Albertsons 2007 Annual Report Download - page 42

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recognition of the gains or losses, prior service costs or credits, and transition asset or obligation. SFAS No. 1
58
is effective for the Company’s fiscal year ending February 24, 2007. The adoption of SFAS No. 158 and its
effects are described in Note 1
5
—Benefit Plans, in the Notes to Consolidated Financial Statements
.
I
n September 200
6
, the SEC issued Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year
Misstatements when Quantif
y
in
g
Misstatements in Current Year Financial Statements” (“SAB 108”). SAB 108
provides interpretive guidance on how the effects of the carryover or reversal of prior year misstatements shoul
d
b
e cons
id
ere
di
n quant
if
y
i
ng a current year m
i
sstatement. T
h
e SEC sta
ff b
e
li
eves t
h
at reg
i
strants s
h
ou
ld
quant
ify
errors usin
g
both a balance sheet and an income statement approach and evaluate whether either approach result
s
in quantifying a misstatement that, when all relevant quantitative and qualitative factors are considered, i
s
mater
i
a
l
. SAB 108
i
se
ff
ect
i
ve
f
or t
h
e Company’s
fi
sca
l
year en
di
ng Fe
b
ruary 24, 2007 an
d did
not
h
ave a
material effect on the Compan
y
’s consolidated financial statements.
Q
UANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RIS
K
T
he Company is exposed to market pricing risk consisting of interest rate risk related to debt obligation
s
o
utstan
di
ng,
i
ts
i
nvestment
i
n notes rece
i
va
bl
ean
d
,
f
rom t
i
me to t
i
me,
d
er
i
vat
i
ves emp
l
oye
d
to
h
e
d
ge
i
nterest rate
chan
g
es on variable and fixed rate debt. The Compan
y
does not use financial instruments or derivatives for an
y
trading or other speculative purposes
.
T
he Compan
y
mana
g
es interest rate risk throu
g
h the strate
g
ic use of fixed and variable rate debt and, to a limite
d
extent, derivative financial instruments. Variable interest rate debt (bank loans, industrial revenue bonds an
d
o
t
h
er var
i
a
bl
e
i
nterest rate
d
e
b
t)
i
sut
ili
ze
d
to
h
e
l
pma
i
nta
i
n
li
qu
idi
ty an
dfi
nance
b
us
i
ness operat
i
ons. Long-term
d
ebt with fixed interest rates is used to assist in mana
g
in
g
debt maturities and to diversif
y
sources of debt capital.
Th
e Company ma
k
es
l
ong-term
l
oans to certa
i
n Supp
l
yc
h
a
i
n customers an
d
as suc
h
,
h
o
ld
s notes rece
i
va
bl
e
i
n
the normal course of business. The notes
g
enerall
y
bear fixed interest rates ne
g
otiated with each retail customer.
T
he market value of the fixed rate notes is subject to change due to fluctuations in market interest rates
.
3
6