Form 10-Q

-----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, O+zsWNav1TbSgaXNvEgHycmC7CeQi4NTOAxXvosptW7DtCw0Gc79dslCVMfdBs3i bKvRMsi/uldNdLSV7P5NsQ== 0001193125-04-175589.txt : 20041021 0001193125-04-175589.hdr.sgml : 20041021 20041021172527 ACCESSION NUMBER: 0001193125-04-175589 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 20040911 FILED AS OF DATE: 20041021 DATE AS OF CHANGE: 20041021 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: 1934 Act SEC FILE NUMBER: 001-05418 FILM NUMBER: 041090297 BUSINESS ADDRESS: STREET 1: 11840 VALLEY VIEW RD CITY: EDEN PRAIRIE STATE: MN ZIP: 55344 BUSINESS PHONE: 9528284000 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 d10q.htm FORM 10-Q Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(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 11, 2004.

¨	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 incorporation or organization)		(I.R.S. Employer identification No.)

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)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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 ¨

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨

The number of shares outstanding of each of the issuer’s classes of common stock as of October 15, 2004 is as follows:


Title of Each Class		Shares Outstanding
Common Shares		134,250,877

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SUPERVALU INC. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except percent and per share data)


	Second Quarter (12 weeks) ended
	September 11, 2004		% of sales		September 6, 2003		% of sales
Net sales	$	4,486,963	100.0	%	$	4,590,650	100.0	%
Costs and expenses
Cost of sales		3,831,825	85.4			3,953,402	86.1
Selling and administrative expenses		500,722	11.2			502,855	11.0
Restructure and other charges		5,861	0.1			2,276	0.0

Operating earnings		148,555	3.3			132,117	2.9
Interest
Interest expense		29,422	0.6			37,553	0.8
Interest income		5,527	0.1			4,610	0.1

Interest expense, net		23,895	0.5			32,943	0.7

Earnings before income taxes		124,660	2.8			99,174	2.2
Provision for income taxes		46,124	1.0			36,942	0.8

Net earnings	$	78,536	1.8	%	$	62,232	1.4	%

Weighted average number of common shares outstanding
Diluted		137,070				135,546
Basic		135,230				133,885
Net earnings per common share—diluted	$	0.57			$	0.46
Net earnings per common share—basic	$	0.58			$	0.46
Dividends declared per common share	$	0.1525			$	0.1450

All data subject to year-end audit.

See notes to condensed consolidated financial statements.

SUPERVALU INC. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except percent and per share data)


	Year-to-date (28 weeks) ended
	September 11, 2004		% of sales		September 6, 2003		% of sales
Net sales	$	10,397,612	100.0	%	$	10,426,937	100.0	%
Costs and expenses
Cost of sales		8,897,437	85.6			8,988,943	86.2
Selling and administrative expenses		1,174,398	11.3			1,140,600	10.9
Gain on sale of WinCo Foods, Inc.		109,238	1.1			—	—
Restructure and other charges		6,140	0.1			3,447	0.1

Operating earnings		428,875	4.1			293,947	2.8
Interest
Interest expense		77,873	0.7			87,128	0.8
Interest income		11,686	0.1			9,757	0.1

Interest expense, net		66,187	0.6			77,371	0.7

Earnings before income taxes		362,688	3.5			216,576	2.1
Provision for income taxes		134,741	1.3			80,674	0.8

Net earnings	$	227,947	2.2	%	$	135,902	1.3	%

Weighted average number of common shares outstanding
Diluted		137,350				134,730
Basic		135,238				133,790
Net earnings per common share—diluted	$	1.66			$	1.01
Net earnings per common share—basic	$	1.68			$	1.02
Dividends declared per common share	$	0.2975			$	0.2875

All data subject to year-end audit.

See notes to condensed consolidated financial statements.

SUPERVALU INC. and Subsidiaries

CONDENSED CONSOLIDATED COMPOSITION OF NET SALES AND OPERATING EARNINGS

(In thousands, except percent data)


	Second Quarter (12 weeks) ended						Year-to-date (28 weeks) ended
	September 11, 2004			September 6, 2003			September 11, 2004			September 6, 2003
Net sales

Retail food	$	2,435,174		$	2,385,531		$	5,565,370		$	5,342,042
% of total		54.3	%		52.0	%		53.5	%		51.2	%

Food distribution		2,051,789			2,205,119			4,832,242			5,084,895
% of total		45.7	%		48.0	%		46.5	%		48.8	%

Total net sales	$	4,486,963		$	4,590,650		$	10,397,612		$	10,426,937
		100	%		100	%		100	%		100.0	%

Operating earnings

Retail food operating earnings	$	105,264		$	98,912		$	234,061		$	222,536
% of sales		4.3	%		4.1	%		4.2	%		4.2	%

Food distribution operating earnings		52,749			47,433			115,648			105,607
% of sales		2.6	%		2.2	%		2.4	%		2.1	%

Subtotal		158,013			146,345			349,709			328,143
% of sales		3.5	%		3.2	%		3.4	%		3.1	%

General corporate expenses		(3,597	)		(11,952	)		(23,932	)		(30,749	)
Gain on sale of WinCo Foods, Inc.		—			—			109,238			—
Restructure and other charges		(5,861	)		(2,276	)		(6,140	)		(3,447	)

Total operating earnings		148,555			132,117			428,875			293,947
% of sales		3.3	%		2.9	%		4.1	%		2.8	%

Interest expense		(29,422	)		(37,553	)		(77,873	)		(87,128	)
Interest income		5,527			4,610			11,686			9,757

Earnings before income taxes		124,660			99,174			362,688			216,576

Provision for income taxes		(46,124	)		(36,942	)		(134,741	)		(80,674	)

Net earnings	$	78,536		$	62,232		$	227,947		$	135,902

The company’s business is classified by management into two reportable segments: Retail food and food distribution. Retail food operations include three retail formats: extreme value stores, regional price superstores and regional supermarkets. The retail formats include results of food stores owned and results of sales to extreme value stores licensed by the company. Food distribution operations include results of sales to affiliated food stores, mass merchants and other customers and logistics arrangements. Management utilizes more than one measurement and multiple views of data to assess segment performance and to allocate resources to the segments. However, the dominant measurements are consistent with the condensed consolidated financial statements.

All data subject to year-end audit.

See notes to condensed consolidated financial statements.

SUPERVALU INC. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)


	Second Quarter		Fiscal Year End
	September 11, 2004		February 28, 2004
Assets
Current Assets
Cash and cash equivalents	$	528,634	$	291,956
Receivables, net		455,678		447,872
Inventories		1,044,191		1,078,343
Other current assets		97,320		218,996

Total current assets		2,125,823		2,037,167
Long-term receivables, net		107,699		129,729
Property, plant and equipment, net		2,100,324		2,134,436
Goodwill		1,557,057		1,557,057
Other assets		257,750		294,624

Total assets	$	6,148,653	$	6,153,013

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	1,149,497	$	1,068,788
Current debt and obligations under capital leases		76,269		305,944
Other current liabilities		511,160		464,047

Total current liabilities		1,736,926		1,838,779
Long-term debt and obligations under capital leases		1,597,689		1,633,721
Other liabilities and deferred income taxes		442,702		470,939
Commitments and contingencies
Total stockholders’ equity		2,371,336		2,209,574

Total liabilities and stockholders’ equity	$	6,148,653	$	6,153,013

All data subject to year-end audit.

See notes to condensed consolidated financial statements.

SUPERVALU INC. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except per share data)


	Common Stock			Capital in Excess of Par Value			Treasury Stock					Accumulated Other Comprehensive Losses			Retained Earnings			Total
	Shares	Amount		Capital in Excess of Par Value			Shares		Amount			Accumulated Other Comprehensive Losses			Retained Earnings			Total
BALANCES AT FEBRUARY 22, 2003	150,670	$	150,670	$	114,028		(16,982	)	$	(327,327	)	$	(79,063	)	$	2,150,932		$	2,009,240
Comprehensive income:
Net earnings	—		—		—		—			—			—			280,138			280,138
Amortization of loss on derivative financial instruments, net of deferred taxes of $4.2 million	—		—		—		—			—			6,735			—			6,735
Minimum pension liability, net of deferred taxes of $17.1 million	—		—		—		—			—			(26,404	)		—			(26,404	)

Total comprehensive income	—		—		—		—			—			—			—			260,469
Sales of common stock under option plans	—		—		(11,047	)	1,596			41,508			—			—			30,461
Cash dividends declared on common stock—$0.5775 per share	—		—		—		—			—			—			(77,495	)		(77,495	)
Compensation under employee incentive plans	—		—		(629	)	93			2,127			—			—			1,498
Purchase of shares for treasury	—		—		—		(617	)		(14,599	)		—			—			(14,599	)

BALANCES AT FEBRUARY 28, 2004	150,670		150,670		102,352		(15,910	)		(298,291	)		(98,732	)		2,353,575			2,209,574
Comprehensive income:
Net earnings	—		—		—		—			—			—			227,947			227,947

Total comprehensive income	—		—		—		—			—			—			—			227,947
Sales of common stock under option plans	—		—		3,095		1,416			26,493			—			—			29,588
Cash dividends declared on common stock $0.2975 per share	—		—		—		—			—			—			(40,153	)		(40,153	)
Compensation under employee incentive plans	—		—		601		8			(261	)		—			—			340
Purchase of shares for treasury	—		—		—		(1,977	)		(55,960	)		—			—			(55,960	)

BALANCES AT SEPTEMBER 11, 2004	150,670	$	150,670	$	106,048		(16,463	)	$	(328,019	)	$	(98,732	)	$	2,541,369		$	2,371,336

All data subject to year-end audit.

See notes to condensed consolidated financial statements.

SUPERVALU INC. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


	Year-to-date (28 weeks) ended
	September 11, 2004			September 6, 2003
Cash flows from operating activities
Net earnings	$	227,947		$	135,902
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		162,972			159,289
LIFO expense		5,644			2,522
Provision for losses on receivables		1,663			5,620
Loss (gain) on sale of property, plant and equipment		3,139			(1,630	)
Gain on sale of WinCo Foods, Inc.		(109,238	)		—
Restructure and other charges		6,140			3,447
Deferred income taxes		(17,148	)		18,742
Equity in earnings of unconsolidated subsidiaries		(9,171	)		(21,883	)
Other adjustments, net		2,827			2,109
Changes in assets and liabilities
Receivables		(9,818	)		(31,069	)
Inventories		28,508			(70,268	)
Accounts payable		48,446			154,333
Income taxes currently payable		86,448			50,470
Other assets and liabilities		19,927			46,299

Net cash provided by operating activities		448,286			453,883

Cash flows from investing activities
Additions to long-term notes receivable		(11,789	)		(11,816	)
Proceeds received on long-term notes receivable		28,433			16,831
Proceeds from sale of assets		15,721			18,899
Proceeds from sale of WinCo Foods, Inc.		229,846			—
Purchases of property, plant and equipment		(123,490	)		(151,007	)

Net cash provided (used) by investing activities		138,721			(127,093	)

Cash flows from financing activities
Net reduction of notes payable		—			(80,000	)
Proceeds from issuance of long-term debt		3,813			—
Repayment of long-term debt		(263,237	)		(15,556	)
Reduction of obligations under capital leases		(16,046	)		(18,604	)
Net proceeds from stock activities under benefit plans		20,334			3,279
Dividends paid		(39,233	)		(38,188	)
Payment for purchase of treasury shares		(55,960	)		(1,582	)

Net cash used in financing activities		(350,329	)		(150,651	)

Net increase in cash and cash equivalents		236,678			176,139
Cash and cash equivalents at beginning of period		291,956			29,188

Cash and cash equivalents at the end of period	$	528,634		$	205,327

All data subject to year-end audit.

See notes to condensed consolidated financial statements.

SUPERVALU INC. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

GENERAL

Accounting Policies:

The summary of significant accounting policies is included in the notes to consolidated financial statements set forth in the company’s Annual Report on Form 10-K for its fiscal year ended February 28, 2004 (fiscal 2004). References to the company refer to SUPERVALU INC. and Subsidiaries.

Fiscal Year:

The company’s fiscal year ends on the last Saturday in February. The company’s first quarter consists of 16 weeks, the second, third, and fourth quarters each consist of 12 weeks for a total of 52 weeks for fiscal 2005. Fiscal 2004 comprised 53 weeks with the first quarter consisting of 16 weeks, the second and third quarters consisting of 12 weeks, with the fourth quarter consisting of 13 weeks.

Statement of Registrant:

The data presented herein is unaudited but, in the opinion of management, includes all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the consolidated financial position of the company and its subsidiaries at September 11, 2004 and September 6, 2003, and the results of the company’s operations and condensed consolidated cash flows for the periods then ended. These interim results are not necessarily indicative of the results that may be expected for the full fiscal year.

Use of Estimates:

The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Stock-based Compensation:

The company has stock based employee compensation plans, which are described more fully in the Stock Option Plans note in the notes to consolidated financial statements set forth in the company’s Annual Report on Form 10-K for fiscal 2004. The company utilizes the intrinsic value-based method, per Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees,” for measuring the cost of compensation paid in company common stock. This method defines the company’s compensation portion of the award as the excess of the stock’s market value at the time of the grant over the amount that the employee is required to pay. In accordance with APB Opinion No. 25, no compensation expense was recognized for options issued under the stock option plans in fiscal 2005 and 2004 as the exercise price of all options granted was not less than 100 percent of fair market value of the common stock on the date of grant.

The following table illustrates the effect on net earnings and net earnings per share if the company had applied the fair value recognition provisions of Statement of Financial Accounting Standard (SFAS) No. 123, “Accounting for Stock-Based Compensation” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation” to stock-based employee compensation:


	Second Quarter (12 weeks) Ended						Year-to-Date (28 weeks) Ended
	September 11, 2004			September 6, 2003			September 11, 2004			September 6, 2003
	(In thousands, except per share amounts)
Net earnings, as reported	$	78,536		$	62,232		$	227,947		$	135,902
Deduct: total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effect		(1,730	)		(2,058	)		(8,562	)		(5,419	)

Pro forma net earnings	$	76,806		$	60,174		$	219,385		$	130,483

Earnings per share—basic:
As reported	$	0.58		$	0.46		$	1.68		$	1.02
Pro forma	$	0.57		$	0.45		$	1.62		$	0.98
Earnings per share—diluted:
As reported	$	0.57		$	0.46		$	1.66		$	1.01
Pro forma	$	0.56		$	0.45		$	1.60		$	0.97
Net Earnings Per Share (EPS): Basic EPS is calculated using earnings available to common shareholders divided by the weighted average number of common shares outstanding during the period. Diluted EPS is similar to basic EPS except that the weighted average number of common shares outstanding includes the number of additional common shares that would have been outstanding if the dilutive potential common shares, such as options, had been exercised. The following table reflects the calculation of basic and diluted earnings per share:

	Second Quarter (12 weeks) Ended						Year-to-date (28 weeks) Ended
	September 11, 2004			September 6, 2003			September 11, 2004			September 6, 2003
	(In thousands, except per share amounts)
Earnings per share—basic
Earnings available to common shareholders	$	78,536		$	62,232		$	227,947		$	135,902

Weighted average shares outstanding		135,230			133,885			135,238			133,790
Earnings per share—basic	$	0.58		$	0.46		$	1.68		$	1.02

Earnings per share—diluted
Earnings available to common shareholders	$	78,536		$	62,232		$	227,947		$	135,902

Weighted average shares outstanding		135,230			133,885			135,238			133,790
Dilutive impact of options outstanding		1,840			1,661			2,112			940

Weighted average shares and potential dilutive shares outstanding		137,070			135,546			137,350			134,730
Earnings per share—diluted	$	0.57		$	0.46		$	1.66		$	1.01

Comprehensive Income:

The components of comprehensive income, net of related tax, included the following:


	Second Quarter (12 weeks) Ended				Year-to-date (28 weeks) Ended
	September 11, 2004		September 6, 2003		September 11, 2004		September 6, 2003
Net earnings	$	78,536	$	62,232	$	227,947	$	135,902
Amortization of loss on derivative financial instrument		—		79		—		184

Total comprehensive income	$	78,536	$	62,311	$	227,947	$	136,086

The Company had two interest rate swap agreements that were terminated on July 6, 2001. The remaining fair market value adjustments, which were offsetting, were being amortized over the original term of the hedge. In conjunction with the company’s early redemption of its $100 million 8.875 percent Notes due 2022 during the third quarter of fiscal 2004, the remaining fair market value adjustments of the two terminated swaps relating to these notes were recognized as interest expense during the third quarter of fiscal 2004. There was no net impact to the Consolidated Statement of Earnings for the third quarter of fiscal 2004 as the two terminated swaps were offsetting.

Reclassifications:

Certain reclassifications have been made to conform prior year’s data to the current presentation. These reclassifications had no effect on reported earnings.

New Accounting Standards

In December 2003, the Financial Accounting Standards Board (FASB) issued SFAS No. 132 (Revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits - An Amendment of FASB Statements No. 87, 88 and 106.” This statement increases the existing disclosure’s requirements by requiring more details about pension plan assets, benefit obligations, cash flows, benefit costs and related information. The effect of the revisions to SFAS No. 132 were included in the notes to consolidated financial statements set forth in the company’s Annual Report on Form 10-K for fiscal 2004, except for those relating to expected future benefit payments. The new required quarterly disclosures are included in the Benefit Plans note in the notes to condensed consolidated financial statements within this Form 10-Q. Additional disclosures about expected future benefit payments are required for fiscal years ending after June 15, 2004 and will be incorporated in the company’s fiscal 2005 consolidated financial statements.

In May 2004, the FASB issued Financial Staff Position (FSP) No. 106-2, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003.” FSP No. 106-2 supersedes FSP No. 106-1, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003,” and provides guidance on the accounting and disclosures related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Medicare Act) which was signed into law in December 2003. Except for certain nonpublic entities, FSP 106-2 is effective for the first interim or annual period beginning after June 15, 2004. The company has adopted FSP 106-2 in the second quarter of fiscal 2005 using the retroactive application method. Year-to-date second quarter amounts include the retroactive application back to first quarter fiscal 2005. Based upon current guidance around the definition of actuarially equivalent, equivalence was only determined with respect to a portion of the plan participants depending on plan benefits provided. If additional clarifying regulations related to the Medicare Act or the definition of actuarially equivalent becomes available, remeasurement of the plan obligations may be required, and related impacts on net periodic benefit costs would be reflected prospectively in the consolidated financial statements.

In January 2003, the FASB issued FASB Interpretation No. (FIN) No. 46, “Consolidation of Variable Interest Entities” (FIN 46), and revised it in December 2003. FIN 46 addresses how a business should evaluate whether it has a controlling financial interest in an entity through means other than voting rights and accordingly should consolidate the entity. FIN 46 applied immediately to entities created after January 31, 2003 and no later than the end of the first reporting period that ended after December 15, 2003 to entities considered to be special-purpose entities (SPEs). FIN 46 was effective for all other entities no later than the end of the first interim or annual reporting period ending after March 15, 2004. The adoption of the provisions of FIN 46 relative to SPEs and for entities created after January 31, 2003 did not have an impact on the company’s condensed consolidated financial statements. The other provisions of FIN 46 did not have an impact on the company’s condensed consolidated financial statements.

The Emerging Issues Task Force (EITF) of the Financial Accounting Standards Board (FASB) reached a consensus on Issue No. 04-8, “The Effect of Contingently Convertible Debt on Diluted Earnings per Share” at its September 29-30, 2004 meeting. The effective date has not been finalized but is expected to be for reporting periods ending after December 15, 2004. Under EITF Issue No. 04-8, net earnings and diluted shares outstanding, used for earnings per share calculations, would be restated using the if-converted method of accounting to reflect the contingent issuance of 7.8 million shares under our outstanding contingently convertible zero coupon debentures which were issued in November 2001. The effect of these adjustments would be to reduce annual earnings per share by approximately $0.07 for 2005 and approximately $0.05 for 2004.

BENEFIT PLANS

The following table provides the components of net periodic pension and postretirement benefit cost for fiscal 2005 and fiscal 2004:


	Second Quarter (12 weeks) Ended
	Pension Benefits						Postretirement Benefits
	September 11, 2004			September 6, 2003			September 11, 2004			September 6, 2003
	(in thousands)
Service cost	$	4,628		$	4,242		$	326		$	288
Interest cost		9,068			8,140			1,362			1,587
Expected return on plan assets		(9,998	)		(9,528	)		—			—
Amortization of:
Unrecognized net loss		4,515			1,837			546			703
Unrecognized prior service cost		301			258			(446	)		(256	)

Net periodic benefit cost	$	8,514		$	4,949		$	1,788		$	2,322


	Year-to-Date (28 weeks) Ended
	Pension Benefits						Postretirement Benefits
	September 11, 2004			September 6, 2003			September 11, 2004			September 6, 2003
	(in thousands)
Service cost	$	10,589		$	9,856		$	775		$	704
Interest cost		20,747			18,910			3,698			3,881
Expected return on plan assets		(22,873	)		(22,135	)		—			—
Amortization of:
Unrecognized net loss		10,329			4,268			1,998			1,720
Unrecognized prior service cost		689			599			(1,045	)		(625	)

Net periodic benefit cost	$	19,481		$	11,498		$	5,426		$	5,680

Net periodic postretirement benefit cost for year-to-date September 11, 2004 includes a reduction of $11.1 million and $0.9 million in accumulated postretirement benefit obligation (APBO) and net periodic postretirement benefit cost, respectively, due to the effects of the federal subsidy introduced in the Medicare Act.

GAIN ON SALE OF WINCO FOODS, INC.

On April 1, 2004, the company completed the sale of its minority ownership interest in WinCo Foods, Inc. (WinCo), a privately-held regional grocery chain that operates stores in Idaho, Oregon, Nevada, Washington and California, for $229.8 million in cash proceeds, which resulted in a pre-tax gain of $109.2 million.

DEBT REDEMPTION

On May 3, 2004, the company utilized cash proceeds from the sale of WinCo and available cash balances to voluntarily redeem $250 million of 7⁵/8 percent notes due September 15, 2004, in accordance with the note redemption provisions. The company incurred $5.7 million in pre-tax costs related to this early redemption.

RESTRUCTURE AND OTHER CHARGES

In the first half of fiscal 2005, the company recognized pre-tax restructure and other charges of $6.1 million. The charges reflect adjustments to the restructure reserves and asset impairment charges for restructure 2001. The charges reflect increased liabilities associated with employee benefit related costs from previously exited distribution facilities as well as changes in estimates on exited real estate in certain markets. See the company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2004, for additional information regarding Restructure and Other Charges.

All activity for the fiscal 2002, 2001 and 2000 restructure plans was completed in fiscal 2003. At September 11, 2004, remaining restructure reserves for 2002, 2001 and 2000 plans were $0, $28.5 million and $1.4 million, respectively.

The remaining restructure 2001 reserves includes $13.2 million for lease related costs and $15.3 million for employee benefit related costs. In the first half of fiscal 2005, there was an increase in reserves of $6.1 million due to employee benefit related costs from previously exited distribution facilities and changes in estimates on exited real estate in certain markets of $4.8 million and $1.3 million, respectively. Year-to-date restructure 2001 usage totaled $3.2 million and $1.0 million for lease and employee benefit related costs, respectively.

RESERVES FOR CLOSED PROPERTIES AND ASSET IMPAIRMENT

Reserves for Closed Properties

The company maintains reserves for estimated losses on retail stores, distribution warehouses and other properties that are no longer being utilized in current operations. The reserves for closed properties include management’s estimates for lease subsidies, lease terminations, future payments on exited real estate and severance. Details of the activity in the closed property reserves for year-to-date fiscal 2005 are as follows:


	Balance February 28, 2004		Additions	Usage		Balance September 11, 2004
Reserves for closed properties	$	45,916	7,734	(12,114	)	$	41,536

Asset Impairment

In the second quarter of fiscal 2005 and for year-to-date fiscal 2005, the company recognized $1.6 million and $3.6 million, respectively, of additional impairment charges on the write-down of property, plant and equipment for closed properties related to the retail food segment. Impairment charges, a component of selling and administrative expenses in the accompanying Condensed Consolidated Statements of Earnings, reflect the difference between the carrying value of the assets and the estimated fair values, which were based on the estimated market values for similar assets.

ASSETS HELD FOR SALE

At September 11, 2004 and February 28, 2004, the company had approximately $7.8 million and $9.7 million, respectively, of assets classified as held for sale reflected as a component of other current assets in the accompanying Condensed Consolidated Balance Sheets. These assets are for closed distribution centers that the company is actively marketing for sale. The company anticipates selling or disposing of these assets within one year from the date the assets were designated as held for sale.

GOODWILL AND OTHER ACQUIRED INTANGIBLE ASSETS

In fiscal 2004, the company completed an asset exchange with C&S Wholesale Grocers, Inc. (C&S) whereby the company acquired certain former Fleming Companies’ distribution operations in the Midwest from C&S in exchange for the company’s New England operations (Asset Exchange). The Asset Exchange resulted in the addition of approximately $58 million of intangible assets related to customer relationships and trademarks and a reduction in goodwill of $20.0 million related to the company’s New England operations included in the Asset Exchange.

At September 11, 2004, the company had approximately $1.6 billion of goodwill of which $0.9 billion related to retail food and $0.7 billion related to food distribution.

A summary of changes in the company’s other acquired intangible assets year-to-date fiscal 2005 follows:


	February 28, 2004			Amortization			Additions		Other net adjustments			September 11, 2004
	(in thousands)
Trademarks	$	15,269					$	—	$	(76	)	$	15,193
Leasehold rights, customer lists and other (accumulated amortization of $19,292 and $17,836, at September 11, 2004 and February 28, 2004)		49,369						4		(527	)		48,846
Customer relationships (accumulated amortization of $1,660 and $495 at September 11, 2004 and February 28, 2004)		43,361						—		(202	)		43,159
Non-compete agreements (accumulated amortization of $3,971 and $3,959 at September 11, 2004 and February 28, 2004)		7,219						—		(550	)		6,669

Total other acquired intangible assets		115,218						4		(1,355	)		113,867
Accumulated amortization		(22,290	)	$	(3,710	)		—		1,077			(24,923	)

Total other acquired intangible assets, net	$	92,928		$	(3,710	)	$	4	$	(278	)	$	88,944

Other intangible assets are a component of other assets in the accompanying Condensed Consolidated Balance Sheets. Year-to-date for fiscal 2005 and fiscal 2004, the company recorded amortization expense of approximately $3.7 million and $0.7 million,

respectively. Future amortization expense will approximate $6.9 million per year for each of the next five years. Intangible assets with a definite life are amortized on a straight-line basis with estimated useful lives ranging from five to twenty years. All intangible assets are amortizable with the exception of the trademarks.

FINANCIAL INSTRUMENTS

Interest Rate Swap Agreements

In the first quarter of fiscal 2003, the company entered into swap agreements in the notional amount of $225.0 million that exchanged a fixed interest rate payment obligation for a floating interest rate payment obligation. The swaps have been designated as a fair value hedge on long-term fixed rate debt of the company and are a component of other assets in the accompanying Condensed Consolidated Balance Sheets. At September 11, 2004, the hedge was highly effective. Changes in the fair value of the swaps and debt are reflected as a component of selling and administrative expenses in the accompanying Condensed Consolidated Statements of Earnings, and through September 11, 2004, the net earnings impact was zero.

The company has limited involvement with derivative financial instruments and uses them only to manage well-defined interest rate risks. The company does not use financial instruments or derivatives for any trading or other speculative purposes.

COMMITMENTS, CONTINGENCIES AND OFF-BALANCE SHEET ARRANGEMENTS

The company has guaranteed certain leases, fixture financing loans and other debt obligations of various retailers at September 11, 2004. These guarantees are generally made to support the business growth of its affiliated retailers. The guarantees are generally for the entire term of the lease or other debt obligation with remaining terms that range from less than one year to twenty-two years, with a weighted average remaining term of approximately ten years. For each guarantee issued, if the affiliated retailer defaults on a payment, the company would be required to make payments under its guarantee. Generally, the guarantees are secured by indemnification agreements or personal guarantees of the affiliated retailer. At September 11, 2004, the maximum amount of undiscounted payments the company would be required to make in the event of default of all guarantees was $325.8 million and represented $187.3 million on a discounted basis. No amount has been accrued for the company’s obligation under its guaranty arrangements.

The company is party to a synthetic leasing program for one of its major warehouses. The lease expires in April 2008 and may be renewed with the lessor’s consent through April 2013. It has a purchase option of $60.0 million. At September 11, 2004, the estimated market value of the property underlying this lease equaled or exceeded the purchase option. The company’s obligation under its guaranty arrangements related to this synthetic lease had a carrying balance of $2.2 million at September 11, 2004, which is a component of other liabilities in the accompanying Condensed Consolidated Balance Sheets. On September 3, 2004, the company exercised the purchase option on a synthetic leasing program that had been in place for one of its major warehouses. The purchase option price of $25.3 million was paid by the company to the lessor, in exchange for the corresponding warehouse assets, which will be retained by the company.

The company had $156.4 million of outstanding letters of credit as of September 11, 2004, of which $131.8 million were issued under the $650.0 million unsecured revolving Credit Agreement (Credit Agreement) and $24.6 million were issued under separate agreements with financial institutions. These letters of credit primarily support workers’ compensation, merchandise import programs and payment obligations. The company pays fees, which vary by instrument, of up to 1.125 percent on the outstanding balance of the letters of credit.

The company is a party to various legal proceedings arising from the normal course of business activities, none of which, in management’s opinion, is expected to have a material adverse impact on the company’s consolidated financial position.

SEGMENT INFORMATION

Refer to the Condensed Consolidated Composition of Net Sales and Operating Earnings on page 4 for the company’s segment information. There were no material changes to total assets of the company’s segments since February 28, 2004.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Fiscal 2005 year-to-date reflects an economy that continues to expand within a modest inflationary environment. Results for fiscal 2005 include a net after-tax gain on the sale of the company’s minority interest in WinCo Foods, Inc. (WinCo) of $68.3 million or $0.50 diluted earnings per share recorded in the first quarter. Given the life cycle maturity of our distribution business with its inherent attrition rate, future growth in food distribution will be achieved through serving new independent customers, net growth from existing customers and further consolidation opportunities. Annual distribution sales attrition in fiscal 2005 is expected to be slightly above the historical range of two to four percent.

RESULTS OF OPERATIONS

In the second quarter of fiscal 2005, the company achieved net sales of $4.5 billion compared with $4.6 billion last year. Net earnings for the second quarter of fiscal 2005 were $78.5 million and diluted earnings per share were $0.57 compared with net earnings of $62.2 million and diluted earnings per share of $0.46 last year.

Net Sales

Net sales for the second quarter of fiscal 2005 were $4.5 billion, a decrease of 2.3 percent from last year. Retail food sales were 54.3 percent of net sales for the second quarter of fiscal 2005 compared with 52.0 percent last year. Food distribution sales were 45.7 percent of net sales for the second quarter of fiscal 2005 compared with 48.0 percent last year.

Retail food sales for the second quarter of fiscal 2005 increased 2.1 percent compared with last year, primarily reflecting new store openings partially offset by the exit of Denver market in the third quarter of the prior year. Same-store retail sales, defined as stores operating for four full quarters, including store expansions, for the second quarter of fiscal 2005 increased 0.2 percent.

Store activity since last year’s second quarter, including licensed stores, resulted in 106 new stores opened and 44 stores closed for a total of 1,513 stores at the end of second quarter fiscal 2005. Excluding the exit of the Denver market, total retail square footage, including licensed stores, increased approximately 4.5 percent from last year’s second quarter.

Food distribution sales for the second quarter of fiscal 2005 decreased 7.0 percent compared with last year, primarily reflecting last year’s asset exchange with C&S Wholesale Grocers, customer attrition and the exit of our Denver operation which accounted for approximately four percent, four percent and one percent of the decrease, respectively, which more than offset new business growth.

Gross Profit

Gross profit (calculated as net sales less cost of sales), as a percent of net sales, was 14.6 percent for the second quarter of fiscal 2005 compared with 13.9 percent last year. The increase in gross profit as a percent of net sales primarily reflects a growing proportion of the company’s retail food business, which operates at a higher gross profit margin as a percent of net sales than does the food distribution business and improved retail merchandising execution.

Selling and Administrative Expenses

Selling and administrative expenses, as a percent of net sales, were 11.2 percent for the second quarter of fiscal 2005 compared with 11.0 percent last year. The increase in selling and administrative expenses, as a percent of net sales, primarily reflects the growing proportion of the company’s retail food business which operates at a higher selling and administrative expense as a percent of net sales than does the food distribution business. In addition, the continued increases in employee benefit and incentive related costs were more than offset by improved leverage from the concentration of food distribution volume in existing facilities and a favorable litigation settlement of $7.6 million pretax.

Restructure and Other Charges

For the second quarter of fiscal 2005 and 2004, the company incurred $5.9 million and $2.3 million, respectively, in pre-tax restructure and other charges. The fiscal 2005 charges reflect increased liabilities associated with employee benefit related costs from previously exited distribution facilities as well as changes in estimates on exited real estate in certain markets.

Operating Earnings

Operating earnings for the second quarter of fiscal 2005 increased 12.4 percent to $148.6 million compared with $132.1 million last year. Retail food operating earnings for the second quarter of fiscal 2005 increased 6.4 percent to $105.3 million, or 4.3 percent of net sales, from last year’s operating earnings of $98.9 million, or 4.1 percent of net sales. The increase in retail food operating earnings, as a percent of net sales, primarily reflects the benefits of retail merchandising execution partially offset by the absence of non-cash equity earnings from WinCo and increases in employee benefit related costs which continue to increase at a rate faster than sales growth. Food distribution operating earnings for the second quarter of fiscal 2005 increased 11.2 percent to $52.7 million, or 2.6 percent of net sales, from last year’s operating earnings of $47.4 million, or 2.2 percent of net sales. The increase in food distribution operating earnings, as a percent of net sales, primarily reflects improved leverage from the concentration of food distribution volume in existing facilities.

Net Interest Expense

Interest expense was $29.4 million in the second quarter of fiscal 2005 compared with $37.6 million last year. The decrease primarily reflects lower borrowing levels. Interest income was $5.5 million in the second quarter of fiscal 2005 compared with $4.6 million last year, reflecting higher cash balances.

Income Taxes

The effective tax rate was 37.00 and 37.25 percent in the second quarter of fiscal 2005 and fiscal 2004, respectively.

Net Earnings

Net earnings were $78.5 million, or $0.57 per diluted share, in the second quarter of fiscal 2005 compared with net earnings of $62.2 million, or $0.46 per diluted share last year.

Weighted average diluted shares increased to 137.1 million in the second quarter of fiscal 2005 compared with 135.5 million shares last year, reflecting the net impact of stock activity including dilution impacts.

YEAR-TO-DATE RESULTS:

Year-to-date for fiscal 2005, the company achieved net sales of $10.4 billion compared with $10.4 billion last year. Net earnings for fiscal 2005 year-to-date were $227.9 million and diluted earnings per share were $1.66 compared with net earnings of $135.9 million and diluted earnings per share of $1.01 last year. Results for fiscal 2005 year-to-date include a net after-tax gain on the sale of the company’s minority interest in WinCo of $68.3 million or $0.50 diluted earnings per share.

Net Sales

Net sales for fiscal 2005 year-to-date were $10.4 billion. Retail food sales were 53.5 percent of net sales for fiscal 2005 year-to-date compared with 51.2 percent last year. Food distribution sales were 46.5 percent of net sales for fiscal 2005 year-to-date compared with 48.8 percent last year.

Retail food sales for fiscal 2005 year-to-date increased 4.2 percent compared with last year, primarily reflecting new store openings, increases in same-store sales, including store expansions, partially offset by the exit of the Denver market. Same-store retail sales for fiscal 2005 year-to-date increased 1.1 percent.

Store activity for fiscal 2005 year-to-date, including licensed stores, resulted in 53 new stores opened and 23 stores closed for a total of 1,513 stores for fiscal 2005 year-to-date. Excluding the exit of the Denver market, total retail square footage, including licensed stores, increased approximately 2.3 percent from fiscal 2004 year-to-date.

Food distribution sales for fiscal 2005 year-to-date decreased 5.0 percent compared with last year, primarily reflecting last year’s asset exchange with C&S Wholesale Grocers, customer attrition and the exit of our Denver operation, which accounted for approximately four percent, three percent and one percent of the decrease, respectively, which more than offset new business growth.

Gross Profit

Gross profit (calculated as net sales less cost of sales), as a percent of net sales, was 14.4 percent for fiscal 2005 year-to-date compared with 13.8 percent last year. The increase in gross profit as a percent of net sales primarily reflects a growing proportion of the company’s retail food business, which operates at a higher gross profit margin as a percent of net sales than does the food distribution business and retail merchandising execution.

Selling and Administrative Expenses

Selling and administrative expenses, as a percentage of net sales, were 11.3 percent for fiscal 2005 year-to-date compared with 10.9 percent last year. The increase in selling and administrative expenses, as a percent of net sales, primarily reflects the growing proportion of the company’s retail food business, which operates at a higher selling and administrative expense as a percent of net sales than does the food distribution business. In addition, the continued increases in employee benefit and incentive related costs were partially offset by the improved leverage from the concentration of food distribution volume in existing facilities.

Operating Earnings

Operating earnings for fiscal 2005 year-to-date increased 45.9 percent to $428.9 million compared with $293.9 million last year, which includes a net after-tax gain on the sale of the company’s minority interest in WinCo of $68.3 million or $0.50 diluted earnings per shares. Retail food fiscal 2005 year-to-date operating earnings increased 5.2 percent to $234.1 million, or 4.2 percent of net sales, from last year’s operating earnings of $222.5 million, or 4.2 percent of net sales. Retail food operating earnings remain constant, as a percent of net sales, primarily reflecting the benefits of retail merchandising execution which were offset by the absence of non-cash equity earnings from WinCo and increases in employee benefit related costs, which continue to increase at a rate faster than sales growth. Food distribution fiscal 2005 year-to-date operating earnings increased 9.5 percent to $115.6 million, or 2.4 percent of net sales, from last year’s operating earnings of $105.6 million, or 2.1 percent of net sales. The increase in food distribution operating earnings, as a percent of net sales, primarily reflects improved leverage from the concentration of food distribution volume in existing facilities.

Net Interest Expense

Interest expense decreased to $77.9 million in fiscal 2005 year-to-date compared with $87.1 million last year. The decrease primarily reflects lower borrowing levels that more than offset $5.7 million in pre-tax costs related to the May 2004 redemption of $250 million of notes due in September 2004. Interest income was $11.7 million in fiscal 2005 year-to-date compared with $9.8 million last year, reflecting higher cash balances.

Income Taxes

The effective tax rate was 37.15 and 37.25 percent in fiscal 2005 year-to-date and fiscal 2004 year-to-date, respectively.

Net Earnings

Net earnings were $227.9 million, or $1.66 per diluted share, in fiscal 2005 year-to-date compared with net earnings of $135.9 million, or $1.01 per diluted share last year. Results for fiscal 2005 year-to-date include a net after-tax gain on the sale of the company’s minority interest in WinCo of $68.3 million or $0.50 diluted earnings per share.

Weighted average diluted shares increased to 137.4 million fiscal 2005 year-to-date compared with 134.7 million shares last year, reflecting the net impact of stock activity including dilution impacts.

RESTRUCTURE AND OTHER CHARGES

The remaining restructure 2001 reserves included $13.2 million for lease related costs and $15.3 million for employee benefit related costs. In the first half of fiscal 2005, there was an increase in reserves of $6.1 million due to employee benefit related costs from previously exited distribution facilities and changes in estimates on exited real estate in certain markets of $4.8 million and $1.3 million, respectively. Year-to-date restructure 2001 usage totaled $3.2 million and $1.0 million for lease and employee benefit related costs, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $448.3 million for fiscal 2005 year-to-date compared with $453.9 million last year.

Net cash provided by investing activities was $138.7 million for fiscal 2005 year-to-date compared with cash used of $127.1 million last year. Fiscal 2005 year-to-date investing activities primarily reflect proceeds from the sale of WinCo offset by capital spending. Fiscal 2004 year-to-date investing activities primarily reflect capital spending.

Net cash used in financing activities was $350.3 million for fiscal 2005 year-to-date compared with $150.7 million last year. Fiscal 2005 year-to-date financing activities primarily reflect the early redemption on May 3, 2004 of $250.0 million of 7⁵/8 percent notes due September 15, 2004, the payment of dividends of $39.2 million and a net $35.6 million for stock benefit plan related activity. Fiscal 2004 year-to-date financing activities primarily reflect the reduction of notes payable of $80.0 million and the payment of dividends of $38.2 million.

Management expects that the company will continue to replenish operating assets with internally generated funds. There can be no assurance, however, that the company’s business will continue to generate cash flow at current levels. The company will continue to obtain short-term financing from its revolving credit agreement with various financial institutions, as well as through its accounts receivable securitization program. Long-term financing will be maintained through existing and new debt issuances. The company’s short-term and long-term financing abilities are believed to be adequate as a supplement to internally generated cash flows to fund its capital expenditures and acquisitions as opportunities arise. Maturities of debt issued will depend on management’s views with respect to the relative attractiveness of interest rates at the time of issuance and other debt maturities.

The company has a $650.0 million unsecured revolving credit agreement (Credit Agreement) with various financial institutions with rates tied to LIBOR plus 0.650 to 1.400 percent. The Credit Agreement contains various financial covenants including ratios for fixed charge interest coverage, asset coverage and debt leverage, in addition to a minimum net worth covenant. The Credit Agreement expires in April 2005.

As of September 11, 2004, the company’s current portion of outstanding debt including obligations under capital leases was $76.3 million. The company had no outstanding borrowings under its Credit Agreement. Letters of credit outstanding under the Credit Agreement were $131.8 million and the unused available credit under the Credit Agreement was $518.2 million. The Company also had $24.6 million of outstanding letters of credit issued under separate agreements with financial institutions.

As of September 11, 2004, the company had no outstanding borrowings under its annual accounts receivable securitization program, renewed in August 2004. Under the program, the company can borrow up to $200.0 million on a revolving basis, with borrowings secured by eligible accounts receivable.

On April 1, 2004, the company completed the sale of its minority ownership interest in WinCo, a privately-held regional grocery chain that operates stores in Idaho, Oregon, Nevada, Washington and California for $229.8 million in cash proceeds.

In November 2001, the company sold zero-coupon convertible debentures due 2031. Holders of the debentures may require the company to purchase all or a portion of their debentures on the first day of October 2006 and 2011 at a purchase price equal to the accreted value of the debentures, which includes accrued and unpaid interest. The company may redeem all or a portion of the debentures at any time on or after the first day of October 2006, at a purchase price equal to the sum of the issue price plus accrued original issue discount as of the redemption date. Under existing accounting rules, in the event SUPERVALU’s stock price reaches the convertible debentures’ conversion trigger price of $37.28 in the third quarter of fiscal 2005, the company would be required to include an additional 7.8 million shares in its diluted shares outstanding calculation for the fourth quarter of fiscal 2005 along with an appropriate adjustment to earnings for the elimination of the related after-tax interest expense. See the company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2004 for additional information regarding debt.

The company is party to a synthetic leasing program for one of its major warehouses. The lease expires in April 2008, and may be renewed with the lessor’s consent through April 2013, and has a purchase option of approximately $60 million. On September 3, 2004, the company exercised the purchase option on a synthetic leasing program that had been in place for one of its major warehouses. The purchase option price of $25.3 million was paid by the company to the lessor, in exchange for the corresponding warehouse assets, which will be retained by the company.

Capital spending during the second quarter of fiscal 2005 was $84.7 million, including $14.6 million in capital leases. Capital spending for year-to-date fiscal 2005 was $146.9 million, including $23.4 million of capital leases. Capital spending primarily included retail store expansion, store remodeling and technology enhancements. The company’s capital budget for fiscal 2005 is projected to be approximately $400.0 million to $425.0 million, including approximately $60.0 million in capital leases.

COMMITMENTS, CONTINGENCIES AND OFF-BALANCE SHEET ARRANGEMENTS

The company has guaranteed certain leases, fixture financing loans and other debt obligations of various retailers at September 11, 2004. These guarantees are generally made to support the business growth of its affiliated retailers. The guarantees are generally for the entire term of the lease or other debt obligation with remaining terms that range from less than one year to twenty-two years, with a weighted average remaining term of approximately ten years. For each guarantee issued, if the affiliated retailer defaults on a payment, the company would be required to make payments under its guarantee. Generally, the guarantees are secured by indemnification agreements or personal guarantees of the affiliated retailer. At September 11, 2004, the maximum amount of undiscounted payments the company would be required to make in the event of default of all guarantees is $325.8 million and represents $187.3 million on a discounted basis. No amount has been accrued for the company’s obligation under its guaranty arrangements.

The company is party to a synthetic leasing program for one of its major warehouses. The lease expires in April 2008 and may be renewed with the lessor’s consent through April 2013. It has a purchase option of $60.0 million. At September 11, 2004, the estimated market value of the property underlying this lease equaled or exceeded the purchase option. The company’s obligation under its guaranty arrangements related to this synthetic lease had a carrying balance of $2.2 million at September 11, 2004, which is a component of other liabilities in the accompanying Condensed Consolidated Balance Sheets. On September 3, 2004, the company exercised the purchase option on a synthetic leasing program that had been in place of one of its major warehouses. The purchase option price of $25.3 million was paid by the company to the lessor, in exchange for the corresponding warehouse assets, which will be retained by the company.

The company had $156.4 million of outstanding letters of credit as of September 11, 2004, of which $131.8 million were issued under the Credit Agreement and $24.6 million were issued under separate agreements with financial institutions. These letters of credit primarily support workers’ compensation, merchandise import programs and payment obligations. The company pays fees, which vary by instrument, of up to 1.125 percent on the outstanding balance of the letter credit.

See the company’s Annual Report Form 10-K for the fiscal year ended February 28, 2004, for additional information regarding Commitments, Contingencies and Off-Balance Sheet Arrangements.

NEW ACCOUNTING STANDARDS

In December 2003, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 132 (Revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits - An Amendment of FASB Statements No. 87, 88 and 106.” This statement increases the existing disclosure’s requirements by requiring more details about pension plan assets, benefit obligations, cash flows, benefit costs and related information. The effect of the revisions to SFAS No. 132 were included in the notes to consolidated financial statements set forth in the company’s Annual Report on Form 10-K for fiscal 2004, except for those relating to expected future benefit payments. The new required quarterly disclosures are included in the Benefit Plans note in the notes to condensed consolidated financial statements within this Form 10-Q. Additional disclosures about expected future benefit payments are required for fiscal years ending after June 15, 2004 and will be incorporated in the company’s fiscal 2005 consolidated financial statements.

Cautionary Statements for Purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995

Any statements contained in this report regarding the outlook for our businesses and their respective markets, such as projections of future performance, statements of our plans and objectives, forecasts of market trends and other matters, are forward-looking statements based on our assumptions and beliefs. Such statements may be identified by such words or phrases as “will likely result,” “are expected to,” “will continue,” “outlook,” “will benefit,” “is anticipated,” “estimate,” “project,” “management believes” or similar expressions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those discussed in such statements and no assurance can be given that the results in any forward-looking statement will be achieved. For these statements, the company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Any forward-looking statement speaks only as of the date on which it is made, and we disclaim any obligation to subsequently revise any forward-looking statement to reflect events or circumstances after such date or to reflect the occurrence of anticipated or unanticipated events.

The following is a summary of certain factors, the results of which could cause our future results to differ materially from those expressed or implied in any forward-looking statements contained in this report. 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 and they should not be construed as exhaustive.

•

Economic Conditions. The food industry is sensitive to a number of economic conditions such as: (i) food price deflation or inflation, (ii) softness in local and national economies, (iii) increases in commodity prices, (iv) the availability of favorable credit and trade terms, and (v) other economic conditions that may affect consumer buying habits. Any one or more of these economic conditions can affect our retail sales, the demand for products we distribute to our retailer customers, our operating costs and other aspects of our businesses.

•

Competition. The industries in which we compete are extremely competitive. Both our retail food and food distribution businesses are subject to competitive practices that may affect: (i) the prices at which we are able to sell products at our retail locations, (ii) sales volume, (iii) the ability of our distribution customers to sell products we supply, which may affect future orders, and (iv) our ability to attract and retain customers. In addition, the nature and extent of consolidation in the retail food and food distribution industries could affect our competitive position or that of our distribution customers in the markets we serve.

Our retail food business faces competition from other retail chains, supercenters, non-traditional competitors and emerging alternative formats in the markets where we have retail operations. In our food distribution business, our success depends in part on the ability of our independent retailer customers to compete with these same formats, our ability to attract new customers, and our ability to supply products in a cost effective manner. Declines in the level of retail sales activity of our distribution customers due to competition, consolidations of retailers or competitors, increased self-distribution by our customers, or the entry of new or non-traditional distribution systems into the industry may adversely affect our revenues.

•

Security and Food Safety. Wartime activities, threats and acts of terror or other criminal activity directed at the grocery industry, the transportation industry, or computer or communications systems, could increase security costs, adversely affect the company’s operations, or impact consumer behavior and spending as well as customer orders. Other events that give rise to actual or potential food contamination or food-born illness could have an adverse effect on the company’s operating results.

•

Labor Relations and Employee Benefit Costs. Potential work disruptions from labor disputes may affect sales at our stores as well as our ability to distribute products. We contribute to various multi-employer healthcare and pension plans covering certain union represented employees in both our retail and distribution operations. Approximately one-third of the employees in our total workforce are participants in multi-employer plans. The costs of providing benefits through such plans have escalated rapidly in recent years. Based upon information available to us, we believe certain of these multi-employer plans are underfunded. The decline in the value of assets supporting these plans, in addition to the high level of benefits generally provided, has led to the underfunding. As a result, contributions to these plans will continue to increase and the benefit levels and related issues will continue to create collective bargaining challenges.

•

Expansion and Acquisitions. While we intend to continue to expand our retail and distribution businesses through new store openings, new affiliations and acquisitions, expansion is subject to a number of risks, including the adequacy of our capital resources, the location of suitable store or distribution center sites and the negotiation of acceptable purchase or lease terms, and the ability to hire and train employees. Acquisitions may involve a number of special risks, including: making acquisitions at acceptable rates of return, the diversion of management’s attention to the assimilation of the operations and integration of personnel of the acquired business, costs and other risks associated with integrating or adapting operating systems, and potential adverse effects on our operating results.

•

Liquidity. We expect to continue to replenish operating assets with internally generated funds. However, if our capital spending significantly exceeds anticipated capital needs, additional funding could be required from other sources including borrowing under our bank credit lines or through debt issuances. In addition, acquisitions could affect our borrowing costs and future financial flexibility.

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. See our Annual Report on Form 10-K for the fiscal year ended February 28, 2004 for a discussion of market risk for the company.

ITEM 4. CONTROLS AND PROCEDURES

The company carried out an evaluation, under the supervision and with the participation of the company’s management, including the company’s chief executive officer and its chief financial officer, of the effectiveness of the design and operation of the company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934 (the Exchange Act) as of September 11, 2004, the end of the period covered by this report. Based upon that evaluation, the chief executive officer and chief financial officer concluded that as of September 11, 2004, the company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

During the fiscal quarter ended September 11, 2004, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

As previously reported, in July and August 2002, several class action lawsuits were filed against the company and certain of its officers and directors in the United States District Court for the District of Minnesota on behalf of purchasers of the company’s securities between July 11, 1999 and June 26, 2002. The lawsuits were consolidated into a single action, in which it was alleged that the company and certain of its officers and directors violated Federal securities laws by issuing materially false and misleading statements relating to its financial performance. On April 29, 2004, the court granted preliminary approval to a stipulation of settlement between the company and plaintiffs. The court granted final approval of the settlement on August 16, 2004, and on September 15, 2004, the period in which to appeal the court’s action expired. The settlement had no material impact to the company’s consolidated statement of earnings or consolidated financial position.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds


Period (1)	Total Number of Shares Purchased (2)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Treasury Stock Purchase Program (3)	Maximum Number of Shares that May Yet be Purchased Under the Treasury Stock Purchase Program (3)
First four weeks
June 20, 2004 to July 17, 2004	32,146	$	30.62	—	6,565,677
Second four weeks
July 18, 2004 to August 14, 2004	1,765,511	$	28.38	1,752,377	4,813,300
Third four weeks
August 15, 2004 to September 11, 2004	225,000	$	27.64	225,000	4,588,300

Totals	2,022,657	$	28.34	1,977,377	4,588,300

(1)	The reported periods conform to the company’s fiscal calendar composed of thirteen 28 day periods. The second quarter of fiscal 2005 contains three 28-day periods.

(2)

These amounts include the deemed surrender by participants in the company’s compensatory stock plans of 45,280 shares of previously issued common stock in payment of the purchase price for shares acquired pursuant to the exercise of stock options and satisfaction of tax obligations arising from such exercises as well as the vesting of restricted stock granted under such plans.

(3)

As of June 20, 2004, 1,565,677 shares remained available for purchase under a treasury stock purchase program authorized by the Board of Directors in October 2001 and announced on November 28, 2001, to repurchase up to 5,000,000 shares of the company’s common stock to offset the issuance of shares over time under the company’s employee benefit plans. This program was completed during the second quarter fiscal 2005 with the purchase of the remaining 1,565,677 shares.

On May 26, 2004, the company announced a treasury stock purchase program authorized by the Board of Directors to repurchase up to 5,000,000 additional shares of the company’s common stock to offset the issuance of shares over time under the company’s employee benefit plans to supplement the 2001 treasury stock purchase program. As of September 11, 2004, 4,588,300 shares remained available for purchase under that program.

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information

None

Item 6. Exhibits

Exhibits filed with this Form 10-Q:


(10.1	)	Form of SUPERVALU INC. 2002 Stock Plan Stock Option Agreement and Stock Option Terms and Conditions for Executive Officers.

(10.2	)	Form of SUPERVALU INC. 2002 Stock Plan Restoration Stock Option Agreement and Restoration Stock Option Terms and Conditions for Executive Officers.

(10.3	)	Form of SUPERVALU INC. 2002 Stock Plan Stock Option Agreement for Non-Employee Directors and Stock Option Terms and Conditions for Non-Employee Directors.

(10.4	)	Form of SUPERVALU INC. 2002 Stock Plan Restoration Stock Option Agreement for Non-Employee Directors and Restoration Stock Option Terms and Conditions for Non-Employee Directors.

(10.5	)	Form of SUPERVALU INC. 2002 Stock Plan Supplemental Non-Qualified Stock Option Agreement for Non-Employee Directors and Terms and Conditions for Supplemental Stock Options for Non-Employee Directors.

(10.6	)	Form of SUPERVALU INC. Long-Term Incentive Plan Restricted Stock Award Certificate and Long-Term Incentive Plan Restricted Stock Award Terms and Conditions.

(10.7	)	Form of SUPERVALU INC. 2002 Stock Plan Restricted Award Certificate and Restricted Stock Award Terms and Conditions.

(12	)	Ratio of Earnings to Fixed Charges.

(31.1	)	Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

(31.2	)	Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

(32.1	)	Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(32.2	)	Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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: October 21, 2004	By:	/s/ PAMELA K. KNOUS
		Pamela K. Knous Executive Vice President, Chief Financial Officer (principal financial and accounting officer)

EXHIBIT INDEX


Exhibit
(10.1	)	Form of SUPERVALU INC. 2002 Stock Plan Stock Option Agreement and Stock Option Terms and Conditions for Executive Officers.

(10.2	)	Form of SUPERVALU INC. 2002 Stock Plan Restoration Stock Option Agreement and Restoration Stock Option Terms and Conditions for Executive Officers.

(10.3	)	Form of SUPERVALU INC. 2002 Stock Plan Stock Option Agreement for Non-Employee Directors and Stock Option Terms and Conditions for Non-Employee Directors.

(10.4	)	Form of SUPERVALU INC. 2002 Stock Plan Restoration Stock Option Agreement for Non-Employee Directors and Restoration Stock Option Terms and Conditions for Non-Employee Directors.

(10.5	)	Form of SUPERVALU INC. 2002 Stock Plan Supplemental Non-Qualified Stock Option Agreement for Non-Employee Directors and Terms and Conditions for Supplemental Stock Options for Non-Employee Directors.

(10.6	)	Form of SUPERVALU INC. Long-Term Incentive Plan Restricted Stock Award Certificate and Long-Term Incentive Plan Restricted Stock Award Terms and Conditions.

(10.7	)	Form of SUPERVALU INC. 2002 Stock Plan Restricted Award Certificate and Restricted Stock Award Terms and Conditions.

(12	)	Ratio of Earnings to Fixed Charges.

(31.1	)	Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

(31.2	)	Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

(32.1	)	Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(32.2	)	Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

EX-10.1 2 dex101.htm FORM OF SUPERVALU INC. 2002 STOCK PLAN STOCK OPTN AGRMT AND STOCK OPTION TERMS Form of SUPERVALU INC. 2002 Stock Plan Stock Optn Agrmt and Stock Option Terms

EXHIBIT 10.1

SUPERVALU INC.

2002 STOCK PLAN

STOCK OPTION AGREEMENT

This Stock Option Agreement is made and entered into as of the Grant Date listed below, by and between SUPERVALU INC. (the “Company”) and the individual whose name and address appears in the signature space below (“Optionee”).

The Company has established the 2002 Stock Plan, as amended (the “Plan”), under which certain key employees of the Company may be granted options (each an “Option”) to purchase shares of the Company’s common stock, par value $1.00 per share (each a “Share”). Optionee has been selected to by the Company to receive an Option subject to Optionee’s acceptance thereof and the terms and conditions governing same.

In consideration of the foregoing, the Company and Optionee hereby agree as follows:

1. Grant. The Company hereby grants Optionee an Option to purchase the number of Shares set forth in the table below, effective as of the Grant Date indicated therein. The Option shall be a non-qualified option, having an exercise price and expiring on an expiration date, as indicated in the table below. Subject to the Stock Option Terms and Conditions attached hereto (the “Terms and Conditions”), the Option shall vest and become exercisable, with respect to twenty percent (20%) of the Shares subject thereto as of the Grant Date and thereafter, on each anniversary of the Grant Date, with respect to an additional twenty percent (20%) of such Shares.

Option

Number

Grant

Date

Number of

Shares

Type of Option

NQ/ISO

Exercise

Price

Expiration

Date

2. Acceptance of Option and Terms and Conditions. The Option is governed by and subject to the Terms and Conditions attached hereto and the provisions of the Plan. Optionee hereby acknowledges receipt of the Terms and Conditions, and the Plan, and represents that he or she has read and understands same. Optionee hereby accepts the Option and agrees to be bound by all of the Terms and Conditions and the provisions of the Plan.

In witness whereof, this Stock Option Agreement has been executed by the Company and Optionee as of the Grant Date listed above.


SUPERVALU INC.				OPTIONEE:

By:

SUPERVALU INC.

2002 STOCK PLAN

STOCK OPTION TERMS AND CONDITIONS

(FOR EXECUTIVE OFFICERS)

These Stock Option Terms and Conditions (“Terms and Conditions”) apply to the Option granted to you under the 2002 Stock Plan, pursuant to the Stock Option Agreement to which this document is attached. Capitalized terms that are used in this document, but are not defined, shall have the meanings ascribed to them in the Plan or the Stock Option Agreement.

1. Vesting and Exercisability. The Option shall vest in cumulative installments as follows:

As of the Grant Date, twenty percent (20%) of the Option shall immediately vest and twenty percent (20%) of the Shares subject to the Option shall then be available for purchase, provided you have signed and returned your Stock Option Agreement within the time period specified.

On each anniversary of the Grant Date, an additional twenty percent (20%) of the Option shall vest and an additional twenty percent (20%) of the Shares subject to the Option shall then be available for purchase.

The vested portion of the Option may be exercised at any time, or from time to time, to purchase Shares. If in any year the full amount of Shares that may be purchased pursuant to the vested portion of the Option is not purchased, the remaining amount of such Shares shall be available for purchase during the remainder of the term of the Option.

2. Manner of Exercise. Except as provided in Section 8 below, you cannot exercise the Option unless at the time of exercise you are an employee of the Company or an Affiliate. Prior to your death, only you may exercise the Option. You may exercise the Option as follows:

By delivering a “Notice of Exercise of Stock Option” to the Company at its principal office, attention: Corporate Secretary, stating the number of Shares being purchased and accompanied by payment of the full purchase price for such Shares (determined by multiplying the Exercise Price by the number of Shares to be purchased). [Note: In the event the Option is exercised by any person other than you pursuant to any of the provisions of Section 8 below, the Notice must be accompanied by appropriate proof of such person’s right to exercise the Option.]; or

By entering an order to exercise the Option using E*TRADE’s OptionsLink website.

3. Method of Payment. The full purchase price for the Shares to be purchased upon exercise of the Option must be paid as follows:

By delivering directly to the Company, cash or its equivalent payable to the Company;

By delivering indirectly to the Company, cash or its equivalent payable to the Company through E*TRADE’s OptionsLink website; or

By delivering Shares having a Fair Market Value as of the Exercise Date equal to the purchase price (commonly known as a “Stock Swap”); or

By delivering the full purchase price in a combination of cash and shares.

4. Delivery of Shares. You shall not have any of the rights of a stockholder with respect to any Shares subject to the Option until such Shares are purchased by you upon exercise of the Option. Such Shares shall then be issued and delivered to you by the Company as follows:

In the form of a stock certificate registered in your name or your name and the name of another adult person (21 years of age or older) as joint tenants, and mailed to your address; or

In “book entry” form, i.e. registered with the Company’s stock transfer agent, in your name or your name and the name of another adult person (21 years of age or older) as joint tenants, and sent by electronic delivery to your brokerage account.

5. Withholding Taxes. You are responsible for the payment of any federal, state, local or other taxes that are required to be withheld by the Company upon exercise of the Option and you must promptly remit such taxes to the Company. You may elect to remit these taxes by:

Delivering directly to the Company, cash or its equivalent payable to the Company;

Delivering indirectly to the Company, cash or its equivalent payable to the Company through E*TRADE’s OptionsLink website;

Having the Company withhold a portion of the Shares to be issued upon exercise of the Option having a Fair Market Value equal to the amount of federal and state income tax required to be withheld upon such exercise (commonly referred to as a “Tax Swap” or “Stock for Tax”); or

Delivering Shares to the Company, other than the Shares issuable upon exercise of the Option, having a Fair Market Value equal to such taxes. [Note: In addition to delivering Shares to satisfy required tax withholding obligations, you may also elect to deliver additional Shares to the Company, other than the Shares issuable upon exercise of the Option, having a Fair Market Value equal to the amount of any additional federal or state income taxes imposed on you in connection with the exercise of the Option, provided such Shares have been held by you for a minimum of six (6) months.]

6. Change of Control. In the event of the occurrence of a Change of Control of the Company, the unvested portion of the Option shall immediately vest and the Option shall become immediately exercisable in full. The term “Change of Control”, means any of the following events:

The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of either (A) the then outstanding shares of common stock of the Company or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; provided, however, that for purposes of this subsection (a), the following share acquisitions shall not constitute a Change of Control; (A) any acquisition directly from the Company or (B) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; or

The consummation of any merger or other business combination of the Company, the sale or lease of the Company’s assets or any combination of the foregoing transactions (each a “Transaction”) other than a Transaction immediately following which the stockholders of the Company and any trustee or fiduciary of any Company employee benefit plan immediately prior to the Transaction own at least sixty percent (60%) of the voting power, directly or indirectly, of (A) the surviving corporation in any such merger or other business combination; (B) the purchaser or lessee of the Company’s assets; or (C) both the surviving corporation and the purchaser or lessee in the event of any combination of Transactions; or

recommendation of or with the approval of, at least three-fourths of the directors who then qualified as Incumbent Directors (so long as such director was not nominated by a person who has expressed an intent to effect a Change of Control or engage in a proxy or other control contest); or.

Such other event or transaction as the Board of Directors of the Company shall determine constitutes a Change of Control.

You acknowledge that as a result of the foregoing acceleration of vesting and exercisability, to the extent that the aggregate Fair Market Value of all Shares subject to stock options that are Incentive Stock Options which are exercisable for the first time by you during any calendar year (under all plans of the Company and its subsidiaries, if any) exceeds $100,000, all or any portion of the Option, as well as any other stock option held by you, may become a stock option which is not an Incentive Stock Option.

7. Transferability. Unless otherwise determined by the Committee, the Option shall not be transferable other than by will or the laws of descent and distribution. More particularly, the Option may not be assigned, transferred, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to these provisions, or the levy of an execution, attachment or similar process upon the Option, shall be void.

You may designate a beneficiary or beneficiaries to exercise your rights with respect to the Option upon your death. In the absence of any such designation, benefits remaining unpaid at your death shall be paid to your estate.

8. Effect of Termination of Employment. Following the termination of your employment with the Company or an Affiliate for any of the reasons set forth below, your right to exercise the Option, as well as that of your beneficiary or beneficiaries, shall be as follows:

Voluntary or Involuntary. In the event your employment is terminated voluntarily or involuntarily for any reason other than retirement, death or permanent disability, you may exercise the Option prior to its Expiration Date, at any time within a period of up to two (2) years after such termination of employment, to the full extent of the number of Shares you were entitled to purchase under that portion of the Option which was vested as of the date of termination of your employment. However, the Committee may, in its sole and absolute discretion, except in the case of the termination of your employment following the occurrence of a Change of Control, during a period of seventy-five (75) days after such termination of employment and following ten (10) days’ written notice to you, reduce the period of time during which the Option may be exercised to any period of time designated by the Committee, provided such period is not less than ninety (90) days following termination of your employment.

Retirement. You shall be deemed to have retired, solely for purposes of this Agreement, in the event that your employment terminates for any reason other than death or disability and you are at least 55 years of age.

(i)

In the event you retire and you have completed ten (10) or more years of service with the Company or an Affiliate, the unvested portion of the Option shall immediately vest in full. Thereafter, you may exercise the Option at any time prior to its Expiration Date, to the full extent of the Shares covered by the Option that were not previously purchased.

(ii)

In the event you retire and you have completed less than ten (10) years of service with the Company or an Affiliate, you may exercise the Option prior to its Expiration Date, at any time within a period of up to two (2) years after the date of your retirement, to the full extent of the number of Shares you were entitled to purchase under that portion of the Option which was vested as of the date of your retirement.

exercised prior to its Expiration Date, by your beneficiary(ies), or a legatee(s) under your last will, or your personal representative(s) or the distributee(s) of your estate, to the full extent of the Shares covered by the Option that were not previously purchased:

(i)

At any time within a period of up to two (2) years after your death if such occurs while you are employed, or

(ii)

At any time within a period of up to two (2) years following the termination of your employment if your death occurs within three (3) months thereafter.

Death After Age 55. In the event your death occurs after you attain the age of fifty-five (55), while you are employed by the Company or an Affiliate, or within three (3) months after the termination of your employment, the unvested portion of the Option shall immediately vest in full. Thereafter, the Option may be exercised prior to its Expiration Date, by your beneficiary(ies), or a legatee(s) under your last will, or your personal representative(s) or the distributee(s) of your estate, to the full extent of the Shares covered by the Option that were not previously purchased:

(i)

At any time, if you have completed ten (10) or more years of service with the Company or an Affiliate; or

(ii)

If you have completed less than ten (10) years of service with the Company or an Affiliate, then at any time within a period of up to two (2) years after the date of your death if such occurs while you are employed, or within a period of up to two (2) years after the date of termination of your employment if your death occurs within three (3) months thereafter.

Disability Prior to Age 55. In the event your employment terminates before you attain the age of fifty-five (55), as a result of a permanent disability, the unvested portion of the Option shall immediately vest in full. Thereafter, the Option may be exercised prior to its Expiration Date, by you or by your personal representative(s), at any time within a period of up to two (2) years after your employment terminates due to such permanent disability, to the full extent of the Shares covered by the Option that were not previously purchased.

You shall be considered permanently disabled if you suffer from a medically determinable physical or mental impairment that renders you incapable of performing any substantial gainful employment, and is evidenced by a certification to such effect by a doctor of medicine approved by the Company. In lieu of such certification, the Company shall accept, as proof of permanent disability, your eligibility for long-term disability payments under the applicable Long-Term Disability Plan of the Company.

Disability After Age 55. In the event your employment terminates as a result of a permanent disability after you attain the age of fifty-five (55), the unvested portion of the Option shall immediately vest in full. Thereafter, the Option may be exercised prior to its Expiration Date, by you or by your personal representative(s), to the full extent of the Shares covered by the Option that were not previously purchased:

(i)

At any time, if you have completed ten (10) or more years of service with the Company or an Affiliate; or

(ii)

If you have completed less than ten (10) years of service with the Company or an Affiliate, then at any time within a period of two (2) years after your employment terminates due to such permanent disability.

Change in Duties/Leave of Absence. The Option shall not be affected by any change of your duties or position or by a temporary leave of absence approved by the Company, so long as you continue to be an employee of the Company or of an Affiliate.

9. Repurchase Rights. If you exercise the Option within six (6) months prior to or three (3) months after the date your employment with the Company or an Affiliate terminates for any reason, whether voluntary or involuntary, with or without cause (except as a result of death, permanent disability or retirement pursuant to the Company’s retirement plans then in effect), the Company shall have the right and option to repurchase from you, that number of Shares which is equal to the number you purchased upon such exercise(s) within such time periods, and you agree to sell such Shares to the Company.

The Company may exercise its repurchase rights by depositing in the United States mail a written notice addressed to you at the latest mailing address for you on the records of the Company (i) within thirty (30) days following the termination of your employment for the repurchase of Shares purchased prior to such termination, or (ii) within thirty (30) days after any exercise of the Option for the repurchase of Shares purchased after your termination of employment. Within thirty (30) days after the mailing of such notice, you shall deliver to the Company the number of Shares the Company has elected to repurchase and the Company shall pay to you in cash, as the repurchase price for such Shares upon their delivery, an amount which shall be equal to the purchase price paid by you for the Shares. If you have disposed of the Shares, then in lieu of delivering an equivalent number of Shares to the Company, you must pay to the Company the amount of gain realized by you from the disposition of the Shares exclusive of any taxes due and payable or commissions or fees arising from such disposition.

If the Company exercises its repurchase option prior to the actual issuance and delivery to you of any Shares pursuant to the exercise of the Option, no Shares need be issued or delivered. In lieu thereof, the Company shall return to you the purchase price you tendered upon the exercise of the Option to the extent that it was actually received from you by the Company.

Following the occurrence of a Change of Control, the Company shall have no right to exercise the repurchase rights set forth in this Section.

10. Employee Covenants.

Non-competition Covenant. You agree that you will not be an employee, trustee, principal, agent, consultant, partner, director or substantial stockholder of any company or business that is engaged in the same business in which you were employed by the Company or any of its Affiliates. This paragraph shall not apply in the event of a Change in Control as described in Section 6 above.

Confidential Information Covenant. You acknowledge that you will have access to and gain knowledge of highly confidential and proprietary information and trade secrets pertaining to the Company, its Affiliates, customers, suppliers, joint ventures, licensors, licensees, distributors and other persons and entities with whom the Company does business (“Confidential Information”) in the course of your employment with the Company or any of its Affiliates. You agree to hold all Confidential Information in a fiduciary capacity for the sole benefit of the Company and/or its Affiliates. You further agree that you will not, without the prior written consent of the Company or as required by your duties as an employee of the Company or any of its Affiliates, in any way divulge or disclose any Confidential Information. All Confidential Information, including all copies, notes and replications thereof will remain the sole property of the Company and/or its Affiliates, and must be returned to the Company immediately upon your termination of employment.

Non-solicitation Covenant. You agree that you will not, directly or in concert with others, have any contact for the purpose of recruiting or soliciting any employee(s) of the Company or any of its Affiliates to terminate their employment with the Company or such Affiliate in order to become associated with another employer. You agree that, with respect to the customers or accounts of the business unit(s) in which you worked or over which you had management responsibility, you will not, directly or in concert with others, have contact with such customers or accounts for the purpose of attempting to divert any customer’s business or any account from the Company or any of its Affiliates.

No Disparaging Statements Covenant. You agree that you will not make any disparaging statements about the Company, its Affiliates, directors, officers, agents, employees, products, pricing policies or services.

Term. You agree that each of the covenants set forth in this Section 10 will continue in effect during your employment with the Company or any of its Affiliates, and for a period of fifteen (15) months after your employment with the Company or such Affiliate ends.

Remedies for Breach of these Covenants. Should you violate any of the above covenants, you agree that the Company shall recover from you the monetary loss resulting from such breach, together with the costs and attorneys fees necessary to gain such recovery. In addition to monetary relief, you agree that upon your breach of any covenant in this Section, the Option, and any other unexercised options issued under the Plan or any other stock option plans of the Company will immediately terminate, and that a court may order injunctive relief requiring you to stop all actions in violation of the provisions of this Section.

Enforceability of these Covenants. You agree that to the extent that a court determines that any provision of this Section detailing the covenants set forth herein is invalid or unenforceable, such provision shall be deleted, but all remaining provisions shall remain in full force and effect.

11.

Arbitration. You and the Company agree that any controversy, claim, or dispute arising out of or relating to the Stock Option Agreement or the breach of any of these Stock Option Terms and Conditions, or arising out of or relating to your employment relationship with the Company or any of its Affiliates, or the termination of such relationship, shall be resolved by binding arbitration before a neutral arbitrator under rules set forth in the Federal Arbitration Act, except for claims by the Company relating to your breach of any of the employee covenants set forth in Paragraph 10 above. By way of example only, claims subject to this agreement to arbitrate include claims litigated under federal, state and local statutory or common law, such as the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, as amended, including the Civil Rights Act of 1994, the Americans with Disabilities Act, the law of contract and the law of tort. You and the Company agree that such claims may be brought in an appropriate administrative forum, but at the point at which you or the Company seek a judicial forum to resolve the matter, this agreement for binding arbitration becomes effective, and you and the Company hereby knowingly and voluntarily waive any right to have any such dispute tried and adjudicated by a judge or jury. The foregoing not to the contrary, the Company may seek to enforce the employee covenants set forth in Paragraph 10 above, in any court of competent jurisdiction.

This agreement to arbitrate shall continue in full force and effect despite the expiration or termination of your Option or your employment relationship with the Company or any of its Affiliates. You and the Company agree that any award rendered by the arbitrator shall be final and binding and that judgment upon the final award may be entered in any court having jurisdiction thereof. The arbitrator may grant any remedy or relief that the arbitrator deems just and equitable, including any remedy or relief that would have been available to you, the Company or any of its Affiliates had the matter been heard in court. All expenses of the arbitration, including the required travel and other expenses of the arbitrator and any witnesses, and the costs relating to any proof produced at the direction of the arbitrator, shall be borne equally by you and the Company unless otherwise mutually agreed or unless the arbitrator directs otherwise in the award. The arbitrator’s compensation shall be borne equally by you and the Company unless otherwise mutually agreed or unless the law provides otherwise.

12. Severability. In the event that any portion of these Terms and Conditions shall be held to be invalid, the same shall not affect in any respect whatsoever the validity and enforceability of the remainder of these Terms and Conditions.

EX-10.2 3 dex102.htm FORM OF SUPERVALU INC. 2002 STOCK PLAN RESTORATION STOCK OPTION AGREEMENT Form of SUPERVALU INC. 2002 Stock Plan Restoration Stock Option Agreement

EXHIBIT 10.2

SUPERVALU INC.

2002 STOCK PLAN

RESTORATION STOCK OPTION AGREEMENT

This Restoration Stock Option Agreement is made and entered into as of the Grant Date listed below, by and between SUPERVALU INC. (the “Company”) and the individual whose name and address appears in the signature space below (“Optionee”).

The Company has established the 2002 Stock Plan, as amended (the “Plan”), under which certain key employees of the Company may be granted restoration stock options (each a “Restoration Option”) to purchase shares of the Company’s common stock, par value $1.00 per share (each a “Share”), in consideration for tendering Shares in payment for the exercise price and withholding tax, if applicable, due on the exercise of a stock option previously granted by the Company. Optionee has tendered Shares in payment of the exercise price and withholding tax, if applicable, of a stock option and has been granted a Restoration Option to purchase additional shares of common stock of the Company as follows:

In consideration of the foregoing, the Company and Optionee hereby agree as follows:

1. Grant. The Company hereby grants Optionee a Restoration Option to purchase the number of Shares set forth in the table below, effective as of the Grant Date indicated therein. The Restoration Option shall be a non-qualified, having an exercise price and expiration date as indicated in the table below. Subject to the Restoration Stock Option Terms and Conditions attached hereto (the “Terms and Conditions”), the Restoration Option is immediately exercisable, with respect to all of the Shares subject thereto, as of the Grant Date.

Grant

No.

Grant

Date

Number of

Shares

Type of

Option

Exercise

Price

Expiration

Date

2. Acceptance of Restoration Option and Terms and Conditions. The Restoration Option is governed by and subject to the Terms and Conditions attached hereto and the provisions of the Plan. Optionee hereby acknowledges receipt of the Terms and Conditions, and the Plan, and represents that he or she has read and understands same. Optionee hereby accepts the Restoration Option and agrees to be bound by all of the Terms and Conditions and the provisions of the Plan.

In witness whereof, this Restoration Stock Option Agreement has been executed by the Company and Optionee as of the Grant Date listed above.


SUPERVALU INC.				OPTIONEE:

By:

SUPERVALU INC.

2002 STOCK PLAN

RESTORATION STOCK OPTION TERMS & CONDITIONS

(FOR EXECUTIVE OFFICERS)

These Restoration Stock Option Terms and Conditions (“Terms and Conditions”) apply to the Restoration Option granted under the SUPERVALU INC. 2002 Stock Plan, pursuant to the Restoration Stock Option Agreement to which this document is attached. Capitalized terms that are used in this document, but are not defined, shall have the meanings ascribed to them in the Plan or the Restoration Stock Option Agreement.

1. Vesting and Exercisability. The Restoration Option shall vest as follows:

As of the Grant Date, one hundred percent (100%) of the Restoration Option shall immediately vest.

The Restoration Option may be exercised at any time, or from time to time, as to any or all full shares.

The term of the Restoration Option shall expire at the close of business on the expiration date set forth in the attached Agreement (the “Expiration Date”) or such shorter period as is prescribed in Section 7.

2. Manner of Exercise. Except as provided in Section 7 below, you cannot exercise the Restoration Option unless at the time of exercise you are an employee of the Company or an Affiliate. Prior to your death, only you may exercise the Restoration Option. You may exercise the Restoration Option as follows:

By delivering a “Notice of Exercise of Stock Restoration Option” to the Company at its principal office, attention: Corporate Secretary, stating the number of Shares being purchased and accompanied by payment of the full purchase price for such Shares (determined by multiplying the Exercise Price by the number of Shares to be purchased). [Note: In the event the Restoration Option is exercised by any person other than you pursuant to any of the provisions of Section 7 below, the Notice must be accompanied by appropriate proof of such person’s right to exercise the Restoration Option.]; or

By entering an order to exercise the Restoration Option using E*TRADE’s OptionsLink website.

3. Method of Payment. The full purchase price for the Shares to be purchased upon exercise of the Restoration Option must be paid as follows:

By delivering directly to the Company, cash or its equivalent payable to the Company;

By delivering indirectly to the Company, cash or its equivalent payable to the Company through E*TRADE’s OptionsLink website; or

By delivering Shares having a Fair Market Value as of the Exercise Date equal to the purchase price (commonly known as a “Stock Swap”); or

By delivering the full purchase price in a combination of cash and shares.

4. Delivery of Shares. You shall not have any of the rights of a stockholder with respect to any Shares subject to the Restoration Option until such Shares are purchased by you upon exercise of the Restoration Option. Such Shares shall then be issued and delivered to you by the Company as follows:

In the form of a stock certificate registered in your name or your name and the name of another adult person (21 years of age or older) as joint tenants, and mailed to your address; or

5. Withholding Taxes. You are responsible for the payment of any federal, state, local or other taxes that are required to be withheld by the Company upon exercise of the Restoration Option and you must promptly remit such taxes to the Company. You may elect to remit these taxes by:

Delivering directly to the Company, cash or its equivalent payable to the Company;

Delivering indirectly to the Company, cash or its equivalent payable to the Company through E*TRADE’s Restoration OptionsLink website;

Having the Company withhold a portion of the Shares to be issued upon exercise of the Restoration Option having a Fair Market Value equal to the amount of federal and state income tax required to be withheld upon such exercise (commonly referred to as a “Tax Swap” or “Stock for Tax”); or

Delivering Shares to the Company, other than the Shares issuable upon exercise of the Restoration Option, having a Fair Market Value equal to such taxes. [Note: In addition to delivering Shares to satisfy required tax withholding obligations, you may also elect to deliver additional Shares to the Company, other than the Shares issuable upon exercise of the Restoration Option, having a Fair Market Value equal to the amount of any additional federal or state income taxes imposed on you in connection with the exercise of the Restoration Option, provided such Shares have been held by you for a minimum of six (6) months.]

6. Transferability. Unless otherwise determined by the Committee, the Restoration Option shall not be transferable other than by will or the laws of descent and distribution. More particularly, the Restoration Option may not be assigned, transferred, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Restoration Option contrary to these provisions, or the levy of an execution, attachment or similar process upon the Restoration Option, shall be void.

You may designate a beneficiary or beneficiaries to exercise your rights with respect to the Restoration Option upon your death. In the absence of any such designation, benefits remaining unpaid at your death shall be paid to your estate.

7. Effect of Termination of Employment. Following the termination of your employment with the Company or an Affiliate for any of the reasons set forth below, your right to exercise the Restoration Option, as well as that of your beneficiary or beneficiaries, shall be as follows:

Voluntary or Involuntary. In the event your employment is terminated voluntarily or involuntarily for any reason other than retirement, death or permanent disability, you may exercise the Restoration Option prior to its Expiration Date, at any time within a period of up to two (2) years after such termination of employment. However, the Committee may, in its sole and absolute discretion, except in the case of the termination of your employment following the occurrence of a Change of Control as defined in Section 12 below, during a period of seventy-five (75) days after such termination of employment and following ten (10) days’ written notice to you, reduce the period of time during which the Restoration Option may be exercised to any period of time designated by the Committee, provided such period is not less than ninety (90) days following termination of your employment.

(i)

In the event you retire and you have completed ten (10) or more years of service with the Company or an Affiliate, you may exercise the Option at any time prior to its Expiration Date, to the full extent of the Shares covered by the Option that were not previously purchased.

(ii)

In the event you retire and you have completed less than ten (10) years of service with the Company or an Affiliate, you may exercise the Option prior to its Expiration Date, at any time within a period of up to two (2) years after the date of your retirement, to the full extent of the Shares covered by the Option that were not previously purchased.

Death Prior to Age 55. In the event your death occurs before you attain the age of fifty-five (55), while you are employed by the Company or an Affiliate, or within three (3) months after the termination of your employment, the Restoration Option may be exercised prior to its Expiration Date, by your beneficiary(ies), or a legatee(s) under your last will, or your personal representative(s) or the distributee(s) of your estate, to the full extent of the Shares covered by the Restoration Option that were not previously purchased:

(i)

At any time within a period of up to two (2) years after your death if such occurs while you are employed, or

(ii)

At any time within a period of up to two (2) years following the termination of your employment if your death occurs within three (3) months thereafter.

Death After Age 55. In the event your death occurs after you attain the age of fifty-five (55), while you are employed by the Company or an Affiliate, or within three (3) months after the termination of your employment, the Restoration Option may be exercised prior to its Expiration Date, by your beneficiary(ies), or a legatee(s) under your last will, or your personal representative(s) or the distributee(s) of your estate, to the full extent of the Shares covered by the Restoration Option that were not previously purchased:

(i)

At any time, if you have completed ten (10) or more years of service with the Company or an Affiliate; or

(ii)

Disability Prior to Age 55. In the event your employment terminates before you attain the age of fifty-five (55), as a result of a permanent disability, the Restoration Option may be exercised prior to its Expiration Date, by you or by your personal representative(s), at any time within a period of up to two (2) years after your employment terminates due to such permanent disability, to the full extent of the Shares covered by the Restoration Option that were not previously purchased.

Disability After Age 55. In the event your employment terminates as a result of a permanent disability after you attain the age of fifty-five (55), the Restoration Option may be exercised prior to its Expiration Date, by you or by your personal representative(s), to the full extent of the Shares covered by the Restoration Option that were not previously purchased:

(i)

At any time, if you have completed ten (10) or more years of service with the Company or an Affiliate; or

(ii)

Change in Duties/Leave of Absence. The Restoration Option shall not be affected by any change of your duties or position or by a temporary leave of absence approved by the Company, so long as you continue to be an employee of the Company or of an Affiliate.

8. Repurchase Rights. If you exercise the Restoration Option within six (6) months prior to or three (3) months after the date your employment with the Company or an Affiliate terminates for any reason, whether voluntary or involuntary, with or without cause (except as a result of death, permanent disability or retirement pursuant to the Company’s retirement plans then in effect), the Company shall have the right and Restoration Option to repurchase from you, that number of Shares which is equal to the number you purchased upon such exercise(s) within such time periods, and you agree to sell such Shares to the Company.

The Company may exercise its repurchase rights by depositing in the United States mail a written notice addressed to you at the latest mailing address for you on the records of the Company (i) within thirty (30) days following the termination of your employment for the repurchase of Shares purchased prior to such termination, or (ii) within thirty (30) days after any exercise of the Restoration Option for the repurchase of Shares purchased after your termination of employment. Within thirty (30) days after the mailing of such notice, you shall deliver to the Company the number of Shares the Company has elected to repurchase and the Company shall pay to you in cash, as the repurchase price for such Shares upon their delivery, an amount which shall be equal to the purchase price paid by you for the Shares. If you have disposed of the Shares, then in lieu of delivering an equivalent number of Shares to the Company, you must pay to the Company the amount of gain realized by you from the disposition of the Shares exclusive of any taxes due and payable or commissions or fees arising from such disposition.

If the Company exercises its repurchase Restoration Option prior to the actual issuance and delivery to you of any Shares pursuant to the exercise of the Restoration Option, no Shares need be issued or delivered. In lieu thereof, the Company shall return to you the purchase price you tendered upon the exercise of the Restoration Option to the extent that it was actually received from you by the Company.

Following the occurrence of a Change of Control as defined in Section 12 below, the Company shall have no right to exercise the repurchase rights set forth in this Section.

9. Employee Covenants.

Remedies for Breach of these Covenants. Should you violate any of the above covenants, you agree that the Company shall recover from you the monetary loss resulting from such breach, together with the costs and attorneys fees necessary to gain such recovery. In addition to monetary relief, you agree that upon your breach of any covenant in this Section, the Restoration Option, and any other unexercised Restoration Option or option issued under the Plan or any other stock option plans of the Company will immediately terminate, and that a court may order injunctive relief requiring you to stop all actions in violation of the provisions of this Section.

10. Arbitration. You and the Company agree that any controversy, claim, or dispute arising out of or relating to the Stock Option Agreement or the breach of any of these Stock Option Terms and Conditions, or arising out of or relating to your employment relationship with the Company or any of its Affiliates, or the termination of such relationship, shall be resolved by binding arbitration before a neutral arbitrator under rules set forth in the Federal Arbitration Act, except for claims by the Company relating to your breach of any of the employee covenants set forth in Paragraph 10 above. By way of example only, claims subject to this agreement to arbitrate include claims litigated under federal, state and local statutory or common law, such as the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, as amended, including the Civil Rights Act of 1994, the Americans with Disabilities Act, the law of contract and the law of tort. You and the Company agree that such claims may be brought in an appropriate administrative forum, but at the point at which you or the Company seek a judicial forum to resolve the matter, this agreement for binding arbitration becomes effective, and you and the Company hereby knowingly and voluntarily waive any right to have any such dispute tried and adjudicated by a judge or jury. The foregoing not to the contrary, the Company may seek to enforce the employee covenants set forth in Paragraph 10 above, in any court of competent jurisdiction.

11. Severability. In the event that any portion of these Terms and Conditions shall be held to be invalid, the same shall not affect in any respect whatsoever the validity and enforceability of the remainder of these Terms and Conditions.

12. Change of Control. The term “Change of Control”, means any of the following events:

The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the

Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of either (A) the then outstanding shares of common stock of the Company or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; provided, however, that for purposes of this subsection (a), the following share acquisitions shall not constitute a Change of Control; (A) any acquisition directly from the Company or (B) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; or

Within any 24-month period, the persons who were directors immediately before the beginning of such period (the “Incumbent Directors”) shall cease (for any reason other than death) to constitute at least a majority of the Board of Directors of the Company or the board of directors of a successor to the Company. For this purpose, any director who was not a director at the beginning of such period shall be deemed to be an Incumbent Director if such director was elected to the Board of Directors of the Company by, or on the recommendation of or with the approval of, at least three-fourths of the directors who then qualified as Incumbent Directors (so long as such director was not nominated by a person who has expressed an intent to effect a Change of Control or engage in a proxy or other control contest); or.

Such other event or transaction as the Board of Directors of the Company shall determine constitutes a Change of Control.

EX-10.3 4 dex103.htm FORM OF SUPERVALU INC. 2002 STOCK PLAN STOCK OPTION AGREEMENT-NON-EMPLOYEE DIREC Form of SUPERVALU INC. 2002 Stock Plan Stock Option Agreement-Non-Employee Direc

EXHIBIT 10.3

SUPERVALU INC.

2002 STOCK PLAN

STOCK OPTION AGREEMENT

(NON-EMPLOYEE DIRECTORS)

The Company has established the 2002 Stock Plan, as amended (the “Plan”), under which non-employee directors of the Company may be granted options (each an “Option”) to purchase shares of the Company’s common stock, par value $1.00 per share (each a “Share”). Optionee has been selected to by the Company to receive an Option subject to Optionee’s acceptance thereof and the terms and conditions governing same.

In consideration of the foregoing, the Company and Optionee hereby agree as follows:

1. Grant. The Company hereby grants Optionee an Option to purchase the number of Shares set forth in the table below, effective as of the Grant Date indicated therein. The Option shall be a non-qualified stock option, having an exercise price and expiring on an expiration date, as indicated in the table below. Subject to the Stock Option Terms and Conditions attached hereto (the “Terms and Conditions”), the Option shall vest and become exercisable, with respect to one hundred percent (100%) of the Shares subject thereto as of the Grant Date.

Grant

Date

Number of

Shares

Type of Option

Exercise

Price

Expiration

Date

In witness whereof, this Stock Option Agreement has been executed by the Company and Optionee as of the Grant Date listed above.


SUPERVALU INC.				OPTIONEE:

By:

SUPERVALU INC.

2002 STOCK PLAN

STOCK OPTION TERMS AND CONDITIONS

(FOR NON-EMPLOYEE DIRECTORS)

This document sets forth the terms and conditions applicable to a stock option granted to Optionee under the SUPERVALU INC. 2002 Stock Plan, as evidenced by a Stock Option Agreement entered into between the Company and Optionee (the “Agreement”). Capitalized terms that appear in this document but are not defined herein, shall have the meanings given to them in the Plan or the Agreement.

1. Duration and Exercisability. The term of the Option shall be for a period of ten years from the Grant Date, terminating at the close of business on the Expiration Date set forth in the Agreement or such shorter period as is prescribed in paragraph 6 hereof.

The Option shall vest and become exercisable with respect to One Hundred Percent (100%) of the Shares subject thereto as of the Grant Date. The Option may be exercised at any time, or from time to time, as to any or all Shares. Optionee shall not have any of the rights of a stockholder with respect to any Shares subject to the Option until such Shares are issued to Optionee upon exercise of the Option.

2. Manner of Exercise. The Option may be exercised by delivering a “Notice of Exercise of Stock Option” (the “Notice”) to the Company at its principal office, attention: Corporate Secretary. The Notice shall state the number of Shares with respect to which the Option is being exercised and shall be accompanied by payment of the full purchase price for such Shares (determined by multiplying the Exercise Price by the number of Shares to be purchased). In the event the Option shall be exercised pursuant to paragraph 6(b) hereof by any person other than Optionee, the Notice shall be accompanied by appropriate proof of such person’s right to exercise the Option.

3. Delivery of Shares. As soon as practicable after the Notice is received, the Company shall issue and deliver (a) in the form of a stock certificate registered in Optionee’s name or Optionee’s name and the name of another adult person (21 years of age or older) as joint tenants, and mailed to Optionee’s address; or (b) In “book entry” form, i.e. registered with the Company’s stock transfer agent, in Optionee’s name or Optionee’s name and the name of another adult person (21 years of age or older) as joint tenants, and sent by electronic delivery to Optionee’s brokerage account. The Optionee shall not have any of the rights of a stockholder with respect to any Shares subject to the Option until such Shares are purchased by Optionee upon exercise of the Option.

4. Withholding Taxes. In order to comply with all applicable income tax laws or regulations, the Company may take such action as it deems appropriate to insure that, if necessary, all applicable federal or state payroll, withholding, income or other taxes are withheld or collected from Optionee. In accordance with the terms of the Plan, Optionee may elect to satisfy Optionee’s federal and state income tax withholding obligations upon exercise of the Option by (a) remitting cash or its equivalent payable to the Company, (b) having the Company withhold a portion of the Shares otherwise to be delivered upon exercise of the Option having a Fair Market Value equal to the amount of federal and state income tax required to be withheld upon such exercise or (c) delivering Shares to the Company, other than the Shares issuable upon exercise of the Option, having a Fair Market Value equal to such taxes. In addition to the amounts required to be withheld to pay applicable taxes, Optionee may elect to deliver Shares to the Company, other than Shares issuable upon exercise of the Option, that have been held by Optionee for a minimum of six months that have a Fair Market Value equal to the amount of such additional federal and/or state income taxes imposed on Optionee in connection with the exercise of the Option.

5. Transferability. Except as otherwise determined by the Committee, the Option shall not otherwise be transferable than by will or the laws of descent and distribution, and the Option may be exercised during the lifetime of Optionee only by Optionee. More particularly (but without limiting the generality of the foregoing), the Option may not be assigned, transferred (except as aforesaid), pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted assignment, transfer, pledge, hypothecation, or other disposition of the Option contrary to the provisions hereof and the levy of an execution, attachment or similar process upon the Option shall be void. Notwithstanding the foregoing, Optionee may, in the manner established by the Committee, designate a beneficiary or beneficiaries to exercise the rights of Optionee with respect to the Option upon the death of Optionee.

6.	Effect of Termination of Service on the Board of Directors

(a) In the event Optionee ceases to be a non-employee director of the Company for any reason, including death, the Optionee may exercise the Option at any time; provided, however, that the Option may not be exercised after ten (10) years from the date of grant.

(b) In the event of the death of Optionee the Option may be exercised by Optionee or a legatee or legatees of Optionee under Optionee’s last will or by Optionee’s personal representatives or distributees at any time, but not after the Expiration Date, to the full extent of the Shares covered by the Option not previously purchased.

(c) Nothing contained herein shall confer on the Optionee any right to continue as a director of the Company or affect in any way the right of the stockholders of the Company to remove the Optionee as a non-employee director of the Company, as provided in the Company’s ByLaws.

Anti-dilution Adjustments. If any portion of the Option is exercised subsequent to any stock dividend, split-up, recapitalization, merger, consolidation, combination or exchange of Shares or the like occurring after the Grant Date as a result of which Shares of any class shall be issued in respect of the outstanding Common Stock, or Common Stock shall be changed into the same or a different number of Shares of the same or another class or classes, the person or persons exercising the Option shall receive for the aggregate price paid upon such exercise the aggregate number of Shares which, if Common Stock (as authorized at the Grant Date) had been purchased at the Grant Date for the same aggregate price (on the basis of the Exercise Price set forth in the Agreement) and had not been disposed of, such person or persons would be holding at the time of such exercise as a result of such purchase and any and all such stock dividends, split-ups, recapitalizations, mergers, consolidations, combinations or exchanges of Shares, or the like; provided, however, that no fractional Share shall be issued upon any such exercise, and the aggregate price paid shall be appropriately reduced on account of any fractional Share not issued.

8.	Miscellaneous.

(a) The Company shall reserve and keep available such number of Shares of Common Stock as will be sufficient to satisfy the requirements of the Agreement, including these Terms and Conditions.

(b) If any of the Shares covered by the Agreement are not registered under the Securities Act of 1933 at the time of their issuance hereunder, Optionee represents and agrees that all such Shares purchased under the Option will be acquired for investment and not for resale.

(c) As used herein, the term “Common Stock” shall mean the Common Stock of the Company as authorized at the Grant Date, and the terms “Affiliate,” “Committee” and “Fair Market Value” shall have the meanings ascribed to them in the Plan.

(d) The Option is granted pursuant to the Plan and is subject to all the terms and conditions contained therein. A copy of the Plan is available to Optionee upon request.

(e) The Agreement and these Terms and Conditions applicable thereto, shall be governed by and construed in accordance with the laws of the State of Minnesota.

(f) Headings herein are for convenience of reference only and shall not be deemed in any way to be material or relevant to the construction or interpretation of these Terms and Conditions or any provision hereof.

EX-10.4 5 dex104.htm FORM OF SUPERVALU INC. 2002 STOCK PLAN RESTORATN STOCK OPTION AGREEMENT-NON-EMPL Form of SUPERVALU INC. 2002 Stock Plan Restoratn Stock Option Agreement-Non-Empl

EXHIBIT 10.4

SUPERVALU INC.

2002 STOCK PLAN

RESTORATION STOCK OPTION AGREEMENT

FOR NON-EMPLOYEE DIRECTORS

The Company has established the 2002 Stock Plan, as amended (the “Plan”), under which non-employee directors of the Company may be granted restoration stock options (each a “Restoration Option”) to purchase shares of the Company’s common stock, par value $1.00 per share (each a “Share”), in consideration for tendering Shares in payment for the exercise price due on the exercise of a stock option previously granted by the Company; and

In consideration of the foregoing, the Company and Optionee hereby agree as follows:

1. Grant. The Company hereby grants Optionee an Option to purchase the number of Shares set forth in the table below, effective as of the Grant Date indicated therein. The Option shall be a non-qualified stock option, having an exercise price and expiring on an expiration date, as indicated in the table below. Subject to the Stock Option Terms and Conditions attached hereto (the “Terms and Conditions”), the Option shall vest and become exercisable, with respect to one hundred percent (100%) of the Shares subject thereto as of the Grant Date.

Grant

No.

Grant

Date

Number of

Shares

Type of Option

NQ/ISO

Exercise

Price

Expiration

Date

In witness whereof, this Stock Option Agreement has been executed by the Company and Optionee as of the Grant Date listed above.


SUPERVALU INC.				OPTIONEE:

By:

SUPERVALU INC.

2002 STOCK PLAN

RESTORATION STOCK OPTION TERMS AND CONDITIONS

(FOR NON-EMPLOYEE DIRECTORS)

This document sets forth the terms and conditions applicable to a restoration stock option granted to Optionee under the SUPERVALU INC. 2002 Stock Plan, as evidenced by a Restoration Stock Option Agreement entered into between the Company and Optionee (the “Agreement”). Capitalized terms that appear in this document but are not defined herein, shall have the meanings given to them in the Plan or the Agreement.

Payment of the purchase price shall, unless otherwise consented to by the Company, be made (a) by delivery of cash or its equivalent payable to the order of the Company, (b) by tender of Shares having a Fair Market Value as of the Exercise Date equal to the purchase price, or (c) by delivery of the full purchase price in a combination of cash and Shares of the Company’s Common Stock.

6.	Effect of Termination of Service on the Board of Directors

8.	Miscellaneous.

(a) The Company shall reserve and keep available such number of Shares of Common Stock as will be sufficient to satisfy the requirements of the Agreement, including these Terms and Conditions.

(d) The Option is granted pursuant to the Plan and is subject to all the terms and conditions contained therein. A copy of the Plan is available to Optionee upon request.

(e) The Agreement and these Terms and Conditions applicable thereto, shall be governed by and construed in accordance with the laws of the State of Minnesota.

EX-10.5 6 dex105.htm FORM OF SUPERVALU INC. 2002 STOCK PLAN SUPPLEMENTAL NON-QUALIFIED STOCK OPTION A Form of SUPERVALU INC. 2002 Stock Plan Supplemental Non-Qualified Stock Option A

EXHIBIT 10.5

SUPERVALU INC.

2002 STOCK PLAN

SUPPLEMENTAL NON-QUALIFIED STOCK OPTION AGREEMENT

FOR NON-EMPLOYEE DIRECTORS

This Supplemental Stock Option Agreement is made and entered into as of the Grant Date listed below, by and between SUPERVALU INC. (the “Company”) and the individual whose name and address appears in the signature space below (“Optionee”).

The Company has established the 2002 Stock Plan, as amended (the “Plan”), under which non-employee directors of the Company may be granted Supplemental Stock Options (each an “Option”) to purchase shares of the Company’s common stock, par value $1.00 per share (each a “Share”). Optionee has been granted an Option subject to Optionee’s acceptance thereof and the terms and conditions governing same as a result and by virtue of the resolutions adopted by the Board of Directors of the Company on ; and

In consideration of the foregoing, the Company and Optionee hereby agree as follows:

1. Grant. The Company hereby grants Optionee an Option to purchase the number of Shares set forth in the table below, effective as of the Grant Date indicated therein. The Option shall be a non-qualified stock option, having an exercise price and expiring on an expiration date, as indicated in the table below. Subject to the Stock Option Terms and Conditions attached hereto (the “Terms and Conditions”), the Option shall vest and become exercisable, with respect to one hundred percent (100%) of the Shares subject thereto as of the Grant Date.

Grant

No.

Grant

Date

Number of

Shares

Type of Option

NQ/ISO

Exercise

Price

Expiration

Date

In witness whereof, this Stock Option Agreement has been executed by the Company and Optionee as of the Grant Date listed above.


SUPERVALU INC.				OPTIONEE:

By:

SUPERVALU INC.

2002 STOCK OPTION PLAN

TERMS AND CONDITIONS FOR

SUPPLEMENTAL STOCK OPTIONS

FOR NON-EMPLOYEE DIRECTORS

The Supplemental Non-Qualified Stock Option Agreement between SUPERVALU INC., a Delaware corporation (hereinafter called the “Company”), and the person named in the attached Notice of Grant of Supplemental Non-Qualified Stock Options (the “Notice”), who is a member of the Board of Directors of the Company but is not an employee of the Company or any of its subsidiaries (hereinafter called the “Optionee”), effective as of the date of grant set forth in the attached Notice (the “Grant Date”).

WITNESSETH:

WHEREAS, the Board of Directors of the Company, at a meeting held on August 12, 1998, adopted a Supplement Option Program, as amended May 26, 2004, that directed the Executive Personnel Compensation Committee to consider at their next meeting a supplemental grant of non-qualified stock options under the Company’s 2002 Stock Plan (“Supplemental Option”) to non-employee directors of the Company, including the Optionee, to purchase shares of the Company’s Common Stock, upon exercise of stock options granted under the Company’s 1983 Employees Stock Plan to the Optionee, using already-owned shares to pay the option price.

WHEREAS, the Subcommittee for Qualified Performance Based Compensation of the Executive Personnel and Compensation Committee (“Committee”) at the next Committee meeting, considered and approved this Supplement Option grant to the Optionee.

NOW, THEREFORE, the parties agree as follows:

The Company irrevocably grants to the Optionee, as a matter of separate agreement and not in lieu of any other compensation for services, the right and option to purchase all or any part of the aggregate number of shares of Common Stock set forth in the attached Notice, on the terms and conditions herein set forth and subject to all provisions of the Plan. The Supplemental Option granted hereunder shall not be an Incentive Stock Option governed by the provisions of Section 422 of the Internal Revenue Code of 1986, as amended.

The purchase price of the Common Stock subject to the stock option shall be the option price per share set forth in the attached Notice.

The term of the Supplemental Option shall expire on the expiration date as set forth in the attached Notice and is exercisable as to 100% of the shares on the date of grant. The Supplemental Option may be exercised at any time, or from time to time as to any or all full shares. The Optionee shall not have any of the rights of a stockholder with respect to any of the Common Stock subject to the Supplemental Option until such shares shall be issued to the Optionee upon due exercise of the Supplemental Option.

Except as otherwise determined by the committee, the Supplemental Option shall not be transferable otherwise than by will or the laws of descent and distribution, and the Supplemental Option may be exercised during the lifetime of the Optionee only by the Optionee. More particularly (but without limiting the generality of the foregoing), the Supplemental Option may not be assigned, transferred (except as aforesaid), pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted assignment, transfer, pledge, hypothecation, or other disposition of the Supplemental Option contrary to the provisions hereof and the levy of an execution, attachment or similar process upon the Supplemental Option shall be void.

In the event the Optionee shall cease to be a member of the Board of Directors of the Company for any reason, including death, the Optionee may exercise the Supplemental Option at any time; provided, however, that the Supplemental Option may not be exercised after the expiration date.

Nothing herein contained shall confer on the Optionee any right to continue as a director of the Company or affect in any way the right of the stockholders of the Company to remove the Optionee from the Board of Directors as provided in the Company’s Bylaws.

In the event of the death of the Optionee prior to the exercise in full or the expiration of this Supplemental Option, the Supplemental Option may be exercised by a legatee or legatees of the Optionee under his or her last will or by the Optionee’s personal representatives or distributees at any time prior to the expiration of the Supplemental Option as set forth in the attached Notice, to the full extent of the Common Stock covered by the Supplemental Option not previously purchased.

If any of the shares covered by this Supplemental Option Agreement are not registered under the Securities Act of 1933 at the time of their issuance hereunder, the Optionee represents and agrees that all such shares purchased under the Supplemental Option will be acquired for investment and not for resale.

If any portion of the Supplemental Option is exercised subsequent to any stock dividend, split-up, recapitalization, merger, consolidation, combination or exchange of shares or the like occurring after the date hereof as a result of which shares of any class shall be issued in respect of the outstanding Common Stock, or Common Stock shall be changed into the same or a different number of shares of the same or another class or classes, the person or persons exercising the Supplemental Option shall receive for the aggregate price paid upon such exercise the aggregate number of shares which, if Common Stock (as authorized at the date hereof) had been purchased at the date hereof for the same aggregate price (on the basis of the price per share set forth in the Notice) and had not been disposed of, such person or persons would be holding at the time of such exercise as a result of such purchase and any and all such stock dividends, split-ups, recapitalizations, mergers, consolidations, combinations or exchanges of shares, or the like; provided, however, that no fractional share shall be issued upon any such exercise, and the aggregate price paid shall be appropriately reduced on account of any fractional share not issued.

10)

The Supplemental Option may be exercised by written notice to the Company at its principal office, attention: Corporate Secretary. The notice shall state the number of shares with respect to which the Supplemental Option is being exercised. The notice shall be accompanied by payment of the full purchase price and the Company shall issue and deliver a certificate representing such shares as soon as practicable after the notice is received. Payment of the purchase price shall, unless otherwise consented to by the Company, be made by a certified or bank cashier’s check payable to the order of the Company, or by tender of shares of the Company’s Common Stock previously owned by the Optionee having a fair market value equal to the option price, or a combination of cash in the form of a certified or bank cashier’s check and shares of the Company’s Common Stock equal to the exercise price of the Supplemental Option. Certificates for the shares purchased shall be registered in the name of the person exercising the Supplemental Option (or if the Supplemental Option shall be exercised by the Optionee and if the Optionee shall so request in the notice exercising the Supplemental Option, shall be registered in the name of the Optionee and another person as joint tenants) and shall be delivered to the person exercising the Supplemental Option. In the event the Supplemental Option shall be exercised pursuant to paragraph 7 hereof by any person other than the Optionee, the notice shall be accompanied by appropriate proof of such person’s right to exercise the Supplemental Option. All shares issued upon the exercise of the Supplemental Option shall be fully paid and non-assessable.

11)

The Company shall reserve and keep available such number of shares of Common Stock as will be sufficient to satisfy the requirements of this Agreement.

12)

As used in this Agreement, the term “Common Stock” shall mean the Common Stock of the Company as authorized at the date hereof, and the term “Committee” shall have the meanings ascribed to it in the Plan.

13)

This Supplemental Option is granted pursuant to the Plan and is subject to all the terms and conditions contained therein. A copy of the Plan is available to the Optionee upon request.

14)

Optionee acknowledges that Optionee will consult with his or her personal tax advisor regarding the income tax consequences of exercising the Supplemental Option or any other matters related to this Agreement. In order to provide the Company with the opportunity to claim the benefit of any income tax deduction which may be available to it upon exercise of this Supplemental Option, and in order to comply with all applicable income tax laws or regulations, the Company may take such action as it deems appropriate to insure that, if necessary, all applicable federal or state payroll, withholding, income or other taxes are withheld or collected from Optionee. In accordance with the terms of the Plan, and such rules as the Company may adopt, Optionee may elect to satisfy Supplemental Optionee’s federal and state income tax withholding obligations upon exercise of this Supplemental Option by having the Company withhold a portion of the shares of Common Stock otherwise to be delivered upon exercise of this Supplemental Option having a fair market value equal to the amount of federal and state income tax required to be withheld upon such exercise.

15)

Pursuant to the terms of the Supplemental Option Program, restoration options will not be granted to non-employee directors upon the exercise of this Supplemental Option.

THIS SUPPLEMENTAL NON-QUALIFIED STOCK OPTION AGREEMENT IS ATTACHED TO AND MADE A PART OF A NOTICE OF GRANT OF SUPPLEMENTAL NON-QUALIFIED OPTIONS AND SHALL HAVE NO FORCE OR EFFECT UNLESS SUCH NOTICE IS DULY EXECUTED AND DELIVERED BY THE COMPANY AND THE OPTIONEE.

* * * * * * * *

EX-10.6 7 dex106.htm FORM OF SUPERVALU INC. 2002 LONG-TERM INCENTIVE PLAN RESTRICTED STOCK AWARD CERT Form of SUPERVALU INC. 2002 Long-Term Incentive Plan Restricted Stock Award Cert

EXHIBIT 10.6

SUPERVALU INC.

LONG-TERM INCENTIVE PLAN

RESTRICTED STOCK AWARD CERTIFICATE

This certifies that the Restricted Stock Award specified below (the “Award”) has been made under the SUPERVALU INC. Long-Term Incentive Plan (the “Plan”) to the person named below. The Award is non-transferable and is subject to all of the terms and conditions of the Plan, and the Restricted Stock Award Terms and Conditions attached hereto.

Name:

Effective Date:

Number of Shares Awarded:

Vesting Date:

In witness whereof, this Certificate has been executed by an authorized officer of SUPERVALU INC. pursuant to the authority granted by the Executive Personnel and Compensation Committee of its Board of Directors.

Date

I acknowledge receipt of the Award, the attached Restricted Stock Award Terms and Conditions of which this Certificate is a part, a copy of the Plan and the Prospectus relating thereto. I accept the Award subject to the terms and conditions of the Plan and the Restricted Stock Award Terms and Conditions.

Name

Date

SUPERVALU INC.

LONG-TERM INCENTIVE PLAN

RESTRICTED STOCK AWARD TERMS AND CONDITIONS

SUPERVALU INC. (the “Company”) has established the Long-Term Incentive Plan (as amended from time to time, the “Plan”), pursuant to which certain key employees of the Company may receive awards (each an “Award”) of restricted shares of the Company’s common stock (each a “Share”). Each Award is evidenced by a Restricted Stock Award Certificate (the “Certificate”) setting forth the employee’s name, the date the Award is granted, the number of Shares subject thereto, and the date all rights to the Shares fully vest in favor of the employee and the restrictions thereon lapse. The Award is governed by and subject to, the terms and conditions of the Plan and those set forth herein.

1. Award of Restricted Stock

The Company has granted you an Award of Restricted Stock for the number of Shares set forth in the Certificate attached hereto. The Award shall become effective as of the date set forth in the Certificate, after you have signed and returned the Certificate to the Company.

2. Vesting; Change in Control

(a) The Shares shall vest in full in favor of you on the date set forth in the Certificate provided you remain continuously employed by the Company or any of its affiliates until such date.

(b) Notwithstanding the foregoing, in the event of a Change in Control (as defined in the Plan) prior to the vesting of the Shares, all Shares shall vest in full as of the date of such Change in Control if you have been continuously employed by the Company or any of its affiliates until the date of such Change in Control.

3. Forfeiture; Early Vesting in Event of Death, Disability or Retirement

(a) If you cease to be an employee of the Company or any of its affiliates for any reason other than death, Disability (as defined below) or Retirement (as defined below), prior to the vesting of the Shares pursuant to Section 2 hereof, then your rights to all of the Shares not theretofore vested shall be immediately and irrevocably forfeited.

(b) If you cease to be an employee of the Company or any of its affiliates by reason of death, Disability or Retirement prior to the vesting of the Shares pursuant to Section 2 hereof, then you or your estate shall become immediately vested, as of the date of such death, Disability or Retirement, in all unvested Shares; provided, however, that the vesting upon Retirement of all unvested Shares shall require the approval of the Executive Personnel and Compensation Committee of the Board of Directors of the Company (the “Committee”). No transfer by will or by laws of descent and distribution of any Shares which vest by reason of your death shall be effective to bind the Company, unless the Company shall have been furnished with written notice of such transfer and a copy of the will or such other evidence as the Company may deem necessary to establish the validity of the transfer.

For purposes hereof, “Disability” is defined as eligibility for long-term disability payments under the applicable Long-Term Disability Plan of the Company; and “Retirement” is defined as severance of employment after age 55, with ten (10) or more years of service with the Company or its affiliates.

4. Restrictions on Transfer

Except as may be otherwise determined by the Committee, until the Shares vest pursuant to Section 2 or 3 hereof, none of the Shares may be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered by you, and no attempt to transfer the Shares, whether voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or right in or with respect to the Shares.

5. Issuance and Custody of Certificate

(a) The Company shall, at its option, cause the Shares to be issued in “book entry” form, i.e. registered with the company’s stock transfer agent, in your name, or in the form of a certificate registered in your name, in each case, with the following legend or a legend containing words substantially similar thereto:

“The shares of Common Stock represented by this book entry or certificate are subject to forfeiture, and the transferability of this entry or certificate and the shares of Common Stock represented thereby are subject to the restrictions, terms and conditions (including restrictions against transfer) contained in the SUPERVALU INC. Long-Term Incentive Plan and a Restricted Stock Award Certificate executed by SUPERVALU INC. and the registered owner of such shares. Copies of such Plan and Certificate are on file in the office of the Secretary of SUPERVALU INC., 11840 Valley View Road, Eden Prairie, Minnesota.”

(b) Any certificate issued pursuant to Section 5(a) hereof shall be deposited by the Company with the Secretary of the Company or a custodian designated by the Secretary. Upon request, the Secretary or such custodian shall issue a receipt to you evidencing the certificate or certificates held which are registered in your name.

(c) After Shares vest pursuant to Sections 2 or 3 hereof, the Company shall promptly cause: (i) a certificate or certificates evidencing such vested Shares to be issued and registered in your name or your name and the name of another adult person (21 years of age or older) as joint tenants, and delivered to you or your legal representative(s), beneficiary(ies) or heir(s); or, (ii) such Shares to be registered in book entry form in your name or your name and the name of another adult person (21 years of age or older) as joint tenants, and sent by electronic delivery to your brokerage account or that of your legal representative(s), beneficiary(ies) or heir(s); in each case, together with any other property held in custody with respect to such Shares pursuant to Section 6(c) hereof and free of the legend provided in Section 5(a) hereof.

Only whole Shares shall be issued to you pursuant to a certificate; the value of any fractional Share shall be paid in cash at the time a certificate evidencing such fractional Share would otherwise have been delivered to you hereunder and shall be based on the Fair Market Value (as defined below) of the Common Stock.

6. Distributions and Adjustments

(a) If the Shares vest in your favor subsequent to any change in the number or character of the outstanding Shares of the Common Stock (through merger, consolidation, reorganization, recapitalization, stock dividend or otherwise), you shall then receive upon such vesting the number and type of securities or other consideration which you would have received if the Shares had vested prior to the event changing the number or character of outstanding Shares of Common Stock.

(b) Any additional Shares, any other securities of the Company and any other property (except for cash dividends or other cash distributions) distributed with respect to the Shares prior to the date the Shares vest shall be subject to the same restrictions, terms and conditions as the Shares. Any cash dividends or other cash distributions payable with respect to the Shares shall be distributed to you at the same time cash dividends or other cash distributions are distributed to stockholders of the Company generally.

(c) Any additional Shares, any securities and any other property (except for cash dividends or other cash distributions) distributed with respect to the Shares prior to the date such Shares vest shall be promptly deposited with the Secretary or the custodian designated by the Secretary to be held in custody in accordance with Section 5(c) hereof.

7. Taxes

(a) In order to comply with all applicable federal or state income, social security, payroll, withholding or other tax laws or regulations, the Company may take such action, and may require you to take such action, as it deems appropriate to ensure that all applicable federal or state income, social security, payroll, withholding or other taxes, which are your sole and absolute responsibility, are withheld or collected from you.

otherwise to be delivered by you upon such vesting having a Fair Market Value (as defined below) equal to the amount of federal and state income taxes required to be withheld on such vesting, or (ii) delivering to the Company shares of Common Stock, other than the Shares issuable upon such vesting, having a Fair Market Value equal to such taxes. You may elect to satisfy any federal and state income tax withholding obligations arising prior to the vesting of any Shares pursuant to Sections 2 or 3 hereof by delivering to the Company Shares other than the Shares issuable upon such vesting having a Fair Market Value equal to such taxes. For purposes hereof, the term “Fair Market Value” shall mean the average of the opening and closing sale price of a Share as reported on the New York Stock Exchange on the date of determination, or, if no trading in the Common Stock occurred on the date of determination, on the day closest to the date of determination when such trading did occur. Any election pursuant to this paragraph (b) will be subject to such rules as may be adopted from time to time by the Committee.

8. Covenants.

(a) Non-competition Covenant. You agree that you will not be an employee, trustee, principal, agent, consultant, partner, director or substantial stockholder of any company or business that is engaged in the same business in which you were employed by the Company or any of its affiliates. This paragraph shall not apply in the event of a Change in Control as described in the Plan.

(b) Confidential Information Covenant. You acknowledge that you will have access to and gain knowledge of highly confidential and proprietary information and trade secrets pertaining to the Company, its affiliates, customers, suppliers, joint ventures, licensors, licensees, distributors and other persons and entities with whom the Company does business (“Confidential Information”) in the course of your employment with the Company or any of its affiliates. You agree to hold all Confidential Information in a fiduciary capacity for the sole benefit of the Company and/or its affiliates. You further agree that you will not, without the prior written consent of the Company or as required by your duties as an employee of the Company or any of its affiliates, in any way divulge or disclose any Confidential Information. All Confidential Information, including all copies, notes and replications thereof will remain the sole property of the Company and/or its affiliates, and must be returned to the Company immediately upon your termination of employment.

(c) Non-solicitation Covenant. You agree that you will not, directly or in concert with others, have any contact for the purpose of recruiting or soliciting any employee(s) of the Company or any of its affiliates to terminate their employment with the Company or such affiliate in order to become associated with another employer. You agree that, with respect to the customers or accounts of the business unit(s) in which you worked or over which you had management responsibility, you will not, directly or in concert with others, have contact with such customers or accounts for the purpose of attempting to divert any customer’s business or any account from the Company or any of its affiliates.

(d) No Disparaging Statements Covenant. You agree that you will not make any disparaging statements about the Company, its affiliates, directors, officers, agents, employees, products, pricing policies or services.

(e) Term. You agree that each of the covenants set forth in this Section will continue in effect during your employment with the Company or any of its affiliates, and for a period of fifteen (15) months after your employment with the Company or such affiliate ends.

(f) Remedies for Breach of these Covenants. Should you violate any of the above covenants, you agree that the Company shall recover from you the monetary loss resulting from such breach, together with the costs and attorneys fees necessary to gain such recovery. In addition to monetary relief, you agree that upon your breach of any covenant in this Section, your Award will be immediately forfeited, and that a court may order injunctive relief requiring you to stop all actions in violation of the provisions of this Section.

(g) Enforceability of these Covenants. You agree that to the extent that a court determines that any provision of this Section detailing the covenants set forth herein is invalid or unenforceable, such provision shall be deleted, but all remaining provisions shall remain in full force and effect.

9. Arbitration

You and the Company agree that any controversy, claim, or dispute arising out of or relating to the Restricted Stock Award Certificate or the breach of any of these Restricted Stock Award Terms and Conditions, or arising out of or relating to your employment relationship with the Company or any of its affiliates, or the termination of such relationship, shall be resolved by binding arbitration before a neutral arbitrator under rules set forth in the Federal Arbitration Act. By way of example only, such claims include claims litigated under federal, state and local statutory or common law, such as the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, as amended, including the Civil Rights Act of 1994, the Americans with Disabilities Act, the law of contract and the law of tort. You and the Company agree that such claims may be brought in an appropriate administrative forum, but at the point at which you or the Company seek a judicial forum to resolve the matter, this agreement for binding arbitration becomes effective. This agreement to arbitrate shall continue in full force and effect despite the forfeiture of your Award or the termination of your employment relationship with the Company or any of its affiliates. You and the Company agree that any award rendered by the arbitrator shall be final and binding and that judgment upon the final award may be entered in any court having jurisdiction thereof. You and the Company hereby knowingly and voluntarily waive any right to have any such dispute tried and adjudicated by a judge or jury. The arbitrator may grant any remedy or relief that the arbitrator deems just and equitable, including any remedy or relief that would have been available to you, the Company or any of its affiliates had the matter been heard in court. All expenses of the arbitration, including the required travel and other expenses of the arbitrator and any witnesses, and the costs relating to any proof produced at the direction of the arbitrator, shall be borne equally by you and the Company unless otherwise mutually agreed or unless the arbitrator directs otherwise in the award. The arbitrator’s compensation shall be borne equally by you and the Company unless otherwise mutually agreed or unless the law provides otherwise.

10. Severability In the event that any portion of these Restricted Stock Award Terms and Conditions shall be held to be invalid, the same shall not affect in any respect whatsoever the validity and enforceability of the remainder of these Restricted Stock Award Terms and Conditions.

11. Miscellaneous

(a) The terms and conditions set forth herein are subject in all respects to the terms of the Plan. In the event that any provision of hereof is inconsistent with the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising hereunder shall be determined by the Committee or its delegates, and such determination shall be final and conclusive upon all parties in interest.

(b) Nothing in the Certificate or herein shall confer on you any right with respect to continuance of employment by the Company or any of its affiliates, nor will it interfere in any way with the right of the Company to terminate such employment at any time with or without cause.

(c) You shall have none of the rights of a shareholder with respect to the Shares until the Shares have vested in your favor as provided herein, except the rights to receive all cash dividends or other cash distributions and the right to vote.

(d) Any compensation realized from the receipt or payment of (or the lapse of restrictions relating to) the Award shall constitute a special long-term incentive payment to you and shall not be taken into account as compensation in determining the amount of any benefit under any retirement or other employee benefit plan of the Company or any of its affiliates.

EX-10.7 8 dex107.htm FORM OF SUPERVALU INC. 2002 STOCK PLAN RESTRICTED AWARD CERTIFICATE AND RESTRICT Form of SUPERVALU INC. 2002 Stock Plan Restricted Award Certificate and Restrict

EXHIBIT 10.7

SUPERVALU INC.

2002 STOCK PLAN

RESTRICTED STOCK AWARD CERTIFICATE

Certification of Award

This certifies that the individual named below as a “Recipient”, has been awarded restricted shares of the common stock of SUPERVALU INC. (the “Company”) pursuant to the Company’s 2002 Stock Plan (the “Plan”). The number of shares awarded, the effective date of the award, and the date on which the restrictions lapse (the “Vesting Date”), are set forth below. The award is non-transferable and is subject to all of the terms and conditions of the Plan, and the Restricted Stock Award Terms and Conditions attached hereto.


Name of Recipient:		«First_» «Last»

Effective Date:

Number of Shares Awarded:		«Shares_Issued»

Vesting Date:

This Certificate has been executed by an authorized officer of the Company pursuant to the authority granted by the Executive Personnel and Compensation Committee of its Board of Directors.



		Date

Recipient’s Acknowledgement of Receipt

I hereby acknowledge receipt of the award of restricted shares of the common stock of SUPERVALU INC. as described above, the Restricted Stock Award Terms and Conditions that are attached, and a copy of the Plan and the Prospectus relating thereto. I accept the award subject to the Plan provisions and the Restricted Stock Award Terms and Conditions.



«First_» «Last»		Date

SUPERVALU INC.

2002 STOCK PLAN

RESTRICTED STOCK AWARD TERMS AND CONDITIONS

SUPERVALU INC. (the “Company”) has established the 2002 Stock Plan (as amended from time to time, the “Plan”), pursuant to which certain key employees of the Company may receive awards (each an “Award”) of restricted shares of the Company’s common stock (each a “Share”). Each Award is evidenced by a Restricted Stock Award Certificate (the “Certificate”) setting forth the employee’s name, the date the Award is granted, the number of Shares subject thereto, and the date all rights to the Shares fully vest in favor of the employee and the restrictions thereon lapse. The Award is governed by and subject to, the terms and conditions of the Plan and those set forth herein.

1. Award of Restricted Stock

2. Vesting; Change in Control

(a) The Shares shall vest in full in favor of you on the date set forth in the Certificate provided you remain continuously employed by the Company or any of its affiliates until such date.

3. Forfeiture; Early Vesting in Event of Death, Disability or Retirement

4. Restrictions on Transfer

5. Issuance and Custody of Certificate

6. Distributions and Adjustments

7. Taxes

(b) You may elect to satisfy any federal and state income tax withholding obligations arising upon the vesting of any Shares pursuant to Sections 2 or 3 hereof by (i) having the Company withhold a portion of the Shares otherwise to be delivered by you upon such vesting having a Fair Market Value (as defined below) equal to the amount of federal and state income taxes required to be withheld on such vesting, or (ii) delivering to the Company shares of Common Stock, other than the Shares issuable upon such vesting, having a Fair Market Value equal to such taxes. You may elect to satisfy any federal and state income tax withholding obligations arising prior to the vesting of any Shares pursuant to Sections 2 or 3 hereof by delivering to the Company Shares other than the Shares issuable upon such vesting having a Fair Market Value equal to such taxes. For purposes hereof, the term “Fair Market Value” shall mean the average of the opening and closing sale price of a Share as reported on the New York Stock Exchange on the date of determination, or, if no trading in the Common Stock occurred on the date of determination, on the day closest to the date of determination when such trading did occur. Any election pursuant to this paragraph (b) will be subject to such rules as may be adopted from time to time by the Committee.

8. Covenants.

9. Arbitration

11. Miscellaneous

EX-12 9 dex12.htm RATIO OF EARNINGS TO FIXED CHARGES Ratio of Earnings to Fixed Charges

Exhibit 12

SUPERVALU INC.

Ratio of Earnings to Fixed Charges

(unaudited)


	Second Quarter			Fiscal Year-to-Date			Fiscal Year End			Fiscal Year End			Fiscal Year End			Fiscal Year End
	September 11, 2004			September 11, 2004			February 28, 2004			February 22, 2003			February 23, 2002			February 24, 2001
Earnings before income taxes	$	124,660		$	362,688		$	454,880		$	408,004		$	331,998		$	139,590
Less undistributed earnings of less than fifty percent owned affiliates		(1,512	)		(2,410	)		(15,793	)		(16,368	)		(13,450	)		(9,429	)

Earnings before income taxes		123,148			360,278			439,087			391,636			318,548			130,161
Interest expense		29,422			77,873			165,581			182,499			194,294			212,898
Interest on operating leases		9,405			21,356			44,280			44,864			35,971			29,047

Subtotal		161,975			459,507			648,948			618,999			548,813			372,106

Total fixed charges	$	38,827		$	99,229		$	209,861		$	227,363		$	230,265		$	241,945

Ratio of earnings to fixed charges		4.17			4.63			3.09			2.72			2.38			1.54

EX-31.1 10 dex311.htm CEO CERTIFICATE PURSUANT TO SS 302 CEO Certificate pursuant to ss 302

Exhibit 31.1

Certification Pursuant to Section 302

of the Sarbanes-Oxley Act of 2002

I, Jeffrey Noddle, certify that:

1. I have reviewed this quarterly report on Form 10-Q of SUPERVALU INC. for the quarterly fiscal period ended September 11, 2004;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: October 21, 2004		/s/ JEFFREY NODDLE
		Chief Executive Officer and President

EX-31.2 11 dex312.htm CFO CERTIFICATE PURSUANT TO SS 302 CFO Certificate pursuant to ss 302

Exhibit 31.2

Certification Pursuant to Section 302

of the Sarbanes-Oxley Act of 2002

I, Pamela K. Knous, certify that:

1. I have reviewed this quarterly report on Form 10-Q of SUPERVALU INC. for the quarterly fiscal period ended September 11, 2004;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: October 21, 2004		/s/ PAMELA K. KNOUS
		Executive Vice President, Chief Financial Officer

EX-32.1 12 dex321.htm CEO CERTIFICATE PURSUANT TO SS 906 CEO Certificate pursuant to ss 906

Exhibit 32.1

Certification Pursuant to Section 906

of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of SUPERVALU INC. (the “company”) certifies that the quarterly report on Form 10-Q of the company for the quarter ended September 11, 2004, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in that Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the company for the period and as of the dates covered thereby.

Dated: October 21, 2004

/s/ JEFFREY NODDLE

Jeffrey Noddle

Chief Executive Officer and President

EX-32.2 13 dex322.htm CFO CERTIFICATE PURSUANT TO SS 906 CFO Certificate pursuant to ss 906

Exhibit 32.2

Certification Pursuant to Section 906

of the Sarbanes-Oxley Act of 2002

Dated: October 21, 2004

/s/ PAMELA K. KNOUS

Pamela K. Knous

Executive Vice President, Chief Financial Officer

-----END PRIVACY-ENHANCED MESSAGE-----