Albertsons 2008 Annual Report Download - page 27

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The Company’s Plan
The Company believes it can be successful against this industry backdrop with its retail formats that focus on
local execution, merchandising and consumer knowledge. In addition, the Company’s operations will benefit
from its efficient and low-cost supply chain and new economies of scale as it leverages its Retail food and
Supply chain services businesses. The Company plans to expand retail square footage through targeted new store
development, remodel activities, licensee growth and acquisitions.
The Company is implementing its integration plan that commenced on the Acquisition Date, including initiatives
to leverage scale and reduce costs in the Company’s Retail food and Supply chain services businesses to enhance
the overall performance of the newly combined company, which it expects to substantially complete within a
three-year time frame. In addition, the Company has a long term goal for 80 percent of its store fleet to be new or
newly remodeled within the last seven years. During fiscal 2008, the Company opened 27 new combination and
food stores and completed approximately 141 major store remodels, which aligns the Company with making
progress towards this goal.
RESULTS OF OPERATIONS
Highlights of results of operations as reported and as a percent of Net sales are as follows:
February 23,
2008
(52 weeks)
February 24,
2007
(52 weeks)
February 25,
2006
(52 weeks)
(In millions, except per share data)
Net sales $44,048 100.0% $37,406 100.0% $19,864 100.0%
Cost of sales 33,943 77.1 29,267 78.2 16,977 85.5
Selling and administrative expenses 8,421 19.1 6,834 18.3 2,452 12.3
Operating earnings $ 1,684 3.8 $ 1,305 3.5 $ 435 2.2
Interest expense 725 1.6 600 1.6 139 0.7
Interest income 18 0.0 42 0.1 33 0.2
Earnings before income taxes $ 977 2.2 $ 747 2.0 $ 329 1.7
Provision for income taxes 384 0.9 295 0.8 123 0.6
Net earnings $ 593 1.3% $ 452 1.2% $ 206 1.1%
Net earnings per share – diluted $ 2.76 $ 2.32 $ 1.46
Comparison of fifty-two weeks ended February 23, 2008 (fiscal 2008) with fifty-two weeks ended
February 24, 2007 (fiscal 2007):
In fiscal 2008, the Company achieved Net sales of $44,048, compared with $37,406 last year. Net earnings for
fiscal 2008 were $593 and diluted net earnings per share were $2.76, compared with net earnings of $452 and
diluted net earnings per share of $2.32 last year. Results for fiscal 2008 include Acquisition-related costs (defined
as one-time transaction costs, which primarily include supply chain consolidation costs, employee-related benefit
costs and consultant fees) of $45 after tax, or $0.21 per diluted share, compared to $40 after tax, or $0.20 per
diluted share, of Acquisition-related costs in fiscal 2007. Results for fiscal 2007 also include charges related to
the Company’s disposal of 18 Scott’s banner stores of $23 after tax, or $0.12 per diluted share.
Net Sales
Net sales for fiscal 2008 were $44,048, compared with $37,406 last year, an increase of 17.8 percent. Retail food
sales were 78.0 percent of Net sales and Supply chain services sales were 22.0 percent of Net sales for fiscal
2008, compared with 74.9 percent and 25.1 percent, respectively, last year.
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