Albertsons 2004 Annual Report Download - page 32

and have been incorporated in the accompanying Notes to Consolidated Financial Statements. Additional
disclosures about expected future benefit payments are required for fiscal years ending after June 15, 2004 and
will be incorporated in the company’s fiscal 2005 consolidated financial statements.
In January 2004, the FASB issued SFAS No. 106-1, “Accounting and Disclosure Requirements Related to
the Medicare Prescription Drug, Improvement and Modernization Act of 2003.” This statement permits a sponsor
to make a one-time election to defer accounting for the effects of the Medicare Prescription Drug, Improvement
and Modernization Act of 2003, or the Prescription Drug Act. The Prescription Drug Act, signed into law in
December 2003, establishes a prescription drug benefit under Medicare (Medicare Part D) and a federal subsidy
to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to
Medicare Part D. SFAS No. 106-1 does not provide specific guidance as to whether a sponsor should recognize
the effects of the Prescription Drug Act in its financial statements. The Prescription Drug Act introduces two new
features to Medicare that must be considered when measuring accumulated postretirement benefit costs. The new
features include a subsidy to the plan sponsors that is based on 28% of an individual beneficiary’s annual
prescription drug costs between $250 and $5,000 and an opportunity for a retiree to obtain a prescription drug
benefit under Medicare. The Prescription Drug Act is not expected to reduce the company’s net postretirement
benefit costs. The company has elected to defer adoption of SFAS No. 106-1 due to the lack of specific guidance.
Therefore, the net postretirement benefit costs disclosed in the company’s financial statements do not reflect the
impacts of the Prescription Drug Act on the plans. The deferral will continue to apply until specific authoritative
accounting guidance for the federal subsidy is issued. Authoritative guidance on the accounting for the federal
subsidy is pending and, when issued, could require information previously reported in the company’s financial
statements to change. The company is currently investigating the impacts of SFAS 106-1’s initial recognition,
measurement and disclosure provisions on its consolidated financial statements.
Emerging Issues Task Force (EITF) Issue No. 00-21, “Accounting for Revenue Arrangements with Multiple
Deliverables”, addresses certain aspects of the accounting by a vendor for arrangements under which it will
perform multiple revenue-generating activities. EITF Issue No. 00-21 establishes three principles: revenue
arrangements with multiple deliverables should be divided into separate units of accounting; arrangement
consideration should be allocated among the separate units of accounting based on their relative fair values; and
revenue recognition criteria should be considered separately for separate units of accounting. EITF Issue No.
00-21 was effective for all revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The
adoption of EITF Issue No. 00-21 did not have an impact on the company’s consolidated financial statements.
EITF Issue No. 01-8, “Determining Whether an Arrangement Contains a Lease”, determines whether an
arrangement conveying the right to use property, plant and equipment meets the definition of a lease within the
scope of SFAS 13, “Accounting for Leases”. EITF Issue No. 01-8 was effective the first interim period beginning
after May 28, 2003. The adoption of EITF Issue No. 01-8 did not have an impact on the company’s consolidated
financial statements.
EITF Issue No. 03-1, “The Meaning of Other-Than Temporary Impairment and Its Application to Certain
Investments”, addresses both qualitative and quantitative disclosures. These disclosures are required for
marketable equity and debt securities accounted for under FASB Statements No. 115, “Accounting for Certain
Investments in Debt and Equity Securities”. The disclosure requirements were effective for fiscal years ending
after December 15, 2003. The adoption of EITF Issue No. 03-1 did not have an impact on the company’s
consolidated financial statements.
EITF Issue No. 03-10, “Application of EITF 02-16, ‘Accounting by a Customer (Including a Reseller) for
Certain Consideration Received from a Vendor,’ by Resellers to Sales Incentives Offered to Consumers by
Manufacturers”, requires that when specified criteria are met, a retailer accepting manufacturers’ coupons should
reflect the value of the coupon as revenue and not as a reduction in cost of sales. EITF Issue No. 03-10 was
effective for the first interim period beginning after November 25, 2003. The adoption of EITF Issue No. 03-10
did not have an impact on the company’s consolidated financial statements.
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