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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Supervalu Inc. (delisted) | NYSE:SVU | NYSE | Ordinary Share |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 32.49 | 0.00 | 01:00:00 |
|
FORM 10-Q
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
DELAWARE
|
|
41-0617000
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
11840 VALLEY VIEW ROAD
EDEN PRAIRIE, MINNESOTA
|
|
55344
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
Large accelerated filer
x
|
|
Accelerated filer
¨
|
|
Non-accelerated filer
¨
|
|
Smaller reporting company
¨
|
|
Item
|
|
Page
|
|
|
|
|
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|
1.
|
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||
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||
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||
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||
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2.
|
||
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3.
|
||
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|
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4.
|
||
|
|
|
|
|
|
|
|
|
1.
|
||
|
|
|
1A.
|
||
|
|
|
2.
|
||
|
|
|
3.
|
||
|
|
|
4.
|
||
|
|
|
5.
|
||
|
|
|
6.
|
||
|
|
|
|
|
Second Quarter Ended
|
|
Year-To-Date Ended
|
||||||||||||
|
September 10,
2016 (12 weeks) |
|
September 12,
2015 (12 weeks) |
|
September 10,
2016 (28 weeks) |
|
September 12,
2015 (28 weeks) |
||||||||
Net sales
|
|
|
|
|
|
|
|
||||||||
Wholesale
|
$
|
1,731
|
|
|
$
|
1,831
|
|
|
$
|
4,006
|
|
|
$
|
4,293
|
|
% of total
|
44.8
|
%
|
|
45.1
|
%
|
|
44.2
|
%
|
|
45.4
|
%
|
||||
Save-A-Lot
|
1,060
|
|
|
1,091
|
|
|
2,492
|
|
|
2,499
|
|
||||
% of total
|
27.4
|
%
|
|
26.8
|
%
|
|
27.5
|
%
|
|
26.4
|
%
|
||||
Retail
|
1,033
|
|
|
1,092
|
|
|
2,464
|
|
|
2,565
|
|
||||
% of total
|
26.7
|
%
|
|
26.9
|
%
|
|
27.2
|
%
|
|
27.1
|
%
|
||||
Corporate
|
41
|
|
|
48
|
|
|
99
|
|
|
112
|
|
||||
% of total
|
1.1
|
%
|
|
1.2
|
%
|
|
1.1
|
%
|
|
1.1
|
%
|
||||
Total net sales
|
$
|
3,865
|
|
|
$
|
4,062
|
|
|
$
|
9,061
|
|
|
$
|
9,469
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
||||
Operating earnings
|
|
|
|
|
|
|
|
||||||||
Wholesale
|
$
|
58
|
|
|
$
|
49
|
|
|
$
|
122
|
|
|
$
|
126
|
|
% of Wholesale sales
|
3.3
|
%
|
|
2.7
|
%
|
|
3.0
|
%
|
|
2.9
|
%
|
||||
Save-A-Lot
|
22
|
|
|
32
|
|
|
61
|
|
|
83
|
|
||||
% of Save-A-Lot sales
|
2.1
|
%
|
|
3.0
|
%
|
|
2.4
|
%
|
|
3.3
|
%
|
||||
Retail
|
(12
|
)
|
|
10
|
|
|
(4
|
)
|
|
43
|
|
||||
% of Retail sales
|
(1.2
|
)%
|
|
0.9
|
%
|
|
(0.2
|
)%
|
|
1.7
|
%
|
||||
Corporate
|
20
|
|
|
3
|
|
|
42
|
|
|
—
|
|
||||
Total operating earnings
|
88
|
|
|
94
|
|
|
221
|
|
|
252
|
|
||||
% of total net sales
|
2.3
|
%
|
|
2.3
|
%
|
|
2.4
|
%
|
|
2.7
|
%
|
||||
Interest expense, net
|
41
|
|
|
44
|
|
|
101
|
|
|
103
|
|
||||
Equity in earnings of unconsolidated affiliates
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
||||
Earnings from continuing operations before income taxes
|
48
|
|
|
50
|
|
|
122
|
|
|
151
|
|
||||
Income tax provision
|
18
|
|
|
19
|
|
|
45
|
|
|
57
|
|
||||
Net earnings from continuing operations
|
30
|
|
|
31
|
|
|
77
|
|
|
94
|
|
||||
Income from discontinued operations, net of tax
|
2
|
|
|
2
|
|
|
2
|
|
|
3
|
|
||||
Net earnings including noncontrolling interests
|
32
|
|
|
33
|
|
|
79
|
|
|
97
|
|
||||
Less net earnings attributable to noncontrolling interests
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(5
|
)
|
||||
Net earnings attributable to SUPERVALU INC.
|
$
|
31
|
|
|
$
|
31
|
|
|
$
|
77
|
|
|
$
|
92
|
|
|
Second Quarter Ended
|
|
Year-To-Date Ended
|
||||||||||||
|
September 10,
2016 (12 weeks) |
|
September 12,
2015 (12 weeks) |
|
September 10,
2016 (28 weeks) |
|
September 12,
2015 (28 weeks) |
||||||||
Net sales
|
$
|
3,865
|
|
|
$
|
4,062
|
|
|
$
|
9,061
|
|
|
$
|
9,469
|
|
Cost of sales
|
3,303
|
|
|
3,479
|
|
|
7,720
|
|
|
8,076
|
|
||||
Gross profit
|
562
|
|
|
583
|
|
|
1,341
|
|
|
1,393
|
|
||||
Selling and administrative expenses
|
474
|
|
|
489
|
|
|
1,120
|
|
|
1,141
|
|
||||
Operating earnings
|
88
|
|
|
94
|
|
|
221
|
|
|
252
|
|
||||
Interest expense, net
|
41
|
|
|
44
|
|
|
101
|
|
|
103
|
|
||||
Equity in earnings of unconsolidated affiliates
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
||||
Earnings from continuing operations before income taxes
|
48
|
|
|
50
|
|
|
122
|
|
|
151
|
|
||||
Income tax provision
|
18
|
|
|
19
|
|
|
45
|
|
|
57
|
|
||||
Net earnings from continuing operations
|
30
|
|
|
31
|
|
|
77
|
|
|
94
|
|
||||
Income from discontinued operations, net of tax
|
2
|
|
|
2
|
|
|
2
|
|
|
3
|
|
||||
Net earnings including noncontrolling interests
|
32
|
|
|
33
|
|
|
79
|
|
|
97
|
|
||||
Less net earnings attributable to noncontrolling interests
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(5
|
)
|
||||
Net earnings attributable to SUPERVALU INC.
|
$
|
31
|
|
|
$
|
31
|
|
|
$
|
77
|
|
|
$
|
92
|
|
|
|
|
|
|
|
|
|
||||||||
Basic net earnings per share attributable to SUPERVALU INC.:
|
|||||||||||||||
Continuing operations
|
$
|
0.11
|
|
|
$
|
0.11
|
|
|
$
|
0.28
|
|
|
$
|
0.34
|
|
Discontinued operations
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
Basic net earnings per share
|
$
|
0.12
|
|
|
$
|
0.12
|
|
|
$
|
0.29
|
|
|
$
|
0.35
|
|
Diluted net earnings per share attributable to SUPERVALU INC.:
|
|||||||||||||||
Continuing operations
|
$
|
0.11
|
|
|
$
|
0.11
|
|
|
$
|
0.28
|
|
|
$
|
0.33
|
|
Discontinued operations
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
Diluted net earnings per share
|
$
|
0.12
|
|
|
$
|
0.11
|
|
|
$
|
0.29
|
|
|
$
|
0.34
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
265
|
|
|
263
|
|
|
264
|
|
|
262
|
|
||||
Diluted
|
267
|
|
|
268
|
|
|
267
|
|
|
268
|
|
|
Second Quarter Ended
|
|
Year-To-Date Ended
|
||||||||||||
|
September 10,
2016 (12 weeks) |
|
September 12,
2015 (12 weeks) |
|
September 10,
2016 (28 weeks) |
|
September 12,
2015 (28 weeks) |
||||||||
Net earnings including noncontrolling interests
|
$
|
32
|
|
|
$
|
33
|
|
|
$
|
79
|
|
|
$
|
97
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Recognition of pension and other postretirement benefit obligations
(1)
|
5
|
|
|
9
|
|
|
11
|
|
|
23
|
|
||||
Recognition of interest rate swap cash flow hedge
(2)
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
||||
Total other comprehensive income
|
5
|
|
|
8
|
|
|
11
|
|
|
21
|
|
||||
Comprehensive income including noncontrolling interests
|
37
|
|
|
41
|
|
|
90
|
|
|
118
|
|
||||
Less comprehensive income attributable to noncontrolling interests
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(5
|
)
|
||||
Comprehensive income attributable to SUPERVALU INC.
|
$
|
36
|
|
|
$
|
39
|
|
|
$
|
88
|
|
|
$
|
113
|
|
(1)
|
Amounts are net of tax expense of
$2
,
$6
,
$6
and
$14
for the
second
quarters of fiscal
2017
and
2016
, and for fiscal
2017
and
2016
year-to-date, respectively.
|
(2)
|
Amounts are net of tax expense (benefit) of
$0
,
$0
,
$0
and
$(1)
for the
second
quarters of fiscal
2017
and
2016
, and for fiscal
2017
and
2016
year-to-date, respectively.
|
|
September 10, 2016
|
|
February 27, 2016
|
||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
57
|
|
|
$
|
57
|
|
Receivables, net
|
479
|
|
|
451
|
|
||
Inventories, net
|
1,071
|
|
|
1,036
|
|
||
Other current assets
|
82
|
|
|
91
|
|
||
Total current assets
|
1,689
|
|
|
1,635
|
|
||
Property, plant and equipment, net
|
1,448
|
|
|
1,481
|
|
||
Goodwill
|
868
|
|
|
867
|
|
||
Intangible assets, net
|
50
|
|
|
55
|
|
||
Deferred tax assets
|
199
|
|
|
228
|
|
||
Other assets
|
107
|
|
|
104
|
|
||
Total assets
|
$
|
4,361
|
|
|
$
|
4,370
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
1,170
|
|
|
$
|
1,118
|
|
Accrued vacation, compensation and benefits
|
181
|
|
|
182
|
|
||
Current maturities of long-term debt and capital lease obligations
|
24
|
|
|
124
|
|
||
Other current liabilities
|
173
|
|
|
148
|
|
||
Total current liabilities
|
1,548
|
|
|
1,572
|
|
||
Long-term debt
|
2,164
|
|
|
2,197
|
|
||
Long-term capital lease obligations
|
197
|
|
|
203
|
|
||
Pension and other postretirement benefit obligations
|
547
|
|
|
578
|
|
||
Long-term tax liabilities
|
83
|
|
|
81
|
|
||
Other long-term liabilities
|
164
|
|
|
172
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ deficit
|
|
|
|
||||
Common stock, $0.01 par value: 400 shares authorized; 266 and 266 shares issued, respectively
|
3
|
|
|
3
|
|
||
Capital in excess of par value
|
2,813
|
|
|
2,808
|
|
||
Treasury stock, at cost, 1 and 1 shares, respectively
|
(5
|
)
|
|
(5
|
)
|
||
Accumulated other comprehensive loss
|
(411
|
)
|
|
(422
|
)
|
||
Accumulated deficit
|
(2,748
|
)
|
|
(2,825
|
)
|
||
Total SUPERVALU INC. stockholders’ deficit
|
(348
|
)
|
|
(441
|
)
|
||
Noncontrolling interests
|
6
|
|
|
8
|
|
||
Total stockholders’ deficit
|
(342
|
)
|
|
(433
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
4,361
|
|
|
$
|
4,370
|
|
|
Common
Stock
|
|
Capital in Excess of Par Value
|
|
Treasury
Stock
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Accumulated
Deficit
|
|
SUPERVALU INC.
Stockholders’
Deficit
|
|
Non-controlling
Interests
|
|
Total
Stockholders’
Deficit
|
||||||||||||||||
Balances as of February 28, 2015
|
$
|
3
|
|
|
$
|
2,810
|
|
|
$
|
(33
|
)
|
|
$
|
(423
|
)
|
|
$
|
(3,003
|
)
|
|
$
|
(646
|
)
|
|
$
|
10
|
|
|
$
|
(636
|
)
|
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
92
|
|
|
92
|
|
|
5
|
|
|
97
|
|
||||||||
Other comprehensive income, net of tax of $13
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
21
|
|
||||||||
Sales of common stock under option plans
|
—
|
|
|
(12
|
)
|
|
21
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
||||||||
Stock-based compensation
|
—
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
||||||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
(7
|
)
|
||||||||
Tax impact on stock-based awards and other
|
—
|
|
|
(16
|
)
|
|
8
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
||||||||
Balances as of September 12, 2015
|
$
|
3
|
|
|
$
|
2,795
|
|
|
$
|
(4
|
)
|
|
$
|
(402
|
)
|
|
$
|
(2,911
|
)
|
|
$
|
(519
|
)
|
|
$
|
8
|
|
|
$
|
(511
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balances as of February 27, 2016
|
$
|
3
|
|
|
$
|
2,808
|
|
|
$
|
(5
|
)
|
|
$
|
(422
|
)
|
|
$
|
(2,825
|
)
|
|
$
|
(441
|
)
|
|
$
|
8
|
|
|
$
|
(433
|
)
|
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
77
|
|
|
77
|
|
|
2
|
|
|
79
|
|
||||||||
Other comprehensive income, net of tax of $6
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
||||||||
Sales of common stock under option plans
|
—
|
|
|
(1
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Stock-based compensation
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
||||||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
||||||||
Tax impact on stock-based awards and other
|
—
|
|
|
(4
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
1
|
|
|
(4
|
)
|
||||||||
Balances as of September 10, 2016
|
$
|
3
|
|
|
$
|
2,813
|
|
|
$
|
(5
|
)
|
|
$
|
(411
|
)
|
|
$
|
(2,748
|
)
|
|
$
|
(348
|
)
|
|
$
|
6
|
|
|
$
|
(342
|
)
|
|
February 27,
2016 |
|
Additions
|
|
Impairments
|
|
Other net
adjustments
|
|
September 10,
2016 |
||||||||||
Goodwill:
|
|
|
|
|
|
|
|
|
|
||||||||||
Wholesale
|
$
|
710
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
710
|
|
Save-A-Lot
|
142
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
143
|
|
|||||
Retail
|
15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|||||
Total goodwill
|
$
|
867
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
868
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Intangible assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Favorable operating leases, prescription files, customer lists and other (accumulated amortization of $102 and $97 as of September 10, 2016 and February 27, 2016, respectively)
|
$
|
142
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
142
|
|
Trademarks and tradenames – indefinite useful lives
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|||||
Non-compete agreements (accumulated amortization of $2 and $2 as of September 10, 2016 and February 27, 2016, respectively)
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||
Total intangible assets
|
154
|
|
|
1
|
|
|
—
|
|
|
(1
|
)
|
|
154
|
|
|||||
Accumulated amortization
|
(99
|
)
|
|
(6
|
)
|
|
—
|
|
|
1
|
|
|
(104
|
)
|
|||||
Total intangible assets, net
|
$
|
55
|
|
|
|
|
|
|
|
|
$
|
50
|
|
|
September 10,
2016 (28 weeks) |
||
Reserves for closed properties at beginning of the fiscal year
|
$
|
29
|
|
Additions
|
1
|
|
|
Payments
|
(6
|
)
|
|
Adjustments
|
(1
|
)
|
|
Reserves for closed properties at the end of period
|
$
|
23
|
|
|
Second Quarter Ended
|
|
Year-To-Date Ended
|
||||||||||||
|
September 10,
2016 (12 weeks) |
|
September 12,
2015 (12 weeks) |
|
September 10,
2016 (28 weeks) |
|
September 12,
2015 (28 weeks) |
||||||||
Property, plant and equipment:
|
|
|
|
|
|
|
|
||||||||
Carrying value
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
4
|
|
|
$
|
3
|
|
Fair value measured using Level 3 inputs
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||
Impairment charge
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
|
|
September 10, 2016
|
||||||||||||||
|
Balance Sheet Location
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Deferred compensation
|
Other assets
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7
|
|
Total
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Deferred compensation
|
Other current liabilities
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
8
|
|
Deferred compensation
|
Other long-term liabilities
|
|
—
|
|
|
39
|
|
|
—
|
|
|
39
|
|
||||
Diesel fuel derivatives
|
Other current liabilities
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Interest rate swap derivative
|
Other current liabilities
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||
Interest rate swap derivative
|
Other long-term liabilities
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||
Total
|
|
|
$
|
—
|
|
|
$
|
54
|
|
|
$
|
—
|
|
|
$
|
54
|
|
|
|
|
February 27, 2016
|
||||||||||||||
|
Balance Sheet Location
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Deferred compensation
|
Other assets
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6
|
|
Total
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Deferred compensation
|
Other current liabilities
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
7
|
|
Deferred compensation
|
Other long-term liabilities
|
|
—
|
|
|
35
|
|
|
—
|
|
|
35
|
|
||||
Diesel fuel derivatives
|
Other current liabilities
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
Interest rate swap derivative
|
Other current liabilities
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||
Interest rate swap derivative
|
Other long-term liabilities
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||
Total
|
|
|
$
|
—
|
|
|
$
|
50
|
|
|
$
|
—
|
|
|
$
|
50
|
|
|
September 10,
2016 |
|
February 27,
2016 |
||||
5.50% Secured Term Loan Facility due March 2019
|
$
|
1,356
|
|
|
$
|
1,459
|
|
6.75% Senior Notes due June 2021
|
400
|
|
|
400
|
|
||
7.75% Senior Notes due November 2022
|
350
|
|
|
350
|
|
||
1.69% to 3.75% Revolving ABL Credit Facility due February 2021
|
100
|
|
|
138
|
|
||
Debt financing costs, net
|
(39
|
)
|
|
(45
|
)
|
||
Original issue discount on debt
|
(3
|
)
|
|
(5
|
)
|
||
Total debt
|
2,164
|
|
|
2,297
|
|
||
Less current maturities of long-term debt
|
—
|
|
|
(100
|
)
|
||
Long-term debt
|
$
|
2,164
|
|
|
$
|
2,197
|
|
|
Year-To-Date Ended
|
|||
|
September 10,
2016 (28 weeks) |
|
September 12,
2015 (28 weeks) |
|
Dividend yield
|
—
|
%
|
|
—%
|
Volatility rate
|
54.2
|
%
|
|
49.0—50.6%
|
Risk-free interest rate
|
1.3
|
%
|
|
1.2—1.4%
|
Expected life
|
5.0 years
|
|
|
4.0—5.0 years
|
|
Second Quarter Ended
|
||||||||||||||
Pension Benefits
|
|
Other Postretirement Benefits
|
|||||||||||||
September 10,
2016 (12 weeks) |
|
September 12,
2015 (12 weeks) |
|
September 10,
2016 (12 weeks) |
|
September 12,
2015 (12 weeks) |
|||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
20
|
|
|
24
|
|
|
—
|
|
|
1
|
|
||||
Expected return on assets
|
(33
|
)
|
|
(32
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service benefit
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(4
|
)
|
||||
Amortization of net actuarial loss
|
10
|
|
|
18
|
|
|
—
|
|
|
1
|
|
||||
Net periodic benefit (income) expense
|
$
|
(3
|
)
|
|
$
|
10
|
|
|
$
|
(3
|
)
|
|
$
|
(2
|
)
|
Contributions to benefit plans
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Year-To-Date Ended
|
||||||||||||||
Pension Benefits
|
|
Other Postretirement Benefits
|
|||||||||||||
September 10,
2016 (28 weeks) |
|
September 12,
2015 (28 weeks) |
|
September 10,
2016 (28 weeks) |
|
September 12,
2015 (28 weeks) |
|||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
46
|
|
|
57
|
|
|
1
|
|
|
2
|
|
||||
Expected return on assets
|
(77
|
)
|
|
(76
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service benefit
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
(8
|
)
|
||||
Amortization of net actuarial loss
|
24
|
|
|
42
|
|
|
1
|
|
|
3
|
|
||||
Net periodic benefit (income) expense
|
$
|
(7
|
)
|
|
$
|
23
|
|
|
$
|
(6
|
)
|
|
$
|
(3
|
)
|
Contributions to benefit plans
|
$
|
(2
|
)
|
|
$
|
(27
|
)
|
|
$
|
—
|
|
|
$
|
(11
|
)
|
|
Second Quarter Ended
|
|
Year-To-Date Ended
|
||||||||||||
|
September 10,
2016 (12 weeks) |
|
September 12,
2015 (12 weeks) |
|
September 10,
2016 (28 weeks) |
|
September 12,
2015 (28 weeks) |
||||||||
Net earnings from continuing operations
|
$
|
30
|
|
|
$
|
31
|
|
|
$
|
77
|
|
|
$
|
94
|
|
Less net earnings attributable to noncontrolling interests
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(5
|
)
|
||||
Net earnings from continuing operations attributable to SUPERVALU INC.
|
29
|
|
|
29
|
|
|
75
|
|
|
89
|
|
||||
Income from discontinued operations, net of tax
|
2
|
|
|
2
|
|
|
2
|
|
|
3
|
|
||||
Net earnings attributable to SUPERVALU INC.
|
$
|
31
|
|
|
$
|
31
|
|
|
$
|
77
|
|
|
$
|
92
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of shares outstanding—basic
|
265
|
|
|
263
|
|
|
264
|
|
|
262
|
|
||||
Dilutive impact of stock-based awards
|
2
|
|
|
5
|
|
|
3
|
|
|
6
|
|
||||
Weighted average number of shares outstanding—diluted
|
267
|
|
|
268
|
|
|
267
|
|
|
268
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic net earnings per share attributable to SUPERVALU INC.:
|
|||||||||||||||
Continuing operations
|
$
|
0.11
|
|
|
$
|
0.11
|
|
|
$
|
0.28
|
|
|
$
|
0.34
|
|
Discontinued operations
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
Basic net earnings per share
|
$
|
0.12
|
|
|
$
|
0.12
|
|
|
$
|
0.29
|
|
|
$
|
0.35
|
|
Diluted net earnings per share attributable to SUPERVALU INC.:
|
|||||||||||||||
Continuing operations
|
$
|
0.11
|
|
|
$
|
0.11
|
|
|
$
|
0.28
|
|
|
$
|
0.33
|
|
Discontinued operations
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
Diluted net earnings per share
|
$
|
0.12
|
|
|
$
|
0.11
|
|
|
$
|
0.29
|
|
|
$
|
0.34
|
|
|
Benefit Plans
|
|
Interest Rate Swap
|
|
Total
|
||||||
Accumulated other comprehensive loss at beginning of the fiscal year, net of tax
|
$
|
(418
|
)
|
|
$
|
(4
|
)
|
|
$
|
(422
|
)
|
Other comprehensive loss before reclassifications
(1)
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Amortization of amounts included in net periodic benefit cost
(2)
|
11
|
|
|
—
|
|
|
11
|
|
|||
Amortization of cash flow hedge
(3)
|
—
|
|
|
1
|
|
|
1
|
|
|||
Net current-period Other comprehensive income
(4)
|
11
|
|
|
—
|
|
|
11
|
|
|||
Accumulated other comprehensive loss at the end of period, net of tax
|
$
|
(407
|
)
|
|
$
|
(4
|
)
|
|
$
|
(411
|
)
|
|
Benefit Plans
|
|
Interest Rate Swap
|
|
Total
|
||||||
Accumulated other comprehensive loss at beginning of the fiscal year, net of tax
|
$
|
(423
|
)
|
|
$
|
—
|
|
|
$
|
(423
|
)
|
Other comprehensive loss before reclassifications
(1)
|
—
|
|
|
(2
|
)
|
|
$
|
(2
|
)
|
||
Amortization of amounts included in net periodic benefit cost
(2)
|
23
|
|
|
—
|
|
|
23
|
|
|||
Net current-period Other comprehensive income (loss)
(3)
|
23
|
|
|
(2
|
)
|
|
21
|
|
|||
Accumulated other comprehensive loss at the end of period, net of tax
|
$
|
(400
|
)
|
|
$
|
(2
|
)
|
|
$
|
(402
|
)
|
|
Second Quarter Ended
|
|
Year-To-Date Ended
|
|
|
||||||||||||
|
September 10,
2016 (12 weeks) |
|
September 12,
2015 (12 weeks) |
|
September 10,
2016 (28 weeks) |
|
September 12,
2015 (28 weeks) |
|
Affected Line Item on Condensed Consolidated Statements of Operations
|
||||||||
Pension and postretirement benefit plan obligations:
|
|
|
|
|
|
|
|
|
|
||||||||
Amortization of amounts included in net periodic benefit expense
(1)
|
$
|
7
|
|
|
$
|
13
|
|
|
$
|
16
|
|
|
$
|
33
|
|
|
Selling and administrative expenses
|
Amortization of amounts included in net periodic benefit expense
(1)
|
—
|
|
|
2
|
|
|
1
|
|
|
4
|
|
|
Cost of sales
|
||||
Total reclassifications
|
7
|
|
|
15
|
|
|
17
|
|
|
37
|
|
|
|
||||
Income tax benefit
|
(2
|
)
|
|
(6
|
)
|
|
(6
|
)
|
|
(14
|
)
|
|
Income tax provision
|
||||
Total reclassifications, net of tax
|
$
|
5
|
|
|
$
|
9
|
|
|
$
|
11
|
|
|
$
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate swap cash flow hedge:
|
|
|
|
|
|
|
|
|
|
||||||||
Reclassification of cash flow hedge
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
Interest expense, net
|
Income tax benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Income tax provision
|
||||
Total reclassifications, net of tax
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
|
(1)
|
Amortization of amounts included in net periodic benefit expense include amortization of prior service benefit and amortization of net actuarial loss as reflected in
Note 9—Benefit Plans
.
|
|
Second Quarter Ended
|
|
Year-To-Date Ended
|
||||||||||||
|
September 10,
2016 (12 weeks) |
|
September 12,
2015 (12 weeks) |
|
September 10,
2016 (28 weeks) |
|
September 12,
2015 (28 weeks) |
||||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Earnings (loss) before income taxes from discontinued operations
|
3
|
|
|
—
|
|
|
3
|
|
|
(3
|
)
|
||||
Income tax provision (benefit)
|
1
|
|
|
(2
|
)
|
|
1
|
|
|
(6
|
)
|
||||
Income from discontinued operations, net of tax
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
3
|
|
•
|
Net sales were
$3,865
, a decrease of
$197
or
4.8 percent
, primarily due to lost Wholesale customers, lower identical store sales in our Retail and Save-A-Lot businesses, and closed Save-A-Lot stores, offset in part by new Wholesale stores and customers, and new corporate Save-A-Lot and Retail stores.
|
•
|
Gross profit was
$562
, a decrease of
$21
or
3.6 percent
, which reflects declines in Retail and Wholesale sales and lower transition services fees, offset in part by higher gross margins in Save-A-Lot and Wholesale.
|
•
|
Operating earnings were
$88
, a decrease of
$6
or
6.4 percent
, primarily due to lower gross profit from decreased sales and higher employee-related costs from new stores, offset in part by higher base margins in Save-A-Lot and Wholesale, and lower pension expense.
|
•
|
Net sales were
$9,061
, a
decrease
of
$408
or
4.3 percent
, primarily due to lost Wholesale customers, lower identical store sales in our Retail and Save-A-Lot businesses, lower sales to existing Wholesale customers and closed Save-A-Lot stores, offset in part by new corporate Save-A-Lot and Retail stores, and new Wholesale stores and customers.
|
•
|
Gross profit was
$1,341
, a decrease of
$52
or
3.7 percent
, which reflects declines in Retail and Wholesale sales and lower transition services fees, offset in part by higher base margins in Save-A-Lot and Wholesale.
|
•
|
Operating earnings were
$221
, a decrease of
$31
or
12.3 percent
, primarily due to lower gross profit from decreased sales and higher employee-related costs from new stores, offset in part by higher base margins in Save-A-Lot and Wholesale and lower pension expense.
|
•
|
Net cash provided by operating activities of continuing operations was
$275
, a decrease of
$1
, primarily due to lower cash generated from earnings and higher levels of cash utilized in operating assets and liabilities, offset by lower contributions to benefit plans.
|
•
|
Net cash used in investing activities of continuing operations was
$115
, a decrease of
$4
, primarily due to a net decrease in cash paid for intangible and other assets, offset in part by an increase in cash paid for capital expenditures.
|
•
|
Net cash used in financing activities of continuing operations was
$163
, an increase of
$138
, primarily due to an increase in revolving debt repayments and the $99 mandatory prepayment of the Secured Term Loan Facility made in the first quarter of fiscal 2017 as described in
Note 6—Long-Term Debt
in Part 1, Item 1 of this Quarterly Report on Form 10-Q.
|
•
|
Retaining our existing customers by continuing to differentiate ourselves through our service levels, product offerings and growing professional services offerings, including administrative back-office solutions
|
•
|
Targeting sales growth by continuing to affiliate new customers, including larger chain businesses, and more aggressively pursuing external growth and market opportunities
|
•
|
Driving sales to existing customers with a sales-driven culture, emphasizing fresh product offerings, such as produce, and by enhancing the Company's professional services offerings, including merchandise and promotional planning, design and back-office technical and financial services
|
•
|
Improving the efficiency of the Company's operations, including its information technology infrastructure and maximizing the use of trucking miles and warehouse capacity
|
•
|
Strengthening core merchandising and marketing programs, including leveraging the Company's private-label programs, such as the Essential Everyday® and Equaline® labels, while marketing and adding depth to the Wild Harvest® and Culinary Circle® brands
|
•
|
Increasing sales and performance in the existing Save-A-Lot network of stores by expanding the sales per square foot of existing corporate stores through store resets, product assortment alterations, ad strategy changes, continued refinement of private-label programs, including America’s Choice® brand, and differentiation through fresh offerings
|
•
|
Growing the Save-A-Lot store footprint through new corporate and licensed store openings
|
•
|
Optimizing the store network, including by opportunistically converting corporate stores to licensed stores and vice versa for profitable growth
|
•
|
Improving operational efficiencies and managing costs to offer compelling value to customers
|
•
|
Driving profitable sales by investing in price and promotions, and enhancing product offerings and merchandising displays
|
•
|
Driving improved store performance, including reducing inventory shrink rates and levels of out-of-stocks, through standardizing certain store processes
|
•
|
Continued development and introduction of the Company's private-label product offerings, including organic products, by providing innovative products in multiple channels across Retail and Wholesale
|
•
|
Investing capital on new stores, relocations and targeted store remodels
|
•
|
Continued management of the Company's overhead cost structure to enable investments in lower prices to customers
|
•
|
Providing high-quality administrative support services by enhancing the Company's service offerings and information technology systems
|
|
Second Quarter Ended
|
|
Year-To-Date Ended
|
||||||||||||
Results of Operations
|
September 10,
2016 (12 weeks) |
|
September 12,
2015 (12 weeks) |
|
September 10,
2016 (28 weeks) |
|
September 12,
2015 (28 weeks) |
||||||||
Net sales
|
$
|
3,865
|
|
|
$
|
4,062
|
|
|
$
|
9,061
|
|
|
$
|
9,469
|
|
Cost of sales
|
3,303
|
|
|
3,479
|
|
|
7,720
|
|
|
8,076
|
|
||||
Gross profit
|
562
|
|
|
583
|
|
|
1,341
|
|
|
1,393
|
|
||||
Selling and administrative expenses
|
474
|
|
|
489
|
|
|
1,120
|
|
|
1,141
|
|
||||
Operating earnings
|
88
|
|
|
94
|
|
|
221
|
|
|
252
|
|
||||
Interest expense, net
|
41
|
|
|
44
|
|
|
101
|
|
|
103
|
|
||||
Equity in earnings of unconsolidated affiliates
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
||||
Earnings from continuing operations before income taxes
|
48
|
|
|
50
|
|
|
122
|
|
|
151
|
|
||||
Income tax provision
|
18
|
|
|
19
|
|
|
45
|
|
|
57
|
|
||||
Net earnings from continuing operations
|
30
|
|
|
31
|
|
|
77
|
|
|
94
|
|
||||
Income from discontinued operations, net of tax
|
2
|
|
|
2
|
|
|
2
|
|
|
3
|
|
||||
Net earnings including noncontrolling interests
|
32
|
|
|
33
|
|
|
79
|
|
|
97
|
|
||||
Less net earnings attributable to noncontrolling interests
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(5
|
)
|
||||
Net earnings attributable to SUPERVALU INC.
|
$
|
31
|
|
|
$
|
31
|
|
|
$
|
77
|
|
|
$
|
92
|
|
Diluted continuing operations net earnings per share attributable to SUPERVALU INC.
|
$
|
0.11
|
|
|
$
|
0.11
|
|
|
$
|
0.28
|
|
|
$
|
0.33
|
|
Weighted average shares outstanding—diluted
|
267
|
|
|
268
|
|
|
267
|
|
|
268
|
|
||||
Other Statistics
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
$
|
63
|
|
|
$
|
64
|
|
|
$
|
149
|
|
|
$
|
147
|
|
Capital expenditures
(1)
|
$
|
51
|
|
|
$
|
55
|
|
|
$
|
117
|
|
|
$
|
104
|
|
Adjusted EBITDA
(2)
|
$
|
147
|
|
|
$
|
166
|
|
|
$
|
369
|
|
|
$
|
412
|
|
Financial Position
|
|
|
|
|
|
|
|
||||||||
Working capital
(3)
|
|
|
|
|
$
|
358
|
|
|
$
|
189
|
|
||||
Total assets
|
|
|
|
|
$
|
4,361
|
|
|
$
|
4,566
|
|
||||
Total debt and capital lease obligations
|
|
|
|
|
$
|
2,385
|
|
|
$
|
2,682
|
|
||||
Stores Supplied and Operated:
|
|
|
|
|
|
|
|
||||||||
Wholesale primary stores
|
|
|
|
|
1,815
|
|
|
1,854
|
|
||||||
Save-A-Lot licensee stores
|
|
|
|
|
888
|
|
|
901
|
|
||||||
Save-A-Lot corporate stores
|
|
|
|
|
482
|
|
|
441
|
|
||||||
Retail stores
|
|
|
|
|
197
|
|
|
199
|
|
||||||
Subtotal
|
|
|
|
|
3,382
|
|
|
3,395
|
|
||||||
Wholesale secondary stores
|
|
|
|
|
231
|
|
|
214
|
|
||||||
Total number of stores
|
|
|
|
|
3,613
|
|
|
3,609
|
|
(1)
|
Capital expenditures include cash payments for purchases of property, plant and equipment and non-cash capital lease additions, and exclude cash payments for business acquisitions.
|
(2)
|
Adjusted EBITDA is a non-GAAP financial measure that the Company provides as a supplement to its results of operations and related analysis, and should not be considered superior to, a substitute for or an alternative to any financial measure of performance prepared and presented in accordance with GAAP. Refer to the “Non-GAAP Financial Measures” section below for additional information regarding the Company’s use of non-GAAP financial measures.
|
(3)
|
Working capital of continuing operations is calculated using the first-in, first-out method for inventories, after adding back the last-in, first-out method (“LIFO”) reserve. The LIFO reserve was
$217
and
$216
as of
September 10, 2016
and
September 12, 2015
, respectively.
|
|
Second Quarter Ended
|
|
Year-To-Date Ended
|
||||||||||||||||||||
September 10,
2016 (12 weeks) |
|
September 12,
2015 (12 weeks) |
|
Variance
|
|
September 10,
2016 (28 weeks) |
|
September 12,
2015 (28 weeks) |
|
Variance
|
|||||||||||||
Wholesale
|
$
|
1,731
|
|
|
$
|
1,831
|
|
|
$
|
(100
|
)
|
|
$
|
4,006
|
|
|
$
|
4,293
|
|
|
$
|
(287
|
)
|
Save-A-Lot
|
1,060
|
|
|
1,091
|
|
|
(31
|
)
|
|
2,492
|
|
|
2,499
|
|
|
(7
|
)
|
||||||
Retail
|
1,033
|
|
|
1,092
|
|
|
(59
|
)
|
|
2,464
|
|
|
2,565
|
|
|
(101
|
)
|
||||||
Corporate
|
41
|
|
|
48
|
|
|
(7
|
)
|
|
99
|
|
|
112
|
|
|
(13
|
)
|
||||||
Total Net sales
|
$
|
3,865
|
|
|
$
|
4,062
|
|
|
$
|
(197
|
)
|
|
$
|
9,061
|
|
|
$
|
9,469
|
|
|
$
|
(408
|
)
|
|
September 10,
2016 (12 weeks) |
|
September 10,
2016 (28 weeks) |
||
Save-A-Lot Network:
|
|
|
|
||
Identical store sales percent variance
(1)
|
(5.2
|
)%
|
|
(3.0
|
)%
|
Save-A-Lot Corporate Stores:
|
|
|
|
||
Identical store sales percent variance
(2)
|
(5.0
|
)%
|
|
(2.7
|
)%
|
Average basket percent variance
(3)
|
(1.8
|
)%
|
|
(1.7
|
)%
|
Customer count percent variance
(4)
|
(3.2
|
)%
|
|
(1.0
|
)%
|
Retail:
|
|
|
|
||
Identical store sales percent variance
(5)
|
(5.9
|
)%
|
|
(5.0
|
)%
|
Average basket percent variance
(3)
|
(0.7
|
)%
|
|
(0.5
|
)%
|
Customer count percent variance
(4)
|
(5.2
|
)%
|
|
(4.5
|
)%
|
(1)
|
Save-A-Lot network identical store sales are defined as the sales attributable to Company-operated stores and sales to licensee stores operating for four full quarters, including store expansions and excluding planned store dispositions.
|
(2)
|
Save-A-Lot corporate stores identical store sales are defined as the sales attributable to Company-operated stores operating for four full quarters, including store expansions and excluding planned store dispositions.
|
(3)
|
Average basket is defined as the average purchases by our customers per transaction within our corporate retail stores operating for four full quarters, including store expansions and excluding fuel and planned store dispositions.
|
(4)
|
Customer count is defined as the number of transactions by our retail customers within our corporate retail stores operating for four full quarters, including store expansions and excluding fuel and planned store dispositions.
|
(5)
|
Retail identical store sales are defined as net sales from stores operating for four full quarters, including store expansions and excluding fuel and planned store dispositions.
|
|
Second Quarter Ended
|
|
Year-To-Date Ended
|
||||||||||||||||||||
September 10,
2016 (12 weeks) |
|
September 12,
2015 (12 weeks) |
|
Variance
|
|
September 10,
2016 (28 weeks) |
|
September 12,
2015 (28 weeks) |
|
Variance
|
|||||||||||||
Wholesale
|
$
|
79
|
|
|
$
|
83
|
|
|
$
|
(4
|
)
|
|
$
|
188
|
|
|
$
|
205
|
|
|
$
|
(17
|
)
|
% of Wholesale sales
|
4.6
|
%
|
|
4.5
|
%
|
|
0.1
|
%
|
|
4.7
|
%
|
|
4.8
|
%
|
|
(0.1
|
)%
|
||||||
Save-A-Lot
|
166
|
|
|
163
|
|
|
3
|
|
|
396
|
|
|
386
|
|
|
10
|
|
||||||
% of Save-A-Lot sales
|
15.7
|
%
|
|
15.0
|
%
|
|
0.7
|
%
|
|
15.9
|
%
|
|
15.5
|
%
|
|
0.4
|
%
|
||||||
Retail
|
276
|
|
|
289
|
|
|
(13
|
)
|
|
657
|
|
|
689
|
|
|
(32
|
)
|
||||||
% of Retail sales
|
26.6
|
%
|
|
26.4
|
%
|
|
0.2
|
%
|
|
26.6
|
%
|
|
26.9
|
%
|
|
(0.3
|
)%
|
||||||
Corporate
|
41
|
|
|
48
|
|
|
(7
|
)
|
|
100
|
|
|
113
|
|
|
(13
|
)
|
||||||
Total Gross profit
|
$
|
562
|
|
|
$
|
583
|
|
|
$
|
(21
|
)
|
|
$
|
1,341
|
|
|
$
|
1,393
|
|
|
$
|
(52
|
)
|
% of total Net sales
|
14.5
|
%
|
|
14.4
|
%
|
|
0.1
|
%
|
|
14.8
|
%
|
|
14.7
|
%
|
|
0.1
|
%
|
|
Second Quarter Ended
|
|
Year-To-Date Ended
|
||||||||||||||||||||
September 10,
2016 (12 weeks) |
|
September 12,
2015 (12 weeks) |
|
Variance
|
|
September 10,
2016 (28 weeks) |
|
September 12,
2015 (28 weeks) |
|
Variance
|
|||||||||||||
Wholesale
|
$
|
58
|
|
|
$
|
49
|
|
|
$
|
9
|
|
|
$
|
122
|
|
|
$
|
126
|
|
|
$
|
(4
|
)
|
% of Wholesale sales
|
3.3
|
%
|
|
2.7
|
%
|
|
0.6
|
%
|
|
3.0
|
%
|
|
2.9
|
%
|
|
0.1
|
%
|
||||||
Save-A-Lot
|
22
|
|
|
32
|
|
|
(10
|
)
|
|
61
|
|
|
83
|
|
|
(22
|
)
|
||||||
% of Save-A-Lot sales
|
2.1
|
%
|
|
3.0
|
%
|
|
(0.9
|
)%
|
|
2.4
|
%
|
|
3.3
|
%
|
|
(0.9
|
)%
|
||||||
Retail
|
(12
|
)
|
|
10
|
|
|
(22
|
)
|
|
(4
|
)
|
|
43
|
|
|
(47
|
)
|
||||||
% of Retail sales
|
(1.2
|
)%
|
|
0.9
|
%
|
|
(2.1
|
)%
|
|
(0.2
|
)%
|
|
1.7
|
%
|
|
(1.9
|
)%
|
||||||
Corporate
|
20
|
|
|
3
|
|
|
17
|
|
|
42
|
|
|
—
|
|
|
42
|
|
||||||
Total Operating earnings
|
$
|
88
|
|
|
$
|
94
|
|
|
$
|
(6
|
)
|
|
$
|
221
|
|
|
$
|
252
|
|
|
$
|
(31
|
)
|
% of total Net sales
|
2.3
|
%
|
|
2.3
|
%
|
|
—
|
%
|
|
2.4
|
%
|
|
2.7
|
%
|
|
(0.3
|
)%
|
|
Second Quarter Ended
|
|
Year-To-Date Ended
|
||||||||||||
|
September 10,
2016 (12 weeks) |
|
September 12,
2015 (12 weeks) |
|
September 10,
2016 (28 weeks) |
|
September 12,
2015 (28 weeks) |
||||||||
Net earnings from continuing operations
|
$
|
30
|
|
|
$
|
31
|
|
|
$
|
77
|
|
|
$
|
94
|
|
Less net earnings attributable to noncontrolling interests
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(5
|
)
|
||||
Income tax provision
|
18
|
|
|
19
|
|
|
45
|
|
|
57
|
|
||||
Interest expense, net
|
41
|
|
|
44
|
|
|
101
|
|
|
103
|
|
||||
Depreciation and amortization
|
63
|
|
|
64
|
|
|
149
|
|
|
147
|
|
||||
LIFO charge
|
—
|
|
|
2
|
|
|
2
|
|
|
5
|
|
||||
Costs related to the potential separation of Save-A-Lot
(1)
|
1
|
|
|
4
|
|
|
4
|
|
|
7
|
|
||||
Store closure charges and costs
(2)
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
||||
Severance costs
(3)
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||
Sales and use tax refunds
(4)
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
||||
Supply agreement termination fee
(5)
|
(9
|
)
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
||||
Adjusted EBITDA
|
$
|
147
|
|
|
$
|
166
|
|
|
$
|
369
|
|
|
$
|
412
|
|
(1)
|
Costs related to the potential separation of Save-A-Lot primarily include, among other things, financial and legal advisers’ costs, employee-related costs, incremental compensation costs, and contract license costs that are directly related to the transition and separation.
|
(2)
|
Store closure charges and costs include impairment, severance and related costs due to store closures.
|
(3)
|
Severance costs include separation-related costs for former employees.
|
(4)
|
Sales and use tax refunds reflect fees received related to tax refunds related to prior years.
|
(5)
|
Termination fees reflect cash gains related to the termination of supply agreements.
|
•
|
Unused available credit under the Revolving ABL Credit Facility increased to
$828
from
$744
as of
September 10, 2016
compared to
February 27, 2016
.
|
•
|
In fiscal 2017 year-to-date, the Secured Term Loan Credit Facility was amended to permit SUPERVALU and its subsidiaries to undertake certain transactions reasonably determined by SUPERVALU to be necessary to effectuate a separation of Save-A-Lot. The interest rate for the term loan increased from LIBOR plus 3.50 percent to LIBOR plus 4.50 percent with a floor on LIBOR remaining at 1.00 percent subject to a further increase of 0.25 percent if certain credit rating conditions are not satisfied.
|
•
|
As of
September 10, 2016
, scheduled debt maturities and mandatory prepayments due in the remainder of fiscal 2017 were $0, exclusive of any potential prepayment requirements under the Secured Term Loan Facility in the event of a separation of the Save-A-Lot business.
|
•
|
Payments to reduce capital lease obligations are expected to be $12 for the remainder of fiscal 2017 and approximately $24 in fiscal 2018.
|
•
|
Working capital increased
$80
to
$358
as of
September 10, 2016
from
$278
as of
February 27, 2016
, excluding the impacts of the LIFO reserve, primarily due to the reduction in current maturities of long-term debt related to the $99 mandatory prepayment of the Secured Term Loan Facility made in the first quarter of fiscal 2017 and higher inventories within Wholesale, Save-A-Lot and Retail, partially offset by higher levels of accounts payable.
|
•
|
Management expects that the Company will be able to fund debt maturities through internally generated funds, borrowings under the Revolving ABL Credit Facility, additional term loans under the Secured Term Loan Facility (subject to identifying term loan lenders or other institutional lenders and satisfying certain terms and conditions) or through new debt issuances.
|
•
|
In connection with the sale of Save-A-Lot, the Company will prepay loans outstanding under the Secured Term Loan Facility with 100% of the first $750 of Net Cash Proceeds (as defined in the facility) received and with 50% of the Net Cash Proceeds in excess of $750 up to an aggregate amount that would cause the Total Secured Leverage Ratio on a pro forma basis after giving effect to such prepayment to be no higher than 1.50:1.00.
|
•
|
Total debt was
$2,164
and
$2,297
as of
September 10, 2016
and
February 27, 2016
, respectively, net of unamortized debt financing costs and original issue discount, under senior secured credit agreements and debentures.
|
•
|
No minimum pension contributions are required under ERISA for fiscal 2017.
|
|
Year-To-Date Ended
|
||||||||||
|
September 10,
2016 (28 weeks) |
|
September 12,
2015 (28 weeks) |
|
Variance
|
||||||
Cash flow activities
|
|
|
|
|
|
||||||
Net cash provided by operating activities – continuing operations
|
$
|
275
|
|
|
$
|
276
|
|
|
$
|
(1
|
)
|
Net cash used in investing activities
|
(115
|
)
|
|
(119
|
)
|
|
4
|
|
|||
Net cash used in financing activities
|
(163
|
)
|
|
(25
|
)
|
|
(138
|
)
|
|||
Net cash provided by discontinued operations
|
3
|
|
|
1
|
|
|
2
|
|
|||
Net increase in cash and cash equivalents
|
—
|
|
|
133
|
|
|
(133
|
)
|
|||
Cash and cash equivalents at beginning of period
|
57
|
|
|
114
|
|
|
(57
|
)
|
|||
Cash and cash equivalents at the end of period
|
$
|
57
|
|
|
$
|
247
|
|
|
$
|
(190
|
)
|
•
|
The Company’s ability to attract and retain customers, and the success of the Company’s wholesale customers and licensees and their ability to maintain and grow sales
|
•
|
Increased competition resulting from consolidation in the grocery industry, and the Company’s ability to effectively respond
|
•
|
Competition from other food or drug retail chains, supercenters, hard discount, dollar stores, online retailers, non-traditional competitors and alternative formats in the Company’s markets
|
•
|
Customer reaction to the increased presence of competitors, including non-traditional competitors, in the Company’s markets
|
•
|
Competition for employees, store sites and products
|
•
|
The ability of the Company’s Wholesale business to maintain or increase sales and profitability due to wholesaler competition, increased competition faced by customers and increased customer self-distribution
|
•
|
The Company's ability to maintain or improve levels of identical store sales and operating margins
|
•
|
Changes in economic conditions or consumer preferences that affect consumer spending or buying habits
|
•
|
The success of the Company’s promotional and sales programs and the Company’s ability to respond to the promotional and pricing practices of competitors
|
•
|
The Company's ability to keep pace with changing customer expectations and new developments and technology investments by competitors
|
•
|
The Company’s ability to identify and effectively execute on performance improvement and customer service initiatives
|
•
|
The Company’s ability to offer competitive products and services at low prices and maintain high levels of productivity and efficiency
|
•
|
The ability to grow by driving sales, attracting new customers and new licensees and successfully opening new locations
|
•
|
The ability to successfully execute on initiatives involving acquisitions or dispositions
|
•
|
The Company’s ability to continue to become a more cost-efficient organization
|
•
|
The Company’s ability to respond appropriately to competitors’ initiatives
|
•
|
The Company’s ability to execute on and consummate the sale of Save-A-Lot and the transactions contemplated thereby, including the professional services agreement
|
•
|
The impact of the Company’s substantial indebtedness, including the restrictive operating covenants in the underlying debt instruments, on its business and financial flexibility
|
•
|
The Company’s ability to comply with debt covenants or to refinance or amend the Company’s debt obligations
|
•
|
A downgrade in the Company’s debt ratings, which may increase the cost of borrowing or adversely affect the Company’s ability to access one or more financial markets
|
•
|
The availability of favorable credit and trade terms
|
•
|
Increased operating costs resulting from rising employee benefit costs
|
•
|
Potential increases in health plan costs resulting from health care reform
|
•
|
Pension funding obligations related to current and former employees of the Company and the Company’s divested operations
|
•
|
Required funding of multiemployer pension plans and any withdrawal liability
|
•
|
The effect of the financial condition of the Company’s pension plans on the Company’s debt ratings
|
•
|
The Company’s ability to renegotiate labor agreements with its unions
|
•
|
Resolution of issues associated with rising pension, healthcare and employee benefit costs
|
•
|
Potential for work disruption from labor disputes
|
•
|
The Company's ability to effectively manage its cost structure and identify new revenue opportunities as the Transition Services Agreement with each of Albertson’s LLC and NAI (collectively, the “TSA”) wind down and with the wind down of the Transition Services Agreement with Haggen in the second quarter of fiscal 2017
|
•
|
The Company's ability to provide services and transition and wind down services to NAI and Albertson’s LLC under the TSA and the letter agreement regarding the transition and wind down of the TSA in an efficient manner that is not disruptive to the Company, while eliminating costs directly and not directly tied to providing these services
|
•
|
The Company's ability to attract and retain qualified personnel to perform services under the TSA
|
•
|
The effect of the information technology intrusions that also impacted Albertson’s LLC and NAI
|
•
|
Impact of the Albertson's acquisition of Safeway on the Company's operating agreement under which the Company operates a distribution center owned by NAI that services both NAI and certain of the Company's wholesale customers
|
•
|
Dependence of the Company’s businesses on computer hardware and software systems that are vulnerable to technical malfunction or security breach by computer hackers and cyber terrorists
|
•
|
Risk of misappropriation of sensitive data, including customer and employee data, as a result of the information technology intrusions or any future cyber-attack or breach and potential related claims
|
•
|
Costs of responding to inquiries, claims or enforcement actions in connection with the information technology intrusions or any future attack or breach resulting in fees and penalties, the loss, damage or misappropriation of information, and potential related damage to the Company’s reputation
|
•
|
Inability to timely obtain future PCI DSS report on compliance that could result in fines or assessments
|
•
|
Costs of complying with stricter privacy and information security laws
|
•
|
Ability of the information technology systems of the Company or its vendors to operate properly and to prevent, contain or detect cyber-attacks or security breaches
|
•
|
Difficulties in developing, maintaining or upgrading information technology systems
|
•
|
Major disasters, business disruptions or losses resulting from failure of these systems to perform as anticipated for any reason or data theft, information espionage, or other criminal activity directed at the Company’s computer or communications systems
|
•
|
Inability to keep pace with changing customer expectations and new developments and technology investments by the Company’s competitors, including relating to the increase in information sharing and multichannel retailing
|
•
|
Worsening economic conditions, consumer confidence or unemployment rates, each of which affect consumer spending or buying habits
|
•
|
Increases in unemployment, insurance, healthcare or energy costs and changes in commodity prices, which could impact consumer spending or buying habits and the cost of doing business
|
•
|
Increases in interest rates, labor costs and tax rates, and other changes in applicable law
|
•
|
Food and drug inflation or deflation
|
•
|
The Company's ability to address the compression of pharmacy gross margins
|
•
|
Costs of compliance with existing laws and regulations and changes in applicable laws and regulations that impose additional requirements or restrictions on the operation of the Company’s businesses
|
•
|
The ability to timely obtain permits, comply with government regulations or make capital expenditures required to maintain compliance with government regulations, including those governing ethical, anti-bribery and similar business practices
|
•
|
Potential costs of compliance with additional foreign laws and regulations if the Company seeks and attains a larger international footprint
|
•
|
Potential costs of compliance with environmental laws and regulations, including relating to disposal of hazardous waste and any required removal or remediation of contamination at current or former locations
|
•
|
Events that give rise to actual or potential food contamination, drug contamination or foodborne illness or injury or any adverse publicity relating to these types of concerns, whether valid or not
|
•
|
Potential recall costs and product liability claims or claims that the Company's products are not of the quality or composition claimed
|
•
|
Unfavorable outcomes and the costs to defend litigation, governmental or administrative proceedings or other disputes, including those related to the information technology intrusions experienced by the Company
|
•
|
Adverse publicity related to such unfavorable outcomes
|
•
|
Risks related to infringement of the Company's intellectual property rights
|
•
|
Property damage or business disruption resulting from severe weather conditions and natural disasters that affect the Company and the Company’s customers or suppliers
|
•
|
Unseasonably adverse climate conditions that impact the availability or cost of certain products in the grocery supply chain
|
•
|
The Company’s ability to effectively maintain its supply chain and distribution network without interruption
|
•
|
Disruptions due to weather, product recalls, crop conditions, regulatory actions, supplier instability, transportation interruptions, labor supply or vendor disputes
|
•
|
Competition in the Company’s military business
|
•
|
Changes in the commissary system or operating model, reductions in government expenditures or funding, or changes in military staffing levels or the locations of bases
|
•
|
Variability in actuarial projections regarding workers’ compensation liability and associated medical costs and automobile and general liability
|
•
|
Potential increase in the number or severity of claims for which the Company is self-insured
|
•
|
Adequacy of cybersecurity insurance maintained by the Company to offset any losses or damages related to the information technology intrusions and any future intrusions experienced by the Company
|
•
|
Availability and cost of energy and fuel to store and transport products
|
•
|
Volatility of fuel, energy and natural gas prices
|
•
|
Risks associated with possession of compressed natural gas equipment and a fueling station
|
•
|
Unfavorable changes in the Company’s industry, the broader economy, market conditions, business operations, competition or the Company’s stock price and market capitalization that could require impairment to intangible assets, including goodwill, and tangible assets, including property, plant and equipment
|
•
|
Fluctuations in the Company’s stock price related to actual or perceived operating performance, any of the factors listed above or general stock market fluctuations
|
(in millions, except shares and per share amounts)
Period
(1)
|
|
Total Number of Shares Purchased
(2)
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
|
||||||
First four weeks
|
|
|
|
|
|
|
|
|
||||||
June 19, 2016 to July 16, 2016
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Second four weeks
|
|
|
|
|
|
|
|
|
||||||
July 17, 2016 to August 13, 2016
|
|
26,419
|
|
|
$
|
4.84
|
|
|
—
|
|
|
$
|
—
|
|
Third four weeks
|
|
|
|
|
|
|
|
|
||||||
August 14, 2016 to September 10, 2016
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Totals
|
|
26,419
|
|
|
$
|
4.84
|
|
|
—
|
|
|
$
|
—
|
|
(1)
|
The reported periods conform to the Company's fiscal calendar composed of thirteen 28-day periods. The
second
quarter of fiscal
2017
contains three 28-day periods.
|
(2)
|
These amounts include the deemed surrender by participants in the Company's compensatory stock plans of 26,419 shares of previously issued common stock. These are in payment of the purchase price of shares acquired pursuant to the exercise of stock options and satisfaction of tax obligations arising from such exercises, as well as from the vesting of restricted stock awards granted under such plans.
|
10.1
|
|
SUPERVALU INC. 2012 Stock Plan (As Amended July 20, 2016) (incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K filed with the Securities and Exchange Commission on July 22, 2016)*
|
|
|
|
10.2
|
|
SUPERVALU INC. 2012 Stock Plan Revised Form of Performance Share Unit Award Agreement (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on July 27, 2016)*
|
|
|
|
10.3
|
|
Letter Agreement Amendment, dated July 25, 2016, between SUPERVALU INC. and Mark Gross (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on July 27, 2016)*
|
|
|
|
12.1
|
|
Ratio of earnings to fixed charges.
|
|
|
|
31.1
|
|
Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1
|
|
Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2
|
|
Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101
|
|
The following information from the SUPERVALU INC. Quarterly Report on Form 10-Q for the fiscal quarter ended September 10, 2016, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Segment Financial Information, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Balance Sheets, (v) the Condensed Consolidated Statements of Stockholders’ Deficit, (vi) the Condensed Consolidated Statements of Cash Flows and (vii) the Notes to Condensed Consolidated Financial Statements.
|
|
|
|
SUPERVALU INC. (Registrant)
|
|
|
|
|
Dated: October 19, 2016
|
|
|
/s/ BRUCE H. BESANKO
|
|
|
|
Bruce H. Besanko
Executive Vice President, Chief Operating Officer and Chief Financial Officer
(principal financial officer)
|
|
|
|
SUPERVALU INC. (Registrant)
|
|
|
|
|
Dated: October 19, 2016
|
|
|
/s/ SUSAN S. GRAFTON
|
|
|
|
Susan S. Grafton
Senior Vice President, Finance, and Chief Accounting Officer
(principal accounting officer)
|
10.1
|
|
SUPERVALU INC. 2012 Stock Plan (As Amended July 20, 2016) (incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K filed with the Securities and Exchange Commission on July 22, 2016)*
|
|
|
|
10.2
|
|
SUPERVALU INC. 2012 Stock Plan Revised Form of Performance Share Unit Award Agreement (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on July 27, 2016)*
|
|
|
|
10.3
|
|
Letter Agreement Amendment, dated July 25, 2016, between SUPERVALU INC. and Mark Gross (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on July 27, 2016)*
|
|
|
|
12.1
|
|
Ratio of earnings to fixed charges.
|
|
|
|
31.1
|
|
Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1
|
|
Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2
|
|
Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101
|
|
The following information from the SUPERVALU INC. Quarterly Report on Form 10-Q for the fiscal quarter ended September 10, 2016, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Segment Financial Information, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Balance Sheets, (v) the Condensed Consolidated Statements of Stockholders’ Deficit, (vi) the Condensed Consolidated Statements of Cash Flows and (vii) the Notes to Condensed Consolidated Financial Statements.
|
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