Albertsons 2013 Annual Report Download - page 97

In connection with the Stock Purchase Agreement, the Company has entered into various agreements with AB
Acquisition related to on-going operations, including a Transition Services Agreement (“TSA”) with each of NAI
and Albertson’s LLC and operating and supply agreements. The initial terms of these arrangements vary from
12 months to 5 years, are generally subject to renewal upon mutual agreement by the parties thereto and also
includes termination provisions that can be exercised by each party. The Company has determined that the
continuing cash flows generated by these arrangements are not significant in proportion to the cash flows of the
Company had the stock sale not occurred and that the arrangements do not provide the Company the ability to
influence the operating or financial policies of the NAI Banners. Accordingly the above arrangements do not
constitute significant continuing involvement in the operations of the NAI Banners. Therefore, the operations of
the NAI Banners are presented as discontinued operations in the Consolidated Financial Statements for fiscal
2013, 2012 and 2011.
As the net assets of the NAI Banners met the held for sale criteria, the Company assessed the long-lived assets
for impairment and then compared the carrying value of the total net assets to be sold (the disposal group) to their
estimated fair value based on the proceeds expected to be received and debt assumed by AB Acquisition pursuant
to the Stock Purchase Agreement less the estimated costs to sell. In the fourth quarter of fiscal 2013 the Company
recorded an intangible asset impairment charge of $84 in addition to an intangible asset impairment charge of
$74 recorded in the second quarter of fiscal 2013, to write-down the intangible assets of the NAI Banners to their
estimated fair value. The Company recorded a preliminary estimated pre-tax loss on contract for the disposal of
NAI of approximately $1,150 and recorded a pre-tax Property, plant and equipment related impairment of $203
which are included in Loss from discontinued operations, net of tax on the Consolidated Statement of Operations.
This estimated loss on contract will be subject to finalization based on the balances as of the sale closing date of
March 21, 2013, which is in the Company’s first fiscal quarter of 2014, and may differ materially to this
preliminary estimate. The Company determined the pre-tax Property, plant and equipment related impairment
using level 3 inputs.
The net assets, operating results, and cash flows of the NAI Banners have been presented separately as
discontinued operations in the Consolidated Financial Statements for fiscal 2013, 2012 and 2011. The net assets,
operating results, and cash flows of the Total Logistic Control have been presented separately as discontinued
operations in the Consolidated Financial Statements for fiscal 2011. The Company has allocated interest related
to debt that will be assumed by AB Acquisition to discontinued operations. Interest expense related to such debt
and included in discontinued operations was $281, $263, and $319 for the years ended February 23,
2013, February 25, 2012 and February 26, 2011, respectively.
The following is a summary of the Company’s operating results and certain other directly attributable expenses
that are included in discontinued operations for the years ended February 23, 2013, February 25, 2012 and
February 26, 2011:
February 23, 2013
(52 weeks)
February 25, 2012
(52 weeks)
February 26, 2011
(52 weeks)
Net sales $ 17,230 $ 18,764 $ 20,177
Loss before income taxes from discontinued operations (1,238) (876) (1,263)
Income tax provision (benefit) (35) 54 47
Loss from discontinued operations, net of tax $ (1,203) $ (930) $ (1,310)
The Company will continue to sell certain products to the NAI Banners subsequent to the stock sale. The
amounts of the intercompany sales, which approximate related costs, were $236, $240 and $245 years ended
February 23, 2013, February 25, 2012 and February 26, 2011.
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