Albertsons 2007 Annual Report Download - page 38

C
onsolidated Balance Sheets for these contingent obligations under the Company’s guarantee arrangements. Th
e
C
ompany
b
e
li
eves t
h
e
lik
e
lih
oo
d
t
h
at
i
tw
ill b
e requ
i
re
d
to assume a mater
i
a
l
amount o
f
t
h
ese o
bli
gat
i
ons
i
s
remo
t
e
.
Th
e Company
i
s cont
i
ngent
l
y
li
a
bl
e
f
or
l
eases t
h
at
h
ave
b
een ass
i
gne
d
to var
i
ous t
hi
r
d
part
i
es
i
n connect
i
on w
i
t
h
f
ac
ili
t
y
c
l
os
i
n
g
san
ddi
spos
i
t
i
ons. T
h
e Compan
y
cou
ld b
e requ
i
re
d
to sat
i
s
fy
t
h
eo
blig
at
i
ons un
d
er t
h
e
l
eases
if
a
n
y
of the assi
g
nees are unable to fulfill their lease obli
g
ations. Due to the wide distribution of the Compan
y
’
s
a
ss
i
gnments among t
hi
r
d
part
i
es, an
d
var
i
ous ot
h
er reme
di
es ava
il
a
bl
e, t
h
e Company
b
e
li
eves t
h
e
lik
e
lih
oo
d
t
h
a
t
i
tw
ill b
e requ
i
re
d
to assume a mater
i
a
l
amount o
f
t
h
ese o
bli
gat
i
ons
i
s remote.
T
he Compan
y
is part
y
to a s
y
nthetic leasin
g
pro
g
ram for one of its ma
j
or warehouses. The lease expires in April
2008 and it may be renewed with the lessor’s consent through April 2013, and has a purchase option of
$
60. On
Februar
y
8, 2007, the Compan
y
approved a plan to exit this facilit
y
. As a result of the decision to exit this
f
acilit
y
, the Compan
y
has recorded the difference between the purchase option and the estimated market value o
f
t
h
e property un
d
er
l
y
i
ng t
h
e
l
ease as a res
id
ua
l
va
l
ue guarantee. T
h
e res
id
ua
l
va
l
ue guarantee
i
s
i
nc
l
u
d
e
di
nOt
h
e
r
current assets on the Compan
y
’s Consolidated Balance Sheet as of Februar
y
24, 2007 and will be amortized ove
r
the remainin
g
term of the lease.
T
he Company had
$
412 of outstanding letters of credit as of February 24, 2007, of which
$
347 were issued under
the credit facilit
y
and $65 were issued under separate a
g
reements with financial institutions. These letters of
credit primarily support workers’ compensation, merchandise import programs and payment obligations. The
C
ompany pays fees, which vary by instrument, of up to 1.75 percent on the outstanding balance of the letters o
f
credit
.
Th
e Company
i
s a party to a var
i
ety o
f
contractua
l
agreements un
d
er w
hi
c
h
t
h
e Company may
b
eo
bli
gate
d
to
i
n
d
emn
ify
t
h
eot
h
er part
yf
or certa
i
n matters, w
hi
c
hi
n
d
emn
i
t
i
es ma
yb
e secure
dby
operat
i
on o
fl
aw o
r
o
therwise, in the ordinar
y
course of business. These contracts primaril
y
relate to the Compan
y
’s commercia
l
contracts, operat
i
ng
l
eases an
d
ot
h
er rea
l
estate contracts,
fi
nanc
i
a
l
agreements, agreements to prov
id
e serv
i
ces t
o
t
h
e Compan
y
,an
d
a
g
reements to
i
n
d
emn
ify
o
ffi
cers,
di
rectors an
d
emp
l
o
y
ees
i
nt
h
e per
f
ormance o
f
t
h
e
i
r wor
k.
While the Compan
y
’s a
gg
re
g
ate indemnification obli
g
ation could result in a material liabilit
y
, the Compan
y
is
a
ware o
f
no current matter t
h
at
i
t expects to resu
l
t
i
n a mater
i
a
lli
a
bili
ty
.
T
he Compan
y
is a part
y
to various le
g
al proceedin
g
s arisin
g
from the normal course of business as described in
Part I, Item 3, under the caption “Le
g
al Proceedin
g
s” and in Note 16 – Commitments, Contin
g
encies and
O
ff
-Ba
l
ance S
h
eet Arrangements,
i
nt
h
e Notes to Conso
lid
ate
d
F
i
nanc
i
a
l
Statements, none o
f
w
hi
c
h
,
in
mana
g
ement’s opinion, is expected to have a material adverse impact on the Compan
y
’s financial condition
,
results of o
p
erations or cash flows
.
I
nsurance Contin
g
encies
T
he Compan
y
has outstandin
g
workers’ compensation and
g
eneral liabilit
y
claims with a former insurance
carr
i
er t
h
at
i
s exper
i
enc
i
ng
fi
nanc
i
a
l diffi
cu
l
t
i
es. I
f
t
h
e
i
nsurer
f
a
il
s to pay any covere
d
c
l
a
i
ms t
h
at excee
d
d
e
d
uct
ibl
e
li
m
i
ts, creat
i
n
g
“excess c
l
a
i
ms,” t
h
e Compan
y
ma
yh
ave t
h
ea
bili
t
y
to present t
h
ese excess c
l
a
i
ms to
g
uarantee funds in certain states in which the claims ori
g
inated. In the state where the Compan
y
faces the lar
g
es
t
potent
i
a
l
exposure,
l
eg
i
s
l
at
i
on was enacte
d
t
h
at t
h
e Company
b
e
li
eves
i
ncreases t
h
e
lik
e
lih
oo
d
o
f
state guarante
e
f
un
d
protect
i
on. T
h
e Compan
y
current
ly
cannot est
i
mate t
h
e amount o
f
t
h
e covere
d
c
l
a
i
ms
i
n excess o
f
d
eductible limits which will not be paid b
y
the insurance carrier or otherwise. As of Februar
y
24, 2007, the
i
nsurance carr
i
er cont
i
nues to pay t
h
e Company’s c
l
a
i
ms. Base
d
on
i
n
f
ormat
i
on present
l
y ava
il
a
bl
etot
he
C
ompan
y
, mana
g
ement
d
oes not expect t
h
at t
h
eu
l
t
i
mate reso
l
ut
i
on o
f
t
hi
s matter w
ill h
ave a mater
i
a
l
a
d
verse
effect on the Compan
y
’s financial condition, results of operations or cash flows
.
32