Albertsons 2010 Annual Report Download - page 27

Goodwill and intangible asset impairment charges
No goodwill impairment charges were recorded in fiscal 2010. During fiscal 2009 the Company recorded
impairment charges of $3,524 due to the significant decline in the market price of the Company’s common
stock as of the end of the third quarter of fiscal 2009 as well as the impact of the unprecedented decline in the
economy on the Company’s plan.
Operating Earnings (Loss)
Operating earnings for fiscal 2010 were $1,201 compared with an operating loss of $2,157 last year. Retail
food operating earnings for fiscal 2010 were $989, or 3.1 percent of Retail food net sales, reflecting $55, or
0.2 percent of Retail food net sales, of charges related to planned retail market exits. Retail food operating
loss for fiscal 2009 was $2,315, or negative 6.7 percent of Retail food net sales last year, reflecting $3,524, or
10.2 percent of Retail food sales, of goodwill and intangible asset impairment charges and $162, or 0.5 percent
of Retail food sales, of charges primarily related to the closure of non-strategic stores. The remaining decrease
of $327, or 70 basis points, primarily reflects the impact of a challenging economic environment, heightened
competitive activity, a higher promotional sales mix, increased investments in price and reduced sales leverage,
partially offset by a lower LIFO charge. Supply chain services operating earnings for fiscal 2010 were $299,
or 3.3 percent of Supply chain services net sales, compared with $307, or 3.1 percent of Supply chain services
net sales, last year. The 20 basis point increase in Supply chain services operating earnings as a percent of
Supply chain services net sales primarily reflects a lower LIFO charge and fees received from the early
termination of a supply agreement in fiscal 2010.
Net Interest Expense
Net interest expense was $569 in fiscal 2010, compared with $622 last year, primarily reflecting lower interest
rates and debt levels as well as one less week in fiscal 2010.
Provision for Income Taxes
Income tax expense was $239, or 37.8 percent of earnings before income taxes, for fiscal 2010 compared with
$76, or 2.7 percent of loss before income taxes, last year. The tax rate for fiscal 2009 reflects the impact of
the goodwill and intangible asset impairment charges, the majority of which are non-deductible for income tax
purposes, as well as a benefit attributable to favorable state tax items, non-taxable life insurance proceeds and
a reduction in the statutory rate.
Net Earnings (Loss)
Net earnings were $393, or $1.86 per basic share and $1.85 per diluted share, for fiscal 2010 compared with net
loss of $2,855, or $13.51 per basic and diluted share last year. Net earnings for fiscal 2010 include net charges of
$39 after tax, or $0.18 per diluted share, related to the planned retail market exits, closure of non-strategic stores
announced in fiscal 2009 and fees received from the early termination of a supply agreement. Net loss for fiscal
2009 includes charges of $3,470 after tax, or $16.40 per diluted share, comprised of goodwill and intangible asset
impairment charges, charges primarily related to the closure of non-strategic stores announced in fiscal 2009,
settlement costs for a pre-Acquisition Albertsons litigation matter and other Acquisition-related costs.
Comparison of fifty-three weeks ended February 28, 2009 (fiscal 2009) with fifty-two weeks ended
February 23, 2008 (fiscal 2008):
In fiscal 2009, the Company achieved Net sales of $44,564, compared with $44,048 in fiscal 2008. Net loss
for fiscal 2009 was $2,855 and diluted net loss per share was $13.51, compared with net earnings of $593 and
diluted net earnings per share of $2.76 for fiscal 2008. Results for fiscal 2009 include charges of $3,762 before
tax ($3,470 after tax, or $16.40 per diluted share) comprised of goodwill and intangible asset impairment
charges of $3,524 before tax ($3,326 after tax, or $15.71 per diluted share), charges primarily related to the
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