- Sales growth continues
- Sixth consecutive quarter of positive
Save-A-Lot network ID sales; Positive 3.6% in Q4 fiscal 2015
- Fifth consecutive quarter of positive
Retail Food ID sales; Positive 1.1% in Q4 fiscal 2015
- Company begins to supply select Haggen
stores in Pacific Northwest
- Diluted EPS from continuing
operations of $0.13
- Adjusted Diluted EPS from continuing
operations of $0.24
- Operating earnings of $139 million
for Q4 fiscal 2015 and $424 million for fiscal 2015
- Adjusted EBITDA of $215 million for Q4
fiscal 2015 and $789 million for fiscal 2015
SUPERVALU INC. (NYSE: SVU) today reported fourth quarter fiscal
2015 net sales of $4.36 billion and net earnings from continuing
operations of $36 million ($0.13 per diluted share).
Results for the fourth quarter of fiscal 2015 included $30
million in after-tax debt refinancing, benefit plan and store
closure costs and charges. When adjusted for these items, fourth
quarter fiscal 2015 net earnings from continuing operations were
$66 million ($0.24 per diluted share) which included an approximate
$0.03 per diluted share benefit related to the additional week in
fiscal 2015. Net earnings from continuing operations for last
year’s fourth quarter were $42 million ($0.15 per diluted share)
and included $8 million in after-tax net costs and charges
primarily for employee severance and debt refinancing activities.
When adjusted for these items, fourth quarter fiscal 2014 net
earnings from continuing operations were $50 million ($0.18 per
diluted share). [See tables 1-5 for a reconciliation of GAAP and
non-GAAP (adjusted) results appearing in this release.]
“We finished the year with a strong quarter, highlighted by
positive identical store sales at both Save-A-Lot and Retail Food
as well as the transition of the first stores in our important new
relationship with Haggen,” said President and CEO Sam Duncan.
“Overall, fiscal 2015 was a year of strategic investment in all
three of our business segments and I’m pleased with how these
investments have positioned us for growth in fiscal 2016.”
Fourth Quarter Results - Continuing Operations
Fourth quarter net sales were $4.36 billion compared to $3.95
billion last year, an increase of $411 million or 10.4 percent,
including the 53rd week, or an increase of $98 million or 2.5
percent excluding the additional week in fiscal 2015. Identical
store sales in the Save-A-Lot network were positive 3.6 percent.
Identical store sales for corporate stores within the Save-A-Lot
network were positive 6.6 percent. Identical store sales in the
Retail Food segment were positive 1.1 percent. Total sales within
the Independent Business segment increased 7.4 percent, or
decreased by 0.5 percent excluding the additional week. Fees earned
under the Transition Services Agreements (“TSA”) in the fourth
quarter were $49 million compared to $46 million last year.
Gross profit for the fourth quarter was $661 million, or 15.1
percent of net sales. Last year’s fourth quarter gross profit was
$590 million, or 14.9 percent of net sales. The increase in gross
profit rate compared to last year was primarily driven by lower
logistics costs and a shift in business mix.
Selling and administrative expenses in the fourth quarter were
$522 million, or 12.0 percent of net sales, and included $9 million
of benefit plan and store closure charges. When adjusted for these
items, selling and administrative expenses were $513 million, or
11.8 percent of net sales. Selling and administrative expenses in
last year’s fourth quarter were $469 million, or 11.9 percent of
net sales, and included $8 million in employee severance
costs. When adjusted for this item, selling and administrative
expenses in the fourth quarter of fiscal 2014 were $461 million, or
11.7 percent of net sales. The increase in adjusted selling and
administrative expense rate was primarily driven by higher employee
related costs and a shift in business mix.
Net interest expense for the fourth quarter was $87 million and
included $40 million in debt refinancing costs and charges. When
adjusted for these items, net interest expense in the fourth
quarter was $47 million. Net interest expense for last year’s
fourth quarter was $55 million and included $5 million in
debt refinancing costs. When adjusted for this item, net interest
expense in the fourth quarter of fiscal 2014 was $50 million. The
decrease in adjusted net interest expense was primarily driven by
lower average interest rates and lower outstanding debt
balances.
SUPERVALU’s income tax expense was $17 million, or 31.7 percent
of pre-tax earnings, for the fourth quarter, compared to an expense
of $24 million, or 37.0 percent of pre-tax earnings in last year’s
fourth quarter. The tax rate for the fourth quarter of fiscal 2015
reflects discrete tax benefits related to Company owned life
insurance and resolution of certain tax matters for closed
years.
Independent Business
Fourth quarter Independent Business net sales were $1.96 billion
and included an approximate $143 million benefit from the 53rd
week, compared to $1.82 billion last year, an increase of 7.4
percent, or a decrease of 0.5 percent excluding the additional
week. When adjusted for the 53rd week, the decrease is primarily
due to increased sales to existing customers and new accounts more
than offset by lost accounts, including one New Albertson’s, Inc.
banner that completed the transition to self-distribution.
Independent Business operating earnings in the fourth quarter
were $63 million, or 3.2 percent of net sales. Last year’s
Independent Business operating earnings in the fourth quarter were
$54 million, or 3.0 percent of net sales, and included $4
million of employee severance costs. When adjusted for this
item, Independent Business operating earnings in the fourth quarter
of fiscal 2014 were $58 million, or 3.2 percent of net sales.
Save-A-Lot
Fourth quarter Save-A-Lot net sales were $1.14 billion and
included an approximate $79 million benefit from the 53rd week,
compared to $999 million last year, an increase of 13.7 percent, or
6.0 percent excluding the additional week. When adjusted for the
53rd week, the sales increase reflects the impact of new store
openings and network identical store sales of positive 3.6 percent.
Identical store sales for corporate stores within the Save-A-Lot
network were positive 6.6 percent.
Save-A-Lot operating earnings in the fourth quarter were $47
million, or 4.2 percent of net sales, and included $3 million of
store closure charges. When adjusted for this item, Save-A-Lot
operating earnings in the fourth quarter of fiscal 2015 were $50
million, or 4.4 percent of net sales. Last year’s Save-A-Lot
operating earnings in the fourth quarter were $43 million, or 4.3
percent of net sales. The increase in Save-A-Lot operating earnings
as a percent of sales was primarily driven by a lower level of
price investment.
Retail Food
Fourth quarter Retail Food net sales were $1.22 billion and
included an approximate $87 million benefit from the 53rd week,
compared to $1.09 billion last year, an increase of 12.5 percent,
or 4.4 percent excluding the additional week. When adjusted for the
53rd week, the sales increase was primarily due to newly acquired
stores and identical store sales of positive 1.1 percent.
Retail Food operating earnings in the fourth quarter were $44
million, or 3.6 percent of net sales. Last year’s Retail Food
operating earnings were $38 million, or 3.5 percent of net sales,
and included $2 million in employee severance costs. When
adjusted for this item, Retail Food operating earnings in the
fourth quarter of fiscal 2014 were $40 million, or 3.6 percent of
net sales.
Corporate
Fourth quarter fees earned under the TSA were $49 million and
included an approximate $4 million benefit from the 53rd week,
compared to $46 million last year.
Net Corporate operating loss in the fourth quarter was $15
million and included $6 million in employee benefit plan charges.
When adjusted for these items, net Corporate operating loss in the
fourth quarter was $9 million. Last year’s fourth quarter net
Corporate operating loss was $14 million and included $2
million in employee severance costs. When adjusted for this
item, net Corporate operating loss in the fourth quarter of fiscal
2014 was $12 million. The decrease in net Corporate operating loss
was primarily driven by lower pension expense.
Cash flows - Continuing Operations
Year-to-date fiscal 2015 net cash flows provided by operating
activities of continuing operations were $333 million compared to
$129 million in the prior year, reflecting prior year cash uses
following the NAI Banner sale, including the fiscal 2014 workforce
reduction and working capital changes, and lower cash used in
income taxes, partly offset by a fiscal 2015 discretionary pension
plan contribution. Year-to-date net cash flows used in investing
activities of continuing operations were $285 million compared to
$86 million in the prior year, reflecting higher levels of capital
expenditures in Retail Food store remodels, new Save-A-Lot stores,
supply chain investments, and payments for business acquisitions.
Year-to-date net cash flows used in financing activities of
continuing operations were $92 million compared to $107 million in
the prior year, primarily reflecting lower proceeds from the sale
of common stock, offset by lower financing costs.
Discontinued Operations
On March 21, 2013, the Company completed the sale of five retail
grocery banners (Albertson's, Acme, Jewel-Osco, Shaw’s and Star
Market). The results from these banners are presented as
discontinued operations for all periods and include the operating
results and charges related to these stores.
Conference Call
A conference call to review the fourth quarter 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 3,353 stores composed of 1,825 primary stores
serviced by the Company’s food distribution business; 1,334
Save-A-Lot stores, of which 903 are operated by licensee owners;
and 194 traditional retail grocery stores (store counts as of
February 28, 2015). 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," 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 initiatives,
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,
governmental regulation, food and drug safety issues, legal
proceedings, 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
SubsidiariesCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)(In millions, except percent and
per share data)
Fourth Quarter Ended Fiscal Year Ended
February 28, 2015 (13
weeks)
February 22, 2014 (12
weeks)
February 28, 2015 (53
weeks)
February 22, 2014 (52
weeks)
Net sales $ 4,364 100.0 % $ 3,953 100.0 % $
17,820 100.0 % $ 17,153 100.0 %
Cost of sales
3,703 84.9 3,363 85.1
15,242 85.5 14,623 85.3
Gross profit(1) 661 15.1 590 14.9 2,578 14.5 2,530
14.7
Selling and administrative expenses(1)
522 12.0 469 11.9 2,154
12.1 2,107 12.3
Operating
earnings 139 3.2 121 3.1 424 2.4 423 2.5
Interest expense,
net(1) 87 2.0 55 1.4 243 1.4 407 2.4
Equity in
earnings of unconsolidated affiliates (1 ) —
— — (4 ) — (2 ) —
Earnings from continuing operations before income
taxes(1) 53 1.2 66 1.7 185 1.0 18 0.1
Income tax
provision 17 0.4 24 0.6
58 0.3 5 —
Net
earnings from continuing operations(1) 36 0.8 42 1.1 127
0.7 13 0.1
Income (loss) from discontinued operations, net of
tax 4 0.1 (14 ) (0.3 ) 72
0.4 176 1.0
Net earnings
including noncontrolling interests 40 0.9 28 0.7 199 1.1 189
1.1
Less net earnings attributable to noncontrolling
interests (1 ) — (2 ) (0.1 ) (7 ) —
(7 ) —
Net earnings attributable to
SUPERVALU INC. $ 39 0.9 % $ 26 0.7 % $ 192
1.1 % $ 182 1.1 %
Basic net earnings (loss) per
share attributable to SUPERVALU INC.: Continuing operations $
0.13 $ 0.15 $ 0.46 $ 0.02 Discontinued operations $ 0.02 $ (0.05 )
$ 0.28 $ 0.69 Basic net earnings per share $ 0.15 $ 0.10 $ 0.74 $
0.71
Diluted net earnings (loss) per share attributable to
SUPERVALU INC.: Continuing operations
(1) $ 0.13 $ 0.15 $
0.45 $ 0.02 Discontinued operations $ 0.02 $ (0.05 ) $ 0.27 $ 0.68
Diluted net earnings per share $ 0.14 $ 0.10 $ 0.73 $ 0.70
Weighted average number of shares outstanding: Basic 261 259
260 255 Diluted 266 261 264 258 (1) 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 fourth quarter
ended February 22, 2014 include net costs and charges of $13 before
tax ($8 after tax, or $0.03 per diluted share), comprised of
severance costs of $8 before tax ($5 after tax, or $0.02 per
diluted share) included within Selling and administrative expenses,
and debt refinancing costs of $4 before tax ($3 after tax, or $0.01
per diluted share) and unamortized financing cost charges of $1
before tax ($0 after tax, or $0.00 per diluted share) included
within Interest expense, net. Results from continuing
operations for the fiscal 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 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.
Results from continuing operations for the fiscal year ended
February 22, 2014 include net costs and charges of $235 before tax
($144 after tax, or $0.56 per diluted share), comprised of charges
for the write-off of non-cash unamortized financing costs and
original issue discount acceleration of $99 before tax ($60 after
tax, or $0.24 per diluted share) and debt refinancing costs of $75
before tax ($47 after tax, or $0.18 per diluted share) recorded in
Interest expense, net, severance costs and accelerated stock-based
compensation charges of $46 before tax ($29 after tax, or $0.11 per
diluted share), non-cash asset impairment and other charges of $16
before tax ($11 after tax, or $0.04 per diluted share), contract
breakage and other costs of $6 before tax ($2 after tax, or $0.01
per diluted share) and a legal settlement charge of $5 before tax
($3 after tax, or $0.01 per diluted share) recorded in Selling and
administrative expenses, and multi-employer pension withdrawal
charge of $3 before tax ($2 after tax, or $0.01 per diluted share)
recorded in Gross profit, offset in part by a gain on sale of
property of $15 before tax ($10 after tax, or $0.04 per diluted
share) recorded in Selling and administrative expenses.
SUPERVALU INC. and
SubsidiariesCONDENSED CONSOLIDATED SEGMENT FINANCIAL
INFORMATION(Unaudited)(In millions, except percent
data)
Fourth Quarter Ended Fiscal Year Ended
February 28, 2015 (13 weeks)
February 22, 2014 (12 weeks) February
28, 2015 (53 weeks) February 22,
2014 (52 weeks) Net sales Independent Business
$ 1,956 $ 1,821 $ 8,134 $ 8,036 % of total 44.8 % 46.1 % 45.6 %
46.9 % Save-A-Lot 1,136 999 4,613 4,228 % of total 26.1 % 25.2 %
25.9 % 24.6 % Retail Food 1,223 1,087 4,879 4,649 % of total 28.0 %
27.5 % 27.4 % 27.1 % Corporate 49 46 194 240 % of total 1.1
% 1.2 % 1.1 % 1.4 % Total net sales $ 4,364 $
3,953 $ 17,820 $ 17,153 100.0 % 100.0 % 100.0
% 100.0 %
Operating earnings Independent Business(1)
$ 63 $ 54 $ 243 $ 235 % of Independent Business sales 3.2 % 3.0 %
3.0 % 2.9 % Save-A-Lot(2) 47 43 153 167 % of Save-A-Lot sales 4.2 %
4.3 % 3.3 % 3.9 % Retail Food(3) 44 38 122 77 % of Retail Food
sales 3.6 % 3.5 % 2.5 % 1.7 % Corporate(4) (15 ) (14
) (94 ) (56 ) Total operating earnings 139 121 424
423 % of total net sales 3.2 % 3.1 % 2.4 % 2.5 %
Interest
expense, net(5) 87 55 243 407
Equity in earnings of
unconsolidated affiliates (1 ) — (4
) (2 )
Earnings from continuing operations before income
taxes 53 66 185 18
Income tax provision 17
24 58 5
Net earnings
from continuing operations 36 42 127 13
Income (loss) from
discontinued operations, net of tax 4 (14
) 72 176
Net earnings including
noncontrolling interests 40 28 199 189
Less net earnings
attributable to noncontrolling interests (1 ) (2
) (7 ) (7 )
Net earnings attributable to SUPERVALU
INC. $ 39 $ 26 $ 192 $ 182
LIFO charge (credit) Independent Business $ 1 $ (4 ) $ 4 $
(3 ) Retail Food — (3 ) 4
(6 ) Total LIFO charge (credit) $ 1 $ (7 ) $ 8 $ (9 )
Depreciation and amortization Independent Business $ 12 $ 11
$ 48 $ 51 Save-A-Lot 15 14 65 64 Retail Food 39
42 172 187 Total
depreciation and amortization $ 66 $ 67 $ 285
$ 302 (1) Independent Business operating earnings for
the fourth quarter ended February 22, 2014 include severance costs
of $4. Independent Business operating earnings for the fiscal year
ended February 28, 2015 include severance costs of $1. Independent
Business operating earnings for the fiscal year ended February 22,
2014 include severance costs of $17, a multi-employer pension
withdrawal charge of $3, non-cash asset impairment and other
charges of $2 and contract breakage and other costs of $1, offset
in part by a gain on sale of property of $15. (2) Save-A-Lot
operating earnings for the fourth quarter and fiscal year ended
February 28, 2015 include store closure charges of $3. Save-A-Lot
operating earnings for the fiscal year ended February 22, 2014
include a legal settlement charge of $5, non-cash asset impairment
and other charges of $3 and severance costs and accelerated
stock-based compensation charges of $2. (3) Retail food
operating earnings for the fourth quarter ended February 22, 2014
include severance costs of $2. Retail Food operating earnings for
the fiscal year ended February 22, 2014 include non-cash asset
impairment charges related to software projects abandoned during
the period of $9, severance costs and accelerated stock-based
compensation charges of $8 and contract breakage costs of $2.
(4) 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 loss
for the fourth quarter ended February 22, 2014 includes severance
costs of $2. 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. Corporate
operating loss for the fiscal year ended February 22, 2014 includes
severance costs and accelerated stock-based compensation charges of
$19, contract breakage and other costs of $3 and non-cash asset
impairment and other charges of $2. (5) 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 fourth quarter ended February 22,
2014 includes debt refinancing costs of $4 and the write-off of
unamortized financing charges of $1 related to the January 2014
term loan amendment. Interest expense, net for the fiscal year
ended February 28, 2015 includes debt refinancing costs of $37 and
unamortized financing costs charges of $6. Interest expense, net
for the fiscal year ended February 22, 2014 includes charges for
the write-off of unamortized financing costs and original issue
discount acceleration of $99 and debt refinancing costs of $75.
SUPERVALU INC. and
SubsidiariesCONDENSED CONSOLIDATED BALANCE
SHEETS(Unaudited)(In millions, except per share
data)
February 28,2015
February 22,2014
ASSETS Current assets Cash and cash equivalents $ 114
$ 83 Receivables, net 482 493 Inventories, net 984 861 Other
current assets 120 106
Total current
assets
1,700 1,543
Property, plant and equipment,
net 1,470 1,497
Goodwill 865 847
Intangible assets,
net 48 43
Deferred tax assets 265 287
Other
assets 137 157
Total assets
$ 4,485 $ 4,374
LIABILITIES AND STOCKHOLDERS’
DEFICIT Current liabilities Accounts payable $ 1,121 $
1,043 Accrued vacation, compensation and benefits 204 190 Current
maturities of long-term debt and capital lease obligations 35 45
Other current liabilities 173 213
Total current liabilities 1,533 1,491
Long-term debt 2,480 2,486
Long-term capital lease
obligations 213 246
Pension and other postretirement benefit
obligations 602 536
Long-term tax liabilities 119 140
Other long-term liabilities 174 205
Commitments and
contingencies Stockholders’ deficit Common stock, $0.01
par value: 400 shares authorized; 262 and 260 shares issued,
respectively 3 3 Capital in excess of par value 2,810 2,862
Treasury stock, at cost, 2 and 4 shares, respectively (33 ) (101 )
Accumulated other comprehensive loss (423 ) (307 ) Accumulated
deficit (3,003 ) (3,195 )
Total SUPERVALU INC.
stockholders’ deficit (646 ) (738 ) Noncontrolling interests
10 8
Total stockholders’ deficit
(636 ) (730 )
Total liabilities and stockholders’
deficit $ 4,485 $ 4,374
SUPERVALU INC. and
SubsidiariesCONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited)(In millions)
Fiscal Year Ended
February 28, 2015 (53
weeks)
February 22, 2014 (52
weeks)
Cash flows from operating activities Net earnings including
noncontrolling interests $ 199 $ 189 Income from discontinued
operations, net of tax 72 176 Net
earnings from continuing operations 127 13 Adjustments to reconcile
Net earnings from continuing operations to Net cash provided by
operating activities – continuing operations: Asset impairment and
other charges 45 194 Net gain on sale of assets and exits of
surplus leases (14 ) (17 ) Depreciation and amortization 285 302
LIFO charge (credit) 8 (9 ) Deferred income taxes 4 (39 )
Stock-based compensation 23 22 Net pension and other postretirement
benefits cost 96 79 Contributions to pension and other
postretirement benefit plans (169 ) (124 ) Other adjustments 30 34
Changes in operating assets and liabilities, net of effects from
business combinations: Receivables 9 (54 ) Inventories (124 ) 2
Accounts payable and accrued liabilities 75 (127 ) Income taxes (15
) (79 ) Other changes in operating assets and liabilities
(47 ) (68 )
Net cash provided by operating activities –
continuing operations 333 129
Net cash provided by (used in)
operating activities – discontinued operations 75
(101 )
Net cash provided by operating activities
408 28
Cash flows from investing
activities Proceeds from sale of assets 7 14 Purchases of
property, plant and equipment (239 ) (111 ) Payments for business
acquisition (55 ) — Other 2 11
Net
cash used in investing activities – continuing operations (285
) (86 )
Net cash provided by investing activities – discontinued
operations — 135
Net cash (used
in) provided by investing activities (285 ) 49
Cash flows from financing activities Proceeds from
issuance of debt 350 2,098 Proceeds from the sale of common stock 7
177 Payments of debt and capital lease obligations (400 ) (2,221 )
Payments for debt financing costs (42 ) (151 ) Distributions to
noncontrolling interests (8 ) (9 ) Other 1 (1
)
Net cash used in financing activities – continuing
operations (92 ) (107 )
Net cash used in financing
activities – discontinued operations — (36
)
Net cash used in financing activities (92 )
(143 ) Net increase (decrease) in cash and cash equivalents 31 (66
)
Cash and cash equivalents at beginning of period 83
149
Cash and cash equivalents at the end of
period $ 114 $ 83
SUPPLEMENTAL CASH FLOW
INFORMATION The Company’s non-cash activities were as follows:
Capital lease asset additions $ 1 $ 2 Purchases of property, plant
and equipment included in Accounts payable $ 21 $ 19 Interest and
income taxes paid: Interest paid, net of amounts capitalized $ 180
$ 227 Income taxes (refunded) paid, net $ (7 ) $ 118
SUPERVALU INC. and
SubsidiariesSUPPLEMENTAL 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 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 reflected below 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 28, 2015.
RECONCILIATIONS OF EARNINGS FROM CONTINUING
OPERATIONS TO EARNINGS FROM CONTINUING OPERATIONS AFTER
ADJUSTMENTS
Table 1
Fourth Quarter Ended February 28, 2015 (In
millions, except per share data)
EarningsBefore Tax
EarningsAfter Tax
DilutedEarnings
PerShare
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 charges 3
2
0.01
Pension settlement charge 1
—
—
Continuing operations after adjustments $ 102 $
66
$
0.24
Table 2
Fiscal Year Ended February 28, 2015 (In millions, except
per share data)
EarningsBefore Tax
EarningsAfter Tax
DilutedEarnings
PerShare
Continuing operations $ 185 $ 127 $ 0.45 Adjustments: Pension
settlement charge 64 36 0.14 Debt refinancing costs 37 23 0.08
Unamortized financing cost charges 6 4 0.02 Benefit plan charge 5 3
0.01 Store closure 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
Table 3 Fourth Quarter Ended
February 22, 2014 (In millions, except per share data)
EarningsBefore Tax
EarningsAfter Tax
DilutedEarnings
PerShare
Continuing operations $ 66 $ 42 $ 0.15 Adjustments: Severance costs
8 5 0.02 Debt refinancing costs 4 3 0.01 Unamortized financing cost
charges 1 — — Continuing
operations after adjustments $ 79 $ 50 $ 0.18
Table 4
Fiscal Year Ended February 22, 2014 (In millions, except
per share data)
EarningsBefore Tax
EarningsAfter Tax
DilutedEarnings
PerShare
Continuing operations $ 18 $ 13 $ 0.02 Adjustments: Unamortized
financing cost charges and original issue discount acceleration 99
60 0.24 Debt refinancing costs 75 47 0.18 Severance costs and
accelerated stock-based compensation charges 46 29 0.11 Asset
impairment and other charges 16 11 0.04 Contract breakage and other
costs 6 2 0.01 Legal settlement charge 5 3 0.01 Multiemployer
pension withdrawal charge 3 2 0.01 Gain on sale of property
(15
)
(10
)
(0.04 ) Continuing operations after adjustments $ 253
$ 157 $ 0.58
RECONCILIATION OF OPERATING EARNINGS FROM
CONDENSED CONSOLIDATED SEGMENT FINANCIAL INFORMATION AS REPORTED TO
SUPPLEMENTALLY PROVIDED ADJUSTED EBITDA AND PRO FORMA ADJUSTED
EBITDA
TABLE 5 Fourth Quarter Ended Fiscal
Year Ended (In millions) February 28, 2015
(13 weeks) February 22, 2014 (12
weeks) February 28, 2015 (53 weeks)
February 22, 2014 (52 weeks) Independent
Business operating earnings, as reported $ 63 $ 54 $ 243 $ 235
Adjustments: Severance costs and accelerated stock-based
compensation charges — 4 1 17 Multiemployer pension withdrawal
charge — — — 3 Asset impairment and other charges — — — 2 Contract
breakage and other costs — — — 1 Gain on sale of property —
— — (15 ) Independent
Business operating earnings, as adjusted 63 58 244 243 Independent
Business depreciation and amortization 12 11 48 51 LIFO charge
(credit) 1 (4 ) 4 (3 )
Independent Business adjusted EBITDA(1) $ 76 $ 65 $
296 $ 291 Save-A-Lot operating earnings, as
reported $ 47 $ 43 $ 153 $ 167 Adjustments: Store closure charges 3
— 3 — Severance costs — — — 2 Asset impairment and other charges —
— — 3 Legal settlement charge — —
— 5 Save-A-Lot operating earnings, as
adjusted 50 43 156 177 Save-A-Lot depreciation and amortization
15 14 65 64
Save-A-Lot adjusted EBITDA(1) $ 65 $ 57 $ 221
$ 241 Retail Food operating earnings, as reported $
44 $ 38 $ 122 $ 77 Adjustments: Severance costs and accelerated
stock-based compensation charges — 2 — 8 Asset impairment and other
charges — — — 9 Contract breakage and other costs —
— — 2 Retail Food
operating earnings, as adjusted 44 40 122 96 Retail Food
depreciation and amortization 39 42 172 187 LIFO (credit) charge —
(3 ) 4 (6 ) Equity in earnings of unconsolidated affiliates(2) 1 —
4 2 Less Net earnings attributable to noncontrolling interests(2)
(1 ) (2 ) (7 ) (7 ) Retail Food
adjusted EBITDA(1)(2) $ 83 $ 77 $ 295 $ 272
Corporate operating loss, as reported $ (15 ) (14 ) $
(94 ) $ (56 ) Adjustments: Pension settlement charge 1 — 64 —
Benefit plan charge 5 — 5 — Information technology intrusion costs,
net of insurance recoverable — — 2 — Severance costs and
accelerated stock-based compensation charges — 2 — 19 Contract
breakage and other costs — — — 3 Asset impairment and other charges
— — — 2
Corporate operating loss, as adjusted (9 ) (12 ) (23 ) (32 )
Corporate depreciation and amortization — —
— — Corporate adjusted EBITDA(1)
$ (9 ) $ (12 ) $ (23 ) $ (32 ) Total adjusted EBITDA(1)(2) $ 215
$ 187 $ 789 $ 772 Pro forma adjustment:
Incremental administrative expense reimbursements(3) —
— — 11 Total pro
forma adjusted EBITDA(1)(2)(3) $ 215 $ 187 $ 789
$ 783 (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. (2) In the first quarter of fiscal 2015, the
Company revised its definition of Adjusted EBITDA to include equity
in earnings of unconsolidated affiliates and remove net earnings
attributable to noncontrolling interests in order for previously
reported Adjusted EBITDA measures to remain unchanged when
reconciling from segment operating earnings after corrections to
certain condensed consolidated financial statement line items were
made. (3) Incremental administrative expense reimbursements
represents additional fees that the Company would have received
under the Transition Services Agreements between SUPERVALU INC. and
New Albertson's, Inc. ("NAI") and between SUPERVALU INC. and
Albertson's LLC ("ABS") entered into in connection with the sale of
the NAI retail banners to AB Acquisition, LLC (the "NAI TSA") on
March 21, 2013 (the "NAI Banner Sale"), net of the fees recognized
under the previous agreement between SUPERVALU INC. and ABS, which
was terminated on the closing of the NAI Banner Sale. The NAI TSA
provides NAI and ABS with certain administrative and other services
following the closing of the NAI Banner Sale for an initial term of
two and a half years following the sale and is subject to certain
adjustments under the terms of the agreement, such as a decrease in
the number of stores and distribution centers operated by NAI and
ABS. Upon commencement of discontinued operations presentation in
accordance with GAAP, SUPERVALU INC. retained certain
administrative functions for which SUPERVALU INC. agreed to provide
transitional services to NAI similar to those previously provided
to ABS. This pro forma adjustment is intended to provide investors
an understanding as to the effects of administrative expenses
reported by SUPERVALU INC. under discontinued operations
presentation in accordance with GAAP, which subsequent to the NAI
Banner Sale are covered under the NAI TSA. This pro forma
adjustment is directly attributable to the NAI Banner Sale and the
presentation of reporting thereon, is derived from the terms of the
NAI TSA, and will have a continuing impact on SUPERVALU INC.'s
results.
SUPERVALU INC.Investor
ContactSteve Bloomquist,
952-828-4144steve.j.bloomquist@supervalu.comorMedia ContactJeff Swanson,
952-903-1645jeffrey.s.swanson@supervalu.com
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