##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period (12 weeks) ended November 29, 2008.
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to.
 Commission File Number: 1-5418
 
 SUPERVALU INC.
 (Exact name of registrant as specified in its charter)
 DELAWARE
    
    41-0617000(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)11840 VALLEY VIEW ROADEDEN PRAIRIE, MINNESOTA
    
    55344(Address of principal executive offices)
    
    (Zip Code)
 (952) 828-4000
(Registrants telephone number, including area code)
 N/A
(Former name, former address and former fiscal year, if changed since last report)
  þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




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##### 



SUPERVALU INC. and Subsidiaries
 Quarterly Report on Form 10-Q
 TABLE OF CONTENTS
 Item
    
    
    
    PagePART I  FINANCIAL INFORMATION1.
    
    Financial Statements (Unaudited)
    
    
    2Condensed Consolidated Composition of Net Sales and Operating Earnings for the third
quarter and year-to-date periods ended  November 29, 2008 and December 1, 2007
    
    
    2Condensed Consolidated Statements of Earnings for the third quarter ended November
29, 2008 and December 1, 2007
    
    
    3Condensed Consolidated Statements of Earnings for the year-to-date periods ended
November 29, 2008 and December 1, 2007
    
    
    4Condensed Consolidated Balance Sheets as of November 29, 2008 and February 23, 2008
    
    
    5Condensed Consolidated Statements of Stockholders Equity for the year-to-date
periods ended November 29, 2008 and the fiscal year ended February 23, 2008
    
    
    6Condensed Consolidated Statements of Cash Flows for the year-to-date periods ended
November 29, 2008 and December 1, 2007
    
    
    7Notes to Condensed Consolidated Financial Statements
    
    
    82.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    163.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    244.
    
    Controls and Procedures
    
    
    24PART II  OTHER INFORMATION1.
    
    Legal Proceedings
    
    
    251A.
    
    Risk Factors
    
    
    252.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    263.
    
    Defaults Upon Senior Securities
    
    
    264.
    
    Submission of Matters to a Vote of Security Holders
    
    
    265.
    
    Other Information
    
    
    266.
    
    Exhibits
    
    
    27EX-4.1EX-10.1EX-10.2EX-31.1EX-31.2EX-32.1EX-32.2
  1




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
 SUPERVALU INC. and Subsidiaries
 
 CONDENSED CONSOLIDATED COMPOSITION OF NET SALES AND OPERATING EARNINGS
 (Unaudited)
 (In millions, except percent data)
 Third Quarter Ended
    
    
    Year-to-Date EndedNovember 29,
    
    
    December 1,
    
    
    November 29,
    
    
    December 1,2008
    
    
    2007
    
    
    2008
    
    
    2007Net salesRetail food
    
    $
    7,861
    
    
    $
    7,858
    
    
    $
    26,168
    
    
    $
    26,259% of total
    
    
    77.3
    %
    
    
    77.0
    %
    
    
    77.5
    %
    
    
    78.0
    %Supply chain services
    
    
    2,310
    
    
    
    2,353
    
    
    
    7,576
    
    
    
    7,402% of total
    
    
    22.7
    %
    
    
    23.0
    %
    
    
    22.5
    %
    
    
    22.0
    %Total net sales
    
    $
    10,171
    
    
    $
    10,211
    
    
    $
    33,744
    
    
    $
    33,661100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Operating earnings (loss)Retail food (1)
    
    $
    (2,941
    )
    
    $
    342
    
    
    $
    (2,258
    )
    
    $
    1,176% of sales
    
    
    (37.4
    )%
    
    
    4.4
    %
    
    
    (8.6
    )%
    
    
    4.5
    %Supply chain services
    
    
    69
    
    
    
    69
    
    
    
    232
    
    
    
    199% of sales
    
    
    3.0
    %
    
    
    2.9
    %
    
    
    3.1
    %
    
    
    2.7
    %Corporate
    
    
    (19
    )
    
    
    (16
    )
    
    
    (67
    )
    
    
    (108
    )Total operating earnings (loss)
    
    
    (2,891
    )
    
    
    395
    
    
    
    (2,093
    )
    
    
    1,267% of sales
    
    
    (28.4
    )%
    
    
    3.9
    %
    
    
    (6.2
    )%
    
    
    3.7
    %Interest expense, net
    
    
    143
    
    
    
    164
    
    
    
    474
    
    
    
    550Earnings (loss) before income taxes
    
    
    (3,034
    )
    
    
    231
    
    
    
    (2,567
    )
    
    
    717Income tax provision (benefit)
    
    
    (90
    )
    
    
    90
    
    
    
    87
    
    
    
    280Net earnings (loss)
    
    $
    (2,944
    )
    
    $
    141
    
    
    $
    (2,654
    )
    
    $
    437
 
 (1)
    
    Retail food operating loss for the third quarter and year-to-date ended November 29, 2008
reflects the preliminary estimate of  goodwill and asset impairment charges of $3,250
related to the write-down of goodwill and other intangible assets required by Statement of
Financial Accounting Standards (SFAS) No. 142, Goodwill and Other
Intangible Assets.
The impairment charges are subject to finalization of fair values which the Company will
complete in the fourth quarter of fiscal 2009.   2




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SUPERVALU INC. and Subsidiaries
 
 CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
 (Unaudited)
 (In millions, except percent and per share data)
 Third Quarter EndedNovember 29,
    
    
    % of
    
    
    December 1,
    
    
    % of2008
    
    
    Net sales
    
    
    2007
    
    
    Net salesNet sales
    
    $
    10,171
    
    
    
    100.0
    %
    
    $
    10,211
    
    
    
    100.0
    %Cost of sales
    
    
    7,891
    
    
    
    77.6
    
    
    
    7,941
    
    
    
    77.8Gross profit
    
    
    2,280
    
    
    
    22.4
    
    
    
    2,270
    
    
    
    22.2Selling and administrative expenses
    
    
    1,921
    
    
    
    18.9
    
    
    
    1,875
    
    
    
    18.3Goodwill and intangible asset impairment charges
    
    
    3,250
    
    
    
    32.0
    
    
    
    
    
    
    
    Operating earnings (loss)
    
    
    (2,891
    )
    
    
    (28.4
    )
    
    
    395
    
    
    
    3.9Interest expense, net
    
    
    143
    
    
    
    1.4
    
    
    
    164
    
    
    
    1.6Earnings (loss) before income taxes
    
    
    (3,034
    )
    
    
    (29.8
    )
    
    
    231
    
    
    
    2.3Income tax provision (benefit)
    
    
    (90
    )
    
    
    (0.9
    )
    
    
    90
    
    
    
    0.9Net earnings (loss)
    
    $
    (2,944
    )
    
    
    (28.9
    )%
    
    $
    141
    
    
    
    1.4
    %Net earnings (loss) per sharebasic
    
    $
    (13.95
    )
    
    
    
    
    
    $
    0.67Net earnings (loss) per sharediluted
    
    $
    (13.95
    )
    
    
    
    
    
    $
    0.66Dividends declared per share
    
    $
    0.1725
    
    
    
    
    
    
    $
    0.1700Weighted average number of shares outstanding:Basic
    
    
    211
    
    
    
    
    
    
    
    211Diluted
    
    
    211
    
    
    
    
    
    
    
    214
  3




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SUPERVALU INC. and Subsidiaries
 
 CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
 (Unaudited)
 (In millions, except percent and per share data)
 Year-to-Date EndedNovember 29,
    
    
    % of
    
    
    December 1,
    
    
    % of2008
    
    
    Net sales
    
    
    2007
    
    
    Net salesNet sales
    
    $
    33,744
    
    
    
    100.0
    %
    
    $
    33,661
    
    
    
    100.0
    %Cost of sales
    
    
    26,110
    
    
    
    77.4
    
    
    
    25,975
    
    
    
    77.2Gross profit
    
    
    7,634
    
    
    
    22.6
    
    
    
    7,686
    
    
    
    22.8Selling and administrative expenses
    
    
    6,477
    
    
    
    19.2
    
    
    
    6,419
    
    
    
    19.1Goodwill and intangible asset impairment charges
    
    
    3,250
    
    
    
    9.6
    
    
    
    
    
    
    
    Operating earnings (loss)
    
    
    (2,093
    )
    
    
    (6.2
    )
    
    
    1,267
    
    
    
    3.7Interest expense, net
    
    
    474
    
    
    
    1.4
    
    
    
    550
    
    
    
    1.6Earnings (loss) before income taxes
    
    
    (2,567
    )
    
    
    (7.6
    )
    
    
    717
    
    
    
    2.1Income tax provision
    
    
    87
    
    
    
    0.3
    
    
    
    280
    
    
    
    0.8Net earnings (loss)
    
    $
    (2,654
    )
    
    
    (7.9)
    %
    
    $
    437
    
    
    
    1.3
    %Net earnings (loss) per sharebasic
    
    $
    (12.56
    )
    
    
    
    
    
    $
    2.06Net earnings (loss) per sharediluted
    
    $
    (12.56
    )
    
    
    
    
    
    $
    2.03Dividends declared per share
    
    $
    0.515
    
    
    
    
    
    
    $
    0.505Weighted average number of shares outstanding:Basic
    
    
    211
    
    
    
    
    
    
    
    211Diluted
    
    
    211
    
    
    
    
    
    
    
    216
  4




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SUPERVALU INC. and Subsidiaries
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In millions, except par value data)
 November 29,
    
    
    February 23,2008
    
    
    2008(Unaudited)ASSETSCurrent assetsCash and cash equivalents
    
    $
    405
    
    
    $
    243Receivables, less allowances for doubtful accounts of $12 and $14, respectively
    
    
    914
    
    
    
    951Inventories
    
    
    3,256
    
    
    
    2,776Other current assets
    
    
    218
    
    
    
    177Total current assets
    
    
    4,793
    
    
    
    4,147Property, plant and equipment, less accumulated depreciation and amortization of
$4,265 and $3,579, respectively
    7,581
    
    
    
    7,533Goodwill
    
    
    3,967
    
    
    
    6,957Intangible assets, net
    
    
    1,656
    
    
    
    1,952Other assets
    
    
    643
    
    
    
    473Total assets
    
    $
    18,640
    
    
    $
    21,062LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable and accrued liabilities
    
    $
    3,611
    
    
    $
    3,354Current maturities of long-term debt and capital lease obligations
    
    
    528
    
    
    
    331Other current liabilities
    
    
    985
    
    
    
    922Total current liabilities
    
    
    5,124
    
    
    
    4,607Long-term debt and obligations under capital leases
    
    
    8,357
    
    
    
    8,502Other liabilities
    
    
    1,937
    
    
    
    2,000Commitments and contingenciesStockholders equityCommon stock, $1.00 par value: 400 shares authorized; 230 shares issued
    
    
    230
    
    
    
    230Capital in excess of par value
    
    
    2,848
    
    
    
    2,822Accumulated other comprehensive losses
    
    
    (94
    )
    
    
    (95
    )Retained earnings
    
    
    780
    
    
    
    3,543Treasury stock, at cost, 18 shares
    
    
    (542
    )
    
    
    (547
    )Total stockholders equity
    
    
    3,222
    
    
    
    5,953Total liabilities and stockholders equity
    
    $
    18,640
    
    
    $
    21,062
  5




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SUPERVALU INC. and Subsidiaries
 
 CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 (In millions, except per share data)
 Capital in
    
    
    
    
    
    
    AccumulatedExcess
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    TotalCommon
    
    
    of Par
    
    
    Treasury
    
    
    Comprehensive
    
    
    Retained
    
    
    Stockholders
    
    
    ComprehensiveStock
    
    
    Value
    
    
    Stock
    
    
    Losses
    
    
    Earnings
    
    
    Equity
    
    
    IncomeBalances as of February 24, 2007
    
    $
    229
    
    
    $
    2,708
    
    
    $
    (499
    )
    
    $
    (235
    )
    
    $
    3,103
    
    
    $
    5,306Effects of changing pension plan
measurement date pursuant to SFAS No.
158 (net of tax of $20 and $7,
respectively)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32
    
    
    
    (10
    )
    
    
    22Beginning balance, as adjusted
    
    
    229
    
    
    
    2,708
    
    
    
    (499
    )
    
    
    (203
    )
    
    
    3,093
    
    
    
    5,328Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    593
    
    
    
    593
    
    
    $
    593Pension and other postretirement
activity (net of tax of $70)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    108
    
    
    
    
    
    
    
    108
    
    
    
    108Sales of common stock under option plans
    
    
    
    
    
    
    3
    
    
    
    141
    
    
    
    
    
    
    
    
    
    
    
    144
    
    
    
    Cash dividends declared on common stock
$0.6750 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (143
    )
    
    
    (143
    )
    
    
    Compensation under employee incentive
plans
    
    
    
    
    
    
    49
    
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    45
    
    
    
    Shares issued in settlement of
zero-coupon convertible debentures and
mandatory convertible securities
    
    
    1
    
    
    
    62
    
    
    
    33
    
    
    
    
    
    
    
    
    
    
    
    96
    
    
    
    Purchase of shares for treasury
    
    
    
    
    
    
    
    
    
    
    (218
    )
    
    
    
    
    
    
    
    
    
    
    (218
    )
    
    
    Balances as of February 23, 2008
    
    
    230
    
    
    
    2,822
    
    
    
    (547
    )
    
    
    (95
    )
    
    
    3,543
    
    
    
    5,953
    
    
    $
    701(Unaudited)Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,654
    )
    
    
    (2,654
    )
    
    $
    (2,654
    )Pension and other postretirement activity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    1Sales of common stock under option plans
    
    
    
    
    
    
    3
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    Cash dividends declared on common stock
$0.5150 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (109
    )
    
    
    (109
    )
    
    
    Compensation under employee incentive
plans
    
    
    
    
    
    
    23
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    39
    
    
    
    Purchase of shares for treasury
    
    
    
    
    
    
    
    
    
    
    (23
    )
    
    
    
    
    
    
    
    
    
    
    (23
    )
    
    
    Balances as of November 29, 2008
    
    $
    230
    
    
    $
    2,848
    
    
    $
    (542
    )
    
    $
    (94
    )
    
    $
    780
    
    
    $
    3,222
    
    
    $
    (2,653
    )
  6




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SUPERVALU INC. and Subsidiaries
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 (In millions)
 Year-to-Date EndedNovember 29,
    
    
    December 1,2008
    
    
    2007Cash flows from operating activitiesNet earnings (loss)
    
    $
    (2,654
    )
    
    $
    437Adjustments to reconcile net earnings (loss) to net cash provided by operating
activities:Goodwill and intangible asset impairment charges
    
    
    3,250
    
    
    
    Depreciation and amortization
    
    
    823
    
    
    
    788LIFO charge
    
    
    58
    
    
    
    27Gain on sale of assets
    
    
    (17
    )
    
    
    (4
    )Deferred income taxes
    
    
    (123
    )
    
    
    (8
    )Stock-based compensation
    
    
    36
    
    
    
    42Other
    
    
    (10
    )
    
    
    (4
    )Changes in operating assets and liabilities, net of effects from acquisition
and dispositions of businesses
    
    
    (279
    )
    
    
    (277
    )Net cash provided by operating activities
    
    
    1,084
    
    
    
    1,001Cash flows from investing activitiesProceeds from sale of assets
    
    
    93
    
    
    
    140Purchases of property, plant and equipment
    
    
    (934
    )
    
    
    (789
    )Other
    
    
    15
    
    
    
    18Net cash used in investing activities
    
    
    (826
    )
    
    
    (631
    )Cash flows from financing activitiesProceeds from issuance of long-term debt
    
    
    396
    
    
    
    11Repayment of long-term debt
    
    
    (316
    )
    
    
    (328
    )Proceeds from settlement of mandatory convertible securities
    
    
    
    
    
    
    52Payment of obligations under capital leases
    
    
    (54
    )
    
    
    (43
    )Net proceeds from the sale of common stock under option plans and related tax benefits
    
    
    10
    
    
    
    154Dividends paid
    
    
    (109
    )
    
    
    (106
    )Payment for purchase of treasury shares
    
    
    (23
    )
    
    
    (218
    )Net cash used in financing activities
    
    
    (96
    )
    
    
    (478
    )Net increase (decrease) in cash and cash equivalents
    
    
    162
    
    
    
    (108
    )Cash and
cash equivalents at beginning of year
    
    
    243
    
    
    
    285Cash and cash equivalents at the end of period
    
    $
    405
    
    
    $
    177
  7




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SUPERVALU INC. and Subsidiaries
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 (Dollars and shares in millions, except per share data)
 NOTE 1  THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Business Description
   Statement of Registrant
  Accounting Policies
  Fiscal Year
  Cash and Cash Equivalents
  Use of Estimates
  8




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Net Earnings (Loss) Per Share
   Third Quarter Ended
    
    
    Year-to-Date EndedNovember 29,
    
    
    December 1,
    
    
    November 29,
    
    
    December 1,2008
    
    
    2007
    
    
    2008
    
    
    2007Net earnings (loss) per sharebasicNet earnings (loss)
    
    $
    (2,944
    )
    
    $
    141
    
    
    $
    (2,654
    )
    
    $
    437Less: undistributed earnings allocable to
contingently convertible debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )Net earnings (loss) available to common stockholders
    
    $
    (2,944
    )
    
    $
    141
    
    
    $
    (2,654
    )
    
    $
    436Weighted average shares outstandingbasic
    
    
    211
    
    
    
    211
    
    
    
    211
    
    
    
    211Net earnings (loss) per sharebasic
    
    $
    (13.95
    )
    
    $
    0.67
    
    
    $
    (12.56
    )
    
    $
    2.06Net earnings (loss) per sharedilutedNet earnings (loss)
    
    $
    (2,944
    )
    
    $
    141
    
    
    $
    (2,654
    )
    
    $
    437Interest expense related to dilutive contingently
convertible debentures, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Net earnings (loss) used for diluted net earnings
(loss) per share calculation
    
    $
    (2,944
    )
    
    $
    141
    
    
    $
    (2,654
    )
    
    $
    438Weighted average shares outstanding
    
    
    211
    
    
    
    211
    
    
    
    211
    
    
    
    211Dilutive impact of options and restricted stock
outstanding
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    4Dilutive impact of convertible securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Weighted average shares outstandingdiluted
    
    
    211
    
    
    
    214
    
    
    
    211
    
    
    
    216Net earnings (loss) per sharediluted
    
    $
    (13.95
    )
    
    $
    0.66
    
    
    $
    (12.56
    )
    
    $
    2.03
  NOTE 2  NEW ACCOUNTING STANDARDS
   9




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NOTE
3  GOODWILL AND INTANGIBLE ASSETS
   February
    
    
    Additions/
    
    
    
    
    
    
    Other Net
    
    
    November 29,23, 2008
    
    
    Amortization
    
    
    Impairment
    
    
    Adjustments
    
    
    2008Goodwill
    
    $
    6,957
    
    
    $
    
    
    
    $
    (3,000
    )
    
    $
    10
    
    
    $
    3,967Intangible assets:Trademarks and tradenames  indefinite-lived
    
    $
    1,370
    
    
    $
    
    
    
    $
    (250
    )
    
    $
    
    
    
    $
    1,120Favorable operating leases, customer lists,
customer relationships and other
(accumulated amortization of $187 and $141
as of November 29, 2008 and February 23,
2008, respectively)
    
    
    717
    
    
    
    7
    
    
    
    
    
    
    
    (8
    )
    
    
    716Non-compete agreements (accumulated
amortization of $10 and $9 as of November
29, 2008 and February 23, 2008,
respectively)
    
    
    15
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    17Total intangible assets
    
    
    2,102
    
    
    
    9
    
    
    
    (250
    )
    
    
    (8
    )
    
    
    1,853Accumulated amortization
    
    
    (150
    )
    
    
    (50
    )
    
    
    
    
    
    
    3
    
    
    
    (197
    )Total intangible assets, net
    
    $
    1,952
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,656
  10




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NOTE 4  RESERVES FOR CLOSED PROPERTIES
   February 23,
    
    
    
    
    
    
    
    
    
    
    November 29,2008
    
    
    Payments
    
    
    Adjustments
    
    
    2008Reserves for closed properties
    
    $
    97
    
    
    $
    (17
    )
    
    $
    
    
    
    $
    80
 NOTE 5  DEBT
  November
    
    
    February 23,29, 2008
    
    
    20086.01% to 8.70% (5.44% to 8.97%) Senior Notes, Medium Term Notes
and Debentures due through May 2037 (face amount $5,230)
    
    $
    5,021
    
    
    $
    5,1332.01% to 4.00% Revolving Credit Facility and Variable Rate Notes
    
    
    2,132
    
    
    
    1,9332.53% Accounts Receivable Securitization Facility
    
    
    276
    
    
    
    2720.78% to 1.15% Variable Rate Industrial Revenue Bonds
    
    
    42
    
    
    
    473.93% to 10.74% (3.93% to 7.75%) Secured Mortgages, secured by
assets with a net book value of $68, 
due through May 2014 (face
amount $39)
    
    
    40
    
    
    
    46Other
    
    
    18
    
    
    
    207,529
    
    
    
    7,451Less current maturities
    
    
    (461
    )
    
    
    (267
    )Long-term debt
    
    $
    7,068
    
    
    $
    7,184
   11




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NOTE 6  INCOME TAXES
  NOTE 7  STOCK-BASED AWARDS
       Dividend yield
    
    
    2.0
    %Volatility rate
    
    
    28.1  36.4
    %Risk-free interest rate
    
    
    2.0  3.6
    %Expected option life
    
    1.0  5.4 years
 NOTE 8  TREASURY STOCK PURCHASE PROGRAM
   12




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NOTE 9  BENEFIT PLANS
   Third Quarter EndedPension Benefits
    
    
    Other Postretirement BenefitsNovember 29,
    
    
    December 1,
    
    
    November 29,
    
    
    December 1,2008
    
    
    2007
    
    
    2008
    
    
    2007Service cost
    
    $
    2
    
    
    $
    6
    
    
    $
    
    
    
    $
    Interest cost
    
    
    30
    
    
    
    29
    
    
    
    3
    
    
    
    2Expected return on assets
    
    
    (33
    )
    
    
    (32
    )
    
    
    
    
    
    
    Amortization of net actuarial loss
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    1Net periodic benefit (income) expense
    
    $
    (1
    )
    
    $
    5
    
    
    $
    3
    
    
    $
    3
 Year-to-Date EndedPension Benefits
    
    
    Other Postretirement BenefitsNovember 29,
    
    
    December 1,
    
    
    November 29,
    
    
    December 1,2008
    
    
    2007
    
    
    2008
    
    
    2007Service cost
    
    $
    6
    
    
    $
    22
    
    
    $
    1
    
    
    $
    1Interest cost
    
    
    99
    
    
    
    95
    
    
    
    8
    
    
    
    7Expected return on assets
    
    
    (108
    )
    
    
    (104
    )
    
    
    
    
    
    
    Amortization of prior service benefit
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )Amortization of net actuarial loss
    
    
    
    
    
    
    10
    
    
    
    2
    
    
    
    4Curtailment
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    Net periodic benefit (income) expense
    
    $
    (3
    )
    
    $
    29
    
    
    $
    10
    
    
    $
    11
  13




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NOTE 10  COMMITMENTS, CONTINGENCIES AND OFF-BALANCE SHEET ARRANGEMENTS
     Legal Proceedings
   14




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Pension Plan / Health and Welfare Plan Contingencies
   NOTE 11  SEGMENT INFORMATION
  NOTE 12  SUBSEQUENT EVENT
  15




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 (Dollars and shares in millions, except per share data)
 OVERVIEW
   RESULTS OF OPERATIONS
   THIRD QUARTER RESULTS
 Net Sales
     16




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##### Table of Contents



Gross Profit
  Selling and Administrative Expenses
  Goodwill and intangible asset impairment charges
  Operating Earnings (Loss)
   Net Interest Expense
  Income Tax Provision (Benefit)
  Net Earnings (Loss)
  YEAR-TO-DATE RESULTS
 Net Sales
   17




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##### Table of Contents



Gross Profit
  Selling and Administrative Expenses
  Goodwill and intangible asset impairment charges
  Operating Earnings (Loss)
   Net Interest Expense
  Income Tax Provision
  Net Earnings (Loss)
  SUBSEQUENT EVENT
  18




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LIQUIDITY AND CAPITAL RESOURCES
           19




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COMMITMENTS, CONTINGENCIES AND OFF-BALANCE SHEET ARRANGEMENTS
      Pension Plan / Health and Welfare Plan Contingencies
   20




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Contractual Obligations
  CRITICAL ACCOUNTING POLICIES
  NEW ACCOUNTING STANDARDS
     21




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##### Table of Contents



CAUTIONARY STATEMENTS FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE SECURITIES LITIGATION
REFORM ACT
   Economic and Industry Conditions
 
    
    Adverse changes in economic conditions that affect consumer spending or buying habits
    
    Food and drug price inflation or deflation
    
    Increases in energy costs and commodity prices, which could impact consumer spending
and buying habits and the cost of doing business
    
    The availability of favorable credit and trade terms
    
    Changes in interest rates
    
    The outcome of negotiations with partners, governments, suppliers, unions or
customers
 Competitive Practices
 
    
    The Companys ability to attract and retain customers
    
    The Companys ability to hire, train or retain employees
    
    Competition from other food or drug retail chains, supercenters, non-traditional
competitors and emerging alternative formats in our retail markets
 22




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##### Table of Contents




    
    Declines in the retail sales activity of our supply chain services customers due to
competition or increased self-distribution
    
    Changes in demographics or consumer preferences that affect consumer spending habits
    
    The impact of consolidation in the retail food and supply chain services industries
    
    The success of the Companys promotional and sales programs and the Companys ability
to respond to the promotional practices of competitors
    
    The ability to successfully improve buying practices and shrink
    
    The increase in Own Brand penetration could impact identical store retail sales
growth
 Food Safety
 
    
    Events that give rise to actual or potential food contamination, drug contamination
or food-borne illness or any adverse publicity relating to these types of concern, whether
or not valid
 Integration of Acquired Businesses
 
    
    Our ability to successfully combine our operations with any businesses we have
acquired or may acquire, to achieve expected synergies and to minimize the diversion of
managements attention and resources
 Store Expansion and Remodeling
 
    
    Potential delays in the development, construction or start-up of planned projects
    
    Our ability to locate suitable store or distribution center sites, negotiate
acceptable purchase or lease terms and build or expand facilities in a manner that
achieves appropriate returns on our capital investment
    
    The adequacy of our capital resources for future acquisitions, the expansion of
existing operations or improvements to facilities
    
    Our ability to make acquisitions at acceptable rates of return, assimilate acquired
operations and integrate the personnel of the acquired business
 Liquidity
 
    
    Additional funding requirements to meet anticipated debt payments and capital needs
    
    The impact of acquisitions on our level of indebtedness, debt ratings, costs and
future financial flexibility
    
    The impact of the recent turmoil in the financial markets on the availability and
cost of credit
 Labor Relations
 
    
    Potential work disruptions resulting from labor disputes
 Employee Benefit Costs
 
    
    Increased operating costs resulting from rising employee benefit costs or pension
funding obligations
 Regulatory Matters
 
    
    The ability to timely obtain permits, comply with government regulations or make
capital expenditures required to maintain compliance with government regulations
    
    Changes in applicable laws and regulations that impose additional requirements or
restrictions on the operation of our businesses
 Self-Insurance
 
    
    Variability in actuarial projection regarding workers compensation and general and
automobile liability
    
    Potential increase in the number or severity of claims for which the Company is
self-insured
    
    Significant volatility in the amount and timing of payments
 Legal and Administrative Proceedings
 
    
    Unfavorable outcomes in litigation, governmental or administrative proceedings or
other disputes
    
    Adverse publicity related to such unfavorable outcomes
 23




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##### Table of Contents



Information Technology
 
    
    Difficulties in developing, maintaining or upgrading information technology systems
 Security
 
    
    Business disruptions or losses resulting from wartime activities, acts or threats of
terror, data theft, information espionage, or other criminal activity directed at the food
and drug industry, the transportation industry or computer or communications systems
 Severe Weather, Natural Disasters and Adverse Climate Changes
 
    
    Property damage or business disruption resulting from severe weather conditions and
natural disasters that affect the Company, its customers or suppliers
    
    Unseasonably adverse climate conditions that impact the availability or cost of
certain products in the grocery supply chain
 Transition Support Services
 
    
    Our ability to provide transition support services to the purchasers of the non-core
supermarket business of Albertsons in a cost effective and non-disputed manner with
minimal diversion of management time
 Accounting Matters
 
    
    Changes in accounting standards that impact our financial statements
 
    
    Changes in the preliminary estimate of impairment charges, which the Company
expects to finalize in the fourth quarter of fiscal 2009
 
 ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4.
    
    CONTROLS AND PROCEDURES
   24




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##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
      
 ITEM 1A.
    
    RISK FACTORS
  25




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##### Table of Contents



ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Total Number ofShares Purchased
    
    
    Maximum Numberas Part of
    
    
    of Shares that MayPublicly
    
    
    Yet be PurchasedAnnounced
    
    
    Under theTotal Number
    
    
    Average
    
    
    Treasury Stock
    
    
    Treasury Stock(in millions, except shares and per share amounts)
    
    of Shares
    
    
    Price Paid
    
    
    Purchase
    
    
    PurchasePeriod (1)
    
    Purchased (2)
    
    
    Per Share
    
    
    Program (3)
    
    
    Program (3)First four weeksSeptember 7, 2008 to October 4, 2008
    
    
    1,636
    
    
    $
    22.42
    
    
    
    
    
    
    
    2,588,478Second four weeksOctober 5, 2008 to November 1, 2008
    
    
    852
    
    
    $
    20.57
    
    
    
    
    
    
    
    3,750,022Third four weeksNovember 2, 2008 to November 29, 2008
    
    
    2,770
    
    
    $
    14.43
    
    
    
    
    
    
    
    4,483,653Totals
    
    
    5,258
    
    
    $
    17.91
    
    
    
    
    
    
    
    4,483,653
 
 (1)
    
    The reported periods conform to the Companys fiscal calendar composed
of thirteen 28-day periods, except for the thirteenth period of fiscal
2009 which includes 35 days. The third quarter of fiscal 2009 contains
three 28-day periods.(2)
    
    These amounts include the deemed surrender by participants in the
Companys compensatory stock plans of 5,258 shares of previously
issued common stock. These are in payment of the purchase price for
shares acquired pursuant to the exercise of stock options and
satisfaction of tax obligations arising from such exercises, as well
as from the vesting of restricted stock awards granted under such
plans.(3)
    
    On May 28, 2008, the Board of Directors of the Company adopted and
announced a new annual share repurchase program authorizing the
Company to purchase up to $70 of the Companys common stock. Stock
purchases will be made from the cash generated from the settlement of
stock options. This annual authorization program replaced all
existing share repurchase programs. 
 ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5.
    
    OTHER INFORMATION
  26




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##### Table of Contents



ITEM 6.
    
    EXHIBITS
 3.1
    

    
    Restated Bylaws, as amended December 3, 2008, is incorporated herein by reference to Exhibit
3.1 to the Current Report on Form 8-K of the Company filed with the SEC on December 3, 2008.4.1
    

    
    Supplemental Indenture No. 3 dated as of December 29, 2008, between NAI, Inc., New Albertsons,
Inc. and U.S. Bank Trust National Association, as Trustee, to Indenture dated as of May 1,
1992, between Albertsons, Inc. and Morgan Guaranty Trust Company of New York, as Trustee.10.1
    

    
    SUPERVALU Executive Deferred Compensation Plan (2008 Statement) *10.2
    

    
    SUPERVALU Directors Deferred Compensation Plan (2009 Restatement) *31.1
    

    
    Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    

    
    Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    

    
    Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    

    
    Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Indicates management contracts, compensatory plans or arrangements required to be filed
pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K. 27




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##### Table of Contents



SIGNATURES
  SUPERVALU INC. (Registrant)Dated: January 8, 2009
    /s/ PAMELA K. KNOUSPamela K. KnousExecutive Vice President and Chief Financial Officer

(principal financial and accounting officer) 28




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##### Table of Contents



EXHIBIT INDEX
 Exhibit
 3.1
    
    
    Restated Bylaws, as amended December 3, 2008, is incorporated herein by reference to Exhibit
3.1 to the Current Report on Form 8-K of the Company filed with the SEC on December 3, 2008.4.1
    
    
    Supplemental Indenture No. 3 dated as of December 29, 2008, between NAI, Inc., New Albertsons,
Inc. and U.S. Bank Trust National Association, as Trustee, to Indenture dated as of May 1,
1992, between Albertsons, Inc. and Morgan Guaranty Trust Company of New York, as Trustee.10.1
    
    
    SUPERVALU Executive Deferred Compensation Plan (2008 Statement) *10.2
    
    
    SUPERVALU Directors Deferred Compensation Plan (2009 Restatement) *31.1
    
    
    Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Indicates management contracts, compensatory plans or arrangements required to be filed
pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K. 29