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American Stores Company Announces Third Quarter 1996 Sales and Earnings

SALT LAKE CITY, Nov. 26 /PRNewswire/ -- American Stores Company (NYSE: ASC) today announced 1996 third quarter earnings of $0.52 per share compared to $0.46 per share in 1995, an increase of 13 percent. Earnings for the first three quarters of 1996 were $1.53 per share compared to $1.33 per share, in 1995, a 15 percent increase.

Comparable store sales increased 3.7 percent during the 1996 third quarter and 3.6 percent for the first three quarters of 1996. Total sales increased 4.6 percent to $4.6 billion in the quarter and 4.2 percent to $13.8 billion for the first three quarters.

Operating profit increased 14.8 percent in the quarter to $177.6 million (3.9 percent of sales) from $154.6 million (3.5 percent of sales) the year earlier. Operating profit for the first three quarters of 1996 increased 14.9 percent to $522.0 million (3.8 percent of sales) compared to $454.5 million (3.4 percent of sales) in 1995.

The Food Store Operations reported third quarter operating profit of $151.5 million (4.6 percent of sales) compared to $135.2 million (4.2 percent of sales) in the prior year, an increase of 12.0 percent. Operating profit in the Company's Drug Store Operations was $50.0 million (4.0 percent of sales) for the quarter compared to $43.6 million (3.8 percent of sales) in the prior year, an increase of 14.7 percent.

Interest expense increased to $43.3 million for the quarter from $38.4 million in the prior year, due primarily to an increase in average outstanding debt.

Victor L. Lund, chairman and chief executive officer of American Stores Company, said, "I am extremely pleased with our third quarter results. Our excellent sales and earnings clearly demonstrate the effectiveness of our local marketing efforts, our centralized Delta processes and our aggressive capital spending programs. It is important to note that comparable store sales were positive in all three of our operations, and we have been able to drop more of these sales dollars to our bottom line through efficient management of gross margins and expenses. We are not sacrificing profits in attaining our strong sales gains."

During the quarter, the Company opened 36 new stores, completed 48 remodels and closed 15 stores. Capital expenditures totaled $237.9 million in the third quarter. For the year to date, capital expenditures totaled $675.4 million. The Company continues to estimate capital expenditures for 1996 to be approximately $900 million, with 100 new stores and 85 remodels to be completed.

American Stores Company is one of the nation's largest food and drug retailers. It operates 1,661 stores in 26 states. Its principal retail operations include Acme Markets, Jewel Food Stores, Lucky Northern California Division, Lucky Southern California Division, Jewel Osco Southwest, Osco Drug and Sav-on.
 American Stores Company
 Consolidated Statements Of Earnings
 (Amounts in thousands)
 (Unaudited)
 13 Weeks Ended 39 Weeks Ended
 Nov 2, 1996 Oct 28, 1995 Nov 2, 1996 Oct 28, 1995
 Sales $4,563,362 $4,361,183 $13,768,456 $13,218,310
 Cost of sales (3,340,396) (3,210,041) (10,107,986) (9,777,409)
 LIFO provision (6,000) (6,000) (22,000) (24,000)
 Gross profit 1,216,966 1,145,142 3,638,470 3,416,901
 26.7% 26.3% 26.4% 25.8%


Operating
 expenses (1,039,404) (990,510) (3,116,440) (2,962,416)
 -22.8% -22.7% -22.6% -22.4%
 Operating profit 177,562 154,632 522,030 454,485
 3.9% 3.5% 3.8% 3.4%
 Interest expense (43,337) (38,362) (125,491) (117,480)
 Other (1,550) 1,435 (8,460) 3,771


Earnings before
 income taxes 132,675 117,705 388,079 340,776


Federal & state
 income taxes (56,918) (50,260) (164,953) (145,511)
 Net Earnings $75,757 $67,445 $223,126 $195,265


Average shares
 outstanding 145,681 147,002 145,907 147,142
 Earnings per share $0.52 $0.46 $1.53 $1.33
 Dividends per share $0.16 $0.14 $0.48 $0.42


NOTE:

Beginning with the first quarter of 1996, advertising expense is classified as cost of sales, rather than operating expense. Prior periods have been reclassified to conform to the new presentation.
 Consolidated Condensed Balance Sheets
 Nov 2, 1996 Oct 28, 1995


Assets
 Inventory $ 1,771,369 $1,645,346
 Other current assets 512,215 414,484
 Property, plant and equipment, net 3,446,818 3,004,442
 Property under capital leases, net 69,181 77,372
 Goodwill, net 1,683,294 1,732,449
 Other assets 357,340 300,480
 $7,840,217 $7,174,573


Liabilities and Shareholders' Equity

Current maturities of long-term debt
 and capital leases $71,414 $116,231
 Accounts payable 1,110,843 985,276
 Other current liabilities 740,091 849,949
 Long-term debt, less current maturities 2,427,887 2,007,297


Obligations under capital leases, less
 current maturities 58,946 66,877
 Other liabilities 939,486 902,212
 Shareholders' equity 2,491,550 2,246,731
 $7,840,217 $7,174,573
 Shares issued and outstanding 145,782 146,366
 American Stores Company
 Sales and Operating Profit Detail
 (Amounts in thousands)
 (Unaudited)
 13 Weeks ended
 Nov 2, 1996 Oct 28, 1995


Comparable Store Sales:
 Eastern food operations 3.0% 0.5%
 Western food operations 2.5% -1.4%
 Total food store operations 2.7% -0.5%
 Drug store operations 6.3% 4.5%
 Total 3.7% 0.7%


Sales:
 Food Store Operations (2) $3,301,013 $3,207,272 2.9%
 Drug store operations 1,254,618 1,150,858 9.0%
 Other 7,731 3,053
 Total sales $4,563,362 $4,361,183 4.6%


Operating profit:
 Food store operations(2) $151,467 $135,219 12.0%
 Drug store operations 50,020 43,595 14.7%
 LIFO (6,000) (6,000)
 Purchase Accounting Amortization (19,752) (19,400)
 Other 1,827 1,218
 Total operating profit $177,562 $154,632 14.8%


Food Store operations (2):
 Sales $3,301,013 $3,207,272
 Gross Profit 883,954 838,973
 % sales 26.8% 26.2%
 operating expenses (732,487) (703,754)
 % sales -22.2% -21.9%
 Operating profit $151,467 $135,219
 % sales 4.6% 4.2%


Drug Store Operations
 Sales $1,254,618 $1,150,858
 Gross Profit 336,153 310,843
 % sales 26.8% 27.0%
 Operating Expenses (286,133) (267,248)
 % sales -22.8% -23.2%
 Operating Profit $50,020 $43,595
 % sales 4.0% 3.8%
 39 weeks ended
 Nov 2, 1996 Oct 28, 1995


Comparable Store Sales:
 Eastern food operations 3.1% 0.1%
 Western food operations 2.6%(1) -1.1%
 Total food store operations 2.8% -0.5%
 Drug store operations 5.8% 5.1%
 Total 3.6%(1) 0.9%


Sales:
 Food Store Operations (2) $9,977,527 $9,658,400 3.3%
 Drug store operations 3,769,406 3,551,819 6.1%
 Other 21,523 8,091
 Total sales $13,768,456 $13,218,310 4.2%


Operating profit:
 Food store operations(2) $431,036 $374,502 15.1%
 Drug store operations 166,723 157,774 5.7%
 LIFO (22,000) (24,000)
 Purchase Accounting Amortization (58,896) (57,885)
 Other 5,167 4,094
 Total operating profit $522,030 $454,485 14.9%


Food Store operations (2):
 Sales $9,977,527 $9,658,400
 Gross Profit 2,635,619 2,492,491
 % sales 26.4% 25.8%
 operating expenses (2,204,583) (2,117,989)
 % sales -22.1% -21.9%
 Operating profit $431,036 $374,502
 % sales 4.3% 3.9%


Drug Store Operations
 Sales $3,769,406 $3,551,819
 Gross Profit 1,016,350 945,422
 % sales 27.0% 26.6%
 Operating Expenses (849,627) (787,648)
 % sales -22.5% -22.2%
 Operating Profit $166,723 $157,774
 % sales 4.4% 4.4%


NOTES:

Comparable store sales include stores opened one year or more and replacement stores.

Food stores operations include Acme markets, Jewel Food Stores, Lucky Northern California Division, Lucky Southern California Division, and Jewel Osco Southwest.

Drug store operations include Osco Drug and Sav-on.

(1) Excluding the estimated impact of the Lucky North nine-day labor dispute in the first quarter of 1995, the western food operations and total comparable store sales for the 39 weeks ended November 2, 1996 would have been 1.8% and 3.3% respectively.

(2) Information for the Company's eastern and western food operations will no longer be presented separately due to the consolidation of the support functions.
 American Stores Company
 Consolidated Condensed Cash Flows
 (Amounts in thousands)
 (Unaudited)
 39 Weeks Ended
 Nov 2, Oct 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)
 Net cash provided by operating activities 405,619 301,993


Cash Flows From Investing Activities:
 Proceeds from the sale of assets 14,017 39,052
 Capital expenditures (1) (603,700) (519,302)
 Net cash (used in) investing activities (589,683) (480,250)


Cash Flows From Financing Activities:
 Net increase in borrowing 318,079 105,425
 Cash dividends (70,025) (62,114)
 Repurchase of common stock (37,798) (70,420)
 Other changes in equity 21,751 12,768


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 at
 Beginning of Period 102,422 195,689
 Cash and Cash Equivalents at End of Period $150,365 $3,091


Noncash Investing and Financing

Activities - 1995:
 Conversion of Convertible Notes to Equity -- $120,311


(1) Total capital expenditures, including the present value of new leases, were $237.9 million for the quarter and $675.4 million year-to-date ended November 2, 1996 and $204.0 million for the quarter and $557.6 million for the year-to-date ended October 28, 1995.
 Store Count
 Stores Stores
 Beginning of Opened/ Closed/ End of
 Quarter Acquired Sold Quarter* Remodels


Quarter Ended Nov. 2, 1996
 Food store operations 807 12 (6) 813 15
 Drug store operations 833 24 (9) 848 33
 Total 1,640 36 (15) 1,661 48
 Stores Stores 1996
 Beginning of Opened/ Closed/ Year-
 Year Acquired Sold to-Date* Remodels


Year-to-Date Nov. 2, 1996
 Food store operations 818 22 (27) 813 31
 Drug store operations 832 42 (26) 848 49
 Total 1,650 64 (53) 1,661 80


* Includes 157 jointly operated combination stores which are counted in both the food store and drug store totals.

SOURCE American Stores
 -0- 11/26/96


/CONTACT: Daniel J. Zvonek, Director - Investor and public relations of American Stores, 801-539-0112/

(ASC)

CO: American Stores Co. ST: Utah IN: REA SU: ERN

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