<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period (12 weeks) ended September 7, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ....................... to ......................
Commission file number 1-5418
SUPERVALU INC.
(Exact name of registrant as specified in its Charter)
DELAWARE 41-0617000
................................................................................
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
11840 Valley View Road, Eden Prairie, Minnesota 55344
................................................................................
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 828-4000
.............................
Former name, former address and former fiscal year, if changed since last
report:
N.A.
................................................................................
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
........... ...........
The number of shares outstanding of each of the issuer's classes of Common Stock
as of September 7, 1996 is as follows:
Title of Each Class Shares Outstanding
------------------- ------------------
Common Shares 67,278,139
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Item 1: Financial Statements
- ------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF EARNINGS
- ------------------------------------------------------------------------------
SUPERVALU INC. and Subsidiaries
- ------------------------------------------------------------------------------
(In thousands, except per share data)
Second Quarter (12 Weeks) Ended
---------------------------------------------------
September 7, 1996 September 9, 1995
- -----------------------------------------------------------------------------------------
<S> <C> <C>
NET SALES $3,778,745 $3,779,397
COSTS AND EXPENSES:
Cost of sales 3,398,505 3,427,689
Selling and administrative expenses 291,616 265,350
Amortization of goodwill 4,193 4,053
Interest
Interest expense 31,171 32,771
Interest income 3,601 4,503
---------------------------------------------------
Interest expense, net 27,570 28,268
---------------------------------------------------
Total costs and expenses 3,721,884 3,725,360
---------------------------------------------------
EARNINGS BEFORE EQUITY IN EARNINGS
OF SHOPKO AND INCOME TAXES 56,861 54,037
EQUITY IN EARNINGS OF SHOPKO 1,798 861
---------------------------------------------------
EARNINGS BEFORE INCOME TAXES 58,659 54,898
PROVISION FOR INCOME TAXES
Current 18,292 5,562
Deferred 4,503 16,058
---------------------------------------------------
Income tax expense 22,795 21,620
---------------------------------------------------
NET EARNINGS $ 35,864 $ 33,278
===================================================
NET EARNINGS PER COMMON SHARE $ .53 $ .49
Weighted average number of common
shares outstanding 67,466 68,181
Dividends declared per common share $ .250 $ .245
Supplemental information:
After-tax LIFO (expense) $ (1,120) $ (2,525)
All data subject to year-end audit. See notes to consolidated financial statements.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Item 1: Financial Statements
- --------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF EARNINGS
- --------------------------------------------------------------------------------------------------------------
SUPERVALU INC. and Subsidiaries
- --------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)
Year-to-date (28 Weeks) Ended
-----------------------------------------------------
September 7, 1996 September 9, 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net sales
Costs and expenses: $ 8,757,506 $ 8,752,434
Cost of sales 7,897,853 7,940,385
Selling and administrative expenses 656,060 609,946
Amortization of goodwill 9,784 9,510
Interest
Interest expense 72,534 76,890
Interest income 8,628 11,595
------------------------------------------------
Interest expense, net 63,906 65,295
------------------------------------------------
Total costs and expenses 8,627,603 8,625,136
------------------------------------------------
Earnings before equity in earnings
of ShopKo and income taxes 129,903 127,298
Equity in earnings of ShopKo 4,446 3,329
------------------------------------------------
Earnings before income taxes 134,349 130,627
Provision for income taxes
Current 45,777 31,266
Deferred 6,726 20,132
------------------------------------------------
Income tax expense 52,503 51,398
------------------------------------------------
Net earnings $ 81,846 $ 79,229
================================================
Net earnings per common share $ 1.21 $ 1.15
Weighted average number of common
shares outstanding 67,475 68,795
Dividends declared per common share $ .495 $ .480
Supplemental information:
After-tax LIFO income (expense) $ 1,670 $ (2,317)
All data subject to year-end audit. See notes to consolidated financial statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
- ---------------------------------------------------------------------------------------------------------------------
SUPERVALU INC. and Subsidiaries Second Quarter as of Fiscal Year End
- ---------------------------------------------------------------------------------------------------------------------
(In thousands) September 7, September 9, February 24,
Assets 1996 1995 1996
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current Assets
Cash and cash equivalents $ 6,501 $ 5,469 $ 5,215
Receivables, less allowance for losses of $17,417 at
September 7, 1996, $27,884 at September 9, 1995, and
$22,064 at February 24, 1996 378,031 406,794 380,611
Inventories 1,082,294 1,029,077 1,029,911
Other current assets 121,604 123,397 137,972
-------------------------------------------------------
Total current assets 1,588,430 1,564,737 1,553,709
Long-term notes receivable 49,076 70,241 36,731
Long-term investment in direct financing leases 71,429 70,870 74,185
Property, plant and equipment
Land 144,284 168,958 146,535
Buildings 949,573 900,827 903,621
Property under construction 30,267 45,939 53,775
Leasehold improvements 143,707 137,858 137,551
Equipment 1,057,940 966,161 988,963
Assets under capital leases 299,955 215,241 270,549
-------------------------------------------------------
2,625,726 2,434,984 2,500,994
Less accumulated depreciation and amortization
Owned property, plant and equipment 929,003 844,745 855,429
Assets under capital leases 53,218 43,098 45,399
-------------------------------------------------------
Net property, plant and equipment 1,643,505 1,547,141 1,600,166
Investment in ShopKo 195,180 182,927 193,975
Goodwill 499,883 505,196 499,688
Other assets 247,962 217,335 225,049
-------------------------------------------------------
Total assets $ 4,295,465 $ 4,158,447 $ 4,183,503
=======================================================
Liabilities and Stockholders' Equity
- ---------------------------------------------------------------------------------------------------------------------
Current Liabilities
Notes payable $ 113,914 $ 134,673 $ 158,027
Accounts payable 1,031,870 990,019 965,444
Current maturities of long-term debt 12,634 10,181 8,483
Current obligations under capital leases 21,434 18,580 17,955
Other current liabilities 178,239 176,651 176,793
-------------------------------------------------------
Total current liabilities 1,358,091 1,330,104 1,326,702
Long-term debt 1,147,169 1,208,042 1,144,600
Long-term obligations under capital leases 321,235 245,319 300,962
Deferred income taxes 43,910 - 37,076
Other liabilities 165,696 196,625 157,987
Stockholders' equity
Preferred stock 5,908 5,908 5,908
Common stock 75,335 75,335 75,335
Capital in excess of par value 12,951 12,708 12,737
Retained earnings 1,385,270 1,282,949 1,336,942
Treasury stock, at cost (220,100) (198,543) (214,746)
-------------------------------------------------------
Total stockholders' equity 1,259,364 1,178,357 1,216,176
-------------------------------------------------------
Total liabilities and stockholders' equity $ 4,295,465 $ 4,158,447 $ 4,183,503
=======================================================
</TABLE>
Quarterly data subject to year-end audit.
See notes to consolidated financial statements.
4
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
SUPERVALU INC. and Subsidiaries
- -----------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)
Capital in
Preferred Common Excess of Treasury Retained
Stock Stock Par Value Stock Earnings Total
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balances at February 25, 1995 $ 5,908 $ 75,335 $ 12,717 $ (137,245) $1,236,507 $ 1,193,222
Net earnings - - - - 166,433 166,433
Sales of common stock
under option plans - - (84) 3,458 - 3,374
Cash dividends declared
on common stock -
$.970 per share - - - - (65,998) (65,998)
Compensation under employee
incentive plans - - 104 (869) - (765)
Purchase of shares for treasury - - - (80,090) - (80,090)
- -----------------------------------------------------------------------------------------------------------------------------
Balances at February 24, 1996 5,908 75,335 12,737 (214,746) 1,336,942 1,216,176
Net earnings - - - - 81,846 81,846
Sales of common stock
under option plans - - 100 1,533 - 1,633
Cash dividends declared
on common stock -
$.495 per share - - - - (33,518) (33,518)
Compensation under employee
incentive plans - - 114 348 - 462
Purchase of shares for treasury - - - (7,235) - (7,235)
- ------------------------------------------------------------------------------------------------------------------------------
Balances at September 7, 1996 $ 5,908 $ 75,335 $ 12,951 $(220,100) $ 1,385,270 $ 1,259,364
==============================================================================================================================
Interim data subject to year-end audit. See notes to consolidated financial statements.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -----------------------------------------------------------------------------------------------------------------------------------
SUPERVALU INC. and Subsidiaries
- -----------------------------------------------------------------------------------------------------------------------------------
(In thousands)
- -----------------------------------------------------------------------------------------------------------------------------------
Year-to-date
(28 weeks ended)
- -----------------------------------------------------------------------------------------------------------------------------------
September 7, September 9,
1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 81,846 $ 79,229
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Equity in earnings of ShopKo (4,446) (3,329)
Dividends received from ShopKo 3,241 3,241
Depreciation and amortization 121,963 116,077
Provision for losses on receivables 2,716 1,811
Gain on sale of property, plant and equipment (1,585) (7,458)
Deferred income taxes 6,726 20,132
Treasury shares contributed to employee incentive plan 23 66
Changes in assets and liabilities:
Receivables 1,430 (25,147)
Inventory (49,147) 80,714
Other current assets 16,689 14,120
Direct finance leases 5,048 4,317
Accounts payable 57,382 (2,269)
Other liabilities 7,226 (21,578)
- -----------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 249,112 259,926
- -----------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Additions to long-term notes receivable (28,211) (16,739)
Payments received on long-term notes receivable 15,866 19,592
Proceeds from sale of property, plant and equipment 20,496 69,874
Purchase of property, plant and equipment (126,452) (120,121)
Business acquisitions, net of cash acquired (4,996) -
Other investing activities (24,380) (10,270)
- -----------------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (147,677) (57,664)
- -----------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Net reduction of short-term notes payable (44,113) (91,495)
Repayment of long-term debt (4,683) (6,238)
Reduction of obligations under capital leases (12,278) (9,721)
Proceeds for purchase of common stock under option plans 1,372 747
Dividends paid (33,212) (32,736)
Payments for purchase of treasury stock (7,235) (62,189)
- -----------------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (100,149) (201,632)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 1,286 630
Cash and cash equivalents at beginning of year 5,215 4,839
- -----------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF SECOND QUARTER $ 6,501 $ 5,469
===================================================================================================================================
All data subject to year-end audit. See notes to consolidated financial statements.
</TABLE>
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Accounting Policies
- -------------------
The summary of significant accounting policies is included in the notes to
consolidated financial statements in the 1996 annual report of SUPERVALU INC.
("SUPERVALU" or the "company").
Restructuring
- -------------
A restructuring charge of $204.8 million was recognized in the third quarter
of fiscal 1995. During the second quarter of fiscal 1997, the company utilized
approximately $15 million of the reserve primarily for losses on disposition
of property and carrying costs in both the food distribution and retail food
segments. The balance of the reserve as of September 7, 1996 was $94 million.
ShopKo Stores, Inc. Sale
- ------------------------
On September 9, 1996 the company announced that it had agreed to sell its 14.7
million shares of ShopKo Stores, Inc. under an agreement to combine ShopKo and
Phar-Mor, Inc. under a holding company, Cabot Noble, Inc. Under the terms of
the agreement, the company will receive approximately $223 million in cash and
short-term notes and approximately $25 million in common stock, which represents
approximately a 6 percent interest in Cabot Noble. The company expects to
realize a gain on the transaction which is expected to close in the fourth
quarter.
Statement of Registrant
- -----------------------
The data presented herein is unaudited but, in the opinion of management,
includes all adjustments necessary for a fair presentation of the consolidated
financial position of the company and its subsidiaries at September 7, 1996 and
September 9, 1995 and the results of the company's operations and cash flows for
the periods then ended. These interim results are not necessarily indicative of
the results of the fiscal years as a whole.
A limited review of this data has been performed by the company's independent
certified public accountants, Deloitte & Touche LLP. A copy of their report is
attached as an exhibit to this report.
7
<PAGE>
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
Net earnings improved 8% in the quarter, driven by strong performance in retail
food. Net sales remained level, and the company continued significant focus and
investment in ADVANTAGE related activities. The following table sets forth items
from the company's Consolidated Statements of Earnings as percentages of net
sales:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Second Quarter Year-to-Date
(12 weeks) Ended (28 weeks) Ended
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fiscal Fiscal Fiscal Fiscal
1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------
Net sales 100.00% 100.00% 100.00% 100.00%
Cost of sales (89.94) (90.69) (90.18) (90.72)
Selling and administrative expenses (7.83) (7.13) (7.61) (7.08)
Interest expense (.83) (.87) (.83) (.88)
Interest income .10 .12 .10 .13
- ----------------------------------------------------------------------------------------------------------------
Earnings before equity in earnings of ShopKo,
and income taxes 1.50 1.43 1.48 1.45
Equity in earnings of ShopKo .05 .02 .05 .04
Provision for income taxes (.60) (.57) (.60) (.58)
- ----------------------------------------------------------------------------------------------------------------
Net earnings .95% .88% .93% .91%
================================================================================================================
</TABLE>
NET SALES
Net sales were even with last year for the quarter and year-to-date. The flat
sales trend was the result of a 7.6% and 6.2% increase in retail food sales for
the quarter and year-to-date, respectively, offset by a 1.5% and 1.0% decline in
food distribution sales for the quarter and year-to-date, respectively.
Food distribution sales decreased due to competitive market conditions at the
wholesale and retail levels, the liquidation of a major customer and lost sales
from the closing of underperforming corporate-owned retail stores. This effect
was partially mitigated by the addition of new retail customers in food
distribution and the growth of Save-A-Lot limited assortment stores. Food price
inflation, as measured by the company, was .6% and 1.0% for the quarter and
year-to-date, respectively.
Retail food sales increased over last year due to new store openings and an
increase in same-store sales of 2.8% and 3.6% for the quarter and year-to-date,
respectively. The same-store sales increase was fueled by improved performance
in the limited assortment stores and strong merchandising refocus in certain
operations. The increase in retail sales was partially offset by the closing of
underperforming corporate-owned retail stores in the prior fiscal year pursuant
to the restructuring plan.
8
<PAGE>
<TABLE>
<CAPTION>
Net Sales by Segment
- ----------------------------------------------------------------------------------------------------------------
(In thousands) Second Quarter (12 weeks)
- ----------------------------------------------------------------------------------------------------------------
September 7, 1996 September 9, 1995
Net Sales % of Total Net Sales % of Total
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Food distribution $ 3,310,689 87.6 % $ 3,362,238 89.0 %
Retail food 1,085,125 28.7 1,008,391 26.6
Less: Eliminations (617,069) (16.3) (591,232) (15.6)
- ----------------------------------------------------------------------------------------------------------------
Total net sales $ 3,778,745 100.0 % $ 3,779,397 100.0 %
================================================================================================================
Net Sales by Segment
- ----------------------------------------------------------------------------------------------------------------
(In thousands) Year-to-Date (28 weeks)
- ----------------------------------------------------------------------------------------------------------------
September 7, 1996 September 9, 1995
Net Sales % of Total Net Sales % of Total
- ----------------------------------------------------------------------------------------------------------------
Food distribution $ 7,729,600 88.3 % $ 7,808,365 89.2 %
Retail food 2,410,111 27.5 2,269,280 25.9
Less: Eliminations (1,382,205) (15.8) (1,325,211) (15.1)
- ----------------------------------------------------------------------------------------------------------------
Total net sales $ 8,757,506 100.0 % $ 8,752,434 100.0 %
================================================================================================================
</TABLE>
Gross Profit
Gross profit as a percentage of net sales increased to 10.1% and 9.8% in the
quarter and year-to-date, respectively, compared with 9.3% for the same periods
last year. The increases were due principally to the growing proportion within
the company's total sales mix of the higher-margined retail food business. Food
distribution gross profit margin increased for the quarter and year-to-date due
primarily to a reduction in LIFO expense. Retail food gross profit margin
increased for the quarter and year-to-date as a result of pricing adjustments
from price modeling, changed promotional practices, improved product mix and the
closing of underperforming corporate-owned retail stores.
Selling and administrative expenses
Selling and administrative expenses were 7.8% and 7.6% of net sales for the
quarter and year-to-date, respectively, compared with 7.1% for the same periods
last year. The higher percentages were primarily due to the increased proportion
of the company's retail food segment which operates at a higher selling and
administrative expense percentage than the food distribution segment and
continuing ADVANTAGE project expenses. Food distribution selling and
administrative expenses as a percent of net sales were higher than last year due
to increased systems development costs associated with ADVANTAGE and the impact
of fixed expenses as a percent of slightly decreased sales. Retail food selling
and administrative expenses as a percent of net sales were consistent with last
year.
9
<PAGE>
The company has integrated many of the ADVANTAGE activities into its regular
business, consequently these expenses are no longer broken out from other
selling and administrative expenses. The continuing ADVANTAGE expenses related
to project implementation costs including, but not limited to, increased systems
development costs, regional organizational realignment costs, employee training
and relocation, consultants costs and retailer training and promotional
programs.
Under ADVANTAGE, during fiscal 1997 the company has opened the Anniston, Alabama
prototype regional distribution facility and has begun the following:
distributing general merchandise and health and beauty care products from the
Anniston facility to most of the customers in the Southeast region;
reconfiguring the existing local distribution centers in the Southeast region
to achieve additional cost efficiencies; constructing the Midwest regional
distribution facility; training retailers for the category management program in
the Midwest and Central regions; and selecting stores for a category management
pilot in the Southeast region. During the quarter, the company also continued
its Activity Based Sell rollout efforts in the Midwest region.
OPERATING EARNINGS
The company's pre-tax operating earnings (earnings before interest, corporate
expenses, equity in earnings of ShopKo Stores, Inc. ("ShopKo"), and taxes)
increased slightly to $89.6 million in the quarter from $89.0 million last year
and were $206.1 million year-to-date compared with $206.2 million last year.
Food distribution operating earnings decreased 10.0% to $70.7 million and 11.6%
to $159.1 million in the quarter and year-to-date, respectively, due to higher
ADVANTAGE related expenses and the general softness in sales, partially offset
by a reduction in LIFO expense. Retail food operating earnings increased 80.3%
to $19.0 million and 78.6% to $47.0 million in the quarter and year-to-date,
respectively, due to strong gross margin resulting from pricing, promotional and
product mix changes and the closing of underperforming corporate-owned retail
stores, as well as an increase in sales.
INTEREST EXPENSE AND INCOME
Interest expense decreased to $31.1 and $72.5 million for the quarter and
year-to-date, respectively, compared with $32.8 and $76.9 million for the same
periods last year, reflecting a reduction in debt levels and slightly lower
short-term interest rates. Interest income decreased to $3.6 and $8.6 million
for the quarter and year-to-date, respectively, compared with $4.5 and $11.6
million for the same periods last year, primarily due to the reduction of notes
receivable as a result of the sale of notes in the ordinary course of business.
EQUITY IN EARNINGS OF SHOPKO
SUPERVALU's share of ShopKo net earnings increased to $1.8 million and $4.4
million in the quarter and year-to-date, respectively, compared with $.9 million
and $3.3 million for the same periods last year. As reported by ShopKo, sales
increased 19.2% to $498.5 million and net earnings increased 109.8% for the
second quarter compared with last year. The increase in net earnings was due to
strong sales related to the ProVantage prescription benefit management business
and an increase in comparable store sales of 6.4% for the quarter.
10
<PAGE>
INCOME TAXES
The effective tax rate decreased to 38.9% and 39.1% in the quarter and year-to-
date, respectively, compared with 39.4% for the same periods last year. The
decrease in the effective tax rate was due to the increased contribution from
ShopKo.
NET EARNINGS
Net earnings were $35.9 and $81.8 million for the quarter and year-to-date,
respectively, compared with $33.3 and $79.2 million for the same periods last
year. Net earnings were positively impacted by improved retail food gross
margin which more than offset increased expenses related to the ADVANTAGE
project. Although ADVANTAGE initiatives are generating benefits, the company
anticipates spending under ADVANTAGE to exceed benefits through fiscal 1997
with a positive contribution from this project in fiscal 1998. The company
will continue to assess the costs and benefits anticipated under the ADVANTAGE
program as part of its annual budget and planning process.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Internally generated funds, principally from the company's food distribution
business, continued to be the major source of capital for liquidity and capital
growth. Cash provided from operations year-to-date was $249.1 million compared
with $259.9 million last year. The slight decrease was due to increased
inventory levels primarily at the retail locations resulting from new store
openings, partially offset by a corresponding increase in accounts payable. The
decrease was also partly offset by increased levels of other liabilities and a
reduction in receivables. Cash provided from operations was primarily used to
finance capital expenditures of $126.4 million, repay short-term notes payable
of $44.1 million and pay dividends of $33.2 million.
During the quarter, the Board of Directors rescinded the previous treasury stock
purchase program and approved a new treasury stock purchase program authorizing
the company to repurchase up to 5.0 million shares to fund stock related
compensation plans. The company has repurchased 258,000 shares at a cost of
$7.2 million under the new program as of the end of the second quarter. There
were no treasury stock purchases under the old program during fiscal 1997.
On September 9, 1996 the company announced that it had agreed to sell its 14.7
million shares of ShopKo Stores, Inc. under an agreement to combine ShopKo and
Phar-Mor, Inc. under a holding company, Cabot Noble, Inc. Under the terms of the
agreement, the company will receive approximately $223 million in cash and
short-term notes and approximately $25 million in common stock, which represents
approximately a 6 percent interest in Cabot Noble. The company expects to
realize a gain on the transaction which is expected to close in the fourth
quarter. The use of the proceeds from the transaction may include growing the
existing food distribution and retail businesses through internal initiatives or
acquisitions, buying back company stock and paying off debt.
11
<PAGE>
SUPERVALU will continue to use short-term and long-term debt as a supplement to
internally generated funds to finance its activities. The company has a $400
million "shelf registration" in effect pursuant to which the company could issue
$242.5 million of additional debt securities. A $400 million revolving credit
agreement also is in place and expires in May 2000. Short-term commercial paper
totaling $100 million has been classified as long-term debt as the company has
the ability and intent to renew these obligations beyond one year. Maturities of
debt issued will depend on management's views with respect to the relative
attractiveness of interest rates at the time of issuance.
The company's financial position and long-term debt ratings remain strong, with
a BBB+ rating from Standard and Poor's Ratings Group. On October 10, 1996
Moody's Investors Services, Inc. lowered its rating on the company's long-term
debt to Baa1 from A3 and confirmed the commercial paper rating at P-2. Moody's
Investors Services, Inc. announced that the downgrade reflected the slower than
expected benefits accruing from the ADVANTAGE project in the context of
challenging competitive conditions in the grocery wholesaling industry. This
change does not impair the company's ability to obtain financing and is expected
to have only a minimal impact on the company's borrowing costs in the future.
The company's investment grade ratings, the available credit facilities and
internally-generated funds provide the company with the financial flexibility to
meet liquidity needs.
Cautionary statements for purposes of the Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995
The information in this 10Q includes forward-looking statements. Important risks
and uncertainties that could cause actual results to differ materially from
those discussed in such forward looking statements are detailed in Exhibit 99.1
to the company's Annual Report on Form 10K, for the Year Ended February 24,
1996; other risks or uncertainties may be detailed from time to time in the
company's future Securities and Exchange Commission filings.
12
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 6. Exhibits and Reports on Form 8-K.
- ------- ---------------------------------
(a) Exhibits filed with this Form 10-Q:
(10)a. First Amendment of SUPERVALU STORES, INC. Nonqualified
Supplemental Executive Retirement Plan.
(10)b. SUPERVALU INC. Non-Employee Directors Deferred Stock Plan.
(10)c. Amendments to SUPERVALU INC. Deferred Compensation Plan and
SUPERVALU INC. Executive Deferred Compensation Plan II.
(15) Letters from Deloitte & Touche regarding unaudited interim
financial information.
(27) Financial Data Schedule containing a summary of financial
information extracted from the Consolidated Balance Sheets as
of September 7, 1996.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SUPERVALU INC. (Registrant)
By:\s\Isaiah Harris
---------------------------------
Isaiah Harris
Date: October 22, 1996 Vice President & Controller
(Principal Accounting Officer
and duly authorized
officer of Registrant)
13
<PAGE>
EXHIBIT (10)A.
FIRST AMENDMENT
OF
SUPERVALU STORES, INC.
NONQUALIFIED SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN
Effective February 26, 1989, SUPERVALU STORES, INC., a Delaware corporation,
established an unfunded nonqualified deferred compensation plan for certain
executive employees in accordance with the terms of the Plan Statement entitled
SUPER VALU STORES, INC. NONQUALIFIED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN.
SUPERVALU STORES, INC. has reserved to itself the power to amend said Plan
Statement and SUPERVALU STORES, INC. desires to amend the Plan Statement in the
following respects:
CHANGE OF CORPORATE NAME. ALL REFERENCES IN THE PLAN STATEMENT TO
SUPERVALU STORES, INC. SHALL BE CHANGED TO SUPERVALU INC.
REFERENCES TO SUPERVALU STORES, INC. RETIREMENT PLAN. ALL REFERENCES IN
THE PLAN STATEMENT TO THE "SUPERVALU STORES, INC. RETIREMENT PLAN" SHALL BE
CHANGED TO "SUPERVALU INC. RETIREMENT PLAN" TO REFLECT CHANGES MADE BY THE
SEVENTEENTH AMENDMENT TO THE SUPERVALU INC. RETIREMENT PLAN.
CHANGE OF PLAN NAME. THE NAME OF THIS PLAN SHALL BE CHANGED TO "SUPERVALU
INC. NONQUALIFIED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN." ALL REFERENCES IN
THE PLAN STATEMENT SHALL BE REVISED TO REFLECT THE NEW PLAN NAME.
BASIC PENSION. ALL REFERENCES IN THE PLAN STATEMENT TO A "BASIC PENSION"
SHALL BE CHANGED TO "SINGLE LIFE ANNUITY" TO REFLECT CHANGES MADE BY THE
SEVENTEENTH AMENDMENT TO THE SUPERVALU INC. RETIREMENT PLAN.
ACCRUED BENEFIT. EFFECTIVE AS OF THE DATE THIS AMENDMENT IS ADOPTED, FOR
PARTICIPANTS WHO PERFORM ONE OR MORE HOURS OF SERVICE AFTER THAT DATE, SECTION
1.2.1 OF THE PLAN STATEMENT IS AMENDED TO READ IN FULL AS FOLLOWS:
1.2.1. ACCRUED BENEFIT -- the monthly amount of retirement income
determined for a Participant as of a specified date (defined as a benefit
payable monthly to the Participant in the Single Life Annuity form beginning on
the first day of the month following the Participant's Normal Retirement Date)
equal of the following:
(a) TIER 1 PARTICIPANTS. For any Participant who is not a Tier 2
Participant on such date, a dollar amount equal to the excess of
the
- 1 -
<PAGE>
amount determined in (i) as of such date over the amount
determined in (ii) as of such date:
(i) PRIMARY AMOUNT.
(A) One and seven-tenths percent (.017) of the
Participant's Final Average Compensation multiplied by
the Participant's years of Credited Service determined
as of such specified date (not to exceed thirty years);
minus
(B) the sum of (A) one-tenth percent (.001) of the
Participant's Final Average Compensation in excess of
Six Thousand Two Hundred Fifty Dollars ($6,250)
multiplied by the Participant's years of Credited
Service (not to exceed thirty years), and (B) one-
thirtieth (1/30) of the Participant's Approximate
Social Security Benefit multiplied by the Participant's
years of Credited Service (not to exceed thirty years).
(ii) OFFSET. A dollar amount (determined as of such specified
date), equal to the Single Life Annuity Determined under
Section 1.2.1(a) of the Retirement Plan (i.e., determined
without reduction for the offset provided in Section
1.2.1(a)(ii) of the Retirement Plan).
(b) TIER 2 PARTICIPANTS. For a Participant who is a Tier 2
Participant as of such date, a dollar amount equal to the excess
of the amount determined in (i) as of such date over the amount
determined in (ii) as of such date:
(i) PRIMARY AMOUNT. Sixty percent (60%) of one-twelfth (1/12th)
of the average annual amount of Recognized Compensation
attributable to any five (5) completed (but not necessarily
consecutive) Plan Years within the Participant's last ten
(10) consecutive years of Recognized Employment which
produce the highest amount.
(ii) OFFSET. A dollar amount, equal to the sum of the following
(each determined as of such specified date, expressed as a
benefit payable monthly to the Participant in the Single
Life Annuity form beginning on the first day of the month
following the Participant's Normal Retirement Date and
converted to such form using the mortality and interest
assumptions in effect under the SUPERVALU INC. RETIREMENT
PLAN as of such date):
- 2 -
<PAGE>
(A) the value of the Participant's Accrued Benefit under
the SUPERVALU INC. RETIREMENT PLAN as of such date; and
(B) the value of any matching contributions made to an
account established for the Participant under the
SUPERVALU PRE-TAX SAVINGS AND PROFIT SHARING PLAN as of
such date; and
(C) the value of any matching contributions credited to the
Participant under any nonqualified deferred
compensation plan sponsored by SUPERVALU INC. as of
such date; and
(D) one-half of the Approximate Social Security Benefit
available to such Participant as of such date.
RENUMBERING. EFFECTIVE AS OF THE DATE THIS AMENDMENT IS ADOPTED, SECTION
2.2 OF THE PLAN STATEMENT IS AMENDED REDESIGNATING IT AS SECTION 2.3.
DESIGNATION OF TIER 2 PARTICIPANTS. EFFECTIVE AS OF THE DATE THIS
AMENDMENT IS ADOPTED, SECTION 2 OF THE PLAN STATEMENT IS AMENDED BY ADDING A NEW
SECTION 2.2 TO READ AS FOLLOWS:
2.2. TIER 2 PARTICIPANTS. The Board of Directors of SUPERVALU INC. shall have
sole authority and discretion to designate Participants as Tier 2 Participants
under this Plan on such terms as the Board may determine.
DEATH BENEFITS. EFFECTIVE AS OF THE DATE THIS AMENDMENT IS ADOPTED, FOR
PARTICIPANTS WHO PERFORM ONE OR MORE HOURS OF SERVICE AFTER THAT DATE, SECTION
5.1 OF THE PLAN STATEMENT IS AMENDED TO READ IN FULL AS FOLLOWS:
5.1. DEATH BEFORE BENEFIT COMMENCEMENT.
5.1.1. WHEN AVAILABLE. A survivor benefit ("Survivor Benefit") shall be
payable upon the death of a Participant who at death had not yet begun to
receive any payment of the Supplemental Pension under the Plan.
5.1.2. BENEFICIARY. If the Participant was married for at least one (1)
year ending on the date of the Participant's death, the survivor benefit shall
be payable to the surviving spouse unless the Participant has elected otherwise
pursuant to rules established by the Retirement Committee. If the Participant
was not married to the same spouse for at least one (1) year ending on the date
of death, the survivor benefit shall be payable to the Participant's designated
beneficiary or, in absence of such designation, the Participant's estate.
- 3 -
<PAGE>
5.1.3. Amount. The amount of the Survivor Benefit shall be fifty
percent (50%) of the amount of the Participant's Accrued Benefit determined as
of the date of the Participant's death.
5.1.4. Form of Benefit.
(a) Surviving Spouse Beneficiary. If the beneficiary is the
Participant's spouse, the Survivor Benefit shall be a monthly
annuity payable to the spouse for the lifetime of the spouse,
the first payment of which shall be due after the death of the
Participant on the first day of the month following the
Participant's death with no actuarial reduction for early
commencement. The Participant may elect before November 1, 1990
to convert the death benefits provided under this Section to any
Actuarially Equivalent form of benefit that would have been made
available under Section 4 to the Participant at his Termination
of Employment. No election, recision or other action taken by
the Participant under Section 4 shall be effective to modify the
survivor annuity hereinbefore described. No other death benefit
shall be payable with respect to a Participant who dies under
these circumstances.
(b) Non-Spouse Beneficiary. If the beneficiary is not the
Participant's spouse, the Survivor Benefit is a lump sum which
is the Actuarial Equivalent of a monthly annuity payable to the
beneficiary for the lifetime of an individual who is the same age
as the Participant, the first payment of which would be due after
the death of the Participant on the first day of the month
following the Participant's death with no actuarial reduction for
early commencement.
Savings Clause. Save and except as herein expressly amended the Plan
Statement shall continue in full force and effect.
August 7, 1996 SUPERVALU INC.
- -------------- --------------
By: \s\Ronald C. Tortelli
----------------------
Its: Sr. V.P. Human Resources
- 4 -
<PAGE>
Exhibit(10)b.
SUPERVALU INC.
NON-EMPLOYEE DIRECTORS DEFERRED STOCK PLAN
1. Purpose. The purpose of the SUPERVALU INC. Non-Employee Directors
Deferred Stock Plan (the "Plan") is to further strengthen the alignment of
interests between members of the Board of Directors (the "Board") of SUPERVALU
INC. (the "Company") who are not employees of the Company (the "Participants")
and the Company's stockholders through the increased ownership by Participants
of shares of the Company's common stock, par value $1.00 per share ("Common
Stock"). This will be accomplished by (i) providing to Participants deferred
compensation in the form of the right to receive shares of Common Stock for
services rendered in their capacity as directors, and (ii) allowing Participants
to elect voluntarily to defer all or a portion of their fees for services as
members of the Board pursuant to the Plan in exchange for the right to receive
shares of Common Stock valued at 110% of the cash fees otherwise payable.
2. Eligibility. Each member of the Board of Directors of the Company who
is not an employee of the Company or of any subsidiary of the Company shall be
eligible to participate in the Plan.
3. Formula Share Award. Effective on July 1, or the first business day
thereafter in each year (the "Award Date"), the Company shall award each
Participant who shall continue to serve on the Board following the Award Date,
as a credit to the Participant's account under the Plan (the "Deferred Stock
Account"), that number of shares (rounded to the nearest one-hundredth share) of
Common Stock, having an aggregate fair market value on the Award Date of Fifteen
Thousand Dollars ($15,000) (the "Award"). The Award shall be in addition to any
cash retainer, stock options, or other remuneration received by the Participant
for services rendered as a director. If, after receiving an Award, the
Participant shall cease to serve on the Board prior to the Company's next annual
meeting, for any reason other than death or permanent disability, then such
Participant's Deferred Stock Account shall be reduced by (i) that number of
shares equal to 1/12 of the Award for each full calendar month during which the
Participant did not serve as a director of the Company, plus (ii) any dividends
paid on that number of shares of Common Stock specified in (i) above during the
period that the Participant did not serve as a director of the Company.
4. Election to Defer Cash Compensation. A Participant may elect to defer,
in the form of a credit to the Participant's Deferred Stock Account all or a
portion of the annual cash retainer, meeting fees for attendance at meetings of
the Board and its committees, committee chairperson retainers, and any other
fees and retainers
<PAGE>
("Compensation") otherwise payable to the director in cash during the period
following the effective date of the deferral election. Such deferral election
shall be made pursuant to Section 5.
5. Manner of Making Deferral Election. A Participant may elect to defer
Compensation pursuant to the Plan by filing, no later than December 31 of each
year (or by such other date as the Committee shall determine), an irrevocable
election with the Corporate Secretary on a form provided for that purpose
("Deferral Election"). The Deferral Election shall be effective with respect to
Compensation payable on or after July 1 of the following year unless the
Participant shall revoke or change the election by means of a subsequent
Deferral Election in writing that takes effect on the date specified therein but
in no event earlier than six (6) months (or such other period as the Committee,
as defined in Section 17, shall determine) after the subsequent Deferral
Election is received by the Company. The Deferral Election form shall specify an
amount to be deferred expressed as a dollar amount or as a percentage of the
Participant's Compensation otherwise payable in cash for the director's
services.
6. Credits to Deferred Stock Account for Elective Deferrals. On the first
day of each calendar quarter (the "Credit Date"), a Participant shall receive a
credit to his or her Deferred Stock Account. The amount of the credit shall be
the number of shares of Common Stock (rounded to the nearest one-hundredth of a
share) determined by dividing an amount equal to 110% of the Participant's
Compensation payable on the Credit Date and specified for deferral pursuant to
Section 5 hereof, by the fair market value on the Credit Date of a share of
Common Stock.
7. Fair Market Value. The fair market value of shares of Common Stock as
of a given date for all purposes of the Plan, shall be the closing sale price
per share of Common Stock as reported on the consolidated tape of the New York
Stock Exchange on the relevant date or, if the New York Stock Exchange is closed
on such day, then the day closest to such date on which it was open.
8. Dividend Credit. Each time a dividend is paid on the Common Stock, the
Participant shall receive a credit to his or her Deferred Stock Account equal to
that number of shares of Common Stock (rounded to the nearest one-hundredth of a
share) having a fair market value on the dividend payment date equal to the
amount of the dividend payable on the number of shares credited to the
Participant's Deferred Stock Account on the dividend record date.
9. Maximum Number of Shares to be Credited Under the Plan. Subject to
adjustment as provided in Section 10, the maximum number of shares of Common
Stock that may be credited under the Plan is 500,000 shares.
10. Adjustments for Certain Changes in Capitalization. If the Company
shall at any time increase or decrease the number of its outstanding shares of
Common Stock or change in any way the rights and privileges of such shares by
means of the
2
<PAGE>
payment of a stock dividend or any other distribution upon such shares payable
in Common Stock, or through a stock split, subdivision, consolidation,
combination, reclassification, or recapitalization involving the Common Stock,
then the numbers, rights, and privileges of the shares credited under the Plan
shall be increased, decreased, or changed in like manner as if such shares had
been issued and outstanding, fully paid, and nonassessable at the time of such
occurrence.
11. Deferral Payment Election. At the time of making the Deferral
Election, each Participant shall also complete a deferral payment election
specifying one of the payment options described in Sections 12 and 13, and the
year in which amounts credited to the Participant's Deferred Stock Account shall
be paid in a lump sum pursuant to Section 12, or in which installment payments
shall commence pursuant to Section 13. The deferral payment election shall be
irrevocable as to all amounts credited to the Participant's Deferred Stock
Account. The Participant may change the deferral payment election by means of a
subsequent deferral payment election in writing that will take effect for
deferrals credited after the date the Company receives such subsequent deferral
payment election.
12. Payment of Deferred Stock Accounts in a Lump Sum. Unless a
Participant elects to receive payment of his or her Deferred Stock Account in
installments as described in Section 13, credits to a Participant's Deferred
Stock Account shall be payable in full on January 10 of the year following the
Participant's termination of service on the Board (or the first business day
thereafter) or such other date as elected by the Participant pursuant to Section
11. All payments shall be made in shares of Common Stock plus cash in lieu of
any fractional share. Notwithstanding the foregoing, in the event of a Change of
Control (as defined in Section 19), credits to a Participant's Deferred Stock
Account as of the business day immediately prior to the effective date of the
transaction constituting the Change of Control shall be paid in full to the
Participant or the Participant's beneficiary or estate, as the case may be, in
whole shares of Common Stock (together with cash in lieu of a fractional share)
on such date.
13. Payment of Deferred Stock Accounts in Installments. A Participant may
elect to have his or her Deferred Stock Account paid in annual installments
following termination of service as a director or at such other time as elected
by the Participant pursuant to Section 11. All payments shall be made in shares
of Common Stock plus cash in lieu of any fractional share. All installment
payments shall be made annually on January 10 of each year (or the first
business day thereafter). The amount of each installment payment shall be
computed as the number of shares credited to the Participant's Deferred Stock
Account on the Computation Date, multiplied by a fraction, the numerator of
which is one and the denominator of which is the total number of installments
elected (not to exceed fifteen) minus the number of installments previously
paid. Amounts paid prior to the final installment payment shall be rounded to
the nearest whole number of shares; the final installment payment shall be for
the whole number of shares then credited to the Participant's Deferred Stock
Account, together
3
<PAGE>
with cash in lieu of any fractional shares. Notwithstanding the foregoing, in
the event of a Change of Control (as defined in Section 19), credits to a
Participant's Deferred Stock Account as of the business day immediately prior to
the effective date of the transaction constituting the Change of Control shall
be paid in full to the Participant or the Participant's beneficiary or estate,
as the case may be, in whole shares of Common Stock (together with cash in lieu
of a fractional share) on such date.
14, Death of Participant. If a Participant dies before receiving all
payments to which he or she is entitled under the Plan, payment shall be made in
accordance with the Participant's designation of a beneficiary on a form
provided for that purpose and delivered to and accepted by the Committee (as
hereinafter defined) or, in the absence of a valid designation or if the
designated beneficiary does not survive the Participant, to such Participant's
estate.
15. Nonassignability. No right to receive payments under the Plan nor any
shares of Common Stock credited to a Participant's Deferred Stock Account shall
be assignable or transferable by a Participant other than by will or the laws of
descent and distribution. The designation of a beneficiary by a Participant
pursuant to Section 14 does not constitute a transfer.
16. Participants Are General Creditors of the Company. Benefits due under
this Plan shall be funded out of the general funds of the Company. The
Participants and beneficiaries thereof shall be general, unsecured creditors of
the Company with respect to any payments to be made pursuant to the Plan and
shall not have any preferred interest by way of trust, escrow, lien or otherwise
in any specific assets of the Company. If the Company shall, in fact, elect to
set aside monies or other assets to meet its obligations hereunder (there being
no obligation to do so), whether in a grantor's trust or otherwise, the same
shall, nevertheless, be regarded as a part of the general assets of the company
subject to the claims of its general creditors, and neither any Participant nor
any beneficiary of any Participant shall have a legal, beneficial, or security
interest therein.
17. Administration. The Plan shall be administered by a committee (the
"Committee") of three or more individuals appointed by the Board to administer
the Plan. The members of the Committee must be members of, and shall serve at
the discretion of, the Board. The members of the Committee shall be
"disinterested persons" as defined in Rule 16b-3 under the Securities Exchange
Act of 1934, as amended (the "Act"), or any successor rule or definition adopted
by the Securities and Exchange Commission ("Rule 16b-3"), if, in the opinion of
counsel for the Company, the absence of "disinterested" administrators would
adversely impact the availability of the exemption from Section 16(b) of the Act
provided by Rule 16b-3 for any Participant's acquisition of Common Stock under
the Plan.
Subject to the provisions of the Plan, the Committee shall have sole and
complete authority to construe and interpret the Plan; to establish, amend and
rescind
4
<PAGE>
appropriate rules and regulations relating to the Plan; to administer the Plan;
and to take all such steps and make all such determinations in connection with
the Plan as it may deem necessary or advisable to carry out the provisions and
intent of the Plan. All determinations of the Committee shall be made by a
majority of its members, and its determinations shall be final and conclusive
for all purposes and upon all persons, including, but without limitation, the
Company, the Committee, the Participants and their respective successors in
interest.
18. Amendment and Termination. The Board may at any time terminate,
suspend, or amend this Plan; provided, however, that the provisions of Sections
2 and 3 may not be amended more than once in every six months other than to
comport with changes in the Internal Revenue Code, ERISA, or the rules
thereunder. No such action shall deprive any Participant of any benefits to
which he or she would have been entitled under the Plan if termination of the
Participant's service as a director had occurred on the day prior to the date
such action was taken, unless agreed to by the Participant.
19. Change of Control. "Change of Control" means any one of the following
events:
(a) the acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of Common Stock (the "Outstanding Company
Common Stock") or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however, that
for purposes of this subsection (a), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly from the Company
(ii) any acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by any corporation
pursuant to a transaction which complies with clauses (i), (ii) and (iii) of
subsection (c) hereof; or
(b) individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then constituting the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
5
<PAGE>
(c) approval by the shareholders of the Company of a reorganization, merger
or consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a "Business Combination"), in each case, unless,
following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case may
be, (ii) no Person (excluding any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and (iii) at least a majority of the members
of the Board of Directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or
(d) approval by the stockholders of the Company of a complete liquidation
or dissolution of the Company.
20. Effective Date. The effective date of the Plan shall be the date of
approval of the Plan by the Company's stockholders.
6
<PAGE>
EXHIBIT (10)c.
AMENDMENTS TO NONQUALIFIED DEFERRED COMPENSATION PLANS
RESOLVED, that the nonqualified deferred compensation plans maintained by
SUPERVALU INC. and known as the SUPERVALU Deferred Compensation Plan and the
SUPERVALU INC. Executive Deferred Compensation Plan II("Plans") shall be amended
to provide for the following:
1. A matching contribution ("Restoration Match") shall be made for each
fiscal year ending on the last Saturday in February ("Fiscal Year") to
participants in the Plans who are eligible to participate in the SUPERVALU
Pre-Tax Savings and Profit Sharing Plan for such Fiscal Year.
2. Subject to further amendment, the Restoration Match shall be made
for the Fiscal Year ending February 22, 1997 and subsequent Fiscal Years.
3. The Restoration Match shall be based on a dollar amount ("Deemed
Deferral Amount") equal to the product of (i) a percentage (not to exceed five
percent (5%)) determined by dividing the participant's deferrals into the Plans
for such Fiscal Year into the participant's income for such Fiscal Year: and
(ii) the excess of the participant's income for such Fiscal Year over the
compensation limit established under section 401(a)(17) of the Internal Revenue
Code for such Fiscal Year (e.g., $150,000 for Fiscal Year ending on February 22,
1997).
4. The Restoration Match for a Fiscal Year shall be equal to the
participant's Deemed Deferral Amount multiplied by the aggregate matching rate
credited to the participant elective contributions under the SUPERVALU Pre-Tax
Savings and Profit Sharing Plan for such Fiscal Year.
5. The Restoration Match shall be credited to the participants under one
of the Plans as determined by SUPERVALU INC. as soon as administratively
feasible after the close of the Fiscal Year for which it is made and shall be
subject to all other rules established under such Plans: provided, however, that
it shall be subject to the vesting rules in effect under the SUPERVALU Pre-Tax
Savings and Profit Sharing Plan.
FURTHER RESOLVED, to the extent necessary, these resolutions will
constitute an amendment to the Plans.
FURTHER RESOLVED, that the Retirement Committee of SUPERVALU INC. is
authorized and directed to take whatever actions it deems necessary to implement
these resolutions including, but not limited to, approval of amendments of the
plan statements which incorporate the provisions of the Plans.
<PAGE>
LETTER REGARDING UNAUDITED INFORMATION
Stockholders and Board of Directors
SUPERVALU INC.
Eden Prairie, Minnesota
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim information
of SUPERVALU INC. and subsidiaries for the periods ended September 7, 1996 and
September 9, 1995, as indicated in our report dated October 17, 1996. Because
we did not perform an audit on such information, we expressed no opinion on it
in our report.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended September 7, 1996, is
incorporated by reference in the Registration Statements (No. 33-28310, No. 33-
16934, No. 2-56896, No. 33-50071, and No. 333-10151 on Form S-8 and No. 33-56415
on Form S-3).
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statements prepared or certified by an accountant within the meaning of Sections
7 and 11 of that act.
/s/ DELOITTE & TOUCHE LLP
October 17, 1996
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Stockholders and Board of Directors
SUPERVALU INC.
Eden Prairie, Minnesota
We have reviewed the accompanying consolidated balance sheets of SUPERVALU INC.
(the Company) and subsidiaries as of September 7, 1996 and September 9, 1995 and
the related consolidated statements of earnings and cash flows for the 12-week
periods then ended and the consolidated statement of stockholders' equity for
the interim period ended September 7, 1996. These consolidated financial
statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and of making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to such consolidated financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of SUPERVALU INC. and subsidiaries as
of February 24, 1996 and the related consolidated statements of earnings,
stockholders' equity, and cash flows for the year then ended (not presented
herein); and in our report dated April 5, 1996, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying consolidated balance sheet as of
February 24, 1996 and the consolidated statement of stockholders' equity for the
year then ended is fairly stated, in all material respects, in relation to the
consolidated financial statements from which it has been derived.
/s/ DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
October 17, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the Consolidated Balance Sheets as of September 7, 1996 and the Consolidated
Statement of Earnings for the 28 weeks ended September 7, 1996 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-22-1997
<PERIOD-END> SEP-07-1996
<CASH> 6,501
<SECURITIES> 0
<RECEIVABLES> 395,448
<ALLOWANCES> (17,417)
<INVENTORY> 1,082,294
<CURRENT-ASSETS> 1,588,430
<PP&E> 2,625,726
<DEPRECIATION> (982,221)
<TOTAL-ASSETS> 4,295,465
<CURRENT-LIABILITIES> 1,358,091
<BONDS> 1,468,404
<COMMON> 75,335
0
5,908
<OTHER-SE> 1,178,121
<TOTAL-LIABILITY-AND-EQUITY> 4,295,465
<SALES> 8,757,506
<TOTAL-REVENUES> 8,757,506
<CGS> 7,897,853
<TOTAL-COSTS> 7,897,853
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,716
<INTEREST-EXPENSE> 72,534
<INCOME-PRETAX> 134,349
<INCOME-TAX> 52,503
<INCOME-CONTINUING> 81,846
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 81,846
<EPS-PRIMARY> 1.21
<EPS-DILUTED> 1.21
</TABLE>
