Albertson's, Inc., one of the nation's largest food and drug retailing companies, today reported sales of $9.0 billion for the thirteen-week quarter ended May 4, 2000. Total sales for the quarter increased 4.2%, excluding divested stores' sales from the first quarter last year. Identical store sales increased 0.5% and comparable store sales (which include replacement stores) increased 0.8%.
Operating profit without merger-related costs and one-time charges for the thirteen-week quarter increased to $454 million. Net earnings without merger-related costs and one-time charges were $226 million or 2.5% as a percent to sales. Diluted earnings per share without merger-related costs and one-time charges were $0.53. Earnings before interest, taxes, depreciation and amortization, and without merger-related costs and one-time charges (EBITDA) on a FIFO basis increased 3.7% to $714 million, or 7.9% as a percent to sales.
Merger-related costs and one-time charges for the quarter amounted to $77 million ($47 million after tax or $0.11 per basic and diluted share). The first quarter pre-tax merger-related costs included period costs of approximately $56 million and restructuring costs of $1 million. A one-time charge of $20 million was expensed to selling, general and administrative expenses to reflect liabilities related to certain previously assigned leases and subleases to tenants who are in bankruptcy. Including all merger-related costs and one-time charges, the Company reported net earnings of $179 million, or $0.42 per basic and diluted share for the quarter.
A. Craig Olson, executive vice president and chief financial officer, said, "We are pleased with our overall results compared to the prior year. Our realized synergies have effectively offset the efficiencies lost due to the required 145 store divestitures. Although our comparable store sales were not as strong as in the fourth quarter, they strengthened in the second half of the quarter, and have remained strong into the second quarter, increasing 2.4% in May. Also, we are taking significant steps to improve efficiencies throughout the Company. In fact, we have made great progress on inventory and debt reduction and we will continue our focus on working capital efficiency. Synergies, or cost savings, achieved this quarter continue to track ahead of prior estimates, and merger-related costs remain in-line with our original estimates."
Gary Michael, chairman and chief executive officer, said, "I'm proud of our associates and all that they have accomplished this quarter as we continue to integrate the operations of American Stores Company and implement best practices. Every quarter we are making great progress. Our focus on sales growth, combined with our emphasis on cost reduction will help us return to Albertson's historical operating margins. As we continue to integrate our two companies and realize the benefits of our merger, we see virtually unlimited potential for this company we call the new Albertson's."
The Company also said that at this time it projects earnings (without merger-related costs and one-time charges) for the second quarter of 2000 to be approximately $0.62 per share and $0.66 per share for the third quarter. Given the stronger sales trends, the Company remains comfortable with approximately $2.70 per share (without merger-related costs and one-time charges) for the 2000 fiscal year, which represents an increase of over 19% compared to the 1999 fiscal year. The earnings outlook reflects the loss of sales and earnings from divested stores, costs of integration and realization of synergies.
During the first quarter the Company opened 15 combination food and drug stores, 1 warehouse store, 6 stand-alone drugstores, 12 fuel centers and completed remodels on 7 supermarkets. The new stores opened this quarter include 6 stores that were acquired in two separate transactions. The Company, during the quarter, closed 2 drugstores, 1 of which was replaced with a newer store, as well as 11 supermarkets, 5 of which were or will be replaced and 1 of which was the final required divestiture. For the fiscal year, the Company expects to open 90 combination food and drug stores, 50 stand-alone drugstores, 100 fuel centers and complete remodels on 109 supermarkets and 21 drugstores.
Pursuant to the stock buyback program approved by Albertson's Board of Directors in April 2000, the Company purchased and retired 697,000 shares of its common stock during the first quarter at a total cost of $22.5 million, or an average of $32.28 per share. "With our strong financial position, we have the capacity to continue our current capital expenditure program and also purchase our common stock," concluded Mr. Michael.
Albertson's, Inc. is one of the largest retail food and drug chains in the United States. Based in Boise, Idaho, the Company currently operates over 2,500 retail stores in 37 states across the United States.
The Company does not undertake to update forward-looking statements in this news release to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking information. Assumptions and other information that could cause actual results to differ from those set forth in the forward-looking information can be found in the Company's filings with the Securities and Exchange Commission, including the Company's Form 10-K.
Operating profit without merger-related costs and one-time charges for the thirteen-week quarter increased to $454 million. Net earnings without merger-related costs and one-time charges were $226 million or 2.5% as a percent to sales. Diluted earnings per share without merger-related costs and one-time charges were $0.53. Earnings before interest, taxes, depreciation and amortization, and without merger-related costs and one-time charges (EBITDA) on a FIFO basis increased 3.7% to $714 million, or 7.9% as a percent to sales.
Merger-related costs and one-time charges for the quarter amounted to $77 million ($47 million after tax or $0.11 per basic and diluted share). The first quarter pre-tax merger-related costs included period costs of approximately $56 million and restructuring costs of $1 million. A one-time charge of $20 million was expensed to selling, general and administrative expenses to reflect liabilities related to certain previously assigned leases and subleases to tenants who are in bankruptcy. Including all merger-related costs and one-time charges, the Company reported net earnings of $179 million, or $0.42 per basic and diluted share for the quarter.
A. Craig Olson, executive vice president and chief financial officer, said, "We are pleased with our overall results compared to the prior year. Our realized synergies have effectively offset the efficiencies lost due to the required 145 store divestitures. Although our comparable store sales were not as strong as in the fourth quarter, they strengthened in the second half of the quarter, and have remained strong into the second quarter, increasing 2.4% in May. Also, we are taking significant steps to improve efficiencies throughout the Company. In fact, we have made great progress on inventory and debt reduction and we will continue our focus on working capital efficiency. Synergies, or cost savings, achieved this quarter continue to track ahead of prior estimates, and merger-related costs remain in-line with our original estimates."
Gary Michael, chairman and chief executive officer, said, "I'm proud of our associates and all that they have accomplished this quarter as we continue to integrate the operations of American Stores Company and implement best practices. Every quarter we are making great progress. Our focus on sales growth, combined with our emphasis on cost reduction will help us return to Albertson's historical operating margins. As we continue to integrate our two companies and realize the benefits of our merger, we see virtually unlimited potential for this company we call the new Albertson's."
The Company also said that at this time it projects earnings (without merger-related costs and one-time charges) for the second quarter of 2000 to be approximately $0.62 per share and $0.66 per share for the third quarter. Given the stronger sales trends, the Company remains comfortable with approximately $2.70 per share (without merger-related costs and one-time charges) for the 2000 fiscal year, which represents an increase of over 19% compared to the 1999 fiscal year. The earnings outlook reflects the loss of sales and earnings from divested stores, costs of integration and realization of synergies.
During the first quarter the Company opened 15 combination food and drug stores, 1 warehouse store, 6 stand-alone drugstores, 12 fuel centers and completed remodels on 7 supermarkets. The new stores opened this quarter include 6 stores that were acquired in two separate transactions. The Company, during the quarter, closed 2 drugstores, 1 of which was replaced with a newer store, as well as 11 supermarkets, 5 of which were or will be replaced and 1 of which was the final required divestiture. For the fiscal year, the Company expects to open 90 combination food and drug stores, 50 stand-alone drugstores, 100 fuel centers and complete remodels on 109 supermarkets and 21 drugstores.
Pursuant to the stock buyback program approved by Albertson's Board of Directors in April 2000, the Company purchased and retired 697,000 shares of its common stock during the first quarter at a total cost of $22.5 million, or an average of $32.28 per share. "With our strong financial position, we have the capacity to continue our current capital expenditure program and also purchase our common stock," concluded Mr. Michael.
Albertson's, Inc. is one of the largest retail food and drug chains in the United States. Based in Boise, Idaho, the Company currently operates over 2,500 retail stores in 37 states across the United States.
The Company does not undertake to update forward-looking statements in this news release to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking information. Assumptions and other information that could cause actual results to differ from those set forth in the forward-looking information can be found in the Company's filings with the Securities and Exchange Commission, including the Company's Form 10-K.
ALBERTSON'S, INC.
(Unaudited - In millions except per share data)
Consolidated Earnings
13 Weeks Ended 13 Weeks Ended
May 4, 2000 April 29, 1999
----------------------------------------------------------------------
Sales $9,013 100.00% $9,215 100.00%
Cost of sales 6,504 72.16 6,712 72.84
----------------------------------------------------------------------
Gross profit 2,509 27.84 2,503 27.16
Selling, general and
administrative expenses 2,131 23.65 2,058 22.33
Merger-related
expense (income) 1 0.02 (28) (0.31)
----------------------------------------------------------------------
Operating profit 377 4.17 473 5.14
Other (expenses) income:
Interest, net (83) (0.92) (82) (0.89)
Other, net 4 0.05
----------------------------------------------------------------------
Earnings before income taxes 294 3.26 395 4.29
Income taxes 115 1.28 157 1.70
----------------------------------------------------------------------
Net Earnings $179 1.98% $238 2.59%
------------------- --------------------
Earnings Per Share:
Basic $0.42 $0.56
Diluted $0.42 $0.56
Weighted Average Number of
Common Shares Outstanding:
Basic 424 420
Diluted 424 423
LIFO charge before income taxes $6 $9
----------------------------------------------------------------------
Consolidated Earnings - Without Merger-Related Costs
and One-Time Charges
13 Weeks Ended 13 Weeks Ended
May 4, 2000 April 29, 1999
----------------------------------------------------------------------
Sales $9,013 100.00% $9,215 100.00%
Cost of sales 6,482 71.92 6,712 72.84
----------------------------------------------------------------------
Gross profit 2,531 28.08 2,503 27.16
Selling, general and
administrative expenses 2,077 23.05 2,054 22.29
----------------------------------------------------------------------
Operating profit 454 5.03 449 4.87
Other (expenses) income:
Interest, net (83) (0.92) (82) (0.89)
Other, net 4 0.05
----------------------------------------------------------------------
Earnings before income taxes 371 4.12 371 4.03
Income taxes 145 1.61 147 1.60
----------------------------------------------------------------------
Net Earnings $226 2.50% $224 2.43%
-------------------- -------------------
Earnings Per Share:
Basic $0.53 $0.53
Diluted $0.53 $0.53
Return on average
stockholders' equity (1) 15.7% 16.0%
Return on average assets (1) 5.8% 5.9%
Effective tax rate 39.2% 39.7%
----------------------------------------------------------------------
(1) Annualized
-- Certain reclassifications have been made in the prior year to
conform to classifications used in the current year.
ALBERTSON'S, INC.
(Unaudited - In millions)
Consolidated Balance Sheets
May 4, 2000 April 29, 1999
----------------------------------------------- -------------
Assets
Current Assets:
Cash and cash equivalents $ 47 $ 116
Inventories 3,362 3,189
Property held for resale 89
Other current assets 698 850
----------------------------------------------- -----------
Total Current Assets 4,196 4,155
Other Assets 607 590
Goodwill, net 1,568 1,725
Land, Buildings and
Equipment, net 9,017 8,711
----------------------------------------------- -----------
Total Assets $15,388 $ 15,181
----------- -----------
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 2,190 $ 2,108
Current portions of long-term
debt and capitalized lease
obligations 334 160
Other current liabilities 1,101 1,124
----------------------------------------------- -----------
Total Current Liabilities 3,625 3,392
Long-Term Debt 4,837 4,828
Capitalized Lease Obligations 202 199
Other Long-Term Liabilities
and Deferred Credits 944 1,091
Stockholders' Equity 5,780 5,671
----------------------------------------------- -----------
Total Liabilities and
Stockholders' Equity $15,388 $ 15,181
----------- -----------
Total Common Shares
Outstanding at End of Period 423 420
----------------------------------------------------------------------
Consolidated Cash Flows
13 Weeks Ended 13 Weeks Ended
May 4, 2000 April 29, 1999
---------------------------------------------------- ---------------
Cash Flows From
Operating Activities:
Net earnings $179 $ 238
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Depreciation and amortization 240 212
Goodwill amortization 14 15
Merger-related noncash expenses (income) 3 (28)
Net loss on asset sales 5
Net deferred income taxes 57 33
Increase in cash surrender
value of Company-owned life insurance (4)
Changes in operating
assets and liabilities (17) (43)
---------------------------------------------------- -------------
Net cash provided by
operating activities 481 423
---------------------------------------------------- -------------
Cash Flows From
Investing Activities:
Net capital expenditures (313) (374)
Decrease in other assets 24 1
---------------------------------------------------- -------------
Net cash used in
investing activities (289) (373)
---------------------------------------------------- -------------
Cash Flows From
Financing Activities:
Payments on long-term borrowings (103) (180)
Net commercial paper and
bank line activity (176) 189
Proceeds from stock options
exercised 2 7
Cash dividends paid (76) (66)
Stock purchased and retired (23)
---------------------------------------------------- -------------
Net cash used in
financing activities (376) (50)
---------------------------------------------------- -------------
Net Decrease in Cash
and Cash Equivalents (184)
Cash and Cash Equivalents
at Beginning of Period 231 116
---------------------------------------------------- -------------
Cash and Cash Equivalents
at End of Period $ 47 $ 116
--------- -------------
-- Certain reclassifications have been made in the prior year to
conform to classifications used in the current year.
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