Supervalu 2016 Annual Report Download

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2016 Annual Report

Table of contents

  • Page 1
    2016 Annual Report

  • Page 2
    ... brands portfolio to bring a new brand to Save-A-Lot, America's Choicesm, which will span most categories. Our weekly ads have been redesigned to give them a stronger price message and attract customers to our stores. We'll also be changing certain aspects of the store layout to better position...

  • Page 3
    ... (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended February 27, 2016 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...

  • Page 4
    ... Data Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information PART III Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related...

  • Page 5
    ... in the grocery industry, and the Company's ability to effectively respond • Competition from other food or drug retail chains, supercenters, hard discount, dollar stores, online retailers, nontraditional competitors and alternative formats in the Company's markets • Customer reaction to...

  • Page 6
    ... from rising employee benefit costs • Potential increases in health plan costs resulting from health care reform • Pension funding obligations related to current and former employees of the Company and the Company's divested operations • Required funding of multiemployer pension plans and any...

  • Page 7
    ... conditions and natural disasters that affect the Company and the Company's customers or suppliers • Unseasonably adverse climate conditions that impact the availability or cost of certain products in the grocery supply chain Disruption to Supply Chain and Distribution Network • The Company...

  • Page 8
    ... distribution. The Retail reportable segment derives revenues from the sale of groceries and other products at retail locations operated by the Company. Supervalu's fiscal year ends on the last Saturday of February. This resulted in a fiscal 2016 52-week year ended February 27, 2016, a fiscal 2015...

  • Page 9
    ... carries approximately 3,000 core stock-keeping units ("SKUs"). Most SaveA-Lot stores are located in the southern and eastern geography of the United States. Save-A-Lot's private-label program provides budget conscious customers a high-quality, low-priced alternative to national brands and accounts...

  • Page 10
    ... sold in the Wholesale, Save-A-Lot and Retail segments, and service agreement revenue discussed in "-Transition Services Agreements" in Corporate: 2016 (52 weeks) Wholesale: Nonperishable grocery products(1) Perishable grocery products(2) Services to independent retail customers and other Save-A-Lot...

  • Page 11
    ... 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 SAVE-A-LOT, CUB FOODS, FESTIVAL FOODS, SENTRY, COUNTY MARKET, SHOP 'N SAVE, NEWMARKET, FOODLAND, JUBILEE and SUPERVALU...

  • Page 12
    ... at distribution centers or a significant number of stores may have a material impact on the Company's business, financial condition or results of operations. Where You Can Find More Information The Company's principal executive offices are located at 11840 Valley View Road, Eden Prairie, Minnesota...

  • Page 13
    ... 2015 Mark Van Buskirk(8) James Weidenheimer(9) Rob Woseth(10) 58 57 45 Executive Vice President, Merchandising, Marketing, Retail & Pharmacy Executive Vice President, Corporate Development and Chief Innovation Officer Executive Vice President, Chief Strategy Officer 2013 2016 2013 (1) Mark...

  • Page 14
    ... a Chapter 7 liquidation. The bankruptcy case was transferred to the Oakland Division in October 2014 and continues to be an active case in that court. (8) Mark Van Buskirk was appointed Executive Vice President, Merchandising, Marketing, Retail & Pharmacy in March 2013. Prior to joining the Company...

  • Page 15
    ... impact the Company's sales and gross margin. The Company's Retail and Save-A-Lot segments face significant competition for customers, managers, employees, store sites and products from traditional grocery retailers, including regional and national chains and independent food store operators, and...

  • Page 16
    .... Any of these risks or uncertainties could adversely affect the Company's business, financial condition, results of operations or cash flows. The Company's Wholesale and Save-A-Lot licensee distribution business models present a number of risks. The Company's success relies in part on the financial...

  • Page 17
    ... Care Act, which has resulted in changes to the U.S. healthcare system and imposes mandatory types of coverage and reporting and other requirements on Company-sponsored health plans. If the Company is unable to control healthcare benefits and pension costs, the Company may experience increased...

  • Page 18
    ...number of stores and distribution centers receiving services as of such date. The Company entered into the Haggen TSA in December 2014 to provide services to 164 stores and also entered into a supply agreement with Haggen to supply certain of the stores in two states. In September 2015, Haggen filed...

  • Page 19
    ... directly related to providing TSA services), new services relationships, growth strategies and additional investments in the business that accelerate revenue growth. The Company expects that the decline in TSA revenue from stores and distribution centers no longer receiving services under the TSA...

  • Page 20
    ...If the Company's or a vendor's customer-facing technology systems do not reliably function as designed, the Company may experience a loss of customer confidence or data security breaches or be exposed to fraudulent purchases, which, if significant, could adversely affect the Company's reputation and...

  • Page 21
    ...In addition, the Company purchases and uses significant quantities of packaging materials to package its products and energy for its distribution centers, stores and offices. Prices for these raw materials, other supplies and energy are volatile and can fluctuate due to conditions that are difficult...

  • Page 22
    ..., equal employment opportunity, public accessibility, employee benefits, wages and hours worked and licensing for the sale of food, drugs and alcoholic beverages, among others. The Company is also required to meet various security and operating standards and comply with the Controlled Substances Act...

  • Page 23
    ... may significantly affect health care financing and reimbursement practices. A change in the composition of pharmacy prescription volume toward programs offering lower reimbursement rates could negatively impact the Company's profitability. The Patient Protection and Affordable Care Act made...

  • Page 24
    ... products within the grocery supply chain. Any of these factors may disrupt the Company's businesses and adversely affect the Company's financial condition and results of operations. Disruption to the supply chain and distribution network could have an adverse impact on the Company's sales and...

  • Page 25
    ... performance of the Company's military business. The Company's Wholesale segment sells and distributes grocery products to military commissaries and exchanges in the United States. The Company's military business faces competition from large national and regional food distributors as well as smaller...

  • Page 26
    ... cost of capital, future revenue, profitability, cash flows, fair value of assets and liabilities, as well as other assumptions. These estimates may be affected by significant variability, including potential changes in economic, industry or market conditions, changes in business operations and...

  • Page 27
    ... wholesale distribution to a Retail banner, as of February 27, 2016. In addition to its principal executive offices in Eden Prairie, Minnesota, the Company maintains store support centers in Boise, Idaho (which is owned by NAI and leased to the Company, but at which the Company has employees and...

  • Page 28
    ... 2011 to the end of fiscal 2016 to that of the Standard & Poor's ("S&P") MidCap 400, a group of peer companies in the retail grocery and distribution industries, which are the same peer companies as used in fiscal 2015 other than Spartan Stores Inc. is now SpartanNash Corporation. The stock price...

  • Page 29
    ...03 173.54 152.21 (1) Total return assuming $100 invested on February 25, 2011 and reinvestment of dividends on the day they were paid. (2) The Company's fiscal year ends on the last Saturday in February. (3) The Company's peer group consists of SpartanNash Corporation, Wal-Mart Stores, Inc., Target...

  • Page 30
    ... the current year presentation. Refer to Note 1-Summary of Significant Accounting Policies within Part II, Item 8 of this Annual Report on Form 10-K for additional information. Pre-tax items recorded in fiscal 2016 included $15 of costs related to the potential separation of Save-A-Lot, $12 of store...

  • Page 31
    ... operations at the end of each fiscal year were as follows: $0 for fiscal 2016, 2015 and 2014, $2,701 for fiscal 2013 and $1,606 for fiscal 2012. Total assets of continuing operations are calculated as Total assets of the Company excluding current assets and long-term assets of discontinued...

  • Page 32
    ... retail customers across the United States. Save-A-Lot is one of the nation's largest hard discount grocery retailers by store count. The Company's Retail business operates traditional grocery stores under the five regionally-based banners of Cub Foods, Shoppers Food & Pharmacy, Shop 'n Save...

  • Page 33
    ... Building a quality Save-A-Lot management team, including Eric Claus as Chief Executive Officer, who brings over thirty years of experience in the retail industry where he has gained deep experience in both hard discount and grocery retail in both the United States and Canada. Fiscal 2016 Highlights...

  • Page 34
    ...product categories in fiscal 2016 was more significant than management's expectations for fiscal 2016. Changes in merchandising, customer buying habits and competitive pressures create inherent difficulties in measuring the impact of inflation and deflation on Net sales and Gross profit. Competitive...

  • Page 35
    ...fiscal year: Fiscal Years Ended February 27, 2016 (52 weeks) February 28, 2015 (53 weeks)(6) Save-A-Lot Network: Identical store sales percent variance(1) Corporate Save-A-Lot Stores: Identical store sales percent variance(2) Average basket percent variance(3) Customer count percent variance Retail...

  • Page 36
    ... closed. Management believes the lower Save-A-Lot network identical store sales in fiscal 2016 compared to fiscal 2015 were driven by a lower number of product units sold and product cost deflation passed on to licensees. Management also believes the lower SaveA-Lot corporate stores customer count...

  • Page 37
    ... to death benefits and fees received from a supply agreement termination in fiscal 2015, and higher expenses from independent retailer marketing costs and store opening costs in fiscal 2016, $9 of higher occupancy costs driven by a higher number of retail stores, $8 of higher pension expense, $7 of...

  • Page 38
    ... related to the potential separation of Save-A-Lot and $6 of severance costs. Corporate expenses for fiscal 2015 included $64 of non-cash pension settlement charges, a $5 benefit plan charge and $2 of information technology intrusion costs, net of insurance recoverable. The additional week in fiscal...

  • Page 39
    ...pension plan withdrawal charge. When adjusted for this item, Wholesale gross profit for fiscal 2015 was approximately flat with fiscal 2014, but included lower logistics and employee-related costs and higher gross profit from increased sales volume, offset by stronger private brands' pricing support...

  • Page 40
    ...agreement termination, higher earnings from increased sales and lower depreciation expense, offset in part by lower margins from stronger private brands pricing support and other margin investments, higher employee-related costs and a higher LIFO charge. Save-A-Lot operating earnings for fiscal 2015...

  • Page 41
    ... to lower prices to customers. Corporate operating loss for fiscal 2015 was $94, compared with $56 for fiscal 2014. Corporate expenses for fiscal 2015 included charges and costs of $71, comprised of $64 of non-cash pension settlement charges, a $5 benefit plan charge and $2 of information technology...

  • Page 42
    ... with GAAP in this Annual Report on Form 10-K for the fiscal year ended February 27, 2016. The Company utilizes certain non-GAAP measures, including Adjusted EBITDA, to analyze underlying core business trends to understand operating performance and as a compensation performance measure. Adjusted...

  • Page 43
    ... week, the decrease of $1 was primarily driven by higher employee-related and occupancy costs from new retail stores and added distribution center capacity, higher inventory shrink and other costs, offset in part by higher gross profit from increased base margins, lower logistics costs, higher TSA...

  • Page 44
    ... and original issue discount, under senior secured credit agreements and debentures. • No minimum pension contributions were required under ERISA for fiscal 2016. The Company made discretionary pension contributions and required minimum other postretirement benefit plan contributions totaling $40...

  • Page 45
    ... in business acquisitions within Retail and Save-A-Lot. The increase in cash used in investing activities in fiscal 2015 compared to fiscal 2014 is primarily attributable to $128 of additional cash used in capital expenditures reflecting Retail store remodels, new Save-A-Lot stores and supply chain...

  • Page 46
    ... from the sale of common stock, offset in part by lower debt financing costs. The Company has no current intent to pay dividends and such payments are subject to limitations under the Company's credit facilities as discussed in Note 7-Long-Term Debt in Part II, Item 8 of this Annual Report on Form...

  • Page 47
    ... cash paid for business acquisitions but including $19 of higher capital lease additions related to Retail stores and a Save-A-Lot distribution center in fiscal 2016, and primarily consisted of capital investments into new Retail and Save-A-Lot corporate stores and a higher number of Save-A-Lot...

  • Page 48
    ...; 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 cash discounts for the...

  • Page 49
    ... as such allowances do not directly generate revenue for the Company's stores. For fiscal 2016, a 1 percent 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 less than 10 basis...

  • Page 50
    ... 8 of this Annual Report on Form 10-K for additional information on reserves for closed properties and Property, plant and equipment-related impairment charges. Reserves for Closed Properties The Company maintains reserves for costs associated with closures of retail stores, distribution centers and...

  • Page 51
    ... distribution areas, which are organized based on region components: East and West. The Company's Retail reporting unit is comprised of the aggregation of five traditional retail food store components under five banners: Cub Foods, Shoppers Food & Pharmacy, Shop 'n Save, Farm Fresh and Hornbacher...

  • Page 52
    ..., the discount rate, the expected long-term rate of return on plan assets and the rates of increase in compensation and healthcare costs. During fiscal 2016, the Retirement Plans Experience Committee of the Society of Actuaries ("RPEC") issued an update to Mortality Improvement Scale MP-2014, which...

  • Page 53
    ...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 Company performs a continuing review of its overall position and reserving...

  • Page 54
    ...as of February 27, 2016. These guarantees were generally made to support the business growth of independent retail customers. The guarantees are generally for the entire terms of the leases or other debt obligations with remaining terms that range from less than one year to 14 years, with a weighted...

  • Page 55
    ...Company's proportionate share of underfunding described above is an estimate and could change based on the results of collective bargaining efforts, investment returns on the assets held in the plans, actions taken by trustees who manage the plans' benefit payments and requirements under the Pension...

  • Page 56
    ... obligations existed that primarily related to fixed asset and information technology commitments. In addition, in the ordinary course of business, the Company enters into supply contracts to purchase product for resale to consumers and to Wholesale customers, which are typically of a short-term...

  • Page 57
    ... retail customer. The market value of the fixed rate notes is subject to change due to fluctuations in market interest rates. On February 24, 2015, the Company entered into a forward starting interest rate swap agreement effectively converting $300 of variable rate debt under the Company's Secured...

  • Page 58
    ...The SUPERVALU Retirement Plan, which is a Company-sponsored qualified pension plan, holds investments in public and private equity, fixed income and real estate securities, which is described further in Note 11-Benefit Plans in Part II, Item 8 of this Annual Report on Form 10-K. Changes in SUPERVALU...

  • Page 59
    ... DATA Index of Financial Statements and Schedules Page Consolidated Financial Statements: Report of Independent Registered Public Accounting Firm Consolidated Segment Financial Information Consolidated Statements of Operations Consolidated Statements of Comprehensive Income Consolidated Balance...

  • Page 60
    ... position of SUPERVALU INC. and subsidiaries as of February 27, 2016 and February 28, 2015, and the results of their operations and their cash flows for each of the fiscal years in the three-year period ended February 27, 2016, in conformity with U.S. generally accepted accounting principles...

  • Page 61
    SUPERVALU INC. and Subsidiaries CONSOLIDATED SEGMENT FINANCIAL INFORMATION (In millions) Fiscal Years Ended February 27, 2016 (52 weeks) Net sales Wholesale % of total Save-A-Lot % of total Retail % of total Corporate % of total Total net sales Operating earnings Wholesale % of Wholesale sales Save...

  • Page 62
    ... OF OPERATIONS (In millions, except per share data) Fiscal Years Ended February 27, 2016 (52 weeks) Net sales Cost of sales Gross profit Selling and administrative expenses Intangible asset impairment charge Operating earnings Interest expense, net Equity in earnings of unconsolidated affiliates...

  • Page 63
    ...(In millions) Fiscal Years Ended February 27, 2016 (52 weeks) Net earnings including noncontrolling interests Other comprehensive income (loss): Recognition of pension and other postretirement benefits income (loss), net of tax(1) Change in fair value of cash flow hedges(2) Total other comprehensive...

  • Page 64
    ... Accounts payable Accrued vacation, compensation and benefits Current maturities of long-term debt and capital lease obligations Other current liabilities Total current liabilities Long-term debt Long-term capital lease obligations Pension and other postretirement benefit obligations Long-term...

  • Page 65
    ... net of tax of $31 Common stock issued and sold in connection with New Albertsons, Inc. divesture Sales of common stock under option plans Stock-based compensation Distributions to noncontrolling interests Tax impact on stock-based awards and other Balances as of February 22, 2014 Net earnings Other...

  • Page 66
    ... taxes Stock-based compensation Net pension and other postretirement benefits cost Contributions to pension and other postretirement benefit plans Other adjustments Changes in operating assets and liabilities, net of effects from business combinations: Receivables Inventories Accounts payable and...

  • Page 67
    ... 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...

  • Page 68
    ... sales and are expensed as incurred. Save-A-Lot and Retail advertising expenses, net of cooperative advertising reimbursements, were $64, $62 and $77 for fiscal 2016, 2015 and 2014, respectively. Costs related to Wholesale and Save-A-Lot advertising services provided to independent retail customers...

  • Page 69
    ...and $1 was capitalized in fiscal 2016, 2015 and 2014, respectfully. Business Dispositions The Company reviews the presentation of planned business dispositions in the Consolidated Financial Statements based on the available information and events that have occurred. The review consists of evaluating...

  • Page 70
    ... business: Licensee Distribution and Corporate Stores. Goodwill has been allocated between the Save-A-Lot reporting units on a relative fair value basis. Fair values are determined by using both the market approach, applying a multiple of earnings and revenue based on guidelines for publicly traded...

  • Page 71
    ... for fiscal 2015 and 0.3 percent to 5.1 percent for fiscal 2014. Changes in the Company's insurance liabilities consisted of the following: 2016 Beginning balance Expense Claim payments Reclassification of insurance recoveries to receivables Ending balance Less current portion Long-term portion...

  • Page 72
    ... of the total benefit obligation. See Note 11- Benefit Plans for additional information on the impact of the change in estimate. The Company contributes to various multiemployer pension plans under collective bargaining agreements, primarily defined benefit pension plans. Pension expense for these...

  • Page 73
    ... 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 $4.00 per share in cash...

  • Page 74
    ... amounts as reported in this Annual Report on Form 10-K: February 28, 2015 (53 weeks) As Originally Reported As Originally Reported February 22, 2014 (52 weeks) Revision As Revised Revision As Revised Net sales Cost of sales Gross profit Selling and administrative expenses Operating earnings...

  • Page 75
    ...presented in the balance sheet as a direct deduction from the carrying amount of the related debt obligation. The Company adopted ASU 2015-03 in fiscal 2016 on a retrospective basis resulting in a $35 reduction of Other assets and Long-term debt within the Company's Consolidated Balance Sheets as of...

  • Page 76
    ... retail customers. The purchase price was allocated to the acquired store assets and such assets were recognized at their estimated fair values and included inventories, property, plant and equipment, and goodwill. During fiscal 2015, the Company completed the purchase of seven Rainbow Foods grocery...

  • Page 77
    ... an annual impairment test of the net book value of goodwill and intangible assets with indefinite useful lives during the fourth quarter of fiscal 2016, which indicated the fair value of the Retail, Wholesale and the Save-A-Lot Corporate Stores reporting units exceeded their carrying values by...

  • Page 78
    ... consisted of the following: 2016 Beginning balance Additions Payments Adjustments Ending balance $ 34 $ 8 (12) (1) 29 $ 2015 47 $ 4 (12) (5) 34 $ 2014 61 4 (16) (2) 47 $ In fiscal 2016, the Company determined it would close 15 non-strategic Save-A-Lot corporate stores and recorded an impairment...

  • Page 79
    ...and were $3, $1 and $0 for fiscal 2016, 2015 and 2014, respectively. Interest Rate Swap Derivatives On February 24, 2015, the Company entered into a forward starting interest rate swap agreement effectively converting $300 of variable rate debt under the Company's Secured Term Loan Facility (defined...

  • Page 80
    ... 2016 and February 28, 2015, respectively. The estimated fair value of notes receivable was calculated using a discounted cash flow approach applying a market rate for similar instruments using Level 3 inputs. The estimated fair value of the Company's long-term debt was less than the carrying amount...

  • Page 81
    ... To secure their obligations under the Secured Term Loan Facility, the Company granted a perfected first-priority security interest for the benefit of the facility lenders in the Term Loan Parties' equity interests in Moran Foods, LLC, the main operating entity of the Company's Save-A-Lot business...

  • Page 82
    ...inventory, credit card, wholesale trade, pharmacy and certain other receivables, prescription files and related assets. In addition, the obligations under the Revolving ABL Credit Facility are secured by second-priority liens on and security interests in the collateral securing the Secured Term Loan...

  • Page 83
    ...2015 148 $ 6 154 (29) 125 $ 2014 143 5 148 (27) 121 $ The Company leases certain property to third parties under operating, capital and direct financing leases. Under the direct financing leases, the Company leases buildings to independent retail customers with terms ranging from one to five years...

  • Page 84
    ... $ 2014 4 - (1) (1) - 3 5 $ $ During the fourth quarter of fiscal 2016, the Company early adopted ASU 2015-17, which requires that all deferred taxes be presented as non-current on the Consolidated Balance Sheet. Refer to Note 1-Summary of Significant Accounting Policies, for further information...

  • Page 85
    ... in fiscal 2016 in Selling and administrative expenses, in the Consolidated Statements of Operations. At February 27, 2016 and February 28, 2015, the Company had accrued interest of $16 and $26, respectively, related to uncertain tax positions recorded in Other current liabilities, and Long-term tax...

  • Page 86
    ... employees across the Company. In fiscal 2016, the Company's Board of Directors granted 2 stock options to the Company's Chief Executive Officer. The stock options have a grant date fair value of $2.08 per share and vest over three years. The Company used the Black Scholes option pricing model...

  • Page 87
    ... the date of the grant. In fiscal 2015, the Company granted 2 shares of restricted stock units to certain employees under the Company's 2012 Stock Plan. The restricted stock awards vest over a three year period from the date of the grant. Stock-Based Compensation Expense The components of pre-tax...

  • Page 88
    ... non-contributory pension, profit sharing or 401(k) plans. The Company's primary defined benefit pension plan, the SUPERVALU INC. Retirement Plan (the "SUPERVALU Retirement Plan"), and certain supplemental executive retirement plans were closed to new participants and service crediting ended for all...

  • Page 89
    ... vacation, compensation and benefits Pension and other postretirement benefit obligations Total $ $ Amounts recognized in Accumulated other comprehensive loss for the defined benefit pension and other postretirement benefit plans consist of the following: Pension Benefits 2016 2015 - $ - $ (693...

  • Page 90
    ... future cash flows of the Company's pension and other postretirement benefit plans. Prior to fiscal 2017, including for the current fiscal 2016 year being reported, the interest and service cost components of pension expense were estimated using a single weighted-average discount rate derived...

  • Page 91
    ... $3. Pension Plan Assets Plan assets are held in a master trust and invested in separately managed accounts and other commingled investment vehicles holding domestic and international equity securities, domestic fixed income securities and other investment classes. The Company employs a total return...

  • Page 92
    ... flows or expected changes in fair value. Mutual funds-Mutual funds are valued at the closing price reported in the active market in which the individual securities are traded. Synthetic guaranteed investment contract-Valued by discounting the related cash flows based on current yields of similar...

  • Page 93
    ...provision for interest rate stabilization for defined benefit employee pension plans. As a result of this stabilization provision, the Company's required pension contributions to the SUPERVALU Retirement Plan decreased significantly in fiscal 2016 compared to fiscal 2015 and the Company expects that...

  • Page 94
    ... in fiscal 2016. Since June 2014, plan investment options do not include shares of the Company's common stock. Post-Employment Benefits The Company recognizes an obligation for benefits provided to former or inactive employees. The Company is self-insured for certain disability plan programs, which...

  • Page 95
    ...2016 2015 2014 Pension Fund 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 Fund Western Conference of Teamsters Pension Plan...

  • Page 96
    ... (1) Agreement Pension Fund Total Collective Bargaining Agreements Expiration Date Over 5% Contribution 2015 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...

  • Page 97
    ... comprehensive income (loss), net of tax, as of the end of the reporting period and relates to pension and other postretirement benefit obligation adjustments, net of tax, and interest rate swaps designated as hedges, net of tax. Changes in Accumulated other comprehensive loss by component are as...

  • Page 98
    ... service benefit and amortization of net actuarial loss as reflected in Note 11-Benefit Plans. (2) Refer to Note 11-Benefit Plans for additional information on the Company's fiscal 2015 pension settlement charge. Upon completion of the sale of NAI in the first quarter of fiscal 2014, the Company...

  • Page 99
    ... with AB Acquisition LLC and its affiliates related to on-going operations, including a Transition Services Agreement with each of NAI and Albertson's LLC (collectively, the "TSA") and operating and supply agreements. At the time of the sale of NAI, these arrangements had initial terms ranging from...

  • Page 100
    ... 2014 (the "Haggen TSA") to provide certain services to 164 stores owned and being acquired by Haggen in five states. The Company also entered into a supply agreement with Haggen to supply goods and products to Haggen stores in Washington and Oregon. On September 8, 2015, Haggen filed voluntary...

  • Page 101
    ... lawsuits, claims and other proceedings will have a material adverse effect on the overall results of the Company's operations, its cash flows or its financial position is remote. In September 2008, a class action complaint was filed against the Company, as well as International Outsourcing Services...

  • Page 102
    ...In Re: Supervalu Inc. Customer Data Security Breach Litigation. On June 26, 2015, the plaintiffs filed a Consolidated Class Action Complaint. The Company filed a Motion to Dismiss the Consolidated Class Action Complaint and the hearing took place on November 3, 2015. On January 7, 2016, the District...

  • Page 103
    ... 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: Wholesale, Save-A-Lot and Retail. These...

  • Page 104
    ... reviewed by executive management. NOTE 16-DISCONTINUED OPERATIONS NAI Banner Sale On March 21, 2013, the Company sold NAI to AB Acquisition, which resulted in the sale of the NAI banners, including Albertsons, Acme, Jewel-Osco, Shaw's and Star Market and related Osco and Sav-on in-store pharmacies...

  • Page 105
    ... on sale of NAI reported at February 23, 2013. UNAUDITED QUARTERLY FINANCIAL INFORMATION (In millions, except per share data) Unaudited quarterly financial information for SUPERVALU INC. and subsidiaries is as follows: 2016 Third (12 weeks) $ 4,114 $ 601 $ 35 $ 34 $ $ $ 0.13 Net sales Gross profit...

  • Page 106
    (2) Results from continuing operations for the fiscal year ended February 28, 2015 include net charges and costs of $118 before tax ($70 after tax, or $0.27 per diluted share). Refer to Item 6 Selected Financial Data in Part II, Item 8 of this Annual Report on Form 10-K for a discussion of these ...

  • Page 107
    .... and Subsidiaries SCHEDULE II-Valuation and Qualifying Accounts (In millions) Balance at Beginning of Fiscal Year $ 18 19 16 Balance at End of Fiscal Year 13 18 19 Description Allowance for losses on accounts and notes receivable: 2016 2015 2014 Additions 6 6 16 Deductions (11) $ (7) (13) 105

  • Page 108
    ... by the SEC's rules and forms and (2) accumulated and 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...

  • Page 109
    ITEM 9B. None. OTHER INFORMATION 107

  • Page 110
    ... Statement to be filed with the SEC pursuant to Regulation 14A in connection with the Company's 2016 Annual Meeting of Stockholders under the headings "Security Ownership of Certain Beneficial Owners," "Security Ownership of Management" and "Equity Compensation Plan Information." ITEM 13. CERTAIN...

  • Page 111
    ... ACCOUNTING FEES AND SERVICES The information called for by Item 14 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 2016 Annual Meeting of Stockholders under the heading "Independent...

  • Page 112
    ... to the SEC upon 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...

  • Page 113
    ... (12 weeks) ended September 12, 1998.* SUPERVALU INC. Directors Retirement Program, as amended, is incorporated herein by reference to Exhibit 10.18 to the Company's Annual Report on Form 10-K for the year ended February 22, 2003.* SUPERVALU INC. Deferred Compensation Plan for Non-Employee Directors...

  • Page 114
    ... Restricted Stock Unit Award Terms and Conditions for Officers, is incorporated herein by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed with the SEC on April 20, 2010.* SUPERVALU INC. 2007 Stock Plan Fiscal 2013-2015 Multi-Year Performance Award Terms and Conditions is...

  • Page 115
    ...the SEC on July 18, 2012.* SUPERVALU INC. 2012 Stock Plan Form of Fiscal 2013-2015 Multi-Year Performance Award Terms and Conditions is incorporated herein by reference to Exhibit 10.6 to the Company's Current Report on Form 8-K filed with the SEC on July 18, 2012.* SUPERVALU INC. 2012 Stock Plan as...

  • Page 116
    ...the quarterly period (16 weeks) ended June 15, 2002.* Trust Agreement Amendment, dated January 9, 2013, by and between SUPERVALU INC. and Wells Fargo Bank Minnesota, N.A., is incorporated herein by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed with the SEC on January 14...

  • Page 117
    ... herein to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on July 24, 2013.* SUPERVALU INC. 2012 Stock Plan Form of Restricted Stock Unit Award Agreement and Restricted Stock Unit Award Terms and Conditions for Employees (Cash-Settled) is incorporated herein by reference...

  • Page 118
    ... Time Sharing Agreement, dated March 8, 2016, between SUPERVALU INC. and Mark Gross is incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on March 10, 2016. Amendment No. 3 to Amended and Restated Credit Agreement, dated February 3, 2016...

  • Page 119
    ...) By: Dated: April 26, 2016 /S/ MARK GROSS Mark Gross Chief Executive Officer and President 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 INC. and in the capacities and...

  • Page 120
    ... 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 26, 2016 /S/ MARK GROSS Mark Gross Chief Executive Officer and President

  • Page 121
    ... 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 26, 2016 /S/ BRUCE H. BESANKO Bruce H. Besanko Executive Vice President, Chief Operating Officer...

  • Page 122
    ... officer of SUPERVALU INC. (the "Company") certifies that the Annual Report on Form 10-K of the Company for the fiscal year ended February 27, 2016, 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...

  • Page 123
    ... officer of SUPERVALU INC. (the "Company") certifies that the Annual Report on Form 10-K of the Company for the fiscal year ended February 27, 2016, 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...

  • Page 124
    ... & Compensation Committee ROB WOSETH Executive Vice President, Chief Strategy Officer INVESTOR INFORMATION The annual meeting of SUPERVALU INC. will take place on July 20, 2016 at 9:30 a.m. Central Time at the SUPERVALU Corporate Headquarters 11840 Valley View Road Eden Prairie, MN 55344 SUPERVALU...

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    ... prepared foods, ingredients, snacks and everyday products your family needs. Discover our entire family of private brands. Our private brands program offers more than 5,000 products within 11 brands in over 100 categories across the store. PO Box 990 Minneapolis, MN, 55440 952-828-4000 supervalu...