Albertsons 2009 Annual Report Download - page 51

SUPERVALU INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars and shares in millions, except per share data, unless otherwise noted)
NOTE 1—THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Description
SUPERVALU INC. (“SUPERVALU” or the “Company”), a Delaware corporation, was organized in 1925 as
the successor of two wholesale grocery firms established in the 1870’s. SUPERVALU is one of the largest
companies in the United States grocery channel. SUPERVALU conducts its retail operations throughout the
United States under three retail food store formats: combination stores (defined as food and pharmacy), food
stores and limited assortment food stores. Additionally, the Company provides supply chain services, primarily
wholesale distribution, across the United States retail grocery channel.
On June 2, 2006 (the “Acquisition Date”), the Company acquired New Albertson’s, Inc. (“New Albertsons”) consisting
of the core supermarket businesses (the “Acquired Operations”) formerly owned by Albertson’s, Inc. (“Albertsons”).
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and all majority-owned subsidiar-
ies. All significant intercompany accounts and transactions have been eliminated. References to the Company
refer to SUPERVALU INC. and Subsidiaries.
Fiscal Year
The Company’s fiscal year ends on the last Saturday in February. The Company’s first quarter consists of
16 weeks while the second, third and fourth quarters each consist of 12 weeks, except for the fourth quarter of
fiscal 2009 which included 13 weeks. Because of differences in the accounting calendars of New Albertsons
and the Company, the February 28, 2009 and February 23, 2008 Consolidated Balance Sheets include the
assets and liabilities related to New Albertsons as of February 26, 2009 and February 21, 2008, respectively.
The accompanying Consolidated Statements of Earnings and Cash Flows for fiscal 2007 include 38 weeks of
operating results of the Acquired Operations.
Use of Estimates
The preparation of the Company’s consolidated financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date
of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Revenue Recognition
Revenues from product sales are recognized at the point of sale for the Retail food segment and upon delivery
for the Supply chain services segment. Typically, invoicing, shipping, delivery and customer receipt of Supply
chain services product occur on the same business day. Revenues from services rendered are recognized
immediately after such services have been provided. Discounts and allowances provided to customers by the
Company at the time of sale, including those provided in connection with loyalty cards, are recognized as a
reduction in Net sales as the products are sold to customers in accordance with Emerging Issues Task Force
(“EITF”) Issue No. 01-9 “Accounting for Consideration Given by a Vendor to a Customer (Including a
Reseller of the Vendor’s Products).” Sales tax is excluded from Net sales.
Revenues and costs from third-party logistic 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 obligor in a transaction, is subject to inventory or credit risk, has latitude in establishing price and
selecting suppliers, or has several, but not all of these indicators, revenue is recorded gross. If the Company is
not the primary obligor and amounts earned have little or no credit risk, revenue is recorded net as
management fees earned.
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