Supervalu (SVU) 10-Q 29 Jul 09 2010 Q1 Quarterly report Financial data

Document and Company Informatio

Document and Company Information (USD $)
	0 Months Ended Jun. 20, 2009	Jul. 24, 2009	Sep. 05, 2008
Document and Company Information [Abstract]
Entity Registrant Name	SUPERVALU INC.
Entity Central Index Key	0000095521
Document Type	10-Q
Document Period End Date	2009-06-20
Amendment Flag	false
Amendment Description	N/A
Current Fiscal Year End Date	--02-27
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$5,026,733,967
Entity Common Stock, Shares Outstanding		211,988,647

Condensed Consolidated Segment

Condensed Consolidated Segment Financial Information (USD $)
In Millions	0 Months Ended Jun. 20, 2009	0 Months Ended Jun. 14, 2008
Net sales
Net sales	$12,715	$13,347
% of total	1	1
Operating earnings
Operating earnings	362	456
% of sales	0.028	0.034
Interest expense, net	177	190
Earnings before income taxes	185	266
Income tax provision	72	104
Net earnings	113	162
Retail Food Member
Net sales
Net sales	9,900	10,346
% of total	0.779	0.775
Operating earnings
Operating earnings	311	399
% of sales	0.031	0.039
Supply Chain Services Member
Net sales
Net sales	2,815	3,001
% of total	0.221	0.225
Operating earnings
Operating earnings	82	86
% of sales	0.029	0.029
Corporate Member
Operating earnings
Operating earnings	($31)	($29)

Condensed Consolidated Statemen

Condensed Consolidated Statements of Earnings (USD $)
In Millions, unless otherwise specified	0 Months Ended Jun. 20, 2009	0 Months Ended Jun. 14, 2008
Net sales	$12,715	$13,347
Cost of sales	9,868	10,282
Gross profit	2,847	3,065
Selling and administrative expenses	2,485	2,609
Operating earnings	362	456
Interest expense, net	177	190
Earnings before income taxes	185	266
Income tax provision	72	104
Net earnings	$113	$162
Net earnings per share-basic	0.53	0.76
Net earnings per share-diluted	0.53	0.76
Dividends declared per share	0.1725	0.17
Weighted average number of shares outstanding:
Basic	212	212
Diluted	212	214

1_Condensed Consolidated Statem

Condensed Consolidated Statements of Earnings (Percent To Sales) (USD $)
	0 Months Ended Jun. 20, 2009	0 Months Ended Jun. 14, 2008
Net Sales	1	1
Cost of sales	0.776	0.77
Gross profit	0.224	0.23
Selling and administrative expenses	0.196	0.196
Operating earnings	0.028	0.034
Interest expense, net	0.014	0.014
Earnings before income taxes	0.015	0.02
Income tax provision	0.006	0.008
Net earnings	0.009	0.012

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (USD $)
In Millions	Jun. 20, 2009	Feb. 28, 2009
Current assets
Cash and cash equivalents	$275	$240
Receivables, net	870	874
Inventories	2,746	2,709
Other current assets	220	282
Total current assets	4,111	4,105
Property, plant and equipment, net	7,461	7,528
Goodwill	3,748	3,748
Intangible assets, net	1,567	1,584
Other assets	684	639
Total assets	17,571	17,604
Current liabilities
Accounts payable and accrued liabilities	3,126	3,067
Current maturities of long-term debt and capital lease obligations	257	516
Other current liabilities	891	889
Total current liabilities	4,274	4,472
Long-term debt and capital lease obligations	8,105	7,968
Other liabilities	2,522	2,583
Stockholders' equity
Common stock, $1.00 par value: 400 shares authorized; 230 shares issued	230	230
Capital in excess of par value	2,850	2,853
Accumulated other comprehensive loss	(498)	(503)
Retained earnings	619	542
Treasury stock, at cost, 18 and 18 shares, respectively	(531)	(541)
Total stockholders' equity	2,670	2,581
Total liabilities and stockholders' equity	$17,571	$17,604

2_Condensed Consolidated Balanc

Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
Share data in Millions	Jun. 20, 2009	Feb. 28, 2009
Common stock, par value (not in millions)	1	1
Common stock, shares authorized	400	400
Common stock, shares issued	230	230
Treasury stock, shares	18	18

3_Condensed Consolidated Statem

Condensed Consolidated Statements of Cash Flows (USD $)
In Millions	0 Months Ended Jun. 20, 2009	0 Months Ended Jun. 14, 2008
Cash flows from operating activities
Net earnings	$113	$162
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	297	322
LIFO charge	18	20
Gain on sale of assets	(2)	(7)
Deferred income taxes	(5)	14
Stock-based compensation	13	23
Other	14	(5)
Changes in operating assets and liabilities	44	(131)
Net cash provided by operating activities	492	398
Cash flows from investing activities
Proceeds from sale of assets	10	41
Purchases of property, plant and equipment	(238)	(395)
Other	5	(15)
Net cash used in investing activities	(223)	(369)
Cash flows from financing activities
Proceeds from issuance of long-term debt	948	272
Payment of long-term debt and capital lease obligations	(1,106)	(250)
Dividends paid	(73)	(36)
Other	(3)	1
Net cash used in financing activities	(234)	(13)
Net increase in cash and cash equivalents	35	16
Cash and cash equivalents at beginning of year	240	243
Cash and cash equivalents at the end of period	$275	$259

The Company and Summary of Sign

The Company and Summary of Significant Accounting Policies
	0 Months Ended Jun. 20, 2009 USD / shares
The Company and Summary of Significant Accounting Policies [Abstract]
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	NOTE 1 THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Description SUPERVALU INC. (SUPERVALU or the Company), a Delaware corporation, was organized in 1925 as the successor of two wholesale grocery firms established in the 1870s. SUPERVALU is one of the largest companies in the United States grocery channel. References to the Company refer to SUPERVALU INC. and Subsidiaries. The Company conducts its retail operations throughout the United States under three retail food store formats: combination stores (defined as food and pharmacy), food stores and limited assortment food stores. Additionally, the Company provides supply chain services, primarily wholesale distribution, across the United States retail grocery channel. Statement of Registrant The accompanying condensed consolidated financial statements of the Company for the 16weeks ended June20, 2009 and June14, 2008 are unaudited and, in the opinion of management, contain all adjustments that are of a normal and recurring nature necessary to present fairly the financial condition and results of operations for such periods. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes in the Companys Annual Report on Form 10-K for the fiscal year ended February28, 2009. The results of operations for the 16weeks ended June20, 2009 are not necessarily indicative of the results expected for the full year. The Condensed Consolidated Balance Sheet as of February28, 2009 has been derived from the audited Consolidated Balance Sheet as of that date. Accounting Policies The summary of significant accounting policies is included in the Notes to Consolidated Financial Statements set forth in the Companys Annual Report on Form 10-K for the fiscal year ended February 28, 2009. Fiscal Year The Companys fiscal year ends on the last Saturday in February. The Companys first quarter consists of 16weeks, while the second, third and fourth quarters each consist of 12weeks, except for the fourth quarter of fiscal 2009 which included 13weeks. Because of differences in the accounting calendars of the Company and its wholly-owned subsidiary, New Albertsons, Inc., the accompanying June20, 2009 and February28, 2009 Condensed Consolidated Balance Sheets include the assets and liabilities related to New Albertsons, Inc. as of June18, 2009 and February26, 2009, respectively. Use of Estimates The preparation of the Companys condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. The Companys banking arrangements allow th

New Accounting Standards

New Accounting Standards
	0 Months Ended Jun. 20, 2009 USD / shares
New Accounting Standards [Abstract]
NEW ACCOUNTING STANDARDS	NOTE 2 NEW ACCOUNTING STANDARDS In December2008, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) FAS 132(R)-1, Employers Disclosures about Postretirement Benefit Plan Assets. FSP FAS 132(R)-1 provides additional guidance regarding disclosures about plan assets of defined benefit pension or other postretirement plans. FSP FAS 132(R)-1 will be effective for the Companys fiscal year ending February27, 2010. The adoption of FSP FAS 132(R)-1 will result in enhanced disclosures, but will not otherwise have an impact on the Companys consolidated financial statements.

Goodwill and Intangible Assets

Goodwill and Intangible Assets
	0 Months Ended Jun. 20, 2009 USD / shares
Goodwill and Intangible Assets [Abstract]
GOODWILL AND INTANGIBLE ASSETS	NOTE 3 GOODWILL AND INTANGIBLE ASSETS As of June20, 2009, the Company had approximately $3,748 of Goodwill; $2,941 related to its Retail food segment and $807 related to its Supply chain services segment. Changes in the Companys Goodwill and Intangible assets consisted of the following: February 28, Additions/ Other net June 20, 2009 Amortization adjustments 2009 Goodwill $ 3,748 $ $ $ 3,748 Intangible assets: Trademarks and tradenames indefinite lived $ 1,069 $ $ $ 1,069 Favorable operating leases, customer lists, customer relationships and other (accumulated amortization of $213 and $197, as of June20, 2009 and February28, 2009, respectively) 706 2 (3 ) 705 Non-compete agreements (accumulated amortization of $4 and $4 as of June20, 2009 and February28, 2009, respectively) 10 10 Total intangible assets 1,785 2 (3 ) 1,784 Accumulated amortization (201 ) (19 ) 3 (217 ) Total intangible assets, net $ 1,584 $ 1,567 Amortization expense of intangible assets with a definite life was $19 and $20 for the 16 weeks ended June20, 2009 and June14, 2008, respectively. Future amortization expense will be approximately $51 per fiscal year for each of the next five fiscal years.

Reserves for Closed Properties

Reserves for Closed Properties
	0 Months Ended Jun. 20, 2009 USD / shares
Reserves for Closed Properties [Abstract]
RESERVES FOR CLOSED PROPERTIES	NOTE 4 RESERVES FOR CLOSED PROPERTIES The Company maintains reserves for costs associated with closures of retail stores, distribution centers and other properties that are no longer being utilized in current operations. The Company provides for closed property operating lease liabilities using a discount rate to calculate the present value of the remaining noncancellable lease payments after the closing date, reduced by estimated subtenant rentals that could be reasonably obtained for the property. Adjustments to closed property reserves primarily relate to changes in subtenant income or actual exit costs differing from original estimates. Adjustments are made for changes in estimates in the period in which the changes become known. Changes in the Companys reserves for closed properties consisted of the following: June 20, 2009 Balance at beginning of year $ 167 Additions 1 Payments (18 ) Adjustments 3 Balance at end of quarter $ 153

Fair Value Measurements

Fair Value Measurements
	0 Months Ended Jun. 20, 2009 USD / shares
Fair Value Measurements [Abstract]
FAIR VALUE MEASUREMENTS	NOTE 5 FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value are categorized using defined hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair value measurements, as follows: Level 1 Quoted prices in active markets for identical assets or liabilities; Level 2 Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; Level 3 Unobservable inputs in which little or no market activity exists, requiring an entity to develop its own assumptions about the assumptions that market participants would use in valuing. As of June 20, 2009, the Company had no material financial assets or liabilities measured at fair value and no material nonfinancial assets or liabilities measured at fair value on a nonrecurring basis subsequent to their initial recognition. Financial Instruments For certain of the Companys financial instruments, including cash and cash equivalents, receivables and accounts payable, the fair values approximate book values due to their short maturities. The estimated fair value of notes receivable was less than the book value by approximately $5 and $8 as of June20, 2009 and February28, 2009, respectively. Notes receivable are valued based on a discounted cash flow approach applying a rate that is comparable to publicly traded instruments of similar credit quality. The estimated fair value of the Companys long-term debt (including current maturities) was less than the book value by approximately $281 and $452 as of June20, 2009 and February28, 2009, respectively. The estimated fair value was based on market quotes, where available, or market values for similar instruments.

Long Term Debt

Long Term Debt
	0 Months Ended Jun. 20, 2009 USD / shares
Long Term Debt [Abstract]
LONG-TERM DEBT	NOTE 6 LONG-TERM DEBT The Companys long-term debt and capital lease obligations consisted of the following: June 20, February 28, 2009 2009 1.19% to 3.25% Revolving Credit Facility and Variable Rate Notes due June2011 June2012 $ 1,617 $ 1,920 8.00% Notes due May2016 1,000 7.50% Notes due February2011 700 700 7.45% Debentures due August2029 650 650 7.50% Notes due November2014 500 500 6.34% to 7.15% Medium Term Notes due July2009 June2028 452 512 8.00% Debentures due May2031 400 400 7.50% Notes due May2012 300 300 8.00% Debentures due June2026 272 272 8.70% Debentures due May2030 225 225 7.75% Debentures due June2026 200 200 7.25% Notes due May2013 200 200 6.95% Notes due August2009 173 350 8.35% Notes due May2010 165 275 7.875% Notes due August2009 118 350 7.90% Debentures due May2017 96 96 7.50% Debentures due May2037 191 Accounts Receivable Securitization Facility, currently 1.41% 125 120 Other 90 97 Net discount on debt, using an effective interest rate of 6.28% to 8.97% (240 ) (208 ) Capital lease obligations 1,319 1,334 Total debt and capital lease obligations 8,362 8,484 Less current maturities of long-term debt and capital lease obligations (257 ) (516 ) Long-term debt and capital lease obligations $ 8,105 $ 7,968 Certain of the Companys credit facilities and long-term debt agreements have restrictive covenants and cross-default provisions which generally provide, subject to the Companys right to cure, for the acceleration of payments due in the event of a breach of the covenant or a default in the payment of a specified amount of indebtedness due under certain other debt agreements. The Company was in compliance with all such covenants and provisions for all periods presented. In May2009, the Company issued $1,000 in senior notes, which rank equally with all of the Companys other senior unsecured indebtedness. In conjunction with the debt issuance, the Company paid off $191 of 7.50% Debentures due May2037 that contained put options exercised in May2009, early redeemed $60 of 6.77% Medium Term Notes due July2009 and purchased pursuant to a tender offer $232 of 7.875% Notes due August2009, $177 of 6.95% Notes due August2009 and $110 of 8.35% Notes due May2010 for an aggregate payment of $777 in cash. The remainder of the debt issuance proceeds was used to reduce the Revolving Credit Facility. In May2009, the Company amended and extended its 364-day accounts receivable securitization program. The Company can borrow up to $200 on a revolving basis, with borrowings secured by eligible accounts receivable, which remain under the Companys control. Facility fees under this program range from 0.75percent to 2.50percent, based on the Companys credit ratings. The facility fee in effect on June20, 2009, based on the Company

Income Taxes

Income Taxes
	0 Months Ended Jun. 20, 2009 USD / shares
Income Taxes [Abstract]
INCOME TAXES	NOTE 7 INCOME TAXES During the 16weeks ended June20, 2009 there were no material changes to the unrecognized tax benefits disclosed in the Companys Annual Report on Form 10-K for the fiscal year ended February, 28, 2009. The Company does not anticipate that its total unrecognized tax benefits will change significantly in the next 12months.

Stock Based Awards

Stock Based Awards
	0 Months Ended Jun. 20, 2009 USD / shares
Stock-Based Awards [Abstract]
STOCK-BASED AWARDS	NOTE 8 STOCK-BASED AWARDS The Company recognized pre-tax stock-based compensation expense (included primarily in Selling and administrative expenses in the Condensed Consolidated Statements of Earnings) related to stock-based awards of $13 and $23 for the 16weeks ended June20, 2009 and June14, 2008, respectively. During the 16weeks ended June20, 2009 and June14, 2008, the Company granted approximately 3 and 4 stock options, respectively. To calculate the fair value of stock options, the Company uses the Black-Scholes option pricing model. The significant weighted average assumptions relating to the valuation of the Companys stock options consisted of the following: June 20, June 14, 2009 2008 Dividend yield 2.0 % 2.0 % Volatility rate 41.3 42.2 % 28.1 36.4 % Risk-free interest rate 1.9 2.0 % 2.0 3.4 % Expected option life 4.0 4.5 years 1.0 5.4 years The weighted average grant date fair value of the stock options granted during the 16weeks ended June20, 2009 and June14, 2008 was $4.93 and $7.93, respectively.

Treasury Stock Purchase Program

Treasury Stock Purchase Program
	0 Months Ended Jun. 20, 2009 USD / shares
Treasury Stock Purchase Program [Abstract]
TREASURY STOCK PURCHASE PROGRAM	NOTE 9 TREASURY STOCK PURCHASE PROGRAM On May28, 2009, the Board of Directors of the Company adopted and announced a new annual share repurchase program authorizing the Company to purchase up to $70 of the Companys common stock. Stock purchases will be made primarily from the cash generated from the settlement of stock options. This annual authorization program replaced the previously existing share repurchase program and continues through June2010. The Company did not repurchase any shares during the 16 weeks ended June20, 2009. As of June20, 2009, there remained $70 available to repurchase the Companys common stock. The Company did not repurchase any shares during the 16weeks ended June20, 2009 under the previously existing share repurchase program. During the 16weeks ended June14, 2008 the Company purchased 0.2 shares under a previously existing program at an average cost of $30.01 per share.

Benefit Plans

Benefit Plans
	0 Months Ended Jun. 20, 2009 USD / shares
Benefit Plans [Abstract]
BENEFIT PLANS	NOTE 10 BENEFIT PLANS Substantially all employees of the Company are covered by various contributory and non-contributory pension, profit sharing or 401(k) plans. Union employees participate in multi-employer retirement plans under collective bargaining agreements, unless the collective bargaining agreement provides for participation in plans sponsored by the Company. In addition to sponsoring both defined benefit and defined contribution pension plans, the Company provides healthcare and life insurance benefits for eligible retired employees under postretirement benefit plans and short-term and long-term disability benefits to former and inactive employees prior to retirement under post-employment benefit plans. The terms of the 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. Net periodic benefit expense (income)for defined benefit pension plans and other postretirement benefit plans consisted of the following: First Quarter Ended Pension Benefits Other Postretirement Benefits June 20, June 14, June 20, June 14, 2009 2008 2009 2008 Service cost $ 2 $ 2 $ 1 $ Interest cost 42 40 2 3 Expected return on assets (39 ) (43 ) Amortization of prior service benefit (2 ) Amortization of net actuarial loss 3 1 1 Net periodic benefit expense (income) $ 8 $ (1 ) $ 2 $ 4 During the 16weeks ended June20, 2009, the Company made contributions of approximately $26 to its pension plans and $2 to its other postretirement benefit plans.

Commitments, Contingencies and

Commitments, Contingencies and Off Balance Sheet Arrangements
	0 Months Ended Jun. 20, 2009 USD / shares
Commitments, Contingencies and Off-Balance Sheet Arrangements [Abstract]
COMMITMENTS, CONTINGENCIES AND OFF-BALANCE SHEET ARRANGEMENTS	NOTE 11 COMMITMENTS, CONTINGENCIES AND OFF-BALANCE SHEET ARRANGEMENTS The Company has guaranteed certain leases, fixture financing loans and other debt obligations of various retailers as of June20, 2009. 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 21 years, with a weighted average remaining term of approximately 10years. For each guarantee issued, if the independent retail customer defaults on a payment, the Company would be required to make payments under its guarantee. Generally, the guarantees are secured by indemnification agreements or personal guarantees of the independent retail customer. The Company reviews performance risk related to its guarantees of independent retail customers based on internal measures of credit performance. As of June20, 2009, the maximum amount of undiscounted payments the Company would be required to make in the event of default of all of these guarantees was approximately $160 and represented approximately $107 on a discounted basis. Based on the indemnification agreements, personal guarantees and results of the reviews of performance risk, the Company believes the likelihood that it will be required to assume a material amount of these obligations is remote. Accordingly, no amount has been recorded in the Condensed Consolidated Balance Sheets for these contingent obligations under the Companys guarantee arrangements. The Company is contingently liable for leases that have been assigned to various third parties in connection with facility closings and dispositions. The Company could be required to satisfy the obligations under the leases if any of the assignees are unable to fulfill their lease obligations. Due to the wide distribution of the Companys assignments among third parties, and various other remedies available, the Company believes the likelihood that it will be required to assume 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. These contracts typically include either volume commitments or fixed expiration dates, termination provisions and other standard contractual considerations. As of June20, 2009, the Company had approximately $1,662 of non-cancelable future purchase obligations primarily related to supply contracts. The Company is a party to a variety of contractual agreements under which the Company may be obligated to indemnify the other party for certain matters, which indemnities may be secured by operation of law or otherwise, in the ordinary course of business. These contracts primarily relate to the Companys 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 of their work. While the Companys aggregate indemnification obligation could result in a material liability, the Company is aware o

Segment Information

Segment Information
	0 Months Ended Jun. 20, 2009 USD / shares
Segment Information [Abstract]
SEGMENT INFORMATION	NOTE 12 SEGMENT INFORMATION Refer to page 2 for the Companys segment information.

Subsequent Event

Subsequent Event
	0 Months Ended Jun. 20, 2009 USD / shares
Subsequent Event [Abstract]
SUBSEQUENT EVENT	NOTE 13 SUBSEQUENT EVENT On July 28, 2009, the Company announced that it reached an agreement for the sale of 36 Albertsons stores located in Utah. The transaction, which is subject to regulatory approval, is expected to realize approximately $150 in after-tax net proceeds and is not expected to have a material effect on the Companys results of operations for fiscal 2010.