SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended November 2, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
- ---------
For the transition period from to
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Commission file number 1-5392
AMERICAN STORES COMPANY
(Exact name of registrant as specified in its charter)
Delaware 87-0207226
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
709 East South Temple
Salt Lake City, Utah 84102
(Address of principal executive offices) (Zip Code)
801-539-0112
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes No
---- ----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of November 30, 1996: Common Stock, Par Value $1.00 -
145,782,161 shares.
- -----------
Part I. Financial Information
Item 1. Financial Statements
AMERICAN STORES COMPANY
Consolidated Condensed Statements of Earnings
(unaudited)
(In thousands, except per share data)
Thirteen Weeks Ended
November 2, October 28,
1996 1995
Sales $4,563,362 $4,361,183
Cost of merchandise sold, including
warehousing and transportation expenses 3,346,396 3,216,041
Gross profit 1,216,966 1,145,142
Operating expenses 1,039,404 990,510
Operating profit 177,562 154,632
Other income (expense):
Interest expense (43,337) (38,362)
Gain on asset sales, other (1,550) 1,435
Net other income (expense) (44,887) (36,927)
Earnings before income taxes 132,675 117,705
Federal and state income taxes 56,918 50,260
Net earnings $ 75,757 $ 67,445
Net earnings per share $0.52 $0.46
Average shares outstanding 145,681 147,002
Dividends per share $0.16 $0.14
See accompanying notes to consolidated condensed financial statements.
AMERICAN STORES COMPANY
Consolidated Condensed Statements of Earnings
(unaudited)
(In thousands, except per share data)
Thirty-Nine Weeks Ended
November 2, October 28,
1996 1995
Sales $13,768,456 $13,218,310
Cost of merchandise sold, including
warehousing and transportation expenses 10,129,986 9,801,409
Gross profit 3,638,470 3,416,901
Operating expenses 3,116,440 2,962,416
Operating profit 522,030 454,485
Other income (expense):
Interest expense (125,491) (117,480)
Gain on asset sales, other (8,460) 3,771
Net other income (expense) (133,951) (113,709)
Earnings before income taxes 388,079 340,776
Federal and state income taxes 164,953 145,511
Net earnings $ 223,126 $ 195,265
Net earnings per share $1.53 $1.33
Average shares outstanding 145,907 147,142
Dividends per share $0.48 $0.42
See accompanying notes to consolidated condensed financial statements.
AMERICAN STORES COMPANY
Consolidated Condensed Balance Sheets
(unaudited)
(In thousands of dollars)
November 2, February 3,
1996 1996
Assets
Current Assets:
Cash and cash equivalents $ 150,365 $ 102,422
Inventories 1,771,369 1,572,242
Other current assets 361,850 409,303
Total current assets 2,283,584 2,083,967
Property, plant and equipment, less
accumulated depreciation and amortization
of $2,331,278 on November 2, 1996 and
$2,126,550 on February 3, 1996 3,515,999 3,205,900
Goodwill 1,683,294 1,722,892
Other assets 357,340 350,205
Assets $7,840,217 $7,362,964
Liabilities and Shareholders' Equity
Current Liabilities:
Current maturities of long-term debt and
capital lease obligations $ 71,414 $ 135,152
Accounts payable 1,110,843 996,354
Other current liabilities 740,091 856,197
Total current liabilities 1,922,348 1,987,703
Long-term debt and obligations under capital
leases, less current maturities 2,486,833 2,105,016
Other liabilities 939,486 915,749
Shareholders' Equity - shares outstanding of
145,781,847 on November 2, 1996 and
146,447,785 on February 3, 1996 2,491,550 2,354,496
Liabilities and Shareholders' Equity $7,840,217 $7,362,964
See accompanying notes to consolidated condensed financial statements.
AMERICAN STORES COMPANY
Consolidated Condensed Statements of Cash Flows
(unaudited)
(In thousands of dollars)
Thirty-Nine Weeks Ended
November 2, October 28,
1996 1995
Cash Flows from Operating Activities:
Net earnings $ 223,126 $ 195,265
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 330,417 302,305
Net (gain) on asset sales (2,942) (1,869)
Changes in operating assets and liabilities (144,982) (193,708)
Total adjustments 182,493 106,728
Net cash provided by operating activities 405,619 301,993
Cash Flows from Investing Activities:
Expended for property, plant and equipment (603,700) (519,302)
Proceeds from sale of other assets 14,017 39,052
Net cash (used in) investing activities (589,683) (480,250)
Cash Flows from Financing Activities:
Proceeds from long-term borrowing 350,000 275,000
Payment of long-term borrowing (100,000) (138,120)
Net increase (decrease) in existing credit
facilities 68,079 (31,455)
Other changes in equity 21,751 12,768
Repurchase of common stock (37,798) (70,420)
Cash dividends (70,025) (62,114)
Net cash provided by (used in)
financing activities 232,007 (14,341)
Net increase (decrease) in cash and
cash equivalents 47,943 (192,598)
Cash and cash equivalents:
Beginning of year 102,422 195,689
End of quarter $ 150,365 $ 3,091
Supplementary information - Statement of Cash Flows:
Cash paid during the year for:
Interest (net of amounts capitalized) $ 122,722 $ 129,739
Income taxes, net of refunds $ 180,227 $ 117,893
Noncash investing and financing activities:
Conversion of convertible notes to equity $ 120,311
AMERICAN STORES COMPANY
Notes to Consolidated Condensed Financial Statements
(unaudited)
November 2, 1996
Basis of Presentation
In the opinion of management, the accompanying unaudited consolidated condensed
financial statements contain all normal recurring adjustments necessary to
present fairly the financial position of American Stores Company and its
subsidiaries as of November 2, 1996 and January 28, 1995 and the results of its
operations for the thirteen weeks ended November 2, 1996 and October 28, 1995
and results of operations and cash flows for the thirty-nine weeks ended
November 2, 1996 and October 28, 1995. The operating results for the interim
periods are not necessarily indicative of results for a full year. For a further
discussion of the Company's accounting policies, please refer to the Company's
Form 10-K for the fiscal year ended February 3, 1996.
Advertising Reclassification
Beginning in the first quarter of 1996, the Company is classifying advertising
expense as a cost of merchandise sold. Previously theses expenses were
classified as operating expenses. Prior years have been reclassified to conform
to the current year presentation.
Net Earnings Per Share
Earnings per share are determined by dividing the year-to-date weighted average
number of shares outstanding into net earnings. Common share equivalents in the
form of stock options are excluded from the calculation of primary earnings per
share since they have no material dilutive effect on per share figures.
Employee Stock Purchase Plan
The Employee Stock Purchase Plan (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. During 1996,
348,469 shares were purchased under the ESPP at an average price of $28.07 per
share. As of November 2, 1996, 6,651,531 shares remained authorized for
issuance under the ESPP.
Repurchase of Common Stock
In June 1996, the Company replaced its existing stock repurchase program with a
new repurchase program which authorizes the repurchase of up to two million
shares of common stock. During 1996 the Company repurchased 1,090,000 shares of
its common stock at an average price of $34.67 per share in accordance with the
Company's stock repurchase programs. There were no shares repurchased during
the third quarter. As of November 2, 1996, an additional 1,945,000 shares
remained authorized for repurchase.
Part I - Financial Information (continued)
Notes to Consolidated Condensed Financial Statements (continued)
Shareholder Rights Plan
On June 25, 1996, the Board of Directors of the Company approved an amendment to
the Rights Agreement dated March 8, 1988, as amended March 20, 1990, to reduce
the ownership threshold at which the rights are triggered from 20% to 10%.
Under the amended plan, if any person or group acquires beneficial ownership of
10% or more of the Company's common stock, each holder of a right (other than
the acquiring person) will have the right to buy $125 of the Company's common
stock for $62.50. The amended plan provides that the rights are not triggered
as a result of the current stock ownership of Mr. L.S. Skaggs, former Chairman
of the Board of the Company, his wife and related trusts and foundations or with
respect to additional purchases of up to 1% of the Company's shares by such
entities.
Long-Term Debt Issuance
On June 10, 1996, the Company issued $350 million principal amount of 8.0%
debentures due June 1, 2026 at 99.262% to yield 8.066%. The Company received net
proceeds of approximately $344 million which were used to refinance a portion of
the Company's long-term indebtedness and to refinance additional short-term
variable rate borrowings under the Company's principal bank credit agreement.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
The percentage change in comparable store sales and total sales for the third
quarter and year-to-date 1996 and 1995 are presented in the tables below. The
increases in sales during the third quarter and year-to-date are primarily a
result of increased capital spending and more effective marketing efforts,
including preferred customer cards, clipless coupons and targeted marketing
promotions at the food store operations. Drug store sales increased due
primarily to increased targeted marketing efforts, capital spending and
increased pharmacy sales. Comparable and total sales year-to-date also increased
due to the impact of a nine-day labor dispute in the first quarter of 1995 in
the food store operations.
<TABLE> 13 Weeks Ended 39 Weeks Ended
<S> <C>November 2, 1996 <C>November 2, 1996
Comparable Store Sales % Change:
Eastern food operations 3.0% 3.1%
Western food operations 2.5% 2.6%
Food store operations 2.7% 2.8%
Drug store operations 6.3% 5.8%
Total comparable store sales 3.7% 3.6%
</TABLE>
<TABLE> 13 Weeks Ended 39 Weeks Ended
<S> <C>1996 <C>1995 <C>% change <C>1996 <C>1995 <C>% change
Sales:
Food store operations $3,301,013 $3,207,272 2.9% $ 9,977,527 $ 9,658,400 3.3%
Drug store operations 1,254,618 1,150,858 9.0% 3,769,406 3,551,819 6.1%
Other 7,731 3,053 21,523 8,091
Total sales $4,563,362 $4,361,183 4.6% $13,768,456 $13,218,310 4.2%
Comparable store sales include stores open one year or more and replacement stores.
Eastern food operations include Acme Markets and Jewel Food Stores.
Western food operations include Lucky Northern California Division, Lucky Southern California Division, Jewel Osco
Southwest and Super Saver.
Food store operations include Eastern and Western food operations
Drug store operations include Osco Drug and Sav-on.
</TABLE>
Beginning in the first quarter of 1996, the Company is classifying advertising
expense as a cost of merchandise sold. Previously theses expenses were
classified as operating expenses. Prior years have been reclassified to conform
to the current year presentation.
Gross profit as a percent of sales increased to 26.7% in the third quarter and
26.4% for the year-to-date 1996, compared to 26.3% and 25.8% in the same periods
of 1995, respectively. These increases are primarily a result of increased
margins from higher private label penetration, better product mix, improved
shrink control, and decreased advertising costs. Additionally, year-to-date
1995 margins as a percent of sales were negatively impacted by
Part I - Financial Information (continued)
the nine-day labor dispute in the food store operations in the first quarter.
Operating expense as a percent of sales increased slightly to 22.8% in the third
quarter of 1996, compared to 22.7% in 1995 and 22.6% year-to-date 1996 compared
to 22.4% in 1995. These increases were primarily a result of increased expenses
related to the capital investment program and new store openings. Comparisons
with the prior year in the food store operations were also impacted by the 1995
renegotiation of a labor contract with the United Food and Commercial Workers
International in southern California in which certain health and welfare
savings, which were being recognized over the life of the contract, were
immediately recognized in the third quarter of 1995. These items were slightly
offset by a decrease in operating expenses as a percent of sales primarily due
to better cost control and by reductions in self insurance costs.
Total operating profit for the third quarter and year-to-date 1996 and 1995 is
presented in the table below. Operating profit was 3.9% of sales in the third
quarter of 1996 and 3.5% of sales in the third quarter of 1995. Operating profit
for the year-to-date 1996 was 3.8% of sales compared to 3.4% of sales for the
same period 1995. The improvement in third quarter operating profit is due
mainly to increased sales and higher margins. The improvement in year-to-date
1996 reflects higher operating profits in the food store operations due
primarily to the negative impact of the nine-day labor dispute in northern
California in 1995.
<TABLE> 13 Weeks Ended 39 Weeks Ended
November 2, October 28, November 2, October 28,
<S> <C> 1996 <C>1995 <C>1996 <C> 1995
Operating Profit:
Food store operations $151,467 $135,219 $431,036 $374,502
Drug store operations 50,020 43,595 166,723 157,774
LIFO (6,000) (6,000) (22,000) (24,000)
Purchase accounting amortization (19,752) (19,400) (58,896) (57,885)
Other 1,827 1,218 5,167 4,094
Total operating profit $177,562 $154,632 $522,030 $454,485
</TABLE>
Interest expense increased in the third quarter and year-to-date 1996 over the
same periods of 1995 due to an increase in average outstanding debt and the
issuance of $350 million, thirty-year 8% debentures during the second quarter of
1996, which partially replaced short-term variable rate debt.
The Company's effective income tax rates were 42.5% in 1996 compared to 42.7% in
the prior year. The current year effective tax rates are down due to higher
earnings in the current year and lower state tax rates.
Net earnings per share amounted to $0.52 per share in the third quarter of 1996
compared to $0.46 per share in the same quarter of the prior year. Net earnings
per share amounted to $1.53 per share year-to-date 1996 compared to $1.33 per
share for the same period of 1995.
Part I - Financial Information (continued)
Liquidity and Capital Resources
Cash provided by operating activities increased to $405.6 million from $302.0
million in the first thirty-nine weeks of 1996 compared to the same period of
1995. The increase in operating cash flows over the prior year is due in part
to increased net earnings before depreciation and amortization. Other changes
in operating assets and liabilities are due to changes in the components of
working capital and are not indicative of long-term trends.
On June 10, 1996, the Company issued $350 million principal amount of 8.0%
debentures due June 1, 2026 at 99.262% to yield 8.066%. The Company received net
proceeds of approximately $344 million which were used to refinance a portion of
the Company's long-term indebtedness and to refinance additional short-term
variable rate borrowings under the Company's principal bank credit agreement.
Cash capital expenditures for the first thirty-nine weeks of 1996 and 1995
amounted to $603.7 million and $519.3 million, respectively. Total capital
expenditures, including the net present value of leases, amounted to $675.4
million in 1996, compared to $557.6 million in 1995. During the first three
quarters of 1996, 64 new stores were opened, 53 stores were closed and 80 stores
were remodeled. Capital expenditures are expected to be approximately $900
million by year-end 1996. Capital expenditures for 1997 are expected to be
approximately $1.0 billion.
The ratio of total debt (debt plus obligations under capital leases) to total
capitalization (total debt plus common shareholders' equity) was 50.7% at
November 2, 1996 and 48.8% at February 3, 1996.
In June 1996, the Company replaced its existing stock repurchase program with a
new repurchase program which authorizes the repurchase of up to two million
shares of common stock. During 1996 the Company repurchased 1,090,000 shares of
its common stock at an average price of $34.67 per share in accordance with the
Company's stock repurchase programs. There were no shares repurchased during
the third quarter. As of November 2, 1996, an additional 1,945,000 shares
remained authorized for repurchase.
The Company believes that its cash flow from operations, supplemented by credit
available under the Company's existing credit facilities, as well as its ability
to refinance debt, will be adequate to meet its presently identifiable cash
requirements.
Part I - Financial Information (continued)
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 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.
Part II - Other Information
Item 1.Legal Proceedings -- For a description of legal proceedings, please
refer to the footnote entitled "Legal Proceedings" contained in the
Notes to Consolidated Financial Statements section of the Company's Form
10-K for the fiscal year ended February 3, 1996.
The Company is also involved in various claims, administrative
proceedings and other legal proceedings which arise from time to time in
connection with the ordinary conduct of the Company's business.
Item 2.Changes in Securities -- None
Item 3.Defaults upon Senior Securities -- None
Item 4.Submission of Matters to a Vote of Security Holders -- None
Item 5.Other Information -- None
Item 6.Exhibits and Reports on Form 8-K --
(a) Exhibits --
10.1 Amendment to the Employment Agreement with Victor L. Lund,
dated as of September 17, 1996.
10.2 Amendment to the 1985 Stock Option and Stock Award Plan, dated
as of September 17, 1996
10.3 Amendment to the 1989 Stock Option and Stock Award Plan, dated
as of September 17, 1996
11.1 Calculations of earnings per share.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K filed during the quarter -- The Company
filed a report on Form 8-K on September 23, 1996 reporting
information under Item 5, including the Restated By-laws of the
Company as amended September 17, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
American Stores Company
(Registrant)
Dated December 17, 1996 /s/ Teresa Beck
Teresa Beck
Chief Financial Officer
(Principal Financial Officer)
Dated December 17, 1996 /s/ Kathleen E. McDermott
Kathleen E. McDermott
Chief Legal Officer and Assistant Secretary
Dated December 17, 1996 /s/ Bradley M. Vierig
Bradley M. Vierig
Senior Vice President and Controller
(Chief Accounting Officer)
<TABLE> Exhibit 11.1
AMERICAN STORES COMPANY
Calculation of Earnings Per Share
(unaudited)
(In thousands of dollars, except per share data)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
November 2, October 28, November 2, October 28,
<S> <C>1996 <C>1995 <C>1996 <C>1995
Primary Earnings Per Share
Primary earnings applicable to
shareholders $ 75,757 $ 67,445 $ 223,126 $ 195,265
Primary earnings per share $0.52 $0.46 $1.53 $1.33
Average shares outstanding 145,682 147,002 145,907 147,142
Fully Diluted Earnings Per Share
Fully diluted earnings applicable to
shareholders $ 75,757 $ 67,445 $ 223,126 $ 195,265
Fully diluted earnings per share $0.52(1) $0.46(1) $1.52(1) $1.33(1)
Fully diluted average shares outstanding 146,591 147,565 146,773 147,804
Calculation of Fully Diluted Average Shares Outstanding
Effect of assumed exercise of stock options:
Proceeds from assumed exercise $ 89,297 $ 45,013 $ 66,341 $ 39,554
Shares under options outstanding 3,135 2,073 2,519 1,989
Shares assumed acquired with proceeds
under the treasury stock method (2,226) (1,510) (1,653) (1,326)
Incremental shares due to assumed
exercise of stock options 909 563 866 663
Fully diluted average shares outstanding:
Average shares outstanding 145,682 147,002 145,907 147,142
Assumed exercise of stock options 909 563 866 663
Assumed conversion of debentures 0 0 0 0
Total 146,591 147,565 146,773 147,805
(1) Dilution is less than 3%.
</TABLE>
Exhibit 10.1
AMENDMENT TO EMPLOYMENT AGREEMENT
Amendment dated as of September 17, 1996 (Amendment) to Employment
Agreement dated as of November 1, 1994 (Employment Agreement) between American
Stores Company, a Delaware corporation (Company) and Victor L. Lund (Executive).
The Company and Executive are collectively referred to as the Parties, and
individually as a Party.
WHEREAS, the Parties desire to amend certain provisions of the Employment
Agreement;
NOW THEREFORE, in consideration of the premises and their mutual agreements
hereinafter set forth, the Parties hereto agree as follows:
1. Section II-A of the Employment Agreement is hereby amended to read as
follows:
"II-A. The term of this Agreement shall expire on November 1, 2001,
provided, that the term shall be automatically extended for subsequent two-year
terms until terminated by written notice given by the Company at least three
years prior to the end of the term, or until terminated as described below."
2. Section IX-C of the Employment Agreement is hereby amended to read as
follows:
"IX-C. If Company terminates Executive's employment without cause or
Executive terminates employment because of Company's breach of a material
provision of this Agreement, the Company shall pay to the Executive in a lump
sum in cash within 30 days after the effective date of termination the aggregate
of the following amounts:
1. the sum of (i) the Executive's annual base salary through the date
of termination to the extent not theretofore paid and (ii) the prorated portion
of Executive's bonus that has been earned (despite any contrary provision in the
then-existing bonus plan), and a lump sum payment equal to the value of premiums
for COBRA coverage that is available to the Executive; and
2. the value of unpaid salary and target bonuses that would have been
paid under the remaining life of the contract had the breach and termination not
occurred.
If the Company had relocated Executive within twelve (12) months prior to the
date of termination under this Section IX-C, Company will relocate Executive
within the continental United States pursuant to the Company's relocation
policy; provided that Executive's relocation move is completed within twelve
(12) months from the date of termination. If the Executive's employment
terminates under Section IX-C, benefits under SLRRP shall be calculated as
though the Executive completed ten (10) years of service; all of the provisions
of Section VI-B of this Agreement shall continue to have full force and effect;
and the provisions of Section VIII-B3 ( the covenant not to compete for one year
following termination of employment) shall thereupon have no force or effect.
Notwithstanding the foregoing, all of the other provisions of Sections VI and
VII hereof shall remain effective. The foregoing payments and benefits shall be
in lieu of payments to which Executive might otherwise be entitled to under the
American Stores Termination Allowance Plan.
3. The Employment Agreement, as amended by this Amendment, constitutes the
entire agreement of the subject matter hereof and may not be amended unless by a
written agreement signed by the Parties.
4. This Amendment is made in and is governed by the laws of the State of Utah.
IN WITNESS WHEREOF, the Parties have executed this Amendment as of the date
first above written.
AMERICAN STORES COMPANY
By:
-------------------------------------
Name: Kathleen E. McDermott
Title: Chief Legal Officer
EXECUTIVE
_________________________________________
Victor L. Lund
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet and income statements for the thirty-nine week period ended November 2,
1996.
</LEGEND>
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-1-1997
<PERIOD-END> NOV-2-1996
<CASH> 150,365
<SECURITIES> 0
<RECEIVABLES> 293,558
<ALLOWANCES> 0
<INVENTORY> 1,771,369
<CURRENT-ASSETS> 2,283,584
<PP&E> 5,669,188
<DEPRECIATION> 2,222,370
<TOTAL-ASSETS> 7,840,217
<CURRENT-LIABILITIES> 1,922,348
<BONDS> 2,486,833
0
0
<COMMON> (149,889)
<OTHER-SE> (2,341,661)
<TOTAL-LIABILITY-AND-EQUITY> (7,840,217)
<SALES> 13,768,456
<TOTAL-REVENUES> 13,768,456
<CGS> 10,129,986
<TOTAL-COSTS> 10,129,986
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 125,491
<INCOME-PRETAX> 388,079
<INCOME-TAX> 164,953
<INCOME-CONTINUING> 223,126
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 223,126
<EPS-PRIMARY> 1.53
<EPS-DILUTED> 1.53
</TABLE>
Exhibit 10.2
AMENDMENT TO THE AMERICAN STORES COMPANY
1985 STOCK OPTION AND STOCK AWARD PLAN
The American Stores Company 1985 Stock Option and Stock Award Plan (the "1985
Plan") is hereby amended by deleting the first sentence of the third paragraph
of Section 18(a) of the 1985 Plan, in its entirety, and inserting the following
language in place thereof:
Notwithstanding anything contained in the Plan to the contrary,
during the 60-day period from and after a Change of Control an
optionee (other than an optionee who initiated a Change of Control in
a capacity other than as an officer or director of the Company) with
respect to an option that is unaccompanied by a stock appreciation
right shall, unless the Committee shall determine otherwise at the
time of grant, have the right, in lieu of the payment of the full
purchase price of the shares of common stock being purchased under the
option and by giving written notice to the Company, to elect (within
such 60-day period) to surrender all or part of the option to the
Company and to receive in cash an amount equal to the amount by which
the fair market value per share of the common stock on the date of
exercise shall exceed the purchase price per share under the option
multiplied by the number of shares of common stock granted under the
option as to which the right granted by this paragraph shall have been
exercised.
The 1985 Plan is further amended by deleting the fourth paragraph of Section
18(a) from the 1985 Plan, in its entirety, and inserting the following language
in place thereof:
Notwithstanding anything contained in the Plan to the contrary,
the payment in settlement of a stock appreciation right during the 60-
day period from and after a Change of Control shall be entirely in
cash and during the 60-day period from and after a Change of Control
the value of a share of common stock on the date of exercise shall
mean (i) with respect to the exercise of a stock appreciation right
accompanying an option which is not an incentive stock option, the
`Change of Control Fair Market Value'' and (ii) with respect to the
exercise of a stock appreciation right accompanying an incentive stock
option, the mean of the high and low prices of the common stock on the
New York Stock Exchange on such date.
CERTIFICATE OF ADOPTION BY BOARD OF DIRECTORS
The undersigned, Mark N. Schneider, Vice President and Assistant Secretary
of American Stores Company, hereby certifies that the foregoing Amendment to the
American Stores Company 1985 Stock Option and Stock Award Plan was approved by
the Board of Directors of the Company at a regular meeting of the Board of
Directors duly called and held on September 17, 1996.
/s/ Mark N. Schneider
-----------------------------------
Mark N. Schneider
Vice President and Assistant Secretary
Exhibit 10.3
AMENDMENT TO THE AMERICAN STORES COMPANY
1989 STOCK OPTION AND STOCK AWARD PLAN
The American Stores Company 1989 Stock Option and Stock Award Plan (the "1989
Plan") is hereby amended by deleting the first sentence of the third paragraph
of Section 19 of the 1989 Plan, in its entirety, and inserting the following
language in place thereof:
Notwithstanding anything contained in the Plan to the contrary,
during the 60-day period from and after a Change of Control an
optionee (other than an optionee who initiated a Change of Control in
a capacity other than as an officer or director of the Company) with
respect to an option that is unaccompanied by a stock appreciation
right shall, unless the Committee shall determine otherwise at the
time of grant, have the right, in lieu of the payment of the full
purchase price of the shares of common stock being purchased under the
option and by giving written notice to the Company, to elect (within
such 60-day period) to surrender all or part of the option to the
Company and to receive in cash an amount equal to the amount by which
the fair market value per share of the common stock on the date of
exercise shall exceed the purchase price per share under the option
multiplied by the number of shares of common stock granted under the
option as to which the right granted by this paragraph shall have been
exercised.
The 1989 Plan is further amended by deleting the fourth paragraph of Section 19
from the 1989 Plan, in its entirety, and inserting the following language in
place thereof:
Notwithstanding anything contained in the Plan to the contrary,
the payment in settlement of a stock appreciation right during the 60-
day period from and after a Change of Control shall be entirely in
cash and during the 60-day period from and after a Change of Control
the value of a share of common stock on the date of exercise shall
mean (i) with respect to the exercise of a stock appreciation right
accompanying an option which is not an incentive stock option, the
`Change of Control Fair Market Value'' and (ii) with respect to the
exercise of a stock appreciation right accompanying an incentive stock
option, the mean of the high and low prices of the common stock on the
New York Stock Exchange on such date.
CERTIFICATE OF ADOPTION BY BOARD OF DIRECTORS
The undersigned, Mark N. Schneider, Vice President and Assistant Secretary
of American Stores Company, hereby certifies that the foregoing Amendment to the
American Stores Company 1989 Stock Option and Stock Award Plan was approved by
the Board of Directors of the Company at a regular meeting of the Board of
Directors duly called and held on September 17, 1996.
/s/ Mark N. Schneider
-----------------------------------
Mark N. Schneider
Vice President and Assistant Secretary
