Albertsons 2013 Annual Report Download - page 101

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vesting under certain stock-based awards. The deemed change-in-control may result in the immediate
acceleration of the award, or may allow acceleration of the award only if certain other events occur. As a result of
this action, the 2013 and 2012 long-term incentive program awards were immediately accelerated resulting in the
recognition of the remaining unamortized stock-based compensation and, as the awards were underwater, the
pay-out to employees was insignificant. Outstanding options granted prior to May of fiscal 2011 were also
immediately accelerated resulting in the recognition of the remaining unamortized costs. The deemed change-in-
control resulted in acceleration of options granted after May of fiscal 2011 and outstanding restricted stock
awards for certain employees also meeting certain qualifying criteria. The Company anticipates recognizing $10
of stock-based compensation expense in the first quarter of fiscal 2014 as a result of the deemed change-in-
control.
The Company and AB Acquisition entered into a binding term sheet with the PBGC relating to issues regarding
the effect of the NAI Banner Sale on certain SUPERVALU retirement plans. The agreement requires that the
Company will not pay any dividends to its stockholders at any time for the period beginning on January 9, 2013
and ending on the earliest of (i) March 21, 2018, (ii) the date on which the total of all contributions made to the
SUPERVALU Retirement Plan that were made to the SUPERVALU Retirement Plan on or after the closing date
of the NAI Banner Sale is at least $450 and (iii) the date on which SUPERVALU’s unsecured credit rating is
BB+ from Standard & Poor’s or Ba1 from Moody’s (such earliest date, the end of the “PBGC Protection
Period”). SUPERVALU has also agreed to make certain contributions to the SUPERVALU Retirement Plan in
excess of the minimum required contributions at or before the ends of fiscal years 2015—2017 (where such fiscal
years end during the PBGC Protection Period), and AB Acquisition has agreed to provide a guarantee to the
PBGC for such excess payments.
The Company has guaranteed certain debt obligations of American Stores Company (“ASC”) on ASC’s $467
notes outstanding. In connection with the sale of NAI, AB Acquisition assumed the ASC debt but the existing
guarantee as provided to the ASC bondholders will not be released, and the Company continues as
guarantor. Concurrently with the sale of NAI, AB Acquisition entered into an agreement with the Company to
indemnify the Company for any consideration used to satisfy the guarantee by depositing $467 million in cash
into an escrow account, which will give the Company first priority interest and the trustee of the ASC
bondholders’ second priority interest in the collateral balance.
On March 26, 2013, the Company announced plans to reduce its national workforce by an estimated 1,100
positions, including current positions and open jobs. These reductions will predominantly occur during the
Company’s first and second quarter of fiscal 2014. The Company anticipates recognizing severance charges of
approximately $25 to $30 during the first quarter of fiscal 2014 with respect to this workforce reduction which is
incremental to the $27 recognized during the fourth quarter of fiscal 2013.
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