWELTH is applicable and is not an Affiliate of such
Interested Stockholder and was a member of the Board of Directors prior to
May 24, 1985 or to the time that such Interested Stockholder became an
Interested Stockholder, and any successor of a Continuing Director who is
not an Affiliate of such Interested Stockholder and who is recommended to
succeed a Continuing Director by a majority of the Continuing Directors
then on the Board of Directors.
(i) "Fair Market Value" shall mean:
/i/ in the case of stock, the highest closing sale price of a
share of such stock during the thirty (30) day period immediately
preceding the date for which such Fair Market Value is being
determined on the principal United States securities exchange
registered under the Securities Exchange Act of 1934 or successor law
on which such stock is listed, or if such stock is not listed on any
such exchange, the highest closing bid quotation with respect to a
share of such stock during the thirty (30) day period preceding the
date for which such Fair Market Value is being determined on the
National Association of Securities Dealers, Inc. Automated Quotation
System or any system then in use, or if no such quotations are
available, the Fair Market Value of such stock as determined by the
Board of Directors in good faith; and
/ii/ in the case of property other than cash or stock, the Fair
Market Value of such property determined by the Board of Directors in
good faith for the date on which such Fair Market Value is being
determined.
(2) Exception to 80% Vote Requirement. The eighty percent (80%) vote
required by this Article TWELTH for approval of certain Business Combinations
shall not be applicable to a Business Combination, and such Business Combination
shall require only such affirmative vote as is required by law and any other
provision of this Restated Certificate of Incorporation, if:
(a) Such Business Combination shall have been approved by a majority
of the Continuing Directors, or
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(b) All of the following conditions shall have been met with respect
to such Business Combination:
/i/ The aggregate amount of cash and the Fair Market Value as of
the date of the consummation of the Business Combination of
consideration other than cash to be received per share by holders of
Common Stock in such Business Combination shall be at least equal to
the highest of the following, adjusted to reflect subdivisions of
stock and stock splits:
A. The highest per share price (including brokerage commissions,
transfer taxes and soliciting dealer's fees) paid by the
Interested Stockholder for any shares of Common Stock acquired by
it (1) within the two-year period immediately prior to the first
public announcement of the proposal of the Business Combination
(the "Announcement Date"), or (2) in the transaction in which it
became an Interested Stockholder, whichever is higher;
B. The Fair Market Value per share of Common Stock (1) on the
Announcement Date, or (2) on the date on which the Interested
Stockholder became an Interested Stockholder (the "Determination
Date"), whichever is higher; and
C. The Fair Market Value per share of Common Stock determined
pursuant to the immediately preceding subparagraph (B),
multiplied by the ratio of (1) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealer's fees) paid by the Interested Stockholder for
any shares of Common Stock acquired by it within the two-year
period immediately prior to the Announcement Date, to the (2) the
Fair Market Value per share of Common Stock on the first day in
such two-year period upon which the Interested Stockholder
acquired any shares of Common Stock.
/ii/ The consideration to be received by holders of a particular
class of outstanding Voting Stock shall be in cash or in the same form
as the Interested Stockholder has previously paid for shares of such
class of Voting Stock. If the Interested Stockholder has paid for
shares of any class of Voting Stock with varying forms of
consideration, the form of consideration for such class of Voting
Stock shall be either cash or the form used to acquire the largest
number of shares of such class of Voting Stock previously acquired by
it.
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/iii/ After such Interested Stockholder has become an Interested
Stockholder and prior to the consummation of such Business
Combination: (a) there shall have been (1) no reduction in the annual
rate of dividends paid on the Common Stock (except as necessary to
reflect any subdivision or split of the Common Stock), except as
approved by a majority of the Continuing Directors, and (2) an
increase in such annual rate of dividends as necessary to reflect any
reclassification (including any reverse stock split),
recapitalization, reorganization or similar transaction which has the
effect of reducing the number of outstanding shares of the Common
Stock, unless the failure to so increase such annual rate is approved
by a majority of the Continuing directors; and (b) such Interested
Stockholder shall not have become the Beneficial Owner of any
additional shares of Voting Stock except as part of the transaction
which results in such Interested Stockholder becoming an Interested
Stockholder, and except as necessary to reflect any subdivision or
split of the Common Stock.
/iv/ After such Interested Stockholder has become an Interested
Stockholder, such Interested Stockholder shall not have received the
benefit, directly or indirectly (except proportionately as a
stockholder), of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantages
provided by the Corporation, whether in anticipation of or in
connection with a Business Combination or otherwise.
/v/ A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the
Securities Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions replacing such Act or Rules)
shall be mailed to stockholders of the Corporation at least thirty
(30) days prior to the consummation of such Business Combination
(whether or not such proxy or information statement is required to be
mailed pursuant to such Act or subsequent provisions).
(3) Certain Determinations. The Board of Directors of the Corporation shall
have the power and duty to determine for the purposes of this Article TWELTH, on
the basis of information known to them after reasonable inquiry, (i) whether a
person is an Interested Stockholder, (ii) the number of shares of Voting Stock
beneficially owned by any person, (iii) whether a person is an Affiliate or
Associate of another, and (iv) whether the assets which are the subject of any
Business Combination have, or the consideration to be received for the issuance
or transfer of securities by the Corporation or any Subsidiary in any Business
Combination has, an aggregate Fair Market Value of $1,000,000 or more.
(4) Fiduciary Obligations of Interested Stockholders. Nothing contained in
this Article TWELTH shall be construed to relieve any Interested Stockholder
from any fiduciary obligation imposed by law.
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(5) Amendment and Repeal. Notwithstanding any other provisions of this
Restated Certificate of Incorporation or the By-Laws of the Corporation (and
notwithstanding the fact that a lesser percentage may be specified by law, this
Restated Certificate of Incorporation or the By-Laws of the Corporation), the
affirmative vote of eighty percent (80%) or more of the voting power of the
outstanding shares of the Voting Stock of the Corporation shall be required to
amend, modify or repeal, or to adopt any provisions inconsistent with, this
Article TWELTH of this Restated Certificate of Incorporation; provided however,
that this Article TWELTH may be amended, modified or repealed, and any such new
provision may be added, upon the affirmative vote of the holders of not less
than a majority of the total voting power of all outstanding shares of the
Voting Stock of the Corporation, if such amendment, modification, repeal or
addition shall first have been approved and recommended by a resolution adopted
by a majority vote of the Continuing Directors.
THIRTEENTH: Notwithstanding any other provision of this Restated
Certificate of Incorporation, no director of the Corporation may be removed from
office as a director by a vote of the stockholders or by the Board of Directors
prior to the expiration of such director's term of office except for cause, nor
may the entire Board of Directors of the Corporation be removed by a vote of the
stockholders except for cause. Cause shall mean (i) conviction of a crime
involving moral turpitude, (ii) administrative agency determination of conduct
involving moral turpitude, or (iii) with respect to removal by the directors, a
determination, in good faith, by a majority of the quorum of the Board of
Directors after a hearing before a quorum of the Board of Directors, of conduct
involving moral turpitude materially adverse to the interests of the
Corporation; and with respect to removal by the stockholders, such a
determination by a majority of a quorum of the stockholders eligible to vote
after a hearing before a quorum of the stockholders.
FOURTEENTH: The Corporation reserves the right to amend, alter, suspend or
repeal any provision contained in this Restated Certificate of Incorporation
from time to time in the manner now or hereafter prescribed by Delaware law, and
all rights conferred upon the directors, officers and stockholders herein are
granted subject to this reservation. Notwithstanding any other provision of this
Restated Certificate of Incorporation or the By-Laws of this Corporation (and in
addition to any other vote that may be required by law, this Restated
Certificate of Incorporation or the By-Laws of this Corporation), the
affirmative vote of the holders of three-fourths (3/4) of the outstanding stock
of the Corporation entitled to vote in elections of directors shall be required
to amend, alter, suspend or repeal Article TENTH, ELEVENTH, THIRTEENTH or
FOURTEENTH of this Restated Certificate of Incorporation.
In witness whereof, we have signed this certificate and caused the
corporate seal of the corporation to be hereunto affixed this 26th day of May,
1998.
/S/ Thomas R. Saldin
----------------------------------------
THOMAS R. SALDIN
Executive Vice President, Administration
and General Counsel
Attest:
/S/ Kaye L. O'Riordan
- --------------------------------
KAYE L. O'RIORDAN
Vice President and Corporate Secretary
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State of Idaho )
) ss.
County of Ada )
Be it remembered that on this 26th day of May, 1998, personally came before
me the undersigned notary public in and for the county and state aforesaid,
THOMAS R. SALDIN, party to the foregoing certificate, known to me personally to
be such, and duly acknowledged the said certificate to be his act and deed, and
that the facts therein stated are true.
Given under my hand and seal of office the day and year aforesaid.
/S/ DeLayne Deck
--------------------------------------
Notary Public for the State of Idaho
Residing at Boise, Idaho
My commission expires: 08/23/02
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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.
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(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 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) $25.00 and (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 $25.00 per share on
the Series A Junior Participating Preferred Stock shall nevertheless be payable
on such subsequent Quarterly Dividend Payment Date.
Page 30
<PAGE>
(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 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.
Page 31
<PAGE>
(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(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.
Page 32
<PAGE>
(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, an Executive 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 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.
Page 33
<PAGE>
(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 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
Page 34
<PAGE>
(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.
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 cancelled 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.
Page 35
<PAGE>
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.
Page 36
<PAGE>
(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.
Page 37
<PAGE>
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.
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.
Page 38
<PAGE>
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.
/S/ Gary G. Michael
--------------------------------
Gary G. Michael
Chairman of the Board and
Chief Executive Officer
Attest:
/S/ Kaye L. O'Riordan
- ---------------------------
Kaye L. O'Riordan
Secretary
Page 39
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> Yes
This schedule contains summary financial information extracted from Albertson's
Quarterly Report to Stockholders for the 13 weeks ended April 30, 1998, and is
qualified in its entirety by reference to such Financial Statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-29-1999
<PERIOD-START> JAN-30-1998
<PERIOD-END> APR-30-1998
<CASH> 76,255
<SECURITIES> 0
<RECEIVABLES> 126,343
<ALLOWANCES> 1,200
<INVENTORY> 1,281,867
<CURRENT-ASSETS> 1,585,441
<PP&E> 5,429,388
<DEPRECIATION> 1,922,710
<TOTAL-ASSETS> 5,405,389
<CURRENT-LIABILITIES> 1,271,236
<BONDS> 1,259,121
0
0
<COMMON> 245,797
<OTHER-SE> 2,243,806
<TOTAL-LIABILITY-AND-EQUITY> 5,405,389
<SALES> 3,848,253
<TOTAL-REVENUES> 3,848,253
<CGS> 2,823,783
<TOTAL-COSTS> 2,823,783
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,504
<INCOME-PRETAX> 176,962
<INCOME-TAX> 66,361
<INCOME-CONTINUING> 110,601
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 110,601
<EPS-PRIMARY> 0.45
<EPS-DILUTED> 0.45
</TABLE>
