Albertsons 2010 Annual Report Download - page 25

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(4) Inventories (FIFO), working capital and current ratio are calculated after adding back the LIFO reserve.
The LIFO reserve for each year is as follows: $264 for fiscal 2010, $258 for fiscal 2009, $180 for fiscal
2008, $178 for fiscal 2007 and $160 for fiscal 2006.
(5) The debt to capital ratio is calculated as debt and capital lease obligations divided by the sum of debt and
capital lease obligations and stockholders’ equity. The increase in fiscal 2009 is due to the write-down of
goodwill and intangible assets.
(6) Capital expenditures include fixed asset and capital lease additions.
(7) Retail stores as of fiscal year end includes licensed hard-discount food stores and is adjusted for planned
sales and closures as of the end of each fiscal year.
Historical data is not necessarily indicative of the Company’s future results of operations or financial
condition. See discussion of “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Weakness in the economy continued to negatively impact consumer confidence throughout fiscal 2010. As a
result, consumers are spending less and trading down to a less expensive mix of products, both of which
impacted the Company’s sales. In addition, low levels of inflation and heightened competitive activity in fiscal
2010 pressured sales growth. If these consumer spending, inflationary and competitive trends continue, they
could further impact the Company’s sales and financial results in fiscal 2011.
The Company has launched certain initiatives to enhance performance through a greater focus on the customer
and simplification of the in-store shopping experience combined with reducing its overall cost structure and
further leveraging its size. In addition, the Company will continue to provide capital spending to fund retail
store remodeling activity and new retail stores.
Highlights of results of operations as reported and as a percent of Net sales are as follows:
(In millions, except per share
data)
February 27,
2010
(52 weeks)
February 28,
2009
(53 weeks)
February 23,
2008
(52 weeks)
Net sales $ 40,597 100.0% $ 44,564 100.0% $ 44,048 100.0%
Cost of sales 31,444 77.5 34,451 77.3 33,943 77.1
Gross profit 9,153 22.5 10,113 22.7 10,105 22.9
Selling and administrative expenses 7,952 19.6 8,746 19.6 8,421 19.1
Goodwill and intangible asset
impairment charges — — 3,524 7.9 — —
Operating earnings (loss) 1,201 3.0 (2,157) (4.8) 1,684 3.8
Interest expense, net 569 1.4 622 1.4 707 1.6
Earnings (loss) before income
taxes 632 1.6 (2,779) (6.2) 977 2.2
Income tax provision 239 0.6 76 0.2 384 0.9
Net earnings (loss) $ 393 1.0% $ (2,855) (6.4)% $ 593 1.3%
Net earnings (loss) per share—
diluted $ 1.85 $ (13.51) $ 2.76
19