F-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
( X )ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1994
OR
( )TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _____ to ____
Commission File Number 1-5392
A. Full title of the Plan and the address of the Plan, if different from
that of the issuer named below:
AMERICAN STORES RETIREMENT ESTATES
B. Name of issuer of the securities held pursuant to the Plan and the
address of its principal executive office:
AMERICAN STORES COMPANY
709 East South Temple
Salt Lake City, UT 84102
The following financial statements of American Stores Retirement Estates
are submitted herewith:
INDEX
Page
Report of Independent Auditors F-3
Statements of Net Assets Available for Benefits -
December 31, 1994 and 1993 F-4
Statements of Changes in Net Assets Available for Benefits -
Years ended December 31, 1994 and 1993 F-5
Notes to Financial Statements F-6 to F-12
The written consent of independent auditors required to be filed as an
exhibit to this report is included on Page F-13 of the financial statements.
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the members of the American Stores Benefit Plans Committee have duly
caused this annual report to be signed by the undersigned hereunto duly
authorized.
AMERICAN STORES RETIREMENT ESTATES
June 29, 1995 By /s/Scott Bergeson
Scott Bergeson, Chairman
American Stores Company
Benefit Plans Committee
REPORT OF INDEPENDENT AUDITORS
The Benefit Plans Committee
American Stores Retirement Estates
We have audited the accompanying statements of net assets available for benefits
of American Stores Retirement Estates as of December 31, 1994 and 1993, and the
related statements of changes in net assets available for benefits for the years
then ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial status of the Plan at December 31, 1994 and
1993, and the changes in its financial status for the years then ended, in
conformity with generally accepted accounting principles.
Ernst & Young LLP
Salt Lake City, Utah
June 19, 1995
AMERICAN STORES RETIREMENT ESTATES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
December 31
1994 1993
ASSETS
<S> <C> <C>
Investments - At Fair Value
American Stores Company Common Stock Fund $ 195,277,854 $ 133,522,501
Fixed Income Fund 210,546,914 254,079,550
Regular Fund 862,700,653 927,918,549
Safety Fund 71,652,479 59,196,478
All Equity Fund 102,549,928 84,749,596
Loans to Participants 90,527,872 72,737,759
1,533,255,700 1,532,204,433
Receivable from American Stores Company 78,177,908 78,000,000
Receivable for net participant activity 1,336,094 976,619
Interest and dividends receivable 878,715 624,073
Net assets available for benefits $ 1,613,648,417 $ 1,611,805,125
See notes to financial statements.
</TABLE>
AMERICAN STORES RETIREMENT ESTATES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
Year Ended December 31
1994 1993
<S> <C> <C>
Additions:
Contributions:
Participants $ 79,396,102 $ 78,489,529
American Stores Company 78,177,908 78,000,000
Forfeitures 2,222,015 2,360,609
159,796,025 158,850,138
Investment income:
Cash dividends:
American Stores Company
Common Stock Fund 3,316,974 2,567,451
Fixed Income Fund 1,381,357 1,471,351
Regular Fund 28,060,954 22,148,579
All Equity Fund 5,265,302 3,126,885
Interest:
American Stores Company
Common Stock Fund 498,141 310,955
Fixed Income Fund 16,837,829 16,154,787
Regular Fund 30,372,912 25,579,786
Safety Fund 3,047,217 2,960,100
All Equity Fund 673,159 425,245
Net realized gains (losses):
American Stores Company
Common Stock Fund 3,631,117 1,824,967
Fixed Income Fund (16,344,300) 7,184,168
Regular Fund 12,230,991 53,559,600
Safety Fund (189,925) (157,321)
All Equity Fund 7,992,362 5,276,769
Transfers from (to) other plan s (71,188,468) 9,095,153
Exchanges from other funds 192,697,059 95,857,477
378,078,706 406,236,090
Deductions:
Withdrawals 110,302,921 107,241,309
Investment manager fees 4,104,776 3,611,117
Custodial fees 975,207 895,846
Administrative fees 1,781,677 1,698,217
Exchanges to other funds 192,697,059 95,857,477
309,861,640 209,303,966
Net unrealized appreciation
(depreciation) of
investments - Note C (66,373,774) 42,742,301
Net additions 1,843,292 239,674,425
Net assets available for benefits at beginning of year 1,611,805,125 1,372,130,700
Net assets available for benefits at end of year $ 1,613,648,417 $ 1,611,805,125
See notes to financial statements.
</TABLE>
AMERICAN STORES RETIREMENT ESTATES
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investments: Investments are stated at fair value. American Stores Company
Common Stock, which is traded on national securities exchanges, and other equity
securities are valued at the last reported sales price on the last business day
of the Plan year. All government and corporate debentures are valued at the
last reported sales price on the last business day of the Plan year on a
national security exchange plus any accrued interest. If there are no such
sales or listings on a national security exchange, alternative sources are used.
Loans to participants are stated at cost which approximates fair value.
Withdrawals and Exchanges: Withdrawals and exchanges between investment fund
options by participants are recorded based upon the specific proceeds and cost
of the investment at the date of withdrawal or exchange.
Realized Gain (Loss): The realized gain (loss) on investments is the
difference between the proceeds received and the average cost of specific
investments sold.
Unrealized Appreciation (Depreciation): Unrealized appreciation
(depreciation) for the year is the difference between the fair values at the
beginning and the end of the year.
NOTE B - DESCRIPTION OF PLAN
American Stores Retirement Estates (the Plan) was authorized by the Board of
Directors of American Stores Company and was effective January 1, 1985 for the
benefit of certain employees of American Stores Company and its subsidiaries
(the Company). The Plan is a defined contribution profit sharing plan
maintained primarily for the purpose of providing retirement income for
participants and is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
Employees become eligible to participate in the Plan upon completion of two
years of service or, if the employee is 21 years of age or older, upon the
completion of one year of service. Effective July 1, 1995, employees become
eligible to participate in the Plan upon completion of one year of service
regardless of age. Employees represented by labor organizations are not
eligible to participate in the Plan unless the Company and the labor
organization specifically agree to the contrary.
Plan participants may make personal deposits to the Plan on either or both a tax
deferred and an after-tax basis. Company contributions to the Plan are set each
year at the discretion of the Company's Board of Directors for the prior Plan
year and are irrevocable. The Company contributions and forfeitures are first
used to restore the previously forfeited accounts of rehired participants
pursuant to Plan provisions. The remainder of such contributions and
forfeitures are then allocated to Plan participants, as described below: one
quarter is allocated among participants who made personal deposits to the Plan,
pro rata, based upon the amounts of their deposits of up to 6% of compensation.
Three quarters are allocated among participants as follows: (i) each
participant who has received compensation in excess of the Social Security wage
base for the year is allocated an amount equal to such excess times the maximum
amount allowable under Code Section 401(1); and (ii) any amount remaining is
allocated among all participants in proportion to the total compensation of each
for the year. Allocations to collective bargaining unit employees are offset by
obligations of the Company to contribute to a collective bargaining unit plan. A
participant's 1994 compensation in excess of $150,000 (adjusted periodically) is
excluded in determining the amount of Company Contributions and forfeitures
allocated to the participant.
AMERICAN STORES RETIREMENT ESTATES
NOTES TO FINANCIAL STATEMENTS
NOTE B - DESCRIPTION OF PLAN (CONTINUED)
Company contributions made on behalf of participants that are not based upon
deposits made by such participants vest on a graduated schedule. For all
participants who perform at least one hour of service in any year beginning on
or after January 1, 1989, the schedule commences with 30% at three years of
service and increases annually to full vesting at seven years of service (the 7-
Year Vesting Schedule). Personal deposits of participants and Company
Contribution allocations based upon personal deposits of participants fully vest
immediately.
The Plan presently maintains five investment fund options in which participants
may invest. The investment fund options are as follows: (i) Company Stock Fund
- - consisting solely of American Stores Company Common Stock. This fund provides
a high degree of risk because of the volatility generally associated with a
single stock investment; (ii) Fixed Income Fund - provides a low to moderate
level of risk because of the diversity of government and corporate securities in
the fund that pay interest. This fund contains both domestic and international
investments; (iii) Regular Fund - provides moderate risk because of the
balance between stocks and fixed income investments. The fund is diversified
across industry sectors and types of equity and fixed income securities and
contains both domestic and international investments; (iv) Safety Fund -
provides a very low level of risk because of the high-quality, short-maturity
fixed income investments included in the fund; (v) All Equity Fund - provides a
moderate to high level of risk. The All Equity fund is diversified across
industry sectors and contains both domestic and international equity
investments.
Participants may apportion their deposits between more than one investment fund
option and can change their current deposit investment mix as often as desired.
Existing participant account balances can be exchanged between investment fund
options every 30 days.
Each participant's share of the Company contribution and forfeitures is
automatically invested according to their current deposit investment mix.
Participants not making personal deposits may specify an investment option for
the Company contribution. If a specification is not made, the Company
contribution will be invested in the Fixed Income Fund.
Usual and customary investment manager fees, trustee fees, and all outside
administrative costs are paid by the Plan.
The number of employees in each investment fund option (an employee can invest
in more than one fund option) at December 31, 1994 was:
Investment Fund Option Employees
American Stores Company Common Stock Fund 14,295
Fixed Income Fund 30,525
Regular Fund 40,734
Safety Fund 2,419
All Equity Fund 10,956
AMERICAN STORES RETIREMENT ESTATES
NOTES TO FINANCIAL STATEMENTS
NOTE B - DESCRIPTION OF PLAN (CONCLUDED)
Upon separation from service, participants can elect to withdraw balances either
in a lump sum or in installments, or the balances can be left in the Plan.
Individuals who transferred amounts to the Plan which are attributable to the
former American Stores Company Retirement Plan may receive their entire Plan
account balance as a deferred annuity. Active employees may withdraw after-tax
personal deposits at any time, but may only withdraw tax deferred personal
deposits upon the occurrence of an extreme financial hardship. Participants may
also obtain loans from the Plan within certain limits.
NOTE C - INVESTMENTS
The Plan's assets are held by Fidelity Management Trust Company, the Trustee of
the Plan, which executes all transactions therein under the direction of the
Benefit Plans Committee. The assets are held in a Master Trust, commingled with
assets of the Company's other benefit plans. The Company's benefit plans
participating in the Master Trust collectively own, through the Master Trust,
the assets based upon investment percentages. Participant transaction activity
is designated to specific plans. Accordingly, each plan's investment percentage
in the Master Trust changes regularly. Income earned by the Master Trust is
allocated to the various plans based upon the investment percentage on the day
the income is earned.
The investment percentages of each fund in the Master Trust at December 31 are:
1994 1993
American Stores Company
Common Stock Fund 7% 5%
Fixed Income Fund 8% 9%
Regular Fund 32% 33%
Safety Fund 3% 2%
All Equity Fund 4% 3%
AMERICAN STORES RETIREMENT ESTATES
NOTES TO FINANCIAL STATEMENTS
NOTE C - INVESTMENTS (CONCLUDED)
The total assets, liabilities and results of operations of the Master Trust
are as follows:
<TABLE>
December 31
1994 1993
<S> <C> <C>
Assets $ 2,750,653,525 $ 2,862,327,862
Liabilities 92,061,129 75,116,932
Net Assets in Master Trust $ 2,658,592,396 $ 2,787,210,930
Change in Net Assets $ (128,618,534) $ 275,073,037
</TABLE>
The cost of investments at December 31, 1994 and 1993 are as follows:
<TABLE>
Number of Shares Cost of Investments
1994 1993 1994 1993
<S> <C> <C> <C> <C>
American Stores Company
Common Stock Fund 7,229,789 6,154,212 $ 132,095,386 $ 101,189,245
Fixed Income Fund 216,825,570 248,464,198
Regular Fund 855,146,755 847,679,511
Safety Fund 71,838,857 59,382,439
All Equity Fund 104,162,266 73,718,513
$ 1,380,068,834 $ 1,330,433,906
</TABLE>
<TABLE>
The net unrealized appreciation (depreciation) in the aggregate from cost to
fair value of investments are as follows:
<S> <C>
Net unrealized appreciation at December 31, 1992 $ 86,290,467
Net 1993 unrealized appreciation 42,742,301
Net unrealized appreciation at December 31, 1993 129,032,768
Net 1994 unrealized depreciation (66,373,774)
Net unrealized appreciation at December 31, 1994 $ 62,658,994
</TABLE>
AMERICAN STORES RETIREMENT ESTATES
NOTES TO FINANCIAL STATEMENTS
NOTE D - ASSET TRANSFERS
The Star Market division was sold during 1994. Plan assets totaling $71,188,468
for those participants continuing employment with Star Market were transferred
to Star Market Retirement Estates (SMRE). SMRE is not administered by or
affiliated with American Stores Company.
During 1993, $13,286,668 was transferred to the Plan from the terminated
American Stores Company Retirement Plan. Of that amount, $4,191,515 was
immediately paid out to participants of the terminating plan who requested lump
sum distributions, resulting in a net transfer of $9,095,153.
NOTE E - FINANCIAL INSTRUMENTS
Certain Plan investment managers invest in derivative foreign exchange forward
contracts for purposes of hedging or moderating the currency risks associated
with holding investments denominated in foreign currencies. Foreign exchange
forward contracts represent agreements to exchange the currency of one country
for the currency of another country at an agreed-upon price, on an agreed-upon
settlement date. Contracts are generally taken for periods ranging from 30 to
90 days, then renewed, generally, if the Plan continues to hold the underlying
foreign investment. Each investment manager's usage of such derivative
financial instruments is limited by the Plan's contractual investment
guidelines which prohibit the speculative or leveraged use of derivatives.
Foreign exchange forward contracts are stated at fair value, under the heading
of `Investments' in the Statements of Net Assets Available for Benefits, which
represents the amounts that the Plan would be required to pay, at December 31,
1994, to cancel the contracts or transfer them to other parties.
The notional or contract amounts of foreign exchange forward contracts are not
recorded as assets or liabilities on the Statements of Net Assets Available
for Benefits and do not represent the potential gain or loss associated with
such transactions.
At December 31, 1994, the Plan had the following open foreign exchange forward
contracts:
FORWARD CONTRACTS TO SELL FOREIGN CURRENCIES AND BUY US DOLLARS
Notional Amount Fair Value
Fixed Income Fund $ 36,893,738 $ (391,548)
Regular Fund 62,270,129 (618,708)
All Equity Fund 1,188,222 8,191
$ 100,352,089 $ (1,002,065)
FORWARD CONTRACTS TO BUY FOREIGN CURRENCIES AND SELL US DOLLARS
Notional Amount Fair Value
Fixed Income Fund $ 7,891,747 $ (2,610)
Regular Fund 12,804,780 (4,235)
$ 20,696,527 $ (6,845)
AMERICAN STORES RETIREMENT ESTATES
NOTES TO FINANCIAL STATEMENTS
NOTE E - FINANCIAL INSTRUMENTS (CONCLUDED)
Credit risk represents the Plan's potential loss on foreign exchange forward
contracts if all counterparties to such contracts fail to perform according to
the terms of the contract. Credit risk is calculated using year-end currency
exchange rates. Historically, there have not been any losses associated with
counterparty non-performance on foreign exchange forward contracts. Exposure
to loss on these contracts will increase or decrease over the lives of the
contracts as currency exchange rates fluctuate.
At December 31, 1994, credit risk related to these contracts was as follows:
Fixed Income Fund $ 53,792
Regular Fund 103,879
All Equity Fund 8,191
$ 165,862
NOTE F - ALLOCATION OF PLAN ASSETS TO INVESTMENT FUND OPTIONS
<TABLE>
RECEIVABLE RECEIVABLE
FROM (PAYABLE) INTEREST
AMERICAN FOR NET AND
INVESTMENT STORES PARTICIPANT DIVIDENDS NET ASSETS AVAILABLE
FUND OPTION INVESTMENTS COMPANY* ACTIVITY RECEIVABLE FOR PLAN BENEFITS
<S> <C> <C> <C> <C> <C>
As of December 31, 1994
ASC Common
Stock Fund $ 195,277,854 $ (62,308) $ 878,715 $ 196,094,261
Fixed Income Fund 210,546,914 204,353 210,751,267
Regular Fund 862,700,653 679,516 863,380,169
Safety Fund 71,652,479 375,179 72,027,658
All Equity Fund 102,549,928 139,354 102,689,282
Company Contribution 78,177,908 78,177,908
Loans to Participants 90,527,872 ___________ __________ _________ 90,527,872
TOTAL $ 1,533,255,700 $ 78,177,908 $ 1,336,094 $ 878,715 $ 1,613,648,417
As of December 31, 1993
ASC Common
Stock Fund $ 133,522,501 $ 5,842,683 $ 34,411 $ 624,073 $ 140,023,668
Fixed Income Fund 254,079,550 14,021,611 39,286 268,140,447
Regular Fund 927,918,549 48,146,424 551,461 976,616,434
Safety Fund 59,196,478 1,499,753 190,913 60,887,144
All Equity Fund 84,749,596 8,489,529 160,548 93,399,673
Loans to Participants 72,737,759 ___________ _________ _________ 72,737,759
TOTAL $ 1,532,204,433 $ 78,000,000 $ 976,619 $ 624,073 $ 1,611,805,125
* Balances reclassified to reflect actual allocations for 1993
AMERICAN STORES RETIREMENT ESTATES
NOTES TO FINANCIAL STATEMENTS
NOTE G - ALLOCATION OF PLAN INCOME AND CHANGES IN PLAN ASSETS TO INVESTMENT
FUND OPTIONS
THIS NOTE IS OVER 132 CHARACTERS WIDE. NOTE G WILL BE FILED ON PAPER WITH THE
SEC.
NOTE H - INCOME TAX STATUS
The Internal Revenue Service ruled on May 9, 1995 that the Plan qualifies
under Section 401(a) of the Internal Revenue Code (IRC) and, therefore, the
underlying trust is not subject to tax under IRC Section 501(a). Once
qualified, the Plan is required to operate in conformity with the IRC to
maintain its qualification. The Plan Administrator is not aware of any
course of action or series of events that have occurred that might adversely
affect the Plan's qualified status.
NOTE I - TRANSACTIONS WITH PARTIES-IN-INTEREST
During 1994 and 1993, the ASC Stock Fund received $3,062,332 and $2,573,135,
respectively, in common stock dividends from American Stores Company.
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-25613) pertaining to American Stores Retirement Estates of
our report dated June 19, 1995, with respect to the financial statements of
American Stores Retirement Estates included in this Annual Report (Form 11-K)
for the year ended December 31, 1994.
ERNST & YOUNG LLP
Salt Lake City, Utah
June 27, 1995
</TABLE>
