Safeway 2011 Annual Report Download - page 65

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SAFEWAY INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
New Accounting Pronouncements
In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of
Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.” The amendments in ASU
2011-12 defer the changes in ASU 2011-05, “Presentation of Comprehensive Income” that relate to the presentation of
reclassifications from other comprehensive income to net income. Safeway early adopted ASU 2011-05 using the
two-statement approach in the fourth quarter of 2011 on a retrospective basis for all periods presented.
In December 2011, the FASB issued ASU 2011-11, “Disclosures about Offsetting Assets and Liabilities.” The amendments
in ASU 2011-11 require that a company disclose information about offsetting and related arrangements to enable users
of financial statements to understand the effect of those arrangements on its financial position. The amendments
enhance current disclosures by requiring improved information about financial instruments and derivative instruments
that are either (i) offset in accordance with current accounting guidance or (ii) subject to an enforceable master netting
arrangement or similar agreement, irrespective of whether they are offset in accordance with current accounting
guidance. ASU 2011-11 is effective for annual reporting periods beginning on or after January 1, 2013 and interim
periods within those periods, and will be applied retrospectively for all comparative periods presented. The adoption of
ASU 2011-11 is not expected to have a material impact on Safeway’s consolidated financial statements.
Note B: Goodwill
Goodwill represents the excess of cost of an acquired business over the fair value of the identifiable tangible and
intangible assets acquired and liabilities assumed in a business combination. Goodwill is not subject to amortization but
must be evaluated for impairment.
A summary of changes in Safeway’s goodwill by geographic area is as follows (in millions):
2011 2010
U.S. Canada Total U.S. Canada Total
Balance – beginning of year:
Goodwill $ 4,324.4 $ 97.8 $ 4,422.2 $ 4,324.4 $ 93.5 $ 4,417.9
Accumulated impairment charges (3,991.3) – (3,991.3) (3,991.3) –(3,991.3)
333.1 97.8 430.9 333.1 93.5 426.6
Activity during the year:
Acquisition 40.5 – 40.5 – – –
Other adjustments – (1.6)(1) (1.6) – 4.3(1) 4.3
40.5 (1.6) 38.9 – 4.3 4.3
Balance – end of year:
Goodwill 4,364.9 96.2 4,461.1 4,324.4 97.8 4,422.2
Accumulated impairment charges (3,991.3) – (3,991.3) (3,991.3) –(3,991.3)
$ 373.6 $ 96.2 $ 469.8 $ 333.1 $ 97.8 $ 430.9
(1) Represents foreign currency translation adjustments in Canada.
On September 15, 2011, Blackhawk acquired Cardpool, Inc., a prepaid card exchange company where customers can
buy, sell or trade previously issued prepaid cards. The purchase consideration was $42.3 million, consisting of $9.9 million
cash paid at close, a $9.2 million payment due one year after close, and contingent payments for up to $23.2 million. The
contingent payments are potentially payable between one and three years after acquisition, based on the achievement of
certain financial targets and operational milestones. Goodwill recognized in this transaction amounted to $40.5 million
which is not deductible for tax purposes.
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