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    Supervalu Sets Post-acquisition Guidance

    MINNEAPOLIS -- Supervalu here expects to increase profits in the coming year, according to preliminary fiscal 2007 earnings guidance reflecting the combined operations of Supervalu and the soon-to-be-acquired Albertsons properties. "The transaction is moving along as planned, and we fully expect to close this transforming acquisition in early June," Supervalu chairman and c.e.o. Jeff Noddle said during a conference call yesterday.

    MINNEAPOLIS -- Supervalu here expects to increase profits in the coming year, according to preliminary fiscal 2007 earnings guidance reflecting the combined operations of Supervalu and the soon-to-be-acquired Albertsons properties. "The transaction is moving along as planned, and we fully expect to close this transforming acquisition in early June," Supervalu chairman and c.e.o. Jeff Noddle said during a conference call yesterday.

    The acquisition is expected to close at that time, pending successful shareholder votes by both Albertsons and Supervalu shareholders, who will convene at special shareholder meetings May 30.

    Noddle said that the deal would increase profits by a double-digit percentage once it closes. "Our estimated one-time transaction costs remain at approximately $145 million pretax, heavily weighted to the first two years, and I remain confident we can deliver the $150 million to $175 million in pretax synergies by the end of the third year," he said.

    Fiscal 2007 sales are estimated to be in a range of approximately $37.4 billion to $38 billion, while earnings per share are estimated to be in a range of $2.17 to $2.44 following the Albertsons acquisition.

    Fiscal 2007, which began Feb. 26, 2006, will include the results of the acquired properties as of the acquisition date. Assuming the close of the acquisition in early June and the need to align the fiscal calendars of the two companies, the first quarter of fiscal 2007, which ends June 17, won't include any operating results from the acquired operations. However, first-quarter results will include incurred one-time transaction costs, and for the time period from the date of the acquisition through the quarter end will include interest expense on the approximately $2.3 billion of the new credit facility, as well as the impact of shares issued to effect the acquisition.

    Supervalu's fiscal 2007 guidance also includes estimates of pretax one-time transaction costs of approximately $99 million to $116 million, or 30 cents to 35 cents per diluted share, and the adoption of a related stock option expense of six cents to eight cents per diluted share. Excluding the impact of one-time transaction costs and the adoption of the stock option expense, the estimated fiscal 2007 earnings guidance range is $2.60 to $2.80 per diluted share.

    In addition, fiscal 2007 guidance also includes a charge of about three cents per diluted share related to the final disposals of the Pittsburgh corporate-owned stores.

    Noddle said that Supervalu would keep its headquarters in Minneapolis while maintaining an "important presence in Boise, recognizing the considerable talent base" in Albertsons' former headquarters location. "Fiscal 2007 is a transformational year, where we will begin to see strength in the new Supervalu as our model reflects the power of our new retail organization and the benefit of a more profitable retail business mix," he noted. "We anticipate a successful close of this acquisition...and the beginning of an exciting chapter for Supervalu. The newly named executive leadership is already engaged in the planning process across the company to ensure a great start. We look forward to sharing our progress as we move through the year."

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