SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 29, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
_______ SECURITIES EXCHANGE ACT OF 1934
For the transition period from________to__________
Commission file number 1-5392
AMERICAN STORES COMPANY
(Exact name of registrant as specified in its charter)
Delaware 87-0207226
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
709 East South Temple
Salt Lake City, Utah 84102
(Address of principal executive offices) (Zip Code)
801-539-0112
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last
report)
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
APPLICABLE ONLY TO ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes____ No____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of November 26, 1994: Common Stock, Par Value $1.00 -
142,850,274 shares.
Part I. Financial Information
Item 1. Financial Statements
AMERICAN STORES COMPANY
Consolidated Condensed Statements of Earnings
(unaudited)
(In thousands, except per share data)
Thirteen Weeks Ended
October 29, October 30,
1994 1993
Sales $4,431,863 $4,531,715
Cost of merchandise sold, including
warehousing and transportation
expenses 3,248,697 3,336,317
Gross profit 1,183,166 1,195,398
Operating and administrative expenses 1,062,184 1,058,404
Operating profit 120,982 136,994
Other income (expense):
Interest income 1,982 1,145
Interest expense (39,595) (46,830)
Gains on asset sales, other 87,785 699
Net other income (expense) 50,172 (44,986)
Earnings before income taxes 171,154 92,008
Federal and state income taxes 73,220 46,600
Net earnings $97,934 $45,408
Net earnings per share:
Primary earnings per share (1) $0.69 $0.32
Fully diluted earnings per share (1) $0.66 $0.31
Average shares outstanding (1) 142,810 142,382
Dividends per share (1) $0.12 $0.10
______________________________________________________________________________
See accompanying notes to consolidated condensed financial statements.
(1) Third quarter 1993 has been restated to reflect the March 1994 two-
for-one stock split.
AMERICAN STORES COMPANY
Consolidated Condensed Statements of Earnings
(unaudited)
(In thousands, except per share data)
Thirty-Nine Weeks Ended
October 29, October 30,
1994 1993
Sales $13,708,533 $13,892,877
Cost of merchandise sold, including
warehousing and transportation
expenses 10,073,063 10,271,508
Gross profit 3,635,470 3,621,369
Operating and administrative expenses 3,212,902 3,212,572
Operating profit 422,568 408,797
Other income (expense):
Interest income 4,359 3,249
Interest expense (129,229) (143,846)
Gains on asset sales, other 84,262 29,820
Net other income (expense) (40,608) (110,777)
Earnings before income taxes and extra-
ordinary item 381,960 298,020
Federal and state income taxes 167,029 137,604
Earnings before extraordinary item 214,931 160,416
Extraordinary item -- early retire-
ment of debt, net of tax (1) 0 (15,000)
Net earnings $214,931 $145,416
Earnings per share before extra-
ordinary item (2) $1.51 $1.13
Extraordinary item (2) 0 ($0.11)
Net earnings per share:
Primary earnings per share (2) $1.51 $1.02
Fully diluted earnings per share (2) $1.46 $1.00
Average shares outstanding (2) 142,725 142,108
Dividends per share (2) $0.36 $0.30
______________________________________________________________________________
See accompanying notes to consolidated condensed financial statements.
(1) A pre-tax charge of $25 million ($15 million, net of tax) for early
retirement of debt, previously reported in "Gains (losses) on asset
sales, other" in the first quarter of 1993 has been reclassified as an
extraordinary item.
(2) Year-to-date 1993 has been restated to reflect the March 1994 two-for-
one stock split.
AMERICAN STORES COMPANY
Consolidated Condensed Balance Sheets
(unaudited)
(In thousands of dollars)
October 29, January 29,
1994 1994
Current Assets:
Cash and cash equivalents $ 64,608 $ 59,580
Short term investments 133,045 0
Inventories 1,585,786 1,539,610
Other current assets 378,990 396,619
Total current assets 2,162,429 1,995,809
Property, plant and equipment, less
accumulated depreciation and amortization
of $1,768,302 on October 29, 1994 and
$1,694,150 on January 29, 1994 2,651,128 2,704,040
Property under capital leases, less
accumulated amortization of $113,036
on October 29, 1994 and $108,394 on
January 29, 1994 88,624 97,127
Goodwill 1,784,454 1,827,334
Other assets 271,714 303,124
Assets $6,958,349 $6,927,434
Current Liabilities:
Current maturities of long-term debt and
capital lease obligations $ 91,603 $ 76,538
Accounts payable 1,004,397 958,272
Accrued payroll and benefits 311,255 303,160
Current portion of self-insurance
reserves 157,035 212,891
Income taxes payable 80,435 118,279
Other current liabilities 403,372 384,959
Total current liabilities 2,048,097 2,054,099
Long-term debt, less current
maturities 1,973,592 2,003,866
Obligations under capital leases, less
current maturities 79,617 87,595
Self-insurance reserves, less current
portion 454,209 464,451
Deferred income taxes 301,977 345,760
Other liabilities 183,788 229,378
Shareholders' equity 1,917,069 1,742,285
Liabilities and Shareholders'
Equity $6,958,349 $6,927,434
______________________________________________________________________________
See accompanying notes to consolidated condensed financial statements.
AMERICAN STORES COMPANY
Consolidated Condensed Statements of Cash Flows
(unaudited)
(In thousands of dollars)
Thirty-Nine Weeks Ended
October 29, October 30,
1994 (1) 1993
Cash Flows from Operating Activities:
Net earnings $214,931 $145,416
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 303,110 285,691
Net (gain) loss on asset sales (117,118) 13,907
Deferred income taxes (42,084) (12,645)
Self-insurance reserves and other (108,528) (29,053)
(Increase) decrease in current assets:
Inventories (95,763) (37,248)
Other current assets (138,394) 20,763
Increase (decrease) in current liabilities:
Accounts payable 76,699 22,002
Accrued payroll and benefits 5,226 (41,226)
Other current liabilities (9,326) (32,864)
Total adjustments (126,178) 189,327
Net cash provided by operating
activities 88,753 334,743
Cash Flows from Investing Activities:
Proceeds from disposition of division,
net of cash 287,990 0
Expended for property, plant and
equipment (312,649) (444,636)
Proceeds from sale of other assets 4,268 26,120
Net cash used in investing activities $(20,391) ($418,516)
(continued on next page)
AMERICAN STORES COMPANY
Consolidated Condensed Statements of Cash Flows (continued)
(unaudited)
(In thousands of dollars)
Thirty-Nine Weeks Ended
October 29, October 30,
1994 (1) 1993
Cash Flows from Financing Activities:
Proceeds from long-term borrowing $530,000 $100,000
Payments of long-term borrowing (737,278) (176,357)
Net increase in borrowing under
existing credit facilities 192,032 200,994
Principal payments for obligations under
capital leases (7,941) (7,548)
Proceeds from exercise of stock options 11,248 4,739
Other changes in equity (1) (10)
Cash dividends (51,394) (42,655)
Net cash (used in) provided by financing
activities (63,334) 79,163
Net increase (decrease) in cash and cash
equivalents 5,028 (4,610)
Cash and cash equivalents:
Beginning of year 59,580 54,048
End of quarter $ 64,608 $ 49,438
Supplementary Information - Statements of Cash Flows:
Cash paid during the year for:
Interest (net of amounts capitalized) $145,238 $147,418
Income taxes, net of refunds $241,029 $144,895
Sale of Division:
Proceeds from the disposition of division,
net of cash $287,990
Basis in assets disposed of and liabilities
retained by the Company (166,990)
Gain on disposition $121,000
______________________________________________________________________________
See accompanying notes to consolidated condensed financial statements.
(1) Cash flow amounts are shown after removing the effect of the sale of Star
Market.
AMERICAN STORES COMPANY
Notes to Consolidated Condensed Financial Statements
(unaudited)
October 29, 1994
Basis of Presentation
In the opinion of management, the accompanying unaudited consolidated condensed
financial statements contain all normal recurring adjustments necessary to
present fairly the financial position of American Stores Company and its
subsidiaries as of October 29, 1994 and January 29, 1994 and the results of its
operations for the thirteen and thirty-nine weeks ended October 29, 1994 and
October 30, 1993 and cash flows for the thirty-nine weeks ended October 29, 1994
and October 30, 1993. The operating results for the interim periods are not
necessarily indicative of results for a full year. For a further discussion of
the Company's accounting policies, please refer to the Company's Form 10-K for
the fiscal year ended January 29, 1994.
Net Earnings Per Share
Primary earnings per share are determined by dividing the year-to-date weighted
average number of shares outstanding into net earnings. Common share
equivalents in the form of stock options are excluded from the calculation of
primary earnings per share since they have no material dilutive effect on per
share figures. Fully diluted earnings per share includes the assumed conversion
of subordinated convertible debt and stock options into common stock.
Stock Split
On March 21, 1994, the Board of Directors declared a two-for-one stock split
that was paid to shareholders on April 21, 1994 in the form of a stock dividend.
All references to the number of shares and per share amounts have been restated
to reflect the effect of the split.
Disposition of Assets
On September 8, 1994, the Company sold its 33-store Star Market food division of
grocery stores to an investment group for $293.0 million and the assumption of
substantially all of Star Market's outstanding liabilities. Sales for Star
Market amounted to $86.9 million during the third quarter and $497.0 million for
the year-to-date through the date of disposition. Operating profit totalled
$0.8 million during the third quarter and $12.6 million for the year-to-date
through the date of disposition. The sale resulted in a pre-tax gain of
approximately $121.0 million or $0.50 per share.
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of Operations
Total sales for the third quarter of 1994 amounted to $4.4 billion compared to
$4.5 billion in 1993. Total sales excluding the sales of Star Market, amounted
to $4.3 billion in the third quarters of 1994 and 1993. Total sales for the
thirty-nine weeks year-to-date 1994 were approximately $13.7 billion compared to
$13.9 billion in the prior year. Total sales year-to-date third quarter
excluding Star Market, were $13.2 billion in 1994 compared to $13.3 billion in
1993. The Company operated 1,640 stores at October 29, 1994 compared to 1,712
stores at October 30, 1993 (in each case, including the food and drug sides of
149 and 147 jointly operated Jewel Osco combination stores, respectively, which
are counted as two stores). On September 8, 1994, the Company sold its 33-store
Star Market food division of grocery stores to an investment group for $293.0
million and the assumption of substantially all of Star Market's outstanding
liabilities. The table below presents sales by major operating division:
<TABLE>
<CAPTION>
13 Weeks Ended 39 Weeks Ended
Comparable October 29, October 30, Comparable October 29, October 30,
Stores 1994 1993 Stores 1994 1993
% Change % Change
<F1> <F1>
<S> <C> <C> <C> <C> <C> <C>
Sales:
Eastern food operations 1.24% $1,531,853 $1,522,848 0.77% $4,701,406 $ 4,763,814
Western food operations 0.10% 1,730,068 1,762,547 -2.06% 5,221,950 5,381,807
Drug store operations 4.67% 1,080,094 1,038,916 4.36% 3,278,700 3,103,611
Other 2,938 4,193 9,487 8,876
Subtotal 1.53% 4,344,953 4,328,504 0.48% 13,211,543 13,258,108
Disposed of operations<F2> 86,910 203,211 496,990 634,769
Total sales $4,431,863 $4,531,715 $13,708,533 $13,892,877
<FN>
<F1> Comparable store sales include stores opened one year or more, replacement
stores and also excludes
the disposed Star Market food division.
Like store sales for comparable operations, including stores opened one year or
more and excluding
Star Market, for the 13 weeks ended October 29, 1994 were:
Eastern food operations 0.84%
Western food operations -0.30%
Drug store operations 4.58%
Total 1.28%
Eastern food operations include Acme Markets and Jewel Food Stores.
Western food operations include Lucky Northern California Division, Lucky
Southern California Division, Jewel Osco - New Mexico and the new warehouse
format stores.
Drug store operations include Osco Drug and Sav-on.
<F2> Sales of Star Market.
</FN>
</TABLE>
Net earnings for the third quarter of 1994 were $97.9 million or $0.69 per share
compared to $45.4 million or $0.32 per share for the same period of the prior
year. Net earnings for the thirty-nine weeks year-to-date 1994 amounted to
$214.9 million or $1.51 per share. The 1994 third quarter results include a non
- -recurring gain on the sale of Star Market of $0.50 per share, charges of $0.13
per share for closed store reserves and $0.10 for reserves for costs related to
centralization of administrative functions, including information technology and
accounting. The third quarter 1993 net earnings include a cumulative adjustment
for the retroactive tax rate increase of $0.04 per share. The 1994 year-to-date
results include the previously mentioned gain and charges, plus the impact of
expenses related to the on-going consolidation of the information technology
data centers and the impact of a voluntary
Part I - Financial Information (continued)
severance program initiated at Acme Markets in the first quarter of 1994,
totalling $0.05 per share. Excluding these charges, year-to-date third quarter
net earnings were $1.29 per share.
Net earnings for the thirty-nine weeks year-to-date 1993 amounted to $145.4
million or $1.02 per share which includes a net non-recurring pre-tax gain of
$45.7 million from the resolution of the "Rule of 80" litigation offset by
approximately $13.6 million of miscellaneous one-time charges, amounting to a
net of $0.14 per share. The "Rule of 80" litigation concerned the Company's
termination of the early retirement feature of an employee retirement plan. See
the 1993 Form 10-K for discussion of the litigation. Third quarter year-to-date
1993 net earnings were impacted by $0.04 per share due to the Omnibus Budget
Reconciliation Act of 1993 which increased the Company's annual effective income
tax rate retroactively to January 1, 1993. Net earnings for the year-to-date
third quarter of 1993 were also impacted by charges incurred in the early
retirement of debt which was accounted for as an extraordinary item. In
connection with the debt restructuring, the Company extinguished $146.0 million
of debt and expensed the related costs of prepaying such debt and related
derivatives. The restructuring resulted in an extraordinary pre-tax loss of $25
million ($15 million, net of tax) or $0.11 per share.
Gross profit for the third quarters of 1994 and 1993 amounted to $1.2 billion or
26.7% of sales in 1994 and 26.4% of sales in 1993. For the thirty-nine weeks
year-to-date, gross profit was approximately $3.6 billion or 26.5% of sales in
1994 compared to $3.6 billion or 26.1% of sales in the prior year. The pre-tax
LIFO charge to earnings for the third quarter was $6.0 million in 1994 and $8.0
million in 1993. The pre-tax LIFO charge to earnings for the thirty-nine weeks
year-to-date amounted to $26.0 million in 1994 and $30.0 million in 1993.
Total operating profit for the third quarter of 1994 amounted to $121.0 million
or 2.7% of sales compared to $137.0 million or 3.0% of sales in the third
quarter of 1993. Operating profit for the thirty-nine weeks year-to-date
amounted to $422.6 million or 3.1% of sales compared to $408.8 million or 2.9%
of sales in the prior year. Third quarter and year-to-date operating profit was
negatively impacted by a charge of $23.9 million or $0.10 per share related to
centralization costs as explained above. The eastern food operations and drug
store operations reported higher operating profit for the third quarter and year
- -to-date periods. The eastern food operations' increase in operating profit was
primarily due to effective promotions and reduced operating expenses due to
improved warehouse and store labor productivity and decreased workers'
compensation and health care claims costs. The drug store operations
experienced a 31.4% increase in operating profit for the third quarter compared
to the prior year. This increase is the result of improved sales and gross
margins due primarily to increased generic prescription sales which generate
higher gross margin dollars per prescription. The western food operations were
negatively impacted by the closure of 11 northern and southern California Lucky
Stores which will be reopened under the new warehouse format. The table which
follows presents operating profit by major operating division:
Part I - Financial Information (continued)
13 Weeks Ended 39 Weeks Ended
Oct. 29, Oct. 30, Oct. 29 Oct. 30,
1994 1993 1994 1993
Operating Profit:
Eastern food operations $ 60,157 $ 53,106 $179,128 $158,610
Western food operations 62,340 69,820 183,018 177,932
Drug store operations 42,842 32,606 149,943 128,994
LIFO (6,000) (8,000) (26,000) (30,000)
Purchase accounting
amortization (19,677) (19,776) (59,194) (59,459)
Other (19,441) 3,620 (16,960) 12,289
Subtotal 120,221 131,376 409,935 388,366
Disposed of operations 761 5,618 12,633 20,431
Total operating profit $120,982 $136,994 $422,568 $408,797
Eastern food operations include Acme Markets and Jewel Food Stores.
Western food operations include Lucky Northern California Division, Lucky
Southern California Division, Jewel Osco - New Mexico and the new warehouse
format stores.
Drug store operations include Osco Drug and Sav-on.
"Other" includes real estate operations and a third quarter 1994 charge of
$23.9 million for
centralization costs.
Net other income for the third quarter of 1994 included interest income of $2.0
million, net gain from asset sales and miscellaneous items of $87.8 million,
including $121.0 million or $0.50 per share from the sale of Star Market, a
charge for reserves for closed facilities of $31.3 million or $0.13 per share
and interest expense of $39.6 million. Net other expense for the third quarter
of 1993 included interest income of $1.1 million, net gain from asset sales and
miscellaneous items of $0.7 million and interest expense of $46.8 million.
Net other expense for the thirty-nine weeks year-to-date in 1994 included
interest income of $4.4 million, net gain from asset sales and other
miscellaneous items of $84.3 million, including the gain on Star Market and
closed facility charges mentioned above and interest expense of $129.2 million.
Net other expense for the same period in 1993 included interest income of $3.2
million, net gain from asset sales and other miscellaneous income of $29.8
million and interest expense of $143.8 million. The lower interest expense
reported in the current year was primarily due to lower levels of average
outstanding debt and lower interest rates. The 1993 net gain of $29.8 million
includes $45.7 million from the resolution of the "Rule of 80" litigation offset
by approximately $13.6 million of miscellaneous one-time charges.
The third quarter of 1994 earnings before income taxes amounted to $171.2
million or 3.9% of sales compared to $92.0 million or 2.0% of sales in 1993.
For the thirty-nine weeks year-to-date 1994, earnings before income taxes and
extraordinary item amounted to $382.0 million or 2.8% of sales compared to
$298.0 million or 2.1% of sales for the same period of 1993.
The effective income tax rate for the third quarter of 1994 was 42.8% compared
to the third quarter of 1993 rate of 50.6%. The year-to-date effective income
tax rate was 43.7% compared to 46.2% in 1993. The Omnibus Budget Reconciliation
Act of 1993 increased the Company's annual effective federal tax rate
retroactively to January 1, 1993. The retroactive portion of the increased tax
rates (approximately $0.04 per share) was reflected in the third quarter of
1993. The effective income tax rate for the third quarter and year-to-date 1994
decreased from the corresponding periods in the prior year due to the
aforementioned 1993 retroactive adjustment and the leverage effect that higher
pre-tax earnings in 1994 have on the relatively fixed goodwill amortization
which is not deductible for income tax purposes.
Average shares outstanding for the thirty-nine weeks in 1994 and 1993 were 142.7
million and 142.1 million, respectively.
Part I - Financial Information (continued)
Financial Condition
The Company uses cash provided from operations and, if necessary, borrowing
under credit facilities to finance its daily operations. Net cash provided by
operations for the thirty-nine weeks ended October 29, 1994 amounted to $88.8
million, compared to $334.7 million in the first thirty-nine weeks of 1993.
Working capital amounted to $114.3 million at October 29, 1994 compared to a
negative $58.3 million at January 29, 1994. The change in working capital is
due to seasonal changes, an increase in short term investments due to the sale
of Star Market and a decrease in current self-insurance reserves. Significant
changes in the components of working capital are customary and are not
indicative of long-term trends.
Net cash used in investing activities amounted to $20.4 million in 1994,
compared to $418.5 million in 1993 reflecting lower capital expenditures and the
$293 million of proceeds from the sale of Star Market in 1994. Cash capital
expenditures for the first thirty-nine weeks of 1994 and 1993 amounted to $312.6
million and $444.6 million, respectively. The Company plans to substantially
increase capital expenditures in the fourth quarter of 1994 compared to the
spending levels in each of the prior three quarters. Additionally, capital
expenditures represented by the net present value of operating leases, amounted
to $3.3 million in 1994, compared to $54.2 million for the corresponding period
in 1993 which included the acquisition of 55 Reliable drug stores. For the year
- -to-date period of 1994, 21 stores were opened, 76 were closed and 95 stores
were remodeled.
Net cash used in financing activities in the first thirty-nine weeks of 1994 was
$63.3 million, compared to $79.2 million provided by financing activities in the
corresponding 1993 period. This reflects a net decrease in debt in 1994
compared to a net increase in debt in 1993. In the third quarter of 1994, the
Company received $293 million in proceeds from the sale of Star Market, $153
million of which was used to pay down debt while the balance of $140 million was
invested in short term investments. In the second quarter of 1994, the Company
entered into a $1.0 billion revolving credit facility which expires in 1999
which replaced an existing $800 million credit facility which would have expired
in 1996. In addition, the Company prepaid a $139 million loan which matured in
1996, retired $100 million of Eurobonds which matured in the second quarter and
borrowed $50 million due in 1996. The prepayment of the Company's indebtedness
under the previous credit agreement reduced the Company's mandatory debt
payments and made more of the Company's cash flow available for working capital
and capital expenditures. Cash flow from operations, supplemented by credit
available under the Company's existing credit facilities, is expected to be
adequate to meet the Company's presently identifiable requirements.
On September 30, 1994 the Company entered into an agreement to sell 45 of its
Acme Markets stores located in northern Pennsylvania and New York to the Penn
Traffic Company for $75.5 million plus inventory, or an estimated total purchase
price of $94 million. The sale is subject to customary closing conditions and
necessary regulatory approvals, including the mandatory waiting period under the
Hart-Scott-Rodino Act, and is expected to close in January, 1995.
The ratio of total debt (debt plus obligations under capital leases) to total
capitalization (total debt plus common shareholders' equity) amounted to 52.8%
at October 29, 1994 and 55.4% at January 29, 1994. The Company anticipates that
the current portion of long-term debt will be paid through internally generated
funds or through refinancing of existing debt.
Part I - Financial Information (continued)
The Company's ratio of earnings to fixed charges for the thirty-nine week
periods ending October 29, 1994 and October 30, 1993 were 2.89 to 1 and 2.25 to
1, respectively. In computing the ratio of earnings to fixed charges, earnings
consist of pre-tax income from continuing operations including the impact of an
extraordinary item, plus fixed charges (adjusted for capitalized interest.)
Fixed charges consist of interest, whether expensed or capitalized (including
the amortization of debt expense), plus the amount of rental expense which is
representative of the interest factor in the particular case.
The improvement in the ratio from 1993 to 1994 is primarily due to reduced
interest expense resulting from lower average outstanding debt and lower average
interest rates, as well as higher pre-tax income from continuing operations in
the current year which was positively impacted by the sale of Star Market.
One measure commonly used in the financial community to measure a company's
ability to service debt and make interest payments is through a FIFO-EBITDA
analysis. The FIFO-EBITDA calculation eliminates non-cash charges to earnings
as well as interest expense and taxes. FIFO-EBITDA should not be considered an
alternative to net income as an indicator of the Company's operating performance
or as an alternative to cash flows as a measure of liquidity. The Company's
earnings before LIFO charge, interest expense, taxes, depreciation and
amortization and extraordinary item (FIFO-EBITDA) for the thirty-nine weeks
ended October 29, 1994 were $840.3 million compared to $757.6 million for the
comparable 1993 period. The 1993 FIFO-EBITDA included $29.8 million in net
gains on asset sales, other, compared to a net gain on asset sales, other of
$84.3 million in 1994. The 1994 calculation was improved further by higher
operating profit. The Company's cash interest payments (net of amounts
capitalized) for the thirty-nine weeks in 1994 were 17.3% of FIFO-EBITDA
compared to 19.5% of FIFO-EBITDA for the corresponding 1993 period.
Contingencies
The Company, from time to time, has disposed of leased properties and may retain
certain contingent lease liabilities, either by contract or law. Although the
Company is unaware of any material assertions against it from such dispositions,
such claims may arise in the future. If such claims were asserted, the expense
to the Company would consist of unpaid lease obligations, such as rents, which
may be offset by subletting the property, negotiating favorable lease
terminations, operating the facilities or applying existing reserves.
The Company has identified environmental contamination sites related primarily
to underground petroleum storage tanks at various store, warehouse, office and
manufacturing facilities (related to current operations as well as previously
disposed of businesses). At most such locations, remediation is either underway
or has been completed. Although the ultimate outcome and expense of
environmental remediation is uncertain, the Company believes that required
remediation and continuing compliance with environmental laws, in excess of
current reserves, will not have a material adverse effect on the financial
position or results of operations of the Company.
Part II - Other Information
Item 1.Legal Proceedings -- For a description of legal proceedings, please
refer to the footnote entitled "Legal Proceedings" contained in the
Notes to Consolidated Financial Statements section of the Company's Form
10-K for the fiscal year ended January 29, 1994, and to the section
captioned "Item 1. Legal Proceedings" in the Company's quarterly reports
on Form 10-Q for the quarters ended April 30 and July 30, 1994.
The Company is also involved in various claims, administrative
proceedings and other legal proceedings which arise from time to time in
connection with the ordinary conduct of the Company's business.
Item 2. Changes in Securities -- None
Item 3. Defaults upon Senior Securities -- None
Item 4. Submission of Matters to a Vote of Security Holders -- None.
Item 5.Other Information -- On September 30, 1994, the Company entered into an
agreement to sell 45 of its Acme Market stores located in northern
Pennsylvania and New York to The Penn Traffic Company for $75.5 million
plus the estimated value of inventory, or an estimated total purchase
price of $94 million. The sale is subject to customary closing
conditions and necessary regulatory approvals, including the mandatory
waiting period under the Hart-Scott-Rodino Act, and is expected to close
in January, 1995.
Item 6. Exhibits and Reports on Form 8-K --
(a) Exhibits --
(11) Calculations of earnings per share.
(27) Financial Data Schedule
(b) Reports on Form 8-K filed during the quarter -- None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
American Stores Company
(Registrant)
Dated December 12, 1994 /s/ Teresa Beck
Teresa Beck
Executive Vice President,
Chief Financial Officer and
Assistant Secretary
Dated December 12, 1994 /s/ Kathleen E. McDermott
Kathleen E. McDermott
Executive Vice President,
General Counsel and Assistant Secretary
Dated December 12, 1994 /s/ Bradley M. Vierig
Bradley M. Vierig
Vice President and Controller
Financial Accounting
(Chief Accounting Officer)
Exhibit 11
AMERICAN STORES COMPANY
Calculation of Earnings Per Share
(unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-NineWeeks Ended
October 29, October 30, October 29, October 30,
1994 1993 <F1> 1994 1993 <F1>
<S> <C> <C> <C> <C>
Primary Earnings Per Share
Earnings applicable to shareholders
before extraordinary item $ 97,934 $ 45,408 $214,931 $160,416
Extraordinary item 0 0 0 (15,000)
Earnings applicable to shareholders $ 97,934 $ 45,408 $214,931 $145,416
Earnings per share before extraordinary
item $0.69 $0.32 $1.51 $1.13
Extraordinary item 0 0 0 (0.11)
Primary earnings per share $0.69 $0.32 $1.51 $1.02
Average shares outstanding 142,810 142,382 142,725 142,108
Fully Diluted Earnings Per Share
Earnings applicable to shareholders
before extraordinary item $ 97,934 $ 45,408 $214,931 $160,416
Plus interest on convertible
debentures 1,903 1,903 5,709 5,709
Fully diluted earnings applicable to share-
holders before extraordinary item 99,837 47,311 220,640 166,125
Extraordinary item 0 0 0 (15,000)
Earnings applicable to shareholders $ 99,837 $ 47,311 $220,640 $151.125
Earnings per share before extraordinary
item $0.66 $0.31 $1.46 $1.10
Extraordinary item 0 0 0 (0.10)
Fully diluted earnings per share $0.66 $0.31 $1.46 $1.00
Fully diluted average shares
outstanding 151,254 151,010 151,234 150,830
(detail and footnotes on page following)
</TABLE>
Exhibit 11
AMERICAN STORES COMPANY
Calculation of Earnings Per Share (continued)
(unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-NineWeeks Ended
October 29, October 30, October 29, October 30,
1994 1993 <F1> 1994 1993 <F1>
<S> <C> <C> <C> <C>
Calculation of Fully Diluted Average Shares Outstanding
Effect of assumed exercise of stock options:
Proceeds from assumed exercise $ 13,388 $ 21,869 $ 14,652 $ 24,549
Shares under options outstanding 1,166 1,858 1,279 2,102
Shares assumed acquired with proceeds
under the treasury stock method (500) (1,008) (548) 1,158)
Incremental shares due to assumed
exercise of stock options 666 850 731 944
Fully diluted average shares outstanding:
Average shares outstanding 142,810 142,382 142,725 142,108
Assumed exercise of stock options 666 850 731 944
Assumed conversion of debentures 7,778 7,778 7,778 7,778
Total 151,254 151,010 151,234 150,830
<FN>
<F1> Restated as necessary to reflect the March 1994 two-for-one stock split.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet and income statements for the Thirty-nine week period ended Oct 29, 1994.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-END> OCT-29-1994
<CASH> 64,608<F1>
<SECURITIES> 0
<RECEIVABLES> 269,011
<ALLOWANCES> 0
<INVENTORY> 1,585,786
<CURRENT-ASSETS> 2,162,429
<PP&E> 4,419,430
<DEPRECIATION> 1,768,302
<TOTAL-ASSETS> 6,958,349
<CURRENT-LIABILITIES> 2,048,097
<BONDS> 2,053,209
<COMMON> 144,542
0
0
<OTHER-SE> 1,772,527
<TOTAL-LIABILITY-AND-EQUITY> 6,958,349
<SALES> 13,708,533
<TOTAL-REVENUES> 13,708,533
<CGS> 10,073,063
<TOTAL-COSTS> 10,073,063
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 129,229
<INCOME-PRETAX> 381,960
<INCOME-TAX> 167,029
<INCOME-CONTINUING> 214,931
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 214,931
<EPS-PRIMARY> $1.51
<EPS-DILUTED> $1.46
<FN>
<F1>All numbers except EPS are in (000's).
</FN>
</TABLE>
