- Net earnings from continuing
operations of $30 million; Adjusted EBITDA of $147 million
- Net earnings per share from
continuing operations of $0.11; adjusted earnings per share of
$0.10
- Outstanding debt further reduced by
approximately $100 million in the quarter
SUPERVALU INC. (NYSE: SVU) today reported second quarter fiscal
2017 consolidated net sales of $3.87 billion and net earnings from
continuing operations of $30 million, or $0.11 per diluted share,
which included a net $2 million after-tax gain, comprised of a fee
received from a supply agreement termination, partially offset by
store closure charges and costs as well as costs related to the
potential separation of Save-A-Lot. When adjusted for these items,
second quarter fiscal 2017 net earnings from continuing operations
were $28 million, or $0.10 per diluted share.
Net earnings from continuing operations for last year’s second
quarter were $31 million, or $0.11 per diluted share, which
included $6 million in after-tax costs related to the potential
separation of Save-A-Lot and severance costs. When adjusted for
these items, second quarter fiscal 2016 net earnings from
continuing operations were $37 million, or $0.13 per diluted share.
[See tables 1-6 for a reconciliation of GAAP and non-GAAP
(adjusted) results appearing in this release.]
“As we expected, the transformation of our business continues to
take time, but I am optimistic about our ability to grow our
wholesale business by adding new customers, securing long-term
supply agreements with existing customers, and expanding overall
product sales to all customers,” said President and CEO Mark Gross.
“We expect wholesale sales in the second half of this year to be
higher than last year as we add new customers, grow our base
business, and cycle select customer losses from last year.”
Second Quarter Results - Continuing Operations
Second quarter net sales were $3.87 billion compared to $4.06
billion last year, a decrease of $197 million or 4.8 percent. Total
net sales within the Wholesale segment decreased 5.5 percent.
Retail identical store sales were negative 5.9 percent. Save-A-Lot
network identical store sales were negative 5.2 percent. Identical
store sales for corporate stores within the Save-A-Lot network were
negative 5.0 percent. Fees earned under transition services
agreements (“TSAs”) in the second quarter were $41 million compared
to $48 million last year.
Gross profit for the second quarter was $562 million, or 14.5
percent of net sales and included net costs of $1 million related
to store closures. When adjusted for this item, gross profit was
$563 million, or 14.6 percent of net sales. Last year’s second
quarter gross profit was $583 million, or 14.4 percent of net
sales. The gross profit rate increase compared to last year is
primarily due to higher product margin rates and new Save-A-Lot
corporate stores.
Selling and administrative expenses in the second quarter were
$474 million and included a fee received from a supply agreement
termination of $9 million, partially offset by $3 million in costs
and charges related to store closures and $1 million in costs
related to the potential separation of Save-A-Lot. When adjusted
for these items, selling and administrative expenses were $479
million, or 12.4 percent of net sales. Selling and administrative
expenses in last year’s second quarter were $489 million and
included $4 million of costs related to the potential
separation of Save-A-Lot and $4 million of severance costs. When
adjusted for these items, second quarter fiscal 2016 selling and
administrative expenses were $481 million, or 11.9 percent of net
sales. The increase in the selling and administrative expense rate
compared to last year is primarily due to the deleveraging impact
of lower sales and new Save-A-Lot corporate stores, partially
offset by lower pension expense.
Net interest expense for the second quarter was $41 million.
Last year's second quarter interest expense was $44 million. The
decrease in interest expense was driven by lower average debt
balances.
Income tax expense was $18 million, or 36.2 percent of pre-tax
earnings, for the second quarter, compared to an income tax expense
of $19 million, or 40.0 percent of pre-tax earnings, in last year’s
second quarter.
Wholesale
Second quarter Wholesale net sales were $1.73 billion, compared
to $1.83 billion last year, a decrease of 5.5 percent. The net
sales decrease is primarily due to stores from the prior year no
longer supplied by the Company, partially offset by increased sales
to new stores operated by existing customers and new customers.
Wholesale operating earnings in the second quarter were $58
million, or 3.3 percent of net sales, and included a fee received
from a supply agreement termination of $9 million. When adjusted
for this item, Wholesale operating earnings were $49 million, or
2.8 percent of net sales, flat to last year’s Wholesale operating
earnings in the second quarter which represented 2.7 percent of net
sales.
Save-A-Lot
Second quarter Save-A-Lot net sales were $1.06 billion, compared
to $1.09 billion last year, a decrease of 2.8 percent. The net
sales decrease reflects network identical store sales of negative
5.2 percent, partially offset by new corporate and licensed
stores.
Save-A-Lot operating earnings in the second quarter were $22
million, or 2.1 percent of net sales. Last year’s Save-A-Lot
operating earnings in the second quarter were $32 million, or 3.0
percent of net sales. The decrease in Save-A-Lot operating earnings
was driven by higher employee-related costs and increased
promotional costs, partially offset by higher product margin
rates.
Retail
Second quarter Retail net sales were $1.03 billion, compared to
$1.09 billion last year, a decrease of 5.4 percent. The net sales
decrease reflects identical store sales of negative 5.9 percent,
partially offset by sales from new stores.
Retail operating loss in the second quarter was $12 million, or
negative 1.2 percent of net sales and included $4 million of store
closure charges and costs. When adjusted for this item, Retail
operating loss was $8 million. Last year’s Retail operating
earnings were $10 million, or 0.9 percent of net sales. The
decrease in Retail operating earnings was driven by lower sales and
higher employee-related costs due to new corporate stores.
Corporate
Second quarter fees earned under the TSAs were $41 million
compared to $48 million last year.
Net Corporate operating earnings in the second quarter were $20
million and included $1 million of costs related to the potential
separation of Save-A-Lot. When adjusted for this item, net
Corporate operating earnings were $21 million. Last year’s second
quarter net Corporate operating earnings were $3 million and
included $4 million of costs related to the potential separation of
Save-A-Lot and $4 million of severance costs. When adjusted for
these items, last year's net Corporate operating earnings were $11
million. The improvement in net Corporate operating earnings was
primarily driven by lower pension expense and lower
employee-related costs.
Cash Flows - Continuing Operations
Fiscal 2017 year-to-date net cash flows provided by operating
activities of continuing operations were $275 million compared to
$276 million last year. Fiscal 2017 year-to-date net cash flows
used in investing activities of continuing operations were $115
million compared to $119 million last year. Fiscal 2017
year-to-date net cash flows used in financing activities of
continuing operations were $163 million compared to $25 million
last year, reflecting higher payments on debt obligations.
Discontinued Operations
On October 17, 2016, SUPERVALU INC. announced it had reached an
agreement with Onex Corporation to sell its Save-A-Lot business.
This transaction is anticipated to be completed by January 31,
2017. As a result of the agreement, the Company anticipates
presenting the Save-A-Lot business being disposed as discontinued
operations for all periods within future earnings releases, and
Form 10-Q and 10-K filings.
Conference Call ---
A conference call to review the second quarter results is
scheduled for 9:00 a.m. central time today. The call will be
webcast live at www.supervaluinvestors.com (click on microphone
icon). A replay of the call will be archived at www.supervaluinvestors.com. To access the website
replay go to the "Investors" link and click on "Presentations and
Webcasts."
About SUPERVALU INC.
SUPERVALU INC. is one of the largest grocery wholesalers and
retailers in the U.S. with annual sales of approximately $18
billion. SUPERVALU serves customers across the United States
through a network of 3,382 stores composed of 1,815 stores
operated by wholesale customers serviced primarily by the Company’s
food distribution business; 1,370 Save-A-Lot stores, of which 888
are operated by licensee owners; and 197 traditional retail grocery
stores (store counts as of September 10, 2016). Headquartered
in Minnesota, SUPERVALU has approximately 40,000 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, the matters set forth in this news release and related
conference call, particularly those pertaining to SUPERVALU’s
expectations, guidance, or future operating results, and other
statements identified by words such as "estimates," "expects,"
"projects," "plans," "intends," 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 competition, ability to execute operations and
initiatives, ability to realize benefits from acquisitions and
dispositions, reliance on the ability of wholesale customers and
licensees to grow or maintain identical store sales, ability to
maintain or increase margins, substantial indebtedness, labor
relations issues, escalating costs of providing employee benefits,
relationships with Albertson’s LLC, New Albertson’s Inc., and
Haggen, intrusions to and disruption of information technology
systems, impact of economic conditions, commodity pricing,
governmental regulation, food and drug safety issues, legal
proceedings, pharmacy reimbursement and health care financing,
intellectual property protection, severe weather, natural disasters
and adverse climate changes, disruption to supply chain and
distribution network, changes in military business, adequacy of
insurance, volatility in fuel and energy costs, asset impairment
charges, fluctuations in our common stock price, executing on and
consummating the sale of Save-A-Lot and other risk factors relating
to our business or industry as detailed from time to time in
SUPERVALU's reports filed with the SEC, and forward-looking
statements regarding the proposed sale of Save-A-Lot are subject to
risks and uncertainties such as the possibility that regulatory and
other approvals and conditions to the transaction are not received
or satisfied on a timely basis or at all; the possibility that
modifications to the terms of the transaction may be required in
order to obtain or satisfy such approvals or conditions; the
possibility that Supervalu may not fully realize the projected
benefits of the transaction; changes in the planned use of proceeds
from the transaction; changes in the anticipated timing for closing
the transaction; business disruption during the pendency of or
following the transaction; diversion of management time on
transaction-related issues; and the reaction of customers and other
parties to the transaction. 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 or revise publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise.
SUPERVALU INC. and Subsidiaries CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In
millions, except percent and per share data)
Second Quarter Ended Year-To-Date Ended
September 10, September 12,
September 10, September 12, 2016
2015 2016 2015 (12 weeks) (12
weeks) (28 weeks) (28 weeks) Net sales $
3,865 100.0 % $ 4,062 100.0 % $ 9,061
100.0 % $ 9,469 100.0 %
Cost of
sales 3,303 85.5 3,479 85.6
7,720 85.2 8,076 85.3
Gross profit(1)
562 14.5 583 14.4 1,341 14.8 1,393 14.7
Selling and administrative
expenses(1)
474 12.3 489 12.1
1,120 12.4 1,141 12.1
Operating earnings 88 2.3 94 2.3 221 2.4 252 2.7
Interest
expense, net(1) 41 1.1 44 1.1 101 1.1 103 1.1
Equity
in earnings of unconsolidated affiliates (1 ) —
— — (2 ) — (2 ) —
Earnings from continuing operations before income
taxes(1) 48 1.2 50 1.2 122 1.3 151 1.6
Income tax
provision 18 0.4 19 0.5
45 0.5 57 0.6
Net earnings from continuing operations(1) 30 0.8 31
0.7 77 0.9 94 1.0
Income from discontinued operations, net of
tax 2 — 2 — 2
— 3 —
Net earnings including
noncontrolling interests 32 0.8 33 0.8 79 0.9 97 1.0
Less
net earnings attributable to noncontrolling interests (1
) — (2 ) — (2 ) — (5 )
(0.1 )
Net earnings attributable to SUPERVALU INC. $ 31
0.8 % $ 31 0.7 % $ 77 0.9 % $ 92 1.0 %
Basic net earnings per share attributable to SUPERVALU
INC.: Continuing operations $ 0.11 $ 0.11 $ 0.28 $ 0.34
Discontinued operations $ 0.01 $ 0.01 $ 0.01 $ 0.01 Basic net
earnings per share $ 0.12 $ 0.12 $ 0.29 $ 0.35
Diluted net
earnings per share attributable to SUPERVALU INC.: Continuing
operations(1) $ 0.11 $ 0.11 $ 0.28 $ 0.33 Discontinued operations $
0.01 $ 0.01 $ 0.01 $ 0.01 Diluted net earnings per share $ 0.12 $
0.11 $ 0.29 $ 0.34
Weighted average number of shares
outstanding: Basic 265 263 264 262 Diluted 267 268 267 268
(1) Results from continuing operations for the second
quarter ended September 10, 2016 include a net gain of $4 before
tax ($2 after tax, or $0.01 per diluted share), comprised of a fee
received from a supply agreement termination of $9 before tax ($6
after tax, or $0.02 per diluted share), offset in part by store
closure charges and costs of $3 before tax ($3 after tax, or $0.01
per diluted share) and costs related to the potential Save-A-Lot
separation of $1 before tax ($1 after tax, or $0.00 per diluted
share) within Selling and administrative expenses, and store
closure costs of $1 before tax ($0 after tax, or $0.00 per diluted
share) within Gross profit. Results from continuing
operations for the second quarter ended September 12, 2015 included
net charges and costs of $8 before tax ($6 after tax, or $0.02 per
diluted share), comprised of costs related to the potential
Save-A-Lot separation of $4 before tax ($3 after tax, or $0.01 per
diluted share) and severance costs of $4 before tax ($3 after tax,
or $0.01 per diluted share) within Selling and administrative
expenses. Results from continuing operations for the
year-to-date ended September 10, 2016 include net charges and costs
of $4 before tax ($4 after tax, or $0.01 per diluted share),
comprised of costs related to the potential Save-A-Lot separation
of $4 before tax ($4 after tax, or $0.02 per diluted share) and
store closure charges and costs of $3 before tax ($3 after tax, or
$0.01 per diluted share) within Selling and administrative
expenses, and unamortized financing cost charges of $5 before tax
($3 after tax, or $0.01 per diluted share) and debt refinancing
costs of $2 before tax ($1 after tax, or $0.00 per diluted share)
within Interest expense, net, and store closure costs of $1 before
tax ($0 after tax, or $0.00 per diluted share) within Gross profit,
offset in part by a fee received from a supply agreement
termination of $9 before tax ($6 after tax, or $0.02 per diluted
share) and a sales and use tax refund of $2 before tax ($1 after
tax, or $0.01 per diluted share). Results from continuing
operations for the year-to-date ended September 12, 2015 included
net charges and costs of $11 before tax ($8 after tax, or $0.03 per
diluted share), comprised of costs related to the potential
Save-A-Lot separation of $7 before tax ($5 after tax, or $0.02 per
diluted share) and severance costs of $4 before tax ($3 after tax,
or $0.01 per diluted share) within Selling and administrative
expenses.
SUPERVALU INC. and Subsidiaries
CONDENSED CONSOLIDATED SEGMENT FINANCIAL INFORMATION
(Unaudited) (In millions, except percent data)
Second Quarter Ended Year-To-Date
Ended September 10, September 12,
September 10, September 12, 2016
2015 2016 2015 (12 weeks) (12
weeks) (28 weeks) (28 weeks) Net sales
Wholesale $ 1,731 $ 1,831 $ 4,006 $ 4,293 % of total 44.8 % 45.1 %
44.2 % 45.4 % Save-A-Lot 1,060 1,091 2,492 2,499 % of total 27.4 %
26.8 % 27.5 % 26.4 % Retail 1,033 1,092 2,464 2,565 % of total 26.7
% 26.9 % 27.2 % 27.1 % Corporate 41 48 99 112 % of total 1.1
% 1.2 % 1.1 % 1.1 % Total net sales $ 3,865 $
4,062 $ 9,061 $ 9,469 100.0 % 100.0 % 100.0 %
100.0 %
Operating earnings Wholesale(1) $ 58 $ 49 $
122 $ 126 % of Wholesale sales 3.3 % 2.7 % 3.0 % 2.9 % Save-A-Lot
22 32 61 83 % of Save-A-Lot sales 2.1 % 3.0 % 2.4 % 3.3 % Retail(2)
(12 ) 10 (4 ) 43 % of Retail sales (1.2 )% 0.9 % (0.2 )% 1.7 %
Corporate(3) 20 3 42
— Total operating earnings 88 94 221 252 % of total
net sales 2.3 % 2.3 % 2.4 % 2.7 %
Interest expense,
net(4) 41 44 101 103
Equity in earnings of
unconsolidated affiliates (1 ) — (2
) (2 )
Earnings from continuing operations before income
taxes 48 50 122 151
Income tax provision 18
19 45 57
Net
earnings from continuing operations 30 31 77 94
Income from
discontinued operations, net of tax 2 2
2 3
Net earnings including
noncontrolling interests 32 33 79 97
Less net earnings
attributable to noncontrolling interests (1 ) (2
) (2 ) (5 )
Net earnings attributable to SUPERVALU
INC. $ 31 $ 31 $ 77 $ 92
LIFO charge Wholesale $ — $ 1 $ 1 $ 2 Retail —
1 1 3 Total LIFO charge $
— $ 2 $ 2 $ 5
Depreciation and
amortization Wholesale $ 12 $ 11 $ 28 $ 25 Save-A-Lot 18 17 41
38 Retail 33 36 79 83 Corporate — —
1 1 Total depreciation and amortization
$ 63 $ 64 $ 149 $ 147 (1)
Wholesale operating earnings for the second quarter and
year-to-date ended September 10, 2016 included a fee received from
a supply agreement termination of $9. (2) Retail operating loss for
the second quarter and year-to-date ended September 10, 2016 each
includes store closure charges and costs of $4. (3) Corporate
operating earnings for the second quarter ended September 10, 2016
includes costs related to the potential Save-A-Lot separation of
$1. Corporate operating earnings for the second quarter ended
September 12, 2015 included costs related to the potential
Save-A-Lot separation of $4 and severance costs of $4. Corporate
operating earnings for the year-to-date ended September 10, 2016
includes costs related to the potential Save-A-Lot separation of
$4, offset by a sales and use tax refund of $2. Corporate operating
earnings for the year-to-date ended September 12, 2015 included
costs related to the potential Save-A-Lot separation of $7 and
severance costs of $4. (4) Interest expense, net for the
year-to-date ended September 10, 2016 includes unamortized
financing cost charges of $5 and debt refinancing costs of $2.
SUPERVALU INC. and Subsidiaries CONDENSED
CONSOLIDATED BALANCE SHEETS (In millions, except par value
data) September 10,
February 27, 2016 2016 (Unaudited)
ASSETS Current assets Cash and cash equivalents $ 57
$ 57 Receivables, net 479 451 Inventories, net 1,071 1,036 Other
current assets 82 91
Total current
assets 1,689 1,635
Property,
plant and equipment, net 1,448 1,481
Goodwill 868 867
Intangible assets, net 50 55
Deferred tax assets 199
228
Other assets 107 104
Total assets $ 4,361 $ 4,370
LIABILITIES
AND STOCKHOLDERS’ DEFICIT Current liabilities Accounts
payable $ 1,170 $ 1,118 Accrued vacation, compensation and benefits
181 182 Current maturities of long-term debt and capital lease
obligations 24 124 Other current liabilities 173
148
Total current liabilities 1,548
1,572
Long-term debt 2,164 2,197
Long-term capital lease obligations 197 203
Pension and
other postretirement benefit obligations 547 578
Long-term
tax liabilities 83 81
Other long-term liabilities 164
172
Commitments and contingencies Stockholders’
deficit Common stock, $0.01 par value: 400 shares authorized;
266 and 266 shares issued, respectively 3 3 Capital in excess of
par value 2,813 2,808 Treasury stock, at cost, 1 and 1 shares,
respectively (5 ) (5 ) Accumulated other comprehensive loss (411 )
(422 ) Accumulated deficit (2,748 ) (2,825 )
Total
SUPERVALU INC. stockholders’ deficit (348 ) (441 )
Noncontrolling interests 6 8
Total
stockholders’ deficit (342 ) (433 )
Total
liabilities and stockholders’ deficit $ 4,361 $ 4,370
SUPERVALU INC. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (In millions)
Year-To-Date Ended September 10,
September 12, 2016 2015 (28 weeks)
(28 weeks) Cash flows from operating activities Net
earnings including noncontrolling interests $ 79 $ 97 Income from
discontinued operations, net of tax 2 3
Net earnings from continuing operations 77 94 Adjustments to
reconcile Net earnings from continuing operations to Net cash
provided by operating activities – continuing operations: Asset
impairment and other charges 2 2 Loss on debt extinguishment 7 —
Net gain on sale of assets and exits of surplus leases (1 ) (2 )
Depreciation and amortization 149 147 LIFO charge 2 5 Deferred
income taxes 16 (22 ) Stock-based compensation 10 13 Net pension
and other postretirement benefits (income) expense (13 ) 20
Contributions to pension and other postretirement benefit plans (2
) (38 ) Other adjustments 9 16 Changes in operating assets and
liabilities, net of effects from business acquisitions 19
41
Net cash provided by operating
activities – continuing operations 275 276
Net cash provided
by operating activities – discontinued operations 3
1
Net cash provided by operating
activities 278 277
Cash flows
from investing activities Proceeds from sale of assets 1 2
Purchases of property, plant and equipment (110 ) (94 ) Payments
for business acquisitions (6 ) (6 ) Other —
(21 )
Net cash used in investing activities (115 )
(119 )
Cash flows from financing activities Proceeds
from issuance of debt 58 — Proceeds from sale of common stock — 9
Payments of debt and capital lease obligations (211 ) (27 )
Payments for debt financing costs (5 ) — Distributions to
noncontrolling interests (5 ) (7 )
Net cash used
in financing activities (163 ) (25 ) Net increase
in cash and cash equivalents — 133
Cash and cash equivalents at
beginning of period 57 114
Cash
and cash equivalents at the end of period $ 57 $ 247
SUPPLEMENTAL CASH FLOW INFORMATION The Company’s
non-cash investing and financing activities were as follows:
Purchases of property, plant and equipment included in Accounts
payable $ 21 $ 20 Capital lease asset additions $ 7 $ 10 Interest
and income taxes paid: Interest paid, net of amounts capitalized $
79 $ 85 Income taxes paid, net $ 6 $ 27
SUPERVALU INC. and Subsidiaries
SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited)
SUPERVALU INC.'s consolidated financial statements are
prepared and presented in accordance with generally accepted
accounting principles ("GAAP"). The measures and items identified
below, and the adjusted Selling and administrative expenses, are
provided as a supplement to our consolidated financial statements
and should not be considered an alternative to any GAAP measure of
performance or liquidity. The presentation of these financial
measures and items is not intended to be a substitute for or be
superior to any financial information prepared and presented in
accordance with GAAP. Investors are cautioned that there are
material limitations associated with the use of non-GAAP financial
measures as an analytical tool. Certain adjustments to our GAAP
financial measures exclude certain items that are recurring in
nature and may be reflected in our financial results for the
foreseeable future. These measurements and items may be different
from non-GAAP financial measures used by other companies. All
measurements are provided as a reconciliation from a GAAP
measurement. Management believes the measurements and items
identified below are important measures of business performance
that provide investors with useful supplemental
information. SUPERVALU utilizes certain non-GAAP measures
to analyze underlying core business trends to understand operating
performance. In addition, management utilizes certain non-GAAP
measures as a compensation performance measure. The items below
should be reviewed in conjunction with SUPERVALU
INC.'s financial results reported in accordance with GAAP, as
reported in SUPERVALU's Quarterly Reports on Form 10-Q
and the Annual Report on Form 10-K for the fiscal year
ended February 27, 2016.
RECONCILIATIONS OF EARNINGS FROM CONTINUING OPERATIONS TO
EARNINGS FROM CONTINUING OPERATIONS AFTER ADJUSTMENTS
Table 1 Second Quarter
Ended September 10, 2016 Diluted Earnings
Earnings Earnings Per (In millions, except per
share data) Before Tax After Tax Share
Continuing operations $ 48 $ 30 $ 0.11 Adjustments: Store closure
charges and costs 4 3 0.01 Costs related to the potential
Save-A-Lot separation 1 1 — Supply agreement termination fee
(9 ) (6 ) (0.02 ) Continuing operations after
adjustments $ 44 $ 28 $ 0.10
Table
2 Year to Date September 10, 2016 Diluted
Earnings Earnings Earnings Per (In
millions, except per share data) Before Tax After
Tax Share Continuing operations $ 122 $ 77 $ 0.28
Adjustments: Unamortized financing cost charges 5 3 0.01 Costs
related to the potential Save-A-Lot separation 4 4 0.02 Store
closure charges and costs 4 3 0.01 Debt refinancing costs 2 1 —
Sales and use tax refund (2 ) (1 ) (0.01 ) Supply agreement
termination fee (9 ) (6 ) (0.02 ) Continuing
operations after adjustments $ 126 $ 81 $ 0.29
Table 3 Second Quarter Ended September 12,
2015 Diluted Earnings Earnings Earnings
Per (In millions, except per share data) Before
Tax After Tax Share Continuing operations $ 50 $
31 $ 0.11 Adjustments: Costs related to the potential Save-A-Lot
separation 4 3 0.01 Severance costs 4 3
0.01 Continuing operations after adjustments $ 58
$ 37 $ 0.13
Table 4 Year to
Date September 12, 2015 Diluted Earnings
Earnings Earnings Per (In millions, except per
share data) Before Tax After Tax Share
Continuing operations $ 151 $ 94 $ 0.33 Adjustments: Costs related
to the potential Save-A-Lot separation 7 5 0.02 Severance costs
4 3 0.01 Continuing
operations after adjustments $ 162 $ 102 $ 0.36
RECONCILIATIONS OF NET EARNINGS FROM
CONTINUING OPERATIONS TO ADJUSTED EBITDA
Table 5 Second Quarter Ended
Year-To-Date Ended September 10,
September 12, September 10, September 12,
2016 2015 2016 2015 (In
millions) (12 weeks) (12 weeks) (28 weeks)
(28 weeks) Net earnings from continuing operations $ 30 $ 31
$ 77 $ 94 Less net earnings attributable to noncontrolling
interests (1 ) (2 ) (2 ) (5 ) Income tax provision 18 19 45 57
Interest expense, net 41 44 101 103 Depreciation and amortization
63 64 149 147 LIFO charge — 2 2 5 Store closure charges and costs 4
— 4 — Costs related to the potential separation of Save-A-Lot 1 4 4
7 Severance costs — 4 — 4 Sales and use tax refund — — (2 ) —
Supply agreement termination fee (9 ) —
(9 ) — Adjusted EBITDA $ 147 $ 166 $
369 $ 412
RECONCILIATION OF NET
EARNINGS FROM CONTINUING OPERATIONS TO TOTAL AND SEGMENT OPERATING
EARNINGS, TO SUPPLEMENTALLY PROVIDED TOTAL AND SEGMENT ADJUSTED
EBITDA Table 6 Second
Quarter Ended Year-To-Date Ended September 10,
September 12, September 10,
September 12, 2016 2015 2016
2015 (In millions) (12 weeks) (12
weeks) (28 weeks) (28 weeks) Results of
operations, as reported: Net earnings from continuing
operations $ 30 $ 31 $ 77 $ 94 Income tax provision 18 19 45 57
Equity in earnings of unconsolidated affiliates (1 ) — (2 ) (2 )
Interest expense, net 41 44 101
103 Total operating earnings $ 88 $ 94
$ 221 $ 252
Reconciliation of segment
operating earnings, as reported: Wholesale operating earnings $
58 $ 49 $ 122 $ 126 Save-A-Lot operating earnings 22 32 61 83
Retail operating earnings (12 ) 10 (4 ) 43 Corporate operating
earnings 20 3 42 —
Total operating earnings $ 88 $ 94 $ 221
$ 252
Reconciliation of segment operating
earnings, as reported, to segment Adjusted EBITDA:
Wholesale operating earnings, as reported $ 58 $ 49 $ 122 $ 126
Adjustments: Supply agreement termination fee (9 ) —
(9 ) — Wholesale operating earnings, as
adjusted 49 49 113 126 Wholesale depreciation and amortization 12
11 28 25 LIFO charge — 1 1
2 Wholesale adjusted EBITDA(1) $ 61 $
61 $ 142 $ 153 Save-A-Lot operating
earnings, as reported $ 22 $ 32 $ 61 $ 83 Save-A-Lot depreciation
and amortization 18 17 41
38 Save-A-Lot adjusted EBITDA(1) $ 40 $ 49
$ 102 $ 121 Retail operating (loss)
earnings, as reported $ (12 ) $ 10 $ (4 ) $ 43 Adjustments: Store
closure charges and costs 4 — 4
— Retail operating (loss) earnings, as
adjusted (8 ) 10 — 43 Retail depreciation and amortization 33 36 79
83 LIFO charge — 1 1 3 Equity in earnings of unconsolidated
affiliates 1 — 2 2 Net earnings attributable to noncontrolling
interests (1 ) (2 ) (2 ) (5 ) Retail
adjusted EBITDA(1) $ 25 $ 45 $ 80 $ 126
Corporate operating earnings, as reported $ 20 $ 3 $ 42 $ —
Adjustments: Costs related to the potential Save-A-Lot separation 1
4 4 7 Sales and use tax refund — — (2 ) — Severance costs —
4 — 4 Corporate
operating earnings, as adjusted 21 11 44 11 Corporate depreciation
and amortization — — 1
1 Corporate adjusted EBITDA(1) $ 21 $ 11
$ 45 $ 12 Total adjusted EBITDA(1) $ 147
$ 166 $ 369 $ 412 (1) The
Company's measure of adjusted EBITDA includes SUPERVALU INC.'s
segment operating earnings (loss), as reported, plus depreciation
and amortization, LIFO charge (credit), equity earnings of
unconsolidated affiliates and certain adjustment items as
determined by management, and less net earnings attributable to
noncontrolling interests.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161019005332/en/
SUPERVALU INC.Investor
ContactSteve Bloomquist, 952-828-4144steve.j.bloomquist@supervalu.comorMedia ContactJeff Swanson,
952-903-1645jeffrey.s.swanson@supervalu.com
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