Albertsons 2002 Annual Report Download - page 28

Details of the fiscal 2001 restructure balances for fiscal 2002 follow:
Balance Fiscal 2002 Fiscal 2002 Balance
(In thousands, except for employees) February 24, 2001 Usage Adjustment February 23, 2002
Consolidation of distribution centers $41,499 $14,134 $ (1,303) $ 26,062
Exit of non-core retail markets 33,735 26,829 15,235 22,141
Disposal of non-core assets and other administrative reductions 16,619 12,782 3,911 7,748
Total restructure and other charges $91,853 $53,745 $17,843 $ 55,951
Employees 4,500 3,200 (550) 750
The reserve at the end of fiscal 2002 for fiscal 2001 restructure charges was $56.0 million, including $50.0 million for lease subsidies, lease terminations
and future payments on exited leased facilities and $6.0 million for employee related costs.
In fiscal 2000, the Company recorded pre-tax restructure and other charges of $103.6 million as a result of an extensive review to reduce costs and
enhance efficiencies. The restructure charges included costs for facility consolidation, non-core store disposal, and rationalization of redundant and certain
decentralized administrative functions. The original amount was reduced by $10.3 million in fiscal 2001, primarily for a change in estimate for the closure of a
remaining facility. The amount was subsequently increased $12.2 million in fiscal 2002, primarily due to the softening real estate market.
Details of the fiscal 2000 restructure balances for fiscal 2002 follow:
Balance Fiscal 2002 Fiscal 2002 Balance
(In thousands, except for employees) February 24, 2001 Usage Adjustment February 23, 2002
Facility consolidation $11,472 $ 8,481 $10,247 $13,238
Non-core store disposal 4,404 2,754 2,961 4,611
Infrastructure realignment 1,980 854 (984) 142
Total restructure and other charges $17,856 $12,089 $12,224 $17,991
Employees 463 463 ——
The reserve at the end of fiscal 2002 for fiscal 2000 restructure charges was $18.0 million, including $14.9 million for future payments on exited leased
facilities and $3.1 million for unpaid employee benefits.
Restructure and Other Charges
In the fourth quarter of fiscal 2002, the Company identified additional efforts
that will allow it to extend its distribution efficiency program begun early in
fiscal 2001 and adjusted prior years’ restructure reserves for changes in
estimates primarily related to real estate as a result of a softening real estate
market. The additional distribution efficiency initiatives identified in fiscal
2002 primarily relate to personnel reductions in transportation and adminis-
trative functions. The total pre-tax restructure charges were $46.3 million,
of which $16.3 million is related to additional efficiency efforts, $17.8 million
is related to changes in estimates for the fiscal 2001 restructure reserve and
$12.2 million is related to changes in estimates for the fiscal 2000 restruc-
ture reserve.
Included in the $16.3 million of restructure charges for fiscal 2002 is
$13.1 million related to severance and employee related costs and $3.2
million related to lease cancellation fees. These actions include a net
approximately 800 employees throughout the organization. Management
will begin the initiatives in fiscal 2003 and expects the majority of these
actions to be completed by the end of fiscal 2003.
In the fourth quarter of fiscal 2001, the Company recorded pre-tax
restructure charges of $171.3 million including $89.7 million for asset
impairment charges, $52.1 million for lease subsidies, lease cancellation
fees, future payments on exited leased facilities and guarantee obligations
and $39.8 million for severance and employee related costs, offset by a
reduction in the fiscal 2000 restructure reserve of $10.3 million for lease
subsidies and future payments on exited leased facilities. As a result of
changes in estimates in fiscal 2002, the fiscal 2001 charges were increased
by $17.8 million, including $19.1 million for increased lease liabilities in
exiting the non-core retail markets and the disposal of non-core assets,
offset by a net decrease of $1.3 million in restructure reserves for the
consolidation of distribution centers.
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