Albertsons 2015 Annual Report Download - page 36

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Operating Earnings
Operating earnings for fiscal 2015 were $424, compared with $423 last year, an increase of $1 or 0.2 percent. Operating earnings
for fiscal 2015 include net charges and costs of $75, comprised of the non-cash pension settlement charges, a benefit plan charge,
store closure charges, information technology intrusion costs, net of insurance recoverable, and severance costs discussed above.
Operating earnings for last year included net charges and costs of $61, comprised of the severance costs and accelerated stock-
based compensation charges, asset impairment and other charges, contract breakage and other costs, legal settlement charge and
multiemployer pension plan withdrawal charge discussed above, offset in part by the gain on sale of property. The remaining $15
increase in Operating earnings is primarily due to $43 of lower net periodic pension expense, $42 of reduced depreciation and
amortization expense and occupancy costs, $24 of higher earnings from increased sales and $12 of lower logistics costs, offset in
part by $46 of lower TSA fees primarily due to the one-year transition fee recognized last year, $33 of incremental investments to
lower prices to customers, higher shrink, stronger private brands pricing support and other margin investments, an $18 higher
LIFO charge and $12 of higher advertising costs.
Independent Business operating earnings for fiscal 2015 were $243, or 3.0 percent of Independent Business net sales, compared
with $235, or 2.9 percent last year. Independent Business operating earnings for fiscal 2015 include $1 of severance costs.
Independent Business operating earnings for last year included net charges and costs of $8, comprised of severance costs and
accelerated stock-based compensation costs of $17, a multi-employer pension plan withdrawal charge of $3, asset impairment and
other charges of $2 and contract breakage costs of $1, offset in part by a gain on sale of property of $15. The remaining $1
increase in Independent Business operating earnings is primarily due to lower logistics costs and fees received from early supply
agreement termination, higher earnings from increased sales and lower depreciation expense, offset in part by lower margins from
stronger private brands pricing support and other margin investments, higher employee-related costs and a higher LIFO charge.
Save-A-Lot operating earnings for fiscal 2015 were $153, or 3.3 percent of Save-A-Lot net sales, compared with $167, or 3.9
percent last year. Save-A-Lot operating earnings for fiscal 2015 included store closure charges of $3. Save-A-Lot operating
earnings for last year included charges and costs of $10, comprised of a legal settlement charge of $5, asset impairment and other
charges of $3 and severance costs of $2. The remaining $21 decrease in Save-A-Lot operating earnings is primarily due to $15 of
higher advertising costs, $12 of higher shrink and incremental investments to lower prices to customers and $12 of higher
employee-related and occupancy costs, offset in part by $16 of higher earnings from increased sales.
Retail Food operating earnings for fiscal 2015 were $122, or 2.5 percent of Retail Food net sales, compared with $77, or 1.7
percent last year. Retail Food operating earnings for last year included charges of $19, comprised of asset impairment and other
charges of $9, severance costs and accelerated stock-based compensation charges of $8 and contract breakage costs of $2. The
remaining $26 increase in Retail Food operating earnings is primarily due to $25 of lower depreciation expense and occupancy
costs, $8 of contracted services, $7 of lower logistics costs and $5 of higher earnings from increased sales, offset in part by $11 of
a higher LIFO charge and $10 of incremental investments to lower prices to customers.
Corporate operating loss for fiscal 2015 was $94, compared with $56 last year. Corporate expenses for fiscal 2015 include
charges and costs of $71, comprised of $64 of non-cash pension settlement charges, a $5 benefit plan charge and $2 of
information technology intrusion costs, net of insurance recoverable. Corporate expenses for last year included charges of $24,
comprised of severance costs and accelerated stock-based compensation charges of $19, contract breakage and other costs of $3
and asset impairment charges of $2. The remaining $9 net decrease in Corporate operating loss was primarily due to $42 of lower
net periodic pension expense, $12 of lower occupancy costs and $7 of lower employee-related costs, offset in part by $46 of
lower TSA fees primarily due to the one-year transition fee recognized last year and $4 of higher other administrative and other
costs of sales.