Exhibit 99.1
SUPERVALU REPORTS FISCAL 2005 FOURTH QUARTER RESULTS
Fiscal 2005 Results Set Earnings Record and Exceed Guidance
SUPERVALU Reports 35 Percent Increase in Diluted Earnings Per Share in
Fiscal 2005; 16 Percent Increase Exclusive of Gain From Sale of WinCo and
Extra Week in Fiscal 2004
MINNEAPOLIS, April 19 /PRNewswire-FirstCall/ -- SUPERVALU INC. (NYSE: SVU)
today reported results for the fourth quarter of fiscal 2005, which ended
February 26, 2005. The company reported net sales of $4.6 billion compared to
$5.0 billion last year, net earnings of $92.9 million compared to $95.6 million
last year, basic earnings per share of $0.69 compared to $0.71 last year, and
diluted earnings per share of $0.65 compared to $0.67 last year. Last year's
fourth quarter reflected an extra week, which contributed approximately $360
million of net sales, $9.9 million of net earnings and $0.07 of basic and
diluted earnings per share. Fourth quarter results exceed previous earnings per
share guidance of $0.61 to $0.66, which did not include the reduction of $0.03
per share from the adoption of the new accounting treatment for contingently
convertible debentures.
For the fiscal 2005 full year, SUPERVALU reported net sales of $19.5 billion
compared to $20.2 billion last year, net earnings of $385.8 million compared to
$280.1 million last year, basic earnings per share of $2.86 compared to $2.09
last year, and diluted earnings per share of $2.71 compared to $2.01 last year.
Full-year results exceed previous earnings per share guidance of $2.75 to $2.80,
which did not include the reduction of $0.11 per share from the adoption of the
new accounting treatment for contingently convertible debentures.
Jeff Noddle, SUPERVALU chairman and chief executive officer said, "SUPERVALU
continues to deliver strong results. Fiscal 2005 set a record net earnings level
as diluted earnings per share grew 35 percent and when eliminating this year's
one-time gain on the sale of WinCo and last year's extra week, fiscal 2005
diluted earnings per share increased 16 percent. We implemented sizable
initiatives during the year, maintained a strict basis point discipline that
supports our competitive customer offerings, invested for growth and returns,
and improved our overall financial condition. We are excited about our strong
position in an ever-changing grocery retail and supply chain environment and
believe our highly complementary business model allows SUPERVALU to successfully
participate and grow."
Fiscal 2005 results include $0.51 basic earnings per share and $0.47 diluted
earnings per share impact from the net after-tax gain on the sale of the
company's minority interest in WinCo Foods, Inc. Fiscal 2005 and fiscal 2004
include $26.4 million and $15.5 million, respectively, of pre-tax restructure
and other charges or $0.12 basic and diluted earnings per share in fiscal 2005
and $0.07 basic and diluted earnings per share in fiscal 2004, primarily related
to increased liabilities associated with employee benefit costs from previously
exited distribution facilities, as well as changes in estimates on exited real
estate. Fiscal 2005 and fiscal 2004 reflect the adoption of the new accounting
treatment for contingently convertible debentures. Fiscal 2004 was a 53-week
year and included an extra week in the fourth quarter that generated
approximately $360 million of sales, $9.9 million of net earnings, and $0.07
basic and diluted earnings per share.
Segment Results
Retail Food Segment -- Fourth quarter retail net sales were $2.6 billion
compared to $2.8 billion last year. The decline in net sales primarily reflects
last year's extra week in the quarter, which contributed approximately $185
million in net sales, and a higher level of store closings, which fully offset
new store growth. Comparable store sales were negative 0.8 percent in the fourth
quarter, reflecting difficult comparison against last year's 12-week comparable
store sales growth of 2.5 percent. When adjusted for planned in-market store
expansion, fourth quarter comparable store sales were negative 0.3 percent.
Comparable store sales at Save-A-Lot were positive in the fourth quarter. Total
retail square footage, including licensed stores, increased by approximately 4.2
percent from last year's fourth quarter, with Save-A-Lot's total square footage
increasing by approximately 6.4 percent.
Reported retail operating earnings for the fourth quarter were $111.0
million compared to $138.0 million last year. Reported operating earnings as a
percent to sales were 4.3 percent compared to 4.9 percent in last year's fourth
quarter. The decrease in operating earnings as a percent to sales primarily
reflects the absence of last year's highly profitable extra week, the absence of
WinCo earnings in this year's results, and increased operating costs primarily
associated with remodel activities, which more than offset recently launched
labor productivity initiatives.
New store activity since last year's fourth quarter, including licensed
stores, resulted in 104 new stores, opened and acquired, and 38 store closings.
During fiscal 2005, net new stores opened include 62 extreme value stores and
four regional banner stores. Fiscal 2005 store closings include 35 Save-A-Lot
stores and three regional banner stores. As of February 26, 2005, Save-A-Lot,
including licensees, operated 1,287 stores, of which 466 were combination stores
compared to 199 combination stores at the end of fiscal 2004.
Food Distribution Segment -- Fourth quarter distribution net sales were $2.0
billion compared to $2.3 billion last year. The decline in sales primarily
reflects the absence of last year's extra week in the quarter, which contributed
approximately $177 million in net sales, and customer attrition including the
previously announced transition of three large customers to other suppliers,
which more than offset new business growth of approximately three percent. The
acquisition of Total Logistics, Inc. was completed on February 7, 2005 and
overall results were immaterial to the fourth quarter.
Reported distribution operating earnings for the fourth quarter were a
record $59.4 million, compared to $55.9 million last year, an increase of 6.3
percent. Reported operating earnings as a percent to sales was a record 2.9
percent compared to 2.5 percent in last year's fourth quarter, a 40 basis-point
increase. The increase in operating earnings as a percent to sales primarily
reflects the benefit of volume throughput including labor productivity
improvements, which more than offset the impact of last year's highly profitable
extra week.
Other Items
General corporate expense for the fourth quarter was $10.1 million compared
to $9.0 million last year. Included in the fourth quarter of fiscal 2005 was
pre-tax expense for the cumulative effect of lease accounting adjustments of
approximately $3 million, or $0.01 per diluted share.
SUPERVALU's effective tax rate for the fourth quarter was 31.2 percent and
the annual effective rate for fiscal 2005 was 35.8 percent versus 38.4 percent
for full year fiscal 2004. The fiscal 2004 annual effective tax rate was higher
than fiscal 2005, primarily from taxes due on the company's asset exchange with
C&S. In both fiscal 2005 and fiscal 2004, the annual effective tax rates reflect
the impact of net favorable tax settlements occurring in each respective fourth
quarter. Net settlements in fiscal 2005 exceeded net settlements in fiscal 2004
by approximately $4 million.
Capital spending for the fourth quarter and full year was $93.8 million and
$325.7 million, including $13.9 million and $62.9 million in capital leases,
respectively. Capital spending primarily included retail store expansion, store
remodeling, and technology enhancements. During the quarter, the company
completed its acquisition of Total Logistics, Inc. The aggregate transaction was
approximately $234 million, including assumed debt of approximately $69 million
and transaction expenses.
Total debt to capital was 40.1 percent at year-end compared to 46.7 percent
at fiscal 2004 year-end, the lowest level in more than a decade. 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. During the year, SUPERVALU used available cash balances to
voluntarily redeem its $250 million in 7 5/8 percent Notes due September 15,
2004 on May 3, 2004. Cash balance as of February 26, 2005 was approximately $464
million.
In the fourth quarter of fiscal 2005, the company adopted the Emerging
Issues Task Force Issue No. 04-8 (EITF) of the Financial Accounting Standards
Board entitled "The Effect of Contingently Convertible Instruments on Diluted
Earnings Per Share" in regard to SUPERVALU's zero-coupon 4-1/2 percent
convertible debentures. Under the new accounting standard, net earnings and
diluted shares outstanding, used only for diluted earnings per share
calculations, have been restated for the current and prior periods using the
if-converted method of accounting to reflect the contingent issuance of 7.8
million shares under the company's outstanding, contingently convertible
debentures, which were issued in November 2001. In fiscal 2005, the impact of
the EITF was to reduce fourth quarter diluted earnings per share by
approximately $0.03 and the full year by approximately $0.11 per diluted share.
The restatement reduced fiscal 2004 and fiscal 2003 diluted earnings per share
by $0.06 and $0.05, respectively.
Basic weighted average shares outstanding in the quarter were 135.1 million
shares and diluted weighted average shares outstanding were 145.2 million
shares, reflecting the dilutive impact of stock options and 7.8 million of
contingently convertible debentures. As of February 26, 2005, SUPERVALU had
135.5 million shares outstanding.
Outlook
SUPERVALU's fiscal 2006 outlook includes business assumptions, such as:
-- Consumer spending will continue to be pressured by higher fuel prices
and modest food inflation.
-- Comparable store sales, reflecting planned in-market store expansion,
are projected to increase by approximately one percent for the year;
-- Store development plans including licensees are: approximately 90 to 110
new extreme value food combination stores; approximately 100 extreme
value combination store conversions; approximately 10 to 12 new regional
banner stores; and approximately 40 regional banner major and minor
store remodels;
-- Annual distribution sales attrition will approximate the upper end of
the historical range of two to four percent for the year with the first
half slightly higher until fiscal 2005 customer losses are fully cycled;
-- Total capital spending is projected to be approximately $500 to $550
million, including approximately $90 million in capital leases;
-- The fiscal 2006 effective tax rate is estimated to be 37 percent.
-- Zero Zone, a refrigeration case and system manufacturer, will be
divested in fiscal 2006 as it is non core to the company's food retail
and supply chain service businesses. Zero Zone was acquired February 7,
2005 in conjunction with the company's acquisition of Total Logistics,
Inc., a third-party logistics company.
SUPERVALU establishes preliminary full-year fiscal 2006 basic earnings per
share range of $2.43 to $2.58 and diluted earnings per share range of $2.30 to
$2.45. Both basic and diluted earnings per share ranges include costs of
approximately $0.05 to $0.07 for new growth and return initiatives including
supply chain technology investments and the W. Newell & Co. produce business
launch. On a comparable basis, Fiscal 2005 basic earnings per share was $2.35
and diluted earnings per share was $2.24 when eliminating the gain on the sale
of WinCo. The ranges include the above business assumptions.
Commenting on SUPERVALU's outlook, Noddle said, "SUPERVALU continues to
transform itself. We are implementing several important initiatives in fiscal
2006 that represent next generation strategies. Initiatives such as leveraging
the growth potential in third-party logistics, launching an enhanced produce
model, and further innovating our supply chain, represent the next chapter in
our efforts to deliver highly successful solutions for our customers. We look
forward to sharing our progress on these initiatives and others in development
as the year unfolds. With the achievement of 15 percent return on invested
capital, we are now establishing a new long-term return-on- invested-capital
goal of 18 percent reflecting the long term potential of our business."
A conference call to review the full-year results is scheduled for today at
9:00 a.m. (CDT). A live Web cast of the call will be available at
http://www.supervalu.com . An archive of the call is accessible via telephone by
dialing 1-630-652-3041 with pass code 11055630 and through the company's Web
site at http://www.supervalu.com . The conference call archive will be available
through May 3, 2005.
About SUPERVALU INC.
As of February 26, 2005, SUPERVALU's retail store network consisted of 1,549
stores in 40 states, including 1,287 Save-A-Lot extreme value food stores -- 408
owned Save-A-Lot stores, 879 licensed Save-A-Lot stores; 262 regional banners
including Cub Foods, Shop 'n Save, Shoppers Food & Pharmacy, bigg's, Farm Fresh,
Scott's Foods and Hornbacher's stores. SUPERVALU serves as primary supplier to
approximately 2,300 stores and SUPERVALU's own regional banner store network of
262 stores, while serving as secondary supplier to approximately 700 stores.
Celebrating its 135th year of fresh thinking, SUPERVALU INC., a Fortune 500
company, is one of the largest companies in the United States grocery channel.
With annual revenues of approximately $20 billion, SUPERVALU holds leading
market share positions across the U.S. with its 1,549 retail grocery locations,
including licensed Save-A-Lot locations. With its Save-A-Lot format, the company
holds the number one market position in the extreme value grocery retail sector.
Through SUPERVALU's geographically diverse supply chain network, the company
provides distribution and related logistics support services to grocery
retailers across the nation. In addition, SUPERVALU's third-party logistics
business provides end-to-end supply chain management solutions that deliver
value for manufacturers, consumer products retailers and food service customers.
SUPERVALU currently has more than 56,000 employees. For more information about
SUPERVALU visit http://www.supervalu.com .
The statements contained in this news release that are not historical fact
are forward-looking statements and are made under the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Certain important factors
could cause results to differ materially from those anticipated by such
forward-looking statements, including the impact of competition, the nature and
extent of the consolidation of the retail food and food distribution industries,
the ability to attract and retain customers for the company's food distribution
operations and to control food distribution costs, the ability of the company to
grow through acquisition and assimilate the acquired entities, the execution of
restructuring activities, potential work disruptions from labor disputes or
national emergencies, the availability of favorable credit and trade terms, food
price changes, general economic or political conditions that affect consumer
buying habits generally or war-time activities, threats or general acts of
terror directed at the food industry that affects consumer behavior, other risk
factors inherent in the food distribution and retail businesses and other
factors discussed from time to time in reports filed by the company with the
Securities and Exchange Commission.
SUPERVALU INC. and Subsidiaries
Consolidated Composition of Net Sales and Operating Earnings
The following table sets forth the composition of the company's net sales
and earnings. (In thousands)
Fourth Quarter Fourth Quarter
(12 weeks) ended (13 weeks) ended
(unaudited) Feb 26, 2005 Feb 28, 2004
- -------------------------------------------- ---------------- ----------------
Net sales
Retail Food $ 2,553,868 $ 2,791,340
% of total 55.6% 55.3%
Food Distribution 2,036,638 2,252,419
% of total 44.4% 44.7%
Total net sales $ 4,590,506 $ 5,043,759
100.0% 100.0%
Earnings
Retail Food operating earnings $ 110,982 $ 138,014
% of sales 4.3% 4.9%
Food Distribution operating earnings 59,391 55,947
% of sales 2.9% 2.5%
Subtotal 170,373 193,961
% of sales 3.7% 3.8%
General corporate expense (10,141) (9,030)
Restructure and other charges - (4,922)
Total operating earnings 160,232 180,009
% of sales 3.5% 3.6%
Interest expense (30,555) (36,332)
Interest income 5,415 5,080
Earnings before income taxes 135,092 148,757
Income tax expense (42,159) (53,137)
Net earnings $ 92,933 $ 95,620
NOTE 1:
Pretax LIFO expense $ (921) $ 161
NOTE 2:
Pretax depreciation and amortization
Retail Food Segment $ 48,866 $ 48,748
Food Distribution Segment 21,464 24,539
General Corporate 52 449
Total Company $ 70,382 $ 73,736
SUPERVALU INC. and Subsidiaries
Consolidated Composition of Net Sales and Operating Earnings
The following table sets forth the composition of the company's net sales
and earnings.
(In thousands)
Year-to-date Year-to-date
(52 weeks) ended (53 weeks) ended
(unaudited) Feb 26, 2005 Feb 28, 2004
- -------------------------------------------- ---------------- ----------------
Net sales
Retail Food $ 10,549,478 $ 10,551,235
% of total 54.0% 52.2%
Food Distribution 8,993,762 9,658,444
% of total 46.0% 47.8%
Total net sales $ 19,543,240 $ 20,209,679
100.0% 100.0%
Earnings
Retail Food operating earnings $ 446,303 $ 443,968
% of sales 4.2% 4.2%
Food Distribution operating earnings 234,585 222,462
% of sales 2.6% 2.3%
Subtotal 680,888 666,430
% of sales 3.5% 3.3%
General corporate expense (48,064) (49,509)
Gain on sale of WinCo Foods, Inc. 109,238 -
Restructure and other charges (26,416) (15,523)
Total operating earnings 715,646 601,398
% of sales 3.7% 3.0%
Interest expense (137,500) (165,581)
Interest income 22,718 19,063
Earnings before income taxes 600,864 454,880
Income tax expense (215,041) (174,742)
Net earnings $ 385,823 $ 280,138
NOTE 1:
Pretax LIFO expense $ 6,112 $ 4,734
NOTE 2:
Pretax depreciation and amortization
Retail Food Segment $ 199,094 $ 193,450
Food Distribution Segment 103,372 106,239
General Corporate 573 1,900
Total Company $ 303,039 $ 301,589
CONSOLIDATED STATEMENTS OF EARNINGS
SUPERVALU INC. and Subsidiaries
(In thousands, except per share data)
Fourth Quarter Fourth Quarter
(12 weeks) ended (13 weeks) ended
----------------------------- -----------------------------
(unaudited) Feb 26, 2005 % of sales Feb 28, 2004 % of sales
-------------------------------- ------------- ------------- ------------- -------------
Net sales $ 4,590,506 100.0% $ 5,043,759 100.0%
Costs and expenses:
Cost of sales 3,889,110 84.7% 4,290,133 85.1%
Selling and administrative
expenses 541,164 11.8% 568,695 11.3%
Restructure and other charges - 0.0% 4,922 0.1%
Interest
Interest expense 30,555 0.7% 36,332 0.7%
Interest income 5,415 0.1% 5,080 0.1%
Interest expense, net 25,140 0.6% 31,252 0.6%
Total costs and
expenses 4,455,414 97.1% 4,895,002 97.1%
Earnings before income taxes 135,092 2.9% 148,757 2.9%
Income tax expense 42,159 0.9% 53,137 1.0%
Net earnings $ 92,933 2.0% $ 95,620 1.9%
Net earnings per common share -
basic $ 0.69 $ 0.71
Net earnings per common share -
diluted $ 0.65 $ 0.67
Weighted average number of
common shares outstanding
Basic 135,116 134,366
Diluted 145,243 144,366
Dividends declared per common
share $ 0.1525 $ 0.1450
CONSOLIDATED STATEMENTS OF EARNINGS
SUPERVALU INC. and Subsidiaries
(In thousands, except per share data)
Year-to-date Year-to-date
(52 weeks) ended (53 weeks) ended
----------------------------- -----------------------------
(unaudited) Feb 26, 2005 % of sales Feb 28, 2004 % of sales
-------------------------------- ------------- ------------- ------------- -------------
Net sales $ 19,543,240 100.0% $ 20,209,679 100.0%
Costs and expenses:
Cost of sales 16,681,472 85.4% 17,372,429 85.9%
Selling and administrative
expenses 2,228,944 11.4% 2,220,329 11.0%
Gain on sale of WinCo
Foods, Inc. 109,238 0.6% - -
Restructure and other
charges 26,416 0.1% 15,523 0.1%
Interest
Interest expense 137,500 0.7% 165,581 0.8%
Interest income 22,718 0.1% 19,063 0.1%
Interest expense, net 114,782 0.6% 146,518 0.7%
Total costs and
expenses 18,942,376 96.9% 19,754,799 97.7%
Earnings before income taxes 600,864 3.1% 454,880 2.3%
Income tax expense 215,041 1.1% 174,742 0.9%
Net earnings $ 385,823 2.0% $ 280,138 1.4%
Net earnings per common share
- basic $ 2.86 $ 2.09
Net earnings per common share
- diluted $ 2.71 $ 2.01
Weighted average number of
common shares outstanding
Basic 135,003 133,975
Diluted 144,924 143,236
Dividends declared per common
share $ 0.6025 $ 0.5775
CONDENSED CONSOLIDATED BALANCE SHEETS
SUPERVALU INC. and Subsidiaries
(In thousands)
Fiscal Year End Fiscal Year End
(unaudited) February 26, 2005 February 28, 2004
---------------------------------------- ----------------- -----------------
Assets
Current Assets
Cash and cash equivalents $ 463,915 $ 291,956
Receivables, net 468,629 447,872
Inventories, net 1,032,034 1,078,343
Other current assets 161,922 218,996
Total current assets 2,126,500 2,037,167
Property, plant and equipment, net 2,201,005 2,134,436
Goodwill & Other Long Term Assets 1,948,277 1,981,410
Total assets $ 6,275,782 $ 6,153,013
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 1,111,240 $ 1,068,788
Current debt and obligations
under capital leases 99,463 305,944
Other current liabilities 420,888 464,047
Total current
liabilities 1,631,591 1,838,779
Long-term debt and obligations under
capital leases 1,578,867 1,633,721
Other liabilities and deferred income
taxes 554,763 470,939
Total stockholders' equity 2,510,561 2,209,574
Total liabilities and stockholders'
equity $ 6,275,782 $ 6,153,013
Subject to change
SOURCE SUPERVALU INC.
-0- 04/19/2005
/CONTACT: Investors, Yolanda Scharton, +1-952-828-4540, or
yolanda.scharton@supervalu.com , or Media, Lynne High, +1-952-828-4515, or
lynne.high@supervalu.com , both of SUPERVALU INC./
/Web site: http://www.supervalu.com /
_