EX-99.1 3 dex991.txt PRESS RELEASE DATED APRIL 10, 2003 Exhibit 99.1 Distribution and Retailing [LOGO OF SUPERVALU] PO Box 990 Minneapolis, MN 55440 952 828 4000 News Release FOR IMMEDIATE RELEASE INVESTORS: Yolanda Scharton 952 828 4540 yolanda.scharton@supervalu.com ------------------------------ MEDIA: Lynne High 952 996 7144 lynne.high@supervalu.com ------------------------ SUPERVALU REPORTS FOURTH QUARTER RESULTS FOR FISCAL 2003 MINNEAPOLIS, MN - April 10, 2003 - SUPERVALU INC. (NYSE: SVU) today reported results for the fourth quarter of fiscal 2003, which ended February 22, 2003. The company reported net sales of $4.6 billion compared to $4.5 billion last year, net earnings of $63.9 million compared to $32.8 million last year, and diluted earnings per share of $0.48 compared to $0.24 last year. Jeff Noddle, SUPERVALU chairman and chief executive officer said, "Unquestionably, the economy continued to weaken during the year and dealt us a difficult hand. While we did not reach our original goal for the quarter, we stayed true to our long-term strategies and maintained financial flexibility. By reducing planned capital spending and managing working capital requirements, we significantly improved our debt to capital ratio by more than 200 basis points for the year." Included in fiscal 2003 net earnings are restructure and other charges of $1.8 million. Included in fiscal 2002 net earnings are restructure and other charges of $27.7 million, other items of $7.5 million and goodwill amortization of $11.6 million. Noddle stated, "We also made important progress on key initiatives this year. Same store sales were flat in the fourth quarter on top of last year's positive performance. During the year we added 157 net retail stores reflecting both organic expansion and the acquisition of Deals. In distribution, we formally launched our new logistics business platform and continued to implement cost savings programs and new technologies. Marking significant progress, in less than one year since launching our general merchandise strategy at Save-A-Lot, we developed new combination store prototypes, introduced 200 popular general merchandise items across our 1,150 store network, converted or opened 35 full combination stores, and continued the expansion of Save-A-Lot's distribution network to support our expanding store base." For the full year, the company reported fiscal 2003 net sales of $19.2 billion compared to $20.3 billion last year, net earnings of $257.0 million compared to $198.3 million, and diluted earnings per share of $1.91 compared to $1.48 last year. Outlook SUPERVALU's full year earnings per share outlook for the fiscal year ending February 28, 2004, is $2.00 to $2.15. Fiscal 2004 is a 53-week year. Fiscal 2004 total capital spending is estimated to be in the range of $425 to $450 million, including approximately $60 million in capitalized leases. SUPERVALU's store activity plans for fiscal 2004 include approximately 75 to 100 new Save-A-Lot combination stores, eight to 12 new regional banner stores and store remodels, including the conversion of the Baltimore-based Metro grocery store network to the Shopper's Food Warehouse banner. Same store sales growth, reflecting a slowly recovering economy and planned in-market store expansion, is projected to be flat for the year. The outlook also assumes no meaningful inflation during the year in our market basket of goods. Distribution top line sales will continue to be impacted by the weak economy and ongoing attrition in the range of 2 to 4 percent. Commenting on the company's outlook, Noddle said, "We will continue to execute our business plans that include expansion of our key retail markets, continued growth of Save-A-Lot and the establishment of a low-cost and efficient logistics business platform. The growing mix of our retail business enhanced by our strong distribution infrastructure will continue to define our future success." Segment Results Retail Food Segment - Fourth quarter retail net sales were $2.5 billion, an increase of 6.0 percent compared to last year, primarily reflecting new store growth. New store activity since last year, including licensed stores, resulted in 157 net new stores, opened and acquired, including 59 Save-A-Lot stores, 93 opened or acquired Deals stores, and five regional banner stores. Total retail square footage increased by approximately six percent. Same store sales growth was flat in the fourth quarter. When adjusted for planned in-market expansion, same store sales increased 0.9 percent. Save-A-Lot same store sales were positive in the fourth quarter. Reported retail operating earnings for the fourth quarter were $115.3 million compared to $92.7 million last year, an increase of 24.3 percent. Fourth quarter retail operating earnings is an all time high for SUPERVALU. Reported operating earnings as a percent to sales was 4.6 percent compared to 3.9 percent in last year's fourth quarter. Major items impacting operating results year over year were the absence of last year's $5.8 million in goodwill amortization and last year's $12.5 million in store closing charges. Operating earnings increased in the fourth quarter primarily due to sales growth partially offset by negative expense leverage primarily due to rising employee benefit costs. Food Distribution Segment - Fourth quarter net sales were $2.1 billion, a decline of 1.9 percent compared to last year. Sales declined slightly in the quarter due to the weak economy and customer attrition that more than offset new business gains. Reported distribution operating earnings for the fourth quarter were $31.0 million, compared to $53.7 million last year. Reported operating earnings as a percent to sales was 1.5 percent compared to 2.5 percent in last year's fourth quarter. Last year's operating earnings included $5.8 million in goodwill amortization. Reported operating earnings and margin were impacted by the lack of sales growth combined with cost pressures that had a sharp negative effect on expense leverage. Major items impacting fourth quarter were a change in mix of customers and services provided, rising employee benefit costs, higher LIFO charges and unexpected shrink expense from consolidation of regional functions. Other Items The effective tax rate for fiscal 2003 fourth quarter was 37.0 percent, reflecting the implementation of Statement of Financial Accounting Standard (SFAS) No. 142. Total debt to capital was 51.8 percent at fiscal 2003 year-end compared to 54.3 percent at fiscal 2002 year-end. The debt to capital ratio is calculated as debt, which includes notes payable, current debt and current obligations under capital leases, long-term debt and long-term obligations under capital leases, divided by the sum of debt and stockholders' equity. Net interest expense during the fourth quarter declined to $34.3 million on lower borrowing levels and lower average interest rates in the quarter. In the event SUPERVALU's stock price reaches the convertible notes' conversion trigger price of $35.07 in the current quarter, the company would be required to include an additional 7.8 million shares in its diluted shares outstanding calculation for the subsequent quarter. Diluted average shares outstanding were essentially flat in the quarter at 133.9 million shares. As of February 22, 2003, SUPERVALU had 133.7 million shares outstanding. Capital spending for fiscal 2003 was $439.4 million, including $42.8 million in capitalized leases, primarily funding retail store expansion, store remodeling, technology enhancements and the first quarter acquisition of Deals. In the fourth quarter of fiscal 2003, the company recorded an additional after-tax charge of $1.8 million, relating to prior years' restructure and other charges for closed properties, as a result of continued weakening in certain real estate markets. In accordance with SFAS No. 87, "Employers' Accounting for Pension", the company has revised certain of its pension plan assumptions. Based on both performance of the pension plan assets and planned assumption changes, the company recorded a net after-tax adjustment in the fourth quarter of fiscal 2003 of $72.3 million to reflect a minimum pension liability. This adjustment is a non-cash reduction of equity and did not impact net earnings. This adjustment will be revised in future years depending upon market performance and interest rate levels. In the fourth quarter of fiscal 2003, the company lowered its expected return on plan assets used for fiscal 2003 pension expense by 75 basis points to 9.25 percent and by an additional 25 basis points to 9.0 percent for fiscal 2004 pension expense. The company also lowered its discount rate by 25 basis points to 7.0 percent for fiscal 2004 pension expense. For fiscal 2004, when not considering other changes in assumptions or actual return on plan assets, the impact to pension expense of a 25 basis point reduction in the discount rate will be approximately $3 million and the impact of a 25 basis point reduction in expected return on plan assets will be approximately $1 million. During the fourth quarter, the company adopted Emerging Issues Task Force (EITF) Issue No. 02-16 that addresses the method by which retailers account for allowances from vendors. Net earnings were not affected by the adoption of EITF Issue No. 02-16. The company recognizes vendor allowances when earned which typically occurs when the activities are completed or when the products are sold for which the promotional allowances are given. SUPERVALU's accounting policies are consistent with generally accepted accounting policies. The company provides certain facilitative services between its independent retailers and vendors related to products typically known as Direct Store Delivery (DSD) products. These services include sourcing, invoicing and payment services. In the fourth quarter of fiscal 2003, the company decided to more fully disclose the components of these facilitative services. These disclosures will now include amounts invoiced to independent retailers by the company, amounts due and paid by the company to its vendors and the associated net gross margin on these facilitative services. The full year and fourth quarter activity relating to such facilitative services for fiscal 2003 and 2002 is as follows: Fiscal Year Fourth Quarter 2003 2002 2003 2002 ------ ------ ------ ------ Amounts invoiced to independent retailers $663.8 $630.4 $151.2 $143.2 Amounts due and paid to vendors 649.3 615.5 147.8 139.7 ------ ------ ------ ------ Net gross margin $ 14.5 $ 14.9 $ 3.4 $ 3.5 ====== ====== ====== ====== Prior to the fourth quarter of fiscal 2003, the amounts invoiced to retailers by the company were recorded as net sales and the amounts due and paid by the company to its vendors were recorded as cost of sales. Commencing with the fourth quarter of fiscal 2003, the company has revised amounts previously recorded by reclassifying cost of sales against net sales for all prior periods. The effect is to present the net gross margin associated with such facilitative services as a component of net sales. This reclassification had no impact on gross profit, earnings before income taxes, net earnings, cash flows, or financial position for any period or their respective trends. A conference call to review the full year results is scheduled for today at 9:00 a.m. (CDT). A live Web cast of the call will be available at www.supervalu.com. An archive of the call is accessible via telephone by dialing 1-630-652-3018 with pass code 6976167 and through the company's Web site at www.supervalu.com. The conference call archive will be available through May 10, 2003. As of February 22, 2003, SUPERVALU's retail store network consisted of 1,417 stores in 39 states, including 1,150 Save-A-Lot extreme value food stores - 274 owned food stores, 783 licensed food stores, and 93 Deals general merchandise stores; 267 regional banners including Cub Foods, Shop `n Save, Shoppers Food Warehouse, Metro, bigg's, Farm Fresh, Scott's Foods and Hornbacher's stores. SUPERVALU serves as primary supplier to approximately 2,460 stores, 29 Cub Foods franchised locations, and SUPERVALU's own regional banner store network of 267 stores, while serving as secondary supplier to approximately 1,500 stores. SUPERVALU is one of the largest companies in the United States grocery channel. With annual revenues approaching $20 billion, SUPERVALU holds leading market share positions with its 1,417 retail grocery locations, including licensed Save-A-Lot locations. Through its Save-A-Lot format, the company holds the number one market position in the extreme value grocery retailing sector. In addition, through SUPERVALU's geographically diverse distribution centers, the company provides distribution and related logistics support services across the nation's grocery channel. At year-end, SUPERVALU had approximately 57,400 employees. The statements contained in this news release that are not historical fact are forward-looking statements and are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Certain important factors could cause results to differ materially from those anticipated by such forward-looking statements, including 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 food distribution operations and to control food distribution costs, the ability of the company to grow through acquisition and assimilate the acquired entities, the execution of restructuring activities, potential work disruptions from labor disputes or national emergencies, the availability of favorable credit and trade terms, food price changes, general economic or political conditions that affect consumer buying habits generally or war-time activities, threats or general acts of terror directed at the food industry that affects consumer behavior, other risk factors inherent in the food distribution and retail businesses and other factors discussed from time to time in reports filed by the company with the Securities and Exchange Commission. SUPERVALU INC. and Subsidiaries Composition of Net Sales and Earnings The following table sets forth the composition of the company's net sales and earnings. (In thousands) Fourth Quarter (12 weeks) ended ------------------------------- Feb. 22, 2003 Feb. 23, 2002 -------------------------------------- ------------- -------------- Net sales -------------------------------------- Retail Food $ 2,517,658 $ 2,376,196 % of total 54.6 % 52.7 % Food Distribution 2,095,264 2,135,480 % of total 45.4 % 47.3 % Total net sales $ 4,612,922 $ 4,511,676 100.0 % 100.0 % -------------------------------------- ----------- ----------- Earnings -------------------------------------- Retail Food operating earnings $ 115,255 $ 92,714 % of sales 4.6 % 3.9 % Food Distribution operating earnings 31,038 53,697 % of sales 1.5 % 2.5 % ----------- ----------- Subtotal 146,293 146,411 % of sales 3.2 % 3.2 % General corporate expense (7,555) (8,086) Restructure and other charges (2,918) (46,300) ----------- ----------- Total operating earnings 135,820 92,025 % of sales 2.9 % 2.0 % Interest expense (39,333) (42,029) Interest income 5,009 4,911 ----------- ----------- Earnings before income taxes 101,496 54,907 Income tax expense 37,553 22,133 ----------- ----------- Net earnings $ 63,943 $ 32,774 ====================================== =========== =========== NOTE 1: Pretax LIFO (expense) revenue $ (1,975) $ 4,229 NOTE 2: Pretax depreciation and amortization Retail Food Segment $ 44,323 $ 45,728 Food Distribution Segment 30,183 37,073 General Corporate 804 133 ----------- ----------- Total Company $ 75,310 $ 82,934 =========== =========== NOTE 3: Fiscal 2003 net earnings include restructure and other charges of $1.8 million or $0.01 per diluted share, reflecting net adjustments to increase prior years' restructure charges, primarily for increased liabilities associated with real estate in certain markets. Fiscal 2002 net earnings include restructure and other items of $35.2 million or $0.27 per diluted share. This includes total pretax adjustments of $58.8 million, including $46.3 million of restructure charges and $12.5 million in store closing charges. The $46.3 million of restructure charges includes $16.3 million for additional efficiency initiatives and $30 million of net adjustments to increase prior years' restructure charges for increased liabilities associated with real estate. The $12.5 million in store closing reserves that was recorded in the fourth quarter of fiscal 2002 relates primarily to lease liabilities and impairment of assets and is reflected in selling and administrative expenses in the retail food segment. NOTE 4: The company provides certain facilitative services between its independent retailers and vendors related to products typically known as Direct Store Delivery (DSD) products. These services include sourcing, invoicing and payment services. Prior to the fourth quarter of fiscal 2003, the amounts invoiced to independent retailers by the company for facilitative services were recorded as net sales and the related amounts due and paid by the company to its vendors were recorded as cost of sales. Commencing with the fourth quarter of fiscal 2003, the company has revised amounts previously recorded by reclassifying cost of sales against net sales for all prior periods. The effect is to present the net gross margin associated with such facilitative services as a component of net sales. This reclassification had no impact on gross profit, earnings before income taxes, net earnings, cash flows, or financial position for any period or their respective trends. SUPERVALU INC. and Subsidiaries Composition of Net Sales and Earnings The following table sets forth the composition of the company's net sales and earnings. (In thousands) Year-to-Date (52 weeks) ended ------------------------------- Actual Actual Feb. 22, 2003 Feb. 23, 2002 -------------------------------------- ------------- -------------- Net sales -------------------------------------- Retail Food $ 9,848,230 $ 9,549,068 % of total 51.4 % 47.1 % Food Distribution 9,312,138 10,743,972 % of total 48.6 % 52.9 % Total net sales $19,160,368 $20,293,040 100.0 % 100.0 % -------------------------------------- ----------- ----------- Earnings -------------------------------------- Retail Food operating earnings $ 436,537 $ 363,304 % of sales 4.4 % 3.8 % Food Distribution operating earnings 171,589 227,013 % of sales 1.8 % 2.1 % ----------- ----------- Subtotal 608,126 590,317 % of sales 3.2 % 2.9 % General corporate expense (35,265) (39,245) Restructure and other charges (2,918) (46,300) ----------- ----------- Total operating earnings 569,943 504,772 % of sales 3.0 % 2.5 % Interest expense (182,499) (194,294) Interest income 20,560 21,520 ----------- ----------- Earnings before income taxes 408,004 331,998 Income tax expense 150,962 133,672 ----------- ----------- Net earnings $ 257,042 $ 198,326 ====================================== =========== =========== NOTE 1: Pretax LIFO expense $ (4,741) $ (143) NOTE 2: Pretax depreciation and amortization Retail Food Segment $ 167,143 $ 177,585 Food Distribution Segment 127,042 160,718 General Corporate 2,871 2,447 ----------- ----------- Total Company $ 297,056 $ 340,750 =========== =========== NOTE 3: Fiscal 2003 net earnings include restructure and other charges of $1.8 million or $0.01 per diluted share, reflecting net adjustments to increase prior years' restructure charges, primarily for increased liabilities associated with real estate in certain markets. Fiscal 2002 net earnings include restructure and other items of $35.2 million or $0.27 per diluted share. This includes total pretax adjustments of $58.8 million, including $46.3 million of restructure charges and $12.5 million in store closing charges. The $46.3 million of restructure charges includes $16.3 million for additional efficiency initiatives and $30 million of net adjustments to increase prior years' restructure charges for increased liabilities associated with real estate. The $12.5 million in store closing reserves that was recorded in the fourth quarter of fiscal 2002 relates primarily to lease liabilities and impairment of assets and is reflected in selling and administrative expenses in the retail food segment. NOTE 4: The company provides certain facilitative services between its independent retailers and vendors related to products typically known as Direct Store Delivery (DSD) products. These services include sourcing, invoicing and payment services. Prior to the fourth quarter of fiscal 2003, the amounts invoiced to independent retailers by the company for facilitative services were recorded as net sales and the related amounts due and paid by the company to its vendors were recorded as cost of sales. Commencing with the fourth quarter of fiscal 2003, the company has revised amounts previously recorded by reclassifying cost of sales against net sales for all prior periods. The effect is to present the net gross margin associated with such facilitative services as a component of net sales. This reclassification had no impact on gross profit, earnings before income taxes, net earnings, cash flows, or financial position for any period or their respective trends. CONSOLIDATED STATEMENTS OF EARNINGS SUPERVALU INC. and Subsidiaries (In thousands, except per share data) Fourth Quarter (12 weeks) ended ------------------------------- Actual Actual Feb. 22, 2003 Feb. 23, 2002 -------------------------------------- ------------- ------------- Net sales $ 4,612,922 $ 4,511,676 Costs and expenses: Cost of sales 3,964,919 3,872,673 Selling and administrative expenses 509,265 489,103 Amortization of goodwill - 11,575 Restructure and other charges 2,918 46,300 Interest Interest expense 39,333 42,029 Interest income 5,009 4,911 ----------- ----------- Interest expense, net 34,324 37,118 ----------- ----------- Total costs and expenses 4,511,426 4,456,769 ----------- ----------- Earnings before income taxes 101,496 54,907 Income tax expense 37,553 22,133 ----------- ----------- Net earnings $ 63,943 $ 32,774 =========== =========== Net earnings per common share - diluted $ 0.48 $ 0.24 Net earnings per common share - basic $ 0.48 $ 0.25 Weighted average number of common shares outstanding Diluted 133,934 134,486 Basic 133,689 132,811 Dividends declared per common share $ 0.1425 $ 0.1400 NOTE 1: Fiscal 2003 net earnings include restructure and other charges of $1.8 million or $0.01 per diluted share, reflecting net adjustments to increase prior years' restructure charges, primarily for increased liabilities associated with real estate in certain markets. Fiscal 2002 net earnings include restructure and other items of $35.2 million or $0.27 per diluted share. This includes total pretax adjustments of $58.8 million, including $46.3 million of restructure charges and $12.5 million in store closing charges. The $46.3 million of restructure charges includes $16.3 million for additional efficiency initiatives and $30 million of net adjustments to increase prior years' restructure charges for increased liabilities associated with real estate. The $12.5 million in store closing reserves that was recorded in the fourth quarter of fiscal 2002 relates primarily to lease liabilities and impairment of assets and is reflected in selling and administrative expenses in the retail food segment. NOTE 2: The company provides certain facilitative services between its independent retailers and vendors related to products typically known as Direct Store Delivery (DSD) products. These services include sourcing, invoicing and payment services. Prior to the fourth quarter of fiscal 2003, the amounts invoiced to independent retailers by the company for facilitative services were recorded as net sales and the related amounts due and paid by the company to its vendors were recorded as cost of sales. Commencing with the fourth quarter of fiscal 2003, the company has revised amounts previously recorded by reclassifying cost of sales against net sales for all prior periods. The effect is to present the net gross margin associated with such facilitative services as a component of net sales. This reclassification had no impact on gross profit, earnings before income taxes, net earnings, cash flows, or financial position for any period or their respective trends. CONSOLIDATED STATEMENTS OF EARNINGS SUPERVALU INC. and Subsidiaries (In thousands, except per share data) Year-to-date (52 weeks) ended ------------------------------- Actual Actual Feb. 22, 2003 Feb. 23, 2002 -------------------------------------- ------------- ------------- Net sales $ 19,160,368 $ 20,293,040 Costs and expenses: Cost of sales 16,567,397 17,704,197 Selling and administrative expenses 2,020,110 1,989,408 Amortization of goodwill - 48,363 Restructure and other charges 2,918 46,300 Interest Interest expense 182,499 194,294 Interest income 20,560 21,520 ------------ ------------ Interest expense, net 161,939 172,774 ------------ ------------ Total costs and expenses 18,752,364 19,961,042 ------------ ------------ Earnings before income taxes 408,004 331,998 Income tax expense 150,962 133,672 ------------ ------------ Net earnings $ 257,042 $ 198,326 ============ ============ Net earnings per common share - diluted $ 1.91 $ 1.48 Net earnings per common share - basic $ 1.92 $ 1.49 Weighted average number of common shares outstanding Diluted 134,877 133,978 Basic 133,730 132,940 Dividends declared per common share $ 0.5675 $ 0.5575 NOTE 1: Fiscal 2003 net earnings include restructure and other charges of $1.8 million or $0.01 per diluted share, reflecting net adjustments to increase prior years' restructure charges, primarily for increased liabilities associated with real estate. Fiscal 2002 net earnings include restructure and other charges of $35.2 million or $0.27 per diluted share. This includes total pretax adjustments of $58.8 million, including $46.3 million of restructure charges and $12.5 million in store closing charges. The $46.3 million of restructure charges includes $16.3 million for additional efficiency initiatives and $30 million of net adjustments to increase prior years' restructure charges for increased liabilities associated with real estate. The $12.5 million in store closing reserves that was recorded in the fourth quarter of fiscal 2002 relates primarily to lease liabilities and impairment of assets and is reflected in selling and administrative expenses in the retail food segment. NOTE 2: The company provides certain facilitative services between its independent retailers and vendors related to products typically known as Direct Store Delivery (DSD) products. These services include sourcing, invoicing and payment services. Prior to the fourth quarter of fiscal 2003, the amounts invoiced to independent retailers by the company for facilitative services were recorded as net sales and the related amounts due and paid by the company to its vendors were recorded as cost of sales. Commencing with the fourth quarter of fiscal 2003, the company has revised amounts previously recorded by reclassifying cost of sales against net sales for all prior periods. The effect is to present the net gross margin associated with such facilitative services as a component of net sales. This reclassification had no impact on gross profit, earnings before income taxes, net earnings, cash flows, or financial position for any period or their respective trends. CONSOLIDATED BALANCE SHEETS SUPERVALU INC. and Subsidiaries (In thousands) Fiscal Year End ------------------------------ February 22, February 23, 2003 2002 ------------------------------------------ ------------ ------------ Assets Current Assets Cash and cash equivalents $ 29,188 $ 12,171 Receivables, net 477,429 447,243 Inventories 1,049,283 1,038,050 Other current assets 91,466 78,030 ----------- ----------- Total current assets 1,647,366 1,575,494 Long-term receivables, net 126,435 137,326 Property, plant and equipment, net 2,220,850 2,208,633 Other Assets Goodwill 1,576,584 1,531,312 Other 325,010 343,484 ----------- ----------- Total assets $ 5,896,245 $ 5,796,249 ========================================== =========== =========== Liabilities and Stockholders' Equity Current Liabilities Notes payable $ 80,000 $ 24,000 Accounts payable 1,081,734 1,016,605 Current debt and obligations under capital leases 61,580 356,408 Other current liabilities 301,993 283,217 ----------- ----------- Total current liabilities 1,525,307 1,680,230 Long-term debt and obligations under capital leases 2,019,658 1,875,873 Other liabilities and deferred income taxes 342,040 341,008 Total stockholders' equity 2,009,240 1,899,138 ----------- ----------- Total liabilities and stockholders' equity $ 5,896,245 $ 5,796,249 ========================================== =========== =========== SUPERVALU, INC. CERTAIN FACILITATIVE SERVICES -- FIVE YEAR SUMMARY The company provides certain facilitative services between its independent retailers and vendors related to products typically known as Direct Store Delivery (DSD) products. These services include sourcing, invoicing and payment services. Prior to the fourth quarter of fiscal 2003, the amounts invoiced to independent retailers by the company for facilitative services were recorded as net sales and the related amounts due and paid by the company to its vendors were recorded as cost of sales. Commencing with the fourth quarter of fiscal 2003, the company has revised amounts previously recorded by reclassifying cost of sales against net sales for all prior periods. The effect is to present the net gross margin associated with such facilitative services as a component of net sales. This reclassification had no impact on gross profit, earnings before income taxes, net earnings, cash flows, or financial position for any period or their respective trends.
(In millions) Fiscal Fiscal Fiscal Fiscal Fiscal 2003 2002 2001 2000 1999 ------- ------- ------- -------- ------- Amounts invoiced to independent retailers $ 663.8 $ 630.4 $ 690.2 $ 679.5 $ 751.4 Amounts due and paid to vendors 649.3 615.5 673.9 663.3 733.3 ------- ------- ------- ------- ------- Net gross margin $ 14.5 $ 14.9 $ 16.3 $ 16.2 $ 18.1 ======= ======= ======= ======= =======