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 39 Weeks Ended: October 29, 1998 Commission File Number: 1-6187
ALBERTSON'S, INC.
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(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
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(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 December 4, 1998: 245,593,266
Page 1
<PAGE>
PART I. FINANCIAL INFORMATION
ALBERTSON'S, INC.
CONSOLIDATED EARNINGS
(in thousands except per share data)
(unaudited)
<TABLE>
<CAPTION>
13 WEEKS ENDED 39 WEEKS ENDED
-------------------------------------- -------------------------------------
October 29, October 30, October 29, October 30,
1998 1997 1998 1997
------------------- ------------------ ------------------- ------------------
<S> <C> <C> <C> <C>
Sales $3,990,459 $3,612,032 $11,833,764 $10,900,082
Cost of sales 2,885,303 2,637,952 8,634,794 8,065,336
------------------- ------------------ ------------------- ------------------
Gross profit 1,105,156 974,080 3,198,970 2,834,746
Selling, general and
administrative expenses 856,013 751,676 2,501,640 2,230,008
Impairment - store closures 29,423
------------------- ------------------ ------------------- ------------------
Operating profit 249,143 222,404 667,907 604,738
Other (expenses) income:
Interest, net (27,013) (22,388) (78,123) (61,243)
Other, net (1,737) (1,104) 13,040 7,941
------------------- ------------------ ------------------- ------------------
Earnings before income taxes 220,393 198,912 602,824 551,436
Income taxes 82,647 75,507 226,059 209,325
------------------- ------------------ ------------------- ------------------
NET EARNINGS $ 137,746 $ 123,405 $ 376,765 $ 342,111
=================== ================== =================== ==================
EARNINGS PER SHARE:
Basic $0.56 $0.50 $1.53 $1.38
Diluted $0.56 $0.50 $1.53 $1.37
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:
Basic 245,536 245,646 245,643 248,433
Diluted 246,678 246,295 246,790 249,114
DIVIDENDS DECLARED PER SHARE $0.17 $0.16 $0.51 $0.48
</TABLE>
See Notes to Consolidated Financial Statements.
Page 2
<PAGE>
ALBERTSON'S, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
October 29, 1998
(unaudited) January 29, 1998
-------------------------- -------------------------
ASSETS
------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 55,140 $ 108,083
Accounts and notes receivable 146,932 121,023
Inventories 1,448,872 1,308,578
Prepaid expenses 56,056 44,426
Deferred income taxes 50,440 45,747
-------------------------- -------------------------
TOTAL CURRENT ASSETS 1,757,440 1,627,857
OTHER ASSETS 255,450 207,360
GOODWILL (net of accumulated amortization
of $1,803) 158,071
LAND, BUILDINGS AND EQUIPMENT (net of
accumulated depreciation and amortization
of $2,064,260 and $1,822,263,
respectively) 3,867,306 3,383,373
========================== =========================
$6,038,267 $5,218,590
========================== =========================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 867,212 $ 742,557
Salaries and related liabilities 163,682 149,898
Taxes other than income taxes 100,596 80,842
Income taxes 5,654 37,657
Self-insurance 73,803 69,982
Unearned income 63,469 46,069
Other current liabilities 71,192 52,395
Current maturities of long-term debt 5,662 86,511
Current capitalized lease obligations 11,044 9,608
-------------------------- -------------------------
TOTAL CURRENT LIABILITIES 1,362,314 1,275,519
LONG-TERM DEBT 1,474,811 989,650
CAPITALIZED LEASE OBLIGATIONS 154,333 140,957
DEFERRED INCOME TAXES 27,063 17,520
UNEARNED INCOME 55,414 81,931
OTHER L/T LIABILITIES AND DEFERRED CREDITS 306,744 293,557
STOCKHOLDERS' EQUITY:
Preferred stock - $1 par value; authorized - 10,000,000 shares; issued - none
Common stock - $1 par value; authorized - 1,200,000,000 shares; issued -
245,555,861 shares and 245,735,633
shares, respectively 245,556 245,736
Capital in excess of par value 1,134 4,271
Retained earnings 2,410,898 2,169,449
-------------------------- -------------------------
2,657,588 2,419,456
========================== =========================
$6,038,267 $5,218,590
========================== =========================
</TABLE>
See Notes to Consolidated Financial Statements.
Page 3
<PAGE>
ALBERTSON'S, INC.
CONSOLIDATED CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
39 WEEKS ENDED
-----------------------------------------------
October 29, October 30,
1998 1997
---------------------- ----------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 376,765 $ 342,111
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 274,797 243,987
Net deferred income taxes (768) (14,432)
Increase in cash surrender value of
Company-owned life insurance (7,342) (8,565)
Impairment - store closures 29,423
Changes in operating assets and
liabilities:
Receivables and prepaid expenses (48,892) 1,805
Inventories (90,390) (43,248)
Accounts payable 93,296 49,722
Other current liabilities 8,419 52,798
Self-insurance 1,775 10,587
Unearned income (9,216) (2,425)
Other long-term liabilities 6,053 6,167
---------------------- ----------------------
Net cash provided by operating activities 633,920 638,507
CASH FLOWS FROM INVESTING ACTIVITIES:
Net capital expenditures excluding
noncash activities (599,227) (457,176)
Business acquisitions, net of cash acquired (262,098)
Increase in other assets (16,818) (10,037)
---------------------- ----------------------
Net cash used in investing activities (878,143) (467,213)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 317,000 200,000
Payments on long-term borrowings (151,017) (6,141)
Net commercial paper activity 162,796 (49,607)
Proceeds from stock options exercised 1,859 2,844
Cash dividends (122,840) (116,969)
Stock purchased and retired (16,518) (193,974)
---------------------- ----------------------
Net cash provided by (used in)
financing activities 191,280 (163,847)
---------------------- ----------------------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (52,943) 7,447
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 108,083 90,865
---------------------- ----------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 55,140 $ 98,312
====================== ======================
</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 except for
the impairment charge discussed under "Impairment - Store Closures" below. 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. As of October 29, 1998, 12 of these stores had
been closed.
Page 5
<PAGE>
Supplemental Cash Flow Information
- ----------------------------------
Selected cash payments and noncash activities were as follows (in thousands):
<TABLE>
<CAPTION>
39 Weeks Ended 39 Weeks Ended
October 29, 1998 October 30, 1997
----------------------- -----------------------
<S> <C> <C>
Cash payments for:
Income taxes $255,234 $213,324
Interest, net of amounts
capitalized 54,507 36,073
Noncash activities:
Tax benefits related to stock
options 2,173 1,990
Fair Market Value of stock
exchanged for options and related
tax withholdings 1,753 1,918
Capitalized leases incurred 18,819 12,395
Capitalized leases terminated 5,509 671
Note payable related to
business acquisition 8,000
Liabilities assumed in connection
with asset acquisition 1,340
</TABLE>
Business Acquisitions
- ---------------------
On January 30, 1998, the Company acquired Seessel Holdings, Inc., 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. 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.
On October 1, 1998, the Company acquired Buttrey Food and Drug Stores Company
for cash consideration of approximately $142 million. This acquisition included
44 stores in Montana, North Dakota, and Wyoming. In compliance with the
agreement with the Federal Trade Commission, 9 Buttrey stores and 6 Albertson's
stores were simultaneously divested with the purchase. The Company is operating
these stores under the Albertson's banner.
All 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. For each of these
acquisitions 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
any acquisition, however, the final purchase price allocations should not differ
significantly from the preliminary purchase price allocations recorded as of
October 29, 1998.
Page 6
<PAGE>
On August 24, 1998, the Company purchased the assets of 15 Bruno's, Inc.
stores. This acquisition included 14 operating stores and 1 store under
construction which, when completed, will replace a store currently operating.
The stores are located in the Nashville and Chattanooga, Tennessee, metropolitan
areas. The Chattanooga area stores include a store in northern Georgia. The
Company is operating these stores under the Albertson's banner.
Indebtedness
- ------------
The Company issued medium term notes of $84 million in February 1998, $77
million in April 1998 and $156 million in June 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%.
The $156 million of medium-term notes issued in June 1998 mature in June
2028. Interest is paid semiannually at a rate of 6.63%.
Proceeds from these issuances were used primarily to repay borrowings under
the Company's commercial paper program. Medium-term notes of up to $183 million
remain available for issuance under the 1997 registration statement.
Capital Stock
- -------------
Since 1987 the Board of Directors had continuously adopted or renewed
programs under which the Company was authorized, but not required, to purchase
and retire shares of its common stock. The remaining authorization under the
program adopted by the Board on March 2, 1998, which authorized the Company to
purchase and retire up to 5 million shares through March 31, 1999, was rescinded
in contemplation of the proposed merger with American Stores Company.
Subsequent Events
- -----------------
On November 12, 1998, in separate special stockholders' meetings,
stockholders of Albertson's and American Stores Company (ASC) approved the
previously announced merger of the two retail food and drug companies.
Albertson's stockholders approved the issuance of shares of Albertson's
Common Stock pursuant to the merger agreement with American Stores Company at
an exchange ratio of 0.63 shares of Albertson's, Inc. Common Stock in exchange
for each share of ASC Common Stock ("Exchange Ratio"), with cash being paid in
lieu of fractional shares (the "Consideration"). As a result of the merger,
former stockholders of ASC will hold approximately 41.3% of the outstanding
Albertson's Common Stock (assuming no conversion of outstanding options).
The Company believes the merger will qualify as a pooling of interests for
accounting and financial reporting purposes and as a tax-free transaction. The
transaction is subject to certain regulatory clearances and is expected to close
in early 1999.
Page 7
<PAGE>
In addition, the stockholders also voted to approve amendments to the
Albertson's Stock-Based Incentive Plan. Subject to the closing of the merger
with ASC this will increase the number of shares from 10,000,000 shares to
30,000,000 shares of Albertson's Common Stock available for issuance under the
plan.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Results for the quarter:
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
----------------------------------
13 weeks ended Percentage
----------------------------------
10-29-98 10-30-97 Increase
----------------- ---------------- ------------------
<S> <C> <C> <C>
Sales 100.00% 100.00% 10.5%
Gross profit 27.69 26.97 13.5
Selling, general and
administrative
expenses 21.45 20.81 13.9
Operating profit 6.24 6.16 12.0
Net interest expense 0.68 0.62 20.7
Earnings before
income taxes 5.52 5.51 10.8
Net earnings 3.45 3.42 11.6
</TABLE>
Sales increased due to improved identical store sales and the continued
expansion of net retail square footage. Identical store sales increased 1.5% and
comparable store sales (which include replacement stores) increased 1.7%.
Management estimates that there was deflation in products the Company sells of
approximately 0.1% (annualized). During the 13 weeks, 62 stores were opened, 9
stores were closed (which included 6 Albertson's stores divested in connection
with the Buttrey acquisition) and 9 store remodels were completed. Included in
store openings are 49 acquired stores (net of 9 Buttrey stores divested). Retail
square footage increased to 47.6 million square feet, a net increase of 14.6%
from October 30, 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. 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 75% 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
$5.2 million (0.13% to sales) for the 13 weeks ended October 29, 1998, as
compared to $3.75 million (0.10% to sales) for the 13 weeks ended October 30,
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, expenses incurred to integrate
acquired stores into the Company's systems, and increased depreciation expense
associated with the Company's expansion program.
The increase in net interest expense resulted primarily from higher average
outstanding debt during the 13 weeks ended October 29, 1998, as compared to the
13 weeks ended October 30, 1997. The average outstanding debt has increased as a
result of the Company's continued investment in new and acquired stores.
Year-to-date results:
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
----------------------------------
39 Weeks ended Percentage
----------------------------------
10-29-98 10-30-97 Increase
----------------- ---------------- ----------------
<S> <C> <C> <C>
Sales 100.00% 100.00% 8.6%
Gross profit 27.03 26.01 12.9
Selling, general and
administrative
expenses 21.14 20.46 12.2
Impairment - store
closures 0.25 N.A.
Operating profit 5.64 5.55 10.4
Net interest
expense 0.66 0.56 27.6
Earnings before
income taxes 5.09 5.06 9.3
Net earnings 3.18 3.14 10.1
</TABLE>
Sales increased primarily as a result of the continued expansion of net
retail square footage. Identical store sales increased 0.5% and comparable store
sales (which include replacement stores) increased 0.7%. Management estimates
that there was deflation in products the Company sells of approximately 0.1%
(annualized). During the 39 weeks, 115 stores were opened, 24 stores were closed
(which included 6 Albertson's stores divested in connection with the Buttrey
acquisition) and 16 store remodels were completed.
Page 9
<PAGE>
Included in store openings are 73 acquired stores (net of 9 Buttrey stores
divested). Retail square footage increased to 47.6 million square feet, a net
increase of 14.6% from October 30, 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.
Gross profit, as a percent to sales, increased primarily as a result of
improvements made in retail 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 75% 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
$18.4 million (0.16% to sales) for the 39 weeks ended October 29, 1998, as
compared to $25.6 million (0.23% to sales) for the 39 weeks ended October 30,
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, expenses incurred to integrate
acquired stores into the Company's systems, 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. As of October 29,
1998, 12 of these stores had been closed and management believes the original
charge and remaining reserve are adequate.
The increase in net interest expense resulted primarily from higher average
outstanding debt during the 39 weeks ended October 29, 1998, as compared to the
prior year. The average outstanding debt has increased as a result of the
Company's continued investment in new and acquired stores.
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 39 weeks ended October 29, 1998, was $634
million compared to $639 million in the prior year. During the 39 weeks ended
October 29, 1998, the Company invested $599 million for net capital expenditures
and $262 million acquiring multiple businesses. The Company's financing
activities for the 39 weeks ended October 29, 1998, included new long-term
borrowings of $166 million, a net increase of commercial paper borrowings of
Page 10
<PAGE>
$163 million, $123 million for the payment of dividends and $17 million for the
purchase and retirement of the Company's common stock.
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 $446 million of commercial paper borrowings
outstanding at October 29, 1998, compared to $283 million at January 29, 1998,
and $279 million at October 30, 1997.
The Company issued $317 million of medium-term notes during the 39 weeks
ended October 29, 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 had continuously adopted or renewed
programs under which the Company was authorized, but not required, to purchase
and retire shares of its common stock. The remaining authorization under the
program adopted by the Board on March 2, 1998, which authorized the Company to
purchase and retire up to 5 million shares through March 31, 1999, was rescinded
in connection with the proposed merger with American Stores Company. During the
39 weeks ended October 29, 1998, 349,300 shares were purchased and retired prior
to the authorization being rescinded.
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. To the extent that the Company's software
applications contain source code that is unable to interpret appropriately the
upcoming calendar year 2000 and beyond, some level of modification or
replacement of such applications will be necessary to avoid system failures and
the temporary inability to process transactions or engage in other normal
business activities.
In September 1995 the Company formed a project team to assess the impact of
the Year 2000 issue on the software and hardware utilized in the Company's
internal operations. The project team is staffed primarily with representatives
of the Company's Information Systems and Technology department and reports on a
regular basis to senior management and the Company's Board of Directors.
The initial phase of the Year 2000 project was assessment and planning. This
phase is substantially complete and included an assessment of all computer
hardware, software, systems and processes ("IT Systems") and non-information
technology systems such as telephones, clocks, scales, refrigeration
controllers, and other equipment containing embedded microprocessor technology
("Non-IT Systems"). The completion of upgrading, validation and forward date
testing is scheduled for early 1999 although many systems will be completed by
the end of 1998. The Company expects to successfully implement the remediation
of the IT Systems and Non-IT Systems.
Page 11
<PAGE>
In addition to the remediation of the IT systems and Non-IT systems, the
Company has identified relationships with third parties, including vendors,
suppliers and service providers, which the Company believes are critical to its
business operations. The Company is in the process of communicating with these
third parties through questionnaires, letters and interviews in an effort to
determine the extent to which they are addressing their Year 2000 Compliance
issues. The Company will continue to communicate with, assess and monitor the
progress of these third parties in resolving Year 2000 issues.
The total costs to address the Company's Year 2000 issues are estimated to be
approximately $14 million, of which approximately $4 million has been or will be
expensed and approximately $10 million has been or will be capitalized. These
costs include expenditures accelerated for year 2000 compliance. To date, the
Company has spent approximately 60% of the estimated costs. These costs have
been funded through operating cash flow and represent an immaterial portion of
the Company's IT budget.
The Company is dependent on the proper operation of its internal computer
systems and software for several key aspects of its business operations
including store operations, merchandise purchasing, inventory management,
pricing, sales, warehousing, transportation, financial reporting and
administrative functions. The Company is also dependent on the proper operation
of the computer systems and software of third parties providing critical goods
and services to the Company including vendors, utilities, financial
institutions, government entities and others. The Company believes that its
efforts will result in Year 2000 compliance. However, the failure or malfunction
of internal or external systems could impair the Company's ability to operate
its business in the ordinary course and could have a material, adverse effect on
its results of operations.
The Company is currently developing its contingency plan and intends to
formalize plans with respect to its most critical applications during the first
half of 1999. Contingency plans include manual workarounds, increased
inventories and extra staffing.
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,
including statements about the ability of the Company and ASC to obtain the
necessary regulatory approvals and satisfy other conditions to the closing of
the merger transaction and with respect to the future performance of the
combined companies. 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 12
<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, stability of
product costs, the inability of the Company and ASC to obtain the required
regulatory approvals on terms acceptable to them, adverse changes in the
business or financial condition of the Company or ASC prior to the closing of
the merger transaction and the Company's ability to integrate the operations of
ASC.
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 three 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 13
<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 a Special Meeting of Stockholders on November 12, 1998, and
transacted the following business:
(a) Approval of the issuance of shares of Albertson's, Inc. Common Stock,
par value $1.00 per share, pursuant to the Agreement and Plan of
Merger, dated as of August 2, 1998, among Albertson's, American Stores
Company and a wholly owned subsidiary of Albertson's, at an exchange
ratio of 0.63 shares of Albertson's common stock for each outstanding
share of common stock, par value of $1.00 per share, of American
Stores, with cash paid in lieu of any fractional shares:
Votes Broker
Votes For Against Abstentions Nonvotes
------------- ----------- ----------- ----------
193,716,622 576,497 611,095 0
(b) Approval of the amendments to Albertson's Inc. 1995 Stock-Based
Incentive Plan to, among other things, increase the number of shares
available for issuance under the plan from 10 million to 30 million
shares:
Votes Broker
Votes For Against Abstentions Nonvotes
------------- ----------- ----------- ----------
176,619,964 17,255,923 1,028,327 0
Item 5. Other Information
- --------------------------
Not applicable.
Page 14
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
a. Exhibits
Number Description
------ -----------
10.18.1 Amendment to Executive Pension Makeup Trust
(dated December 1, 1998)*
10.19.1 Amendment to Executive Deferred Compensation Trust
(dated December 1, 1998)*
10.20.3 Amendment to 1990 Deferred Compensation Plan
(dated November 1, 1998)*
10.22.1 Amendment to 1990 Deferred Compensation Trust
(dated December 1, 1998)*
10.26 Amended and Restated 1995 Stock-Based Incentive Plan
(dated November 12, 1998)*
27 Financial data schedule for the 39 weeks ended
October 29, 1998
* Identifies management contracts or compensatory plans or
arrangements required to be filed as an exhibit hereto.
b. The following reports on Form 8-K were filed subsequent to the quarter
ended October 29, 1998:
Current Report on Form 8-K dated November 3, 1998, regarding the
Company's sales trend release for the four-week and thirteen-week
periods ended October 29, 1998.
Current Report on Form 8-K dated November 19, 1998, regarding the
Company's Special Meeting of Stockholders and the press release
issued in connection with that meeting.
Page 15
<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: December 11, 1998 /S/ A. Craig Olson
--------------------- ---------------------------------
A. Craig Olson
Senior Vice President, Finance
and Chief Financial Officer
Page 16
<PAGE>
Exhibit 10.18.1
AMENDMENT
to the
ALBERTSON'S, INC.
EXECUTIVE PENSION MAKEUP TRUST
This Amendment is made by Albertson's, Inc., a Delaware corporation
(the "Corporation" or the "Employer").
RECITALS:
A. The Corporation has established the Albertson's, Inc. Executive Pension
Makeup Trust, effective February 1, 1989 (the "Trust");
B. The Corporation, pursuant to Section 6.01 of the Trust, retains the
right to amend the Trust at any time prior to the time when the Trust shall
become irrevocable pursuant to Section 6.02 thereof; and
C. The Corporation certifies that the Trust has not become irrevocable
pursuant to Section 6.02 thereof; and
D. The Corporation has determined that it is advisable to amend the
Trust in the manner hereinafter set forth.
AMENDMENT
The Trust is hereby amended, as of December 1, 1998, to add the
following language at the end of the definition of "Change in Control" in
Article 1:
Notwithstanding the foregoing, the occurrence of any of the foregoing
events or transactions shall not be deemed to be a Change in Control of
the Employer, if prior to the consummation of any of the foregoing
events or transactions, the Continuing Directors (as defined in
paragraph 1 of Article TWELFTH of the Employer's Restated Certificate
of Incorporation, dated May 27, 1998) adopt a resolution to the effect
that a Change in Control for the purposes of this Trust shall not be
deemed to have occurred upon the consummation of any such event or
transaction.
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned on this 1st day of December, 1998 and has been delivered by
facsimile to the Trustee (as that term is defined in the Trust) of the Trust on
this 1st day of December, 1998.
ALBERTSON'S, INC.
By: /s/ Thomas R. Saldin
Thomas R. Saldin
Executive Vice President and
General Counsel
<PAGE>
Exhibit 10.19.1
AMENDMENT
to the
ALBERTSON'S, INC.
EXECUTIVE DEFERED COMPENSATION TRUST
This Amendment is made by Albertson's, Inc., a Delaware corporation
(the "Corporation" or the "Employer").
RECITALS:
A. The Corporation has established the Albertson's, Inc. Executive Deferred
Compensation Trust, effective February 1, 1989 (the "Trust");
B. The Corporation, pursuant to Section 6.01 of the Trust, retains the
right to amend the Trust at any time prior to the time when the Trust shall
become irrevocable pursuant to Section 6.02 thereof; and
C. The Corporation certifies that the Trust has not become irrevocable
pursuant to Section 6.02 thereof; and
D. The Corporation has determined that it is advisable to amend the
Trust in the manner hereinafter set forth.
AMENDMENT
The Trust is hereby amended, as of December 1, 1998, to add the
following language at the end of the definition of "Change in Control" in
Article 1:
Notwithstanding the foregoing, the occurrence of any of the foregoing
events or transactions shall not be deemed to be a Change in Control of
the Employer, if prior to the consummation of any of the foregoing
events or transactions, the Continuing Directors (as defined in
paragraph 1 of Article TWELFTH of the Employer's Restated Certificate
of Incorporation, dated May 27, 1998) adopt a resolution to the effect
that a Change in Control for the purposes of this Trust shall not be
deemed to have occurred upon the consummation of any such event or
transaction.
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned on this 1st day of December, 1998 and has been delivered by
facsimile to the Trustee (as that term is defined in the Trust) of the Trust on
this 1st day of December, 1998.
ALBERTSON'S, INC.
By: /s/ Thomas R. Saldin
Thomas R. Saldin
Executive Vice President and
General Counsel
<PAGE>
Exhibit 10.20.3
AMENDMENT
to the
ALBERTSON'S, INC.
1990 DEFERRED COMPENSATION PLAN
This Amendment is made by Albertson's, Inc., a Delaware corporation
the "Corporation").
RECITALS:
A. The Corporation established the Albertson's, Inc. 1990 Deferred
Compensation Plan effective January 1, 1990 (the "Plan");
B. The Corporation, pursuant to Section 10.1 of the Plan, retained the
right to amend the Plan and Section 10.1 provides that the Plan may be amended
by the Grantor Trust Committee appointed by the Board of Directors of
Albertson's, Inc. and the Committee has granted the authority to amend the Plan
to the Grantor Trust Committee so long as such amendments do not materially
alter benefits; and
C. The Committee has determined that it is advisable to amend the Plan
in the manner hereinafter set forth and that such amendments does not materially
alter benefits.
AMENDMENT
The Plan is hereby amended, as of November 1, 1998, in the following
respects:
The last two sentences of Section 6.4 (a) of the Plan shall be deleted
and the following language shall be substituted in their place:
The Participant may modify the form of the distribution of all or part
of the Participant's Account, provided that such modification is made
on a validly executed and timely filed Deferral Agreement before the
end of the calendar year which ends at least twelve (12) months prior
to the date on which any distribution of the Participant's Account
shall have commenced.
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned on this 11th day of November, 1998.
ALBERTSON'S, INC.
By:/s/ Thomas R. Saldin
Thomas R. Saldin
Executive Vice President,
Administration and General Counsel
<PAGE>
Exhibit 10.22.1
AMENDMENT
to the
ALBERTSON'S, INC.
1990 DEFERRED COMPENSATION TRUST
This Amendment is made by Albertson's, Inc., a Delaware corporation
(the "Corporation" or the "Employer").
RECITALS:
A. The Corporation has established the Albertson's, Inc. Deferred
Compensation Trust, effective November 20, 1990 (the "Trust");
B. The Corporation, pursuant to Section 6.01 of the Trust, retains the
right to amend the Trust at any time prior to the time when the Trust shall
become irrevocable pursuant to Section 6.02 thereof; and
C. The Corporation certifies that the Trust has not become irrevocable
pursuant to Section 6.02 thereof; and
D. The Corporation has determined that it is advisable to amend the
Trust in the manner hereinafter set forth.
AMENDMENT
The Trust is hereby amended, as of December 1, 1998, to add the
following language at the end of the definition of "Change in Control" in
Article 1:
Notwithstanding the foregoing, the occurrence of any of the foregoing
events or transactions shall not be deemed to be a Change in Control of
the Employer, if prior to the consummation of any of the foregoing
events or transactions, the Continuing Directors (as defined in
paragraph 1 of Article TWELFTH of the Employer's Restated Certificate
of Incorporation, dated May 27, 1998) adopt a resolution to the effect
that a Change in Control for the purposes of this Trust shall not be
deemed to have occurred upon the consummation of any such event or
transaction.
IN WITNESS WHEREOF, this instrument has been duly executed by the
undersigned on this 1st day of December, 1998 and has been delivered by
facsimile to the Trustee (as that term is defined in the Trust) of the Trust on
this 1st day of December, 1998.
ALBERTSON'S, INC.
By: /s/ Thomas R. Saldin
Thomas R. Saldin
Executive Vice President and
General Counsel
<PAGE>
Exhibit 10.26
ALBERTSON'S, INC.
AMENDED AND RESTATED
1995 STOCK-BASED INCENTIVE PLAN
Section 1. General Purposes of Plan.
The name of this plan is the Albertson's, Inc. Amended and Restated 1995
Stock-Based Incentive Plan (the "Plan"). The Plan, as amended and restated, was
adopted on August 31, 1998 by the Board of Directors subject to approval by the
Company's stockholders, in separate votes, of both (i) the Plan and (ii) the
merger (as contemplated in the Agreement and Plan of Merger by and among the
Company, American Stores Company and Abacus Holdings Inc., dated August 3, 1998
(the "Merger")). The Plan was originally adopted by the Board of Directors on
April 5, 1995 and approved by the Company's stockholders on May 26, 1995. The
purposes of the Plan are to promote the growth and profitability of the Company
and its Subsidiaries by enabling them to attract and retain the best available
personnel for positions of substantial responsibility, to provide key employees
and non-employee directors with an opportunity for investment in the Company's
Common Stock, to give them an additional incentive to increase their efforts on
behalf of the Company and its Subsidiaries, and to further align the long-term
interests of key employees and non-employee directors with those of the
stockholders. Awards granted under the Plan may be (a) options which may be
designated as (i) Nonqualified Stock Options or (ii) Incentive Stock Options;
(b) Stock Appreciation Rights; (c) Restricted or Deferred Stock; or (d) other
forms of stock-based incentive awards.
Section 2. Definitions.
The terms defined in this Section 2 shall, for all purposes of this Plan, have
the meanings herein specified:
(a) "Act" shall mean the Securities Exchange Act of 1934, as amended.
(b) "Administrator" shall mean the Board, or if the Board does not
administer the Plan, the Committee in accordance with Section 4.
(c) "Award Agreement" shall mean a Stock Option Agreement or other
written agreement between the Company and a Participant evidencing the
number of shares of Common Stock, SARs or Units subject to the Award
and setting forth the terms and conditions of the Award as the
Committee may deem appropriate which shall not be inconsistent with the
Plan.
(d) "Award Price" shall mean the Option Price in the case of an Option
or the price to be paid for the shares of Common Stock, SARs or Units
to be granted pursuant to an Award Agreement.
<PAGE>
(e) "Awards" shall mean, collectively, (i) Options which may be
designated as (A) Nonqualified Stock Options or (B) Incentive Stock
Options; (ii) Stock Appreciation Rights (SARs); (iii) Restricted or
Deferred Stock; or (iv) other forms of stock-based incentive awards as
described in Section 10 hereof.
(f) "Board" or "Board of Directors" shall mean the Board of Directors
of the Company.
(g) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, or any successor thereto.
(h) "Commission" shall be the Securities and Exchange Commission.
(i) "Committee" shall mean the committee appointed by the Board of
Directors pursuant to Section 4 hereof.
(j) "Common Stock" shall mean the Company's presently authorized Common
Stock, par value $1.00 per share, except as this definition may be
modified pursuant to Section 14 hereof.
(k) "Company" shall mean Albertson's, Inc., a Delaware corporation.
(l) "Deferred Stock" shall mean deferred stock awards as described in
Section 9 hereof.
(m) "Demotion" shall mean the reduction of an Optionee's salary grade,
job classification, or title (the Optionee's job classification or
title shall govern in cases where said job classification or title are
not defined by means of a salary grade) with the Company to a level at
which Options under this Plan or any other option plan of the Company
have not been granted within the three years preceding such demotion.
(n) "Eligible Director" means a director of the Company who is not an
employee of the Company or any Subsidiary.
(o) "Employee" or "Employees" shall mean key persons (including, but
not limited to, employee members of the Board of Directors and
officers) employed by the Company, or a Subsidiary thereof, on a
full-time basis and who are compensated for such employment by a
regular salary.
(p) "Fair Market Value" shall mean the last sale price of the Common
Stock on the New York Stock Exchange Composite Tape on the date an
Award is granted or exercised, as applicable, (or for purposes of
determining the value of shares of Common Stock used in payment of the
Award Price, the date the certificate is delivered) or, if there are no
sales on such date, on the next following day on which there are sales.
(q) "Incentive Stock Option" shall mean an "incentive stock option" as
defined in Section 422 of the Code.
<PAGE>
(r) "Mature Stock" shall mean Common Stock which was obtained through
the exercise of an option under this Plan or any other plan of the
Company, which is delivered to the Company in order to exercise an
Option and which has been held continuously by an Optionee for the
longer of: (i) six months or more, or (ii) any other period that may in
the future be recognized under Generally Accepted Accounting Principles
for purposes of defining the term "Mature Stock" in connection with
such an Option exercise.
(s) "Nonqualified Stock Option" shall mean an Option that by its terms
is designated as not being an Incentive Stock Option as defined above.
(t) "Option" shall mean the option to purchase shares of Common Stock
set forth in a Stock Option Agreement between the Company and an
Optionee and which may be granted as a Nonqualified Stock Option or an
Incentive Stock Option.
(u) "Optionee" shall mean an eligible Employee or Eligible Director, as
described in Section 5 hereof, who accepts an Option.
(v) "Option Price" shall mean the price to be paid for the shares of
Common Stock being purchased pursuant to a Stock Option Agreement.
(w) "Option Period" shall mean the period from the date of grant of an
Option to the date after which such Option may no longer be exercised.
Nothing in this Plan shall be construed to extend the termination date
of the Option Period beyond the date set forth in the Stock Option
Agreement.
(x) "Participant" shall be an Employee or Eligible Director who has
been granted an Award under the Plan.
(y) "Plan" shall mean the Albertson's, Inc. Amended and Restated 1995
Stock-Based Incentive Plan.
(z) "Restricted Stock" shall mean restricted stock awards as described
in Section 9 hereof.
(aa) "SARs" shall mean stock appreciation rights as described in
Section 8 hereof.
(bb) "Stock Appreciation Rights" shall mean stock appreciation rights
as described in Section 8 hereof.
(cc) "Stock Option Agreement" shall mean the written agreement between
the Company and Optionee setting forth the Option and the terms and
conditions upon which it may be exercised.
(dd) "Subsidiary" shall mean any corporation in which the Company owns,
directly or indirectly through Subsidiaries, at least 50% of the total
combined voting power of all classes of stock, or any other entity
(including, but not limited to, partnerships and joint ventures) in
<PAGE>
which the Company owns an interest of at least 50% of the total
combined equity thereof.
(ee) "Successor" or "Successors" shall have the meaning set forth in
Subsection C3(d) of Section 7 hereof.
(ff) "Unit" shall mean a unit of measurement which is measured by the
Fair Market Value of the Common Stock.
Section 3. Effective Date and Term.
The effective date of the Plan, as amended and restated, is August 31, 1998,
subject to approval by the Company's stockholders in separate votes of both (i)
the Plan and (ii) the Merger.
No Award shall be granted pursuant to the Plan on or after the tenth anniversary
of May 26, 1995, the original effective date of the Plan, but Awards theretofore
granted may extend beyond that date.
Section 4. Administration.
The Plan shall be administered by the Board in accordance with the requirements
of Rule 16b-3 as promulgated by the Commission under the Act, or by the
Compensation Committee of the Board plus such additional individuals as the
Board shall designate in order to fulfill the Non-Employee Directors requirement
of Rule 16b-3 and as such Rule may be amended from time to time, or any
successor definition adopted by the Commission, or any other committee the Board
may subsequently appoint to administer the Plan. Any committee so designated
shall be composed entirely of individuals who meet the qualifications referred
to in Rule 16b-3.
Any Awards under this Plan made to Eligible Directors are made to such
non-employee directors solely in their capacity as directors.
Members of the Committee shall serve at the pleasure of the Board of Directors.
Vacancies occurring in the membership of the Committee shall be filled by
appointment by the Board of Directors.
The Committee shall keep minutes of its meetings. A majority of the Committee
shall constitute a quorum thereof and the acts of a majority of the members
present at any meeting of the Committee at which a quorum is present, or acts
approved in writing by a majority of the entire Committee, shall be the acts of
the Committee.
If at any time the Board shall not administer the Plan, then the functions of
the Board shall be exercised by the Committee.
<PAGE>
Section 5. Eligibility.
Subject to the provisions of the Plan, the Administrator shall determine and
designate from time to time those key Employees and/or Eligible Directors of the
Company or its Subsidiaries to whom Awards are to be granted, the number of
shares of Common Stock, SARs or Units to be awarded from time to time to any
individual and the length of the term of any Award. In determining the
eligibility of an Employee or Eligible Director to receive an Award, as well as
in determining the size of the Award to be made to any Employee or Eligible
Director, the Administrator shall consider the position and responsibilities of
the Employee or Eligible Director being considered, the nature and value to the
Company or a Subsidiary of the Employee's or Eligible Director's services and
accomplishments, the Employee's or Eligible Director's present and potential
contribution to the success of the Company or its Subsidiaries and such other
factors as the Administrator may deem relevant. An Employee or Eligible Director
who has been granted an Award in one year shall not necessarily be entitled to
be granted Awards in subsequent years.
More than one Award may be granted to an individual, but the aggregate number of
shares of Common Stock, SARs or Units with respect to which an Award is made to
any individual, during the life of the Plan may not, subject to adjustment as
provided in Section 14 hereof, exceed 10% of the shares of Common Stock reserved
for purposes of the Plan, in accordance with the provisions of Section 6 hereof.
Section 6. Number of Shares Subject to the Plan.
Under the Plan the maximum number and kind of shares with respect to which
Awards may be granted, subject to adjustment in accordance with Section 14
hereof, is thirty million (30,000,000) shares of Common Stock; provided,
however, that in the aggregate, not more than one-tenth (1/10) of such allotted
shares may be made the subject of Awards other than Options and Stock
Appreciation Rights. The Common Stock to be offered under the Plan may be either
authorized and unissued shares or issued shares reacquired by the Company and
presently or hereafter held as treasury shares. The Board of Directors has
reserved for the purposes of the Plan a total of thirty million (30,000,000) of
the authorized but unissued shares of Common Stock, subject to adjustment in
accordance with Section 14 hereof.
If any shares as to which an Award granted under the Plan shall remain unvested
and /or unexercised at the expiration thereof or shall be terminated unvested
and/or unexercised, they may be the subject of further Awards provided that the
Plan has not been terminated pursuant to Section 18 hereof. In addition, if any
Option is exercised by tendering shares to the Company as full or partial
payment of the exercise price in accordance with Subsection C of Section 7
hereof, the number of shares available under this Section 6 shall be increased
by the number of shares so tendered.
Section 7. Stock Options.
The Administrator may grant Options which may be designated as (i) Nonqualified
Stock Options or (ii) Incentive Stock Options. The grant of each Option shall be
confirmed by a Stock Option Agreement (in a form prescribed by the
<PAGE>
Administrator) that shall be executed by the Company and by the Optionee as
promptly as practicable after such grant. The Stock Option Agreement shall
expressly state or incorporate by reference the applicable provisions of this
Plan pertaining to the type of Option granted.
A. Nonqualified Stock Options. A Nonqualified Stock Option is an Award
in the form of an Option to purchase a specified number of shares of
Common Stock during such specified time as the Administrator may
determine, at a price determined by the Administrator that, unless
deemed otherwise by the Administrator, is not less than the Fair Market
Value of the Common Stock on the date the Option is granted.
B. Incentive Stock Options. An Incentive Stock Option is an Award in
the form of an Option to purchase Common Stock that is identified as an
Incentive Stock Option, complies with the requirements of Code Section
422 or any successor section. Eligible Directors shall not be granted
Incentive Stock Options.
C. Provisions Applicable to Either Nonqualified Stock Options or
Incentive Stock Options
1. Option Periods
The term of each Option granted under this Plan shall be for
such period as the Administrator shall determine, but not more
than 10 years from the date of grant thereof, subject to
Subsection 3 of Subsection B hereof, or to earlier termination
as herein after provided in Subsection 3 of this Subsection C.
2. Exercise of Options
Each Option granted under this Plan may be exercised on such
date or dates during the Option Period for such number of
shares as shall be prescribed by the provisions of the Stock
Option Agreement evidencing such Option, provided that:
(a) An Option may be exercised, (i) only by the Optionee
during the continuance of the Optionee's employment by the
Company or a Subsidiary, or (ii) after termination of the
Optionee's employment by the Company or a Subsidiary in
accordance with the provisions of Subsection 3 of this
Subsection C.
(b) An Option may be exercised by the Optionee or a Successor
only by written notice (in the form prescribed by the
Administrator) to the Company specifying the number of shares
to be purchased.
(c) The aggregate Option Price of the shares as to which an
Option may be exercised shall be paid in full upon exercise by
any one or any combination of the following: cash, personal
check, wire transfer, certified or cashier's check or the
transfer, either actually or by attestation, of certificates
for Mature Stock or other Common Stock which was not obtained
through the exercise of a stock option, endorsed in blank or
<PAGE>
accompanied by executed stock powers with signatures
guaranteed by a national bank or trust company or a member of
a national securities exchange.
As soon as practicable after receipt by the Company of notice
of exercise and of payment in full of the Option Price of the
shares with respect to which an Option has been exercised and
any applicable taxes, a certificate or certificates
representing such shares shall be registered in the name of
the Optionee or the Optionee's Successor and shall be
delivered to the Optionee or the Optionee's Successor. An
Optionee or Successor shall have no rights as a stockholder
with respect to any shares covered by the Option until the
Optionee or Successor shall have become the holder of record
of such shares, and, except as provided in Section 14 hereof,
no adjustments shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property)
or distributions or other rights in respect of such shares for
which the record date is prior to the date on which the
Optionee or Successor shall have become the holder of record
thereof.
3. Termination of Employment; Demotion
The effect of the Demotion (as "Demotion" is defined in
Subsection 2(m) of this Plan) of an Optionee by the Company or
of the termination of an Optionee's employment or, in the case
of an Eligible Director, service, with the Company or a
Subsidiary shall be as follows:
(a) Involuntary Termination or Demotion. If the employment or,
in the case of Eligible Director, the service, of an Optionee
is terminated involuntarily by the Company or a Subsidiary or
if the Optionee receives a Demotion, the right to exercise any
outstanding Options, to the extent exercisable, held by such
Optionee shall terminate, notwithstanding any other provisions
herein, on the date such Options expire or three months
following such Demotion or involuntary termination, whichever
first occurs, or such other period (not beyond the expiration
date of the Option) as determined by the Committee and set
forth in the Stock Option Agreement at the time such Option is
granted or thereafter; it being understood, however, that such
right to exercise any outstanding Options during such period
shall only exist to the extent such Options were exercisable
immediately preceding such Demotion or involuntary termination
of employment or service under the provisions of the
applicable agreements relating thereto, unless the
Administrator, in its sole discretion, specifically waives in
writing the restrictions relating to exercisability, if any,
contained in such agreements. Upon expiration of such period,
all of such Optionee's rights under any Option shall lapse and
be without further force or effect.
(b) Disability. If the employment or, in the case of an
Eligible Director, the service, of an Optionee is interrupted
by reason of a "disability," as defined in Albertson's, Inc.
Employees' Disability Benefits Plan or a successor plan or
<PAGE>
Albertson's Southern Region Employees' Disability Benefits
Plan or a successor plan (collectively referred to herein as
the "Disability Plan") and a determination has been made by
the trustees under the Disability Plan that such Optionee is
eligible to receive disability payments thereunder (or, in the
case of an Eligible Director, would otherwise have been
entitled to receive such disability payments thereunder if he
or she was an employee)("Disability Determination"), the right
to exercise any outstanding Options, to the extent
exercisable, held by such Optionee shall terminate,
notwithstanding any other provisions herein, on the date such
Options expire or within three years of the date that the
first payment is made pursuant to the Disability
Determination, whichever is the shorter period, or such other
period (not beyond the expiration date of the Option) as
determined by the Committee and set forth in the Stock Option
Agreement at the time such Option is granted or thereafter; it
being understood, however, that such right to exercise any
outstanding Options during such period shall only exist to the
extent such Options were exercisable immediately preceding the
date of the Disability Determination under the provisions of
the applicable agreements relating thereto, unless the
Administrator in its sole discretion, specifically waives in
writing the restrictions relating to exercisability, if any,
contained in such agreements. Upon expiration of such period,
all of such Optionee's rights under any Option shall lapse and
be without further force or effect.
(c) Retirement. If an Optionee's employment terminates as the
result of retirement of the Optionee under any retirement plan
of the Company or a Subsidiary or, in the case of an Eligible
Director whose service terminates on or after attaining age
65, or age 55 with 10 years of service as a director, an
Optionee with a Nonqualified Stock Option may exercise any
outstanding Nonqualified Stock Option at any time prior to the
expiration date of the Nonqualified Stock Option, or such
other period as determined by the Committee and set forth in
the Stock Option Agreement at the time such Option is granted
or thereafter, and an Optionee with an Incentive Stock Option
may exercise any outstanding Incentive Stock Option at any
time prior to the expiration date of the Incentive Stock
Option or within three months following the effective date of
the Optionee's retirement, whichever is the shorter period; it
being understood, however, that such right to exercise Options
during such applicable periods shall only exist to the extent
such Options were exercisable on the date of such termination
under the provisions of the applicable agreements relating
thereto, unless the Administrator, in its sole discretion,
specifically waives in writing the restrictions relating to
exercisability, if any, contained in such agreements. Upon
expiration of such applicable period all of such Optionee's
rights under the Option shall lapse and be without further
force or effect.
(d) Death. (i) If an Optionee shall die while an Employee or
while serving as a director or within three months after the
date that a determination is made under the Disability Plan
that such Optionee is, or in the case of an Eligible Director,
would have been, eligible to receive disability payments
thereunder, the Optionee's Option or Options may be exercised
by the person or persons entitled to do so under the
<PAGE>
Optionee's will or, if the Optionee shall have failed to make
testamentary disposition of such Options or shall have died
intestate, by the Optionee's legal representative or
representatives (such person, persons, representative or
representatives are referred to herein as the "Successor" or
"Successors" of an Optionee), in either case at any time prior
to the expiration date of such Options or within three years
of the date of the Optionee's death, whichever is the shorter
period, or such other period (not beyond the expiration date
of the Option) as determined by the Committee and set forth in
the Stock Option Agreement at the time such Option is granted
or thereafter; it being understood, however, that such right
to exercise Options during such period shall only exist to the
extent such Options were exercisable on the date of the
Optionee's death under the provisions of the applicable
agreements relating thereto, unless the Administrator, in its
sole discretion, specifically waives in writing the
restrictions relating to exercisability, if any, contained in
such agreements. Upon expiration of such period, all of such
Optionee's rights under any Option shall lapse and be without
further force or effect. (ii) If an Optionee shall die within
three months after the involuntary termination of the
Optionee's employment, the Optionee's Options may be exercised
by the Optionee's Successors at any time prior to the
expiration date of such Options or within one year of the date
of the Optionee's death, whichever is the shorter period, or
such other period (not beyond the expiration date of the
Option) as determined by the Committee and set forth in the
Stock Option Agreement at the time such Option is granted or
thereafter; it being understood, however, that such right to
exercise Options during such period shall only exist to the
extent such Options were exercisable on the date of the
Optionee's retirement or termination of employment under the
provisions of the applicable agreements relating thereto,
unless the Administrator, in its sole discretion, specifically
waives in writing the restrictions relating to exercisability,
if any, contained in such agreements. Upon expiration of such
period all of such Optionee's rights under any Option shall
lapse and be without further force or effect. (iii) If an
Optionee shall die after the Optionee's retirement, the
Optionee's Options may be exercised by the Optionee's
Successors in accordance with Section 7(C)(3)(c) hereof.
(e) Voluntary or Other Termination. If the employment or, in
the case of an Eligible Director, the service, of an Optionee
shall terminate voluntarily or for any reason other than as
set forth in Paragraphs (a), (b), (c) or (d) above, the
Optionee's rights under any then outstanding Options shall
terminate on the date of such termination of employment or
service; provided, however, the Administrator may, in its sole
discretion, take such action as it considers appropriate to
waive in writing such automatic termination and/or the
restrictions, if any, contained in the applicable agreements
relating thereto.
(f) To the extent that an Option may be exercised during a
period designated (expressly or pursuant to an action of the
Administrator) in Subsection C3 of this Section 7, unless
exercised within such designated period, the Option shall
thereafter be null and void.
<PAGE>
4. Other Terms
The Administrator may not reduce the exercise price of an
Option after the date of its grant. Options granted pursuant
to the Plan may contain such other terms, restrictions,
provisions and conditions not inconsistent herewith as may be
determined by the Administrator.
Section 8. Stock Appreciation Rights.
(a) A stock appreciation right or SAR is a right to receive, upon surrender of
the right, but without payment, an amount payable in cash. The amount payable
with respect to each SAR shall be equal in value to the excess, if any, of the
Fair Market Value of a share of Common Stock on the exercise date over the
exercise price of the SAR. The exercise price of the SAR shall be determined by
the Administrator and shall not be less than the Fair Market Value of a share of
Common Stock on the date the SAR is granted.
(b) In the case of an SAR granted in tandem with an Incentive Stock Option to an
Employee who is a Ten Percent Shareholder on the date of such grant, the amount
payable with respect to each SAR shall be equal in value to the excess, if any,
of the Fair Market Value of a share of Common Stock on the exercise date over
the exercise price of the SAR, which exercise price shall not be less than 110%
of the Fair Market Value of a share of Common Stock on the date the SAR is
granted.
(c) The exercise price shall be established by the Administrator at the time the
SAR is granted. A SAR may contain such other terms, restrictions, provisions and
conditions not inconsistent herewith as may be determined by the Administrator.
Section 9. Restricted Stock/Deferred Stock.
(a) Restricted Stock is Common Stock of the Company that is issued to a
Participant at a price determined by the Administrator, which price may be zero
(if permitted by law), and is subject to restrictions on transfer and/or such
other restrictions on incidents of ownership as the Administrator may determine.
Restricted Stock may contain such other terms, restrictions, provisions and
conditions not inconsistent herewith as may be determined by the Administrator.
(b) Deferred Stock is an Award of Common Stock which is made to a Participant at
a price determined by the Administrator, which price may be zero (if permitted
by law) and which is not issued to the Participant until all the restrictions on
transfer and/or such other restrictions on incidents of ownership as the
Administrator has determined have lapsed. Deferred Stock may contain such other
terms, restrictions, provisions and conditions not inconsistent herewith as may
be determined by the Administrator.
(c) The Administrator may provide that the restrictions on shares of Restricted
Stock or any other Award shall lapse upon the achievement by the Company of
specified performance goals. Such performance goals may be expressed in terms of
one or more financial or other objective goals listed below which may be
Company-wide or otherwise, including on a division basis, regional basis or on
<PAGE>
an individual basis. Financial goals may be expressed 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, total stockholder
return, reductions in the Company's overhead ratio and/or expense to sales
ratios, or any one or more of the foregoing. 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.
Section 10. Other Stock-Based Incentive Awards.
The Administrator may from time to time grant Awards under this Plan that
provide the Participant with the right to purchase Common Stock or that are
valued by reference to the Fair Market Value of the Common Stock (including, but
not limited to, phantom securities or dividend equivalents). Such Awards shall
be in a form determined by the Administrator, provided that such Awards shall
not be inconsistent with the terms and purposes of the Plan. The Administrator
will determine the price of any Award and may accept any lawful consideration
therefor. Such Awards may contain such other terms, restrictions, provisions and
conditions not inconsistent herewith as may be determined by the Administrator.
Section 11. No Right to Continued Employment.
Neither the Plan nor any Awards granted under the Plan shall be deemed to confer
upon any Employee any right to continued employment by the Company or any
Subsidiary, and shall not interfere in any way with the right of the Company or
any Subsidiary to demote or discharge the Employee for any reason at any time.
Nothing contained in the Plan shall prevent the Board from adopting other or
additional compensation arrangements, subject to stockholder approval if such
approval is required; and such arrangements may be either generally applicable
or applicable only in specific cases.
Section 12. Listing and Registration of Shares.
If at any time the Board of Directors shall determine, in its discretion, that
the listing, registration or qualification of any of the shares subject to
Awards under the Plan upon any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of or in connection with the purchase or
issuance of shares thereunder, no outstanding Awards may be exercised in whole
or in part and/or shares so purchased or issued unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Board of Directors. The
Board of Directors may require any person exercising an Award to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of the shares in compliance with
applicable law and shall have the authority to cause the Company at its expense
to take any action related to the Plan that may be required in connection with
such listing, registration, qualification, consent or approval.
<PAGE>
Section 13. Acceleration of Awards Upon Change in Control and Termination of
Employment.
(a) Notwithstanding anything to the contrary contained elsewhere in this Plan,
unless the terms of the Award Agreement specifically provide otherwise or unless
otherwise determined by the Administrator in writing at or after award, but
prior to the occurrence of a Change in Control (as defined below), upon a Change
in Control, each outstanding Award shall become immediately vested and/or
exercisable for the total remaining number of shares of Common Stock, SARs or
Units covered by the Award.
(b) Notwithstanding anything to the contrary contained elsewhere in this Plan or
under the terms of any Award Agreement, if any Participant's employment with the
Company is terminated by the Company prior to a Change in Control without Cause
(as defined below) at the direction of a "person" (as defined for purposes of
Section 13(d) of the Act) who has entered into an agreement with the Company the
consummation of which will constitute a Change in Control, the Award of such
terminated Participant shall become immediately exercisable, as of the date
immediately preceding such date of termination, for the total remaining number
of shares of Common Stock, SARs or Units covered by the Award. For purposes of
this Section, "Cause" shall mean (i) the willful and continued failure by the
Participant to substantially perform his or her duties with the Company (other
than due to incapacity due to physical or mental illness) or (ii) the willful
engaging by the Participant in conduct which is demonstrably and materially
injurious to the Company or its Subsidiaries.
(c) For purposes of this Section, "Change in Control" shall mean the occurrence
in a single transaction or series of transactions of any one of the following
events or circumstances: (i) merger, consolidation or reorganization where the
beneficial owners of the voting securities of the Company immediately preceding
such merger, consolidation or reorganization beneficially own less than 80% of
the securities possessing the right to vote to elect directors or to authorize a
merger, consolidation or reorganization with respect to the survivor, after
giving effect to such merger, consolidation or reorganization, (ii) merger,
consolidation or reorganization of the Company where 20% or more of the
incumbent directors of the Company are changed, (iii) acquisition by any person
or group, as defined for purposes of Section 13(d) of the Act, other than a
trustee or other fiduciary holding voting securities of the Company under an
employee benefit plan of the Company (or a corporation owned, directly or
indirectly, by the holders of voting securities of the Company in substantially
the same proportion as their ownership of voting securities of the Company) of
beneficial ownership of 20% or more of the voting securities of the Company
(such amount to include any voting securities of the Company acquired prior to
the effective date of this Plan), (iv) during any period of two (2) consecutive
years, individuals who at the beginning of such period constitute the Board of
Directors and any new director (other than a director designated by a person who
has entered into an agreement with the Company to effect a transaction described
in clauses (i), (ii), (iii) or (v) of this Subsection) whose election by the
Company's stockholders was approved by a vote of at least two-thirds (2/3) of
the directors still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof, or (v) approval by the
stockholders of the Company of a plan of liquidation or dissolution with respect
to the Company or an agreement for the sale or disposition by the Company of all
<PAGE>
or substantially all the Company's assets; provided, that in the event the exact
date of a Change in Control cannot be determined, such Change in Control will be
deemed to have occurred on the earliest date on which it could have occurred.
For these purposes, the Administrator shall rely upon any notice from the
Company that concludes that a Change in Control has occurred. In the absence of
such a notice, the Administrator shall determine whether a Change in Control has
occurred and shall specify the date on which the Change in Control occurred, or
if an exact date cannot be determined, the earliest date on which such Change in
Control could have occurred. Notwithstanding the foregoing, a Change in Control
shall not include, with respect to an individual Participant, any event,
circumstance or transaction described in clauses (i), (ii), (iii), (iv) or (v)
of this Subsection which results, within the six-month period preceding such
event, circumstance or transaction, from the action of any entity or group which
includes, is affiliated with or is wholly or partly controlled by such
individual Participant (a "Participant Group"), provided, however, that such
action shall not be taken into account for this purpose if it occurs within such
six-month period after the action of any person or group (within the meaning of
clause (iii) of this Subsection) which is not a Participant Group.
Section 14. Adjustments.
In the event of any merger, reorganization, consolidation, recapitalization,
stock dividend, stock split-up, reverse stock split, combination of shares or
other change in corporate structure affecting the Common Stock, a substitution
or adjustment shall be made in (i) the aggregate number of shares reserved for
issuance under the Plan, and (ii) the kind, number and Award Price of shares
subject to outstanding Awards granted under the Plan as may be determined by the
Administrator, in its sole discretion, provided that the number of shares
subject to any Award shall always be a whole number. Such other substitutions or
adjustments shall be made as may be determined by the Administrator, in its sole
discretion.
Upon any adjustment made pursuant to this Section 14 the Company will, upon
request, deliver to the Participant or to the Participant's Successors a
certificate of its Secretary setting forth the Award Price thereafter in effect
and the number and kind of shares or other securities thereafter purchasable
upon the exercise of such Award.
Section 15. Use of Proceeds.
The proceeds received by the Company from the sale of shares pursuant to Options
granted under this Plan or from the exercise of other Awards shall be available
for general corporate purposes.
Section 16. Tax Withholding.
The Administrator may establish such rules and procedures as it considers
desirable in order to satisfy any obligation of the Company and any Subsidiary
to withhold federal income taxes or other taxes with respect to any Award made
under the Plan. Such rules and procedures may provide (i) in the case of Awards
paid in shares of Common Stock, that the person receiving the Award may satisfy
the withholding obligation by instructing the Company to withhold shares of
Common Stock otherwise issuable upon exercise of such Award in order to satisfy
<PAGE>
such withholding obligation and (ii) in the case of an Award paid in cash, that
the withholding obligation shall be satisfied by withholding the applicable
amount and paying the net amount in cash to the Participant.
Section 17. Nontransferability.
No Award shall be transferable by the Participant otherwise than by will or by
the laws of descent and distribution or, in the case of an Award other than an
Incentive Stock Option, pursuant to a domestic relations order (within the
meaning of Rule 16a-12 promulgated under the Act), and such Award shall be
exercisable during the lifetime of an Participant only by the Participant or his
or her guardian or legal representative. Notwithstanding the foregoing, the
Administrator may set forth in the Award Agreement evidencing an Award (other
than an Incentive Stock Option) at the time of grant or thereafter, that the
Award may be transferred to members of the Participant's immediate family, to
trusts solely for the benefit of such immediate family members and to
partnerships in which such family members and/or trusts are the only partners,
and for purposes of this Plan, a transferee of an Award shall be deemed to be
the Participant. For this purpose, immediate family means the Participant's
spouse, parents, children, stepchildren and grandchildren and the spouses of
such parents, children, stepchildren and grandchildren. The terms of an Award
shall be final, binding and conclusive upon the beneficiaries, executors,
administrators, heirs and successors of the Participant.
Section 18. Interpretation, Amendments and Termination.
The Administrator may make such rules and regulations and establish such
procedures for the administration of the Plan as it deems appropriate. In the
event of any dispute or disagreement as to the interpretation of this Plan or of
any rule, regulation or procedure, or as to any question, right or obligation
arising from or related to the Plan, the decision of the Administrator shall be
final and binding upon all persons.
The Board may amend, alter or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made that would impair the rights of a
Participant under any Award theretofore granted without such Participant's
consent, or that, without the approval of the Company stockholders, would:
(a) except as provided in Section 14, increase the total number of
shares of Common Stock reserved for the purposes of the Plan;
(b) change the Employees or class of Employees eligible to participate
in the Plan; or
(c) extend the maximum period during which Awards may be granted.
Notwithstanding the foregoing, stockholder approval under this Section 18 shall
be required only at such times and under such circumstances as stockholder
approval would be required under Rule 16b-3 of the Act with respect to any
material amendment to any employee benefit plan of the Company.
<PAGE>
The Administrator may amend the terms of any award theretofore granted,
prospectively or retroactively, but, subject to Section 14 above, no such
amendment shall impair the rights of any holder without his or her consent.
The Board of Directors may, in its discretion, terminate this Plan at any time.
Termination of the Plan shall not affect the rights of Participants or their
Successors under any Awards outstanding and not exercised in full on the date of
termination.
Section 19. General Provisions.
No Award may be exercised by the holder thereof if such exercise, and the
receipt of cash or stock thereunder, would be, in the opinion of counsel
selected by the Administrator, contrary to law or the regulations of any duly
constituted authority having jurisdiction over the Plan.
Absence on leave approved by a duly constituted officer of the Company or any of
its Subsidiaries shall not be considered interruption or termination of service
of any Employee for any purposes of the Plan or Awards granted thereunder,
except that no Awards may be granted to an Employee while he or she is absent on
leave.
No Participant shall have any rights as a stockholder with respect to any shares
subject to Awards granted to him or her under the Plan prior to the date as of
which he or she is actually recorded as the holder of such shares upon the stock
records of the Company.
Nothing contained in the Plan or in Awards granted thereunder shall confer upon
any Employee any right to continue in the employ of the Company or any of its
Subsidiaries or interfere in any way with the right of the Company or any of its
Subsidiaries to terminate his or her employment at any time.
Any Award Agreement may provide that stock issued upon exercise of any Award may
be subject to such restrictions, including, without limitation, restrictions as
to transferability and restrictions constituting substantial risks or forfeiture
as the Committee may determine at the time such Award is granted.
Section 20. Indemnification and Exculpation.
Each person who is or shall have been a member of the Board of Directors or of
the Committee administering the Plan shall be indemnified and held harmless by
the Company against and from any and all loss, cost, liability or expense that
may be imposed upon or reasonably incurred by such person in connection with or
resulting from any claim, action, suit or proceeding to which such person may be
or become a party or in which such person may be or become involved by reason of
any action taken or failure to act under the Plan and against and from any and
all amounts paid by such person in settlement thereof (with the Company's
written approval) or paid by such person in satisfaction of a judgment in any
such action, suit or proceeding, except a judgment in favor of the Company based
upon a finding of such person's lack of good faith; subject, however, to the
condition that, upon the institution of any claim, action, suit or proceeding
against such person, such person shall in writing give the Company an
<PAGE>
opportunity, at its own expense, to handle and defend the same before such
person undertakes to handle and defend it on such person's behalf. The foregoing
right of indemnification shall not be exclusive of any other right to which such
person may be entitled as a matter of law or otherwise, or any power that the
Company may have to indemnify or hold such person harmless.
Each member of the Board of Directors or of the Committee administering the
Plan, and each officer and employee of the Company, shall be fully justified in
relying or acting in good faith upon any information furnished in connection
with the administration of the Plan by any appropriate person or persons other
than such person. In no event shall any person who is or shall have been a
member of the Board of Directors or of the Committee administering the Plan, or
an officer or employee of the Company be held liable for any determination made
or other action taken or any omission to act in reliance upon any such
information, or for any action (including the furnishing of information) taken
or any failure to act, if in good faith.
Section 21. Notices.
All notices under the Plan shall be in writing, and if to the Company, shall be
delivered to the Secretary of the Company or mailed to its principal office, 250
Parkcenter Blvd., Post Office Box 20, Boise, Idaho 83726, addressed to the
attention of the Secretary; and if to a Participant, shall be delivered
personally or mailed to the Participant at the address appearing in the payroll
records of the Company or a Subsidiary. Such addresses may be changed at any
time by written notice to the other party.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ALBERTSON'S
QUARTERLY REPORT TO STOCKHOLDERS FOR THE 39 WEEKS ENDED OCTOBER 29, 1998,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-28-1999
<PERIOD-START> JAN-30-1998
<PERIOD-END> OCT-29-1998
<CASH> 55,140
<SECURITIES> 0
<RECEIVABLES> 148,132
<ALLOWANCES> 1,200
<INVENTORY> 1,448,872
<CURRENT-ASSETS> 1,757,440
<PP&E> 5,931,566
<DEPRECIATION> 2,064,260
<TOTAL-ASSETS> 6,038,267
<CURRENT-LIABILITIES> 1,362,314
<BONDS> 1,629,144
0
0
<COMMON> 245,556
<OTHER-SE> 2,412,032
<TOTAL-LIABILITY-AND-EQUITY> 6,038,267
<SALES> 11,833,764
<TOTAL-REVENUES> 11,833,764
<CGS> 8,634,794
<TOTAL-COSTS> 8,634,794
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 78,123
<INCOME-PRETAX> 602,824
<INCOME-TAX> 226,059
<INCOME-CONTINUING> 376,765
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 376,765
<EPS-PRIMARY> 1.53
<EPS-DILUTED> 1.53
</TABLE>
