Albertsons 2015 Annual Report Download - page 8

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PART I
ITEM 1. BUSINESS
Unless otherwise indicated, all references to the “Company,” “we,” “us,” “our” and “SUPERVALU” in this Annual Report on
Form 10-K relate to SUPERVALU INC. and its wholly and majority-owned subsidiaries. All dollar and share amounts in this
Annual Report on Form 10-K are in millions, except per share data and where otherwise noted.
Business Overview
SUPERVALU, a Delaware corporation, was organized in 1925 as the successor to two wholesale grocery firms established in
the 1870s. SUPERVALU today is one of the largest wholesale distributors to independent retail customers across the United
States through its Independent Business segment, one of the nation’s largest hard discount grocery retailers by store count
through its Save-A-Lot segment and operates five regionally-based traditional format grocery banners through its Retail Food
segment. Substantially all of the Company's operations are domestic.
Distribution operations are leveraged by providing wholesale distribution and logistics service solutions to independent retail
customers and Save-A-Lot licensees, as well as wholesale distribution to the Company's Retail Food and Save-A-Lot stores.
On March 21, 2013, the Company completed the sale (the “NAI Banner Sale”) of New Albertson’s, Inc. (“New Albertsons” or
“NAI”) to AB Acquisition LLC (“AB Acquisition”), an affiliate of Cerberus Capital Management, L.P. (“Cerberus”). The NAI
Banner Sale was completed through a Stock Purchase Agreement (the “Stock Purchase Agreement”) providing for a sale of
NAI stock by SUPERVALU to AB Acquisition, which included the stores operating under the Acme, Albertsons, Jewel-Osco,
Shaw’s and Star Market banners and related Osco and Sav-on in-store pharmacies (collectively, the “NAI Banners”). Results of
operations of NAI are reported as discontinued operations for all periods presented.
In connection with the sale of NAI, the Company entered into various agreements with AB Acquisition and its affiliates,
including a Transition Services Agreement with each of NAI and Albertson’s LLC (collectively, the “TSA”) under which the
Company provides certain services to each of NAI and Albertson’s LLC, and NAI and Albertson’s LLC provide certain
services to the Company, in each case as described therein. On April 16, 2015, following discussions with NAI and Albertson’s
LLC regarding the impact of Albertson’s LLC’s acquisition of Safeway, Inc. (the “Safeway Acquisition”) and their plans
around winding down the TSA, the Company entered into a letter agreement regarding the TSA with NAI and Albertson’s LLC
pursuant to which the Company will provide services to NAI and Albertson’s LLC as needed to transition and wind down the
TSA. For additional discussion of the TSA and this letter agreement, see “Risk Factors-Changes in the Company’s relationships
with NAI, Albertson’s LLC or Haggen could adversely impact the Company’s results of operations” in Part I, Item 1A of this
Annual Report on Form 10-K. In December 2014, the Company entered into a Transition Services Agreement with Haggen (the
“Haggen TSA”) to provide certain services to all 164 stores owned and being acquired by Haggen in connection with the
Safeway Acquisition as the stores are acquired by Haggen. The Haggen TSA is similar to the TSA supporting NAI and
Albertson’s LLC and has a term of two years with three one-year automatic renewal periods unless earlier notice of nonrenewal
is given by either party. Approximately 100 of these stores being acquired by Haggen received services from the Company
under the TSA with Albertson’s LLC.
Concurrently with the execution of the Stock Purchase Agreement, the Company entered into a Tender Offer Agreement (the
“Tender Offer Agreement”) with Symphony Investors, LLC, a newly formed acquisition entity owned by a Cerberus investor
consortium (“Symphony Investors”). Through the Tender Offer Agreement, Symphony Investors acquired 42 and 12 shares of
Company common stock from the issuance by the Company and a tender offer, respectively, and owned approximately 20.7
percent of the Company’s issued and outstanding common stock as of February 28, 2015. Many of the restrictions on the shares
acquired by Symphony Investors in the tender offer and from the Company under the Tender Offer Agreement, including the
two-year restriction on transfers, expired on March 21, 2015. SUPERVALU has agreed to customary obligations to register the
shares issued by the Company with the Securities and Exchange Commission (the “SEC”) if requested by Symphony Investors.
The Company’s principal executive offices are located at 11840 Valley View Road, Eden Prairie, Minnesota 55344 (Telephone:
952-828-4000). 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 amended (the “Exchange Act”) as soon
as reasonably practicable after such material is electronically filed with or furnished to 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 Investor Relations, SUPERVALU INC., P.O. Box 990, Minneapolis, MN
55440.