FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the fiscal year ended February 3, 1996.
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)
Registrant's telephone number, including area code: (801) 539-0112
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock ($1 par value) Chicago Stock Exchange, Inc.
and New York Stock Exchange, Inc.
Preferred Share Purchase Rights Pacific Stock Exchange, Inc.
Registered on: Philadelphia Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
None
Indicate by checkmark 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
AMERICAN STORES COMPANY
FORM 10-K
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
State the aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 30, 1996:
Common Stock, $1 Par Value -- $4,082,248,500.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of March 30, 1996:
Common Stock, $1 Par Value -- 149,889,236.
Documents Incorporated by Reference:
Portions of the registrant's 1995 Annual Report to its shareholders for the
fiscal year ended February 3, 1996 (Annual Report), to the extent specifically
incorporated herein, are incorporated by reference into Parts I, II and IV.
Portions of the Proxy Statement to be filed with the Securities and Exchange
Commission relating to the registrant's Annual Meeting of Shareholders to be
held on June 19, 1996 (Proxy Statement), to the extent specifically incorporated
herein, are incorporated by reference into Part III.
AMERICAN STORES COMPANY
FORM 10-K
TABLE OF CONTENTS
PART I
Page Number
Item 1 Business.........................................................4
Item 2 Properties.......................................................7
Item 3 Legal Proceedings................................................10
Item 4 Submission of Matters to a Vote of Security Holders..............10
PART II
Item 5 Market for the Registrant's Common Equity and
Related Shareholder Matters...................................10
Item 6 Selected Financial Data..........................................10
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations...........................10
Item 8 Financial Statements and Supplementary Data......................10
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure...........................10
PART III
Item 10 Directors and Executive Officers of the Registrant...........11
Item 11 Executive Compensation.......................................14
Item 12 Security Ownership of Certain Beneficial Owners
and Management............................................14
Item 13 Certain Relationships and Related Transactions...............14
PART IV
Item 14 Exhibits, Financial Statement Schedules, and
Reports on Form 8-K..........................................14
Signatures.........................................................18
AMERICAN STORES COMPANY
FORM 10-K
PART I
Item 1 Business
HISTORY
American Stores Company, a Delaware corporation (the Company) traces its
roots to 1939 with the purchase of four drug stores in Utah, Idaho and
Montana and was incorporated in Delaware in 1965 under the name of
Skaggs Drug Centers, Inc. The Company grew initially through the
acquisition of additional drug stores and, from 1969 through 1977,
through a partnership with Albertson's that developed food and drug
combination stores. In 1979, in order to enhance its food retailing
capabilities, the Company acquired American Stores Company, including
Acme Markets, and adopted the American Stores Company name. In 1984
Jewel Companies, Inc. was acquired by the Company, adding Jewel Food
Stores and the Osco and Sav-on drug stores. In 1988, the Company
acquired Lucky Stores, Inc. which currently operates stores in
California and Nevada.
After each acquisition mentioned above, the Company has reviewed the
consolidated group and disposed of selected stores and divisions to
reduce debt as well as to focus on growth opportunities available to the
remaining entities. Past major dispositions have included the Rea &
Derick drug chain, two groups of food stores in Arizona, Kash n' Karry,
Buttrey Food and Drug, Alpha Beta Company, 74 Jewel Osco combination
stores in Texas, Florida, Oklahoma and Arkansas, 51 Osco drug stores in
the intermountain region, the 33-store Star Market food division and 45
Acme Markets stores.
OPERATIONS
The Company is principally engaged in a single industry segment, the
retail sale of food and drug merchandise. The Company's principal food
operations are Acme Markets and Jewel Food Stores (the eastern food
operations) and Lucky Stores Northern California Division and Southern
California Division and Jewel Osco Southwest (the western food
operations). The Company's drug stores operate under the Osco Drug and
Sav-on names (the drug store operations).
The Company is one of the nation's leading food and drug retailers,
operating stand-alone food and drug stores and combination food/drug
store units. The Company's operations are generally located in major
metropolitan markets where they hold leading market positions (generally
first or second in overall market share). At year-end 1995, the Company
operated 1,650 stores in 26 states including 153 Jewel Osco combination
stores which are jointly operated by Osco Drug and Jewel Food Stores and
are counted as two separate stores.
PART I - (Continued)
Item 1 Business - (Continued)
The following is a summary of stores by state and operating company as of
February 3, 1996:
<TABLE>
Jewel Lucky Stores Lucky Stores
Acme Food Northern CA Southern CA Jewel Osco Osco
State Markets Stores Division Division Southwest Drug Sav-on Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Arizona 66 66
Arkansas 6 6
California 187 222 259 668
Delaware 15 15
Illinois 173 221 394
Indiana 6 63 69
Iowa 2 18 20
Kansas 26 26
Kentucky 1 1
Maine 1 1
Maryland 12 12
Massachusetts 44 44
Michigan 5 5 10
Minnesota 2 2
Missouri 29 29
Montana 8 8
Nebraska 12 12
Nevada 21 5 22 48
New Hampshire 17 17
New Jersey 81 81
New Mexico 11 11
North Dakota 6 6
Pennsylvania 82 82
South Dakota 3 3
Vermont 1 1
Wisconsin 1 17 18
Total Stores 190 187 187 243 11 551 281 1,650
</TABLE>
See "Item 2 Properties" for additional information concerning properties
of the registrant.
The Company tailors the merchandising and advertising of its stores to
the demographics in each area it serves. The merchandise sold by the
Company's retail food and combination food/drug stores includes most
food items and non-food items, such as prescription drugs, health and
beauty aids and sundry merchandise.
The combination stores and many of the food stores include specialty
departments such as delicatessens, bakeries, seafood departments and
pharmacies. The Company operates private label merchandising programs,
including such brands as "Lady Lee" at Lucky Stores, "Lancaster" meats
and "Acme" groceries at Acme, "Jewel" at Jewel stores and "Osco" and
"Sav-on" at Osco and Sav-on stores, respectively. "American Premier"
has been introduced as a premium brand in the drug stores while "Value
Wise" is now the budget brand across all of American Stores companies.
The Company has the
PART I - (Continued)
Item 1 Business - (Continued)
exclusive right to sell "President's Choice," premium grocery products,
in the geographic markets where Acme, Jewel and Lucky operate stores.
COMPETITION
In all areas in which the Company operates, the business is highly
competitive, with competition from local and national supermarket and
drug store chains as well as independent stores. Competition also
includes such retailers as convenience stores, warehouse stores and
membership or club stores. Some of the Company's largest competitors in
various regions are Dominicks, Long's, Pathmark, Ralphs, Safeway,
Thrifty Payless, Vons and Walgreens. Principal competitive factors in
the industry include store location, the price and quality of products,
variety of selection, quality of service and store image, including
cleanliness and promotions.
The Company's business is characterized by narrow profit margins and,
accordingly, its successful financial performance depends primarily on
its ability to maintain relatively high sales volume and control
operating costs. The Company's geographic diversity allows it to reduce
the risk that competitive pressures in individual markets may have on
its overall operating results. The Company's food and drug stores
collectively operate in nine of the 25 largest U.S. metropolitan areas
(Source: Progressive Grocer 1996 Market Scope) and hold a leading market
position (generally first or second in overall market share) in each.
These market areas include: Los Angeles-Long Beach, Chicago,
Philadelphia, Boston, Riverside-San Bernardino, San Diego, Orange
County, Phoenix and Oakland.
SEASONALITY
The Company is subject to effects of seasonality. Food and drug store
sales are higher in the Company's fourth quarter than other quarters due
to the holiday season. The Company's drug store sales are also
generally higher in the fourth quarter in connection with the increase
in cold and flu occurrences during this quarter.
EMPLOYEES
At year-end 1995, the Company had approximately 121,000 full and part-
time employees. Approximately 77% of the Company's employees are
covered by collective bargaining agreements negotiated with local unions
affiliated with one of seven different international unions. There are
approximately 118 such agreements, typically having three to five year
terms. Accordingly, the Company renegotiates a significant number of
these agreements every year.
PART I - (Continued)
Item 1 Business - (Continued)
INCORPORATION BY REFERENCE
The section entitled "Fiscal Year" in the Notes to Consolidated
Financial Statements on page 22, the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" on pages 13 through 15 and the section entitled
"Contingencies" on page 30 of the Annual Report are incorporated herein
by reference.
Item 2 Properties
The Company categorizes its retail stores into the following types:
supermarkets, superstores, combination food/drug stores, drug stores,
warehouse-type stores and other. At year-end 1995, the Company operated
480 supermarkets, 109 superstores, 365 combination stores, 673 drug
stores, 14 warehouse-type stores and nine stand-alone pharmacies. The
365 combination stores include 153 Jewel Osco combination stores which
are jointly operated by Jewel Food Stores and Osco Drug and are counted
as two separate stores.
Combination stores are stores with 40,000 or more square feet, they
include a pharmacy department and have an expanded selection of food,
drug and general merchandise. Combination stores average approximately
55,500 square feet. Superstores are stores in excess of 40,000 square
feet that do not meet combination store criteria. Superstores average
approximately 48,400 square feet. Supermarkets average approximately
28,200 square feet. Stand-alone drug stores average approximately
19,200 square feet. Warehouse-type stores average approximately 44,600
square feet.
The Company owns approximately 25% of its retail locations; the
remaining retail locations are leased under capitalized or operating
leases. The Company also owns, or controls through long-term leases,
its distribution, warehouse and maintenance support facilities. At year-
end 1995, owned property, with a net book value of approximately $113.5
million, collateralized loans secured by real estate of approximately
$83.5 million. The Company currently finances new construction of owned
stores through internally generated funds and borrowings under existing
credit facilities.
Throughout the country, the Company leases and owns distribution
centers, fleet maintenance shops and warehouses for merchandise such as
dry grocery, produce, frozen foods and general merchandise. These
facilities support the Company's retail outlets and do not have
significant sales to unrelated third parties.
PART I - (Continued)
Item 2 Properties - (Continued)
The Company also owns or leases office space, owns land for future
development and operates dairies, bakeries and other manufacturing or
processing facilities that supply many of its retail outlets with a
variety of private label merchandise. Manufacturing facilities operate
at levels of production required to meet the demands of customers at the
Company's retail locations.
At year-end 1995, the store counts by various types of stores and total
square footage were as follows:
<TABLE>
Store Count by Type of Stores
Super- Super- Warehouse-
markets stores Combination Drug Type Other Total
<S> <C> <C> <C> <C> <C> <C> <C>
Eastern Food Operations:
Acme Markets 149 2 39 190
Jewel Food Stores (1) 30 4 153 187
Total Eastern Operations 179 6 192 377
Western Food Operations:
Lucky Stores - North 152 27 2 6 187
Lucky Stores - South 149 76 10 8 243
Jewel Osco Southwest 8 3 11
Total Western Operations 301 103 20 3 14 441
Drug Store Operations:
Osco Drug (1) 153 389 9 551
Sav-on ___ ___ ___ 281 ___ ___ 281
Total Drug Operations ___ ___ 153 670 9 832
Total 480 109 365 673 14 9 1,650
(1) The 365 combination stores include 153 Jewel Osco combination stores
which are jointly operated by Jewel Food Stores and Osco Drug and are
counted as two separate stores.
</TABLE>
PART I - (Continued)
Item 2 Properties - (Continued)
Thousands of Square Feet
Retail Distribution, Warehouse
Locations and Maintenance Facilities
Eastern Food Operations:
Acme Markets 6,020 1,626
Jewel Food Stores 6,515 1,618
Total Eastern Operations 12,535 3,244
Western Food Operations:
Lucky Stores - North 6,124 1,545
Lucky Stores - South 9,107 3,012
Jewel Osco Southwest 565
Total Western Operations 15,796 4,557
Drug Store Operations:
Osco Drug 9,998 906
Sav-on 5,770 985
Total Drug Operations 15,768 1,891
Non-retail Operations 131
Total 44,099 9,823
The Company operated 14 manufacturing or processing facilities at year-
end 1995 as follows:
Type of Facility Number of Plants and Locations
Bakery 4-Melrose Park, Illinois; San Leandro, California;
Buena Park, California; San Diego, California
Dairy 4-Sacramento, California; San Leandro, California;
Buena Park, California; Escondido, California
Photo Finishing 3-Braintree, Massachusetts; Elgin, Illinois;
Burbank, California
Ice Cream 1-Buena Park, California
Fixture Shop 1-Payson, Utah
Deli Packaging 1-San Leandro, California
See also Item 1, Business, for Additional Information on Properties of
the Registrant.
The section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" on pages 13 through 15 of the
Annual Report is incorporated herein by reference.
PART I - (Continued)
Item 3 Legal Proceedings
The section entitled "Legal Proceedings" on page 30 of the Annual Report
is incorporated herein by reference.
Item 4 Submission of Matters to a Vote of Security Holders
There were no matters submitted to the security holders of the Company
for a vote during the quarter ended February 3, 1996.
PART II
Item 5 Market for the Registrant's Common Equity and Related Shareholder
Matters
The section entitled "Common Stock Market Prices and Dividends" on the
bottom of page 1 of the Annual Report is incorporated herein by
reference.
Item 6 Selected Financial Data
The section entitled "Selected Financial Data" on page 12 of the Annual
Report is incorporated herein by reference.
Item 7 Management's Discussion and Analysis of Financial Condition and
Results of Operations
The section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" on pages 13 through 15 of the
Annual Report is incorporated herein by reference.
Item 8 Financial Statements and Supplementary Data
The Company's consolidated financial statements and related notes
thereto, together with the Report of Independent Auditors and the
selected quarterly financial data of the Company presented on pages 17
to 31 of the Annual Report are incorporated herein by reference.
Item 9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10 Directors and Executive Officers of the Registrant
There is hereby incorporated by reference the information under the
captions "Election of Directors", "Information Regarding the Nominees
Standing for Election in 1996" and "Information Regarding Directors who
are not Nominees for Election and Whose Terms Continue Beyond 1996" in
the Proxy Statement.
In addition to the information regarding Directors and Executive
Officers set forth above, the following represents information regarding
Executive Officers of the registrant as of March 20, 1996:
Officer Offices Held Age
David L. Maher Chief Operating Officer of the registrant 57
since March 1995 and President since June
1995; prior thereto, Senior Executive Vice
President and Chief Operating Officer-Drug
from March 1993; Chairman of the Board and
Chief Executive Officer of American Drug
Stores, Inc. from September 1990 and President
from March 1990.
Kent T. Anderson Chief Operating Officer - Strategy and 42
Development of the registrant since August
1995; prior thereto, Chief Strategy Officer
from March 1995; prior thereto, Executive Vice
President and General Manager - American Stores
Properties, Inc. from March 1993; prior thereto,
General Counsel from February 1987 and Executive
Vice President from February 1989.
Teresa Beck Chief Financial Officer of the registrant 41
since March 1995; prior thereto, Executive
Vice President and Chief Financial Officer
from June 1994; prior thereto, Executive Vice
President Finance from March 1994; prior
thereto, Executive Vice President Administration
from March 1992; prior thereto, Senior Vice
President Finance and Assistant Treasurer from
June 1989. Assistant Secretary from June 1989
until March 1995.
PART III - (Continued)
Item 10 Directors and Executive Officers of the Registrant - (Continued)
Officer Offices Held Age
James R. Clark Chief Planning Officer of the registrant since 52
March 1995; prior thereto, Senior Vice President
Strategy and Change Management from December 1993.
Senior Vice President Marketing and Planning,
Lucky Stores, Inc. from August 1991 to December
1993.
Robert P. Hermanns Chief Operating Officer - Procurement & 52
Logistics of the registrant since March 1995;
prior thereto, Senior Executive Vice President
and Chief Operating Officer - Food from April
1994; prior thereto, Executive Vice President
and General Manager - Southern Division of
Lucky Stores, Inc. from August 1991.
Kathleen E. McDermott Chief Legal Officer of the registrant since 46
May 1995 and Assistant Secretary since June
1993; prior thereto, Executive Vice President
and General Counsel from June 1993; partner
of the law firm of Collier, Shannon, Rill &
Scott from prior to 1991 to June 1993.
Stephen L. MannschreckChief Human Resources Officer of the registrant 50
since March 1995; prior thereto, Executive
Vice President Human Resources from June 1994;
prior thereto, Executive Vice President and
General Manager - Osco Drug from March 1993;
prior thereto, Executive Vice President and
Chief Operating Officer of the Osco Division
of American Drug Stores, Inc. from September
1990.
Francis J. Raucci Chief Labor Officer of the registrant since 59
May 1995; prior thereto, Executive Vice
President Chief Labor Counsel from June 1994;
prior thereto, Senior Vice President and Chief
Labor Counsel from December 1993 to June 1994;
prior thereto Senior Vice President and
Assistant General Counsel from April 1989 to
December 1993.
PART III - (Continued)
Item 10 Directors and Executive Officers of the Registrant - (Continued)
Officer Offices Held Age
Martin A. Scholtens Chief Operating Officer - Retail of the 53
registrant since March 1995; prior thereto,
Executive Vice President and General Manager -
Lucky Southern California Division from March
1994; prior thereto, Executive Vice President
and General Manager - Acme from March 1993;
prior thereto, President of Acme Markets, Inc.
from April 1991.
Jack Lunt Senior Vice President of the registrant since 51
March 1993; prior thereto, Vice President
from April 1989. Assistant General Counsel and
Secretary since April 1989.
J. Greg Spencer Senior Vice President, Treasurer and Assistant 39
Secretary of the registrant since June 1995;
prior thereto, Vice President, Corporate
Transactions and Senior Counsel from March
1992; prior thereto, Vice President, Senior
Real Estate Counsel of American Stores
Properties, Inc. from November 1988.
Bradley M. Vierig Senior Vice President of the registrant since 38
June 1995 and Controller since March 1994;
prior thereto, Vice President and Assistant
Treasurer from August 1992 to March 1994; Vice
President Corporate Financial Planning from
March 1990 to July 1992.
PART III - (Continued)
Item 11 Executive Compensation
There is hereby incorporated by reference the information under the
captions "Directors' Compensation", "Executive Compensation",
"Options/SAR Grants in Last Fiscal Year", "Aggregated Option/SAR
Exercises in Last Fiscal Year and Fiscal Year-End Option/SAR Value",
"Long-Term Incentive Plans-Awards in Last Fiscal Year", "Pension Plans",
"Employment Agreements" and "Other Information Pertaining to Directors
and Executive Officers" in the Proxy Statement.
Item 12 Security Ownership of Certain Beneficial Owners and Management
There is hereby incorporated by reference the information under the
caption "Beneficial Ownership of Securities" in the Proxy Statement.
Item 13 Certain Relationships and Related Transactions
There is hereby incorporated by reference the information under the
captions "Information Regarding the Nominees Standing for Election in
1996", "Information Regarding Directors who are not Nominees for
Election and Whose Terms Continue Beyond 1996", "Footnotes to the
Foregoing Information Regarding Directors and Nominees for Director of
the Company", "Directors' Compensation", and "Other Information
Pertaining to Directors and Executive Officers" in the Proxy Statement.
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K
Item 14(a)(1) - Financial Statements
The following consolidated financial statements of the registrant and
its subsidiaries, included in the Annual Report, are incorporated by
reference in Item 8:
Consolidated Statements of Earnings for the fiscal years 1995, 1994 and
1993;
Consolidated Balance Sheets for the fiscal years ended 1995, 1994 and
1993;
Consolidated Statements of Cash Flows for the fiscal years 1995, 1994
and 1993;
Consolidated Statements of Shareholders' Equity for the fiscal years
1995, 1994 and 1993;
Notes to Consolidated Financial Statements.
PART IV - (Continued)
Item 14(a)(2) - Supplementary Data and Financial Statement Schedules
The supplementary data entitled "Quarterly Results (Unaudited)" on page
31 of the Annual Report is incorporated by reference in Item 8.
In response to Item 14(d), all schedules for which provision is made in
the applicable accounting regulations of the Securities and Exchange
Commission are not required under the related instructions or are
inapplicable, and therefore have been omitted.
Item 14(a)(3) - Exhibits
In response to Item 14(c), the following exhibits are submitted as a separate
section of this report:
3.1 The restated Certificate of Incorporation of American Stores Company, as
amended.
3.2 The By-Laws of American Stores Company as amended.
4.1 The Rights Agreement dated March 8, 1988 between the Company and First
Chicago Trust Company of New York, formerly Morgan Shareholder Services
Trust Company, as Rights Agent, and the amendments thereto, are
incorporated by reference to the Registrant's Registration Statement on
Form 8-A as filed with the Commission on March 16, 1988, and Amendment Nos.
1, 2 and 3 to such Registration Statement filed on March 28, 1990, July 17,
1991 and May 16, 1994, respectively.
4.2 Senior Indenture dated May 1, 1995 between the Company and the First
National Bank of Chicago, as Trustee, is incorporated herein by
reference to Exhibit 4.1 of Form 10-Q as filed with the Commission on
June 12, 1995.
4.3 Form of 7-1/4% Debenture due 2005 is incorporated herein by reference to
Exhibit 4.2 of Form 10-Q as filed with the Commission on June 12, 1995.
10.1 Credit Agreement dated as of June 28, 1994 among the Company, the banks
listed therein and Morgan Guaranty Trust Company of New York as Agent, is
incorporated herein by reference to Exhibit 4.3 to Amendment No. 1 to the
Form S-3 Registration Statement (Registration No. 33-52331) filed with the
Commission on November 2, 1994.
PART IV - (Continued)
Item 14(a)(3) - Exhibits (Continued)
10.2 Amended and Restated Retirement Plan for Non-Employee Directors is
incorporated herein by reference to Exhibit 10.2 of Form 10-K as filed
with the Commission on April 26, 1995. *
10.3 Non-Employee Directors' Deferred Fee Plan is incorporated herein by
reference to Exhibit 10.3 to Form 8 as filed with the Commission on July
12, 1991. *
10.4 Supplemental Executive Retirement Plan as amended and restated on June 24,
1994 is incorporated herein by reference to Exhibit 10.4 of Form 10-K as
filed with the Commission on April 26, 1995. *
10.5 1989 Stock Option and Stock Award Plan is incorporated herein by reference
to the Registrant's S-8 Registration Statement (Registration No. 33-32150)
filed with the Commission on November 16, 1989. *
10.6 The 1985 Stock Option and Stock Award Plan is incorporated herein by
reference to the Registrant's S-8 Registration Statement (Registration No.
33-08801) filed with the Commission on September 22, 1986. *
10.7 American Stores Company Key Executive Stock Purchase Incentive Plan is
incorporated herein by reference to Exhibit A to the Registrant's 1992
Proxy Statement filed with the Commission on May 7, 1992. *
10.8 American Stores Company Board of Directors Stock Purchase Incentive Plan as
Amended and Restated is incorporated herein by reference to Exhibit 10.11
of Form 10-K as filed with the Commission on April 26, 1995. *
10.9 Description of Key Management Annual Incentive Bonus Plan of American
Stores Company for fiscal 1996. *
10.10 Description of Key Management Long-Term Performance Incentive Plan
(1995-1997) is incorporated by reference to Exhibt 10.13 of Form 10-K as
flied with the Commission on April 26, 1995.
10.11 Description of Key Management Long-Term Performance Incentive Plan
(1994-1996) is incorporated by reference to Exhibit 10(o) of Form 10-K as
filed with the commission on April 28, 1994.
10.12 Form of Employment Agreement together with Schedule of eighteen
officers who entered into Employment Agreements with Company is
incorporated herein by reference to Exhibit 10.14 of Form 10-K as filed
with the Commission on April 26, 1995. *
10.13 Consulting agreement between the Company and L.S. Skaggs is
incorporated herein by reference to Exhibit 10.1 of Form 10-Q as filed with
the Commission on December 11, 1995.*
________________________________________________
* Constitutes a management contract or compensatory plan or arrangement
required to be filed as an exhibit to this report pursuant to Item 14(c) of
this report
PART IV - (Continued)
Item 14(a)(3) - Exhibits (Continued)
11. Calculation of earnings per share.
12. Computation of ratio of earnings to fixed charges.
13. Exhibit 13 consists of pages 12 to 31 and page 1 of American Stores
Company's 1995 Annual Report to Shareholders which are numbered as pages 1
to 27 of Exhibit 13. Such report, except to the extent incorporated hereby
by reference, has been sent to and furnished for the information of the
Securities and Exchange Commission only and is not to be deemed filed as
part of this Annual Report on Form 10-K. The references to the pages
incorporated by reference are to the printed Annual Report. The references
to the pages of Exhibit 13 are as follows: Item 1--pages 15, 3 through 8
and 26; Item 2--pages 3 through 8; Item 3--page 26; Item 5--page 1; Item 6-
-page 2; Item 7--pages 3 through 8; Item 8--pages 9 through 27; and Item 14
-pages 10 through 27.
22. Subsidiaries of the Registrant.
24. Consent of Ernst & Young LLP.
27. Financial Data Schedule.
All other exhibits for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required
under the related instruction or are inapplicable, and therefore have been
omitted.
Item 14(b) - Reports on Form 8-K filed during the last quarter of 1995 -
None.
For the purposes of complying with the amendments to the rules governing
Form S-8 under the Securities Act of 1933, the Company hereby undertakes as
follows, which undertaking shall be incorporated by reference into the
Company's Registration Statements on Form S-8 Nos. 2-71032; 33-25613; 2-
94235; 33-48203; 33-48204; 33-08801; 33-32150; 33-63869 and on Forms S-3
Nos. 33-41640 and 33-52331.
AMERICAN STORES COMPANY
FORM 10-K
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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.
(Registrant): American Stores Company
By (Signature and Title): /s/Kathleen McDermott April 19, 1996
Kathleen McDermott,
Chief Legal Officer and
Assistant Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the date indicated.
/s/Victor L. Lund Chairman of the Board and April 19, 1996
Victor L. Lund Chief Executive Officer
(Principal Executive Officer)
/s/Teresa Beck Chief Financial Officer April 19, 1996
Teresa Beck (Principal Financial Officer)
/s/Bradley M. Vierig Senior Vice President and April 19, 1996
Bradley M. Vierig Controller
(Principal Accounting Officer)
AMERICAN STORES COMPANY
FORM 10-K
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the date indicated.
/s/ Victor L. Lund Chairman of the Board April 19, 1996
Victor L. Lund and Chief Executive
Officer
/s/ Henry I. Bryant Director April 19, 1996
Henry I. Bryant
/s/ Louis H. Callister Director April 19, 1996
Louis H. Callister
/s/ Arden B. Engebretsen Director April 19, 1996
Arden B. Engebretsen
/s/ James B. Fisher Director April 19, 1996
James B. Fisher
/s/ Fernando R. Gumucio Director April 19, 1996
Fernando R. Gumucio
/s/ Leon G. Harmon Director April 19, 1996
Leon G. Harmon
/s/ Donald B. Holbrook Director April 19, 1996
Donald B. Holbrook
/s/ John E. Masline Director April 19, 1996
John E. Masline
/s/ Michael T. Miller Director April 19, 1996
Michael T. Miller
AMERICAN STORES COMPANY
FORM 10-K
Signatures (Continued)
/s/ L. Tom Perry Director April 19, 1996
L. Tom Perry
/s/ Barbara S. Preiskel Director April 19, 1996
Barbara S. Preiskel
/s/ J. L. Scott Director April 19, 1996
J. L. Scott
/s/ Don L. Skaggs Director April 19, 1996
Don L. Skaggs
/s/ L. S. Skaggs Director April 19, 1996
L. S. Skaggs
/s/ Arthur K. Smith Director April 19, 1996
Arthur K. Smith
SECOND AMENDMENT TO
AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION OF AMERICAN STORES COMPANY
Pursuant to Section 242 of the General Corporation Law of the State of
Delaware, American Stores Company (the "Company") hereby adopts the following
Second Amendment to its Amended and Restated Certificate of Incorporation (the
"Second Amendment").
1. The Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") is hereby amended by deleting Section 10.01 of
Article TENTH in its entirety and inserting the following in lieu thereof:
10.01 The Board of Directors shall consist of such number of
directors, not less than five nor more than twenty, as may be
determined from time to time by the Board of Directors. Each director
elected prior to January 1, 1995 shall hold office for the term of
years for which that director was elected and until that director's
successor is elected and qualified or until that director's earlier
resignation or removal, and each director elected after January 1,
1995 shall hold office until the next annual meeting of shareholders
and until that director's successor is elected and qualified or until
that director's earlier resignation or removal.
2. Except as specifically provided herein, the Certificate of
Incorporation shall remain unamended and shall continue in full force and
effect.
3. By execution of this Second Amendment, the undersigned Vice President
and Secretary of the Company do hereby certify that the foregoing Second
Amendment was duly authorized and adopted in accordance with Section 242 of the
General Corporation Law of Delaware. Such officers further certify that this
Amendment was adopted and approved by the Company's Board of Directors and was
approved by the Company's shareholders at its annual meeting held on June 21,
1995, at which a total of 124,761,055 shares, or 84.04% of the 148,461,419
shares outstanding on the record date for shareholders entitled to vote at the
meeting, were voted in favor of the Second Amendment.
DATED as of the 27th day of June, 1995.
AMERICAN STORES COMPANY
By /s/
Mark N. Schneider, Vice President
By /s/
Jack Lunt, Secretary
CERTIFICATE OF AMENDMENT OF
RESTATED CERTIFICATE OR INCORPORATION OF
AMERICAN STORES COMPANY
AMERICAN STORES COMPANY, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of AMERICAN STORES
COMPANY, held on March 21, 1994, a resolution was duly adopted setting forth a
proposed amendment to the Restated Certificate of Incorporation of such
corporation. The resolution setting forth the proposed amendment is as follows:
WHEREAS, the Company presently has 210,000,000 authorized shares
of stock, of which 200,000,000 are common shares ("Common Stock") and
10,000,000 are preferred shares ("Preferred Stock"); and
WHEREAS, the Board has authorized a two-for-one Common Stock
split in the form of a dividend of one share of Common Stock for each
outstanding share of Common Stock ("Stock Split"); and
WHEREAS, the Board believes it to be in the best interests of the
Company and its shareholders that the number of authorized but
unissued shares of Common Stock be increased so that a substantial
number of authorized but unissued shares are available for proper
corporate actions including, without limitation, the raising of
additional capital, stock dividends or splits, and acquisitions; and
WHEREAS, the Board has determined that it is advisable and in the
best interests of the Company to increase the number of authorized
shares of the Company's Common Stock; and
WHEREAS, subject to the approval of the Company's shareholders
at the Company's 1994 Annual Meeting of Shareholders, the Board has
decided to amend the Company's Restated Certificate of Incorporation
to increase the number of authorized shares.
NOW, THEREFORE, IT IS HEREBY RESOLVED, that the Company's
Restated Certificate of Incorporation be amended by deleting the
existing Section 4.01 of Article FOURTH and substituting the following
Section 4.01, which shall read in its entirety as follows:
Section 4.01 The total number of shares of all classes of stock
which the Corporation shall have authority to issue is 335,000,000,
consisting of
(a) 325,000,000 shares of Common Stock, par value $1 per share
("Common Stock"); and
(b) l0,000,000 shares of Preferred Stock, par value $1 per share
("Preferred Stock").
RESOLVED FURTHER, that the Board of Directors deems it advisable to
propose to the Company's shareholders the amendment of Section 4.01 of Article
FOURTH to increase the number of shares of Common Stock authorized and directs
that it be submitted for consideration at the 1994 Annual Meeting of
Shareholders.
RESOLVED FURTHER, that the Board of Directors recommend that the
Company's shareholders approve the amendment of Section 4.01 of Article FOURTH.
RESOLVED FURTHER, that, upon receipt of the requisite shareholder
approval, the appropriate officers of the Company be, and each such officer
hereby is authorized and directed to take such action as necessary to file or
cause to be filed a certificate of amendment reflecting the authorized amendment
to the Company's Restated Certificate of Incorporation with the Secretary of
State of Delaware
RESOLVED FURTHER, that the proper officers of the Company be, and each
of them is authorized and directed, jointly and severally, for and on behalf of
the Company, to execute and deliver any and all such other instruments and to do
or cause to be done any and all such other acts as they deem necessary or
advisable to carry out the intent and purposes of the foregoing resolutions and
to comply with applicable laws and regulations.
RESOLVED FURTHER. that the Board of Directors hereby adopts, as if
expressly set forth herein, the form of any resolution required by any authority
to be filed in connection with any applications, consents to service, issuers
covenants or other documents if (i) in the opinion of the officers of the
Company executing the same, the adoption of such resolutions is necessary or
desirable and (ii) the Secretary or an Assistant Secretary of the Company
evidences such adoption by inserting in the minutes of this meeting copies of
such resolutions, which will thereupon be deemed to be adopted by the Board of
Directors with the same force and effect as if presented at this meeting.
SECOND: That, thereafter, pursuant to resolution of its Board of
Directors, the 1994 annual meeting of the shareholders of such corporation was
duly called and held on June 21, 1994, upon notice in accordance with Section
222 of the General Corporation law of the State of Delaware, at which meeting
the necessary number of shares as required by statute were voted in favor of the
amendment.
THIRD: That such amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of such corporation shall not be reduced
under or by reason of such amendment.
IN WITNESS WHEREOF, AMERICAN STORES COMPANY has caused this
certificate to be signed by Kathleen E. McDermott, Executive Vice President, and
Jack Lunt, its Secretary, this 21st day of June, 1994.
AMERICAN STORES COMPANY
By /s/
Kathleen E. McDermott
ATTEST:
By /s/
Jack Lunt, Secretary
EXHIBIT A
RESTATED CERTIFICATE OF INCORPORATION
OF
AMERICAN STORES COMPANY
American Stores Company, a corporation organized and existing under the
laws of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is American Stores Company. The date of
filing its original Certificate of Incorporation with the Secretary of State was
October 6, 1965.
2. This Restated Certificate of Incorporation only restates and
integrates and does not further amend the Certificate of Incorporation of this
corporation as heretofore amended or supplemented and there is no discrepancy
between those provisions and the provisions of this Restated Certificate of
Incorporation
3. The text of the Certificate of Incorporation is hereby restated to
read in full as set forth in the attached Annex and incorporated herein.
4. This Restated Certificate of Incorporation has been adopted by the
Board of Directors of American Stores Company in accordance with the provisions
of Section 245 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, American Stores Company has caused this certificate to
be signed by Kent T. Anderson, its Executive Vice President, and attested by
Jack Lunt, its Secretary, this 20th day of June, 1991.
AMERICAN STORES COMPANY
By /s/
Kent T. Anderson
Executive Vice President
ATTEST:
By /s/
Jack Lunt
Secretary
RESTATED CERTIFICATE OF INCORPORATION
OF AMERICAN STORES COMPANY
PURSUANT TO SECTION 245 OF THE GENERAL CORPORATION LAW OF
DELAWARE
Article FIRST
Name
The name of the corporation is American Stores Company.
Article SECOND
Registered Office
Its registered office in the state of Delaware is located at Corporation
Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801.
Its registered Agent at that address is The Corporation Trust Company.
Article THIRD
Purposes
The sole purpose of the corporation is the acquisition and hold of stock of
other corporations for the purpose of controlling the management of affairs of
such other corporations; and, in furtherance of the foregoing, the corporation
may engage in such activities as are incidental to the business of acquiring
and holding such stock.
Article FOURTH
Shares
4.01 The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 210,000,000, consisting of
(a) 200,000,000 shares of Common Stock, par value $1 per share
("Common Stock"), and
(b) 10,000,000 shares of Preferred Stock, par value $1 per share
("Preferred Stock").
4.02 The Board of Directors is hereby expressly authorized, by resolution
or resolutions, to provide, out of the unissued shares of Preferred Stock, for
series of Preferred Stock. Before any shares of any such series are issued, the
Board of Directors shall fix, and hereby is expressly empowered to fix, by
resolution or resolutions, the following provisions of the shares thereof:
(a) the designation of such series, the number of shares to
constitute such series and the stated value thereof if different from the par
value thereof;
(b) whether the shares of such series shall have voting rights, in
addition to any voting rights provided by law, and, if so, the terms of such
voting rights, which may be general or limited;
(c) the dividends, if any, payable on such series, whether any such
dividends shall be cumulative, and, if so, from what dates, the conditions and
dates upon which such dividends shall be payable, the preference or relation
which such dividends shall bear to the dividends payable on any shares of stock
of any other class or any other series of this class;
(d) whether the shares of such series shall be subject to redemption
by the Corporation, and, if so, the times, prices and other conditions of such
redemption;
(e) the amount or amounts payable upon shares of such series upon,
and the rights of the holders of such series in, the voluntary or involuntary
liquidation, dissolution or winding up, or upon any distribution of the assets,
of the Corporation;
(f) whether the shares of such series shall be subject to the
operation of a retirement or sinking fund and, if so, the extent to and manner
in which any such retirement or sinking fund shall be applied to the purchase or
redemption of the shares of such series for retirement or other corporate
purposes and the terms and provisions relative to the operation thereof;
(g) whether the shares of such series shall be convertible into, or
exchangeable for, shares of stock of any other class or any other series of this
class or any other securities and, if so, the price or prices or the rate or
rates of conversion or exchange and the method, if any, of adjusting the same,
and any other terms and conditions of conversion of exchange;
(h) the limitations and restrictions, if any, to be effective while
any shares of such series are outstanding upon the payment of dividends or the
making of other distributions on, and upon the purchase, redemption or other
acquisition by the Corporation of, the Common Stock or shares of stock of any
other class or any other series of this class;
(i) the conditions or restrictions, if any, upon the creation of
indebtedness of the Corporation or upon the issue of any additional stock,
including additional shares of such series or of any other series of this class
or of any other class; and
(j) any other powers, preferences and relative, participating,
optional and other special rights, and any qualifications, limitations and
restrictions thereof.
The powers, preferences and relative, participating, optional and other
special rights of each series of Preferred Stock, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of any and
all other series at any time outstanding. All shares of any one series of
Preferred Stock shall be identical in all respects with all other shares of such
series, except that shares of any one series issued at different times may
differ as to the dates from which dividends thereon shall accrue and/or be
cumulative.
Pursuant to the authority granted to and vested in the Board of Directors
of the Corporation in accordance with the provisions of this Section 4.02, the
Board of Directors has created a series of Preferred Stock and has stated the
designation and number of shares, and fixed the relative rights, preferences,
and limitations thereof as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Junior
Preferred Stock") and the number of shares constituting the Junior Preferred
Stock shall be 380,000. Such number of shares may be increased or decreased by
resolution of the Board; provided, that no decrease shall reduce the number of
shares of Junior Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Junior
Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the Junior
Preferred Stock with respect to dividends, the holders of shares of Junior
Preferred Stock, in preference to the holders of Common Stock, $1 par value per
share (the "Common Stock"), of the Corporation, and of any other junior stock,
shall be entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly dividends payable in
cash on the first day of March, June, September and December in each year (each
such date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Junior Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1 or (b)
subject to the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Junior Preferred Stock. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of Junior
Preferred Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) The Corporation shall declare a dividend or distribution on the Junior
Preferred Stock as provided in paragraph (A) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1 per share on the Junior
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Junior Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Junior Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Junior Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Junior Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Junior Preferred Stock
shall have the following voting rights.
(A) Subject to the provision for adjustment hereinafter set forth, each
share of
Junior Preferred Stock shall entitle the holder thereof to 100 votes on all
matters submitted to a vote of the stockholders of the Corporation. In the
event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares of Junior
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Junior Preferred Stock and the holders of shares
of Common Stock and any other capital stock of the Corporation having general
voting rights shall vote together as one class on all matters submitted to a
vote of stock holders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law, holders
of Junior Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Junior Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Junior Preferred Stock outstanding shall have been
paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Junior Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Junior Preferred Stock, except dividends
paid ratably on the Junior Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares of
any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Junior Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or winding up)
to the Junior Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any shares
of Junior Preferred Stock, or any shares of stock ranking on a parity with the
Junior Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Junior Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Charter, or in any other Supplemental Charter Section creating a series of
Preferred Stock or any similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (1)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock unless,
prior thereto, the holders of shares of Junior Preferred Stock shall have
received $100 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment,
provided that the holders of shares of Junior Preferred Stock shall be entitled
to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (2) to the
holders of shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Junior Preferred Stock, except
distributions made ratably on the Junior Preferred Stock and all such parity
stock in proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation, dissolution or winding up. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Junior Preferred Stock were
entitled immediately prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Junior Preferred Stock shall at the same time be similarly exchanged or changed
into an amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for which each share of Common Stock is changed or exchanged. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Junior Preferred Stock shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
Section 8. No Redemption. The shares of Junior Preferred Stock shall not
be redeemable.
Section 9. Rank. The Junior Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all series of
any other class of the Corporation's Preferred Stock.
Section 10. Amendment. The Restated Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Junior Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Junior Preferred Stock, voting
together as a single class.
4.03 Deleted.
4.04 Deleted.
4.05 Common Stock Provision.
(a) Subject to the provisions of applicable law and the preference of
the Preferred Stock, the holders of Common Stock shall be entitled to receive
dividends at such time and in such amounts as may be determined by the Board of
Directors.
(b) Except as otherwise provided by law or by the provisions of this
Restated Certificate of Incorporation, the holders of Common Stock shall have
sole voting power and shall have one vote for each share on each matter
submitted to a vote of the stockholders of the Corporation.
(c) In the event of any liquidation, dissolution or winding up of the
corporation, whether voluntary or involuntary, after payment or provision for
payment of the debts and other liabilities of the corporation and preferential
amounts to which the holders of the Preferred Stock shall be entitled, the
holders of the Common Stock shall be entitled to share ratably in all of the
remaining assets of the corporation.
4.06 Deleted.
4.07 Deleted.
4.08 Deleted.
4.09 Deleted.
4.10 Deleted.
Article FIFTH
Cumulative Voting
Deleted.
Article SIXTH
Preemptive Rights
No stockholder of this corporation shall by reason of his holding shares of
any class have any preemptive or preferential rights to purchase or subscribe to
any shares of any class of this corporation, now or hereafter to be authorized,
or any notes, debentures, bonds or other securities convertible into or carrying
options or warrants to purchase shares of any class, now or hereafter to be
authorized, whether or not the issuance of any such shares, or such notes,
debentures, bonds or other securities, would adversely affect the dividend or
voting rights of such stockholder, other than such rights, if any, as the Board
of Directors, in its discretion from time to time, may grant and at such price
as the Board of Directors in its discretion may fix; and the Board of Directors
may issue shares of any class of this corporation, or any notes, debentures,
bonds, or other securities convertible into or carrying options or warrants to
purchase shares of any class, without offering any such shares of any class,
either in whole or in part, to the existing stockholders of any class.
Article SEVENTH
Perpetual existence
The Corporation is to have perpetual existence.
Article EIGHTH
Non-Liability of Shareholders
The private property of the stockholders shall not be subject to the
payment of corporate debts to any extent whatever.
Article NINTH
Indemnification and Insurance
9.01 Elimination of Certain Liability of Directors. A Director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a Director,
except for liability (i) for any breach of the Director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the Director derived an improper personal benefit if the Delaware
General Corporation Law is amended after approval by the stockholders of this
Article to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
corporation shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the stockholders
of the Corporation shall not adversely affect any right or protection of a
Director of the Corporation existing at the time of such repeal or modification.
9.02 Indemnification and Insurance.
(a) Right to Indemnification. Each person who was or is made party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a Director or officer,
of the Corporation or while serving as a Director or officer of the Corporation
is or was also serving at the request of the Corporation as a director, officer,
employee or agent of another Corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, shall be indemnified and held harmless by the Corporation to the fullest
extent authorized by the Delaware General Corporation Law, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys' fees, judgements, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) reasonably incurred or suffered by such person
in connection therewith and such indemnification shall continue as to a person
who has ceased to be a Director or officer, and shall inure to the benefit of
his or her heirs, executors and administrators; provided, however, that, except
as provided in paragraph (b) hereof, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Section shall be a contract right (which may
not be reduced or limited by any repeal or modification of this Section 9.02)
and shall include the right to be paid by the Corporation the expenses incurred
in defending any such proceeding in advance of its final disposition; provided,
however, that, if the Delaware General Corporation Law requires, the payment of
such expenses incurred by a Director or officer in his or her capacity as a
Director or officer (and not in any other capacity in which service was or is
rendered by such person while a Director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the company of
an undertaking, by or on behalf of such Director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such Director or
officer is not entitled to be indemnified under this section or otherwise. The
Corporation may, by action of its Board of Directors, provide indemnification to
employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of Directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a)
of this Section is not paid in full by the Corporation within thirty days after
a written claim has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General Corporation Law for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, by-law, agreement, vote of stockholders or
disinterested Directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss whether or not the
Corporation would have the power to indemnify such person against such expense,
liability to or loss under the Delaware General Corporation Law.
Article TENTH
Directors
10.01 The Board of Directors shall consist of such number of directors
not less than five or more than twenty as may be determined from time to time by
the Board of Directors, subject to the provisions of Sections 4.02(i) and
4.04(h)(1). The Board is divided into three classes, Class I, Class II and
Class III. Such classes shall be as nearly equal in number of directors as
possible. Each director shall serve for a term ending on the third annual
meeting following the annual meeting at which such director was elected;
provided, however, that the directors first elected to Class I shall serve for a
term ending at the annual meeting next following the end of the fiscal year
1981, the directors first elected to Class II shall serve for a term ending at
the second annual meeting next following the end of the fiscal year 1981, and
the directors first elected to Class III shall serve for a term ending at the
third annual meeting next following the end of the fiscal year 1981. The
foregoing notwithstanding, each director shall serve until his successor shall
have been duly elected and qualified, unless he shall resign, become
disqualified, disabled or shall otherwise be removed
At each annual election, the directors chosen to succeed those whose terms
then expire shall be of the same class as the directors they succeed, unless, by
reason of any intervening changes in the authorized number of directors, the
Board shall designate one or more directorships whose term then expires as
directorships of another class in order more nearly to achieve equality of
number of directors among the classes.
Notwithstanding the rule that the three classes shall be as nearly equal in
number of directors as possible, in the event of any change in the authorized
number of directors, each director then continuing to serve as such shall
nevertheless continue as director of the class of which he is a member until the
expiration of his current term, or his prior death, resignation or removal, if
any newly created directorship may, consistent with the rule that the three
classes shall be as nearly equal in number of directors as possible, be
allocated to one of two or more classes, the Board shall allocate it to that of
the available classes whose term of office is due to expire at the earliest date
following such allocation.
10.02 Deleted.
10.03 In furtherance and not in limitation of the powers conferred by
the laws of the State of Delaware and by this Certificate of Incorporation, the
Board of Directors is expressly authorized:
(a) to make, alter or repeal the by-laws of the corporation;
(b) to authorize and cause to be executed mortgages and liens upon
the real and personal property of the corporation;
(c) to set apart out of any of the funds of the corporation available
for dividends a reserve or reserves for any proper purpose and to abolish any
such reserve in the manner in which it was created;
(d) by resolution passed by a majority of the whole Board to
designate one or more committees, each committee to consist of two or more of
the directors of the corporation, which, to the extent provided in the
resolution or in the by-laws of the corporation, shall have and may exercise the
powers of the Board of Directors in the management of the business and affairs
of the corporation, and may authorize the seal of the corporation to be affixed
to all papers which may require it. Such committee or committees shall have
such name or names as may be stated in the by-laws of the corporation or as may
be determined from time to time by resolution adopted by the Board of Directors;
(e) subject to the provisions of Article TWELFTH, when and as
authorized by the affirmative vote of the holders of a majority of the stock
issued and outstanding having voting power as to such matter given at a
stockholders' meeting duly called for that purpose, to sell, lease or exchange
all of the property and assets of the corporation, including its good will and
its corporate franchises, upon such terms and conditions and for such
consideration, which may be in whole or in part shares of stock, in and/or other
securities, of, any other corporation or corporations, as the Board of Directors
shall deem expedient and for the best interests of this corporation.
Article ELEVENTH
Meetings
11.01 Meetings of stockholders may be held outside the State of
Delaware, if the by-laws so provide. The books of the corporation may be kept
(subject to any provision contained in the statute) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors in the by-laws of the corporation.
11.02 No action shall be taken by the stockholders except at an annual
or special meeting of stockholders.
11.03 Except as provided in Section 4.08, special meetings of the
stockholders of the corporation for any purpose or purposes may be called at any
time by the Board of Directors or by any person or committee expressly so
authorized by the Board of Directors and by no other person or persons.
Article TWELFTH
Amendment of By-Laws
By-laws shall not be made, repealed, altered, amended or rescinded by the
stockholders of the corporation except by the vote of the holders of not less
than 80% of the total outstanding shares of Common Stock, as well as, a majority
of the total outstanding shares of Common Stock not held by a Related Person (as
defined in Article THIRTEENTH) and/or its affiliates. Nothing contained herein
shall detract from the authority of the Board of Directors to make, alter or
repeal the by-laws of the corporation (as set forth in Article 10.03(a)).
Article THIRTEENTH
Transactions with Related Persons
The approval of any proposal that the corporation:
(a) merge or consolidate with any other person or entity if such
other person or entity and its affiliates singly or in the aggregate are
directly or indirectly the beneficial owners of more than ten percent (10%) of
the outstanding shares of Common Stock of the corporation (any such other person
or entity being herein referred to as a "Related Person"); or
(b) sell or exchange all or substantially all of its assets or
business to or with a Related Person; or
(c) issue or deliver any stock or other securities of its issue in
exchange or payment for any properties or assets of a Related Person or
securities issued by a Related Person, or in a merger of any affiliate of the
Company with or into a Related Person or any of its affiliates; shall require,
in addition to any approval otherwise required by law or this Certificate of
Incorporation, the affirmative vote of the holders of not less than two-thirds
of those outstanding shares of Common Stock not held by the Related Person
and/or its affiliates; provided, however, that the foregoing shall not apply to
any such merger, consolidation, sale or exchange, or issuance or delivery of
stock or other securities which is (i) approved by resolution of the Board of
Directors adopted by the affirmative vote of not less than two-thirds (2/3) of
the then authorized number of directors, or (ii) approved by resolution of the
Board of Directors prior to the acquisition of the beneficial ownership of more
than ten percent (10%) of the Common Stock by such Related Person and its
affiliates. For the purposes hereof, an "affiliate" is any person (including a
corporation, partnership, trust, estate or individual) who directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the person specified; "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract, or otherwise; and in computing the
percentage of outstanding Common Stock beneficially owned by any person, the
shares outstanding and the shares owned shall be determined as of the record
date fixed to determine the stockholders entitled to vote or express consent
with respect to such proposal. The stockholder vote, if any, required for
mergers, consolidations, sales or exchanges of assets or issuances of stock or
other securities not expressly provided for in this Article, shall be such as
may be required by applicable law.
Article FOURTEENTH
Evaluation of Certain Acquisition Proposals
The Board of Directors of the corporation, when evaluating any proposal
from another party to (a) make a tender offer for equity securities of the
Corporation; (b) merge or consolidate the corporation with another corporation;
or (c) purchase or otherwise acquire substantially all of the properties and
assets of the corporation, shall, in connection with the exercise of its
judgement in determining what is in the best interests of the corporation and
its stockholders, give due consideration to all relevant factors, including,
without limitation, the social and economic effects on the employees, customers,
suppliers and other constituents of the corporation and its subsidiaries and on
the communities in which they operate or are located.
Article FIFTEENTH
Amendments
The corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation. Notwithstanding the foregoing,
the provisions of Article FOURTH relating to the voting rights of the $5.51
Cumulative Preferred Stock shall not be changed except in accordance with the
provisions contained therein; and the provisions of this Article, Section 10.01
of Article TENTH, Sections 11.02 and 11.03 of Article ELEVENTH, Article TWELFTH,
Article THIRTEENTH and Article FOURTEENTH may only be amended by the affirmative
vote of the holders of not less than 80% of the outstanding shares of Common
Stock, as well as, a majority of the total outstanding shares of Common Stock
not held by a Related Person, as defined in Article THIRTEENTH, and/or its
affiliates.
RESTATED BY-LAWS OF
AMERICAN STORES COMPANY
ARTICLE I
OFFICES
Section 1.01. Registered Office. The registered office of the Company
shall be at 100 West Tenth Street, Wilmington, County of New Castle, Delaware,
until otherwise established by a vote of a majority of the Board of Directors in
office, and a statement of such change is filed in the manner provided by
statute.
Section 1.02. Other Offices. The Company may also have offices at such
other places within or without the State of Delaware as the Board of Directors
may from time to time determine or the business of the Company requires.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.01. Place of Meeting. All meetings of the stockholders of the
Company shall be held in Wilmington, Delaware, or at such other place within or
without the State of Delaware as shall be designated by the Board of Directors
in the notice of such meeting.
Section 2.02. Annual Meeting. The Board of Directors may fix the date and
time of the annual meeting of the stockholders, but if no such date and time is
fixed by the Board, the meeting for any calendar year shall be held at such time
and date as the Board of Directors may determine and at said meeting the
stockholders then entitled to vote shall elect by written ballot directors and
shall transact such other business as may properly be brought before the
meeting.
Section 2.03. Special Meetings. Special meetings of the stockholders of
the Company for any purpose or purposes for which meetings may lawfully be
called, may be called at any time for any purpose or purposes by the Board of
Directors or by any person or Committee expressly so authorized by the Board of
Directors and by no other person or persons. At any time, upon written request
of any person or persons who have duly called a special meeting, which written
request shall state the purpose or purposes of the meeting, it shall be the duty
of the Secretary to fix the date of the meeting to be held at such date and time
as the Secretary may fix, not less than ten nor more than sixty days after the
receipt of the request, and to give due notice thereof. If the Secretary shall
neglect or refuse to fix the time and date of such meeting and give notice
thereof, the person or persons calling the meeting may do so.
Amended Effective March 20, 1996
Section 2.04. Notice of Meetings. Written notice of the place, date and
hour of every meeting of the stockholders, whether annual or special, shall be
given to each stockholder of record entitled to vote at the meeting not less
than ten nor more than sixty days before the date of the meeting. Every notice
of a special meeting shall state the purpose or purposes thereof.
Section 2.04.1 Notice of Nominations and Stockholder Business
(1) Annual Meetings of Stockholders.
(a) Nominations of persons for election to the Board of Directors of the
Company and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders (a)
pursuant to the Company's notice of meeting, (b) by or at the
direction of the Board of Directors or (c) by any stockholder of the
Company who was a stockholder of record at the time of giving the
notice provided for in this by-law who is entitled to vote at the
meeting and who complies with the notice procedures set forth in this
by-law.
(b) For nominations or other business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the Secretary of the Company and such
other business must otherwise be a proper matter for stockholder
action. To be timely, a stockholder's notice shall be delivered to the
Secretary at the principal executive offices of the Company not later
than the close of business on the 30th day nor earlier than the close
of business on the 90th day prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event
that the date of the annual meeting is more than 15 days before or more
than 60 days after such anniversary date, notice by the stockholder to
be timely must be so delivered not earlier than the close of business
on the 90th day prior to such annual meeting and not later than the
close of business on the later of the 30th day prior to such annual
meeting or the 10th day following the day on which public announcement
of the date of such meeting is first made by the Company. In no event
shall the public announcement of an adjournment of an annual meeting
commence a new time period for the giving of a stockholder's notice as
described above. Such stockholder's notice shall set forth (a) as to
each person whom the stockholder proposes to nominate for election or
reelection as a director, all information relating to such person that
is required to be disclosed in solicitations of proxies for election of
directors in an election contest, or is otherwise required, in each
case pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (the "Exchange Act") and Rule 14a-11 thereunder
(including such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected); (b) as
to any other business that the stockholder proposes to bring before the
meeting, a brief description of the business desired to be brought
before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such stockholder
and the beneficial owner, if any, on whose behalf the proposal is made;
and (c) as to the stockholder giving the notice and the beneficial
owner, if any, on whose behalf the nomination or proposal is made (i)
the name and address of such stockholder, as they appear on the
Company's books, and of such beneficial owner and (ii) the class and
number of shares of the Company which are owned beneficially and of
record by such stockholder and such beneficial owner.
(c) Notwithstanding any provision in this by-law to the contrary, in the
event that the number of directors to be elected to the Board of
Directors of the Company is increased and the Company does not make a
public announcement naming all of the nominees for director or
specifying the size of the increased Board of Directors at least 40
days prior to the first anniversary of the preceding year's annual
meeting, a stockholder's notice required by this by-law shall also be
considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to the
Secretary at the principal executive offices of the Company not later
than the close of business on the 10th day following the day on which
such public announcement is first made by the Company.
(2) Special Meetings of Stockholders. Only such business shall be conducted at
a special meeting of stockholders as shall have been brought before the
meeting pursuant to the Company's notice of meeting.
(3) General.
(a) Only such persons who are nominated in accordance with the procedures
set forth in this by-law shall be eligible to serve as directors and
only such business shall be conducted at a meeting of stockholders as
shall have been brought before the meeting in accordance with the
procedures set forth in this by-law. Except as otherwise provided by
law, the Certificate of Incorporation or these by-laws, the Chairman of
the meeting shall have the power and duty to determine whether a
nomination or any business proposed to be brought before the meeting
was made or proposed, as the case may be, in accordance with the
procedures set forth in this by-law and, if any proposed nomination or
business is not in compliance with this by-law, to declare that such
defective proposal or nomination shall be disregarded.
(b) For purposes of this by-law, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document
publicly filed by the Company with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(c) Notwithstanding the foregoing provisions of this by-law, a stockholder
shall also comply with all applicable requirements of the Exchange Act
and the rules and regulations thereunder with respect to the matters
set forth in this by-law. Nothing in this by-law shall be deemed to
affect any rights (i) of stockholders to request inclusion of proposals
in the Company's proxy statement pursuant to Rule 14a-8 under the
Exchange Act or (ii) of the holders of any series of Preferred Stock to
elect directors under specified circumstances.
Section 2.05. Quorum, Manner of Acting and Adjournment. The holders of a
majority of the stock issued and outstanding (not including treasury stock) and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute, by the Certificate of
Incorporation or by these by-laws. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
any such adjourned meeting, at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the meeting
as originally notified. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting. When a quorum is present at any meeting, the
vote of the holders of the majority of the stock having voting power present in
person or represented by proxy shall decide any questions brought before such
meeting, unless the question is one upon which, by express provision of the
applicable statute, the Company's Certificate of Incorporation or these by-laws,
a different vote is required in which case such express provision shall govern
and control the decision of such question. Except upon those questions governed
by the aforesaid express provisions, the stockholders present in person or by
proxy at a duly organized meeting can continue to do business until adjournment,
notwithstanding withdrawal of enough stockholders to leave less than a quorum.
Section 2.06. Organization. At every meeting of the stockholders the
Chairman of the Board, if there be one, or in the case of vacancy in office or
absence of the Chairman of the Board, such person as may be designated by the
Board of Directors, or, in the absence of any such person, one of the following
persons present in the order stated: the Vice Chairmen of the Board, if there
be one in their order of rank and seniority; the President; the Executive Vice
Presidents and the Vice Presidents, in their order of rank and seniority; or a
Chairman chosen by the stockholders entitled to cast a majority of the votes
which all stockholders present in person or by proxy are entitled to cast, shall
act as Chairman, and the Secretary, or, in his absence, an Assistant Secretary,
or in the absence of both the Secretary and Assistant Secretaries, a person
appointed by the Chairman shall act as Secretary.
Section 2.07. Voting: Proxies. Each stockholder shall at every meeting of
the stockholders be entitled to one vote in person or by proxy for each share of
capital stock having voting power registered in his name on the books of the
Company on the record date for such meeting. All elections of directors shall
be by written ballot. The vote upon any other matter need not be by ballot. No
proxy shall be voted after three years from its date, unless the proxy provides
for a longer period. Every proxy shall be executed in writing by the
stockholder or by his duly authorized attorney-in-fact and filed with the
Secretary of the Company. A proxy, unless coupled with an interest, shall be
revocable at will, notwithstanding any other agreement or any provisions in the
proxy to the contrary, but the revocation of a proxy shall not be effective
until notice thereof has been given to the Secretary of the Company. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and if,
and only as long as, it is coupled with an interest sufficient in law to support
an irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the Company generally. A proxy shall not be revoked by the death or
incapacity of the maker unless, before the vote is counted or the authority is
exercised, written notice of such death or incapacity is given to the Secretary
of the Company.
Section 2.08. Voting Lists. The officer who has charge of the stock ledger
of the Company shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting. The list shall be arranged in alphabetical order showing the address
of each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
Section 2.09. Inspectors of Election. In advance of any meeting of
stockholders the Board of Directors may appoint inspectors of election, who need
not be stockholders, to act at such meeting or any adjournment thereof. If
inspectors of election are not so appointed, the Chairman of any such meeting
may, and upon the demand of any stockholder or his proxy at the meeting and
before voting begins, shall appoint inspectors of election. The number of
inspectors shall be either one, two or three, as determined, in the case of
inspectors appointed upon demand of a stockholder, by stockholders present
entitled to cast a majority of the votes which all stockholders present are
entitled to cast thereon. No person who is a candidate for office shall act as
an inspector. In case any person appointed as inspector fails to appear or
fails or refuses to act, the vacancy may be filled by appointment made by the
Board of Directors in advance of the convening of the meeting, or at the meeting
by the Chairman of the meeting.
If inspectors of election are appointed as aforesaid, they shall determine
the number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum, the authenticity,
validity and effect of proxies, receive votes or ballots, hear and determine all
challenges and questions in any way arising in connection with the right to
vote, count and tabulate all votes, determine the result, and do such acts as
may be proper to conduct the election or vote with fairness to all stockholders.
If there be three inspectors of election, the decision, act or certificate of a
majority shall be effective in all respects as the decision, act or certificate
of all.
On request of the Chairman of the meeting or of any stockholder or his
proxy, the inspectors shall make a report in writing of any challenge or
question or matter determined by them, and execute a certificate of any fact
found by them.
ARTICLE III
BOARD OF DIRECTORS
Section 3.01. Board Powers. The business and affairs of the Company shall
be managed by or under the direction of the Board of Directors; and all powers
of the Company, except those specifically reserved or granted to the
stockholders by statute, the Certificate of Incorporation or these by-laws, are
hereby granted to and vested in the Board of Directors. The primary functions
of the Board are to select the Chief Executive Officer and, in consultation with
such Chief Executive Officer, select the other principal senior executives;
evaluate their performance; fix their compensation; oversee the conduct of the
business to evaluate whether it is being managed properly; review the Company's
financial objectives, major plans and major accounting and auditing issues; and
to perform all other functions prescribed by law or the Certificate of
Incorporation.
Section 3.02. Number, Term of Office and Qualification. The Board of
Directors shall consist of such number of directors not less than five nor more
than twenty as may be determined from time to time by the Board of Directors.
Each director elected prior to 1995 shall hold office for the term of years for
which that director was elected and until that director's successor is elected
and qualified or until that director's earlier resignation or removal, and each
director elected after January 1, 1995 shall hold office until the next annual
meeting of shareholders and until that director's successor is elected and
qualified or until that director's earlier resignation or removal. All
directors of the Company shall be natural persons of full age.
Section 3.03. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office until
the event of their death, resignation or removal. If there are no directors in
office, then an election of directors may be held in the manner provided by
statute. If, at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole Board of Directors (as constituted immediately prior to any such
increase), the Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent of the total number of the shares at
the time outstanding having the right to vote for such directors, summarily
order an election to be held to fill any such vacancies or newly created
directorships, or to replace the directors chosen by the directors then in
office.
Section 3.04. Resignations. Any director of the Company may resign at any
time by giving written notice to the Chairman of the Board or the Secretary of
the Company. Such resignation shall take effect at the date of the receipt of
such notice or at any later time specified therein and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
Section 3.05. Organization. At every meeting of the Board of Directors,
the Chairman of the Board, if there be one, or, in the case of a vacancy in the
office or absence of the Chairman of the Board, one of the following officers
present in the order stated: the Vice Chairmen of the Board, if there be one in
their order of rank and seniority; the President; the Executive Vice Presidents
or Vice Presidents in their order of rank and seniority; or a Chairman chosen by
a majority of the directors present, shall preside, and the Secretary, or in his
absence, an Assistant Secretary, or in the absence of the Secretary and the
Assistant Secretaries, any person appointed by the Chairman of the meeting,
shall act as Secretary.
Section 3.06. Place of Meeting. The Board of Directors may hold its
meetings, both regular and special, at such place or places within or without
the State of Delaware as the Chairman of the Board or the Board of Directors may
from time to time determine, or as may be designated in the notice calling the
meeting.
Section 3.07. Organization Meeting. Immediately after each annual election
of directors or other meeting at which the entire Board of Directors is elected,
the newly elected Board of Directors shall meet for the purpose of organization,
election of officers, and the transaction of other business, at the place where
said election of directors was held. Notice of such meeting need not be given.
Such organization meeting may be held at any other time or place which shall be
specified in a notice given as hereinafter provided for special meetings of the
Board of Directors, or as shall be specified in a written waiver signed by all
of the directors.
Section 3.08. Regular Meetings. Regular meetings of the Board of Directors
shall be held without notice at such time and at such place as shall be
determined from time to time by the Board of Directors. Notice of any regular
meeting shall be given in the manner prescribed for special meetings of the
Board of Directors.
Section 3.09. Special Meetings. Special meetings of the Board of Directors
shall be held whenever called by the Chairman of the Board of Directors, the
President or on the written request of three or more of the directors. Notice
of each such meeting shall be given to each director in writing, or by
telephone personally, at least 24 hours before the time at which the meeting is
to be held. Each such notice shall state the time and place of the meeting to
be so held.
Section 3.10. Quorum, Manner of Acting and Adjournment. At all meetings of
the Board of Directors a majority of the total number of directors shall
constitute a quorum for the transaction of business and the act of a majority of
the Directors present at any meeting at which there is a quorum shall be the act
of the Board of Directors, except as may be otherwise specifically provided by
statute or by the Certificate of Incorporation. If a quorum shall not be
present at any meeting of the Board of Directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Unless otherwise restricted by the Certificate of Incorporation or these by-
laws, any action required or permitted to be taken at any meeting of the Board
of Directors or of any committee thereof may be taken without a meeting, if all
members of the Board or Committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee as the case may be.
Section 3.11. Committees of the Board of Directors. The Board of Directors
may, by a resolution adopted by the Board, designate an Executive Committee and
other committees. Each committee shall consist of two or more directors who
shall be approved by a majority of the whole Board, except that the Executive
Committee shall consist of three or more directors, one of whom shall be the
Chairman of the Board of the Company. The Board may designate one or more
directors as alternate members of any committee who may replace any absent or
disqualified member at any meeting of the committee.
The committees of the Board shall have and exercise the authority of the
Board of Directors to the extent provided in the resolution designating the
committee.
No committee of the Board of Directors shall have the authority of the Board
with respect to any of the following actions:
(1) Declaring any dividend;
(2) Authorizing the issuance of any stock of the Company;
(3) Amending the Certificate of Incorporation, except to the extent
permitted by Section 141(c) of the Delaware General Corporation Law.
(4) Adopting an agreement of merger or consolidation;
(5) Recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Company's property and assets;
(6) Recommending to the stockholders a dissolution of the Company or a
revocation of a dissolution; or
(7) Amending the by-laws of the Company.
The provisions of Section 3.09 with respect to the provision of notice for
special meetings shall be applicable to all committees of the Board.
At all meetings of any committee of the Board of Directors, a majority of
the members of the committee shall constitute a quorum for the transaction of
business and the act of a majority of the members of the committee present at
any meeting thereof at which there is a quorum shall be the act of the
committee, except as may be otherwise specifically provided for in the
resolution establishing the committee, or by law or by the Certificate of
Incorporation. If a quorum is not present at any meeting of any committee of
the Board, the committee members present thereat may adjourn the meeting from
time to time without notice other than announcement at the meeting, until a
quorum shall be present.
Section 3.12. Interested Directors or Officers. No contract or transaction
between the Company and one or more of its directors or officers, or between the
Company and any other Company, partnership, association, or other organization
in which one or more of its directors or officers are directors or officers, or
have a financial interest, shall be void or voidable solely for this reason, or
solely because the director or officer is present at or participates in the
meeting of the Board or committee thereof which authorized the contract or
transaction, or solely because his or their votes are counted for such purpose,
if:
(1) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board or committee in good faith
authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or
(2) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the Company as of the time
it is authorized, approved or ratified by the Board of Directors, a
committee thereof, or the stockholders.
Common or interested directors may be counted in determining the presence of
a quorum at a meeting of the Board of Directors or of a committee which
authorizes the contract or transaction.
Section 3.13. Compensation. Each director who is not also a full-time
active employee of the Company or any subsidiary thereof shall be paid such
compensation for his or her services as a director and shall be reimbursed for
such expenses as may be fixed by the Board of Directors.
ARTICLE IV
NOTICE, WAIVERS, MEETINGS
Section 4.01. Notice, What Constitutes. Whenever, under the provisions of
the statutes or of the Certificate of Incorporation or of these by-laws, written
notice is required to be given to any directors or stockholder, such notice may
be given to such person, either personally or by sending a copy thereof through
the mail, or by telegraph, facsimile transmission, charges prepaid, to his
address appearing on the books of the Company. If the notice is sent by mail,
by telegraph or by private delivery service, it shall be deemed to have been
given to the person entitled thereto when deposited in the United States mail or
with a telegraph office or private delivery service for transmission to such
person.
Section 4.02. Waivers of Notice. Whenever any written notice is required
to be given under the provisions of the Certificate of Incorporation, these by-
laws, or by statute, a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice of such meeting.
Attendance of a person, either in person or by proxy, at any meeting, shall
constitute a waiver of notice of such meeting, except when a person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting was not lawfully called
or convened.
Section 4.03. Conference Telephone Meetings.
(a) Policy Statement by the Board of Directors. It is the position of the
Board of Directors that personal attendance at meetings is highly
preferable to attendance via telephone conference and, therefore, that
telephone conferences should be discouraged and used only in limited
circumstances, such as an emergency or when the Chairman of the Board
or the President and Chief Executive Officer feel that it is in the
best interest of the Company to call a meeting (as opposed to
postponing or rescheduling the meeting) when one or more Directors can
be present only by telephone conference, or where the matters to be
discussed are of a routine or perfunctory nature. Because of the
concern for confidentiality and electronic interference or signal
disruption, only "wired" telephones should be used.
(b) One or more directors may participate in a meeting of the Board, or of
a committee of the Board, by means of conference telephone or similar
communications equipment by means of which all persons participating in
the meeting can hear each other and participation in a meeting pursuant
to this section ("b") shall constitute presence in person at such
meeting.
ARTICLE V
OFFICERS
Section 5.01. Number, Qualifications and Designation. The officers of the
Company shall be chosen by the Board of Directors and shall be a Chairman of the
Board, a President and/or Chief Executive Officer, one or more Executive Vice
Presidents, Senior Vice Presidents and Vice Presidents, a Secretary, a
Treasurer, and such other officers as may be elected in accordance with the
provisions of Section 5.03 of this Article. One person may hold more than one
office.
Section 5.02. Election and Term of Office. The officers of the Company,
except those elected by delegated authority pursuant to Section 5.03 of this
Article, shall be elected annually by the Board of Directors, and each such
officer shall hold his office until his successor shall have been elected and
qualified, or until his earlier resignation or removal.
Section 5.03. Subordinate Officers, Committees and Agents. The Board of
Directors may, from time to time, elect such other officers, employees or other
agents as it deems necessary, who shall hold their offices for such terms and
shall exercise such powers and perform such duties as are provided in these by-
laws, or as the Board of Directors may from time to time determine. The Board
of Directors may delegate to any officer or committee the power to elect
subordinate officers and to retain or appoint employees or other agents, or
committees thereof, and to prescribe the authority and duties of such
subordinate officers, committees, employees or other agents.
Section 5.04. Resignations. Any officer or agent may resign at any time by
giving written notice to the Board of Directors, or to the Chairman of the Board
or the Secretary of the Company. Any such resignation shall take effect at the
date of the receipt of such notice or at any later time specified therein and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 5.05. Removal. Any officer, committee, employee or other agent of
the Company may be removed, either for or without cause, by the Board of
Directors or other authority which elected or appointed such officer, committee
or other agent whenever in the judgment of such authority the best interests of
the Company will be served thereby.
Section 5.06. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or any other cause, shall be filled by
the Board of Directors or by the officer or committee to which the power to fill
such office has been delegated pursuant to Section 5.03 of this Article, as the
case may be, and if the office is one for which these by-laws prescribe a term,
shall be filled for the unexpired portion of the term.
Section 5.07. General Powers. Except as otherwise provided by law, the
Certificate of Incorporation or these by-laws, the day-to-day management of the
Company's business and affairs shall be conducted by or under the supervision of
the President and Chief Executive Officer and by those other officers and
employees to whom management functions are delegated by the Board of Directors
or the President and Chief Executive Officer.
Section 5.08. Corporate Authority. The Chairman of the Board shall,
subject to the control of the Board of Directors, have general and active
supervision of the affairs, business, officers and employees of the Company.
By virtue of his office, the Chairman of the Board shall be a member of all
committees of the Board of Directors or of the Company except as otherwise
specifically provided. He shall, from time to time, in his discretion or at the
order of the Board, submit to the Board reports of the operations and affairs of
the Company. He shall also perform such other duties and have such other powers
as may be assigned to him from time to time by the Board of Directors.
Section 5.09. The Chairman and Vice Chairmen of the Board. The Chairman of
the Board shall preside at all meetings of the stockholders and of the Board of
Directors, and shall perform such other duties as may from time to time be
assigned to him by the Board of Directors. The Vice Chairmen of the Board, if
there be one, in their order of rank and seniority, shall perform such duties as
may from time to time be assigned to them by the Board of Directors, by the
Chairman of the Board or these by-laws.
SECTION 5.10. THE PRESIDENT. DELETED IN ITS ENTIRETY.
Section 5.11. The Vice Presidents. The Company may have one or more
Executive Vice Presidents, Senior Vice Presidents and Vice Presidents having
such duties as from time to time may be determined by the Board of Directors or
by the Chairman of the Board, or by the President and/or Chief Executive Officer
pursuant to Section 5.07.
Section 5.12. The Secretary. The Secretary shall keep full minutes of all
meetings of the stockholders and of the Board of Directors; shall be ex-officio
Secretary of the Board of Directors; shall attend all meetings of the
stockholders and of the Board of Directors; shall record all the votes of the
stockholders and of the directors and the minutes of the meetings of the
stockholders and of the Board of Directors and of committees of the Board in a
book or books to be kept for that purpose. The Secretary shall give, or cause
to be given, notices of all meetings of the stockholders of the Company and of
the Board of Directors; shall be the custodian of the seal of the Company and
see that it is affixed to all documents to be executed on behalf of the Company
under its seal; shall have responsibility for the custody and safekeeping of all
permanent records and other documents of the Company; and, in general, shall
perform all duties incident to the office of Secretary and such other duties as
may be prescribed by the Board of Directors or by the Chairman of the Board,
under whose supervision he shall be. The Board of Directors may elect one or
more Assistant Secretaries to perform such duties as shall from time to time be
assigned to them by the Board of Directors or the Chairman of the Board.
Section 5.13. The Treasurer. The Treasurer shall have or provide for the
custody of all funds, securities and other property of the Company; shall
collect and receive or provide for the collection or receipt of money earned by
or in any manner due to or received by the Company; shall deposit or cause to be
deposited all said moneys in such banks or other depositories as the Board of
Directors may from time to time designate; shall make disbursements of Company
funds upon appropriate vouchers; shall keep full and accurate accounts of
transactions of his office in books belonging to the Company; shall, whenever so
required by the Board of Directors, the Executive Committee or an Audit
Committee, render an accounting showing his transactions as Treasurer, and the
financial condition of the Company; and, in general, shall discharge any other
duties as may from time to time be assigned to him by the Board of Directors.
The Board of Directors may elect one or more Assistant Treasurers to perform the
duties of the Treasurer as shall from time to time be assigned to them by the
Board of Directors or the Treasurer.
Section 5.14. The Controller. The Board of Directors may appoint a
Controller who shall maintain full and accurate records of all assets and
liabilities and transactions of the Company, see that adequate audits thereof
are currently and regularly made and, in conjunction with other officers and
department heads, initiate and enforce measures and procedures whereby the
business of the Company shall be conducted with maximum safeguards, efficiency
and economy. He shall make all such records available for examination when so
required by the Board of Directors, the Executive Committee, or an Audit
Committee. He shall perform such other duties and have such other obligations
as may be prescribed by the Board of Directors or by the Chairman of the Board.
Section 5.15. Officer's Bonds. Any officer shall give a bond for the
faithful discharge of his duties in such sum, if any, and with such surety or
sureties as the Board of Directors shall require. The Company may obtain such
bonds at its expense as the Board of Directors shall require.
Section 5.16. Compensation. The compensation of the officers and agents of
the Company elected by the Board of Directors shall be fixed from time to time
by the Board of Directors or by such committee as may be designated by the Board
of Directors to fix salaries or other compensation of officers.
ARTICLE VI
CERTIFICATES OF STOCK, TRANSFER, ETC.
Section 6.01. Issuance. The certificates for stock of the Company shall be
numbered and registered in the stock ledger and transfer books or equivalent
records of the Company as they are issued. They shall be signed by the Chairman
of the Board, the President, an Executive Vice President or a Vice President and
by the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer, and shall bear the corporate seal, which may be a facsimile, engraved
or printed. Any of or all the signatures upon such certificate may be a
facsimile, engraved or printed if such certificate of stock is signed or
countersigned by a transfer agent or by a registrar, which signature may also be
a facsimile. In case any officer, transfer agent or registrar who has signed,
or whose facsimile signature has been placed upon any share certificate shall
have ceased to be such officer, transfer agent or registrar before the
certificate is issued, it may be issued with the same effect as if he were such
officer, transfer agent or registrar at the date of its issue.
Section 6.02. Transfer. Transfers of shares of stock of the Company shall
be made on the books of the Company upon surrender of the certificates therefor,
endorsed by the person named in the certificate or by attorney lawfully
constituted in writing. No transfer shall be made inconsistent with the
provisions of the Uniform Commercial Code, Article 8 of Title 5A of the Delaware
Code, and its amendments and supplements.
Section 6.03. Stock Certificates. Stock certificates of the Company shall
be in such form as provided by statute and approved by the Board of Directors.
The stock record books and the blank stock certificate books shall be kept by
the Secretary or by any agency designated by the Board of Directors for that
purpose.
Section 6.04. Lost, Stolen, Destroyed or Mutilated Certificates. The Board
of Directors may direct a new certificate or certificates to be issued in place
of any certificate or certificates theretofore issued by the Company alleged to
have been lost, stolen or destroyed, upon the making of an affidavit of the fact
by the person claiming the certificate of stock to be lost, stolen or destroyed.
When authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to give the Company a bond in such
sum as it may direct as indemnity against any claim that may be made against the
Company with respect to the certificate alleged to have been lost, stolen or
destroyed.
Section 6.05. Record Holder of Shares. The Company shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.
Section 6.06. Determination of Stockholders of Record. In order that the
Company may determine the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or entitled to receive
payment of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion or exchange
of stock or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which shall not be more than sixty nor less
than ten days before the date of such meeting, nor more than sixty days prior to
any other action.
If no record date is fixed:
(1) The record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the
day next preceding the day on which the meeting is held.
(2) The record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
Only such stockholders as shall be stockholders on the record date fixed or
determined as aforesaid shall be entitled to notice of or to vote at such
meeting or adjournment, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS, OFFICERS, ETC.
DELETED IN ITS ENTIRETY.
ARTICLE VIII
INSURANCE
DELETED IN ITS ENTIRETY.
ARTICLE IX
MISCELLANEOUS
Section 9.01. Corporate Seal. The corporate seal of the Company shall have
inscribed thereon the name of the Company, the year of its incorporation and the
words "Corporate Seal, Delaware". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or otherwise reproduced.
Section 9.02. Checks. All checks, notes, bills of exchange or other
orders in writing shall be signed by such person or persons as the Board of
Directors, or officer or officers authorized by resolution of the Board of
Directors may, from time to time, designate.
Section 9.03. Contracts. Except as otherwise provided in these by-laws,
the Board of Directors may authorize any officer or officers including the
Chairman and Vice Chairmen of the Board of Directors, or any agent or agents, to
enter into any contract or to execute or deliver any instrument on behalf of the
Company and such authority may be general or confined to specific instances.
Section 9.04. Audit. The Board of Directors shall cause the accounts and
records of the Company and its subsidiaries to be examined and audited by a firm
of independent certified public accountants at least once each year. The Board
of Directors each year shall cause a report of the financial condition of the
Company and its subsidiaries as of the closing date of the preceding fiscal year
to be prepared. Such report shall be in such form as shall be approved by the
Board of Directors and shall be examined and audited by a firm of independent
certified public accountants.
Section 9.05. Inspection. The books, accounts and records of the Company
shall be open for inspection in person by any member of the Board of Directors
at all times.
Section 9.06. Amendment of by-laws. These by-laws shall not be made,
repealed, altered, amended or rescinded by the stockholders of the Company
except by the vote of not less than 80% of the total outstanding shares of
common stock as well as a majority of the total outstanding shares of common
stock not held by a Related Person (as defined in Article Thirteenth of the
Certificate of Incorporation) and/or its affiliates. Nothing contained herein
shall detract from the authority of the Board of Directors to make, alter or
repeal the by-laws of the Company (as set forth in Article 10.03(a) of the
Certificate of Incorporation).
American Stores Company
Key Management Annual Incentive Plan
Fiscal 1996
YOUR INCENTIVE COMPENSATION PROGRAM
THE PURPOSE OF INCENTIVES
Our incentive program rewards the management team for achieving
and exceeding planned business results. We believe incentives
improve the Company's overall performance by encouraging our
management team to increase sales, profits and control expenses.
Your total compensation objective (TCO) is composed of a base
salary, and an annual incentive opportunity.
We want you to know how our incentive compensation program works
and what you can do to maximize your own income.
HOW THE PROGRAM WORKS
THE HIGHLIGHTS
YOUR INCENTIVE TARGET: Each participant will have an expected
incentive award equal to a specified percentage of his or her
average annual salary during the fiscal year. For this purpose,
average annual salary is defined as the base pay an individual
receives during the fiscal year of February 4, 1996 through
February 1, 1997. Each participant will be informed of his or
her percentage participation which is determined by his/her job
responsibilities or target bonus amount.
THE GOAL: The Plan has been designed to provide an incentive to
focus on achieving and exceeding the annual earnings and sales
targets. The maximum payout as a percent of base salary will be
equal to the participant's bonus percentage participation level
times 250%.
Participants in the Plan will be awarded an incentive payment
based on the increase in adjusted earnings in the current fiscal
year over the earnings target. Adjusted earnings equal
consolidated earnings before taxes, adjusted for gains or losses
and any one-time non-recurring events. The LIFO amount to be
used for bonus purposes will not vary from the budgeted amount.
Participants in the Plan will be awarded an incentive payment
based on the achievement of targeted comparable store sales in
the current fiscal year.
You will be notified of the annual earnings and comparable store
sales plans, as well as your specific target incentive.
Incentive compensation shall be computed on the financial results
for the full fiscal year February 4, 1996 through February 1,
1997 as adjusted. The determination of adjusted earnings will be
made by the Compensation and Stock Option Committee of American
Stores Company and will be conclusive with respect to all
incentive awards to be paid. With this in mind, it is the
intention of the Company that all incentive payments for fiscal
year 1996 will be paid in April, 1997.
PAYOUT CALCULATIONS
The Payout Table lets you calculate that portion of your Target
Award Percentage based on earnings and comparable store sales
performance. The appropriate percentage from the table that
represents that portion of your results may be applied directly
to your targeted amount to determine your incentive award.
The Incentive Plan emphasizes and rewards achieving budgeted
goals. Performance that exceeds budgeted goals is rewarded at an
accelerated rate. In other words, the better your business unit
performs relative to budget, the greater your reward.
EXAMPLE
ASSUMPTIONS: This manager's Target Award Percentage is 10% of
his/her $50,000 average annual salary. Annual results equal 102%
of plan for earnings and 101% of plan for comparable store sales.
TARGET INCENTIVE
$50,000 X 10% = $5,000
Based on the Payout Table, this manager is entitled to an award
equal to 117.5% of his/her target award.
AWARD
$5,000 X 117.5% = $5,875
<TABLE>
ANNUAL INCENTIVE
PLAN PAYOUT
TABLE FOR FY 96
AS A
PERCENT OF
BONUS EARNED
SALES
ACHIEVEMENT
VERSUS TARGET -->
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
95% 96% 97% 98% 99% 100% 101% 102% 103% 104% 105%
80% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00% 50.00%
81% 3.75% 8.75% 13.75% 18.75% 23.75% 28.75% 33.75% 38.75% 43.75% 48.75% 53.75%
82% 7.50% 12.50% 17.50% 22.50% 27.50% 32.50% 37.50% 42.50% 47.50% 52.50% 57.50%
EARNINGS 83% 11.25% 16.25% 21.25% 26.25% 31.25% 36.25% 41.25% 46.25% 51.25% 56.25% 61.25%
ACHIEVEMENT 84% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00% 50.00% 55.00% 60.00% 65.00%
VERSUS 85% 18.75% 23.75% 28.75% 33.75% 38.75% 43.75% 48.75% 53.75% 58.75% 63.75% 68.75%
TARGET 86% 22.50% 27.50% 32.50% 37.50% 42.50% 47.50% 52.50% 57.50% 62.50% 67.50% 72.50%
87% 26.25% 31.25% 36.25% 41.25% 46.25% 51.25% 56.25% 61.25% 66.25% 71.25% 76.25%
88% 30.00% 35.00% 40.00% 45.00% 50.00% 55.00% 60.00% 65.00% 70.00% 75.00% 80.00%
89% 33.75% 38.75% 43.75% 48.75% 53.75% 58.75% 63.75% 68.75% 73.75% 78.75% 83.75%
90% 37.50% 42.50% 47.50% 52.50% 57.50% 62.50% 67.50% 72.50% 77.50% 82.50% 87.50%
91% 41.25% 46.25% 51.25% 56.25% 61.25% 66.25% 71.25% 76.25% 81.25% 86.25% 91.25%
92% 45.00% 50.00% 55.00% 60.00% 65.00% 70.00% 75.00% 80.00% 85.00% 90.00% 95.00%
93% 48.75% 53.75% 58.75% 63.75% 68.75% 73.75% 78.75% 83.75% 88.75% 93.75% 98.75%
94% 52.50% 57.50% 62.50% 67.50% 72.50% 77.50% 82.50% 87.50% 92.50% 97.50% 102.50%
95% 56.25% 61.25% 66.25% 71.25% 76.25% 81.25% 86.25% 91.25% 96.25% 101.25% 106.25%
96% 60.00% 65.00% 70.00% 75.00% 80.00% 85.00% 90.00% 95.00% 100.00% 105.00% 110.00%
97% 63.75% 68.75% 73.75% 78.75% 83.75% 88.75% 93.75% 98.75% 103.75% 108.75% 113.75%
98% 67.50% 72.50% 77.50% 82.50% 87.50% 92.50% 97.50% 102.50% 107.50% 112.50% 117.50%
99% 71.25% 76.25% 81.25% 86.25% 91.25% 96.25% 101.25% 106.25% 111.25% 116.25% 121.25%
100% 75.00% 80.00% 85.00% 90.00% 95.00% 100% 105.00% 110.00% 115.00% 120.00% 125.00%
101% 81.25% 86.25% 91.25% 96.25% 101.25% 106.25% 111.25% 116.25% 121.25% 126.25% 131.25%
102% 87.50% 92.50% 97.50% 102.50% 107.50% 112.50% 117.50% 122.50% 127.50% 132.50% 137.50%
103% 93.75% 98.75% 103.75% 108.75% 113.75% 118.75% 123.75% 128.75% 133.75% 138.75% 143.75%
104% 100.00% 105.00% 110.00% 115.00% 120.00% 125.00% 130.00% 135.00% 140.00% 145.00% 150.00%
105% 106.25% 111.25% 116.25% 121.25% 126.25% 131.25% 136.25% 141.25% 146.25% 151.25% 156.25%
106% 112.50% 117.50% 122.50% 127.50% 132.50% 137.50% 142.50% 147.50% 152.50% 157.50% 162.50%
107% 118.75% 123.75% 128.75% 133.75% 138.75% 143.75% 148.75% 153.75% 158.75% 163.75% 168.75%
108% 125.00% 130.00% 135.00% 140.00% 145.00% 150.00% 155.00% 160.00% 165.00% 170.00% 175.00%
109% 131.25% 136.25% 141.25% 146.25% 151.25% 156.25% 161.25% 166.25% 171.25% 176.25% 181.25%
110% 137.50% 142.50% 147.50% 152.50% 157.50% 162.50% 167.50% 172.50% 177.50% 182.50% 187.50%
111% 143.75% 148.75% 153.75% 158.75% 163.75% 168.75% 173.75% 178.75% 183.75% 188.75% 193.75%
112% 150.00% 155.00% 160.00% 165.00% 170.00% 175.00% 180.00% 185.00% 190.00% 195.00% 200.00%
113% 156.25% 161.25% 166.25% 171.25% 176.25% 181.25% 186.25% 191.25% 196.25% 201.25% 206.25%
114% 162.50% 167.50% 172.50% 177.50% 182.50% 187.50% 192.50% 197.50% 202.50% 207.50% 212.50%
115% 168.75% 173.75% 178.75% 183.75% 188.75% 193.75% 198.75% 203.75% 208.75% 213.75% 218.75%
116% 175.00% 180.00% 185.00% 190.00% 195.00% 200.00% 205.00% 210.00% 215.00% 220.00% 225.00%
117% 181.25% 186.25% 191.25% 196.25% 201.25% 206.25% 211.25% 216.25% 221.25% 226.25% 231.25%
118% 187.50% 192.50% 197.50% 202.50% 207.50% 212.50% 217.50% 222.50% 227.50% 232.50% 237.50%
119% 193.75% 198.75% 203.75% 208.75% 213.75% 218.75% 223.75% 228.75% 233.75% 238.75% 243.75%
120% 200.00% 205.00% 210.00% 215.00% 220.00% 225.00% 230.00% 235.00% 240.00% 245.00% 250.00%
</TABLE>
CHANGES IN EMPLOYMENT STATUS
During the fiscal year, new associates may join the incentive
program, and other eligible associates may retire (normal retirement is age 57
or above). The following provisions govern incentive awards for those whose
employment status changes during the period:
* You must be on the active payroll of the Company on the date
that the fiscal year ends (or retire from active employment
during the period) to be eligible to receive an incentive award.
* In case of death, disability as determined under the American
Stores Long Term Disability Plan, or retirement at or after age
57, generally a pro rata award will be made based on the
participant's salary received while in this plan and percentage
level of participation. Payment will be made in April after the
end of the fiscal year. A pro rata award will not be made to
individuals retiring at or after age 57 who begin competing with
the company within 1 year of leaving employment. For purposes of
this paragraph, the word "competing" shall mean working or
consulting for a retail establishment in the food or drug
business in direct competition with ASC or its subsidiaries in a
supermarket store, drug store, warehouse store, club store, or
any combination thereof, or in an organization that primarily
sells the products which constitute at least 10 percent (10%) of
the products sold in any of the stores described above.
* Incentive plan participants who are absent from the job for
medical and personal leaves will have their awards determined as
follows:
* Participants who are on sick leave in excess of 30
consecutive working days will forfeit their share of the bonus
accrued during their illness.
Personal Leave - Participants will not receive credit for time
missed on a personal leave. Awards will be prorated accordingly.
* If a plan participant's job is eliminated and a severance
allowance is paid, a prorated portion of the incentive award will
be paid in April after the end of the fiscal year.
* Transfer and/or promotion from one incentive-eligible
position to another will result in a prorated award for the time
in each position. Where such a proration is necessary, the award
calculation for the changed position will be based on the salary,
the length of time, and the target percentage established by that
change and the results of the applicable operating division. For
these participants, at least one quarter (13 weeks) are required
before a proration will be made.
SPECIAL PROVISIONS
* The Company reserves the right to discontinue or replace
this program.
Being a member of this incentive compensation plan should not be
construed as a contract for employment nor an agreement on the
part of the management of the Company for such employment.
Exhibit 11
AMERICAN STORES COMPANY
CALCULATION OF EARNINGS PER SHARE
(Unaudited)
(In thousands, except per share data)
<TABLE>
1995 1994 1993
Primary Earnings Per Share
<S> <C> <C> <C>
Primary earnings applicable to shareholders before
extraordinary item $316,809 $345,184 $262,090
Extraordinary item 0 0 (15,000)
Primary earnings applicable to shareholders $316,809 $345,184 $247,090
Earnings per share before extraordinary item $2.16 $2.42 $1.85
Extraordinary item 0 0 (0.11)
Primary earnings per share $2.16 $2.42 $1.74
Average shares outstanding 146,943 142,767 142,202
Fully Diluted Earnings Per Share
Earnings applicable to shareholders before extra-
ordinary item $316,809 $345,184 $262,090
Plus interest on convertible debentures 0 7,612 7,612
Fully diluted earnings applicable to shareholders
before extraordinary item 316,809 352,796 269,702
Extraordinary item 0 0 (15,000)
Fully diluted earnings applicable to shareholders $316,809 $352,796 $254,702
Earnings per share before extraordinary item $2.16 $2.33 $1.79
Extraordinary item 0 0 (0.10)
Fully diluted earnings per share $2.16(1) $2.33 $1.69(1)
Fully diluted average shares outstanding 147,425 151,211 151,020
Calculation of Fully Diluted Average Shares Outstanding
Effect of assumed exercise of stock options:
Proceeds from assumed exercise $40,485 $13,773 $23,557
Shares under options outstanding 1,974 1,213 2,139
Shares assumed acquired with proceeds under the
treasury stock method (1,492) (547) (1,099)
Incremental shares due to assumed exercise
of stock options 482 666 1,040
Fully diluted average shares outstanding:
Average shares outstanding 146,943 142,767 142,202
Assumed exercise of stock options 482 666 1,040
Assumed conversion of debentures 0 7,778 7,778
Total 147,425 151,211 151,020
</TABLE>
(1) Dilution is less than 3%.
Exhibit 12
<TABLE>
AMERICAN STORES COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
In the computation of the ratio of earnings to fixed charges for the Company,
earnings consist of pre-tax income from continuing operations before 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.
(In thousands) 1995 1994 1993
<S> <C> <C> <C>
Earnings before income taxes and an extra-
extraordinary item $550,916 $606,263 $480,805
Fixed charges (detail below) 259,648 265,529 284,834
Adjusted for:
Capitalized interest (8,542) (3,900) (3,416)
Previously capitalized interest
amortized during the period 1,231 1,269 1,246
Earnings $803,253 $869,161 $763,469
Interest expense $159,545 $170,703 $189,773
Capitalized interest 8,542 3,900 3,416
Interest factor for rental expense
of operating leases 91,561 90,926 91,645
Fixed charges $259,648 $265,529 $284,834
Ratio of earnings to fixed charges 3.09 to 1 3.27 to 1 2.68 to 1
</TABLE>
Exhibit 13
Common Stock Market Prices and Dividends
The market price range on the New York Stock Exchange and the dividends declared
on the Company's stock are set forth in the following table. The common shares
of the Company are listed on the New York, Philadelphia, Chicago and Pacific
stock exchanges under the trading symbol "ASC". The number of shareholders of
record of the Company's common stock at March 30, 1996, was 18,197.
<TABLE>
1995 1994 1993
Market Price Market Price Market Price
Cash Cash Cash
Dividend Dividend Dividend
High Low Paid High Low Paid High Low Paid
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
First Quarter $26 1/8 $23 1/4 $.14 $27 3/16 $20 7/8 $.12 $22 3/16 $18 1/8 $.10
Second Quarter $29 3/4 $24 3/4 .14 $26 1/8 $23 1/4 .12 $23 3/16 $20 3/16 .10
Third Quarter $30 3/4 $28 1/8 .14 $27 1/8 $23 3/4 .12 $24 5/8 $19 7/8 .10
Fourth Quarter $30 3/4 $24 7/8 .14 $27 3/4 $24 .12 $22 1/4 $19 7/8 .10
Annual Dividend $.56 $.48 $.40
</TABLE>
Selected Financial Data
The following consolidated selected financial data of the Company for the last
five years should be read in conjunction with the consolidated financial
statements and related notes appearing on pages 17 to 30.
Comparisons of the results of operations between fiscal years 1991 to 1995 are
rendered difficult due to the Company's disposition of stores. These include
the disposition of 45 Acme Markets stores in the fourth quarter of 1994, the 33-
store Star Market food division in the third quarter of 1994, 74 Jewel Osco
combination food and drug stores in the first quarter of 1992 and the 145 Alpha
Beta Company stores and 59 Osco Drug stores in the second and third quarters of
1991. These disposed of stores generated sales in the amounts of $0.8 billion,
$1.2 billion, $1.4 billion and $3.4 billion in 1994, 1993, 1992, and 1991,
respectively.
<TABLE>
(In thousands of dollars, except per share data)
1995(1) 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Sales $18,308,894 $18,355,126 $18,763,439 $19,051,180 $20,822,956
Earnings before extraordinary item
and cumulative effect of a change
in accounting principle $316,809 $345,184 $262,090 $207,466 $240,016
Extraordinary item - early retire-
ment of debt - net of taxes (15,000)
Cumulative effect of a change in
accounting principle -
Postretirement health care benefits (40,734)
Net earnings $316,809 $345,184 $247,090 $207,466 $199,282
Average shares outstanding 146,943 142,767 142,202 140,314 138,364
Earnings per share before extra-
ordinary item and cumulative
effect of a change in accounting
principle $2.16 $2.42 $1.85 $1.48 $1.73
Extraordinary item - early retirement
of debt - net of taxes (.11)
Cumulative effect of a change in
accounting principle-
Postretirement health care benefits (.29)
Net earnings per share $2.16 $2.42 $1.74 $1.48 $1.44
Fully diluted earnings per share $2.16 $2.33 $1.69 $1.44 $1.41
Cash dividends declared per share $.56 $.48 $.40 $.36 $.32
Total assets at year-end $7,362,964 $7,031,566 $6,927,434 $6,763,793 $7,198,050
Total debt and obligations under
capital leases at year-end $2,240,168 $2,205,291 $2,167,999 $2,248,316 $2,798,578
Total capital expenditures (2) $801,371 $565,313 $652,928 $476,617 $378,593
Store count (3) 1,650 1,597 1,695 1,672 1,631
Selling area square footage (000's) (4) 32,523 31,179 32,727 32,320 34,428
(1) 53-week year
(2) Includes present value of new leases
(3) Includes both the food and drug sides of Jewel Osco combination stores which
are counted as separate stores
(4) Selling area square footage was 74% of total retail square footage in 1995
NOTE: The fiscal year of the Company ends on the Saturday nearest to January
31. All references herein to "1995", "1994", "1993", "1992" and "1991"
represent the fiscal years ended February 3, 1996, January 28, 1995, January 29,
1994, January 30, 1993 and February 1, 1992, respectively.
</TABLE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations
Total sales and the percentage change in comparable store sales for the 1995 53-
week fiscal year, and the 1994 and 1993 52-week fiscal years, are set forth in
the tables below. The decrease in total sales is primarily attributable to the
disposition of the 33-store Star Market food division in the third quarter of
1994 and the 45 Acme Markets stores in the fourth quarter of 1994 (disposed of
operations). Sales from continuing operations increased 4.5% in 1995, and
decreased 0.3% in 1994 and 0.2% in 1993. The increase in sales from continuing
operations in 1995 is primarily a result of improved performance at all three
operating divisions and the extra week of operations. Comparable store sales
(sales from stores that have been open at least one year, including replacement
stores) increased 1.4% in 1995, 0.5% in 1994 and decreased 0.7% in 1993. The
improvement in comparable store sales is primarily the result of successful
marketing of the combination stores in the eastern food operations, increased
pharmacy and third-party sales in the drug store operations and aggressive
pricing programs offset slightly by the impact of a nine-day labor dispute in
the first quarter of 1995 in the western food operations. The Super Saver
warehouse-type stores have been reorganized under the Lucky operations in 1996
to leverage our support functions.
Total Sales
53 weeks 52 weeks 52 weeks
(In millions of dollars) 1995 1994 1993
Eastern food operations $ 6,147 $ 5,957 $ 6,052
Western food operations 7,155 7,002 7,183
Drug store operations 4,995 4,544 4,322
Other 12 12 12
Continuing operations 18,309 17,515 17,569
Disposed of operations 840 1,194
Total sales $18,309 $18,355 $18,763
Comparable Store Sales
53 weeks 52 weeks 52 weeks
(Percentage change) 1995 1994 1993
Eastern food operations 1.5% 0.7% (1.5)%
Western food operations (0.8) (1.8) (1.9)
Drug store operations 4.8 4.2 2.6
Total Change 1.4% 0.5% (0.7)%
Gross profit as a percent of sales increased to 26.9% in 1995, compared to 26.8%
in 1994 and 26.4% in 1993. The increase in gross profit in 1995 over 1994 is
primarily the result of the disposed of operations, which produced lower margins
than the continuing operations, and improvements in the eastern food operations
due to improved product mix and promotional strategies. These increases were
offset by decreases in competitive drug store pharmacy gross margins and the
impact of a nine-day labor dispute in the first quarter of 1995 in the western
food operations. The 1994 gross profit percentage increased from 1993 in the
eastern food, western food and drug store operations primarily due to
improvements in the mix of products sold, promotional strategies and shrink
control. The annual pre-tax LIFO charge to earnings amounted to $12.8 million
in 1995, $8.2 million in 1994 and $7.2 million in 1993. Changes in the mix of
inventory have influenced the LIFO charge.
Operating expense as a percent of sales decreased to 23.0% in 1995, compared to
23.3% in 1994 and 23.0% in 1993. Operating expense in the western food
operations benefited in 1995 from the renegotiation of a labor contract with the
United Food and Commercial Workers International. The new contract will expire
in 1999, and replaces a contract scheduled to expire in 1996. As a result of
the early termination of the contract, certain health and welfare savings, which
were being recognized over the life of the old contract, were immediately
recognized in the third quarter of 1995. Operating expense in the western food
operations also decreased due to lower self-insurance costs and productivity
improvements, which were partially offset by the impact of the nine-day labor
dispute. In addition, improved sales, lower insurance costs and better overall
cost control in the eastern food and drug store operations helped lower
operating expense as a percentage of sales. Operating expense in 1994 included
charges of $23.9 million ($0.10 per share) for centralization of administrative
functions, including information technology and accounting. As of third quarter
1995, the entire reserve had been utilized without significant adjustments to
the original amount. Operating expense in 1994 also included expenses for the
consolidation of the computer data centers and a voluntary severance program
initiated at Acme Markets, totaling $11.2 million ($0.05 per share). Operating
expense in 1993 included $7.6 million ($0.04 per share) for the settlement of
meat products litigation in California and severance programs stemming from the
Company's expense reduction programs.
Total operating profit for the last three fiscal years is set forth in the
following table. Operating profit from continuing operations increased 11.9% in
1995, 4.4% in 1994 and 0.8% in 1993. Total operating profit was 3.9% of sales
in 1995, 3.5% of sales in 1994 and 3.4% of sales in 1993. The increase in
operating profit and operating profit as a percentage of sales is primarily due
to strong performances from the Company's core operations and the extra week of
operations included in 1995. In addition, eastern food operations improved due
to successful joint marketing of the combination stores, western food operations
improved due to lower health and welfare costs associated with the renegotiated
labor contract and drug store operations improved due to lower insurance costs
and better cost control slightly offset by the start-up costs of 71 new stores,
including 17 acquired Clark drug stores.
<TABLE>
Operating Profit
53 weeks 52 weeks 52 weeks
(In millions of dollars) 1995 1994 1993
<S> <C> <C> <C>
Eastern food operations $271.7 $258.2 $231.2
Western food operations 271.2 245.9 248.7
Drug store operations 245.4 228.5 197.0
LIFO charge (12.8) (8.2) (7.2)
Purchase accounting amortization (76.8) (78.6) (79.2)
Other 8.1 (14.1) 14.7
Continuing operations 706.8 631.7 605.2
Disposed of operations 18.4 36.7
Total operating profit $706.8 $650.1 $641.9
</TABLE>
Interest expense decreased in 1995, 1994 and 1993 due to lower average interest
rates resulting from the refinancing of high coupon borrowings at lower rates.
In addition, the Company experienced lower average debt levels for each of the
last three years. Interest expense also benefited from the conversion of a
portion of the convertible notes from debt to equity in the first quarter of
1995. The caption "Other" in 1994 of $120.1 million included non-recurring
gains of $121.0 million on the sale of the Star Market food division, $41.2
million on the sale of 45 Acme Markets stores and a charge of $31.3 million for
closed store costs (totaling $0.54 per share). "Other" in 1993 of $24.1 million
included $45.7 million ($0.20 per share) of income from the resolution of the
"Rule of 80" litigation, which concerned the Company's termination of the early
retirement feature of an employee retirement plan. This was offset by
approximately $17.2 million ($0.07 per share) of various charges, including
costs associated with store closings, integrating acquired stores into existing
operations and costs associated with the earthquake in southern California.
The Company's effective income tax rates were 42.5% in 1995, 43.1% in 1994 and
45.5% in 1993. The disposition of assets during 1995 and 1994 in states with
higher tax rates has resulted in lower effective income tax rates.
Earnings for 1993 were affected by charges incurred in the early retirement of
debt totaling $0.11 per share, which were accounted for as an extraordinary
item. Net earnings per share amounted to $2.16 in 1995, $2.42 in 1994 and $1.74
in 1993.
Liquidity and Capital Resources
Cash provided by operating activities increased by $313.3 million from 1994 to
1995 primarily due to higher earnings after adjusting for the gain on disposed
of operations. In addition, the disposed of operations in 1994 render the
comparison between years more difficult. Cash and cash equivalents at the
beginning of 1995 were higher than the beginning of 1994 and 1993 due to
proceeds held from the sale of the disposed of operations.
Cash capital expenditures amounted to $750.9 million in 1995, $538.0 million in
1994 and $593.8 million in 1993. Additional capital expenditures represented by
the net present value of leases amounted to $50.5 million in 1995, $27.3 million
in 1994 and $59.1 million in 1993. The increase in capital expenditures in 1995
reflects the Company's commitment to its expanded capital expenditure program
announced in 1992. The Company opened 92 new stores in 1995 including 17
acquired Clark drug stores. The Company opened 49 and 39 new stores in 1994 and
1993, respectively. There were 223, 166 and 233 stores remodeled in 1995, 1994
and 1993, respectively. During 1993 the Company acquired 55 Reliable drug
stores and four Thrifty drug stores. Capital expenditures for fiscal 1996,
including the net present value of leases, are expected to approximate $900
million and will be funded through cash flow from operations, existing credit
facilities and other long-term borrowings. The Company currently plans to open
100 new stores and remodel 72 stores in 1996.
On March 9, 1995, the Company completed the redemption of its $175 million,
7-1/4% Convertible Subordinated Notes due 2001. The Company issued 5.3 million
shares of common stock upon the conversion of $120.3 million principal amount of
Notes and the balance of approximately $54.7 million principal amount of Notes
was redeemed with cash.
On May 18, 1995, the Company issued $200 million, 7.4% debentures due May 15,
2005, at 99.5% to yield 7.5% under an $800 million shelf registration statement
filed on February 18, 1994. On August 7, 1995, the Company entered into a $75
million, 6.6%, note payable due August 7, 2000. The proceeds from the note were
used to pay off an existing $75 million, 8.9% note due August 7, 1995. On
November 29, 1995, the Company paid off a $50 million, 10.9% note payable.
The net increase in debt was $43.3 million and $50.0 million in 1995 and 1994,
respectively. The increases are due to increased capital spending in each year.
In addition, debt increased in 1995 due to the repurchase of 2.5 million shares
of the Company's common stock at an average market price of $28.93 under an
existing stock repurchase program. As of February 3, 1996, there remained an
additional 1.5 million shares authorized for repurchase under the program.
The Company's principal bank credit agreement is a $1.0 billion revolving credit
facility which expires in 1999, and is used for direct borrowings and as backup
support for commercial paper. The Company also has $150 million of 364-day
committed bank lines and $360 million of uncommitted bank lines, which are used
for overnight and short-term bank borrowings. At year-end 1995, the Company had
$865 million of debt supported by the credit facility and $69 million
outstanding under bank lines, leaving unused committed borrowing capacity of
$216 million.
Working capital amounted to $96.3 million at year-end 1995 compared to $200.7
million at year-end 1994 and a negative $58.3 million at year-end 1993.
Fluctuations in the components of working capital are customary.
The Company's ratio of total debt (debt plus obligations under capital leases)
to total capitalization (total debt plus common shareholders' equity) amounted
to 48.8%, 51.8% and 55.4% at year-end 1995, 1994 and 1993, respectively.
The Company believes that its cash flow from operations, supplemented by credit
available under the Company's existing credit facility, committed and
uncommitted credit facilities, other long-term borrowings, as well as its
ability to refinance debt, will be adequate to meet its presently identifiable
cash requirements.
The Company uses derivative financial instruments to manage interest and
currency risks on two foreign loans that had an outstanding principal balance of
$210 million at year-end 1995. The Company is exposed to credit losses in the
event of nonperformance by the counterparties to its swap agreements. Such
counterparties are highly rated financial institutions and the Company
anticipates they will be able to satisfy their obligations under the contracts.
Contingencies
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). Although the ultimate outcome and expense of
environmental remediation is uncertain, the Company believes that the required
costs of remediation and continuing compliance with environmental laws in excess
of current reserves will not have a material adverse effect on the financial
condition or operating results of the Company.
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.
Inflation
In recent years, the impact of inflation on the Company's results of operations
has been moderate. As operating expenses and inventory costs have increased,
the Company, to the extent permitted by competition, has recovered these
increases in costs by increasing prices over time.
The Company uses the LIFO (last-in, first-out) method of accounting for the
majority of its inventories. Under this method, the cost of merchandise sold
reported in the financial statements approximates current costs and thus reduces
the distortion in reported earnings due to increasing costs.
The historical costs of property, plant and equipment recorded by the Company
were incurred over a period of many years. The cost of replacing property,
plant and equipment is generally greater than the cost on the books of the
Company as a result of inflation that has occurred over the years since the
property, plant and equipment were placed in service.
Supply Chain Re-engineering
The Company is currently engaged in an effort to re-engineer its supply chain
business processes. This involves streamlining the Company's buying,
warehousing, distribution and merchandising activities. Major components of
this effort include the development of new processes and implementation of new
software to support these activities, as well as centralized management of
certain procurement and logistics processes. The goal is to provide better
products and services to customers through more cost-effective processes. In
1996, the Company plans to launch the centralization of the grocery procurement
functions in Salt Lake City and implement its first set of integrated supply
chain systems for liquor, wine and tobacco. The re-engineering efforts will
continue over the next few years and, while the Company believes this effort
will ultimately reduce its operating expenses and enhance its future operating
results, the beneficial impact cannot presently be quantified or assured.
However, the Company anticipates that the costs will exceed the benefits of such
efforts during the 1996 fiscal year.
Impact of New Accounting Standards
As further explained in the accompanying notes to the financial statements, the
Company adopted the recently issued accounting standard relating to long-lived
assets in 1995, and its adoption did not have a material impact on the Company's
financial statements.
The Company does not intend to change its method of recognizing expense in
connection with stock-based compensation arrangements as permitted by the
recently issued related standard and thus, its issuance will not have a material
impact on the Company's financial statements.
Report of Independent Auditors
Shareholders and Board of Directors
American Stores Company
We have audited the accompanying consolidated balance sheets of American Stores
Company and subsidiaries as of February 3, 1996, January 28, 1995 and January
29, 1994, and the related consolidated statements of earnings, shareholders'
equity and cash flows for each of the three fiscal years in the period ended
February 3, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of American Stores
Company and subsidiaries at February 3, 1996, January 28, 1995 and January 29,
1994, and the consolidated results of their operations and their cash flows for
each of the three fiscal years in the period ended February 3, 1996, in
conformity with generally accepted accounting principles.
(Signature)
March 15, 1996
Salt Lake City, Utah
<TABLE>
Consolidated Statements of Earnings
53 weeks 52 weeks 52 weeks
(In thousands, except per share data) 1995 1994 1993
<S> <C> <C> <C>
Sales $18,308,894 $18,355,126 $18,763,439
Cost of merchandise sold, including ware-
housing and transportation expenses 13,390,353 13,436,699 13,815,607
Gross profit 4,918,541 4,918,427 4,947,832
Operating and administrative expenses 4,211,718 4,268,359 4,305,950
Operating profit 706,823 650,068 641,882
Other income (expense):
Interest income 8,747 6,789 4,568
Interest expense (159,545) (170,703) (189,773)
Other (5,109) 120,109 24,128
Total other income (expense) (155,907) (43,805) (161,077)
Earnings before income taxes and extra-
ordinary item 550,916 606,263 480,805
Federal and state income taxes (234,107) (261,079) (218,715)
Earnings before extraordinary item 316,809 345,184 262,090
Extraordinary item - early retirement
of debt - net of taxes (15,000)
Net earnings $ 316,809 $ 345,184 $ 247,090
Average shares outstanding 146,943 142,767 142,202
Earnings per share before extraordinary
item $2.16 $2.42 $1.85
Extraordinary item (.11)
Net earnings per share $2.16 $2.42 $1.74
Fully diluted earnings per share $2.16 $2.33 $1.69
See notes to consolidated financial statements
Consolidated Balance Sheets
Year-end
(In thousands of dollars, except per share data) 1995 1994 1993
ASSETS
Current Assets
Cash and cash equivalents $ 102,422 $ 195,689 $ 59,580
Receivables 319,688 291,760 282,124
Inventories 1,572,242 1,526,770 1,539,610
Prepaid expenses 69,098 48,711 43,265
Deferred income tax benefits 20,517 69,165 71,230
Total Current Assets 2,083,967 2,132,095 1,995,809
Property, Plant and Equipment, at cost
Land 597,804 522,014 541,396
Buildings 1,399,561 1,221,871 1,109,737
Fixtures and equipment 2,415,326 2,168,826 2,092,934
Leasehold improvements 736,682 654,441 654,123
5,149,373 4,567,152 4,398,190
Less accumulated depreciation and
amortization 2,019,557 1,800,714 1,694,150
Net Property, Plant and Equipment 3,129,816 2,766,438 2,704,040
Property Under Capital Leases, less
accumulated amortization of $106,993
in 1995, $103,760 in 1994 and $108,394
in 1993 76,084 84,690 97,127
Goodwill, less accumulated amortization
of $418,006 in 1995, $365,271 in 1994
and $311,823 in 1993 1,722,892 1,771,121 1,827,334
Other Assets 350,205 277,222 303,124
Total Assets $7,362,964 $7,031,566 $6,927,434
Consolidated Balance Sheets (concluded)
Year-end
(In thousands of dollars, except per share data) 1995 1994 1993
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term debt $ 125,413 $ 132,019 $ 66,830
Current obligations under capital leases 9,739 9,195 9,708
Accounts payable 996,354 883,329 958,272
Accrued payroll and benefits 331,843 350,637 303,160
Current portion of self-insurance reserves 153,464 179,595 212,891
Income taxes payable 17,292 46,170 118,279
Other Current Liabilities 353,598 330,486 384,959
Total Current Liabilities 1,987,703 1,931,431 2,054,099
Long-term Debt,
less current maturities 2,038,636 1,988,710 2,003,866
Obligations Under Capital Leases,
less current obligations 66,380 75,367 87,595
Self-insurance Reserves, less current portion 434,028 464,119 464,451
Deferred Income Taxes 365,978 320,814 345,760
Other Liabilities 115,743 200,204 229,378
Shareholders' Equity
Common stock of $1.00 par value, authorized
325,000,000 shares; issued 149,889,236
shares in 1995 and 144,542,156 shares
in 1994 and 1993 149,889 144,542 144,542
Additional paid-in capital 345,118 216,418 190,173
Retained earnings 1,942,874 1,708,672 1,432,032
Less cost of treasury stock; 3,441,451 shares
in 1995, 1,571,094 shares in 1994 and
2,038,454 shares in 1993 (83,385) (18,711) (24,462)
Total Shareholders' Equity 2,354,496 2,050,921 1,742,285
Total Liabilities and Shareholders' Equity $7,362,964 $7,031,566 $6,927,434
See notes to consolidated financial statements
</TABLE>
<TABLE>
Consolidated Statements of Shareholders' Equity (1)
Additional
(In thousands of dollars, Common Paid-In Retained Treasury
except per share data) Stock Capital Earnings Stock Total
<S> <C> <C> <C> <C> <C>
Balances at beginning of 1993 $144,542 $190,475 $1,241,847 $(32,850) $1,544,014
Net earnings -- 1993 (52 weeks) 247,090 247,090
Issuance of 524,258 shares of
stock for stock options and awards 579 6,953 7,532
Dividends ($.40 per share) (56,905) (56,905)
Stock Purchase Incentive Plans including
issuance of 120,000 shares (3,389) 1,446 (1,943)
Purchase of 498 shares for treasury (11) (11)
Other 2,508 2,508
Balances at year-end 1993 $144,542 $190,173 $1,432,032 $(24,462) $1,742,285
Net earnings -- 1994 (52 weeks) 345,184 345,184
Issuance of 427,512 shares of
stock for stock options and awards 2,629 5,259 7,888
Dividends ($.48 per share) (68,544) (68,544)
Stock Purchase Incentive Plans including
issuance of 40,000 shares 21,245 496 21,741
Purchase of 152 shares for treasury (4) (4)
Other 2,371 2,371
Balances at year-end 1994 $144,542 $216,418 $1,708,672 $(18,711) $2,050,921
Net earnings -- 1995 (53 weeks) 316,809 316,809
Issuance of 592,143 shares of
stock for stock options and awards 914 7,583 8,497
Dividends ($.56 per share) (82,607) (82,607)
Stock Purchase Incentive Plans including
issuance of 60,000 shares 3,869 733 4,602
Conversion of convertible notes 5,347 119,215 124,562
Purchase of 124 shares for treasury (3) (3)
Stock Repurchase Program
2,522,500 shares (72,987) (72,987)
Other 4,702 4,702
Balances at year-end 1995 $149,889 $345,118 $1,942,874 $(83,385) $2,354,496
See notes to consolidated financial statements
(1) Restated as necessary to reflect the March 1994 2-for-1 stock split.
</TABLE>
<TABLE>
Consolidated Statements of Cash Flows
53 weeks 52 weeks 52 weeks
(In thousands of dollars) 1995 1994 1993
Cash flows from operating activities:
<S> <C> <C> <C>
Net earnings $316,809 $345,184 $247,090
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 404,562 407,286 384,307
Net (gain) loss on asset sales (3,219) (158,448) 16,060
Self-insurance reserves (56,222) (22,229) 8,197
Other (114,385) (95,422) (107,529)
(Increase) decrease in current assets:
Receivables (32,694) (26,037) 3,063
Inventories (54,645) (46,149) 36,889
Prepaid expenses 28,164 (10,347) (14,308)
(Decrease) increase in current liabilities:
Accounts payable 124,750 (44,369) 189
Other current liabilities 23,305 (49,866) 28,774
Accrued payroll and benefits (18,794) 41,108 1,507
Income taxes payable (30,249) (66,611) 86,207
Total adjustments 270,573 (71,084) 443,356
Net cash provided by operating activities 587,382 274,100 690,446
Cash flows from investing activities:
Expended for property, plant and equipment (750,914) (538,033) (593,785)
Proceeds from disposition of operations 377,618
Proceeds from sale of assets 50,511 21,680 38,007
Net cash used in investing activities (700,403) (138,735) (555,778)
Cash flows from financing activities:
Proceeds from long-term borrowing 278,500 530,000 100,000
Reduction of long-term debt (114,869) (479,967) (170,467)
Principal payments for obligations under
capital leases (10,332) (12,741) (9,850)
Proceeds from exercise of stock options, other 22,049 31,996 8,086
Repurchase of common stock (72,987)
Cash dividends (82,607) (68,544) (56,905)
Net cash provided by (used in) financing
activities 19,754 744 (129,136)
Net increase (decrease) in cash and cash
equivalents (93,267) 136,109 5,532
Cash and cash equivalents:
Beginning of year 195,689 59,580 54,048
End of year $102,422 $195,689 $ 59,580
See notes to consolidated financial statements
</TABLE>
Notes to Consolidated Financial Statements
Nature of Operations
American Stores Company is one of the nation's leading food and drug retailers,
operating 1,650 stores in 26 states nationwide. The Company operates in a
single industry segment and its principal lines of business are food, drug and
combination food/drug stores. Food stores account for more than two-thirds of
the Company's sales and operating profit. Principal markets include California,
Illinois, New Jersey, Pennsylvania, Indiana and Arizona, where products are sold
primarily to end-user customers.
Significant Accounting Policies
Fiscal Year. The fiscal year of the Company ends on the Saturday nearest to
January 31. All references herein to "1995", "1994" and "1993" represent the 53
- -week fiscal year ended February 3, 1996, and the 52-week fiscal years ended
January 28, 1995, and January 29, 1994, respectively.
Basis of Consolidation. The consolidated financial statements include the
accounts of American Stores Company and all subsidiaries. Accordingly, all
references herein to "American Stores Company" include the consolidated results
of its subsidiaries. All significant intercompany accounts and transactions
have been eliminated in consolidation.
Use of Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Cash and Cash Equivalents. The Company considers all highly liquid investments
with a maturity of three months or less when purchased to be cash equivalents.
The carrying amounts reported in the balance sheet for cash and cash equivalents
approximate those assets' fair value. The balance of cash was higher at year-
end 1994 due to proceeds held from the sale of the Star Market food division and
45 Acme Markets stores.
Depreciation and Amortization. Depreciation and amortization are provided on a
straight-line basis over the estimated useful lives of owned assets. Leasehold
improvements and leased properties under capital leases are amortized over the
estimated useful life of the property or over the term of the lease, whichever
is shorter.
Goodwill. Goodwill, principally from the acquisition of Lucky Stores, Inc. in
1988, represents the excess of cost over fair value of net assets acquired and
is being amortized over 40 years using the straight-line method.
Costs of Opening and Closing Stores. The costs of opening new stores are
charged against earnings as incurred. When operations are discontinued and a
store is closed, the remaining investment, net of salvage value, is charged
against earnings and, for leased stores, a provision is made for the remaining
lease liability, net of expected sublease income.
Income Taxes. The Company provides for deferred income taxes or credits as
temporary differences arise in recording income and expenses between financial
reporting and tax reporting. Amortization of goodwill is not deductible for
purposes of calculating income tax provisions.
Net Earnings Per Share. Net earnings per share are determined by dividing the
weighted average number of shares outstanding during the year into net earnings.
Common share equivalents in the form of stock options are excluded from the
calculation of net earnings per share since they do not have a material dilutive
effect on per share figures. Fully diluted earnings per share in 1994 and 1993
include the assumed conversion of subordinated convertible debt.
New Accounting Standards. Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed of (FAS 121) was issued during 1995 and is
effective for 1996. This standard requires losses to be recorded on long-lived
assets when indicators of impairment are present and the undiscounted cash flows
are less than the related asset's carrying value. The Company adopted this
standard in the fourth quarter of 1995 and its adoption did not have a material
effect on its financial statements.
Accounting for Stock-Based Compensation (FAS 123) was issued in 1995 and is
effective for 1996. This standard encourages companies to recognize expense for
all stock-based compensation arrangements at the date of grant using a fair
value based method. However, the standard will allow companies to continue to
use historical methods with footnote disclosure for the pro forma effect of
using the new fair value method. The Company's present intent is to continue to
use its historical method.
Environmental Remediation Costs. Costs incurred to investigate and remediate
contaminated sites, caused primarily by defective underground petroleum storage
tanks and ground water contamination, are accrued when identified and estimable.
The related costs are expensed unless the remediation extends the economic
useful life of the assets employed at the site.
Self-insurance. The Company is self-insured for property loss, workers'
compensation, general liability and automotive liability, subject to specific
retention levels. The Company is also self-insured for health care claims for
eligible active and retired associates. Consulting actuaries assist the Company
in determining its liability for self-insured claims. The Company is required
in certain cases to obtain letters of credit to support its self-insured status.
At year-end 1995, the Company's self-insured liabilities were supported by
approximately $254.8 million of undrawn letters of credit. Self-insured
liabilities, with the exception of postretirement health care benefits, are not
discounted.
Inventories
Approximately 94% of inventories are accounted for using the LIFO (last-in,
first-out) method for inventory valuation. If the FIFO and average cost methods
had been used, inventories would have been $313.1 million, $300.3 million and
$303.3 million higher at year-end 1995, 1994 and 1993, respectively. The LIFO
charge to earnings was $12.8 million in 1995, $8.2 million in 1994 and $7.2
million in 1993. Under this method, the cost of merchandise sold that is
reported in the financial statements approximates current costs and thus reduces
the distortion in reported earnings due to increasing cost.
Advertising Expense
The Company expenses advertising costs when the advertisement occurs. Total
advertising expense amounted to $168.3 million, $167.2 million and $169.5
million in 1995, 1994 and 1993, respectively. Capitalized advertising costs are
immaterial for the periods presented.
Disposition of Operations
On September 8, 1994, the Company sold its 33-store Star Market food division
with a basis of $167.0 million for $288.0 million and the assumption of
substantially all of its outstanding liabilities. On January 19, 1995, the
Company sold 45 of its Acme Markets stores with a basis of $48.4 million for
$89.6 million. The assets sold consisted primarily of property, plant,
equipment and inventories.
Debt
On March 9, 1995, the Company completed the redemption of its $175 million,
7-1/4% Convertible Subordinated Notes due 2001. The Company issued 5.3 million
shares of common stock upon the conversion of $120.3 million principal amount of
Notes and the balance of approximately $54.7 million principal amount of Notes
was redeemed for cash.
On May 18, 1995, the Company issued $200 million, 7.4% debentures due May 15,
2005, at 99.5% to yield 7.5%. The net proceeds of the offering were used to
refinance a portion of the Company's long-term indebtedness that was repaid or
redeemed over the twelve months preceding the issuance of such debentures. The
refinancing of this long-term debt had been temporarily funded through short-
term, variable-rate borrowings under the Company's principal bank credit
agreement. The debentures were issued under the Company's $800 million shelf
registration statement that was filed on February 18, 1994.
On August 7, 1995, the Company entered into a $75 million, 6.6% note payable due
August 7, 2000. The proceeds from the note were used to pay off an existing $75
million, 8.9% note due August 7, 1995. On November 29, 1995, the Company paid
off a $50 million, 10.9% note payable.
The Company's principal bank credit agreement is a $1.0 billion revolving credit
facility, which expires in 1999. Interest rates for borrowings under the
facility are established at the time of borrowing through four different pricing
options. Terms of the revolving credit facility provide for borrowings from
participating banks or borrowings through issuance of commercial paper that is
supported by the facility. The Company also has $150 million of 364-day
committed bank lines and $360 million of uncommitted bank lines, which are used
for overnight and short-term bank borrowings. At year-end 1995, the Company had
$865 million of debt supported by the credit facility and $69 million
outstanding under bank lines, leaving unused committed borrowing capacity of
$216 million.
The Company capitalized interest costs associated with construction projects of
$8.5 million, $3.9 million and $3.4 million in 1995, 1994 and 1993,
respectively. The Company made cash payments for interest (net of amounts
capitalized) of $169.5 million, $172.0 million and $175.2 million in 1995, 1994
and 1993, respectively.
The aggregate amounts of debt maturing in each of the next five fiscal years are
listed below:
(In thousands of dollars)
1996 $ 125,413
1997 56,222
1998 72,847
1999 1,098,362
2000 148,983
Thereafter 662,222
Total Debt $2,164,049
The Company's various loans secured by real estate are collateralized by
properties with a net book value of $113.5 million at year-end 1995.
<TABLE>
A summary of debt is as follows:
(In thousands of dollars) 1995 1994 1993
<S> <C> <C> <C>
Public Debt (unsecured):
7.4% Notes due 2005 $200,000
Medium Term Notes--fixed interest rates due
1997 through 2003--average interest rate 7.9% 250,000 $ 250,000 $ 250,000
9-1/8% Notes due 2002 249,075 248,966 248,868
7-1/4% Convertible Subordinated Notes due 2001 174,997 174,997
9-3/4% Eurobond Notes due 1994 100,000
Bank Borrowings (unsecured):
Revolving credit facility--variable
interest rates, effectively due 1999--
average interest rates 6.2% in 1995,
4.8% in 1994 and 3.6% in 1993 865,000 645,000 450,000
Lines of credit and commercial paper--
variable interest rates, effectively
due 1999--average interest rates 6.4%
in 1995, 4.7% in 1994 and 3.4% in 1993 69,000 210,000 128,000
Other borrowings--due 1995 through 2000--
average interest rates 6.5% in 1995,
8.8% in 1994 and 9.5% in 1993 125,000 175,000 140,000
9.7% due in 1996 138,803
Other Unsecured Debt:
9.8% due in 1999 (1) 210,000 210,000 210,000
10.6% due in 2004 108,893 108,893 108,893
Other--due through 2001 3,625 4,211 8,353
Debt Secured by Real Estate:
Fixed interest rates--due through 2014--
average interest rate 13.3% in 1995,
13.4% in 1994 and 13.7% in 1993 83,456 93,662 112,782
Outstanding debt 2,164,049 2,120,729 2,070,696
Less current maturities 125,413 132,019 66,830
Long-term debt $2,038,636 $1,988,710 $2,003,866
(1) See following paragraph concerning yen loans
</TABLE>
The Company uses derivative financial instruments to manage interest and
currency risks on two foreign borrowings totaling 29.1 billion yen at an average
yen interest rate of 6% and accounts for them as a hedge. At the time the loans
originated, the Company entered into interest rate and currency exchange swap
agreements (swaps) that match the interest and principal payments of the yen
loans. Under these swap agreements, the Company makes fixed rate interest
payments of 9.8% and principal payments totaling $210 million and receives
payments equal to the underlying yen loan obligations. The proceeds, in yen,
from these swaps are used to satisfy the yen-based interest and principal
payments. As of year-end 1995, the estimated fair value of the swap agreements
based on market quotes was approximately $68.2 million and equaled the loss on
the yen loans due to currency and interest rate movements, resulting in an
aggregate fair value of zero. The Company is exposed to credit losses in the
event of nonperformance by the counterparties to its swap agreements. Such
counterparties are highly rated financial institutions and the Company
anticipates they will be able to satisfy their obligations under the contracts.
The carrying amounts of the Company's bank borrowings with variable interest
rates approximate fair value. The fair value of the Company's borrowings with
fixed interest rates is estimated using discounted cash flow analyses, based on
current market rates where available, or on the Company's current incremental
borrowing rates for similar types of borrowing arrangements. The fair value of
outstanding debt as of year-end 1995 was $2.3 billion compared to the carrying
value of $2.2 billion.
Leases
The Company leases retail stores, offices, warehouses and distribution
facilities. Initial lease terms generally range from 20 to 25 years, plus
renewal options, and may provide for contingent rent based on sales volume in
excess of specified levels.
The summary below shows the aggregate future minimum rent commitments at year-
end 1995 for both capital and operating leases. Operating leases are shown net
of an aggregate $82.7 million of minimum rent income receivable under non-
cancellable subleases. Operating leases also exclude the amortization of
acquisition-related fair value adjustments.
Operating Capital
(In thousands of dollars) Leases Leases
1996 $ 158,008 $ 17,270
1997 150,676 15,688
1998 142,438 14,200
1999 132,694 12,557
2000 119,031 10,381
Thereafter 830,500 57,207
Total minimum rent commitments $1,533,347 127,303
Less executory costs (such as taxes, insurance
and maintenance) included in capital leases 1,467
Net minimum lease payments 125,836
Less amount representing interest 49,717
Obligations under capital leases, including $9.7
million due within one year $76,119
Rent expense, excluding the amortization of acquisition-related fair value
adjustments of $14.3 million in 1995, $14.5 million in 1994 and $14.9 million in
1993, was as follows:
Minimum Sublease Contingent Total
(In thousands of dollars) Rent Rent Net Rent Rent
1995 $197,543 $14,782 $182,761 $26,003 $208,764
1994 $184,116 $ 9,064 $175,052 $26,508 $201,560
1993 $173,910 $ 9,133 $164,777 $29,809 $194,586
Income Taxes
Federal and state income taxes charged to earnings before extraordinary item are
summarized below:
53 weeks 52 weeks 52 weeks
(In thousands of dollars) 1995 1994 1993
Current:
Federal $124,317 $229,052 $221,838
State 15,979 34,906 30,939
Deferred:
Federal 81,859 (2,469) (29,519)
State 11,952 (410) (4,543)
Federal and state income taxes $234,107 $261,079 $218,715
Cash payments of income taxes were $169.2 million, $354.6 million and $201.8
million in 1995, 1994 and 1993, respectively.
The Company's effective income tax rate differs from the statutory federal
income tax rate as follows:
53 weeks 52 weeks 52 weeks
(Percent of earnings before income taxes) 1995 1994 1993
Statutory federal income tax rate 35.0% 35.0% 35.0%
State income tax rate, net of federal
income tax effect 5.1 5.7 5.5
Goodwill amortization 3.8 3.6 4.5
Tax credits (0.4) (0.6) (0.3)
Other (1.0) (0.6) 0.8
Effective income tax rate 42.5% 43.1% 45.5%
Deferred tax benefits and liabilities as of year-end 1995 related to the
following temporary differences:
(In thousands of dollars) Benefits Liabilities Total
Basis in fixed assets $ 36,105 $(269,333) $(233,228)
Self-insurance reserves 215,386 215,386
Purchase accounting valuation 41,827 (334,787) (292,960)
Compensation and benefits 34,021 (55,011) (20,990)
Other, net 51,330 (64,999) (13,669)
Deferred tax benefits and liabilities $378,669 $(724,130) $(345,461)
No valuation allowances have been considered necessary in the calculation of
deferred tax benefits.
Stock Option Plans
The Company's 1989 Stock Option and Stock Award Plan (1989 Plan) provides
for the grant of options to purchase shares of common stock, the grant of
stock appreciation rights and the issuance of restricted stock awards for
an aggregate of up to 4.8 million shares of common stock, subject to
certain antidilution adjustments. At year-end 1995, there were 3.1 million
shares reserved for future grants under the 1989 Plan.
During 1995, 1.2 million options to purchase common stock were issued under
the 1989 Plan and 0.4 million were issued under a plan that subsequently
expired.
At year-end 1995, there were 1.1 million shares under stock options
outstanding under the 1989 Plan and 0.8 million shares under stock options
outstanding under an expired plan.
Compensation relating to stock option and award plans decreased pre-tax
earnings by $3.4 million in 1995, $2.9 million in 1994 and $3.1 million in
1993. The average exercise price of stock options exercised during 1995
was $7.28 per share. The average exercise price per share for outstanding
options was $22.73, $11.24 and $11.20 at year end 1995, 1994 and 1993,
respectively.
A summary of stock options is as follows:
(In thousands of shares) 1995 1994 1993
Outstanding at beginning of year 1,360 2,183 3,008
Granted 1,548
Exercised (826) (610) (715)
Forfeited (162) (213) (110)
Outstanding at end of year 1,920 1,360 2,183
Exercisable at end of year 237 457 1,067
Reserved for future grants 3,117 4,503 4,298
Employee Stock Purchase Plan
On June 21, 1995, the shareholders approved the American Stores Company Employee
Stock Purchase Plan (ESPP). The ESPP allows eligible employees the right to
purchase common stock on a quarterly basis at the lower of 85% of the market
price at the beginning or end of each three-month offering period. As of
February 3, 1996, there were 7.0 million shares of common stock reserved for the
ESPP and there had been no issuances to date. The ESPP operates on a calendar
basis beginning January 1, 1996; a liability has been recorded for ESPP
withholdings not yet applied towards the purchase of common stock.
Stock Purchase Incentive Plans
In 1992, the Company's shareholders approved both the American Stores Company
Key Executive Stock Purchase Incentive Plan and the American Stores Company
Board of Directors Stock Purchase Incentive Plan (Plans). The Plans are
intended to promote the long-term growth and financial success of the Company,
and to strengthen the link between management and shareholders. The Board of
Directors Plan was terminated on March 21, 1995, however the termination does
not affect the terms of any awards outstanding on the date of termination.
Since the Plan's inception, the Company has awarded to certain directors and key
executive officers the right to purchase a specified number of shares of the
Company's stock and extended to such directors and officers full recourse
interest bearing purchase loans to acquire the stock. The stock purchased by
the directors and officers with the purchase loans was issued from treasury
shares. The purchase loans have an eight-year term and accrue interest at rates
ranging from 5.3% to 7.8%. The acquisition price of the stock was the average
of the high and low value on the day acquired, as reported on the New York Stock
Exchange. Shares held by the executives and directors pursuant to the Plans
were 2.1 million for 1995 and 1994 and 2.4 million for 1993, with corresponding
loan balances of $42.6 million, $40.3 million and $45.8 million, respectively.
The aggregate principal of these notes outstanding is recorded as a reduction of
additional paid-in capital in the balance sheet.
Participants purchasing stock under the Plans are eligible for a deferred cash
incentive award, which is generally payable at the end of a five-year
performance cycle. One-half of the deferred award will be based on the
continuation of service with the Company (Service Component), and the other half
will be based on the Company's relative stock price performance versus a
selected group of companies in the retail food and drug industry (Performance
Component). The maximum combined Performance Component and Service Component
payable to participants will not exceed the original principal amount of the
purchase loan plus accrued but unpaid interest. The estimated deferred cash
incentive award is recorded as compensation expense on the income statement and
amounts earned to date are recognized as a credit to the note balances in
additional paid-in capital in the balance sheet.
Preferred Share Purchase Rights
During March 1988, the Board of Directors of the Company declared a distribution
of one Preferred Share Purchase Right (Right) for each outstanding share of the
Company's common stock.
Each Right entitles shareholders to purchase one four-hundredth of a share of a
new series of preferred stock at an exercise price of $62.50. The Rights will
be exercisable only if a person or group acquires 20% or more of the Company's
common stock or announces a tender offer, the consummation of which would result
in ownership by a person or group of 20% or more of the Company's common stock.
The Rights will not apply to a 20% or greater position held by Mr. L. S. Skaggs,
the Company's former Chairman, or certain other related parties. The Company
will be entitled to redeem the Rights at one-quarter cent per Right any time
before a 20% or greater position has been acquired. Additionally, the Company
may lower the 20% threshold to not less than the greater of (i) any percentage
greater than the largest percentage of common stock known by the Company to be
owned by any person (other than L. S. Skaggs) and (ii) 10%.
If the Company is acquired in a merger or other business combination
transaction, each Right will "flip over" and entitle its holder to purchase, at
the Right's then current exercise price, a number of the acquiring company's
common shares having a market value at that time of twice the Right's exercise
price.
In addition, if a person or group acquired 20% or more of the outstanding
Company common stock, each Right will "flip in" and entitle all other holders to
purchase, at the Right's then current exercise price, a number of shares of the
Company's common stock having a market value of twice the Right's exercise
price. Further, at any time after a person or group acquires 20% or more of the
outstanding Company common stock but prior to the acquisition of 50% of such
stock, the Board of Directors may, at its option, exchange part or all of the
Rights (other than rights held by the acquiring person or group) for shares of
the Company's common stock at an exchange rate of one share of common stock for
each Right.
On February 22, 1995, the Board of Directors expressed its intent, subject to
the exercise of its fiduciary duties, to allow the Rights Agreement pertaining
to the Company's preferred share purchase rights, dated March 18, 1988, as
amended, to expire in accordance with its terms on March 18, 1998, without
renewal or extension.
Repurchase of Common Stock
The Company repurchased 2.5 million shares of its common stock during 1995 at an
average price of $28.93 per share in accordance with its existing stock
repurchase program. As of February 3, 1996, there remained an additional 1.5
million shares authorized for repurchase under the program.
Postretirement Health Care Benefits
The Company provides certain health care benefits to eligible retirees of
certain defined employee groups under two unfunded plans, a defined dollar and a
full coverage plan.
The accumulated postretirement health care benefit obligation is as follows:
(In thousands of dollars) 1995 1994 1993
Current retirees $37,396 $35,787 $45,389
Current active employees 14,275 13,521 20,893
Unrecognized gain 14,390 16,819 1,612
Accumulated postretirement
benefit obligation ("APBO") $66,061 $66,127 $67,894
Discount rate 8.5% 8.5% 7.4%
The components of postretirement health care benefit expense are as follows:
(In thousands of dollars) 1995 1994 1993
Service cost $ 768 $1,013 $1,027
Interest cost 4,006 3,730 4,827
Adjustment of APBO (465) (598)
Net post retirement health care
benefit expense $4,309 $4,145 $5,854
The Company assumed no increase in the cost of the defined dollar benefit plan
in any year presented. Changes in assumptions do not impact the defined dollar
plan. The assumed health care cost trend rates used to measure the expected
cost of benefits included a rate of increase of 10% for 1996 decreasing to 6% by
the year 2000. Increasing the assumed health care cost trend rates for the full
coverage plan by one percentage point in each year would have resulted in an
increase of $2.1 million in the APBO and no material increase in annual health
care expense.
Retirement Plans
The Company sponsors and contributes to a defined contribution retirement plan,
American Stores Retirement Estates (ASRE). This plan was authorized by the
Board of Directors for the purpose of providing retirement benefits for
associates of American Stores Company and its subsidiaries. The plan covers
employees meeting age and service eligibility requirements, except those
represented by a labor union, unless the collective bargaining agreement
provides for participation. Contributions to ASRE are made at the discretion of
the Board of Directors.
The Company also contributes to multi-employer defined benefit retirement plans
in accordance with the provisions of the various labor contracts that govern the
plans. The multi-employer plan contributions are generally based on the number
of hours worked. Information about these plans as to vested and non-vested
accumulated benefits and net assets available for benefits is not available.
53 weeks 52 weeks 52 weeks
(In thousands of dollars) 1995 1994 1993
Company sponsored plans $ 81,704 $ 84,149 $ 79,626
Multi-employer plans 86,723 67,391 62,859
Retirement plans expense $168,427 $151,540 $142,485
During 1994, the Company entered into Employment Agreements (Agreements) with 17
of the Company's key executive officers. During 1995 the Company entered into
an Agreement with an additional employee. The Agreements are for terms of
either three or five years, may be renewed by the Company for subsequent three-
year or five-year terms, contain usual and customary terms of employment
agreements and provide the officers with a special long-range retirement plan.
Under the retirement plan, the executives are entitled to receive an annual
payment for a period of 20 years beginning at age 57 or upon termination of
employment, whichever occurs later. The retirement benefit is calculated as a
percentage of the executive's average target compensation objective during the
last two years of his or her employment under the Agreement. The benefit ranges
from 9% to 40% based on years of service with the Company. The retirement
benefit will be forfeited if the executive enters into competition with the
Company. At year-end 1995, 17 of the Agreements remained in effect.
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 completed. Reserves have been established for each environmental
contamination site unless an unfavorable outcome is remote. 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 condition or results of operations of the
Company. Charges against earnings for environmental remediation were not
material in 1995, 1994 or 1993.
Legal Proceedings
The Company is involved in various claims, administrative proceedings and other
legal proceedings which arise from time to time in connection with the conduct
of the Company's business. In the opinion of management, such proceedings will
not have a material adverse effect on the Company's financial condition or
results of operations.
Organizational Changes
The Company recorded a charge to operating expenses of $23.9 million in 1994 for
centralization of information technology, accounting, real estate and
construction functions. As of third quarter 1995, the entire reserve had been
utilized without significant adjustments to the original amount.
<TABLE>
Quarterly Results (Unaudited)
In the opinion of management, all adjustments necessary for a fair presentation
have been included:
(In thousands of dollars, First Second Third Fourth Fiscal
except per share data) Quarter Quarter Quarter Quarter(3) Year
1995(1)(2)
<S> <C> <C> <C> <C> <C>
Sales $4,362,237 $4,494,890 $4,361,183 $5,090,584 $18,308,894
Gross profit 1,160,445 1,193,991 1,181,934 1,382,171 4,918,541
Operating profit 134,576 165,277 154,632 252,338 706,823
Other (3,703) 1,042 (718) (1,730) (5,109)
Net earnings 53,883 73,937 67,445 121,544 316,809
Net earnings per share $.37 $.50 $.46 $.83 $2.16
Fully diluted earnings per share .37 .50 .46 .83 2.16
1994
Sales $4,607,652 $4,669,018 $4,431,863 $4,646,593 $18,355,126
Gross profit 1,219,801 1,232,503 1,183,166 1,282,957 4,918,427
Operating profit 131,756 169,830 120,982 227,500 650,068
Other (1,623) (1,900) 87,785 35,847 120,109
Net earnings 47,963 69,034 97,934 130,253 345,184
Net earnings per share $.34 $.48 $.69 $.91 $2.42
Fully diluted earnings per share .33 .47 .66 .87 2.33
1993
Sales $4,668,105 $4,693,057 $4,531,715 $4,870,562 $18,763,439
Gross profit 1,201,785 1,224,186 1,195,398 1,326,463 4,947,832
Operating profit 118,108 153,695 136,994 233,085 641,882
Other 31,665 (2,544) 699 (5,692) 24,128
Net earnings before extraordinary item 56,507 58,501 45,408 101,674 262,090
Extraordinary item - early retirement of
debt - net of taxes (15,000) (15,000)
Net earnings 41,507 58,501 45,408 101,674 247,090
Earnings per share before
extraordinary item $.40 $.41 $.32 $.72 $1.85
Extraordinary item (.11) (.11)
Net earnings per share $.29 $.41 $.32 $.72 $1.74
Fully diluted earnings per share .29 .40 .31 .69 1.69
</TABLE>
(1) 53-week year
(2) The fourth quarter of fiscal 1995 is a fourteen week quarter, compared to
thirteen week quarters for
fiscal 1994 and 1993.
(3)Operating profit in the fourth quarter has exceeded the prior three quarters
in each of the three years presented due to the seasonality of the food and
drug retail business and LIFO inventory adjustments. The holiday season in
the fourth quarter benefits the food and drug retail business. Increased
cold and flu occurrences during this quarter also benefit the drug store
operations.
Exhibit 22
AMERICAN STORES COMPANY
PRINCIPAL SUBSIDIARIES
YEAR END 1995
State of
Subsidiary Incorporation
Jewel Companies, Inc. DE
Acme Markets, Inc. DE
Jewel Food Stores, Inc. NY
American Drug Stores, Inc., dba IL
Osco Drug
Sav-on
RxAmerica, Inc. DE
Health `n' Home Corporation DE
The Open Pharmacy Network, Inc. DE
American Food and Drug, Inc. DE
Jewel Osco Southwest, Inc. IL
Lucky Stores, Inc. DE
American Stores Properties, Inc. DE
American Stores Realty Corp. PA
Skaggs Telecommunications Service, Inc. UT
National Procurement and Logistics Company DE
ASC Services, Inc. DE
Exhibit 24
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of American Stores Company of our report dated March 15, 1996, included in the
1995 Annual Report to Shareholders of American Stores Company.
We also consent to the incorporation by reference in the Registration Statements
(Forms S-8 Nos. 2-71032; 33-25613; 2-94235; 33-48203; 33-48204;
33-08801; 33-32150; 33-63869 and S-3 Nos. 33-41640 and 33-52331) of our report
dated March 15, 1996, with respect to the consolidated financial statements
incorporated by reference in this Annual Report (Form 10-K) for the year ended
February 3, 1996.
ERNST & YOUNG LLP
Salt Lake City, Utah
April 18, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet and income statements for the Fifty-three week period ended Feb. 3, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-3-1996
<PERIOD-END> FEB-3-1996
<CASH> 102,422<F1>
<SECURITIES> 0
<RECEIVABLES> 319,688
<ALLOWANCES> 0
<INVENTORY> 1,572,242
<CURRENT-ASSETS> 2,083,967
<PP&E> 5,149,373
<DEPRECIATION> 2,019,557
<TOTAL-ASSETS> 7,362,964
<CURRENT-LIABILITIES> 1,987,703
<BONDS> 2,105,016
0
0
<COMMON> 149,889
<OTHER-SE> 2,204,607
<TOTAL-LIABILITY-AND-EQUITY> 7,362,964
<SALES> 18,308,894
<TOTAL-REVENUES> 18,308,894
<CGS> 13,390,353
<TOTAL-COSTS> 13,390,353
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 159,545
<INCOME-PRETAX> 550,916
<INCOME-TAX> 234,107
<INCOME-CONTINUING> 316,809
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 316,809
<EPS-PRIMARY> $2.16
<EPS-DILUTED> $2.16
<FN>
<F1>All numbers except EPS are in (000's).
</FN>
</TABLE>
