Exhibit 99.1
SUPERVALU Reports Record Fiscal 2007 Fourth Quarter and Year Results
SUPERVALU Raises Fiscal 2008 Guidance; Poised for Continued
Success
Company Demonstrates Powerful New Business Model with Double Digit
Accretion Following Transformational Acquisition
MINNEAPOLIS--(BUSINESS WIRE)--April 19, 2007--SUPERVALU INC.
(NYSE:SVU) today reported record results for the fourth quarter of
fiscal 2007. The company reported record net sales of $10.3 billion
compared to $4.6 billion last year, record net earnings of $119
million compared to $6 million last year, and diluted earnings per
share of $0.57 compared to $0.04 last year. Fiscal 2007 fourth quarter
results included net after-tax charges of $37 million, or $0.19 per
diluted share. Fiscal 2006 fourth quarter results included net
after-tax charges of $72 million, or $0.52 per diluted share. On June
2, 2006, SUPERVALU completed its acquisition of Albertson's premier
retail properties which transformed SUPERVALU into one of the nation's
largest supermarket chains with leading market shares across the
country.
Jeff Noddle, SUPERVALU chairman and chief executive officer said,
"Fiscal 2007 marked the transformation of SUPERVALU into a retail
powerhouse holding a significant position in the retail grocery
industry with some of the most enviable brands in the market. Our
record fourth quarter showed good momentum and completes a very
successful fiscal 2007 year, with full year reported diluted earnings
per share of $2.32. Our double-digit earnings growth in fiscal 2007
clearly demonstrates the highly accretive nature of the acquisition.
Fiscal 2007 also marked the successful execution of our business plans
including the improvement in our identical store sales on a combined
store network basis. We are very well-positioned for the next stage of
growth as we implement initiatives designed to further deliver the
economics of the acquisition by leveraging our competencies in both
retail and supply chain. Today, we are raising our earnings per share
guidance for fiscal 2008 from $2.58 to $2.77 to $2.68 to $2.87 which
includes one-time transaction costs of $0.16 to $0.20, equating to
another year of double-digit earnings growth. I am confident that the
full potential of the NEW SUPERVALU will continue to emerge in the
years ahead."
Fiscal 2007 fourth quarter results included net after-tax charges
of $37 million, or $0.19 per diluted share comprised of one-time
transaction costs of $0.05 per diluted share, expense from the
adoption of FAS 123R related to stock option expensing of $0.01 per
diluted share, the impact of the Hybrid Income Term Security Units
("HITS") which did not settle upon close of the acquisition of $0.02
per diluted share and non-cash charges related to the sale of Scott's
Foods & Pharmacy stores of $0.11. Fiscal 2006 fourth quarter results
included net after-tax charges of $72 million, or $0.52 per diluted
share, primarily related to the sale of Cub Foods stores in Chicago
and asset impairment related to the disposition of Deals stores.
Segment Results
Retail Food Segment - Fourth quarter retail net sales were a
record $8.2 billion, compared to $2.5 billion last year. The sales
increase primarily reflects the acquisition of Albertson's premier
retail properties. Identical store sales growth on a combined basis,
as if the newly acquired operations were in the store base for more
than a year, increased 1.4 percent in the fourth quarter. The acquired
stores identical store sales growth in the quarter increased 1.8
percent. Identical store sales growth for stores in existence prior to
the acquisition was flat and when adjusted for planned in-market store
expansion increased approximately 1 percent.
Reported retail operating earnings for the fourth quarter were a
record $363 million compared to a loss of $2 million last year,
primarily reflecting the acquisition of Albertsons' premier
properties. Fourth quarter fiscal 2007 results included non-cash
charges of $26 million pre-tax related to the sale of the 18 Scott's
Food & Pharmacy stores, announced today. The company signed a
definitive agreement to sell the 18 Scott's stores in Fort Wayne
Indiana to Kroger. The sale is consistent with the company's
discipline to periodically review assets and focus resources on the
best growth opportunities. Fourth quarter fiscal 2007 retail operating
earnings also included $1.6 million of expense from the adoption of
FAS 123R related to stock option expensing. Fiscal 2006 fourth quarter
results included charges of approximately $112 million pre-tax,
primarily related to the sale of Cub Foods stores in Chicago and the
disposition of Deals stores. Reported retail operating earnings as a
percent of sales for the fourth quarter of fiscal 2007 were 4.5
percent. When adjusted for the noted charges in both years' fourth
quarter, retail operating earnings as a percent of sales were 4.8
percent in fiscal 2007 compared to 4.4 percent in fiscal 2006,
primarily reflecting the fiscal 2007 acquisition of Albertson's
premier retail properties.
Net new store activity since last year's fourth quarter included
723 combination stores (combination stores are defined as food and
drug), 357 food stores and 35 limited assortment food stores. Net new
store activity is inclusive of the stores acquired. As of year end,
SUPERVALU's retail store network of 2,478 stores includes
approximately 876 combination stores, 412 food stores, and 1,190
limited assortment grocery stores. Included in the total store counts
are 120 fuel centers and 858 licensed limited assortment food stores.
Total retail square footage at year end, including acquired stores and
licensed stores was approximately 84 million square feet compared to
approximately 30 million square feet last fiscal year end. Store
counts and square footage are adjusted for the sale of Scott's and the
Milwaukee Jewel-Osco stores.
Supply Chain Services Segment - Fourth quarter net sales for
supply chain services were $2.1 billion, up slightly from last year,
reflecting new business growth which was offset by normal customer
attrition.
Reported supply chain services operating earnings for the fourth
quarter were $55 million compared to $41 million last year. This
year's results also included approximately $1.3 million of expense
from the adoption of FAS 123R related to stock option expensing. Last
year's fourth quarter results included $10 million of losses related
to minority-owned investments. When adjusted for last year's fourth
quarter minority-owned investments, reported supply chain operating
earnings as a percent of sales were 2.6 percent this year compared to
2.4 percent last year.
Other Items
General corporate expenses for the fourth quarter were $39 million
compared to $6 million last year primarily reflecting one-time
transaction costs of approximately $18 million in the fourth quarter
of fiscal 2007 and lower incentive related expenses in the prior year.
SUPERVALU's tax rate for the fourth quarter was 41.9 percent
compared to 47.5 percent in last year's fourth quarter. The fiscal
2007 and 2006 fourth quarter tax rates reflect the write-off of
non-deductible goodwill on the sale of Scott's Food & Pharmacy stores
and the sale of Cub Foods stores in Chicago, respectively. When
adjusted for the non-deductible goodwill primarily related to the sale
of Scott's Food & Pharmacy and Cub Foods stores, the effective tax
rate was 38.6 percent in the fourth quarter of fiscal 2007 and 37
percent in the fourth quarter of fiscal 2006.
Net interest expense for the fourth quarter was $174 million
compared to $22 million last year reflecting the assumption of debt
and new borrowings from the acquisition.
Capital spending for fourth quarter was $297 million, including
$32 million in capital leases. Fiscal 2007 capital spending was
approximately $950 million, including $73 million in capital leases.
Capital spending primarily includes retail store expansion, store
remodeling and supply chain initiatives.
Total debt to capital was approximately 64 percent at the end of
the fiscal 2007 compared to approximately 37 percent at fiscal 2006
year-end. The total debt to capital ratio is calculated as total debt,
which includes notes payable, current debt and obligations under
capital leases, long-term debt and obligations under capital leases,
divided by the sum of total debt and total stockholders' equity.
Diluted weighted average shares outstanding for the fourth quarter
were 211 million shares compared to 138 million shares last year. The
net increase was primarily due to the additional shares issued for the
acquisition and issuances under employee benefit programs, net of
repurchases. As of February 24, 2007, SUPERVALU had 209 million net
shares outstanding.
Fiscal 2007 Results
For the fiscal 2007 full year, SUPERVALU reported record net sales
of $37.4 billion compared to $19.9 billion last year, record net
earnings of $452 million compared to $206 million last year and
diluted earnings per share of $2.32 compared to $1.46 last year.
Fiscal 2007 full year results included net after-tax charges of $78
million, or $0.46 per diluted share primarily related to one-time
transaction costs, expense from the adoption of FAS 123R related to
stock option expensing, the impact of the HITS which did not settle
upon close of the acquisition, and charges related to the sale of
Scott's Food & Pharmacy stores. Fiscal 2006 full year results included
net after-tax charges of $111 million, or $0.76 per diluted share,
primarily related to the sale of Cub Foods stores in Chicago, the sale
of Shop 'n Save stores in Pittsburgh, the disposition of Deals stores,
and losses incurred from Hurricane Katrina.
Fiscal 2007 Fourth Quarter and Full
Year
Diluted Earnings Per Share Summary
Fiscal 2007 Fiscal 2007
Fourth Quarter Full Year
- ----------------------------------------------------------------------
Reported diluted earnings per share $0.57(a) $2.32(a)
One-time transaction costs $0.05 $0.20
Charges related to sale of Scott's
Food & Pharmacy $0.11 $0.12
- ----------------------------------------------------------------------
Diluted earnings per share before
adjustments $0.73 $2.64
Weighted average diluted shares
outstanding (millions) 211 196
(a) Reported diluted earnings per share includes $0.01 and $0.08,
respectively, for the quarter and the full year from the adoption of
FAS 123R related to stock option expensing and $0.02 and $0.06,
respectively, for the quarter and the full year related to the impact
of the HITS which did not settle upon close of the acquisition.
Fiscal 2008 Guidance
Diluted Earnings Per Share Summary
Fiscal 2008
Guidance
- ----------------------------------------------------------------------
Reported diluted earnings per share $2.68 to $2.87
One-time transaction costs $0.20 to $0.16
- ----------------------------------------------------------------------
Diluted earnings per share before $2.88 to $3.03
adjustments
Weighted average diluted shares 214 to 217
outstanding (millions)
SUPERVALU's fiscal 2008 outlook includes business assumptions,
such as:
-- Net sales are estimated to be approximately $44 billion;
-- Identical store sales for the combined retail network, as if
the newly acquired operations were in the store base for more
than a year, are projected to increase 1 to 2 percent;
-- Store development plans are projected to be approximately 25
to 30 standard size stores and 60 to 80 limited assortment
stores, including licensed stores. Major remodels are
estimated at approximately 100 to 110 stores;
-- Sales attrition, exclusive of new business, in the traditional
food distribution business will approximate four to five
percent for the year;
-- Total capital spending is projected to be approximately $1.2
billion, including capital leases;
-- Stock option expense is projected to be approximately $0.12
per diluted share, compared to $0.08 in fiscal 2007
representing the larger employee base of the company;
-- One-time transaction costs are expected to be approximately
$56 to $70 million pre-tax, or approximately $0.16 to $0.20
per diluted share;
-- The outlook for the year is based on the preliminary fair
value assigned to acquired assets and liabilities. These fair
values will be refined as final valuation information is
received or developed through the first quarter of fiscal
2008; and
-- The effective tax rate is estimated to be approximately 39
percent.
Commenting on SUPERVALU, Noddle said, "As we near the one year
mark of the acquisition in June, we are on schedule with our three
year plan to leverage our transformed business model and deliver
continued value to our shareholders."
A conference call to review the fourth quarter results is
scheduled for today at 9:00 a.m. (CST). A live Web cast of the call
will be available at www.supervalu.com. An archive of the call is
accessible via telephone by dialing 630-652-3041 with passcode
17421580 and through the company's Web site at www.supervalu.com. The
conference call archive will be available through April 30, 2007.
About SUPERVALU INC
SUPERVALU INC. is one of the largest companies in the United
States grocery channel with annual sales of approximately $40 billion.
SUPERVALU holds leading market share positions across the U.S. with
its approximately 2,500 retail grocery locations. Through SUPERVALU's
nationwide supply chain network, the company provides distribution and
related logistics support services to more than 5,000 grocery
endpoints across the country. SUPERVALU currently has approximately
200,000 employees. For more information about SUPERVALU visit
www.supervalu.com.
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR
THE PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
Except for the historical and factual information contained
herein, the matters set forth in this news release, including
statements as to the progress and expected benefits of the combination
of the operations of Albertson's, Inc. that were acquired in June 2006
with those of SUPERVALU, such as efficiencies, cost savings, market
profile and financial strength, and the competitive ability and
position of the combined company, and other statements identified by
words such as "estimates," "expects," "projects," "plans," and similar
expressions are forward-looking statements within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements are subject to risks and
uncertainties that may cause actual results to differ materially,
including the possibility that the anticipated benefits from the
acquisition cannot be fully realized or may take longer to realize
than expected, the possibility that costs, including costs related to
purchase accounting estimates of fair value, or difficulties related
to the combination of Albertsons operations into SUPERVALU will be
greater than expected, and the impact of competition, economic and
industry conditions, security and food and drug safety issues, severe
weather and natural disasters, escalating costs of providing employee
benefits, and other labor relations issues including contract
negotiations, expansion, liquidity, legal and administrative
proceedings, regulatory and accounting matters, changes in operating
conditions, and other risk factors relating to our business or
industry as detailed from time to time in SUPERVALU's reports filed
with the SEC. You should not place undue reliance on these
forward-looking statements, which speak only as of the date of this
news release. Unless legally required, SUPERVALU undertakes no
obligation to update publicly any forward-looking statements, whether
as a result of new information, future events or otherwise.
You should not place undue reliance on these forward-looking
statements, which speak only as of the date of this news release.
Unless legally required, SUPERVALU undertakes no obligation to update
publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
SUPERVALU INC. and Subsidiaries
CONSOLIDATED COMPOSITION OF NET SALES AND OPERATING EARNINGS
(unaudited)
February 24, February 25,
2007 2006
(In millions, except per share data) (12 weeks) (12 weeks)
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Net sales
Retail food and drug $8,153 $2,528
79% 55%
Supply chain services 2,148 2,112
21% 45%
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Total net sales $10,301 $4,640
100.0% 100.0%
======================================================================
Operating earnings
Retail food and drug operating earnings $363 $(2)
Supply chain services operating earnings 55 41
General corporate expenses 39 6
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Total operating earnings 379 33
Interest expense, net 174 22
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Operating earnings before income taxes $205 $11
Income tax expense 86 5
- ----------------------------------------------------------------------
Net earnings $119 $6
======================================================================
LIFO charge $- $5
Depreciation and amortization
Retail food and drug $233 $52
Supply chain services 23 20
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Total $256 $72
======================================================================
SUPERVALU INC. and Subsidiaries
CONSOLIDATED COMPOSITION OF NET SALES AND OPERATING EARNINGS
(unaudited)
February 24, February 25,
2007 2006
(In millions, except per share data) (52 weeks) (52 weeks)
- ----------------------------------------------------------------------
Net sales
Retail food and drug $28,016 $10,635
75% 54%
Supply chain services 9,390 9,229
25% 46%
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Total net sales $37,406 $19,864
100.0% 100.0%
======================================================================
Operating earnings
Retail food and drug operating earnings $1,179 $269
Supply chain services operating earnings 257 214
General corporate expenses 131 48
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Total operating earnings 1,305 435
Interest expense, net 558 106
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Operating earnings before income taxes $747 $329
Income tax expense 295 123
- ----------------------------------------------------------------------
Net earnings $452 $206
======================================================================
LIFO charge $18 $11
Depreciation and amortization
Retail food and drug $783 $216
Supply chain services 96 94
General Corporate - 1
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Total $879 $311
======================================================================
SUPERVALU INC. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
February 24, February 25,
2007 2006
(In millions, except per (12 weeks) % of sales (12 weeks) % of sales
share data)
- ----------------------------------------------------------------------
Net sales $10,301 100.0% $4,640 100.0%
Cost of sales 7,877 76.5% 3,959 85.3%
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Gross profit 2,424 23.5% 681 14.7%
Selling, general and
administrative expenses 2,045 19.8% 648 14.0%
- ----------------------------------------------------------------------
Operating earnings 379 3.7% 33 0.7%
Interest expense, net 174 1.7% 22 0.5%
- ----------------------------------------------------------------------
Earnings before income
taxes 205 2.0% 11 0.2%
Income tax expense 86 0.8% 5 0.1%
- ----------------------------------------------------------------------
Net earnings $119 1.2% $6 0.1%
======================================================================
Earnings per common share
Basic
Net earnings $0.57 $0.04
Diluted
Net earnings $0.57 $0.04
Weighted average number of
common shares outstanding
Basic 208 136
Diluted 211 138
SUPERVALU INC. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
February 24, February 25,
2007 2006
(In millions, except per (52 Weeks) % of sales (52 Weeks) % of sales
share data)
- ----------------------------------------------------------------------
Net sales $37,406 100.0% $19,864 100.0%
Cost of sales 29,267 78.2% 16,977 85.5%
- ----------------------------------------------------------------------
Gross profit 8,139 21.8% 2,887 14.5%
Selling, general and
administrative expenses 6,834 18.3% 2,452 12.3%
- ----------------------------------------------------------------------
Operating earnings 1,305 3.5% 435 2.2%
Interest expense, net 558 1.5% 106 0.5%
- ----------------------------------------------------------------------
Earnings before income
taxes 747 2.0% 329 1.7%
Income tax expense 295 0.8% 123 0.6%
- ----------------------------------------------------------------------
Net earnings $452 1.2% $206 1.1%
======================================================================
Earnings per common share
Basic
Net earnings $2.38 $1.52
Diluted
Net earnings $2.32 $1.46
Weighted average number of
common shares outstanding
Basic 189 136
Diluted 196 146
SUPERVALU INC. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
February 24, February 25,
2007 2006
(unaudited)
- ----------------------------------------------------------------------
ASSETS
Current Assets
Cash and cash equivalents $285 $801
Accounts and notes receivable, net 957 439
Inventories 2,749 954
Prepaid and other current assets 469 89
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Total Current Assets 4,460 2,283
Land, buildings, leasehold improvements and
equipment, net 8,415 1,969
Goodwill 5,921 1,614
Intangibles, net 2,450 94
Other assets 456 193
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Total Assets $21,702 $6,153
======================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $2,741 $1,377
Current maturities of long-term debt and
capital lease obligations 286 112
Other current liabilities 1,678 133
- ----------------------------------------------------------------------
Total Current Liabilities 4,705 1,622
Long-term debt and obligations under capital
Leases 9,192 1,406
Other long-term liabilities and deferred
credits 2,499 506
Total Stockholder's Equity 5,306 2,619
- ----------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $21,702 $6,153
======================================================================
CONTACT: SUPERVALU INC.
Investors and Financial Media:
Yolanda Scharton, 952-828-4540
yolanda.scharton@supervalu.com
or
General and Trade Media:
Haley Meyer, 952-828-4786
Haley.meyer@supervalu.com