Safeway 2013 Annual Report Download - page 62
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Table of Contents
the operating results. Safeway's operating segments are our retail divisions. Safeway's reporting units are generally consistent with its
operating segments.
If Safeway concludes that fair value is greater than the book value, Safeway does not have to proceed to step two, and Safeway can conclude
there is no goodwill impairment. If the Company concludes that the fair value of a reporting unit is less than book value, the Company must
perform step two, in which it calculates the implied fair value of goodwill and compares it to carrying value. If the carrying value of goodwill
exceeds the implied fair value of goodwill, such excess represents the amount of goodwill impairment.
Determining the fair value of a reporting unit involves the use of significant estimates and assumptions. The estimated fair value of each
reporting unit is based on an average of the guideline company method and the discounted cash flow method. These methods are based on
historical and forecasted amounts specific to each reporting unit and consider sales, gross profit, operating profit and cash flows and general
economic and market conditions, as well as the impact of planned business and operational strategies. Safeway bases its fair value
estimates on assumptions it believes to be reasonable at the time, but such assumptions are subject to inherent uncertainty. Measuring the
fair value of reporting units would constitute a Level 3 measurement under the fair value hierarchy. See Note H for a discussion of levels.
Based upon the results of our 2013, 2012 and 2011 analyses, no impairment of goodwill was indicated in 2013, 2012 or 2011.
A summary of changes in Safeway’s goodwill by geographic area is as follows (in millions):
2012
U.S. Canada Total
Balance – beginning of year:
Goodwill $4,364.9 $96.2 $4,461.1
Accumulated impairment charges (3,991.3)— (3,991.3)
373.6 96.2 469.8
Activity during the year:
Disposal of CSL goodwill — —
—
Blackhawk acquisition of Retailo (2)
— —
—
Blackhawk acquisition of
InteliSpend (2)
— —
—
Other adjustments (3) —1.7
1.7
—1.7 1.7
Balance – end of year (4):
Goodwill 4,364.9 97.9 4,462.8
Accumulated impairment charges (3,991.3)— (3,991.3)
$373.6 $97.9 $471.5
(1) See Note B.
(2) See Note C.
(3) Represents foreign currency translation.
(4) Blackhawk goodwill was $133.5 million at year-end 2013 and $42.7 million at year-end 2012.
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