Supervalu 2002 Annual Report Download

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2002 Annual Report
Strength
& stability

Table of contents

  • Page 1
    2002 Annual Report Strength & stability

  • Page 2
    ... number one position within extreme value grocery retail. An efficient multi-tier logistics network across a diverse geography, SUPERVALU provides logistics services to thousands of additional customer locations providing a broad array of product, support services and third party logistics solutions...

  • Page 3
    ..., we implemented a comprehensive plan. Progress in Fiscal 2002 was swift and ultimately, strengthened our core competencies in retailing and logistics. To recap, we: â- Exited under-performing stores and non-core retail markets our retail execution our distribution network by consolidating volume...

  • Page 4
    ...margins, increased purchasing power in the supply chain that benefits all our customers and enhanced stock valuation. The changing business mix demonstrates the importance of our retail segment as a growing part of SUPERVALU's overall success. In Fiscal 2002, we opened 103 new Save-A-Lot stores, of...

  • Page 5
    ...providing the best service at competitive costs to our customers that span almost 5,000 locations nationwide. The Future SUPERVALU is a stronger, more efficient Company today than just a year ago. We are well-positioned for the future. Jeff Noddle President and Chief Executive Officer years ago is...

  • Page 6
    ... cases each year. Retail SUPERVALU's growing presence in grocery retailing, specifically price impact retailing, combines excellent store level execution, merchandising, supply chain expertise, and overall commitment to customer satisfaction. Market Position â- â- Store Expansion â- Save...

  • Page 7
    ..., refill, reverse logistics, cross-dock, nationwide customer service call center, category management, store planograms, promotional programs, store design, Internet marketing solutions, market analysis and research, equipment purchases, SUPERVALU Harbor on-line retailer interface, access to World...

  • Page 8
    ...ts for customers. Customers appreciate the convenient, clean, simple store layout where they save time and money. SUPERVALU plans to aggressively expand Save-A-Lot's store network leveraging its highly efficient business model that combines operational simplicity, supply chain benefits, product SKU...

  • Page 9
    ...Lot customers generally save up to 40 percent on their grocery shopping compared to conventional supermarkets. By utilizing a highly efficient business model across the entire supply chain and a very disciplined store format, Save-A-Lot is today's breakthrough model in grocery retailing. SUPERVALU...

  • Page 10
    ... selection in every department. During Fiscal 2002, we opened 11 stores in our key markets adding to our strong market positions. Customers love fresh produce Aided by global sourcing of product, a wide variety of fresh produce is available year round. Today, our stores offer exceptional savings on...

  • Page 11
    are expansion Shoppers in search of the traditional grocery shopping experience are served by our associates at Farm Fresh, Scott's and Hornbacher's stores. With 60 traditional supermarkets each averaging 50,000 square feet, these formats continue to fill a large share of consumers' regular ...

  • Page 12
    ... offerings, service solutions and infrastructure to address today's retail grocery environment, SUPERVALU's customers benefit. Customers capitalize on SUPERVALU's scale and proprietary "cost to serve" technology, as well as category management programs to maximize sales and profits. Information...

  • Page 13
    ...chain management. As larger chains outsource portions of their supply chain to reduce investment in inventory or fixed assets and improve overall efficiency, SUPERVALU offers an array of logistics solutions tailored to any retail network. Product costs are just the beginning SUPERVALU's purchasing...

  • Page 14
    ... 17.9 percent in 2002 compared to 2001. Retail food sales increased over last year primarily due to new store openings. Same-store sales were positive 0.2 percent reï¬,ecting the soft economy, competitor activities and cannibalization in certain markets. Food distribution sales decreased from last...

  • Page 15
    ... new customers, and new corporate stores. Retail food sales increased 15.9 percent and food distribution sales increased 12.8 percent in 2001 compared to 2000. Retail food sales increased from 2000 primarily due to the Richfood acquisition and the opening of new stores in 2001. Same-store sales were...

  • Page 16
    ...on the sale of Hazelwood Farms Bakeries and the restructure charges in 2000, net earnings were $235.9 million or $1.78 per diluted share in 2001 compared with $232.0 million or $1.78 per diluted share in 2000. consolidation of distribution centers. The reserve at the end of fiscal 2002 for fiscal...

  • Page 17
    ...fund its capital expenditures and acquisitions as opportunities arise. Maturities of debt issued will depend on management's views with respect to the relative attractiveness of interest rates at the time of issuance and other debt maturities. The Company has revolving credit agreements with various...

  • Page 18
    ... value general merchandise stores. The balance of the fiscal 2003 capital budget relates to distribution maintenance capital and information technology related items. In addition, the Company will continue to support store development and financing for the Company's independent retailers. Certain...

  • Page 19
    ... Financial Statements for further information). The notes generally bear fixed interest rates negotiated with each retail customer. The market value of the fixed rate notes is subject to change due to ï¬,uctuations in market interest rates. At February 23, 2002, the estimated fair value of notes...

  • Page 20
    ... stores and non-operating properties, • the availability of favorable credit and trade terms, and • other risk factors inherent in the retail food and food distribution industries. These risks and uncertainties are set forth in further detail in Exhibit 99(i) to the Company's Annual Report...

  • Page 21
    ... weeks) February 26, 2000 (52 weeks) Net sales Retail food $ 9,549,068 45.7% Food distribution 11,359,454 54.3% Total net sales $20,908,522 100.0% Operating earnings Retail food Food distribution General corporate expenses Gain on sale of Hazelwood Farms Bakeries Restructure and other charges Total...

  • Page 22
    ... of Earnings February 23, 2002 (In thousands, except per share data) (52 weeks) February 24, 2001 (52 weeks) February 26, 2000 (52 weeks) Net sales Costs and expenses Cost of sales Selling and administrative expenses Gain on sale of Hazelwood Farms Bakeries Restructure and other charges Interest...

  • Page 23
    ...Net property, plant and equipment Goodwill Other assets Total assets Liabilities and Stockholders' Equity Current Liabilities Notes payable Accounts payable Accrued vacation, compensation...' equity Common stock, $1.00 par value: Authorized 200,000 shares Shares issued, 150,670 in 2002 and 2001 Capital...

  • Page 24
    ... at February 27, 1999 Net earnings Sales of common stock under option plans Cash dividends declared on common stock - $0.5375 per share Compensation under employee incentive plans Treasury shares exchanged for acquisitions Redemption of preferred stock Purchase of shares for treasury Balances at...

  • Page 25
    ... to long-term notes receivable Proceeds received on long-term notes receivable Proceeds from sale of assets Purchase of property, plant and equipment Business acquisitions, net of cash acquired Other investing activities Net cash used in investing activities Cash ï¬,ows from financing activities...

  • Page 26
    ... income from product sales are recognized at the point of sale for retail food and upon shipment of the product for food distribution. Revenues and income from services rendered are recognized immediately after such services have been provided. Allowances for Losses on Receivables Management makes...

  • Page 27
    ...value of notes receivable approximates the net carrying value at February 23, 2002 and February 24, 2001. Notes receivable are valued based on comparisons to publicly traded debt instruments of similar credit quality. The estimated fair market value of the Company's long-term debt (including current...

  • Page 28
    .... Balance February 24, 2001 Fiscal 2002 Usage Fiscal 2002 Adjustment Balance February 23, 2002 Consolidation of distribution centers Exit of non-core retail markets Disposal of non-core assets and other administrative reductions Total restructure and other charges Employees $41,499 33,735 16...

  • Page 29
    ...1, 2011 at a purchase price equal to the accreted value of the debentures, which includes accrued and unpaid cash interest. The debentures will generally be convertible if the closing price of the Company's common stock on the New York Stock Exchange for twenty of the last thirty trading days of any...

  • Page 30
    ...669 $996,728 Leases Capital and operating leases The Company leases certain retail food stores, food distribution warehouses and office facilities. Many of these leases include renewal options, and to a limited extent, include options to purchase. Amortization of assets under capital leases was $31...

  • Page 31
    ...Option Plans The Company's 1997, 1993 and SUPERVALU/Richfood 1996 stock option plans allow the granting of non-qualified stock options and incentive stock options to key salaried executive employees at prices not less than 100 percent of fair market value, determined by averaging the open and close...

  • Page 32
    ...granted to purchase 2.9 million shares of common stock and are exercisable only upon a "change in control." No compensation cost has been recognized for options issued under the stock option plans because the exercise price of all options granted was not less than 100 percent of fair market value of...

  • Page 33
    ... the Employee Retirement Income Security Act (ERISA). Plan assets are held in trust and invested in separately managed accounts and publicly traded mutual funds holding both equity and fixed income securities. In addition to providing pension benefits, the Company provides certain health care and...

  • Page 34
    ... of year Service cost Interest cost Plan amendments Actuarial loss Benefits paid Benefit obligations at end of year Changes in Plan Assets Fair value of plan assets at beginning of year Actual return on plan assets Company contributions Plan participants' contributions Benefits paid Fair value of...

  • Page 35
    ... Information The Company's business is classified by management into two reportable segments: Retail Food and Food Distribution. Retail Food operations include three retail formats: extreme value food stores, price superstores, and supermarkets. The retail formats include results of food stores...

  • Page 36
    Independent Auditors' Report The Board of Directors and Stockholders SUPERVALU INC. Eden Prairie, Minnesota We have audited the accompanying consolidated balance sheets of SUPERVALU INC. and subsidiaries as of February 23, 2002 and February 24, 2001, and the related consolidated statements of ...

  • Page 37
    ... financial information for SUPERVALU INC. and subsidiaries is as follows: Fiscal Year Ended February 23, 2002 (In thousands, except per share data) First (16 wks) Second (12 wks) Third (12 wks) Fourth (12 wks) Year (52 wks) Net sales Gross profit Net earnings Net earnings per common share-diluted...

  • Page 38
    ...$53.7 million or $0.42 per diluted share. Earnings as a percent of net sales, return on average stockholders' equity, and EBITDA have been adjusted to exclude this transaction. (f) Information adjusted to include stock split in fiscal 1999. (g) Working capital and current ratio are calculated after...

  • Page 39
    ...Capital Management A private equity company Investor Information Annual Meeting Date: Thursday, May 30, 2002 Time: 10:30 a.m. Central Time Place: Save-A-Lot Headquarters 100 Corporate Office Drive Earth City, Missouri 63045 Transfer Agent & Registrar For inquiries about SUPERVALU common stock, such...

  • Page 40
    PO Box 990 Minneapolis, MN 55440 952-828-4000 www.supervalu.com