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FORM 10-Q
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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DELAWARE
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41-0617000
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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11840 VALLEY VIEW ROAD
EDEN PRAIRIE, MINNESOTA
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55344
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
x
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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Item
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Page
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1.
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2.
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3.
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4.
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1.
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1A.
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2.
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3.
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4.
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||
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5.
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6.
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||
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First Quarter Ended
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||||||
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June 20,
2015 (16 weeks) |
|
June 14,
2014 (16 weeks) |
||||
Net sales
|
|
|
|
||||
Independent Business
|
$
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2,462
|
|
|
$
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2,420
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% of total
|
45.6
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%
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|
46.0
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%
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||
Save-A-Lot
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1,408
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|
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1,356
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% of total
|
26.0
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%
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25.7
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%
|
||
Retail Food
|
1,473
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|
|
1,430
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|
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% of total
|
27.2
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%
|
|
27.2
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%
|
||
Corporate
|
64
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|
|
58
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|
||
% of total
|
1.2
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%
|
|
1.1
|
%
|
||
Total net sales
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$
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5,407
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|
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$
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5,264
|
|
|
100.0
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%
|
|
100.0
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%
|
||
Operating earnings
|
|
|
|
||||
Independent Business
|
$
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77
|
|
|
$
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66
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|
% of Independent Business sales
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3.1
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%
|
|
2.8
|
%
|
||
Save-A-Lot
|
51
|
|
|
46
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|
||
% of Save-A-Lot sales
|
3.6
|
%
|
|
3.4
|
%
|
||
Retail Food
|
33
|
|
|
30
|
|
||
% of Retail Food sales
|
2.2
|
%
|
|
2.1
|
%
|
||
Corporate
|
(3
|
)
|
|
(7
|
)
|
||
Total operating earnings
|
158
|
|
|
135
|
|
||
% of total net sales
|
2.9
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%
|
|
2.6
|
%
|
||
Interest expense, net
|
59
|
|
|
64
|
|
||
Equity in earnings of unconsolidated affiliates
|
(2
|
)
|
|
(1
|
)
|
||
Earnings from continuing operations before income taxes
|
101
|
|
|
72
|
|
||
Income tax provision
|
38
|
|
|
24
|
|
||
Net earnings from continuing operations
|
63
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|
|
48
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|
||
Income (loss) from discontinued operations, net of tax
|
1
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|
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(3
|
)
|
||
Net earnings including noncontrolling interests
|
64
|
|
|
45
|
|
||
Less net earnings attributable to noncontrolling interests
|
(3
|
)
|
|
(2
|
)
|
||
Net earnings attributable to SUPERVALU INC.
|
$
|
61
|
|
|
$
|
43
|
|
|
First Quarter Ended
|
||||||
|
June 20,
2015 (16 weeks) |
|
June 14,
2014 (16 weeks) |
||||
Net sales
|
$
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5,407
|
|
|
$
|
5,264
|
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Cost of sales
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4,597
|
|
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4,509
|
|
||
Gross profit
|
810
|
|
|
755
|
|
||
Selling and administrative expenses
|
652
|
|
|
620
|
|
||
Operating earnings
|
158
|
|
|
135
|
|
||
Interest expense, net
|
59
|
|
|
64
|
|
||
Equity in earnings of unconsolidated affiliates
|
(2
|
)
|
|
(1
|
)
|
||
Earnings from continuing operations before income taxes
|
101
|
|
|
72
|
|
||
Income tax provision
|
38
|
|
|
24
|
|
||
Net earnings from continuing operations
|
63
|
|
|
48
|
|
||
Income (loss) from discontinued operations, net of tax
|
1
|
|
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(3
|
)
|
||
Net earnings including noncontrolling interests
|
64
|
|
|
45
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|
||
Less net earnings attributable to noncontrolling interests
|
(3
|
)
|
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(2
|
)
|
||
Net earnings attributable to SUPERVALU INC.
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$
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61
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$
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43
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|
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Basic net earnings (loss) per share attributable to SUPERVALU INC.:
|
|||||||
Continuing operations
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$
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0.23
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$
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0.18
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Discontinued operations
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$
|
—
|
|
|
$
|
(0.01
|
)
|
Basic net earnings per share
|
$
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0.23
|
|
|
$
|
0.17
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Diluted net earnings (loss) per share attributable to SUPERVALU INC.:
|
|||||||
Continuing operations
|
$
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0.23
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|
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$
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0.18
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|
Discontinued operations
|
$
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—
|
|
|
$
|
(0.01
|
)
|
Diluted net earnings per share
|
$
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0.23
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|
|
$
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0.17
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Weighted average number of shares outstanding:
|
|
|
|
||||
Basic
|
262
|
|
|
260
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|
||
Diluted
|
268
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262
|
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First Quarter Ended
|
||||||
|
June 20,
2015 (16 weeks) |
|
June 14,
2014 (16 weeks) |
||||
Net earnings including noncontrolling interests
|
$
|
64
|
|
|
$
|
45
|
|
Other comprehensive income:
|
|
|
|
||||
Recognition of pension and other postretirement benefit obligations, net of tax of $8 and $5, respectively
|
14
|
|
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11
|
|
||
Change in fair value of cash flow hedges, net of tax of $1 and $0, respectively
|
(1
|
)
|
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—
|
|
||
Comprehensive income including noncontrolling interests
|
77
|
|
|
56
|
|
||
Less comprehensive income attributable to noncontrolling interests
|
(3
|
)
|
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(2
|
)
|
||
Comprehensive income attributable to SUPERVALU INC.
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$
|
74
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$
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54
|
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June 20, 2015
|
|
February 28, 2015
|
||||
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(Unaudited)
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|
||||
ASSETS
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|
||||
Current assets
|
|
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|
||||
Cash and cash equivalents
|
$
|
137
|
|
|
$
|
114
|
|
Receivables, net
|
484
|
|
|
482
|
|
||
Inventories, net
|
1,011
|
|
|
984
|
|
||
Other current assets
|
94
|
|
|
120
|
|
||
Total current assets
|
1,726
|
|
|
1,700
|
|
||
Property, plant and equipment, net
|
1,433
|
|
|
1,470
|
|
||
Goodwill
|
865
|
|
|
865
|
|
||
Intangible assets, net
|
68
|
|
|
48
|
|
||
Deferred tax assets
|
266
|
|
|
265
|
|
||
Other assets
|
133
|
|
|
137
|
|
||
Total assets
|
$
|
4,491
|
|
|
$
|
4,485
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
1,130
|
|
|
$
|
1,121
|
|
Accrued vacation, compensation and benefits
|
182
|
|
|
204
|
|
||
Current maturities of long-term debt and capital lease obligations
|
305
|
|
|
35
|
|
||
Other current liabilities
|
186
|
|
|
173
|
|
||
Total current liabilities
|
1,803
|
|
|
1,533
|
|
||
Long-term debt
|
2,200
|
|
|
2,480
|
|
||
Long-term capital lease obligations
|
207
|
|
|
213
|
|
||
Pension and other postretirement benefit obligations
|
555
|
|
|
602
|
|
||
Long-term tax liabilities
|
112
|
|
|
119
|
|
||
Other long-term liabilities
|
175
|
|
|
174
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ deficit
|
|
|
|
||||
Common stock, $0.01 par value: 400 shares authorized; 265 and 262 shares issued, respectively
|
3
|
|
|
3
|
|
||
Capital in excess of par value
|
2,793
|
|
|
2,810
|
|
||
Treasury stock, at cost, 2 and 2 shares, respectively
|
(15
|
)
|
|
(33
|
)
|
||
Accumulated other comprehensive loss
|
(410
|
)
|
|
(423
|
)
|
||
Accumulated deficit
|
(2,942
|
)
|
|
(3,003
|
)
|
||
Total SUPERVALU INC. stockholders’ deficit
|
(571
|
)
|
|
(646
|
)
|
||
Noncontrolling interests
|
10
|
|
|
10
|
|
||
Total stockholders’ deficit
|
(561
|
)
|
|
(636
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
4,491
|
|
|
$
|
4,485
|
|
|
Common
Stock
|
|
Capital in Excess of Par Value
|
|
Treasury
Stock
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Accumulated
Deficit
|
|
SUPERVALU INC.
Stockholders’
Deficit
|
|
Non-controlling
Interests
|
|
Total
Stockholders’
Deficit
|
||||||||||||||||
Balances as of February 22, 2014
|
$
|
3
|
|
|
$
|
2,862
|
|
|
$
|
(101
|
)
|
|
$
|
(307
|
)
|
|
$
|
(3,195
|
)
|
|
$
|
(738
|
)
|
|
$
|
8
|
|
|
$
|
(730
|
)
|
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|
43
|
|
|
2
|
|
|
45
|
|
||||||||
Other comprehensive income, net of tax of $5
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
||||||||
Sales of common stock under option plans
|
—
|
|
|
(32
|
)
|
|
34
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||||||
Stock-based compensation
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
||||||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
||||||||
Tax impact on stock-based awards and other
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
(13
|
)
|
||||||||
Balances as of June 14, 2014
|
$
|
3
|
|
|
$
|
2,824
|
|
|
$
|
(67
|
)
|
|
$
|
(296
|
)
|
|
$
|
(3,152
|
)
|
|
$
|
(688
|
)
|
|
$
|
6
|
|
|
$
|
(682
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balances as of February 28, 2015
|
$
|
3
|
|
|
$
|
2,810
|
|
|
$
|
(33
|
)
|
|
$
|
(423
|
)
|
|
$
|
(3,003
|
)
|
|
$
|
(646
|
)
|
|
$
|
10
|
|
|
$
|
(636
|
)
|
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
61
|
|
|
61
|
|
|
3
|
|
|
64
|
|
||||||||
Other comprehensive income, net of tax of $7
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
||||||||
Sales of common stock under option plans
|
—
|
|
|
(8
|
)
|
|
10
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||||||
Stock-based compensation
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
||||||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
||||||||
Tax impact on stock-based awards and other
|
—
|
|
|
(16
|
)
|
|
8
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
||||||||
Balances as of June 20, 2015
|
$
|
3
|
|
|
$
|
2,793
|
|
|
$
|
(15
|
)
|
|
$
|
(410
|
)
|
|
$
|
(2,942
|
)
|
|
$
|
(571
|
)
|
|
$
|
10
|
|
|
$
|
(561
|
)
|
|
First Quarter Ended
|
||||||
|
June 20,
2015 (16 weeks) |
|
June 14,
2014 (16 weeks) |
||||
Cash flows from operating activities
|
|
|
|
||||
Net earnings including noncontrolling interests
|
$
|
64
|
|
|
$
|
45
|
|
Income (loss) from discontinued operations, net of tax
|
1
|
|
|
(3
|
)
|
||
Net earnings from continuing operations
|
63
|
|
|
48
|
|
||
Adjustments to reconcile Net earnings from continuing operations to Net cash provided by operating activities – continuing operations:
|
|
|
|
||||
Asset impairment and other charges
|
—
|
|
|
2
|
|
||
Net gain on sale of assets and exits of surplus leases
|
—
|
|
|
(7
|
)
|
||
Depreciation and amortization
|
83
|
|
|
89
|
|
||
LIFO charge
|
3
|
|
|
2
|
|
||
Deferred income taxes
|
(14
|
)
|
|
6
|
|
||
Stock-based compensation
|
7
|
|
|
7
|
|
||
Net pension and other postretirement benefits cost
|
11
|
|
|
9
|
|
||
Contributions to pension and other postretirement benefit plans
|
(37
|
)
|
|
(45
|
)
|
||
Other adjustments
|
9
|
|
|
6
|
|
||
Changes in operating assets and liabilities, net of effects from business acquisitions
|
(14
|
)
|
|
(60
|
)
|
||
Net cash provided by operating activities – continuing operations
|
111
|
|
|
57
|
|
||
Net cash provided by operating activities – discontinued operations
|
1
|
|
|
—
|
|
||
Net cash provided by operating activities
|
112
|
|
|
57
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Proceeds from sale of assets
|
1
|
|
|
4
|
|
||
Purchases of property, plant and equipment
|
(49
|
)
|
|
(37
|
)
|
||
Payments for business acquisitions
|
(1
|
)
|
|
(5
|
)
|
||
Other
|
(21
|
)
|
|
6
|
|
||
Net cash used in investing activities
|
(70
|
)
|
|
(32
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Proceeds from sale of common stock
|
2
|
|
|
2
|
|
||
Payments of debt and capital lease obligations
|
(17
|
)
|
|
(13
|
)
|
||
Distributions to noncontrolling interests
|
(3
|
)
|
|
(4
|
)
|
||
Payments of debt financing costs
|
(1
|
)
|
|
(3
|
)
|
||
Net cash used in financing activities
|
(19
|
)
|
|
(18
|
)
|
||
Net increase in cash and cash equivalents
|
23
|
|
|
7
|
|
||
Cash and cash equivalents at beginning of period
|
114
|
|
|
83
|
|
||
Cash and cash equivalents at the end of period
|
$
|
137
|
|
|
$
|
90
|
|
SUPPLEMENTAL CASH FLOW INFORMATION
|
|||||||
The Company’s non-cash activities were as follows:
|
|
|
|
||||
Purchases of property, plant and equipment included in Accounts payable
|
$
|
17
|
|
|
$
|
16
|
|
Capital lease asset additions
|
$
|
—
|
|
|
$
|
—
|
|
Interest and income taxes paid:
|
|
|
|
||||
Interest paid, net of amounts capitalized
|
$
|
62
|
|
|
$
|
58
|
|
Income taxes paid (refunded), net
|
$
|
4
|
|
|
$
|
(3
|
)
|
|
|
First Quarter Ended June 14, 2014
|
||||||||||
|
|
As Originally Reported
|
|
Revision
|
|
As Revised
|
||||||
Net sales
|
|
$
|
5,234
|
|
|
$
|
30
|
|
|
$
|
5,264
|
|
Cost of sales
|
|
4,482
|
|
|
27
|
|
|
4,509
|
|
|||
Gross profit
|
|
752
|
|
|
3
|
|
|
755
|
|
|||
Selling and administrative expenses
|
|
617
|
|
|
3
|
|
|
620
|
|
|||
Operating earnings
|
|
$
|
135
|
|
|
$
|
—
|
|
|
$
|
135
|
|
|
|
First Quarter Ended June 14, 2014
|
||||||||||
|
|
As Originally Reported
|
|
Revision
|
|
As Revised
|
||||||
Net sales
|
|
|
|
|
|
|
||||||
Independent Business
|
|
$
|
2,400
|
|
|
$
|
20
|
|
|
$
|
2,420
|
|
% of total
|
|
45.9
|
%
|
|
0.1
|
%
|
|
46.0
|
%
|
|||
Save-A-Lot
|
|
1,348
|
|
|
8
|
|
|
1,356
|
|
|||
% of total
|
|
25.7
|
%
|
|
—
|
%
|
|
25.7
|
%
|
|||
Retail Food
|
|
1,428
|
|
|
2
|
|
|
1,430
|
|
|||
% of total
|
|
27.3
|
%
|
|
(0.1
|
)%
|
|
27.2
|
%
|
|||
Corporate
|
|
58
|
|
|
—
|
|
|
58
|
|
|||
% of total
|
|
1.1
|
%
|
|
—
|
%
|
|
1.1
|
%
|
|||
Total net sales
|
|
$
|
5,234
|
|
|
$
|
30
|
|
|
$
|
5,264
|
|
|
|
100.0
|
%
|
|
—
|
%
|
|
100.0
|
%
|
|
February 28,
2015 |
|
Additions
|
|
Impairments
|
|
Other net
adjustments
|
|
June 20,
2015 |
||||||||||
Goodwill:
|
|
|
|
|
|
|
|
|
|
||||||||||
Independent Business goodwill
|
$
|
710
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
710
|
|
Save-A-Lot goodwill
|
141
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
141
|
|
|||||
Retail Food goodwill
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|||||
Total goodwill
|
$
|
865
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
865
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Intangible assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Favorable operating leases, prescription files, customer lists and other (accumulated amortization of $89 and $86 as of June 20, 2015 and February 28, 2015, respectively)
|
$
|
124
|
|
|
$
|
23
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
147
|
|
Trademarks and tradenames – indefinite useful lives
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|||||
Non-compete agreements (accumulated amortization of $2 and $2 as of June 20, 2015 and February 28, 2015, respectively)
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||
Total intangible assets
|
136
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|
159
|
|
|||||
Accumulated amortization
|
(88
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(91
|
)
|
|||||
Total intangible assets, net
|
$
|
48
|
|
|
|
|
|
|
|
|
$
|
68
|
|
|
June 20,
2015 (16 weeks) |
||
Reserves for closed properties at beginning of the fiscal year
|
$
|
34
|
|
Additions
|
1
|
|
|
Payments
|
(4
|
)
|
|
Adjustments
|
—
|
|
|
Reserves for closed properties at the end of period
|
$
|
31
|
|
|
First Quarter Ended
|
||||||
|
June 20,
2015 (16 weeks) |
|
June 14,
2014 (16 weeks) |
||||
Property, plant and equipment:
|
|
|
|
||||
Carrying value
|
$
|
2
|
|
|
$
|
—
|
|
Fair value measured using Level 3 inputs
|
2
|
|
|
—
|
|
||
Impairment charge
|
$
|
—
|
|
|
$
|
—
|
|
Level 1 -
|
Quoted prices in active markets for identical assets or liabilities;
|
Level 2 -
|
Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable;
|
Level 3 -
|
Unobservable inputs in which little or no market activity exists, requiring an entity to develop its own assumptions that market participants would use to value the asset or liability.
|
|
June 20,
2015 |
|
February 28,
2015 |
||||
4.50% Secured Term Loan Facility due March 2019
|
$
|
1,459
|
|
|
$
|
1,469
|
|
6.75% Senior Notes due June 2021
|
400
|
|
|
400
|
|
||
7.75% Senior Notes due November 2022
|
350
|
|
|
350
|
|
||
8.00% Senior Notes due May 2016
|
278
|
|
|
278
|
|
||
3.75% Revolving ABL Credit Facility due September 2019
|
—
|
|
|
—
|
|
||
Net discount on debt, using an effective interest rate of 4.63% to 8.56%
|
(8
|
)
|
|
(8
|
)
|
||
Total debt
|
2,479
|
|
|
2,489
|
|
||
Less current maturities of long-term debt
|
(279
|
)
|
|
(9
|
)
|
||
Long-term debt
|
$
|
2,200
|
|
|
$
|
2,480
|
|
|
First Quarter Ended
|
||
|
June 20,
2015 (16 weeks) |
|
June 14,
2014 (16 weeks) |
Dividend yield
|
—%
|
|
—%
|
Volatility rate
|
49.0—50.6%
|
|
50.8—53.2%
|
Risk-free interest rate
|
1.2—1.4%
|
|
1.2—1.6%
|
Expected life
|
4.0—5.0 years
|
|
4.0—5.0 years
|
|
First Quarter Ended
|
||||||||||||||
Pension Benefits
|
|
Other Postretirement Benefits
|
|||||||||||||
June 20,
2015 (16 weeks) |
|
June 14,
2014 (16 weeks) |
|
June 20,
2015 (16 weeks) |
|
June 14,
2014 (16 weeks) |
|||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
33
|
|
|
39
|
|
|
1
|
|
|
1
|
|
||||
Expected return on assets
|
(44
|
)
|
|
(47
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service benefit
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
||||
Amortization of net actuarial loss
|
24
|
|
|
19
|
|
|
2
|
|
|
1
|
|
||||
Net periodic benefit expense (income)
|
$
|
13
|
|
|
$
|
11
|
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
Contributions to benefit plans
|
$
|
(26
|
)
|
|
$
|
(45
|
)
|
|
$
|
(11
|
)
|
|
$
|
—
|
|
|
First Quarter Ended
|
||||||
|
June 20,
2015 (16 weeks) |
|
June 14,
2014 (16 weeks) |
||||
Net earnings from continuing operations
|
$
|
63
|
|
|
$
|
48
|
|
Less net earnings attributable to noncontrolling interests
|
(3
|
)
|
|
(2
|
)
|
||
Net earnings from continuing operations attributable to SUPERVALU INC.
|
60
|
|
|
46
|
|
||
Income (loss) from discontinued operations, net of tax
|
1
|
|
|
(3
|
)
|
||
Net earnings attributable to SUPERVALU INC.
|
$
|
61
|
|
|
$
|
43
|
|
|
|
|
|
||||
Weighted average number of shares outstanding—basic
|
262
|
|
|
260
|
|
||
Dilutive impact of stock-based awards
|
6
|
|
|
2
|
|
||
Weighted average number of shares outstanding—diluted
(1)
|
268
|
|
|
262
|
|
||
|
|
|
|
||||
Basic net earnings (loss) per share attributable to SUPERVALU INC.:
|
|||||||
Continuing operations
|
$
|
0.23
|
|
|
$
|
0.18
|
|
Discontinued operations
|
$
|
—
|
|
|
$
|
(0.01
|
)
|
Basic net earnings per share
|
$
|
0.23
|
|
|
$
|
0.17
|
|
Diluted net earnings (loss) per share attributable to SUPERVALU INC.:
|
|||||||
Continuing operations
|
$
|
0.23
|
|
|
$
|
0.18
|
|
Discontinued operations
(1)
|
$
|
—
|
|
|
$
|
(0.01
|
)
|
Diluted net earnings per share
|
$
|
0.23
|
|
|
$
|
0.17
|
|
(1)
|
Weighted average number of shares outstanding—diluted was equal to Weighted average number of shares outstanding—basic for the computation of diluted net loss per share from discontinued operations for the first quarter ended
June 14, 2014
.
|
|
Benefit Plans
|
|
Interest Rate Swap
|
|
Total
|
||||||
Accumulated other comprehensive loss at beginning of the fiscal year, net of tax
|
$
|
(423
|
)
|
|
$
|
—
|
|
|
$
|
(423
|
)
|
Other comprehensive loss before reclassifications, net of tax benefit of $1
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Amortization of amounts included in net periodic benefit cost, net of tax expense of $8
|
14
|
|
|
—
|
|
|
14
|
|
|||
Net current-period Other comprehensive income (loss), net of tax expense of $7
|
14
|
|
|
(1
|
)
|
|
13
|
|
|||
Accumulated other comprehensive loss at the end of period, net of tax
|
$
|
(409
|
)
|
|
$
|
(1
|
)
|
|
$
|
(410
|
)
|
|
Benefit Plans
|
||
Accumulated other comprehensive loss at beginning of the fiscal year, net of tax
|
$
|
(307
|
)
|
Other comprehensive loss before reclassifications, net of tax benefit of ($0)
|
—
|
|
|
Amortization of amounts included in net periodic benefit cost, net of tax expense of $5
|
11
|
|
|
Net current-period Other comprehensive income, net of tax expense of $5
|
11
|
|
|
Accumulated other comprehensive loss at the end of period, net of tax
|
$
|
(296
|
)
|
|
First Quarter Ended
|
|
|
||||||
|
June 20,
2015 (16 weeks) |
|
June 14,
2014 (16 weeks) |
|
Affected Line Item on Condensed Consolidated Statement of Operations
|
||||
Pension and postretirement benefit plan obligations:
|
|
|
|
|
|
||||
Amortization of amounts included in net periodic benefit expense
(1)
|
$
|
20
|
|
|
$
|
12
|
|
|
Selling and administrative expenses
|
Amortization of amounts included in net periodic benefit expense
(1)
|
2
|
|
|
4
|
|
|
Cost of sales
|
||
Total reclassifications
|
22
|
|
|
16
|
|
|
|
||
Income tax benefit
|
(8
|
)
|
|
(5
|
)
|
|
Income tax provision
|
||
Total reclassifications, net of tax
|
$
|
14
|
|
|
$
|
11
|
|
|
|
(1)
|
Amortization of amounts included in net periodic benefit cost include amortization of prior service benefit and amortization of net actuarial loss as reflected in
Note 8—Benefit Plans
.
|
|
First Quarter Ended
|
||||||
|
June 20,
2015 (16 weeks) |
|
June 14,
2014 (16 weeks) |
||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
(Loss) income before income taxes from discontinued operations
|
(3
|
)
|
|
2
|
|
||
Income tax (benefit) provision
|
(4
|
)
|
|
5
|
|
||
Income (loss) from discontinued operations, net of tax
|
$
|
1
|
|
|
$
|
(3
|
)
|
•
|
Net sales were
$5,407
, an increase of
$143
or
2.7 percent
, primarily due to new store sales in Save-A-Lot and Retail Food, and sales to new stores and new affiliations within Independent Business.
|
•
|
Gross profit was
$810
, an increase of
$55
or
7.3 percent
, primarily due to higher base margins, higher sales volume and lower logistics costs.
|
•
|
Operating earnings were
$158
, an increase of
$23
or
17.0 percent
, primarily due to higher base margins, higher sales volume and lower logistics costs.
|
•
|
Net cash provided by operating activities of continuing operations was
$111
, an increase of
$54
, primarily due to lower levels of cash utilized in inventory build and benefit plan contributions.
|
•
|
Net cash used in investing activities was
$70
, an increase of
$38
, primarily due to an increase in cash paid for intangible assets of $23 and capital expenditures of
$12
, comprised of new retail stores, offset in part by
$4
of cash paid for business combinations last year.
|
|
First Quarter Ended
|
||||||
Results of Operations
|
June 20,
2015 (16 weeks) |
|
June 14,
2014 (16 weeks) |
||||
Net sales
|
$
|
5,407
|
|
|
$
|
5,264
|
|
Cost of sales
|
4,597
|
|
|
4,509
|
|
||
Gross profit
|
810
|
|
|
755
|
|
||
Selling and administrative expenses
|
652
|
|
|
620
|
|
||
Operating earnings
|
158
|
|
|
135
|
|
||
Interest expense, net
|
59
|
|
|
64
|
|
||
Equity in earnings of unconsolidated affiliates
|
(2
|
)
|
|
(1
|
)
|
||
Earnings from continuing operations before income taxes
|
101
|
|
|
72
|
|
||
Income tax provision
|
38
|
|
|
24
|
|
||
Net earnings from continuing operations
|
63
|
|
|
48
|
|
||
Income (loss) from discontinued operations, net of tax
|
1
|
|
|
(3
|
)
|
||
Net earnings including noncontrolling interests
|
64
|
|
|
45
|
|
||
Less net earnings attributable to noncontrolling interests
|
(3
|
)
|
|
(2
|
)
|
||
Net earnings attributable to SUPERVALU INC.
|
$
|
61
|
|
|
$
|
43
|
|
Diluted continuing operations net earnings per share attributable to SUPERVALU INC.
|
$
|
0.23
|
|
|
$
|
0.18
|
|
Weighted average shares outstanding—diluted
|
268
|
|
|
262
|
|
||
Financial Position
|
|
|
|
||||
Working capital
(1)
|
$
|
137
|
|
|
$
|
310
|
|
Total assets
|
$
|
4,491
|
|
|
$
|
4,354
|
|
Total debt and capital lease obligations
|
$
|
2,712
|
|
|
$
|
2,762
|
|
Other Statistics
|
|
|
|
||||
Depreciation and amortization
|
$
|
83
|
|
|
$
|
89
|
|
Capital expenditures
(2)
|
$
|
49
|
|
|
$
|
37
|
|
Adjusted EBITDA
(3)
|
$
|
246
|
|
|
$
|
226
|
|
Stores Supplied and Operated:
|
|
|
|
||||
Independent Business Primary Stores
|
1,857
|
|
|
1,805
|
|
||
Independent Business Secondary Stores
|
208
|
|
|
241
|
|
||
Save-A-Lot licensee stores
|
902
|
|
|
931
|
|
||
Save-A-Lot corporate stores
|
433
|
|
|
394
|
|
||
Retail Food stores
|
197
|
|
|
190
|
|
||
Total number of stores
|
3,597
|
|
|
3,561
|
|
(1)
|
Working capital of continuing operations is calculated using the first-in, first-out method (“FIFO”) for inventories, after adding back the last-in, first-out method (“LIFO”) reserve. The LIFO reserve was
$214
and
$204
as of June 20, 2015 and June 14, 2014, respectively.
|
(2)
|
Capital expenditures include cash payments for purchases of property, plant and equipment, excluding business acquisitions, and non-cash capital lease additions.
|
(3)
|
Adjusted EBITDA is a non-GAAP financial measure that the Company provides as a supplement to our results of operations and related analysis, and should not be considered superior to, a substitute for or an alternative to any financial measure of performance prepared and presented in accordance with GAAP. Refer to the “Non-GAAP Financial Measures” section below for additional information regarding the Company’s use of non-GAAP financial measures.
|
|
First Quarter Ended
|
||||||
|
June 20,
2015 (16 weeks) |
|
June 14,
2014 (16 weeks) |
||||
Net earnings from continuing operations
|
$
|
63
|
|
|
$
|
48
|
|
Less net earnings attributable to noncontrolling interests
|
(3
|
)
|
|
(2
|
)
|
||
Income tax provision
|
38
|
|
|
24
|
|
||
Interest expense, net
|
59
|
|
|
64
|
|
||
Depreciation and amortization
|
83
|
|
|
89
|
|
||
LIFO charge
|
3
|
|
|
2
|
|
||
Unusual employee-related costs
|
—
|
|
|
1
|
|
||
Structural and Tax Planning Fees
|
3
|
|
|
—
|
|
||
Adjusted EBITDA
|
$
|
246
|
|
|
$
|
226
|
|
•
|
Unused available credit under the Revolving ABL Credit Facility increased to
$903
from
$871
as of
June 20, 2015
compared to
February 28, 2015
.
|
•
|
Working capital decreased
$241
from
$378
as of
February 28, 2015
to
$137
as of
June 20, 2015
, excluding the impacts of the LIFO reserve, primarily due to the classification of the $278 of Senior Notes due May 2016 as current, offset in part by an increase in Cash and cash equivalents.
|
•
|
Debt maturities due in the remainder of fiscal
2016
and fiscal
2017
were $0 and $293, respectively, as of
June 20, 2015
, exclusive of any potential Excess Cash Flow prepayment requirements under the Secured Term Loan Facility.
|
•
|
Management expects that it will be able to fund debt maturities through internally generated funds, borrowings under the Revolving ABL Credit Facility, additional term loans under the Secured Term Loan Facility (subject to identifying term loan lenders or other institutional lenders and satisfying certain terms and conditions) or through new debt issuances.
|
•
|
Payments to reduce Capital lease obligations are expected to total approximately $26 in both fiscal
2016
and
2017
.
|
•
|
Total debt was
$2,479
and
$2,489
as of
June 20, 2015
and
February 28, 2015
, respectively, under senior secured credit agreements and debentures.
|
•
|
No minimum pension contributions are required under ERISA for fiscal 2016, but the Company anticipates fiscal 2016 discretionary pension contributions and required minimum other postretirement benefit plan contributions will be approximately $65 to $75.
|
|
First Quarter Ended
|
||||||||||
|
June 20,
2015 (16 weeks) |
|
June 14,
2014 (16 weeks) |
|
Change
|
||||||
Cash flow activities
|
|
|
|
|
|
||||||
Net cash provided by operating activities – continuing operations
|
$
|
111
|
|
|
$
|
57
|
|
|
$
|
54
|
|
Net cash used in investing activities
|
(70
|
)
|
|
(32
|
)
|
|
(38
|
)
|
|||
Net cash used in financing activities
|
(19
|
)
|
|
(18
|
)
|
|
(1
|
)
|
|||
Net cash provided by discontinued operations
|
1
|
|
|
—
|
|
|
1
|
|
|||
Net increase in cash and cash equivalents
|
23
|
|
|
7
|
|
|
16
|
|
|||
Cash and cash equivalents at beginning of period
|
114
|
|
|
83
|
|
|
31
|
|
|||
Cash and cash equivalents at the end of period
|
$
|
137
|
|
|
$
|
90
|
|
|
$
|
47
|
|
•
|
The Company’s ability to attract and retain customers, and the success of the Company’s independent retailers and licensees
|
•
|
Increased competition resulting from consolidation in the grocery industry, and the Company’s ability to effectively respond
|
•
|
Competition from other food or drug retail chains, supercenters, hard discount, dollar stores, online retailers, non-traditional competitors and alternative formats in the Company’s markets
|
•
|
Customer reaction to the increased presence of competitors, including non-traditional competitors, in the Company’s markets
|
•
|
Competition for employees, store sites and products
|
•
|
The ability of the Company’s Independent Business to maintain or increase sales due to wholesaler competition, increased competition faced by customers and increased customer self-distribution
|
•
|
Changes in economic conditions or consumer preferences that affect consumer spending or buying habits
|
•
|
The success of the Company’s promotional and sales programs and the Company’s ability to respond to the promotional and pricing practices of competitors
|
•
|
The Company’s ability to identify and effectively execute on performance improvement and customer service initiatives
|
•
|
The Company’s ability to offer competitive products and services at low prices and maintain high levels of productivity and efficiency
|
•
|
The ability to grow by driving sales, attracting new customers and new licensees and successfully opening new locations
|
•
|
The ability to successfully execute on initiatives involving acquisitions or dispositions
|
•
|
The Company’s ability to continue to become a more cost-efficient organization
|
•
|
The Company’s ability to respond appropriately to competitors’ initiatives
|
•
|
The Company’s ability to execute on its exploration process for a separation of Save-A-Lot and, to the extent any transaction or other change in the Company’s overall structure or business model is ultimately completed, to deliver anticipated benefits and enhanced shareholder value
|
•
|
The impact of the Company’s substantial indebtedness, including the restrictive operating covenants in the underlying debt instruments, on its business and financial flexibility
|
•
|
The Company’s ability to comply with debt covenants or to refinance the Company’s debt obligations
|
•
|
A downgrade in the Company’s debt ratings, which may increase the cost of borrowing or adversely affect the Company’s ability to access one or more financial markets
|
•
|
The availability of favorable credit and trade terms
|
•
|
The Company’s ability to renegotiate labor agreements with its unions
|
•
|
Resolution of issues associated with rising pension, healthcare and employee benefit costs
|
•
|
Potential for work disruption from labor disputes
|
•
|
Increased operating costs resulting from rising employee benefit costs
|
•
|
Potential increases in health plan costs resulting from health care reform
|
•
|
Pension funding obligations related to current and former employees of the Company and the Company’s divested operations
|
•
|
Required funding of multiemployer pension plans and any withdrawal liability
|
•
|
The effect of the financial condition of the Company’s pension plans on the Company’s debt ratings
|
•
|
Disruptions in current plans, operations and business relationships
|
•
|
Ability to effectively manage the Company’s cost structure to realize benefits from the Transition Services Agreement with each of Albertson’s LLC and NAI (collectively, the “TSA”) and the Transition Services Agreement with Haggen (the “Haggen TSA”)
|
•
|
Impact of the Safeway acquisition by Albertson’s on the Company’s relationships with Albertson’s LLC and NAI, including the transition and wind down of the TSA, certain supply relationships and the operating agreement under which the Company operates a distribution center owned by NAI
|
•
|
Ability to provide services and transition and wind down services to NAI and Albertson’s LLC under the TSA and the letter agreement regarding the TSA, as well as services to Haggen under the Haggen TSA, in an efficient manner that is not disruptive to the Company, while eliminating costs directly and not directly tied to providing these services
|
•
|
Ability to attract and retain qualified personnel to perform services under the TSA and the Haggen TSA
|
•
|
The effect of the information technology intrusions that also impacted Albertson’s LLC and NAI
|
•
|
Dependence of the Company’s businesses on computer hardware and software systems that are vulnerable to security breach by computer hackers and cyber terrorists
|
•
|
The intrusions into the Company’s information technology systems and the Company’s continued investigation to determine the full extent of their impact, if any, on its business and future operating results
|
•
|
Risk of misappropriation of sensitive data, including customer and employee data, as a result of the information technology intrusions or any future cyber-attack or breach and potential related claims
|
•
|
Costs of responding to inquiries, claims or enforcement actions in connection with the information technology intrusions or any future attack or breach resulting in fees and penalties, the loss, damage or misappropriation of information, and potential related damage to the Company’s reputation
|
•
|
Inability to timely obtain the Company’s PCI DSS report on compliance that could result in fines or assessments
|
•
|
Costs of complying with stricter privacy and information security laws
|
•
|
Ability of the information technology systems of the Company or its vendors to prevent, contain or detect cyber-attacks or security breaches
|
•
|
Difficulties in developing, maintaining or upgrading information technology systems
|
•
|
Major disasters, business disruptions or losses resulting from failure of these systems to perform as anticipated for any reason or data theft, information espionage, or other criminal activity directed at the Company’s computer or communications systems
|
•
|
Inability to keep pace with changing customer expectations and new developments and technology investments by the Company’s competitors
|
•
|
Worsening economic conditions, consumer confidence or unemployment rates, each of which affect consumer spending or buying habits
|
•
|
Increases in unemployment, insurance and healthcare costs, energy costs and commodity prices, which could impact consumer spending or buying habits and the cost of doing business
|
•
|
Increases in interest rates, labor costs and tax rates, and other changes in applicable law
|
•
|
Food and drug inflation or deflation
|
•
|
Costs of compliance with existing laws and regulations and changes in applicable laws and regulations that impose additional requirements or restrictions on the operation of the Company’s businesses
|
•
|
The ability to timely obtain permits, comply with government regulations or make capital expenditures required to maintain compliance with government regulations, including those governing ethical, anti-bribery and similar business practices
|
•
|
Potential costs of compliance with additional foreign laws and regulations if the Company seeks and attains a larger international footprint
|
•
|
Potential costs of compliance with environmental laws and regulations, including relating to disposal of hazardous waste and any required removal or remediation of contamination at current or former locations
|
•
|
Events that give rise to actual or potential food contamination, drug contamination or foodborne illness or injury or any adverse publicity relating to these types of concerns, whether or not valid
|
•
|
Potential recall costs and product liability claims
|
•
|
Unfavorable outcomes and the costs to defend litigation, governmental or administrative proceedings or other disputes, including those related to the information technology intrusions experienced by the Company
|
•
|
Adverse publicity related to such unfavorable outcomes
|
•
|
Property damage or business disruption resulting from severe weather conditions and natural disasters that affect the Company and the Company’s customers or suppliers
|
•
|
Unseasonably adverse climate conditions that impact the availability or cost of certain products in the grocery supply chain
|
•
|
The Company’s ability to effectively maintain its supply chain and distribution network without interruption
|
•
|
Disruptions due to weather, product recalls, crop conditions, regulatory actions, supplier instability, transportation interruptions, labor supply or vendor disputes
|
•
|
Competition in the Company’s military business
|
•
|
Changes in the commissary system, reductions in government expenditures or funding, or changes in military staffing levels or the locations of bases
|
•
|
Variability in actuarial projections regarding workers’ compensation liability and associated medical costs and automobile and general liability
|
•
|
Potential increase in the number or severity of claims for which the Company is self-insured
|
•
|
Adequacy of cybersecurity insurance maintained by the Company to offset any losses or damages related to the information technology intrusions and any future intrusions experienced by the Company
|
•
|
Availability and cost of energy and fuel to store and transport products
|
•
|
Volatility of fuel, energy and natural gas prices
|
•
|
Risks associated with possession of compressed natural gas equipment and a fueling station
|
•
|
Unfavorable changes in the Company’s industry, the broader economy, market conditions, business operations, competition or the Company’s stock price and market capitalization that could require impairment to intangible assets, including goodwill, and tangible assets, including property, plant and equipment
|
•
|
Fluctuations in the Company’s stock price related to actual or perceived operating performance, any of the factors listed above or general stock market fluctuations
|
(in millions, except shares and per share amounts)
Period
(1)
|
|
Total Number of Shares Purchased
(2)
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
|
||||||
First four weeks
|
|
|
|
|
|
|
|
|
||||||
March 1, 2015 to March 28, 2015
|
|
346
|
|
|
$
|
11.22
|
|
|
—
|
|
|
$
|
—
|
|
Second four weeks
|
|
|
|
|
|
|
|
|
||||||
March 29, 2015 to April 25, 2015
|
|
15,193
|
|
|
$
|
10.86
|
|
|
—
|
|
|
$
|
—
|
|
Third four weeks
|
|
|
|
|
|
|
|
|
||||||
April 26, 2015 to May 23, 2015
|
|
288,174
|
|
|
$
|
9.02
|
|
|
—
|
|
|
$
|
—
|
|
Fourth four weeks
|
|
|
|
|
|
|
|
|
||||||
May 24, 2015 to June 20, 2015
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Totals
|
|
303,713
|
|
|
$
|
9.11
|
|
|
—
|
|
|
$
|
—
|
|
(1)
|
The reported periods conform to the Company's fiscal calendar composed of thirteen 28-day periods. The
first
quarter of fiscal
2016
contains four 28-day periods.
|
(2)
|
These amounts include the deemed surrender by participants in the Company's compensatory stock plans of 303,713 shares of previously issued common stock. These are in payment of the purchase price of shares acquired pursuant to the
|
3.1
|
|
Amended and Restated Bylaws of SUPERVALU INC., as amended July 22, 2015 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 23, 2015).
|
|
|
|
10.1
|
|
SUPERVALU INC. 2012 Stock Plan Form of Stock Option Agreement*
|
|
|
|
10.2
|
|
SUPERVALU INC. 2012 Stock Plan Form of Restricted Stock Award Agreement*
|
|
|
|
10.3
|
|
SUPERVALU INC. 2012 Stock Plan Form of Restricted Stock Unit Award Agreement (Stock-Settled)*
|
|
|
|
10.4
|
|
SUPERVALU INC. 2012 Stock Plan Form of Restricted Stock Unit Award Agreement (Cash-Settled) (incorporated by reference to Exhibit 10.70 to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 28, 2015)*
|
|
|
|
10.5
|
|
Letter Agreement, dated April 16, 2015, to each of the Transition Services Agreement between SUPERVALU INC. and New Albertson’s, Inc. dated March 21, 2013, and the Transition Services Agreement between SUPERVALU INC. and Albertson’s LLC dated March 21, 2013 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 17, 2015)
|
|
|
|
12.1
|
|
Ratio of earnings to fixed charges.
|
|
|
|
31.1
|
|
Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1
|
|
Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2
|
|
Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101
|
|
The following information from the SUPERVALU INC. Quarterly Report on Form 10-Q for the fiscal quarter ended June 20, 2015, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Segment Financial Information, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Balance Sheets, (v) the Condensed Consolidated Statements of Stockholders’ Deficit, (vi) the Condensed Consolidated Statements of Cash Flows and (vii) the Notes to Condensed Consolidated Financial Statements.
|
*
|
Indicates management contracts, compensatory plans or arrangements required to be filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K.
|
|
|
|
SUPERVALU INC. (Registrant)
|
|
|
|
|
Dated: July 28, 2015
|
|
|
/s/ BRUCE H. BESANKO
|
|
|
|
Bruce H. Besanko
Executive Vice President, Chief Financial Officer
(principal financial officer)
|
|
|
|
|
Dated: July 28, 2015
|
|
|
/s/ SUSAN S. GRAFTON
|
|
|
|
Susan S. Grafton
Senior Vice President, Finance, and Chief Accounting Officer
(principal accounting officer)
|
3.1
|
|
Amended and Restated Bylaws of SUPERVALU INC., as amended July 22, 2015 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 23, 2015).
|
|
|
|
10.1
|
|
SUPERVALU INC. 2012 Stock Plan Form of Stock Option Agreement*
|
|
|
|
10.2
|
|
SUPERVALU INC. 2012 Stock Plan Form of Restricted Stock Award Agreement*
|
|
|
|
10.3
|
|
SUPERVALU INC. 2012 Stock Plan Form of Restricted Stock Unit Award Agreement (Stock-Settled)*
|
|
|
|
10.4
|
|
SUPERVALU INC. 2012 Stock Plan Form of Restricted Stock Unit Award Agreement (Cash-Settled) (incorporated by reference to Exhibit 10.70 to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 28, 2015)*
|
|
|
|
10.5
|
|
Letter Agreement, dated April 16, 2015, to each of the Transition Services Agreement between SUPERVALU INC. and New Albertson’s, Inc. dated March 21, 2013, and the Transition Services Agreement between SUPERVALU INC. and Albertson’s LLC dated March 21, 2013 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 17, 2015)
|
|
|
|
12.1
|
|
Ratio of earnings to fixed charges.
|
|
|
|
31.1
|
|
Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1
|
|
Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2
|
|
Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101
|
|
The following information from the SUPERVALU INC. Quarterly Report on Form 10-Q for the fiscal quarter ended June 20, 2015, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Segment Financial Information, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Balance Sheets, (v) the Condensed Consolidated Statements of Stockholders’ Deficit, (vi) the Condensed Consolidated Statements of Cash Flows and (vii) the Notes to Condensed Consolidated Financial Statements.
|
*
|
Indicates management contracts, compensatory plans or arrangements required to be filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K.
|
1.
|
Option Grant.
The Company hereby grants to Optionee, subject to Optionee’s acceptance hereof, the right and option to purchase the number of Shares indicated below at the exercise price per Share indicated below (the “Exercise Price”), effective as of the Grant Date. The Option has been designated as a Non-Qualified Stock Option (“NQ”) for tax purposes, the consequences of which are set forth in the prospectus that describes the Plan.
|
2.
|
Acceptance of Option and Stock Option Terms and Conditions.
The Option is subject to and governed by the Stock Option Terms and Conditions (“Terms and Conditions”) attached hereto, which is incorporated herein and made a part hereof, and the terms and provisions of the Plan. To accept the Option, this agreement must be delivered and accepted through an electronic medium in accordance with procedures established by the Company or Optionee must sign and return a copy of this agreement to the Company
within sixty (60) days after the Grant Date.
By so doing, Optionee acknowledges receipt of the accompanying Terms and Conditions and the Plan, and represents that Optionee has read and understands the same and agrees to be bound by the accompanying Terms and Conditions and the terms and provisions of the Plan. In the event that any provision of this agreement or the accompanying Terms and Conditions is inconsistent with the terms and provisions of the Plan, the terms and provisions of the Plan shall govern. Any question of administration or interpretation arising under this agreement or the accompanying Terms and Conditions shall be determined by the Committee administering the Plan, and such determination shall be final, conclusive and binding upon all parties in interest.
|
3.
|
Vesting, Exercise Rights and Expiration.
Except as otherwise provided in the accompanying Terms and Conditions: (i) the Option shall vest according the schedule below, (ii) the vested portion of the Option may be exercised in whole or part, and (iii) the Option will expire on the expiration date indicated below (the “Expiration Date”).
|
SUPERVALU INC.
|
|
RECIPIENT:
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
Michele A. Murphy
|
|
FIRST_NAME_MIDDLE_NAME_LAST_NAME
|
|
Executive Vice President
|
|
EMPLOYEE_IDENTIFIER
|
|
Human Resources & Corporate Communications
|
|
|
1.
|
Vesting and Exercisability.
The Option shall vest on the date or dates and in the amount or amounts set forth in the attached Agreement, or at such earlier time or times as may be provided in Sections 6 or 8 below.
|
a)
|
By delivering a “Notice of Exercise of Stock Option” to the Company at its principal office, attention: Vice President, Compensation, stating the number of Shares being purchased and accompanied by payment of the full purchase price for such Shares (determined by multiplying the Exercise Price by the number of Shares to be purchased). Note: In the event the Option is exercised by any person other than you pursuant to any of the provisions of Section 7 below, the Notice must be accompanied by appropriate proof of such person’s right to exercise the Option; or
|
b)
|
By entering an order to exercise the Option using E*TRADE’s website.
|
a)
|
By delivering directly to the Company, cash or its equivalent (personal check, bank draft or money order) payable to the Company;
|
b)
|
By delivering indirectly to the Company, cash or its equivalent payable to the Company through E*TRADE under a broker-assisted sale and remittance program approved by the Company;
|
c)
|
By delivering directly to the Company Shares having a Fair Market Value as of the exercise date equal to the purchase price (commonly known as a “Stock Swap”);
|
d)
|
By delivering directly to the Company the full purchase price in a combination of cash and Shares; or
|
e)
|
By the Company delivering to you a number of Shares having an aggregate Fair Market Value (determined as of the date of exercise) equal to the excess, if positive, of the Fair Market Value (on the date of exercise) of the Shares as to which the Option is being exercised, over the aggregate exercise price for such Shares under the Option (commonly known as a “net exercise”).
|
a)
|
In the form of a stock certificate registered in your name or your name and the name of another adult person (twenty-one (21) years of age or older) as joint tenants, and mailed to your address;
|
b)
|
In “book entry” form, that is, registered with the Company’s stock transfer agent, in your name or your name and the name of another adult person (twenty-one (21) years of age or older) as joint tenants, with a notice of issuance provided to you; or
|
c)
|
sent by electronic delivery to your brokerage account.
|
a)
|
Delivering directly to the Company, cash or its equivalent payable to the Company;
|
b)
|
Delivering indirectly to the Company, cash or its equivalent payable to the Company through E*TRADE’s website;
|
c)
|
Having the Company withhold a portion of the Shares to be issued upon exercise of the Option having a Fair Market Value as of the exercise date equal to the amount of taxes required to be withheld upon such exercise; or
|
d)
|
Delivering directly to the Company, Shares, other than the Shares issuable upon exercise of the Option, having a Fair Market Value as of the exercise date equal to the amount of taxes required to be withheld upon such exercise. You shall represent and warrant in writing that you are the owner of the Shares so delivered, free and clear of all liens, encumbrances, security interests and restrictions. To the extent that you possess Shares in certificated form, you shall duly endorse in blank all certificates delivered to the Company.
|
a)
|
If, within two (2) years after a Change of Control, you experience an involuntary termination of employment initiated by the Company for reasons other than Cause, or a termination of employment for Good Reason, the unvested portion of the Option shall immediately vest and the Option shall become immediately exercisable in full and remain exercisable for
one (1) year
beginning on the date of your termination of employment. If the Option is replaced pursuant to subsection (d) below, the protections and rights granted under this subsection (a) shall transfer and apply to such replacement option.
|
b)
|
If, in the event of a Change of Control described in clause (ii) of Section 21(b) below, and to the extent the Option is not assumed by a successor corporation (or affiliate thereto) or other successor entity or person, or replaced with an award or grant that, solely in the discretionary judgment of the Committee preserves the existing intrinsic value of the Option at the time of the Change of Control, then the Option shall become fully vested and exercisable for such period of time prior to the effective time of the Change of Control as is deemed fair and equitable by the Committee to provide you with the opportunity to participate as a stockholder in the Change of Control transaction, and shall terminate at the effective time of the Change of Control. The Company will provide written notice of of the period of accelerated vesting and exercisability to you, and the exercise of this Option pursuant to such accelerated vesting and exercisability shall be conditioned upon the consummation of the Change of Control and shall be effective only immediately before such consummation.
|
c)
|
In the discretion of the Committee and notwithstanding subsection (b) above or any other provision, the Option (whether or not exercisable) may be cancelled at the time of the Change of Control in exchange for cash, property or a combination thereof that is determined by the Committee to be at least equal to the excess (if any) of the value of the consideration that would be received in such Change of Control by a holder of the number of Shares remaining subject to the Option (or the Fair Market Value of such number of Shares immediately prior to the Change of Control if the holders of Company common stock will not receive consideration in such Change of Control), over the aggregate Exercise Price under the Option for that number of Shares. For purposes of clarification, if application of the formula in the preceding sentence does not result in a positive number, then this Option is subject to cancellation without consideration. Furthermore, the Committee is under no obligation to treat Options and/or holders of Options uniformly and has the discretionary authority to treat Options and/or holders of Options disparately.
|
d)
|
If in the event of a Change of Control and to the extent that this Option is assumed by any successor corporation, affiliate thereof, person or other entity, or is replaced with awards that, solely in the discretionary judgment of the Committee preserve the existing intrinsic value of this Option at the time of the Change of Control and provide for vesting and settlement terms that are at least as favorable to you as the vesting and payout terms applicable to this Option, then the assumed Option or such substitute therefore shall remain outstanding and be governed by its respective terms.
|
a)
|
Voluntary
. If you voluntarily terminate your employment, you may exercise the portion of the Option that was vested and exercisable as of the date of termination of your employment at any time until the earlier of (i)
ninety (90) days
after such termination of employment, or (ii) the Expiration Date.
|
b)
|
Involuntary
. If your employment is terminated involuntarily for any reason other than death, Disability or Cause, you may exercise the portion of the Option that was vested and exercisable as of the date of termination of your employment at any time until the earlier of (i)
one (1) year
after such termination of employment, or (ii) the Expiration Date.
|
c)
|
Retirement
. Notwithstanding paragraphs (a) and (b) above, if your employment terminates on or after reaching age 60 for any reason other than death or Disability, your termination shall be considered a “retirement” and the following provisions will apply:
|
(i)
|
If at the time of your retirement you have completed at least fifteen (15) years of service with the Company or an Affiliate, you may exercise the portion of the Option that was vested and exercisable as of the date of your retirement at any time until the earlier of (i)
five (5) years
after the date of your retirement, or (ii) the Expiration Date.
|
(ii)
|
If at the time of your retirement you have completed fewer than fifteen (15) years of service with the Company or an Affiliate, you may exercise the portion of the Option that was vested and exercisable as of the date of your retirement at any time until the earlier of (i)
one (1) year
after your retirement, or (ii) the Expiration Date.
|
d)
|
Death
.
|
(i)
|
Prior to Age 60
. If your employment terminates as a result of your death prior to reaching age 60, the unvested portion of the Option shall immediately vest and become exercisable in full. Thereafter, the Option may be exercised by your beneficiary(ies), or a legatee(s) under your last will, or your personal representative(s) or the distributee(s) of your estate, to the full extent of the Shares covered by the Option that were not previously purchased, until the earlier of (i)
one (1) year
after the date of your death, or (ii) the Expiration Date.
|
(ii)
|
On or After Age 60
. If your employment terminates as a result of your death on or after you have reached age 60, the unvested portion of your Option shall immediately vest and become exercisable in full. Thereafter, the Option may be exercised by your beneficiary(ies), or a legatee(s) under your last will, or your personal representative(s) or the distributee(s) of your estate, to the full extent of the Shares covered by the Option that were not previously purchased, until the earlier of (i)
five (5) years
after the date of your death, or (ii) the Expiration Date.
|
e)
|
Disability
.
|
(i)
|
Prior to Age 60
. If your employment terminates prior to reaching age 60 as a result of your Disability, the unvested portion of the Option shall immediately vest and become exercisable in full. Thereafter, the Option may be exercised by you or by your personal representative(s), to the full extent of the Shares covered by the Option that were not previously purchased, until the earlier of (i)
one (1) year
after your employment terminates due to such Disability, or (ii) the Expiration Date.
|
(ii)
|
On or After Age 60
. If your employment terminates on or after reaching age 60 as a result of your Disability, the unvested portion of the Option shall immediately vest and become exercisable in full. Thereafter, the Option may be exercised by you or by your personal representative(s), to the full extent of the Shares covered by the Option that were not previously purchased, until the earlier of (i)
five (5) years
after your employment terminates due to such Disability, or (ii) the Expiration Date.
|
f)
|
Cause
. If your employment is terminated for Cause, or if you are determined to have engaged in conduct during a post-termination exercise period that would constitute Cause or be in violation of Section 10, any unexercised or unvested portion of this Option shall be immediately forfeited without consideration.
|
g)
|
Change in Duties/Leave of Absence
. The Option shall not be affected by any change of your duties or position or by a temporary leave of absence approved by the Company, so long as you continue to be an employee of the Company or of an Affiliate.
|
a)
|
Non-Disclosure of Confidential Information
. You acknowledge that you will receive access or have received access to Confidential Information about the Company or its Affiliates, that this information was obtained or developed by the Company or its Affiliates at great expense and is zealously guarded by the Company and its Affiliates from unauthorized disclosure, and that your possession of this special knowledge is due solely to your employment with the Company or one (1) or more of its Affiliates. In recognition of the foregoing, you will not at any time during employment or following termination of employment for any reason, disclose, use or otherwise make available to any third party, any Confidential Information relating to the Company’s or any Affiliate’s business, products, services, customers, vendors, or suppliers; trade secrets, data, specifications, developments, inventions and research activity; marketing and sales strategies, information and techniques; long and short term plans; existing and prospective client, vendor, supplier and employee lists, contacts and information; financial, personnel and information system information and applications; and any other information concerning the business of the Company or its Affiliates which is not disclosed to the general public or known in the industry, except for disclosure necessary in the course of your duties or with the express written consent of the Company. All Confidential Information, including all copies, notes regarding and replications of such Confidential Information will remain the sole property of the Company or its Affiliate, as applicable, and must be returned to the Company or such Affiliate immediately upon termination of your employment.
|
b)
|
Return of Property
. Upon termination of employment with the Company or any of its Affiliates, or at any other time at the request of the Company, you shall deliver to a designated Company representative all records, documents, hardware, software and all other property of the Company or its Affiliates and all copies of such property in your possession. You
|
c)
|
Non-Solicitation of Existing or Prospective Customers, Vendors and Suppliers
. You specifically acknowledge that the Confidential Information described in Section 10(a) includes confidential data pertaining to existing and prospective customers, vendors and suppliers of the Company or its Affiliates; that such data is a valuable and unique asset of the business of the Company or its Affiliates; and that the success or failure of their businesses depends upon their ability to establish and maintain close and continuing personal contacts and working relationships with such existing and prospective customers, vendors and suppliers and to develop proposals which are specific to such existing and prospective customers, vendors and suppliers. Therefore, during your employment with the Company or any of its Affiliates and for the twelve (12) months following termination of employment for any reason, you agree that you will not, except on behalf of the Company or its Affiliates, or with the Company’s express written consent, solicit, approach, contact or attempt to solicit, approach or contact, either directly or indirectly, on your own behalf or on behalf of any other person or entity, any existing or prospective customers, vendors or suppliers of the Company or its Affiliates with whom you had contact or about whom you gained Confidential Information during your employment with the Company or its Affiliates for the purpose of obtaining business or engaging in any commercial relationship that would be competitive with the “Business of the Company” (as defined below in Section 10(e)(i)) or cause such customer, supplier or vendor to materially change or terminate its business or commercial relationship with the Company or its Affiliates.
|
d)
|
Non-Solicitation of Employees
. You specifically acknowledge that the Confidential Information described in Section 10(a) also includes confidential data pertaining to employees and agents of the Company or its Affiliates, and you further agree that during your employment with the Company or its Affiliates and for the twelve (12) months following termination of employment for any reason, you will not, directly or indirectly, on your own behalf or on behalf of any other person or entity, solicit, contact, approach, encourage, induce or attempt to solicit, contact, approach, encourage or induce any of the employees or agents of the Company or its Affiliates to terminate their employment or agency with the Company or any of its Affiliates.
|
e)
|
Non-Competition
. You covenant and agree that during your employment with the Company or any of its Affiliates and for the twelve (12) months following termination of employment for any reason, you will not, in any geographic market in which you worked on behalf of the Company or any of its Affiliates, or for which you had any sales, marketing, operational, logistical or other management or oversight responsibility, engage in or carry on, directly or indirectly, as an owner, employee, agent, associate, consultant, partner or in any other capacity, a business competitive with the Business of the Company.
|
i)
|
The “Business of the Company” shall mean any business or activity involved in grocery or general merchandise retailing and supply chain logistics, including but not limited to grocery distribution, business-to-business portal, retail support services and third-party logistics, of the type provided by the Company or its Affiliates, or presented in concept to you by the Company or its Affiliates at any time during your employment with the Company or any of its Affiliates.
|
ii)
|
To “engage in or carry on” shall mean to have ownership in such business (excluding ownership of up to one percent (1%) of the outstanding shares of a publicly-traded company) or to consult, work in, direct or have responsibility for any area of such business, including but not limited to operations, logistics, sales, marketing, finance, recruiting, sourcing, purchasing, information technology or customer service.
|
f)
|
No Disparaging Statements
. You agree that you will not make any disparaging statements about the Company, its Affiliates, directors, officers, agents, employees, products, pricing policies or services.
|
g)
|
Remedies for Breach of These Covenants
. Any breach of the covenants in this Section 10 likely will cause irreparable harm to the Company or its Affiliates for which money damages could not reasonably or adequately compensate the Company or its Affiliates. Accordingly, the Company or any of its Affiliates shall be entitled to all forms of injunctive relief (whether temporary, emergency, preliminary, prospective or permanent) to enforce such covenants, in addition to damages and other available remedies, and you consent to the issuance of such an injunction without the necessity of the Company or any such Affiliate posting a bond or, if a court requires a bond to be posted, with a bond of no greater than $500 in principal amount. In the event that injunctive relief or damages are awarded to the Company or any of its Affiliates for any breach by you of this Section 10, you further agree that the Company or such Affiliate shall be entitled to recover its costs and attorneys’ fees necessary to obtain such recovery. In addition, you agree that upon your breach of any covenant in this Section 10, the Option, and any other unexercised options issued under the Plan or any other stock option plans of the Company will immediately terminate and the Company shall have the right to exercise any and all of the rights described above including the provisions articulated in Section 9.
|
h)
|
Enforceability of These Covenants
. It is further agreed and understood by you and the Company that if any part, term or provision of these Terms and Conditions should be held to be unenforceable, invalid or illegal under any applicable law or rule, the offending term or provision shall be applied to the fullest extent enforceable, valid or lawful under such law or rule, or, if that is not possible, the offending term or provision shall be struck and the remaining provisions of these Terms and Conditions shall not be affected or impaired in any way.
|
a)
|
Notice of Termination by Company
. Any purported termination of employment of you by the Company (whether for Cause or without Cause) shall be communicated by a Notice of Termination to you. No purported termination of employment of you by the Company shall be effective without a Notice of Termination having been given.
|
b)
|
Good Reason Notice by You
. Any purported termination of employment by you for Good Reason shall be communicated by a Notice of Termination to the Company or successor. Your termination of employment will not be for Good Reason unless (i) you give the Company written notice of the event or circumstance which you claim is the basis for Good Reason within ninety (90) days of such event or circumstance first occurring, and (ii) the Company is given thirty (30) days from its receipt of such notice within which to cure or resolve the event or circumstance so noticed. If the circumstance is cured or resolved within said thirty (30) days, your termination of employment will not be for Good Reason.
|
a)
|
Cause
shall mean:
|
i)
|
your continued failure to perform your duties with the Company (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to you by the Board or an officer of the Company which specifically identifies the manner in which the Board or the officer believes that you have not substantially performed your duties;
|
ii)
|
the conviction of, or plea of guilty or nolo contendere to, a felony or the willful engaging by you in conduct which is materially and demonstrably injurious to the Company;
|
iii)
|
your commission of a material act or material acts of personal dishonesty intended to result in your substantial personal enrichment at the expense of the Company; or
|
iv)
|
your material violation of Company policies relating to Code of Business Conduct, Equal Employment Opportunities and Harassment or Workplace Violence;
|
b)
|
Change of Control
shall be deemed to have occurred upon any of the following events:
|
i)
|
the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than fifty percent (50%) of either (A) the then outstanding shares of common stock of the Company, or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control: (A) any acquisition directly from the Company, or (B) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company;
|
ii)
|
the consummation of any merger or other business combination of the Company, sale or lease of all or substantially all of the Company's assets or combination of the foregoing transactions (the "Transactions") other than a Transaction immediately following which the stockholders of the Company and any trustee or fiduciary of any Company employee benefit plan immediately prior to the Transaction own at least sixty percent (60%) of the
|
iii)
|
within any 24‑month period, the persons who were directors immediately before the beginning of such period (the "Incumbent Directors") shall cease (for any reason other than death) to constitute at least a majority of the Board or the board of directors of a successor to the Company. For this purpose, any director who was not a director at the beginning of such period shall be deemed to be an Incumbent Director if such director was elected to the Board by, or on the recommendation of or with the approval of, at least three‑fourths of the directors who then qualified as Incumbent Directors (so long as such director was not nominated by a person who has expressed an intent to effect a Change of Control or engage in a proxy or other control contest).
|
c)
|
Change of Control Date
shall mean the date on which a Change of Control occurs.
|
d)
|
Good Reason
shall mean any one (1) or more of the following events occurring during the two-year period following the Change of Control Date:
|
i)
|
your annual base salary is reduced below the amount in effect on the Change of Control Date;
|
ii)
|
your Target Bonus is reduced below the Target Bonus as it existed on the Change of Control Date;
|
iii)
|
your title is reduced from the title that you had on the Change of Control Date, or your duties and responsibilities are materially and adversely diminished in comparison to the duties and responsibilities that you had on the Change of Control Date other than in a general reduction of the number or scope of personnel for which you are responsible for supervising which reduction occurs in connection with a restructuring or recapitalization of the Company or the division of the Company in which you work;
|
iv)
|
the program of long term incentive compensation is materially and adversely diminished in comparison to the program of long term incentive compensation as it existed for you on the Change of Control Date (for purposes of this clause (iv), a reduction of fifteen percent (15%) or more of the target dollar amount of your long term incentive compensation as it existed for you on the Change of Control Date based on your most recent award of long term incentive compensation prior to the Change of Control Date shall be considered to be material and adverse); or
|
v)
|
you are required to be based at a location more than forty-five (45) miles from the location where you were based and performed services on the Change of Control Date;
|
e)
|
Notice of Termination
shall mean a written notice which shall indicate the specific provision in these Terms and Conditions relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for your termination of employment under the provisions so indicated.
|
f)
|
Target Bonus
shall mean the target amount of bonus established under the annual bonus plan for you for the year in which the termination of employment occurs. When the context requires, it shall also mean the target amount of bonus established for any earlier or later year.
|
SUPERVALU INC.
|
|
RECIPIENT:
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
Michele A. Murphy
|
|
FIRST_NAME_MIDDLE_NAME_LAST_NAME
|
|
Executive Vice President
|
|
EMPLOYEE_IDENTIFIER
|
|
Human Resources & Corporate Communications
|
|
|
a)
|
If, within two (2) years after a Change of Control, you experience an involuntary termination of employment initiated by the Company for reasons other than Cause, or a termination of employment for Good Reason, then you shall become immediately and unconditionally vested in all the Restricted Shares and the restrictions with respect to all the Restricted Shares shall lapse. If this Award of Restricted Stock is replaced pursuant to subsection (c) below, the protections and rights granted under this subsection (a) shall transfer and apply to such replacement grant.
|
b)
|
If, in the event of a Change of Control, and to the extent this Award of Restricted Stock is not assumed by a successor corporation (or affiliate thereto) or other successor entity or person, or replaced with an award or grant that, solely in the discretionary judgment of the Committee preserves the existing value of this Award of Restricted Stock at the time of the Change of Control, then you shall become immediately and unconditionally vested in all the Restricted Shares and the restrictions with respect to all the Restricted Shares shall lapse upon the Change of Control.
|
c)
|
If in the event of a Change of Control and to the extent that this Award of Restricted Stock is assumed by any successor corporation, affiliate thereof, person or other entity, or is replaced with awards that, solely in the discretionary judgment of the Committee preserve the existing value of this Award of Restricted Stock at the time of the Change of Control and provide for vesting and settlement terms that are at least as favorable to you as the vesting and payout terms applicable to this Award of Restricted Stock, then the assumed Award of Restricted Stock or such substitute therefor shall remain outstanding and be governed by its respective terms.
|
a)
|
Death
. If your death occurs while you are employed by the Company or an Affiliate, the unvested portion of the Restricted Shares shall immediately vest in full.
|
b)
|
Disability
. If your employment terminates as a result of a Disability, the unvested portion of the Restricted Shares shall immediately vest in full. You shall be considered subject to a “Disability” for these purposes if you suffer from a medically determinable physical or mental impairment that renders you incapable of performing any substantial gainful employment, and is evidenced by a certification to such effect by a doctor of medicine approved by the Company. In lieu of such
|
c)
|
Change in Duties/Leave of Absence
. The Restricted Shares shall not be affected by any change of your duties or position or by a temporary leave of absence approved by the Company so long as you continue to be an employee of the Company or of an Affiliate.
|
d)
|
Cause Termination
. Notwithstanding anything in the Agreement or the Terms and Conditions to the contrary, all Restricted Shares shall be terminated and forfeited immediately upon your termination of employment for Cause.
|
e)
|
Other Exceptions
. The Committee may determine to accelerate the vesting of the Restricted Shares if you cease to be an employee of the Company and its Affiliates prior to the vesting of the Restricted Shares pursuant to the Agreement and Sections 3, 4 or 5 hereof for any reason.
|
a)
|
The Company shall, at its option, cause the Restricted Shares to be issued in book entry registration, in your name, or in the form of a certificate registered in your name, which certificate shall be held by the Company. The Restricted Shares shall be restricted from transfer and shall be subject to an appropriate stop-transfer order. If any certificate is issued, the certificate shall bear an appropriate legend referring to the restrictions applicable to the Restricted Shares.
|
b)
|
If any certificate is issued, you shall be required to execute and deliver to the Company a stock power relating to the Restricted Shares as a condition to the receipt of this Award of Restricted Stock.
|
c)
|
After Restricted Shares vest pursuant to Section 3, Section 4 or Section 5 hereof, and following payment of the applicable withholding taxes pursuant to Section 8 hereof, the Company shall promptly cause such vested Shares (less any Shares withheld to pay taxes), free of the restrictions and/or legend described in Section 7(a) hereof, to be delivered as follows:
|
1)
|
in the form of a stock certificate or certificates, registered in your name or in the name(s) of your legal representatives, beneficiaries or heirs, as the case may be;
|
2)
|
in “book entry” form, that is, registered with the Company’s stock transfer agent, in your name or in the name(s) of your legal representatives, beneficiaries or heirs, as the case may be, with a notice of issuance provided to you or such transferee(s); or
|
3)
|
sent by electronic delivery to your brokerage account.
|
a)
|
You acknowledge that you will consult with your personal tax advisor regarding the income tax consequences of the Award of Restricted Stock (including the advisability of making the election described in Section 8(b) below), the receipt of any payment of cash dividends, the vesting of the Restricted Shares and any other matters related to the Terms and Conditions and the attached Agreement. In order to comply with all applicable federal or state income, social security, payroll, withholding or other tax laws or regulations, the Company may take such action, and may require you to take such action, as it deems appropriate to ensure that all applicable federal or state income, social
|
b)
|
You may make and file with the Internal Revenue Service an election under Section 83(b) of the Internal Revenue Code with respect to the grant of the Restricted Shares hereunder, electing to include in your gross income as of the Grant Date the Fair Market Value of the Restricted Shares as of the Grant Date. You shall promptly provide a copy of any such election to the Company. If you make and file such an election, you shall make such arrangements as are satisfactory to the Company to provide for the timely payment of all applicable withholding taxes.
|
c)
|
In accordance with the terms of the Plan, and such rules as may be adopted by the Committee administering the Plan, you may elect to satisfy any applicable federal or state income tax withholding obligations arising from the vesting of, and the lapse of restrictions relating to, the Restricted Shares by (i) having the Company withhold a portion of the Shares otherwise to be delivered by you upon such vesting having a Fair Market Value equal to the amount of taxes required to be withheld on such vesting, or (ii) delivering to the Company shares of Common Stock, other than the Shares issuable upon such vesting, having a Fair Market Value equal to the amount of taxes required to be withheld on such vesting. You may elect to satisfy any tax withholding obligations arising prior to the vesting of any Restricted Shares pursuant to Section 3, Section 4 or Section 5 hereof by delivering to the Company shares of Common Stock other than the Shares issuable upon such vesting having a Fair Market Value equal to the amount of taxes required to be withheld.
|
a)
|
If any Restricted Shares vest subsequent to any change in the number or character of the Common Stock through any recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company or other similar corporate transaction or event that affects the Restricted Shares covered by this Award of Restricted Stock, you shall then receive upon such vesting the number and type of securities or other consideration which you would have received if such Shares had vested prior to the event changing the number or character of the outstanding Common Stock. Any such securities or other consideration shall be subject to Section 9(b) below pending vesting of the underlying Restricted Shares.
|
b)
|
Any additional shares of Common Stock, any other securities of the Company and any other property (except for cash dividends or other cash distributions) distributed with respect to the Restricted Shares prior to the date the Restricted Shares vest shall be subject to the same restrictions, terms and conditions as the Restricted Shares and shall be promptly deposited with the Secretary of the Company or the custodian designated by the Secretary to be held in custody in accordance with Section 7(a) hereof. Any cash dividends or other cash distributions payable with respect to the Restricted Shares shall be distributed to you at the same time cash dividends or other cash distributions are distributed to stockholders of the Company generally.
|
a)
|
Non-Disclosure of Confidential Information
. You acknowledge that you will receive access or have received access to Confidential Information about the Company or its Affiliates, that this information was obtained or developed by the Company or its Affiliates at great expense and is zealously guarded by the Company and its Affiliates from unauthorized disclosure, and that your possession of this special knowledge is due solely to your employment with the Company or one or more of its Affiliates. In recognition of the foregoing, you will not at any time during employment or following termination of employment for any reason, disclose, use or otherwise make available to any third party, any Confidential Information relating to the Company’s or any Affiliate’s business, products, services, customers, vendors or suppliers; trade secrets, data, specifications, developments, inventions and research activity; marketing and sales strategies, information and techniques; long and short term plans; existing and prospective client, vendor, supplier and employee lists, contacts and information; financial, personnel and information system information and applications; and any other information concerning the business of the Company or its Affiliates which is not disclosed to the general public or known in the industry, except for disclosure necessary in the course of your duties or with the express written consent of the Company. All Confidential Information, including all copies, notes regarding and replications of such Confidential Information will remain the sole property of the Company or its Affiliates, as applicable, and must be returned to the Company or such Affiliates immediately upon termination of your employment.
|
b)
|
Return of Property
. Upon termination of employment with the Company or any of its Affiliates, or at any other time at the request of the Company, you shall deliver to a designated Company representative all records, documents, hardware, software and all other property of the Company or its Affiliates and all copies of such property in your possession. You acknowledge and agree that all such materials are the sole property of the Company or its Affiliates and that you will certify in writing to the Company at the time of delivery, whether upon termination or otherwise, that you have complied with this obligation.
|
c)
|
Non-Solicitation of Existing or Prospective Customers, Vendors, and Suppliers
. You specifically acknowledge that the Confidential Information described in Section 11(a) includes confidential data pertaining to existing and prospective customers, vendors and suppliers of the Company or its Affiliates; that such data is a valuable and unique asset of the business of the Company or its Affiliates; and that the success or failure of their businesses depends upon their ability to establish and maintain close and continuing personal contacts and working relationships with such existing and prospective customers, vendors and suppliers and to develop proposals which are specific to such existing and prospective customers, vendors and suppliers. Therefore, during your employment with the Company or any of its Affiliates and for the twelve (12) months following termination of employment for any reason, you agree that you will not, except on behalf of the Company or its Affiliates, or with the Company’s express written consent, solicit, approach, contact or attempt to solicit, approach or contact, either directly or indirectly, on your own behalf or on behalf of any other person or entity, any existing or prospective customers, vendors or suppliers of the Company or its Affiliates with whom you had contact or about whom you gained Confidential Information during your employment with the Company or its Affiliates for the purpose of obtaining business or engaging in any commercial relationship that would be competitive with the “Business of the Company” (as defined below in Section 11(e)(i)) or cause such customer, supplier or vendor to materially change or terminate its business or commercial relationship with the Company or its Affiliates.
|
d)
|
Non-Solicitation of Employees
. You specifically acknowledge that the Confidential Information described in Section 11(a) also includes confidential data pertaining to employees and agents of the Company or its Affiliates, and you further agree that during your employment with the Company or its Affiliates and for the twelve (12) months following termination of employment for any reason, you will not, directly or indirectly, on your own behalf or on behalf of any other person or entity, solicit, contact, approach, encourage, induce or attempt to solicit, contact, approach, encourage or induce any of the employees or agents of the Company or its Affiliates to terminate their employment or agency with the Company or any of its Affiliates.
|
e)
|
Non-Competition
. You covenant and agree that during your employment with the Company or any of its Affiliates and for the twelve (12) months following termination of employment for any reason, you will not, in any geographic market in which you worked on behalf of the Company or any of its Affiliates, or for which you had any sales, marketing, operational, logistical or other management or oversight responsibility, engage in or carry on, directly or indirectly, as an owner, employee, agent, associate, consultant, partner or in any other capacity, a business competitive with the Business of the Company.
|
i)
|
The “Business of the Company” shall mean any business or activity involved in grocery or general merchandise retailing and supply chain logistics, including but not limited to grocery distribution, business-to-business portal, retail support services and third-party logistics, of the type provided by the Company or its Affiliates, or presented in concept to you by the Company or its Affiliates at any time during your employment with the Company or any of its Affiliates.
|
ii)
|
To “engage in or carry on” shall mean to have ownership in such business (excluding ownership of up to one percent (1%) of the outstanding shares of a publicly-traded company) or to consult, work in, direct or have responsibility for any area of such business, including but not limited to operations, logistics, sales, marketing, finance, recruiting, sourcing, purchasing, information technology or customer service.
|
f)
|
No Disparaging Statements
. You agree that you will not make any disparaging statements about the Company, its Affiliates, directors, officers, agents, employees, products, pricing policies or services.
|
g)
|
Remedies for Breach of These Covenants
. Any breach of the covenants in this Section 11 likely will cause irreparable harm to the Company or its Affiliates for which money damages could not reasonably or adequately compensate the Company or its Affiliates. Accordingly, the Company or any of its Affiliates shall be entitled to all forms of injunctive relief (whether temporary, emergency, preliminary, prospective or permanent) to enforce such covenants, in addition to damages and other available remedies, and you consent to the issuance of such an injunction without the necessity of the Company or any such Affiliate posting a bond or, if a court requires a bond to be posted, with a bond of no greater than $500 in principal amount. In the event that injunctive relief or damages are awarded to Company or any of its Affiliates for any breach by you of this Section 11, you further agree that the Company or such Affiliate shall be entitled to recover its costs and attorneys’ fees necessary to obtain such recovery. In addition, you agree that upon your breach of any covenant in this Section 11, the unvested portion of this Award of Restricted Stock shall be immediately and irrevocably forfeited and the Company shall have the right to exercise any and all of the rights described above, including the provisions articulated in Section 10.
|
h)
|
Enforceability of These Covenants
. It is further agreed and understood by you and the Company that if any part, term or provision of these Terms and Conditions and the attached Agreement should be held to be unenforceable, invalid or illegal under any applicable law or rule, the offending term or provision shall be applied to the fullest extent enforceable, valid or lawful under such law or rule, or, if that is not possible, the offending term or provision shall be struck and the remaining provisions of these Terms and Conditions and the attached Agreement shall not be affected or impaired in any way.
|
a)
|
Notice of Termination by Company
. Any purported termination of employment of you by the Company (whether for Cause or without Cause) shall be communicated by a Notice of Termination to you. No purported termination of employment of you by the Company shall be effective without a Notice of Termination having been given.
|
b)
|
Good Reason Notice by You
. Any purported termination of employment by you for Good Reason shall be communicated by a Notice of Termination to the Company or successor. Your termination of employment will not be for Good Reason unless (i) you give the Company written notice of the event or circumstance which you claim is the basis for Good Reason within ninety (90) days of such event or circumstance first occurring and (ii) the Company is given thirty (30) days from its receipt of such notice within which to cure or resolve the event or circumstance so noticed. If the circumstance is cured or resolved within said thirty (30) days, your termination of employment will not be for Good Reason.
|
a)
|
Cause
shall mean:
|
i)
|
your continued failure to perform your duties with the Company (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to you by the Board or an officer of the Company which specifically identifies the manner in which the Board or the officer believes that you have not substantially performed your duties;
|
ii)
|
the conviction of, or plea of guilty or nolo contendere to, a felony or the willful engaging by you in conduct which is materially and demonstrably injurious to the Company;
|
iii)
|
your commission of a material act or material acts of personal dishonesty intended to result in your substantial personal enrichment at the expense of the Company; or
|
iv)
|
your material violation of Company policies relating to Code of Business Conduct, Equal Employment Opportunities and Harassment or Workplace Violence;
|
b)
|
Change of Control
shall be deemed to have occurred upon any of the following events:
|
i)
|
the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act of beneficial ownership (within the meaning of Rule 13d‑3 promulgated under the Exchange Act) of more than fifty percent (50%) of either (A) the then outstanding shares of Common Stock or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control: (A) any acquisition directly from the Company or (B) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company;
|
ii)
|
the consummation of any merger or other business combination of the Company, sale or lease of all or substantially all of the Company's assets or combination of the foregoing transactions (the "Transactions") other than a Transaction immediately following which the stockholders of the Company and any trustee or fiduciary of any Company employee benefit plan immediately prior to the Transaction own at least sixty percent (60%) of the voting power, directly or indirectly, of (A) the surviving corporation in any such merger or other business combination; (B) the purchaser or lessee of the Company's assets or (C) both the surviving corporation and the purchaser or lessee in the event of any combination of Transactions; or
|
iii)
|
within any 24‑month period, the persons who were directors immediately before the beginning of such period (the "Incumbent Directors") shall cease (for any reason other than death) to constitute at least a majority of the Board or the board of directors of a successor to the Company. For this purpose, any director who was not a director at the beginning of such period shall be deemed to be an Incumbent Director if such director was elected to the Board by, or on the recommendation of or with the approval of, at least three‑fourths of the directors who then qualified as Incumbent Directors (so long as such director was not nominated by a person who has expressed an intent to effect a Change of Control or engage in a proxy or other control contest).
|
c)
|
Change of Control Date
shall mean the date on which a Change of Control occurs.
|
d)
|
Good Reason
shall mean any one (1) or more of the following events occurring during the two-year period following the Change of Control Date:
|
i)
|
your annual base salary is reduced below the amount in effect on the Change of Control Date;
|
ii)
|
your Target Bonus is reduced below the Target Bonus as it existed on the Change of Control Date;
|
iii)
|
your title is reduced from the title that you had on the Change of Control Date, or your duties and responsibilities are materially and adversely diminished in comparison to the duties and responsibilities that you had on the Change of Control Date other than in a general reduction of the number or scope of personnel for which you are responsible for supervising which reduction occurs in connection with a restructuring or recapitalization of the Company or the division of the Company in which you work;
|
iv)
|
the program of long term incentive compensation is materially and adversely diminished in comparison to the program of long term incentive compensation as it existed for you on the Change of Control Date (for purposes of this clause (iv), a reduction of fifteen percent (15%) or more of the target dollar amount of your long term incentive compensation as it existed for you on the Change of Control Date based on your most recent award of long term incentive compensation prior to the Change of Control Date shall be considered to be material and adverse); or
|
v)
|
you are required to be based at a location more than forty-five (45) miles from the location where you were based and performed services on the Change of Control Date;
|
e)
|
Notice of Termination
shall mean a written notice which shall indicate the specific provision in these Terms and Conditions relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for your termination of employment under the provisions so indicated.
|
f)
|
Target Bonus
shall mean the target amount of bonus established under the annual bonus plan for you for the year in which the termination of employment occurs. When the context requires, it shall also mean the target amount of bonus established for any earlier or later year.
|
SUPERVALU INC.
|
|
RECIPIENT:
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
Michele A. Murphy
|
|
FIRST_NAME_MIDDLE_NAME_LAST_NAME
|
|
Executive Vice President
|
|
EMPLOYEE_IDENTIFIER
|
|
Human Resources & Corporate Communications
|
|
|
a)
|
In the form of a stock certificate registered in your name or your name and the name of another adult person (twenty-one (21) years of age or older) as joint tenants, and mailed to your address;
|
b)
|
In “book entry” form, that is, registered with the Company’s stock transfer agent, in your name or your name and the name of another adult person (twenty-one (21) years of age or older) as joint tenants, with a notice of issuance provided to you; or
|
c)
|
sent by electronic delivery to your brokerage account.
|
a)
|
You acknowledge that you will consult with your personal tax advisor regarding the income tax consequences of the grant of the Restricted Stock Units, the vesting of the Restricted Stock Units and the receipt of Shares in settlement of the Restricted Stock Units and any other matters related to the Terms and Conditions and the attached Agreement. In order to comply with all applicable federal or state income, social security, payroll, withholding or other tax laws or regulations, the Company may take such action, and may require you to take such action, as it deems appropriate to ensure that all applicable federal or state income, social security, payroll, withholding or other taxes, which are your sole and absolute responsibility, are withheld or collected from you.
|
b)
|
You acknowledge that you are responsible for the payment of any federal, state, local or other taxes that are required to be withheld by the Company upon vesting or settlement of the Restricted Stock Units, and authorize the Company to withhold from other compensation owed to you an amount or amounts sufficient to pay such taxes. In order to satisfy any applicable federal, state, local or other taxes that are required to be withheld in connection with the settlement of Restricted Stock Units, the Company shall withhold a portion of the Shares otherwise to be issued following vesting of the Restricted Stock Units having a Fair Market Value as of the settlement date equal to the amount of federal and state income tax required to be withheld upon such settlement (commonly referred to as a “Tax Swap” or “Stock for Tax”).
|
a)
|
If, within two (2) years after a Change of Control, you experience an involuntary termination of employment initiated by the Company for reasons other than Cause, or a termination of employment for Good Reason, the unvested portion of the Restricted Stock Units shall immediately vest. If the Restricted Stock Units are replaced pursuant to subsection (d) below, the protections and rights granted under this subsection (a) shall transfer and apply to such replacement grant.
|
b)
|
If, in the event of a Change of Control, and to the extent the Restricted Stock Units are not assumed by a successor corporation (or affiliate thereto) or other successor entity or person, or replaced with an award or grant that, solely in the discretionary judgment of the Committee preserves the existing value of the Restricted Stock Units at the time of the Change of Control, then the unvested portion of the Restricted Stock Units shall immediately vest.
|
c)
|
In the discretion of the Committee and notwithstanding subsections (a) or (b) above or any other provision, the Committee may fully vest the Restricted Stock Units at the time of a Change of Control and deliver in exchange therefor cash, property or a combination thereof that is determined by the Committee to be at least equal to the value of the consideration that would be received in such Change of Control by the holders of Common Stock. The Committee is under no obligation to treat Recipients of Restricted Stock Units uniformly and has the discretionary authority to treat Recipients disparately.
|
d)
|
In the event of a Change of Control and to the extent that the Restricted Stock Units are assumed by any successor corporation, affiliate thereof, person or other entity, or are replaced with awards that, solely in the discretionary judgment of the Committee, preserve the existing value of the Restricted Stock Units at the time of the Change of Control and provide for vesting terms that are at least as favorable to you as the vesting terms applicable to the Restricted Stock Units, then the assumed Restricted Stock Units or such substitute therefore shall remain outstanding and be governed by its respective terms.
|
e)
|
Notwithstanding anything in this Section 4 to the contrary, if your right to receive payment of the Restricted Stock Units constitutes a “deferral of compensation” subject to Code Section 409A, and if the application of the other provisions of this Section 4 would cause a violation of such Code section, then the unvested portion of your Restricted Stock Units shall immediately vest at the time of the Change of Control and issuance and delivery of Shares in settlement of such Restricted Stock Units shall occur after such vesting no later than sixty (60) calendar days after the earliest of: (i) such vesting date if the Change of Control also constitutes a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of the Company within the meaning of Code Section 409A, (ii) your “separation from service” with the Company within the meaning of Code Section 409A, or (iii) the applicable vesting date or dates set forth in the attached Agreement.
|
f)
|
If the Restricted Stock Units become payable as a result of clause (ii) of subsection 4(e) and if you are a “specified employee” within the meaning of Code Section 409A (as determined in accordance with the Company’s policy for identifying specified employees) on the date of your separation from service, then the issuance and delivery of Shares in settlement of the Restricted Stock Units shall be made to you no later than sixty (60) calendar days after the first business day that is six months after the date of your separation from service (or if your death occurs during such six month period, within sixty (60) calendar days after your death).
|
a)
|
Death
. If your death occurs while you are employed by the Company or an Affiliate, the unvested portion of the Restricted Stock Units shall immediately vest in full.
|
b)
|
Disability
. If your employment terminates as a result of a permanent disability, the unvested portion of the Restricted Stock Units shall immediately vest in full. You shall be considered permanently disabled for these purposes if you suffer from a medically determinable physical or mental impairment that renders you incapable of performing any substantial gainful employment, and is evidenced by a certification to such effect by a doctor of medicine approved by the Company. In lieu of such certification, the Company shall accept, as proof of permanent disability, your eligibility for long-term disability payments under the applicable Long-Term Disability Plan of the Company. Notwithstanding anything in this Section 6(b) to the contrary, if your right to receive payment of the Restricted Stock Units constitutes a “deferral of
|
c)
|
Change in Duties/Leave of Absence
. The Restricted Stock Units shall not be affected by any change of your duties or position or by a temporary leave of absence approved by the Company so long as you continue to be an employee of the Company or of an Affiliate. The foregoing provisions shall not apply, however, if your right to receive payment of the Restricted Stock Units constitutes a “deferral of compensation” subject to Code Section 409A and your change in duties or position or temporary leave of absence would be considered a “separation from service” within the meaning of Code Section 409A. In such circumstances, you will be deemed to have ceased employment with the Company and its Affiliates and the other provisions of these Terms and Conditions and the provisions of the Agreement shall control.
|
d)
|
Cause Terminations
. Notwithstanding anything in the Agreement or the Terms and Conditions to the contrary, all Restricted Stock Units shall be terminated and forfeited immediately upon your termination of employment for Cause.
|
e)
|
Other Exceptions
. The Committee may determine to accelerate the vesting of the Restricted Stock Units if you cease to be an employee of the Company and its Affiliates prior to the vesting of the Restricted Stock Units pursuant to the Agreement and Sections 1, 4 or 6 hereof for any reason; provided, however, that if your right to receive payment of the Restricted Stock Units constitutes a “deferral of compensation” subject to Code Section 409A, no such acceleration will be permitted if the result of such acceleration would cause a violation of Code Section 409A, and in such case the other provisions of these Terms and Conditions and the provisions of the Agreement shall control.
|
a)
|
Non-Disclosure of Confidential Information
. You acknowledge that you will receive access or have received access to Confidential Information about the Company or its Affiliates, that this information was obtained or developed by the Company or its Affiliates at great expense and is zealously guarded by the Company and its Affiliates from unauthorized disclosure, and that your possession of this special knowledge is due solely to your employment with the Company or one (1) or more of its Affiliates. In recognition of the foregoing, you will not at any time during employment or following termination of employment for any reason, disclose, use or otherwise make available to any third party, any Confidential Information relating to the Company’s or any Affiliate’s business, products, services, customers, vendors, or suppliers; trade secrets, data, specifications, developments, inventions and research activity; marketing and sales strategies, information and techniques; long and short term plans; existing and prospective client, vendor, supplier and employee lists, contacts and information; financial, personnel and information system information and applications; and any other information concerning the business of the Company or its Affiliates which is not disclosed to the general public or known in the industry, except for disclosure necessary in the course of your duties or with the express written consent of the Company. All Confidential Information, including all copies, notes regarding and replications of such Confidential
|
b)
|
Return of Property
. Upon termination of employment with the Company or any of its Affiliates, or at any other time at the request of the Company, you shall deliver to a designated Company representative all records, documents, hardware, software and all other property of the Company or its Affiliates and all copies of such property in your possession. You acknowledge and agree that all such materials are the sole property of the Company or its Affiliates and that you will certify in writing to the Company at the time of delivery, whether upon termination or otherwise, that you have complied with this obligation.
|
c)
|
Non-Solicitation of Existing or Prospective Customers, Vendors and Suppliers
. You specifically acknowledge that the Confidential Information described in Section 8(a) includes confidential data pertaining to existing and prospective customers, vendors and suppliers of the Company or its Affiliates; that such data is a valuable and unique asset of the business of the Company or its Affiliates; and that the success or failure of their businesses depends upon their ability to establish and maintain close and continuing personal contacts and working relationships with such existing and prospective customers, vendors and suppliers and to develop proposals which are specific to such existing and prospective customers, vendors and suppliers. Therefore, during your employment with the Company or any of its Affiliates and for the twelve (12) months following termination of employment for any reason, you agree that you will not, except on behalf of the Company or its Affiliates, or with the Company’s express written consent, solicit, approach, contact or attempt to solicit, approach or contact, either directly or indirectly, on your own behalf or on behalf of any other person or entity, any existing or prospective customers, vendors or suppliers of the Company or its Affiliates with whom you had contact or about whom you gained Confidential Information during your employment with the Company or its Affiliates for the purpose of obtaining business or engaging in any commercial relationship that would be competitive with the “Business of the Company” (as defined below in Section 8(e)(i)) or cause such customer, supplier or vendor to materially change or terminate its business or commercial relationship with the Company or its Affiliates.
|
d)
|
Non-Solicitation of Employees
. You specifically acknowledge that the Confidential Information described in Section 8(a) also includes confidential data pertaining to employees and agents of the Company or its Affiliates, and you further agree that during your employment with the Company or its Affiliates and for the twelve (12) months following termination of employment for any reason, you will not, directly or indirectly, on your own behalf or on behalf of any other person or entity, solicit, contact, approach, encourage, induce or attempt to solicit, contact, approach, encourage or induce any of the employees or agents of the Company or its Affiliates to terminate their employment or agency with the Company or any of its Affiliates.
|
e)
|
Non-Competition
. You covenant and agree that during your employment with the Company or any of its Affiliates and for the twelve (12) months following termination of employment for any reason, you will not, in any geographic market in which you worked on behalf of the Company or any of its Affiliates, or for which you had any sales, marketing, operational, logistical or other management or oversight responsibility, engage in or carry on, directly or indirectly, as an owner, employee, agent, associate, consultant, partner or in any other capacity, a business competitive with the Business of the Company.
|
i)
|
The “Business of the Company” shall mean any business or activity involved in grocery or general merchandise retailing and supply chain logistics, including but not limited to grocery distribution, business-to-business portal, retail support services and third-party logistics, of the type provided by the Company or its Affiliates, or presented in concept to you by the Company or its Affiliates at any time during your employment with the Company or any of its Affiliates.
|
ii)
|
To “engage in or carry on” shall mean to have ownership in such business (excluding ownership of up to one percent (1%) of the outstanding shares of a publicly-traded company) or to consult, work in, direct or have responsibility for any area of such business, including but not limited to operations, logistics, sales, marketing, finance, recruiting, sourcing, purchasing, information technology or customer service.
|
f)
|
No Disparaging Statements
. You agree that you will not make any disparaging statements about the Company, its Affiliates, directors, officers, agents, employees, products, pricing policies or services.
|
g)
|
Remedies for Breach of These Covenants
. Any breach of the covenants in this Section 8 likely will cause irreparable harm to the Company or its Affiliates for which money damages could not reasonably or adequately compensate the Company or its Affiliates. Accordingly, the Company or any of its Affiliates shall be entitled to all forms of injunctive relief (whether temporary, emergency, preliminary, prospective or permanent) to enforce such covenants, in addition to damages and other available remedies, and you consent to the issuance of such an injunction without the necessity of the Company or any such Affiliate posting a bond or, if a court requires a bond to be posted, with a bond of no greater than $500 in principal amount. In the event that injunctive relief or damages are awarded to the Company or any of its Affiliates for any breach by you of this Section 8, you further agree that the Company or such Affiliate shall be entitled to recover
|
h)
|
Enforceability of These Covenants
. It is further agreed and understood by you and the Company that if any part, term or provision of these Terms and Conditions should be held to be unenforceable, invalid or illegal under any applicable law or rule, the offending term or provision shall be applied to the fullest extent enforceable, valid or lawful under such law or rule, or, if that is not possible, the offending term or provision shall be struck and the remaining provisions of these Terms and Conditions shall not be affected or impaired in any way.
|
a)
|
Notice of Termination by Company
. Any purported termination of employment of you by the Company (whether for Cause or without Cause) shall be communicated by a Notice of Termination to you. No purported termination of employment of you by the Company shall be effective without a Notice of Termination having been given.
|
b)
|
Good Reason Notice by You
. Any purported termination of employment by you for Good Reason shall be communicated by a Notice of Termination to the Company or successor. Your termination of employment will not be for Good Reason unless (i) you give the Company written notice of the event or circumstance which you claim is the basis for Good Reason within ninety (90) days of such event or circumstance first occurring, and (ii) the Company is given thirty (30) days from its receipt of such notice within which to cure or resolve the event or circumstance so noticed. If the circumstance is cured or resolved within said thirty (30) days, your termination of employment will not be for Good Reason.
|
a)
|
Cause
shall mean:
|
i)
|
your continued failure to perform your duties with the Company (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to you by the Board or an officer of the Company which specifically identifies the manner in which the Board or the officer believes that you have not substantially performed your duties;
|
ii)
|
the conviction of, or plea of guilty or nolo contendere to, a felony or the willful engaging by you in conduct which is materially and demonstrably injurious to the Company;
|
iii)
|
your commission of a material act or material acts of personal dishonesty intended to result in your substantial personal enrichment at the expense of the Company; or
|
iv)
|
your material violation of Company policies relating to Code of Business Conduct, Equal Employment Opportunities and Harassment or Workplace Violence;
|
b)
|
Change of Control
shall be deemed to have occurred upon any of the following events:
|
i)
|
the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than fifty percent (50%) of either (A) the then outstanding shares of common stock of the Company, or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control: (A) any acquisition directly from the Company, or (B) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company;
|
ii)
|
the consummation of any merger or other business combination of the Company, sale or lease of all or substantially all of the Company's assets or combination of the foregoing transactions (the "Transactions") other than a Transaction immediately following which the stockholders of the Company and any trustee or fiduciary of any Company employee benefit plan immediately prior to the Transaction own at least sixty percent (60%) of the voting power, directly or indirectly, of (A) the surviving corporation in any such merger or other business combination; (B) the purchaser or lessee of the Company's assets, or (C) both the surviving corporation and the purchaser or lessee in the event of any combination of Transactions; or
|
iii)
|
within any 24‑month period, the persons who were directors immediately before the beginning of such period (the "Incumbent Directors") shall cease (for any reason other than death) to constitute at least a majority of the Board or the board of directors of a successor to the Company. For this purpose, any director who was not a director at the beginning of such period shall be deemed to be an Incumbent Director if such director was elected to the Board by, or on the recommendation of or with the approval of, at least three‑fourths of the directors who then qualified as Incumbent Directors (so long as such director was not nominated by a person who has expressed an intent to effect a Change of Control or engage in a proxy or other control contest).
|
c)
|
Change of Control Date
shall mean the date on which a Change of Control occurs.
|
d)
|
Good Reason
shall mean any one (1) or more of the following events occurring during the two-year period following the Change of Control Date:
|
i)
|
your annual base salary is reduced below the amount in effect on the Change of Control Date;
|
ii)
|
your Target Bonus is reduced below the Target Bonus as it existed on the Change of Control Date;
|
iii)
|
your title is reduced from the title that you had on the Change of Control Date, or your duties and responsibilities are materially and adversely diminished in comparison to the duties and responsibilities that you had on the Change of Control Date other than in a general reduction of the number or scope of personnel for which you are responsible for supervising which reduction occurs in connection with a restructuring or recapitalization of the Company or the division of the Company in which you work;
|
iv)
|
the program of long term incentive compensation is materially and adversely diminished in comparison to the program of long term incentive compensation as it existed for you on the Change of Control Date (for purposes of this clause (iv), a reduction of fifteen percent (15%) or more of the target dollar amount of your long term incentive compensation as it existed for you on the Change of Control Date based on your most recent award of long term incentive compensation prior to the Change of Control Date shall be considered to be material and adverse); or
|
v)
|
you are required to be based at a location more than forty-five (45) miles from the location where you were based and performed services on the Change of Control Date;
|
e)
|
Notice of Termination
shall mean a written notice which shall indicate the specific provision in these Terms and Conditions relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for your termination of employment under the provisions so indicated.
|
f)
|
Target Bonus
shall mean the target amount of bonus established under the annual bonus plan for you for the year in which the termination of employment occurs. When the context requires, it shall also mean the target amount of bonus established for any earlier or later year.
|
|
First Quarter Ended
|
|
Fiscal Year Ended
|
||||||||||||||||||||
|
June 20,
2015 (16 weeks) |
|
February 28,
2015 (53 weeks) |
|
February 22, 2014
(52 weeks)
|
|
February 23, 2013
(1)
(52 weeks)
|
|
February 25, 2012
(2)
(52 weeks)
|
|
February 26, 2011
(3)
(52 weeks) |
||||||||||||
Earnings (loss) from continuing operations before income taxes
|
$
|
101
|
|
|
$
|
185
|
|
|
$
|
18
|
|
|
$
|
(416
|
)
|
|
$
|
(138
|
)
|
|
$
|
(253
|
)
|
Less net earnings attributable to noncontrolling interests
|
(3
|
)
|
|
(7
|
)
|
|
(7
|
)
|
|
(10
|
)
|
|
(13
|
)
|
|
(7
|
)
|
||||||
Net overdistributed earnings of less than fifty percent owned affiliates
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||||
Fixed charges
|
71
|
|
|
281
|
|
|
444
|
|
|
313
|
|
|
295
|
|
|
279
|
|
||||||
Amortized capitalized interest
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(4
|
)
|
|
(6
|
)
|
|
(8
|
)
|
||||||
Earnings (loss) available to cover fixed charges
|
$
|
170
|
|
|
$
|
458
|
|
|
$
|
455
|
|
|
$
|
(116
|
)
|
|
$
|
138
|
|
|
$
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
59
|
|
|
244
|
|
|
407
|
|
|
272
|
|
|
251
|
|
|
235
|
|
||||||
Capitalized interest
|
—
|
|
|
1
|
|
|
1
|
|
|
4
|
|
|
6
|
|
|
8
|
|
||||||
Interest on operating leases
|
12
|
|
|
36
|
|
|
36
|
|
|
37
|
|
|
38
|
|
|
36
|
|
||||||
Total fixed charges
|
$
|
71
|
|
|
$
|
281
|
|
|
$
|
444
|
|
|
$
|
313
|
|
|
$
|
295
|
|
|
$
|
279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Excess (deficiency) of earnings to fixed charges
|
$
|
99
|
|
|
$
|
177
|
|
|
$
|
11
|
|
|
$
|
(429
|
)
|
|
$
|
(157
|
)
|
|
$
|
(268
|
)
|
Ratio of earnings to fixed charges
|
2.39
|
|
|
1.63
|
|
|
1.02
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
Date: July 28, 2015
|
|
/s/ SAM DUNCAN
|
|
|
Sam Duncan
Chief Executive Officer and President
|
Date: July 28, 2015
|
|
/s/ BRUCE H. BESANKO
|
|
|
Bruce H. Besanko
Executive Vice President, Chief Financial Officer
|
Date: July 28, 2015
|
|
/s/ SAM DUNCAN
|
|
|
Sam Duncan
Chief Executive Officer and President
|
Date: July 28, 2015
|
|
/s/ BRUCE H. BESANKO
|
|
|
Bruce H. Besanko
Executive Vice President, Chief Financial Officer
|