<PAGE>
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended February 26, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ____________ to ____________
Commission file Number: 1-5418
SUPERVALU INC.
(Exact Name of registrant as specified in its Charter)
Delaware 41-0617000
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
11840 Valley View Road
Eden Prairie, Minnesota 55344
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (612) 828-4000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
------------------- ------------------------------
registered
----------
Common Stock, par value $1.00 New York Stock Exchange
per share
Preferred Share Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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
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[Cover page 1 of 2 pages]
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[ ]
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of April 1, 1994 was approximately $2,162,895,712 (based upon the
closing price of Registrant's Common Stock on the New York Stock Exchange on
March 31, 1994).
Number of shares of $1.00 par value Common Stock outstanding as of April 1,
1994: 71,797,541.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of Registrant's Annual Report to Stockholders for the fiscal
year ended February 26, 1994 are incorporated into Parts I, II and IV, as
specifically set forth in said Parts I, II and IV.
2. Portions of Registrant's definitive Proxy Statement filed for
Registrant's 1994 Annual Meeting of Stockholders are incorporated into
Part III, as specifically set forth in said Part III.
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[Cover page 2 of 2 pages]
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PART I
------
Unless the context indicates otherwise, all references to the "Company,"
"SUPERVALU" or "Registrant" in this Annual Report on Form 10-K relate to
SUPERVALU INC. and its majority-owned subsidiaries.
ITEM 1. BUSINESS
- - - ------ --------
GENERAL DEVELOPMENT
-------------------
SUPERVALU INC., a Delaware corporation organized in 1925 as the successor
to two wholesale grocery firms established in the 1870's, has its
principal executive offices at 11840 Valley View Road, Eden Prairie,
Minnesota 55344 (Telephone: 612-828-4000).
The Company is the nation's largest food wholesaler and approximately
14th largest food retailer. It is primarily engaged in the business of
selling food and nonfood products at wholesale. The Company supplied
approximately 4,350 stores in 47 states as of the close of fiscal 1994
and approximately 4,650 stores in May of 1994. In addition, the Company
also operated at fiscal year-end 258 retail food supermarkets, discount
food superstores, combination stores, limited-assortment and other
stores, primarily under the names of Cub Foods, Shop 'n Save, Save-A-Lot,
Scott's, Laneco, Hornbacher's, Twin Valu, Ultra IGA and MAX CLUB.
While not material to overall operations to date, the Company also serves
a growing international sales operation to customers in many foreign
countries, and its military sales operations serve over 100 military
bases.
In 1991, SUPERVALU began the implementation of a strategy to focus on its
core food distribution and retailing business segments. The Company
executed the first major step of this strategy in October 1991 with the
sale of 54% of SUPERVALU's interest in ShopKo Stores, Inc. ("ShopKo"),
its discount general merchandise subsidiary, through an initial public
offering. SUPERVALU continues to own a 46% interest in ShopKo which, at
fiscal year end, operated 118 discount department stores in 15 states.
As of October 31, 1992, the Company completed the acquisition of Wetterau
Incorporated ("Wetterau"), resulting in a significant expansion of the
geographic market and customer base compared with that previously served
by SUPERVALU food wholesale and retail operations. In fiscal 1994 the
Company completed the integration of Wetterau's administrative and
support services into its own and combined or closed a number of
distribution operations to eliminate inefficiencies and overlap. The
Company continues to evaluate further consolidations to improve
efficiencies in its distribution operations. See "Properties."
In March, 1994, the Company acquired Sweet Life Foods, Inc. ("Sweet
Life"), a privately-owned grocery wholesale distributor serving
Massachusetts, Connecticut, Maine and Eastern New York. This acquisition
further strengthened the Company's customer base by adding 280 additional
stores as customers in the New England states. The Company plans to
consolidate its New England distribution operations and further develop
retail support services for New England retailers.
The Company has also made other smaller acquisitions from time to time to
further the growth of its food distribution, retailing and bakery
operations.
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Additional description of the Company's business is contained in the
"Financial Review" portion of the Company's Annual Report to the
Stockholders for fiscal year 1994 (Exhibit 13), pages 14-17, which
description is incorporated herein by reference.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
---------------------------------------------
Financial information about the Company's industry segments for the five
years ended February 26, 1994 is incorporated by reference to page 20 of
the Company's Annual Report to Stockholders for fiscal year 1994 (Exhibit
13).
FOOD DISTRIBUTION OPERATIONS
----------------------------
DESCRIPTION OF FOOD STORES SERVED. SUPERVALU food distribution divisions
---------------------------------
sell food and nonfood products at wholesale and offer a variety of retail
support services to independently-owned retail food stores. At February
26, 1994, the Company's 26 food distribution divisions and 4 general
merchandise divisions were the principal supplier to approximately 4,350
retail grocery and general merchandise stores, the same number of stores
served at the end of fiscal 1993. In March, 1994 the Company acquired an
additional 280 stores as customers upon completion of the acquisition of
Sweet Life.
Retail food stores served by the Company at wholesale range in size from
small convenience stores to 200,000 square foot supercenters. The
Company's wholesale customer base includes single and multiple store
independent operators, affiliated stores, regional chains and Company
owned stores, operating in a variety of formats including limited
assortment stores, discount food stores, conventional and upscale
supermarkets and combination stores.
Retail food stores served by the Company at wholesale offer a wide
variety of groceries, meats, dairy products, frozen foods and fresh
fruits and vegetables. In addition, most stores carry an assortment of
non-food items, including tobacco products, health and beauty aids, paper
products, cleaning supplies, and small household and clothing items. The
number and variety of such non-food items have expanded significantly in
recent years in line with the general industry trend but vary
considerably from store to store. Many stores offer one or more
specialized services, such as delicatessens, food courts, in-store
bakeries, liquor departments, video, pharmacies, housewares and flower
shops.
The Company is constantly endeavoring to strengthen the retail food
stores it serves by assisting in the upgrading and enlargement of
existing stores, establishing new stores, more aggressively merchandising
its stores, developing diverse formats and retail strategies, and
assisting stores to serve markets which are increasingly segmented.
PRODUCTS SUPPLIED. SUPERVALU continues to supply its retail food stores
-----------------
with an increasing variety and selection of products, including national
and regional brands and the Company's own line of private label product
programs. Such trademarks as SUPER VALU, FLAV-O-RITE, CHATEAU, SHOP 'N
SAVE, SHOPPERS VALUE, IGA, NATURE'S BEST, HOME BEST, BI-RITE, FOODLAND,
WHY PAY MORE, and others accounted for approximately 9.5 percent of the
Company's fiscal 1994 sales to retail food stores. With the acquisition
of Sweet Life in March of 1994, the Company also added the SWEET LIFE
private label. In addition, the Company is planning to test market a
new, upscale, private label line of products under the name PREFERRED
SELECTION.
Private labels cover a broad range of products including every department
in the store: frozen, dairy, grocery, meats, bakery, deli, general
merchandise and produce. These products are produced to the Company's
specifications by many suppliers, some of whom are the nation's foremost
manufacturers. In addition, such items as peanut butter, nuts, sugar and
coconut are
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manufactured or repackaged in the Company's own manufacturing facility
located in Chaska, Minnesota, which is operated by Preferred Products,
Inc., a subsidiary of the Company.
In addition to making these products available, SUPERVALU also assumes a
large part of the marketing and merchandising role, conducts private
label sales events, and provides a wide array of in-store promotional and
advertising tools and training expertise to assist the retailer in
conducting private label programs to maximize sales and produce profit
advantage.
Hazelwood Farms Bakeries, Inc., a subsidiary, manufactures frozen dough
and bakery products primarily for the in-store bakery market, and has
customers in all 50 states as well as Canada and Mexico. Its customer
base consists of wholesale food distributors, supermarket chains
(including company-owned, affiliated and non-affiliated stores), fast
food chains and institutional food service companies.
The Company has no significant long-term purchase obligations and
considers that it has adequate and alternative sources of supply for most
of its purchased products.
DISTRIBUTION AND COSTS OF MERCHANDISE. Deliveries to retail stores are
-------------------------------------
made from the Company's distribution centers, usually in Company-owned
trucks. In addition, many types of meats, dairy products, bakery and
other products purchased from the Company are delivered directly by
suppliers to retail stores under programs established by the Company.
Wholesale sales are made to the Company's retailers at the applicable
price and fee schedule in effect at the time of sale.
The Company seeks to lower its cost of product by regionalizing its food
buying operations and centralizing buying for general merchandise and
health and beauty products to better leverage the buying power of larger
product orders. The integration of administrative functions and
consolidation of facilities is also expected to improve operating
efficiencies and lower costs of operations. These actions are intended
to reduce the cost of product to the Company's retailers, thereby
enhancing their competitive position.
SERVICES SUPPLIED. In addition to supplying merchandise, the Company
-----------------
also offers retail stores a wide variety of support services, including
advertising, promotional and merchandising assistance, store management
assistance, retail operations counseling, computerized inventory control
and ordering services, accounting, bill paying and payroll services
(largely computerized), store layout and equipment planning (including
point-of-sale electronic scanning), cash management, tax counseling,
building design and construction services, financial and budget planning,
assistance in selection and purchasing or leasing of store sites,
consumer and market research and personnel management assistance.
Certain Company subsidiaries operate as insurance agencies and provide
comprehensive insurance programs to the Company's affiliated retailers.
Separate charges are made for most, but not all, of these services.
The Company may provide financial assistance to retail stores served or
to be served by it, including the acquisition and subleasing of store
properties, the making of direct loans, and providing guarantees or other
forms of financing. In general, loans made by the Company to independent
retailers are secured by liens on inventory and/or equipment, by personal
guarantees and other security. When the Company subleases store
properties to retailers, the rentals are generally as high or higher than
those paid by the Company.
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RETAIL FOOD OPERATIONS.
----------------------
At fiscal year end, the Company's retail businesses operated a total of
258 retail stores under several formats, including discount food
superstores, conventional stores, upscale service-oriented supermarkets,
supercenters, combination stores and limited-assortment stores. These
diverse formats enable the Company to operate in a variety of markets
under widely differing competitive circumstances.
At the close of fiscal 1994, the Company's retail stores operated under
the following principal formats:
Cub Foods consists of 107 discount food superstores, 54 of which are
franchised to independent retailers and 53 of which are corporately
operated. Plans for fiscal 1995 include the opening of from seven to
nine corporate Cub Foods stores and seven franchised units. The Company
has also developed a prototype format called Cub Too!, a 28,000 square
foot store which is designed to supplement the traditional Cub Foods
format within existing markets. One Cub Too! store was opened during the
fiscal year.
Shop 'n Save consists of 28 discount food stores located in Eastern
Missouri and Southern Illinois; one new replacement store and five
remodeling projects are planned for fiscal 1995.
Save-A-Lot is the Company's combined wholesale and retail limited
assortment operation. At fiscal year end there were 411 Save-A-Lot
limited assortment stores of which 75 were corporately operated. In May
of 1994, Save-A-Lot completed the acquisition of 30 Texas T stores in the
Dallas-Ft. Worth, Texas market, which will be converted to the Save-A-Lot
banner. Save-A-Lot projects adding 105 stores in fiscal 1995 including
20 corporately owned stores, in addition to the Texas T stores.
Scott's Foods is a 13-store group located in the Fort Wayne, Indiana area
acquired by the Company in 1991. One new store is planned for fiscal
1995.
The Company's Laneco division operates a diverse mix of 50 retail outlets
comprised predominantly of supermarkets and supercenters, together with
discount department stores, discount food stores, drug stores and craft
stores. These stores operate mainly under the Laneco, Foodlane, Ultra
IGA, and Price Slasher names and formats. No new stores are planned for
fiscal 1995.
Hornbacher's is a four-store group located in the Fargo, North Dakota
marketplace, with one additional store under construction for opening in
fiscal 1995.
Twin Valu consists of two 180,000 square foot supercenter formats in the
Cleveland, Ohio area, together with two Twin Valu Foods stores which were
opened in fiscal 1993. No new stores are planned for fiscal 1995.
MAX CLUB consists of two 70,000 square foot corporately-operated
membership warehouse clubs in Arizona. The Company intends to develop
two additional stores in fiscal 1995.
Other formats operated by the Company include County Market, SUPERVALU
Stores, IGA, Foodland and Rite Choice.
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TRADEMARKS
----------
The Company offers its customers the opportunity to franchise a concept
or license a trademark. This program helps the customer compete by
providing, as part of the franchise or license program, a complete
business concept, group advertising, private label products and other
benefits. The Company is the franchisor or has the right to license
retailers to use certain trademarks such as CUB FOODS, SAVE-A-LOT, COUNTY
MARKET, SHOP 'N SAVE, NEWMARKET, SUPERVALU, IGA, FOODLAND and SUPERVALU
FOOD & DRUG. The Company registers a substantial number of its
trademarks in the United States Patent and Trademark Office, including
many of its private label product trademarks. See "Products Supplied".
The Company considers certain of its trademarks to be of material
importance to its business and actively defends and enforces such
trademarks.
COMPETITION
-----------
Since the Company's food business consists principally of supplying
independently owned and operated retail food stores, its success is
dependent upon the ability of those retail store operators to compete
successfully with other retail food stores, whether such other stores are
owned by chains or are independently operated, and also upon its own
ability to compete successfully with other wholesale distributors. Both
the wholesale and the retail food businesses are highly competitive. At
the wholesale level, the Company competes directly with a number of
wholesalers which supply affiliated and unaffiliated retailers and
indirectly with the warehouse and distribution operations of the large
integrated chains. The Company competes with other wholesale food
distributors in most of its market areas on the basis of product price,
quality and assortment, schedule and reliability of deliveries, the range
and quality of services provided, the location of the store sites and
distribution facilities and its willingness to provide financing to its
customers. See "Distribution and Costs of Merchandise" and "Services
Supplied."
The principal competitive factors that affect the Company's retail
segment are location, price, quality, service and consumer loyalty.
Local, regional, and national food chains, as well as independent food
stores and markets, comprise the principal competition, although the
Company also faces competition from alternative formats including
supercenters and membership warehouse clubs and from convenience stores
and specialty and discount retailers.
EMPLOYEES
---------
At February 26, 1994, the Company had approximately 42,500 employees.
Approximately 18,500 employees are covered by collective bargaining
agreements. During fiscal year 1994, 20 agreements covering 6,000
employees were re-negotiated, with no work stoppages. In fiscal year
1995, 35 contracts covering approximately 7,000 employees will expire.
The Company believes that it has generally good relationships with its
employees.
INVESTMENT IN SHOPKO
--------------------
Following its initial public offering in October 1991, ShopKo has been
operated as an independent company. The Company's 46% investment in
ShopKo is accounted for by the equity method. The following summary of
ShopKo's business has been prepared from information provided by ShopKo.
Additional information regarding ShopKo is available from the reports and
other documents prepared and filed by ShopKo with the Securities and
Exchange Commission.
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<PAGE>
As of February 26, 1994, ShopKo operated 118 discount retail stores in 15
states. ShopKo's corporate headquarters are located in Green Bay,
Wisconsin and its stores are located primarily in medium-sized and
smaller cities in the Upper Midwest and in Mountain and Pacific Northwest
states. ShopKo stores carry a wide selection of branded and private
label nondurable "hard line" goods such as housewares, music/videos,
health and beauty aids, toys and sporting goods and "soft line" goods
such as home textiles, men's, women's and children's apparel, shoes,
jewelry, cosmetics and accessories. ShopKo's stores average 90,400
square feet with approximately 83% of the stores greater than 74,000
square feet. During fiscal 1994, ShopKo opened six new stores and
renovated 16 stores. ShopKo plans to open seven new stores and remodel
up to 34 stores in fiscal 1995. The discount general merchandise
business is very competitive. ShopKo competes in most of its markets
with a variety of national discount chains, including Wal-Mart and K
Mart, and with regional discount chains such as Target, and local
discount stores, certain discount specialty retail chains and deep
discount drug operations. Of ShopKo's six directors, two are officers of
SUPERVALU.
OTHER INVESTMENTS.
-----------------
The Company has ownership interests in business ventures related to its
wholesale and retail segments. Investments in retail businesses include
Hyper Shoppes, Inc., Waremart, Inc., and Super Discount Markets, Inc.
Investments in wholesale businesses include Foodland Distributors. The
Company also owns interests in certain Cub franchise partnerships and
corporations and other ventures.
The Company's ownership interests range from 9% to 57%. Where the Company
owns a majority interest, results are accounted for on a consolidated
basis with minority interests; otherwise results are accounted for using
the equity method or at cost. The aggregate carrying amounts from these
investments are approximately 2% of total assets and the aggregate income
is approximately 2% of net earnings.
ITEM 2. PROPERTIES
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The Company's executive offices are located in a 180,000 square foot
corporate headquarters facility located in Eden Prairie, Minnesota, a
western suburb of Minneapolis, Minnesota. This headquarters facility is
located on a 140 acre site owned by the Company. In February, 1994 the
Company purchased a 240,000 square foot office facility, One Southwest
Crossing, which is located within one mile of its executive offices. At
the end of fiscal 1994, One Southwest Crossing was occupied principally
by third party tenants. The Company plans to move certain of its
headquarters staff to One Southwest Crossing as these leases expire.
The following table lists the location, use and approximate size of the
Company's principal warehouse, distribution and manufacturing facilities
utilized in the Company's food distribution operations as of February 26,
1994:
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<TABLE>
<CAPTION>
Square Square
Footage Footage
Division or Location Use Owned Leased
- - - ----------------------------- --- --------- ---------
<S> <C> <C> <C>
Andover, Massachusetts Distribution Center & Offices 454,000
Anniston, Alabama Distribution Center & Offices 497,000
Atlanta, Georgia Distribution Center & Offices 628,000
Atlanta, Georgia Bakery, Warehouse and Offices 111,000
Belle Vernon, Pennsylvania Distribution Center & Offices 131,000 501,000*
Billings, Montana Distribution Center & Offices 255,000 10,800
Bismarck, North Dakota Distribution Center & Offices 257,000
Buffalo Grove, Illinois Bakery, Warehouse and Offices 32,000
Champaign, Illinois Distribution Center & Offices 820,000 172,000
Charleston, South Carolina General Merchandise Warehouse
and Offices 113,000*
Chaska, Minnesota Private Label Manufacturing,
Warehouse and Offices 340,000
Columbus, Ohio Save-A-Lot Distribution Center
and Offices 150,000
Cranston, Rhode Island Distribution Center & Offices 227,000
Denver, Colorado Distribution Center & Offices 721,000 74,000
Des Moines, Iowa Distribution Center & Offices 663,000
Desloge, Missouri General Merchandise Warehouse
and Offices 105,000
Fargo, North Dakota Distribution Center & Offices 493,000
Ft. Wayne, Indiana Distribution Center & Offices 1,000,000
Great Falls, Montana Distribution Center & Offices 144,000
Green Bay, Wisconsin Distribution Center & Offices 430,000 475,000
Greenville, Kentucky Distribution Center & Offices 309,000
Hammond, Louisiana Distribution Center & Offices 257,000
Hagerstown, Maryland Save-A-Lot Distribution Center
and Offices 120,000*
Hazelwood, Missouri Distribution Center & Offices 769,000*
Hazelwood, Missouri Bakery, Warehouse and Offices 240,000
Hazleton, Pennsylvania Bakery, Warehouse and Offices 116,000
Jackson, Tennessee Save-A-Lot Distribution Center
and Offices 165,000
Indianola, Mississippi Distribution Center & Offices 695,000
Keene, New Hampshire Distribution Center & Offices 176,000*
Lexington, Kentucky Save-A-Lot Distribution Center
and Offices 179,000
Livonia, Michigan(1) Foodland Distributors, Distribution
Center 1,275,000
Los Angeles, California General Merchandise Warehouse
and Offices 227,000
Lower Nazareth Township, General Merchandise Warehouse
Pennsylvania (Easton) and Offices 230,000*
</TABLE>
- - - --------------------
(1) Leased by Foodland Distributors in which the Company is a 50% partner.
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<TABLE>
<CAPTION>
Square Square
Footage Footage
Division or Location Use Owned Leased
- - - -------------------- --- --------- --------
<S> <C> <C> <C>
McMinnville, Oregon Bakery, Warehouse and Offices 110,000
Milton, West Virginia Distribution Center & Offices 35,000 211,000
Minneapolis, Minnesota Distribution Center & Offices 1,345,000 263,000
New Stanton, Pennsylvania Distribution Center & Offices 787,000 140,000
Pleasant Prairie, Wisconsin Distribution Center & Offices 595,000
Portland, Maine Distribution Center & Offices 184,000*
Presque Isle, Maine Distribution Center & Offices 61,000
Providence, Rhode Island Distribution Center & Offices 463,000
Quincy, Florida Distribution Center & Offices 772,000
Reading, Pennsylvania Distribution Center & Offices 749,000
Rochester, New York Bakery, Warehouse and Offices 46,200
Scott City, Missouri Distribution Center & Offices 278,000*
Spokane, Washington Distribution Center & Offices 551,000
Tacoma, Washington Distribution Center & Offices 788,000 100,000
Vinita Park, Missouri Save-A-Lot Distribution Center
and Offices 156,000
Williamsport, Maryland Distribution Center & Offices 175,000
Xenia, Ohio Distribution Center & Offices 511,000 170,000
</TABLE>
- - - --------------------
* The facilities are currently owned by Wetterau Properties Inc., a publicly
owned real estate investment trust. The Company has entered into an agreement
in principle to acquire all the assets of Wetterau Properties, Inc.,
including these facilities.
With the purchase of Sweet Life in March of 1994, the Company acquired a
650,000 square foot leased distribution facility in Suffield, Connecticut
and a 300,000 square foot facility under a short term lease in Northboro,
Massachusetts.
As part of its plan to consolidate facilities after the Wetterau
acquisition, the Company closed distribution facilities in Kansas City,
Kansas; Mexico, Missouri; Charleston, South Carolina and Butler,
Pennsylvania. The Company is also in the process of closing its
Bloomington, Indiana facility. As planned, the Company has closed the
former Wetterau administrative offices.
The Company also owns certain additional real estate consisting primarily
of shopping centers and retail store locations, which in the aggregate
are not material to its operations.
The Company owns, in addition to merchandise inventories, substantially
all of the trucks and trailers used in making deliveries in its food
operations.
Retail food stores operated by the Company generally have been leased,
usually for a term of 15-25 years plus renewal options. The Company is
increasingly developing and owning its own retail store sites. The
Company also leases properties for subletting to certain affiliated
retailers for periods generally not exceeding 20 years plus renewal
options.
Incorporated by reference hereto is the Note captioned "Leases" of Notes
to Consolidated Financial Statements on pages 28-29 of the Company's
Annual Report to Stockholders for fiscal year 1994 (Exhibit 13) for
information regarding lease commitments for facilities occupied by the
Company. Incorporated by reference hereto is the Note captioned "Long-
Term Debt"
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of Notes to Consolidated Financial Statements on pages 27-28 of the
Company's Annual Report to Stockholders for fiscal year 1994 (Exhibit 13)
for information regarding properties held subject to mortgages.
Management of the Company believes the physical facilities and equipment
described above are adequate for the Company's present needs and
businesses.
ITEM 3. LEGAL PROCEEDINGS
- - - ------ -----------------
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the business of the Registrant.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- - - ------ ---------------------------------------------------
There was no matter submitted during the fourth quarter of fiscal year
1994 to a vote of the security holders of Registrant.
EXECUTIVE OFFICERS OF THE REGISTRANT
- - - ------------------------------------
The following table sets forth certain information concerning the executive
officers of the Company as of April 1, 1994.
<TABLE>
<CAPTION>
YEAR ELECTED OTHER POSITIONS HELD
TO PRESENT WITH THE COMPANY
NAME AGE PRESENT POSITION POSITION 1989-1994
- - - ------------------------- --- ---------------------------- ------------ ---------------------------------
<S> <C> <C> <C> <C>
*Michael W. Wright 55 Director, Chairman of the 1981
Board, President and
Chief Executive Officer
Laurence L. Anderson 52 Executive Vice President, 1992 Senior Vice President
Regional President-Retail 1988-1992
Support Companies
Phillip A. Dabill 51 Executive Vice President, 1992 Senior Vice President,
Regional President-Retail 1988-1992
Support Companies
Jeffrey C. Girard 46 Executive Vice President, 1992 Senior Vice President, Chief
Chief Financial Officer Financial Officer, 1990-1992
Jeffrey Noddle 47 Executive Vice President, 1992 Senior Vice President, Marketing,
Marketing 1988-1992
David L. Boehnen 47 Senior Vice President, 1991
Law and External
Relations
Gordon W. Hippen 54 Senior Vice President, 1992 Vice President,
Operations Analysis Market Development, 1987-1992
</TABLE>
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<TABLE>
<CAPTION>
YEAR ELECTED OTHER POSITIONS HELD
TO PRESENT WITH THE COMPANY
NAME AGE PRESENT POSITION POSITION 1989-1994
- - - ------------------------- --- ---------------------------- ------------ ---------------------------------
<S> <C> <C> <C> <C>
George Z. Lopuch 44 Senior Vice President, 1992 Vice President, 1989-1992
Strategic Planning &
Research
Ronald C. Tortelli 48 Senior Vice President, 1988
Human Resources
David A. Cairns 48 Vice President, Treasurer 1988
James R. Campbell 53 Vice President, Market 1993 Senior Vice President,
Development Northeast Region, 1992-1993;
Minneapolis, Great Lakes and
former Green Bay Divisions
President, 1984-1992
George Chirtea 57 Vice President, 1993 Wetterau Senior Vice President,
Merchandising Marketing, and First Vice
President, Retail Operations,
1992-1993
Isaiah Harris 41 Vice President, Controller 1991 Director, Internal Control,
1987-1991
Gregory C. Heying 45 Vice President, Distribution 1988
John H. Hooley 42 Vice President, 1993 Cub Foods Division President,
SUPERVALU; Chief Operating Officer,
Cub Foods Division 1992-1993
President and Vice President, Merchandising,
Chief Executive Officer 1991-1992
Cub Foods Division Senior Vice
President, Marketing and
Merchandising, 1989-1991
Michael L. Mulligan 49 Vice President, Sales 1992 Vice President, Communications,
1985-1992
Jonathan M. Seltzer 44 Vice President, Industry 1991 Director, Corporate Planning,
& Government Relations 1989-1991
E. Wayne Shives 52 Vice President, Employee 1993 Vice President, Labor Relations,
Relations 1988-1993
H. S. (Skip) Smith III 47 Vice President, Information 1986
Services
Kristine K. Sundberg 45 Vice President, Investor 1993
Relations &
Communications
</TABLE>
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The term of office of each executive officer is from one annual meeting of
the directors until the next annual meeting of directors or until a
successor for each is elected. There are no arrangements or understandings
between any of the executive officers of the Registrant and any other
person (not an officer or director of the Registrant acting as such)
pursuant to which any of the executive officers were selected as an officer
of the Registrant. There are no immediate family relationships between or
among any of the executive officers of the Company.
Each of the executive officers of the Company has been in the employ of the
Company or its subsidiaries for more than five years, except for Jeffrey C.
Girard, David L. Boehnen, George Chirtea and Kristine K. Sundberg.
Mr. Girard is Executive Vice President and Chief Financial Officer; from
1983 to 1990 he held positions as Vice President, Senior Vice President,
Executive Vice President and Chief Financial Officer of Supermarkets
General Corporation (a supermarket company, not affiliated with the
Company); he joined the Company and was elected Senior Vice President and
Chief Financial Officer in 1990, and was elected to his present position in
1992.
Mr. Boehnen is Senior Vice President-Law and External Relations; from
January, 1990 to April, 1991, he was Vice President of Administration of
Supercomputer Systems, Incorporated; prior to that time he was with the
Dorsey & Whitney law firm for approximately 18 years, the last 12 as a
partner; he joined the Company and was elected to his present position in
April, 1991.
Mr. Chirtea is Vice President, Merchandising. Prior to the Company's
acquisition of Wetterau, Mr. Chirtea was Senior Vice President, Marketing,
Wetterau and Wetterau First Vice President, Retail Operations from 1984
through 1992.
Ms. Sundberg was elected Vice President - Investor Relations and
Communications in November, 1993; from November 1990 - November 1993, she
held positions as Director, Public Affairs and Communications and Director,
Communications, with Minnegasco (a public utility providing natural gas
services); prior to that time she was Director, Investor Relations with
Diversified Energies, Inc. (a holding company for diversified energy
services) from 1986 through October 1990.
-13-
<PAGE>
PART II
-------
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
- - - ------ -----------------------------------------------------------------
MATTERS
-------
The information called for by Item 5 as to the principal market upon
which the Registrant's Common Stock is traded and as to the approximate
record number of stockholders of the Registrant is hereby incorporated by
reference to the Registrant's Annual Report to the Stockholders for
fiscal year 1994 (Exhibit 13) page 37.
The information called for by Item 5 as to the Registrant's quarterly
dividends and quarterly stock price ranges for the last two fiscal years
is hereby incorporated by reference to the paragraph captioned "Common
Stock Price" in the Financial Review Section of the Registrant's Annual
Report to the Stockholders for fiscal year 1994 (Exhibit 13) page 15.
The information called for by Item 5 as to restrictions on the payment of
dividends by the Registrant is hereby incorporated by reference to the
Note captioned "Long-Term Debt" of Notes to Consolidated Financial
Statements of the Registrant's Annual Report to the Stockholders for
fiscal year 1994 (Exhibit 13) pages 27-28.
ITEM 6. SELECTED FINANCIAL DATA
- - - ------ -----------------------
The information called for by Item 6 is incorporated by reference to the
Registrant's Annual Report to the Stockholders for fiscal year 1994
(Exhibit 13) pages 18-19.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- - - ------ -----------------------------------------------------------------------
OF OPERATIONS
-------------
The information called for by Item 7 is incorporated by reference to the
Registrant's Annual Report to the Stockholders for fiscal year 1994
(Exhibit 13) pages 14-17.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- - - ------ -------------------------------------------
The information called for by Item 8 is incorporated by reference to the
Registrant's Annual Report to the Stockholders for fiscal year 1994
(Exhibit 13) pages 20-34.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- - - ------ ---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None.
-14-
<PAGE>
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- - - ------- --------------------------------------------------
The information called for by Item 10, as to (a) Directors of the
Registrant and (b) compliance with Section 16(a) of the Securities and
Exchange Act of 1934, is incorporated by reference to the Registrant's
definitive Proxy Statement dated May 23, 1994 filed with the Securities
and Exchange Commission pursuant to Regulation 14A in connection with
the Registrant's 1994 Annual Meeting of Stockholders at pages 4-6.
Certain information regarding executive officers is included in Part I
above.
ITEM 11. EXECUTIVE COMPENSATION
- - - ------- ----------------------
The information called for by Item 11 is incorporated by reference to
the Registrant's definitive Proxy Statement dated May 23, 1994 filed
with the Securities and Exchange Commission pursuant to Regulation 14A
in connection with the Registrant's 1994 Annual Meeting of Stockholders
at pages 8-14.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- - - ------- --------------------------------------------------------------
The information called for by Item 12 is incorporated by reference to
the Registrant's definitive Proxy Statement dated May 23, 1994 filed
with the Securities and Exchange Commission pursuant to Regulation 14A
in connection with the Registrant's 1994 Annual Meeting of Stockholders
at pages 2-3.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- - - ------- ----------------------------------------------
The information called for by Item 13 is incorporated by reference to
the Registrant's definitive Proxy Statement dated May 23, 1994 filed
with the Securities and Exchange Commission pursuant to Regulation 14A
in connection with the Registrant's 1994 Annual Meeting of Stockholders
at page 14.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- - - ------- ---------------------------------------------------------------
Form 10-K
---------
(a) 1. Financial Statements:
The following consolidated financial statements
of SUPERVALU INC. and Subsidiaries
are included in Part II, Item 8 (which
incorporates information by reference to the
Registrant's 1994 Annual Report to Stockholders
(Exhibit 13)):
-15-
<PAGE>
Independent Auditors' Report
Consolidated balance sheets as of February 26, 1994 and February 27,
1993.
Consolidated statements of earnings for each
of the three years in the period ended
February 26, 1994
Consolidated statements of cash flows for each
of the three years in the period ended
February 26, 1994
Consolidated statements of stockholders' equity
for each of the three years in the period
ended February 26, 1994
Notes to consolidated financial statements
2. Consolidated Financial Statement Schedules Page on this Form 10-K
----------------------
for SUPERVALU INC. and Subsidiaries:
Selected Quarterly Financial Data - for the
two years ended February 26, 1994 - included
in Part II, Item 8 (which incorporates
information by reference to the Registrant's
1994 Annual Report to Stockholders
(Exhibit 13)).
Independent Auditors' report on schedules 22
Schedule I - Marketable Securities 23
Schedule V - Property, plant and equipment 24
Schedule VI - Reserve for depreciation and 25
amortization of property,
plant and equipment
Schedule VIII - Valuation and qualifying 26
accounts
Schedule IX - Short-term borrowings 27
All other schedules are omitted because they
are not applicable or not required.
3. Exhibits:
(3)(i) Articles of Incorporation. Restated Certificate of
Incorporation.
(3)(ii) Bylaws. Bylaws, as amended, is incorporated by reference to
Exhibit 3.2 to the Registrant's Registration Statement on
Form S-3, Registration No. 33-52422.
(4) Instruments defining the rights of security holders,
including indentures:
a. Indenture dated as of July 1, 1987 between the Registrant
and Bankers Trust Company, as Trustee, relating to
certain outstanding debt securities of the
-16-
<PAGE>
Registrant, is incorporated by reference to Exhibit 4.1 to the
Registrant's Registration Statement on Form S-3, Registration
No. 33-52422.
b. First Supplemental Indenture dated as of August 1, 1990
between the Registrant and Bankers Trust Company, as Trustee,
to Indenture dated as of July 1, 1987 between the Registrant
and Bankers Trust Company, as Trustee, is incorporated by
reference to Exhibit 4.2 to the Registrant's Registration
Statement on Form S-3, Registration No. 33-52422.
c. Second Supplemental Indenture dated as of October 1, 1992
between the Registrant and Bankers Trust Company, as Trustee,
to Indenture dated as of July 1, 1987 between the Registrant
and Bankers Trust Company, as Trustee, is incorporated by
reference to Exhibit 4.1 to the Registrant's Form 8-K Report
dated November 13, 1992.
d. Letter of Representations dated November 12, 1992 between the
Registrant, Bankers Trust Company, as Trustee, and The
Depository Trust Company relating to certain outstanding debt
securities of the Registrant, is incorporated by reference to
Exhibit 4.5 to the Registrant's Form 8-K Report dated November
13, 1992.
e. Four-year Revolving Credit Agreement dated as of October 26,
1992 among the Registrant, the Banks named therein, Citibank,
N.A., as Agent, Bankers Trust Company, Pittsburgh National
Bank and Nationsbank of North Carolina, N.A., as Co-Agents,
and First Bank National Association, as Lead Manager, is
incorporated by reference to Exhibit 4.16 to the Registrant's
Registration Statement on Form S-3, Registration No. 33-52422.
f. Rights Agreement dated as of April 12, 1989 between the
Registrant and Norwest Bank Minnesota, N.A., as Rights Agent,
is incorporated by reference to Exhibit 1 to the Registrant's
Form 8-K Report dated April 19, 1989.
Pursuant to Instruction 4(iii) of Item 601(b) of Regulation S-K,
copies of certain instruments defining the rights of holders of
certain long-term debt of the Registrant and its subsidiaries are
not filed and, in lieu thereof, the Registrant agrees to furnish
copies thereof to the Securities and Exchange Commission upon
request.
(10) Material Contracts. The following exhibits are management
contracts, compensatory plans or arrangements required to be
filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K:
a. SUPERVALU INC. 1993 Stock Plan.
b. SUPERVALU INC. 1973 Executive Employees Stock Option Plan, as
amended, is incorporated by reference to Exhibit (10)a. to
Registrant's Form 10-K Report for the year ended February 25,
1989.
c. SUPERVALU INC. 1976 Executive Employees Stock Option Plan, as
amended, is incorporated by reference to Exhibit (10)b. to
Registrant's Form 10-K Report for the year ended February 23,
1991.
-17-
<PAGE>
d. SUPERVALU INC. 1978 Stock Appreciation Rights Plan, as
amended, is incorporated by reference to Exhibit (10)c. to
Registrant's Form 10-K Report for the year ended February 25,
1989.
e. Management Incentive Bonus Plan, as amended, is incorporated
by reference to Exhibit (10)d. to Registrant's Form 10-K for
the year ended February 29, 1992.
f. Directors Deferred Compensation Plan, as amended, is
incorporated by reference to Exhibit (10)e. to the
Registrant's Form 10-K Report for the year ended February 27,
1988.
g. SUPERVALU INC. 1983 Employees Stock Option Plan, as amended,
is incorporated by reference to Exhibit (10)f. to Registrant's
Form 10-K for the year ended February 29, 1992.
h. SUPERVALU INC. 1989 Stock Appreciation Rights Plan is
incorporated by reference to Exhibit (10)g. to Registrant's
Form 10-K Report for the year ended February 25, 1989.
i. SUPERVALU INC. ERISA Excess Plan Restatement is incorporated
by reference to Exhibit (10)h. to Registrant's Form 10-K
Report for the year ended February 24, 1990.
j. SUPERVALU INC. Deferred Compensation Plan is incorporated by
reference to Exhibit (10)i. to Registrant's Form 10-K Report
for the year ended February 23, 1991.
k. SUPERVALU INC. Executive Deferred Compensation Plan as amended
and Executive Deferred Compensation Plan II are incorporated
by reference to Exhibit (10)j. to Registrant's Form 10-K
Report for the year ended February 25, 1989.
l. Form of Agreement used in connection with Registrant's
Executive Post-Retirement Survivor Benefit Program, is
incorporated by reference to Exhibit (10)j. to Registrant's
Form 10-K Report for the year ended February 27, 1988.
m. Forms of Change of Control Severance Agreements entered into
with certain officers of the Registrant are incorporated by
reference to Exhibit (10)l. to Registrant's Form 10-K Report
for the year ended February 27, 1993.
n. SUPERVALU INC. Agreement and Plans Trust dated as of November
14, 1988 is incorporated by reference to Exhibit (10)n. to
Registrant's Form 10-K Report for the year ended February 25,
1989.
o. First Amendment (dated May 7, 1991) to SUPERVALU INC.
Agreement and Plans Trust dated as of November 14, 1988, is
incorporated by reference to Exhibit (10)o. to Registrant's
Form 10-K Report for the year ended February 23, 1991.
-18-
<PAGE>
p. Employment Agreement dated July 24, 1992 with Ted C. Wetterau,
a former Director and executive officer of the Registrant, is
incorporated by reference to Exhibit 10.1 to Registrant's Form
8-K Report dated October 29, 1992.
q. SUPERVALU INC. Directors Retirement Program as amended.
r. Supplemental Executive Retirement Plan is incorporated by
reference to Exhibit (10)r. to Registrant's Form 10-K Report
for the year ended February 24, 1990.
s. SUPERVALU INC. Long-Term Incentive Plan is incorporated by
reference to Exhibit (10)s. to Registrant's Form 10-K Report
for the year ended February 29, 1992.
t. SUPERVALU INC. Bonus Plan for Designated Corporate Officers.
(12) Ratio of Earnings to Fixed Charges.
(13) Portions of 1994 Annual Report to Stockholders of Registrant.
(21) Subsidiaries of the Registrant.
(23) Consent of Independent Auditors.
(24) Power of Attorney.
(b) Reports on Form 8-K:
No report on Form 8-K was filed during the fourth fiscal quarter of
fiscal year 1994 ended February 26, 1994.
-19-
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) 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)
DATE: May 26, 1994 By:/s/Michael W. Wright
----------------------------------
Michael W. Wright
Chairman of the Board;
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
- - - --------- ----- ----
/s/Michael W. Wright Chairman of the Board; President; May 26, 1994
- - - ----------------------- Chief Executive Officer; and
Michael W. Wright Director (principal executive
officer)
/s/Jeffrey C. Girard Executive Vice President and May 26, 1994
- - - ----------------------- Chief Financial Officer (principal
Jeffrey C. Girard financial officer)
/s/Isaiah Harris Vice President and Controller May 26, 1994
- - - ----------------------- (principal accounting officer)
Isaiah Harris
/s/ Herman Cain* Director
- - - -----------------------
Herman Cain
/s/ Stephen I. D'Agostino* Director
- - - --------------------------
Stephen I. D'Agostino
/s/ Edwin C. Gage* Director
- - - --------------------------
Edwin C. Gage
/s/ Sumner H. Goldman* Director
- - - --------------------------
Sumner H. Goldman
-20-
<PAGE>
/s/ Vernon H. Heath* Director
- - - ------------------------------
Vernon H. Heath
/s/ William A. Hodder* Director
- - - ------------------------------
William A. Hodder
/s/ Garnett L. Keith, Jr.* Director
- - - ------------------------------
Garnett L. Keith, Jr.
/s/ Richard D. McCormick* Director
- - - ------------------------------
Richard D. McCormick
/s/ Harriet Perlmutter* Director
- - - ------------------------------
Harriet Perlmutter
/s/ Carole F. St. Mark* Director
- - - ------------------------------
Carole F. St. Mark
/s/ Winston R. Wallin* Director
- - - ------------------------------
Winston R. Wallin
*Executed this 26 day of May, 1994, on behalf of the indicated Directors by
--
Michael W. Wright, duly appointed Attorney-in-Fact.
/s/Michael W. Wright
------------------------------------
Michael W. Wright
Attorney-in-Fact
-21-
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
SUPERVALU INC.
Eden Prairie, Minnesota
We have audited the consolidated financial statements of SUPERVALU INC. (the
Company) and subsidiaries as of February 26, 1994 and February 27, 1993 and for
each of the three years in the period ended February 26, 1994 and have issued
our report thereon dated April 7, 1994; such financial statements and report are
included in your 1994 Annual Report to Stockholders and are incorporated herein
by reference. Our audits also included the financial statement schedules of
SUPERVALU INC. and subsidiaries, listed in Item 14. These financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
/s/Deloitte & Touche
Minneapolis, Minnesota
April 7, 1994
-22-
<PAGE>
SUPERVALU INC. and Subsidiaries
SCHEDULE I - Marketable Securities - other investments
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- - - ------------------------------ --------------- --------------- --------------- ---------------
Market value of Amount at which
each issue each issue
Name of issuer and Number Cost of at balance carried in the
title of each issue of shares each issue sheet date balance sheet
- - - ------------------------------ --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
ShopKo Stores, Inc.-
Common Stock $.01 par value 14,731,667 $ 11.78 $ 11.63(A) $ 173,566,697
</TABLE>
(A) This represents the closing price on February 25, 1994 of ShopKo Stores,
Inc. common shares traded on the New York Stock Exchange and is not
necessarily indicative of the amount realizable by the company in a sale of
a large number of shares.
- 23 -
<PAGE>
SUPERVALU INC. and Subsidiaries
SCHEDULE V - Property, plant and equipment
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
- - - ------------------------ --------------- ------------ ----------- ------------- --------------
Balance at Additions Other changes Balance at
Classification beginning of year at cost Retirements Add (Deduct) end of year
- - - ------------------------ ----------------- ------------ ----------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Year (52 weeks) ended
February 26, 1994
Land $ 162,451,000 3,735,000 984,000 6,872,000 172,074,000
Buildings:
Owned 732,515,000 18,898,000 14,228,000 32,016,000 769,201,000
Leased 183,236,000 8,113,000 8,424,000 (7,034,000)(E) 175,891,000
Property Under Construction 38,386,000 84,683,000 70,000 (49,049,000) 73,950,000
Leasehold Improvements 103,620,000 6,463,000 936,000 5,577,000 114,724,000
Equipment 840,922,000 117,710,000 73,164,000 4,584,000 890,052,000
-------------- ------------ ----------- ------------ --------------
$2,061,130,000 $239,602,000 $97,806,000 $ (7,034,000)(C,E) $2,195,892,000
============== ============ =========== ============ ==============
Year (52 weeks) ended
February 27, 1993
Land $ 89,492,000 13,836,000 2,159,000 61,282,000 (A,B,C) 162,451,000
Buildings:
Owned 536,274,000 (12,274,000) 13,436,000 221,951,000 (A,B,C) 732,515,000
Leased 146,371,000 12,230,000 12,560,000 37,195,000 (A) 183,236,000
Property Under Construction 36,080,000 55,048,000 57,000 (52,685,000)(C) 38,386,000
Leasehold Improvements 52,405,000 4,370,000 3,708,000 50,553,000 (A,C) 103,620,000
Equipment 610,405,000 91,518,000 46,899,000 185,898,000 (A,C) 840,922,000
-------------- ------------ ----------- ------------ --------------
$1,471,027,000 $164,728,000 $78,819,000 $504,194,000 $2,061,130,000
============== ============ =========== ============ ==============
Year (53 weeks) ended
February 29, 1992
Land $ 83,453,000 218,000 91,000 5,912,000 (C) 89,492,000
Buildings:
Owned 495,493,000 10,816,000 1,483,000 31,448,000 (C) 536,274,000
Leased 113,688,000 40,343,000 7,660,000 --- 146,371,000
Property Under Construction 17,551,000 62,887,000 2,052,000 (42,306,000)(C,D) 36,080,000
Leasehold Improvements 40,286,000 1,917,000 361,000 10,563,000 (C,D) 52,405,000
Equipment 558,293,000 71,975,000 31,657,000 11,794,000 (C,D) 610,405,000
-------------- ------------ ----------- ------------ --------------
$1,308,764,000 $188,156,000 $43,304,000 $ 17,411,000 $1,471,027,000
============== ============ =========== ============ ==============
</TABLE>
(A) Includes assets acquired from Wetterau.
(B) This includes assets from the adoption of FASB 109.
(C) Miscellaneous transfers of assets between SUPERVALU divisions.
(D) Includes assets acquired from Scott's Foods, Inc.
(E) Change in present value for certain assets acquired from Wetterau.
- 24 -
<PAGE>
SUPERVALU INC. and Subsidiaries
SCHEDULE VI - Reserve for depreciation and amortization of property,
plant and equipment
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
- - - --------------------- ------------ ------------ ----------- ------------- ------------
Balance at Additions Other changes Balance at
Classification beginning of year at cost Retirements Add (Deduct) end of year
- - - --------------------- ----------------- ------------ ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Year (52 weeks) ended
February 26, 1994
Buildings:
Owned $189,580,000 $ 44,294,000 $ 2,695,000 $(1,159,000) $230,020,000
Leased 29,154,000 13,608,000 1,531,000 (1,489,000) 39,742,000
Leasehold Improvements 20,633,000 11,787,000 750,000 223,000 31,893,000
Equipment 437,522,000 92,066,000 46,410,000 936,000 484,114,000
------------ ------------ ----------- ----------- ------------
$676,889,000 $161,755,000 $51,386,000 $(1,489,000)(C) $785,769,000
============ ============ =========== =========== ============
Year (52 weeks) ended
February 27, 1993
Buildings:
Owned 157,167,000 32,845,000 3,875,000 3,443,000 (A,B) 189,580,000
Leased 19,790,000 12,207,000 2,563,000 (280,000) 29,154,000
Leasehold Improvements 17,318,000 5,502,000 2,435,000 248,000 (A) 20,633,000
Equipment 397,566,000 75,612,000 36,680,000 1,024,000 (A) 437,522,000
------------ ------------ ----------- ----------- ------------
$591,841,000 $126,166,000 $45,553,000 $ 4,435,000 (A,B) $676,889,000
============ ============ =========== =========== ============
Year (53 weeks) ended
February 29, 1992
Buildings:
Owned 132,655,000 25,298,000 778,000 (8,000) 157,167,000
Leased 16,117,000 7,777,000 4,104,000 --- 19,790,000
Leasehold Improvements 14,529,000 2,919,000 138,000 8,000 17,318,000
Equipment 356,020,000 67,593,000 26,047,000 --- 397,566,000
------------ ------------ ----------- ----------- ------------
$519,321,000 $103,587,000 $31,067,000 $ 0 (B) $591,841,000
============ ============ =========== =========== ============
</TABLE>
(A) This includes assets from the adoption of FASB 109.
(B) Miscellaneous transfers of assets between SUPERVALU divisions.
(C) Change in present value for certain assets acquired from Wetterau.
Cost of buildings, equipment and idle property are depreciated over the
estimated useful lives of the assets using a stright-line method. Useful lives
generally assigned are: buildings - 25 to 40 years; retail store equipment - 3
to 10 years. Costs of leasehold improvements are amortized individually over the
period of the lease or the estimated useful life of the asset, whichever is
shorter, using the straight-line method. Leased assets under capital leases are
amortized over the related lease term using the straight-line method.
- 25 -
<PAGE>
SUPERVALU INC. and Subsidiaries
SCHEDULE VIII - Valuation and qualifying accounts
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- - - -------------------------------- ----------- ------------------------------ ---------- ----------
ADDITIONS
(1) (2)
Balance at Charged to Balance at
beginning costs and Charged to end
Description of year expenses other accounts Deductions of year
- - - -------------------------------- ----------- ---------- -------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended:
February 26, 1994 $38,593,000 7,165,000 0 (A) 11,938,000 (B) $33,820,000
February 27, 1993 11,636,000 7,867,000 27,020,000 (A) 7,930,000 (B) 38,593,000
February 29, 1992 16,605,000 6,675,000 12,000 (A) 11,656,000 (B) 11,636,000
</TABLE>
(A) Beginning account balances of companies acquired.
(B) Balance consists of accounts determined to be uncollectible and charged
against reserves, net of collections on accounts previously charged off
- 26 -
<PAGE>
SUPERVALU INC. AND SUBSIDIARIES
SCHEDULE IX - Short-Term Borrowings - (Thousands of dollars)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
- - - ------------------------- ----------- ---------------- -------------- -------------- ----------------
END OF YEAR FISCAL YEAR AVERAGES
------------------------------ Maximum amount ----------------------------------
Category of aggregate Weighted average outstanding Average amount Weighted average
short-term borrowings Balance interest rate during the year outstanding interest rate
- - - ------------------------- ----------- ---------------- --------------- -------------- ----------------
(A) (B) (C)
<S> <C> <C> <C> <C> <C>
February 26, 1994
- - - -----------------
Notes Payable to Banks $ -0- 0.00% $38,000 $ 4,161 3.22%
Notes Payable to Factors
or Other Financial
Institutions 16,084 5.39 16,084 13,970 6.14
Payable to Holders of
Commercial Paper 6,998 3.38 234,363 127,783 3.25
February 27, 1993
- - - -----------------
Notes Payable to Banks -0- 0.00 178,001 7,706 3.31
Notes Payable to Factors
or Other Financial
Institutions 14,120 6.16 14,120 4,469 6.13
Payable to Holders of
Commercial Paper 237,376 3.27 952,683 137,024 3.52
February 29, 1992
- - - -----------------
Notes Payable to Banks -0- 0.00 30,000 108 6.12
Payable to Holders of
Commercial Paper 133,573 4.04 287,199 180,779 5.68
</TABLE>
(A) The total maximum short-term borrowings outstanding during the year
including notes payable and commercial paper was $234,363 in FY94, $965,651
in FY93 and $287,199 in FY92.
(B) Average amount outstanding during the period is computed by dividing the
total of daily outstanding principal balances by 364 (371 in year ended
2/29/92).
(C) Weighted average interest rate for the year is computed by dividing the
actual short-term interest expense by the short-term debt outstanding.
- 27 -
<PAGE>
EXHIBIT INDEX
SUPERVALU INC.
10-K REPORT
EXHIBIT NUMBER EXHIBIT
- - - -------------- -------
(3)(i) Restated Certificate of Incorporation.
*(3)(ii) Bylaws, as amended.
*(4)a. Indenture dated as of July 1, 1987 between the Registrant and
Bankers Trust Company, as Trustee, relating to certain
outstanding debt securities of the Registrant.
*(4)b. First Supplemental Indenture dated as of August 1, 1990
between the Registrant and Bankers Trust Company, as Trustee,
to Indenture dated as of July 1, 1987 between the Registrant
and Bankers Trust Company, as Trustee.
*(4)c. Second Supplemental Indenture dated as of October 1, 1992
between the Registrant and Bankers Trust Company, as Trustee,
to Indenture dated as of July 1, 1987 between the Registrant
and Bankers Trust Company, as Trustee.
*(4)d. Letter of Representations dated November 12, 1992 between the
Registrant, Bankers Trust Company, as Trustee, and The
Depository Trust Company relating to certain outstanding debt
securities of the Registrant.
*(4)e. Four-year Revolving Credit Agreement dated as of October 26,
1992 among the Registrant, the Banks named therein, Citibank,
N.A., as Agent, Bankers Trust Company, Pittsburgh National
Bank and Nationsbank of North Carolina, N.A., as Co-Agents,
and First Bank National Association, as Lead Manager.
*(4)f. Rights Agreement dated as of April 12, 1989 between the
Registrant and Norwest Bank Minnesota, N.A., as Rights Agent.
(10)a. SUPERVALU INC. 1993 Stock Plan
*(10)b. SUPERVALU INC. 1973 Executive Employees Stock Option Plan, as
amended.
*(10)c. SUPERVALU INC. 1976 Executive Employees Stock Option Plan, as
amended.
*(10)d. SUPERVALU INC. 1978 Stock Appreciation Rights Plan, as
amended.
*(10)e. Management Incentive Bonus Plan, as amended.
*(10)f. Directors Deferred Compensation Plan, as amended.
*(10)g. SUPERVALU INC. 1983 Employees Stock Option Plan, as amended.
Page 1 of 2
-28-
<PAGE>
EXHIBIT NUMBER EXHIBIT
- - - -------------- -------
*(10)h. SUPERVALU INC. 1989 Stock Appreciation Rights Plan.
*(10)i. SUPERVALU INC. ERISA Excess Plan Restatement.
*(10)j. SUPERVALU INC. Deferred Compensation Plan.
*(10)k. SUPERVALU INC. Executive Deferred Compensation Plan as amended
and Executive Deferred Compensation Plan II.
*(10)l. Form of Agreement used in connection with Registrant's
Executive Post-Retirement Survivor Benefit Program.
*(10)m. Forms of Change of Control Severance Agreements entered into
with certain officers of the Registrant.
*(10)n. SUPERVALU INC. Agreement and Plans Trust dated as of November
14, 1988.
*(10)o. First Amendment (dated May 7, 1991) to SUPERVALU INC.
Agreement and Plans Trust dated as of November 14, 1988.
*(10)p. Employment Agreement dated July 24, 1992 with Ted C. Wetterau,
a former Director and executive officer of the Registrant.
(10)q. SUPERVALU INC. Directors Retirement Program, as amended.
*(10)r. Supplemental Executive Retirement Plan
*(10)s. SUPERVALU INC. Long-Term Incentive Plan
(10)t. SUPERVALU INC. Bonus Plan for Designated Corporate Officers.
(12) Ratio of Earnings to Fixed Charges.
(13) Portions of 1994 Annual Report to Stockholders of Registrant.
(21) Subsidiaries of the Registrant.
(23) Consent of Independent Auditors.
(24) Power of Attorney.
- - - --------------------
* Incorporated by Reference
Page 2 of 2
-29-
<PAGE>
EXHIBIT (3)(i)
RESTATED
CERTIFICATE OF INCORPORATION
OF
SUPERVALU INC.
SUPERVALU INC., a corporation organized and existing under the laws of the
State of Delaware, hereby certifies as follows:
1. The name of the corporation is SUPERVALU INC.
2. This corporation was originally incorporated under the name of Winston
and Newell Co. by the filing of its original Certificate of
Incorporation with the Secretary of State of the State of Delaware on
December 28, 1925.
3. This corporation's Restated Certificate of Incorporation as heretofore
amended is hereby restated in its entirety to read as set forth on the
attached Exhibit A.
4. This Restated Certificate of Incorporation only restates and
integrates and does not further amend the provisions of the currently
existing Restated Certificate of Incorporation of this corporation as
heretofore amended or supplemented and there is no discrepancy between
those provisions and the provisions of this Restated Certificate of
Incorporation.
5. This Restated Certificate of Incorporation was duly adopted by the
Board of Directors of this corporation in accordance with Section 245
of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said SUPERVALU INC. has caused this Certificate to be
signed by David L. Boehnen, its Senior Vice President, and attested by Teresa H.
Johnson, its Secretary, this 13th day of April 1994.
SUPERVALU INC.
By /s/David L. Boehnen
---------------------------
David L. Boehnen
Senior Vice President
ATTEST:
By /s/Teresa H. Johnson
-------------------------
Teresa H. Johnson
Secretary
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
SUPERVALU INC.
ARTICLE FIRST. The name of this Corporation is SUPERVALU INC.
ARTICLE SECOND. Its principal office in the State of Delaware is to be
located at 1209 Orange Street in the City of Wilmington, County of New Castle,
and the name and address of its resident agent at such address is The
Corporation Trust Company.
ARTICLE THIRD. The purpose of the Corporation is to engage in any lawful
act or activity which corporations may be organized under the General
Corporation Law of the State of Delaware.
ARTICLE FOURTH. Section 1. Authorized Classes of Stock. That the total
--------- ---------------------------
number of shares of stock which this Corporation is authorized to issue is
201,000,000 shares, of which 200,000,000 shares of the par value of $1.00 per
share are designated Common Stock and 1,000,000 shares of no par value are
designated Preferred Stock (herein referred to as "Preferred Stock"). Shares of
any class of stock of the Corporation may be issued for such consideration and
for such corporate purposes as the Board of Directors may from time to time
determine.
Section 2. Description of capital Stock. The following is a description of
--------- ----------------------------
each of the classes of capital stock which the Corporation has authority to
issue with the designations, preferences, voting powers and participating,
optional or other special rights and the qualifications, limitations or
restrictions thereof.
PREFERRED STOCK
A. Rights and Restrictions of Preferred Stock. Authority is hereby
------------------------------------------
expressly vested in the Board of Directors of the Corporation, subject to the
provisions of this Article Fourth and to the limitations prescribed by law, to
authorize the issue from time to time of one or more series of Preferred Stock
and with respect to each such series to fix by resolution or resolutions adopted
by the affirmative vote of a majority of the whole Board of Directors providing
for the issue of such series the voting powers, full or limited, if any, of the
shares of such series and the designations, preferences and relative,
participating, optional or other special rights and the qualifications,
limitations or restrictions thereof. The authority of the Board of Directors
with respect to each series shall include, but not be limited to, the
determination or fixing of the following:
(1) The number of shares constituting such series and the designation of
such series.
(2) The dividend rate of such series, the conditions and dates upon which
such dividends shall be payable, the relation which such dividends shall
bear to the dividends payable on any
<PAGE>
other class or classes or series of the Corporation's capital stock, and
whether such dividends shall be cumulative or noncumulative.
(3) Whether the shares of such series shall be subject to redemption by the
Corporation at the option of either the Corporation or the holder or both
or upon the happening of a specified event, and, if made subject to any
such redemption, the times or events, prices and other terms and conditions
of such redemption.
(4) The terms and amount of any sinking fund provided for the purchase or
redemption of the shares of such series.
(5) Whether or not the shares of such series shall be convertible into, or
exchangeable for, at the option of either the holder or the Corporation or
upon the happening of a specified event, shares of any other class or
classes or of any other series of the same or any other class or classes of
the Corporation's capital stock, and, if provision be made for conversion
or exchange, the times or events, prices, rates, adjustments, and other
terms and conditions of such conversions or exchanges.
(6) The restrictions, if any, on the issue or reissue of any additional
Preferred Stock, including increases or decreases in the number of shares
of any series subsequent to the issue of shares of that series.
(7) The rights of the holders of the shares of such series upon the
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation.
(8) Any right to vote with holders of shares of any other series or class
and any right to vote as a class, either generally or as a condition to
specified corporate action, in addition to any voting powers required by
law.
COMMON STOCK
B. Rights and Restrictions of Common Stock. The holders of the Common
---------------------------------------
Stock shall have and possess all rights as stockholders of the Corporation,
except as such rights may be limited by the preferences, rights, limitations and
restrictions of the Preferred Stock. Subject to provisions of a resolution or
resolutions of the Board of Directors establishing a series of Preferred Stock,
dividends may be declared by the Board of Directors and paid from time to time
out of any funds legally available there for. In the event of any dissolution,
liquidation or winding up of the affairs of the Corporation, all assets and
funds of the Corporation remaining after paying all amounts payable to the
holders of Preferred Stock, as provided by a resolution or resolutions of the
Board of Directors establishing a series of Preferred Stock, shall be
distributed to the holders of Common Stock ratably according to the number of
shares of Common Stock held.
3
<PAGE>
OTHER PROVISIONS
C. Preemptive Rights. No holders of shares of any class or series of
-----------------
this Corporation shall have any preemptive rights to subscribe for any shares of
any class or series of stock of this Corporation, whether now or hereafter
authorized, or for any obligations convertible into shares of any class or
series of stock of this Corporation, whether now or hereafter authorized.
D. voting by Classes. Except as otherwise required by law or by the
provisions of a resolution or resolutions of the Board of Directors establishing
a series of Preferred Stock, all matters shall be voted upon without distinction
as to classes or series of stock.
ARTICLE FIFTH. In furtherance, and not in limitation of the powers
conferred by statute, the Board of Directors is expressly authorized:
(a) To make, amend, alter, change, add to or repeal bylaws of this
Corporation, without any action on the part of the stockholders. The
bylaws made by the directors may be amended, altered, changed, added to or
repealed by the stockholders. Any specific provision in the bylaws
regarding amendment thereof shall be controlling.
(b) By resolution passed by a majority of the whole board, to designate two
or more directors to constitute an Executive Committee, which committee
shall have and exercise (except when the Board of Directors shall be in
session) such powers and rights of the Board of Directors in the management
of the business and affairs of this Corporation as may be provided in the
bylaws or in said resolution, and shall have power to authorize the seal of
this Corporation to be affixed to all papers which may require it.
4
<PAGE>
ARTICLE SIXTH. Section 1. Special Vote for Certain Combinations. Except
--------- -------------------------------------
as otherwise expressly provided in Section 2 of this Article:
(i) any merger or consolidation of the Corporation with or into any
other corporation;
(ii) any sale, lease, exchange or other disposition of all or any
substantial part of the assets of the Corporation to or with any other
corporation, person or other entity;
(iii) the issuance or transfer of any securities of the Corporation to
any other corporation, person or other entity in exchange for assets or
securities or a combination thereof (except assets or securities or a
combination thereof so acquired in a single transaction or a series of
related transactions having an aggregate fair market value of less than
$5,000,000); or
(iv) the issuance or transfer of any securities of the Corporation to
any other corporation, person or other entity for cash,
shall require the affirmative vote of the holders of
(a) at least 75% of the outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of
directors, considered for the purposes of this Article as one class,
and
(b) at least a majority of the outstanding shares of capital
stock of the Corporation which are not beneficially owned by such
corporation, person or other entity,
if, as of the record date for the determination of stockholders entitled to
notice thereof and to vote thereon, such other corporation, person or entity is
the beneficial owner, directly or indirectly, of 5% or more of the outstanding
shares of capital stock of the Corporation entitled to vote generally in the
election of directors, considered for the purposes of this Article as one class.
Such affirmative vote shall be required notwithstanding the fact that no vote
may be required, or that some lesser percentage may be specified by law or in
any agreement with any national securities exchange.
Section 2. Special Vote Not Required. The provisions of this Article shall
--------- -------------------------
not apply to any transaction described in clauses (i), (ii), (iii) or (iv) of
Section 1 of this Article, (i) with another corporation if a majority, by vote,
of the outstanding shares of all classes of capital stock of such other
corporation entitled to vote generally in the election of directors, considered
5
<PAGE>
for this purpose as one class is owned of record or beneficially by the
Corporation and/or its subsidiaries; or (ii) with another corporation, person or
other entity if the Board of Directors of the Corporation shall by resolution
have approved a memorandum of understanding with such other corporation, person
or other entity with respect to and substantially consistent with such
transaction prior to the time such other corporation, person or other entity
became the beneficial owner, directly or indirectly, of 5% or more of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors.
Section 3. Beneficial Ownership. For the purposes of this Article, a
--------- --------------------
corporation, person or other entity shall be deemed to be the beneficial owner
of any shares of capital stock of the Corporation (i) which it has the right to
acquire pursuant to any agreement, or upon exercise of conversion rights,
warrants or options, or otherwise, or (ii) which are beneficially owned,
directly or indirectly (including shares deemed owned through application of
clause (i) above), by any other corporation, person or other entity (a) with
which it or its "affiliate" or "associate" (as defined below) has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of capital stock of the Corporation or (b) which is its "affiliate" or
"associate" as those terms were defined in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934 as in effect on May 1,
1976. For the purposes of this Article, the outstanding shares of any class of
capital stock of the Corporation shall include shares deemed owned through the
application of clauses (i) and (ii) of this Section 3 but shall not include any
other shares which may be issuable pursuant to any agreement, or upon exercise
of conversion rights, warrants or options, or otherwise.
Section 4. Determination by Board of Directors. The Board of Directors of
--------- -----------------------------------
the Corporation shall have the power and duty to determine for the purposes of
this Article, on the basis of information then known to it, whether (i) any
corporation, person, or other entity beneficially owns, directly or indirectly,
5% or more of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors, or is an "affiliate" or
an "associate" (as defined above) of another, (ii) any proposed sale, lease,
exchange or other disposition of part of the assets of the Corporation involves
a substantial part of the assets of the Corporation, (iii) assets or securities,
or a combination thereof, to be acquired in exchange for securities of the
Corporation, have an aggregate fair market value of less than $5,000,000 and
whether the same are proposed to be acquired in a single transaction or a series
of related transactions, and (iv) the memorandum of understanding referred to
above is substantially
6
<PAGE>
consistent with the transaction to which it relates. Any such determination by
the Board shall be conclusive and binding for all purposes of this Article.
Section 5. Amendment. Notwithstanding any other provision of this
--------- ---------
Certificate of Incorporation or the Bylaws (and in addition to any other vote
that may be required by law, this Certificate of Incorporation or the Bylaws),
there shall be required to amend, alter, change, or repeal, directly or
indirectly, this Article Sixth the affirmative vote of (i) at least 75% of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class) and (ii) at least a majority of the outstanding shares of capital stock
of the Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class), exclusive of all voting stock of the
Corporation beneficially owned, directly or indirectly, by any corporation,
person or entity which is, as of the record date for the determination of
stockholders entitled to notice of such amendment, alteration, change or repeal
and to vote thereon, the beneficial owner, directly or indirectly, of 5% or more
of the outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class).
ARTICLE SEVENTH. The Corporation shall have the right, subject to any
express provisions or restrictions contained in the Certificate of Incorporation
or the Bylaws, from time to time to amend the Certificate of Incorporation or
any provision thereof in any manner now or hereafter provided by law.
ARTICLE EIGHTH. A director of this Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, provided, however, that this Article Eighth shall not
eliminate or limit the liability of a director to the extent provided by
applicable law (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (iii) under
section 174 of the General Corporation Law of the State of Delaware; (iv) for
any transaction from which the director derived an improper personal benefit; or
(v) for any act or omission occurring prior to the date when this Article Eighth
became effective. Any repeal or modification of the foregoing provisions of this
Article Eighth by the stockholders of the Corporation shall not adversely affect
any right or protection of a director of the Corporation existing at the time of
such repeal or modification.
7
<PAGE>
CERTIFICATE OF DESIGNATIONS
of
SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
of
SUPER VALU STORES, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
-----------------------------------
Super Valu Stores, Inc., a corporation organized and existing under
the General Corporation Law of the state of Delaware (hereinafter called the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation as required by Section 151 of the
General Corporation Law at a meeting duly called and held on April 12, 1989:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Certificate
of Incorporation, the Board of Directors hereby creates a series of Preferred
Stock, no par value (the "Preferred Stock"), of the Corporation and hereby
states the designation and number of shares, and fixes the relative rights,
preferences, and limitations thereof as follows:
Series B Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall
----------------------
be designated as "Series B Junior Participating Preferred Stock" (the "Series B
Preferred Stock") and the number of shares constituting the Series B Preferred
Stock shall be 100,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
--------
the number of shares of Series B Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series B Preferred Stock.
Section 2. Dividends and Distributions.
---------------------------
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and
superior to the Series B Preferred Stock with respect to dividends,
the holders of shares of Series B Preferred Stock, in preference to
the
8
<PAGE>
holders of Common Stock, par value $1.00 per share (the "Common
Stock"), of the Corporation, and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September
and December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series B Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $10 or
(b) subject to the provision for adjustment hereinafter set forth,
1,000 times the aggregate per share amount of all cash dividends, and
1,000 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions, other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on
the Common Stock since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of
Series B Preferred Stock. In the event the Corporation shall at any
time declare or pay any dividend on the Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of
Series B Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series B Preferred Stock as provided in paragraph (A) of this
Section immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $10 per share on the Series B
Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
9
<PAGE>
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series B Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date
for the first Quarterly Dividend Payment Date, in which case dividends
on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of
holders of shares of Series B Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares
of Series B Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series B Preferred Stock
entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series B
-------------
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series B Preferred Stock shall entitle the holder
thereof to 1,000 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall
at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to which
holders of shares of Series B Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of
10
<PAGE>
Preferred Stock or any similar stock, or by law, the holders of shares
of Series B Preferred Stock and the holders of shares of Common Stock
and any other capital stock of the Corporation having general voting
rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series B Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section 4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series B Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of
Series B Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to
the Series B Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series B Preferred Stock, except dividends paid ratably
on the Series B Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series B Preferred Stock, provided that the Corporation may at
any time redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series B Preferred
Stock; or
(iv) redeem or purchase or otherwise acquire
11
<PAGE>
for consideration any shares of Series B Preferred Stock, or any
shares of stock ranking on a parity with the Series B Preferred
Stock, except in accordance with a purchase offer made in writing
or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series B Preferred Stock
-----------------
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
--------------------------------------
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series B
Preferred Stock unless, prior thereto, the holders of shares of Series B
Preferred Stock shall have received $1,000 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series B
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 1,000
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series B Preferred Stock, except distributions made ratably on the Series B
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a
12
<PAGE>
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which holders of shares of Series B
Preferred Stock were entitled immediately prior to such event under the proviso
in clause (1) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
---------------------------
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series B Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series B Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series B Preferred Stock
-------------
shall not be redeemable.
Section 9. Rank. The Series B Preferred Stock shall rank, with
----
respect to the payment of dividends and the distribution of assets, junior to
all series of any other class of the Corporation's Preferred Stock.
Section 10. Amendment. The Certificate of Incorporation of the
---------
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series B Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series B Preferred Stock, voting
together as a single class.
IN WITNESS WHEREOF, this Certificate of Designations is
13
<PAGE>
executed on behalf of the Corporation by one of its Vice Presidents and attested
by its Secretary this 25th day of April, 1989.
/s/ William C. Hunt
---------------------------------------
Vice President
Attest:
/s/ James A. Strom
- - - ----------------------------------
Secretary
14
<PAGE>
CERTIFICATE OF DESIGNATIONS
of
4.50% PREFERRED STOCK
of
SUPERVALU INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
SUPERVALU INC., a corporation organized and existing under the General
Corporation Law of the State of Delaware (hereinafter called the "Corporation"),
hereby certifies that the following resolution was duly adopted by the Pricing
Committee (the "Committee") of the Board of Directors of the Corporation as
required by Section 151 of the General Corporation Law by a written action dated
February 14, 1994:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (hereinafter called the "Board of
Directors") in accordance with the provisions of the Certificate of
Incorporation of the Corporation (hereinafter, as amended and restated to date,
called the "Certificate of Incorporation"), and pursuant to the authority
granted to and vested in the Committee by the Board of Directors at a meeting
duly held on December 15, 1993, the Committee hereby creates a series of
Preferred Stock, no par value (the "Preferred Stock"), of the Corporation and
hereby states the designation and number of shares, and fixes the relative
rights, preferences, and limitations thereof as follows:
Section 1. Designation and Amount. The shares of such series shall
-----------------------
be designated as "4.50% Preferred Stock" (hereinafter called this "Series") and
the number of shares constituting this Series shall be 6,000. Such number of
shares may be increased or decreased by resolution of the Board of Directors,
the Committee or any duly authorized committee of the Board of Directors;
provided, that no decrease shall reduce the number of shares of this Series to a
- - - --------
number less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into shares of this Series.
Section 2. Dividends.
----------
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock (or any similar stock) ranking prior to this Series with
respect to dividends, the holders of shares of this Series, in preference to the
holders of Common Stock, par value $1.00 per share (the "Common Stock"), of the
15
<PAGE>
Corporation, and of any other junior stock, shall be entitled to receive, when,
as and if declared by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the fifteenth day of March,
June, September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of shares of this
Series, in an amount per share equal to $45.00 per annum. The amount of the
dividend for any period less than a full quarter shall be computed on the basis
of a 360-day year of twelve 30-day months and the actual number of days elapsed
in the period.
(B) Dividends shall begin to accrue and be cumulative on outstanding
shares of this Series from the date of original issue of such shares. Accrued
but unpaid dividends shall not bear interest. Dividends paid on the shares of
this Series in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a share-
by-share basis among all such shares at the time outstanding. The Board of
Directors or a duly authorized committee of the Board of Directors may fix a
record date for the determination of holders of shares of this Series entitled
to receive payment of a dividend declared thereon, which record date shall be
not more than 60 days prior to the date fixed for the payment thereof.
(C) Dividends payable on shares of this Series are subject, in certain
circumstances, to the Corporation's right of offset as set forth in that certain
Agreement and Plans of Reorganization dated February 14, 1994 (the "Agreement")
by and among the Corporation, Clyde Evans Markets, Inc. and the shareholders of
Clyde Evans Markets, Inc., a copy of which is on file at the principal executive
offices of the Corporation, and any dividends so set-off by the Corporation
shall not be deemed to be in arrears
Section 3. Voting Rights. The holders of shares of this Series shall
--------------
have the following voting rights:
(A) Each share of this Series shall entitle the holder thereof to one
vote on all matters submitted to a vote of the stockholders of the Corporation.
(B) Except as otherwise provided herein, in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of this Series and the holders of shares of Common
Stock and any other capital stock of the Corporation having general voting
rights shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law,
holders of this Series shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth
16
<PAGE>
herein) for taking any corporate action.
Section 4. Certain Restrictions.
---------------------
(A) Whenever quarterly dividends payable on this Series as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid dividends,
whether or not declared, on shares of this Series outstanding shall have been
paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior
(either as to dividends or upon liquidation,
dissolution or winding up) to this Series;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a
parity (either as to dividends or upon
liquidation, dissolution or winding up) with this
Series, except dividends paid ratably on this
Series and all such parity stock on which
dividends are payable or in arrears in proportion
to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior
(either as to dividends or upon liquidation,
dissolution or winding up) to this Series, provided
that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in
exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to this Series;
or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of this Series, or any shares
of stock ranking on a parity with this Series, except
in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors
or a duly authorized committee of the Board of
Directors) to all holders of such shares upon such
terms as the Board of Directors or a duly authorized
committee of the
17
<PAGE>
Board of Directors, after consideration of the
respective annual dividend rates and other relative
rights and preferences of the respective series and
classes, shall determine in good faith will result in
fair and equitable treatment among the respective
series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of this Series redeemed,
------------------
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
---------------------------------------
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, no distribution shall be made (1) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to this Series unless, prior thereto, the holders of shares of this
Series shall have received $1,000.00 per share, plus an amount equal to accrued
and unpaid dividends thereon, whether or not declared, to the date of such
payment, or (2) to the holders of shares of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with this Series,
except distributions made ratably on this Series and all such parity stock in
proportion to the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up. For the purposes of
this Section 6, a voluntary or involuntary liquidation, dissolution or winding
up of the Corporation shall not include the consolidation or merger of the
Corporation with or into any other corporation, or a merger of another
corporation with or into the Corporation, or any sale, lease or conveyance of
all or any part of the property or business of the Corporation.
Section 7. Redemption at the Option of the Corporation.
--------------------------------------------
(A) The shares of this Series shall not be redeemable at the option of
the Corporation prior to the fifth anniversary of the date of first issuance of
shares of this Series. Subject to the restrictions set forth in Section 4, the
Corporation, at its option, may redeem shares of this Series, as a whole or in
part, at any time or from time to time on or after the fifth anniversary of
18
<PAGE>
the date of first issuance of shares of this Series, at a redemption price equal
to $1,000.00 per share, plus, in each case, accrued and unpaid dividends
thereon, whether or not declared, to the date fixed for redemption.
(B) In the event that fewer than all the outstanding shares of this
Series are to be redeemed, the number of shares to be redeemed shall be
determined by the Board of Directors or any duly authorized committee of the
Board of Directors, and the shares to be redeemed shall be determined by lot,
pro rata or by any other method as may be determined by the Board of Directors
or any duly authorized committee of the Board of Directors in its sole
discretion.
(C) In the event the Corporation shall redeem shares of this Series,
notice of such redemption shall be given by first class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the redemption date, to
each holder of record of the shares to be redeemed, at such holder's address as
the same appears on the stock register of the Corporation. Each such notice
shall state: (i) the redemption date; (ii) the number of shares of this Series
to be redeemed and, if fewer than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder; (iii) the
redemption price; (iv) the place or places where certificates for such shares
are to be surrendered for payment of the redemption price; and (v) that
dividends on the shares to be redeemed will cease to accrue on the redemption
date.
(D) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in providing
money for the payment of the applicable redemption price), dividends on the
shares of this Series so called for redemption shall cease to accrue, and said
shares shall no longer be deemed to be outstanding, and all rights of the
holders thereof as stockholders of the Corporation (except the right to receive
from the Corporation the applicable redemption price) shall cease. Upon
surrender in accordance with said notice of the certificates for any shares so
redeemed (properly endorsed or assigned for transfer), such shares shall be
redeemed by the Corporation at the redemption price. In case fewer than all the
shares represented by any such certificate are redeemed, a new certificate shall
be issued representing the unredeemed shares without cost to the holder thereof.
(E) The right of the Corporation to redeem shares of this Series, and
the right of the holder of such shares to receive the redemption price therefor,
pursuant to this Section 7 are, in certain circumstances, subject to certain
restrictions (including the Corporation's right of offset) set forth in the
Agreement, a copy of which is on file at the principal executive offices of the
Corporation.
19
<PAGE>
Section 8. Redemption at the Option of the Holder.
---------------------------------------
(A) The shares of this Series shall not be redeemable at the option of
any holder thereof prior to the fifth anniversary of the date of first issuance
of shares of this Series. Subject to the restrictions set forth in Section 4,
any holder of shares of this Series, at the option of such holder, may require
the Corporation to redeem shares of this Series held by such holder, as a whole
or in part, at any time or from time to time on or after the fifth anniversary
of the date of first issuance of shares of this Series, at a redemption price
equal to $1,000.00 per share, plus, in each case, accrued and unpaid dividends
thereon, whether or not declared, to the date fixed for redemption; provided,
--------
however, that a holder of shares of this Series may exercise the right to
require the Corporation to redeem such holder's shares pursuant to this Section
8 not more than one time in any calendar year; and provided further, that no
-------- -------
such request by a holder of shares of this Series shall be for less than the
lesser of (i) ten percent of the number of shares of this Series originally
issued to such holder by the Corporation, or (ii) all the shares of this Series
owned of record by such holder.
(B) For a holder of shares of this Series to exercise the right to
require the Corporation to redeem such holder's shares pursuant to this Section
8, such holder shall give notice of such exercise by first class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the redemption
date, to the Corporation at its principal executive offices (which, until
further notice by the Corporation, shall be 11840 Valley View Road, Eden
Prairie, Minnesota 55344) to the attention of the Corporate Secretary. Each
such notice shall state: (i) the name of such holder, (ii) the redemption date
and (iii) the number of shares of this Series to be redeemed from such holder.
(C) Not later than 20 days after receipt by the Corporation of a
notice from a holder of shares of this Series pursuant to Section 8(B), the
Corporation shall give notice by first class mail, postage prepaid, to such
holder confirming the redemption date and the number of shares to be redeemed
from such holder and stating (i) the redemption price, (ii) the place or places
where certificates for such shares are to be surrendered for payment of the
redemption price and (iii) that dividends on the shares to be redeemed will
cease to accrue on the redemption date.
(D) Notice having been mailed by the Corporation as aforesaid, from
and after the redemption date (unless default shall be made by the Corporation
in providing money for the payment of the applicable redemption price),
dividends on the shares of this Series so put for redemption shall cease to
accrue, and said shares shall no longer be deemed to be outstanding, and all
rights of the holder thereof as a stockholder of the Corporation (except the
right to receive from the Corporation the applicable redemption price) shall
cease. Upon surrender of the certificates for any shares so redeemed (properly
endorsed or assigned for transfer),
20
<PAGE>
such shares shall be redeemed by the Corporation at the redemption price. In
case fewer than all the shares represented by any such certificate are redeemed,
a new certificate shall be issued representing the unredeemed shares without
cost to the holder thereof.
(E) The right of a holder of shares of this Series to require the
Corporation to redeem such holder's shares, and the right of such holder to
receive the redemption price therefor, pursuant to this Section 8 are, in
certain circumstances, subject to certain restrictions (including the
Corporation's right of offset) set forth in the Agreement, a copy of which is on
file at the principal executive offices of the Corporation.
Section 9. Rank. Any stock of any class or classes of the
-----
Corporation shall be deemed to rank:
(A) Prior to the shares of this Series, either as to dividends or upon
liquidation, dissolution or winding up, if the holders of such class or classes
shall be entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may be,
in preference or priority to the holders of shares of this Series;
(B) On a parity with shares of this Series, either as to dividends or
upon liquidation, dissolution or winding up, whether or not the dividend rates,
dividend payment dates or redemption or liquidation prices per share or sinking
fund provisions, if any, be different from those of this Series, if the holders
of such stock shall be entitled to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in proportion to their respective dividend rates or liquidation
prices, without preference or priority, one over the other, as between the
holders of such stock and the holders of shares of this Series; and
(C) Junior to shares of this Series, either as to dividends or upon
liquidation, dissolution or winding up, if such class shall be Common Stock or
if the holders of shares of this Series shall be entitled to receipt of
dividends or of amounts distributable upon dissolution, liquidation or winding
up of the Corporation, as the case may be, in preference or priority to the
holders of shares of such class or classes. The outstanding shares of the
Corporation's Series B Junior Participating Preferred Stock shall be deemed to
rank junior to the outstanding shares of this Series with respect to the payment
of dividends and upon liquidation, dissolution or winding up.
21
<PAGE>
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Corporation by one of its Vice Presidents and attested by its
Secretary this 14th day of February, 1994.
/s/David L. Boehnen
-------------------------------------
Senior Vice President
Attest:
/s/Teresa H. Johnson
- - - ------------------------
Secretary
22
<PAGE>
EXHIBIT (10)a.
--------------
SUPERVALU INC.
1993 STOCK PLAN
Section 1. Purpose.
- - - -------------------
The purpose of the Plan is to promote the interests of the Company and
its stockholders by aiding the Company in attracting and retaining key
management personnel capable of assuring the future success of the Company, to
offer such personnel incentives to put forth maximum efforts for the success of
the Company's business and to afford such personnel an opportunity to acquire a
proprietary interest in the Company.
Section 2. Definitions.
- - - -----------------------
As used in the Plan, the following terms shall have the meanings set
forth below:
(a) "Affiliate" shall mean (i) any entity that, directly or
indirectly through one or more intermediaries, is controlled by the Company and
(ii) any entity in which the Company has a significant equity interest, in each
case as determined by the Committee.
(b) "Award" shall mean any Option, Stock Appreciation Right,
Restricted Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent
or Other Stock-Based Award granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract or
other instrument or document evidencing any Award granted under the Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and any regulations promulgated thereunder.
(e) "Committee" shall mean a committee of the Board of Directors of
the Company designated by such Board to administer the Plan, which shall consist
of members appointed from time to time by the Board of Directors and shall be
comprised of not less than such number of directors as shall be required to
permit the Plan to satisfy the requirements of Rule 16b-3. Each member of the
Committee shall be a "disinterested person" within the meaning of Rule 16b-3.
(f) "Company" shall mean SUPERVALU INC., a Delaware corporation, and
any successor corporation.
(g) "Dividend Equivalent" shall mean any right granted under Section
6(e) of the Plan.
<PAGE>
(h) "Eligible Person" shall mean any employee, officer, consultant or
independent contractor providing services to the Company or any Affiliate who
the Committee determines to be an Eligible Person. A director of the Company
who is not also an employee of the Company or an Affiliate shall not be an
Eligible Person.
(i) "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair market
value of such property determined by such methods or procedures as shall be
established from time to time by the Committee. Notwithstanding the foregoing,
unless otherwise determined by the Committee, the Fair Market Value of Shares on
a given date for purposes of the Plan shall be the average of the opening and
closing sale price of the Shares as reported on the New York Stock Exchange on
such date or, if such Exchange is not open for trading on such date, on the day
closest to such date when such Exchange is open for trading.
(j) "Incentive Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is intended to meet the requirements of Section
422 of the Code or any successor provision.
(k) "Non-Qualified Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.
(l) "Option" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option, and shall include Restoration Options.
(m) "Other Stock-Based Award" shall mean any right granted under
Section 6(f) of the Plan.
(n) "Participant" shall mean an Eligible Person designated to be
granted an Award under the Plan.
(o) "Performance Award" shall mean any right granted under Section
6(d) of the Plan.
(p) "Person" shall mean any individual, corporation, partnership,
association or trust.
(q) "Plan" shall mean this 1993 Stock Plan, as amended from time to
time.
(r) "Restoration Option" shall mean any Option granted under Section
6(a)(iv) of the Plan.
(s) "Restricted Stock" shall mean any Share granted under Section
6(c) of the Plan.
(t) "Restricted Stock Unit" shall mean any unit granted under Section
6(c) of the Plan evidencing the right to receive a Share (or a cash payment
equal to the Fair Market Value of a Share) at some future date.
A-2
<PAGE>
(u) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as amended,
or any successor rule or regulation.
(v) "Shares" shall mean shares of Common Stock, $1.00 par value, of
the Company or such other securities or property as may become subject to Awards
pursuant to an adjustment made under Section 4(c) of the Plan.
(w) "Stock Appreciation Right" shall mean any right granted under
Section 6(b) of the Plan.
Section 3. Administration.
- - - --------------------------
(a) Power and Authority of the Committee. The Plan shall be
------------------------------------
administered by the Committee. Subject to the express provisions of the Plan
and to applicable law, the Committee shall have full power and authority to:
(i) designate Participants; (ii) determine the type or types of Awards to be
granted to each Participant under the Plan; (iii) determine the number of Shares
to be covered by (or with respect to which payments, rights or other matters are
to be calculated in connection with) each Award; (iv) determine the terms and
conditions of any Award or Award Agreement; (v) amend the terms and conditions
of any Award or Award Agreement and accelerate the exercisability of Options or
the lapse of restrictions relating to Restricted Stock, Restricted Stock Units
or other Awards; (vi) determine whether, to what extent and under what
circumstances Awards may be exercised in cash, Shares, other securities, other
Awards or other property, or canceled, forfeited or suspended; (vii) determine
whether, to what extent and under what circumstances cash, Shares, other
securities, other Awards, other property and other amounts payable with respect
to an Award under the Plan shall be deferred either automatically or at the
election of the holder thereof or the Committee; (viii) interpret and administer
the Plan and any instrument or agreement relating to, or Award made under, the
Plan; (ix) establish, amend, suspend or waive such rules and regulations and
appoint such agents as it shall deem appropriate for the proper administration
of the Plan; and (x) make any other determination and take any other action that
the Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the Committee, may be
made at any time and shall be final, conclusive and binding upon any
Participant, any holder or beneficiary of any Award and any employee of the
Company or any Affiliate.
(b) Delegation. The Committee may delegate its powers and duties
----------
under the Plan to one or more officers of the Company or any Affiliate or a
committee of such officers, subject to such terms, conditions and limitations as
the Committee may establish in its sole discretion; provided, however, that the
-------- -------
Committee shall not delegate its powers and duties under the Plan with regard to
officers or directors of the Company or any Affiliate who are subject to Section
16 of the Securities Exchange Act of 1934, as amended.
A-3
<PAGE>
(c) Power and Authority of the Board of Directors. Notwithstanding
---------------------------------------------
anything to the contrary contained herein, the Board of Directors may, at any
time and from time to time, without any further action of the Committee,
exercise the powers and duties of the Committee under the Plan with regard to
any Person who is not an officer or director of the Company or any Affiliate who
is subject to Section 16 of the Securities Exchange Act of 1934, as amended.
Section 4. Shares Available for Awards.
- - - ---------------------------------------
(a) Shares Available. Subject to adjustment as provided in Section
----------------
4(c), the aggregate number of Shares which may be issued under all Awards under
the Plan shall be 3,500,000. Shares to be issued under the Plan may be either
Shares reacquired and held in the treasury or authorized but unissued Shares.
If any Shares covered by an Award or to which an Award relates are not purchased
or are forfeited, or if an Award otherwise terminates without delivery of any
Shares, then the number of Shares counted against the aggregate number of Shares
available under the Plan with respect to such Award, to the extent of any such
forfeiture or termination, shall again be available for granting Awards under
the Plan.
(b) Accounting for Awards. For purposes of this Section 4, if an
---------------------
Award entitles the holder thereof to receive or purchase Shares, the number of
Shares covered by such Award or to which such Award relates shall be counted on
the date of grant of such Award against the aggregate number of Shares available
for granting Awards under the Plan.
(c) Adjustments. In the event that the Committee shall determine
-----------
that any dividend or other distribution (whether in the form of cash, Shares,
other securities or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and type of Shares (or other securities or other property) which
thereafter may be made the subject of Awards, (ii) the number and type of Shares
(or other securities or other property) subject to outstanding Awards and (iii)
the purchase or exercise price with respect to any Award; provided, however,
-------- -------
that the number of Shares covered by any Award or to which such Award relates
shall always be a whole number.
Section 5. Eligibility.
- - - -----------------------
Any Eligible Person, including any Eligible Person who is an officer
or director of the Company or any Affiliate, shall be eligible to be designated
a Participant. In determining which Eligible Persons shall receive an Award and
the terms of any Award, the Committee may take into account the nature of the
services rendered by the respective Eligible Persons, their present and
potential contributions to the success of the Company or
A-4
<PAGE>
such other factors as the Committee, in its discretion, shall deem relevant.
Notwithstanding the foregoing, an Incentive Stock Option may only be granted
to full or part-time employees (which term as used herein includes, without
limitation, officers and directors who are also employees) and an Incentive
Stock Option shall not be granted to an employee of an Affiliate unless such
Affiliate is also a "subsidiary corporation" of the Company within the meaning
of Section 424(f) of the Code or any successor provision.
Section 6. Awards.
- - - ------------------
(a) Options. The Committee is hereby authorized to grant Options to
-------
Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:
(i) Exercise Price. The purchase price per Share purchasable under
--------------
an Option shall be determined by the Committee; provided, however, that
-------- -------
such purchase price shall not be less than 100% of the Fair Market Value of
a Share on the date of grant of such Option.
(ii) Option Term. The term of each Option shall be fixed by the
-----------
Committee.
(iii) Time and Method of Exercise. The Committee shall determine the
---------------------------
time or times at which an Option may be exercised in whole or in part and
the method or methods by which, and the form or forms (including, without
limitation, cash, Shares, promissory notes, other securities, other Awards
or other property, or any combination thereof, having a Fair Market Value
on the exercise date equal to the relevant exercise price) in which,
payment of the exercise price with respect thereto may be made or deemed to
have been made.
(iv) Restoration Options. The Committee may grant Restoration
-------------------
Options, separately or together with another Option, pursuant to which,
subject to the terms and conditions established by the Committee and any
applicable requirements of Rule 16b-3 or any other applicable law, the
Participant would be granted a new Option when the payment of the exercise
price of the option to which such Restoration Option relates is made by the
delivery or withholding of Shares pursuant to the relevant provisions of
the plan or agreement relating to such option, which new Option would be an
Option to purchase the number of Shares not exceeding the sum of (A) the
number of Shares so provided as consideration upon the exercise of the
previously granted option to which such Restoration Option relates and (B)
the number of Shares, if any, tendered or withheld as payment of the amount
to be withheld under applicable tax laws in connection with the exercise of
the option to which such Restoration Option relates pursuant to the
relevant provisions of the plan or agreement relating to such option.
Restoration Options may be granted with respect to options previously
granted under the Plan or any other stock option plan of the Company, and
may be granted in connection with any option granted under the Plan or any
other stock option plan of the Company at the time of such grant; provided,
--------
however, that Restoration Options may not be granted with respect to any
-------
A-5
<PAGE>
option granted to a Non-Employee Director under the Company's 1983 Employee
Stock Option Plan.
(b) Stock Appreciation Rights. The Committee is hereby authorized to
-------------------------
grant Stock Appreciation Rights to Participants subject to the terms of the Plan
and any applicable Award Agreement. A Stock Appreciation Right granted under
the Plan shall confer on the holder thereof a right to receive upon exercise
thereof the excess of (i) the Fair Market Value of one Share on the date of
exercise (or, if the Committee shall so determine, at any time during a
specified period before or after the date of exercise) over (ii) the grant price
of the Stock Appreciation Right as specified by the Committee, which price shall
not be less than 100% of the Fair Market Value of one Share on the date of grant
of the Stock Appreciation Right. Subject to the terms of the Plan and any
applicable Award Agreement, the grant price, term, methods of exercise, dates of
exercise, methods of settlement and any other terms and conditions of any Stock
Appreciation Right shall be as determined by the Committee. The Committee may
impose such conditions or restrictions on the exercise of any Stock Appreciation
Right as it may deem appropriate.
(c) Restricted Stock and Restricted Stock Units. The Committee is
-------------------------------------------
hereby authorized to grant Awards of Restricted Stock and Restricted Stock Units
to Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:
(i) Restrictions. Shares of Restricted Stock and Restricted Stock
------------
Units shall be subject to such restrictions as the Committee may impose
(including, without limitation, any limitation on the right to vote a Share
of Restricted Stock or the right to receive any dividend or other right or
property with respect thereto), which restrictions may lapse separately or
in combination at such time or times, in such installments or otherwise as
the Committee may deem appropriate.
(ii) Stock Certificates. Any Restricted Stock granted under the Plan
------------------
shall be evidenced by issuance of a stock certificate or certificates,
which certificate or certificates shall be held by the Company. Such
certificate or certificates shall be registered in the name of the
Participant and shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Restricted Stock. In the
case of Restricted Stock Units, no Shares shall be issued at the time such
Awards are granted.
(iii) Forfeiture; Delivery of Shares. Except as otherwise determined
------------------------------
by the Committee, upon termination of employment (as determined under
criteria established by the Committee) during the applicable restriction
period, all Shares of Restricted Stock and all Restricted Stock Units at
such time subject to restriction shall be forfeited and reacquired by the
Company; provided, however, that the Committee may, when it finds that a
-------- -------
waiver would be in the best interest of the Company, waive in whole or in
part any or all remaining restrictions with respect to Shares of Restricted
Stock or Restricted Stock Units. Any Share representing Restricted Stock
that is no longer subject to restrictions shall be delivered to the holder
thereof promptly after the applicable restrictions lapse or are waived.
Upon the lapse or waiver of restrictions and
A-6
<PAGE>
the restricted period relating to Restricted Stock Units evidencing the
right to receive Shares, such Shares shall be issued and delivered to the
holders of the Restricted Stock Units.
(d) Performance Awards. The Committee is hereby authorized to grant
------------------
Performance Awards to Participants subject to the terms of the Plan and any
applicable Award Agreement. A Performance Award granted under the Plan (i) may
be denominated or payable in cash, Shares (including, without limitation,
Restricted Stock), other securities, other Awards or other property and (ii)
shall confer on the holder thereof the right to receive payments, in whole or in
part, upon the achievement of such performance goals during such performance
periods as the Committee shall establish. Subject to the terms of the Plan and
any applicable Award Agreement, the performance goals to be achieved during any
performance period, the length of any performance period, the amount of any
Performance Award granted, the amount of any payment or transfer to be made
pursuant to any Performance Award and any other terms and conditions of any
Performance Award shall be determined by the Committee.
(e) Dividend Equivalents. The Committee is hereby authorized to
--------------------
grant to Participants Dividend Equivalents under which such Participants shall
be entitled to receive payments (in cash, Shares, other securities, other Awards
or other property as determined in the discretion of the Committee) equivalent
to the amount of cash dividends paid by the Company to holders of Shares with
respect to a number of Shares determined by the Committee. Subject to the terms
of the Plan and any applicable Award Agreement, such Dividend Equivalents may
have such terms and conditions as the Committee shall determine.
(f) Other Stock-Based Awards. The Committee is hereby authorized to
------------------------
grant to Participants such other Awards that are denominated or payable in,
valued in whole or in part by reference to, or otherwise based on or related to,
Shares (including, without limitation, securities convertible into Shares), as
are deemed by the Committee to be consistent with the purpose of the Plan;
provided, however, that such grants must comply with Rule 16b-3 and applicable
- - - -------- -------
law. Subject to the terms of the Plan and any applicable Award Agreement, the
Committee shall determine the terms and conditions of such Awards. Shares or
other securities delivered pursuant to a purchase right granted under this
Section 6(f) shall be purchased for such consideration, which may be paid by
such method or methods and in such form or forms (including without limitation,
cash, Shares, promissory notes, other securities, other Awards or other property
or any combination thereof), as the Committee shall determine, the value of
which consideration, as established by the Committee, shall not be less than
100% of the Fair Market Value of such Shares or other securities as of the date
such purchase right is granted.
(g) General.
-------
(i) No Cash Consideration for Awards. Awards shall be granted for
--------------------------------
no cash consideration or for such minimal cash consideration as may be
required by applicable law.
(ii) Awards May Be Granted Separately or Together. Awards may, in
--------------------------------------------
the discretion of the Committee, be granted either alone or in addition to,
in tandem with
A-7
<PAGE>
or in substitution for any other Award or any award granted under any
plan of the Company or any Affiliate other than the Plan. Awards granted
in addition to or in tandem with other Awards or in addition to or in
tandem with awards granted under any such other plan of the Company or
any Affiliate may be granted either at the same time as or at a different
time from the grant of such other Awards or awards.
(iii) Forms of Payment under Awards. Subject to the terms of the
-----------------------------
Plan and of any applicable Award Agreement, payments or transfers to be
made by the Company or an Affiliate upon the grant, exercise or payment of
an Award may be made in such form or forms as the Committee shall determine
(including, without limitation, cash, Shares, promissory notes, other
securities, other Awards or other property or any combination thereof), and
may be made in a single payment or transfer, in installments or on a
deferred basis, in each case in accordance with rules and procedures
established by the Committee. Such rules and procedures may include,
without limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments or the grant or crediting of
Dividend Equivalents with respect to installment or deferred payments.
(iv) Limits on Transfer of Awards. No Award and no right under any
----------------------------
such Award shall be transferable by a Participant otherwise than by will or
by the laws of descent and distribution; provided, however, that, if so
-------- -------
determined by the Committee, a Participant may, in the manner established
by the Committee, designate a beneficiary or beneficiaries to exercise the
rights of the Participant and receive any property distributable with
respect to any Award upon the death of the Participant. Each Award or
right under any Award shall be exercisable during the Participant's
lifetime only by the Participant or, if permissible under applicable law,
by the Participant's guardian or legal representative. No Award or right
under any such Award may be pledged, alienated, attached or otherwise
encumbered, and any purported pledge, alienation, attachment or encumbrance
thereof shall be void and unenforceable against the Company or any
Affiliate.
(v) Term of Awards. The term of each Award shall be for such period
--------------
as may be determined by the Committee.
(vi) Restrictions; Securities Exchange Listing. All certificates for
-----------------------------------------
Shares or other securities delivered under the Plan pursuant to any Award
or the exercise thereof shall be subject to such stop transfer orders and
other restrictions as the Committee may deem advisable under the Plan or
the rules, regulations and other requirements of the Securities and
Exchange Commission and any applicable federal or state securities laws,
and the Committee may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions. If the
Shares or other securities are traded on a securities exchange, the Company
shall not be required to deliver any Shares or other securities covered by
an Award unless and until such Shares or other securities have been
admitted for trading on such securities exchange.
A-8
<PAGE>
Section 7. Amendment and Termination; Adjustments.
- - - --------------------------------------------------
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:
(a) Amendments to the Plan. The Board of Directors of the Company
----------------------
may amend, alter, suspend, discontinue or terminate the Plan; provided, however,
-------- -------
that, notwithstanding any other provision of the Plan or any Award Agreement,
without the approval of the stockholders of the Company, no such amendment,
alteration, suspension, discontinuation or termination shall be made that,
absent such approval:
(i) would cause Rule 16b-3 to become unavailable with respect to the
Plan;
(ii) would violate the rules or regulations of the New York Stock
Exchange, any other securities exchange or the National Association of
Securities Dealers, Inc. that are applicable to the Company; or
(iii) would cause the Company to be unable, under the Code, to grant
Incentive Stock Options under the Plan.
(b) Amendments to Awards. The Committee may waive any conditions of
--------------------
or rights of the Company under any outstanding Award, prospectively or
retroactively. The Committee may not amend, alter, suspend, discontinue or
terminate any outstanding Award, prospectively or retroactively, without the
consent of the Participant or holder or beneficiary thereof, except as otherwise
herein provided.
(c) Correction of Defects, Omissions and Inconsistencies. The
----------------------------------------------------
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem desirable to carry the Plan into effect.
Section 8. Income Tax Withholding.
- - - ----------------------------------
In order to comply with all applicable federal or state income tax
laws or regulations, the Company may take such action as it deems appropriate to
ensure that all applicable federal or state payroll, withholding, income or
other taxes, which are the sole and absolute responsibility of a Participant,
are withheld or collected from such Participant. In order to assist a
Participant in paying all or a portion of the federal and state taxes to be
withheld or collected upon exercise or receipt of (or the lapse of restrictions
relating to) an Award, the Committee, in its discretion and subject to such
additional terms and conditions as it may adopt, may permit the Participant to
satisfy such tax obligation by (i) electing to have the Company withhold a
portion of the Shares otherwise to be delivered upon exercise or receipt of (or
the lapse of restrictions relating to) such Award with a Fair Market Value equal
to the amount of such taxes or (ii) delivering to the Company Shares other than
Shares issuable upon exercise or receipt of (or the lapse of restrictions
relating to) such Award with a Fair Market Value equal to the amount of such
taxes. The election, if any, must be made on or before the date that the amount
of tax to be withheld is determined.
A-9
<PAGE>
Section 9. General Provisions.
- - - ------------------------------
(a) No Rights to Awards. No Eligible Person, Participant or other
-------------------
Person shall have any claim to be granted any Award under the Plan, and there is
no obligation for uniformity of treatment of Eligible Persons, Participants or
holders or beneficiaries of Awards under the Plan. The terms and conditions of
Awards need not be the same with respect to any Participant or with respect to
different Participants.
(b) Award Agreements. No Participant will have rights under an Award
----------------
granted to such Participant unless and until an Award Agreement shall have been
duly executed on behalf of the Company.
(c) No Limit on Other Compensation Arrangements. Nothing contained
-------------------------------------------
in the Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in specific
cases.
(d) No Right to Employment. The grant of an Award shall not be
----------------------
construed as giving a Participant the right to be retained in the employ of the
Company or any Affiliate, nor will it affect in any way the right of the Company
or an Affiliate to terminate such employment at any time, with or without cause.
In addition, the Company or an Affiliate may at any time dismiss a Participant
from employment free from any liability or any claim under the Plan, unless
otherwise expressly provided in the Plan or in any Award Agreement.
(e) Governing Law. The validity, construction and effect of the Plan
-------------
or any Award, and any rules and regulations relating to the Plan or any Award,
shall be determined in accordance with the laws of the State of Minnesota.
(f) Severability. If any provision of the Plan or any Award is or
------------
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the Committee, materially altering the purpose or intent of
the Plan or the Award, such provision shall be stricken as to such jurisdiction
or Award, and the remainder of the Plan or any such Award shall remain in full
force and effect.
(g) No Trust or Fund Created. Neither the Plan nor any Award shall
------------------------
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
(h) No Fractional Shares. No fractional Shares shall be issued or
--------------------
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash shall be
A-10
<PAGE>
paid in lieu of any fractional Shares or whether such fractional Shares or
any rights thereto shall be canceled, terminated or otherwise eliminated.
(i) Headings. Headings are given to the Sections and subsections of
--------
the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
Section 10. Effective Date of the Plan.
- - - ---------------------------------------
The Plan shall be effective as of April 14, 1993, subject to approval
by the stockholders of the Company within one year thereafter.
Section 11. Term of the Plan.
- - - -----------------------------
Unless the Plan shall have been discontinued or terminated as provided
in Section 7(a), the Plan shall terminate on April 13, 2003. No Award shall be
granted after the termination of the Plan. However, unless otherwise expressly
provided in the Plan or in an applicable Award Agreement, any Award theretofore
granted may extend beyond the termination of the Plan, and the authority of the
Committee provided for hereunder with respect to the Plan and any Awards, and
the authority of the Board of Directors of the Company to amend the Plan, shall
extend beyond the termination of the Plan.
A-11
<PAGE>
EXHIBIT (10)q.
DIRECTORS RETIREMENT PROGRAM
- - - ----------------------------
(a) PRIOR TO CHANGE OF CONTROL. Outside directors who have served as non-
--------------------------
employee, outside directors on the SUPERVALU Board for at least four years,
and who resign for any reason or are not re-elected, will receive an annual
fee equal to the annual retainer fee for active directors on the date of
leaving the Board. This annual fee is payable for the lesser of the number
of years of Board service as an outside director or ten years, subject to
the director being available to management for consultation services and
engaging in no activity directly competitive to the Company's business.
Upon the death of the director, any retirement compensation which has been
earned shall be paid to the legal representative of the director's estate or
to such person(s) as the director shall have instructed the Company by
written instrument filed with the Secretary of the Company and signed by the
director. This annual retirement fee will be paid quarterly and will
commence when the outside director leaves the Board or at age 55, whichever
is later.
(b) AFTER CHANGE OF CONTROL. Outside directors who leave the Board for any
-----------------------
reason following a Change of Control will receive an annual fee equal to the
annual retainer fee for active directors on the date of leaving. This
annual fee is payable quarterly upon leaving the Board for the lesser of the
number of years of Board service as an outside director or ten years, but
not less than four years, subject to the director being available to
management for consultation services and engaging in no activity directly
competitive to the Company's business. Upon the death of the director, any
retirement compensation which has been earned shall be paid to the legal
representative of the director's estate or to such person(s) as the director
shall have instructed the Company by written instrument filed with the
Secretary of the Company and signed by the director. "Change of Control"
shall have the meaning set forth in the SUPERVALU Stores, Inc. Executive
Deferred Compensation Plan.
<PAGE>
EXHIBIT (10)t.
SUPERVALU INC.
ANNUAL CASH BONUS PLAN
FOR DESIGNATED CORPORATE OFFICERS
1. DEFINITIONS. When the following terms are used herein with initial capital
letters, they shall have the following meanings:
1.1. BONUS POOL AMOUNT -- An amount from which bonuses as provided herein
may be paid equal to two and eight-tenths percent (2.8%) of the Company's
earnings before income taxes for the Performance Period for which bonuses
are being paid, as computed in accordance with generally accepted
accounting principles as in effect from time to time and as applied by the
Company in the preparation of its financial statements. For purposes of
the foregoing computation, changes in generally accepted accounting
principles which occur during a Performance Period shall not be taken into
account, and extraordinary items, discontinued operations and restructuring
costs, as computed in accordance with generally accepted accounting
principles as in effect from time to time and as applied and reported by
the Company in the preparation of its financial statements, shall also not
be taken into account.
1.2. COMMITTEE - A committee of the Board of Directors comprised solely of
two or more members appointed from time to time by the Board of Directors.
To the extent required by Section 162(m) of the Code, at all times
following the 1995 annual meeting of stockholders of the Company, all
members of the Committee shall be "outside directors" within the meaning of
Section 162(m) of the Code.
1.3. CODE - The Internal Revenue Code of 1986, as it may be amended from
time to time, and any proposed, temporary or final Treasury Regulations
promulgated thereunder.
1.4. COMPANY - SUPERVALU INC., a Delaware corporation, and any of its
subsidiaries or affiliates whether now or hereafter established.
1.5. PARTICIPANT - The Chief Executive Officer and four other key
employees of the Company or any of its subsidiaries or affiliates who are
designated by the Committee pursuant to Section 2.2 hereof as Participants
in this Plan.
1.6. PERFORMANCE PERIOD - The period which coincides with the Company's
fiscal year.
1.7. COMPANY PERFORMANCE FACTOR - The Company's "return on invested
capital" must be at least eight percent (8%) for the Performance Period for
which bonuses are being paid. For purposes of the foregoing computation,
"return on invested capital" means a fraction with a numerator equal to
earnings before income taxes for that Performance Period as computed in
accordance with Section 1.1 above but before interest expense, and with a
denominator equal to the sum of the Company's interest-
<PAGE>
bearing short-term borrowings, interest-bearing long-term debt,
stockholders equity and the present value of capital and operating leases,
all as computed in accordance with generally accepted accounting principles
as in effect from time to time and as applied and reported by the Company
in the preparation of its financial statements. Such denominator shall be
computed as of the last day of the Company's fiscal year which ends
immediately before the beginning of a Performance Period and as of the last
day of the fiscal year which coincides with the Performance Period, and the
sum of the foregoing amounts shall then be divided by two in order to
determine such denominator.
2. ADMINISTRATION.
2.1. COMMITTEE. The Plan shall be administered by the Committee.
2.2. DETERMINATIONS MADE PRIOR TO EACH PERFORMANCE PERIOD. Prior to each
Performance Period, or solely in the case of the Performance Period which begins
February 27, 1994, prior to April 1, 1994, the Committee shall designate
Participants for that Performance Period.
2.3. CERTIFICATION. Following the close of each Performance Period and
prior to payment of any bonus under the Plan, the Committee must certify in
writing that the Company Performance Factor has been attained and as to the
computation of the Bonus Pool Amount.
2.4. SHAREHOLDER APPROVAL. The material terms of this Plan shall be
disclosed to and approved by the stockholders of the Company in accordance with
Section 162(m) of the Code. No bonus shall be paid under this Plan unless such
stockholder approval has been obtained.
3. BONUS PAYMENT.
3.1. FORMULA. Subject to Section 3.2(b) hereof, the Chief Executive
Officer of the Company shall receive a cash bonus for each Performance Period in
an amount equal to twenty-eight percent (28%) of the Bonus Pool Amount for that
Performance Period, and each of the four other Participants in this Plan for a
Performance Period shall receive a cash bonus payment for each Performance
Period in an amount equal to eighteen percent (18%) of the Bonus Pool Amount for
that Performance Period.
3.2. LIMITATIONS.
(a) NO PAYMENT IF PERFORMANCE FACTOR NOT ACHIEVED. In no event shall
any Participant receive a bonus payment hereunder if the Company
Performance Factor is not achieved during the Performance Period.
(b) COMMITTEE MAY REDUCE BONUS PAYMENT. The Committee retains sole
discretion to reduce the amount of any bonus otherwise payable
under this Plan. If and to the extent permitted by Section
162(m) of the Code,
-2-
<PAGE>
the Bonus Pool Amount in a subsequent Performance Period shall be
increased by any portion of the Bonus Pool Amount of a prior
Performance Period which has not been paid or credited to or for
the benefit of Participants hereunder.
4. BENEFIT PAYMENTS.
4.1. TIME AND FORM OF PAYMENTS. Subject to any deferred compensation
election pursuant to any such plans of the Company applicable hereto, benefits
shall be paid to the Participant in a single lump sum cash payment as soon as
administratively feasible after the Committee has certified that the Company
Performance Factor has been attained.
4.2. NONTRANSFERABILITY. Participants and beneficiaries shall not have the
right to assign, encumber or otherwise anticipate the payments to be made under
this Plan, and the benefits provided hereunder shall not be subject to seizure
for payment of any debts or judgments against any Participant or any
beneficiary.
4.3. TAX WITHHOLDING. In order to comply with all applicable federal or
state income tax laws or regulations, the Company may take such action as it
deems appropriate to ensure that all applicable federal or state payroll,
withholding, income or other taxes, which are the sole and absolute
responsibility of a Participant, are withheld or collected from such
Participant.
5. AMENDMENT AND TERMINATION. The Committee may amend this Plan prospectively
at any time and for any reason deemed sufficient by it without notice to any
person affected by this Plan and may likewise terminate or curtail the benefits
of this Plan both with regard to persons expecting to receive benefits hereunder
in the future and persons already receiving benefits at the time of such action.
6. MISCELLANEOUS.
6.1. EFFECTIVE DATE. February 27, 1994.
6.2. TERM OF THE PLAN. The Plan shall continue until discontinued or
terminated by the Committee.
6.3. HEADINGS. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not
be deemed in any way material or relevant to the construction or interpretation
of the Plan or any provision thereof.
6.4. APPLICABILITY TO SUCCESSORS. This Plan shall be binding upon and
inure to the benefit of the Company and each Participant, the successors and
assigns of the Company, and the beneficiaries, personal representatives and
heirs of each Participant. If the Company becomes a party to any merger,
consolidation or reorganization, this Plan shall remain in full force and effect
as an obligation of the Company or its successors in interest.
-3-
<PAGE>
6.5. EMPLOYMENT RIGHTS AND OTHER BENEFIT PROGRAMS. The provisions of this
Plan shall not give any Participant any right to be retained in the employment
of the Company. In the absence of any specific agreement to the contrary, this
Plan shall not affect any right of the Company, or of any affiliate of the
Company, to terminate, with or without cause, the participant's employment at
any time. This Plan is in addition to, and not in lieu of, any other employee
benefit plan or program in which any Participant may be or become eligible to
participate by reason of employment with the Company. Receipt of benefits
hereunder shall have such effect on contributions to and benefits under such
other plans or programs as the provisions of each such other plan or program may
specify.
6.6. NO TRUST OR FUND CREATED. This Plan shall not create or be construed
to create a trust or separate fund of any kind or a fiduciary relationship
between the Company or any affiliate and a Participant or any other person. To
the extent that any person acquires a right to receive payments from the Company
or any affiliate pursuant to this Plan, such right shall be no greater than the
right of any unsecured general creditor of the Company or of any affiliate.
6.7. GOVERNING LAW. The validity, construction and effect of the Plan or
any bonus payable under the Plan shall be determined in accordance with the
internal laws, and not the laws of conflicts, of the State of Minnesota.
6.8. SEVERABILITY. If any provision of the Plan is or becomes or is deemed
to be invalid, illegal or unenforceable in any jurisdiction such provision shall
be construed or deemed amended to conform to applicable laws, or if it cannot be
so construed or deemed amended without, in the determination of the Committee,
materially altering the purpose or intent of the Plan, such provision shall be
stricken as to such jurisdiction, and the remainder of the Plan shall remain in
full force and effect.
6.9. QUALIFIED PERFORMANCE-BASED COMPENSATION. All of the terms and
conditions of the Plan shall be interpreted in such a fashion as to qualify all
compensation paid hereunder as "qualified performance-based compensation" within
the meaning of Section 162(m) of the Code.
-4-
<PAGE>
EXHIBIT 12
SUPERVALU INC. and Subsidiaries
Ratio of Earnings to Fixed Charges
For Fiscal Years Ended
<TABLE>
<CAPTION>
(In thousands, except ratios) 1994 1993 1992 1991 1990
-------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
Earnings before income taxes $294,080 $258,618 $322,840 $225,680 $215,730
Less undistributed earnings of ShopKo (8,306) (16,582) (14,891) - -
-------- -------- -------- -------- --------
Earnings before income taxes 285,774 242,036 307,949 225,680 215,730
Interest expense 120,292 83,066 72,693 76,411 75,340
Interest on operating leases 17,288 6,661 2,732 3,435 3,038
-------- -------- -------- -------- --------
$423,354 $331,763 $383,374 $305,526 $294,108
======== ======== ======== ======== ========
Total fixed charges 137,580 89,727 75,425 79,846 78,378
======== ======== ======== ======== ========
Ratio of earnings to fixed charges 3.08 3.70 5.08 3.83 3.75
======== ======== ======== ======== ========
</TABLE>
<PAGE>
Exhibit 13-Portions of 1994 Annual Report
FINANCIAL REVIEW
SUPERVALU management decisions are guided by established policies covering
financial goals, capital structure, capital investment and dividends. The
company's long-term financial goals are arrived at by balancing two broad
objectives: increasing profitability levels and maintaining a strong capital
structure.
The profitability of the company is gauged by return on investment measures.
Achievement of targeted return levels in these areas is expected to lead to
excellent returns for the company's stockholders through increasing dividends
and higher valuations on their investment in the company. These measures are an
integral part of the company's planning process and are an integral part of
management incentive compensation.
CAPITAL STRUCTURE
SUPERVALU's financial objectives also include maintaining a strong capital
structure. Management believes that maintaining such financial flexibility
provides a significant competitive advantage and allows the company to be
opportunistic in terms of acquisitions.
The capital structure of SUPERVALU at each fiscal year-end included the
following:
<TABLE>
<CAPTION>
- - - --------------------------------------------------------------------------
Summary of Capitalization
- - - --------------------------------------------------------------------------
(In millions) 1994 1993* 1992
- - - --------------------------------------------------------------------------
<S> <C> <C> <C>
Short-term borrowings $ 23.1 $ 251.5 $ 133.6
Long-term debt 1,139.1 1,118.5 407.9
Present value of:
Capital leases 163.4 158.9 143.1
Operating leases 251.1 261.2 37.8
Retailer finance leases 88.4 95.8 85.1
- - - --------------------------------------------------------------------------
Total debt, including current maturities 1,665.1 1,885.9 807.5
Stockholders' equity 1,275.5 1,134.8 1,031.0
- - - --------------------------------------------------------------------------
Total capitalization $2,940.6 $3,020.7 $1,838.5
- - - --------------------------------------------------------------------------
Debt-to-total capitalization 57% 62% 44%
</TABLE>
(*) The acquisition of Wetterau resulted in the increase in the debt-to-total
capitalization ratio.
LIQUIDITY
Internally-generated funds, principally from the company's food distribution
business, were the major source of capital for liquidity and growth in 1994. In
1993, such funds were supplemented by certain financing activities to complete
the Wetterau acquisition. Management expects that the company will continue to
replenish operating assets and reduce aggregate debt with internally-generated
funds and capital leases unless additional funds are necessary to complete
acquisitions. The company has adequate short-term and long-term financing
capabilities to fund acquisitions as the opportunities arise.
Cash provided from operations increased 7 percent in 1994 to $433 million. Total
debt was reduced by $220.8 million in 1994, as shown by the summary of
capitalization, and was a primary use of the cash provided from operations. Cash
generated in 1993 increased 67 percent to $404 million from cash generated in
1992. The cash generated in 1992 is before the gain on sale of ShopKo and
cumulative effect of change in accounting principle. The closing or
consolidation of five food distribution facilities in 1994 provided cash by
reducing inventory levels. The cash generated in 1993 was affected by a $120
million reduction in inventory levels. The decrease in inventory was primarily
due to the timing of the Wetterau acquisition, the sale of the Salem division
and the closing of the Kansas City division. Liquidity was affected in 1993 by
the acquisition of Wetterau and the treasury stock purchase program, and in 1992
by the acquisition of Scott's Food Stores, Inc. ("Scott's") and the ShopKo IPO.
The ShopKo IPO and the acquisition of Scott's generated net cash of
approximately $229 million for the company which was used initially to reduce
debt and later reinvested in Wetterau.
The company completed the acquisition of Wetterau as of October 31, 1992, for
approximately $700 million. To finance the acquisition, the company entered into
a $700 million 364-day credit revolver and a $400 million four-year credit
revolver (aggregately the "credit facilities") which were utilized to back up
commercial paper issued by the company. On November 17, 1992 the company
refinanced $700 million of its commercial paper borrowings through the sale of
$700 million of medium and long-term notes and simultaneously reduced the credit
facilities to an aggregate amount of $550 million. In October of 1993, $150
million of the credit facility expired. In addition, the company funded the
repayment of $200 million of Wetterau commercial paper, and approximately $266
million of additional Wetterau debt remained outstanding. This acquisition was
the principle reason for the increase in the company's debt-to-capital ratio in
1993.
SUPERVALU will continue to use short-term and long-term debt as a supplement to
internally-generated funds to finance its activities. To that end, the company
has a "shelf registration" in effect pursuant to which the company could sell an
additional $150 million of long-term debt without further registration. The use
of available short-term credit of $400 million, the shelf registration or any
other long-term debt will depend on management's views with respect to long-term
capital needs and the relative attractiveness of short-term versus long-term
interest rates.
The company's financial position is strong and its long-term debt ratings, after
the Wetterau acquisition remain strong, with an A rating from Standard and
Poor's and an A3 rating from Moody's. These strong ratings, the non-utilized
credit facilities and internally-generated funds provide the company with
financial flexibility relative to expected liquidity needs.
14
<PAGE>
EXPANSION PLANS FOR FISCAL 1995
SUPERVALU's capital budget for fiscal 1995 is $500 million compared with the
$321 million and $235 million incurred during 1994 and 1993, respectively. The
budget provides sufficient funding for the growth and vitality of the expanded
company, including Wetterau.
Capital Expenditures (In Millions)
BAR GRAPH IN ORIGINAL--SEE GRAPHICS APPENDIX
Approximately $283 million of the 1995 capital budget is slated for use in the
company's food distribution activities for regular replacement, productivity and
capacity enhancement projects ($133 million) and for financing of the company's
independent retailers ($150 million). Retailer financing activities typically do
not require new cash outlays because they are leases or guarantees or funded by
the repayment of existing notes.
The retail food capital budget of $192 million ($62 million of which are capital
leases) covers corporately-owned retail food businesses. The increased level of
spending within the retail food segment represents a permanently higher level of
capital to that area. The balance of the 1995 capital budget is dedicated to the
corporate area and will be utilized principally for computer and communication
equipment.
These capital spending activities are not expected to result in an increase in
the company's debt-to-total-capital ratio as internal cash flow is expected to
support all spending requirements except leases. The capital budget does include
amounts for projects which are subject to change and for which firm commitments
have not been made.
On December 17, 1993, the company announced that an agreement in principle had
been entered into whereby the company would acquire all the outstanding stock of
Sweet Life Foods, Inc. ("Sweet Life"). Sweet Life, a wholesale distributor of
food products, with annual revenues of approximately $650 million, supplies
approximately 280 independent food retailers throughout New England and New York
from two distribution centers located in Suffield, Connecticut and Northboro,
Massachusetts. The transaction was completed on March 9, 1994 and funded through
the issuance of commercial paper.
The company has announced an agreement in principle to acquire all the assets of
Wetterau Properties, Inc. ("WPI"), a publicly owned real estate investment
trust. Most of the properties WPI owns were acquired from and leased back to
Wetterau. The transaction is expected to be completed in the second quarter of
1995.
Due to the size of the Sweet Life and WPI acquisitions, the company does not
expect such transactions to have a significant impact on liquidity.
DIVIDENDS
Cash dividends declared during fiscal 1994 amounted to 85 1/2 cents per common
share, an increase of 11.8 percent over the 76 1/2 cents per share declared in
the prior fiscal year. This was the 57th year of consecutive cash dividends and
the 22nd year of successive annual increases. Cash dividend payments have
increased since 1974 at an annual compounded rate of 12 percent. The company's
dividend policy will continue to emphasize a high level of earnings retention
reflecting the attractive returns available from reinvesting earnings.
COMMON STOCK PRICE
SUPERVALU's common stock is listed on the New York Stock Exchange under the
symbol SVU. At year-end, there were 8,233 stockholders of record compared with
8,511 at the end of fiscal 1993.
<TABLE>
<CAPTION>
- - - ----------------------------------------------------------------------------
Common Stock Dividends Per
Price Range Share
Fiscal Quarter 1994 1993 1994 1993
- - - ----------------------------------------------------------------------------
High Low High Low
<S> <C> <C> <C> <C> <C> <C>
First $34 1/2 $29 7/8 $27 3/4 $23 3/8 $.195 $.180
Second 37 5/8 32 27 1/8 23 1/2 .220 .195
Third 35 3/4 32 34 3/8 26 3/4 .220 .195
Fourth 40 1/8 32 1/2 34 7/8 30 5/8 .220 .195
- - - ----------------------------------------------------------------------------
Year $40 1/8 $29 7/8 $34 7/8 $23 3/8 $.855 $.765
- - - ----------------------------------------------------------------------------
</TABLE>
Dividend payment dates are on or about the 15th day of March, June, September
and December, subject to Board of Directors approval.
15
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth items from the company's Consolidated Statements
of Earnings as percentages of net sales:
<TABLE>
<CAPTION>
- - - ---------------------------------------------------------------------------------------
Fiscal Year Ended
- - - ---------------------------------------------------------------------------------------
February 26, February 27, February 29,
1994 1993 1992
(52 weeks) (52 weeks) (53 weeks)
- - - ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of sales 91.1 91.8 92.2
Selling and administrative expenses 6.6 5.9 5.5
Interest expense .7 .6 .7
Interest income (.2) (.2) (.3)
Equity in earnings of ShopKo (.1) (.2) (.3)
Gain on sale of ShopKo stock - - (.8)
- - - ---------------------------------------------------------------------------------------
Earnings before income taxes and
accounting change 1.9 2.1 3.0
Income taxes .7 .8 1.1
- - - -------------------------------------------------------------------------------------------------------
Earnings before accounting change 1.2 1.3 1.9
Cumulative effect of change in
accounting principle - - .1
- - - -------------------------------------------------------------------------------------------------------
Net earnings 1.2% 1.3% 1.8%
=======================================================================================================
</TABLE>
Fiscal 1994 and fiscal 1993 were 52-week years, fiscal 1992 contained 53 weeks.
The company's ownership of ShopKo was reduced to 46 percent effective with
ShopKo's October 1991 IPO. All ShopKo sales were eliminated from historical
results and net earnings and ShopKo operating results are now reflected on an
equity basis of 100 percent prior to October 1991 and 46 percent thereafter.
Wetterau was acquired in October 1992 and treated as a purchase; therefore,
earnings contributions are net of goodwill amortization of $10.8 million in 1994
and $3.4 million in 1993, as well as financing costs. Seventeen weeks of
Wetterau results were included in fiscal 1993 and 52 weeks in fiscal 1994.
NET SALES
Net sales increased 26.8 percent to $15.9 billion in fiscal 1994, from $12.6
billion in 1993. Net sales increased 18.2 percent in 1993 from $10.6 billion in
1992. The increase in net sales in 1994 and 1993 was principally due to the
acquisition of Wetterau. However, the increase in 1994 was impacted by the
January 1993 sale of the Salem division; lost sales from the closing or
consolidation of five divisions; purchase of two major customers by chains; and
the bankruptcy of a large customer. Sales for 1994 increased approximately 1
percent excluding the sales impact of the Wetterau acquisition and the sale of
the Salem division. Sales for 1993 would have increased approximately 3 percent
excluding the change in number of weeks and the Wetterau acquisition.
Food distribution sales increased $2.9 billion in 1994 to $14.4 billion, a 25.4
percent increase. The increase over 1993 net sales was due to the Wetterau
acquisition. Food inflation was negligible in both years. Food distribution
sales for 1993 increased 16.3 percent over 1992 net sales of $9.8 billion due to
the Wetterau acquisition. Both years were affected by increased competition,
slower retail development due to the inability of developers to obtain
financing, and low food inflation. The extra week in fiscal 1992 added about 2
percent to that year's sales.
Retail food sales in 1994 increased 36.9 percent to $3.7 billion, compared with
$2.7 billion in 1993. Sales in 1993 grew 34.8 percent over 1992 sales of $2.0
billion. The increase in 1994 was primarily due to the full year versus partial
year contribution from Wetterau's retail operations and new store openings.
However, this increase was partially offset by a decrease in same-store sales of
2 percent and a reduced sales contribution from Twin Valu due to competitive
pressures. The increase in 1993 was due to the acquisitions of Wetterau in
October 1992 and Scott's in November 1991.
GROSS PROFIT
Gross profit as a percentage of net sales increased to 8.9 percent in 1994,
compared with 8.2 percent in 1993 and 7.8 percent in 1992. These increases were
due principally to the growing proportion within the company's total sales mix
of the higher-margined retail food business. The Wetterau and Scott's
acquisitions and an increase in the number of corporately-owned Cub Foods stores
contributed to the higher gross profit percentage.
SELLING AND ADMINISTRATIVE EXPENSES
Selling and administrative expenses were 6.6 percent of net sales in 1994,
compared with 5.9 percent in 1993, and 5.5 percent in 1992. The higher
percentage in 1994 was attributable primarily to the increased proportion of the
company's retail food operations. With the purchase of Wetterau late in fiscal
1993, the effect of the company's retail operations on selling and
administrative expenses has been more significant as a percent of sales. Also
contributing to the higher selling and administrative percentage were new store
costs associated with MAX CLUB, which is the company's entry into the wholesale
club market, and new store costs at Cub. Selling and administrative expenses as
a percent of net sales were higher due to reduced sales levels at the Twin Valu
and Laneco locations. The higher percentage in 1993 compared with 1992 was also
due principally to the increased proportion of the company's retail operations.
OPERATING EARNINGS
The company's pre-tax operating earnings (earnings before interest, corporate
expenses, equity in earnings of ShopKo, gain on sale of ShopKo stock, taxes and
change in accounting principle) increased 28.4 percent to $396.9 million after
increasing 21.6 percent in 1993. Sales were negatively impacted by the closedown
and consolidation of duplicative Wetterau facilities. However, operating
efficiencies from the closedowns and consolidations offset the operating
earnings lost from the reduced sales level. Food distribution operating earnings
increased 28.6 percent in 1994 to $365.5 million, following
16
<PAGE>
a 17.7 percent gain over 1992. The increase in 1994 and 1993 was primarily due
to the acquisition of Wetterau; however, improved productivity and overall
improvements in expense control also contributed to the results.
Retail food operating earnings increased in 1994 to $31.4 million, from $24.8
million in 1993, which increased 98.5 percent from 1992. The increase in 1994
and 1993 was due to the addition of the Wetterau retail operations and the
increase in contribution from corporately-owned Cub stores and Scott's. The
increase in 1994 and 1993 was partially offset by a reduced contribution from
the Twin Valu operation due to competitive pressures.
INTEREST INCOME AND EXPENSE
Interest income for 1994 increased over 1993 due to the notes receivable
acquired in conjunction with the Wetterau acquisition offsetting the effect of
declining rates. Interest income in 1993 was below 1992 due primarily to
ShopKo's repayment of its indebtedness owed to the company. Interest expense for
1994 was $120.3 million compared with $83.1 million and $72.7 million in 1993
and 1992 respectively. The increase in the past two years was due primarily to
the Wetterau acquisition, partially offset by lower interest rates.
EQUITY IN EARNINGS OF SHOPKO
ShopKo reported net sales for 1994 increased 3.3 percent to $1.74 billion,
compared to 1993 of $1.68 billion. Sales for 1993 increased 2.1 percent over
1992, which was a 53 week year. On a comparable weeks basis, the 1993 sales
increase was 3.6 percent. ShopKo reported total net earnings of $32.1 million
for 1994, a decrease of 35.9 percent from 1993. Net earnings decreased due to
lower gross margins and higher selling, general and administrative expenses.
Competitive pricing pressures and clearance markdowns related to lower-than-
expected sales resulted in the decrease in gross margins. ShopKo's net earnings
were also negatively impacted by the cumulative effect of a change in accounting
for future post-retirement medical benefits (SFAS No. 106) and a higher tax
rate. Net earnings for 1993 were $50.1 million, a 1 percent increase over 1992.
The 1993 net sales and net earnings increases were limited due to the weak
economic environment, unfavorable weather and increased competitive pressures.
INCOME TAXES
The effective tax rate increased to 37 percent in 1994 from 36 percent in 1993
and 1992. The increase in the effective tax rate was principally due to the
Omnibus Budget Reconciliation Act of 1993.
ACCOUNTING CHANGES
Post-retirement Benefits
In fiscal 1992 the company adopted the provisions of Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Post-retirement
Benefits Other Than Pensions." The company elected to immediately recognize the
accumulated post-retirement benefit obligation, resulting in a charge to net
earnings of $13.3 million, or 18 cents per share. The change did not have a
material effect on operating earnings.
Post-employment Benefits
Statement of Financial Accounting Standards No. 112 "Employers' Accounting for
Post-employment Benefits" was issued in November 1992 and must be adopted no
later than fiscal 1995. The company was in compliance with this new standard
prior to its issuance and therefore, no change in accounting policy was
necessary.
Income taxes
The company changed its method of accounting for income taxes to comply with the
provisions of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" from Statement of Financial Accounting Standard No. 96 which
was adopted in 1987. The change in accounting method was made in fiscal 1993.
The change did not have a material impact on results of operations.
NET EARNINGS
Net earnings for 1994 increased 13 percent to $185.3 million, compared with net
earnings for 1993 of $164.5 million and $194.4 million reported in 1992. Overall
earnings in 1994 improved because of the Wetterau acquisition and tight expense
controls. Reflected in 1992 amounts are the cumulative effect charge of adopting
SFAS No. 106, the company's 100 percent equity in ShopKo's net earnings through
October 16, 1991, the gain on the partial divestiture of ShopKo and the benefit
of the extra week. After adjusting 1992's net earnings to reflect the company's
current ownership interest in ShopKo, excluding the charge for SFAS No. 106, the
gain on the sale of ShopKo stock and the extra week, net earnings would have
shown an increase of about 15 percent in 1993 over 1992. The net earnings
increase in 1993 over 1992 was due to the Wetterau acquisition, tight expense
controls and a significant improvement in retail operations.
INFLATION
Inflation has not had a significant effect on the company's operating results or
its external sources of liquidity. The impact of negligible food inflation on
the company's sales was partially offset by retail development and marketing
activities. As operating expenses and inventory costs have increased, the
company has been able to identify operating efficiencies to minimize the impact.
17
<PAGE>
<TABLE>
<CAPTION>
TEN YEAR FINANCIAL AND OPERATING SUMMARY
- - - --------------------------------------------------------------------------------------------------------------------------------
SUPERVALU INC. and Subsidiaries
- - - --------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 (b) 1991
- - - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA (a)
Net sales $15,936,925 $12,568,000 $10,632,301 $10,104,899
Cost of sales 14,523,434 11,531,394 9,807,633 9,360,886
Selling and administrative expense 1,044,433 746,857 583,789 531,972
Interest, net 89,767 54,203 34,320 31,441
Equity in earnings of ShopKo 14,789 23,072 32,176 45,080
Earnings before taxes and accounting change 294,080 258,618 322,840 226,680
Provision for income taxes 108,827 94,092 115,175 70,544
Net earnings 185,253 164,526 194,377 155,136
Earnings per common share before accounting change 2.58 2.31 2.78 2.06
Net earnings per common share 2.58 2.31 2.60 2.06
- - - --------------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA (a)
Inventories (FIFO) $ 1,227,170 $ 1,247,337 $ 862,621 $ 785,395
Working capital (d) 452,121 361,093 534,182 196,217
Net property, plant and equipment 1,410,123 1,384,241 879,186 789,443
Total assets 4,042,351 4,064,189 2,484,300 2,401,357
Long-term debt (e) 1,262,995 1,347,386 608,241 567,444
Stockholders' equity 1,275,458 1,134,820 1,030,981 978,678
- - - --------------------------------------------------------------------------------------------------------------------------------
OTHER STATISTICS (a)
Earnings before accounting change as a
percent of net sales 1.16% 1.31% 1.95% 1.54%
Return on average stockholders' equity 15.40% 15.32% 20.17% 16.82%
Book value per common share $ 17.70 $ 15.84 $ 14.35 $ 13.01
Current ratio (d) 1.37:1 1.27:1 1.72:1 1.24:1
Debt to capital ratio (f) 57% 62% 44% 47%
Dividends declared per common share $ .85 1/2 $ .76 1/2 $ .70 1/2 $ .64 1/2
Weighted average common shares outstanding 71,817 71,341 74,700 75,165
Depreciation and amortization $ 186,261 $ 140,790 $ 111,488 $ 105,582
Capital expenditures, excluding retailer financing $ 239,602 $ 164,728 $ 175,624 $ 203,199
================================================================================================================================
</TABLE>
NOTES:
(a) Amounts for all years prior to 1992 have been restated to reflect the sale
of a 54 percent interest in ShopKo, effective October 16, 1991. Fiscal 1992
and 1987 contained 53 weeks; all other years cover 52 weeks. Dollars in
thousands except per share and percentage data.
(b) The cumulative effect of adopting Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions," resulted in a decrease in net earnings of $13,288,000 ($.18
per share). A $51,304,000 after-tax gain on the sale of a 54 percent
interest in ShopKo was included in fiscal 1992 net earnings ($.69 per
share). All statistics include the results of both transactions.
(c) The cumulative effect of adopting Statement of Financial Accounting
Standards No. 96, "Accounting for Income Taxes," resulted in a decrease in
net earnings of $13,640,000 ($.18 per share). A repeal of the investment
tax credit under the Tax Reform Act of 1986 resulted in a reduction in
earnings of approximately $6.0 million ($.08 per share).
(d) Working capital and current ratio are calculated after adding back the LIFO
reserve.
(e) Total long-term debt includes long-term debt and long-term obligations
under capital leases.
(f) For this ratio calculation, debt also includes the present value of
operating leases.
18
<PAGE>
<TABLE>
<CAPTION>
- - - -----------------------------------------------------------------------------------------------------
1990 1989 1988 1987 (c) 1986 1985
- - - -----------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
$9,734,811 $9,061,176 $8,331,333 $8,172,099 $7,164,463 $5,947,655
9,043,953 8,429,692 7,751,172 7,620,235 6,727,338 5,561,686
484,586 433,177 399,504 381,822 286,259 249,697
33,104 34,532 30,089 23,288 10,727 5,069
42,562 36,943 27,122 21,594 16,122 13,647
215,730 200,718 177,690 168,348 156,261 144,850
67,984 63,250 64,678 81,837 65,014 61,588
147,746 137,468 113,012 72,871 91,247 83,262
1.97 1.84 1.51 1.16 1.23 1.13
1.97 1.84 1.51 .98 1.23 1.13
- - - -----------------------------------------------------------------------------------------------------
$ 726,194 $ 688,947 $ 618,545 $ 588,646 $ 524,184 $ 384,618
188,139 165,887 217,320 169,526 250,372 122,641
701,162 666,508 518,197 474,296 450,803 352,452
2,239,900 2,116,202 1,844,918 1,641,401 1,410,739 1,059,763
549,694 557,828 529,894 415,907 412,966 211,644
869,891 763,706 660,720 578,275 534,830 469,170
- - - -----------------------------------------------------------------------------------------------------
1.52% 1.52% 1.36% 1.06% 1.27% 1.40%
18.12% 19.31% 18.28% 15.55% 18.06% 19.14%
$ 11.59 $ 10.20 $ 8.84 $ 7.76 $ 7.20 $ 6.33
1.25:1 1.22:1 1.35:1 1.28:1 1.56:1 1.32:1
47% 47% 50% 46% 41% 37%
$ .58 1/2 $ .48 1/2 $ .43 1/2 $ .41 $ .37 $ .33
74,972 74,785 74,634 74,387 74,184 73,975
$ 95,593 $ 86,944 $ 85,179 $ 71,955 $ 61,092 $ 47,847
$ 142,899 $ 193,218 $ 137,533 $ 214,314 $ 172,346 $ 155,578
=====================================================================================================
</TABLE>
19
<PAGE>
CONSOLIDATED COMPOSITION OF NET SALES AND OPERATING EARNINGS
- - - --------------------------------------------------------------------------------
SUPERVALU INC. and Subsidiaries
- - - --------------------------------------------------------------------------------
The following table sets forth, for each of the last five fiscal years, the
composition of the company's net sales and operating earnings.
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(In thousands, except
percent data) 1994 1993 1992 1991 1990
- - - ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales
- - - ----------------------------------------------------------------------------------------------------------
Food distribution $14,361,255 $11,448,148 $ 9,841,033 $ 9,523,719 $ 9,264,336
90.1% 91.1% 92.6% 94.2% 95.2%
Retail food 3,696,145 2,699,075 2,002,923 1,764,745 1,591,346
23.2% 21.5% 18.8% 17.5% 16.3%
Less: Eliminations (2,120,475) (1,579,223) (1,211,655) (1,183,565) (1,120,871)
(13.3)% (12.6)% (11.4)% (11.7)% (11.5)%
Total net sales $15,936,925 $12,568,000 $10,632,301 $10,104,899 $ 9,734,811
100.0% 100.0% 100.0% 100.0% 100.0%
- - - ----------------------------------------------------------------------------------------------------------
Operating earnings
- - - ----------------------------------------------------------------------------------------------------------
Food distribution $ 365,527 $ 284,337 $ 241,666 $ 214,155 $ 217,334
Retail food 31,366 24,842 12,512 11,761 2,471
---------------------------------------------------------------------------
Total operating earnings 396,893 309,179 254,178 225,916 219,805
Interest expense, net (89,767) (54,203) (34,320) (31,441) (33,104)
General corporate expenses (27,835) (19,430) (13,299) (13,875) (13,533)
---------------------------------------------------------------------------
Earnings before equity in
earnings of ShopKo, gain on
sale of ShopKo stock and
income taxes 279,291 235,546 206,559 180,600 173,168
Equity in earnings of
ShopKo 14,789 23,072 32,176 45,080 42,562
Gain on sale of ShopKo
stock -- -- 84,105 -- --
---------------------------------------------------------------------------
Earnings before income
taxes $ 294,080 $ 258,618 $ 322,840 $ 225,680 $ 215,730
- - - ----------------------------------------------------------------------------------------------------------
Identifiable assets
- - - ----------------------------------------------------------------------------------------------------------
Food distribution $ 2,644,670 $ 2,830,400 $ 1,594,003 $ 1,542,859 $ 1,422,087
Retail food 948,551 837,148 508,441 328,383 312,610
Corporate 449,130 396,641 381,856 530,115 505,203
---------------------------------------------------------------------------
Total $ 4,042,351 $ 4,064,189 $ 2,484,300 $ 2,401,357 $ 2,239,900
- - - ----------------------------------------------------------------------------------------------------------
Depreciation and
amortization
- - - ----------------------------------------------------------------------------------------------------------
Food distribution $ 105,763 $ 83,686 $ 71,326 $ 72,009 $ 67,134
Retail food 64,924 48,303 35,360 27,433 22,116
Corporate 15,574 8,801 4,802 6,140 6,343
---------------------------------------------------------------------------
Total $ 186,261 $ 140,790 $ 111,488 $ 105,582 $ 95,593
- - - ----------------------------------------------------------------------------------------------------------
Capital expenditures
- - - ----------------------------------------------------------------------------------------------------------
Food distribution $ 131,322 $ 60,408 $ 94,835 $ 129,518 $ 69,166
Retail food 69,939 78,715 68,562 64,594 64,853
Corporate 38,341 25,605 12,227 9,087 8,880
---------------------------------------------------------------------------
Total $ 239,602 $ 164,728 $ 175,624 $ 203,199 $ 142,899
==========================================================================================================
</TABLE>
The company's food distribution operations include sales to independently owned
and operated food stores, sales to food stores owned by the company, and the
operations of several allied service operations throughout the United States.
Retail food operations include sales by food stores owned by the company, other
than transition retail food stores. Eliminations include food distribution sales
to food stores included in the retail food segment.
Industry segment operating earnings were computed as total revenue less
associated operating expenses, which exclude general corporate expenses, net
interest expense and income taxes.
Identifiable assets are those assets of the company directly associated with the
industry segments and exclude short-term investments, certain accumulated income
tax temporary differences and other corporate assets.
See notes following the Ten Year Financial and Operating Summary and notes to
the consolidated financial statements.
20
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF EARNINGS
- - - -------------------------------------------------------------------------------------------------------
SUPERVALU INC. and Subsidiaries
- - - -------------------------------------------------------------------------------------------------------
(In thousands, except per share data) Fiscal Year Ended
- - - ---------------------------------------------------------------------------------------------------------
February 26, February 27, February 29,
1994 1993 1992
(52 Weeks) (52 Weeks) (53 Weeks)
- - - ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $15,936,925 $12,568,000 $10,632,301
Costs and expenses
Cost of sales 14,523,434 11,531,394 9,807,633
Selling and administrative expenses 1,044,433 746,857 583,789
Interest
Interest expense 120,292 83,066 72,693
Interest income 30,525 28,863 38,373
- - - ---------------------------------------------------------------------------------------------------------
Interest expense, net 89,767 54,203 34,320
- - - ---------------------------------------------------------------------------------------------------------
Total costs and expenses 15,657,634 12,332,454 10,425,742
- - - ---------------------------------------------------------------------------------------------------------
Earnings before equity in earnings of ShopKo, gain
on sale of ShopKo stock, income taxes and cumulative
effect of change in accounting principle 279,291 235,546 206,559
Equity in earnings of ShopKo 14,789 23,072 32,176
Gain on sale of ShopKo stock -- -- 84,105
- - - ---------------------------------------------------------------------------------------------------------
Earnings before income taxes and cumulative effect of
change in accounting principle 294,080 258,618 322,840
Provision for income taxes
Current 110,717 79,980 82,308
Deferred (1,890) 14,112 32,867
- - - ---------------------------------------------------------------------------------------------------------
Income tax expense 108,827 94,092 115,175
- - - ---------------------------------------------------------------------------------------------------------
Earnings before cumulative effect of change in
accounting principle 185,253 164,526 207,665
Cumulative effect of change in accounting principle -- -- (13,288)
- - - ---------------------------------------------------------------------------------------------------------
Net earnings $185,253 $164,526 $194,377
- - - ---------------------------------------------------------------------------------------------------------
Weighted average number of common shares outstanding 71,817 71,341 74,700
Net earnings per common share:
Earnings per common share before cumulative effect of
change in accounting principle $ 2.58 $ 2.31 $ 2.78
Cumulative effect of change in accounting principle -- -- (0.18)
- - - ---------------------------------------------------------------------------------------------------------
Net earnings per common share $ 2.58 $ 2.31 $ 2.60
=========================================================================================================
See notes to consolidated financial statements.
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
- - - -------------------------------------------------------------------------------------------------
SUPERVALU INC. and Subsidiaries
- - - -------------------------------------------------------------------------------------------------
(In thousands, except per share data) February 26, 1994 February 27, 1993
- - - -------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets
Cash $ 2,846 $ 1,773
Receivables, less allowance for losses of $33,820 in 1994
and $38,593 in 1993 352,151 357,709
Inventories 1,113,937 1,134,059
Other current assets 94,379 80,052
- - - -------------------------------------------------------------------------------------------------
Total current assets 1,563,313 1,573,593
- - - -------------------------------------------------------------------------------------------------
Long-term notes receivable 66,568 82,534
Long-term investment in direct financing leases 81,574 92,103
Property, plant and equipment
Land 172,241 162,451
Buildings 769,036 732,515
Property under construction 73,950 38,386
Leasehold improvements 114,724 103,620
Equipment 890,050 840,922
Assets under capital leases 175,891 183,236
- - - -------------------------------------------------------------------------------------------------
2,195,892 2,061,130
Less accumulated depreciation and amortization
Owned property, plant and equipment 746,027 647,735
Assets under capital leases 39,742 29,154
- - - -------------------------------------------------------------------------------------------------
Net property, plant and equipment 1,410,123 1,384,241
- - - -------------------------------------------------------------------------------------------------
Investment in ShopKo 173,567 165,464
Goodwill 427,559 436,215
Other assets 319,647 330,039
- - - -------------------------------------------------------------------------------------------------
Total assets $4,042,351 $4,064,189
=================================================================================================
See notes to consolidated financial statements.
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
- - - --------------------------------------------------------------------------------------------------------
February 26, 1994 February 27, 1993
- - - --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable $ 23,082 $ 251,496
Accounts payable 883,088 864,917
Current maturities of long-term debt 108,728 6,493
Current obligations under capital leases 19,222 19,348
Other current liabilities 190,305 183,524
- - - --------------------------------------------------------------------------------------------------------
Total current liabilities 1,224,425 1,325,778
- - - --------------------------------------------------------------------------------------------------------
Long-term debt 1,030,378 1,112,042
Long-term obligations under capital leases 232,617 235,344
Deferred income taxes 99,734 85,830
Other liabilities 179,739 170,375
Commitments and contingencies - -
Stockholders' equity
Preferred stock, no par value: Authorized 1,000 shares
Shares issued and outstanding, 6 in 1994 ($1,000 stated value) 5,908 -
Common stock, $1.00 par value: Authorized, 200,000 shares
Shares issued, 75,335, in 1994 and 1993 75,335 75,335
Capital in excess of par value 12,966 12,584
Retained earnings 1,268,117 1,144,374
Treasury stock, at cost, 3,276 shares in 1994 and 3,680 in 1993 (86,868) (97,473)
- - - --------------------------------------------------------------------------------------------------------
Total stockholders' equity 1,275,458 1,134,820
- - - --------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $4,042,351 $4,064,189
========================================================================================================
</TABLE>
23
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
- - - -------------------------------------------------------------------------------
SUPERVALU INC. and Subsidiaries
- - - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(In thousands, except per share data)
Capital in
Preferred Common Excess of Treasury Retained
Stock Stock Par Value Stock Earnings Total
<S> <C> <C> <C> <C> <C> <C>
- - - -------------------------------------------------------------------------------------------------------------
Balance at February 23, 1991 $ -- $75,225 $11,021 $ -- $ 892,432 $ 978,678
Net earnings -- -- -- -- 194,377 194,377
Sales of common stock under
option plans -- 110 1,734 2,127 -- 3,971
Cash dividends declared on common
stock--$.705 per share -- -- -- -- (52,422) (52,422)
Purchase of shares for treasury -- -- -- (93,623) -- (93,623)
- - - -------------------------------------------------------------------------------------------------------------
Balance at February 29, 1992 -- 75,335 12,755 (91,496) 1,034,387 1,030,981
Net earnings -- -- -- -- 164,526 164,526
Sales of common stock under
options plans -- -- (932) 8,321 -- 7,389
Cash dividends declared on common
stock--$.765 per share -- -- -- -- (54,539) (54,539)
Compensation under employee
incentive plan -- -- 761 6,003 -- 6,764
Purchase of shares for treasury -- -- -- (20,301) -- (20,301)
- - - -------------------------------------------------------------------------------------------------------------
Balance at February 27, 1993 -- 75,335 12,584 (97,473) 1,144,374 1,134,820
Net earnings -- -- -- -- 185,253 185,253
Sales of common stock under
option plans -- -- 225 10,838 -- 11,063
Cash dividends declared on common
stock--$.855 per share -- -- -- -- (61,510) (61,510)
Issuance of preferred stock 5,908 -- -- -- -- 5,908
Compensation under employee
incentive plan -- -- 157 (233) -- (76)
- - - -------------------------------------------------------------------------------------------------------------
Balance at February 26, 1994 $5,908 $75,335 $12,966 $(86,868) $1,268,117 $1,275,458
=============================================================================================================
</TABLE>
See notes to consolidated financial statements.
24
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
- - - --------------------------------------------------------------------------------
SUPERVALU INC. and Subsidiaries
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(In thousands) Fiscal Year Ended
- - - ------------------------------------------------------------------------------------------------------------------
February 26, February 27, February 29,
1994 1993 1992
- - - ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities
Net earnings $ 185,253 $ 164,526 $ 194,377
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Equity in earnings of ShopKo (14,789) (23,072) (32,176)
Gain on sale of ShopKo stock - - (84,105)
Dividends received from ShopKo 6,483 6,490 -
Depreciation and amortization 186,261 140,790 111,488
Provision for losses on receivables 7,165 7,867 6,675
(Gain) loss on sale of property, plant and equipment (404) (2,734) 936
Deferred income taxes (1,890) 14,112 25,743
Treasury shares contributed to employee incentive plan 444 6,282 -
Changes in assets and liabilities, excluding effect from acquisitions:
Receivables (1,207) 21,917 (10,360)
Inventories 22,222 119,959 (68,779)
Other current assets 108 (908) (5,615)
Direct financing leases 9,183 12,881 3,102
Accounts payable 18,171 (19,968) 12,897
Other liabilities 15,745 (44,004) 22,758
- - - ------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 432,745 404,138 176,941
- - - ------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Net proceeds from sale of ShopKo stock - - 240,831
Additions to long-term notes receivable (35,591) (38,986) (51,698)
Proceeds received on long-term notes receivable 51,557 53,136 55,665
Net reductions to note receivable from ShopKo - 181,167 22,867
Proceeds from sale of property, plant and equipment 41,531 23,467 7,745
Purchase of property, plant and equipment (231,489) (152,498) (147,813)
Business acquisitions, net of cash acquired - (643,718) (11,847)
Other investing activities 44,249 (114,132) (26,402)
- - - ------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities (129,743) (691,564) 89,348
- - - ------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Net reductions of short-term notes payable (228,414) (108,910) (99,468)
Proceeds from issuance of long-term debt 4,365 701,363 12,931
Repayment of long-term debt (9,462) (219,320) (10,772)
Reduction of obligations under capital leases (18,377) (17,590) (27,427)
Proceeds from the sale of common stock under option plans 9,521 5,985 3,971
Dividends paid (59,562) (53,574) (51,902)
Payment for purchase of treasury stock - (20,301) (93,623)
- - - ------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (301,929) 287,653 (266,290)
- - - ------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash 1,073 227 (1)
Cash at beginning of year 1,773 1,546 1,547
- - - ------------------------------------------------------------------------------------------------------------------
Cash at end of year $ 2,846 $ 1,773 $ 1,546
==================================================================================================================
See notes to consolidated financial statements.
</TABLE>
25
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUPERVALU INC. and Subsidiaries
- - - --------------------------------------------------------------------------------
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation:
The financial statements include the accounts of the company and all its
subsidiaries. All significant inter-company accounts and transactions have been
eliminated.
Revenue and Income Recognition:
Revenues from product sales are recognized upon shipment of the product for food
distribution and at the point of sale for retail food. Revenues from services
rendered are recognized immediately after such services have been provided.
Income is recognized upon the completion of the earnings process.
Inventories:
Inventories are stated at the lower of cost or market. Cost is determined
through use of the last-in, first-out method (LIFO) for a major portion of
consolidated inventories: 82.0 percent for 1994 and 80.1 percent for 1993. The
first-in, first-out method (FIFO) is used to determine cost for remaining
inventories which are principally perishable products. Market is replacement
value. If the FIFO method had been used to determine cost of inventories for
which the LIFO method is used, the company's inventories would have been higher
by approximately $113.2 million at February 26, 1994 and $113.3 million at
February 27, 1993.
Property, plant and equipment:
Property, plant and equipment are carried at cost. Depreciation, as well as
amortization of assets under capital leases, is based on the estimated useful
lives of the assets using a straight-line method. Interest on property under
construction of $2.9, $4.0 and $2.4 million was capitalized in fiscal years
1994, 1993 and 1992, respectively.
Goodwill:
Amounts paid in excess of the fair value of acquired net assets are amortized on
a straight-line basis over 5 to 40 years. The recoverability of goodwill is
assessed by determining whether the goodwill balance can be recovered through
projected cash flows and operating results over its remaining life. Any
impairment of the asset would be recognized when it is probable that such future
undiscounted cash flows will be less than the carrying value of the asset.
Goodwill is shown net of accumulated amortization of $20.4 and $8.0 million for
1994 and 1993, respectively.
Accounts payable:
Accounts payable include $80.5 and $41.8 million at February 26, 1994 and
February 27, 1993, respectively, of issued checks which had not cleared the
company's bank accounts, reduced by deposits in transit and cash on deposit in
the company's depository banks.
Financial Instruments:
The company, from time to time, utilizes interest rate caps, collars and swaps
to manage interest costs and reduce exposure to interest rate changes. The
difference between amounts to be paid or received is accrued and recognized over
the life of such contracts.
Fair value disclosures of financial instruments:
The estimated fair value of significant financial instruments and the methods
and assumptions used to determine the value are disclosed in the notes
receivable and long-term debt notes.
Pre-opening costs:
Pre-opening costs of retail stores are charged against earnings as incurred.
Net earnings per share:
Net earnings per share are computed by dividing net earnings by the weighted
average number of common shares outstanding. Outstanding stock options do not
have a significant dilutive effect on earnings per share.
Reclassifications:
Certain reclassifications have been made to prior years' financial statements to
conform to 1994 presentation. These reclassifications did not affect results of
operations as previously reported.
ACQUISITIONS
As of October 31, 1992, the company completed the acquisition of Wetterau
Incorporated ("Wetterau"). The acquisition was accounted for as a purchase,
whereby the company acquired all of the outstanding common stock of Wetterau,
approximately 21.4 million shares, for $30.25 per share. In addition to the
approximately $647 million paid for the stock, the company funded the repayment
of approximately $200 million of Wetterau commercial paper. The company also
incurred additional costs of approximately $50 million for buyouts of Wetterau
stock options, fees and transaction expenses. Approximately $266 million of
additional Wetterau debt remained outstanding immediately after the acquisition.
The allocation of the purchase price for Wetterau was based on fair values at
the date of acquisition. The excess of the purchase price over the fair value of
the net assets acquired ("goodwill") of approximately $432 million is being
amortized on a straight-line basis over 40 years. The results of Wetterau's
operations from October 31, 1992 have been included with the company's
continuing operations.
The following unaudited pro forma results of operations for the year ended
February 27, 1993 assumes the acquisition occurred as of the beginning of the
respective period after giving effect to certain adjustments, including
amortization of goodwill, depreciation of
26
<PAGE>
- - - -------------------------------------------------------------------------------
fixed asset write-ups, increased interest expense on acquisition debt and
related income tax effects. The pro forma results have been prepared for
comparative purposes only and do not purport to indicate the results of
operations which would actually have occurred had the combination been in effect
on the date indicated, or which may occur in the future.
- - - ----------------------------------------------------------
(In thousands, except per share amounts) 1993
- - - ----------------------------------------------------------
Net sales $16,446,508
Net earnings 167,499
Net earnings per common share 2.35
==========================================================
NOTES RECEIVABLE
Notes receivable arise from fixture and other financing related to independently
owned retail food operations. Loans to independent retailers, as well as trade
accounts receivable, are primarily collateralized by the retailers' inventory,
equipment and fixtures. The notes range in length from 1 to 20 years with the
average being 8 years, and may be non-interest bearing or bear interest at rates
ranging primarily from 6 to 13 percent. The estimated fair market value of the
notes receivable approximates the net carrying value at February 26, 1994 and
February 27, 1993, based on comparisons to publicly traded debt instruments of
similar credit quality.
Included in current receivables are notes receivable due within one year
totaling $10.9 and $19.3 million at February 26, 1994 and February 27, 1993,
respectively.
The Financial Accounting Standards Board issued SFAS No. 114--"Accounting by
Creditors for Impairment of a Loan" in 1994. This new standard must be adopted
no later than fiscal 1996. The impact of this new standard is being evaluated,
but is not expected to be material.
INVESTMENT IN SHOPKO
On October 16, 1991, ShopKo, the company's mass merchandise discount subsidiary,
completed its sale of 17,250,000 shares of its common stock at $15 per share in
an initial public offering. This sale generated net proceeds to the company of
$240.8 million and a gain of $84.1 million, reducing the company's ownership in
ShopKo from 100 to 46 percent. The company accounts for the investment in ShopKo
under the equity method.
The following table summarizes the significant transactions between the company
and ShopKo:
- - - --------------------------------------------------------
(In thousands) 1994 1993 1992
- - - --------------------------------------------------------
Sales to ShopKo $9,759 $16,645 $27,493
Interest income -- 509 16,838
========================================================
Summarized financial information of ShopKo is as follows:
- - - --------------------------------------------------------
(In thousands) 1994 1993 1992
- - - --------------------------------------------------------
Sales $1,738,746 $1,682,854 $1,648,427
Gross profit 449,488 454,423 449,701
Net earnings 32,122 50,059 49,589
========================================================
- - - --------------------------------------------------------
(In thousands) 1994 1993
- - - --------------------------------------------------------
Current assets $370,507 $ 296,328
Non-current assets 582,542 495,397
Current liabilities 251,743 214,552
Non-current liabilities 327,600 221,693
========================================================
LONG-TERM DEBT
- - - ----------------------------------------------------------------------
(In thousands, February 26, February 27,
except payment data) 1994 1993
- - - ----------------------------------------------------------------------
5.875%-8.875% promissory notes $700,000 $ 700,000
semi-annual interest payments of
$24.9 million; due 1995 to 2022
8.875%-9.64% promissory notes 170,000 170,000
semi-annual interest payments of
$7.9 million; due 1994 to 1999
9.67% senior subordinated notes due 1998 75,000 75,000
8.39%-11.5% promissory notes 33,317 34,409
due 1993 to 2004
8.28%-9.46% promissory notes due 2010 26,394 --
8.875% sinking fund debentures due 2016 22,110 22,110
3.0%-10.0% mortgages payable due 8,331 7,829
1993 to 2007 (secured by land and buildings)
2.05%-11.875% industrial revenue bonds 95,944 99,968
Other debt 8,010 9,219
- - - ----------------------------------------------------------------------
1,139,106 1,118,535
Less current maturities 108,728 6,493
- - - ----------------------------------------------------------------------
Long-term debt $1,030,378 $1,112,042
======================================================================
Aggregate maturities of long-term debt during the next five fiscal years are:
- - - -------------------------------------------
(In thousands)
- - - -------------------------------------------
1995 $108,728
1996 308,543
1997 5,505
1998 35,497
1999 91,014
===========================================
On October 26, 1992 the company's $300 million fully committed revolving credit
agreement was terminated and replaced with fully committed $700 million 364 day
and $400 million four year revolving credit agreements with a group of banks.
These credit agreements were subsequently reduced to $150 million and $400
million credit agreements, respectively. On October 25, 1993 the $150 million
364 day credit agreement expired leaving the company with a $400 million credit
agreement expiring in October 1997. The amounts available under the credit
agreement support the company's commercial paper program. If the company were to
borrow under the
27
<PAGE>
credit agreements, the interest rate would be based on various money market
rates selected by the company at the time of borrowing. The company pays an
annual facility fee of .15 percent for the four year credit agreement.
The company issued unsecured notes of $22.8 million and $3.6 million on February
10, 1994 in connection with the company's acquisition of certain properties from
Wetterau Properties, Inc., a publicly owned real estate investment trust. The
notes, which bear interest at 9.46 percent and 8.28 percent, respectively,
replaced the company's obligations under debt contingent purchase agreements.
On November 17, 1992 the company completed the public offering of notes due
November 15, 1995, 2002 and 2022, bearing interest at 5.875 percent, 7.80
percent and 8.875 percent, respectively. The notes were issued in principal
amounts of $300, $300 and $100 million for the 1995, 2002 and 2022 maturities,
respectively. On July 15, 1992 the company redeemed $100 million of its 10.5
percent notes with an original maturity of July 15, 1995.
In connection with the company's acquisition of Wetterau Incorporated, the
company acquired certain long-term debt of Wetterau, including $75 million of
9.67 percent senior subordinated notes and various industrial revenue bonds. At
the time of the acquisition, Wetterau had outstanding a convertible subordinated
debt issue of $107.5 million which, pursuant to its terms, its holders could
require to be redeemed in connection with the acquisition. At February 26, 1994
substantially all of this debt had been retired.
The debt agreements contain various covenants, including minimum tangible net
worth requirements and maximum permitted leverage. Under the most restrictive
covenants, retained earnings of approximately $166 million were available at
year-end for payment of cash dividends.
The company periodically enters into interest rate caps, collars and swaps to
manage exposure to interest rate changes. The financial instruments are subject
to market risk as interest rates fluctuate. At February 26, 1994, the company
had notional amounts in effect of $20.6 million, all aimed at fixing interest
costs. The fair market value of these financial instruments was immaterial at
February 26, 1994.
As of February 26, 1994 and February 27, 1993 the estimated fair value of the
company's long-term debt (including current maturities) exceeded the carrying
value by approximately $69 and $81 million, respectively. The estimated fair
value was based on market quotes where available, discounted cash flows and
market yields for similar instruments. The estimated fair value of the company's
commercial paper outstanding as of February 26, 1994 and February 27, 1993
approximated the carrying value.
LEASES
Capital and operating leases:
The company leases certain food distribution warehouse and office facilities, as
well as corporate-owned and operated retail food stores. Many of these leases
include renewal options, and to a limited extent, include options to purchase.
Amortization of assets under capital leases was $13.6, $11.8 and $7.8 million in
1994, 1993 and 1992, respectively.
Future minimum obligations under capital leases in effect at February 26, 1994
are as follows:
- - - -------------------------------------------------------------
(In thousands) Lease
Year Obligations
- - - -------------------------------------------------------------
1995 $ 24,708
1996 23,517
1997 22,560
1998 21,421
1999 20,734
Later 188,899
- - - -------------------------------------------------------------
Total future minimum obligations 301,839
Less interest 138,411
- - - -------------------------------------------------------------
Present value of net future minimum obligations 163,428
Less current portion 9,992
- - - -------------------------------------------------------------
Long-term obligations $153,436
=============================================================
The present values of future minimum obligations shown are calculated based on
interest rates ranging from 7.1 percent to 13.8 percent, with a weighted average
of 9.8 percent, determined to be applicable at the inception of the leases.
Interest expense on the outstanding obligations under capital leases was $15.6,
$14.8 and $12.1 million in 1994, 1993 and 1992, respectively.
Contingent rent expense, based primarily on sales performance, for capital
leases was $.9, $.3 and $.1 million in 1994, 1993 and 1992, respectively.
In addition to its capital leases, the company is obligated under operating
leases, primarily for buildings, warehouse and computer equipment.
28
<PAGE>
Future minimum obligations under operating leases in effect at February 26, 1994
are as follows:
- - - -----------------------------------------------
(In thousands) Lease
Year Obligations
- - - -----------------------------------------------
1995 $ 54,856
1996 49,570
1997 43,962
1998 36,087
1999 29,412
Later 129,782
- - - -----------------------------------------------
Total future minimum obligations $343,669
===============================================
Total rent expense, net of sublease income, relating to all operating leases
with terms greater than one year was $33.3, $13.0 and $2.8 million in 1994, 1993
and 1992, respectively.
Future minimum receivables under operating leases and subleases in effect at
February 26, 1994 are as follows:
<TABLE>
<CAPTION>
- - - --------------------------------------------------------------------------
(In thousands) Owned Leased
Year Property Property Total
- - - --------------------------------------------------------------------------
<S> <C> <C> <C>
1995 $ 6,473 $ 22,049 $ 28,522
1996 6,313 19,777 26,090
1997 6,192 16,918 23,110
1998 5,830 13,242 19,072
1999 5,462 10,061 15,523
Later 26,298 29,200 55,498
- - - --------------------------------------------------------------------------
Total future minimum receivables $56,568 $111,247 $167,815
==========================================================================
Owned property under operating leases is as follows:
- - - -----------------------------------------------------------------------------
(In thousands) February 26, February 27,
1994 1993
- - - -----------------------------------------------------------------------------
Land, buildings and equipment $70,491 $78,858
Less accumulated depreciation 15,754 12,030
- - - -----------------------------------------------------------------------------
Net land, buildings and equipment $54,737 $66,828
=============================================================================
</TABLE>
Total rental income relating to property owned by the company and leased under
operating leases was $6.6, $5.4 and $3.7 million in 1994, 1993 and 1992,
respectively.
Direct financing leases:
Under direct financing capital leases, the company leases buildings on behalf of
independent retailers with terms ranging from 5 to 25 years.
Future minimum rentals to be received under direct financing leases and the
related future minimum obligations under capital leases in effect at February
26, 1994 are as follows:
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------
(In thousands) Direct Financing Capital Lease
Year Lease Receivables Obligations
- - - -------------------------------------------------------------------------------
<S> <C> <C>
1995 $ 19,181 $ 17,719
1996 17,900 16,594
1997 16,500 15,245
1998 14,842 13,743
1999 12,978 12,111
Later 74,576 70,195
- - - -------------------------------------------------------------------------
Total minimum lease payments 155,977 145,607
Less unearned income 65,317 --
Less interest -- 57,196
- - - -------------------------------------------------------------------------
Present value of net minimum lease payments 90,660 88,411
Less current portion 9,086 9,230
- - - -------------------------------------------------------------------------
Long-term portion $ 81,574 $ 79,181
=========================================================================
</TABLE>
Contingent rental income earned, based primarily on sales performance, for
direct financing leases was $1.5, $1.5 and $1.4 million for 1994, 1993 and 1992,
respectively. Contingent rental expense paid, based primarily on sales
performance, for direct financing leases was $1.3, $1.8 and $1.0 million in
1994, 1993 and 1992, respectively.
INCOME TAXES
In 1993 the company changed its method of accounting for income taxes to comply
with the provisions of Statement of Financial Accounting Standards (SFAS) No.
109, "Accounting for Income Taxes." The change in accounting method was applied
retroactively to the beginning of 1993. The change did not have a material
impact on results of operations.
The provision for federal and state income taxes includes the following:
<TABLE>
<CAPTION>
- - - ---------------------------------------------------------------------
(In thousands) 1994 1993 1992
- - - ---------------------------------------------------------------------
<S> <C> <C> <C>
Current
Federal $ 91,113 $66,699 $ 66,628
State 19,955 13,836 16,047
Tax credits (351) (555) (367)
Deferred
Statutory rate change 500 -- --
Other (2,390) 14,112 32,867
- - - ---------------------------------------------------------------------
Total provision $108,827 $94,092 $115,175
=====================================================================
</TABLE>
The effective tax rate varies from the statutory federal income tax rate for the
following reasons:
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------
1994 1993 1992
- - - -------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory 35.0% 34.0% 34.0%
State income taxes, net of federal benefit 4.3 4.3 4.5
Benefit of dividends received deduction (.7) (.7) (2.4)
Other (1.6) (1.2) (.4)
- - - -------------------------------------------------------------------------
Effective income tax rate 37.0% 36.4% 35.7%
=========================================================================
</TABLE>
29
<PAGE>
Temporary differences which give rise to significant portions of the net
deferred tax liability as of February 26, 1994 and February 27, 1993, are as
follows:
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------
(In thousands) 1994 1993
- - - -------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Depreciation and amortization $ 89,522 $ 81,274
Acquisition assets adjustment to fair values 80,329 89,301
Earnings from ShopKo investment 44,623 42,445
Accelerated tax deductions for
benefits to be paid in future periods 17,986 12,215
Other 6,511 3,660
- - - -------------------------------------------------------------------------------
Total deferred tax liabilities 238,971 228,895
- - - -------------------------------------------------------------------------------
Deferred tax assets:
Depreciation and amortization (12,683) (8,578)
Provision for obligations and
contingencies to be settled in future periods (154,742) (153,900)
Other (15,439) (8,420)
- - - -------------------------------------------------------------------------------
Total deferred tax assets (182,864) (170,898)
- - - -------------------------------------------------------------------------------
Net deferred tax liability $ 56,107 $ 57,997
===============================================================================
</TABLE>
Temporary differences attributable to obligations and contingencies consist
primarily of valuation allowances, accrued postretirement benefits and vacation
pay, and other expenses which are not deductible for income tax purposes until
paid.
SUPPLEMENTAL CASH FLOW INFORMATION
The company's non-cash investing and financing activities were as follows:
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------
(In thousands) 1994 1993 1992
<S> <C> <C> <C>
- - - -------------------------------------------------------------------------------
Leased asset additions and
related obligation $ 13,127 $ 12,797 $ 17,142
------------------------------
Acquisitions:
Fair value of assets acquired 35,482 1,837,693 63,870
Cash paid - 647,382 12,280
Preferred stock issued 5,908 - -
- - - -------------------------------------------------------------------------------
Liabilities assumed $ 29,574 $1,190,311 $ 51,590
===============================================================================
</TABLE>
Payments for interest and income taxes were as follows:
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------
(In thousands) 1994 1993 1992
- - - -------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest (net of amount capitalized) $123,457 $ 71,259 $ 73,729
Income taxes 107,891 99,658 103,740
===============================================================================
</TABLE>
STOCK OPTION PLANS
The company's 1993, 1983 and 1976 stock option plans allow the granting of non-
qualified stock options and incentive stock options to key salaried executive
employees at prices not less than 100 percent of fair market value, determined
by averaging the open and close price on the date of grant. The plans provide
that the Board of Directors or the Executive Personnel and Compensation
Committee of the Board may determine at the time of granting whether each option
granted will be a non-qualified or incentive stock option under the Internal
Revenue Code. The term of each option will be determined by the Board of
Directors or the Committee, but shall not be for more than 10 years from the
date of grant. Options may be exercised in installments or otherwise, as the
Board of Directors or the Committee may determine.
Changes in options were as follows:
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------
Shares Price
(In thousands) Range
- - - -------------------------------------------------------------------------------
<S> <C> <C>
Outstanding, February 23, 1991 2,210 $ 8.57-29.75
Granted 548 23.88-27.88
Exercised (191) 8.57-25.13
Cancelled and forfeited (214)
- - - -------------------------------------------------------------------------------
Outstanding, February 29, 1992 2,353 8.57-29.75
Granted 793 24.00-34.56
Exercised (495) 8.57-29.75
Cancelled and forfeited (23)
- - - -------------------------------------------------------------------------------
Outstanding, February 27, 1993 2,628 13.19-34.56
Granted 692 31.63-39.25
Exercised (482) 13.19-32.81
Cancelled and forfeited (73)
- - - -------------------------------------------------------------------------------
Outstanding, February 26, 1994 2,765 $15.25-39.25
===============================================================================
</TABLE>
Options to purchase 1.7 million shares were exercisable at February 26, 1994 and
February 27, 1993. Option shares available for grant were 3.8 and 1.0 million at
February 26, 1994 and February 27, 1993, respectively. The company has reserved
6.1 million shares, in aggregate, for the plans.
As of February 26, 1994, limited stock appreciation rights have been granted and
are outstanding under the 1978 and 1989 Stock Appreciation Rights Plans. Such
rights relate to options granted to purchase 1.1 million shares of common stock
and are exercisable only upon a change of control as defined by the plan.
TREASURY STOCK PURCHASE PROGRAM
In February 1994, the Board of Directors rescinded the 1991 treasury stock
purchase program and instituted a new treasury stock purchase program. Under the
1994 program, which was primarily instituted in connection with the 1993 stock
option plan, the company may repurchase sufficient shares annually for
reissuance upon the exercise of employee stock options or for other compensation
programs. No shares were repurchased under either treasury stock program in
1994. The company repurchased .8 and 3.6 million shares at an average per share
cost of $25.78 and $26.34 during 1993 and 1992, respectively.
STOCKHOLDER RIGHTS PLAN
The company has a "Preferred Share Purchase Rights Plan," in which the Board of
Directors declared a dividend of one preferred share purchase right for each
outstanding share of common stock. The
30
<PAGE>
rights, which expire on April 12, 1999, are exercisable only under certain
conditions, and when exercisable the holder will be entitled to purchase from
the company one one-thousandth of a share of a new series of preferred stock at
a price of $95 per one one-thousandth of a preferred share, subject to certain
adjustments. The rights will become exercisable 10 days after a person or group
acquires beneficial ownership of 20 percent or more of the company's shares, or
10 business days (or such later time as the Board of Directors may determine)
after a person or group announces an offer the consummation of which would
result in such person or group owning 20 percent or more of the shares.
RETIREMENT PLANS
Substantially all non-union employees of the company and its subsidiaries are
covered by various contributory and non-contributory pension or profit-sharing
plans. The company also participates in several multi-employer plans providing
defined benefits to union employees under the provisions of collective
bargaining agreements.
Contributions under the defined contribution profit sharing plans are determined
at the discretion of the Board of Directors and were $5.1, $4.4 and $4.3 million
for 1994, 1993 and 1992, respectively.
Amounts charged to union pension expense were $28.2, $21.5 and $16.7 million for
1994, 1993 and 1992, respectively.
Benefit calculations for the company's defined benefit pension plan are based on
years of service and the participants' highest compensation during five
consecutive years of employment. Annual payments to the pension trust fund are
determined in compliance with the Employee Retirement Income Security Act
(ERISA).
The following table sets forth the company's defined benefit pension plans'
funded status and the amounts recognized in the company's financial statements:
- - - ------------------------------------------------------------------
February 26, February 27,
(In thousands) 1994 1993
- - - ------------------------------------------------------------------
Actuarial present value of
accumulated benefit obligation:
Vested $ 156,508 $ 119,645
Total $ 173,420 $ 134,962
- - - ------------------------------------------------------------------
Projected benefit obligation $ 220,498 $ 181,637
Plan assets at fair value (160,205) (143,982)
- - - ------------------------------------------------------------------
Projected benefit obligation in
excess of plan assets 60,293 37,655
Unrecognized net loss (33,460) (9,488)
Unrecognized prior service cost (4,291) (5,036)
Unrecognized transition obligation (794) (921)
Adjustment to minimum liability 1,235 650
- - - ------------------------------------------------------------------
Pension liability $ 22,983 $ 22,860
==================================================================
Net pension expense included the following components:
- - - ------------------------------------------------------------------
(In thousands) 1994 1993 1992
- - - ------------------------------------------------------------------
Service cost $ 9,066 $ 6,154 $ 5,073
Interest cost 15,790 10,196 6,625
Actual return on plan assets (12,834) (6,518) (8,482)
Net amortization and deferral (941) (2,259) 2,887
- - - ------------------------------------------------------------------
Net pension expense $ 11,081 $ 7,573 $ 6,103
==================================================================
The weighted-average discount rate and rate of increase in future compensation
levels used in determining the actuarial present value of the projected benefit
obligation were 7.5 percent and 4.5 percent, respectively for 1994, and 8.5
percent and 5.5 percent, respectively, for 1993. The expected long-term rate of
return on assets was 10 percent. The company computes pension expense using the
projected unit credit actuarial cost method.
Other Postretirement Benefits:
In addition to providing pension benefits, the company provides certain health
care and life insurance benefits for retired employees. Employees become
eligible for these benefits upon meeting certain age and service requirements.
The provisions of Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions," were
adopted in 1992. The statement requires accrual of the expected cost of
providing postretirement benefits other than pensions over the years that
employees render the necessary service. Prior to adopting this statement, the
company recognized expense when benefits were paid. The total cumulative effect
of this accounting change was to decrease net earnings by $13.3 million or $.18
per share for 1992. The periodic postretirement benefit cost and accumulated
postretirement benefit obligation are as follows:
- - - -------------------------------------------------------------------------
(In thousands)
Net periodic postretirement benefit cost 1994 1993 1992
- - - -------------------------------------------------------------------------
(Service cost-benefits attributed to service
during the period $1,783 $1,385 $ 868
Interest cost on accumulated
postretirement benefit obligation 3,686 2,648 1,785
Net amortization and deferral 340 - -
- - - -------------------------------------------------------------------------
Net periodic postretirement benefit cost $5,809 $4,033 $2,653
=========================================================================
- - - -------------------------------------------------------------------------
Accumulated postretirement benefit February 26, February 27,
obligation 1994 1993
- - - -------------------------------------------------------------------------
Retirees $17,617 $18,938
Active plan participants 34,930 28,778
- - - -------------------------------------------------------------------------
Total accumulated postretirement
benefit obligation 52,547 47,716
Unrecognized loss (5,984) -
Unrecognized prior service cost 839 -
- - - -------------------------------------------------------------------------
Postretirement benefit liability $47,402 $47,716
=========================================================================
31
<PAGE>
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.5 percent in 1994 and 8.5 percent in
1993.
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 12 percent per year through fiscal 1995, 9
percent through fiscal 1999 and 6 percent thereafter. The health care cost trend
rate assumption has a significant effect on the amounts reported. For example, a
1 percent increase in the health care trend rate would increase the accumulated
postretirement benefit obligation by $8.1 million and $4.1 million and the net
periodic cost by $.9 million and $.6 million for fiscal 1994 and 1993,
respectively.
The Financial Accounting Standards Board issued SFAS No. 112-"Employers'
Accounting for Postemployment Benefits" in 1992. The company was in compliance
with this new standard prior to its issuance and therefore, no change in
accounting policy was necessary.
INDUSTRY SEGMENT INFORMATION
Information concerning the company's continuing operations by business segment
for the years ended February 26, 1994, February 27, 1993 and February 29, 1992,
as required by Statement of Financial Accounting Standards No. 14, "Financial
Reporting for Segments of a Business Enterprise," is contained on page 20.
COMMITMENTS AND CONTINGENCIES
The company has guaranteed mortgage loan and other debt obligations of $19.2
million. The company has also guaranteed the leases and fixture financing loans
of various affiliated retailers with a present value of $34.4 and $11.9 million,
respectively. The company has provided limited recourse to purchasers of notes
receivable from affiliated retailers with outstanding note balances of $55.9 and
$52.3 million, $9.5 and $8.9 million of which the company has contingent
liability, at February 26, 1994 and February 27, 1993, respectively. In
addition, the company is contingently liable for bonds totaling $2.6 million.
The company has also entered into note repurchase agreements with various
lenders totaling $39.6 million, under which certain events require the company
to repurchase collateralized loans.
32
<PAGE>
INDEPENDENT AUDITORS' REPORT
SUPERVALU INC.
Board of Directors and Stockholders
Eden Prairie, Minnesota
We have audited the accompanying consolidated balance sheets of SUPERVALU INC.
and subsidiaries as of February 26, 1994 and February 27, 1993, and the related
statements of earnings, stockholders' equity and cash flows for each of the
three years (52-53 weeks) in the period ended February 26, 1994. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of SUPERVALU INC. and
subsidiaries as of February 26, 1994 and February 27, 1993, and the results of
their operations and their cash flows for each of the three years in the period
ended February 26, 1994, in conformity with generally accepted accounting
principles.
As discussed in the notes to the consolidated financial statements, in fiscal
1992 the company changed its method of accounting for postretirement benefits to
conform with Statement of Financial Accounting Standards No. 106.
/s/Deloitte & Touche
Minneapolis, Minnesota
April 7, 1994
-33-
<PAGE>
UNAUDITED QUARTERLY FINANCIAL INFORMATION
Quarterly unaudited financial information for SUPERVALU INC. and subsidiaries is
as follows:
<TABLE>
<CAPTION>
- - - ----------------------------------------------------------------------------------------------------
(In thousands, except per share data) Fiscal Year (52 Weeks) Ended February 26, 1994
- - - ----------------------------------------------------------------------------------------------------
First Second Third Fourth Year
(16 wks) (12 wks) (12 wks) (12 wks) (52 wks)
- - - ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $4,875,784 $3,703,823 $3,670,298 $3,687,020 $15,936,925
Gross profit 418,362 311,771 331,270 352,088 1,413,491
Net earnings 51,084 36,324 45,238 52,607 185,253
Net earnings per common
share .71 .51 .63 .73 2.58
Dividends declared per
common share .195 .220 .220 .220 .855
Weighted average shares 71,583 71,818 71,937 72,005 71,817
====================================================================================================
Fiscal Year (52 Weeks) Ended February 27, 1993
- - - ----------------------------------------------------------------------------------------------------
First Second Third Fourth Year
(16 wks) (12 wks) (12 wks) (12 wks) (52 wks)
- - - ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $3,284,254 $2,469,609 $2,960,400 $3,853,737 $12,568,000
Gross profit 258,616 196,999 238,909 342,082 1,036,606
Net earnings 45,631 32,220 36,726 49,949 164,526
Net earnings per common
share .64 .45 .51 .70 2.31
Dividends declared per
common share .180 .195 .195 .195 .765
Weighted average shares 71,575 71,117 71,393 71,398 71,341
====================================================================================================
</TABLE>
The results for the third quarter of 1993 include four weeks of Wetterau
Incorporated, which was acquired in October 1992 and accounted for as a
purchase. The fourth quarter of 1993 includes 13 weeks of results for Wetterau.
34
<PAGE>
Stock Exchange
The company's common stock is listed on the New York Stock Exchange (trading
symbol SVU).
Stockholders of the Company
As of May 5, 1994, there were approximately 8,230 holders of the company's
common stock.
37
<PAGE>
GRAPHICS APPENDIX
A bar graph on page 15 of the Annual Report appears under the caption
"Capital Expenditures (In Millions)" and graphs the following information:
<TABLE>
<CAPTION>
1995 (BUDGET) 1994 1993
------------- ---- ----
<S> <C> <C> <C>
Food Distribution $283 $204 $160
Retail Food 192 78 55
Corporate 25 39 20
---- ---- ----
TOTAL $500 $321 $235
</TABLE>
<PAGE>
EXHIBIT 21
SUPERVALU INC. SUBSIDIARIES
as of May 1, 1994
(All are Subsidiary Corporations 100% Owned Directly or
Indirectly, Except as Noted)
<TABLE>
<CAPTION>
PERCENTAGE OF VOTING
JURISDICTION SECURITIES OWNED BY
OF ORGANIZATION IMMEDIATE PARENT
--------------- --------------------
<S> <C> <C>
SUPERVALU INC.
Cub Foods of Appleton, Inc. Wisconsin 100%
Cub Foods of Green Bay, Inc. Wisconsin 100%
Cub Foods of Milwaukee, Inc. Wisconsin 100%
DFLP, Inc. Minnesota 100%
D2LP, Inc. Minnesota 100%
J. M. Jones Equipment Company Delaware 100%
Jackson Markets, Inc. Mississippi 100%
Max Club, Inc. Minnesota 100%
NC&T Supermarkets, Inc. Ohio 100%
Nevada Bond Investment Corp. I Nevada 100%
NAFTA Industries Consolidated, Inc. Texas 51%
NAFTA Industries, Ltd. Texas Limited
Partnership 51%
Planmark, Inc. Minnesota 100%
Planmark Architecture of Oregon, P.C. Oregon 100%
Preferred Products, Inc. Minnesota 100%
Risk Planners Agency of Ohio, Inc. Ohio 100%
Risk Planners, Inc. Minnesota 100%
Risk Planners of Montana, Inc. Montana 100%
Risk Planners of Illinois, Inc. Illinois 100%
Risk Planners of Mississippi, Inc. Mississippi 100%
Risk Planners of Pennsylvania, Inc. Pennsylvania 100%
S & C Supermarkets, Inc. Wisconsin 100%
Super Valu International Limited Barbados 100%
Sweet Life Foods, Inc. Missouri 100%
Market Development Corporation Connecticut 100%
Springfield Sugar & Products Company Delaware 100%
First Colonial Trading Corporation Massachusetts 100%
Hamlet Trading Corporation Massachusetts 100%
Sweet Life Products Corporation New York 75%
SUPERVALU Pharmacies, Inc. Minnesota 100%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF VOTING
JURISDICTION SECURITIES OWNED BY
OF ORGANIZATION IMMEDIATE PARENT
--------------- -------------------
<S> <C> <C>
Supervalu Transportation, Inc. Minnesota 100%
SUVACO Insurance International, Ltd. Islands of Bermuda 100%
Twin Valu Stores, Inc. Minnesota 100%
Valu Ventures, Inc. Minnesota 100%
Valu Ventures 2, Inc. Minnesota 100%
Valu Ventures-Albert Lea, Inc. Minnesota 100%
Valu Ventures-Duluth, Inc. Minnesota 100%
Western Dairy Distributors, Inc. Colorado 100%
SUPERMARKET OPERATORS OF AMERICA INC. Delaware 100%
Clyde Evans Markets, Inc. Ohio 100%
Scott's Food Stores, Inc. Indiana 100%
SV Ventures Indiana General
Partnership 50%
Wetterau Finance Co. Missouri 100%
SUPERVALU HOLDINGS, INC. Missouri 100%
(f/k/a Wetterau Incorporated)
Airway Redevelopment Corporation Missouri 100%
Augsburger's, Inc. Indiana 100%
BI-GO Markets, Inc. New Hampshire 100%
Ellsworth Foods, Inc. Maine 100%
Glenn-Wohlberg & Company Missouri 100%
Hazelwood Farms Bakeries, Inc. Missouri 100%
John Alden Industries, Inc. Rhode Island 100%
Livonia Holding Company, Inc. Michigan 100%
Foodland Distributors Michigan General
Partnership 50%
Mohr Developers, Inc. Missouri 100%
Mohr Distributors of Litchfield, Inc. Illinois 100%
Pets, Crafts & Things Inc. Pennsylvania 100%
Save Mart Foods, Inc. Missouri 100%
Shop 'N Save Warehouse Foods, Inc. Missouri 100%
SV Ventures Indiana General
Partnership 50%
Trans Continental Leasing, Ltd. Missouri 100%
Treasure Enterprises, Inc. Missouri 100%
Ultra Foods, Inc. New Jersey 100%
USCP-WESCO, Inc. California 100%
WC&V Supermarkets, Inc. Vermont 100%
Wetterau Builders, Inc. Missouri 100%
Wetterau Independence, Inc. Missouri 100%
Wetterau Insurance Co. Ltd. Bermuda 100%
Wettersub/SSI Holdings, Inc. Missouri 100%
Save and Pack, Inc. Delaware 100%
Wetterau Transportation, Inc. Missouri 100%
Wincom Systems, Incorporated Missouri 100%
SUPERVALU OPERATIONS, INC. Rhode Island 100%
(f/k/a Wetterau N.E. Inc.)
Glendale Foods, Inc. Pennsylvania 100%
M & C Foods, Inc. Pennsylvania 100%
Moran Foods, Inc. Missouri 100%
Total Insurance Marketing
Enterprises, Inc. Pennsylvania 100%
Verona Road Associates, Inc. Pennsylvania 100%
West Kittanning Foods, Inc. Pennsylvania 56.8%
</TABLE>
-2-
<PAGE>
EXHIBIT (23)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements (No. 33-
15731, No. 33-31430, and No. 33-52422) on Form S-3 and (No. 33-28310, No. 33-
16934, No. 2-56896, and No. 33-50071) on Form S-8 of our reports dated April 7,
1994 appearing in or incorporated by reference in this Annual Report on Form 10-
K of SUPERVALU INC. for the year ended February 26, 1994.
/s/Deloitte & Touche
Minneapolis, Minnesota
May 20, 1994
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and
officers of SUPERVALU INC., a Delaware corporation, which is about to file with
the Securities and Exchange Commission, Washington, D.C. 20549, its Annual
Report on Form 10-K for the year ended February 26, 1994 under the provisions of
the Securities Exchange Act of 1934, hereby constitutes and appoints Michael W.
Wright and Vernon H. Heath, his or her true and lawful attorneys-in-fact and
agents, and each of them, with full power to act without the other, for him or
her and in his or her name, place and stead, in any and all capacities
(including without limitation, as Director and/or principal Executive Officer,
principal Financial Officer, principal Accounting Officer or any other officer
of the Company), to sign such Annual Report on Form 10-K which is about to be
filed, and any and all amendments thereto, and to file such Annual Report on
Form 10-K and each such amendment thereto so signed, with all exhibits thereto,
and any and all other documents in connection therewith, with the Securities and
Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform any and all acts and
things requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as he or she might do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney on
this 13th day of April, 1994.
/s/Herman Cain /s/Richard D. McCormick
- - - ------------------------------- -------------------------------
Herman Cain Richard D. McCormick
/s/Stephen I. D'Agostino /s/Harriet Perlmutter
- - - --------------------------- -------------------------------
Stephen I. D'Agostino Harriet Perlmutter
/s/Edwin C. Gage /s/Carole F. St. Mark
- - - ------------------------------- -------------------------------
Edwin C. Gage Carole F. St. Mark
/s/Sumner H. Goldman /s/Winston R. Wallin
- - - ------------------------------- --------------------------------
Sumner H. Goldman Winston R. Wallin
/s/Vernon H. Heath /s/Michael W. Wright
- - - ------------------------------- --------------------------------
Vernon H. Heath Michael W. Wright
/s/William A. Hodder /s/Jeffrey Girard
- - - ------------------------------- --------------------------------
William A. Hodder Jeffrey Girard
/s/Garnett L. Keith, Jr. /s/Isaiah Harris
- - - ------------------------------- --------------------------------
Garnett L. Keith, Jr. Isaiah Harris
