Albertsons 2008 Annual Report Download

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ANNUAL REPORT | FISCAL 2008
®

Table of contents

  • Page 1
    ® A N N U A L R E P O RT | F I S C A L 2 0 0 8

  • Page 2
    Financial Highlights (in millions except per share data) 52 weeks ended February 24, 2007 Sales Retail $28,016 9,390 37,406 52 weeks ended February 23 2008 $34,341 9,707 44,048 Creating long-term, sustainable success. This is SUPERVALU's pledge to shareholders, and we're working on it every day. ...

  • Page 3
    ... Chief Executive Officer We are well along our three-year journey to leverage the full potential of SUPERVALU. As we approach the second anniversary of the acquisition, we are positioned to drive future growth and maximize the value of the company. This letter highlights our progress in fiscal 2008...

  • Page 4
    ... their food dollars. In fiscal 2008, SUPERVALU also made progress on many technology initiatives that will benefit the company in the years to come. • Expertise in supply chain was leveraged as we made continued progress on "standardizing" the acquired Albertsons distribution centers to SUPERVALU...

  • Page 5
    ...Fiscal 2009 will be an important year for SUPERVALU while we continue to execute our growth plans and integration activities. Activities include rolling out merchandising and remodeling programs across the entire store network to build identical store sales momentum; implementing numerous technology...

  • Page 6
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 7
    UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended February 23, 2008 OR ' TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ...

  • Page 8
    ... Market Risk ...Financial Statements and Supplementary Data ...Changes in and Disagreements With Accountants on Accounting and Financial Disclosure ...Controls and Procedures ...Other Information ...PART III 18 20 20 37 38 38 38 39 10. 11. 12. 13. 14. Directors, Executive Officers and Corporate...

  • Page 9
    ...'s, Jewel-Osco, Lucky, Save-A-Lot, Shaw's Supermarkets, Shop 'n Save, Shoppers Food & Pharmacy and Star Markets. SUPERVALU also provides supply chain services, which primarily includes wholesale distribution and related logistics support services. The Company's principal market is the United States...

  • Page 10
    ... department and expanded sections of general merchandise and health and beauty care. As of February 23, 2008, the Company operated 891 combination stores under the Acme Markets, Albertsons, bigg's, Cub Foods, Farm Fresh, Jewel-Osco, Sav-on, Shaw's Supermarkets, Shop 'n Save, Shoppers Food & Pharmacy...

  • Page 11
    ..., FESTIVAL FOODS, COUNTY MARKET, SHOP 'N SAVE, NEWMARKET, FOODLAND, JUBILEE, SUPERVALU and SUPERVALU PHARMACIES. In connection with the Acquisition, the Company entered into a trademark license agreement with Albertson's LLC, the purchaser of the non-core supermarket business of Albertsons, under...

  • Page 12
    ... 34,300 employees will expire. The Company is focused on ensuring competitive cost structures in each market in which it operates while meeting its employees' needs for attractive wages and affordable health care and retirement benefits. The Company believes that it has generally good relations with...

  • Page 13
    ... Resources, 2004-2006; Senior Vice President, Human Resources and Management Services, Save-A-Lot, 2000-2004 Executive Vice President, Drug Operations and President, Drug Store Division, Albertsons, 2002-2006 (1) Senior Vice President; President, Retail West 2006-2007; President and CEO, California...

  • Page 14
    ..., store location, in-store marketing and design, promotional strategies and continued growth into new markets. The Company's Supply chain services business is primarily wholesale distribution and includes a third-party logistics component. The distribution component of the Company's Supply chain...

  • Page 15
    ...2009 capital plan, the Company expects to complete 165 major store remodels, and open approximately 15 new traditional supermarkets and 55 to 65 limited assortment food stores, including licensed stores. If, as a result of labor relations issues, supply issues or environmental and real estate delays...

  • Page 16
    ... 33,400 employees are scheduled to expire in 2009. These expiring agreements cover approximately 28 percent of the Company's union-affiliated employees. In future negotiations with labor unions, the Company expects that, among other issues, rising health care, pension and employee benefit costs will...

  • Page 17
    ...provisions regulating health and sanitation standards, equal employment opportunity, minimum wages and licensing for the sale of food, drugs and alcoholic beverages. The Company's inability to timely obtain permits, comply with government regulations or make capital expenditures required to maintain...

  • Page 18
    ... the Company's businesses by causing the Company to implement costly security measures in recognition of actual or potential threats, by requiring the Company to expend significant time and expense developing, maintaining or upgrading its information technology systems and by causing the Company to...

  • Page 19
    ... connection with the Acquisition, the Company entered into a Transition Services Agreement ("TSA") with the purchaser of the non-core supermarket business of Albertsons. That agreement is structured to provide the Company payments from the purchaser to cover the historical costs of providing support...

  • Page 20
    ... retailers. (2) The Company operates food stores under the Acme Markets, Albertsons, Bristol Farms, Cub Foods, Farm Fresh, Hornbacher's, Jewel, Lucky, Shaw's Supermarkets, Shop 'n Save, Shoppers Food & Pharmacy and Star Markets banners. Excluded from the table above is one Cub Foods food store...

  • Page 21
    ... is a summary of the Company's principal distribution centers utilized in the Company's Supply chain services segment as of February 23, 2008 and does not include the distribution centers dedicated exclusively to the Retail food segment: Supply the Company's Own Stores and ThirdParty Retail Stores...

  • Page 22
    ... due to the Acquisition. In April 2000, a class action complaint was filed against Albertsons, as well as American Stores Company, American Drug Stores, Inc., Sav-on Drug Stores, Inc. and Lucky Stores, Inc., wholly-owned subsidiaries of Albertsons, in the Superior Court for the County of Los Angeles...

  • Page 23
    ..., a complaint was filed, later certified as a class action, in California Superior Court in and for the County of San Diego (Sally Wilcox and Dennis Taber. v. Albertson's, Inc.), alleging that Albertsons failed to pay wages for time worked during meal breaks to its non-exempt employees employed in...

  • Page 24
    ... in security position listings. The information called for by Item 5 as to the sales price for the Company's common stock on a quarterly basis during the last two fiscal years and dividend information is found under the heading "Common Stock Price" in Part II, Item 7 of this Annual Report on Form 10...

  • Page 25
    ... end of fiscal 2003 to the end of fiscal 2008 to that of the Standard & Poor's ("S&P") 500 and a group of peer companies in the retail grocery industry. The stock price performance shown below is not necessarily indicative of future performance. COMPARISON OF FIVE-YEAR TOTAL RETURN AMONG SUPERVALU...

  • Page 26
    ... of Acme Markets, Bristol Farms, Jewel-Osco, Shaw's Supermarkets, Star Markets, the Albertsons banner in the Intermountain, Northwest and Southern California regions, the related in-store pharmacies under the Osco and Sav-on banners, 10 distribution centers and certain regional and corporate offices...

  • Page 27
    ... will benefit from its efficient and low-cost supply chain and new economies of scale as it leverages its Retail food and Supply chain services businesses. The Company plans to expand retail square footage through targeted new store development, remodel activities, licensee growth and acquisitions...

  • Page 28
    ... in fiscal 2008 compared with 38 weeks last year. The Acquired Operations are part of the Retail food segment which has a higher Selling and administrative expenses percentage than Supply chain services. The impact of the business segment mix more than offset the decrease in employee-related costs...

  • Page 29
    ... fuel and planned closures, for fiscal 2007 as compared to fiscal 2006 was negative 1.1 percent. Identical store retail sales growth on a combined basis, as if the Acquired Operations stores were in the store base for four full quarters, was positive 0.4 percent. During fiscal 2007, the Company...

  • Page 30
    ... fiscal 2006. The increase is primarily due to the shares issued in conjunction with the Acquisition on June 2, 2006. CRITICAL ACCOUNTING POLICIES The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires...

  • Page 31
    ... Company's stores. For fiscal 2008, a 100 basis point change in total vendor funds earned, including advertising allowances, with no offsetting changes to the base price on the products purchased, would impact gross profit by 10 basis points. Inventories Inventories are valued at the lower of cost...

  • Page 32
    ... Disposal of Long-Lived Assets." The Company estimates fair value based on its experience and knowledge of the market in which the closed property is located and, when necessary, utilizes local real estate brokers. The expectations on timing of disposition and the estimated sales price or subtenant...

  • Page 33
    ... for workers' compensation, health care for certain employees and general and automobile liability costs. It is the Company's policy to record its self-insurance liabilities based on management's estimate of the ultimate cost of reported claims and claims incurred but not yet reported and related...

  • Page 34
    ... things, the discount rate, the expected long-term rate of return on plan assets and the rates of increase in compensation and health care costs. The discount rate is based on current investment yields on high-quality fixed-income investments. The expected long-term rate of return on plan assets is...

  • Page 35
    ...drug business payables related to the sale of Albertsons. Fiscal 2006 financing activities primarily reflect the repayments of long-term debt, the payment of dividends and the purchase of treasury shares offset by proceeds received from the sale of common stock under the Company's stock option plans...

  • Page 36
    ...the fiscal quarters ending after December 30, 2009. As of February 23, 2008, the Company was in compliance with the covenants of the senior secured credit facilities. Borrowings under Term Loan A and Term Loan B may be repaid, in full or in part, at any time without penalty. Term Loan A has required...

  • Page 37
    ... less than one year to 19 years, with a weighted average remaining term of approximately 11 years. For each guarantee issued, if the affiliated retailer defaults on a payment, the Company would be required to make payments under its guarantee. Generally, the guarantees are secured by indemnification...

  • Page 38
    ... 23, 2008. Payments Due Per Period Fiscal Fiscal Fiscal 2009 2010-2011 2012-2013 Total Thereafter Contractual Obligations: Debt (1) Operating leases (2) Interest on long-term debt (3) Capital leases (4) Benefit obligations (5) Construction commitments Deferred income taxes Purchase obligations...

  • Page 39
    ...settlement of unrecognized tax benefits cannot be fully determined. However, the Company expects to resolve $5, net, of unrecognized tax benefits within the next 12 months. COMMON STOCK PRICE SUPERVALU's common stock is listed on the New York Stock Exchange under the symbol SVU. At the end of fiscal...

  • Page 40
    ... to Consolidated Financial Statements. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to market pricing risk consisting of interest rate risk related to debt obligations outstanding, its investment in notes receivable and, from time to time, derivatives employed to...

  • Page 41
    The Company makes long-term loans to certain Supply chain customers and as such, holds notes receivable in the normal course of business. The notes generally bear fixed interest rates negotiated with each retail customer. The market value of the fixed interest rate notes is subject to change due to ...

  • Page 42
    ... of management's attention and resources Store Expansion and Remodeling • • Potential delays in the development, construction or start-up of planned projects Our ability to locate suitable store or distribution center sites, negotiate acceptable purchase or lease terms and build or expand...

  • Page 43
    ... supermarket business of Albertsons in a cost effective and non-disputed manner with minimal diversion of management time Accounting Matters • Changes in accounting standards that impact our financial statements QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ITEM 7A. The information...

  • Page 44
    ... it files or submits under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms and (2) accumulated and communicated to the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer...

  • Page 45
    ... F-5 of this Annual Report on Form 10-K, expresses an unqualified opinion on the effectiveness of the Company's internal control over financial reporting as of February 23, 2008. Changes in Internal Control Over Financial Reporting During the fiscal quarter ended February 23, 2008, there has been...

  • Page 46
    ...Statement to be filed with the SEC pursuant to Regulation 14A in connection with the Company's 2008 Annual Meeting of Stockholders under the heading "Election of Directors (Item 1)." The Company has adopted a code of ethics that applies to its principal executive officer, principal financial officer...

  • Page 47
    ... The information called for by Item 12, as to security ownership of certain beneficial owners, directors and management, is incorporated by reference to the Company's definitive Proxy Statement to be filed with the SEC pursuant to Regulation 14A in connection with the Company's 2008 Annual Meeting...

  • Page 48
    ... Stock Plan may not have an exercise price less than 100 percent of the fair market value of SUPERVALU's common stock on the date of the grant. Unless the Board of Directors otherwise specifies, restricted stock and restricted stock units will be forfeited and reacquired by SUPERVALU if an employee...

  • Page 49
    ... public accountants, are filed as part of this Annual Report on Form 10-K. (2) Financial Statement Schedules: The consolidated financial statement schedule to the Company listed in the accompanying "Index of Selected Financial Data and Financial Statements and Schedules." (3) Exhibits: (2) Plan...

  • Page 50
    ... Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the SEC on April 17, 2000. Indenture dated as of November 2, 2001, between the Company and The Chase Manhattan Bank, as Trustee, including form of Liquid Yield Optionâ„¢ Note due 2031 (Zero Coupon-Senior), is incorporated herein by...

  • Page 51
    ... Annual Report on Form 10-K for the year ended February 25, 2006.* Form of SUPERVALU INC. 2002 Stock Plan Stock Option Agreement for Non-Employee Directors and Stock Option Terms and Conditions for Non-Employee Directors is incorporated herein by reference to Exhibit 10.3 to the Company's Quarterly...

  • Page 52
    ... Criteria for Awards Under the Company's Annual Cash Bonus Plan for Designated Corporate Officers and the Executive Incentive Bonus Plan is incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period (12 weeks) ended December 4, 2004.* 46

  • Page 53
    ... to Exhibit 10.25 to the Company's Annual Report on Form 10-K for the year ended February 24, 2007.* 10.26 Form of SUPERVALU INC. Long-Term Incentive Plan Restricted Stock Award Certificate and Long-Term Incentive Plan Restricted Stock Award Terms and Conditions is incorporated herein by reference...

  • Page 54
    ...the Current Report on Form 8-K of Albertson's, Inc. (Commission File Number 1-6187) filed with the SEC on December 20, 2004.* 10.42 SUPERVALU INC. Deferred Compensation Plan for Non-Employee Directors, as amended, is incorporated herein by reference to Exhibit 10.11 to the Company's Annual Report on...

  • Page 55
    ...'s Annual Report on Form 10-K for the year ended February 25, 2006.* 10.58 Purchase and Separation Agreement, dated January 22, 2006, by and among the Company, Albertson's, Inc., New Aloha Corporation and AB Acquisition LLC is incorporated herein by reference to Exhibit 10.1 to the Company's Current...

  • Page 56
    ... Company's Current Report on Form 8-K filed with the SEC on September 27, 2006.* 10.66 Summary of Non-Employee Director Compensation for fiscal 2008, is incorporated herein by reference to Exhibit 10.65 to the Company's Annual Report on Form 10-K for the year ended February 24, 2007. 10.67 Albertson...

  • Page 57
    ...the Annual Report on Form 10-K of Albertson's, Inc. (Commission File Number 1-6187) for the year ended January 30, 2003.* 10.81 Second Amendment to the Albertson's, Inc. Executive Pension Makeup Plan, dated as of April 28, 2006, is incorporated herein by reference to Exhibit 10.13.8 to the Quarterly...

  • Page 58
    ... File Number 1-6187) for the quarter ended May 4, 2006.* 10.100 Albertson's, Inc. Non-Employee Directors' Deferred Compensation Plan is incorporated herein by reference to Exhibit 10.21 to the Annual Report on Form 10-K of Albertson's, Inc. (Commission File Number 1-6187) for the year ended...

  • Page 59
    ...to the Annual Report on Form 10-K of Albertson's, Inc. (Commission File Number 1-6187) for the year ended February 1, 2001.* 10.113 American Stores Company Supplemental Executive Retirement Plan 1998 Restatement is incorporated herein by reference to Exhibit 4.1 of the Registration Statement on Form...

  • Page 60
    ... the American Stores Company Supplemental Executive Retirement Plan, dated as of April 28, 2006, is incorporated herein by reference to Exhibit 10.30.2 to the Quarterly Report on Form 10-Q of Albertson's, Inc. (Commission File Number 1-6187) for the quarter ended May 4, 2006.* 10.116 Albertsons Inc...

  • Page 61
    ...by the undersigned, thereunto duly authorized. SUPERVALU INC. (Registrant) /s/ By: DATE: April 23, 2008 JEFFREY NODDLE Jeffrey Noddle Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following...

  • Page 62
    ... that: 1. I have reviewed this Annual Report on Form 10-K of SUPERVALU INC. for the fiscal year ended February 23, 2008; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of...

  • Page 63
    ... that: 1. I have reviewed this Annual Report on Form 10-K of SUPERVALU INC. for the fiscal year ended February 23, 2008; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of...

  • Page 64
    ... officer of SUPERVALU INC. (the "Company") certifies that the Annual Report on Form 10-K of the Company for the fiscal year ended February 23, 2008, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in that Annual...

  • Page 65
    ... officer of SUPERVALU INC. (the "Company") certifies that the Annual Report on Form 10-K of the Company for the fiscal year ended February 23, 2008, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in that Annual...

  • Page 66

  • Page 67
    ... Statements and Schedules Page(s) Selected Financial Data: Five Year Financial and Operating Summary ...Financial Statements: Reports of Independent Registered Public Accounting Firm ...Consolidated Composition of Net Sales and Operating Earnings for the fiscal years ended February 23, 2008...

  • Page 68
    ...percent of net sales Net earnings per share-diluted Financial Position (1) Inventories (FIFO) (3) Working capital (3) Property, plant and equipment, net Total assets Long-term debt (4) Stockholders' equity Other Statistics (1) Return on average stockholders' equity Book value per share Current ratio...

  • Page 69
    ... and capital leases. (7) Retail stores at fiscal year end includes licensed limited assortment food stores and is adjusted for planned sales and closures at the end of each fiscal year. Historical data is not necessarily indicative of the Company's future results of operations or financial condition...

  • Page 70
    ... their operations and their cash flows for each of the fiscal years in the three-year period ended February 23, 2008, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated...

  • Page 71
    ... Company Accounting Oversight Board (United States), the consolidated balance sheets of SUPERVALU INC. as of February 23, 2008 and February 24, 2007, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the fiscal years in the three-year period ended...

  • Page 72
    ...2007 (52 weeks) February 25, 2006 (52 weeks) The Company's business is classified by management into two reportable segments: Retail food and Supply chain services. Retail food operations include results of the Company's own combination stores (defined as food and pharmacy), food stores and limited...

  • Page 73
    ... INC. and Subsidiaries CONSOLIDATED STATEMENTS OF EARNINGS (In millions, except per share data) February 23, 2008 (52 weeks) February 24, 2007 (52 weeks) February 25, 2006 (52 weeks) Net sales Costs and expenses Cost of sales Selling and administrative expenses Operating earnings Interest Interest...

  • Page 74
    ... EQUITY Current liabilities Accounts payable Accrued vacation, compensation and benefits Current maturities of long-term debt Current obligations under capital leases Income taxes currently payable Other current liabilities Total current liabilities Long-term debt Long-term obligations under capital...

  • Page 75
    ...stock units issued in connection with acquisition of New Albertsons Sales of common stock under option plans Cash dividends declared on common stock $0.6575 per share Compensation under employee incentive plans Purchase of shares for treasury Balances at February 24, 2007 Effects of changing pension...

  • Page 76
    ... of long-term debt Payment of Albertson's, Inc. standalone drug business payables Proceeds from settlement of mandatory convertible securities Payment of obligations under capital leases Dividends paid Net proceeds from the sale of common stock under option plans and related tax benefits Payment for...

  • Page 77
    ... CASH FLOW INFORMATION The Company's non-cash activities were as follows: Capital lease asset additions and related obligations Purchases of property, plant and equipment included in Accounts payable Interest and income taxes paid: Interest paid (net of amount capitalized) Income taxes paid...

  • Page 78
    ... chain services, including wholesale distribution and related logistics support services primarily across the United States retail grocery channel. On June 2, 2006 (the "Acquisition Date"), the Company acquired New Albertson's, Inc. ("New Albertsons") consisting of the core supermarket businesses...

  • Page 79
    ...no credit risk, the Company generally records the net amounts as management fees earned. Cost of Sales Cost of sales includes cost of inventory sold during the period, including purchasing and distribution costs and shipping and handling fees. Retail food advertising expenses are a component of Cost...

  • Page 80
    ... for workers' compensation, health care for certain employees and general and automobile liability costs. It is the Company's policy to record its self-insurance liabilities based on management's estimate of the ultimate cost of reported claims and claims incurred but not yet reported and related...

  • Page 81
    ... capitalized in fiscal 2008, 2007 and 2006, respectively. Goodwill and Intangible Assets The Company reviews goodwill for impairment during the fourth quarter of each year, and also if an event occurs or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit...

  • Page 82
    ... on management's selection of certain assumptions in calculating these amounts. These assumptions include, among other things, the discount rate, the expected long-term rate of return on plan assets and the rates of increase in compensation and health care costs. Derivatives The Company accounts for...

  • Page 83
    ... as risk-free interest rate, expected volatility, expected dividend yield and expected life of options. Prior to the adoption of SFAS No. 123(R), the Company utilized the intrinsic value based method, per Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees...

  • Page 84
    ... the fair value of the purchase price of an acquisition, including the issuance of equity securities, to be determined on the acquisition date. SFAS No. 141(R) also requires that all assets, liabilities, contingent considerations and contingencies of an acquired business be recorded at fair value at...

  • Page 85
    ... for a purchase price of approximately $11,370, net of approximately $4,911 of cash for the sale of the Albertsons' standalone drug store business to CVS Corporation and the sale of Albertsons' non-core supermarket business ("Albertsons LLC") to an investment group led by Cerberus Capital Management...

  • Page 86
    ...for the Acquired Operations of $958 in the first quarter of fiscal 2008 and other purchase accounting adjustments during fiscal 2008 for income tax-related amounts. Goodwill also increased $57 related to other store acquisitions. The increase in Goodwill from $1,614 as of February 25, 2006 to $5,921...

  • Page 87
    ... of retail stores, distribution warehouses and other properties that are no longer being utilized in current operations. The Company provides for closed property operating lease liabilities using a discount rate to calculate the present value of the remaining noncancellable lease payments after...

  • Page 88
    ... the book value at February 23, 2008. Notes receivable are valued based on a discounted cash flow approach applying a rate that is comparable to publicly traded debt instruments of similar credit quality. The estimated fair value of the Company's long-term debt (including current maturities) was...

  • Page 89
    ... below, the stated interest rates for the debt assumed from New Albertsons are followed by the effective rates in parentheses resulting from the discounts and premiums due to purchase accounting fair value adjustments. 2008 2007 6.01% to 8.70% (5.44% to 8.97%) Senior Notes, Medium Term Notes and...

  • Page 90
    ...the fiscal quarters ending after December 30, 2009. As of February 23, 2008, the Company was in compliance with the covenants of the senior secured credit facilities. Borrowings under Term Loan A and Term Loan B may be repaid, in full or in part, at any time without penalty. Term Loan A has required...

  • Page 91
    ... in a senior note. The remaining forward purchase contracts were settled on May 16, 2007 at which time the Company received approximately $52 of net cash and issued approximately 1.1 shares. NOTE 9-LEASES The Company leases certain retail food stores, food distribution warehouses, office facilities...

  • Page 92
    ..., the Company leases buildings to independent retailers with terms ranging from five to 20 years. Future minimum lease and subtenant rentals under noncancellable leases in effect at February 23, 2008 were as follows: Lease Receipts Direct Operating Financing Leases Leases Fiscal Year 2009 2010...

  • Page 93
    ... the tax provision computed by applying the statutory federal income tax rate to earnings before income taxes is attributable to the following: 2008 2007 2006 Federal taxes based on statutory rate State income taxes, net of federal benefit Other Total provision $342 40 2 $384 $261 31 3 $295 $115...

  • Page 94
    ...asset, as realization of the deferred tax asset in future years is uncertain, and the change in the valuation allowance is due to the change in the capital loss carryforward. The capital loss carryforward will expire in fiscal 2011. The Company has evaluated the remaining deferred tax assets and has...

  • Page 95
    SUPERVALU INC. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) A summary of changes in the Company's unrecognized tax benefits during fiscal 2008 is as follows: 2008 Beginning balance Increase based on tax positions related to the current year Decrease based on tax positions...

  • Page 96
    ... the Company's non-employee directors to purchase common stock at an exercise price not less than 100 percent of the fair market value of the Company's common stock on the date of grant. Generally, stock options vest over four years. In fiscal 2007, in accordance with the New Albertsons acquisition...

  • Page 97
    ... as of each applicable grant date. The dividend yield is based on analysis of actual historical dividend yield. The significant weighted average assumptions relating to the valuation of the Company's stock options were as follows: 2008 2007 2006 Dividend yield Volatility rate Risk-free interest...

  • Page 98
    ..., 2007, the Company's Board of Directors adopted a new annual share repurchase program authorizing the Company to purchase up to $235 of the Company's common stock. Share repurchases will be made with the cash generated from the settlement of stock options and mandatory convertible securities equity...

  • Page 99
    ... pension plans, the Company provides health care and life insurance benefits for eligible retired employees under postretirement benefit plans and short-term and long-term disability benefits to former and inactive employees prior to retirement under post-employment benefit plans. The terms...

  • Page 100
    ...Fair value of plan assets at beginning of year Acquired Operations fair value of plan assets at Acquisition Date Change in measurement date Actual return on plan assets Employer contributions Plan participants' contributions Benefits paid Fair value of plan assets at end of year Funded status at end...

  • Page 101
    ...Benefit calculations for Acquired Operation retirees are based upon age at retirement, years of eligible service and average compensation. Net periodic benefit expense for defined benefit pension plans and other postretirement benefit plans consisted of the following: Pension Benefits 2008 2007 2006...

  • Page 102
    ... payments to be paid from the Company's defined benefit pension plans and other postretirement benefit plans, which reflect expected future service, are as follows: Other Postretirement Benefits Pension Benefits Fiscal Year 2009 2010 2011 2012 2013 Years 2014-2018 Assumptions Weighted average...

  • Page 103
    ... 30, 2006. The Acquired Operations benefit obligations and the fair value of plan assets were measured as of February 22, 2007. (2) Net periodic benefit expense is measured using weighted average assumptions as of the beginning of each year. (3) The Company reviews and selects the discount rate to...

  • Page 104
    ... investment manager portfolios and both general and portfolio-specific investment guidelines. Risk tolerance is established through careful consideration of the plan liabilities, plan funded status and the Company's financial condition. This asset allocation policy mix is reviewed annually and...

  • Page 105
    ... to former or inactive employees. The Company is selfinsured for certain of its employees' short-term and long-term disability plans, which are the primary benefits paid to inactive employees prior to retirement. At February 23, 2008, the obligation for post-employment benefits was $75, with $24...

  • Page 106
    ... Albertsons. In April 2000, a class action complaint was filed against Albertsons, as well as American Stores Company, American Drug Stores, Inc., Sav-on Drug Stores, Inc. and Lucky Stores, Inc., wholly-owned subsidiaries of Albertsons, in the Superior Court for the County of Los Angeles, California...

  • Page 107
    ..., a complaint was filed, later certified as a class action, in California Superior Court in and for the County of San Diego (Sally Wilcox and Dennis Taber. v. Albertson's, Inc.), alleging that Albertsons failed to pay wages for time worked during meal breaks to its non-exempt employees employed in...

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    ...'s financial condition, results of operations or cash flows. Pension Plan / Health and Welfare Plan Contingencies The Company contributes to various multi-employer pension plans under collective bargaining agreements, primarily defined benefit pension plans. These plans generally provide retirement...

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    ... FINANCIAL STATEMENTS-(Continued) NOTE 16-SHAREHOLDER RIGHTS PLAN On April 24, 2000, the Company announced that the Board of Directors adopted a Shareholder Rights Plan under which one preferred stock purchase right is distributed for each outstanding share of common stock. The rights, which expire...

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    UNAUDITED QUARTERLY FINANCIAL INFORMATION (In millions, except per share data) Unaudited quarterly financial information for SUPERVALU INC. and subsidiaries is as follows: 2008 First (16 wks) Second (12 wks) Third (12 wks) Fourth (12 wks) Fiscal Year (52 wks) Net sales Gross profit Net earnings Net...

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    SUPERVALU INC. and Subsidiaries SCHEDULE II-Valuation and Qualifying Accounts (In millions) Balance at Beginning of Fiscal Year Balance at End of Fiscal Year Description Additions Deductions Allowance for losses on receivables: 2008 2007 (1) 2006 $28 27 34 13 20 3 (21) (19) (10) $20 28 27 ...

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    ... Chief Securities Counsel [email protected] For corporate headquarters, please contact 952-828-4000 CERT I F I C AT I O N S The company has filed as exhibits to its Annual Report on Form 10-K for the fiscal year ended February 23, 2008, the Chief Executive Officer and Chief Financial...

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    SU P ERVAL U.C OM - PO B OX 9 9 0 MINNEAPOLIS, MN 55344 - (952) 828-4000