Albertsons 2005 Annual Report Download - page 8

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PART I
ITEM 1. BUSINESS
General Development
SUPERVALU is one of the largest companies in the United States grocery channel. SUPERVALU conducts
its retail operations under three retail food store formats: extreme value stores primarily under the retail banner
Save-A-Lot; price superstores, under the regional retail banners of Cub Foods, Shop ‘n Save, Shoppers Food &
Pharmacy and bigg’s; and supermarkets, under the regional retail banners of Farm Fresh, Scott’s and
Hornbacher’s. As of the close of the fiscal year, the company conducted its retail operations through 1,549 stores,
including 879 licensed extreme value stores. SUPERVALU also provides food distribution and related logistics
support services across the United States retail grocery channel. As of the close of the fiscal year, the company
served as the primary grocery supplier to approximately 2,300 retail food stores in 48 states, in addition to its
own regional banner store network, and as a secondary supplier to approximately 700 stores.
SUPERVALU is focused on retail growth through targeted new store development, remodel activities, licensee
growth and acquisitions. During fiscal 2005, the company added 66 net new stores through new store development.
The company’s plans also include leveraging its distribution operations by providing logistics and service solutions
through an increasingly efficient supply chain, which should allow it to affiliate new independent customers.
On February 7, 2005, the company completed its acquisition of Total Logistics, Inc. (Total Logistics), a
national provider of integrated third-party logistics services. The aggregate transaction value was approximately
$234 million, including assumed debt and direct costs related to the acquisition. The company expects the
acquisition to be slightly accretive to fiscal year 2006 earnings. The Total Logistics acquisition also included its
Zero Zone subsidiary, a manufacturer of refrigeration cases and systems, which will be divested in fiscal 2006 as
it is non-core to the company’s food retail and supply chain service businesses.
On April 1, 2004 the company sold its minority interest in WinCo Foods, Inc. (WinCo), a privately-held
regional grocery chain that operates stores primarily in the northwestern United States, for approximately $150
million in net after-tax cash proceeds. The impact of this transaction to fiscal 2005 results was to reduce net
earnings by approximately $0.10 per basic share or $0.09 per diluted share, reflecting the elimination of WinCo’s
non-cash equity in earnings, and to increase net earnings by approximately $0.51 per basic share or $0.47 per
diluted share for the one-time after-tax gain on the sale.
SUPERVALU INC., a Delaware corporation, was organized in 1925 as the successor to two wholesale
grocery firms established in the 1870’s. The company’s principal executive offices are located at 11840 Valley
View Road, Eden Prairie, Minnesota 55344 (Telephone: 952-828-4000). Unless the discussion in this Annual
Report on Form 10-K indicates otherwise, all references to the “company,” “SUPERVALU” or “Registrant”
relate to SUPERVALU INC. and its majority-owned subsidiaries.
The company makes available free of charge at its internet website (www.supervalu.com) its annual reports
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to these
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as
reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange
Commission (the “SEC”). Information on the company’s website is not deemed to be incorporated by reference
into this Annual Report on Form 10-K. The company will also provide its SEC filings free of charge upon
written request to the Corporate Secretary, SUPERVALU INC., P.O. Box 990, Minneapolis, MN 55440.
Additional description of the company’s business is found in Part II, Item 7 of this report.
Financial Information About Reportable Segments
The company’s business is classified by management into two reportable segments: Retail food and food
distribution. Retail food operations include three retail food store formats: extreme value stores, regional price
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