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 | ||||||||
For the Fiscal Year Ended February 24, 2018 (52 weeks) | ||||||||
(In millions) | Projected Low End Amount | Projected High End Amount | ||||||
Results of operations, as projected | ||||||||
Net earnings from continuing operations | $ | 80 | $ | 93 | ||||
Income tax provision | 45 | 52 | ||||||
Equity in earnings of unconsolidated affiliates | (4 | ) | (4 | ) | ||||
Interest expense, net | 111 | 111 | ||||||
Total operating earnings | $ | 232 | $ | 252 | ||||
Add Equity in earnings of unconsolidated affiliates | 4 | 4 | ||||||
Less net earnings attributable to noncontrolling interests | (4 | ) | (4 | ) | ||||
Depreciation and amortization | 202 | 202 | ||||||
LIFO charge | 6 | 6 | ||||||
Adjusted EBITDA | $ | 440 | $ | 460 |
Exhibit Number | Description | |
99.1 | News Release of SUPERVALU INC., dated April 25, 2017 |
Dated: | April 25, 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 April 25, 2017 |
• | Fourth quarter net earnings from continuing operations of $6 million; adjusted EBITDA of $124 million |
• | Fourth quarter net earnings per share from continuing operations of $0.02; adjusted earnings per share of $0.13 |
• | Completion of Save-A-Lot sale in fourth quarter strengthened balance sheet |
• | Agreement to acquire Unified Grocers announced in April 2017 |
• | Total outstanding debt and pension obligation reduced by $1.04 billion and $248 million, respectively, in fiscal 2017 |
Fourth Quarter Ended | Fiscal Year Ended | ||||||||||||||||||||||||||
February 25, 2017 (12 weeks) | February 27, 2016 (12 weeks) | February 25, 2017 (52 weeks) | February 27, 2016 (52 weeks) | ||||||||||||||||||||||||
Net sales | $ | 2,907 | 100.0 | % | $ | 2,891 | 100.0 | % | $ | 12,480 | 100.0 | % | $ | 12,907 | 100.0 | % | |||||||||||
Cost of sales | 2,472 | 85.0 | 2,460 | 85.1 | 10,693 | 85.7 | 11,033 | 85.5 | |||||||||||||||||||
Gross profit | 435 | 15.0 | 431 | 14.9 | 1,787 | 14.3 | 1,874 | 14.5 | |||||||||||||||||||
Selling and administrative expenses(1) | 400 | 13.7 | 356 | 12.3 | 1,589 | 12.7 | 1,570 | 12.2 | |||||||||||||||||||
Goodwill and intangible asset impairment charges(1) | — | — | — | — | 15 | 0.1 | 6 | — | |||||||||||||||||||
Operating earnings | 35 | 1.2 | 75 | 2.6 | 183 | 1.5 | 298 | 2.3 | |||||||||||||||||||
Interest expense, net(1) | 40 | 1.3 | 47 | 1.6 | 181 | 1.4 | 195 | 1.5 | |||||||||||||||||||
Equity in earnings of unconsolidated affiliates | (2 | ) | — | (2 | ) | — | (5 | ) | — | (5 | ) | — | |||||||||||||||
(Loss) earnings from continuing operations before income taxes(1) | (3 | ) | (0.1 | ) | 30 | 1.0 | 7 | 0.1 | 108 | 0.8 | |||||||||||||||||
Income tax (benefit) provision | (9 | ) | (0.3 | ) | — | — | (20 | ) | (0.2 | ) | 24 | 0.2 | |||||||||||||||
Net earnings from continuing operations(1) | 6 | 0.2 | 30 | 1.0 | 27 | 0.2 | 84 | 0.6 | |||||||||||||||||||
Income from discontinued operations, net of tax | 594 | 20.5 | 24 | 0.9 | 627 | 5.0 | 102 | 0.8 | |||||||||||||||||||
Net earnings including noncontrolling interests | 600 | 20.7 | 54 | 1.9 | 654 | 5.2 | 186 | 1.4 | |||||||||||||||||||
Less net earnings attributable to noncontrolling interests | (1 | ) | — | (2 | ) | (0.1 | ) | (4 | ) | — | (8 | ) | (0.1 | ) | |||||||||||||
Net earnings attributable to SUPERVALU INC. | $ | 599 | 20.6 | % | $ | 52 | 1.8 | % | $ | 650 | 5.2 | % | $ | 178 | 1.4 | % | |||||||||||
Basic net earnings per share attributable to SUPERVALU INC.: | |||||||||||||||||||||||||||
Continuing operations | $ | 0.02 | $ | 0.10 | $ | 0.09 | $ | 0.29 | |||||||||||||||||||
Discontinued operations | $ | 2.23 | $ | 0.09 | $ | 2.37 | $ | 0.39 | |||||||||||||||||||
Basic net earnings per share | $ | 2.25 | $ | 0.20 | $ | 2.45 | $ | 0.68 | |||||||||||||||||||
Diluted net earnings per share attributable to SUPERVALU INC.: | |||||||||||||||||||||||||||
Continuing operations(2) | $ | 0.02 | $ | 0.10 | $ | 0.09 | $ | 0.28 | |||||||||||||||||||
Discontinued operations | $ | 2.21 | $ | 0.09 | $ | 2.34 | $ | 0.38 | |||||||||||||||||||
Diluted net earnings per share | $ | 2.23 | $ | 0.20 | $ | 2.43 | $ | 0.66 | |||||||||||||||||||
Weighted average number of shares outstanding: | |||||||||||||||||||||||||||
Basic | 267 | 264 | 265 | 263 | |||||||||||||||||||||||
Diluted | 269 | 267 | 268 | 268 |
(1) | Results from continuing operations for the fourth quarter ended February 25, 2017 include net charges and costs of $54 before tax ($32 after tax, or $0.11 per diluted share), composed of an asset impairment charge of $41 before tax ($25 after tax, or $0.09 per diluted share) and a pension settlement charge of $1 before tax ($0 after tax, or $0.00 per diluted share) within Selling and administrative expenses, and unamortized financing cost charges of $12 before tax ($7 after tax, or $0.02 per diluted share) within Interest expense, net. |
Fourth Quarter Ended | Fiscal Year Ended | ||||||||||||||
February 25, 2017 (12 weeks) | February 27, 2016 (12 weeks) | February 25, 2017 (52 weeks) | February 27, 2016 (52 weeks) | ||||||||||||
Net sales | |||||||||||||||
Wholesale | $ | 1,793 | $ | 1,740 | $ | 7,705 | $ | 7,935 | |||||||
% of total | 61.7 | % | 60.2 | % | 61.7 | % | 61.5 | % | |||||||
Retail | 1,072 | 1,107 | 4,596 | 4,769 | |||||||||||
% of total | 36.9 | % | 38.3 | % | 36.8 | % | 36.9 | % | |||||||
Corporate | 42 | 44 | 179 | 203 | |||||||||||
% of total | 1.4 | % | 1.5 | % | 1.5 | % | 1.6 | % | |||||||
Total net sales | $ | 2,907 | $ | 2,891 | $ | 12,480 | $ | 12,907 | |||||||
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Operating earnings | |||||||||||||||
Wholesale(1) | $ | 64 | $ | 50 | $ | 238 | $ | 230 | |||||||
% of Wholesale sales | 3.6 | % | 2.9 | % | 3.1 | % | 2.9 | % | |||||||
Retail(2) | (27 | ) | 30 | (45 | ) | 94 | |||||||||
% of Retail sales | (2.6 | )% | 2.7 | % | (1.0 | )% | 2.0 | % | |||||||
Corporate(3) | (2 | ) | (5 | ) | (10 | ) | (26 | ) | |||||||
Total operating earnings | 35 | 75 | 183 | 298 | |||||||||||
% of total net sales | 1.2 | % | 2.6 | % | 1.5 | % | 2.3 | % | |||||||
Interest expense, net(4) | 40 | 47 | 181 | 195 | |||||||||||
Equity in earnings of unconsolidated affiliates | (2 | ) | (2 | ) | (5 | ) | (5 | ) | |||||||
(Loss) earnings from continuing operations before income taxes | (3 | ) | 30 | 7 | 108 | ||||||||||
Income tax (benefit) provision | (9 | ) | — | (20 | ) | 24 | |||||||||
Net earnings from continuing operations | 6 | 30 | 27 | 84 | |||||||||||
Income from discontinued operations, net of tax | 594 | 24 | 627 | 102 | |||||||||||
Net earnings including noncontrolling interests | 600 | 54 | 654 | 186 | |||||||||||
Less net earnings attributable to noncontrolling interests | (1 | ) | (2 | ) | (4 | ) | (8 | ) | |||||||
Net earnings attributable to SUPERVALU INC. | $ | 599 | $ | 52 | $ | 650 | $ | 178 | |||||||
LIFO (credit) charge | |||||||||||||||
Wholesale | $ | (1 | ) | $ | (1 | ) | $ | — | $ | 1 | |||||
Retail | (1 | ) | (2 | ) | 1 | 2 | |||||||||
Total LIFO (credit) charge | $ | (2 | ) | $ | (3 | ) | $ | 1 | $ | 3 | |||||
Depreciation and amortization | |||||||||||||||
Wholesale | $ | 14 | $ | 12 | $ | 54 | $ | 49 | |||||||
Retail | 31 | 35 | 145 | 153 | |||||||||||
Corporate | 3 | 2 | 8 | 8 | |||||||||||
Total depreciation and amortization | $ | 48 | $ | 49 | $ | 207 | $ | 210 |
(1) | Wholesale operating earnings for the fiscal year ended February 25, 2017 include a supply agreement termination fee of $9. Wholesale operating earnings for the fiscal year ended February 27, 2016 include an intangible asset impairment charge of $6. |
(2) | Retail operating loss for the fourth quarter ended February 25, 2017 includes an asset impairment charge of $41. Retail operating loss for the fiscal year ended February 25, 2017 includes an asset impairment charge of $41, a goodwill impairment charge of $15 and store closure charges and costs of $5. Retail operating earnings for the fiscal year ended February 27, 2016 include store closure charges and costs of $1. |
(3) | Corporate operating loss for the fourth quarter ended February 25, 2017 includes a pension settlement charge of $1. Corporate operating loss for the fourth quarter ended February 27, 2016 includes store closure charges and costs of $6. Corporate operating loss for the fiscal year ended February 25, 2017 includes pension settlement charges of $42, offset in part by a sales and use tax refund of $2 and a severance benefit of $1. Corporate operating loss for the fiscal year ended February 27, 2016 includes severance costs of $6 and store closure charges and costs of $6. |
(4) | Interest expense, net for the fourth quarter ended February 25, 2017 includes unamortized financing cost charges of $12. Interest expense, net for the fiscal year ended February 25, 2017 includes unamortized financing cost charges of $17 and debt refinancing costs of $2. Interest expense, net for the fourth quarter and fiscal year ended February 27, 2016 includes debt refinancing costs of $6 and unamortized financing costs charges of $4. |
February 25, 2017 | February 27, 2016 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 332 | $ | 42 | |||
Receivables, net | 386 | 406 | |||||
Inventories, net | 764 | 738 | |||||
Other current assets | 59 | 73 | |||||
Current assets of discontinued operations | — | 376 | |||||
Total current assets | 1,541 | 1,635 | |||||
Property, plant and equipment, net | 1,004 | 1,021 | |||||
Goodwill | 710 | 725 | |||||
Intangible assets, net | 39 | 47 | |||||
Deferred tax assets | 165 | 238 | |||||
Other assets | 121 | 91 | |||||
Long-term assets of discontinued operations | — | 613 | |||||
Total assets | $ | 3,580 | $ | 4,370 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||
Current liabilities | |||||||
Accounts payable | $ | 881 | $ | 829 | |||
Accrued vacation, compensation and benefits | 150 | 148 | |||||
Current maturities of long-term debt and capital lease obligations | 26 | 123 | |||||
Other current liabilities | 172 | 126 | |||||
Current liabilities of discontinued operations | — | 346 | |||||
Total current liabilities | 1,229 | 1,572 | |||||
Long-term debt | 1,263 | 2,197 | |||||
Long-term capital lease obligations | 186 | 194 | |||||
Pension and other postretirement benefit obligations | 322 | 578 | |||||
Long-term tax liabilities | 63 | 75 | |||||
Other long-term liabilities | 134 | 145 | |||||
Long-term liabilities of discontinued operations | — | 42 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity (deficit) | |||||||
Common stock, $0.01 par value: 400 shares authorized; 268 and 266 shares issued, respectively | 3 | 3 | |||||
Capital in excess of par value | 2,828 | 2,808 | |||||
Treasury stock, at cost, 0 and 1 shares, respectively | (2 | ) | (5 | ) | |||
Accumulated other comprehensive loss | (278 | ) | (422 | ) | |||
Accumulated deficit | (2,175 | ) | (2,825 | ) | |||
Total SUPERVALU INC. stockholders’ equity (deficit) | 376 | (441 | ) | ||||
Noncontrolling interests | 7 | 8 | |||||
Total stockholders’ equity (deficit) | 383 | (433 | ) | ||||
Total liabilities and stockholders’ equity (deficit) | $ | 3,580 | $ | 4,370 |
Fiscal Year Ended | |||||||
February 25, 2017 (52 weeks) | February 27, 2016 (52 weeks) | ||||||
Cash flows from operating activities | |||||||
Net earnings including noncontrolling interests | $ | 654 | $ | 186 | |||
Income from discontinued operations, net of tax | 627 | 102 | |||||
Net earnings from continuing operations | 27 | 84 | |||||
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 | 47 | 8 | |||||
Loss on debt extinguishment | 19 | 10 | |||||
Net gain on sale of assets and exits of surplus leases | (1 | ) | (2 | ) | |||
Depreciation and amortization | 207 | 210 | |||||
LIFO charge | 1 | 3 | |||||
Deferred income taxes | 2 | 1 | |||||
Stock-based compensation | 18 | 22 | |||||
Net pension and other postretirement benefits costs | 18 | 34 | |||||
Contributions to pension and other postretirement benefit plans | (62 | ) | (40 | ) | |||
Other adjustments | 3 | 20 | |||||
Changes in operating assets and liabilities, net of effects from business combinations: | |||||||
Receivables | 27 | 22 | |||||
Inventories | (18 | ) | (52 | ) | |||
Accounts payable and accrued liabilities | 36 | (33 | ) | ||||
Income taxes | (23 | ) | (8 | ) | |||
Other changes in operating assets and liabilities | (8 | ) | (40 | ) | |||
Net cash provided by operating activities—continuing operations | 308 | 245 | |||||
Net cash provided by operating activities—discontinued operations | 53 | 179 | |||||
Net cash provided by operating activities | 361 | 424 | |||||
Cash flows from investing activities | |||||||
Proceeds from sale of assets | 4 | 2 | |||||
Purchases of property, plant and equipment | (182 | ) | (158 | ) | |||
Payments for business acquisition | (19 | ) | (7 | ) | |||
Other | (1 | ) | (24 | ) | |||
Net cash used in investing activities—continuing operations | (198 | ) | (187 | ) | |||
Net cash provided by (used in) investing activities—discontinued operations | 1,219 | (101 | ) | ||||
Net cash provided by (used in) investing activities | 1,021 | (288 | ) | ||||
Cash flows from financing activities | |||||||
Proceeds from issuance of debt | 218 | 138 | |||||
Proceeds from the sale of common stock | 3 | 10 | |||||
Payments of debt and capital lease obligations | (1,315 | ) | (320 | ) | |||
Payments for debt financing costs | (6 | ) | (9 | ) | |||
Distributions to noncontrolling interests | (7 | ) | (10 | ) | |||
Dividends paid | — | — | |||||
Other | 1 | (1 | ) | ||||
Net cash used in financing activities—continuing operations | (1,106 | ) | (192 | ) | |||
Net cash used in financing activities—discontinued operations | (1 | ) | (1 | ) | |||
Net cash used in financing activities | (1,107 | ) | (193 | ) | |||
Net increase (decrease) in cash and cash equivalents | 275 | (57 | ) | ||||
Cash and cash equivalents at beginning of year | 57 | 114 | |||||
Cash and cash equivalents at end of year | $ | 332 | $ | 57 | |||
Less cash and cash equivalents of discontinued operations at end of year | — | (15 | ) | ||||
Cash and cash equivalents of continuing operations at end of year | $ | 332 | $ | 42 | |||
SUPPLEMENTAL CASH FLOW INFORMATION | |||||||
Supervalu’s non-cash activities were as follows: | |||||||
Purchases of property, plant and equipment included in Accounts payable | $ | 33 | $ | 28 | |||
Capital lease asset additions | $ | 17 | $ | 20 | |||
Interest and income taxes paid: | |||||||
Interest paid, net of amounts capitalized | $ | 156 | $ | 176 | |||
Income taxes (refunded) paid, net | $ | 24 | $ | 91 |
Table 1 | ||||||||||||
Fourth Quarter Ended February 25, 2017 | ||||||||||||
(In millions, except per share data) | (Loss) earnings Before Tax | Earnings After Tax | Diluted Earnings Per Share | |||||||||
Continuing operations | $ | (3 | ) | $ | 6 | $ | 0.02 | |||||
Adjustments: | ||||||||||||
Asset impairment charge | 41 | 25 | 0.09 | |||||||||
Unamortized financing cost charges | 12 | 7 | 0.02 | |||||||||
Pension settlement charge | 1 | — | — | |||||||||
Continuing operations after adjustments | $ | 51 | $ | 38 | $ | 0.13 |
Table 2 | ||||||||||||
Fiscal Year Ended February 25, 2017 | ||||||||||||
(In millions, except per share data) | Earnings Before Tax | Earnings After Tax | Diluted Earnings Per Share | |||||||||
Continuing operations | $ | 7 | $ | 27 | $ | 0.09 | ||||||
Adjustments: | ||||||||||||
Pension settlement charges | 42 | 24 | 0.09 | |||||||||
Asset impairment charge | 41 | 25 | 0.09 | |||||||||
Unamortized financing cost charges | 17 | 10 | 0.03 | |||||||||
Goodwill impairment charge | 15 | 9 | 0.03 | |||||||||
Store closure charges and costs | 5 | 4 | 0.01 | |||||||||
Debt refinancing costs | 2 | 1 | — | |||||||||
Supply agreement termination fee | (9 | ) | (6 | ) | (0.02 | ) | ||||||
Deferred income tax benefit | — | (9 | ) | (0.03 | ) | |||||||
Sales and use tax refund | (2 | ) | (1 | ) | — | |||||||
Severance costs | (1 | ) | (1 | ) | — | |||||||
Continuing operations after adjustments | $ | 117 | $ | 83 | $ | 0.29 |
Table 3 | ||||||||||||
Fourth Quarter Ended February 27, 2016 | ||||||||||||
(In millions, except per share data) | Earnings Before Tax | Earnings After Tax | Diluted Earnings Per Share | |||||||||
Continuing operations | $ | 30 | $ | 30 | $ | 0.10 | ||||||
Adjustments: | ||||||||||||
Store closure charges and costs | 6 | 3 | 0.01 | |||||||||
Debt refinancing costs | 6 | 4 | 0.02 | |||||||||
Unamortized financing cost charges | 4 | 2 | 0.01 | |||||||||
Continuing operations after adjustments | $ | 46 | $ | 39 | $ | 0.14 |
Table 4 | ||||||||||||
Fiscal Year Ended February 27, 2016 | ||||||||||||
(In millions, except per share data) | Earnings Before Tax | Earnings After Tax | Diluted Earnings Per Share | |||||||||
Continuing operations | $ | 108 | $ | 84 | $ | 0.28 | ||||||
Adjustments: | ||||||||||||
Store closure charges and costs | 7 | 4 | 0.01 | |||||||||
Severance costs | 6 | 3 | 0.01 | |||||||||
Intangible asset impairment charge | 6 | 4 | 0.01 | |||||||||
Debt refinancing costs | 6 | 4 | 0.02 | |||||||||
Unamortized financing cost charges | 4 | 2 | 0.01 | |||||||||
Continuing operations after adjustments | $ | 137 | $ | 101 | $ | 0.34 |
RECONCILIATIONS OF NET EARNINGS FROM CONTINUING OPERATIONS TO ADJUSTED EBITDA AND PRO FORMA ADJUSTED EBITDA | ||||||||||||||||
Table 5 | ||||||||||||||||
Fourth Quarter Ended | Fiscal Year Ended | |||||||||||||||
(In millions) | February 25, 2017 (12 weeks) | February 27, 2016 (12 weeks) | February 25, 2017 (52 weeks) | February 27, 2016 (52 weeks) | ||||||||||||
Results of operations, as reported | ||||||||||||||||
Net earnings from continuing operations | $ | 6 | $ | 30 | $ | 27 | $ | 84 | ||||||||
Income tax (benefit) provision | (9 | ) | — | (20 | ) | 24 | ||||||||||
Equity in earnings of unconsolidated affiliates | (2 | ) | (2 | ) | (5 | ) | (5 | ) | ||||||||
Interest expense, net | 40 | 47 | 181 | 195 | ||||||||||||
Total operating earnings | $ | 35 | $ | 75 | $ | 183 | $ | 298 | ||||||||
Add Equity in earnings of unconsolidated affiliates | 2 | 2 | 5 | 5 | ||||||||||||
Less net earnings attributable to noncontrolling interests | (1 | ) | (2 | ) | (4 | ) | (8 | ) | ||||||||
Depreciation and amortization | 48 | 49 | 207 | 210 | ||||||||||||
LIFO charge | (2 | ) | (3 | ) | 1 | 3 | ||||||||||
Pension settlement charges | 1 | — | 42 | — | ||||||||||||
Asset impairment charge | 41 | — | 41 | — | ||||||||||||
Goodwill and intangible asset impairment charges | — | — | 15 | 6 | ||||||||||||
Store closure charges and costs | — | 6 | 5 | 7 | ||||||||||||
Severance (benefit) cost | — | — | (1 | ) | 6 | |||||||||||
Sales and use tax refund | — | — | (2 | ) | — | |||||||||||
Supply agreement termination fee | — | — | (9 | ) | — | |||||||||||
Adjusted EBITDA(1) | $ | 124 | $ | 127 | $ | 483 | $ | 527 | ||||||||
Pro forma adjustments: | ||||||||||||||||
Net sales(2) | — | 8 | 33 | 47 | ||||||||||||
Cost of sales(3) | — | (2 | ) | (9 | ) | (17 | ) | |||||||||
Total pro forma adjustments | — | 6 | 24 | 30 | ||||||||||||
Pro forma adjusted EBITDA | $ | 124 | $ | 133 | $ | 507 | $ | 557 |
(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 |
RECONCILIATION OF OPERATING EARNINGS FROM CONSOLIDATED SEGMENT FINANCIAL INFORMATION AS REPORTED TO SUPPLEMENTALLY PROVIDED ADJUSTED EBITDA AND PRO FORMA ADJUSTED EBITDA | ||||||||||||||||
Table 6 | ||||||||||||||||
Fourth Quarter Ended | Fiscal Year Ended | |||||||||||||||
(In millions) | February 25, 2017 (12 weeks) | February 27, 2016 (12 weeks) | February 25, 2017 (52 weeks) | February 27, 2016 (52 weeks) | ||||||||||||
Results of operations, as reported: | ||||||||||||||||
Net earnings from continuing operations | $ | 6 | $ | 30 | $ | 27 | $ | 84 | ||||||||
Income tax provision | (9 | ) | — | (20 | ) | 24 | ||||||||||
Equity in earnings of unconsolidated affiliates | (2 | ) | (2 | ) | (5 | ) | (5 | ) | ||||||||
Interest expense, net | 40 | 47 | 181 | 195 | ||||||||||||
Total operating earnings | $ | 35 | $ | 75 | $ | 183 | $ | 298 | ||||||||
Reconciliation of segment operating earnings to total operating earnings, as reported | ||||||||||||||||
Wholesale operating earnings | $ | 64 | $ | 50 | $ | 238 | $ | 230 | ||||||||
Retail operating (loss) earnings | (27 | ) | 30 | (45 | ) | 94 | ||||||||||
Corporate operating loss | (2 | ) | (5 | ) | (10 | ) | (26 | ) | ||||||||
Total operating earnings | $ | 35 | $ | 75 | $ | 183 | $ | 298 | ||||||||
Reconciliation of segment operating earnings, as reported, to segment Adjusted EBITDA and consolidated pro forma adjusted EBITDA: | ||||||||||||||||
Wholesale operating earnings, as reported | $ | 64 | $ | 50 | $ | 238 | $ | 230 | ||||||||
Adjustments: | ||||||||||||||||
Supply agreement termination fee | — | — | (9 | ) | — | |||||||||||
Intangible asset impairment charge | — | — | — | 6 | ||||||||||||
Wholesale operating earnings, as adjusted | 64 | 50 | 229 | 236 | ||||||||||||
Wholesale depreciation and amortization | 14 | 12 | 54 | 49 | ||||||||||||
LIFO (credit) charge | (1 | ) | (1 | ) | — | 1 | ||||||||||
Wholesale adjusted EBITDA(1) | $ | 77 | $ | 61 | $ | 283 | $ | 286 | ||||||||
Retail operating (loss) earnings, as reported | $ | (27 | ) | $ | 30 | $ | (45 | ) | $ | 94 | ||||||
Adjustments: | ||||||||||||||||
Asset impairment charge | 41 | — | 41 | — | ||||||||||||
Goodwill impairment charge | — | — | 15 | — | ||||||||||||
Store closure charges and costs | — | — | 5 | 1 | ||||||||||||
Retail operating earnings, as adjusted | 14 | 30 | 16 | 95 | ||||||||||||
Retail depreciation and amortization | 31 | 35 | 145 | 153 | ||||||||||||
LIFO (credit) charge | (1 | ) | (2 | ) | 1 | 2 | ||||||||||
Equity in earnings of unconsolidated affiliates | 2 | 2 | 5 | 5 | ||||||||||||
Net earnings attributable to noncontrolling interests | (1 | ) | (2 | ) | (4 | ) | (8 | ) | ||||||||
Retail adjusted EBITDA(1) | $ | 45 | $ | 63 | $ | 163 | $ | 247 | ||||||||
Corporate operating (loss) earnings, as reported | $ | (2 | ) | $ | (5 | ) | $ | (10 | ) | $ | (26 | ) | ||||
Adjustments: | ||||||||||||||||
Pension settlement charges | 1 | — | 42 | — | ||||||||||||
Sales and use tax refund | — | — | (2 | ) | — | |||||||||||
Severance costs | — | — | (1 | ) | 6 | |||||||||||
Store closure charges and costs | 6 | — | 6 | |||||||||||||
Corporate operating (loss) earnings, as adjusted | (1 | ) | 1 | 29 | (14 | ) | ||||||||||
Corporate depreciation and amortization | 3 | 2 | 8 | 8 | ||||||||||||
Corporate adjusted EBITDA(1) | $ | 2 | $ | 3 | $ | 37 | $ | (6 | ) | |||||||
Total adjusted EBITDA(1) | $ | 124 | $ | 127 | $ | 483 | $ | 527 | ||||||||
Pro forma adjustments: | ||||||||||||||||
Net sales(2) | — | 8 | 33 | 47 | ||||||||||||
Cost of sales(3) | — | (2 | ) | (9 | ) | (17 | ) |
Total Pro forma adjustments | — | 6 | 24 | 30 | ||||||||||||
Pro Forma Adjusted EBITDA | $ | 124 | $ | 133 | $ | 507 | $ | 557 |
(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. |
G)E4WI.5&-Z:V,Y9"(_/B \
M>#IX;7!M971A('AM;&YS.G@](F%D;V)E.FYS.FUE=&$O(B!X.GAM<'1K/2)!
M9&]B92!835 @0V]R92 T+C$M8S S-B T-BXR-S8W,C L($UO;B!&96(@,3D@
M,C P-R R,CHQ,SHT,R @(" @(" @(CX@/')D9CI21$8@>&UL;G,Z &%P1SIB;&%C:STB,"XP,# P,# B+SX@/')D
M9CIL:2!X87!'.G-W871C:$YA;64](D,]-2!-/3 &%P1SIC>6%N/2(U
M+C P,# P,2(@>&%P1SIM86=E;G1A/2(W,"XP,# P,# B('AA<$ &%P
M1SIG
MIG8"[.=L<4VB[?H3AB+E87*FE*;M,9':I*U7+)R[T%5)9%I615%35532G24U
M%K;26$]CHM%I>>EJ=94K)FTG;8$3'J_GV6\_E&K5?]?-.;^KU)M>/.$7)V==
MB;-N]V<*U&[?MGOZQ%,M!Z0AD
M /_T+^
M
M
M
M !&;SN=W!9KW!V\#Q)SIN8ZV_*U;
[@_+A5O@O@2I9RV
MMD=+6.HJ68'#S#F;=%M_Z29S$QX&^QJFV(I% *>FQ8 !7UR2-D
MOP.8IN[E\@M-%G).:6Q':A:98EH)5$\5E5WE HI.H^%]^K.A;KH?O.VB(N)W
MQ:JYFCUE$G6HG:6N'N*W%L&-/]?'Q,!@3X1O2*6\&O%N=IQU;**
Q3<,NTKN:WA
MHBEFM(TYDRB%ABXXJZ\1?8UE-7S2=OW?W_WK/*SR_P U@FYI:VMP0V<-?S5U
M+(KCNB/C7VRV6K8AG./8%?
M /__0OX
M
M
M
M ?'2V71^#Q9_F4G=$K-&HJSNLBD;LJKII1M;.THZG1T6JJC_:V;%-5?L\/
MK#X.8S9BW5R\P(B6VG8R>43:H9LTI^3-MG>/H\%O"A)JQ(JIDY*8TQJMF.RW
M"N Z^G>3N4D&[7<5D7-3N:JRUO;CXMA+*K/6J-P1G]Z0]HU/W'[3[LL*S^.7
M%"CHN"B57U&[J:HW4VR4L1$L1/>TQ>K&;46CU<])[CKJY3=LSZ/ @JKZ)AW0
M\BK:X<:NOM6LWV,Q='G"9P "D7D6[(_'CPMWCY':ZO%#,J=([A1K
M<4=.JV0%5W233LRKX'2WZ>*F_0CTOFL,]*T]LQ82Y*CLY3RQ>I@Q-NV&(CA+
M=(I9:S31\H]TNS.%SF;JFI ^3L_I'=#CWO-]2.I5(+)F%P
M
M /_1OX
M
M
M 3M\]W=[YC8XCVU.%NEY/*LIV+$LR+?1K"
M]Z8W1N)T-,>KZI<*GERL:GIQ[NDN6JBZBK401?95:R]BE-M<<=-MP=+_ +3*
MGP9EPR516#N^VI&MK&1[F8_/UPQ''T-NO7(Z+C@*2="KYG' ,GM
MGNV.5[N<^PC"T8[PA3.B@W*:R-.FI5>:$$9J3.1R+6LR(C^XH]3TN++B=/\
M=#'HZ5IQW4\W:2AJMB)A762%KJ0Q?]?/)[A[JYK>/-\<':FK7OAY$PMV_*2V
M+@7<^R1+#L!<=X_BF*X-%\<05LL,D/A#$VQN.-=FOK4)&II2]VM6SJ+IKT(S
MN7.FJK4SZ1>F7-&DO:HS:)@@X,7JM4U:*JJ>