Albertsons 2005 Annual Report Download - page 66

SUPERVALU INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
GOODWILL AND OTHER ACQUIRED INTANGIBLE ASSETS
On February 7, 2005, the company acquired Total Logistics, a national provider of third party logistics
services for approximately $234 million comprised of $164 million of cash and $70 million of assumed debt. As
part of the Total Logistics acquisition, the company acquired Zero Zone, a refrigeration case and system
manufacturer, which will be divested in fiscal 2006 as it is non-core to the company’s food retail and supply
chain businesses. The results of Total Logistics for the period subsequent to the acquisition are immaterial to the
fiscal 2005 consolidated financial statements. The purchase price allocation resulted in approximately $14.7
million of intangible assets related to trademarks, tradenames and customer relationships and approximately
$116.6 million of goodwill. The allocation of the acquisition cost was based on a preliminary independent
appraisal of fair values. The final appraised values may differ from the amounts presented. Final valuation related
adjustments will be reflected in fiscal 2006.
In fiscal 2004, the company completed an asset exchange with C&S Wholesale Grocers, Inc. (C&S)
whereby the company acquired certain former Fleming Companies’ distribution operations in the Midwest from
C&S in exchange for the company’s New England operations (Asset Exchange). The Asset Exchange resulted in
the addition of approximately $58.6 million of intangible assets related to customer relationships and trademarks.
The Asset Exchange was based on fair value and the valuation was finalized in fiscal 2005. The assets exchanged
were part of the food distribution segment.
At February 26, 2005 and at February 28, 2004, the company had approximately $0.8 billion of goodwill
related to retail food and 0.8 billion related to food distribution.
A summary of changes in the company’s goodwill and other acquired intangible assets during fiscal 2004
and fiscal 2005 follows:
February 22,
2003
Amorti-
zation Additions
Other net
adjustments
February 28,
2004
Amorti-
zation Additions
Other net
adjustments
February 26,
2005
(in thousands)
Goodwill $1,576,584 $ — $(19,527) $1,557,057 $116,606 $(45,816) $1,627,847
Other acquired intangible assets:
Trademarks and tradenames — 15,269 — 15,269 8,042 (1,057) 22,254
Leasehold Rights, Customer
lists and other
(accumulated amortization
of $20,573 and $17,836, at
February 26, 2005 and
February 28, 2004,
respectively) 49,663 — (294) 49,369 510 (594) 49,285
Customer relationships
(accumulated amortization
of $2,492 and $495 at
February 26, 2005 and
February 28, 2004,
respectively) — 43,361 — 43,361 6,700 (2,992) 47,069
Non-compete agreements
(accumulated amortization
of $4,329 and $3,959 at
February 26, 2005 and
February 28, 2004) 8,506 502 (1,789) 7,219 1,625 (550) 8,294
Total other acquired intangible
assets 58,169 59,132 (2,083) 115,218 16,877 (5,193) 126,902
Accumulated amortization (19,772) $(4,541) — 2,023 (22,290) $(6,166) — 1,062 (27,394)
Total goodwill and other acquired
intangible assets, net $1,614,981 $(4,541) $59,132 $(19,587) $1,649,985 $(6,166) $133,483 $(49,947) $1,727,355
Fiscal 2005 additions primarily reflect the acquisition of Total Logistics and Fiscal 2004 additions primarily
reflect the Asset Exchange. Fiscal 2005 other net adjustments of $49.9 million primarily reflect purchase
accounting adjustments between deferred taxes and goodwill relating to former acquisitions of $45.8 million and
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