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Form 8-K SUPERVALU INC For: Apr 26

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April 26, 2016 6:40 AM EDT


 
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 26, 2016
SUPERVALU INC.
(Exact name of registrant as specified in its charter)
Delaware
1-5418
41-0617000
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)

11840 Valley View Road
Eden Prairie, Minnesota
55344
(Address of principal executive offices)
(Zip Code)

Registrant’s telephone number, including area code:  (952) 828-4000

 
N/A
 
 
(Former name or former address, if changed since last report)
 


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 





Item 2.02  Results of Operations and Financial Condition.
On April 26, 2016, SUPERVALU INC. (the “Company”) issued a News Release announcing its financial results for the quarter (12 weeks) and fiscal year (52 weeks) ended February 27, 2016. A copy of the News Release issued by the Company in connection with this Item 2.02 is attached as Exhibit 99.1 and is incorporated by reference herein.
The information in this Item 2.02 and in Exhibit 99.1 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, regardless of any general incorporation language in such filing.
Item 9.01  Financial Statements and Exhibits.
(d)  Exhibits.
Exhibit Number
 
Description
99.1
 
News Release of SUPERVALU INC., dated April 26, 2016






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 hereunto duly authorized.
Dated:
April 26, 2016
 
 
 
 
 
 
 
 
SUPERVALU INC.
 
 
 
 
 
 
By: /s/ Bruce H. Besanko             
 
 
 
 
 
 
 
Bruce H. Besanko
 
 
 
Executive Vice President, Chief Operating Officer and
 
 
Chief Financial Officer
 
 
(Authorized Officer of Registrant)
 
 
 
 





EXHIBIT INDEX
Exhibit Number
 
Description
99.1
 
News Release of SUPERVALU INC., dated April 26, 2016
    




Exhibit 99.1
SUPERVALU Reports Fourth Quarter and Full Year Fiscal 2016 Results
•
Consolidated operating earnings of $101 million; Adjusted EBITDA of $177 million for Q4 fiscal 2016
•
Net diluted earnings per share from continuing operations of $0.18; adjusted diluted earnings per share of $0.23
•
Total outstanding debt reduced by $169 million in fiscal 2016

MINNEAPOLIS--(BUSINESS WIRE)--April 26, 2016--SUPERVALU INC. (NYSE: SVU) today reported fourth quarter fiscal 2016 consolidated net sales of $3.95 billion and net earnings from continuing operations of $49 million, or $0.18 per diluted share, which included $15 million in after-tax charges and costs related to debt refinancing, store closures and impairments, the potential separation of Save-A-Lot and employee severance. When adjusted for these items, fourth quarter fiscal 2016 net earnings from continuing operations were $64 million, or $0.23 per diluted share.
Net earnings from continuing operations for last year’s fourth quarter were $36 million, or $0.13 per diluted share, which included $30 million in after-tax costs and charges related to debt refinancing, benefit plans, and store closures and impairments. When adjusted for these items, fourth quarter fiscal 2015 net earnings from continuing operations were $66 million, or $0.24 per diluted share, which included an approximate $0.03 per diluted share benefit related to the additional week in fiscal 2015. [See tables 1-5 for a reconciliation of GAAP and non-GAAP (adjusted) results appearing in this release.]

"I am thrilled to be a part of SUPERVALU and impressed with the people, assets and infrastructure that are in place within this great company,” said President and CEO Mark Gross. “Although fourth quarter sales were softer than we had forecast, I am optimistic about our future prospects and pleased at our ability to manage adjusted EBITDA to finish in-line with our expectations. We have a lot of positives to build on as we move forward.”
Fourth Quarter Results - Continuing Operations
Fourth quarter consolidated net sales were $3.95 billion compared to $4.07 billion last year when excluding the additional week in fiscal 2015, which accounted for $313 million in net sales last year. Total net sales within the Wholesale segment decreased 4.8 percent excluding the additional week in fiscal 2015. Save-A-Lot network identical store sales were negative 2.2 percent. Identical store sales for corporate stores within the Save-A-Lot network were negative 1.3 percent. Retail segment identical store sales were negative 3.9 percent. Fees earned under transition services agreements (“TSAs”) in the fourth quarter were $44 million compared to $45 million last year, when excluding $4 from the additional week last year.
Gross profit for the fourth quarter was $590 million, or 15.0 percent of net sales. Last year’s fourth quarter gross profit was $663 million, or 15.1 percent of net sales, which included the additional week in fiscal 2015 that contributed approximately $49 million to fourth quarter fiscal 2015 gross profit. The decrease in gross profit as a percent of sales compared to last year was primarily driven by higher inventory shrink and employee costs.
Selling and administrative expenses in the fourth quarter were $489 million and included charges and costs of $9 million for store closure and impairments, $3 million for the potential separation of Save-A-Lot and $2 million for employee severance. When adjusted for these items, selling and administrative costs were $475 million, or 12.1 percent of net sales. Selling and administrative expenses in last year’s fourth quarter were $524 million and included $6 million of benefit plan charges and $3 million of store closure and impairment charges. When adjusted for these items, last year's selling and administrative expenses were $515 million, or 11.8 percent of net sales. The additional week in fiscal 2015 contributed approximately $32 million to fourth quarter fiscal 2015 selling and administrative expenses. The increase in adjusted selling and administrative expenses as a percent of sales compared to last year was primarily driven by a change in business segment mix as Save-A-Lot and Retail were a greater percentage of total sales in the fourth quarter of fiscal 2016 compared to the fourth quarter of fiscal 2015.
Net interest expense for the fourth quarter was $48 million and included $10 million in debt refinancing costs and charges. When adjusted for these items, net interest expense was $38 million. Last year's fourth quarter interest expense was $87 million and included $40 million in debt refinancing costs and charges and $3 million from the additional week. When adjusted for these items, last year's fourth quarter interest expense was $44 million. The decrease in adjusted net interest expense was primarily driven by lower outstanding debt balances.
Income tax expense was $6 million, or 11.3 percent of pre-tax earnings, for the fourth quarter, compared to $17 million, or 31.7 percent in last year’s fourth quarter. The tax rate for the fourth quarter of fiscal 2016 reflects the resolution of certain federal and state tax matters. The tax rate for the fourth quarter of fiscal 2015 reflects the resolution of certain tax matters for closed years.




Wholesale
Fourth quarter Wholesale net sales were $1.74 billion, compared to $1.83 billion last year when excluding $143 million in net sales from the additional week in fiscal 2015. The net sales decrease of 4.8 percent when excluding the additional week in fiscal 2015 is primarily due to lost accounts and lower sales to existing customers, partially offset by increased sales to new customers and new stores operated by existing customers.
Wholesale operating earnings in the fourth quarter were $50 million, or 2.9 percent of net sales. Last year’s Wholesale operating earnings in the fourth quarter were $63 million, or 3.2 percent of net sales. The additional week in fiscal 2015 contributed approximately $7 million to Wholesale operating earnings. The decrease in Wholesale operating earnings as a percent of sales was driven by higher employee costs.
Save-A-Lot
Fourth quarter Save-A-Lot net sales were $1.06 billion, compared to $1.06 billion last year when excluding $79 million in net sales from the additional week in fiscal 2015. The net sales decrease of 0.8 percent when excluding the additional week in fiscal 2015 reflects identical store sales across the Save-A-Lot network of negative 2.2 percent and the impact of closed stores, partially offset by increased sales from new corporate and licensed stores.
Save-A-Lot operating earnings in the fourth quarter were $14 million, or 1.4 percent of net sales, and included $9 million of store closure and impairment charges and $2 million of severance costs. When adjusted for these items, Save-A-Lot's operating earnings were $25 million, or 2.4 percent of sales. Last year’s Save-A-Lot operating earnings in the fourth quarter were $47 million, or 4.1 percent of net sales, and included $3 million of store closure and impairment charges. When adjusted for this item, last year's Save-A-Lot operating earnings were $50 million, or 4.4 percent of net sales. The additional week in fiscal 2015 contributed approximately $4 million to Save-A-Lot operating earnings. The decrease in Save-A-Lot operating earnings as a percent of sales was driven by higher employee and store occupancy costs, and higher inventory shrink.
Retail
Fourth quarter Retail net sales were $1.11 billion, compared to $1.14 billion last year when excluding $87 million in net sales from the additional week in fiscal 2015. The net sales decrease of 2.6 percent when excluding the additional week in fiscal 2015 reflects negative identical store sales of 3.9 percent, partially offset by sales from new stores.
Retail operating earnings in the fourth quarter were $30 million, or 2.7 percent of net sales. Last year’s Retail operating earnings in the fourth quarter were $44 million, or 3.6 percent of net sales. The additional week in fiscal 2015 contributed approximately $7 million to Retail operating earnings. The decrease in Retail operating earnings as a percent of sales was driven by lower base margins, higher inventory shrink, and higher employee costs.
Corporate
Fourth quarter fees earned under the TSAs were $44 million compared to $45 million last year when excluding $4 million in fees from the additional week in fiscal 2015.
Net Corporate operating earnings in the fourth quarter was $7 million and included $3 million of costs related to the potential separation of Save-A-Lot. When adjusted for this item, net Corporate operating earnings were $10 million. Last year’s fourth quarter net Corporate operating loss was $15 million and included $6 million in pension and employee benefit plan charges. The additional week in fiscal 2015 contributed a loss of approximately $1 million. When adjusted for these items, last year's net Corporate operating loss was $8 million. The improvement in net Corporate operating earnings was primarily driven by lower employee costs.
Cash Flows - Continuing Operations
Fiscal 2016 net cash flows provided by operating activities of continuing operations were $421 million compared to $333 million last year, primarily reflecting lower benefit plan contributions. Fiscal 2016 cash flows used in investing activities of continuing operations were $288 million compared to $285 million last year. Fiscal 2016 net cash flows used in financing activities of continuing operations were $193 million compared to $92 million last year, reflecting higher net payments made toward the reduction of outstanding debt.




Conference Call ­­­
A conference call to review the fourth quarter and full year fiscal 2016 results is scheduled for 9:00 a.m. central time today. The call will be webcast live at www.supervaluinvestors.com (click on microphone icon). A replay of the call will be archived at www.supervaluinvestors.com. To access the website replay go to the "Investors" link and click on "Presentations and Webcasts."
About SUPERVALU INC.
SUPERVALU INC. is one of the largest grocery wholesalers and retailers in the U.S. with annual sales of approximately $18 billion. SUPERVALU serves customers across the United States through a network of 3,588 stores composed of 1,796 independent stores serviced primarily by the Company’s food distribution business; 1,360 Save-A-Lot stores, of which 897 are operated by licensee owners; and 200 traditional retail grocery stores (store counts as of February 27, 2016). Headquartered in Minnesota, SUPERVALU has approximately 40,000 employees. For more information about SUPERVALU visit www.supervalu.com.
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
Except for the historical and factual information contained herein, the matters set forth in this news release, particularly those pertaining to SUPERVALU’s expectations, guidance, or future operating results, and other statements identified by words such as "estimates," "expects," "projects," "plans," "intends," and similar expressions are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including competition, ability to execute operations and initiatives, ability to realize benefits from acquisitions and dispositions, impact of exploration of possible separation of Save-A-Lot, reliance on wholesale customers and licensees ability to grow or maintain identical store sales, ability to maintain or increase margins, substantial indebtedness, labor relations issues, escalating costs of providing employee benefits, relationships with Albertson’s LLC, New Albertson’s Inc., and Haggen, intrusions to and disruption of information technology systems, impact of economic conditions, commodity pricing, governmental regulation, food and drug safety issues, legal proceedings, pharmacy reimbursement and health care financing, intellectual property protection, severe weather, natural disasters and adverse climate changes, disruption to supply chain and distribution network, changes in military business, adequacy of insurance, volatility in fuel and energy costs, asset impairment charges, fluctuations in our common stock price and other risk factors relating to our business or industry as detailed from time to time in SUPERVALU's reports filed with the SEC. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this news release. Unless legally required, SUPERVALU undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.





SUPERVALU INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except percent and per share data)
 
Fourth Quarter Ended
 
Fiscal Year Ended
 
February 27, 
 2016 
 (12 weeks)
 
February 28, 
 2015 
 (13 weeks)
 
February 27, 2016 
 (52 weeks)
 
February 28, 2015 
 (53 weeks)
Net sales(1)
$
3,946

 
100.0
%
 
$
4,387

 
100.0
%
 
$
17,529

 
100.0
%
 
$
17,917

 
100.0
%
Cost of sales
3,356

 
85.0

 
3,724

 
84.9

 
14,945

 
85.3

 
15,329

 
85.6

Gross profit
590

 
15.0

 
663

 
15.1

 
2,584

 
14.7

 
2,588

 
14.4

Selling and administrative expenses(2)
489

 
12.4

 
524

 
12.0

 
2,124

 
12.1

 
2,164

 
12.1

Intangible asset impairment charge(2)
—

 
—

 
—

 
—

 
6

 
—

 
—

 
—

Operating earnings
101

 
2.6

 
139

 
3.2

 
454

 
2.6

 
424

 
2.4

Interest expense, net(2)
48

 
1.2

 
87

 
2.0

 
196

 
1.1

 
243

 
1.4

Equity in earnings of unconsolidated affiliates
(2
)
 
—

 
(1
)
 
—

 
(5
)
 
—

 
(4
)
 
—

Earnings from continuing operations before income taxes(2)
55

 
1.4

 
53

 
1.2

 
263

 
1.5

 
185

 
1.0

Income tax provision
6

 
0.1

 
17

 
0.4

 
85

 
0.5

 
58

 
0.3

Net earnings from continuing operations(2)
49

 
1.3

 
36

 
0.8

 
178

 
1.0

 
127

 
0.7

Income from discontinued operations, net of tax
5

 
0.1

 
4

 
0.1

 
8

 
—

 
72

 
0.4

Net earnings including noncontrolling interests
54

 
1.4

 
40

 
0.9

 
186

 
1.1

 
199

 
1.1

Less net earnings attributable to noncontrolling interests
(2
)
 
—

 
(1
)
 
—

 
(8
)
 
—

 
(7
)
 
—

Net earnings attributable to SUPERVALU INC.
$
52

 
1.4
%
 
$
39

 
0.9
%
 
$
178

 
1.0
%
 
$
192

 
1.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic net earnings per share attributable to SUPERVALU INC.:
Continuing operations
$
0.18

 
 
 
$
0.13

 
 
 
$
0.64

 
 
 
$
0.46

 
 
Discontinued operations
$
0.02

 
 
 
$
0.02

 
 
 
$
0.03

 
 
 
$
0.28

 
 
Basic net earnings per share
$
0.20

 
 
 
$
0.15

 
 
 
$
0.68

 
 
 
$
0.74

 
 
Diluted net earnings per share attributable to SUPERVALU INC.:
Continuing operations(2)
$
0.18

 
 
 
$
0.13

 
 
 
$
0.63

 
 
 
$
0.45

 
 
Discontinued operations
$
0.02

 
 
 
$
0.02

 
 
 
$
0.03

 
 
 
$
0.27

 
 
Diluted net earnings per share
$
0.20

 
 
 
$
0.14

 
 
 
$
0.66

 
 
 
$
0.73

 
 
Weighted average number of shares outstanding:
Basic
264

 
 
 
261

 
 
 
263

 
 
 
260

 
 
Diluted
267

 
 
 
266

 
 
 
268

 
 
 
264

 
 

(1)
In the first quarter of fiscal 2016, the Company completed an assessment of its revenue and expense presentation primarily related to professional services and certain other transactions. Expenses related to transactions in which the Company determined it was the principal were previously presented net of related revenues within Net sales in the Consolidated Statements of Operations. The presentation of these expenses has been revised to include them within Cost of sales and Selling and administrative expenses. These revisions had the effect of increasing Net sales with a corresponding increase to Cost of sales and Selling and administrative expenses. These revisions did not impact Operating earnings, Earnings from continuing operations before income taxes, Net earnings attributable to SUPERVALU INC., cash flows, or financial position for any period reported.
(2)
Results from continuing operations for the fourth quarter ended February 27, 2016 include net charges and costs of $24 before tax ($15 after tax, or $0.05 per diluted share), comprised of store closure and impairment charges of $9 before tax ($5 after tax, or $0.02 per diluted share), costs related to the potential Save-A-Lot separation of $3 before tax ($3 after tax, or $0.01 per diluted share), and severance costs of $2 before tax ($1 after tax, or $0.00 per diluted share) within Selling and administrative expenses, and debt refinancing costs of $6 before tax ($4 after tax, or $0.01 per diluted share) and unamortized financing cost charges of $4 before tax ($2 after tax, or $0.01 per diluted share) within Interest expense, net.
Results from continuing operations for the fourth quarter ended February 28, 2015 include net charges and costs of $49 before tax ($30 after tax, or $0.11 per diluted share), comprised of debt refinancing costs of $35 before tax ($22 after tax, or $0.08 per diluted share) and unamortized financing cost charges of $5 before tax ($3 after tax, or $0.01 per diluted share) included within Interest expense, net, and a benefit plan charge of $5 before tax ($3 after tax, or $0.01 per diluted share), store closure charges of $3 before tax ($2 after tax, or $0.01 per diluted share) and a further pension settlement charge of $1 before tax ($0 after tax, or $0.00 per diluted share) included within Selling and administrative expenses.
Results from continuing operations for the year ended February 27, 2016 include net charges and costs of $51 before tax ($34 after tax, or $0.13 per diluted share), comprised of costs related to the potential Save-A-Lot separation of $15 before tax ($12 after tax, or $0.04 per diluted share), store closure and impairment charges of $12 before tax ($7 after tax, or $0.03 per diluted share), and severance costs of $8 before tax ($5 after tax, or $0.02 per diluted share) within Selling and administrative expenses, an intangible asset impairment charge of $6 before tax ($4 after tax, or $0.01 per diluted share) within Intangible asset impairment charge, and debt refinancing costs of $6 before tax ($4 after tax, or $0.02 per diluted share) and unamortized financing cost charges of $4 before tax ($2 after tax, or $0.01 per diluted share) within Interest expense, net.
Results from continuing operations for the year ended February 28, 2015 include net charges and costs of $118 before tax ($70 after tax, or $0.27 per diluted share), comprised of pension settlement charges of $64 before tax ($36 after tax, or $0.14 per diluted share), a benefit plan charge of $5 before tax ($3 after tax, or $0.01 per diluted share), store closure and impairment charges of $3 before tax ($2 after tax, or $0.01 per diluted share), information technology intrusion costs, net of insurance recoverable, of $2 before tax ($1 after tax, or $0.01 per diluted share) and severance costs of $1 before tax ($1 after tax, or




$0.00 per diluted share) included within Selling and administrative expenses, and debt refinancing costs of $37 before tax ($23 after tax, or $0.08 per diluted share) and unamortized financing cost charges of $6 before tax ($4 after tax, or $0.02 per diluted share) included within Interest expense, net.




SUPERVALU INC. and Subsidiaries
CONSOLIDATED SEGMENT FINANCIAL INFORMATION
(Unaudited)
(In millions, except percent data)
 
Fourth Quarter Ended
 
Fiscal Year Ended
 
February 27, 
 2016 
 (12 weeks)
 
February 28, 
 2015 
 (13 weeks)
 
February 27, 
 2016 
 (52 weeks)
 
February 28, 
 2015 
 (53 weeks)
Net sales
 
 
 
 
 
 
 
Wholesale
$
1,740

 
$
1,971

 
$
7,935

 
$
8,198

% of total
44.1
%
 
44.9
%
 
45.3
%
 
45.8
%
Save-A-Lot
1,055

 
1,143

 
4,623

 
4,641

% of total
26.7
%
 
26.1
%
 
26.4
%
 
25.8
%
Retail
1,107

 
1,224

 
4,769

 
4,884

% of total
28.1
%
 
27.9
%
 
27.2
%
 
27.3
%
Corporate
44

 
49

 
202

 
194

% of total
1.1
%
 
1.1
%
 
1.1
%
 
1.1
%
Total net sales
$
3,946

 
$
4,387

 
$
17,529

 
$
17,917

 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
Operating earnings
 
 
 
 
 
 
 
Wholesale(1)
$
50

 
$
63

 
$
230

 
$
243

% of Wholesale sales
2.9
%
 
3.2
%
 
2.9
%
 
3.0
%
Save-A-Lot(2)
14

 
47

 
129

 
153

% of Save-A-Lot sales
1.4
%
 
4.1
%
 
2.8
%
 
3.3
%
Retail(3)
30

 
44

 
94

 
122

% of Retail sales
2.7
%
 
3.6
%
 
2.0
%
 
2.5
%
Corporate(4)
7

 
(15
)
 
1

 
(94
)
Total operating earnings
101

 
139

 
454

 
424

% of total net sales
2.6
%
 
3.2
%
 
2.6
%
 
2.4
%
Interest expense, net(5)
48

 
87

 
196

 
243

Equity in earnings of unconsolidated affiliates
(2
)
 
(1
)
 
(5
)
 
(4
)
Earnings from continuing operations before income taxes
55

 
53

 
263

 
185

Income tax provision
6

 
17

 
85

 
58

Net earnings from continuing operations
49

 
36

 
178

 
127

Income from discontinued operations, net of tax
5

 
4

 
8

 
72

Net earnings including noncontrolling interests
54

 
40

 
186

 
199

Less net earnings attributable to noncontrolling interests
(2
)
 
(1
)
 
(8
)
 
(7
)
Net earnings attributable to SUPERVALU INC.
$
52

 
$
39

 
$
178

 
$
192

 
 
 
 
 
 
 
 
LIFO charge
 
 
 
 
 
 
 
Wholesale
$
(1
)
 
$
1

 
$
1

 
$
4

Retail
(2
)
 
—

 
2

 
4

Total LIFO charge
$
(3
)
 
$
1

 
$
3

 
$
8

Depreciation and amortization
 
 
 
 
 
 
 
Wholesale
$
12

 
$
12

 
$
49

 
$
48

Save-A-Lot
17

 
15

 
71

 
65

Retail
35

 
39

 
153

 
172

Corporate
1

 
—

 
3

 
—

Total depreciation and amortization
$
65

 
$
66

 
$
276

 
$
285


(1)
Wholesale operating earnings for the fiscal year ended February 27, 2016 include an intangible asset impairment charge of $6. Wholesale operating earnings for the fiscal year ended February 28, 2015 include severance costs of $1.
(2)
Save-A-Lot operating earnings for the fourth quarter ended February 27, 2016 include store closure and impairment charges of $9 and severance costs of $2. Save-A-Lot operating earnings for the fourth quarter and fiscal year ended February 28, 2015 include store closure and impairment charges of $3. Save-A-Lot operating earnings for the fiscal year ended February 27, 2016 include store closure and impairment charges of $11 and severance costs of $2.
(3)
Retail operating earnings for the fiscal year ended February 27, 2016 include store closure and impairment charges of $1.
(4)
Corporate operating earnings for the fourth quarter ended February 27, 2016 include costs related to the potential Save-A-Lot separation of $3. Corporate operating loss for the fourth quarter ended February 28, 2015 includes a benefit plan charge of $5 and a non-cash pension settlement charge of $1. Corporate operating earnings for the fiscal year ended February 27, 2016 include costs related to the potential Save-A-Lot separation of $15 and severance costs of $6. Corporate operating loss for the fiscal year ended February 28, 2015 includes a non-cash pension settlement charge of $64, a benefit plan charge of $5 and information technology intrusion costs, net of insurance recoverable, of $2.
(5)
Interest expense, net for the fourth quarter and fiscal year ended February 27, 2016 includes debt refinancing costs of $6 and unamortized financing costs charges of $4. Interest expense, net for the fourth quarter ended February 28, 2015 includes debt refinancing costs $35 and unamortized financing costs charges of $5. Interest expense, net for the fiscal year ended February 28, 2015 includes debt refinancing costs of $37 and unamortized financing costs charges of $6.




SUPERVALU INC. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In millions, except par value data)
 
February 27,
2016
 
February 28,
2015
ASSETS
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
57

 
$
114

Receivables, net
451

 
482

Inventories, net
1,036

 
984

Other current assets
91

 
120

Total current assets
1,635

 
1,700

Property, plant and equipment, net
1,481

 
1,470

Goodwill
867

 
865

Intangible assets, net
55

 
48

Deferred tax assets
228

 
250

Other assets
104

 
101

Total assets
$
4,370

 
$
4,434

LIABILITIES AND STOCKHOLDERS’ DEFICIT
 
 
 
Current liabilities
 
 
 
Accounts payable
$
1,118

 
$
1,121

Accrued vacation, compensation and benefits
182

 
204

Current maturities of long-term debt and capital lease obligations
124

 
35

Other current liabilities
148

 
157

Total current liabilities
1,572

 
1,517

Long-term debt
2,197

 
2,445

Long-term capital lease obligations
203

 
213

Pension and other postretirement benefit obligations
578

 
602

Long-term tax liabilities
81

 
119

Other long-term liabilities
172

 
174

Commitments and contingencies
 
 
 
Stockholders’ deficit
 
 
 
Common stock, $0.01 par value: 400 shares authorized; 266 and 262 shares issued, respectively
3

 
3

Capital in excess of par value
2,808

 
2,810

Treasury stock, at cost, 1 and 2 shares, respectively
(5
)
 
(33
)
Accumulated other comprehensive loss
(422
)
 
(423
)
Accumulated deficit
(2,825
)
 
(3,003
)
Total SUPERVALU INC. stockholders’ deficit
(441
)
 
(646
)
Noncontrolling interests
8

 
10

Total stockholders’ deficit
(433
)
 
(636
)
Total liabilities and stockholders’ deficit
$
4,370

 
$
4,434







SUPERVALU INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
 
Fiscal Year Ended
 
February 27, 
 2016 
 (52 weeks)
 
February 28, 
 2015 
 (53 weeks)
Cash flows from operating activities
 
 
 
Net earnings including noncontrolling interests
$
186

 
$
199

Income from discontinued operations, net of tax
8

 
72

Net earnings from continuing operations
178

 
127

Adjustments to reconcile Net earnings from continuing operations to Net cash provided by operating activities—continuing operations:
 
 
 
Intangible asset impairment charge
6

 
—

Asset impairment and other charges
15

 
4

Loss on debt extinguishment
10

 
41

Net gain on sale of assets and exits of surplus leases
(3
)
 
(14
)
Depreciation and amortization
276

 
285

LIFO charge
3

 
8

Deferred income taxes
(1
)
 
4

Stock-based compensation
26

 
23

Net pension and other postretirement benefits cost
34

 
96

Contributions to pension and other postretirement benefit plans
(40
)
 
(169
)
Other adjustments
26

 
30

Changes in operating assets and liabilities, net of effects from business combinations:
 
 
 
Receivables
22

 
9

Inventories
(52
)
 
(124
)
Accounts payable and accrued liabilities
(30
)
 
75

Income taxes
(8
)
 
(15
)
Other changes in operating assets and liabilities
(41
)
 
(47
)
Net cash provided by operating activities—continuing operations
421

 
333

Net cash provided by operating activities—discontinued operations
3

 
75

Net cash provided by operating activities
424

 
408

Cash flows from investing activities
 
 
 
Proceeds from sale of assets
7

 
7

Purchases of property, plant and equipment
(261
)
 
(239
)
Payments for business acquisition
(9
)
 
(55
)
Other
(25
)
 
2

Net cash used in investing activities
(288
)
 
(285
)
Cash flows from financing activities
 
 
 
Proceeds from issuance of debt
138

 
350

Proceeds from the sale of common stock
10

 
7

Payments of debt and capital lease obligations
(321
)
 
(400
)
Payments for debt financing costs
(9
)
 
(42
)
Distributions to noncontrolling interests
(10
)
 
(8
)
Other
(1
)
 
1

Net cash used in financing activities
(193
)
 
(92
)
Net (decrease) increase in cash and cash equivalents
(57
)
 
31

Cash and cash equivalents at beginning of year
114

 
83

Cash and cash equivalents at end of year
$
57

 
$
114

SUPPLEMENTAL CASH FLOW INFORMATION
The Company’s non-cash activities were as follows:
 
 
 
Purchases of property, plant and equipment included in Accounts payable
$
28

 
$
21

Capital lease asset additions
$
20

 
$
1

Interest and income taxes paid:
 
 
 
Interest paid, net of amounts capitalized
$
176

 
$
180

Income taxes (refunded) paid, net
$
91

 
$
(7
)




SUPERVALU INC. and Subsidiaries
SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited)

SUPERVALU INC.'s consolidated financial statements are prepared and presented in accordance with generally accepted accounting principles ("GAAP"). The measures and items identified below, and the adjusted Selling and administrative expenses, are provided as a supplement to our consolidated financial statements and should not be considered an alternative to any GAAP measure of performance or liquidity. The presentation of these financial measures and items is not intended to be a substitute for or be superior to any financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. Certain adjustments to our GAAP financial measures exclude certain items that are occasionally recurring in nature and may be reflected in our financial results for the foreseeable future. These measurements and items may be different from non-GAAP financial measures used by other companies. All measurements are provided as a reconciliation from a GAAP measurement. Management believes the measurements and items identified below are important measures of business performance that provide investors with useful supplemental information. SUPERVALU utilizes certain non-GAAP measures to analyze underlying core business trends to understand operating performance. In addition, management utilizes certain non-GAAP measures as a compensation performance measure. The items below should be reviewed in conjunction with SUPERVALU INC.'s financial results reported in accordance with GAAP, as reported in SUPERVALU's Quarterly Reports on Form 10-Q and the Annual Report on Form 10-K for the fiscal year ended February 27, 2016.

RECONCILIATIONS OF EARNINGS FROM CONTINUING OPERATIONS TO EARNINGS FROM CONTINUING OPERATIONS AFTER ADJUSTMENTS

Table 1
 
 
 
 
 
 
 
 
Fourth Quarter Ended February 27, 2016
(In millions, except per share data)
 
 Earnings Before Tax
 
 Earnings After Tax
 
 Diluted Earnings Per Share
Continuing operations
 
$
55

 
$
49

 
$
0.18

Adjustments:
 
 
 
 
 
 
Store closure and impairment charges
 
9

 
5

 
0.02

Debt refinancing costs
 
6

 
4

 
0.01

Unamortized financing cost charges
 
4

 
2

 
0.01

Costs related to the potential Save-A-Lot separation
 
3

 
3

 
0.01

Severance costs
 
2

 
1

 
—

Continuing operations after adjustments
 
$
79

 
$
64

 
$
0.23

Table 2
 
 
 
 
 
 
 
 
Fiscal Year Ended February 27, 2016
(In millions, except per share data)
 
 Earnings Before Tax
 
 Earnings After Tax
 
 Diluted Earnings Per Share
Continuing operations
 
$
263

 
$
178

 
$
0.63

Adjustments:
 
 
 
 
 
 
Costs related to the potential Save-A-Lot separation
 
15

 
12

 
0.04

Store closure and impairment charges
 
12

 
7

 
0.03

Severance costs
 
8

 
5

 
0.02

Intangible asset impairment charge
 
6

 
4

 
0.01

Debt refinancing costs
 
6

 
4

 
0.02

Unamortized financing cost charges
 
4

 
2

 
0.01

Continuing operations after adjustments
 
$
314

 
$
212

 
$
0.76

Table 3
 
 
 
 
 
 
 
 
Fourth Quarter Ended February 28, 2015
(In millions, except per share data)
 
 Earnings Before Tax
 
 Earnings After Tax
 
 Diluted Earnings Per Share
Continuing operations
 
$
53

 
$
36

 
$
0.13

Adjustments:
 
 
 
 
 
 
Debt refinancing costs
 
35

 
22

 
0.08

Unamortized financing cost charges
 
5

 
3

 
0.01

Benefit plan charge
 
5

 
3

 
0.01

Store closure and impairment charges
 
3

 
2

 
0.01

Pension settlement charge
 
1

 
—

 
—

Continuing operations after adjustments
 
$
102

 
$
66

 
$
0.24





Table 4
 
 
 
 
 
 
 
 
Fiscal Year Ended February 28, 2015
(In millions, except per share data)
 
 Earnings Before Tax
 
 Earnings After Tax
 
 Diluted Earnings Per Share
Continuing operations
 
$
185

 
$
127

 
$
0.45

Adjustments:
 
 
 
 
 
 
Pension settlement charge
 
64

 
36

 
0.14

Debt refinancing costs
 
37

 
23

 
0.08

Unamortized financing costs charges
 
6

 
4

 
0.02

Benefit plan charge
 
5

 
3

 
0.01

Store closure and impairment charges
 
3

 
2

 
0.01

Information technology intrusion costs, net of insurance recoverable
 
2

 
1

 
0.01

Severance costs
 
1

 
1

 
—

Continuing operations after adjustments
 
$
303

 
$
197

 
$
0.72






RECONCILIATION OF OPERATING EARNINGS FROM CONSOLIDATED SEGMENT FINANCIAL INFORMATION AS REPORTED TO SUPPLEMENTALLY PROVIDED ADJUSTED EBITDA
 
 
 
 
 
Table 5
 
 
 
 
 
 
Fourth Quarter Ended
 
Fiscal Year Ended
(In millions)
 
February 27, 
 2016 
 (12 weeks)
 
February 28, 
 2015 
 (13 weeks)
 
February 27,
2016 
 (52 weeks)
 
February 28,
2015 
 (53 weeks)
Wholesale operating earnings, as reported
 
$
50

 
$
63

 
$
230

 
$
243

Adjustments:
 
 
 
 
 
 
 
 
Intangible asset impairment charge
 
—

 
—

 
6

 
—

Severance costs
 
—

 
—

 
—

 
1

Wholesale operating earnings, as adjusted
 
50

 
63

 
236

 
244

Wholesale depreciation and amortization
 
12

 
12

 
49

 
48

LIFO charge
 
(1
)
 
1

 
1

 
4

Wholesale adjusted EBITDA(1)
 
$
61

 
$
76

 
$
286

 
$
296

 
 
 
 
 
 
 
 
 
Save-A-Lot operating earnings, as reported
 
$
14

 
$
47

 
$
129

 
$
153

Adjustments:
 
 
 
 
 
 
 
 
Store closure and impairment charges
 
9

 
3

 
11

 
3

Severance costs
 
2

 
—

 
2

 
—

Save-A-Lot operating earnings, as adjusted
 
25

 
50

 
142

 
156

Save-A-Lot depreciation and amortization
 
17

 
15

 
71

 
65

Save-A-Lot adjusted EBITDA(1)
 
$
42

 
$
65

 
$
213

 
$
221

 
 
 
 
 
 
 
 
 
Retail operating earnings, as reported
 
$
30

 
$
44

 
$
94

 
$
122

Adjustments:
 
 
 
 
 
 
 
 
Store closure and impairment charges
 
—

 
—

 
1

 
—

Retail operating earnings, as adjusted
 
30

 
44

 
95

 
122

Retail depreciation and amortization
 
35

 
39

 
153

 
172

LIFO charge
 
(2
)
 
—

 
2

 
4

Equity in earnings of unconsolidated affiliates
 
2

 
1

 
5

 
4

Net earnings attributable to noncontrolling interests
 
(2
)
 
(1
)
 
(8
)
 
(7
)
Retail adjusted EBITDA(1)
 
$
63

 
$
83

 
$
247

 
$
295

 
 
 
 
 
 
 
 
 
Corporate operating earnings (loss), as reported
 
$
7

 
$
(15
)
 
$
1

 
$
(94
)
Adjustments:
 
 
 
 
 
 
 
 
Costs related to the potential Save-A-Lot separation
 
3

 
—

 
15

 
—

Severance costs
 
—

 
—

 
6

 
—

Pension settlement charge
 
—

 
1

 
—

 
64

Benefit plan charge
 
—

 
5

 
—

 
5

Information technology intrusion costs, net of insurance recoverable
 
—

 
—

 
—

 
2

Corporate operating earnings (loss), as adjusted
 
10

 
(9
)
 
22

 
(23
)
Corporate depreciation and amortization
 
1

 
—

 
3

 
—

Corporate adjusted EBITDA(1)
 
$
11

 
$
(9
)
 
$
25

 
$
(23
)
Total adjusted EBITDA(1)
 
$
177

 
$
215

 
$
771

 
$
789


(1)
The Company's measure of adjusted EBITDA includes SUPERVALU INC.'s segment operating earnings (loss), as reported, plus depreciation and amortization, LIFO charge (credit), equity earnings of unconsolidated affiliates and any unusual items, and less net earnings attributable to noncontrolling interests.

CONTACT:
SUPERVALU INC.
Investor Contact
Steve Bloomquist, 952-828-4144
or




Media Contact
Jeff Swanson, 952-903-1645



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