Exhibit 99.1
June 5, 2003
Contacts: Media
Ertharin Cousin
208-395-5392
Analysts
Nick Kormeluk
208-395-6622
Albertsons Announces Quarterly Results
BOISE, Idaho- Albertsons, Inc., (NYSE:ABS) reported first quarter results today
for the period ended May 1, 2003. Net Earnings totaled $172 million, $337
million higher than the $165 million loss recorded during last year's first
quarter. Earnings totaled $0.47 per diluted share versus last year's first
quarter loss of $ (0.40) per share on the same basis.
Sales for the quarter reached $8.940 billion, up from $8.921 billion recorded
during last year's first quarter. Gross profit was 28.6% of sales, versus 29.4%
achieved last year, reflecting the Company's previously stated strategy to
invest gross margin to drive competitiveness. Comparable store sales declined
(0.9) % while identical store sales declined (1.2) %.
Larry Johnston, chairman & CEO, commented on the results. "The first quarter
yielded a much tougher than expected economic and competitive climate. Even as
the war ended we saw no improvement. Although sales were much tougher to come by
as the quarter progressed, both our food and drug teams promoted aggressively
and were successful in protecting our market share."
During the quarter, the Company recorded several marketing highlights:
|X| Patricia Heaton, two-time Emmy award winning co-star of
"Everybody Loves Raymond" was signed as the Company's new
spokesperson. Television spots featuring Ms. Heaton and the
Company's new branding theme, "Working Hard to Make Life Easier,"
will begin airing in late June 2003.
|X| Sav-On Drug was rated the #1 Drug Store Brand in America by Chain
Store Age Magazine
|X| "Essensia" was introduced as the Company's new premium private
label brand. 58 new items were introduced to drive the launch.
Peter Lynch, president & chief operating officer, commented on the quarter,
"Customer service levels, price competitiveness, and private label penetration
all improved during the quarter. These are extremely positive indicators that
show our Company and our brands are becoming stronger even during a tougher than
expected environment."
During the quarter, the Company paid a dividend of $70 million to shareowners,
an effective yield of 3.5%. In addition, 5.3 million shares of stock were
repurchased, returning $108 million to shareowners. The Company also opened 32
new food and drug stores during the quarter and closed 22, and completed
remodels on 45 stores.
Progress also continued against the Company's goal to eliminate $750 million in
cost by year end 2004. First quarter cumulative savings reached $482 million
against the $500 million cost-out milestone targeted for mid-year 2003. Savings
in a myriad of areas were strong, but still not enough to offset increases in
occupancy, employee benefits, and workers
-MORE-
compensation. Selling, General & Administrative expenses reached $2.18 billion
during the quarter, or 24.4% of sales versus 23.8% during last year's first
quarter.
Larry Johnston commented on the outlook for the year. "Worsening economic
conditions, a more cautious consumer and an intensifying competitive environment
are making 2003 even more difficult than we had originally anticipated. In this
environment, we must be more determined than ever to take the steps necessary to
defend share, drive sales and attract customers. We believe these near-term
investments will ensure our longer-term competitiveness. Consequently, we now
expect earnings per share of $1.70 to $1.75 for the total year."
Albertsons is one of the world's largest food and drug retailers with annual
revenues of approximately $36 billion. Based in Boise, Idaho, the Company
employs more than 200,000 associates and operates approximately 2,300 retail
stores across the United States, under banners including Albertsons, Jewel-Osco,
Acme, Sav-on Drugs, Osco Drug, Albertsons-Osco, Albertsons-Sav-on, Max Foods and
Super Saver.
***
Certain statements contained in this press release, including statements
regarding the Company's expected financial performance, are forward-looking
information as defined in the Private Securities Litigation Reform Act of 1995.
In reviewing such information about the future performance of the Company, it
should be kept in mind that actual results may differ materially from those
projected or suggested in such forward-looking information. These statements
relate to, among other things: projected sales and earnings per share; investing
to increase sales; changes in cash flow; increases in insurance and employee
benefit costs; attainment of cost reduction goals; achieving sales increases and
increases in identical sales; opening and remodeling stores; and our five
strategic imperatives; and are indicated by words or phrases such as "expects,"
"plans," "believes," "ensure," and "expect." In reviewing such information about
the future performance of the Company, it should be kept in mind that actual
results may differ materially from those projected or suggested in such
forward-looking information.
Important assumptions and other important factors that could cause actual
results to differ materially from those set forth in the forward-looking
information include changes in the general economy; changes in interest rates;
changes in consumer spending; actions taken by new or existing competitors
(including nontraditional competitors), particularly those intended to improve
their market share (such as pricing and promotional activities); and other
factors affecting the Company's business in or beyond the Company's control.
These factors include changes in the rate of inflation; changes in state or
federal legislation or regulation; adverse determinations with respect to
litigation or other claims (including environmental matters); labor
negotiations; the cost and stability of energy sources; the Company's ability to
recruit, retain and develop employees; the Company's ability to develop new
stores or complete remodels as rapidly as planned; the Company's ability to
implement new technology successfully; stability of product costs; the Company's
ability to integrate the operations of acquired or merged companies; the
Company's ability to execute its restructuring plans; and the Company's ability
to achieve its five strategic imperatives.
Other factors and assumptions not identified above could also cause the actual
results to differ materially from those set forth in the forward-looking
information. The Company does not undertake to update forward-looking
information contained herein or elsewhere to reflect actual results, changes in
assumptions or changes in other factors affecting such forward-looking
information.
Please refer to our reports and filings with the Securities and Exchange
Commission for a further discussion of these risks and uncertainties.
###
ALBERTSONS, INC.
(Unaudited - In millions, except per share data)
Consolidated Earnings Statements
13 Weeks Ended 13 Weeks Ended
May 1, 2003 May 2, 2002
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Sales $ 8,940 100.00% $8,921 100.00%
Cost of sales 6,387 71.44 6,298 70.60
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Gross profit 2,553 28.56 2,623 29.40
Selling, general and administrative expenses 2,179 24.38 2,121 23.78
Restructuring (credits) charges and other (7) (0.08) 15 0.17
- -----------------------------------------------------------------------------------------------------------------------------------
Operating profit 381 4.26 487 5.45
Other (expense) income:
Interest, net (103) (1.15) (105) (1.18)
Other, net 1 0.01 (3) (0.03)
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations before income taxes 279 3.12 379 4.24
Income tax expense 107 1.20 147 1.66
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations 172 1.92 232 2.58
Discontinued operations:
Operating loss - - (454) (5.09)
Income tax benefit - - (151) (1.70)
- -----------------------------------------------------------------------------------------------------------------------------------
Loss from discontinued operations - - (303) (3.39)
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) before cumulative effect of change in accounting principle 172 1.92 (71) (0.81)
Cumulative effect of change in accounting principle (net of tax of $60) - - (94) (1.05)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Earnings (Loss) $ 172 1.92% $ (165) (1.86)%
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings (Loss) Per Share:
Basic
Continuing operations $ 0.47 $ 0.57
Discontinued operations - (0.74)
Cumulative effect of change in accounting principle (net of tax of $0.15) - (0.24)
---------- ------------
Net Earnings (Loss) 0.47 (0.41)
---------- ------------
Diluted
Continuing operations $ 0.47 $ 0.57
Discontinued operations - (0.74)
Cumulative effect of change in accounting principle (net of tax of $0.15) - (0.23)
----------- ------------
Net Earnings (Loss) $ 0.47 $ (0.40)
----------- ------------
Weighted Average
Common Shares Outstanding:
Basic 368 407
Diluted 369 409
o Certain reclassifications have been made in the prior year to conform to classifications used in the current year.
ALBERTSONS, INC.
(Unaudited - In millions)
Consolidated Balance Sheets Consolidated Cash Flow Statements
13 Weeks Ended 13 Weeks Ended 13 Weeks Ended 13 Weeks Ended
May 1, 2003 May 2, 2002 May 1, 2003 May 2, 2002
- ------------------------------------------------------------------------------------------------------------------------------------
Assets Cash Flows From
Current Assets: Operating Activities:
Cash and cash equivalents $ 107 $ 367 Net earnings (loss) $ 172 $ (165)
Inventories 2,944 2,804 Adjustments to reconcile net
Asets held for sale 124 571 earnings to net cash provided by
Other current assets 925 1,102 operating activities:
- ----------------------------------------------------------- Depreciation and amortization 239 251
Total Current Assets 4,100 4,844 Discontinued operations
noncash charges - 401
Other Assets 307 366 Cumulative effect of change in
Goodwill and accounting principle 94
Other Intangibles, net 1,611 1,601 Net (gain) loss on asset sales (6) 9
Land, Buildings and Net deferred income taxes
Equipment, net 9,086 8,676 and other 14 (82)
- -----------------------------------------------------------------------------
Total Assets $ 15,104 $ 15,487 Changes in operating
------------------------------- assets and liabilities (38) 123
-----------------------------------------------------------
Net cash provided
by operating activities 381 631
-----------------------------------------------------------
Liabilities and Stockholders' Equity Cash Flows From
Current Liabilities: Investing Activities:
Accounts payable $ 1,945 $ 1,960 Capital Expenditures (354) (288)
Current portions of long-term Proceeds from disposal of land,
debt and capitalized lease buildings, and equipment 35 42
obligations 167 48 Proceeds from disposal
of assets held for sale 31 69
Other current liabilities 1,219 1,327 Other (10) 14
- ---------------------------------------------------------- -----------------------------------------------------------
Total Current Liabilities 3,331 3,335 Net cash used
in investing activities (298) (163)
-----------------------------------------------------------
Long-Term Debt 4,950 5,057 Cash Flows From
Capitalized Lease Obligations 302 281 Financing Activities:
Other Long-Term Liabilities Stock purchases
and Deferred Credits 1,324 1,125 and retirements (108) -
Stockholders' Equity 5,197 5,689 Cash dividends paid (71) (77)
- ---------------------------------------------------------- Net commercial paper 50 -
Total Liabilities and Payments on long-term
Stockholders' Equity $ 15,104 $ 15,487 borrowings (9) (95)
--------- --------- Proceeds from stock options
exercised - 10
-----------------------------------------------------------
Net cash used in
financing activities (138) (162)
-----------------------------------------------------------
Net (Decrease) Increase in Cash
and Cash Equivalents (55) 306
Cash and Cash Equivalents
at Beginning of Period 162 61
Total Common Shares -----------------------------------------------------------
Outstanding at End of Period 367 407 Cash and Cash Equivalents
at End of Period $ 107 $ 367
---------- ----------
Certain reclassifications have been made in the prior year to conform to
classifications used in the current year.