Albertsons 2013 Annual Report Download - page 21

Changes in accounting standards
Accounting principles generally accepted in the United 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.
Effect of the NAI Banner Sale on the Company
As a result of the NAI Banner Sale, significant assets and personnel were transferred to AB Acquisition. Certain
of these assets and personnel had been used by the Company across the enterprise. To the extent that the
Company is not able to restructure quickly and efficiently for the Company to operate without those assets and
personnel, it could result in disruptions to the Company’s current plans, operations and business relationships.
Additionally, the Company has made significant changes to its senior management team and may make
additional changes which could cause disruption as those new leaders transition into their roles. The Company
will also have ongoing Transition Services Agreements with each of NAI and Albertson’s LLC to support the
divested NAI Banners and the continuing operations of Albertson’s LLC, each with an initial term of two and
one-half years. The Company’s ability to effectively manage its cost structure may be impacted by ongoing
obligations under the Transition Services Agreements. The process of implementing the NAI Banner Sale and the
effects of the Tender Offer may be disruptive to the Company’s business operations, may distract the Company’s
management team from their day-to-day responsibilities and may make it more difficult to retain employees. Any
of these risks or uncertainties could adversely affect the Company’s business, financial condition, results of
operations or cash flows.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Total Retail Food store square footage of continuing operations as of February 23, 2013, was 11 million, of
which approximately 84 percent was leased. Total Save-A-Lot corporate-owned store square footage as of
February 23, 2013, was 6 million, of which 91 percent was leased. Total Independent Business distribution center
square footage as of February 23, 2013 was 8 million, of which approximately 5 percent was leased.
The Company’s Retail Food stores are supplied by distribution centers with total square footage of 6 million, of
which approximately 24 percent was leased, with all but one distribution center with square footage of 1 million
providing wholesale distribution to both the Company’s own stores and stores of independent retail
customers. The Company’s Save-A-Lot operations are supplied by distribution centers with total square footage
of 5 million, of which approximately 27 percent was leased.
In addition to its principal executive offices in Eden Prairie, Minnesota, the Company maintains store support
centers in Boise, Idaho (which is owned by NAI but at which the Company has employees and provides services
to NAI and Albertson’s, LLC) and St. Louis, Missouri. The Company’s properties are in good condition, well
maintained and suitable to carry on its business. Additional information on the Company’s properties can be
found in Part I, Item 1 of this Annual Report on Form 10-K.
Substantially all of the Company’s owned and ground-leased real estate will be subject to mortgages to secure
the Company’s bank credit facilities.
19