-----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, WiScmmhyNudvm06RB6iHQcBUDlqWzeUu76A16ZpwoeHECAIzu5zBGSEFCEOHG1dQ 6vYfuuDyAAppARv3XGdvzg== 0001045969-98-000544.txt : 19980720 0001045969-98-000544.hdr.sgml : 19980720 ACCESSION NUMBER: 0001045969-98-000544 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980620 FILED AS OF DATE: 19980714 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: 0222 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-05418 FILM NUMBER: 98665797 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 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 (16 weeks) ended June 20, 1998. [ ] 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 July 7, 1998 is as follows: Title of Each Class Shares Outstanding ------------------- ------------------ Common Shares 60,488,347 PART I - FINANCIAL INFORMATION - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Item 1: Financial Statements - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF EARNINGS - -------------------------------------------------------------------------------- SUPERVALU INC. and Subsidiaries - -------------------------------------------------------------------------------- (In thousands, except per share data)
First Quarter (16 weeks) Ended ----------------------------------------------------- June 20, 1998 % of sales June 14, 1997 % of sales - ------------------------------------------------------------------------------------------- NET SALES $5,202,576 100.00% $5,033,303 100.00% COSTS AND EXPENSES: Cost of sales 4,683,755 90.03 4,532,174 90.04 Selling and administrative expenses 394,051 7.57 380,302 7.56 Amortization of goodwill 6,322 0.12 6,037 0.12 Interest Interest expense 38,322 0.74 41,321 0.82 Interest income 6,177 0.12 5,118 0.10 ------------------------------------------------- Interest expense, net 32,145 0.62 36,203 0.72 ------------------------------------------------- Total costs and expenses 5,116,273 98.34 4,954,716 98.44 ------------------------------------------------- EARNINGS BEFORE EQUITY IN EARNINGS OF SHOPKO AND INCOME TAXES 86,303 1.66 78,587 1.56 EQUITY IN EARNINGS OF SHOPKO -- -- 3,330 0.07 ------------------------------------------------- EARNINGS BEFORE INCOME TAXES 86,303 1.66 81,917 1.63 PROVISION FOR INCOME TAXES Current 33,288 28,631 Deferred 1,217 3,520 ------------------------------------------------- Income tax expense 34,505 0.66 32,151 0.64 ------------------------------------------------- NET EARNINGS $ 51,798 1.00% $ 49,766 0.99% ================================================= NET EARNINGS PER COMMON SHARE - BASIC $ .43 $ .37 NET EARNINGS PER COMMON SHARE - DILUTED $ .42 $ .37 Weighted average number of common shares outstanding Basic 120,565 133,954 Diluted 122,145 134,488 Dividends declared per common share $ .130 $ .125
All data subject to year-end audit. See notes to consolidated financial statements. 2 CONDENSED CONSOLIDATED BALANCE SHEETS
- ------------------------------------------------------------------------------------- SUPERVALU INC. and Subsidiaries First Quarter as of Fiscal Year End - ------------------------------------------------------------------------------------- (In thousands) June 20, February 28, ASSETS 1998 1998 - ------------------------------------------------------------------------------------ CURRENT ASSETS Cash and cash equivalents $ 5,716 $ 6,100 Receivables, less allowance for losses of $14,226 at June 20, 1998 and $13,415 at February 28, 1998 402,081 410,741 Inventories 1,128,175 1,115,529 Other current assets 75,684 79,690 ------------------------- TOTAL CURRENT ASSETS 1,611,656 1,612,060 LONG-TERM NOTES RECEIVABLE 182,790 178,692 PROPERTY, PLANT AND EQUIPMENT, NET 1,594,026 1,589,601 GOODWILL 490,122 498,438 OTHER ASSETS 213,354 214,219 ------------------------- TOTAL ASSETS $4,091,948 $4,093,010 ========================= LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------------------------------------------------------ CURRENT LIABILITIES Notes payable $ 187,216 $ 149,002 Accounts payable 975,688 924,371 Current debt and obligations under capital leases 144,704 179,594 Other current liabilities 169,082 204,193 ------------------------- TOTAL CURRENT LIABILITIES 1,476,690 1,457,160 LONG-TERM DEBT AND OBLIGATIONS UNDER CAPTIAL LEASES 1,190,309 1,260,728 OTHER LIABILITIES AND DEFERRED INCOME TAXES 178,077 173,217 TOTAL STOCKHOLDERS' EQUITY 1,246,872 1,201,905 ------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,091,948 $4,093,010 =========================
All data subject to year-end audit. See notes to consolidated financial statements. 3 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 22, 1997 $ 5,908 $ 150,670 $ 99 $(231,871) $ 1,382,617 $ 1,307,423 Net earnings -- -- -- -- 230,757 230,757 Sales of common stock under option plans -- -- (4,123) 51,623 -- 47,500 Cash dividends declared on common stock - $.515 per share -- -- -- -- (63,678) (63,678) Compensation under employee incentive plans -- -- 6,951 11,289 -- 18,240 Purchase of shares for treasury -- -- -- (338,337) -- (338,337) - -------------------------------------------------------------------------------------------------------------- BALANCES AT FEBRUARY 28,1998 5,908 150,670 2,927 (507,296) 1,549,696 1,201,905 Net earnings -- -- -- -- 51,798 51,798 Sales of common stock under option plans -- -- (1,823) 9,637 -- 7,814 Cash dividends declared on common stock - $.130 per share -- -- -- -- (16,190) (16,190) Compensation under employee incentive plans -- -- 996 4,898 -- 5,894 Purchase of shares for treasury -- -- -- (4,349) -- (4,349) - -------------------------------------------------------------------------------------------------------------- BALANCES AT JUNE 20, 1998 $ 5,908 $ 150,670 $ 2,100 $(497,110) $ 1,585,304 $ 1,246,872 ==============================================================================================================
All data subject to year-end audit. See notes to consolidated financial statements. 4 CONSOLIDATED STATEMENTS OF CASH FLOWS - -------------------------------------------------------------------------------- SUPERVALU INC. AND SUBSIDIARIES - -------------------------------------------------------------------------------- (In thousands) - --------------------------------------------------------------------------------
YEAR-TO-DATE (16 WEEKS ENDED) - ------------------------------------------------------------------------------------ JUNE 20, JUNE 14, 1998 1997 - ------------------------------------------------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 51,798 $ 49,766 Adjustments to reconcile net earnings to net cash provided by operating activities: Equity in earnings of ShopKo -- (3,330) Depreciation and amortization 69,194 69,444 LIFO (income) expense (1,067) 668 Provision for losses on receivables 2,659 2,016 Deferred income taxes 1,217 3,520 Other adjustments, net (2,586) (7,283) Changes in assets and liabilities: Receivables 6,001 663 Inventory (11,579) (29,832) Accounts payable 16,202 45,181 Other assets and liabilities (828) (8,380) - ------------------------------------------------------------------------------------ NET CASH PROVIDED BY OPERATING ACTIVITIES 131,011 122,433 - ------------------------------------------------------------------------------------ CASH FLOWS FROM INVESTING ACTIVITIES Additions to long-term notes receivable (11,252) (26,868) Proceeds received on long-term notes receivable 13,281 8,798 Proceeds from sale of property, plant and equipment 11,807 31,627 Purchase of property, plant and equipment (83,505) (59,786) Business acquisitions, net of cash acquired -- (23,523) Other investing activities 2,235 (14,999) - ------------------------------------------------------------------------------------ NET CASH USED IN INVESTING ACTIVITIES (67,434) (84,751) - ------------------------------------------------------------------------------------ CASH FLOWS FROM FINANCING ACTIVITIES Net increase in checks outstanding, net of deposits 34,893 (2,485) Net issuance of short-term notes payable 38,214 16,269 Proceeds from issuance of long-term debt 83,500 -- Repayment of long-term debt (184,537) (26,974) Reduction of obligations under capital leases (6,050) (7,492) Proceeds from the sale of common stock under option plans 6,420 3,861 Dividends paid (32,052) (16,798) Payments for purchase of treasury stock (4,349) (3,285) - ------------------------------------------------------------------------------------ NET CASH USED IN FINANCING ACTIVITIES (63,961) (36,904) - ------------------------------------------------------------------------------------ Net increase in cash and cash equivalents (384) 778 Cash and cash equivalents at beginning of year 6,100 6,539 - ------------------------------------------------------------------------------------ CASH AND CASH EQUIVALENTS AT END OF FIRST QUARTER $ 5,716 $ 7,317 ====================================================================================
All data subject to year-end audit. See notes to consolidated financial statements. 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Accounting Policies - ------------------- The summary of significant accounting policies is included in the notes to consolidated financial statements in the 1998 annual report of SUPERVALU INC. ("SUPERVALU" or the "company"). Stock Split - ----------- On July 1, 1998 the company announced a two-for-one stock split, to be effected in the form of a 100 percent stock dividend for shareholders of record on July 20, 1998. All share and per share data have been adjusted to reflect the stock dividend. Weighted average number of common shares outstanding prior to the stock dividend was 60.3 million - basic (61.1 million - diluted) and net earnings per share was $ .86 - basic ($ .85 - diluted). Weighted average number of common shares outstanding subsequent to the stock dividend is 120.6 million - basic (122.1 million - diluted) and net earnings per share is $ .43 - basic ($ .42 - diluted). 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 June 20, 1998 and June 14, 1997 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. 6 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS - --------------------- The company reported record sales of $5.2 billion, net earnings of $51.8 million, basic earnings per share of $.43 and diluted earnings per share of $.42. Last year sales were $5.0 billion, net earnings were $49.8 million and basic and diluted earnings per share were $.37. The following table sets forth net sales by segment: Net Sales by Segment - ---------------------------------------------------------------------------- (In thousands) First Quarter (16 weeks) - ---------------------------------------------------------------------------- June 20, 1998 June 14, 1997 - ---------------------------------------------------------------------------- Net Sales % of Total Net Sales % of Total - ---------------------------------------------------------------------------- Food distribution $ 4,609,097 88.6 % $ 4,446,880 88.3 % Retail food 1,408,603 27.1 1,364,853 27.1 Less: Eliminations (815,124) (15.7) (778,430) (15.4) - ---------------------------------------------------------------------------- Total net sales $ 5,202,576 100.0 % $ 5,033,303 100.0 % - ---------------------------------------------------------------------------- NET SALES Net sales increased 3.4 percent compared to last year, positively impacted by a 3.6 percent increase in food distribution sales and a 3.2 percent increase in retail food sales. Sales gains were achieved despite the low inflationary environment. Food distribution continued to achieve sales increases by adding new customers and new stores, partially offset by the loss of retail customers and competitive market conditions. Retail food sales increased over last year primarily due to new store openings over the past twelve months and an increase in same-store sales of 1.6 percent. The 3.2 percent increase in retail food sales was achieved despite the closing or sale of underperforming stores in the prior year. GROSS PROFIT Gross profit as a percentage of net sales was 10.0 percent, even with last year. Food distribution and retail food gross profit increased over last year driven by increased sales. SELLING AND ADMINISTRATIVE EXPENSES Selling and administrative expenses were 7.7 percent of net sales, even with last year. Food distribution and retail food selling and administrative expenses as a percent of net sales were consistent with last year. 7 OPERATING EARNINGS The company's pre-tax operating earnings (earnings before interest, equity in earnings of ShopKo Stores, Inc. ("ShopKo") and taxes) increased to $118.4 million compared with $114.8 million last year. Operating earnings before depreciation and amortization increased to $187.6 million compared with $184.2 million last year, a 1.8 percent increase. Food distribution operating earnings increased 3.7 percent to $90.0 million from $86.8 million. Retail food operating earnings increased 2.9 percent to $37.2 million from $36.2 million. INTEREST EXPENSE AND INCOME Interest expense decreased to $38.3 million compared with $41.3 million last year, reflecting lower average borrowings. Interest income increased to $6.2 million compared with $5.1 million last year, primarily due to increased retailer financing. EQUITY IN EARNINGS OF SHOPKO During the second quarter of last year, the company exited its remaining 46 percent investment in ShopKo. Due to the sale, there was no equity in earnings recorded in the quarter compared with $3.3 million or $.02 per share last year. INCOME TAXES The effective tax rate increased to 40.0 percent in the quarter compared with 39.3 percent last year. The increase in the effective tax rate was due to the elimination of ShopKo earnings. NET EARNINGS Net earnings were $51.8 million or $.43 per share - basic ($.42 per share - diluted) compared with last year's net earnings of $49.8 million or $.37 per share - basic and diluted. Weighted average shares - diluted declined to 122.1 million compared with last year's 134.5 million primarily due to the repurchase of 13.8 million shares in the second quarter of last year, with proceeds from the ShopKo transaction. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Internally generated funds from operations continued to be the major source of liquidity and capital growth. Cash provided from operations for the first quarter was $131.0 million compared with $122.4 million last year. Cash provided from operations of $131.0 million and the issuance of long term debt of $83.5 million and short term notes payable of $38.2 million was primarily used to repay long term debt of $184.5 million and finance capital expenditures of $83.5 million. 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 $159 million of additional debt securities. During the quarter the company issued $83.5 million of bonds under the existing "shelf registration". The bonds issued had a coupon rate of 6.6 percent with seven and eight year maturities. A $400 million revolving credit agreement, with rates tied to LIBOR plus .180 to .275 percent, also is in place and expires in October 2002. The revolving credit agreement is available for general corporate purposes and to support the company's commercial paper program. There were no drawings on the revolving credit agreement during the first quarter. Total commercial paper outstanding as of the end of the first quarter was $160 8 million. Maturities of debt will depend on management's views with respect to the relative attractiveness of interest rates at the time of issuance. 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 10-K for the fiscal year ended February 28, 1998; other risks or uncertainties may be detailed from time to time in the company's future Securities and Exchange Commission filings. 9 PART II - OTHER INFORMATION --------------------------- Item 4. Submission of Matters to a Vote of Security Holders. The Registrant held its Annual Meeting of Stockholders on July 1, 1998 at which the stockholders took the following actions: (a) elected Herman Cain, Charles M. Lillis, Steven S. Rogers and Michael W. Wright to the Board of Directors for terms expiring in 2001. The votes cast for and withheld with respect to each such Director was as follows: Votes For Votes Withheld --------- -------------- Herman Cain 40,881,605 10,386,370 Charles M. Lillis 49,606,383 1,661,592 Steven S. Rogers 49,829,184 1,438,791 Michael W. Wright 50,405,931 862,044 The Directors whose terms continued after the meeting are as follows: Lawrence A. Del Santo, Edwin C. Gage, William A. Hodder, Garnett L. Keith, Jr., Richard L. Knowlton, Harriet Perlmutter, and Carole F. St. Mark. (b) ratified by a vote of 51,085,896 for, 89,114 against, and 92,965 abstaining, the appointment of KPMG Peat Marwick LLP as the independent auditors of Registrant for the fiscal year ending February 27, 1999. (c) approved by a vote of 35,957,910 for, 14,823,831 against, and 486,234 abstaining, the adoption of certain amendments to the SUPERVALU INC. 1993 Stock Plan. 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. (b) Reports on Form 8-K: The Registrant filed a report on Form 8-K dated May 8, 1998 during the quarterly period (16 weeks) ending June 20, 1998 reporting a Change in Registrant's Certifying Accountants (Item 4). 10 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) Dated: July 14, 1998 By: /s/ Pamela K. Knous ------------------------ Pamela K. Knous Executive Vice President, Chief Financial Officer (Authorized officer of Registrant) 11 EX-11 2 COMPUTATION OF EARNINGS Exhibit 11 SUPERVALU INC. Computation of Earnings per Common Share (unaudited) - -------------------------------------------------------------------------------- First Quarter Ended (In thousands, except per share amounts) June 20,1998 June 14,1997 - -------------------------------------------------------------------------------- Earnings per share - basic Income available to common shareholders $ 51,798 $ 49,766 Weighted average shares outstanding 120,565 133,954 Earnings per share - basic $ .43 $ .37 Earnings per share - diluted Income available to common shareholders $ 51,798 $ 49,766 Weighted average shares outstanding 120,565 133,954 Dilutive impact of options outstanding 1,580 534 -------- -------- Weighted average shares and potential dilutive shares outstanding 122,145 134,488 Earnings per share - diluted $ .42 $ .37 - -------------------------------------------------------------------------------- Basic earnings per share is calculated using income available to common shareholders divided by the weighted average of common shares outstanding during the quarter. 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. EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS AS OF JUNE 20, 1998 AND THE CONSOLIDATED STATEMENT OF EARNINGS FOR THE 16 WEEKS ENDED JUNE 20, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 4-MOS FEB-27-1999 MAR-01-1998 JUN-20-1998 5,716 0 416,307 (14,226) 1,128,175 1,611,656 2,748,230 (1,154,204) 4,091,948 1,476,690 1,190,309 0 5,908 150,670 1,090,294 4,091,948 5,202,576 5,202,576 4,683,755 4,683,755 0 2,659 38,322 86,303 34,505 51,798 0 0 0 51,798 .43 .42 On July 1, 1998 the company announced a two-for-one stock split, to be effected in the form of a 100 percent stock dividend for shareholders of record on July 20, 1998. All share and per share data have been adjusted to reflect the stock dividend. Prior Financial Data Schedules have not been restated.
-----END PRIVACY-ENHANCED MESSAGE-----