Albertsons 2007 Annual Report Download - page 79

SU
PERVAL
U
IN
C
. and
S
ubsidiaries
N
OTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
R
evenues and costs from third part
y
lo
g
istic operations are recorded in accordance with EITF Issue No. 99-19
,
“Reporting Revenue Gross as a Principal Versus Net as an Agent.” Generally, when the Company is the primary
obli
gor
i
n a transact
i
on,
i
ssu
bj
ect to
i
nventory an
d
/or cre
di
tr
i
s
k
,
h
as
l
at
i
tu
d
e
i
n esta
bli
s
hi
ng pr
i
ce an
d
se
l
ect
i
n
g
suppliers, or has several, but not all of these indicators, revenue is recorded
g
ross. If the Compan
y
is not th
e
primary obligor and amounts earned have little or no credit risk, the Company generally records the net amount
s
a
s management
f
ees earne
d.
C
ost o
f
Sales
C
ost o
f
sa
l
es
i
nc
l
u
d
es cost o
fi
nventory so
ld d
ur
i
ng t
h
e per
i
o
d
,
i
nc
l
u
di
ng purc
h
as
i
ng an
ddi
str
ib
ut
i
on costs an
d
s
hi
pp
i
n
g
an
dh
an
dli
n
gf
ees
.
A
d
vert
i
s
i
ng expenses are a component o
f
Cost o
f
sa
l
es
i
nt
h
e Conso
lid
ate
d
Statements o
f
Earn
i
ngs an
d
ar
e
expensed as incurred. Advertisin
g
expenses were $301, $79 and $81 for fiscal 2007, 2006 and 2005, respectivel
y.
Th
e Compan
y
rece
i
ves
f
un
d
s
f
rom man
y
o
f
t
h
e ven
d
ors w
h
ose pro
d
ucts t
h
e Compan
yb
u
y
s
f
or resa
l
e
i
n
i
ts
stores. These vendor funds are provided to increase the sell-throu
g
h of the related products. The Compan
y
rece
i
ves ven
d
or
f
un
d
s
f
or a var
i
ety o
f
merc
h
an
di
s
i
ng act
i
v
i
t
i
es,
i
nc
l
u
di
ng: p
l
acement o
f
t
h
e ven
d
ors’ pro
d
ucts
in
the Compan
y
’s advertisin
g
; displa
y
of the vendors’ products in prominent locations in the Compan
y
’s stores
;
introduction of new products into the Compan
y
’s distribution s
y
stem and retail stores; exclusivit
y
ri
g
hts in
certa
i
n categor
i
es t
h
at
h
ave s
l
ower-turn
i
ng pro
d
ucts; an
d
to compensate
f
or temporary pr
i
ce re
d
uct
i
ons o
ff
ere
d
t
o
customers on products held for sale at retail stores. The Compan
y
also receives vendor funds for bu
y
in
g
activities
such as volume commitment rebates, credits for purchasin
g
products in advance of their need and cash discount
s
f
or t
h
e ear
l
y payment o
f
merc
h
an
di
se purc
h
ases. As o
f
Fe
b
ruary 24, 2007, t
h
e terms o
f
t
h
e Company’s ven
d
or
f
unds arran
g
ements varied in len
g
th from primaril
y
short-term arran
g
ements that are to be completed within a
quarter to lon
g
-term arran
g
ements that are primaril
y
expected to be completed within three
y
ears.
T
he Compan
y
reco
g
nizes vendor funds for merchandisin
g
activities as a reduction of Cost of sales when th
e
related products are sold in accordance with EITF Issue 02-16, “Accounting by a Customer (Including a Reseller
)
f
or
C
erta
i
n
C
ons
id
erat
i
on Rece
iv
e
df
rom a Ven
d
or.
”
C
as
h
an
d
Cas
h
Equiva
l
ent
s
Th
e Company cons
id
ers a
ll hi
g
hl
y
li
qu
id i
nvestments w
i
t
h
a matur
i
ty o
f
t
h
ree mont
h
sor
l
ess at t
h
et
i
me o
f
purc
h
ase to
b
e cas
h
equ
i
va
l
ents. T
h
e Compan
y
’s
b
an
ki
n
g
arran
g
ements a
ll
ow t
h
e Compan
y
to
f
un
d
outstan
di
n
g
checks when presented to the financial institution for pa
y
ment. This cash mana
g
ement practice frequentl
y
results
i
n a net cas
hb
oo
k
over
d
ra
f
t pos
i
t
i
on, w
hi
c
h
occurs w
h
en tota
l
outstan
di
ng
i
ssue
d
c
h
ec
k
s excee
d
ava
il
a
bl
e cas
h
b
alances at a sin
g
le financial institution. The Compan
y
records its cash disbursement accounts with a net cash
b
ook overdraft position in Accounts pa
y
able in the Consolidated Balance Sheets, and the net chan
g
e in cash boo
k
o
ver
d
ra
f
ts
i
nt
h
e Accounts paya
bl
e
li
ne
i
tem w
i
t
hi
nt
h
e Cas
hfl
ows
f
rom operat
i
ng act
i
v
i
t
i
es sect
i
on o
f
t
he
C
onsolidated Statements of Cash Flows. At Februar
y
24, 2007 and Februar
y
25, 2006, the Compan
y
had net
b
ook overdrafts of $416 and $198, respectivel
y
.
A
llowances for Losses on Receivables
M
ana
g
ement makes estimates of the uncollectibilit
y
of its accounts and notes receivable portfolios. In
d
etermining the adequacy of the allowances, management analyzes the value of the collateral, customer financial
statements,
hi
stor
i
ca
l
co
ll
ect
i
on exper
i
ence, ag
i
ng o
f
rece
i
va
bl
es an
d
ot
h
er econom
i
can
di
n
d
ustry
f
actors.
Althou
g
h risk mana
g
ement practices and methodolo
g
ies are utilized to determine the adequac
y
of the allowance
,
F-
13