Albertsons 2012 Annual Report Download - page 58

Download and view the complete annual report

Please find page 58 of the 2012 Albertsons annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 116

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116

During the third and fourth quarters of fiscal 2012 the Company’s stock price experienced a significant and
sustained decline and the book value per share substantially exceeded the stock price. As a result, the Company
performed reviews of goodwill and intangible assets with indefinite useful lives for impairment, which indicated
that the carrying value of traditional retail stores’ goodwill and certain intangible assets with indefinite useful
lives exceeded their estimated fair values. The Company recorded preliminary non-cash impairment charges of
$907, comprised of $661 of goodwill and $246 of intangible assets with indefinite useful lives during the third
quarter of fiscal 2012 due to the significant and sustained decline in the Company’s market capitalization and
updated discounted cash flows. The finalization of third quarter impairment charges and the results of the fourth
quarter impairment review resulted in an additional non-cash impairment charge of $525 including an immaterial
finalization to the third quarter preliminary charge. The fourth quarter charge is comprised of $460 of goodwill
and $65 of intangible assets with indefinite useful lives. The impairment charge was due to the significant and
sustained decline in the Company’s market capitalization as of and subsequent to the end of the fourth quarter of
fiscal 2012 and was recorded in the Retail food segment.
For the full fiscal 2012 year the Company recorded non-cash impairment charges of $1,432, comprised of $1,121
of goodwill and $311 of intangible assets with indefinite useful lives, in the Retail food segment. The calculation
of the impairment charges contains significant judgments and estimates including weighted average cost of
capital, future revenue, profitability, cash flows and fair values of assets and liabilities.
The Company undertook reviews for impairment of goodwill and intangible assets with indefinite useful lives
twice during fiscal 2011. During the second quarter of fiscal 2011 the Company’s stock price had a significant
and sustained decline and book value per share substantially exceeded the stock price. As a result, the Company
completed an impairment review and recorded non-cash impairment charges of $1,840 related to the Retail food
segment, comprised of a $1,619 reduction to the carrying value of goodwill and a $221 reduction to the carrying
value of intangible assets with indefinite useful lives. The result of the fiscal 2011 annual review of goodwill
undertaken in the fourth quarter indicated no reduction to the carrying value of goodwill was required. The result
of the fiscal 2011 annual fourth quarter impairment review of intangible assets with indefinite useful lives
indicated that the carrying value of certain Acquired Trademarks exceeded their estimated fair value based on
projected future revenues and recorded non-cash impairment charges of $30 related to the Retail food segment.
During fiscal 2011 the Company recorded $95 reduction to Goodwill as a result of divesting Total Logistic
Control. Refer to Note 15—Divestiture. During fiscal 2010 the Company also recorded impairment charges of
$20 to its trademarks and tradenames.
During fiscal 2012 the Company sold 107 retail fuel centers which were part of the Retail food segment. As a
result of this sale, during the second quarter the Company reclassified $17 of Goodwill and $76 of Property, plant
and equipment and other assets to assets held for sale. Assets held for sale is a component of Other current assets
in the Consolidated Balance Sheets. The Company completed the sale during the third and fourth quarter of fiscal
2012, at which time the $16 of Goodwill and $76 of Property, plant and equipment was eliminated from assets
held for sale.
Amortization expense of intangible assets with definite useful lives of $56, $57 and $59 was recorded in fiscal
2012, 2011 and 2010, respectively. Future amortization expense will be approximately $32 per year for each of
the next five years.
54