<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 21, 1999
SUPERVALU INC.
(Exact name of registrant as specified in its charter)
Delaware 1-5418 41-0617000
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
11840 Valley View Road
Eden Prairie, Minnesota 55344
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 828-4000
(Former name or former address, if changed since last report)
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Item 5. Other Events.
As previously announced, on June 9, 1999, SUPERVALU INC. ("SUPERVALU")
entered into a merger agreement (the "Merger Agreement") with Richfood Holdings,
Inc. ("Richfood") whereby SUPERVALU will acquire in a merger all of the
outstanding common stock of Richfood. The transaction has a total value of
approximately $1.5 billion, including the assumption of $642 million of Richfood
debt. Richfood is a major food retailer and distributor operating primarily in
the Mid-Atlantic region of the United States. Richfood's retail division
operates the 38 store Farm Fresh chain located primarily in the Hampton Roads
region of Virginia, 37 Shoppers Food Warehouse stores in the greater Washington,
D.C. metropolitan area and the Metro chain of 16 retail grocery stores in the
metropolitan Baltimore, Maryland area. SUPERVALU does not currently have a
retail presence in these market areas. On a pro forma basis, the acquisition
would have increased SUPERVALU's retail food sales for fiscal 1999 by
approximately 35% from approximately $5 billion to approximately $7 billion.
Richfood's distribution division serves approximately 1,400 retail grocery
stores. The acquisition will enhance SUPERVALU's industry-leading distribution
network and provide a platform to expand its operations in the Mid-Atlantic
region of the United States where it currently does not have a significant
retail or distribution presence.
Under the terms of the Merger Agreement, Richfood's shareholders will
have the option to receive $18.50 per share in cash or SUPERVALU common stock
subject to allocation and proration. Subject to adjustment under some
circumstances, the merger consideration will be 50% cash and 50% SUPERVALU
common stock. The merger will be accounted for as a purchase. The merger is
subject to approval by Richfood's shareholders and the expiration or termination
of applicable waiting periods under antitrust laws. While SUPERVALU expects the
merger will close by the end of its second quarter of fiscal 2000, there can be
no assurance that the merger will be consummated.
Approximately $886 million will be paid to Richfood shareholders,
consisting of approximately $443 million of cash and the issuance of
approximately $443 million of SUPERVALU common stock. In addition, SUPERVALU
intends to repay approximately $366 million of outstanding Richfood debt,
consisting of a bank term loan and revolving bank loans. SUPERVALU intends to
finance the acquisition with a combination of existing cash, proceeds from a
debt offering and commercial paper issuances (supported by bank facilities).
SUPERVALU intends to refinance a portion of its commercial paper borrowings with
one or more additional debt offerings.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro Forma Information.
Although not required to be filed at this time on
Form 8-K, the registrant is voluntarily filing this Form 8-K
for the purpose of disclosing pro forma financial information
that gives effect to the merger described in Item 5 above. See
pages F-1 through F-4 attached hereto.
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(c) Exhibits
2. Agreement and Plan of Merger, dated as of June 9,
1999, among SUPERVALU INC., Winter Acquisition, Inc. and
Richfood Holdings, Inc. (incorporated by reference to Exhibit
2 to the registrant's quarterly Report on Form 10-Q for the
quarter ended June 19, 1999).
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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.
Dated: July 21, 1999
SUPERVALU INC.
By: /s/ Pamela K. Knous
----------------------------------
Pamela K. Knous
Executive Vice President,
Chief Financial Officer
(Authorized Officer of Registrant)
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<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
Introduction
The unaudited pro forma combined financial statements give effect to the
merger described under Item 5 of this report. The unaudited pro forma combined
financial statements have been prepared on the basis of assumptions described in
the notes to the unaudited pro forma combined financial statements and include
assumptions relating to the allocation of the consideration paid for Richfood to
the consolidated assets and liabilities of Richfood based on preliminary
estimates of their respective fair values. The actual allocation of such
consideration may differ from that reflected in the pro forma consolidated
financial statements after an appropriate review of the fair values of the
consolidated assets and liabilities of Richfood has been completed. Amounts
allocated will be based upon the estimated fair values at the time of the merger
which could vary significantly from the amounts reflected in the unaudited pro
forma combined financial statements. The unaudited pro forma combined financial
statements do not reflect any cost savings and other synergies nor any
transaction costs or other merger related expenses anticipated by SUPERVALU's
management. The pro forma information also does not give effect to the non-
renewal of Richfood's supply agreement with Giant Food Stores, Inc. which will
expire in December 1999. Richfood's sales to Giant in fiscal 1999 were
approximately $629 million. The merger has been accounted for using the purchase
method of accounting. The unaudited pro forma combined financial statements
should be read in conjunction with the respective financial statements of
SUPERVALU and Richfood and the related notes on file with the Securities and
Exchange Commission.
Pro Forma Condensed Combined Statements of Earnings (Unaudited)
The pro forma condensed combined statement of earnings for the fiscal year
ended February 27, 1999 has been prepared by combining the consolidated
statement of earnings of SUPERVALU for the fiscal year (52 weeks) ended
February 27, 1999 with the consolidated statement of earnings of Richfood for
the fiscal year (52 weeks) ended May 1, 1999, adjusted to give effect to the
merger as if it had occurred on March 1, 1998. The pro forma condensed combined
statement of earnings for the first quarter of fiscal 2000 (16 weeks) ended
June 19, 1999 has been prepared by combining the consolidated statement of
earnings of SUPERVALU for the fiscal quarter (16 weeks) ended June 19, 1999
with the consolidated statement of earnings of Richfood for the fiscal quarter
(16 weeks) ended May 1, 1999, adjusted to give effect to the merger as if it
had occurred on February 28, 1999. The pro forma combined financial statements
do not necessarily reflect the actual results of operations of SUPERVALU which
would have resulted had the merger occurred as of the dates presented. The pro
forma information is not necessarily indicative of future results of operations
for the combined companies.
<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------------------------
(52 Weeks)
February 27, 1999
(52 Weeks) (52 Weeks) --------------------------
February 27, 1999 May 1, 1999 Pro Forma Pro Forma
SUPERVALU Richfood Adjustments Combined
----------------- ----------- ----------- -----------
(In thousands, except per share data and ratios)
<S> <C> <C> <C> <C>
Net Sales............... $17,420,507 $3,968,239 $ $21,388,746
Costs and expenses:
Cost of sales.......... 15,620,127 3,247,017 18,867,144
Selling and
administrative
expenses.............. 1,382,212 558,560 11,800 (A) 1,952,572
Interest, net.......... 101,907 43,087 47,800 (B) 192,794
----------- ---------- -------- -----------
Total costs and
expenses............. 17,104,246 3,848,664 59,600 21,012,510
----------- ---------- -------- -----------
Earnings before taxes... 316,261 119,575 (59,600) 376,236
Provision for income
taxes.................. 124,923 46,532 (18,881)(C) 152,574
----------- ---------- -------- -----------
Net earnings............ $ 191,338 $ 73,043 $(40,719) $ 223,662
=========== ========== ======== ===========
Weighted average common
shares--diluted........ 121,961 18,000 (D) 139,961
Net earnings per common
share--diluted......... $ 1.57 $ 1.60
Ratio of earnings to
fixed charges (E)
Including one-time
items................. 3.17 2.92 2.47
Excluding one-time
items................. 3.17 2.92 2.47
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Condensed
Combined Statements of Earnings on Page F-2.
F-1
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<TABLE>
<CAPTION>
Fiscal Quarter Ended
---------------------------------------------------
(16 Weeks)
June 19, 1999
(16 Weeks) (16 Weeks) -------------------------
June 19, 1999 May 1, 1999 Pro Forma Pro Forma
SUPERVALU Richfood Adjustments Combined
------------- ----------- ----------- ----------
(In thousands, except per share data and ratios)
<S> <C> <C> <C> <C>
Net Sales................ $5,289,720 $1,211,081 $ $6,500,801
Costs and expenses:
Cost of sales........... 4,746,897 984,057 5,730,954
Selling and
administrative
expenses............... 420,424 173,427 3,630 (A) 597,481
Gain on sale............ (163,662) (163,662)
Restructuring and other
charges................ 103,596 103,596
Interest, net........... 30,245 12,422 14,707 (B) 57,374
---------- ---------- -------- ----------
Total costs and
expenses.............. 5,137,500 1,169,906 18,337 6,325,743
---------- ---------- -------- ----------
Earnings before taxes.... 152,220 41,175 (18,337) 175,058
Provision for income
taxes................... 85,499 15,931 (5,809)(C) 95,621
---------- ---------- -------- ----------
Net earnings............. $ 66,721 $ 25,244 $(12,528) $ 79,437
========== ========== ======== ==========
Weighted average common
shares--diluted......... 120,769 18,000 (D) 138,769
Net earnings per common
share--diluted.......... $ 0.55 $ 0.57
Ratio of earnings to
fixed charges (E)
Including one-time
items.................. 4.71 3.23 3.35
Excluding one-time
items.................. 3.23 3.23 2.54
</TABLE>
Notes to the Unaudited Pro Forma Condensed
Combined Statements of Earnings
(A) To amortize over forty years the cost in excess of fair value of net assets
acquired, net of goodwill amortization previously recorded by Richfood.
(B) SUPERVALU intends to finance the acquisition with a combination of existing
cash, commercial paper issuances (supported by bank credit facilities) and
the proceeds of one or more debt offerings. Approximately $886 million will
be paid to Richfood shareholders, consisting of $443 million of cash and
the issuance of $443 million of SUPERVALU common stock. SUPERVALU intends
to repay approximately $366 million of outstanding Richfood debt,
consisting of a bank term loan and revolving bank loans. SUPERVALU intends
to finance approximately $500 million with the proceeds of one or more debt
offerings. For the purposes of the pro forma combined financial statements,
an annual average interest rate of 7.3% is assumed for the debt securities,
and an annual interest rate of 5.3% is assumed for commercial paper and
borrowings under credit facilities.
(C) To provide for income taxes at an effective tax rate of 39.5% for all
adjustments except goodwill amortization.
(D) To increase common shares outstanding for the anticipated 18 million shares
to be issued in the transaction based on an assumed SUPERVALU common stock
price of $24.00 per share.
(E) Earnings used to calculate the ratio of earnings to fixed charges consist
of earnings from operations before income taxes, adjusted for the portion
of fixed charges deducted from such earnings. Fixed charges consist of
interest on all indebtedness (including capital lease obligations),
amortization of debt expense and the portion of interest expense on
operating leases deemed representative of the interest factor. Ratios are
presented on a consolidated basis.
F-2
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Pro Forma Condensed Combined Balance Sheet (Unaudited)
The pro forma condensed combined balance sheet as of June 19, 1999 has been
prepared by combining the consolidated balance sheet of SUPERVALU as of June
19, 1999 with the consolidated balance sheet of Richfood as of May 1, 1999,
adjusted to give effect to the merger as if it had occurred on June 19, 1999.
The pro forma financial statements do not necessarily reflect the actual
financial position of SUPERVALU that would have resulted had the merger
occurred as of the date presented. The pro forma information is not necessarily
indicative of the future financial position for the combined companies.
<TABLE>
<CAPTION>
June 19, 1999
-------------------------
June 19, 1999 May 1, 1999 Pro Forma Pro Forma
SUPERVALU Richfood Adjustments Combined
------------- ----------- ----------- ----------
(In thousands)
<S> <C> <C> <C> <C>
Cash and cash
equivalents............. $ 213,898 $ 4,911 $(206,150)(G) $ 12,659
Receivables, net......... 386,717 117,757 504,474
Inventories.............. 1,066,622 227,539 7,000 (I) 1,301,161
Other current assets..... 111,623 60,846 172,469
---------- ---------- --------- ----------
Total current assets... 1,778,860 411,053 (199,150) 1,990,763
Long-term investment in
direct financing
leases.................. 99,179 99,179
Long-term notes
receivable, net......... 57,643 34,291 91,934
Net property, plant and
equipment............... 1,657,750 248,716 1,906,466
Goodwill................. 503,936 587,479 534,600 (F) 1,626,015
Other assets and deferred
charges................. 238,584 139,566 378,150
---------- ---------- --------- ----------
Total assets........... $4,335,952 $1,421,105 $ 335,450 $6,092,507
========== ========== ========= ==========
Notes payable............ $ 37,537 $ $ 103,126 (G) $ 140,663
Accounts payable......... 1,036,103 206,173 1,242,276
Current maturities of
long-term debt and
capitalized leases...... 185,137 217,907 (210,000)(G) 193,044
Other current
liabilities............. 289,510 125,884 70,000 (I) 485,394
---------- ---------- --------- ----------
Total current
liabilities........... 1,548,287 549,964 (36,874) 2,061,377
Long-term debt and
capitalized leases...... 1,248,264 455,981 344,000 (G) 2,048,245
Deferred taxes........... 30,252 (26,000)(I) 4,252
Other liabilities........ 167,514 26,484 193,998
Common stock............. 150,670 91,691 (91,691)(F) 150,670
Additional paid-in
capital................. 172,500 (H) 172,500
Retained earnings........ 1,721,381 296,985 (296,985)(F) 1,721,381
Treasury stock, at cost.. (530,416) 270,500 (H) (259,916)
---------- ---------- --------- ----------
Total stockholders'
equity................ 1,341,635 388,676 54,324 1,784,635
---------- ---------- --------- ----------
Total liabilities and
stockholders'
equity.............. $4,335,952 $1,421,105 $ 335,450 $6,092,507
========== ========== ========= ==========
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Condensed
Combined Balance Sheet on Page F-4
F-3
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Notes to the Unaudited Pro Forma Condensed
Combined Balance Sheet
(F) To record the excess of purchase price over the estimated fair market value
of net assets acquired and the elimination of Richfood equity accounts and
goodwill.
(G) SUPERVALU intends to finance the acquisition with a combination of existing
cash, commercial paper issuances (supported by bank credit facilities) and
the proceeds of one or more debt offerings. Approximately $886 million will
be paid to Richfood shareholders, consisting of $443 million of cash and
the issuance of $443 million of SUPERVALU common stock. SUPERVALU intends
to repay approximately $366 million of outstanding Richfood debt,
consisting of a bank term loan and revolving bank loans. SUPERVALU intends
to finance approximately $500 million with the proceeds of one or more debt
offerings. For the purposes of the pro forma combined financial statements,
an annual average interest rate of 7.3% is assumed for the debt securities,
and an annual interest rate of 5.3% is assumed for commercial paper and
borrowings under credit facilities.
(H) To record the estimated 18 million shares to be issued in the transaction
out of treasury stock at cost with the difference recorded to additional
paid-in capital. The estimated 18 million shares is based on an assumed
SUPERVALU common stock price of $24.00 per share.
(I) To record Richfood's consolidated assets and liabilities based on the
estimated fair values of the assets acquired and the liabilities assumed,
all in accordance with purchase accounting principles.
F-4
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EXHIBIT INDEX
2. Agreement and Plan of Merger, dated as of June 9, 1999, among SUPERVALU
INC., Winter Acquisition, Inc. and Richfood Holdings, Inc.
(incorporated by reference to Exhibit 2 to the registrant's Quarterly
Report on Form 10-Q for the quarter ended June 19, 1999).
