Supervalu 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
    ... 180 percent of pre-acquisition levels. Today, SUPERVALU operations touch 49 states through our retail network of nearly 2,500 food and drug stores and our supply chain services operation that serves an additional 2,700 retail endpoints. We finished the year with record sales, record earnings and an...

  • Page 4
    ... 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 technology systems and service...

  • Page 5
    Outlook 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 ...

  • Page 6
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 7
    ... (State or other jurisdiction of incorporation or organization) 41-0617000 (I.R.S. Employer Identification No.) 11840 Valley View Road Eden Prairie, Minnesota (Address of principal executive offices) 55344 (Zip Code) Registrant's telephone number, including area code: (952) 828-4000 Securities...

  • Page 8
    ... 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 Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and...

  • Page 9
    ... States grocery channel. SUPERVALU conducts its retail operations under the following banners: Acme Markets, Albertsons, Bristol Farms, bigg's, Cub Foods, Farm Fresh, Hornbacher's, Jewel-Osco, Lucky, Save-A-Lot, Shaw's Supermarkets, Shop 'n Save, Shoppers Food & Pharmacy and Star Markets. SUPERVALU...

  • Page 10
    ..., bigg's, Cub Foods, Farm Fresh, Jewel-Osco, Sav-on, Shaw's Supermarkets, Shop 'n Save, Shoppers Food & Pharmacy and Star Markets banners. Typical combination stores carry about 50,000 items and average approximately 60,000 square feet. Food stores focus their product offerings primarily on grocery...

  • Page 11
    ... of the franchise or license program, a complete business concept, group advertising, private-label products and other benefits. The Company is the franchisor or licensor of certain service marks such as CUB FOODS, SAVE-A-LOT, SENTRY, FESTIVAL FOODS, COUNTY MARKET, SHOP 'N SAVE, NEWMARKET, FOODLAND...

  • Page 12
    ...third-party retail stores it supplies, include the location and image of the store, the price, quality and variety of products and the quality and consistency of service. The traditional distribution component of the Company's Supply chain services business competes directly with a number of grocery...

  • Page 13
    ...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 Division, Albertsons, 20042006; President, Jewel Osco Division...

  • Page 14
    ... of product price, quality, assortment, brand recognition, 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...

  • Page 15
    ... wider variety of products and services at competitive prices by such consolidated companies, which could adversely affect the Company's financial condition and results of operations. Food and drug safety concerns and related unfavorable publicity may adversely affect the Company's sales and results...

  • Page 16
    ...'s relationship with unions, including labor disputes or work stoppages, could affect the sale and distribution of the Company's products and have an adverse impact on the Company's financial condition and results of operations. As of February 23, 2008, the Company is a party to approximately 280...

  • Page 17
    ...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 compliance with governmental regulations may affect the Company's ability to open new stores...

  • Page 18
    ... significant time and expense developing, maintaining or upgrading its information technology systems and by causing the Company to incur significant costs to reimburse third parties for damages. Such activities may also adversely affect the Company's financial condition and results of operations by...

  • Page 19
    ... affect the availability or cost of certain products within the grocery supply chain. Any of these factors could disrupt the Company's businesses and adversely affect the Company's financial condition and results of operations. The obligation to provide transition support services to the purchasers...

  • Page 20
    ... Acme Markets, Albertsons, bigg's, Cub Foods, Farm Fresh, Jewel-Osco, Sav-on, Shaw's Supermarkets, Shop 'n Save, Shoppers Food & Pharmacy and Star Markets banners. Excluded from the table above are 29 Cub Foods combination stores that are franchised by independent retailers. (2) The Company operates...

  • Page 21
    ... distribution centers dedicated exclusively to the Retail food segment: Supply the Company's Own Stores and ThirdParty Retail Stores - - 1 2 - 1 - - 1 1 2 1 - - - 9 Alabama Florida Idaho Illinois Indiana Minnesota Mississippi Montana North Dakota Ohio Pennsylvania Virginia Washington West Virginia...

  • Page 22
    ...Sav-on Drug Stores, Inc.), and was certified as a class action in June 2001 with respect to assistant managers and operating managers. The two cases were consolidated in December 2001. New Albertsons was added as a named defendant in November 2006. Plaintiffs seek overtime wages, meal and rest break...

  • Page 23
    ...that Albertsons failed to pay wages for time worked during meal breaks to its non-exempt employees employed in key carrier positions. The lawsuit further alleges that Albertsons failed to provide itemized wage statements as required by California law and that Albertsons failed to timely pay wages of...

  • Page 24
    PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company's common stock is listed on the New York Stock Exchange under the symbol SVU. As of April 18, 2008 there were 212,491,776 (not in millions) shares of common ...

  • Page 25
    ... Ahold NV, The Kroger Co., Safeway Inc. and Wal-Mart Stores, Inc. The performance graph above is being furnished solely to accompany this Annual Report on Form 10-K pursuant to Item 201(e) of Regulation S-K, is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as...

  • Page 26
    ...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 (the "Acquisition...

  • Page 27
    ..., the Company's operations 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...

  • Page 28
    ... Acquired Operations in fiscal 2008 compared with 38 weeks last year. The Acquired Operations are part of the Retail food segment which has a higher Gross profit percentage than Supply chain services. Selling and Administrative Expenses Selling and administrative expenses, as a percent of Net sales...

  • Page 29
    ... 2006. Results for fiscal 2007 include Acquisition-related costs of $40 after tax, charges related to the Company's disposal of 18 Scott's banner stores of $23 after tax and incremental stock-based compensation expense related to the Company's adoption of Statement of Financial Accounting Standards...

  • Page 30
    ...compared with Net earnings of $206 in fiscal 2006. Results for fiscal 2007 include Acquisition-related costs of $40 after tax, a charge related to the disposal of Scott's banner stores of $23 after tax and incremental stock-based compensation expense related to the Company's adoption of SFAS No. 123...

  • Page 31
    ...'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 or market...

  • Page 32
    ... basis point change in the estimated inventory shortages would impact the allowances for inventory shortages by approximately $14. Reserves for Closed Properties and Related Impairment Charges The Company maintains reserves for costs associated with closures of retail stores, distribution warehouses...

  • Page 33
    ... 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 expenses, discounted at a risk-free interest rate...

  • Page 34
    ... plans at this time, it could trigger a withdrawal liability that would require the Company to fund its proportionate share of a plan's unfunded vested benefits. The Company contributed $142, $122 and $37 to these plans for fiscal 2008, 2007 and 2006, respectively. Income Taxes The Company's current...

  • Page 35
    ...'s stock option plans. Fiscal 2007 financing activities primarily reflect the debt incurred in connection with the Acquisition and senior notes issued in October 2006, partially offset by repayment of long-term debt of Albertsons standalone drug business payables related to the sale of Albertsons...

  • Page 36
    ... agreements with financial institutions. These letters of credit primarily support workers' compensation, merchandise import programs and payment obligations. The Company pays fees, which vary by instrument, of up to 1.75 percent on the outstanding balance of the letters of credit. In May 2007, the...

  • Page 37
    ... program for one of its major warehouses, which had a purchase option of $60. On February 8, 2007, the Company approved a plan to exit this facility. As a result of the decision to exit this facility, the Company has recorded the difference between the purchase option and the estimated market value...

  • Page 38
    ... in the plans, actions taken by the trustees who manage the plans and requirements under the Pension Protection Act and Section 412(e) of the Internal Revenue Code. Furthermore, if the Company were to exit certain markets or otherwise cease making contributions to these plans at this time, it could...

  • Page 39
    ...the New York Stock Exchange under the symbol SVU. At the end of fiscal 2008, there were 28,890 stockholders of record compared with 31,614 at the end of fiscal 2007. Common Stock Price Range 2008 2007 High Low High Low Dividends Per Share 2008 2007 Fiscal First Quarter Second Quarter Third Quarter...

  • 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
    ... of the Safe Harbor Provisions of the Securities Litigation Reform Act Any statements contained in this Annual Report on Form 10-K regarding the outlook for our businesses and their respective markets, such as projections of future performance, statements of our plans and objectives, forecasts...

  • Page 42
    ... Operations, to achieve expected synergies and to minimize the diversion 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...

  • Page 43
    ... products in the grocery supply chain Transition Support Services • Our ability to provide transition support services to the purchasers of the non-core supermarket business of Albertsons in a cost effective and non-disputed manner with minimal diversion of management time Accounting Matters...

  • Page 44
    ...Executive Officer and Chief Financial Officer, in a manner that allows timely decisions regarding required disclosure. Management's Annual Report on Internal Control Over Financial Reporting The financial statements, financial analyses and all other information included in this Annual Report on Form...

  • Page 45
    ... been no change in the Company's internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. ITEM 9B. None. OTHER INFORMATION 39

  • Page 46
    ... 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, principal accounting 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
    ... to be filed with the SEC pursuant to Regulation 14A in connection with the Company's 2008 Annual Meeting of Stockholders under the heading "Board Practices - Policy and Procedures Regarding Transactions with Related Persons." ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information called...

  • Page 49
    ... Annual Report on Form 10-K for the year ended February 28, 2004. Restated Bylaws, as amended, is incorporated herein by reference to Exhibit 3.1 to the Company's amendment to Current Report on Form 8-K/A filed with the SEC on December 21, 2007. 3.2 (4) Instruments defining the rights of security...

  • Page 50
    ...and various financial institutions and other persons from time to time parties hereto is incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the SEC on June 7, 2006. First Amendment to Credit Agreement, dated March 8, 2007, among SUPERVALU INC., The...

  • 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
    ...Current Report on Form 8-K filed with the SEC on February 14, 2007.* 10.12 SUPERVALU INC. 2002 Stock Plan Restricted Stock Unit Award Agreement for Michael L. Jackson is incorporated herein by reference to Exhibit 10.28 to the Company's Annual Report on Form 10-K for the year ended February 28, 2004...

  • Page 53
    ... to Exhibit 10.58 to the Current Report on Form 8-K of Albertson's, Inc. (Commission File Number 1-6187) filed with the SEC on December 20, 2004.* 10.32 Form of Albertson's, Inc. 2004 Equity and Performance Incentive Plan Non-Employee Director Deferred Share Units Agreement is incorporated herein by...

  • 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 LLC, New Albertson's, Inc. and AB Acquisition LLC is incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on June 7, 2006. 10.60 Asset Purchase Agreement, dated as of January 22, 2006, among the Company, CVS Corporation, CVS Pharmacy, Inc...

  • Page 56
    ...'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's, Inc...

  • Page 57
    ...incorporated herein by reference to Exhibit 10.13.6 to the Annual Report on Form 10-K of Albertson's, Inc. (Commission File Number 1-6187) for the year ended February 3, 2000.* 10.80 Amendment to the Albertson's, Inc. Executive Pension Makeup Plan, dated as of June 1, 2001, is incorporated herein by...

  • Page 58
    ... 10.20.7 to the Quarterly Report on Form 10-Q of Albertson's, Inc. (Commission File Number 1-6187) for the quarter ended May 4, 2006.* 10.100 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...

  • Page 59
    ... 10.21.4 to the Annual Report on Form 10-K of Albertson's, Inc. (Commission File Number 1-6187) for the year ended January 29, 2004.* 10.105 Fifth Amendment to the Albertson's, Inc. Non-Employees Directors' Deferred Compensation Plan, dated as of April 28, 2006, is incorporated herein by reference...

  • Page 60
    ... File Number 1-6187) for the quarter ended November 3, 2005.* 10.117 SUPERVALU INC. 2007 Stock Plan, as amended, is incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on May 31, 2007. * 10.118 SUPERVALU INC. 2007 Stock Plan Form of Stock...

  • Page 61
    .... (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 persons on behalf of SUPERVALU and in the capacities and on...

  • Page 62
    ... in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who...

  • Page 63
    ... report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: April 23, 2008 /s/ PAMELA K. KNOUS Executive Vice President, Chief Financial Officer...

  • Page 64
    ... 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 Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company...

  • Page 65
    ... the information contained in that Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company for the period and as of the dates covered thereby. Dated: April 23, 2008 PAMELA K. KNOUS Pamela K. Knous Executive Vice President...

  • Page 66

  • Page 67
    ...ended February 23, 2008, February 24, 2007 and February 25, 2006 ...Notes to Consolidated Financial Statements ...Unaudited Quarterly Financial Information ...Financial Schedule: Schedule II - Valuation and Qualifying Accounts ...All other schedules are omitted because they are not applicable or not...

  • Page 68
    SUPERVALU INC. AND Subsidiaries FIVE YEAR FINANCIAL AND OPERATING SUMMARY (In millions, except per share data) 2008 2007 2006 2005 2004 Operating Results (1) Net sales Identical store retail sales increase (decrease) (2) Cost of sales Selling and administrative expenses Gain on sale of WinCo Foods,...

  • Page 69
    ... sales for stores operating for four full quarters, including store expansions and excluding fuel and planned store closures, and as if the Acquired Operations stores were in the identical store base for four full quarters in fiscal 2008 and 2007. (3) Inventories (FIFO), working capital and current...

  • Page 70
    ... of SFAS No. 123 (revised 2004), "Share-Based Payment," on February 26, 2006. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), SUPERVALU INC.'s internal control over financial reporting as of February 23, 2008, based on criteria...

  • Page 71
    ... responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit...

  • Page 72
    ... 24, 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...

  • Page 73
    SUPERVALU 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 ...

  • Page 74
    ...$14 in 2008 and $18 in 2007 Inventories Other current assets Total current assets Property, plant and equipment, net Goodwill Intangible assets, net Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable Accrued vacation, compensation and benefits Current...

  • Page 75
    ...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 plan measurement date...

  • Page 76
    ...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 purchase...

  • Page 77
    ... 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 (net of refunds) $743 $107 $545 $310 $117 $172 $ 36 $154 $ 73 $105 $ 57 $ 14 See Notes to Consolidated Financial...

  • Page 78
    ... stores. Additionally, the Company provides supply 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...

  • Page 79
    ... cooperative advertising reimbursements, were $162, $157 and $57 for fiscal 2008, 2007 and 2006, respectively. The Company recognizes vendor funds for merchandising and buying activities as a reduction of Cost of sales when the related products are sold in accordance with EITF No. 02-16, "Accounting...

  • Page 80
    ... 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 expenses, discounted at a risk-free interest rate. The present value of such claims was calculated using discount rates ranging...

  • Page 81
    ... TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) A summary of changes in the Company's self-insurance liabilities is as follows: 2008 2007 2006 Beginning balance Self-insurance liabilities from the Acquired Operations Additions Claim payments Ending balance Less current portion Long-term portion...

  • Page 82
    ... rents are included in Other current liabilities and Other long-term liabilities in the Consolidated Balance Sheets. Benefit Plans Effective for fiscal 2007, the Company adopted SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans-an amendment of FASB...

  • Page 83
    ... balance as of February 24, 2007 and had no effect on reported earnings or cash flows. NOTE 2-NEW ACCOUNTING STANDARDS In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." SFAS No. 157 clarifies the principle that fair value should be based on the assumptions that market...

  • Page 84
    ... the accounting for adjustments to income tax-related amounts, which is applied to acquisitions that closed prior to the effective date of SFAS No. 141(R). The Company is evaluating the effect the implementation of SFAS No. 141(R) will have on the consolidated financial statements. In December 2007...

  • Page 85
    ... $335 related to cash settlement and assumption of restricted stock unit and stock option awards and direct costs of the acquisition of New Albertsons. The acquisition of New Albertsons was accounted for under the purchase method of accounting with the Company as the acquirer in accordance...

  • Page 86
    ... 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 at February 24, 2007 resulted primarily...

  • Page 87
    ... the Deals banner stores. During fiscal 2006, the Company sold 26 Cub Foods stores located primarily in the Chicago area to the Cerberus Group for a loss of approximately $95. Additions and adjustments to the reserves for closed properties and asset impairment charges for fiscal 2008, 2007 and 2006...

  • Page 88
    ... market values for similar instruments. NOTE 8-DEBT As a result of the acquisition of New Albertsons and the application of the purchase method of accounting, the Company estimated the fair value of the debt assumed. This resulted in an aggregate net discount related to the New Albertsons long-term...

  • 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
    ... agreements with financial institutions. These letters of credit primarily support workers' compensation, merchandise import programs and payment obligations. The Company pays fees, which vary by instrument, of up to 1.75 percent on the outstanding balance of the letters of credit. In May 2007, the...

  • Page 91
    ...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 and equipment...

  • Page 92
    ... leases were as follows: 2008 2007 2006 Operating leases: Minimum rent Contingent rent $450 7 457 Subtenant rentals (66) $391 Capital Leases: Amortization expense $ 64 $ 54 $ 32 $366 5 371 (54) $317 $147 1 148 (26) $122 The Company was party to a synthetic leasing program for one of its major...

  • Page 93
    ... parties under operating leases was as follows: 2008 2007 Property, plant and equipment Less accumulated depreciation Property, plant and equipment, net $24 (5) $19 $ 37 (12) $ 25 NOTE 10-INCOME TAXES The provision for income taxes consists of the following: 2008 2007 2006 Current Federal State...

  • Page 94
    ... and liabilities for financial reporting and income tax purposes. The Company's deferred tax assets and liabilities consist of the following: 2008 2007 Deferred tax assets: Compensation and benefits Self-insurance Property, plant and equipment and capital leases Capital loss carryforward Other...

  • Page 95
    ... of the Board (the "Compensation Committee") may determine at the time of grant whether each stock-based award granted will be a non-qualified or incentive stock based award under the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"). The terms of each stock-based award will be...

  • Page 96
    ... in fiscal 2006, stock-based awards granted will not be for a term of more than seven years. Stock options are granted to key salaried employees and to 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...

  • Page 97
    ... components of pre-tax stock-based compensation expense (included primarily in Selling and administrative expenses in the Consolidated Statements of Earnings) and related tax benefits were as follows: 2008 2007 2006 Stock-based compensation Income tax benefits Stock-based compensation (net of tax...

  • Page 98
    ... Pro forma Net earnings per share-diluted: As reported Pro forma NOTE 12-TREASURY STOCK PURCHASE PROGRAM $ 206 2 (18) 190 7 $ 197 $1.52 1.40 1.46 1.36 On April 18, 2007, the Company's Board of Directors adopted a new annual share repurchase program authorizing the Company to purchase up to $235 of...

  • Page 99
    ...terms of these postretirement benefit plans vary based on employment history, age and date of retirement. For most retirees, the Company provides a fixed dollar contribution and retirees pay contributions to fund the remaining cost. On May 31, 2007, the Company authorized amendments to the SUPERVALU...

  • Page 100
    ... postretirement benefit plans are as follows: Other Postretirement Benefits 2008 2007 Pension Benefits 2008 2007 Change in Benefit Obligation (1) Benefit obligation at beginning of year Acquired Operations benefit obligation at Acquisition Date Change in measurement date Service cost Interest cost...

  • 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
    ...pension plans consist of the following: 2008 2007 (1) 2006 $ 69 75 81 88 96 614 $12 12 13 14 14 81 Weighted average assumptions used to determine benefit obligations: Discount rate Rate of compensation increase Weighted average assumptions used to determine net periodic benefit cost: (2) Discount...

  • 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
    ...the defined benefit pension plans is to contribute the minimum contribution allowed under the Employee Retirement Income Security Act of 1974, with consideration given to contributing larger amounts in order to be exempt from Pension Benefit Guaranty Corporation variable rate premiums or participant...

  • Page 105
    ... Company's common stock at both February 23, 2008 and February 24, 2007. Post-Employment Benefits The Company recognizes an obligation for benefits provided to former or inactive employees. The Company is selfinsured for certain of its employees' short-term and long-term disability plans, which are...

  • Page 106
    ...-acquisition legal contingencies related to the Acquired Operations were included in liabilities assumed due to the acquisition of New 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...

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    ...that Albertsons failed to pay wages for time worked during meal breaks to its non-exempt employees employed in key carrier positions. The lawsuit further alleges that Albertsons failed to provide itemized wage statements as required by California law and that Albertsons failed to timely pay wages of...

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    ... in the plans, actions taken by the trustees who manage the plans and requirements under the Pension Protection Act and Section 412(e) of the Internal Revenue Code. Furthermore, if the Company were to exit certain markets or otherwise cease making contributions to these plans at this time, it could...

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    ... voting stock of the Company. NOTE 17-SEGMENT INFORMATION Refer to page F-6 for the Company's segment information. The Company offers a wide variety of grocery products, general merchandise and health and beauty care, pharmacy, fuel and other items and services. The amount of consolidated net sales...

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    ...(1) The sum of the quarterly Net earnings per share-diluted amounts does not equal the fiscal year amount due to rounding. (2) On June 2, 2006, the Company acquired New Albertsons. No operating results of New Albertsons are included in the first quarter financial information for the period from June...

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    ...for losses on receivables: 2008 2007 (1) 2006 $28 27 34 13 20 3 (21) (19) (10) $20 28 27 (1) Fiscal 2007 additions include approximately $15 of allowances for losses on receivables from the Acquired Operations, which were recorded as a result of applying the purchase method of accounting. F-45

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    ... of annual reports, Forms 10-K and 10-Q and other SUPERVALU publications are available via our Web site at supervalu.com or contact: SUPERVALU INC. PO Box 990 Minneapolis, MN 55440 Attn: Investor Relations Key Contacts: David M. Oliver Vice President, Investor Relations [email protected]...

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