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65
SUPERVALU INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars and shares in millions, except per share data, unless otherwise noted)
NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Description and Principles of Consolidation
SUPERVALU INC. and its subsidiaries (“Supervalu” or the “Company”) operates primarily in the United States grocery
channel. Supervalu provides supply chain services, primarily wholesale distribution, operates hard discount retail stores and
licenses stores to independent operators under the Save-A-Lot banner, and operates five competitive, regionally-based
traditional format grocery banners under the Cub Foods, Shoppers Food & Pharmacy, Shop 'n Save, Farm Fresh and
Hornbacher’s banners. The Consolidated Financial Statements include the accounts of the Company and all its wholly and
majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
During fiscal 2013, the Company entered into a stock purchase agreement (the “Stock Purchase Agreement”) to sell the
Company’s New Albertson’s, Inc. subsidiary (“New Albertsons” or “NAI”), including the Acme, Albertsons, Jewel-Osco,
Shaw’s and Star Market retail banners and the associated Osco and Sav-on in-store pharmacies (the “NAI Banner Sale”) to AB
Acquisition LLC (“AB Acquisition”). The NAI Banner Sale was completed effective March 21, 2013, during the Company’s
first quarter of fiscal 2014. The NAI operations disposed of under the NAI Banner Sale are reported as discontinued operations
in the Consolidated Statements of Operations for all periods presented. Unless otherwise indicated, references to the
Consolidated Statements of Operations and the Consolidated Balance Sheets in the Notes to the Consolidated Financial
Statements exclude all amounts related to discontinued operations. See Note 16—Discontinued Operations for additional
information regarding these discontinued operations.
Fiscal Year
Supervalu operates on a 52/53 week fiscal year basis, with its fiscal year ending on the last Saturday in February. References to
fiscal 2016 and 2014 relate to Supervalu's fiscal years ended February 27, 2016 and February 22, 2014, respectively, each
consisting of 52 weeks. References to fiscal 2015 relate to Supervalu's fiscal year ended February 28, 2015 consisting of 53
weeks.
Use of Estimates
The preparation of the Company’s Consolidated Financial Statements in conformity with accounting principles generally
accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses for the reporting periods presented. Actual results could differ from those estimates.
Revenue Recognition
Revenues from product sales are recognized upon delivery for the Wholesale segment, at the point of sale for the Retail
Segment and Save-A-Lot’s corporate retail operations, and upon delivery for Save-A-Lot’s licensee distribution operations.
Typically, invoicing, shipping, delivery and customer receipt of Wholesale product occur on the same business day. Revenues
from services rendered are recognized immediately after such services have been provided. Discounts and allowances provided
to customers by the Company at the time of sale, including those provided in connection with loyalty cards, are recognized as a
reduction in Net sales as the products are sold to customers. Sales tax is excluded from Net sales.
Revenues and costs from professional services and third-party logistics operations are recorded gross when the Company is the
primary obligor in a transaction, is subject to inventory or credit risk, has latitude in establishing price and selecting suppliers,
or has several, but not all, of these indicators. If the Company is not the primary obligor and amounts earned have little or no
inventory or credit risk, revenue is recorded net as management fees when earned.
Incentives in the form of upfront cash payments to Save-A-Lot licensees are provided by the Company to help offset
independent operator costs associated with opening and initially operating a store. Licensee incentives are recognized as a
reduction of Net sales over the term of the incentive agreements, which coincides with the term of the license and supply
agreements. Licensee incentive assets are included in Other current assets and Other long-term assets in the Consolidated
Balance Sheets.