Albertsons 2010 Annual Report Download - page 50

Impairment of Long-Lived Assets
The Company monitors the recoverability of its long-lived assets whenever events or changes in circumstances
indicate that its carrying amount may not be recoverable, including current period losses combined with a
history of losses or a projection of continuing losses, a significant decrease in the market value of an asset or
the Company’s plans for store closures. When such events or changes in circumstances occur, a recoverability
test is performed by comparing projected undiscounted future cash flows to the carrying value of the group of
assets being tested. If impairment is identified for long-lived assets to be held and used, the fair value is
compared to the carrying value of the group of assets and an impairment charge is recorded for the excess of
the carrying value over the discounted future cash flows. For long-lived assets that are classified as assets held
for sale, the Company recognizes impairment charges for the excess of the carrying value plus estimated costs
of disposal over the estimated fair value. Fair value is based on current market values or discounted future
cash flows. The Company estimates fair value based on the Company’s experience and knowledge of the
market in which the property is located and, when necessary, utilizes local real estate brokers. Long-lived asset
impairment charges are a component of Selling and administrative expenses in the Consolidated Statements of
Earnings.
Deferred Rent
The Company recognizes rent holidays, including the time period during which the Company has access to the
property prior to the opening of the site, as well as construction allowances and escalating rent provisions, on
a straight-line basis over the term of the operating lease. The deferred rents are included in Other current
liabilities and Other long-term liabilities in the Consolidated Balance Sheets.
Self-Insurance Liabilities
The Company is primarily self-insured for workers’ compensation and general and automobile liability costs.
It is the Company’s policy to record its self-insurance liabilities based on management’s estimate of the
ultimate cost of reported claims and claims incurred but not yet reported and related expenses, discounted at a
risk-free interest rate. The present value of such claims was calculated using discount rates ranging from
1.1 percent to 5.1 percent for fiscal 2010 and fiscal 2009 and 2.4 percent to 5.1 percent for fiscal 2008.
Changes in the Company’s self-insurance liabilities consisted of the following:
2010 2009 2008
Beginning balance $1,142 $1,132 $ 992
Expense 190 269 385
Claim payments (231) (259) (245)
Ending balance 1,101 1,142 1,132
Less current portion (297) (321) (347)
Long-term portion $ 804 $ 821 $ 785
The current portion of the reserves for self-insurance is included in Other current liabilities and the long-term
portion is included in Other liabilities in the Consolidated Balance Sheets. The self-insurance liabilities as of
the end of the fiscal year are net of discounts of $191 and $223 as of February 27, 2010 and February 28,
2009, respectively.
Benefit Plans
The Company recognizes the funded status of its sponsored defined benefit plans in its Consolidated Balance
Sheets and gains or losses and prior service costs or credits not yet recognized as a component of other
comprehensive income, net of tax. The Company sponsors pension and other postretirement plans in various
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