Albertsons 2012 Annual Report Download - page 35

hard-discount stores’ goodwill exceeded its $137 carrying value by greater than 100 percent. If the Company’s
stock price experiences a significant and sustained decline, or other events or changes in circumstances, such as
operating results not meeting plan indicate that impairment may have occurred, the Company would reassess the
fair value of the implied goodwill compared to the carrying value.
The Company’s goodwill attributable to each reporting unit consisted of the following:
Reporting Unit 2012 2011
Traditional retail stores $ — $ 1,137
Hard discount stores 137 137
Independent business 710 710
$ 847 $ 1,984
Goodwill was assigned to the reporting units as of the acquisition date, with no amounts being allocated between
reporting units.
Self-Insurance Liabilities
The Company is primarily self-insured for workers’ compensation, healthcare for certain employees 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.
In determining its self-insurance liabilities, the Company performs a continuing review of its overall position and
reserving techniques. Since recorded amounts are based on estimates, the ultimate cost of all incurred claims and
related expenses may be more or less than the recorded liabilities. Any projection of losses concerning workers’
compensation, healthcare and general and automobile liability is subject to a degree of variability. Among the
causes of this variability are unpredictable external factors affecting future inflation rates, discount rates,
litigation trends, legal interpretations, regulatory changes, benefit level changes and actual claim settlement
patterns. The majority of the self-insurance liability for workers’ compensation is related to claims occurring in
California. California workers’ compensation has received intense scrutiny from the state’s politicians, insurers
and providers. In recent years, there has been an increase in the number of legislative reforms and judicial rulings
affecting the handling of claim activity. The impact of many of these variables on ultimate costs is difficult to
estimate. The effects of changes in such estimated items are included in results of operations in the period in
which the estimates are changed. Such changes may be material to the results of operations and could occur in a
future period. If, in the future, the Company was to experience significant volatility in the amount and timing of
cash payments compared to its earlier estimates, the Company would assess whether to continue to discount
these liabilities. The Company had self-insurance liabilities of approximately $956, net of the discount of $159,
and $1,050, net of the discount of $178, as of February 25, 2012 and February 26, 2011, respectively. As of
February 25, 2012, each 25 basis point change in the discount rate would impact the self-insurance liabilities by
approximately $1.
Benefit Plans
The Company sponsors pension and other postretirement plans in various forms covering substantially all
employees who meet eligibility requirements. Pension benefits associated with these plans are generally based
primarily on each participant’s years of service, compensation, and age at retirement or termination. Effective
December 31, 2007, the Company authorized amendments to the SUPERVALU Retirement Plan and certain
supplemental executive retirement benefit plans whereby service crediting ended in these plans and no
employees will become eligible to participate in these plans after December 31, 2007. Pay increases will continue
to be reflected in the amount of benefit earned in these plans until December 31, 2012.
31