-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SmbRkEZnmzcsRRFD7gu65V1MAzDZmGN+Tjngl3Z8nqpxjHxlrAkYA/Um738gu/7s gddgoQEb4AMmdWda7oEp4Q== 0000950131-96-005184.txt : 19961023 0000950131-96-005184.hdr.sgml : 19961023 ACCESSION NUMBER: 0000950131-96-005184 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960907 FILED AS OF DATE: 19961022 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUPERVALU INC CENTRAL INDEX KEY: 0000095521 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-GROCERIES & RELATED PRODUCTS [5140] IRS NUMBER: 410617000 STATE OF INCORPORATION: DE FISCAL YEAR END: 0224 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05418 FILM NUMBER: 96646261 BUSINESS ADDRESS: STREET 1: 11840 VALLEY VIEW RD CITY: EDEN PRAIRIE STATE: MN ZIP: 55344 BUSINESS PHONE: 6128284000 MAIL ADDRESS: STREET 1: 11840 VALLEY VIEW ROAD CITY: EDEN PRAIRIE STATE: MN ZIP: 55344 FORMER COMPANY: FORMER CONFORMED NAME: SUPER VALU STORES INC DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period (12 weeks) ended September 7, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ....................... to ...................... Commission file number 1-5418 SUPERVALU INC. (Exact name of registrant as specified in its Charter) DELAWARE 41-0617000 ................................................................................ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 11840 Valley View Road, Eden Prairie, Minnesota 55344 ................................................................................ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (612) 828-4000 ............................. Former name, former address and former fiscal year, if changed since last report: N.A. ................................................................................ Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ........... ........... The number of shares outstanding of each of the issuer's classes of Common Stock as of September 7, 1996 is as follows: Title of Each Class Shares Outstanding ------------------- ------------------ Common Shares 67,278,139
PART I - FINANCIAL INFORMATION - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ Item 1: Financial Statements - ------------------------------------------------------------------------------ CONSOLIDATED STATEMENTS OF EARNINGS - ------------------------------------------------------------------------------ SUPERVALU INC. and Subsidiaries - ------------------------------------------------------------------------------ (In thousands, except per share data) Second Quarter (12 Weeks) Ended --------------------------------------------------- September 7, 1996 September 9, 1995 - ----------------------------------------------------------------------------------------- NET SALES $3,778,745 $3,779,397 COSTS AND EXPENSES: Cost of sales 3,398,505 3,427,689 Selling and administrative expenses 291,616 265,350 Amortization of goodwill 4,193 4,053 Interest Interest expense 31,171 32,771 Interest income 3,601 4,503 --------------------------------------------------- Interest expense, net 27,570 28,268 --------------------------------------------------- Total costs and expenses 3,721,884 3,725,360 --------------------------------------------------- EARNINGS BEFORE EQUITY IN EARNINGS OF SHOPKO AND INCOME TAXES 56,861 54,037 EQUITY IN EARNINGS OF SHOPKO 1,798 861 --------------------------------------------------- EARNINGS BEFORE INCOME TAXES 58,659 54,898 PROVISION FOR INCOME TAXES Current 18,292 5,562 Deferred 4,503 16,058 --------------------------------------------------- Income tax expense 22,795 21,620 --------------------------------------------------- NET EARNINGS $ 35,864 $ 33,278 =================================================== NET EARNINGS PER COMMON SHARE $ .53 $ .49 Weighted average number of common shares outstanding 67,466 68,181 Dividends declared per common share $ .250 $ .245 Supplemental information: After-tax LIFO (expense) $ (1,120) $ (2,525) All data subject to year-end audit. See notes to consolidated financial statements.
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PART I - FINANCIAL INFORMATION - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- Item 1: Financial Statements - -------------------------------------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF EARNINGS - -------------------------------------------------------------------------------------------------------------- SUPERVALU INC. and Subsidiaries - -------------------------------------------------------------------------------------------------------------- (In thousands, except per share data) Year-to-date (28 Weeks) Ended ----------------------------------------------------- September 7, 1996 September 9, 1995 - -------------------------------------------------------------------------------------------------------------- Net sales Costs and expenses: $ 8,757,506 $ 8,752,434 Cost of sales 7,897,853 7,940,385 Selling and administrative expenses 656,060 609,946 Amortization of goodwill 9,784 9,510 Interest Interest expense 72,534 76,890 Interest income 8,628 11,595 ------------------------------------------------ Interest expense, net 63,906 65,295 ------------------------------------------------ Total costs and expenses 8,627,603 8,625,136 ------------------------------------------------ Earnings before equity in earnings of ShopKo and income taxes 129,903 127,298 Equity in earnings of ShopKo 4,446 3,329 ------------------------------------------------ Earnings before income taxes 134,349 130,627 Provision for income taxes Current 45,777 31,266 Deferred 6,726 20,132 ------------------------------------------------ Income tax expense 52,503 51,398 ------------------------------------------------ Net earnings $ 81,846 $ 79,229 ================================================ Net earnings per common share $ 1.21 $ 1.15 Weighted average number of common shares outstanding 67,475 68,795 Dividends declared per common share $ .495 $ .480 Supplemental information: After-tax LIFO income (expense) $ 1,670 $ (2,317) All data subject to year-end audit. See notes to consolidated financial statements.
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CONSOLIDATED BALANCE SHEETS - --------------------------------------------------------------------------------------------------------------------- SUPERVALU INC. and Subsidiaries Second Quarter as of Fiscal Year End - --------------------------------------------------------------------------------------------------------------------- (In thousands) September 7, September 9, February 24, Assets 1996 1995 1996 - --------------------------------------------------------------------------------------------------------------------- Current Assets Cash and cash equivalents $ 6,501 $ 5,469 $ 5,215 Receivables, less allowance for losses of $17,417 at September 7, 1996, $27,884 at September 9, 1995, and $22,064 at February 24, 1996 378,031 406,794 380,611 Inventories 1,082,294 1,029,077 1,029,911 Other current assets 121,604 123,397 137,972 ------------------------------------------------------- Total current assets 1,588,430 1,564,737 1,553,709 Long-term notes receivable 49,076 70,241 36,731 Long-term investment in direct financing leases 71,429 70,870 74,185 Property, plant and equipment Land 144,284 168,958 146,535 Buildings 949,573 900,827 903,621 Property under construction 30,267 45,939 53,775 Leasehold improvements 143,707 137,858 137,551 Equipment 1,057,940 966,161 988,963 Assets under capital leases 299,955 215,241 270,549 ------------------------------------------------------- 2,625,726 2,434,984 2,500,994 Less accumulated depreciation and amortization Owned property, plant and equipment 929,003 844,745 855,429 Assets under capital leases 53,218 43,098 45,399 ------------------------------------------------------- Net property, plant and equipment 1,643,505 1,547,141 1,600,166 Investment in ShopKo 195,180 182,927 193,975 Goodwill 499,883 505,196 499,688 Other assets 247,962 217,335 225,049 ------------------------------------------------------- Total assets $ 4,295,465 $ 4,158,447 $ 4,183,503 ======================================================= Liabilities and Stockholders' Equity - --------------------------------------------------------------------------------------------------------------------- Current Liabilities Notes payable $ 113,914 $ 134,673 $ 158,027 Accounts payable 1,031,870 990,019 965,444 Current maturities of long-term debt 12,634 10,181 8,483 Current obligations under capital leases 21,434 18,580 17,955 Other current liabilities 178,239 176,651 176,793 ------------------------------------------------------- Total current liabilities 1,358,091 1,330,104 1,326,702 Long-term debt 1,147,169 1,208,042 1,144,600 Long-term obligations under capital leases 321,235 245,319 300,962 Deferred income taxes 43,910 - 37,076 Other liabilities 165,696 196,625 157,987 Stockholders' equity Preferred stock 5,908 5,908 5,908 Common stock 75,335 75,335 75,335 Capital in excess of par value 12,951 12,708 12,737 Retained earnings 1,385,270 1,282,949 1,336,942 Treasury stock, at cost (220,100) (198,543) (214,746) ------------------------------------------------------- Total stockholders' equity 1,259,364 1,178,357 1,216,176 ------------------------------------------------------- Total liabilities and stockholders' equity $ 4,295,465 $ 4,158,447 $ 4,183,503 =======================================================
Quarterly data subject to year-end audit. See notes to consolidated financial statements. 4 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------------------------------------- SUPERVALU INC. and Subsidiaries - ----------------------------------------------------------------------------------------------------------------------------- (In thousands, except per share data) Capital in Preferred Common Excess of Treasury Retained Stock Stock Par Value Stock Earnings Total - ----------------------------------------------------------------------------------------------------------------------------- Balances at February 25, 1995 $ 5,908 $ 75,335 $ 12,717 $ (137,245) $1,236,507 $ 1,193,222 Net earnings - - - - 166,433 166,433 Sales of common stock under option plans - - (84) 3,458 - 3,374 Cash dividends declared on common stock - $.970 per share - - - - (65,998) (65,998) Compensation under employee incentive plans - - 104 (869) - (765) Purchase of shares for treasury - - - (80,090) - (80,090) - ----------------------------------------------------------------------------------------------------------------------------- Balances at February 24, 1996 5,908 75,335 12,737 (214,746) 1,336,942 1,216,176 Net earnings - - - - 81,846 81,846 Sales of common stock under option plans - - 100 1,533 - 1,633 Cash dividends declared on common stock - $.495 per share - - - - (33,518) (33,518) Compensation under employee incentive plans - - 114 348 - 462 Purchase of shares for treasury - - - (7,235) - (7,235) - ------------------------------------------------------------------------------------------------------------------------------ Balances at September 7, 1996 $ 5,908 $ 75,335 $ 12,951 $(220,100) $ 1,385,270 $ 1,259,364 ============================================================================================================================== Interim data subject to year-end audit. See notes to consolidated financial statements.
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CONSOLIDATED STATEMENTS OF CASH FLOWS - ----------------------------------------------------------------------------------------------------------------------------------- SUPERVALU INC. and Subsidiaries - ----------------------------------------------------------------------------------------------------------------------------------- (In thousands) - ----------------------------------------------------------------------------------------------------------------------------------- Year-to-date (28 weeks ended) - ----------------------------------------------------------------------------------------------------------------------------------- September 7, September 9, 1996 1995 - ----------------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 81,846 $ 79,229 Adjustments to reconcile net earnings to net cash provided by operating activities: Equity in earnings of ShopKo (4,446) (3,329) Dividends received from ShopKo 3,241 3,241 Depreciation and amortization 121,963 116,077 Provision for losses on receivables 2,716 1,811 Gain on sale of property, plant and equipment (1,585) (7,458) Deferred income taxes 6,726 20,132 Treasury shares contributed to employee incentive plan 23 66 Changes in assets and liabilities: Receivables 1,430 (25,147) Inventory (49,147) 80,714 Other current assets 16,689 14,120 Direct finance leases 5,048 4,317 Accounts payable 57,382 (2,269) Other liabilities 7,226 (21,578) - ----------------------------------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 249,112 259,926 - ----------------------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities Additions to long-term notes receivable (28,211) (16,739) Payments received on long-term notes receivable 15,866 19,592 Proceeds from sale of property, plant and equipment 20,496 69,874 Purchase of property, plant and equipment (126,452) (120,121) Business acquisitions, net of cash acquired (4,996) - Other investing activities (24,380) (10,270) - ----------------------------------------------------------------------------------------------------------------------------------- NET CASH USED IN INVESTING ACTIVITIES (147,677) (57,664) - ----------------------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities Net reduction of short-term notes payable (44,113) (91,495) Repayment of long-term debt (4,683) (6,238) Reduction of obligations under capital leases (12,278) (9,721) Proceeds for purchase of common stock under option plans 1,372 747 Dividends paid (33,212) (32,736) Payments for purchase of treasury stock (7,235) (62,189) - ----------------------------------------------------------------------------------------------------------------------------------- NET CASH USED IN FINANCING ACTIVITIES (100,149) (201,632) - ----------------------------------------------------------------------------------------------------------------------------------- Net increase in cash and cash equivalents 1,286 630 Cash and cash equivalents at beginning of year 5,215 4,839 - ----------------------------------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF SECOND QUARTER $ 6,501 $ 5,469 =================================================================================================================================== All data subject to year-end audit. See notes to consolidated financial statements.
6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Accounting Policies - ------------------- The summary of significant accounting policies is included in the notes to consolidated financial statements in the 1996 annual report of SUPERVALU INC. ("SUPERVALU" or the "company"). Restructuring - ------------- A restructuring charge of $204.8 million was recognized in the third quarter of fiscal 1995. During the second quarter of fiscal 1997, the company utilized approximately $15 million of the reserve primarily for losses on disposition of property and carrying costs in both the food distribution and retail food segments. The balance of the reserve as of September 7, 1996 was $94 million. ShopKo Stores, Inc. Sale - ------------------------ On September 9, 1996 the company announced that it had agreed to sell its 14.7 million shares of ShopKo Stores, Inc. under an agreement to combine ShopKo and Phar-Mor, Inc. under a holding company, Cabot Noble, Inc. Under the terms of the agreement, the company will receive approximately $223 million in cash and short-term notes and approximately $25 million in common stock, which represents approximately a 6 percent interest in Cabot Noble. The company expects to realize a gain on the transaction which is expected to close in the fourth quarter. Statement of Registrant - ----------------------- The data presented herein is unaudited but, in the opinion of management, includes all adjustments necessary for a fair presentation of the consolidated financial position of the company and its subsidiaries at September 7, 1996 and September 9, 1995 and the results of the company's operations and cash flows for the periods then ended. These interim results are not necessarily indicative of the results of the fiscal years as a whole. A limited review of this data has been performed by the company's independent certified public accountants, Deloitte & Touche LLP. A copy of their report is attached as an exhibit to this report. 7 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Net earnings improved 8% in the quarter, driven by strong performance in retail food. Net sales remained level, and the company continued significant focus and investment in ADVANTAGE related activities. The following table sets forth items from the company's Consolidated Statements of Earnings as percentages of net sales:
- ---------------------------------------------------------------------------------------------------------------- Second Quarter Year-to-Date (12 weeks) Ended (28 weeks) Ended - ---------------------------------------------------------------------------------------------------------------- Fiscal Fiscal Fiscal Fiscal 1997 1996 1997 1996 - ---------------------------------------------------------------------------------------------------------------- Net sales 100.00% 100.00% 100.00% 100.00% Cost of sales (89.94) (90.69) (90.18) (90.72) Selling and administrative expenses (7.83) (7.13) (7.61) (7.08) Interest expense (.83) (.87) (.83) (.88) Interest income .10 .12 .10 .13 - ---------------------------------------------------------------------------------------------------------------- Earnings before equity in earnings of ShopKo, and income taxes 1.50 1.43 1.48 1.45 Equity in earnings of ShopKo .05 .02 .05 .04 Provision for income taxes (.60) (.57) (.60) (.58) - ---------------------------------------------------------------------------------------------------------------- Net earnings .95% .88% .93% .91% ================================================================================================================
NET SALES Net sales were even with last year for the quarter and year-to-date. The flat sales trend was the result of a 7.6% and 6.2% increase in retail food sales for the quarter and year-to-date, respectively, offset by a 1.5% and 1.0% decline in food distribution sales for the quarter and year-to-date, respectively. Food distribution sales decreased due to competitive market conditions at the wholesale and retail levels, the liquidation of a major customer and lost sales from the closing of underperforming corporate-owned retail stores. This effect was partially mitigated by the addition of new retail customers in food distribution and the growth of Save-A-Lot limited assortment stores. Food price inflation, as measured by the company, was .6% and 1.0% for the quarter and year-to-date, respectively. Retail food sales increased over last year due to new store openings and an increase in same-store sales of 2.8% and 3.6% for the quarter and year-to-date, respectively. The same-store sales increase was fueled by improved performance in the limited assortment stores and strong merchandising refocus in certain operations. The increase in retail sales was partially offset by the closing of underperforming corporate-owned retail stores in the prior fiscal year pursuant to the restructuring plan. 8
Net Sales by Segment - ---------------------------------------------------------------------------------------------------------------- (In thousands) Second Quarter (12 weeks) - ---------------------------------------------------------------------------------------------------------------- September 7, 1996 September 9, 1995 Net Sales % of Total Net Sales % of Total - ---------------------------------------------------------------------------------------------------------------- Food distribution $ 3,310,689 87.6 % $ 3,362,238 89.0 % Retail food 1,085,125 28.7 1,008,391 26.6 Less: Eliminations (617,069) (16.3) (591,232) (15.6) - ---------------------------------------------------------------------------------------------------------------- Total net sales $ 3,778,745 100.0 % $ 3,779,397 100.0 % ================================================================================================================ Net Sales by Segment - ---------------------------------------------------------------------------------------------------------------- (In thousands) Year-to-Date (28 weeks) - ---------------------------------------------------------------------------------------------------------------- September 7, 1996 September 9, 1995 Net Sales % of Total Net Sales % of Total - ---------------------------------------------------------------------------------------------------------------- Food distribution $ 7,729,600 88.3 % $ 7,808,365 89.2 % Retail food 2,410,111 27.5 2,269,280 25.9 Less: Eliminations (1,382,205) (15.8) (1,325,211) (15.1) - ---------------------------------------------------------------------------------------------------------------- Total net sales $ 8,757,506 100.0 % $ 8,752,434 100.0 % ================================================================================================================
Gross Profit Gross profit as a percentage of net sales increased to 10.1% and 9.8% in the quarter and year-to-date, respectively, compared with 9.3% for the same periods last year. The increases were due principally to the growing proportion within the company's total sales mix of the higher-margined retail food business. Food distribution gross profit margin increased for the quarter and year-to-date due primarily to a reduction in LIFO expense. Retail food gross profit margin increased for the quarter and year-to-date as a result of pricing adjustments from price modeling, changed promotional practices, improved product mix and the closing of underperforming corporate-owned retail stores. Selling and administrative expenses Selling and administrative expenses were 7.8% and 7.6% of net sales for the quarter and year-to-date, respectively, compared with 7.1% for the same periods last year. The higher percentages were primarily due to the increased proportion of the company's retail food segment which operates at a higher selling and administrative expense percentage than the food distribution segment and continuing ADVANTAGE project expenses. Food distribution selling and administrative expenses as a percent of net sales were higher than last year due to increased systems development costs associated with ADVANTAGE and the impact of fixed expenses as a percent of slightly decreased sales. Retail food selling and administrative expenses as a percent of net sales were consistent with last year. 9 The company has integrated many of the ADVANTAGE activities into its regular business, consequently these expenses are no longer broken out from other selling and administrative expenses. The continuing ADVANTAGE expenses related to project implementation costs including, but not limited to, increased systems development costs, regional organizational realignment costs, employee training and relocation, consultants costs and retailer training and promotional programs. Under ADVANTAGE, during fiscal 1997 the company has opened the Anniston, Alabama prototype regional distribution facility and has begun the following: distributing general merchandise and health and beauty care products from the Anniston facility to most of the customers in the Southeast region; reconfiguring the existing local distribution centers in the Southeast region to achieve additional cost efficiencies; constructing the Midwest regional distribution facility; training retailers for the category management program in the Midwest and Central regions; and selecting stores for a category management pilot in the Southeast region. During the quarter, the company also continued its Activity Based Sell rollout efforts in the Midwest region. OPERATING EARNINGS The company's pre-tax operating earnings (earnings before interest, corporate expenses, equity in earnings of ShopKo Stores, Inc. ("ShopKo"), and taxes) increased slightly to $89.6 million in the quarter from $89.0 million last year and were $206.1 million year-to-date compared with $206.2 million last year. Food distribution operating earnings decreased 10.0% to $70.7 million and 11.6% to $159.1 million in the quarter and year-to-date, respectively, due to higher ADVANTAGE related expenses and the general softness in sales, partially offset by a reduction in LIFO expense. Retail food operating earnings increased 80.3% to $19.0 million and 78.6% to $47.0 million in the quarter and year-to-date, respectively, due to strong gross margin resulting from pricing, promotional and product mix changes and the closing of underperforming corporate-owned retail stores, as well as an increase in sales. INTEREST EXPENSE AND INCOME Interest expense decreased to $31.1 and $72.5 million for the quarter and year-to-date, respectively, compared with $32.8 and $76.9 million for the same periods last year, reflecting a reduction in debt levels and slightly lower short-term interest rates. Interest income decreased to $3.6 and $8.6 million for the quarter and year-to-date, respectively, compared with $4.5 and $11.6 million for the same periods last year, primarily due to the reduction of notes receivable as a result of the sale of notes in the ordinary course of business. EQUITY IN EARNINGS OF SHOPKO SUPERVALU's share of ShopKo net earnings increased to $1.8 million and $4.4 million in the quarter and year-to-date, respectively, compared with $.9 million and $3.3 million for the same periods last year. As reported by ShopKo, sales increased 19.2% to $498.5 million and net earnings increased 109.8% for the second quarter compared with last year. The increase in net earnings was due to strong sales related to the ProVantage prescription benefit management business and an increase in comparable store sales of 6.4% for the quarter. 10 INCOME TAXES The effective tax rate decreased to 38.9% and 39.1% in the quarter and year-to- date, respectively, compared with 39.4% for the same periods last year. The decrease in the effective tax rate was due to the increased contribution from ShopKo. NET EARNINGS Net earnings were $35.9 and $81.8 million for the quarter and year-to-date, respectively, compared with $33.3 and $79.2 million for the same periods last year. Net earnings were positively impacted by improved retail food gross margin which more than offset increased expenses related to the ADVANTAGE project. Although ADVANTAGE initiatives are generating benefits, the company anticipates spending under ADVANTAGE to exceed benefits through fiscal 1997 with a positive contribution from this project in fiscal 1998. The company will continue to assess the costs and benefits anticipated under the ADVANTAGE program as part of its annual budget and planning process. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Internally generated funds, principally from the company's food distribution business, continued to be the major source of capital for liquidity and capital growth. Cash provided from operations year-to-date was $249.1 million compared with $259.9 million last year. The slight decrease was due to increased inventory levels primarily at the retail locations resulting from new store openings, partially offset by a corresponding increase in accounts payable. The decrease was also partly offset by increased levels of other liabilities and a reduction in receivables. Cash provided from operations was primarily used to finance capital expenditures of $126.4 million, repay short-term notes payable of $44.1 million and pay dividends of $33.2 million. During the quarter, the Board of Directors rescinded the previous treasury stock purchase program and approved a new treasury stock purchase program authorizing the company to repurchase up to 5.0 million shares to fund stock related compensation plans. The company has repurchased 258,000 shares at a cost of $7.2 million under the new program as of the end of the second quarter. There were no treasury stock purchases under the old program during fiscal 1997. On September 9, 1996 the company announced that it had agreed to sell its 14.7 million shares of ShopKo Stores, Inc. under an agreement to combine ShopKo and Phar-Mor, Inc. under a holding company, Cabot Noble, Inc. Under the terms of the agreement, the company will receive approximately $223 million in cash and short-term notes and approximately $25 million in common stock, which represents approximately a 6 percent interest in Cabot Noble. The company expects to realize a gain on the transaction which is expected to close in the fourth quarter. The use of the proceeds from the transaction may include growing the existing food distribution and retail businesses through internal initiatives or acquisitions, buying back company stock and paying off debt. 11 SUPERVALU will continue to use short-term and long-term debt as a supplement to internally generated funds to finance its activities. The company has a $400 million "shelf registration" in effect pursuant to which the company could issue $242.5 million of additional debt securities. A $400 million revolving credit agreement also is in place and expires in May 2000. Short-term commercial paper totaling $100 million has been classified as long-term debt as the company has the ability and intent to renew these obligations beyond one year. Maturities of debt issued will depend on management's views with respect to the relative attractiveness of interest rates at the time of issuance. The company's financial position and long-term debt ratings remain strong, with a BBB+ rating from Standard and Poor's Ratings Group. On October 10, 1996 Moody's Investors Services, Inc. lowered its rating on the company's long-term debt to Baa1 from A3 and confirmed the commercial paper rating at P-2. Moody's Investors Services, Inc. announced that the downgrade reflected the slower than expected benefits accruing from the ADVANTAGE project in the context of challenging competitive conditions in the grocery wholesaling industry. This change does not impair the company's ability to obtain financing and is expected to have only a minimal impact on the company's borrowing costs in the future. The company's investment grade ratings, the available credit facilities and internally-generated funds provide the company with the financial flexibility to meet liquidity needs. Cautionary statements for purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995 The information in this 10Q includes forward-looking statements. Important risks and uncertainties that could cause actual results to differ materially from those discussed in such forward looking statements are detailed in Exhibit 99.1 to the company's Annual Report on Form 10K, for the Year Ended February 24, 1996; other risks or uncertainties may be detailed from time to time in the company's future Securities and Exchange Commission filings. 12 PART II - OTHER INFORMATION --------------------------- Item 6. Exhibits and Reports on Form 8-K. - ------- --------------------------------- (a) Exhibits filed with this Form 10-Q: (10)a. First Amendment of SUPERVALU STORES, INC. Nonqualified Supplemental Executive Retirement Plan. (10)b. SUPERVALU INC. Non-Employee Directors Deferred Stock Plan. (10)c. Amendments to SUPERVALU INC. Deferred Compensation Plan and SUPERVALU INC. Executive Deferred Compensation Plan II. (15) Letters from Deloitte & Touche regarding unaudited interim financial information. (27) Financial Data Schedule containing a summary of financial information extracted from the Consolidated Balance Sheets as of September 7, 1996. (b) Reports on Form 8-K: No reports on Form 8-K were filed during the quarter. SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SUPERVALU INC. (Registrant) By:\s\Isaiah Harris --------------------------------- Isaiah Harris Date: October 22, 1996 Vice President & Controller (Principal Accounting Officer and duly authorized officer of Registrant) 13 EX-10.(A) 2 NONQUALIFIED SUPPLEMENTAL EXCUTIVE RETIREMENT PLA EXHIBIT (10)A. FIRST AMENDMENT OF SUPERVALU STORES, INC. NONQUALIFIED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN Effective February 26, 1989, SUPERVALU STORES, INC., a Delaware corporation, established an unfunded nonqualified deferred compensation plan for certain executive employees in accordance with the terms of the Plan Statement entitled SUPER VALU STORES, INC. NONQUALIFIED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. SUPERVALU STORES, INC. has reserved to itself the power to amend said Plan Statement and SUPERVALU STORES, INC. desires to amend the Plan Statement in the following respects: CHANGE OF CORPORATE NAME. ALL REFERENCES IN THE PLAN STATEMENT TO SUPERVALU STORES, INC. SHALL BE CHANGED TO SUPERVALU INC. REFERENCES TO SUPERVALU STORES, INC. RETIREMENT PLAN. ALL REFERENCES IN THE PLAN STATEMENT TO THE "SUPERVALU STORES, INC. RETIREMENT PLAN" SHALL BE CHANGED TO "SUPERVALU INC. RETIREMENT PLAN" TO REFLECT CHANGES MADE BY THE SEVENTEENTH AMENDMENT TO THE SUPERVALU INC. RETIREMENT PLAN. CHANGE OF PLAN NAME. THE NAME OF THIS PLAN SHALL BE CHANGED TO "SUPERVALU INC. NONQUALIFIED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN." ALL REFERENCES IN THE PLAN STATEMENT SHALL BE REVISED TO REFLECT THE NEW PLAN NAME. BASIC PENSION. ALL REFERENCES IN THE PLAN STATEMENT TO A "BASIC PENSION" SHALL BE CHANGED TO "SINGLE LIFE ANNUITY" TO REFLECT CHANGES MADE BY THE SEVENTEENTH AMENDMENT TO THE SUPERVALU INC. RETIREMENT PLAN. ACCRUED BENEFIT. EFFECTIVE AS OF THE DATE THIS AMENDMENT IS ADOPTED, FOR PARTICIPANTS WHO PERFORM ONE OR MORE HOURS OF SERVICE AFTER THAT DATE, SECTION 1.2.1 OF THE PLAN STATEMENT IS AMENDED TO READ IN FULL AS FOLLOWS: 1.2.1. ACCRUED BENEFIT -- the monthly amount of retirement income determined for a Participant as of a specified date (defined as a benefit payable monthly to the Participant in the Single Life Annuity form beginning on the first day of the month following the Participant's Normal Retirement Date) equal of the following: (a) TIER 1 PARTICIPANTS. For any Participant who is not a Tier 2 Participant on such date, a dollar amount equal to the excess of the - 1 - amount determined in (i) as of such date over the amount determined in (ii) as of such date: (i) PRIMARY AMOUNT. (A) One and seven-tenths percent (.017) of the Participant's Final Average Compensation multiplied by the Participant's years of Credited Service determined as of such specified date (not to exceed thirty years); minus (B) the sum of (A) one-tenth percent (.001) of the Participant's Final Average Compensation in excess of Six Thousand Two Hundred Fifty Dollars ($6,250) multiplied by the Participant's years of Credited Service (not to exceed thirty years), and (B) one- thirtieth (1/30) of the Participant's Approximate Social Security Benefit multiplied by the Participant's years of Credited Service (not to exceed thirty years). (ii) OFFSET. A dollar amount (determined as of such specified date), equal to the Single Life Annuity Determined under Section 1.2.1(a) of the Retirement Plan (i.e., determined without reduction for the offset provided in Section 1.2.1(a)(ii) of the Retirement Plan). (b) TIER 2 PARTICIPANTS. For a Participant who is a Tier 2 Participant as of such date, a dollar amount equal to the excess of the amount determined in (i) as of such date over the amount determined in (ii) as of such date: (i) PRIMARY AMOUNT. Sixty percent (60%) of one-twelfth (1/12th) of the average annual amount of Recognized Compensation attributable to any five (5) completed (but not necessarily consecutive) Plan Years within the Participant's last ten (10) consecutive years of Recognized Employment which produce the highest amount. (ii) OFFSET. A dollar amount, equal to the sum of the following (each determined as of such specified date, expressed as a benefit payable monthly to the Participant in the Single Life Annuity form beginning on the first day of the month following the Participant's Normal Retirement Date and converted to such form using the mortality and interest assumptions in effect under the SUPERVALU INC. RETIREMENT PLAN as of such date): - 2 - (A) the value of the Participant's Accrued Benefit under the SUPERVALU INC. RETIREMENT PLAN as of such date; and (B) the value of any matching contributions made to an account established for the Participant under the SUPERVALU PRE-TAX SAVINGS AND PROFIT SHARING PLAN as of such date; and (C) the value of any matching contributions credited to the Participant under any nonqualified deferred compensation plan sponsored by SUPERVALU INC. as of such date; and (D) one-half of the Approximate Social Security Benefit available to such Participant as of such date. RENUMBERING. EFFECTIVE AS OF THE DATE THIS AMENDMENT IS ADOPTED, SECTION 2.2 OF THE PLAN STATEMENT IS AMENDED REDESIGNATING IT AS SECTION 2.3. DESIGNATION OF TIER 2 PARTICIPANTS. EFFECTIVE AS OF THE DATE THIS AMENDMENT IS ADOPTED, SECTION 2 OF THE PLAN STATEMENT IS AMENDED BY ADDING A NEW SECTION 2.2 TO READ AS FOLLOWS: 2.2. TIER 2 PARTICIPANTS. The Board of Directors of SUPERVALU INC. shall have sole authority and discretion to designate Participants as Tier 2 Participants under this Plan on such terms as the Board may determine. DEATH BENEFITS. EFFECTIVE AS OF THE DATE THIS AMENDMENT IS ADOPTED, FOR PARTICIPANTS WHO PERFORM ONE OR MORE HOURS OF SERVICE AFTER THAT DATE, SECTION 5.1 OF THE PLAN STATEMENT IS AMENDED TO READ IN FULL AS FOLLOWS: 5.1. DEATH BEFORE BENEFIT COMMENCEMENT. 5.1.1. WHEN AVAILABLE. A survivor benefit ("Survivor Benefit") shall be payable upon the death of a Participant who at death had not yet begun to receive any payment of the Supplemental Pension under the Plan. 5.1.2. BENEFICIARY. If the Participant was married for at least one (1) year ending on the date of the Participant's death, the survivor benefit shall be payable to the surviving spouse unless the Participant has elected otherwise pursuant to rules established by the Retirement Committee. If the Participant was not married to the same spouse for at least one (1) year ending on the date of death, the survivor benefit shall be payable to the Participant's designated beneficiary or, in absence of such designation, the Participant's estate. - 3 - 5.1.3. Amount. The amount of the Survivor Benefit shall be fifty percent (50%) of the amount of the Participant's Accrued Benefit determined as of the date of the Participant's death. 5.1.4. Form of Benefit. (a) Surviving Spouse Beneficiary. If the beneficiary is the Participant's spouse, the Survivor Benefit shall be a monthly annuity payable to the spouse for the lifetime of the spouse, the first payment of which shall be due after the death of the Participant on the first day of the month following the Participant's death with no actuarial reduction for early commencement. The Participant may elect before November 1, 1990 to convert the death benefits provided under this Section to any Actuarially Equivalent form of benefit that would have been made available under Section 4 to the Participant at his Termination of Employment. No election, recision or other action taken by the Participant under Section 4 shall be effective to modify the survivor annuity hereinbefore described. No other death benefit shall be payable with respect to a Participant who dies under these circumstances. (b) Non-Spouse Beneficiary. If the beneficiary is not the Participant's spouse, the Survivor Benefit is a lump sum which is the Actuarial Equivalent of a monthly annuity payable to the beneficiary for the lifetime of an individual who is the same age as the Participant, the first payment of which would be due after the death of the Participant on the first day of the month following the Participant's death with no actuarial reduction for early commencement. Savings Clause. Save and except as herein expressly amended the Plan Statement shall continue in full force and effect. August 7, 1996 SUPERVALU INC. - -------------- -------------- By: \s\Ronald C. Tortelli ---------------------- Its: Sr. V.P. Human Resources - 4 - EX-10.(B) 3 NON-EMPLOYEE DIRECTORS DEFERRED STOCK PLAN Exhibit(10)b. SUPERVALU INC. NON-EMPLOYEE DIRECTORS DEFERRED STOCK PLAN 1. Purpose. The purpose of the SUPERVALU INC. Non-Employee Directors Deferred Stock Plan (the "Plan") is to further strengthen the alignment of interests between members of the Board of Directors (the "Board") of SUPERVALU INC. (the "Company") who are not employees of the Company (the "Participants") and the Company's stockholders through the increased ownership by Participants of shares of the Company's common stock, par value $1.00 per share ("Common Stock"). This will be accomplished by (i) providing to Participants deferred compensation in the form of the right to receive shares of Common Stock for services rendered in their capacity as directors, and (ii) allowing Participants to elect voluntarily to defer all or a portion of their fees for services as members of the Board pursuant to the Plan in exchange for the right to receive shares of Common Stock valued at 110% of the cash fees otherwise payable. 2. Eligibility. Each member of the Board of Directors of the Company who is not an employee of the Company or of any subsidiary of the Company shall be eligible to participate in the Plan. 3. Formula Share Award. Effective on July 1, or the first business day thereafter in each year (the "Award Date"), the Company shall award each Participant who shall continue to serve on the Board following the Award Date, as a credit to the Participant's account under the Plan (the "Deferred Stock Account"), that number of shares (rounded to the nearest one-hundredth share) of Common Stock, having an aggregate fair market value on the Award Date of Fifteen Thousand Dollars ($15,000) (the "Award"). The Award shall be in addition to any cash retainer, stock options, or other remuneration received by the Participant for services rendered as a director. If, after receiving an Award, the Participant shall cease to serve on the Board prior to the Company's next annual meeting, for any reason other than death or permanent disability, then such Participant's Deferred Stock Account shall be reduced by (i) that number of shares equal to 1/12 of the Award for each full calendar month during which the Participant did not serve as a director of the Company, plus (ii) any dividends paid on that number of shares of Common Stock specified in (i) above during the period that the Participant did not serve as a director of the Company. 4. Election to Defer Cash Compensation. A Participant may elect to defer, in the form of a credit to the Participant's Deferred Stock Account all or a portion of the annual cash retainer, meeting fees for attendance at meetings of the Board and its committees, committee chairperson retainers, and any other fees and retainers ("Compensation") otherwise payable to the director in cash during the period following the effective date of the deferral election. Such deferral election shall be made pursuant to Section 5. 5. Manner of Making Deferral Election. A Participant may elect to defer Compensation pursuant to the Plan by filing, no later than December 31 of each year (or by such other date as the Committee shall determine), an irrevocable election with the Corporate Secretary on a form provided for that purpose ("Deferral Election"). The Deferral Election shall be effective with respect to Compensation payable on or after July 1 of the following year unless the Participant shall revoke or change the election by means of a subsequent Deferral Election in writing that takes effect on the date specified therein but in no event earlier than six (6) months (or such other period as the Committee, as defined in Section 17, shall determine) after the subsequent Deferral Election is received by the Company. The Deferral Election form shall specify an amount to be deferred expressed as a dollar amount or as a percentage of the Participant's Compensation otherwise payable in cash for the director's services. 6. Credits to Deferred Stock Account for Elective Deferrals. On the first day of each calendar quarter (the "Credit Date"), a Participant shall receive a credit to his or her Deferred Stock Account. The amount of the credit shall be the number of shares of Common Stock (rounded to the nearest one-hundredth of a share) determined by dividing an amount equal to 110% of the Participant's Compensation payable on the Credit Date and specified for deferral pursuant to Section 5 hereof, by the fair market value on the Credit Date of a share of Common Stock. 7. Fair Market Value. The fair market value of shares of Common Stock as of a given date for all purposes of the Plan, shall be the closing sale price per share of Common Stock as reported on the consolidated tape of the New York Stock Exchange on the relevant date or, if the New York Stock Exchange is closed on such day, then the day closest to such date on which it was open. 8. Dividend Credit. Each time a dividend is paid on the Common Stock, the Participant shall receive a credit to his or her Deferred Stock Account equal to that number of shares of Common Stock (rounded to the nearest one-hundredth of a share) having a fair market value on the dividend payment date equal to the amount of the dividend payable on the number of shares credited to the Participant's Deferred Stock Account on the dividend record date. 9. Maximum Number of Shares to be Credited Under the Plan. Subject to adjustment as provided in Section 10, the maximum number of shares of Common Stock that may be credited under the Plan is 500,000 shares. 10. Adjustments for Certain Changes in Capitalization. If the Company shall at any time increase or decrease the number of its outstanding shares of Common Stock or change in any way the rights and privileges of such shares by means of the 2 payment of a stock dividend or any other distribution upon such shares payable in Common Stock, or through a stock split, subdivision, consolidation, combination, reclassification, or recapitalization involving the Common Stock, then the numbers, rights, and privileges of the shares credited under the Plan shall be increased, decreased, or changed in like manner as if such shares had been issued and outstanding, fully paid, and nonassessable at the time of such occurrence. 11. Deferral Payment Election. At the time of making the Deferral Election, each Participant shall also complete a deferral payment election specifying one of the payment options described in Sections 12 and 13, and the year in which amounts credited to the Participant's Deferred Stock Account shall be paid in a lump sum pursuant to Section 12, or in which installment payments shall commence pursuant to Section 13. The deferral payment election shall be irrevocable as to all amounts credited to the Participant's Deferred Stock Account. The Participant may change the deferral payment election by means of a subsequent deferral payment election in writing that will take effect for deferrals credited after the date the Company receives such subsequent deferral payment election. 12. Payment of Deferred Stock Accounts in a Lump Sum. Unless a Participant elects to receive payment of his or her Deferred Stock Account in installments as described in Section 13, credits to a Participant's Deferred Stock Account shall be payable in full on January 10 of the year following the Participant's termination of service on the Board (or the first business day thereafter) or such other date as elected by the Participant pursuant to Section 11. All payments shall be made in shares of Common Stock plus cash in lieu of any fractional share. Notwithstanding the foregoing, in the event of a Change of Control (as defined in Section 19), credits to a Participant's Deferred Stock Account as of the business day immediately prior to the effective date of the transaction constituting the Change of Control shall be paid in full to the Participant or the Participant's beneficiary or estate, as the case may be, in whole shares of Common Stock (together with cash in lieu of a fractional share) on such date. 13. Payment of Deferred Stock Accounts in Installments. A Participant may elect to have his or her Deferred Stock Account paid in annual installments following termination of service as a director or at such other time as elected by the Participant pursuant to Section 11. All payments shall be made in shares of Common Stock plus cash in lieu of any fractional share. All installment payments shall be made annually on January 10 of each year (or the first business day thereafter). The amount of each installment payment shall be computed as the number of shares credited to the Participant's Deferred Stock Account on the Computation Date, multiplied by a fraction, the numerator of which is one and the denominator of which is the total number of installments elected (not to exceed fifteen) minus the number of installments previously paid. Amounts paid prior to the final installment payment shall be rounded to the nearest whole number of shares; the final installment payment shall be for the whole number of shares then credited to the Participant's Deferred Stock Account, together 3 with cash in lieu of any fractional shares. Notwithstanding the foregoing, in the event of a Change of Control (as defined in Section 19), credits to a Participant's Deferred Stock Account as of the business day immediately prior to the effective date of the transaction constituting the Change of Control shall be paid in full to the Participant or the Participant's beneficiary or estate, as the case may be, in whole shares of Common Stock (together with cash in lieu of a fractional share) on such date. 14, Death of Participant. If a Participant dies before receiving all payments to which he or she is entitled under the Plan, payment shall be made in accordance with the Participant's designation of a beneficiary on a form provided for that purpose and delivered to and accepted by the Committee (as hereinafter defined) or, in the absence of a valid designation or if the designated beneficiary does not survive the Participant, to such Participant's estate. 15. Nonassignability. No right to receive payments under the Plan nor any shares of Common Stock credited to a Participant's Deferred Stock Account shall be assignable or transferable by a Participant other than by will or the laws of descent and distribution. The designation of a beneficiary by a Participant pursuant to Section 14 does not constitute a transfer. 16. Participants Are General Creditors of the Company. Benefits due under this Plan shall be funded out of the general funds of the Company. The Participants and beneficiaries thereof shall be general, unsecured creditors of the Company with respect to any payments to be made pursuant to the Plan and shall not have any preferred interest by way of trust, escrow, lien or otherwise in any specific assets of the Company. If the Company shall, in fact, elect to set aside monies or other assets to meet its obligations hereunder (there being no obligation to do so), whether in a grantor's trust or otherwise, the same shall, nevertheless, be regarded as a part of the general assets of the company subject to the claims of its general creditors, and neither any Participant nor any beneficiary of any Participant shall have a legal, beneficial, or security interest therein. 17. Administration. The Plan shall be administered by a committee (the "Committee") of three or more individuals appointed by the Board to administer the Plan. The members of the Committee must be members of, and shall serve at the discretion of, the Board. The members of the Committee shall be "disinterested persons" as defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Act"), or any successor rule or definition adopted by the Securities and Exchange Commission ("Rule 16b-3"), if, in the opinion of counsel for the Company, the absence of "disinterested" administrators would adversely impact the availability of the exemption from Section 16(b) of the Act provided by Rule 16b-3 for any Participant's acquisition of Common Stock under the Plan. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to construe and interpret the Plan; to establish, amend and rescind 4 appropriate rules and regulations relating to the Plan; to administer the Plan; and to take all such steps and make all such determinations in connection with the Plan as it may deem necessary or advisable to carry out the provisions and intent of the Plan. All determinations of the Committee shall be made by a majority of its members, and its determinations shall be final and conclusive for all purposes and upon all persons, including, but without limitation, the Company, the Committee, the Participants and their respective successors in interest. 18. Amendment and Termination. The Board may at any time terminate, suspend, or amend this Plan; provided, however, that the provisions of Sections 2 and 3 may not be amended more than once in every six months other than to comport with changes in the Internal Revenue Code, ERISA, or the rules thereunder. No such action shall deprive any Participant of any benefits to which he or she would have been entitled under the Plan if termination of the Participant's service as a director had occurred on the day prior to the date such action was taken, unless agreed to by the Participant. 19. Change of Control. "Change of Control" means any one of the following events: (a) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of Common Stock (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) hereof; or (b) individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then constituting the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or 5 (c) approval by the shareholders of the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the Board of Directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (d) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. 20. Effective Date. The effective date of the Plan shall be the date of approval of the Plan by the Company's stockholders. 6 EX-10.(C) 4 AMEND. TO NONQUALIFIED DEFERRED COMPENSATION PLANS EXHIBIT (10)c. AMENDMENTS TO NONQUALIFIED DEFERRED COMPENSATION PLANS RESOLVED, that the nonqualified deferred compensation plans maintained by SUPERVALU INC. and known as the SUPERVALU Deferred Compensation Plan and the SUPERVALU INC. Executive Deferred Compensation Plan II("Plans") shall be amended to provide for the following: 1. A matching contribution ("Restoration Match") shall be made for each fiscal year ending on the last Saturday in February ("Fiscal Year") to participants in the Plans who are eligible to participate in the SUPERVALU Pre-Tax Savings and Profit Sharing Plan for such Fiscal Year. 2. Subject to further amendment, the Restoration Match shall be made for the Fiscal Year ending February 22, 1997 and subsequent Fiscal Years. 3. The Restoration Match shall be based on a dollar amount ("Deemed Deferral Amount") equal to the product of (i) a percentage (not to exceed five percent (5%)) determined by dividing the participant's deferrals into the Plans for such Fiscal Year into the participant's income for such Fiscal Year: and (ii) the excess of the participant's income for such Fiscal Year over the compensation limit established under section 401(a)(17) of the Internal Revenue Code for such Fiscal Year (e.g., $150,000 for Fiscal Year ending on February 22, 1997). 4. The Restoration Match for a Fiscal Year shall be equal to the participant's Deemed Deferral Amount multiplied by the aggregate matching rate credited to the participant elective contributions under the SUPERVALU Pre-Tax Savings and Profit Sharing Plan for such Fiscal Year. 5. The Restoration Match shall be credited to the participants under one of the Plans as determined by SUPERVALU INC. as soon as administratively feasible after the close of the Fiscal Year for which it is made and shall be subject to all other rules established under such Plans: provided, however, that it shall be subject to the vesting rules in effect under the SUPERVALU Pre-Tax Savings and Profit Sharing Plan. FURTHER RESOLVED, to the extent necessary, these resolutions will constitute an amendment to the Plans. FURTHER RESOLVED, that the Retirement Committee of SUPERVALU INC. is authorized and directed to take whatever actions it deems necessary to implement these resolutions including, but not limited to, approval of amendments of the plan statements which incorporate the provisions of the Plans. EX-15 5 LETTER RE: UNAUDITED INFO/ACCOUNTANTS REVIEW RPT. LETTER REGARDING UNAUDITED INFORMATION Stockholders and Board of Directors SUPERVALU INC. Eden Prairie, Minnesota We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim information of SUPERVALU INC. and subsidiaries for the periods ended September 7, 1996 and September 9, 1995, as indicated in our report dated October 17, 1996. Because we did not perform an audit on such information, we expressed no opinion on it in our report. We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended September 7, 1996, is incorporated by reference in the Registration Statements (No. 33-28310, No. 33- 16934, No. 2-56896, No. 33-50071, and No. 333-10151 on Form S-8 and No. 33-56415 on Form S-3). We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statements prepared or certified by an accountant within the meaning of Sections 7 and 11 of that act. /s/ DELOITTE & TOUCHE LLP October 17, 1996 INDEPENDENT ACCOUNTANTS' REVIEW REPORT Stockholders and Board of Directors SUPERVALU INC. Eden Prairie, Minnesota We have reviewed the accompanying consolidated balance sheets of SUPERVALU INC. (the Company) and subsidiaries as of September 7, 1996 and September 9, 1995 and the related consolidated statements of earnings and cash flows for the 12-week periods then ended and the consolidated statement of stockholders' equity for the interim period ended September 7, 1996. These consolidated financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to such consolidated financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of SUPERVALU INC. and subsidiaries as of February 24, 1996 and the related consolidated statements of earnings, stockholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated April 5, 1996, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of February 24, 1996 and the consolidated statement of stockholders' equity for the year then ended is fairly stated, in all material respects, in relation to the consolidated financial statements from which it has been derived. /s/ DELOITTE & TOUCHE LLP Minneapolis, Minnesota October 17, 1996 EX-27 6 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Consolidated Balance Sheets as of September 7, 1996 and the Consolidated Statement of Earnings for the 28 weeks ended September 7, 1996 and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS FEB-22-1997 SEP-07-1996 6,501 0 395,448 (17,417) 1,082,294 1,588,430 2,625,726 (982,221) 4,295,465 1,358,091 1,468,404 75,335 0 5,908 1,178,121 4,295,465 8,757,506 8,757,506 7,897,853 7,897,853 0 2,716 72,534 134,349 52,503 81,846 0 0 0 81,846 1.21 1.21
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