Albertsons 2008 Annual Report Download - page 88

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SUPERVALU INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
NOTE 6—PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, net, consisted of the following:
2008 2007
Land $ 1,335 $ 1,482
Buildings 3,269 3,488
Property under construction 333 265
Leasehold improvements 1,383 1,347
Equipment 3,777 3,445
Capitalized leases 1,015 1,135
11,112 11,162
Accumulated depreciation (3,347) (2,577)
Accumulated amortization on capital leases (232) (170)
$ 7,533 $ 8,415
Depreciation expense was $911, $793 and $274 for fiscal 2008, 2007 and 2006, respectively. Amortization
expense of capital leases was $64, $54 and $32 for fiscal 2008, 2007 and 2006, respectively.
NOTE 7—FINANCIAL INSTRUMENTS
Interest Rate Swap Agreements
In fiscal 2003, the Company entered into a fixed to floating rate interest rate swap in the aggregate notional
amount of $225 relating to the Company’s 7.875 percent fixed interest rate promissory notes due fiscal 2010. On
April 18, 2007, the Company closed out the swap, resulting in a pre-tax deferred gain of $1 that will be
recognized in earnings over the remaining term of the notes.
Fair Value Disclosures of Financial Instruments
For certain of the Company’s financial instruments, including cash and cash equivalents, receivables and
accounts payable, the fair values approximate book values due to their short maturities.
The estimated fair value of notes receivable approximates the book value at February 23, 2008. Notes receivable
are valued based on a discounted cash flow approach applying a rate that is comparable to publicly traded debt
instruments of similar credit quality.
The estimated fair value of the Company’s long-term debt (including current maturities) was less than the book
value by approximately $42 at February 23, 2008. The estimated fair value was based on market quotes, where
available, or market values for similar instruments.
NOTE 8—DEBT
As a result of the acquisition of New Albertsons and the application of the purchase method of accounting, the
Company estimated the fair value of the debt assumed. This resulted in an aggregate net discount related to the
New Albertsons long-term debt of $231 as of the Acquisition Date, which will be amortized to Interest expense
F-22