Albertsons 2003 Annual Report Download - page 51

SUPERVALU INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Recently Issued Accounting Standards
In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations”, which
addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The company plans to adopt the provisions of SFAS No. 143 in
the first quarter of fiscal 2004. The company does not expect the adoption of SFAS No. 143 to have a material
impact on its consolidated financial statements.
In April 2002, the FASB issued SFAS No. 145, “Recission of FASB Statements No. 4, 44 and 64,
Amendment of FASB Statement No. 13, and Technical Corrections”. SFAS No. 145 allows only those gains and
losses on the extinguishment of debt that meet the criteria of extraordinary items to be treated as such in the
financial statements. SFAS No. 145 also requires sales-leaseback accounting for certain lease modifications that
have economic effects that are similar to sales-leaseback transactions. Certain provisions of SFAS No. 145 are
effective for transactions occurring after May 15, 2002, while the remaining provisions will be effective for the
company in the first quarter of fiscal 2004. The company does not expect the adoption of SFAS No. 145 to have
a material impact on its consolidated financial statements.
In January 2003, the FASB issued FIN No. 46, “Consolidation of Variable Interest Entities”. FIN No. 46
states that companies that have exposure to the economic risks and potential rewards from another entity’s assets
and activities have a controlling financial interest in a variable interest entity and should consolidate the entity,
despite the absence of clear control through a voting equity interest. The consolidation requirements apply to all
variable interest entities created after January 31, 2003. For variable interest entities that existed prior to
February 1, 2003, the consolidation requirements are effective for annual or interim periods beginning after
June 15, 2003. Disclosure of significant variable interest entities is required in all financial statements issued
after January 31, 2003, regardless of when the variable interest was created. The company does not expect the
adoption of FIN No. 46 to have a material impact on its consolidated financial statements.
RESTRUCTURE AND OTHER CHARGES
In the fourth quarter of fiscal 2003, the company recognized pre-tax restructure and other charges of
$2.9 million reflected in the “Restructure and other charges” line in the Consolidated Statements of Earnings
primarily due to continued softening of real estate in certain markets. The charges represent the net adjustment
for changes in estimates related to prior years’ restructure reserves and asset impairment charges, including a
decrease of $3.6 million to restructure 2002, a net increase of $8.1 million to restructure 2001 and a net decrease
of $1.6 million to restructure 2000.
Restructure 2002
In the fourth quarter of fiscal 2002, the company identified additional efforts that would allow it to extend
its distribution efficiency program that began early in fiscal 2001. The additional distribution efficiency
initiatives identified resulted in pre-tax restructure charges of $16.3 million, primarily related to personnel
reductions in administrative and transportation functions. Management began the initiatives in fiscal 2003 and
the majority of these actions were completed by the end of fiscal 2003.
In the fourth quarter of fiscal 2003, the fiscal 2002 restructure charges were decreased by $3.6 million,
including a decrease of $1.4 million due to lower than anticipated lease related costs in transportation efficiency
initiatives and a decrease of $2.2 million in employee related costs due to lower than anticipated severance costs.
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