Albertsons 2015 Annual Report Download - page 72

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70
NOTE 3—GOODWILL AND INTANGIBLE ASSETS
Changes in the Company’s Goodwill and Intangible assets, net consisted of the following:
February 23,
2013 Additions Impairments
Other net
adjustments
February 22,
2014 Additions Impairments
Other net
adjustments
February 28,
2015
Goodwill:
Independent Business $ 710 $ — $ — $ — $ 710 $ — $ — $ — $ 710
Save-A-Lot 137 — — — 137 4 — — 141
Retail Food —————14——14
Total goodwill $ 847 $ — $ — $ — $ 847 $ 18 $ — $ — $ 865
Intangible assets:
Favorable operating
leases, prescription
files, customer lists
and other
(accumulated
amortization of $86
and $78 as of
February 28, 2015
and February 22,
2014, respectively) $ 106 $ — $ — $ 5 $ 111 $ 13 $ — $ — $ 124
Tradenames and
trademarks—
indefinite useful
lives 9——— 9——— 9
Non-compete
agreements
(accumulated
amortization of $2
and $2 as of
February 28, 2015
and February 22,
2014, respectively) 3——— 3——— 3
Total intangible assets 118 — — 5 123 13 — — 136
Accumulated
amortization (67) (8) — (5) (80) (8) — — (88)
Total intangible assets,
net $ 51 $ 43 $ 48
The Company applies a fair value based impairment test to the net book value of goodwill and intangible assets with indefinite
useful lives on an annual basis and on an interim basis if events or circumstances indicate that an impairment loss may have
occurred.
The Company conducted an annual impairment test of the net book value of goodwill and intangible assets with indefinite
useful lives during the fourth quarter of fiscal 2015, which indicated the fair value of the Independent Business reporting unit
exceeded its carrying value by approximately 80 percent, the fair value of each of Save-A-Lot and Retail Food reporting units
was in excess of 100 percent of its carrying value and the fair value of intangible assets with indefinite useful lives was in
excess of their carrying value. In fiscal 2013, recoverability tests of indefinite-lived tradename intangibles indicated the
carrying value of a tradename within the Independent Business segment was not recoverable, which resulted in a pre-tax
impairment charge of $6.
Annual impairment testing and the related calculation of the impairment charges contains significant judgments and estimates
including weighted average cost of capital, future revenue, profitability, cash flows and fair values of assets and liabilities.
Amortization expense of intangible assets with definite useful lives of $8 was recorded in each of fiscal 2015, 2014 and 2013.
Future amortization expense will average approximately $5 per year for the next five years.
NOTE 4—RESERVES FOR CLOSED PROPERTIES AND PROPERTY, PLANT AND EQUIPMENT-RELATED
IMPAIRMENT CHARGES
Reserves for Closed Properties