Delaware | 1-5418 | 41-0617000 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
11840 Valley View Road Eden Prairie, Minnesota | 55344 |
(Address of principal executive offices) | (Zip Code) |
N/A | ||
(Former name or former address, if changed since last report) |
RECONCILIATION OF PROJECTED NET EARNINGS FROM CONTINUING OPERATIONS TO PROJECTED ADJUSTED EBITDA AND PRO FORMA ADJUSTED EBITDA | ||||
For the Fiscal Year Ended | ||||
(In millions) | February 25, 2017 (52 weeks) | |||
Results of operations, as projected | ||||
Net earnings from continuing operations | $ | 38 | ||
Income tax (benefit) provision | (3 | ) | ||
Equity in earnings of unconsolidated affiliates | (4 | ) | ||
Interest expense, net | 181 | |||
Total operating earnings | $ | 212 | ||
Add Equity in earnings of unconsolidated affiliates | 4 | |||
Less net earnings attributable to noncontrolling interests | (5 | ) | ||
Depreciation and amortization | 206 | |||
LIFO charge | 5 | |||
Pension settlement charge | 41 | |||
Goodwill and intangible asset impairment charge | 15 | |||
Supply agreement termination fee | (9 | ) | ||
Other(1) | 3 | |||
Adjusted EBITDA | $ | 472 | ||
Pro forma adjustments: | ||||
Net sales(2) | 33 | |||
Cost of sales(3) | (9 | ) | ||
Total pro forma adjustments | 24 | |||
Pro forma adjusted EBITDA | $ | 496 |
(1) | Includes store closure charges and costs of $5, severance costs of $(1) and a sales and use tax refund of $(2). |
(2) | This adjustment reflects (1) the fees that the Company expects to recognize in connection with performing services for Save-A-Lot under the Services Agreement and (2) Wholesale distribution sales to Save-A-Lot pursuant to a customer agreement between the Company and Save-A-Lot that had historically been intercompany sales. Actual Services Agreement fees are subject to adjustments pursuant to the terms of the Services Agreement including for changes in service levels. This adjustment only applies to time periods prior to the sale of Save-A-Lot on December 5, 2016. |
(3) | This adjustment reflects the Cost of sales related to Wholesale’s distribution to Save-A-Lot, which was previously eliminated on an intercompany basis. No adjustment for expenses related to the Services Agreement has been included within Cost of sales because the shared service center costs incurred to support back office functions related to the Services Agreement represent administrative overhead costs that have been included within Selling and administrative expenses within the Company's historical consolidated financial statements. This adjustment only applies to time periods prior to the sale of Save-A-Lot on December 5, 2016. |
Exhibit Number | Description | |
99.1 | News Release of SUPERVALU INC., dated January 11, 2017 |
Dated: | January 11, 2017 | ||
SUPERVALU INC. | |||
By: /s/ Bruce H. Besanko | |||
Bruce H. Besanko | |||
Executive Vice President, Chief Operating Officer and Chief Financial Officer | |||
(Authorized Officer of Registrant) | |||
Exhibit Number | Description | |
99.1 | News Release of SUPERVALU INC., dated January 11, 2017 |
• | Net loss from continuing operations of $11 million; pro forma adjusted EBITDA of $114 million |
• | Net loss per share from continuing operations of $0.04; adjusted earnings per share from continuing operations of $0.05 |
• | Wholesale sales increase with new business outpacing lost business |
• | Save-A-Lot presented as discontinued operations; sale results in debt reduction of approximately $1.1 billion |
Third Quarter Ended | Year-To-Date Ended | ||||||||||||||||||||||||||
December 3, 2016 (12 weeks) | December 5, 2015 (12 weeks) | December 3, 2016 (40 weeks) | December 5, 2015 (40 weeks) | ||||||||||||||||||||||||
Net sales | $ | 3,003 | 100.0 | % | $ | 3,045 | 100.0 | % | $ | 9,573 | 100.0 | % | $ | 10,016 | 100.0 | % | |||||||||||
Cost of sales | 2,596 | 86.4 | 2,609 | 85.7 | 8,221 | 85.9 | 8,573 | 85.6 | |||||||||||||||||||
Gross profit(1) | 407 | 13.6 | 436 | 14.3 | 1,352 | 14.1 | 1,443 | 14.4 | |||||||||||||||||||
Selling and administrative expenses(1) | 391 | 13.0 | 364 | 12.0 | 1,189 | 12.4 | 1,214 | 12.1 | |||||||||||||||||||
Goodwill and intangible asset impairment charge(1) | 15 | 0.5 | 6 | 0.2 | 15 | 0.2 | 6 | 0.1 | |||||||||||||||||||
Operating earnings | 1 | 0.1 | 66 | 2.2 | 148 | 1.5 | 223 | 2.2 | |||||||||||||||||||
Interest expense, net(1) | 40 | 1.4 | 45 | 1.5 | 141 | 1.5 | 148 | 1.5 | |||||||||||||||||||
Equity in earnings of unconsolidated affiliates | (1 | ) | — | (1 | ) | — | (3 | ) | — | (3 | ) | — | |||||||||||||||
(Loss) earnings from continuing operations before income taxes(1) | (38 | ) | (1.3 | ) | 22 | 0.7 | 10 | 0.1 | 78 | 0.8 | |||||||||||||||||
Income tax (benefit) provision(1) | (27 | ) | (0.9 | ) | 6 | 0.2 | (11 | ) | (0.1 | ) | 24 | 0.2 | |||||||||||||||
Net (loss) earnings from continuing operations(1) | (11 | ) | (0.4 | ) | 16 | 0.5 | 21 | 0.2 | 54 | 0.5 | |||||||||||||||||
(Loss) income from discontinued operations, net of tax | (14 | ) | (0.5 | ) | 19 | 0.6 | 33 | 0.3 | 78 | 0.8 | |||||||||||||||||
Net (loss) earnings including noncontrolling interests | (25 | ) | (0.9 | ) | 35 | 1.2 | 54 | 0.6 | 132 | 1.3 | |||||||||||||||||
Less net earnings attributable to noncontrolling interests | (1 | ) | — | (1 | ) | (0.1 | ) | (3 | ) | — | (6 | ) | (0.1 | ) | |||||||||||||
Net (loss) earnings attributable to SUPERVALU INC. | $ | (26 | ) | (0.9 | )% | $ | 34 | 1.1 | % | $ | 51 | 0.5 | % | $ | 126 | 1.3 | % | ||||||||||
Basic net (loss) earnings per share attributable to SUPERVALU INC.: | |||||||||||||||||||||||||||
Continuing operations | $ | (0.04 | ) | $ | 0.05 | $ | 0.07 | $ | 0.18 | ||||||||||||||||||
Discontinued operations | $ | (0.06 | ) | $ | 0.07 | $ | 0.12 | $ | 0.30 | ||||||||||||||||||
Basic net (loss) earnings per share | $ | (0.10 | ) | $ | 0.13 | $ | 0.19 | $ | 0.48 | ||||||||||||||||||
Diluted net (loss) earnings per share attributable to SUPERVALU INC.: | |||||||||||||||||||||||||||
Continuing operations(1) | $ | (0.04 | ) | $ | 0.05 | $ | 0.07 | $ | 0.18 | ||||||||||||||||||
Discontinued operations | $ | (0.06 | ) | $ | 0.07 | $ | 0.12 | $ | 0.29 | ||||||||||||||||||
Diluted net (loss) earnings per share | $ | (0.10 | ) | $ | 0.13 | $ | 0.19 | $ | 0.47 | ||||||||||||||||||
Weighted average number of shares outstanding: | |||||||||||||||||||||||||||
Basic | 265 | 264 | 265 | 263 | |||||||||||||||||||||||
Diluted | 265 | 268 | 267 | 268 |
(1) | Results from continuing operations for the third quarter ended December 3, 2016 include net charges and costs of $57 before tax ($25 after tax, or $0.09 per diluted share), comprised of a pension settlement charge of $41 before tax ($24 after tax, or $0.09 per diluted share) and store closure charges and costs of $1 before tax ($1 after tax, or $0.00 per diluted share) within Selling and administrative expenses, and a goodwill impairment charge of $15 before tax ($9 after tax, or $0.03 per diluted share) within Goodwill and intangible asset impairment charge, offset in part by a deferred income tax benefit of $0 before tax ($9 after tax, or $0.03 per diluted share) within Income tax (benefit) provision. |
Third Quarter Ended | Year-To-Date Ended | ||||||||||||||
December 3, 2016 (12 weeks) | December 5, 2015 (12 weeks) | December 3, 2016 (40 weeks) | December 5, 2015 (40 weeks) | ||||||||||||
Net sales | |||||||||||||||
Wholesale | $ | 1,906 | $ | 1,902 | $ | 5,912 | $ | 6,195 | |||||||
% of total | 63.5 | % | 62.5 | % | 61.8 | % | 61.9 | % | |||||||
Retail | 1,060 | 1,097 | 3,524 | 3,662 | |||||||||||
% of total | 35.3 | % | 36.0 | % | 36.8 | % | 36.6 | % | |||||||
Corporate | 37 | 46 | 137 | 159 | |||||||||||
% of total | 1.2 | % | 1.5 | % | 1.4 | % | 1.5 | % | |||||||
Total net sales | $ | 3,003 | $ | 3,045 | $ | 9,573 | $ | 10,016 | |||||||
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Operating earnings (loss) | |||||||||||||||
Wholesale(1) | $ | 52 | $ | 54 | $ | 174 | $ | 180 | |||||||
% of Wholesale sales | 2.7 | % | 2.8 | % | 2.9 | % | 2.9 | % | |||||||
Retail(2) | (14 | ) | 21 | (18 | ) | 64 | |||||||||
% of Retail sales | (1.3 | )% | 2.0 | % | (0.5 | )% | 1.8 | % | |||||||
Corporate(3) | (37 | ) | (9 | ) | (8 | ) | (21 | ) | |||||||
Total operating earnings | 1 | 66 | 148 | 223 | |||||||||||
% of total net sales | 0.1 | % | 2.2 | % | 1.5 | % | 2.2 | % | |||||||
Interest expense, net(4) | 40 | 45 | 141 | 148 | |||||||||||
Equity in earnings of unconsolidated affiliates | (1 | ) | (1 | ) | (3 | ) | (3 | ) | |||||||
(Loss) earnings from continuing operations before income taxes | (38 | ) | 22 | 10 | 78 | ||||||||||
Income tax (benefit) provision(5) | (27 | ) | 6 | (11 | ) | 24 | |||||||||
Net (loss) earnings from continuing operations | (11 | ) | 16 | 21 | 54 | ||||||||||
(Loss) income from discontinued operations, net of tax | (14 | ) | 19 | 33 | 78 | ||||||||||
Net (loss) earnings including noncontrolling interests | (25 | ) | 35 | 54 | 132 | ||||||||||
Less net earnings attributable to noncontrolling interests | (1 | ) | (1 | ) | (3 | ) | (6 | ) | |||||||
Net (loss) earnings attributable to SUPERVALU INC. | $ | (26 | ) | $ | 34 | $ | 51 | $ | 126 | ||||||
LIFO charge | |||||||||||||||
Wholesale | $ | — | $ | — | $ | 1 | $ | 2 | |||||||
Retail | 1 | 1 | 2 | 4 | |||||||||||
Total LIFO charge | $ | 1 | $ | 1 | $ | 3 | $ | 6 | |||||||
Depreciation and amortization | |||||||||||||||
Wholesale | $ | 12 | $ | 12 | $ | 40 | $ | 37 | |||||||
Retail | 35 | 35 | 114 | 118 | |||||||||||
Corporate | 1 | 2 | 5 | 6 | |||||||||||
Total depreciation and amortization | $ | 48 | $ | 49 | $ | 159 | $ | 161 |
(1) | Wholesale operating earnings for the year-to-date ended December 3, 2016 include a fee received from a supply agreement termination of $9. Wholesale operating earnings for the third quarter and year-to-date ended December 5, 2015 include an intangible asset impairment charge of $6. |
(2) | Retail operating loss for the third quarter ended December 3, 2016 includes a goodwill impairment charge of $15 and store closure charges and costs of $1. Retail operating loss for the year-to-date ended December 3, 2016 includes a goodwill impairment charge of $15 and store closure charges and costs of $5. Retail operating earnings for the third quarter and year-to-date ended December 5, 2015 include store closure charges and costs of $1. |
(3) | Corporate operating loss for the third quarter ended December 3, 2016 includes a pension settlement charge of $41. Corporate operating loss for the third quarter ended December 5, 2015 includes severance costs of $2. Corporate operating loss for the year-to-date ended December 3, 2016 includes a pension settlement charge of $41, offset in part by a sales and use tax refund of $2 and a severance benefit of $1. Corporate operating loss for the year-to-date ended December 5, 2015 includes severance costs of $6. |
(4) | Interest expense, net for the year-to-date ended December 3, 2016 includes unamortized financing cost charges of $5 and debt refinancing costs of $2. |
(5) | Income tax provision for the third quarter and year-to-date ended December 3, 2016 includes a deferred income tax benefit of $9. |
December 3, 2016 | February 27, 2016 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 47 | $ | 42 | |||
Receivables, net | 440 | 406 | |||||
Inventories, net | 895 | 738 | |||||
Other current assets | 74 | 73 | |||||
Current assets of discontinued operations | 394 | 376 | |||||
Total current assets | 1,850 | 1,635 | |||||
Property, plant and equipment, net | 1,014 | 1,021 | |||||
Goodwill | 710 | 725 | |||||
Intangible assets, net | 41 | 47 | |||||
Deferred tax assets | 169 | 238 | |||||
Other assets | 99 | 91 | |||||
Long-term assets of discontinued operations | 591 | 613 | |||||
Total assets | $ | 4,474 | $ | 4,370 | |||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||
Current liabilities | |||||||
Accounts payable | $ | 924 | $ | 829 | |||
Accrued vacation, compensation and benefits | 152 | 148 | |||||
Current maturities of long-term debt and capital lease obligations | 1,091 | 123 | |||||
Other current liabilities | 125 | 126 | |||||
Current liabilities of discontinued operations | 305 | 346 | |||||
Total current liabilities | 2,597 | 1,572 | |||||
Long-term debt | 1,261 | 2,197 | |||||
Long-term capital lease obligations | 193 | 194 | |||||
Pension and other postretirement benefit obligations | 430 | 578 | |||||
Long-term tax liabilities | 73 | 75 | |||||
Other long-term liabilities | 128 | 145 | |||||
Long-term liabilities of discontinued operations | 45 | 42 | |||||
Commitments and contingencies | |||||||
Stockholders’ deficit | |||||||
Common stock, $0.01 par value: 400 shares authorized; 268 and 266 shares issued, respectively | 3 | 3 | |||||
Capital in excess of par value | 2,820 | 2,808 | |||||
Treasury stock, at cost, 0 and 1 shares, respectively | — | (5 | ) | ||||
Accumulated other comprehensive loss | (307 | ) | (422 | ) | |||
Accumulated deficit | (2,774 | ) | (2,825 | ) | |||
Total SUPERVALU INC. stockholders’ deficit | (258 | ) | (441 | ) | |||
Noncontrolling interests | 5 | 8 | |||||
Total stockholders’ deficit | (253 | ) | (433 | ) | |||
Total liabilities and stockholders’ deficit | $ | 4,474 | $ | 4,370 |
Year-To-Date Ended | |||||||
December 3, 2016 (40 weeks) | December 5, 2015 (40 weeks) | ||||||
Cash flows from operating activities | |||||||
Net earnings including noncontrolling interests | $ | 54 | $ | 132 | |||
Income from discontinued operations, net of tax | 33 | 78 | |||||
Net earnings from continuing operations | 21 | 54 | |||||
Adjustments to reconcile Net earnings from continuing operations to Net cash provided by operating activities – continuing operations: | |||||||
Goodwill and intangible asset impairment charges | 15 | 6 | |||||
Asset impairment and other charges | 4 | 2 | |||||
Loss on debt extinguishment | 7 | — | |||||
Net gain on sale of assets and exits of surplus leases | (1 | ) | (2 | ) | |||
Depreciation and amortization | 159 | 161 | |||||
LIFO charge | 3 | 6 | |||||
Deferred income taxes | 5 | (14 | ) | ||||
Stock-based compensation | 13 | 17 | |||||
Net pension and other postretirement benefits expense | 23 | 29 | |||||
Contributions to pension and other postretirement benefit plans | (2 | ) | (38 | ) | |||
Other adjustments | 6 | 18 | |||||
Changes in operating assets and liabilities, net of effects from business acquisitions | (106 | ) | (85 | ) | |||
Net cash provided by operating activities – continuing operations | 147 | 154 | |||||
Net cash provided by operating activities – discontinued operations | 69 | 98 | |||||
Net cash provided by operating activities | 216 | 252 | |||||
Cash flows from investing activities | |||||||
Proceeds from sale of assets | 2 | 1 | |||||
Purchases of property, plant and equipment | (118 | ) | (112 | ) | |||
Payments for business acquisitions | (19 | ) | (6 | ) | |||
Other | (1 | ) | (24 | ) | |||
Net cash used in investing activities – continuing operations | (136 | ) | (141 | ) | |||
Net cash used in investing activities – discontinued operations | (65 | ) | (57 | ) | |||
Net cash used in investing activities | (201 | ) | (198 | ) | |||
Cash flows from financing activities | |||||||
Proceeds from issuance of debt | 218 | — | |||||
Proceeds from sale of common stock | 3 | 10 | |||||
Payments of debt and capital lease obligations | (217 | ) | (34 | ) | |||
Payments for debt financing costs | (6 | ) | (1 | ) | |||
Distributions to noncontrolling interests | (6 | ) | (8 | ) | |||
Other | — | — | |||||
Net cash used in financing activities – continuing operations | (8 | ) | (33 | ) | |||
Net cash used in financing activities – discontinued operations | — | (1 | ) | ||||
Net cash used in financing activities | (8 | ) | (34 | ) | |||
Net increase in cash and cash equivalents | 7 | 20 | |||||
Cash and cash equivalents at beginning of period | 57 | 114 | |||||
Cash and cash equivalents at the end of period | $ | 64 | $ | 134 | |||
Less cash and cash equivalents of discontinued operations at end of period | $ | (17 | ) | $ | (47 | ) | |
Cash and cash equivalents of continuing operations at end of period | $ | 47 | $ | 87 | |||
SUPPLEMENTAL CASH FLOW INFORMATION | |||||||
The Company’s non-cash investing and financing activities were as follows: | |||||||
Purchases of property, plant and equipment included in Accounts payable | $ | 25 | $ | 31 | |||
Capital lease asset additions | $ | 15 | $ | 18 | |||
Interest and income taxes paid: | |||||||
Interest paid, net of amounts capitalized | $ | 136 | $ | 150 | |||
Income taxes paid, net | $ | 12 | $ | 44 |
RECONCILIATIONS OF (LOSS) EARNINGS FROM CONTINUING OPERATIONS TO EARNINGS FROM CONTINUING OPERATIONS AFTER ADJUSTMENTS | ||||||||||||
Table 1 | ||||||||||||
Third Quarter Ended December 3, 2016 | ||||||||||||
(In millions, except per share data) | (Loss) Earnings Before Tax | (Loss) Earnings After Tax | Diluted (Loss) Earnings Per Share | |||||||||
Continuing operations | $ | (38 | ) | $ | (11 | ) | $ | (0.04 | ) | |||
Adjustments: | ||||||||||||
Pension settlement charge | 41 | 24 | 0.09 | |||||||||
Goodwill impairment charge | 15 | 9 | 0.03 | |||||||||
Store closure charges and costs | 1 | 1 | — | |||||||||
Deferred income tax benefit | — | (9 | ) | (0.03 | ) | |||||||
Continuing operations after adjustments | $ | 19 | $ | 14 | $ | 0.05 | ||||||
Table 2 | ||||||||||||
Year-To-Date Ended December 3, 2016 | ||||||||||||
(In millions, except per share data) | Earnings Before Tax | Earnings After Tax | Diluted Earnings Per Share | |||||||||
Continuing operations | $ | 10 | $ | 21 | $ | 0.07 | ||||||
Adjustments: | ||||||||||||
Pension settlement charge | 41 | 24 | 0.09 | |||||||||
Goodwill impairment charge | 15 | 9 | 0.03 | |||||||||
Unamortized financing cost charges | 5 | 3 | 0.01 | |||||||||
Store closure charges and costs | 5 | 4 | 0.01 | |||||||||
Debt refinancing costs | 2 | 1 | — | |||||||||
Severance costs | (1 | ) | (1 | ) | — | |||||||
Sales and use tax refund | (2 | ) | (1 | ) | — | |||||||
Deferred income tax benefit | — | (9 | ) | (0.03 | ) | |||||||
Supply agreement termination fee | (9 | ) | (6 | ) | (0.02 | ) | ||||||
Continuing operations after adjustments | $ | 66 | $ | 45 | $ | 0.16 |
Table 3 | ||||||||||||
Third Quarter Ended December 5, 2015 | ||||||||||||
(In millions, except per share data) | Earnings Before Tax | Earnings After Tax | Diluted Earnings Per Share | |||||||||
Continuing operations | $ | 22 | $ | 16 | $ | 0.05 | ||||||
Adjustments: | ||||||||||||
Intangible asset impairment charge | 6 | 4 | 0.02 | |||||||||
Severance costs | 2 | 1 | 0.01 | |||||||||
Store closure charges and costs | 1 | 1 | — | |||||||||
Continuing operations after adjustments | $ | 31 | $ | 22 | $ | 0.08 | ||||||
Table 4 | ||||||||||||
Year-To-Date Ended December 5, 2015 | ||||||||||||
(In millions, except per share data) | Earnings Before Tax | Earnings After Tax | Diluted Earnings Per Share | |||||||||
Continuing operations | $ | 78 | $ | 54 | $ | 0.18 | ||||||
Adjustments: | ||||||||||||
Intangible asset impairment charge | 6 | 4 | 0.02 | |||||||||
Severance costs | 6 | 3 | 0.01 | |||||||||
Store closure charges and costs | 1 | 1 | — | |||||||||
Continuing operations after adjustments | $ | 91 | $ | 62 | $ | 0.21 |
RECONCILIATIONS OF NET (LOSS) EARNINGS FROM CONTINUING OPERATIONS TO ADJUSTED EBITDA AND PRO FORMA ADJUSTED EBITDA | ||||||||||||||||
Table 5 | ||||||||||||||||
Third Quarter Ended | Year-To-Date Ended | |||||||||||||||
(In millions) | December 3, 2016 (12 weeks) | December 5, 2015 (12 weeks) | December 3, 2016 (40 weeks) | December 5, 2015 (40 weeks) | ||||||||||||
Results of operations, as reported | ||||||||||||||||
Net (loss) earnings from continuing operations | $ | (11 | ) | $ | 16 | $ | 21 | $ | 54 | |||||||
Income tax (benefit) provision | (27 | ) | 6 | (11 | ) | 24 | ||||||||||
Equity in earnings of unconsolidated affiliates | (1 | ) | (1 | ) | (3 | ) | (3 | ) | ||||||||
Interest expense, net | 40 | 45 | 141 | 148 | ||||||||||||
Total operating earnings | $ | 1 | $ | 66 | $ | 148 | $ | 223 | ||||||||
Add Equity in earnings of unconsolidated affiliates | 1 | 1 | 3 | 3 | ||||||||||||
Less net earnings attributable to noncontrolling interests | (1 | ) | (1 | ) | (3 | ) | (6 | ) | ||||||||
Depreciation and amortization | 48 | 49 | 159 | 161 | ||||||||||||
LIFO charge | 1 | 1 | 3 | 6 | ||||||||||||
Pension settlement charge | 41 | — | 41 | — | ||||||||||||
Goodwill and intangible asset impairment charge | 15 | 6 | 15 | 6 | ||||||||||||
Store closure charges and costs | 1 | 1 | 5 | 1 | ||||||||||||
Severance costs | — | 2 | (1 | ) | 6 | |||||||||||
Sales and use tax refund | — | — | (2 | ) | — | |||||||||||
Supply agreement termination fee | — | — | (9 | ) | — | |||||||||||
Adjusted EBITDA(1) | $ | 107 | $ | 125 | $ | 359 | $ | 400 | ||||||||
Pro forma adjustments: | ||||||||||||||||
Net sales(2) | 9 | 9 | 33 | 39 | ||||||||||||
Cost of sales(3) | (2 | ) | (2 | ) | (9 | ) | (15 | ) | ||||||||
Total pro forma adjustments | 7 | 7 | 24 | 24 | ||||||||||||
Pro forma adjusted EBITDA | $ | 114 | $ | 132 | $ | 383 | $ | 424 |
(1) | The Company's measure of adjusted EBITDA includes SUPERVALU INC.'s operating earnings (loss), as reported, plus depreciation and amortization, LIFO charge, equity earnings of unconsolidated affiliates and certain adjustment items as determined by management, and less net earnings attributable to noncontrolling interests. |
(2) | This adjustment reflects (1) the fees that the Company expects to recognize in connection with performing services for Save-A-Lot under the services agreement entered into with Save-A-Lot on December 5, 2016 (the "Services Agreement") and (2) Wholesale distribution sales to Save-A-Lot pursuant to a customer agreement between the Company and Save-A-Lot that had historically been intercompany sales. Actual Services Agreement fees are subject to adjustments pursuant to the terms of the Services Agreement including for changes in service levels. This adjustment only applies to time periods prior to the sale of Save-A-Lot on December 5, 2016. |
(3) | This adjustment reflects the Cost of sales related to Wholesale’s distribution to Save-A-Lot, which was previously eliminated on an intercompany basis. No adjustment for expenses related to the Services Agreement has been included within Cost of sales because the shared service center costs incurred to support back office functions related to the Services Agreement represent administrative overhead costs that have been included within Selling and administrative expenses within the Company’s historical consolidated financial statements. This adjustment only applies to time periods prior to the sale of Save-A-Lot on December 5, 2016. |
RECONCILIATION OF NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS TO TOTAL AND SEGMENT OPERATING EARNINGS, TO SUPPLEMENTALLY PROVIDED TOTAL AND SEGMENT ADJUSTED EBITDA | ||||||||||||||||
Table 6 | ||||||||||||||||
Third Quarter Ended | Year-To-Date Ended | |||||||||||||||
(In millions) | December 3, 2016 (12 weeks) | December 5, 2015 (12 weeks) | December 3, 2016 (40 weeks) | December 5, 2015 (40 weeks) | ||||||||||||
Results of operations, as reported: | ||||||||||||||||
Net (loss) earnings from continuing operations | $ | (11 | ) | $ | 16 | $ | 21 | $ | 54 | |||||||
Income tax provision | (27 | ) | 6 | (11 | ) | 24 | ||||||||||
Equity in earnings of unconsolidated affiliates | (1 | ) | (1 | ) | (3 | ) | (3 | ) | ||||||||
Interest expense, net | 40 | 45 | 141 | 148 | ||||||||||||
Total operating earnings | $ | 1 | $ | 66 | $ | 148 | $ | 223 | ||||||||
Reconciliation of segment operating earnings to total operating earnings, as reported: | ||||||||||||||||
Wholesale operating earnings | $ | 52 | $ | 54 | $ | 174 | $ | 180 | ||||||||
Retail operating (loss) earnings | (14 | ) | 21 | (18 | ) | 64 | ||||||||||
Corporate operating loss | (37 | ) | (9 | ) | (8 | ) | (21 | ) | ||||||||
Total operating earnings | $ | 1 | $ | 66 | $ | 148 | $ | 223 | ||||||||
Reconciliation of segment operating earnings, as reported, to segment Adjusted EBITDA: | ||||||||||||||||
Wholesale operating earnings, as reported | $ | 52 | $ | 54 | $ | 174 | $ | 180 | ||||||||
Adjustments: | ||||||||||||||||
Supply agreement termination fee | — | — | (9 | ) | — | |||||||||||
Intangible asset impairment charge | — | 6 | — | 6 | ||||||||||||
Wholesale operating earnings, as adjusted | 52 | 60 | 165 | 186 | ||||||||||||
Wholesale depreciation and amortization | 12 | 12 | 40 | 37 | ||||||||||||
LIFO charge | — | — | 1 | 2 | ||||||||||||
Wholesale adjusted EBITDA(1) | $ | 64 | $ | 72 | $ | 206 | $ | 225 | ||||||||
Retail operating (loss) earnings, as reported | $ | (14 | ) | $ | 21 | $ | (18 | ) | $ | 64 | ||||||
Adjustments: | ||||||||||||||||
Goodwill impairment charge | 15 | — | 15 | — | ||||||||||||
Store closure charges and costs | 1 | 1 | 5 | 1 | ||||||||||||
Retail operating earnings, as adjusted | 2 | 22 | 2 | 65 | ||||||||||||
Retail depreciation and amortization | 35 | 35 | 114 | 118 | ||||||||||||
LIFO charge | 1 | 1 | 2 | 4 | ||||||||||||
Equity in earnings of unconsolidated affiliates | 1 | 1 | 3 | 3 | ||||||||||||
Net earnings attributable to noncontrolling interests | (1 | ) | (1 | ) | (3 | ) | (6 | ) | ||||||||
Retail adjusted EBITDA(1) | $ | 38 | $ | 58 | $ | 118 | $ | 184 | ||||||||
Corporate operating (loss) earnings, as reported | $ | (37 | ) | $ | (9 | ) | $ | (8 | ) | $ | (21 | ) | ||||
Adjustments: | ||||||||||||||||
Pension settlement charge | 41 | — | 41 | — | ||||||||||||
Sales and use tax refund | — | — | (2 | ) | — | |||||||||||
Severance costs | — | 2 | (1 | ) | 6 | |||||||||||
Corporate operating earnings (loss), as adjusted | 4 | (7 | ) | 30 | (15 | ) | ||||||||||
Corporate depreciation and amortization | 1 | 2 | 5 | 6 | ||||||||||||
Corporate adjusted EBITDA(1) | $ | 5 | $ | (5 | ) | $ | 35 | $ | (9 | ) | ||||||
Total adjusted EBITDA(1) | $ | 107 | $ | 125 | $ | 359 | $ | 400 | ||||||||
Pro forma adjustments: | ||||||||||||||||
Net sales(2) | 9 | 9 | 33 | 39 | ||||||||||||
Cost of sales(3) | (2 | ) | (2 | ) | (9 | ) | (15 | ) | ||||||||
Total Pro forma adjustments | 7 | 7 | 24 | 24 | ||||||||||||
Pro Forma Adjusted EBITDA | $ | 114 | $ | 132 | $ | 383 | $ | 424 |
(1) | The Company's measure of adjusted EBITDA includes SUPERVALU INC.'s segment operating earnings (loss), as reported, plus depreciation and amortization, LIFO charge, equity earnings of unconsolidated affiliates and certain adjustment items as determined by management, and less net earnings attributable to noncontrolling interests. |
(2) | This adjustment reflects (1) the fees that the Company expects to recognize in connection with performing services for Save-A-Lot under the Services Agreement and (2) Wholesale distribution sales to Save-A-Lot pursuant to a customer agreement between the Company and Save-A-Lot that had historically been intercompany sales. Actual Services Agreement fees are subject to adjustments pursuant to the terms of the Services Agreement including for changes in service levels. This adjustment only applies to time periods prior to the sale of Save-A-Lot on December 5, 2016. |
(3) | This adjustment reflects the Cost of sales related to Wholesale’s distribution to Save-A-Lot, which was previously eliminated on an intercompany basis. No adjustment for expenses related to the Services Agreement has been included within Cost of sales because the shared service center costs incurred to support back office functions related to the Services Agreement represent administrative overhead costs that have been included within Selling and administrative expenses within the Company’s historical consolidated financial statements. This adjustment only applies to time periods prior to the sale of Save-A-Lot on December 5, 2016. |
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