Albertsons 2007 Annual Report Download - page 33

the Acquired Operations. The impact to the Company’s liability of each 2
5
basis point reduction in the discount
rate would be to increase the Company’s liability by approximately
$
6
.
Benefit Plan
s
T
he Compan
y
sponsors pension and other postretirement plans in various forms coverin
g
substantiall
y
al
l
employees who meet eligibility requirements. The determination of the Company’s obligation and related
expense
f
or Company-sponsore
d
pens
i
on an
d
ot
h
er postret
i
rement
b
ene
fi
ts
i
s
d
epen
d
ent,
i
n part, o
n
mana
g
ement’s selection of certain assumptions used b
y
its actuaries in calculatin
g
these amounts. These
a
ssumptions include, among other things, the discount rate, the expected long-term rate of return on plan asset
s
a
n
d
t
h
e rates o
fi
ncrease
i
n compensat
i
on an
dh
ea
l
t
h
care costs. In accor
d
ance w
i
t
h
genera
ll
y accepte
d
account
i
n
g
principles, actual results that differ from the Compan
y
’s assumptions are accumulated and amortized over future
periods and, therefore, affect expense and obligation in future periods. While the Company believes that its
a
ssumpt
i
ons are appropr
i
ate, s
i
gn
ifi
cant
diff
erences
i
n actua
l
exper
i
ence or s
i
gn
ifi
cant c
h
anges
i
n assumpt
i
on
s
ma
y
materiall
y
impact non-union pension and other postretirement obli
g
ations and future expenses
.
For fiscal 2008, the impact to pension expense of each 25 basis point reduction in the discount rate would be t
o
increase pension expense b
y
approximatel
y
$6 and the impact of each 25 basis point reduction in expected return
o
n plan assets would be to increase pension expense by approximately
$
4. Similarly, for postretirement benefits,
a
one percent c
h
ange
i
nt
h
e
h
ea
l
t
h
care cost tren
d
rate wou
ld i
mpact t
h
e accumu
l
ate
d
postret
i
rement
b
ene
fi
t
o
bli
g
ation b
y
approximatel
y
$11 and the service and interest cost b
y
$1 in fiscal 2008. The actuarial assumptions
u
sed by the Company may differ materially from actual results due to changing market and economic conditions,
hi
g
h
er or
l
ower w
i
t
hd
rawa
l
rates, an
dl
onger or s
h
orter
lif
e spans o
f
part
i
c
i
pants
.
Goodwill and Intan
g
ible Assets
Goodwill was $5,921 as of Februar
y
24, 2007, reflectin
g
an increase of approximatel
y
$4,307 in fiscal 2007 from
$
1,614 as of February 25, 2006. This increase was primarily due to
$
4,333 of goodwill recognized as a result of
t
h
e Acqu
i
s
i
t
i
on. Goo
d
w
ill
an
di
ntang
ibl
e asset
b
a
l
ances re
l
ate
d
to t
h
e Acqu
i
s
i
t
i
on w
ill b
ea
dj
uste
d
t
h
roug
h
t
h
e
f
irst
q
uarter of fiscal 2008 in accordance with SFAS No. 141, “Business Combinations.” For further information
,
see Note 3 – Business Ac
q
uisition, in the Notes to Consolidated Financial Statements. In fiscal 2007, th
e
C
ompany recorded a pre-tax goodwill impairment charge of
$
19 related to the plan to dispose of Scott’s. Th
e
d
ecrease in
g
oodwill from $1,628 as of Februar
y
25, 2005 to $1,614 as of Februar
y
26, 2006 resulted primaril
y
f
rom purchase accounting adjustments of
$
29 between deferred income taxes and goodwill related to forme
r
a
cquisitions and reductions of goodwill of
$
11 primarily related to the disposition of Pittsburgh and Chicag
o
stores, which were partiall
y
offset b
y
purchase accountin
g
ad
j
ustments to increase
g
oodwill b
y
$20 for the
f
inalization of the valuation in fiscal 2006 related to the acquisition of Total Logistics in fiscal 200
5
. For
addi
t
i
ona
li
n
f
ormat
i
on, see Note 7 – Goo
d
w
ill
an
d
Ot
h
er Acqu
i
re
d
Intang
ibl
e Assets,
i
nt
h
e Notes to
C
onsolidated Financial Statements.
I
ncome
T
axes
We calculate our current and deferred tax
p
rovisions based on estimates and assum
p
tions that could differ from
t
h
e actua
l
resu
l
ts re
fl
ecte
di
n our
i
ncome tax returns
fil
e
dd
ur
i
ng t
h
esu
b
sequent year. We recor
d
a
dj
ustment
s
based on filed returns when we have identified and finalized them, which is
g
enerall
y
in a subsequent period. In
conjunction with the Acquisition, the Company has and will continue to record the deferred tax impacts o
f
purc
h
ase account
i
ng a
dj
ustments
i
nc
l
u
di
ng t
h
eu
l
t
i
mate reso
l
ut
i
on o
f
acqu
i
s
i
t
i
on tax cont
i
ngenc
i
es an
d
any
chan
g
es to the respective valuation allowance
.
We recogn
i
ze
d
e
f
erre
d
tax assets an
dli
a
bili
t
i
es
f
or t
h
e expecte
d
tax consequences o
f
temporary
diff
erences
between the tax bases of assets and liabilities and their reported amounts usin
g
enacted tax rates in effect for the
year in which we expect the differences to reverse.
I
n addition, the calculation of our tax liabilities involves dealin
g
with uncertainties in the application of complex
tax regulations that can often take many years to resolve. We recognize liabilities for anticipated tax issues based
2
7