Exhibit 99.1
Cautionary Statements for Purposes of the Safe Harbor Provisions
of the Securities Litigation Reform Act
In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995 (the "Act"), SUPERVALU INC. (the "Company") is
filing the cautionary statements set forth below, identifying important factors
that could cause the Company's actual results to differ materially from those
projected in forward-looking statements made by, or on behalf of the Company.
When used in this Quarterly Report on Form 10-Q for the fiscal quarter ended
June 16, 2001 and in future filings by the Company with the Securities and
Exchange Commission, in the Company's press releases, other communications, and
in oral statements made by or with the approval of an authorized executive
officer, the words or phrases "will likely result", "are expected to", "will
continue", "is anticipated", "estimate", "project", "believe" or similar
expressions are intended to identify forward-looking statements within the
meaning of the Act. The following cautionary statements are for use as a
reference to a readily available written document in connection with forward-
looking statements as defined in the Act. These factors are in addition to any
other cautionary statements, written or oral, which may be made or referred to
in connection with any such forward-looking statement.
Retail Food Business Risks
The Company's retail food segment faces risks which may prevent the Company from
maintaining or increasing retail sales and earnings including: competition from
other retail chains, supercenters, non-traditional competitors and emerging
alternative formats; operating risks of retail operations; potential work
disruptions from labor disputes; and the adverse impact from the entry of other
retail chains, supercenters and non-traditional or emerging competitors into
markets where the Company has a retail concentration.
Food Distribution Business Risks
The Company's sales and earnings in its food distribution operations are
dependent on (i) the Company's ability to attract new customers and retain
existing customers; (ii) the success of its customers in competing with other
retail chains, supercenters, and non-traditional competitors; and (iii) its
ability to control costs. While the Company believes that its efforts will
enable it to attain its goals, certain factors could adversely impact the
Company's results, including: declines in sales to its independent retailer
customer base due to competition and other factors; consolidations of retailers
or competitors; increased self-distribution by chain retailers; increases in
operating costs; increases in credit risk associated with open accounts and
financing activities with independent retailers; potential work disruptions from
labor disputes; and the entry of new or non-traditional distribution systems
into the industry.
In addition, on June 30, 2001, the Company's supply agreement with Kmart
Corporation terminated. The earnings impact from the elimination of this
business is dependent on a number of variables including, the transition process
to a new supplier and overall "ramp down" costs. While the Company has
forecasted that the loss of the Kmart business, which generated annual revenues
of approximately $2.5 billion for fiscal 2001, will impact earnings per share
for fiscal 2002 in the range of $.018 to $0.22, including ramp down costs,
actual results may differ. Ramp down costs include expenses related to the
transfer of inventory, the reallocation of transportation fleet and warehousing
equipment, and employee transition costs.
Restructure Activities
In the fourth quarter of fiscal 2001, the Company completed a company-wide asset
review to identify assets that do not meet return objectives, provide long-term
strategic opportunities, or justify additional capital improvement, it would
consolidate certain distribution facilities, exit certain non-core retail
markets, dispose of under-performing retail stores, reduce its workforce and
write-off other items. The Company expects these restructuring activities to
generate approximately $60 million of free cash flow, which reflects cash
proceeds from asset sales and working capital reductions. The Company estimates
that the earnings per share benefit of these activities will be minimal in
fiscal 2002 and will contribute $0.07 to $0.09 to earnings per share by fiscal
2003. However, the timing of targeted asset sales as well as the Company's
ability to realize the anticipated benefits of such sales and working capital
reductions may affect the Company's ability to realize the full benefits of
these restructuring activities and impact the Company's future financial
results.
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Risks of Expansion and Acquisitions
The Company intends to continue to grow its retail and distribution businesses
through new store openings, new affiliations and in part through acquisitions.
Expansion is subject to a number of risks, including the adequacy of the
Company's capital resources; the location of suitable store or distribution
center sites and the negotiation of acceptable lease terms; and the ability to
hire and train employees. In addition, acquisitions involve a number of special
risks, including: making acquisitions at acceptable rates of return; the
diversion of management's attention to assimilation of the operations and
integration of personnel of the acquired business; possible costs and other
risks of integrating or adapting operational systems; potential adverse short-
term effects on the Company's operating results; and amortization of acquired
intangible assets.
Liquidity
Management expects that the Company will continue to replenish operating assets
and reduce aggregate debt with internally generated funds and capital leases
unless additional funds are necessary to complete acquisitions. If capital
spending significantly exceeds anticipated capital needs, additional funding
could be required from other sources. In addition, acquisitions could affect
the Company's borrowing costs and future financial flexibility.
In April 2001, Moody's Investors Service, Inc. reduced the company's long-term
debt ratings from Baa1 to Baa3. Moody's also lowered the company's short-term
debt ratings from P2 to P3. The company's access to the commercial paper market
has been reduced as a result of these ratings changes.
Litigation
While the Company believes that it is currently not subject to any material
litigation, the costs and other effects of legal and administrative cases and
proceedings, and settlements, are impossible to predict with certainty.
The foregoing should not be construed as exhaustive and the Company disclaims
any obligation subsequently to revise any forward-looking statements to reflect
events or circumstances after the date of such statements or to reflect the
occurrence of anticipated or unanticipated events.
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