Albertsons 2010 Annual Report Download - page 20

reported earnings without a comparable underlying change in cash flow from operations. As a result, changes
in accounting standards may materially impact the Company’s financial condition and results of operations.
Impairment charges for goodwill or other intangible assets
The Company is required to annually test goodwill and intangible assets with indefinite useful lives, including
the goodwill associated with past acquisitions and any future acquisitions, to determine if impairment has
occurred. Additionally, interim reviews must be performed whenever events or changes in circumstances
indicate that impairment may have occurred. If the testing performed indicates that impairment has occurred,
the Company is required to record a non-cash impairment charge for the difference between the carrying value
of the goodwill or other intangible assets and the implied fair value of the goodwill or other intangible assets
in the period the determination is made.
The testing of goodwill and other intangible assets for impairment requires the Company to make significant
estimates about our future performance and cash flows, as well as other assumptions. These estimates can be
affected by numerous factors, including potential changes in economic, industry or market conditions, changes
in business operations, changes in competition or changes in the Company’s stock price and market
capitalization. Changes in these factors, or changes in actual performance compared with estimates of the
Company’s future performance, may affect the fair value of goodwill or other intangible assets, which may
result in an impairment charge. The Company cannot accurately predict the amount and timing of any
impairment of assets. Should the value of goodwill or other intangible assets become impaired, the Company’s
financial condition and results of operations may be adversely affected.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Total retail square footage as of February 27, 2010 was 65 million, of which approximately 62 percent was
leased. Additional information on the Company’s properties can be found in Part I, Item 1 of this Annual
Report on Form 10-K.
ITEM 3. LEGAL PROCEEDINGS
The Company is subject to various lawsuits, claims and other legal matters that arise in the ordinary course of
conducting business, none of which, in management’s opinion, is expected to have a material adverse effect on
the Company’s financial condition, results of operations or cash flows.
In September 2008, a class action complaint was filed against the Company, as well as International
Outsourcing Services, LLC (“IOS”), Inmar, Inc., Carolina Manufacturer’s Services, Inc., Carolina Coupon
Clearing, Inc. and Carolina Services, in the United States District Court in the Eastern District of Wisconsin.
The plaintiffs in the case are a consumer goods manufacturer, a grocery co-operative and a retailer marketing
services company who allege on behalf of a purported class that the Company and the other defendants
(i) conspired to restrict the markets for coupon processing services under the Sherman Act and (ii) were part
of an illegal enterprise to defraud the plaintiffs under the Federal Racketeer Influenced and Corrupt
Organizations Act. The plaintiffs seek monetary damages, attorneys’ fees and injunctive relief. The Company
intends to vigorously defend this lawsuit, however all proceedings have been stayed in the case pending the
result of the criminal prosecution of certain former officers of IOS. Although this lawsuit is subject to the
uncertainties inherent in the litigation process, based on the information presently available to the Company,
management does not expect that the ultimate resolution of this lawsuit will have a material adverse effect on
the Company’s financial condition, results of operations or cash flows.
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