Filed by SUPERVALU INC.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: SUPERVALU INC., File #1-5418
SUPERVALU Reports Fiscal 2006 Fourth Quarter and Full Year Results;
Acquisition of Premier Retail Properties from Albertsons on Track to
Close in June
MINNEAPOLIS--(BUSINESS WIRE)--April 18, 2006--SUPERVALU INC.
(NYSE:SVU) today reported results for the fourth quarter of fiscal
2006, which ended February 25, 2006. The company reported net sales of
$4.6 billion, unchanged in comparison to the same period of fiscal
2005, net earnings of $6.0 million compared to $92.9 million last
year, basic earnings per share of $0.04 compared to $0.69 last year,
and diluted earnings per share of $0.04 compared to $0.65 last year.
Fourth quarter results include net after-tax charges of $72.4 million,
or $0.54 per basic share and $0.51 per diluted share, primarily
related to the sale of Cub Foods stores in Chicago, asset impairment
related to the planned disposition of its Deals stores, the plan to
sell its Shop 'n Save Pittsburgh stores, and costs related to supply
chain growth initiatives.
For the fiscal 2006 full year, SUPERVALU reported net sales of
$19.9 billion compared to $19.5 billion last year, net earnings of
$206.2 million compared to $385.8 million last year, basic earnings
per share of $1.52 compared to $2.86 last year, and diluted earnings
per share of $1.46 compared to $2.71 last year. Full-year results
included net after-tax charges of $129.6 million, or $0.95 per basic
share and $0.89 per diluted share, primarily related to the sale of
Cub Foods stores in Chicago, the plan to sell its Shop 'n Save
Pittsburgh stores, costs related to supply chain growth initiatives,
asset impairment related to the planned disposition of its Deals
stores, losses incurred from Hurricane Katrina, costs related to
acquisition activities, and restructure charges primarily associated
with changes in estimates on exited real estate. Fiscal 2005 results
include $0.51 basic earnings per share and $0.47 diluted earnings per
share impact from the net after-tax gain of $68.3 million on the sale
of the company's minority interest in WinCo Foods, Inc. Fiscal 2005
also includes net after-tax restructure charges of $16.6 million or
$0.12 per diluted share primarily associated with employee benefit
costs from previously exited distribution facilities, as well as
changes in estimates on exited real estate.
Jeff Noddle, SUPERVALU chairman and chief executive officer said,
"Fiscal year 2006 was the year we mapped out our vision for the
future, invested in our business and then focused our energies on the
activities necessary to effectively combine our operations with the
premier retail properties of Albertsons. The reported results for
fiscal 2006 include the divesture of certain non-strategic retail
properties, as well as the sale of the Cub Foods stores in Chicago to
facilitate the pending acquisition. Our efforts are fully directed
toward bringing the acquisition to successful completion. Our
significantly expanded footprint of approximately 2,500 stores will
maximize our scale and allow us to deliver the economics of our
combined enterprise. Fiscal 2007 will be the year we begin the
transformation of SUPERVALU into a national retail and pharmacy
powerhouse."
"I am in the process of finalizing the executive leadership of the
new enterprise that I plan to announce in early May. We intend to
provide full year guidance of the combined new enterprise soon,
hopefully by mid-May, and we are still planning for a June close. I
know I speak for the entire team when I express my excitement and
confidence in our future."
Segment Results
Retail Food Segment - Fourth quarter retail net sales were $2.5
billion compared to $2.6 billion last year. The decline in net sales
primarily reflects store divestitures, store closings and soft
comparable sales, which offset sales growth from new stores.
Comparable store sales growth for the quarter was negative 1.1 percent
with positive comparable store sales at company-operated Save-A-Lot
stores. When adjusted for planned in-market store expansion, fourth
quarter comparable store sales growth was negative 0.6 percent. For
the full year, comparable store sales growth was negative 0.5 percent.
When adjusted for planned in-market store expansion, fiscal 2006
comparable store sales growth was negative 0.1 percent. Exclusive of
the Cub Foods stores in Chicago, Shop 'n Save stores in Pittsburgh and
the Deals stores, total retail square footage, including licensed
stores, increased by approximately two percent from last year's fourth
quarter, with Save-A-Lot's total square footage increasing by
approximately one percent.
The reported retail operating loss for the fourth quarter was $2.2
million compared to earnings of $111.0 million last year. Reported
operating earnings as a percent of sales was negative 0.1 percent
compared to 4.3 percent last year. Fourth quarter results include
charges of approximately $94 million pretax related to the sale of 26
Cub Foods stores in Chicago, approximately $14 million pretax for
asset impairment related to the planned disposition of 138 Deals
stores, and approximately $3 million pretax related to the plan to
sell 20 Shop 'n Save stores in Pittsburgh. These items accounted for
the entire decline in fourth quarter operating earnings as a percent
of sales compared to last year. This quarter's performance also
reflected benefits of merchandising programs offset by higher
expenses, primarily utilities and property taxes.
New store activity since last year's fourth quarter, including
licensed stores, resulted in 68 new stores, opened and acquired, and
85 store closings. During fiscal 2006, new stores opened include 55
extreme value stores and 13 regional banner stores. Fiscal 2006 store
closings include 49 Save-A-Lot stores and 36 regional banner stores
including Cub Chicago and Shop 'n Save Pittsburgh. Save-A-Lot,
including licensees, operated 1,154 stores, of which 445 were
combination stores compared to 394 combination stores at the end of
fiscal 2005.
For the full year, SUPERVALU's retail segment reported net sales
of $10.6 billion, compared to $10.5 billion last year and operating
earnings of $268.8 million compared to $446.3 million last year.
Fiscal 2006 operating earnings include pretax charges of approximately
$174 million related to the sale of Cub Foods stores in Chicago, the
plan to sell its Shop 'n Save stores in Pittsburgh, the asset
impairment related to the planned disposition of Deals stores, and
losses incurred from Hurricane Katrina.
Supply Chain Services Segment - Fourth quarter net sales for
supply chain services were $2.1 billion compared to $2.0 billion last
year. The increase in sales primarily reflects new business growth and
the third-party logistics service business acquired in February of
2005 that offset customer attrition.
Reported supply chain services operating earnings for the fourth
quarter were $41.4 million, compared to $59.4 million last year.
Reported operating earnings as a percent of sales was 2.0 percent,
compared to a record 2.9 percent in last year's fourth quarter. The
decline in operating earnings compared to prior year includes
approximately $11 million of losses incurred related to minority-owned
investments and costs related to supply chain growth initiatives.
These items accounted for approximately 50 basis points of the decline
in operating earnings as a percent of sales in the fourth quarter
compared to a year ago. The remainder of the decline in operating
earnings as a percent of sales reflects higher LIFO expense and
changing customer mix.
For the full year, SUPERVALU's supply chain services segment
reported net sales of $9.2 billion compared to $9.0 billion last year
and operating earnings of $214.4 million compared to $234.6 million
last year. Fiscal 2006 operating earnings include pretax costs of
approximately $22 million relating to supply chain growth initiatives.
Other Items
General corporate expense for the fourth quarter was $4.7 million
compared to $10.1 million last year primarily reflecting lower benefit
and incentive costs.
SUPERVALU's effective tax rate for the fourth quarter was 47.5
percent primarily reflecting the write-off of non-deductible goodwill
on the sale of Cub Foods Chicago stores. The annual effective rate for
fiscal 2006 was 37.4 percent versus 35.8 percent for fiscal 2005
reflecting last year's net favorable tax settlements.
Capital spending for the fourth quarter and full year was $121.5
million and $365.3 million, including $30.4 million and $57.4 million
in capital leases, respectively. Capital spending primarily included
retail store expansion, store remodeling, and supply chain growth
initiatives.
Cash at year end was approximately $686 million. Total debt to
capital was 36.7 percent at year end compared to 40.1 percent at
fiscal 2005 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.
Basic weighted average shares outstanding in the quarter were
136.3 million shares compared to 135.1 million shares last year.
Diluted weighted average shares outstanding in the quarter were 137.9
million shares compared to 145.2 million shares last year with the
decrease primarily due to the anti-dilutive impact of 7.8 million of
contingently convertible debentures in fiscal 2006. For the full year,
basic weighted average shares outstanding were 136.1 million compared
to 135.0 million last year and diluted weighted average shares
outstanding were 145.7 million compared to 144.9 million last year. As
of February 25, 2006, SUPERVALU had 136.4 million shares outstanding.
Fiscal 2007 Guidance
The company plans to establish preliminary earnings guidance for
the combined enterprise reflecting the acquisition of the premier
properties of Albertsons by mid-May.
Commenting on SUPERVALU, Noddle said, "SUPERVALU is on the verge
of a major transformation. We remain firmly committed to our vision
and our financial goals. As we combine two powerful organizations, we
will focus on several key areas including the application of our
strict operating discipline to maximize return and reclaim investment
grade status, and the differentiation of our company through
innovative programs and retail merchandising initiatives across all of
our retail banners."
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 www.supervalu.com. An archive of the call is accessible
via telephone by dialing 1-630-652-3041 with pass code 14309092 and
through the company's Web site at www.supervalu.com. The conference
call archive will be available through May 2, 2006.
About SUPERVALU INC
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 1,381 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 approximately 50,000 employees. For more information
about SUPERVALU visit http://www.supervalu.com.
As of February 25, 2006 SUPERVALU's retail store network consists
of 1,381 stores in 40 states, including 1,154 extreme value stores,
(292 corporate-owned Save-A-Lot stores, 862 licensed Save-A-Lot
stores); and 227 regional banner stores (Cub Foods, Shop 'n Save,
Shoppers Food & Pharmacy, bigg's, Farm Fresh, Scott's Foods,
Hornbacher's and Sunflower Market stores). Store counts are adjusted
for the planned sale of Deals and Shop 'n Save Pittsburgh. SUPERVALU
serves as primary supplier to approximately 2,200 stores and
SUPERVALU's own regional banner store network of 227 stores.
On January 23, 2006, SUPERVALU, CVS and an investment group led by
Cerberus Capital Management, L.P. announced that they had reached
definitive agreements to acquire Albertson's, Inc. (NYSE:ABS). In
accordance with the agreements, SUPERVALU will acquire key retail
operations of Albertsons - representing more than 1,100 stores -
including Acme Markets, Bristol Farms, Jewel-Osco, Shaw's
Supermarkets, Star Markets, and Albertsons banner stores in the
Intermountain, Northwest and Southern California regions. The
acquisition will also include the related in-store pharmacies under
the Osco Drug and Sav-on banners. As a result of the acquisition,
which is subject to approval by both the shareholders of Albertson's,
Inc. and SUPERVALU INC., SUPERVALU will become the nation's
third-largest supermarket chain with annual revenues of approximately
$44 billion.
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 filing, including statements as
to the expected benefits of the acquisition 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 required approvals by SUPERVALU and
Albertsons stockholders and regulatory agencies, 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 or difficulties related to the integration of Albertsons
operations into SUPERVALU will be greater than expected, the impact of
competition and other risk factors relating to our industry as
detailed from time to time in each of SUPERVALU's and Albertsons
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 press 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.
ADDITIONAL INFORMATION
SUPERVALU and Albertsons have filed a preliminary joint proxy
statement/prospectus with the Securities and Exchange Commission
(SEC). INVESTORS ARE URGED TO READ THE DEFINITIVE JOINT PROXY
STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION. You will be able to obtain the definitive joint
proxy statement/prospectus (when available), as well as other filings
containing information about SUPERVALU and Albertson's, free of
charge, at the website maintained by the SEC at www.sec.gov. Copies of
the definitive joint proxy statement/prospectus and the filings with
the SEC that will be incorporated by reference in the definitive joint
proxy statement/prospectus can also be obtained, free of charge, by
directing a request to SUPERVALU INC., 11840 Valley View Road, Eden
Prairie, Minnesota, 55344, Attention: Corporate Secretary, or to
Albertson's, Inc., 250 East Parkcenter Boulevard, Boise, Idaho,
83706-3940, Attention: Corporate Secretary. The respective directors
and executive officers of SUPERVALU and Albertson's and other persons
may be deemed to be participants in the solicitation of proxies in
respect of the proposed transaction. Information regarding SUPERVALU's
directors and executive officers is available in its proxy statement
filed with the SEC by SUPERVALU on May 12, 2005, and information
regarding Albertson's directors and executive officers is available in
its proxy statement filed with the SEC by Albertson's on May 6, 2005.
Other information regarding the participants in the proxy solicitation
and a description of their direct and indirect interests, by security
holdings or otherwise, will be contained the definitive joint proxy
statement/prospectus and other relevant materials to be filed with the
SEC when they become available.
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
(12 weeks ended)
Feb. 25, Feb. 26,
(unaudited) 2006 2005
-------------------------------------------- ------------------------
Net sales
-------------------------------------------- ------------------------
Retail Food $2,527,894 $2,553,868
% of total 54.5 % 55.6 %
Supply Chain Services 2,112,210 2,036,638
% of total 45.5 % 44.4 %
Total net sales $4,640,104 $4,590,506
100.0 % 100.0 %
-------------------------------------------- ------------------------
Earnings
-------------------------------------------- ------------------------
Retail Food operating earnings $(2,195) $110,982
% of sales -0.1 % 4.3 %
Supply Chain Services operating earnings 41,366 59,391
% of sales 2.0 % 2.9 %
------------------------
Subtotal 39,171 170,373
% of sales 0.8 % 3.7 %
General corporate expense (4,651) (10,141)
Restructure and other charges (1,086) -
------------------------
Total operating earnings 33,434 160,232
% of sales 0.7 % 3.5 %
Interest expense, net (22,011) (25,140)
Earnings before income taxes 11,423 135,092
Income tax expense (5,421) (42,159)
------------------------
Net earnings $6,002 $92,933
============================================ ========================
NOTE 1:
Pretax LIFO expense $4,537 $(921)
NOTE 2:
Pretax depreciation and amortization
Retail Food Segment $51,938 $50,918
Supply Chain Services Segment 19,664 19,412
General Corporate 180 52
----------- -----------
Total Company $71,782 $70,382
=========== ===========
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
(52 weeks) ended
-------------------------
Feb. 25, Feb. 26,
(unaudited) 2006 2005
------------------------------------------ --------------------------
Net sales
------------------------------------------ --------------------------
Retail Food $10,634,954 $10,549,478
% of total 53.5 % 54.0 %
Supply Chain Services 9,228,645 8,993,762
% of total 46.5 % 46.0 %
Total net sales $19,863,599 $19,543,240
100.0 % 100.0 %
------------------------------------------ --------------------------
Earnings
------------------------------------------ --------------------------
Retail Food operating earnings $268,820 $446,303
% of sales 2.5 % 4.2 %
Supply Chain Services operating earnings 214,371 234,585
% of sales 2.3 % 2.6 %
--------------------------
Subtotal 483,191 680,888
% of sales 2.4 % 3.5 %
General corporate expense (43,578) (48,064)
Gain on sale of WinCo Foods, Inc. - 109,238
Restructure and other charges (4,455) (26,416)
--------------------------
Total operating earnings 435,158 715,646
% of sales 2.2 % 3.7 %
Interest expense, net (106,010) (114,782)
Earnings before income taxes 329,148 600,864
Income tax expense (122,979) (215,041)
--------------------------
Net earnings $206,169 $385,823
========================================== ==========================
NOTE 1:
Pretax LIFO expense $11,397 $6,112
NOTE 2:
Pretax depreciation and amortization
Retail Food Segment $216,480 $207,523
Supply Chain Services Segment 93,535 94,943
General Corporate 663 573
------------ ------------
Total Company $310,678 $303,039
============ ============
CONSOLIDATED STATEMENTS OF EARNINGS
----------------------------------------------------------------------
SUPERVALU INC. and Subsidiaries
----------------------------------------------------------------------
(In thousands, except per share data)
Fourth Quarter (12 weeks ended)
Feb. 25, % of Feb. 26, % of
(unaudited) 2006 sales 2005 sales
----------------------------- ----------------------------------------
Net sales $4,640,104 100.0% $4,590,506 100.0%
Costs and expenses:
Cost of sales 3,959,095 85.3% 3,889,110 84.7%
Selling and administrative
expenses 646,489 14.0% 541,164 11.8%
Restructure and other charges 1,086 0.0% - 0.0%
----------------------------------------
Operating earnings 33,434 0.7% 160,232 3.5%
Interest expense, net 22,011 0.5% 25,140 0.6%
----------------------------------------
Earnings before income taxes 11,423 0.2% 135,092 2.9%
Provision for Income taxes 5,421 0.1% 42,159 0.9%
----------------------------------------
Net earnings $6,002 0.1% $92,933 2.0%
========================================
Weighted average number of common shares
outstanding
Basic 136,313 135,116
Diluted 137,921 145,243
Net earnings per common share
- basic $0.04 $0.69
Net earnings per common share
- diluted $0.04 $0.65
Dividends declared per common
share $0.1625 $0.1525
CONSOLIDATED STATEMENTS OF EARNINGS
----------------------------------------------------------------------
SUPERVALU INC. and Subsidiaries
----------------------------------------------------------------------
(In thousands, except per share data)
Year-to-date (52 weeks) ended
Feb. 25, % of Feb. 26, % of
(unaudited) 2006 sales 2005 sales
------------------------------ ---------------------------------------
Net sales $19,863,599 100.0% $19,543,240 100.0%
Costs and expenses:
Cost of sales 16,977,352 85.5% 16,681,472 85.4%
Selling and administrative
expenses 2,446,634 12.3% 2,228,944 11.4%
Gain on sale WinCo Foods, Inc. - 0.0% (109,238) -0.6%
Restructure and other charges 4,455 0.0% 26,416 0.1%
---------------------------------------
Operating earnings 435,158 2.2% 715,646 3.7%
Interest expense, net 106,010 0.5% 114,782 0.6%
---------------------------------------
Earnings before income taxes 329,148 1.7% 600,864 3.1%
Income tax expense 122,979 0.6% 215,041 1.1%
---------------------------------------
Net earnings $206,169 1.1% $385,823 2.0%
=======================================
Weighted average number of common shares
outstanding
Basic 136,077 135,003
Diluted 145,699 144,924
Net earnings per common share -
basic $1.52 $2.86
Net earnings per common share -
diluted $1.46 $2.71
Dividends declared per common
share $0.6400 $0.6025
CONDENSED CONSOLIDATED BALANCE SHEETS
----------------------------------------------------------------------
SUPERVALU INC. and Subsidiaries
----------------------------------------------------------------------
(In thousands)
Fiscal Fiscal
Year End Year End
-------------------------
February 25, February 26,
(unaudited) 2006 2005
----------------------------------------------------------------------
Assets
Current Assets
Cash and cash equivalents $686,099 $463,915
Receivables, net 439,168 464,249
Inventories, net 954,200 1,032,034
Other current assets 98,817 161,922
-------------------------
Total current assets 2,178,284 2,122,120
Long-term receivables, net 65,902 88,551
Property, plant and equipment, net 1,968,872 2,190,888
Goodwill & Other Long Term Assets 1,832,680 1,872,403
-------------------------
Total assets $6,045,738 $6,273,962
======================================================================
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $1,028,903 $1,106,860
Current debt and obligations under
capital leases 111,721 99,463
Other current liabilities 366,394 420,888
-------------------------
Total current liabilities 1,507,018 1,627,211
Long-term debt and obligations under capital
leases 1,405,971 1,578,867
Other liabilities and deferred income taxes 513,296 557,323
Total stockholders' equity 2,619,453 2,510,561
-------------------------
Total liabilities and stockholders' equity $6,045,738 $6,273,962
======================================================================
CONTACT: SUPERVALU INC., Minneapolis
Yolanda Scharton, 952-828-4540
yolanda.scharton@supervalu.com
or
Haley Meyer, 952-828-4786
haley.meyer@supervalu.com