Albertsons 2007 Annual Report Download - page 83

SU
PERVAL
U
IN
C
. and
S
ubsidiaries
N
OTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
D
erivative
s
T
he Company accounts for derivatives pursuant to SFAS No. 133, “Accounting for Derivatives and Hedging
Act
i
v
i
t
i
es,” an
d
SFAS No. 138, “Account
i
ng
f
or Certa
i
n Der
i
vat
i
ve Instruments an
d
Certa
i
nHe
d
g
i
ng Act
i
v
i
ty
,
a
n Amendment of SFAS No. 133.” SFAS No. 133 and SFAS No. 138 re
q
uire that all derivative financia
l
instruments are recorded on the balance sheet at their res
p
ective fair value.
T
he Compan
y
has limited involvement with derivatives, primaril
y
interest rate swap a
g
reements, and uses them
o
n
l
y to manage we
ll
-
d
e
fi
ne
di
nterest rate r
i
s
k
s. T
h
e Company
d
oes not use
fi
nanc
i
a
li
nstruments or
d
er
i
vat
i
ve
s
f
or an
y
tra
di
n
g
or ot
h
er specu
l
at
i
ve purposes. See Note 19 – Su
b
sequent Events
.
S
tock-based Com
p
ensatio
n
Th
e Company’s stoc
kb
ase
d
compensat
i
on p
l
ans a
l
ong w
i
t
h
t
h
ea
d
opt
i
on o
f
SFAS No. 123(R), “S
h
are Base
d
Pa
y
ment” (“SFAS No. 123(R)”), and its effects are described more full
y
in Note 12—Stock-Based
C
ompensation. Effective February 26, 2006, the Company adopted the provisions of SFAS No. 123(R) using th
e
mo
difi
e
d
-prospect
i
ve trans
i
t
i
on met
h
o
d
.Un
d
er t
hi
s trans
i
t
i
on met
h
o
d
, compensat
i
on expense recogn
i
ze
dd
ur
i
ng
the
y
ear ended Februar
y
24, 2007 included: (1) compensation expense for all stock-based awards
g
ranted prio
r
to, but not yet vested as of February 2
5
, 2006 based on the grant date fair value estimated in accordance with the
o
r
i
g
i
na
l
prov
i
s
i
ons o
f
SFAS No. 123 an
d
(2) compensat
i
on expense
f
or a
ll
stoc
k
-
b
ase
d
awar
d
s grante
d
on or a
f
ter
F
ebruar
y
2
6
, 200
6
, based on the
g
rant date fair value estimated in accordance with the provisions of SFA
S
N
o. 123(R). The Company used the straight-line method to recognize the expense related to the option plan prio
r
to an
d
su
b
sequent to t
h
ea
d
opt
i
on o
f
SFAS No. 123(R). As stoc
k
-
b
ase
d
compensat
i
on expense recogn
i
ze
di
nt
he
C
onsolidated Statement of Earnin
g
s for the
y
ear ended Februar
y
24, 2007 is based on awards ultimatel
y
expected
to vest, it has been reduced for estimated forfeitures. The effect of adopting SFAS No. 123(R) was an additiona
l
a
fter tax expense of
$
15 (
$
0.08 per basic and diluted share) recognized in the Consolidated Statement of Earning
s
f
or the
5
2 weeks ended Februar
y
24, 2007. Prior to the adoption of SFAS No. 123(R), the Compan
y
utilized the
intrinsic value based method, per Accounting Principles Board (APB) Opinion No. 2
5
, “Accounting for Stock
I
ssue
d
to Emp
l
oyees.
”
I
ncome
T
axe
s
Th
e Company prov
id
es
f
or
d
e
f
erre
di
ncome taxes
d
ur
i
ng t
h
e year
i
n accor
d
ance w
i
t
h
SFAS No. 109,
“Account
i
ng
f
or Income Taxes.” De
f
erre
di
ncome taxes represent
f
uture net tax e
ff
ects resu
l
t
i
ng
f
rom temporar
y
d
ifferences between the financial statement and tax basis of assets and liabilities usin
g
enacted tax rates in effec
t
f
or t
h
e year
i
nw
hi
c
h
t
h
e
diff
erences are expecte
d
to
b
e sett
l
e
d
or rea
li
ze
d
.T
h
ema
j
or temporary
diff
erences an
d
t
h
e
i
r net e
ff
ect are
i
nc
l
u
d
e
di
n Note 11—Income Taxes
.
Net Earnin
g
s Per Share (EPS
)
B
as
i
c EPS
i
sca
l
cu
l
ate
d
us
i
ng net earn
i
ngs ava
il
a
bl
e to common s
h
are
h
o
ld
ers
di
v
id
e
db
yt
h
ewe
i
g
h
te
d
average
num
b
er o
f
common s
h
ares outstan
di
n
gd
ur
i
n
g
t
h
e per
i
o
d
.D
il
ute
d
EPS
i
ss
i
m
il
ar to
b
as
i
c EPS except t
h
at t
he
w
ei
g
hted avera
g
e number of common shares outstandin
g
is after
g
ivin
g
affect to the dilutive impacts of stoc
k
o
pt
i
ons, restr
i
cte
d
stoc
k
awar
d
san
d
outstan
di
ng convert
ibl
e secur
i
t
i
es. In a
ddi
t
i
on,
f
or t
h
eca
l
cu
l
at
i
on o
f dil
ute
d
earn
i
n
g
s per s
h
are, net earn
i
n
g
s
i
sa
dj
uste
d
to e
li
m
i
nate t
h
ea
f
ter tax
i
nterest expense reco
g
n
i
ze
dd
ur
i
n
g
t
h
e
period related to contin
g
entl
y
convertible debentures. Effective on Au
g
ust 31, 2006, in con
j
unction with th
e
C
ompany’s announcement o
fi
ts
i
ntent to use cas
h
to repurc
h
ase t
h
e cont
i
ngent
l
y convert
ibl
e
d
e
b
entures, t
he
d
e
b
entures were no
l
on
g
er cons
id
ere
d dil
ut
i
ve
f
or t
h
eca
l
cu
l
at
i
on o
f dil
ute
d
earn
i
n
g
s per s
h
are.
F-
17