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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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5.
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6.
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First Quarter Ended
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||||||
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June 18,
2016 (16 weeks) |
|
June 20,
2015 (16 weeks) |
||||
Net sales
|
|
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||||
Wholesale
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$
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2,275
|
|
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$
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2,462
|
|
% of total
|
43.8
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%
|
|
45.6
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%
|
||
Save-A-Lot
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1,432
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|
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1,408
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% of total
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27.6
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%
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26.0
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%
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Retail
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1,431
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|
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1,473
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% of total
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27.5
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%
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27.2
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%
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||
Corporate
|
58
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|
|
64
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|
||
% of total
|
1.1
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%
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|
1.2
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%
|
||
Total net sales
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$
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5,196
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$
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5,407
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|
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100.0
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%
|
|
100.0
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%
|
||
Operating earnings
|
|
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|
||||
Wholesale
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$
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64
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|
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$
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77
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% of Wholesale sales
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2.8
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%
|
|
3.1
|
%
|
||
Save-A-Lot
|
39
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|
|
51
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|
||
% of Save-A-Lot sales
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2.7
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%
|
|
3.6
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%
|
||
Retail
|
8
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|
|
33
|
|
||
% of Retail sales
|
0.6
|
%
|
|
2.2
|
%
|
||
Corporate
|
22
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|
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(3
|
)
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||
Total operating earnings
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133
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|
|
158
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|
||
% of total net sales
|
2.6
|
%
|
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2.9
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%
|
||
Interest expense, net
|
60
|
|
|
59
|
|
||
Equity in earnings of unconsolidated affiliates
|
(1
|
)
|
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(2
|
)
|
||
Earnings from continuing operations before income taxes
|
74
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|
|
101
|
|
||
Income tax provision
|
27
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|
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38
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|
||
Net earnings from continuing operations
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47
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|
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63
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|
||
Income from discontinued operations, net of tax
|
—
|
|
|
1
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|
||
Net earnings including noncontrolling interests
|
47
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64
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|
||
Less net earnings attributable to noncontrolling interests
|
(1
|
)
|
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(3
|
)
|
||
Net earnings attributable to SUPERVALU INC.
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$
|
46
|
|
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$
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61
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First Quarter Ended
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||||||
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June 18,
2016 (16 weeks) |
|
June 20,
2015 (16 weeks) |
||||
Net sales
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$
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5,196
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$
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5,407
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Cost of sales
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4,417
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4,597
|
|
||
Gross profit
|
779
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|
810
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Selling and administrative expenses
|
646
|
|
|
652
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|
||
Operating earnings
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133
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|
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158
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|
||
Interest expense, net
|
60
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|
|
59
|
|
||
Equity in earnings of unconsolidated affiliates
|
(1
|
)
|
|
(2
|
)
|
||
Earnings from continuing operations before income taxes
|
74
|
|
|
101
|
|
||
Income tax provision
|
27
|
|
|
38
|
|
||
Net earnings from continuing operations
|
47
|
|
|
63
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|
||
Income from discontinued operations, net of tax
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—
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|
1
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|
||
Net earnings including noncontrolling interests
|
47
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|
|
64
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|
||
Less net earnings attributable to noncontrolling interests
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(1
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)
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(3
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)
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||
Net earnings attributable to SUPERVALU INC.
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$
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46
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$
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61
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Basic net earnings per share attributable to SUPERVALU INC.:
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|||||||
Continuing operations
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$
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0.17
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$
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0.23
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Discontinued operations
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$
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—
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|
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$
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—
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Basic net earnings per share
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$
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0.17
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$
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0.23
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Diluted net earnings per share attributable to SUPERVALU INC.:
|
|||||||
Continuing operations
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$
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0.17
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$
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0.23
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Discontinued operations
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$
|
—
|
|
|
$
|
—
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Diluted net earnings per share
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$
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0.17
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$
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0.23
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Weighted average number of shares outstanding:
|
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||||
Basic
|
264
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262
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Diluted
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267
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268
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First Quarter Ended
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||||||
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June 18,
2016 (16 weeks) |
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June 20,
2015 (16 weeks) |
||||
Net earnings including noncontrolling interests
|
$
|
47
|
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$
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64
|
|
Other comprehensive income:
|
|
|
|
||||
Recognition of pension and other postretirement benefit obligations
(1)
|
6
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|
|
14
|
|
||
Recognition of interest rate swap cash flow hedge
(2)
|
—
|
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(1
|
)
|
||
Total other comprehensive income
|
6
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|
13
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||
Comprehensive income including noncontrolling interests
|
53
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|
|
77
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|
||
Less comprehensive income attributable to noncontrolling interests
|
(1
|
)
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(3
|
)
|
||
Comprehensive income attributable to SUPERVALU INC.
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$
|
52
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$
|
74
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(1)
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Amounts are net of tax expense of
$4
and
$8
for the
first
quarters of fiscal
2017
and
2016
, respectively.
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(2)
|
Amounts are net of tax expense (benefit) of
$0
and
$(1)
for the
first
quarters of fiscal
2017
and
2016
, respectively.
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June 18, 2016
|
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February 27, 2016
|
||||
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(Unaudited)
|
|
|
||||
ASSETS
|
|
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|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
59
|
|
|
$
|
57
|
|
Receivables, net
|
466
|
|
|
451
|
|
||
Inventories, net
|
1,078
|
|
|
1,036
|
|
||
Other current assets
|
88
|
|
|
91
|
|
||
Total current assets
|
1,691
|
|
|
1,635
|
|
||
Property, plant and equipment, net
|
1,458
|
|
|
1,481
|
|
||
Goodwill
|
868
|
|
|
867
|
|
||
Intangible assets, net
|
52
|
|
|
55
|
|
||
Deferred tax assets
|
202
|
|
|
228
|
|
||
Other assets
|
102
|
|
|
104
|
|
||
Total assets
|
$
|
4,373
|
|
|
$
|
4,370
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
1,136
|
|
|
$
|
1,118
|
|
Accrued vacation, compensation and benefits
|
182
|
|
|
182
|
|
||
Current maturities of long-term debt and capital lease obligations
|
25
|
|
|
124
|
|
||
Other current liabilities
|
145
|
|
|
148
|
|
||
Total current liabilities
|
1,488
|
|
|
1,572
|
|
||
Long-term debt
|
2,257
|
|
|
2,197
|
|
||
Long-term capital lease obligations
|
203
|
|
|
203
|
|
||
Pension and other postretirement benefit obligations
|
560
|
|
|
578
|
|
||
Long-term tax liabilities
|
82
|
|
|
81
|
|
||
Other long-term liabilities
|
166
|
|
|
172
|
|
||
Stockholders’ deficit
|
|
|
|
||||
Common stock, $0.01 par value: 400 shares authorized; 266 and 266 shares issued, respectively
|
3
|
|
|
3
|
|
||
Capital in excess of par value
|
2,806
|
|
|
2,808
|
|
||
Treasury stock, at cost, 1 and 1 shares, respectively
|
(5
|
)
|
|
(5
|
)
|
||
Accumulated other comprehensive loss
|
(416
|
)
|
|
(422
|
)
|
||
Accumulated deficit
|
(2,779
|
)
|
|
(2,825
|
)
|
||
Total SUPERVALU INC. stockholders’ deficit
|
(391
|
)
|
|
(441
|
)
|
||
Noncontrolling interests
|
8
|
|
|
8
|
|
||
Total stockholders’ deficit
|
(383
|
)
|
|
(433
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
4,373
|
|
|
$
|
4,370
|
|
|
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 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
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balances as of February 27, 2016
|
$
|
3
|
|
|
$
|
2,808
|
|
|
$
|
(5
|
)
|
|
$
|
(422
|
)
|
|
$
|
(2,825
|
)
|
|
$
|
(441
|
)
|
|
$
|
8
|
|
|
$
|
(433
|
)
|
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46
|
|
|
46
|
|
|
1
|
|
|
47
|
|
||||||||
Other comprehensive income, net of tax of $4
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
||||||||
Sales of common stock under option plans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Stock-based compensation
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
||||||||
Tax impact on stock-based awards and other
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
1
|
|
|
(5
|
)
|
||||||||
Balances as of June 18, 2016
|
$
|
3
|
|
|
$
|
2,806
|
|
|
$
|
(5
|
)
|
|
$
|
(416
|
)
|
|
$
|
(2,779
|
)
|
|
$
|
(391
|
)
|
|
$
|
8
|
|
|
$
|
(383
|
)
|
|
February 27,
2016 |
|
Additions
|
|
Impairments
|
|
Other net
adjustments
|
|
June 18,
2016 |
||||||||||
Goodwill:
|
|
|
|
|
|
|
|
|
|
||||||||||
Wholesale
|
$
|
710
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
710
|
|
Save-A-Lot
|
142
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
143
|
|
|||||
Retail
|
15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|||||
Total goodwill
|
$
|
867
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
868
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Intangible assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Favorable operating leases, prescription files, customer lists and other (accumulated amortization of $100 and $97 as of June 18, 2016 and February 27, 2016, respectively)
|
$
|
142
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
141
|
|
Trademarks and tradenames – indefinite useful lives
|
9
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
10
|
|
|||||
Non-compete agreements (accumulated amortization of $2 and $2 as of June 18, 2016 and February 27, 2016, respectively)
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||
Total intangible assets
|
154
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
154
|
|
|||||
Accumulated amortization
|
(99
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(102
|
)
|
|||||
Total intangible assets, net
|
$
|
55
|
|
|
|
|
|
|
|
|
$
|
52
|
|
|
June 18,
2016 (16 weeks) |
||
Reserves for closed properties at beginning of the fiscal year
|
$
|
29
|
|
Additions
|
1
|
|
|
Payments
|
(4
|
)
|
|
Adjustments
|
—
|
|
|
Reserves for closed properties at the end of period
|
$
|
26
|
|
|
First Quarter Ended
|
||||||
|
June 18,
2016 (16 weeks) |
|
June 20,
2015 (16 weeks) |
||||
Property, plant and equipment:
|
|
|
|
||||
Carrying value
|
$
|
2
|
|
|
$
|
2
|
|
Fair value measured using Level 3 inputs
|
2
|
|
|
2
|
|
||
Impairment charge
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
June 18, 2016
|
||||||||||||||
|
Balance Sheet Location
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Deferred compensation
|
Other assets
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
Total
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Deferred compensation
|
Other current liabilities
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
8
|
|
Deferred compensation
|
Other long-term liabilities
|
|
—
|
|
|
29
|
|
|
—
|
|
|
29
|
|
||||
Diesel fuel derivatives
|
Other current liabilities
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Interest rate swap derivative
|
Other current liabilities
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||
Interest rate swap derivative
|
Other long-term liabilities
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||
Total
|
|
|
$
|
—
|
|
|
$
|
44
|
|
|
$
|
—
|
|
|
$
|
44
|
|
|
|
|
February 27, 2016
|
||||||||||||||
|
Balance Sheet Location
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Deferred compensation
|
Other assets
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6
|
|
Total
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Deferred compensation
|
Other current liabilities
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
7
|
|
Deferred compensation
|
Other long-term liabilities
|
|
—
|
|
|
35
|
|
|
—
|
|
|
35
|
|
||||
Diesel fuel derivatives
|
Other current liabilities
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
Interest rate swap derivative
|
Other current liabilities
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||
Interest rate swap derivative
|
Other long-term liabilities
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||
Total
|
|
|
$
|
—
|
|
|
$
|
50
|
|
|
$
|
—
|
|
|
$
|
50
|
|
|
June 18,
2016 |
|
February 27,
2016 |
||||
5.50% Secured Term Loan Facility due March 2019
|
$
|
1,356
|
|
|
$
|
1,459
|
|
6.75% Senior Notes due June 2021
|
400
|
|
|
400
|
|
||
7.75% Senior Notes due November 2022
|
350
|
|
|
350
|
|
||
1.69% to 3.75% Revolving ABL Credit Facility due February 2021
|
196
|
|
|
138
|
|
||
Debt financing costs, net
|
(41
|
)
|
|
(45
|
)
|
||
Original issue discount on debt
|
(4
|
)
|
|
(5
|
)
|
||
Total debt
|
2,257
|
|
|
2,297
|
|
||
Less current maturities of long-term debt
|
—
|
|
|
(100
|
)
|
||
Long-term debt
|
$
|
2,257
|
|
|
$
|
2,197
|
|
|
First Quarter Ended
|
|||
|
June 18,
2016 (16 weeks) |
|
June 20,
2015 (16 weeks) |
|
Dividend yield
|
—
|
%
|
|
—%
|
Volatility rate
|
54.2
|
%
|
|
49.0—50.6%
|
Risk-free interest rate
|
1.3
|
%
|
|
1.2—1.4%
|
Expected life
|
5.0 years
|
|
|
4.0—5.0 years
|
|
First Quarter Ended
|
||||||||||||||
Pension Benefits
|
|
Other Postretirement Benefits
|
|||||||||||||
June 18,
2016 (16 weeks) |
|
June 20,
2015 (16 weeks) |
|
June 18,
2016 (16 weeks) |
|
June 20,
2015 (16 weeks) |
|||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
26
|
|
|
33
|
|
|
1
|
|
|
1
|
|
||||
Expected return on assets
|
(44
|
)
|
|
(44
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service benefit
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(4
|
)
|
||||
Amortization of net actuarial loss
|
14
|
|
|
24
|
|
|
1
|
|
|
2
|
|
||||
Net periodic benefit (income) expense
|
$
|
(4
|
)
|
|
$
|
13
|
|
|
$
|
(3
|
)
|
|
$
|
(1
|
)
|
Contributions to benefit plans
|
$
|
(1
|
)
|
|
$
|
(26
|
)
|
|
$
|
—
|
|
|
$
|
(11
|
)
|
|
First Quarter Ended
|
||||||
|
June 18,
2016 (16 weeks) |
|
June 20,
2015 (16 weeks) |
||||
Net earnings from continuing operations
|
$
|
47
|
|
|
$
|
63
|
|
Less net earnings attributable to noncontrolling interests
|
(1
|
)
|
|
(3
|
)
|
||
Net earnings from continuing operations attributable to SUPERVALU INC.
|
46
|
|
|
60
|
|
||
Income from discontinued operations, net of tax
|
—
|
|
|
1
|
|
||
Net earnings attributable to SUPERVALU INC.
|
$
|
46
|
|
|
$
|
61
|
|
|
|
|
|
||||
Weighted average number of shares outstanding—basic
|
264
|
|
|
262
|
|
||
Dilutive impact of stock-based awards
|
3
|
|
|
6
|
|
||
Weighted average number of shares outstanding—diluted
|
267
|
|
|
268
|
|
||
|
|
|
|
||||
Basic net earnings per share attributable to SUPERVALU INC.:
|
|||||||
Continuing operations
|
$
|
0.17
|
|
|
$
|
0.23
|
|
Discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
Basic net earnings per share
|
$
|
0.17
|
|
|
$
|
0.23
|
|
Diluted net earnings per share attributable to SUPERVALU INC.:
|
|||||||
Continuing operations
|
$
|
0.17
|
|
|
$
|
0.23
|
|
Discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
Diluted net earnings per share
|
$
|
0.17
|
|
|
$
|
0.23
|
|
|
Benefit Plans
|
|
Interest Rate Swap
|
|
Total
|
||||||
Accumulated other comprehensive loss at beginning of the fiscal year, net of tax
|
$
|
(418
|
)
|
|
$
|
(4
|
)
|
|
$
|
(422
|
)
|
Other comprehensive loss before reclassifications
(1)
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Amortization of amounts included in net periodic benefit cost
(2)
|
6
|
|
|
—
|
|
|
6
|
|
|||
Amortization of cash flow hedge
(3)
|
—
|
|
|
1
|
|
|
1
|
|
|||
Net current-period Other comprehensive income
(4)
|
6
|
|
|
—
|
|
|
6
|
|
|||
Accumulated other comprehensive loss at the end of period, net of tax
|
$
|
(412
|
)
|
|
$
|
(4
|
)
|
|
$
|
(416
|
)
|
|
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
(1)
|
—
|
|
|
(1
|
)
|
|
$
|
(1
|
)
|
||
Amortization of amounts included in net periodic benefit cost
(2)
|
14
|
|
|
—
|
|
|
14
|
|
|||
Net current-period Other comprehensive loss
(3)
|
14
|
|
|
(1
|
)
|
|
13
|
|
|||
Accumulated other comprehensive loss at the end of period, net of tax
|
$
|
(409
|
)
|
|
$
|
(1
|
)
|
|
$
|
(410
|
)
|
|
First Quarter Ended
|
|
|
||||||
|
June 18,
2016 (16 weeks) |
|
June 20,
2015 (16 weeks) |
|
Affected Line Item on Condensed Consolidated Statements of Operations
|
||||
Pension and postretirement benefit plan obligations:
|
|
|
|
|
|
||||
Amortization of amounts included in net periodic benefit expense
(1)
|
$
|
9
|
|
|
$
|
20
|
|
|
Selling and administrative expenses
|
Amortization of amounts included in net periodic benefit expense
(1)
|
1
|
|
|
2
|
|
|
Cost of sales
|
||
Total reclassifications
|
10
|
|
|
22
|
|
|
|
||
Income tax benefit
|
(4
|
)
|
|
(8
|
)
|
|
Income tax provision
|
||
Total reclassifications, net of tax
|
$
|
6
|
|
|
$
|
14
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swap cash flow hedge:
|
|
|
|
|
|
||||
Reclassification of cash flow hedge
|
$
|
1
|
|
|
$
|
—
|
|
|
Interest expense, net
|
Income tax benefit
|
—
|
|
|
—
|
|
|
Income tax provision
|
||
Total reclassifications, net of tax
|
$
|
1
|
|
|
$
|
—
|
|
|
|
(1)
|
Amortization of amounts included in net periodic benefit expense include amortization of prior service benefit and amortization of net actuarial loss as reflected in
Note 8—Benefit Plans
.
|
|
First Quarter Ended
|
||||||
|
June 18,
2016 (16 weeks) |
|
June 20,
2015 (16 weeks) |
||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
Loss before income taxes from discontinued operations
|
—
|
|
|
(3
|
)
|
||
Income tax benefit
|
—
|
|
|
(4
|
)
|
||
Income from discontinued operations, net of tax
|
$
|
—
|
|
|
$
|
1
|
|
•
|
Net sales were
$5,196
, a decrease of
$211
or
3.9 percent
, primarily due to lost Wholesale customers and lower sales to existing Wholesale customers, lower identical store sales in our Retail and Save-A-Lot businesses and lost Save-A-Lot licensees, offset in part by new corporate Save-A-Lot and Retail stores.
|
•
|
Gross profit was
$779
, a decrease of
$31
or
3.8 percent
, which included lower gross profit as a result of declines in sales in our Retail and Wholesale businesses, and lower transition services fees.
|
•
|
Operating earnings were
$133
, a decrease of
$25
or
15.8 percent
, primarily due to lower gross profit from decreased sales and higher employee-related costs from new stores, offset in part by lower pension expense in selling and administrative expenses.
|
•
|
Net cash provided by operating activities of continuing operations increased
$10
primarily due to lower benefit plan contributions, offset in part by higher levels of cash utilized in operating assets and liabilities.
|
•
|
Net cash used in investing activities of continuing operations decreased
$9
primarily due to a reduction in cash paid for intangible and other assets, offset in part by an increase in cash paid for capital expenditures.
|
•
|
Net cash used in financing activities of continuing operations increased
$39
primarily due to higher levels of required prepayments of the Secured Term Loan Facility in the first quarter of fiscal 2017, offset in part by higher levels of net borrowings under the Revolving ABL Credit Facility.
|
•
|
Targeting sales growth by continuing to affiliate new customers, including larger chain businesses, and more aggressively pursuing external growth and market opportunities
|
◦
|
On July 5, 2016, the Company announced it had entered into a long-term supply agreement with Indiana-based Marsh Supermarkets to serve as its primary grocery wholesaler and to provide certain professional services to the grocery chain. Founded in 1931 and headquartered in Indianapolis, Indiana, Marsh operates approximately 70 Marsh Supermarkets and O’Malia Food Markets across Indiana and Ohio. The transition of stores is expected to be completed by approximately the end of September 2016.
|
◦
|
On July 13, 2016, the Company announced it had entered into a definitive agreement to acquire 22 Food Lion grocery stores that are being sold in connection with the merger between Ahold and Delhaize. The 22 Food Lion stores are located in northern West Virginia, western Maryland, south central Pennsylvania and northwestern Virginia. The acquired stores will be converted to the Company's Shop ‘N Save format and at least initially be operated by the Company. The Company is in discussions with certain of its wholesale customers and the Federal Trade Commission on ways for its wholesale customers to have an interest in these stores going forward.
|
•
|
Driving sales to existing customers through fresh product offerings, such as produce, and by enhancing the Company's professional services offerings, including merchandise and promotional planning, design and back-office technical and financial services
|
•
|
Improving the efficiency of the Company's operations, including its information technology infrastructure and maximizing the use of trucking miles and warehouse capacity
|
•
|
Strengthening core merchandising and marketing programs, including leveraging the Company's private-label programs such as the Essential Everyday® and Equaline® labels while marketing and adding depth to the Wild Harvest® and Culinary Circle® brands
|
•
|
Increasing sales and performance in the existing Save-A-Lot network of stores by expanding the sales per square foot of existing corporate stores through store resets, product assortment alterations, ad strategy changes, continued refinement of private-label programs, and differentiation through fresh offerings
|
◦
|
The Company acquired the America’s Choice
sm
brand and will be enhancing its private label assortment with the introduction of new and innovative items under this label
|
•
|
Growing the Save-A-Lot store footprint through new corporate and licensed store openings
|
•
|
Optimizing the store network including by opportunistically converting corporate stores to licensed stores and vice versa for profitable growth
|
•
|
Improving operational efficiencies and managing costs to offer compelling value to customers
|
•
|
Driving profitable sales by investing in price, optimizing promotions and enhancing product offerings and displays with local, growing and private label categories
|
•
|
Driving store performance by managing inventory levels and reducing inventory shrink rates, as well as standardizing certain store processes
|
•
|
Continued development and sales penetration of the Company's private label product offerings, including organic products, by providing innovative products in multiple channels across Retail and Wholesale
|
•
|
Investing capital on new stores, relocations and targeted store remodels
|
•
|
Continued management of the Company's overhead cost structure to enable investments in lower prices to customers
|
•
|
Providing high-quality administrative support services by enhancing the Company's service offerings and information technology systems
|
•
|
Continued exploration of a potential separation of the Save-A-Lot business
|
◦
|
On June 9, 2016, Save-A-Lot, Inc. filed an Amendment No. 1 to Form 10 with the SEC as part of Save-A-Lot's potential separation from the Company into a stand-alone, publicly traded company.
|
◦
|
Building a quality Save-A-Lot management team, including having appointed Eric Claus as Chief Executive Officer, who brings over thirty years of experience in the retail industry where he has gained deep experience in both hard discount and grocery retail in both the United States and Canada.
|
|
First Quarter Ended
|
||||||
Results of Operations
|
June 18,
2016 (16 weeks) |
|
June 20,
2015 (16 weeks) |
||||
Net sales
|
$
|
5,196
|
|
|
$
|
5,407
|
|
Cost of sales
|
4,417
|
|
|
4,597
|
|
||
Gross profit
|
779
|
|
|
810
|
|
||
Selling and administrative expenses
|
646
|
|
|
652
|
|
||
Operating earnings
|
133
|
|
|
158
|
|
||
Interest expense, net
|
60
|
|
|
59
|
|
||
Equity in earnings of unconsolidated affiliates
|
(1
|
)
|
|
(2
|
)
|
||
Earnings from continuing operations before income taxes
|
74
|
|
|
101
|
|
||
Income tax provision
|
27
|
|
|
38
|
|
||
Net earnings from continuing operations
|
47
|
|
|
63
|
|
||
Income from discontinued operations, net of tax
|
—
|
|
|
1
|
|
||
Net earnings including noncontrolling interests
|
47
|
|
|
64
|
|
||
Less net earnings attributable to noncontrolling interests
|
(1
|
)
|
|
(3
|
)
|
||
Net earnings attributable to SUPERVALU INC.
|
$
|
46
|
|
|
$
|
61
|
|
Diluted continuing operations net earnings per share attributable to SUPERVALU INC.
|
$
|
0.17
|
|
|
$
|
0.23
|
|
Weighted average shares outstanding—diluted
|
267
|
|
|
268
|
|
||
Other Statistics
|
|
|
|
||||
Depreciation and amortization
|
$
|
86
|
|
|
$
|
83
|
|
Capital expenditures
(1)
|
$
|
66
|
|
|
$
|
49
|
|
Adjusted EBITDA
(2)
|
$
|
222
|
|
|
$
|
246
|
|
Financial Position
|
|
|
|
||||
Working capital
(3)
|
$
|
420
|
|
|
$
|
137
|
|
Total assets
|
$
|
4,373
|
|
|
$
|
4,491
|
|
Total debt and capital lease obligations
|
$
|
2,485
|
|
|
$
|
2,712
|
|
Stores Supplied and Operated:
|
|
|
|
||||
Wholesale primary stores
|
1,773
|
|
|
1,857
|
|
||
Save-A-Lot licensee stores
|
896
|
|
|
902
|
|
||
Save-A-Lot corporate stores
|
472
|
|
|
433
|
|
||
Retail stores
|
201
|
|
|
197
|
|
||
Subtotal
|
3,342
|
|
|
3,389
|
|
||
Wholesale secondary stores
|
203
|
|
|
208
|
|
||
Total number of stores
|
3,545
|
|
|
3,597
|
|
(1)
|
Capital expenditures include cash payments for purchases of property, plant and equipment and non-cash capital lease additions, and exclude cash payments for business acquisitions.
|
(2)
|
Adjusted EBITDA is a non-GAAP financial measure that the Company provides as a supplement to its 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.
|
(3)
|
Working capital of continuing operations is calculated using the first-in, first-out method for inventories, after adding back the last-in, first-out method (“LIFO”) reserve. The LIFO reserve was
$217
and
$214
as of
June 18, 2016
and
June 20, 2015
, respectively.
|
|
First Quarter Ended
|
|
Variance
|
|||||||||||
June 18,
2016 (16 weeks) |
|
June 20,
2015 (16 weeks) |
|
Dollars
|
|
Percent
|
||||||||
Wholesale
|
$
|
2,275
|
|
|
$
|
2,462
|
|
|
$
|
(187
|
)
|
|
(7.6
|
)%
|
Save-A-Lot
|
1,432
|
|
|
1,408
|
|
|
24
|
|
|
1.7
|
%
|
|||
Retail
|
1,431
|
|
|
1,473
|
|
|
(42
|
)
|
|
(2.9
|
)%
|
|||
Corporate
|
58
|
|
|
64
|
|
|
(6
|
)
|
|
(9.4
|
)%
|
|||
Total Net sales
|
$
|
5,196
|
|
|
$
|
5,407
|
|
|
$
|
(211
|
)
|
|
(3.9
|
)%
|
|
June 18,
2016 (16 weeks) |
|
Save-A-Lot Network:
|
|
|
Identical store sales percent variance
(1)
|
(1.4
|
)%
|
Save-A-Lot Corporate Stores:
|
|
|
Identical store sales percent variance
(2)
|
(1.0
|
)%
|
Average basket percent variance
(3)
|
(1.7
|
)%
|
Customer count percent variance
(4)
|
0.7
|
%
|
Retail:
|
|
|
Identical store sales percent variance
(5)
|
(4.5
|
)%
|
Average basket percent variance
(3)
|
(0.4
|
)%
|
Customer count percent variance
(4)
|
(4.1
|
)%
|
(1)
|
Save-A-Lot network identical store sales are defined as the sales attributable to Company-operated stores and sales to licensee stores operating for four full quarters, including store expansions and excluding planned store dispositions.
|
(2)
|
Save-A-Lot corporate stores identical store sales are defined as the sales attributable to Company-operated stores operating for four full quarters, including store expansions and excluding planned store dispositions.
|
(3)
|
Average basket is defined as the average purchases by our customers per transaction within our corporate retail stores operating for four full quarters, including store expansions and excluding fuel and planned store dispositions.
|
(4)
|
Customer count is defined as the number of transactions by our retail customers within our corporate retail stores operating for four full quarters, including store expansions and excluding fuel and planned store dispositions.
|
(5)
|
Retail identical store sales are defined as net sales from stores operating for four full quarters, including store expansions and excluding fuel and planned store dispositions.
|
|
First Quarter Ended
|
||||||||||
June 18,
2016 (16 weeks) |
|
June 20,
2015 (16 weeks) |
|
Variance
|
|||||||
Wholesale
|
$
|
109
|
|
|
$
|
122
|
|
|
$
|
(13
|
)
|
% of Wholesale sales
|
4.8
|
%
|
|
4.9
|
%
|
|
(0.1
|
)%
|
|||
Save-A-Lot
|
230
|
|
|
223
|
|
|
7
|
|
|||
% of Save-A-Lot sales
|
16.0
|
%
|
|
15.8
|
%
|
|
0.2
|
%
|
|||
Retail
|
381
|
|
|
400
|
|
|
(19
|
)
|
|||
% of Retail sales
|
26.6
|
%
|
|
27.2
|
%
|
|
(0.6
|
)%
|
|||
Corporate
|
59
|
|
|
65
|
|
|
(6
|
)
|
|||
Total Gross profit
|
$
|
779
|
|
|
$
|
810
|
|
|
$
|
(31
|
)
|
% of total Net sales
|
15.0
|
%
|
|
15.0
|
%
|
|
—
|
%
|
|
First Quarter Ended
|
||||||||||
June 18,
2016 (16 weeks) |
|
June 20,
2015 (16 weeks) |
|
Variance
|
|||||||
Wholesale
|
$
|
64
|
|
|
$
|
77
|
|
|
$
|
(13
|
)
|
% of Wholesale sales
|
2.8
|
%
|
|
3.1
|
%
|
|
(0.3
|
)%
|
|||
Save-A-Lot
|
39
|
|
|
51
|
|
|
(12
|
)
|
|||
% of Save-A-Lot sales
|
2.7
|
%
|
|
3.6
|
%
|
|
(0.9
|
)%
|
|||
Retail
|
8
|
|
|
33
|
|
|
(25
|
)
|
|||
% of Retail sales
|
0.6
|
%
|
|
2.2
|
%
|
|
(1.6
|
)%
|
|||
Corporate
|
22
|
|
|
(3
|
)
|
|
25
|
|
|||
Total Operating earnings
|
$
|
133
|
|
|
$
|
158
|
|
|
$
|
(25
|
)
|
% of total Net sales
|
2.6
|
%
|
|
2.9
|
%
|
|
(0.3
|
)%
|
|
First Quarter Ended
|
||||||
|
June 18,
2016 (16 weeks) |
|
June 20,
2015 (16 weeks) |
||||
Net earnings from continuing operations
|
$
|
47
|
|
|
$
|
63
|
|
Less net earnings attributable to noncontrolling interests
|
(1
|
)
|
|
(3
|
)
|
||
Income tax provision
|
27
|
|
|
38
|
|
||
Interest expense, net
|
60
|
|
|
59
|
|
||
Depreciation and amortization
|
86
|
|
|
83
|
|
||
LIFO charge
|
2
|
|
|
3
|
|
||
Costs related to the potential separation of Save-A-Lot
|
3
|
|
|
3
|
|
||
Sales and use tax refund
|
(2
|
)
|
|
—
|
|
||
Adjusted EBITDA
|
$
|
222
|
|
|
$
|
246
|
|
•
|
Unused available credit under the Revolving ABL Credit Facility decreased to
$732
from
$744
as of
June 18, 2016
compared to
February 27, 2016
.
|
•
|
In the first quarter ended June 18, 2016, the Secured Term Loan Credit Facility was amended to permit Supervalu and its subsidiaries to undertake certain transactions reasonably determined by Supervalu to be necessary to effectuate a separation of Save-A-Lot. The interest rate for the term loan increased from LIBOR plus 3.50 percent to LIBOR plus 4.50 percent with a floor on LIBOR remaining at 1.00 percent subject to a further increase of 0.25 percent if certain credit rating conditions are not satisfied.
|
•
|
As of
June 18, 2016
, scheduled debt maturities and mandatory prepayments due in the remainder of fiscal 2017 were $0, exclusive of any potential Excess Cash Flow and other prepayment requirements under the Secured Term Loan Facility.
|
•
|
Payments to reduce Capital lease obligations are expected to be $16 for the remainder of fiscal 2017 and approximately $24 in fiscal 2018.
|
•
|
Working capital increased
$142
to
$420
as of
June 18, 2016
from
$278
as of
February 27, 2016
, excluding the impacts of the LIFO reserve, primarily due to the $99 prepayment of the Secured Term Loan Facility made in the first quarter of fiscal 2017 and higher Wholesale and Save-A-Lot inventories.
|
•
|
Management expects that the Company 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.
|
•
|
Total debt was
$2,257
and
$2,297
as of
June 18, 2016
and
February 27, 2016
, respectively, net of unamortized debt financing costs and original issue discount, under senior secured credit agreements and debentures.
|
•
|
No minimum pension contributions are required under ERISA for fiscal 2017.
|
|
First Quarter Ended
|
||||||||||
|
June 18,
2016 (16 weeks) |
|
June 20,
2015 (16 weeks) |
|
Change
|
||||||
Cash flow activities
|
|
|
|
|
|
||||||
Net cash provided by operating activities – continuing operations
|
$
|
121
|
|
|
$
|
111
|
|
|
$
|
10
|
|
Net cash used in investing activities
|
(61
|
)
|
|
(70
|
)
|
|
9
|
|
|||
Net cash used in financing activities
|
(58
|
)
|
|
(19
|
)
|
|
(39
|
)
|
|||
Net cash provided by discontinued operations
|
—
|
|
|
1
|
|
|
(1
|
)
|
|||
Net increase in cash and cash equivalents
|
2
|
|
|
23
|
|
|
(21
|
)
|
|||
Cash and cash equivalents at beginning of period
|
57
|
|
|
114
|
|
|
(57
|
)
|
|||
Cash and cash equivalents at the end of period
|
$
|
59
|
|
|
$
|
137
|
|
|
$
|
(78
|
)
|
•
|
The Company’s ability to attract and retain customers, and the success of the Company’s wholesale customers and licensees and their ability to maintain and grow sales
|
•
|
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 Wholesale business to maintain or increase sales and profitability due to wholesaler competition, increased competition faced by customers and increased customer self-distribution
|
•
|
The Company's ability to maintain or improve levels of identical store sales and operating margins
|
•
|
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 keep pace with changing customer expectations and new developments and technology investments by 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 or amend 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
|
•
|
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
|
•
|
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
|
•
|
The Company's ability to effectively manage its cost structure and identify new revenue opportunities as the Transition Services Agreement with each of Albertson’s LLC and NAI (collectively, the “TSA”) wind down and with the wind down of the Transition Services Agreement with Haggen in the first quarter of fiscal 2017
|
•
|
The Company's 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 transition and wind down of the TSA in an efficient manner that is not disruptive to the Company, while eliminating costs directly and not directly tied to providing these services
|
•
|
The Company's ability to attract and retain qualified personnel to perform services under the TSA
|
•
|
The effect of the information technology intrusions that also impacted Albertson’s LLC and NAI
|
•
|
Impact of the Albertson's acquisition of Safeway on the Company's operating agreement under which the Company operates a distribution center owned by NAI that services both NAI and certain of the Company's wholesale customers
|
•
|
Dependence of the Company’s businesses on computer hardware and software systems that are vulnerable to technical malfunction or security breach by computer hackers and cyber terrorists
|
•
|
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 future 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 operate properly and 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, including relating to the increase in information sharing and multichannel retailing
|
•
|
Worsening economic conditions, consumer confidence or unemployment rates, each of which affect consumer spending or buying habits
|
•
|
Increases in unemployment, insurance, healthcare or energy costs and changes in 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
|
•
|
The Company's ability to address the compression of pharmacy gross margins
|
•
|
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 valid or not
|
•
|
Potential recall costs and product liability claims or claims that the Company's products are not of the quality or composition claimed
|
•
|
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
|
•
|
Risks related to infringement of the Company's intellectual property rights
|
•
|
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 or operating model, 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
|
|
|
|
|
|
|
|
|
||||||
February 28, 2016 to March 26, 2016
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Second four weeks
|
|
|
|
|
|
|
|
|
||||||
March 27, 2016 to April 23, 2016
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Third four weeks
|
|
|
|
|
|
|
|
|
||||||
April 24, 2016 to May 21, 2016
|
|
427,608
|
|
|
$
|
4.90
|
|
|
—
|
|
|
$
|
—
|
|
Fourth four weeks
|
|
|
|
|
|
|
|
|
||||||
May 22, 2016 to June 18, 2016
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Totals
|
|
427,608
|
|
|
$
|
4.90
|
|
|
—
|
|
|
$
|
—
|
|
(1)
|
The reported periods conform to the Company's fiscal calendar composed of thirteen 28-day periods. The
first
quarter of fiscal
2017
contains four 28-day periods.
|
(2)
|
These amounts include the deemed surrender by participants in the Company's compensatory stock plans of 427,608 shares of previously issued common stock. These are in payment of the purchase price of shares acquired pursuant to the exercise of stock options and satisfaction of tax obligations arising from such exercises, as well as from the vesting of restricted stock awards granted under such plans.
|
3.1
|
|
Amended and Restated Bylaws, as amended and restated (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 April 25, 2016)
|
|
|
|
10.1
|
|
Third Amendment and Consent Agreement, dated May 20, 2016, to the Second Amended and Restated Term Loan Credit Agreement, dated January 31, 2014, among SUPERVALU INC., as Borrower, the subsidiaries of the Company named as Loan Parties therein, Goldman Sachs Bank USA, as Administrative Agent and Collateral Agent, and the lenders party thereto (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 May 23, 2016)
|
|
|
|
10.2
|
|
SUPERVALU INC. 2012 Stock Plan (As Amended July 20, 2016) (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 July 22, 2016)*
|
|
|
|
10.3
|
|
SUPERVALU INC. 2012 Stock Plan Form of Performance Share Unit Award Agreement (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 25, 2016)*
|
|
|
|
10.4
|
|
SUPERVALU INC. 2012 Stock Plan Revised Form of Performance Share Unit Award Agreement*
|
|
|
|
10.5
|
|
Aircraft Time Sharing Agreement, dated March 8, 2016, between SUPERVALU INC. and Mark Gross (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 March 10, 2016)*
|
|
|
|
10.6
|
|
Letter Agreement Amendment, dated July 25, 2016, between SUPERVALU INC. and Mark Gross*
|
|
|
|
10.7
|
|
Letter Agreement Amendment, dated May 27, 2016, between SUPERVALU INC. and Eric Claus*
|
|
|
|
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 18, 2016, 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.
|
|
|
|
SUPERVALU INC. (Registrant)
|
|
|
|
|
Dated: July 27, 2016
|
|
|
/s/ BRUCE H. BESANKO
|
|
|
|
Bruce H. Besanko
Executive Vice President, Chief Operating Officer and Chief Financial Officer
(principal financial officer)
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SUPERVALU INC. (Registrant)
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Dated: July 27, 2016
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/s/ SUSAN S. GRAFTON
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Susan S. Grafton
Senior Vice President, Finance, and Chief Accounting Officer
(principal accounting officer)
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3.1
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Amended and Restated Bylaws, as amended and restated (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 April 25, 2016)
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10.1
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Third Amendment and Consent Agreement, dated May 20, 2016, to the Second Amended and Restated Term Loan Credit Agreement, dated January 31, 2014, among SUPERVALU INC., as Borrower, the subsidiaries of the Company named as Loan Parties therein, Goldman Sachs Bank USA, as Administrative Agent and Collateral Agent, and the lenders party thereto (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 May 23, 2016)
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10.2
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SUPERVALU INC. 2012 Stock Plan (As Amended July 20, 2016) (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 July 22, 2016)*
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10.3
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SUPERVALU INC. 2012 Stock Plan Form of Performance Share Unit Award Agreement (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 25, 2016)*
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10.4
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SUPERVALU INC. 2012 Stock Plan Revised Form of Performance Share Unit Award Agreement*
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10.5
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Aircraft Time Sharing Agreement, dated March 8, 2016, between SUPERVALU INC. and Mark Gross (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 March 10, 2016)*
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10.6
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Letter Agreement Amendment, dated July 25, 2016, between SUPERVALU INC. and Mark Gross*
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10.7
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Letter Agreement Amendment, dated May 27, 2016, between SUPERVALU INC. and Eric Claus*
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12.1
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Ratio of earnings to fixed charges.
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31.1
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Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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31.2
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Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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32.1
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Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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32.2
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Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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101
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The following information from the SUPERVALU INC. Quarterly Report on Form 10-Q for the fiscal quarter ended June 18, 2016, 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.
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SUPERVALU INC.
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RECIPIENT:
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By:
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Bruce H. Besanko
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FIRST_NAME-MIDDLE_NAME- LAST_NAME-
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Executive Vice President, Chief Operating
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EMPLOYEE_IDENTIFIER-
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Officer and Chief Financial Officer
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1
An individual PSU Award recipient will receive separate award agreements for the PSUs that are subject to the [Metric #1] performance metric and the PSUs that are subject to the [Metric #2] performance metric. These award agreements will be identical, and in the form of this document, except that where there are bracketed alternative provisions in this document and alternative Schedules A, the first alternative will apply to the [Metric #1] form of award agreement, and the second alternative will apply to the [Metric #2] form of award agreement.
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2
The caption and the introductory clause of the first sentence of this paragraph in form of PSU Award agreement for the Company’s CEO reads as follows: “
Involuntary (Other Than for Cause) or Good Reason
. If, during the term of this Award but prior to a Change of Control, your employment is involuntarily terminated for reasons other than Cause, or you terminate your employment for Good Reason,”
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3
The definition of “Cause” in form of PSU Award agreement for the Company’s CEO reads as follows:
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“Cause" shall mean:
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(i)
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your continued failure to substantially perform your duties with the Company (other than any such failure resulting from incapacity due to physical or mental illness) after a written notice has been provided identifying the manner in which you have not substantially performed your duties, and after you have had six months to improve performance to the Company’s expectations;
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(ii)
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the conviction of, or plea of guilty or nolo contendere to, a felony or the willful engaging by you in conduct which, in the Company’s opinion, is materially and demonstrably injurious to the Company;
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(iii)
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your commission of an act or acts of personal dishonesty intended to result in your substantial personal enrichment at the expense of the Company; provided, however, that in no event shall Cause exist by virtue of any action taken by you in compliance with express written directions of the Board, or in reliance upon the express written consent of the Company’s counsel; or
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(iv)
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your failure to comply with Company policies relating to Code of Business Conduct, Equal Employment Opportunities and Harassment, or Workplace Violence;
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provided, however, for a termination of employment to be for Cause, you must be provided with a notice of termination within six (6) months after the Company has actual knowledge of the act or omission constituting Cause, you must be provided with an opportunity to be heard by the Board no earlier than thirty (30) days following the notice of termination; and there must be a good faith determination of Cause by at least two-thirds (2/3rds) of the non-employee outside directors of the Company. Whether a termination of employment is for Cause as provided above will be determined by the Company in its sole discretion based on all the facts and circumstances. For purposes hereof, the term “Company” shall include an Affiliate.
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4
The definition of “Good Reason” in form of PSU Award agreement for the Company’s CEO reads as follows:
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“Good Reason” shall mean that you are removed from the position of Chief Executive Officer of the Company, or there occurs a material reduction in your duties, responsibilities, base salary or target annual bonus opportunity. For this purpose, a reduction in the size of the Company, including, without limitation, on account of the anticipated separation or disposition of the Save-A-Lot business by spinoff or otherwise, shall not constitute a material reduction in your duties or responsibilities. Your termination of employment will be for Good Reason only if you first deliver to the Company a written notice of the occurrence of the event or circumstance that you claim is the basis for Good Reason (a “Good Reason Event”) within thirty (30) days of the Good Reason Event first occurring, and the Company fails to cure such event within thirty (30) days following the receipt of your written notice; provided that no termination will be for Good Reason unless you actually resign from employment effective as of a date within seventy-five (75) days after the end of the Company’s thirty (30) day cure period.
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SUPERVALU INC.
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P.O. Box 990
Minneapolis, MN 55440
952 828 4623
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Sincerely,
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SUPERVALU INC.
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By:
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/s/ GERALD STORCH
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Name: Gerald Storch
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Title: Non-Executive Chairman of the Board
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Date: July 25, 2016
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AGREED AND ACKNOWLEDGED:
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/s/ MARK GROSS
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Name: Mark Gross
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Date: July 25, 2016
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/s/ ERIC CLAUS
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6/1/2016
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Eric Claus
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Date
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First Quarter Ended
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Fiscal Year Ended
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June 18,
2016 (16 weeks) |
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February 27,
2016 (52 weeks) |
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February 28,
2015 (53 weeks) |
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February 22, 2014
(52 weeks)
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February 23, 2013
(1)
(52 weeks) |
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Earnings (loss) from continuing operations before income taxes
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$
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74
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$
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263
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$
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185
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$
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18
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$
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(416
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Less net earnings attributable to noncontrolling interests
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(1
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(8
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(7
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(7
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(10
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Net overdistributed earnings of less than fifty percent owned affiliates
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1
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1
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—
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1
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1
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Fixed charges
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69
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236
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281
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444
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313
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Amortized capitalized interest
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—
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(1
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(1
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(1
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(4
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Earnings (loss) available to cover fixed charges
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$
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143
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$
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491
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$
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458
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$
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455
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$
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(116
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Interest expense
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61
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196
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244
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407
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272
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Capitalized interest
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—
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1
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1
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1
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4
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Interest on operating leases
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8
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39
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36
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36
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37
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Total fixed charges
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$
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69
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$
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236
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$
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281
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$
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444
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$
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313
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Excess (deficiency) of earnings to fixed charges
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$
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74
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$
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255
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$
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177
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$
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11
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$
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(429
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Ratio of earnings to fixed charges
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2.08
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2.08
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1.63
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1.02
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N/A
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(1)
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The Company’s earnings available to cover fixed charges were insufficient to cover fixed charges for fiscal 2013 due to $227 of non-cash asset impairment and other charges before tax, administrative expenses related to divested NAI operations, $36 of severance costs before tax, $22 of store closure charges and costs before tax, $22 of non-cash unamortized financing costs before tax and $6 of non-cash intangible asset impairment charges before tax, offset in part by $10 in a cash settlement received from credit card companies before tax.
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Date: July 27, 2016
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/s/ MARK GROSS
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Mark Gross
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Chief Executive Officer and President
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Date: July 27, 2016
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/s/ BRUCE H. BESANKO
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Bruce H. Besanko
Executive Vice President, Chief Operating Officer and Chief Financial Officer |
Date: July 27, 2016
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/s/ MARK GROSS
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Mark Gross
Chief Executive Officer and President
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Date: July 27, 2016
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/s/ BRUCE H. BESANKO
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Bruce H. Besanko
Executive Vice President, Chief Operating Officer and Chief Financial Officer (principal financial officer) |