Albertsons 2015 Annual Report Download - page 42

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The following summarizes the calculation of Adjusted EBITDA for fiscal 2015, 2014, 2013, 2012 and 2011:
2015
(53 weeks)
2014
(52 weeks)
2013
(52 weeks)
2012
(52 weeks)
2011
(52 weeks)
Net earnings (loss) from continuing operations $ 127 $ 13 $ (253) $ (97) $ (193)
Less net earnings attributable to noncontrolling interests (7) (7) (10) (13) (7)
Income tax provision (benefit) 58 5 (163) (41) (60)
Interest expense, net 243 407 269 247 230
Depreciation and amortization 285 302 365 355 354
LIFO charge (credit) 8 (9) 4 16 5
Unusual employee-related costs and pension related items 70 49 36 15 38
Asset impairment and other charges, net of gains 3 1 249 — 49
Goodwill and intangible asset impairment charges — — 6 92 110
Legal settlement charges (gains) — 5 (10) — —
Contract breakage costs and certain other charges — 6———
Information technology intrusion costs, net of insurance
recoverable 2————
Adjusted EBITDA $ 789 $ 772 $ 493 $ 574 $ 526
Comparison of Fiscal 2015 Adjusted EBITDA to Fiscal 2014 Adjusted EBITDA
Adjusted EBITDA for fiscal 2015 was $789, or 4.4 percent of Net sales, compared to $772, or 4.5 percent of Net sales last year,
an increase of $17, or decrease of 10 basis points. The increase in Adjusted EBITDA is primarily due to $43 of lower net
periodic pension expense, $39 of higher earnings from increased sales and $12 of lower logistics costs, $9 of lower occupancy
costs and $3 of lower other administrative costs, offset in part by $46 of lower TSA fees primarily due to the one-year transition
fee recognized last year, which covered last year's transitional employee and occupancy costs included within Adjusted
EBITDA, $33 of incremental investments to lower prices to customers, higher shrink, stronger private brands pricing support
and other margin investments, and $12 of higher advertising costs.
Comparison of Fiscal 2014 Adjusted EBITDA to Fiscal 2013 Adjusted EBITDA
Adjusted EBITDA for fiscal 2014 was $772, or 4.5 percent of Net sales, compared to $493, or 2.9 percent of Net sales for fiscal
2013, an increase of $279, or 160 basis points. The increase in Adjusted EBITDA is primarily due to $198 of incremental TSA
fees earned related to shared service center costs to support back office functions related to the NAI Banners. Such costs have
been historically incurred as administrative overhead but were not specifically charged to NAI within discontinued operations.
Also contributing to the increase in Adjusted EBITDA in fiscal 2014 was $126 of cost savings initiatives including reduced
consulting fees, $17 of lower logistics costs, $7 of higher fees from new product introductions net of lower independent retail
customer fees, $6 of higher professional services income from services provided to independent retail customers and $6 of
lower other administrative expense. These improvements were offset in part by $30 of incremental investments to lower prices
to customers, $28 of higher shrink, $16 of increased insurance costs, $6 of higher advertising costs and $2 of lower sales
volume.
CRITICAL ACCOUNTING POLICIES
The preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the
United States of America (“Accounting Standards”) requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from
those estimates.
Significant accounting policies are discussed in Note 1—Summary of Significant Accounting Policies in the Notes to
Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K. Management believes the
following critical accounting policies reflect its more subjective or complex judgments and estimates used in the preparation of
the Company’s Consolidated Financial Statements.