Supervalu 2013 Annual Report Download

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2013 ANNUAL REPORT

Table of contents

  • Page 1
    2013 ANNUAL REPORT

  • Page 2
    ... quarter of fiscal 2013, SUPERVALU announced that it would sell its Albertsons, Acme, Jewel-Osco, Shaw's and Star Market stores and related Osco and Sav-on in-store pharmacies in a deal valued at $3.3 billion. This transaction closed on March 21, 2013 and marked another important milestone and new...

  • Page 3
    ... ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended February 23, 2013 OR ' TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-5418 SUPERVALU...

  • Page 4
    ... With Accountants on Accounting and Financial Disclosure ...Controls and Procedures ...Other Information ...PART III 10. 11. 12. 13. 14. Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related...

  • Page 5
    ... to attract and retain customers Å Competition from other food or drug retail chains, supercenters, non-traditional competitors and alternative formats in the Company's markets Å Competition for employees, store sites and products Å The ability of the Company's Independent Business to maintain or...

  • Page 6
    ... rates Å Food and drug inflation or deflation Labor Relations Å The Company's ability to renegotiate labor agreements with its unions Å Resolution of issues associated with rising pension, healthcare and employee benefits costs Å Potential for work disruption from labor disputes Employee Benefit...

  • Page 7
    ... in current plans, operations and business relationships Å Difficulties in attracting or retaining management and employees and transitioning to a new management team Å Ability to effectively manage the Company's cost structure to realize benefits from the Transition Services Agreement with...

  • Page 8
    ... stores under the banners of Acme, Albertsons, Jewel-Osco, Shaw's, Star Market, the related in-store pharmacies under the Osco and Sav-on banners, 10 distribution centers and certain regional and corporate offices (the "Albertsons Acquisition"). On January 10, 2013, the Company, AB Acquisition LLC...

  • Page 9
    ...President and Chief Executive Officer of AB Acquisition and Mr. Tessler is Co-Head of Global Private Equity and Senior Managing Director of Cerberus. Pursuant to the Tender Offer Agreement, four new directors will be added to the Board, consisting of (i) Sam Duncan, the Company's President and Chief...

  • Page 10
    ...market. The Company's Retail Food stores provide an extensive grocery offering and, depending on size, a variety of additional products including, general merchandise, health and beauty care, and pharmacy. Prior to the NAI Banner Sale, the Company also operated under the Acme, Albertsons, Jewel-Osco...

  • Page 11
    ... of nationally advertised brand name and private-label products, primarily including grocery (both perishable and nonperishable), general merchandise and health and beauty care, and pharmacy, which are sold through the Company's owned and licensed Retail Food and Save-A-Lot stores to shoppers and...

  • Page 12
    ... 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, JUBILEE, SUPERVALU...

  • Page 13
    ... competes directly with a number of traditional grocery wholesalers. The Company believes it competes in this business on the basis of price, quality, assortment, schedule and reliability of deliveries, service fees and distribution facility locations. Employees As of February 23, 2013, the Company...

  • Page 14
    ... 45 Executive Vice President, General Counsel and Corporate Secretary 2013 Sherry M. Smith Mark Van Buskirk (7) 51 55 Executive Vice President and Chief Financial Officer Executive Vice President, Merchandising, Marketing & Pharmacy Executive Vice President, Chief Strategy Officer 2010 2013...

  • Page 15
    ..., Mr. Casteel served as Director of Sales and Operations at Grocery Outlet Inc. from 2005-2009 and served as a Consultant for Hallmark Cards, Inc., from 2011-2013. (4) Keith E. Kravcik was appointed to Group Vice President, Controller and Corporate Officer effective April 2011. Prior to joining the...

  • Page 16
    ...the Company's sale of New Albertsons, the Company is positioned as a leading food wholesaler, the largest hard discount grocery chain by store count in the United States and a traditional food retailer with five regional retail banners. The Company is focused on operating under a decentralized model...

  • Page 17
    ... employees of the Company as well as some of its divested businesses. The Company and AB Acquisition also entered into a binding term sheet with the Pension Benefit Guaranty Corporation (the "PBGC") relating to issues regarding the effect of the NAI Banner Sale on certain SUPERVALU retirement plans...

  • Page 18
    ... in financial markets during fiscal 2008 and 2009. The SUPERVALU Retirement Plan remaining with the Company is frozen as to benefit service and earnings for all participants, and participants who were employed by Company or New Albertsons on March 21, 2013 became vested in their pension plan benefit...

  • Page 19
    ... Affordable Care Act on the Company's health plan program may increase health plan costs. Legal Proceedings The Company's businesses are subject to the risk of legal proceedings by employees, consumers, suppliers, stockholders, governmental agencies or others through private actions, class actions...

  • Page 20
    ... the Company's customers. Data theft, information espionage or other criminal activity directed at the grocery or drug store industry, the transportation industry, or computer or communications systems may adversely affect the Company's businesses by causing the Company to implement costly security...

  • Page 21
    ... with an initial term of two and one-half years. The Company's ability to effectively manage its cost structure may be impacted by ongoing obligations under the Transition Services Agreements. The process of implementing the NAI Banner Sale and the effects of the Tender Offer may be disruptive to...

  • Page 22
    ... stated that the additional security was required as a result of an increase in estimated future liabilities, as determined by the DIR pursuant to a review of the self-insured California workers' compensation claims with respect to the applicable businesses, and a decline in the Company's net worth...

  • Page 23
    ... outcomes, costs and exposures relative to current predictions and estimates, or material changes in such predictions or estimates, could have a material adverse effect on the Company's financial condition, results of operations or cash flows. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 21

  • Page 24
    ..., 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 19, 2013, there were 19,058 stockholders of record. Common Stock Price Common Stock Price Range 2013 Fiscal First Quarter...

  • Page 25
    ...to the end of fiscal 2013 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 CUMULATIVE TOTAL SHAREHOLDER RETURN AMONG SUPERVALU, S&P 500...

  • Page 26
    ... 2013, $207 for fiscal 2012, $185 for fiscal 2011, $181 for fiscal 2010, and $181 for fiscal 2009. (5) Capital expenditures include cash payments for purchases of property, plant and equipment and non-cash capital lease additions. Historical data is not necessarily indicative of the Company's future...

  • Page 27
    ...quarter of fiscal 2013, the Company announced it had entered into a Stock Purchase Agreement (the "Stock Purchase Agreement") for the sale of its wholly owned subsidiary New Albertsons, Inc. ("NAI"), resulting in the sale of the Albertsons, Acme, Jewel-Osco, Shaw's and Star Market stores and related...

  • Page 28
    ... past fiscal years. Refer to Note 15-Discontinued Operations and Divestitures in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion. (In millions, except per share data) Net sales Cost of sales Gross profit Selling and...

  • Page 29
    ...end of fiscal 2012. Total retail square footage, excluding actual and planned store dispositions, decreased 0.9 percent from the end of fiscal 2012. Net Sales Net sales for fiscal 2013 were $17,097, compared with $17,336 last year. Retail Food net sales were 27.7 percent of Net sales, Save-A-Lot net...

  • Page 30
    ... charges of $227, employee-related expenses, primarily severance and labor buyout costs of $36, store closure costs of $22 and net lower goodwill and intangible asset impairment charges of $86 from fiscal 2012, partially offset by a cash settlement received from credit card companies of $10 before...

  • Page 31
    ... these items the remaining decrease in operating loss for Retail Food in fiscal 2013 is primarily due to lower employee-related costs. Save-A-Lot operating earnings for fiscal 2013 were $146, or 3.5 compared with $232, or 5.5 percent of Save-ALot net sales, last year. The $86 decrease in Save-A-Lot...

  • Page 32
    ...related expenses of $15 before tax ($10 after tax, or $0.05 per diluted share). During fiscal 2012, the Company added one new store through new store development for Retail Food and sold or closed 3 Retail Food stores, including planned dispositions. During fiscal 2012, the Company added 82 new Save...

  • Page 33
    ... for fiscal 2011. The 40 basis point decrease in Independent Business gross profit is primarily related to the impact of a national retail customer's transition to self-distribution and a higher LIFO charge. Selling and Administrative Expenses Selling and administrative expenses for fiscal 2012 were...

  • Page 34
    ... reduction in Selling and administrative expenses due to lower employee-related costs and increased Gross profit within the Save-A-Lot business from higher sales and stronger margin, offset in part by a decline in the Independent Business sales volume. Retail Food operating loss for fiscal 2012 was...

  • Page 35
    ...rights in certain categories; and to compensate for temporary price reductions offered to customers on products held for sale at retail stores. The Company also receives vendor funds for buying activities such as volume commitment rebates, credits for purchasing products in advance of their need and...

  • Page 36
    ... changes to the base price on the products purchased, would impact gross profit by less than 10 basis points. Inventories Inventories are valued at the lower of cost or market. Substantially all of the Company's inventory consists of finished goods. The Company uses one of either replacement...

  • Page 37
    ... 2011, respectively. During the fourth quarter of fiscal 2013, the executive management team determined the Company would abandon certain capital projects in process, mainly related to software under development, and would cease use of certain other software support tools, all within the Retail Food...

  • Page 38
    ... of banners: Shoppers, Hornbacher's, Farm Fresh, Cub Foods, and Shop'n Save. The Company's hard-discount stores reporting unit is comprised of a single component under one banner: Save-ALot. The Independent Business reporting unit is comprised of the aggregation of four geographic distribution areas...

  • Page 39
    ...: Reporting Unit Retail Food Save-A-Lot Independent Business $ $ 2013 - 137 710 847 $ $ 2012 - 137 710 847 The Company performed its annual test of goodwill during the fourth quarter of fiscal 2013, utilizing discount rates ranging between 11 percent and 15 percent to discount projected future cash...

  • Page 40
    ...'s years of service, compensation, and age at retirement or termination. Effective December 31, 2007, the Company authorized amendments to the SUPERVALU Retirement Plan and certain supplemental executive retirement benefit plans whereby service crediting ended in these plans and no employees will...

  • Page 41
    ...asset class, and historical long-term investment performance. The 10-year annual average rate of return on pension assets for fiscal 2013 and fiscal 2012 are lower than the assumed long-term rate of return of 7.25 and 7.50 percent due to the unprecedented decline in the economy and the credit market...

  • Page 42
    ...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. In determining its self-insurance liabilities, the...

  • Page 43
    ... of the regular quarterly dividend. The Company and AB Acquisition LLC entered into a binding term sheet with the Pension Benefit Guaranty Corporation (the "PBGC") relating to issues regarding the effect of the NAI Banner Sale on certain SUPERVALU retirement plans. The agreement requires that the...

  • Page 44
    ... drawn balance each year, payable quarterly, with the entire remaining balance due at the six year anniversary of the inception date. In addition, the Company was required to apply net cash proceeds (as defined in the Secured Term Loan Facility) from certain types of asset sales in amounts ranging...

  • Page 45
    ...Symphony Investors") and Cerberus, pursuant to which, upon the terms and subject to the conditions of the Tender Offer Agreement, and contingent upon the NAI Banner Sale, Symphony Investors tendered for up to 30 percent of the issued and outstanding common stock of the Company at a purchase price of...

  • Page 46
    ... March 20, 2013, in conjunction with the completion of the Tender Offer the Company's Board of Directors deemed the completion of the Tender Offer and issuance of common stock to Symphony Investors a change-incontrol for the purposes of the Company's outstanding stock-based awards which allowed for...

  • Page 47
    ...including capital leases. Pension and Other Postretirement Benefit Obligations Cash contributions to defined benefit pension plans and other postretirement benefit plans were $98, $83 and $154 in fiscal 2013, 2012 and 2011, respectively, in accordance with minimum Employee Retirement Income Security...

  • Page 48
    ... ordinary course of business. These contracts primarily relate to the Company's commercial contracts, operating leases and other real estate contracts, financial agreements, agreements to provide services to the Company and agreements to indemnify officers, directors and employees in the performance...

  • Page 49
    ...in the plans, actions taken by trustees who manage the plans' benefit payments and requirements under the Pension Protection Act of 2006 and Section 412(e) of the Internal Revenue Code. The Company also makes contributions to multiemployer health and welfare plans in amounts set forth in the related...

  • Page 50
    ... obligations related to sponsored defined benefit pension and postretirement benefit plans and deferred compensation plans. The defined benefit pension plans have plan assets of $2,031 as of the end of February 23, 2013. As part of the NAI Banner Sale in the first quarter of fiscal 2014, the Company...

  • Page 51
    ... principal payments and related weighted average interest rates by year of maturity using interest rates as of February 23, 2013, applicable to variable interest debt instruments and stated fixed rates for all other debt instruments, excluding any original issue discounts. For notes receivable...

  • Page 52
    ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index of Financial Statements and Schedules Page(s) Financial Statements: Report of Independent Registered Public Accounting Firm Consolidated Segment Financial Information for the fiscal years ended February 23, 2013, February 25, 2012 and ...

  • Page 53
    ... and financial statement schedule, and an opinion on SUPERVALU INC.'s internal control over financial reporting, based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and...

  • Page 54
    ... in fiscal 2013, 2012 and 2011 for inactive participants in the SUPERVALU Retirement Plan. This pension expense is anticipated to be reclassified primarily to Corporate Operating earnings (loss) for future periods to reflect the structure of the organization under which the business will be managed...

  • Page 55
    SUPERVALU INC. and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share data) February 23, 2013 (52 weeks) Net sales Cost of sales Gross profit Selling and administrative expenses Goodwill and intangible asset impairment charges Operating earnings (loss) Interest ...

  • Page 56
    SUPERVALU INC. and Subsidiaries CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (In millions) February 23, 2013 (52 weeks) Net loss Other comprehensive income (loss): Recognition of pension and other postretirement benefits income (loss), net of tax of $(22), $129 and $(28), respectively Comprehensive...

  • Page 57
    ...' EQUITY Current liabilities Accounts payable Accrued vacation, compensation and benefits Current maturities of long-term debt and capital lease obligations Other current liabilities Current liabilities of discontinued operations Total current liabilities Long-term debt and capital lease obligations...

  • Page 58
    ...Stock of Par Value Stock Loss Deficit Equity (Deficit) Balances as of February 27, 2010 Net loss Other comprehensive income, net of tax of $28 Cash dividends declared on common stock $0.3500 per share Stock-based compensation Purchase of shares for treasury Other Balances as of February 26, 2011 Net...

  • Page 59
    ... Proceeds from issuance of long-term debt Payments of long-term debt and capital lease obligations Dividends paid Net proceeds from the sale of common stock under option plans and related tax benefits Payments for debt financing costs Payments for purchase of treasury shares Other Net cash used in...

  • Page 60
    ... to SUPERVALU INC. and Subsidiaries. During the fourth quarter of fiscal 2013, the Company entered into a stock purchase agreement to sell the operations of the Company's New Albertson's, Inc. subsidiary ("New Albertsons" or "NAI"), including the Acme, Albertsons, Jewel-Osco, Shaw's and Star Market...

  • Page 61
    ... 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...

  • Page 62
    ... 23, 2013 and February 25, 2012, respectively. Bad debt expense was $11, $6 and $11 in fiscal 2013, 2012 and 2011, respectively. Inventories, Net Inventories are valued at the lower of cost or market. Substantially all of the Company's inventory consists of finished goods. The Company uses one...

  • Page 63
    ... associated with pension obligations of the operations of the business. The anticipated loss on disposition of New Albertsons of $1,150 was recognized as of February 23, 2013 and is presented as a component of Current liabilities of discontinued operations in the Consolidated Balance Sheets. There...

  • Page 64
    ...Retail Food, Save-ALot and Independent Business. As of February 23, 2013, Goodwill balances existed in the Save-A-Lot and Independent Business reporting units. Fair values are determined by using both the market approach, applying a multiple of earnings based on the guideline publicly traded company...

  • Page 65
    ... 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. The present value of such claims was calculated...

  • Page 66
    ... end of the fiscal year are net of discounts of $7 and $8 as of February 23, 2013 and February 25, 2012, respectively. Benefit Plans The Company recognizes the funded status of its Company sponsored defined benefit plans in its Consolidated Balance Sheets and gains or losses and prior service costs...

  • Page 67
    ... weighted average number of shares outstanding is determined after giving effect to the dilutive impacts of stock options, performance awards and restricted stock awards. Reclassifications As a result of the consummation of the NAI stock purchase agreement and the related sale of the Company's NAI...

  • Page 68
    ... loss may have occurred. The Company conducted an annual impairment test of the net book value of goodwill and intangible assets with indefinite useful lives during the fourth quarter of fiscal 2013. The fair value of goodwill for the Company's Save-ALot reporting was in excess of 100 percent...

  • Page 69
    ... tradename and future revenue and profitability. During the third and fourth quarters of fiscal 2012 and 2011 the Company's stock price experienced a significant and sustained decline and the book value per share substantially exceeded the stock price. As a result, the Company performed reviews of...

  • Page 70
    ..., discount rates, and future cash flows based on the Company's experience and knowledge of the market in which the closed property is located, and previous efforts to dispose of similar assets and existing market conditions. During the fourth quarter of fiscal 2013, the executive management team...

  • Page 71
    ... Total property, plant and equipment, net $ 100 1,294 37 688 2,733 335 5,187 (3,277) (210) $ 1,700 $ 2012 103 1,240 297 652 2,701 369 5,362 (3,063) (200) $ 2,099 Depreciation expense was $333, $321 and $320 for fiscal 2013, 2012 and 2011, respectively. Amortization expense related to capitalized...

  • Page 72
    ...2,815 $ $ 1,000 - 490 - 55 1,074 282 30 (20) 315 3,226 (345) 2,881 Future maturities of long-term debt, excluding the net discount on the debt and capital lease obligations, as of February 23, 2013 consist of the following: Fiscal Year 2014 2015 2016 2017 2018 Thereafter 70 $ 19 556 9 1,008 216 791

  • Page 73
    ... drawn balance each year, payable quarterly, with the entire remaining balance due at the six year anniversary of the inception date. In addition, the Company was required to apply net cash proceeds (as defined in the Secured Term Loan Facility) from certain types of asset sales in amounts ranging...

  • Page 74
    ... leases and capital leases as of February 23, 2013, consist of the following: Lease Obligations Fiscal Year 2014 2015 2016 2017 2018 Thereafter Total future minimum obligations Less interest Present value of net future minimum obligations Less current obligations Long-term obligations $ $ Operating...

  • Page 75
    ...Fiscal Year 2014 2015 2016 2017 2018 Thereafter Total minimum lease receipts Less unearned income Net investment in direct financing leases Less current portion Long-term portion The carrying value of owned property leased to third parties under operating leases was as follows: 2013 Property, plant...

  • Page 76
    ... 2013 Current Federal State Total current Deferred Total income tax benefit $ $ (98) $ (9) (107) (56) (163) $ (92) $ (8) (100) 59 (41) $ (39) (3) (42) (18) (60) 2012 2011 The difference between the actual tax provision and the tax provision computed by applying the statutory federal income tax rate...

  • Page 77
    ... for financial reporting and income tax purposes. The Company's deferred tax assets and liabilities consisted of the following: 2013 Deferred tax assets: Compensation and benefits Self-insurance Property, plant and equipment and capitalized lease assets Loss on sale of discontinued operations Net...

  • Page 78
    ... Albertsons 2004 Equity and Performance Incentive Plan. The Company's 2012 Stock Plan, as approved by stockholders in fiscal 2013, is the only plan under which stock-based awards may be granted. The 2012 Stock Plan provides that the Board of Directors or the Leadership Development and Compensation...

  • Page 79
    ...2012, the Company granted 5 performance award units to certain employees under the SUPERVALU INC. 2007 Stock Plan as part of the Company's long-term incentive program ("2013 LTIP"). Payout of the award will be based on the increase in share price over the three-year service period ending May 1, 2015...

  • Page 80
    ... years) Aggregate Intrinsic Value (In thousands) On July 17, 2012, the Company's Board of Directors granted non-qualified stock options to the Company's Chief Executive Officer, and the Board of Directors granted non-qualified stock options to certain employees, under the Company's 2012 Stock Plan...

  • Page 81
    ...On April 24, 2012 the Company granted 1 shares of restricted stock awards to certain employees under the company's fiscal 2012 bonus plan at a fair value of $6.15 per share. The restricted stock awards will vest over a three year period from the date of grant. Compensation Expense The components of...

  • Page 82
    ... retirees pay contributions to fund the remaining cost. Effective December 31, 2007, the Company authorized amendments to the SUPERVALU Retirement Plan and certain supplemental executive retirement benefit plans whereby service crediting ended in these plans and no employees will become eligible to...

  • Page 83
    ... Benefits paid Benefit obligation at end of year Changes in Plan Assets Fair value of plan assets at beginning of year Actual return on plan assets Employer contributions 1,827 205 93 Pension Benefits 2013 2012 Plan participants' contributions Benefits paid Fair value of plan assets at end of year...

  • Page 84
    ... Benefits 2013 57 $ (46) 11 $ 7 $ 2012 70 (60) 10 6 The Company has recognized $49 as Accumulated other comprehensive loss, net of tax of the divested defined benefit pension plan associated with its Shaw's banner. The unfunded benefit obligations of the divested defined benefit pension plan...

  • Page 85
    ...% 2012 2011 (1) Net periodic benefit cost is measured using weighted average assumptions as of the beginning of each year. (2) The Company reviews and selects the discount rate to be used in connection with its pension and other postretirement obligations annually. In determining the discount rate...

  • Page 86
    ... stock- Valued at the closing price reported in the active market in which the individual securities are traded. Common collective trusts-Valued at net asset value ("NAV"), which is based on the fair value of the underlying securities owned by the fund and divided by the number of shares outstanding...

  • Page 87
    ...Company's benefit plans held in a master trust as of February 23, 2013, by asset category, consisted of the following: Level 1 Common stock Common collective trusts-fixed income Common collective trusts-equity Government securities Mutual funds Corporate bonds Real estate partnerships Private equity...

  • Page 88
    ..., 2012 Purchases Sales Unrealized gains Realized gains and losses Ending balance, February 23, 2013 $ $ 87 17 (2) 11 - 113 15 - 8 - 136 $ Private Equity $ 59 27 (6) 8 - 88 20 (7) 9 - 110 Contributions The Company expects to contribute approximately $120 to $130 to its defined benefit pension plans...

  • Page 89
    ... benefit plans, which reflect expected future service, are as follows: Fiscal Year 2014 2015 2016 2017 2018 Years 2019-2023 Defined Contribution Plans The Company sponsors several defined contribution and profit sharing plans pursuant to Section 401(k) of the Internal Revenue Code. Employees...

  • Page 90
    ...Identification Number ("EIN") and the three-digit plan number, if applicable. Unless otherwise noted, the most recent Pension Protection Act zone status ("PPA") available in 2013 and 2012 relates to the plans' two most recent fiscal year-ends. The zone status is based on information that the Company...

  • Page 91
    ... 2013 2012 2011 Imposed (1) Provisions Yes Yes No Yes Yes Yes Yes 89 Minneapolis Food Distributing Industry Pension Plan Central States, Southeast and Southwest Areas Pension Fund Minneapolis Retail Meat Cutters and Food Handlers Pension Fund UFCW Unions and Participating Employers Pension Plan...

  • Page 92
    ...5% Contribution 2013 Yes No Yes Yes No Yes Yes Minneapolis Food Distributing Industry Pension Plan Central States, Southeast and Southwest Areas Pension Fund Minneapolis Retail Meat Cutters and Food Handlers Pension Fund UFCW Unions and Participating Employers Pension Plan Western Conference of...

  • Page 93
    ... a material amount of these obligations is remote. In the ordinary course of business, the Company enters into supply contracts to purchase products for resale and purchase and service contracts for fixed asset and information technology commitments. These contracts typically include either volume...

  • Page 94
    ... with the Company's California self-insured workers' compensation obligations of New Albertsons and certain other subsidiaries pursuant to applicable regulations. The notice from the DIR stated that the additional security was required as a result of an increase in estimated future liabilities, as...

  • Page 95
    ... maker is the Chief Executive Officer. The Company offers a wide variety of grocery products, general merchandise and health and beauty care, pharmacy, fuel and other items and services. The Company's business is classified by management into three reportable segments: Retail Food, Save-A-Lot and...

  • Page 96
    ... 10, 2013, the Company, AB Acquisition LLC ("AB Acquisition") and NAI, entered into a Stock Purchase Agreement (the "Stock Purchase Agreement") providing for the sale by the Company of its Albertsons, Acme, Jewel-Osco, Shaw's and Star Market banners and related Osco and Sav-on in-store pharmacies...

  • Page 97
    ...2012 and 2011. The net assets, operating results, and cash flows of the Total Logistic Control have been presented separately as discontinued operations in the Consolidated Financial Statements for fiscal 2011. The Company has allocated interest related to debt that will be assumed by AB Acquisition...

  • Page 98
    ...historical shared service center costs incurred to support back office functions related to the NAI Banners were incurred as administrative overhead and not specifically charged to the NAI Banners. During the fourth quarter of fiscal 2011, the Company divested the Total Logistic Control business for...

  • Page 99
    ...Symphony Investors") and Cerberus, pursuant to which, upon the terms and subject to the conditions of the Tender Offer Agreement, and contingent upon the NAI Banner Sale, Symphony Investors tendered for up to 30 percent of the issued and outstanding common stock of the Company at a purchase price of...

  • Page 100
    ... March 20, 2013, in conjunction with the completion of the Tender Offer the Company's Board of Directors deemed the completion of the Tender Offer and issuance of common stock to Symphony Investors a change-incontrol for the purposes of the Company's outstanding stock-based awards which allowed for...

  • Page 101
    ...of stock-based compensation expense in the first quarter of fiscal 2014 as a result of the deemed change-incontrol. The Company and AB Acquisition entered into a binding term sheet with the PBGC relating to issues regarding the effect of the NAI Banner Sale on certain SUPERVALU retirement plans. The...

  • Page 102
    ... per share data) Unaudited quarterly financial information for SUPERVALU INC. and subsidiaries is as follows: 2013 First Second Third Fourth Fiscal Year (16 wks) (12 wks) (12 wks) (12 wks) (52 wks) Net sales Gross profit Net loss from continuing operations (1) Dividends declared per share Weighted...

  • Page 103
    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 Allowance for losses on receivables: 2013 2012 2011 Additions Deductions $ 3 4 5 11 6 11 (9) $ (7) (12) 5 3 4 101

  • Page 104
    ... communicated to the Company's management, including the Company's Chief 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...

  • Page 105
    ... Part II, Item 8 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, 2013. Changes in Internal Control Over Financial Reporting During the fiscal quarter ended February 23, 2013, there...

  • Page 106
    ... that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, and all other employees and non-employee directors of the Company. This code of ethics is posted on the Company's website (www.supervalu...

  • Page 107
    ... by security holders (1) Equity compensation plans not approved by security holders (5) Total (1) Includes the Company's 1993 Stock Plan, 2002 Stock Plan, 2007 Stock Plan, 2012 Stock Plan, Albertson's, Inc. Amended and Restated 1995 Stock-Based Incentive Plan and Albertson's, Inc. 2004 Equity and...

  • Page 108
    ... Statement to be filed with the SEC pursuant to Regulation 14A in connection with the Company's 2013 Annual Meeting of Stockholders under the heading "Board Practices- Policy and Procedures Regarding Transactions with Related Persons." ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information...

  • Page 109
    ...request.) Tender Offer Agreement, dated January 10, 2013, by and between SUPERVALU INC., Symphony Investors LLC and Cerberus Capital Management, L.P., is incorporated herein by reference to Exhibit 2.2 to the Company's Current Report on Form 8-K filed with the SEC on January 14, 2013 (Schedules have...

  • Page 110
    ...) filed with the SEC on December 9, 1997. Supplemental Indenture No.1, dated as of May 7, 2004, between Albertson's, Inc. and U.S. Bank Trust National Association, as Trustee, is incorporated herein by reference to Exhibit 4.14 to the Company's Annual Report on Form 10-K for the year ended February...

  • Page 111
    ...'s Annual Report on Form 10-K for the year ended February 25, 2006.* Form of SUPERVALU INC. 2002 Stock Plan Stock Option Agreement for NonEmployee 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 112
    ... Plan Stock Option Agreement and Stock Option Terms and Conditions for Employees, is incorporated herein by reference to Exhibit 10.29 to the Company's Annual Report on Form 10-K for the year ended February 24, 2007.* Form of Albertson's, Inc. 2004 Equity and Performance Incentive Plan Award...

  • Page 113
    ... Albertson's, Inc. (Commission File Number 1-6187) filed with the SEC on December 20, 2004.* 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 Form 10-K for the year ended February...

  • Page 114
    .... Executive Deferred Compensation Plan II, as amended, is incorporated herein by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K for the year ended February 22, 2003.* Form of Agreement used in connection with the Company's Executive Post Retirement Survivor Benefit Program is...

  • Page 115
    ...) for the quarter ended May 4, 2006.* Albertson's, Inc. Executive Pension Makeup Plan, amended and restated as of February 1, 1989, is incorporated herein by reference to Exhibit 10.13 to the Annual Report on Form 10-K of Albertson's, Inc. (Commission File Number 1-6187) for the year ended February...

  • Page 116
    .... (Commission File Number 1-6187) for the quarter ended May 4, 2006.* Third Amendment to the Albertson's, Inc. Executive Pension Makeup Plan, effective as of January 1, 2008, is incorporated herein by reference to Exhibit 10.72 to the Company's Annual Report on Form 10-K for the year ended February...

  • Page 117
    ... File Number 1-6187) for the quarter ended May 4, 2006.* Albertson's, Inc. Executive Pension Makeup Trust, dated as of February 1, 1989, is incorporated herein by reference to Exhibit 10.18 to the Annual Report on Form 10-K of Albertson's, Inc. (Commission File Number 1-6187) for the year ended...

  • Page 118
    ... by reference to Exhibit 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.* Fifth Amendment to the Albertson's, Inc. Non-Employees Directors' Deferred Compensation Plan, dated as of April 28, 2006, is incorporated...

  • Page 119
    ... herein by reference to Exhibit 10.23.1 to the Annual Report on Form 10-K of Albertson's, Inc. (Commission File Number 1-6187) for the year ended February 1, 2001.* American Stores Company Supplemental Executive Retirement Plan 1998 Restatement is incorporated herein by reference to Exhibit...

  • Page 120
    ... the quarter ended June 14, 2008.* SUPERVALU INC. 2007 Stock Plan Form of Restricted Stock Award Terms and Conditions is incorporated herein by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 14, 2008.* Summary of Non-Employee Director Compensation...

  • Page 121
    ... of Non-Employee Director Compensation is incorporated herein by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 12, 2009.* Form of 2007 Stock Plan Stock Option Agreement and Stock Option Terms and Conditions for Officers, is incorporated...

  • Page 122
    ...the Company's Annual Report on Form 10-K filed with the SEC on April 19, 2012.* SUPERVALU INC. Fiscal 2013-2015 Multi-Year Performance Award under the 2007 Stock Plan Award Terms and Conditions is incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with...

  • Page 123
    ..., N.A. and GE Capital Markets, Inc., as Joint Lead Arrangers and Joint Bookrunners, is incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed with the SEC on October 19, 2012.** Term Loan Credit Agreement, dated August 30, 2012, among SUPERVALU INC., as...

  • Page 124
    ..., 2013.** Transition Services Agreement, dated as of March 21, 2013, by and between SUPERVALU INC. and New Albertson's, Inc., is incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on March 26, 2013.** Amended and Restated Credit Agreement...

  • Page 125
    .... Chief Financial Officer Certification of Periodic Financial Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2. (101) Interactive Data File. 101. The following materials from the SUPERVALU INC. Annual Report on Form 10-K for the fiscal year ended February 23, 2013 formatted...

  • Page 126
    ... on behalf of SUPERVALU and in the capacities and on the dates indicated: Signature /s/ SAM DUNCAN Sam Duncan Title Chief Executive Officer and President (principal executive officer) Executive Vice President, Chief Financial Officer (principal financial and accounting officer) Director Date April...

  • Page 127
    ... and 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 24, 2013 /s/ Sam Duncan Sam Duncan Chief Executive Officer and President

  • Page 128
    ... 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 24, 2013 /s/ Sherry M. Smith Sherry M. Smith Executive Vice President, Chief Financial Officer

  • Page 129
    ...adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned 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, 2013, fully complies with the requirements of Section 13(a) or 15(d) of the...

  • Page 130
    ...adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned 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, 2013, fully complies with the requirements of Section 13(a) or 15(d) of the...

  • Page 131
    ...Executive Officer, AB Acquisition LLC A North American grocery company with retail stores and pharmacies in 29 states (a) Audit Committee (b) Corporate Governance & Nominating Committee (c) Leadership Development & Compensation Committee MICHELE A. MURPHY Executive Vice President, Human Resources...

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    supervalu.com P.O. BOX 990 MINNEAPOLIS, MN 55440 952-828-4000