<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 (16 weeks) ended June 15, 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 July 13, 1996 is as follows:
Title of Each Class Shares Outstanding
------------------- ------------------
Common Shares 67,527,498
<PAGE>
<TABLE>
<CAPTION>
PART 1 - FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Item 1: Financial Statements
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF EARNINGS
- --------------------------------------------------------------------------------
SUPERVALU INC. and Subsidiaries
- --------------------------------------------------------------------------------
(In thousands, except per share data)
First Quarter (16 Weeks) Ended
------------------------------------
June 15, 1996 June 17, 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
NET SALES $ 4,978,761 $ 4,973,037
COSTS AND EXPENSES:
Cost of sales 4,499,348 4,512,696
Selling and administrative expenses 364,444 344,596
Amortization of goodwill 5,591 5,457
Interest
Interest expense 41,363 44,119
Interest income 5,027 7,092
------------------------------------
Interest expense, net 36,336 37,027
------------------------------------
Total costs and expenses 4,905,719 4,899,776
====================================
EARNINGS BEFORE EQUITY IN EARNINGS
OF SHOPKO AND INCOME TAXES 73,042 73,261
EQUITY IN EARNINGS OF SHOPKO 2,648 2,468
------------------------------------
EARNINGS BEFORE INCOME TAXES 75,690 75,729
Provision for income taxes
Current 27,485 25,542
Deferred 2,223 4,236
------------------------------------
Income tax expense 29,708 29,778
------------------------------------
NET EARNINGS $ 45,982 $ 45,951
====================================
NET EARNINGS PER COMMON SHARE $ .68 $ .66
Weighted average number of common
shares outstanding 67,482 69,225
Dividends declared per common share $ .245 $ .235
Supplemental information:
After-tax LIFO income $ 2,790 $ 208
</TABLE>
All data subject to year-end audit.
See notes to consolidated financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------------------------------------------------
SUPERVALU INC. and Subsidiaries First Quarter as of Fiscal Year End
- --------------------------------------------------------------------------------------------------------------------------
(In thousands) June 15, June 17, February 24,
Assets 1996 1995 1996
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current Assets
Cash and cash equivalents $ 5,082 $ 6,109 $ 5,215
Receivables, less allowance for losses of $18,694 at
June 15, 1996, $28,929 at June 17, 1995, and
$22,064 at February 24, 1996 366,406 405,755 380,611
Inventories 1,083,672 1,093,752 1,029,911
Other current assets 125,485 137,405 137,972
---------------------------------------------------------
Total current assets 1,580,645 1,643,021 1,553,709
Long-term notes receivable 54,494 69,138 36,731
Long-term investment in direct financing leases 71,287 72,246 74,185
Property, plant and equipment
Land 147,149 175,347 146,535
Buildings 934,301 905,384 903,621
Property under construction 37,413 40,316 53,775
Leasehold improvements 140,679 137,886 137,551
Equipment 1,023,569 951,370 988,963
Assets under capital leases 291,096 217,587 270,549
---------------------------------------------------------
2,574,207 2,427,890 2,500,994
Less accumulated depreciation and amortization
Owned property, plant and equipment 894,167 830,303 855,429
Assets under capital leases 49,566 40,170 45,399
---------------------------------------------------------
Net property, plant and equipment 1,630,474 1,557,417 1,600,166
Investment in ShopKo 193,382 182,066 193,975
Goodwill 503,748 509,251 499,688
Other assets 245,277 235,206 225,049
---------------------------------------------------------
Total assets $ 4,279,307 $ 4,268,345 $ 4,183,503
=========================================================
Liabilities and Stockholders' Equity
- --------------------------------------------------------------------------------------------------------------------------
Current Liabilities
Notes payable $ 154,484 $ 255,146 $ 158,027
Accounts payable 1,001,728 978,639 965,444
Current maturities of long-term debt 11,765 10,181 8,483
Current obligations under capital leases 20,990 18,587 17,955
Other current liabilities 169,749 156,443 176,793
---------------------------------------------------------
Total current liabilities 1,358,716 1,418,996 1,326,702
Long-term debt 1,149,427 1,212,835 1,144,600
Long-term obligations under capital leases 315,030 249,949 300,962
Deferred income taxes 39,407 - 37,076
Other liabilities 169,142 210,290 157,987
Stockholders' equity
Preferred stock 5,908 5,908 5,908
Common stock 75,335 75,335 75,335
Capital in excess of par value 12,956 12,688 12,737
Retained earnings 1,366,470 1,266,403 1,336,942
Treasury stock, at cost (213,084) (184,059) (214,746)
---------------------------------------------------------
Total stockholders' equity 1,247,585 1,176,275 1,216,176
---------------------------------------------------------
Total liabilities and stockholders' equity $ 4,279,307 $ 4,268,345 $ 4,183,503
=========================================================
</TABLE>
Quarterly data subject to year-end audit.
See notes to consolidated financial statements.
3
<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>
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 - - - - 45,982 45,982
Sales of common stock
under option plans - - 102 1,269 - 1,371
Cash dividends declared
on common stock -
$.245 per share - - - - (16,454) (16,454)
Compensation under employee
incentive plans - - 117 393 - 510
- --------------------------------------------------------------------------------------------------------------------------
Balances at June 15, 1996 $ 5,908 $ 75,335 $ 12,956 $ (213,084) $ 1,366,470 $ 1,247,585
- --------------------------------------------------------------------------------------------------------------------------
Interim data subject to year-end audit. See notes to consolidated financial statements.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------------------------------------------
SUPERVALU INC. and Subsidiaries
- -------------------------------------------------------------------------------------------------------------------
(In thousands)
- -------------------------------------------------------------------------------------------------------------------
Year-to-date
(16 weeks ended)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
June 15, June 17,
1996 1995
- -------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities
Net earnings $ 45,982 $ 45,951
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Equity in earnings of ShopKo (2,648) (2,468)
Dividends received from ShopKo 3,241 3,241
Depreciation and amortization 68,542 64,848
Provision for losses on receivables 1,788 1,699
Gain on sale of property, plant and equipment (1,020) (1,587)
Deferred income taxes 2,223 4,236
Treasury shares contributed to employee incentive plan 68 66
Changes in assets and liabilities:
Receivables 13,983 (23,996)
Inventory (50,525) 16,039
Other current assets 12,917 10,656
Direct finance leases 2,869 2,536
Accounts payable 28,829 (24,026)
Other liabilities 17,321 (11,549)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 143,570 85,646
- -------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Additions to long-term notes receivable (20,487) (9,982)
Payments received on long-term notes receivable 2,724 13,938
Proceeds from sale of property, plant and equipment 8,633 31,063
Purchase of property, plant and equipment (66,225) (57,787)
Business acquisitions, net of cash acquired (4,996) -
Other investing activities (19,039) (4,393)
- -------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (99,390) (27,161)
- -------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Net (reduction) issuance of short-term notes payable (3,543) 28,978
Repayment of long-term debt (3,294) (1,445)
Reduction of obligations under capital leases (7,114) (5,100)
Proceeds (payments) for purchase of common stock under option plans 1,130 (309)
Dividends paid (31,492) (32,720)
Payments for purchase of treasury stock - (46,619)
- -------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (44,313) (57,215)
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (133) 1,270
Cash and cash equivalents at beginning of year 5,215 4,839
- -------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of first quarter $ 5,082 $ 6,109
===================================================================================================================
All data subject to year-end audit. See notes to consolidated financial statements.
</TABLE>
5
<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 first quarter of fiscal 1997, the company utilized
approximately $4 million of the reserve leaving a balance of $109 million. The
primary use of the reserve in the first quarter was for carrying costs and
losses on disposition of property in both the food distribution and retail food
segments.
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 June 15, 1996 and June
17, 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.
6
<PAGE>
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
- ---------------------
The following table sets forth items from the company's Consolidated Statements
of Earnings as percentages of net sales:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
First Quarter (16 weeks) Ended
- ---------------------------------------------------------------------------------------
Fiscal Fiscal
1997 1996
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Net sales 100.00% 100.00%
Cost of sales (90.37) (90.74)
Selling and administrative expenses (7.43) (7.04)
Interest expense (.83) (.89)
Interest income .10 .14
- ---------------------------------------------------------------------------------------
Earnings before equity in earnings of ShopKo,
and income taxes 1.47 1.47
Equity in earnings of ShopKo .05 .05
Provision for income taxes (.60) (.60)
- ---------------------------------------------------------------------------------------
Net earnings .92% .92%
=======================================================================================
</TABLE>
NET SALES
Net sales for the first quarter were even with last year, positively impacted by
a 5.1% increase in retail food sales, offset by a .6% decline in food
distribution sales. 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, the growth of Save-A-Lot, and food price
inflation, as measured by the company, of 1.2%. Retail food sales increased over
the first quarter of last year due to new store openings and an increase in
same-store sales of 4.5%. The same-store sales increase was fueled by improved
performance in the price superstores and limited assortment stores, strong
merchandising refocus in certain operations and a strike/lockout affecting
competitors in the Denver market. 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 program.
<TABLE>
<CAPTION>
Net Sales by Segment
- ---------------------------------------------------------------------------------------------
(In thousands) First Quarter (16 weeks)
- ---------------------------------------------------------------------------------------------
June 15, 1996 June 17, 1995
Net Sales % of Total Net Sales % of Total
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Food distribution $4,418,911 88.8% $4,446,127 89.4%
Retail food 1,324,986 26.6% 1,260,889 25.4%
Less: Eliminations (765,136) (15.4)% (733,979) (14.8)%
- ---------------------------------------------------------------------------------------------
Total net sales $4,978,761 100.0% $4,973,037 100.0%
=============================================================================================
</TABLE>
7
<PAGE>
GROSS PROFIT
Gross profit as a percentage of net sales increased to 9.6% in the first
quarter, compared with 9.3% in the first quarter of last year. The increase was
due principally to a strong retail gross profit margin resulting from improved
pricing and product mix and the closing of underperforming corporate-owned
retail stores. The higher gross profit margin was also caused by the growing
proportion within the company's total sales mix of the higher-margined retail
food business, which represented 26.6% of total sales in the first quarter of
fiscal 1997, compared with 25.4% in the first quarter of last year. Food
distribution gross profit margin decreased slightly due to the competitive
retail environment and the continuation of the industry's movement to every-day-
low pricing, partially offset by an increased LIFO credit over last year's first
quarter.
SELLING AND ADMINISTRATIVE EXPENSES
Selling and administrative expenses were 7.4% of net sales for the quarter
compared with 7.0% in the first quarter last year. The higher percentage was
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 to a lesser degree, increased ADVANTAGE
project expenses. Food distribution selling and administrative expenses as a
percent of net sales were higher than last year due to ADVANTAGE implementation
expenses charged to this segment totaling $8.6 million versus $1.6 million last
year. Retail food selling and administrative expenses as a percent of net sales
were consistent with last year.
<TABLE>
<CAPTION>
ADVANTAGE Expenses by Segment
=========================================================================
(In thousands) First Quarter (16 weeks)
- -------------------------------------------------------------------------
June 15, 1996 June 17, 1995
- -------------------------------------------------------------------------
<S> <C> <C>
Food distribution $8,600 $1,600
Retail food 700 -
Corporate expenses - 3,900
- -------------------------------------------------------------------------
Total ADVANTAGE Expenses $9,300 $5,500
=========================================================================
</TABLE>
Pre-tax expenses of $9.3 million related to the ADVANTAGE project were incurred
during the quarter, compared with $5.5 million last year. The expenses related
to project implementation costs including, but not limited to, systems
development, employee training and relocation, consultants costs and retailer
training and promotional programs. The increased ADVANTAGE expenses resulted
from heavy implementation activity in the current quarter and expenses incurred
for increased information systems support.
During the first quarter of fiscal 1997, the company achieved the following
under ADVANTAGE: opened the Anniston, Alabama prototype regional distribution
facility and began shipping to retailers; broke ground for the new Midwest
regional distribution facility; began implementing its new pricing strategy,
Activity Based Sell, in the Midwest region; and rolled out the newly developed
category management program in the Northern, Southeast and Midwest marketing
regions with category reviews, training and resets underway.
8
<PAGE>
OPERATING EARNINGS
The company's pre-tax operating earnings (earnings before interest, corporate
expenses, equity in earnings of ShopKo Stores, Inc. ("ShopKo"), and taxes)
decreased slightly to $116.5 million in the quarter from $117.2 million last
year. Food distribution operating earnings decreased 12.8% to $88.4 million due
to higher ADVANTAGE related expenses, reduced gross margin due to the
competitive market and the general softness in sales. Retail food operating
earnings increased 77.4% to $28.1 million in the quarter due to strong gross
margin resulting from improved pricing, product mix and the closing of
underperforming corporate-owned retail stores, as well as an increase in sales.
INTEREST EXPENSE AND INCOME
Interest expense decreased to $41.4 million in the quarter, compared with $44.1
million in the prior year, reflecting a reduction in debt levels and slightly
lower short-term interest rates. Interest income decreased to $5.0 million in
the first quarter, compared with $7.1 million in the prior 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 $2.6 million in the first
quarter from $2.5 million in the first quarter of last year. As reported by
ShopKo, sales increased 9.0% to $610.9 million and net earnings increased 7.3%
for the first quarter compared to last year. The increase in net earnings was
due to strong sales related to the ProVantage prescription benefit management
business.
NET EARNINGS
Net earnings for the first quarter of fiscal 1997 were $46.0 million, even with
the prior year. Net earnings were positively impacted by improved retail food
gross margin, offsetting 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. This is the result of the
expansion and the acceleration in timing of certain ADVANTAGE programs which
will drive expenses higher in fiscal 1997.
NEW ACCOUNTING STANDARDS
Impairment of long-lived assets
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
was issued in March 1995 and was adopted in the first quarter of fiscal 1997.
The adoption of SFAS No. 121 had no impact on the results of operations.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Internally generated funds, principally from the company's food distribution
business, continue to be the major source of capital for liquidity and capital
growth. Cash provided from operations for the first quarter was $143.6 million
compared with $85.6 million last year. The increase was primarily due to a
reduction in receivables and increased levels of other liabilities. Cash
provided by operations was impacted by increased inventory levels at retail
locations resulting from new store openings and increased sales, as well as
slightly higher inventory levels at wholesale distribution centers. This impact
was offset by a corresponding increase in accounts payable. Cash provided from
operations was primarily used to finance capital expenditures of $66.2 million
and pay dividends of $31.5 million. There were no treasury stock purchases in
the quarter.
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 past fiscal 1997 and into
future periods. 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
an A3 rating from Moody's Investors Services, Inc. and a BBB+ from Standard and
Poor's Ratings Group. Moody's Investors Services, Inc. announced on July 8, 1996
that it has placed the company's ratings under review. Management does not
believe a rating change by Moody's, if any, would have a significant impact on
the company's liquidity, borrowing cost or access to financial markets. The
company's strong current and anticipated 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.
10
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
The Registrant held its Annual Meeting of Stockholders on June 27, 1996
at which the stockholders took the following actions:
(a) elected Edwin C. Gage, Garnett L. Keith, Jr., Richard L. Knowlton,
and Carole F. St. Mark for terms expiring in 1999. The votes cast
for and withheld with respect to each such Director was as
follows:
<TABLE>
<CAPTION>
Votes For Votes Withheld
---------- --------------
<S> <C> <C>
Edwin C. Gage 58,270,965 619,805
Garnett L. Keith, Jr. 58,219,816 670,954
Richard L. Knowlton 58,258,526 632,244
Carole F. St. Mark 58,273,190 617,580
</TABLE>
The Directors whose terms continued after the meeting are as
follows: Herman Cain, Stephen D'Agostino, Vernon Heath, William
Hodder, Charles Lillis, Harriet Perlmutter, Winston Wallin and
Michael Wright.
(b) ratified, by a vote of 58,671,778 for, 102,357 against, and
116,635 abstaining, the appointment of Deloitte & Touche LLP as
the independent auditors of Registrant for the fiscal year ending
February 22, 1997.
(c) approved by a vote of 56,793,072 for, 1,789,406 against, and
308,292 abstaining, the adoption of the Non-Employee Directors
Deferred Stock Plan.
(d) approved by a vote of 49,202,420 for, 9,330,904 against, and
357,446 abstaining, the adoption of certain amendments to the 1983
Employee Stock Option Plan.
(e) approved by a vote of 34,761,053 for, 18,874,614 against, and
721,708 abstaining, the adoption of the shareholder proposal
relating to the Company's Preferred Share Purchase Rights Plan.
Reference is hereby made to the Proxy Statement dated May 24, 1996,
filed with the Commission pursuant to Regulation 14A, for further
information regarding these proposals approved by the stockholders at
the Annual Meeting.
11
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
- ------ --------------------------------
(a) Exhibits filed with this Form 10-Q:
10(e) SUPERVALU INC. Deferred Compensation Plan for
Non-Employee Directors, as amended.
10(o) SUPERVALU INC. Directors Retirement Program, as amended.
15. Letters from Deloitte & Touche LLP regarding unaudited
interim financial information.
27. Financial Data Schedule.
(b) Reports on Forms 8-K.
No reports were filed on Form 8-K during the quarter ended
June 15, 1996.
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: July 30, 1996 Vice President and Controller
(Chief Accounting Officer and
duly authorized officer
of Registrant)
12
<PAGE>
Exhibit 10(e)
SUPERVALU INC.
--------------
DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
-----------------------------------------------------
EFFECTIVE 6/27/96
-----------------
1. A director who is not an employee of the Company or of a subsidiary of the
Company may elect to defer receipt of the payment of his cash fees and
other cash compensation as a director until such time as he has ceased to
be a director, as hereinafter provided.
2. Any election hereunder to defer fees shall apply to all or any part of the
cash fees and other cash compensation earned by the director as a director
of the Company (quarterly retainer fees as well as fees for attending Board
meetings and committee meetings, but not stock option grants or amounts
paid pursuant to the Non-Employee Directors Deferred Stock Plan) until
termination of such election.
3. Such election shall be made by the director filing a written statement with
the Secretary of the Company electing to defer director's fees pursuant to
this plan and shall be effective with respect to any fees and other
compensation thereafter payable to the electing director for which no
services have yet been rendered by said electing director.
4. A director's election to defer director's fees hereunder shall continue
thereafter unless and until the director terminates the deferral by giving
notice to the Secretary in writing. In the event of such termination of a
deferral, the amount previously deferred shall not be paid until such
director ceases to be a director.
5. All fees so deferred will be credited to a special bookkeeping account for
the director at such times as the fees would have been payable had the
director not elected to defer payment thereof.
6. The Company will not set aside any money in trust or otherwise fund the
payment of any amounts credited to the director's deferred fee account, but
shall make payment to the director when due out of general corporate funds.
The director shall have the status solely of an unsecured general creditor
of the Company with respect to the amounts credited to the director's
deferred fee account.
7. Interest shall be accrued on all deferred fees from and after the date when
credited to the director's deferred fee account until paid as hereinafter
provided. For all amounts credited to a director's deferred fee account
prior to July 1, 1996, interest shall be accrued at the rate of 11% per
annum; for all amounts credited to a director's deferred fee account on or
after July 1, 1996, interest shall be accrued at the prime interest rate as
published in the Wall Street Journal on the first business day of January
each year for the ensuing year. Such interest shall be credited to the
director's deferred fee account as of the last day of each month and shall
be compounded annually.
8. The balance in the director's deferred fee account (including interest
thereon) accrued prior to July 1, 1996, shall be paid in ten equal annual
installments, each installment being paid on or before January 10 of each
year beginning with the calendar year immediately following the year in
which the director ceases to be a director. The balance in the director's
deferred fee account (including interest thereon) accrued on and after July
1, 1996, shall be paid in a lump sum or in equal annual installments, as
the director shall elect at the time the director makes the deferral
election under paragraph 1 hereof. Notwithstanding the foregoing, the
Company, acting by resolution of the Board exclusive of any director
covered by this plan, in its sole discretion may determine to make payment
of the balance in the director's deferred fee account (including accrued
interest thereon) in one payment or in installments. Interest at the rates
provided in Section 7 shall be earned on unpaid installments.
<PAGE>
9. Upon the death of a director or a former director, any amounts of deferred
director's fees and interest accrued shall be paid in full on or before
January 10 of the calendar year following the year in which the director
dies, 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.
10. Upon a Change of Control of the Company (as hereinafter defined) the entire
balance of the director's deferred fee account shall be paid in full to the
director.
CHANGE OF CONTROL
For purposes hereof, Change of Control shall have the following meaning:
(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 of the
Company (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
(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
<PAGE>
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.
<PAGE>
Exhibit 10(o)
SUPERVALU INC.
DIRECTORS RETIREMENT PROGRAM
EFFECTIVE JUNE 27, 1996
Effective June 27, 1996, the Directors Retirement Program is terminated, subject
to the payment of benefits earned by directors prior to such termination in
accordance with the following provisions. Directors who have served as non-
employee, outside directors on the SUPERVALU Board will receive an annual
retirement fee equal to $20,000 per year, payable quarterly, commencing when the
outside director leaves the Board or at age 55, whichever is later. This annual
fee is payable for the lesser of the number of years of Board service as an
outside director prior to June 27, 1996, 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. For purposes of this
paragraph, years of service shall be measured from Annual Meeting to Annual
Meeting and any director who serves for less than a full year shall be
considered to have served for a full year if the director has served at least
four months. Upon a Change of Control (as hereinafter defined) of the Company
any retirement compensation otherwise payable in installments shall be
accelerated and paid to the director. Upon the death of the director, the
director's retirement compensation 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
- -----------------
For purposes hereof, Change of Control shall have the following meaning:
(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 of the
Company (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
(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
<PAGE>
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.
<PAGE>
Exhibit (15) to
Quarterly Report on
Form 10-Q
Page 1 of 2
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 June 15, 1996 and June
17, 1995, as indicated in our report dated July 19, 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 June 15, 1996, is
incorporated by reference in the Registration Statements (No. 33-28310, No. 33-
16934, No. 2-56896, and No. 33-50071 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
July 26, 1996
<PAGE>
Exhibit (15) to
Quarterly Report on
Form 10-Q
Page 2 of 2
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 June 15, 1996 and June 17, 1995 and the
related consolidated statements of earnings and cash flows for the 16-week
period then ended, and the consolidated statement of stockholders' equity for
the interim period ended June 15, 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
July 19, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the consolidated balance sheets as of June 15, 1996 and the consolidated
statement of earnings for the 16 weeks ended June 15, 1996 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> FEB-22-1997
<PERIOD-END> JUN-15-1996
<CASH> 5,082
<SECURITIES> 0
<RECEIVABLES> 385,100
<ALLOWANCES> (18,694)
<INVENTORY> 1,083,672
<CURRENT-ASSETS> 1,580,645
<PP&E> 2,574,207
<DEPRECIATION> (943,733)
<TOTAL-ASSETS> 4,279,307
<CURRENT-LIABILITIES> 1,358,716
<BONDS> 1,464,457
<COMMON> 75,335
0
5,908
<OTHER-SE> 1,166,342
<TOTAL-LIABILITY-AND-EQUITY> 4,279,307
<SALES> 4,978,761
<TOTAL-REVENUES> 4,978,761
<CGS> 4,499,348
<TOTAL-COSTS> 4,499,348
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,788
<INTEREST-EXPENSE> 41,363
<INCOME-PRETAX> 75,690
<INCOME-TAX> 29,708
<INCOME-CONTINUING> 45,982
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 45,982
<EPS-PRIMARY> .68
<EPS-DILUTED> .68
</TABLE>
