SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
( X )ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1995
OR
( )TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _____ to ____
Commission File Number 1-5392
A. Full title of the Plan and the address of the Plan, if different from
that of the issuer named below:
AMERICAN STORES RETIREMENT ESTATES
B. Name of issuer of the securities held pursuant to the Plan and the
address of its principal executive office:
AMERICAN STORES COMPANY
709 East South Temple
Salt Lake City, UT 84102
The following financial statements of American Stores Retirement Estates
are submitted herewith:
INDEX
Page
Report of Independent Auditors F-3
Statements of Net Assets Available for Benefits -
December 31, 1995 and 1994 F-4
Statements of Changes in Net Assets Available for Benefits -
Years ended December 31, 1995 and 1994 F-5
Notes to Financial Statements F-6 to F-12
The written consent of independent auditors required to be filed as an
exhibit to this report is included on Page F-13 of the financial statements.
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the members of the American Stores Benefit Plans Committee have duly
caused this annual report to be signed by the undersigned hereunto duly
authorized.
AMERICAN STORES RETIREMENT ESTATES
June 24, 1996 By /s/ Scott Bergeson
Scott Bergeson
Senior Vice President, Human Resources
and Chairman, Benefit Plans Committee
REPORT OF INDEPENDENT AUDITORS
The Benefit Plans Committee
American Stores Retirement Estates
We have audited the accompanying statements of net assets available for benefits
of American Stores Retirement Estates as of December 31, 1995 and 1994, and the
related statements of changes in net assets available for benefits for the years
then ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1995 and 1994, and the changes in its net assets available for
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
Salt Lake City, Utah
June 24, 1996
AMERICAN STORES RETIREMENT ESTATES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS (In thousands of dollars)
December 31,
1995 1994
ASSETS
Value of Investment in the Master Trust
American Stores Company Common Stock Fund $ 212,632 $ 195,278
Fixed Income Fund 240,660 210,547
Regular Fund 1,104,244 862,701
Safety Fund 73,424 71,652
All Equity Fund 153,523 102,550
Loans to Participants 94,657 90,528
1,879,140 1,533,256
Receivable from American Stores Company 78,000 78,177
Receivable for net participant activity 1,483 1,336
Interest and dividends receivable 1,111 879
Net assets available for benefits $ 1,959,734 $ 1,613,648
See notes to financial statements
AMERICAN STORES RETIREMENT ESTATES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (In thousands of
dollars)
<TABLE>
Year Ended December 31,
1995 1994
<S> <C> <C>
Additions:
Contributions:
Participants $ 82,852 $ 79,396
American Stores Company 78,000 78,177
Forfeitures 1,901 2,223
162,753 159,796
Income from investment in master trust:
American Stores Company
Common Stock Fund 7,813 38,296
Fixed Income Fund 35,999 (10,798)
Regular Fund 222,643 (5,641)
Safety Fund 5,092 2,669
All Equity Fund 31,055 794
302,602 25,320
Exchanges from other funds 188,099 192,697
653,454 377,813
Deductions:
Withdrawals 113,601 110,303
Administrative fees 1,559 1,782
Transfer to other plans 4,109 71,188
Exchanges to other funds 188,099 192,697
307,368 375,970
Net additions 346,086 1,843
Net assets available for benefits at beginning of year 1,613,648 1,611,805
Net assets available for benefits at end of year $ 1,959,734 $ 1,613,648
See notes to financial statements
</TABLE>
AMERICAN STORES RETIREMENT ESTATES
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment in Master Trust: The Investment in the Master Trust Fund is stated
at fair value. The majority of investment values are ascertained from national
security exchanges. American Stores Company Common Stock, which is traded on
national securities exchanges, and other equity securities, are valued within
the Master Trust Fund at the last reported sales price on the last business day
of the Plan year. All government and corporate debentures are valued at the
last reported sales price on the last business day of the Plan year on a
national security exchange plus any accrued interest within the Master Trust
Fund. If there are no such sales or listings on a national security exchange,
alternative sources are used. Loans to participants are stated at cost which
approximates fair value.
Withdrawals and Exchanges: Withdrawals and exchanges between investment fund
options by participants are recorded based upon the specific proceeds and cost
of the investment at the date of withdrawal or exchange.
Receivable (Payable) for Net Participant Activity: The receivable (payable) for
net participant activity represents year-end participant contributions and
transactions processed in the record keeping system but not yet reflected in the
master trust.
Reclassification of Prior Year Information: Certain prior year information has
been reclassified to conform with current year presentation.
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.
NOTE B - DESCRIPTION OF PLAN
American Stores Retirement Estates (the Plan) was authorized by the Board of
Directors of American Stores Company and was effective January 1, 1985 for the
benefit of certain employees of American Stores Company and its subsidiaries
(the Company). The Plan is a defined contribution profit sharing plan
maintained primarily for the purpose of providing retirement income for
participants and is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
Prior to July 1995, employees become eligible to participate in the Plan upon
completion of two years of service or, if the employee is 21 years of age or
older, upon the completion of one year of service. Effective July 1, 1995,
employees become eligible to participate in the Plan upon completion of one year
of service regardless of age. This eligibility change in the Plan did not have
a material effect. Employees represented by labor organizations are not
eligible to participate in the Plan unless the Company and the labor
organization specifically agree to the contrary.
Plan participants may make personal deposits to the Plan on either or both a tax
deferred and an after-tax basis. Company contributions to the Plan are set each
year at the discretion of the Company's Board of Directors for the prior Plan
year and are irrevocable. The Company contributions and forfeitures are first
used to restore the previously forfeited accounts of rehired participants
pursuant to Plan provisions. The remainder of such contributions and
forfeitures are then allocated to Plan participants, as described below: one
quarter is allocated among participants who made personal deposits to the Plan,
pro rata, based upon the amounts of their deposits of up to 6% of compensation.
Three quarters are allocated among participants as follows: (i) each
participant who has received compensation in excess of the Social Security wage
base for the year is allocated an amount equal to such excess times the maximum
amount allowable under Code Section 401(1); and (ii) any amount remaining is
allocated among
AMERICAN STORES RETIREMENT ESTATES
NOTES TO FINANCIAL STATEMENTS
NOTE B - DESCRIPTION OF PLAN (CONTINUED)
all participants in proportion to the total compensation of each for the year.
Allocations to collective bargaining unit employees are offset by obligations of
the Company to contribute to a collective bargaining unit plan. A participant's
1995 compensation in excess of $150,000 (adjusted periodically) is excluded in
determining the amount of Company contribution and forfeitures allocated to the
participant.
Company contributions made on behalf of participants that are not based upon
deposits made by such participants vest on a graduated schedule. For all
participants who perform at least one hour of service in any year beginning on
or after January 1, 1989, the schedule commences with 30% at three years of
service and increases annually to full vesting at seven years of service (the 7-
Year Vesting Schedule). Personal deposits of participants and Company
contribution allocations based upon personal deposits of participants fully vest
immediately.
The Plan presently maintains five investment fund options within the Master
Trust in which participants may invest. The investment fund options are as
follows: (i) Company Stock Fund - consisting solely of American Stores Company
Common Stock. This fund provides a high degree of risk because of the
volatility generally associated with a single stock investment; (ii) Fixed
Income Fund - provides a low to moderate level of risk because of the diversity
of government and corporate securities in the fund that pay interest. This fund
contains both domestic and international investments; (iii) Regular Fund -
provides moderate risk because of the balance between stocks and fixed income
investments. The fund is diversified across industry sectors and types of
equity and fixed income securities and contains both domestic and international
investments; (iv) Safety Fund - provides a very low level of risk because of
the high-quality, short-maturity fixed income investments included in the fund;
(v) All Equity Fund - provides a moderate to high level of risk. The All Equity
fund is diversified across industry sectors and contains both domestic and
international equity investments.
Participants may apportion their deposits between more than one investment fund
option and can change their current deposit investment mix as often as desired.
Existing participant account balances can be exchanged between investment fund
options every 30 days.
Each participant's share of the Company contribution and forfeitures is
automatically invested according to their current deposit investment mix.
Participants not making personal deposits may specify an investment option for
the Company contribution. If a specification is not made, the Company
contribution will be invested in the Fixed Income Fund.
Usual and customary investment manager fees, trustee fees, and all outside
administrative costs are paid by the Plan.
The number of employees in each investment fund option (an employee can invest
in more than one fund option) at December 31, 1995 was:
Investment Fund Option Employees
American Stores Company Common Stock Fund 13,932
Fixed Income Fund 38,570
Regular Fund 40,499
Safety Fund 2,509
All Equity Fund 12,236
AMERICAN STORES RETIREMENT ESTATES
NOTES TO FINANCIAL STATEMENTS
NOTE B - DESCRIPTION OF PLAN (CONCLUDED)
Upon separation from service, participants can elect to withdraw balances either
in a lump sum or in installments, or the balances can be left in the Plan.
Individuals who transferred amounts to the Plan which are attributable to the
former American Stores Company Retirement Plan may receive their entire Plan
account balance as a deferred annuity. Active employees may withdraw after-tax
personal deposits at any time, but may only withdraw tax deferred personal
deposits upon the occurrence of an extreme financial hardship. Participants may
also obtain loans from the Plan within certain limits.
NOTE C - INVESTMENTS IN MASTER TRUST
The Plan's assets are held by Fidelity Management Trust Company, the Trustee of
the Plan, which executes all transactions therein under the direction of the
Benefit Plans Committee. The assets are held in a Master Trust, commingled with
assets of the Company's other benefit plans. The Company's benefit plans
participating in the Master Trust collectively own, through the Master Trust,
the assets based upon investment percentages. Participant transaction activity
is designated to specific plans. Accordingly, each plan's investment percentage
in the Master Trust changes regularly. Income earned by the Master Trust is
allocated to the various plans based upon the investment percentage on the day
the income is earned.
ASRE's investment percentages of each fund in the Master Trust at December 31
are:
1995 1994
American Stores Company
Common Stock Fund 7% 7%
Fixed Income Fund 8% 8%
Regular Fund 35% 32%
Safety Fund 2% 3%
All Equity Fund 5% 4%
AMERICAN STORES RETIREMENT ESTATES
NOTES TO FINANCIAL STATEMENTS
NOTE C - INVESTMENTS (CONCLUDED)
The total assets, liabilities and results of operations of the Master Trust
are as follows (In thousands of dollars):
December 31,
1995 1994
Assets $ 3,168,171 $ 2,750,653
Liabilities 2,578 92,061
Net Assets in Master Trust $ 3,165,593 $ 2,658,592
Change in Net Assets $ 507,001 $ (128,619)
The cost of investments for ASRE at December 31, 1995 and 1994 are as follows
(In thousands of dollars):
Number of Shares Cost of Investments
1995 1994 1995 1994
American Stores Company
Common Stock Fund 7,865 7,230 $ 178,675 $ 132,095
Fixed Income Fund 197,428 216,826
Regular Fund 801,630 855,147
Safety Fund 66,689 71,839
All Equity Fund 111,632 104,162
$ 1,356,054 $1,380,069
The net unrealized appreciation (depreciation) for ASRE in the aggregate from
cost to fair value of investments are as follows (In thousands of dollars):
Net unrealized appreciation at December 31, 1993 $ 129,033
Net 1994 unrealized depreciation (66,374)
Net unrealized appreciation at December 31, 1994 62,659
Net 1995 unrealized appreciation 365,770
Net unrealized appreciation at December 31, 1995 $ 428,429
Unrealized appreciation (depreciation) for the year is the difference between
the fair values at the beginning and the end of the year.
AMERICAN STORES RETIREMENT ESTATES
NOTES TO FINANCIAL STATEMENTS
NOTE D - ASSET TRANSFERS
The Star Market division was sold during 1994. Plan assets totaling $71,188,468
for those participants continuing employment with Star Market were transferred
to Star Market Retirement Estates (SMRE) in 1994. The 1994 Company contribution
attributable to those participants totaling $4,109,027 was transferred to SMRE
in 1995, shortly following payment of the contribution in March 1995. SMRE is
not administered by or affiliated with American Stores Company.
NOTE E - FINANCIAL INSTRUMENTS
Certain Plan investment managers invest in derivative foreign exchange forward
contracts for purposes of hedging or moderating the currency risks associated
with holding investments denominated in foreign currencies. Foreign exchange
forward contracts represent agreements to exchange the currency of one country
for the currency of another country at an agreed-upon price, on an agreed-upon
settlement date. Contracts are generally taken for periods ranging from 30 to
90 days, then renewed, generally, if the Plan continues to hold the underlying
foreign investment. Each investment manager's usage of such derivative
financial instruments is limited by the Plan's contractual investment
guidelines which prohibit the speculative or leveraged use of derivatives.
Foreign exchange forward contracts are stated at fair value, under the heading
of `Investments' in the Statements of Net Assets Available for Benefits, which
represents the amounts that the Plan would be required to pay, at December 31,
1995, to cancel the contracts or transfer them to other parties.
The notional or contract amounts of foreign exchange forward contracts are not
recorded as assets or liabilities on the Statements of Net Assets Available
for Benefits and do not represent the potential gain or loss associated with
such transactions.
At December 31, 1995, the Plan had the following open foreign exchange forward
contracts (In thousands of dollars):
FORWARD CONTRACTS TO SELL FOREIGN CURRENCIES AND BUY US DOLLARS
Notional Amount Fair Value
Fixed Income Fund $ 48,701 $ (19)
Regular Fund 95,991 96
All Equity Fund 4,248 72
$ 148,940 $ 149
FORWARD CONTRACTS TO BUY FOREIGN CURRENCIES AND SELL US DOLLARS
Notional Amount Fair Value
Fixed Income Fund $ 32,595 $ (125)
Regular Fund 62,291 (262)
All Equity Fund 1,752 (20)
$ 96,638 $ (407)
AMERICAN STORES RETIREMENT ESTATES
NOTES TO FINANCIAL STATEMENTS
NOTE E - FINANCIAL INSTRUMENTS (CONCLUDED)
Credit risk represents the Plan's potential loss on foreign exchange forward
contracts if all counterparties to such contracts fail to perform according to
the terms of the contract. Credit risk is calculated using year-end currency
exchange rates. Historically, there have not been any losses associated with
counterparty non-performance on foreign exchange forward contracts. Exposure
to loss on these contracts will increase or decrease over the lives of the
contracts as currency exchange rates fluctuate.
At December 31, 1995, credit risk related to these contracts was as follows
(In thousands of dollars):
Fixed Income Fund $ 249
Regular Fund 585
All Equity Fund 74
$ 908
NOTE F - ALLOCATION OF PLAN ASSETS TO INVESTMENT FUND OPTIONS (In thousands of
dollars)
<TABLE>
RECEIVABLE RECEIVABLE
FROM (PAYABLE) INTEREST
AMERICAN FOR NET AND
INVESTMENT STORES PARTICIPANT DIVIDENDS NET ASSETS AVAILABLE
FUND OPTION INVESTMENTS COMPANY* ACTIVITY RECEIVABLE FOR PLAN BENEFITS
<S> <C> <C> <C> <C> <C>
As of December 31, 1995
ASC Common
Stock Fund $ 212,632 $ 230 $ 1,111 $ 213,973
Fixed Income Fund 240,660 231 240,891
Regular Fund 1,104,244 700 1,104,944
Safety Fund 73,424 66 73,490
All Equity Fund 153,523 256 153,779
Company Contribution $ 78,000 78,000
Loans to Participants 94,657 94,657
TOTAL $ 1,879,140 $ 78,000 $ 1,483 $ 1,111 $ 1,959,734
As of December 31, 1994
ASC Common
Stock Fund $ 195,278 $ 9,060 $ (62) $ 879 $ 205,155
Fixed Income Fund 210,547 12,871 204 223,622
Regular Fund 862,701 8,244 680 871,625
Safety Fund 71,652 1,686 375 73,713
All Equity Fund 102,550 46,316 139 149,005
Company Contribution 0
Loans to Participants 90,528 90,528
TOTAL $ 1,533,256 $ 78,177 $ 1,336 $ 879 $ 1,613,648
</TABLE>
* Balances reclassified to reflect actual allocations for 1994.
AMERICAN STORES RETIREMENT ESTATES
NOTES TO FINANCIAL STATEMENTS
NOTE G - ALLOCATION OF PLAN INCOME AND CHANGES IN PLAN ASSETS TO INVESTMENT
FUND OPTIONS (In thousands of dollars)
<TABLE>
Income from
Participant Company Investment Transfers Withdrawals Exchange of Admini- Net
Year Ended Contri- Contri- in (to) from less Participants Holdings strative Additions
December 31, 1995 butions butions* Master Trust Other Plans Forfeitures Additions Deductions Fees (Deductions)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASC Common
Stock Fund $ 9,364 $ $ 7,813 $ (196) $ (10,652) $ 61,621 $ (55,528) $ (212) $ 12,210
Fixed Income Fund 9,762 35,999 (827) (17,471) 19,077 (26,829) (221) 19,490
Regular Fund 50,356 222,643 (2,639) (55,907) 50,207 (57,805) (936) 205,919
Safety Fund 2,056 5,092 4 (8,153) 31,856 (30,879) (74) (98)
All Equity Fund 11,314 31,055 (451) (6,330) 25,338 (17,058) (116) 43,752
Company Contribution 78,000 78,000
Loan Defaults (13,187) (13,187)
Total $ 82,852 $ 78,000 $ 302,602 (4,109) $(111,700) $188,099 $(188,099) $(1,559) $ 346,086
Year Ended
December 31, 1994
ASC Common
Stock Fund $ 6,916 $ 9,060 $ 38,296 $ (2,560) $ (15,393) $ 64,739 $ (32,820) $ (267) $ 67,971
Fixed Income Fund 10,559 12,871 (10,798) (7,352) (19,415) 17,923 (45,042) (265) (41,519)
Regular Fund 50,438 8,244 (5,641) (55,274) (54,073) 40,799 (73,494) (1,062) (90,063)
Safety Fund 1,760 1,686 2,669 (1,994) (9,317) 43,266 (24,907) (75) 13,088
All Equity Fund 9,723 46,316 794 (4,008) (5,073) 25,970 (16,434) (113) 57,175
Loan Defaults (4,809) (4,809)
Total $ 79,396 $ 78,177 $ 25,320 $ (71,188) $(108,080) $192,697 $(192,697) $(1,782) $ 1,843
</TABLE>
* Balances reclassified to reflect actual allocations for 1994.
NOTE H - INCOME TAX STATUS
The Internal Revenue Service ruled on May 9, 1995 that the Plan qualifies
under Section 401(a) of the Internal Revenue Code (IRC) and, therefore, the
underlying trust is not subject to tax under IRC Section 501(a). Once
qualified, the Plan is required to operate in conformity with the IRC to
maintain its qualification. The Plan Administrator is not aware of any
course of action or series of events that have occurred that might adversely
affect the Plan's qualified status.
NOTE I - TRANSACTIONS WITH PARTIES-IN-INTEREST
During 1995 and 1994, the ASC Stock Fund received $4,220,902 and $3,062,332,
respectively, in common stock dividends from American Stores Company.
NOTE J - SUBSEQUENT EVENT
American Stores Company is plan sponsor for JCRE (Jewel Companies Retirement
Estates), a frozen retirement plan which is maintained for members of JCRE who
had balances in the plan when American Stores Company merged with Jewel
Companies, Inc. in 1984. ASRE was established January 1, 1985 and since that
time no employee or employer contributions have been made to JCRE for plan
years subsequent to 1984. Of the approximately 14,300 JCRE participants, over
12,000 also have ASRE accounts. Recently, members of JCRE were balloted to
determine their desire to merge JCRE with ASRE. The voting effort was
completed June 15, 1996 with a large majority of JCRE members voting in favor
of the merger. Based on that outcome, JCRE will be merged with ASRE effective
July 31, 1996. As of June 15, 1996, JCRE assets are approximately $1.3
billion. Plan features will not change as a result of the merger.
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-25613) pertaining to American Stores Retirement Estates of
our report dated June 24, 1996, with respect to the financial statements of
American Stores Retirement Estates included in this Annual Report (Form 11-K)
for the year ended December 31, 1995.
ERNST & YOUNG LLP
Salt Lake City, Utah
June 26, 1996
