Albertsons 2012 Annual Report Download - page 20

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 are 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 its weighted average cost of capital, future revenue, profitability, cash flows, fair value of assets
and liabilities, as well as other assumptions. These estimates may be affected by significant variability, 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.
Changes in accounting standards
Accounting principles generally accepted in the Unites States of America (“accounting standards”) and
interpretations by various governing bodies, including the SEC, for many aspects of the Company’s business,
such as accounting for insurance and self-insurance, inventories, goodwill and intangible assets, store closures,
leases, income taxes and stock-based compensation, are complex and involve subjective judgments. Changes in
these rules or their interpretation may significantly change or add volatility to the Company’s 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.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Total retail square footage as of February 25, 2012 was 64 million, of which approximately 62 percent was
leased. In addition to its principal executive offices in Eden Prairie, Minnesota, the Company maintains store
support centers in Boise, Idaho and St. Louis, Missouri. Additional information on the Company’s properties can
be found in Part I, Item 1 of this Annual Report on Form 10-K. The Company’s properties are in good condition,
well maintained and suitable to carry on its business.
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. In the opinion of management, based upon currently-available facts, it is remote that the
ultimate outcome of any lawsuits, claims and other proceedings will have a material adverse effect on the overall
results of the Company’s operations, its cash flows or its financial position.
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
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