FIN 201

TERM PAPER
On

Prepared by:

Allah Ditta Khan- 0530120

Md Shafiqul Matin- 0810212
Alimur Reza- 0630109

Course Instructor- R. Mohsin

Company Profile

The grocery Super star! Founded in 1871, SuperValu Inc. (NYSE: SVU)
is a $44 billion company based in Prairie, MN. It has 200,000
employees and operates wholesale grocery stores. The company has
two segments: Grocery Retail and Pharmacy and Supply Chain
Services. Grocery Retail and Pharmacy includes extreme value food
stores, regional price superstores and regional supermarkets. Supply
Chain Services include grocery and produce distribution, business
technology and logistics. The company has about 1,550 stores in 40
states. It acquired the retail properties of Albertson's, Inc. in June 2006
making it the third-largest grocery retailer in the US.

Supervalu operates its stores under various banners, such as Acme

Markets, Albertsons, Bristol Farms, bigg’s, Cub Foods, Farm Fresh,
Hornbacher’s, Jewel-Osco, Lucky, Save-A-Lot, Shaw’s Supermarkets,
Shop ‘n Save, Shoppers Food & Pharmacy and Star Markets. As of
February 23, 2008, the Company conducted its retail operations
through 2,474 stores, including 873 licensed limited assortment stores.
SUPERVALU also provides supply chain services, including food
distribution and related logistics support services primarily across the
United States retail grocery channel.

As of February 23, 2008, the Company served as the primary grocery

supplier to approximately 2,200 stores, in addition to its own regional
banner store network, as well as serving as secondary grocery supplier
to approximately 500 stores. During the fiscal year ended February 23,
2008 (fiscal 2008), the Company added 73 new stores through new
store development, acquired eight stores and closed 85 stores, 28 of
which were acquired through the Acquisition.

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 Competitor Analysis

SVU KR SWY WMT Industry

Market Cap: 2.95B 17.92B 9.22B 215.39B 754.81M
2,100,00
Employees: 190,000 323,000 201,000 0 15.81K
Qtrly Rev Growth
(yoy): 0.70% 11.90% 3.90% 10.40% 9.20%
Revenue (ttm): 44.17B 74.53B 43.64B 397.38B 4.70B
Gross Margin (ttm): 23.10% 23.46% 29.61% 24.47% 27.07%
EBITDA (ttm): 2.66B 3.81B 2.98B 29.79B 218.98M
Oper Margins (ttm): 3.68% 3.24% 4.27% 5.83% 3.58%
Net Income (ttm): 586.00M 1.24B 928.60M 13.39B N/A
EPS (ttm): 2.749 1.842 2.107 3.361 1.65
P/E (ttm): 5.06 14.91 10.2 16.29 14.39
PEG (5 yr
expected): 0.64 1.5 0.87 1.4 1.12
P/S (ttm): 0.07 0.24 0.21 0.54 0.19

KR = Kroger Co.
SWY = Safeway Inc.
WMT = Wal-Mart Stores Inc.
Industry = Grocery Stores

Sector Analysis

1- Net
Day Debt Profit
Price Div. to Margi
Chg Market ROE Yield Equit Price to n Price To Free Cash
Sectors % Cap P/E % % y Book (mrq) Flow (mrq)
8.96 7473.14 16.92 20.88 5.42 11.40
Basic Materials 1 B 2 1 3 0.639 3.731 1 29.592
Conglomerate 1.38
s 1 324.15B 14 18.4 5.04 3.147 10.2 10 -67.4
-
Consumer 1848.50 14.30 21.34 3.22 155.44
Goods 3.29 B 3 8 1 0.973 6 7.031 41.264
7.62 5410.53 14.81 7.27
Financial 8 B 1 22.94 9 1.957 2.672 8.674 -2.904
2.38 1837.09 16.68 15.23 2.68 12.56
Healthcare 3 B 9 2 5 0.719 9.578 3 116.714
Industrial 4.67 21.22 2.79
Goods 3 646.91B 4 17.02 6 0.816 10.089 5.848 81.886
2148.52 24.35 14.34 2.39
Services 4.04 B 2 4 3 0.972 2.31 6.078 -124.155
3.95 3562.08 19.38 14.70 3.85
Technology 1 B 6 2 7 0.746 6.098 9.681 -403.56
5.07 15.42 4.91
Utilities 7 553.01B 14.23 2 1 1.521 2.478 9.074 -167.633

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Financial Statements of Supervalu Inc. (2004-08)

Income Statement

Period Ending FY2008 FY2007 FY2006 FY2005 FY2004

Net Sales/Revenues 44.05 B 37.41 B 19.86 B 19.54 B 20.21 B
Cost of Goods Sold 32.91 B 28.39 B 16.67 B 16.38 B 16.99 B
(Excluding Depreciation)

Depreciation, Depletion and 1.03 B 879.00 310.68 303.04 301.59

Amortization M M M M
Gross Income 10.10 B 8.14 B 2.89 B 2.86 B 2.92 B
Selling, General & Admin 8.42 B 6.74 B 2.38 B 2.22 B 2.30 B
Expenses
Other Operating Expense 0.00 0.00 0.00 0.00 0.00
Operating Expenses - Total 0.00 0.00 0.00 0.00 0.00
Operating Income 1.68 B 1.40 B 504.21 637.62 616.92
M M M
Extraordinary Credit - Pretax 0.00 0.00 0.00 0.00 0.00
Non-operating Interest 18.00 M 42.00 M 32.92 M 22.72 M 19.06 M
Income
Reserves Inc (Dec) 0.00 0.00 0.00 0.00 0.00
Pretax Equity in Earnings 0.00 0.00 0.00 0.00 0.00

Other Income/Expenses - Net 59.00 M 0.00 0.00 109.24 0.00

M
Earnings Before Interest & 1.70 B 1.35 B 468.08 738.36 620.46
Taxes (EBIT) M M M

Interest Expenses On Debt 733.00 600.00 138.93 137.50 165.58

M M M M M
Interest Capitalized 8.00 M 0.00 0.00 5.90 M —
Pretax Income 977.00 747.00 329.15 600.86 454.88
M M M M M
Income Taxes 384.00 295.00 122.98 215.04 174.74
M M M M M
Current Foreign Income Tax 0.00 0.00 0.00 0.00 0.00

Deferred Domestic Income -75.00 M 72.00 M -45.13 M 46.46 M 51.72 M

Tax
Deferred Foreign Income Tax 0.00 0.00 0.00 0.00 0.00
Income Tax Credits — — — — —
Minority Interest 0.00 0.00 0.00 0.00 0.00

Equity in Earnings 0.00 0.00 0.00 0.00 0.00

After Tax Income Expense -2.00 M 0.00 0.00 0.00 0.00

Discontinued Operations 0.00 0.00 0.00 0.00 0.00

Net Income Before Extra 591.00 452.00 206.17 385.82 280.14

Items/Preferred Div M M M M M

Extra Items & Gain (Loss) 0.00 0.00 0.00 0.00 0.00
Sale of Assets

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Net Income Before Preferred 591.00 452.00 206.17 385.82 280.14
Dividends M M M M M
Preferred Dividend 0.00 0.00 0.00 0.00 0.00
Requirements
Net Income Available to 594.00 455.00 213.24 392.61 280.14
Common M M M M M

Balance Sheet (2004-08)

Period Ending FY2008 FY2007 FY2006 FY2005 FY2004

Assets
Cash and Short Term 243.00 285.00 686.10 463.92 291.96
Investments M M M M M

Net Receivables 951.00 957.00 439.17 482.43 447.87

M M M M M
Total Inventories 2.78 B 2.75 B 954.20 1.03 B 1.08 B
M
Progress Payments & — — — — —
Others
Prepaid Expenses — — — — —

Other Current Assets 177.00 469.00 88.57 M 161.92 218.92

M M M M
Current Assets Total 4.15 B 4.46 B 2.17 B 2.13 B 2.04 B
Long Term Receivables 0 0 31.78 M 35.12 M 61.04 M
Investment in 0 0 2.90 M 3.90 M 0
Unconsolidated Subsidiaries
Other Investments 0 0 34.12 M 53.44 M 68.69 M
Property, Plant & 7.53 B 8.42 B 1.97 B 2.20 B 2.13 B
Equipment Net
Property, Plant & 11.11 B 10.96 B 4.10 B 4.03 B 3.83 B
Equipment Gross
Accumulated Depreciation 3.58 B 2.55 B 2.13 B 1.83 B 1.70 B
Other Assets 9.38 B 8.83 B 1.83 B 1.87 B 1.85 B
Deferred Charges 0 0 8.29 M 0 0

Tangible Other Assets 473.00 456.00 124.79 134.93 201.70

M M M M M
Intangible Other Assets 8.91 B 8.37 B 1.70 B 1.73 B 1.65 B
Total Assets 21.06 B 21.70 B 6.04 B 6.28 B 6.15 B
Liabilities
Short Term Debt & Current 331.00 286.00 111.72 99.46 M 305.94
Portion of Long Term Debt M M M M
Accrued Payroll 775.00 807.00 230.32 240.86 248.77
M M M M M
Income Taxes Payable 65.00 M 51.00 M 23.12 M 52.21 M 106.58
M
Dividends Payable — — — — —

Other Current Liabilities 857.00 820.00 110.03 127.82 92.57 M

M M M M
Current Liabilities Total 4.61 B 4.70 B 1.51 B 1.63 B 1.87 B

Long Term Debt 8.50 B 9.19 B 1.41 B 1.58 B 1.63 B

Provision for Risks & 836.00 725.00 0 0 —
Charges M M
Deferred Taxes 0 508.00 53.70 M 150.65 143.07
M M M

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Deferred Income — — — — —

Deferred Tax Liability in — — — — —

Untaxed Reserves

Other Liabilities 1.16 B 1.27 B 452.47 406.67 294.60

M M M
Total Liabilities 15.11 B 16.40 B 3.42 B 3.77 B 3.94 B

Shareholders Equity

Non-Equity Reserves 0 0 0 0 0

Minority Interest 0 0 0 0 0

Preferred Stock 0 0 0 0 0

Common Equity 5.95 B 5.31 B 2.62 B 2.51 B 2.21 B

Common Stock 230.00 229.00 150.67 150.67 150.67

M M M M M
Capital Surplus 2.82 B 2.71 B 132.72 116.05 102.35
M M M
Revaluation Reserves 0 0 0 0 0
Other Appropriated -95.00 -235.00 -128.23 -104.58 -98.73
Reserves M M M M M
Inappropriate (Free) — — — — —
Reserves
Retained Earnings 3.54 B 3.10 B 2.78 B 2.66 B 2.35 B

Equity in Untaxed Reserves — — — — —

ESOP Guarantees 0.00 0.00 0.00 0.00 0.00

Unrealized Foreign 0.00 0.00 0.00 0.00 0.00

Exchange Gain (Loss)
Unrealized Gain (Loss) on 0.00 0.00 0.00 0.00 -6.74 M
Marketable Securities
Treasury Stock 547.00 499.00 312.60 309.59 298.29
M M M M M
Total Liabilities & 21.06 B 21.70 B 6.04 B 6.27 B 6.15 B
Shareholders Equity

Common Shares 212.00 209.00 136.44 135.48 134.76

Outstanding M M M M M

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Cash-Flow Statement (2004-08)

Period Ending FY2008 FY2007 FY2006 FY2005 FY2004

Net Income/Starting Line 591.00 452.00 206.17 385.82 280.14
M M M M M
Operating Activities

Depreciation, Depletion & 1.03 B 879.00 310.68 303.04 301.59

Amortization M M M M

Depreciation & Depletion 975.00 831.00 303.98 296.84 297.09

M M M M M
Amortization of Intangible 55.00 M 48.00 M 6.70 M 6.20 M 4.50 M
Assets

Deferred Income Taxes and — — — — —

Investment Tax credity

Deferred Income Taxes — — — — —

Income Tax Credit — — — — —

Other Cash Flow 45.00 M 65.00 M 200.36 -70.10 -5.94 M

M M
Funds from Operations 1.59 B 1.44 B 655.97 667.73 614.55
M M M
Extraordinary Items & 0.00 0.00 0.00 0.00 0.00
Discontinued Operations

Funds from/for Other 138.00 -639.00 18.09 M 123.84 217.66

Operating Activities M M M M

Incline (Decline) in 103.00 258.00 22.24 M 18.05 M 23.41 M

Receivables M M
Incline (Decline) in -20.00 28.00 M 28.18 M 34.94 M -19.33
Inventories M M
Incline (Decline) in -251.00 -471.00 -82.26 26.99 M 7.32 M
Accounts Payable M M M
Incline (Decline) in Income 319.00 -224.00 -21.48 -67.45 82.78 M
Taxes Payable M M M M
Incline (Decline) in Other — — — — —
Accruals

Incline (Decline) in Other -13.00 -230.00 71.41 M 111.31 123.48

Assets or Liabilties M M M M

Net Cash Flow/Operating 1.73 B 801.00 674.06 791.57 832.21

Activities M M M M

Capital Expenditures
(Additions to Fixed Assets)

Additions to Other Assets 0.00 0.00 0.00 0.00 0.00

Net Assets from 0.00 2.40 B 0.00 163.77 0.00

Acquisitions M

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Incline (Decline) in 0.00 0.00 0.00 0.00 0.00
Inventories
Decrease in Investments 0.00 0.00 0.00 0.00 0.00
Disposal of Fixed Assets 195.00 189.00 49.43 M 264.74 56.55 M
M M M
Other Uses - Investing -28.00 -290.00 0.00 0.00 -14.62
M M M
Other Sources - Investing 28.00 M 290.00 0.00 0.00 32.58 M
M
Net Cash Flow - Investing 968.00 2.76 B 258.48 161.81 256.98
M M M M
Proceeds from Stock 153.00 252.00 25.57 M 39.38 M 23.13 M
Options M M
Other Proceeds from 0.00 0.00 0.00 0.00 0.00
Sale/Issues of Stock

Com/Pfd Purchase, Retired, 218.00 220.00 28.81 M 55.96 M 14.60 M

Converted, Redeemed M M
Financing Activities
Long Term Borrowings 93.00 M 3.31 B 0.00 3.81 M 0.00

Incline or Decline in Short 0.00 0.00 0.00 0.00 -80.00

Term Borrowings M

Reduction in Long Term 692.00 1.49 B 104.38 364.80 163.95

Debt M M M M
Cash Dividends Paid Total 142.00 113.00 85.78 M 80.22 M 77.04 M
M M
Common Dividends (Cash) 142.00 113.00 85.78 M 80.22 M 77.04 M
M M
Preferred Dividends (Cash) 0.00 0.00 0.00 0.00 0.00

Other Sources - Financing 0.00 0.00 0.00 0.00 0.00

Other Uses - Financing 0.00 -299.00 0.00 0.00 0.00

M
Net Cash Flow - Financing -806.00 1.44 B -193.40 -457.79 -312.45
M M M M
Effect of Exchange rate on — — — — —
Cash
Changes in Cash and/or — — — — —
Liquid Items

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Ratio Analysis for 5 years

• Current Ratio= Current Asset/Current Liabilities

2004: 2.04B/ 1.87B= 1.09: 1

2005: 2.13B/ 1.63B= 1.31: 1

2006: 2.17B/ 1.51B= 1.44: 1

2007: 4.46B/ 4.70B= 0.95: 1

2008: 4.15B/ 4.61B= 0.9: 1

• Quick Ratio= (current assets- inventories)/ current liabilities

2004: (2.04B- 1.08B)/ 1.87B= 0.51: 1

2005: (2.13B- 1.03B)/ 1.63B= 0.67: 1

2006: (2.17B- 954.20M)/ 1.51B= 0.81: 1

2007: (4.46B- 2.75B)/ 4.70B= 0.36: 1

2008: (4.15B- 2.78B)/ 4.61B= 0.297: 1

• Inventory turnover ratio= cost of goods sold/ inventory

2004: 16.99B/ 1.08B= 15.73: 1

2005: 16.38B/ 1.03B= 15.90: 1

2006: 16.67B/ 954.2M= 17.47: 1

2007: 28.39B/ 2.75B= 10.32

2008: 32.91B/ 2.78B= 11.84

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 • DSO(days sales outstanding)= receivables/ (annual sales/360)

2004: .44787B/ (20.21B/ 360) = 7.98 days

2005: .48243B/ (19.54B/ 360) = 8.89 days

2006: .43917B/ (19.86B/ 360) = 7.96 days

2007: 957.00M/ (37.41B/ 360) = 9.21 days

2008: 951.00M/ (44.05B/ 360) = 7.77 days

• Fixed asset turnover ratio= sales/ net fixed asset

2004: 20.21B/6.312B= 3.20: 1

2005: 19.54B/ 6.405B= 3.05: 1

2006: 19.86B/ 5.813B= 3.42: 1

2007: 37.41B/ 456.00M= 82.04

2008: 44.05B/ 473.00M= 93.13

• Total asset turnover ratio= sales/ total assets

2004: 20.21B/ 6.15B= 3.29 times

2005: 19.54B/ 6.28B= 3.11 times

2006: 19.86B/ 6.04B= 3.29 times

2007: 37.41B/ 21.70B= 1.72 times

2008: 44.05B/ 21.06B= 2.09 times

• Debt ratio= total debt/ total asset

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2004: (1.63B+.11172)/ 6.04B= 0.25: 1

2005: (1.58B+.09946)/ 6.28B= 0.27: 1

2006: (1.63B+.30594)/ 6.15B= 0.31: 1

2007: 286.00M/ 21.70B= 0.013: 1

2008: 331.00M/ 21.06B= 0.016: 1

• Times interest earned ratio= EBIT/ (interest charges/interest

exp.)

2004: .62046B/ .16558B= 3.75

2005: .73836B/ .13750B= 5.37

2006: .46808B/ .13893B= 3.37

2007: 1.35B/ 600.00M= 2.25

2008: 1.70B/ 733.00M= 2.32

• Profit margin ratio= net income/ sales

2004: .28014B/ 20.21B= 0.0139= 1.39%

2005: .39261B/ 19.54B= 0.0201= 2.01%

2006: .21324B/ 19.86B= 0.0107= 1.07%

2007: 455.00M/ 37.41B= 0.0121= 1.21%

2008: 594.00M/ 44.05B= 0.0134= 1.34%

• Return on total assets (ROA)= net income/ total assets

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2004: .28014B/ 6.15B= 0.0456= 4.56%

2005: .39216B/ 6.28B= 0.0624= 6.24%

2006: .21324B/ 6.04B= 0.0353= 3.53%

2007: 455.00M/ 21.70B= 0.021= 2.10%

2008: 594.00M/ 21.06B= 0.028= 2.80%

• Return on common equity (ROE)= net income available to

common stock holders/ common equity

2004: .28014B/ 2.21B= 0.01268= 1.26%

2005: .39261B/ 2.51B= 0.1564= 15.6%

2006: .21324B/ 2.62B= 0.0814= 8.14%

2007: 455.00M/ 5.31B= 0.0857= 8.57%

2008: 594.00M/ 5.95B= 0.0998= 9.98%

• Earnings per share (EPS)= net income available to common stock

holders/ no. of common shares outstanding

2004: .28014B/ .13476B= 2.08

2005: .39261B/ .13548B= 2.90

2006: .21324B/ .13644B= 1.56

2007: .45200B/ .20900B= 2.16

2008: .59100B/ .21200B= 2.79

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