Albertsons 2006 Annual Report Download - page 62

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SUPERVALU INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
company sponsored pension and other post retirement benefits is dependent, in part, on management’s selection
of certain assumptions used by actuaries in calculating such amounts. These assumptions are described in the
Benefit Plans note in the Notes to Consolidated Financial Statements and include, among other things, the
discount rate, the expected long-term rate of return on plan assets, and the rates of increases in compensation and
healthcare costs.
Derivatives:
The company accounts for derivatives pursuant to SFAS No. 133, “Accounting for Derivatives and Hedging
Activities”, and SFAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activity,
an Amendment of SFAS No. 133”. SFAS No. 133 and No. 138 require that all derivative financial instruments
are recorded on the balance sheet at their respective fair value.
The company has limited involvement with derivatives, primarily interest rate swap agreements, and uses
them only to manage well-defined interest rate risks. The company does not use financial instruments or
derivatives for any trading or other speculative purposes.
Stock-based Compensation:
The company has stock based employee compensation plans, which are described more fully in the Stock
Option Plans note in the Notes to Consolidated Financial Statements. The company utilizes the intrinsic value-
based method, per Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to
Employees,” for measuring the cost of compensation paid in company common stock. This method defines the
company’s cost as the excess of the stock’s market value at the time of the grant over the amount that the
employee is required to pay. In accordance with APB Opinion No. 25, no compensation expense was recognized
for options issued under the stock option plans in fiscal 2006, 2005 or 2004 as the exercise price of all options
granted was not less than 100 percent of fair market value of the common stock on the date of grant.
F-17