-----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, SvqgAxAivDsWVm2P55XV4xUYwLaJaJyEBId2UwdHoTn+ylUg4Xy/ST7t5viyii54 X1/u35fGDHKN11nJztfWsQ== /in/edgar/work/0001045969-00-000809/0001045969-00-000809.txt : 20001025 0001045969-00-000809.hdr.sgml : 20001025 ACCESSION NUMBER: 0001045969-00-000809 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000909 FILED AS OF DATE: 20001024 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUPERVALU INC CENTRAL INDEX KEY: 0000095521 STANDARD INDUSTRIAL CLASSIFICATION: [5140 ] IRS NUMBER: 410617000 STATE OF INCORPORATION: DE FISCAL YEAR END: 0222 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-05418 FILM NUMBER: 744963 BUSINESS ADDRESS: STREET 1: 11840 VALLEY VIEW RD STREET 2: NULL 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 0001.txt 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 9, 2000. [_] 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) (952) 828-4000 (Registrant's telephone number, including area code) (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 October 9, 2000 is as follows: Title of Each Class Shares Outstanding ------------------- ------------------ Common Shares 132,320,986
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 Sept 9, 2000 % of sales Sept 11, 1999 % of sales - ------------------------------------------------------------------------------------------------------------------------------- Net sales $ 5,333,823 100.00% $ 4,145,775 100.00% Costs and expenses: Cost of sales 4,740,086 88.87 3,697,589 89.19 Selling and administrative expenses 442,102 8.29 344,120 8.30 Amortization of goodwill 11,383 0.21 6,024 0.15 Interest Interest expense 49,869 0.93 27,439 0.66 Interest income 5,430 0.10 4,574 0.11 -------------------------------------------------------------------------------- Interest expense, net 44,439 0.83 22,865 0.55 -------------------------------------------------------------------------------- Total costs and expenses 5,238,010 98.20 4,070,598 98.19 -------------------------------------------------------------------------------- Earnings before income taxes 95,813 1.80 75,177 1.81 Provision for income taxes Current 50,462 30,942 Deferred (11,945) (1,247) ----------------------------------------------------------------------------- Income tax expense 38,517 0.72 29,695 0.71 -------------------------------------------------------------------------------- Net earnings $ 57,296 1.07% $ 45,482 1.10% ================================================================================ Net earnings per common share- diluted $ .43 $ .37 Net earnings per common share- basic $ .43 $ .37 Weighted average number of common shares outstanding Diluted 133,096 123,682 Basic 132,321 122,483 Dividends declared per common share $ .1375 $ .1350 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 ---------------------------------------------------------------------- Sept 9, 2000 % of sales Sept 11, 1999 % of sales - ----------------------------------------------------------------------------------------------------------------------------- Net sales $ 12,287,216 100.00% $ 9,435,495 100.00% Costs and expenses: Cost of sales 10,945,207 89.08 8,444,486 89.50 Selling and administrative expenses 1,000,696 8.14 757,718 8.03 Amortization of goodwill 26,448 0.22 12,850 0.14 Gain on sale - - 163,662 1.73 Restructuring and other charges - - 103,596 1.09 Interest Interest expense 113,505 0.92 63,009 0.67 Interest income 11,451 0.09 9,899 0.11 -------------------------------------------------------------------- Interest expense, net 102,054 0.83 53,110 0.56 -------------------------------------------------------------------- Total costs and expenses 12,074,405 98.27 9,208,098 97.59 -------------------------------------------------------------------- Earnings before income taxes 212,811 1.73 227,397 2.41 Provision for income taxes Current 104,815 165,314 Deferred (19,265) (50,120) -------------------------------------------------------------------- Income tax expense 85,550 0.70 115,194 1.22 -------------------------------------------------------------------- Net earnings $ 127,261 1.04% $ 112,203 1.19% ==================================================================== Net earnings per common share- diluted $ .96 $ .92 Net earnings per common share- basic $ .96 $ .93 Weighted average number of common shares outstanding Diluted 133,068 122,017 Basic 132,130 120,853 Dividends declared per common share $ .2725 $ .2675 All data subject to year-end audit. See notes to consolidated financial statements.
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CONSOLIDATED STATEMENTS OF NET SALES AND EARNINGS - ----------------------------------------------------------------------------------------------------------------------------- SUPERVALU INC and Subsidiaries - ----------------------------------------------------------------------------------------------------------------------------- (In thousands) Second Quarter (12 weeks) ended Year-to-date (28 weeks) ended --------------------------------------------------------------------------------------- Net Sales Sept. 9, 2000 Sept. 11, 1999 Sept. 9, 2000 Sept. 11, 1999 - ----------------------------------------------------------------------------------------------------------------------------- Retail food $ 2,141,789 $ 1,705,751 $ 4,840,297 $ 3,705,340 40.2% 41.1% 39.4% 39.3% Food distribution 3,192,034 2,440,024 7,446,919 5,730,155 59.8% 58.9% 60.6% 60.7% --------------------------------------------------------------------------------------- Total net sales $ 5,333,823 $ 4,145,775 $ 12,287,216 $ 9,435,495 100.0% 100.0% 100.0% 100.0% - ----------------------------------------------------------------------------------------------------------------------------- Earnings - ----------------------------------------------------------------------------------------------------------------------------- Retail food $ 86,350 $ 65,132 $ 195,747 $ 144,278 Food distribution 62,575 41,188 137,484 94,201 Gain on sale - - - 163,662 Restructuring and other charges (1) - - - (103,596) --------------------------------------------------------------------------------------- Total operating earnings 148,925 106,320 333,231 298,545 Interest income 5,430 4,574 11,451 9,899 Interest expense (49,869) (27,439) (113,505) (63,009) General corporate expenses (8,673) (8,278) (18,366) (18,038) --------------------------------------------------------------------------------------- Earnings before income taxes 95,813 75,177 212,811 227,397 Provision for income taxes (38,517) (29,695) (85,550) (115,194) --------------------------------------------------------------------------------------- Net earnings $ 57,296 $ 45,482 $ 127,261 $ 112,203 ============================================================================================================================= All data subject to year-end audit. See notes to consolidated financial statements.
(1) In the first quarter of fiscal 2000, the company incurred restructuring and other charges for retail food and food distribution of $19.4 million and $84.2 million, respectively. 4
CONDENSED CONSOLIDATED BALANCE SHEETS - ----------------------------------------------------------------------------------------------------------------------- SUPERVALU INC. and Subsidiaries Second Quarter as of Fiscal Year End - ----------------------------------------------------------------------------------------------------------------------- (In thousands) September 9, February 26, Assets 2000 2000 - ----------------------------------------------------------------------------------------------------------------------- Current Assets Cash and cash equivalents $ 14,460 $ 10,920 Receivables, less allowance for losses of $30,349 at September 9, 2000 and $30,399 at February 26, 2000 597,537 562,448 Inventories 1,382,702 1,490,454 Other current assets 98,805 113,817 ------------------------------------------------ Total current assets 2,093,504 2,177,639 Long-term notes receivable 180,834 179,224 Property, plant and equipment, net 2,258,249 2,168,210 Goodwill 1,616,160 1,608,580 Other assets 383,979 361,700 ------------------------------------------------ Total assets $6,532,726 $6,495,353 ================================================ Liabilities and Stockholders' Equity - ----------------------------------------------------------------------------------------------------------------------- Current Liabilities Notes payable $ 620,242 $ 576,513 Accounts payable 1,409,393 1,430,312 Current debt and obligations under capital leases 106,540 200,282 Other current liabilities 312,894 302,513 ------------------------------------------------ Total current liabilities 2,449,069 2,509,620 Long-term debt and obligations under capital leases 1,992,880 1,953,741 Other liabilities and deferred income taxes 216,278 210,513 Total stockholders' equity 1,874,499 1,821,479 ------------------------------------------------ Total liabilities and stockholders' equity $6,532,726 $6,495,353 ================================================ All data subject to year-end audit. See notes to consolidated financial statements.
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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 27, 1999 $ 5,908 $150,670 $ - $(524,321) $1,673,382 $1,305,639 Net earnings - - - - 242,941 242,941 Sales of common stock under option plans - - (5,181) 10,738 - 5,557 Cash dividends declared on common stock- $.5375 per share - - - - (68,952) (68,952) Compensation under employee incentive plans - - (1,802) 9,408 - 7,606 Treasury shares exchanged for acquisitions - - 139,209 318,293 - 457,502 Redemption of Preferred Stock (5,908) - - - - (5,908) Purchase of shares for treasury - - - (122,906) - (122,906) - ----------------------------------------------------------------------------------------------------------------------------- Balances at February 26, 2000 - 150,670 132,226 (308,788) 1,847,371 1,821,479 Net earnings - - - - 127,261 127,261 Sales of common stock under option plans - - (3,164) 6,501 - 3,337 Cash dividends declared on common stock- $.2725 per share - - - - (36,716) (36,716) Compensation under employee incentive plan - - 19 7,723 - 7,742 Purchase of shares for treasury - - - (48,604) - (48,604) - ----------------------------------------------------------------------------------------------------------------------------- Balances at September 9, 2000 $ - $150,670 $ 129,081 $(343,168) $1,937,916 $1,874,499 ============================================================================================================================= All data subject to year-end audit. See notes to consolidated financial statements.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - ---------------------------------------------------------------------------------------------------------------------- SUPERVALU INC. and Subsidiaries - ---------------------------------------------------------------------------------------------------------------------- (In thousands) - ---------------------------------------------------------------------------------------------------------------------- Year-to-date (28 weeks ended) - ---------------------------------------------------------------------------------------------------------------------- September 9, September 11, 2000 1999 - ---------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities $ 380,653 $ 222,387 - ---------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities Additions to long-term notes receivable (31,052) (24,635) Proceeds received on long-term notes receivable 18,200 22,942 Proceeds from sale of assets 20,510 359,206 Purchase of property, plant and equipment (187,346) (179,401) Business acquisitions, net of cash acquired - (469,185) Other cash provided by (used in) investing activities (72,148) 36,696 - ---------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (251,836) (254,377) - ---------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities Net increase in checks outstanding, net of deposits 24,744 6,068 Net issuance of short-term notes payable 43,729 351,412 Proceeds from issuance of long-term debt - 346,300 Repayment of long-term debt (95,499) (603,987) Dividends paid (36,119) (31,861) Payment for purchase of treasury stock (48,604) (15,883) Other cash used in financing activities (13,528) (16,410) - ---------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities (125,277) 35,639 - ---------------------------------------------------------------------------------------------------------------------- Net increase in cash 3,540 3,649 Cash at beginning of year 10,920 7,608 - ---------------------------------------------------------------------------------------------------------------------- Cash at end of second quarter $ 14,460 $ 11,257 ====================================================================================================================== Supplemental Information: Pretax LIFO expense $ 1,292 $ 1,337 Pretax depreciation and amortization $ 175,312 $ 130,378 All data subject to year-end audit. See notes to consolidated financial statements.
7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Accounting Policies - ------------------- The summary of significant accounting policies is included in the notes to consolidated financial statements set forth in the Annual Report on Form 10-K of SUPERVALU INC. ("SUPERVALU" or the "company") for its fiscal year ended February 26, 2000 ("fiscal 2000"). 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 condensed consolidated financial position of the company and its subsidiaries at September 9, 2000 and September 11, 1999, and the results of the company's operations and condensed cash flows for the periods then ended. These interim results are not necessarily indicative of the results of the fiscal years as a whole. Richfood Acquisition - -------------------- On August 31, 1999, the company acquired, in a merger, all of the outstanding common stock of Richfood Holdings, Inc. ("Richfood"), a major food retailer and distributor operating primarily in the Mid-Atlantic region of the United States. The acquisition was accounted for as a purchase. The company issued approximately 19.7 million shares of SUPERVALU common stock with a market value of approximately $443 million, paid $443 million in cash for the common stock of Richfood and assumed approximately $685 million of debt in conjunction with the acquisition. In addition, the company repaid approximately $394 million of outstanding Richfood debt, leaving approximately $291 million outstanding immediately after the acquisition. The allocation of the consideration paid for Richfood to the consolidated assets and liabilities is based on estimates of their respective fair values. The excess of the purchase price over the fair value of net assets acquired of approximately $1.1 billion is being amortized on a straight-line basis over 40 years. Unaudited pro forma consolidated results of continuing operations, as though the companies had been combined at the beginning of the periods presented, are as follows:
- ------------------------------------------------------------------------------------------------------------------------------ Year-to-date (28 weeks) ended - ------------------------------------------------------------------------------------------------------------------------------ (In thousands, except per share data) Sept. 9, 2000 Sept. 11, 1999 - ------------------------------------------------------------------------------------------------------------------------------ Net sales $ 12,287,216 $ 11,405,477 Net earnings $ 127,261 $ 130,668 (a) Net earnings per common share - diluted $ .96 $ .93 (a) ==============================================================================================================================
(a) Amounts include a net gain of $10.9 million or $.08 per share-diluted from the gain on the sale of Hazelwood Farms Bakeries and from restructuring and other charges. Restructuring and Other Charges - ------------------------------- In the first quarter of fiscal 2000, the company recorded one-time pre-tax restructuring and other charges of $103.6 million as a result of an extensive review to reduce costs and enhance efficiency. Included in this total is $9.6 million for asset impairment costs. The restructuring charges include costs for facility consolidation, non-core store disposal, and rationalization of redundant and certain decentralized administrative functions. The facility consolidation and non-core store disposal charges represent costs to exit certain distribution centers and stores. Included in the charges are costs such as markdown of assets from net book value to estimated selling price, subsidized lease costs for leased properties at current estimated market rates, and severance and related benefits to be paid to terminated employees. The rationalization of redundant and certain decentralized administrative functions represents severance and related benefits such as outplacement, counseling and medical coverage to be paid to terminated employees. During the second quarter of fiscal 2000, the company acquired Richfood and signed a $2.3 billion annual supply agreement with Kmart Corporation ("Kmart"). Due to these significant changes in the business, the company reevaluated the restructure activities in the fourth quarter of fiscal 2000 as well as the timeline to complete. This resulted in an increase to the facility consolidation charge of $8.0 million and a decrease in the non-core store disposal charge of $1.9 million. The infrastructure 8 realignment charge decreased $6.1 million due to a number of voluntary terminations and higher than expected attrition. The company expects to complete these activities by the end of fiscal 2001. Details of the restructuring activity follow.
- ------------------------------------------------------------------------------------------------------------------- Balance, Fiscal 2001 Balance, (Dollars in thousands) Feb. 26, 2000 Activity Sept. 9, 2000 - ------------------------------------------------------------------------------------------------------------------- Facility consolidation $ 44,550 $ 7,555 $ 36,995 Non-core store disposal 29,326 16,426 12,900 Infrastructure realignment 6,791 2,225 4,566 - ------------------------------------------------------------------------------------------------------------------- Total restructure and other charges $ 80,667 $ 26,206 $ 54,461 - ------------------------------------------------------------------------------------------------------------------- Employees 1,513 402 1,111 - -------------------------------------------------------------------------------------------------------------------
Item 2: Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations - --------------------- RESULTS FOR THE QUARTER: For the second quarter of fiscal 2001, the company achieved sales of $5.3 billion, net earnings of $57.3 million and diluted earnings per share of $.43. Last year, sales were $4.1 billion, net earnings were $45.5 million and diluted earnings per share were $.37. Net sales Net sales increased 28.7 percent compared to last year reflecting the acquisition of Richfood, incremental volume from other new customers and new corporate stores. Retail food and food distribution sales increased 25.6 percent and 30.8 percent, respectively. Retail food sales increased over last year primarily due to the Richfood acquisition and 132 new store openings including 103 new limited assortment stores over the past twelve months. Same-store sales were negative 3.3 percent due to the effect of cannibalization and competitive activities in certain markets. Food distribution sales increased from last year primarily due to the Richfood acquisition and incremental volume from other new customers, principally the $2.3 billion annual supply agreement with Kmart. Gross profit Gross profit as a percentage of net sales was 11.1 percent compared to 10.8 percent last year. The increase was primarily due to the Richfood acquisition, which increased the proportion of the higher margin retail food business of the company. Selling and administrative expenses Selling and administrative expenses as a percentage of sales remained flat at 8.5 percent compared to last year. Operating earnings The company's pretax operating earnings (earnings before interest and taxes) increased to $140.3 million compared with $98.0 million last year, a 43.2 percent increase. Operating earnings before depreciation and amortization increased to $219.2 million compared with $155.8 million last year, a 40.7 percent increase. Retail food operating earnings increased 32.6 percent to $86.4 million, or 4.0 percent of sales, from last year's $65.1 million, or 3.8 percent of sales, primarily reflecting sales growth from the Richfood acquisition and the opening of 132 new stores. Retail food operating earnings before depreciation and amortization increased 31.2 percent to $125.7 million, or 5.9 percent of sales, from last year's $95.8 million, or 5.6 percent of sales. Food distribution operating earnings increased 51.9 percent to $62.6 million, or 2.0 percent of sales, from last year's $41.2 million, or 1.7 percent of sales, due primarily to the Richfood acquisition and incremental volume from other new customers, principally Kmart. Food distribution operating earnings before depreciation and amortization increased 50.3 percent to $101.5 million, or 3.2 percent of sales, from last year's $67.5 million, or 2.8 percent of sales. 9 Interest expense Interest expense increased to $49.9 million compared with $27.4 million last year, primarily reflecting higher average borrowings due to the Richfood acquisition and higher interest rates compared to last year. Income taxes The effective tax rate was 40.2 percent in the second quarter, compared with 39.5 percent in the second quarter of last year as a result of a full quarter of non-deductible goodwill expense occurring in the current year associated with the Richfood acquisition. Net earnings Net earnings increased 26.0 percent to $57.3 million or $.43 per share - diluted compared with last year's net earnings of $45.5 million or $.37 per share - diluted. Weighted average shares - diluted increased to 133.1 million compared with last year's 123.7 million. The increase in shares outstanding was due to the 19.7 million shares issued in connection with the Richfood acquisition, partially offset by the company's repurchase of 7.9 million shares. YEAR TO DATE RESULTS: Net sales Net sales increased 30.2 percent to $12.3 billion compared with $9.4 billion last year, reflecting the acquisition of Richfood, incremental volume from other new customers and new corporate stores. Retail food and food distribution sales increased 30.6 percent and 30.0 percent, respectively. Retail food sales increased over last year primarily due to the Richfood acquisition and 132 new store openings including 103 new limited assortment stores over the past twelve months. Same-store sales were negative 2.4 percent due to the effect of cannibalization and competitive activities in certain markets. Food distribution sales increased from last year primarily due to the Richfood acquisition and incremental volume from other new customers, principally the $2.3 billion annual supply agreement with Kmart. Gross profit Gross profit as a percentage of net sales was 10.9 percent compared to 10.5 percent last year. The increase was primarily due to the Richfood acquisition, which increased the proportion of the higher margin retail food business of the company. Selling and administrative expenses Selling and administrative expenses were 8.4 percent of net sales compared to 8.2 percent last year. The higher percentage was primarily due to the Richfood acquisition, which increased the proportion of the company's retail food business, which operates at a higher selling and adminstrative expense percentage. Sale of Business On May 22, 1999 the company sold Hazelwood Farms Bakeries, which resulted in a pre-tax gain of $163.7 million. The company had identified Hazelwood Farms Bakeries as a non-strategic asset to be liquidated. The transaction resulted in $248.2 million of after-tax cash proceeds, which were utilized in funding the cash portion of the Richfood acquisition in the second quarter of fiscal 2000. Restructuring and other charges In the first quarter of fiscal 2000, the company recorded one-time pre-tax restructuring and other charges of $103.6 million as a result of an extensive review to reduce costs and enhance efficiency. Included in this total is $9.6 million for asset impairment costs. The restructuring charges include costs for facility consolidation, non-core store disposal, and rationalization of redundant and certain decentralized administrative functions. During the second quarter of fiscal 2000, the company acquired Richfood and signed the $2.3 billion annual supply agreement with Kmart. Due to these significant changes in the business, the company reevaluated the restructure activities in the fourth quarter as well as the timeline to complete. This resulted in an increase to the facility consolidation charge of $8.0 million and a decrease in the non-core store disposal charge of $1.9 million. The infrastructure realignment charge decreased $6.1 million due to a number of voluntary terminations and higher than expected attrition. The company expects to complete these activities by the end of fiscal 2001. 10 Operating earnings The company's pretax operating earnings (earnings before interest and taxes) increased to $314.9 million compared with $220.4 million last year, excluding the gain on the sale of Hazelwood Farms Bakeries and restructuring and other charges. Including the one-time items, last year's operating earnings were $280.5 million. Operating earnings before depreciation and amortization increased to $490.2 million compared with $350.8 million last year, excluding one-time items, a 39.7 percent increase. Retail food operating earnings increased 35.7 percent to $195.7 million, or 4.0 percent of sales, from last year's $144.3 million, or 3.9 percent of sales, primarily reflecting sales growth from the Richfood acquisition and the opening of 132 new stores. Retail food operating earnings before depreciation and amortization increased 34.7 percent to $283.4 million, or 5.9 percent of sales, from last year's $210.4 million, or 5.7 percent of sales. Food distribution operating earnings increased 45.9 percent to $137.5 million, or 1.8 percent of sales, from $94.2 million, or 1.6 percent of sales due primarily to the Richfood acquisition and incremental volume from other new customers, principally Kmart. Food distribution operating earnings before depreciation and amortization increased 42.7 percent to $223.5 million, or 3.0 percent of sales, from last year's $156.6 million, or 2.7 percent of sales. Interest expense Interest expense increased to $113.5 million compared with $63.0 million last year, primarily reflecting higher average borrowings due to the Richfood acquisition and higher interest rates compared to last year. Income taxes The effective tax rate was 40.2 percent compared to 50.7 percent last year. The higher effective tax rate in the prior year was due to the gain on the sale of Hazelwood Farms Bakeries. Excluding the impact of this gain, the effective tax rate in fiscal 2000 was approximately 39.5 percent. Net earnings Excluding the gain on the sale of Hazelwood Farms Bakeries and restructuring and other charges, net earnings increased 25.7 percent to $127.3 million or $.96 per share - diluted compared with last year's net earnings of $101.3 million or $.83 per share - diluted. Including one-time items, last year's net earnings were $112.2 million or $.92 per share - diluted. Weighted average shares - diluted increased to 133.1 million compared with last year's 122.0 million. The increase in shares outstanding is due to the 19.7 million shares issued in connection with the Richfood acquisition, partially offset by the company's repurchase of 7.9 million shares. Liquidity and Capital Resources - ------------------------------- Internally generated funds from operations continued to be the major source of liquidity and capital growth. Cash provided from operations was $380.7 million year-to-date compared with $222.4 million last year, a 71.2 percent increase. The increase is primarily due to a reduction in net working capital of $96.4 million and an increase in depreciation and amortization of $44.9 million. Net cash used in investing activities was $251.8 million, compared with $254.4 million last year. Last year's results reflect cash used for business acquisitions of $469.2 million and pretax proceeds received on the sale of assets of $359.2 million, which includes the proceeds received from the sale of Hazelwood Farms Bakeries. Net cash used in financing activities was $125.3 million, compared with $35.6 million generated last year. Last year's financing activities included the issuance of $350 million of 7 7/8 percent notes due 2009 and proceeds from the issuance of commercial paper, primarily used to fund the cash portion of the Richfood acquisition and to repay long-term debt. During the first quarter of fiscal 2001, the company completed the $140 million stock repurchase program, authorized in December 1999, by purchasing 2.0 million shares at a cost of $35.2 million. Management expects that the company will continue to replenish operating assets and reduce aggregate debt with internally generated funds. The company has adequate short-term and long-term financing capabilities to fund its capital expenditures plan and acquisitions as the opportunities arise. SUPERVALU will continue to use short-term and long-term debt as a supplement to internally generated funds to finance its activities. 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 has entered into revolving credit agreements with various financial institutions, which are available for general corporate purposes and to support the company's commercial paper program as well as the issuance of letters of credit. A $400 million revolving credit agreement, with rates tied to LIBOR plus .180 to .275 percent, is in place and expires in October 2002. As of September 9, 2000, letters of credit outstanding under this agreement totaled $21.7 million, compared to $40.5 million outstanding as of September 11, 1999. In August 1999, the company executed a 364-day $300 million revolving credit agreement with rates tied to LIBOR plus .310 to .535 percent. This agreement was amended and restated in August 2000 to change the maturity date to August 2001. From time to time the company enters into short-term revolving credit agreements having tenors of three to nine months. As of October 20, 2000, the company had established $140 million in credit facilities under such agreements with rates tied to LIBOR plus .310 to .535 percent. 11 There have been no drawings under the company's revolving credit agreements during fiscal 2001. Total commercial paper outstanding as of the end of the second quarter was $608.0 million. On August 8, 2000, the company filed an $850 million "shelf registration". To date, there have been no securities issued under this "shelf registration". Cautionary statements for Purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995 The information in this Quarterly Report includes forward-looking statements. Important risks and uncertainties that could cause actual results to differ materially from those discussed in such forward looking statements, such as the impact of changing economic or business conditions, the impact of competition, the nature and extent of the consolidation of the retail food and food distribution industries, the ability to attract and retain customers for the company's businesses, the ability to control food distribution costs, the ability of SUPERVALU to grow through acquisition and assimilate acquired entities, the availability of favorable credit and trade terms, food price changes, other risk factors inherent in the food wholesaling and retail businesses and other factors, are detailed in Exhibit 99(i) to this report. Any forward-looking statement speaks only as of the date on which such statement is made, and SUPERVALU undertakes no obligation to update such statement to reflect events or circumstances arising after such date. Other risks or uncertainties may be detailed from time to time in the company's future Securities and Exchange Commission filings. Item 3. Quantitative and Qualitative Disclosures About Market Risk ---------------------------------------------------------- There were no material changes in market risk for the company in the period covered by this report. 12 PART II - OTHER INFORMATION - --------------------------- Item 1. Legal Proceedings - ------- ----------------- There are no material pending legal proceedings, other than ordinary routine litigation incidental to the business of the Registrant. Item 2. Changes in Securities and Use of Proceeds - ------- ----------------------------------------- None Item 3. Defaults Upon Senior Securities - ------- ------------------------------- None Item 4. Submission of Matters to a Vote of Security Holders. - ------- ---------------------------------------------------- The Registrant held its Annual Meeting of Stockholders on June 29, 2000 at which the stockholders took the following actions: (a) elected Lawrence A. Del Santo, Susan E. Engel, William A. Hodder and Harriet Perlmutter to the Board of Directors for terms expiring in 2003. The votes cast for and withheld with respect to each such Director were as follows: Votes For Votes Withheld ----------- -------------- Lawrence A. Del Santo 105,986,275 10,880,236 Susan E. Engel 114,795,262 2,071,249 William A. Hodder 114,783,400 2,083,111 Harriet Perlmutter 114,682,584 2,183,927 The Directors whose terms continued after the meeting are as follows: Edwin C. Gage, Garnett L. Keith, Jr., Richard L. Knowlton, Charles M. Lillis, Steven S. Rogers, Carole F. St. Mark and Michael W. Wright . (b) ratified by a vote of 115,261,168 for, 1,140,157 against, and 465,186 abstaining, the appointment of KPMG LLP as the independent auditors of Registrant for the fiscal year ending February 24, 2001. Item 5. Other Information - ------- ----------------- None Item 6. Exhibits and Reports on Form 8-K. - ------- --------------------------------- (a) Exhibits filed with this Form 10-Q: (11) Computation of Earnings Per Common Share. (27) Financial Data Schedule. (99)(i) Cautionary Statements pursuant to the Securities Litigation Reform Act. (b) Reports on Form 8-K: None. SIGNATURES - ---------- 13 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) Dated: October 24, 2000 By: /s/ Pamela K. Knous ----------------------------- Pamela K. Knous Executive Vice President, Chief Financial Officer (Authorized officer of Registrant) 14 EXHIBIT INDEX - ------------- Exhibit (11) Computation of Earnings Per Common Share (27) Financial Data Schedule (99)(i) Cautionary Statements pursuant to the Securities Litigation Reform Act 15 EX-11 2 0002.txt COMPUTATION OF EARNINGS PER COMMON SHARE Exhibit 11 SUPERVALU INC. Computation of Earnings per Common Share (unaudited)
- ---------------------------------------------------------------------------------------------------------------------- Second Quarter Ended Year-to-date Ended (In thousands, except per share amounts) Sept. 9, 2000 Sept. 11, 2000 Sept. 9, 2000 Sept. 11, 1999 - ---------------------------------------------------------------------------------------------------------------------- Earnings per share - basic Income available to common shareholders $ 57,296 $ 45,482 $127,261 $112,203 Weighted average shares outstanding 132,321 122,483 132,130 120,853 Earnings per share - basic $ .43 $ .37 $ .96 $ .93 Earnings per share - diluted Income available to common shareholders $ 57,296 $ 45,482 $127,261 $112,203 Weighted average shares outstanding 132,321 122,483 132,130 120,853 Dilutive impact of options outstanding 775 1,199 938 1,164 ----------------------------------------------------------------------- Weighted average shares and potential dilutive shares outstanding 133,096 123,682 133,068 122,017 Earnings per share - dilutive $ .43 $ .37 $ .96 $ .92 - ----------------------------------------------------------------------------------------------------------------------
Basic earnings per share is calculated using income available to common shareholders divided by the weighted average of common shares outstanding during the period. Diluted earnings per share is similar to basic earnings per share except that the weighted average of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares, such as options, had been issued. i EX-27 3 0003.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE 28 WEEK PERIOD ENDED SEPTEMBER 9, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 7-MOS FEB-24-2001 FEB-27-2000 SEP-09-2000 14,460 0 627,886 (30,349) 1,382,702 2,093,504 3,713,622 (1,455,373) 6,532,726 2,449,069 1,992,880 0 0 150,670 1,723,829 6,532,726 12,287,216 12,287,216 10,945,207 10,945,207 0 4,634 113,505 212,811 85,550 127,261 0 0 0 127,261 .96 .96
EX-99.1 4 0004.txt CAUTIONARY STATEMENTS Exhibit 99.1 Cautionary Statements for Purposes of the Safe Harbor Provisions of the Securities Litigation Reform Act SUPERVALU INC. ("SUPERVALU" or the "Company") may occasionally make statements regarding its businesses, such as projections of future performance, statements of management's plans and objectives, forecasts of market trends and other matters, which to the extent they are not historical fact, may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements containing the words or phrases "will likely result", "are expected to," "will continue," "outlook," "is anticipated," "estimate," "project," "believe," or similar expressions, which may appear in certain documents, reports (including but not limited to those filed with the Securities and Exchange Commission), press releases, and written or oral presentations made by officers of the Company to analysts, shareholders, investors, news organizations and others, identify such forward-looking statements. No assurance can be given that the results in any forward-looking statements will be achieved and actual results could be affected by one or more factors which could cause them to differ materially. Therefore, SUPERVALU wishes to ensure that any written or oral forward-looking statements made by it or on its behalf, are accompanied by, or referenced to, meaningful cautionary statements in order to maximize to the fullest extent possible the protections of the safe harbor established in the Private Securities Litigation Reform Act of 1995. All forward-looking statements made by or on behalf of SUPERVALU are hereby qualified in their entirety by reference to the following important factors, among others, that could affect the Company's businesses and cause actual results to differ materially from those projected. These factors are in addition to any other cautionary statements, written or oral, which may be made or referred to in connection with any such forward-looking statement. Any forward- looking statement speaks only as of the date on which such statement is made, and SUPERVALU undertakes no obligation to update such statement to reflect events or circumstances arising after such date. Competition and Other Business Factors Competition is intense in the markets in which the Company's businesses operate. In the retail segment, the ability to maintain or increase sales and earnings may be affected by a number of factors including, but not limited to, competition from other retail chains, supercenters, non-traditional competitors, and emerging alternative formats. Similarly, in the distribution segment, sales and earnings may be affected by the success of the Company's customers in competing with other retail chains, supercenters and non-traditional competitors, competition from established distribution companies and the entry of new or non-traditional distribution competitors into the industry. Other factors that could impact the Company's businesses include the ability to attract new customers and retain existing customers, consolidations of retailers or competitors, normal operating risks, increased operating costs, credit risks associated with open accounts and financing activities with independent retailers, the risk of increased self-distribution by chain retailers and potential disruptions resulting from labor disputes. Expansion and Acquisitions The Company intends to continue to grow its retail and wholesale businesses in part through acquisitions. Expansion is subject to a number of risks, including the adequacy of the Company's capital resources; the location of suitable store or distribution center sites and the negotiation of acceptable lease terms; the ability to hire, train and integrate employees; and possible costs and other risks of integrating or adapting operational systems. In addition, acquisitions involve a number of special risks, including: making acquisitions at acceptable rates of return; the diversion of management's attention to assimilation of the operations and personnel of the acquired business; potential adverse short-term effects on the Company's operating results; and amortization of acquired intangible assets. Liquidity Management expects that the Company will continue to replenish operating assets with internally generated funds and leases. If capital spending significantly exceeds anticipated capital needs, additional funding could be required from other sources. In addition, acquisitions could affect the Company's borrowing costs and future financial flexibility. iii Litigation While the Company believes that it is currently not subject to any material litigation, the costs and other effects of legal and administrative cases and proceedings and settlements are impossible to predict with certainty. The foregoing should not be construed as exhaustive and the Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. -----END PRIVACY-ENHANCED MESSAGE-----