Exhibit
Exhibit 99.1
SUPERVALU Reports Third Quarter Fiscal 2016 Results
| |
• | Consolidated operating earnings of $101 million; Adjusted EBITDA of $182 million for Q3 fiscal 2016 |
| |
• | Net earnings per share from continuing operations of $0.13; adjusted earnings per share of $0.16 |
| |
• | Redeemed remaining $278 million of 8.00% Senior Notes due May 2016 on January 6, 2016 |
MINNEAPOLIS--(BUSINESS WIRE)--January 13, 2016--SUPERVALU INC. (NYSE: SVU) today reported third quarter fiscal 2016 net sales of $4.11 billion and net earnings from continuing operations of $35 million, or $0.13 per diluted share, which included $11 million in after-tax charges and costs related to asset impairments, the potential separation of Save-A-Lot, and employee severance. When adjusted for these items, third quarter fiscal 2016 net earnings from continuing operations were $46 million, or $0.16 per diluted share.
Net earnings from continuing operations for last year’s third quarter were $12 million, or $0.04 per diluted share, which included a $36 million after-tax pension settlement charge and $1 million in after-tax debt refinancing and net information technology intrusion costs. When adjusted for these items, third quarter fiscal 2015 net earnings from continuing operations were $49 million, or $0.18 per diluted share. [See tables 1-5 for a reconciliation of GAAP and non-GAAP (adjusted) results appearing in this release.]
"Although third quarter adjusted EBITDA was in-line with our operating plan, we continue to operate in a challenging environment," said President and CEO Sam Duncan. "Improving sales is a primary focus as we look to complete the fiscal year."
Third Quarter Results - Continuing Operations
Third quarter net sales were $4.11 billion compared to $4.23 billion last year, a decrease of $111 million or 2.6 percent. Save-A-Lot network identical store sales were negative 3.4 percent. Identical store sales for corporate stores within the Save-A-Lot network were negative 0.4 percent. Retail Food identical store sales were negative 2.6 percent. Total net sales within the Independent Business segment decreased 3.5 percent. Fees earned under transition services agreements (“TSAs”) in the third quarter were $46 million compared to $43 million last year.
Gross profit for the third quarter was $601 million, or 14.6 percent of net sales. Last year’s third quarter gross profit was $596 million, or 14.1 percent of net sales. The increase in gross profit rate compared to last year was primarily driven by higher base margins across all three segments, lower logistics costs, and higher TSA fees, partially offset by higher employee and occupancy costs.
Selling and administrative expenses in the third quarter were $494 million and included charges and costs of $10 million for the potential separation of Save-A-Lot, store closure impairments and employee severance. When adjusted for these items, selling and administrative costs were $484 million, or 11.7 percent of net sales. Selling and administrative expenses in last year’s third quarter were $540 million and included a $63 million pension settlement charge and $1 million in information technology intrusion costs, net of insurance recoverable. When adjusted for these items, last year's selling and administrative expenses were $476 million, or 11.3 percent of net sales.
Net interest expense for the third quarter was $45 million. Last year's third quarter interest expense was $46 million and included $1 million in debt refinancing costs. When adjusted for this item, last year's third quarter interest expense was $45 million.
Income tax expense was $22 million, or 37.6 percent of pre-tax earnings, for the third quarter, compared to an income tax benefit of $1 million, or 8.9 percent of pre-tax earnings in last year’s third quarter. The increase in the effective tax rate is primarily due to the pension settlement charge included in the prior year.
Independent Business
Third quarter Independent Business net sales were $1.90 billion, compared to $1.97 billion last year, a decrease of 3.5 percent. The decrease is primarily due to lower sales to existing customers and lost stores, partially offset by increased sales to new customers and new stores operated by existing customers.
Independent Business operating earnings in the third quarter were $54 million, or 2.8 percent of net sales, and included a $6 million intangible asset impairment charge. When adjusted for this item, Independent Business operating earnings were $60 million or 3.2 percent of net sales. Last year’s Independent Business operating earnings in the third quarter were $60 million, or 3.1 percent of net sales.
Save-A-Lot
Third quarter Save-A-Lot net sales were $1.07 billion, compared to $1.09 billion last year, a decrease of 1.5 percent. The sales decrease reflects identical store sales across the Save-A-Lot network of negative 3.4 percent and the impact of closed stores.
Save-A-Lot operating earnings in the third quarter were $32 million, or 2.9 percent of net sales, and included $2 million of store closure impairment charges. When adjusted for this item, Save-A-Lot's operating earnings were $34 million, or 3.1 percent of sales. Last year’s Save-A-Lot operating earnings in the third quarter were $34 million, or 3.1 percent of net sales.
Retail Food
Third quarter Retail Food net sales were $1.10 billion, compared to $1.13 billion last year, a decrease of 2.5 percent. The sales decrease reflects negative identical store sales of 2.6 percent.
Retail Food operating earnings in the third quarter were $21 million, or 2.0 percent of net sales, and included $1 million of store closure impairment charges. When adjusted for this item, Retail Food operating earnings were $22 million, or 2.1 percent of sales. Last year’s Retail Food operating earnings were $28 million, or 2.5 percent of net sales. The decrease in Retail Food operating earnings was driven by higher employee-related costs.
Corporate
Third quarter fees earned under the TSAs were $46 million compared to $43 million last year.
Net Corporate operating loss in the third quarter was $6 million and included $7 million of costs related to the potential separation of Save-A-Lot and employee severance. When adjusted for these items, net Corporate operating earnings were $1 million. Last year’s third quarter net Corporate operating loss was $66 million and included $64 million in charges and costs for a pension settlement charge and information technology intrusion costs, net of insurance receivable. When adjusted for these items, last year's net Corporate operating loss was $2 million. The improvement in net Corporate operating earnings was primarily driven by lower employee-related costs and higher fees earned under the TSAs.
Cash Flows - Continuing Operations
Year-to-date fiscal 2016 net cash flows provided by operating activities of continuing operations were $251 million compared to $104 million last year, reflecting lower levels of investment in working capital and lower benefit plan contributions. Year-to-date net cash flows used in investing activities of continuing operations were $198 million compared to $209 million last year. Year-to-date net cash flows used in financing activities of continuing operations were $34 million compared to net cash flows provided by financing activities of $438 million last year, which included proceeds from a bond issuance.
Conference Call
A conference call to review the third quarter results is scheduled for 9:00 a.m. central time today. The call will be webcast live at www.supervaluinvestors.com (click on microphone icon). A replay of the call will be archived at www.supervaluinvestors.com. To access the website replay go to the "Investors" link and click on "Presentations and Webcasts."
About SUPERVALU INC.
SUPERVALU INC. is one of the largest grocery wholesalers and retailers in the U.S. with annual sales of approximately $18 billion. SUPERVALU serves customers across the United States through a network of 3,407 stores composed of 1,871 independent stores serviced primarily by the Company’s food distribution business; 1,336 Save-A-Lot stores, of which 883 are operated by licensee owners; and 200 traditional retail grocery stores (store counts as of December 5, 2015). Headquartered in Minnesota, SUPERVALU has approximately 40,000 employees. For more information about SUPERVALU visit www.supervalu.com.
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
Except for the historical and factual information contained herein, the matters set forth in this news release, particularly those pertaining to SUPERVALU’s expectations, guidance, or future operating results, and other statements identified by words such as "estimates," "expects," "projects," "plans," "intends," and similar expressions are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including competition, ability to execute initiatives, substantial indebtedness, labor relations issues, escalating costs of providing employee benefits,
relationships with Albertson’s LLC, New Albertson’s Inc., and Haggen, intrusions to and disruption of information technology systems, impact of economic conditions, governmental regulation, food and drug safety issues, legal proceedings, severe weather, natural disasters and adverse climate changes, disruption to supply chain and distribution network, changes in military business, adequacy of insurance, volatility in fuel and energy costs, asset impairment charges, fluctuations in our common stock price and other risk factors relating to our business or industry as detailed from time to time in SUPERVALU's reports filed with the SEC. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this news release. Unless legally required, SUPERVALU undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
SUPERVALU INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except percent and per share data) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Third Quarter Ended | | Year-To-Date Ended |
| December 5,
2015
(12 weeks) | | November 29,
2014
(12 weeks) | | December 5,
2015
(40 weeks) | | November 29,
2014
(40 weeks) |
Net sales(1) | $ | 4,114 |
| | 100.0 | % | | $ | 4,225 |
| | 100.0 | % | | $ | 13,583 |
| | 100.0 | % | | $ | 13,530 |
| | 100.0 | % |
Cost of sales | 3,513 |
| | 85.4 |
| | 3,629 |
| | 85.9 |
| | 11,589 |
| | 85.3 |
| | 11,605 |
| | 85.8 |
|
Gross profit | 601 |
| | 14.6 |
| | 596 |
| | 14.1 |
| | 1,994 |
| | 14.7 |
| | 1,925 |
| | 14.2 |
|
Selling and administrative expenses(2) | 494 |
| | 12.0 |
| | 540 |
| | 12.8 |
| | 1,635 |
| | 12.0 |
| | 1,640 |
| | 12.1 |
|
Intangible asset impairment charge(2) | 6 |
| | 0.2 |
| | — |
| | — |
| | 6 |
| | — |
| | — |
| | — |
|
Operating earnings | 101 |
| | 2.4 |
| | 56 |
| | 1.3 |
| | 353 |
| | 2.6 |
| | 285 |
| | 2.1 |
|
Interest expense, net(2) | 45 |
| | 1.1 |
| | 46 |
| | 1.1 |
| | 148 |
| | 1.1 |
| | 156 |
| | 1.2 |
|
Equity in earnings of unconsolidated affiliates | (1 | ) | | — |
| | (1 | ) | | — |
| | (3 | ) | | — |
| | (3 | ) | | — |
|
Earnings from continuing operations before income taxes(2) | 57 |
| | 1.4 |
| | 11 |
| | 0.3 |
| | 208 |
| | 1.5 |
| | 132 |
| | 1.0 |
|
Income tax provision (benefit) | 22 |
| | 0.5 |
| | (1 | ) | | — |
| | 79 |
| | 0.6 |
| | 41 |
| | 0.3 |
|
Net earnings from continuing operations(2) | 35 |
| | 0.9 |
| | 12 |
| | 0.3 |
| | 129 |
| | 1.0 |
| | 91 |
| | 0.7 |
|
Income from discontinued operations, net of tax | — |
| | — |
| | 69 |
| | 1.6 |
| | 3 |
| | — |
| | 68 |
| | 0.5 |
|
Net earnings including noncontrolling interests | 35 |
| | 0.9 |
| | 81 |
| | 1.9 |
| | 132 |
| | 1.0 |
| | 159 |
| | 1.2 |
|
Less net earnings attributable to noncontrolling interests | (1 | ) | | — |
| | (2 | ) | | — |
| | (6 | ) | | — |
| | (6 | ) | | — |
|
Net earnings attributable to SUPERVALU INC. | $ | 34 |
| | 0.8 | % | | $ | 79 |
| | 1.9 | % | | $ | 126 |
| | 0.9 | % | | $ | 153 |
| | 1.1 | % |
| | | | | | | | | | | | | | | |
Basic net earnings per share attributable to SUPERVALU INC.: |
Continuing operations | $ | 0.13 |
| | | | $ | 0.04 |
| | | | $ | 0.47 |
| | | | $ | 0.33 |
| | |
Discontinued operations | $ | — |
| | | | $ | 0.27 |
| | | | $ | 0.01 |
| | | | $ | 0.26 |
| | |
Basic net earnings per share | $ | 0.13 |
| | | | $ | 0.31 |
| | | | $ | 0.48 |
| | | | $ | 0.59 |
| | |
Diluted net earnings per share attributable to SUPERVALU INC.: |
Continuing operations(2) | $ | 0.13 |
| | | | $ | 0.04 |
| | | | $ | 0.46 |
| | | | $ | 0.33 |
| | |
Discontinued operations | $ | — |
| | | | $ | 0.26 |
| | | | $ | 0.01 |
| | | | $ | 0.26 |
| | |
Diluted net earnings per share | $ | 0.13 |
| | | | $ | 0.30 |
| | | | $ | 0.47 |
| | | | $ | 0.58 |
| | |
Weighted average number of shares outstanding: |
Basic | 264 |
| | | | 261 |
| | | | 263 |
| | | | 260 |
| | |
Diluted | 268 |
| | | | 265 |
| | | | 268 |
| | | | 263 |
| | |
| |
(1) | In the first quarter of fiscal 2016, the Company completed an assessment of its revenue and expense presentation primarily related to professional services and certain other transactions. Expenses related to transactions in which the Company determined it was the principal were previously presented net of related revenues within Net sales in the Consolidated Statements of Operations. The presentation of these expenses has been revised to include them within Cost of sales and Selling and administrative expenses. These revisions had the effect of increasing Net sales with a corresponding increase to Cost of sales and Selling and administrative expenses. These revisions did not impact Operating earnings, Earnings from continuing operations before income taxes, Net earnings attributable to SUPERVALU INC., cash flows, or financial position for any period reported. |
| |
(2) | Results from continuing operations for the third quarter ended December 5, 2015 include net charges and costs of $16 before tax ($11 after tax, or $0.03 per diluted share), comprised of an intangible asset impairment charge of $6 before tax ($4 after tax, or $0.02 per diluted share) within Intangible asset impairment charge, and costs related to the potential Save-A-Lot separation of $5 before tax ($4 after tax, or $0.01 per diluted share), store closure impairment charges of $3 before tax ($2 after tax, or $0.00 per diluted share) and severance costs of $2 before tax ($1 after tax, or $0.00 per diluted share) within Selling and administrative expenses. |
Results from continuing operations for the third quarter ended November 29, 2014 include net charges and costs of $65 before tax ($37 after tax, or $0.14 per diluted share), comprised of a pension settlement charge of $63 before tax ($36 after tax, or $0.14 per diluted share) and information technology intrusion costs, net of insurance recoverable, of $1 before tax ($0 after tax, or $0.00 per diluted share) included within Selling and administrative expenses, and debt refinancing costs of $1 before tax ($1 after tax, or $0.00 per diluted share) included within Interest expense, net.
Results from continuing operations for the year-to-date ended December 5, 2015 include net charges and costs of $27 before tax ($19 after tax, or $0.07 per diluted share), comprised of costs related to the potential Save-A-Lot separation of $12 before tax ($9 after tax, or $0.03 per diluted share), severance costs of $6 before tax ($4 after tax, or $0.02 per diluted share) and store closure impairment charges of $3 before tax ($2 after tax, or $0.00 per diluted share) within Selling and administrative expenses, and an intangible asset impairment charge of $6 before tax ($4 after tax, or $0.02 per diluted share) within Intangible asset impairment charge.
Results from continuing operations for the year-to-date ended November 29, 2014 include net charges and costs of $69 before tax ($40 after tax, or $0.15 per diluted share), comprised of a pension settlement charge of $63 before tax ($36 after tax, or $0.14 per diluted share), information technology intrusion costs, net of insurance recoverable, of $2 before tax ($1 after tax, or $0.00 per diluted share) and severance costs of $1 before tax ($1 after tax, or $0.00 per diluted share) included within Selling and administrative expenses, and unamortized financing cost charges of $2 before tax ($1 after tax, or $0.01 per diluted share) and debt refinancing costs of $1 before tax ($1 after tax, or $0.00 per diluted share) included within Interest expense, net.
SUPERVALU INC. and Subsidiaries
CONSOLIDATED SEGMENT FINANCIAL INFORMATION
(Unaudited)
(In millions, except percent data) |
| | | | | | | | | | | | | | | |
| Third Quarter Ended | | Year-To-Date Ended |
| December 5,
2015
(12 weeks) | | November 29,
2014
(12 weeks) | | December 5,
2015
(40 weeks) | | November 29,
2014
(40 weeks) |
Net sales | | | | | | | |
Independent Business | $ | 1,902 |
| | $ | 1,972 |
| | $ | 6,195 |
| | $ | 6,227 |
|
% of total | 46.2 | % | | 46.7 | % | | 45.6 | % | | 46.0 | % |
Save-A-Lot | 1,069 |
| | 1,085 |
| | 3,568 |
| | 3,498 |
|
% of total | 26.0 | % | | 25.7 | % | | 26.3 | % | | 25.8 | % |
Retail Food | 1,097 |
| | 1,125 |
| | 3,662 |
| | 3,660 |
|
% of total | 26.7 | % | | 26.6 | % | | 27.0 | % | | 27.1 | % |
Corporate | 46 |
| | 43 |
| | 158 |
| | 145 |
|
% of total | 1.1 | % | | 1.0 | % | | 1.1 | % | | 1.1 | % |
Total net sales | $ | 4,114 |
| | $ | 4,225 |
| | $ | 13,583 |
| | $ | 13,530 |
|
| 100.0 | % | | 100.0 | % | | 100.0 | % | | 100.0 | % |
Operating earnings | | | | | | | |
Independent Business(1) | $ | 54 |
| | $ | 60 |
| | $ | 180 |
| | $ | 180 |
|
% of Independent Business sales | 2.8 | % | | 3.1 | % | | 2.9 | % | | 2.9 | % |
Save-A-Lot(2) | 32 |
| | 34 |
| | 115 |
| | 106 |
|
% of Save-A-Lot sales | 2.9 | % | | 3.1 | % | | 3.2 | % | | 3.0 | % |
Retail Food(3) | 21 |
| | 28 |
| | 64 |
| | 78 |
|
% of Retail Food sales | 2.0 | % | | 2.5 | % | | 1.8 | % | | 2.1 | % |
Corporate(4) | (6 | ) | | (66 | ) | | (6 | ) | | (79 | ) |
Total operating earnings | 101 |
| | 56 |
| | 353 |
| | 285 |
|
% of total net sales | 2.4 | % | | 1.3 | % | | 2.6 | % | | 2.1 | % |
Interest expense, net(5) | 45 |
| | 46 |
| | 148 |
| | 156 |
|
Equity in earnings of unconsolidated affiliates | (1 | ) | | (1 | ) | | (3 | ) | | (3 | ) |
Earnings from continuing operations before income taxes | 57 |
| | 11 |
| | 208 |
| | 132 |
|
Income tax provision (benefit) | 22 |
| | (1 | ) | | 79 |
| | 41 |
|
Net earnings from continuing operations | 35 |
| | 12 |
| | 129 |
| | 91 |
|
Income from discontinued operations, net of tax | — |
| | 69 |
| | 3 |
| | 68 |
|
Net earnings including noncontrolling interests | 35 |
| | 81 |
| | 132 |
| | 159 |
|
Less net earnings attributable to noncontrolling interests | (1 | ) | | (2 | ) | | (6 | ) | | (6 | ) |
Net earnings attributable to SUPERVALU INC. | $ | 34 |
| | $ | 79 |
| | $ | 126 |
| | $ | 153 |
|
| | | | | | | |
LIFO charge | | | | | | | |
Independent Business | $ | — |
| | $ | 1 |
| | $ | 2 |
| | $ | 3 |
|
Retail Food | 1 |
| | 2 |
| | 4 |
| | 4 |
|
Total LIFO charge | $ | 1 |
| | $ | 3 |
| | $ | 6 |
| | $ | 7 |
|
Depreciation and amortization | | | | | | | |
Independent Business | $ | 12 |
| | $ | 10 |
| | $ | 37 |
| | $ | 36 |
|
Save-A-Lot | 16 |
| | 15 |
| | 54 |
| | 50 |
|
Retail Food | 35 |
| | 40 |
| | 118 |
| | 133 |
|
Corporate | 1 |
| | — |
| | 2 |
| | — |
|
Total depreciation and amortization | $ | 64 |
| | $ | 65 |
| | $ | 211 |
| | $ | 219 |
|
| |
(1) | Independent Business operating earnings for the third quarter and year-to-date ended December 5, 2015 include an intangible asset impairment charge of $6. Independent Business operating earnings for the year-to-date ended November 29, 2014 include severance costs of $1. |
| |
(2) | Save-A-Lot operating earnings for the third quarter and year-to-date ended December 5, 2015 include store closure impairment charges of $2. |
| |
(3) | Retail Food operating earnings for the third quarter and year-to-date ended December 5, 2015 include store closure impairment charges of $1. |
| |
(4) | Corporate operating loss for the third quarter ended December 5, 2015 includes costs related to the potential Save-A-Lot separation of $5 and severance costs of $2. Corporate operating loss for the third quarter ended November 29, 2014 includes a pension settlement charge of $63 and information technology intrusion costs, net of insurance recoverable, of $1. Corporate operating loss for the year-to-date ended December 5, 2015 includes costs related to the potential Save-A-Lot separation of $12 and severance costs of $6. Corporate operating loss for the year-to-date ended November 29, 2014 includes a pension settlement charge of $63 and information technology intrusion costs, net of insurance recoverable, of $2. |
| |
(5) | Interest expense, net for the third quarter ended November 29, 2014 includes debt refinancing costs of $1. Interest expense, net for the year-to-date ended November 29, 2014 includes unamortized financing cost charges of $2 and debt refinancing costs of $1. |
SUPERVALU INC. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In millions, except par value data)
|
| | | | | | | |
| December 5, 2015 | | February 28, 2015 |
| (Unaudited) | | |
ASSETS | | | |
Current assets | | | |
Cash and cash equivalents | $ | 134 |
| | $ | 114 |
|
Receivables, net | 485 |
| | 482 |
|
Inventories, net | 1,170 |
| | 984 |
|
Other current assets | 78 |
| | 120 |
|
Total current assets | 1,867 |
| | 1,700 |
|
Property, plant and equipment, net | 1,458 |
| | 1,470 |
|
Goodwill | 867 |
| | 865 |
|
Intangible assets, net | 57 |
| | 48 |
|
Deferred tax assets | 246 |
| | 265 |
|
Other assets | 148 |
| | 137 |
|
Total assets | $ | 4,643 |
| | $ | 4,485 |
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | |
Current liabilities | | | |
Accounts payable | $ | 1,200 |
| | $ | 1,121 |
|
Accrued vacation, compensation and benefits | 187 |
| | 204 |
|
Current maturities of long-term debt and capital lease obligations | 224 |
| | 35 |
|
Other current liabilities | 175 |
| | 173 |
|
Total current liabilities | 1,786 |
| | 1,533 |
|
Long-term debt | 2,281 |
| | 2,480 |
|
Long-term capital lease obligations | 209 |
| | 213 |
|
Pension and other postretirement benefit obligations | 513 |
| | 602 |
|
Long-term tax liabilities | 129 |
| | 119 |
|
Other long-term liabilities | 169 |
| | 174 |
|
Commitments and contingencies | | | |
Stockholders’ deficit |
| | |
Common stock, $0.01 par value: 400 shares authorized; 266 and 262 shares issued, respectively | 3 |
| | 3 |
|
Capital in excess of par value | 2,802 |
| | 2,810 |
|
Treasury stock, at cost, 1 and 2 shares, respectively | (5 | ) | | (33 | ) |
Accumulated other comprehensive loss | (375 | ) | | (423 | ) |
Accumulated deficit | (2,877 | ) | | (3,003 | ) |
Total SUPERVALU INC. stockholders’ deficit | (452 | ) | | (646 | ) |
Noncontrolling interests | 8 |
| | 10 |
|
Total stockholders’ deficit | (444 | ) | | (636 | ) |
Total liabilities and stockholders’ deficit | $ | 4,643 |
| | $ | 4,485 |
|
SUPERVALU INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions) |
| | | | | | | |
| Year-To-Date Ended |
| December 5,
2015
(40 weeks) | | November 29,
2014
(40 weeks) |
Cash flows from operating activities | | | |
Net earnings including noncontrolling interests | $ | 132 |
| | $ | 159 |
|
Income from discontinued operations, net of tax | 3 |
| | 68 |
|
Net earnings from continuing operations | 129 |
| | 91 |
|
Adjustments to reconcile Net earnings from continuing operations to Net cash provided by operating activities – continuing operations: | | | |
Intangible asset impairment charge | 6 |
| | — |
|
Asset impairment and other charges | 7 |
| | 3 |
|
Net gain on sale of assets and exits of surplus leases | (3 | ) | | (11 | ) |
Depreciation and amortization | 211 |
| | 219 |
|
LIFO charge | 6 |
| | 7 |
|
Deferred income taxes | (19 | ) | | (41 | ) |
Stock-based compensation | 19 |
| | 18 |
|
Net pension and other postretirement benefits cost | 29 |
| | 82 |
|
Contributions to pension and other postretirement benefit plans | (38 | ) | | (115 | ) |
Other adjustments | 20 |
| | 15 |
|
Changes in operating assets and liabilities, net of effects from business acquisitions | (116 | ) | | (164 | ) |
Net cash provided by operating activities – continuing operations | 251 |
| | 104 |
|
Net cash provided by operating activities – discontinued operations | 1 |
| | 2 |
|
Net cash provided by operating activities | 252 |
| | 106 |
|
Cash flows from investing activities | | | |
Proceeds from sale of assets | 4 |
| | 7 |
|
Purchases of property, plant and equipment | (169 | ) | | (164 | ) |
Payments for business acquisitions | (9 | ) | | (55 | ) |
Other | (24 | ) | | 3 |
|
Net cash used in investing activities | (198 | ) | | (209 | ) |
Cash flows from financing activities | | | |
Proceeds from issuance of debt | — |
| | 484 |
|
Proceeds from sale of common stock | 10 |
| | 5 |
|
Payments of debt and capital lease obligations | (35 | ) | | (37 | ) |
Distributions to noncontrolling interests | (8 | ) | | (8 | ) |
Payments of debt financing costs | (1 | ) | | (7 | ) |
Other | — |
| | 1 |
|
Net cash (used in) provided by financing activities | (34 | ) | | 438 |
|
Net increase in cash and cash equivalents | 20 |
| | 335 |
|
Cash and cash equivalents at beginning of period | 114 |
| | 83 |
|
Cash and cash equivalents at the end of period | $ | 134 |
| | $ | 418 |
|
SUPPLEMENTAL CASH FLOW INFORMATION |
The Company’s non-cash activities were as follows: | | | |
Purchases of property, plant and equipment included in Accounts payable | $ | 31 |
| | $ | 10 |
|
Capital lease asset additions | $ | 18 |
| | $ | 1 |
|
Interest and income taxes paid: | | | |
Interest paid, net of amounts capitalized | $ | 150 |
| | $ | 136 |
|
Income taxes paid, net | $ | 44 |
| | $ | 55 |
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SUPERVALU INC. and Subsidiaries
SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited)
SUPERVALU INC.'s consolidated financial statements are prepared and presented in accordance with generally accepted accounting principles ("GAAP"). The measures and items identified below, and the adjusted Selling and administrative expenses, are provided as a supplement to our consolidated financial statements and should not be considered an alternative to any GAAP measure of performance or liquidity. The presentation of these financial measures and items is not intended to be a substitute for or be superior to any financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. Certain adjustments to our GAAP financial measures exclude certain items that are occasionally recurring in nature and may be reflected in our financial results for the foreseeable future. These measurements and items may be different from non-GAAP financial measures used by other companies. All measurements are provided as a reconciliation from a GAAP measurement. Management believes the measurements and items identified below are important measures of business performance that provide investors with useful supplemental information. SUPERVALU utilizes certain non-GAAP measures to analyze underlying core business trends to understand operating performance. In addition, management utilizes certain non-GAAP measures as a compensation performance measure. The items below should be reviewed in conjunction with SUPERVALU INC.'s financial results reported in accordance with GAAP, as reported in SUPERVALU's Quarterly Reports on Form 10-Q and the Annual Report on Form 10-K for the fiscal year ended February 28, 2015.
RECONCILIATIONS OF EARNINGS FROM CONTINUING OPERATIONS TO EARNINGS FROM CONTINUING OPERATIONS AFTER ADJUSTMENTS
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| | | | | | | | | | | | |
Table 1 | | | | | | |
| | Third Quarter Ended December 5, 2015 |
(In millions, except per share data) | | Earnings Before Tax | | Earnings After Tax | | Diluted Earnings Per Share |
Continuing operations | | $ | 57 |
| | $ | 35 |
| | $ | 0.13 |
|
Adjustments: | | | | | | |
Intangible asset impairment charge | | 6 |
| | 4 |
| | 0.02 |
|
Costs related to the potential Save-A-Lot separation | | 5 |
| | 4 |
| | 0.01 |
|
Store closure impairment charges | | 3 |
| | 2 |
| | — |
|
Severance costs | | 2 |
| | 1 |
| | — |
|
Continuing operations after adjustments | | $ | 73 |
| | $ | 46 |
| | $ | 0.16 |
|
|
| | | | | | | | | | | | |
Table 2 | | | | | | |
| | Year to Date December 5, 2015 |
(In millions, except per share data) | | Earnings Before Tax | | Earnings After Tax | | Diluted Earnings Per Share |
Continuing operations | | $ | 208 |
| | $ | 129 |
| | $ | 0.46 |
|
Adjustments: | | | | | | |
Costs related to the potential Save-A-Lot separation | | 12 |
| | 9 |
| | 0.03 |
|
Intangible asset impairment charge | | 6 |
| | 4 |
| | 0.02 |
|
Severance costs | | 6 |
| | 4 |
| | 0.02 |
|
Store closure impairment charges | | 3 |
| | 2 |
| | — |
|
Continuing operations after adjustments | | $ | 235 |
| | $ | 148 |
| | $ | 0.53 |
|
|
| | | | | | | | | | | | |
Table 3 | | | | | | |
| | Third Quarter Ended November 29, 2014 |
(In millions, except per share data) | | Earnings Before Tax | | Earnings After Tax | | Diluted Earnings Per Share |
Continuing operations | | $ | 11 |
| | $ | 12 |
| | $ | 0.04 |
|
Adjustments: | | | | | | |
Pension settlement charge | | 63 |
| | 36 |
| | 0.14 |
|
Information technology intrusion costs, net of insurance recoverable | | 1 |
| | — |
| | — |
|
Debt refinancing costs | | 1 |
| | 1 |
| | — |
|
Continuing operations after adjustments | | $ | 76 |
| | $ | 49 |
| | $ | 0.18 |
|
|
| | | | | | | | | | | | |
Table 4 | | | | | | |
| | Year to Date November 29, 2014 |
(In millions, except per share data) | | Earnings Before Tax | | Earnings After Tax | | Diluted Earnings Per Share |
Continuing operations | | $ | 132 |
| | $ | 91 |
| | $ | 0.33 |
|
Adjustments: | | | | | | |
Pension settlement charge | | 63 |
| | 36 |
| | 0.14 |
|
Unamortized financing costs charges | | 2 |
| | 1 |
| | 0.01 |
|
Information technology intrusion costs, net of insurance recoverable | | 2 |
| | 1 |
| | — |
|
Severance costs | | 1 |
| | 1 |
| | — |
|
Debt refinancing costs | | 1 |
| | 1 |
| | — |
|
Continuing operations after adjustments | | $ | 201 |
| | $ | 131 |
| | $ | 0.48 |
|
|
| | | | | | | | | | | | | | | | |
RECONCILIATION OF OPERATING EARNINGS FROM CONSOLIDATED SEGMENT FINANCIAL INFORMATION AS REPORTED TO SUPPLEMENTALLY PROVIDED ADJUSTED EBITDA |
| | | | |
Table 5 | | | | |
| | Third Quarter Ended | | Year-To-Date Ended |
(In millions) | | December 5,
2015
(12 weeks) | | November 29,
2014
(12 weeks) | | December 5,
2015
(40 weeks) | | November 29,
2014
(40 weeks) |
Independent Business operating earnings, as reported | | $ | 54 |
| | $ | 60 |
| | $ | 180 |
| | $ | 180 |
|
Adjustments: | | | | | | | | |
Intangible asset impairment charge | | 6 |
| | — |
| | 6 |
| | — |
|
Severance costs | | — |
| | — |
| | — |
| | 1 |
|
Independent Business operating earnings, as adjusted | | 60 |
| | 60 |
| | 186 |
| | 181 |
|
Independent Business depreciation and amortization | | 12 |
| | 10 |
| | 37 |
| | 36 |
|
LIFO charge | | — |
| | 1 |
| | 2 |
| | 3 |
|
Independent Business adjusted EBITDA(1) | | $ | 72 |
| | $ | 71 |
| | $ | 225 |
| | $ | 220 |
|
| | | | | | | | |
Save-A-Lot operating earnings, as reported | | $ | 32 |
| | $ | 34 |
| | $ | 115 |
| | $ | 106 |
|
Adjustments: | | | | | | | | |
Store closure impairment charges | | 2 |
| | — |
| | 2 |
| | — |
|
Save-A-Lot operating earnings, as adjusted | | 34 |
| | 34 |
| | 117 |
| | 106 |
|
Save-A-Lot depreciation and amortization | | 16 |
| | 15 |
| | 54 |
| | 50 |
|
Save-A-Lot adjusted EBITDA(1) | | $ | 50 |
| | $ | 49 |
| | $ | 171 |
| | $ | 156 |
|
| | | | | | | | |
Retail Food operating earnings, as reported | | $ | 21 |
| | $ | 28 |
| | $ | 64 |
| | $ | 78 |
|
Adjustments: | | | | | | | | |
Store closure impairment charges | | 1 |
| | — |
| | 1 |
| | — |
|
Retail Food operating earnings, as adjusted | | 22 |
| | 28 |
| | 65 |
| | 78 |
|
Retail Food depreciation and amortization | | 35 |
| | 40 |
| | 118 |
| | 133 |
|
LIFO charge | | 1 |
| | 2 |
| | 4 |
| | 4 |
|
Equity in earnings of unconsolidated affiliates | | 1 |
| | 1 |
| | 3 |
| | 3 |
|
Net earnings attributable to noncontrolling interests | | (1 | ) | | (2 | ) | | (6 | ) | | (6 | ) |
Retail Food adjusted EBITDA(1) | | $ | 58 |
| | $ | 69 |
| | $ | 184 |
| | $ | 212 |
|
| | | | | | | | |
Corporate operating loss, as reported | | $ | (6 | ) | | $ | (66 | ) | | $ | (6 | ) | | $ | (79 | ) |
Adjustments: | | | | | | | | |
Pension settlement charge | | — |
| | 63 |
| | — |
| | 63 |
|
Costs related to the potential Save-A-Lot separation | | 5 |
| | — |
| | 12 |
| | — |
|
Severance costs | | 2 |
| | — |
| | 6 |
| | — |
|
Information technology intrusion costs, net of insurance recoverable | | — |
| | 1 |
| | — |
| | 2 |
|
Corporate operating earnings (loss), as adjusted | | 1 |
| | (2 | ) | | 12 |
| | (14 | ) |
Corporate depreciation and amortization | | 1 |
| | — |
| | 2 |
| | — |
|
Corporate adjusted EBITDA(1) | | $ | 2 |
| | $ | (2 | ) | | $ | 14 |
| | $ | (14 | ) |
Total adjusted EBITDA(1) | | $ | 182 |
| | $ | 187 |
| | $ | 594 |
| | $ | 574 |
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(1) | The Company's measure of adjusted EBITDA includes SUPERVALU INC.'s segment operating earnings (loss), as reported, plus depreciation and amortization, LIFO charge (credit), equity earnings of unconsolidated affiliates and any unusual items, and less net earnings attributable to noncontrolling interests. |
CONTACT:
SUPERVALU INC.
Investor Contact
Steve Bloomquist, 952-828-4144
steve.j.bloomquist@supervalu.com
or
Media Contact
Jeff Swanson, 952-903-1645
jeffrey.s.swanson@supervalu.com
