Albertsons Companies, Inc 10-Q for FY2021 Q2

Albertsons Companies, Inc. (ACI)

10-Q 2020-10-21 For: 2020-09-12

Added on April 07, 2026

About this 10-Q

Albertsons Companies, Inc filed this 10-Q on October 21, 2020, covering the quarter ended September 12, 2020 (FY2021 Q2).

Headline figures

Quarter ended September 12, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $15.76B; up 11.2% from $14.18B a year earlier
Net income: $284.5M; down 3.5% from net income of $294.8M a year earlier
Diluted EPS: $0.49; down 3.9% from $0.51 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →


Delaware						47-4376911
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, $0.01 par value	ACI	New York Stock Exchange



PART I - FINANCIAL INFORMATION			Page
	Item 1 - Condensed Consolidated Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Income	4
	Condensed Consolidated Statements of Cash Flows	5
	Condensed Consolidated Statements of Stockholders' Equity	6
	Notes to Condensed Consolidated Financial Statements	8










	Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations	25
	Item 3 - Quantitative and Qualitative Disclosures About Market Risk	37
	Item 4 - Controls and Procedures	38

PART II - OTHER INFORMATION
	Item 1 - Legal Proceedings	39
	Item 1A - Risk Factors	39
	Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds	39
	Item 3 - Defaults Upon Senior Securities	39
	Item 4 - Mine Safety Disclosures	40
	Item 5 - Other Information	40
	Item 6 - Exhibits	40

SIGNATURES			42


		September 12, 2020				February 29, 2020
ASSETS
Current assets
	Cash and cash equivalents	$	2,389.6			$	470.7
	Receivables, net	547.1				525.3
	Inventories, net	4,267.1				4,352.5
	Other current assets	374.8				382.8
	Total current assets	7,578.6				5,731.3

Property and equipment, net				9,110.0				9,211.9
Operating lease right-of-use assets				5,769.2				5,867.4
Intangible assets, net				2,077.8				2,087.2
Goodwill				1,183.3				1,183.3
Other assets				750.7				654.0
TOTAL ASSETS				$	26,469.6			$	24,735.1

LIABILITIES
Current liabilities
	Accounts payable	$	3,389.8			$	2,891.1
	Accrued salaries and wages	1,280.3				1,126.0
	Current maturities of long-term debt and finance lease obligations	331.6				221.4
	Current maturities of operating lease obligations	577.8				563.1
	Other current liabilities	1,148.2				1,102.7
	Total current liabilities	6,727.7				5,904.3

Long-term debt and finance lease obligations				8,460.0				8,493.3
Long-term operating lease obligations				5,385.0				5,402.8
Deferred income taxes				563.8				613.8
Other long-term liabilities				2,232.4				2,042.8

Commitments and contingencies
Series A convertible preferred stock, $0.01 par value; 1,750,000 shares authorized, 924,000 shares issued and outstanding as of September 12, 2020 and no shares authorized, issued and outstanding as of February 29, 2020				844.3				—
Series A-1 convertible preferred stock, $0.01 par value; 1,410,000 shares authorized, 826,000 shares issued and outstanding as of September 12, 2020 and no shares authorized, issued and outstanding as of February 29, 2020				754.8				—

STOCKHOLDERS' EQUITY
	Undesignated preferred stock, $0.01 par value; 96,840,000 shares authorized, no shares issued as of September 12, 2020 and 30,000,000 shares authorized, no shares issued as of February 29, 2020	—				—
	Class A common stock, $0.01 par value; 1,000,000,000 shares authorized, 584,332,211 and 582,997,251 shares issued as of September 12, 2020 and February 29, 2020, respectively	5.8				5.8
	Class A-1 convertible common stock, $0.01 par value; 150,000,000 shares authorized, no shares issued as of September 12, 2020 and no shares authorized and issued as of February 29, 2020	—				—
	Additional paid-in capital	1,875.8				1,824.3
	Treasury stock, at cost, 105,283,357 shares held as of September 12, 2020 and 3,671,621 shares held as of February 29, 2020	(1,705.8)				(25.8)
	Accumulated other comprehensive loss	(106.4)				(118.5)
	Retained earnings	1,432.2				592.3
	Total stockholders' equity	1,501.6				2,278.1
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY				$	26,469.6			$	24,735.1


	12 weeks ended						28 weeks ended
	September 12, 2020		September 7, 2019		September 12, 2020		September 7, 2019
Net sales and other revenue	$	15,757.6	$	14,176.7	$	38,509.2	$	32,915.1
Cost of sales	11,182.7		10,235.2		27,162.8		23,734.0
Gross profit	4,574.9		3,941.5		11,346.4		9,181.1

Selling and administrative expenses	4,031.2		3,794.6		9,800.6		8,741.2
(Gain) loss on property dispositions and impairment losses, net	(18.3)		(435.5)		12.0		(464.0)

Operating income	562.0		582.4		1,533.8		903.9

Interest expense, net	128.6		177.5		309.2		402.7
Loss on debt extinguishment	49.1		23.1		49.1		65.8
Other (income) expense, net	(11.4)		5.1		(8.3)		(6.0)
Income before income taxes	395.7		376.7		1,183.8		441.4

Income tax expense	111.2		81.9		313.1		97.6
Net income	$	284.5	$	294.8	$	870.7	$	343.8

Other comprehensive income (loss), net of tax
Loss on interest rate swaps	—		(11.3)		—		(38.3)
Recognition of pension gain	10.1		0.7		10.9		24.1

Other	0.3		1.3		1.2		3.0
Other comprehensive income (loss)	$	10.4	$	(9.3)	$	12.1	$	(11.2)

Comprehensive income	$	294.9	$	285.5	$	882.8	$	332.6

Net income per Class A common share
Basic net income per Class A common share	$	0.52	$	0.51	$	1.57	$	0.59
Diluted net income per Class A common share	0.49		0.51		1.49		0.59
Weighted average Class A common shares outstanding
Basic	477.3		579.3		529.2		579.3
Diluted	582.9		580.6		583.3		580.0


	Class A Common Stock					Additional paid in capital		Treasury Stock							Accumulated other comprehensive loss		Retained earnings	Total stockholders' equity
	Shares	Amount					Shares			Amount
Balance as of February 29, 2020	582,997,251	$	5.8	$	1,824.3	3,671,621		$	(25.8)		$	(118.5)	$	592.3	$	2,278.1
Issuance of common stock to Company's parents	1,312,859	—		—		—		—			—		—		—
Equity-based compensation	—	—		19.0		—		—			—		—		19.0
Employee tax withholding on vesting of phantom units	—	—		(6.2)		—		—			—		—		(6.2)

Repurchase of common stock	—	—		—		101,611,736		(1,680.0)			—		—		(1,680.0)
Dividends accrued on convertible preferred stock	—	—		—		—		—			—		(3.9)		(3.9)
Net income	—	—		—		—		—			—		586.2		586.2
Other comprehensive income, net of tax	—	—		—		—		—			1.7		—		1.7

Balance as of June 20, 2020	584,310,110	5.8		1,837.1		105,283,357		(1,705.8)			(116.8)		1,174.6		1,194.9

Equity-based compensation	—	—		9.3		—		—			—		—		9.3
Shares issued and employee tax withholding on vesting of restricted stock	22,101	—		(0.5)		—		—			—		—		(0.5)
Equity reclassification	—	—		30.0		—		—			—		—		30.0


Dividends accrued on convertible preferred stock	—	—		—		—		—			—		(26.9)		(26.9)
Net income	—	—		—		—		—			—		284.5		284.5
Other comprehensive income, net of tax	—	—		—		—		—			10.4		—		10.4
Other activity	—	—		(0.1)		—		—			—		—		(0.1)
Balance as of September 12, 2020	584,332,211	$	5.8	$	1,875.8	105,283,357		$	(1,705.8)		$	(106.4)	$	1,432.2	$	1,501.6


	Fair Value Measurements
	Total		Quoted prices in active markets for identical assets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets:


Short-term investments (1)	$	11.7	$	3.9	$	7.8	$	—
Non-current investments (2)	85.7		22.1		63.6		—

Total	$	97.4	$	26.0	$	71.4	$	—

Liabilities:
Derivative contracts (3)	$	68.9	$	—	$	68.9	$	—

Total	$	68.9	$	—	$	68.9	$	—


	September 12, 2020		February 29, 2020

Senior Unsecured Notes due 2023 to 2030, interest rate range of 3.25% to 7.50%	$	7,132.1	$	6,884.5
Safeway Inc. Notes due 2021 to 2031, interest rate range of 4.75% to 7.45%	504.2		642.1
New Albertsons L.P. Notes due 2026 to 2031, interest rate range of 6.52% to 8.70%	467.7		466.0

Other financing obligations	37.1		37.2
Mortgage notes payable, secured	17.9		18.2
Finance lease obligations	632.6		666.7
Total debt	8,791.6		8,714.7
Less current maturities	(331.6)		(221.4)
Long-term portion	$	8,460.0	$	8,493.3


	12 weeks ended
	Pension						Other post-retirement benefits
	September 12, 2020		September 7, 2019		September 12, 2020		September 7, 2019
Estimated return on plan assets	$	(23.7)	$	(25.3)	$	—	$	—
Service cost	3.5		3.4		—		0.1
Interest cost	12.6		18.6		0.1		0.2
Amortization of prior service cost	—		0.1		0.4		0.9
Amortization of net actuarial loss (gain)	0.5		0.1		(0.1)		(0.2)
Settlement charge	3.0		—		—		—
(Income) expense, net	$	(4.1)	$	(3.1)	$	0.4	$	1.0


	28 weeks ended September 12, 2020
	Total		Interest rate swaps		Pension and Post-retirement benefit plans		Other
Beginning balance	$	(118.5)	$	—	$	(121.7)	$	3.2

Other comprehensive income before reclassifications	11.1		—		9.6		1.5
Amounts reclassified from accumulated other comprehensive income	4.9		—		4.9		—
Tax expense	(3.9)		—		(3.6)		(0.3)
Current-period other comprehensive income, net of tax	12.1		—		10.9		1.2
Ending balance	$	(106.4)	$	—	$	(110.8)	$	4.4


	28 weeks ended September 7, 2019
	Total		Interest rate swaps		Pension and Post-retirement benefit plans		Other
Beginning balance	$	91.3	$	3.4	$	88.8	$	(0.9)
Cumulative effect of accounting change (1)	16.6		1.2		14.9		0.5
Other comprehensive (loss) income before reclassifications	(36.7)		(50.3)		10.2		3.4
Amounts reclassified from accumulated other comprehensive income	(1.0)		(3.2)		2.2		—
Tax benefit (expense)	9.9		14.0		(3.2)		(0.9)
Current-period other comprehensive (loss) income, net of tax	(11.2)		(38.3)		24.1		3.0
Ending balance	$	80.1	$	(34.9)	$	112.9	$	2.1


	Number of stores				Percent of Total				Retail Square Feet (1)
Square Footage	September 12, 2020	September 7, 2019	September 12, 2020		September 7, 2019		September 12, 2020	September 7, 2019
Less than 30,000	204	205	9.1	%	9.1	%	4.7	4.8
30,000 to 50,000	781	790	34.6	%	34.9	%	32.8	33.1
More than 50,000	1,267	1,267	56.3	%	56.0	%	74.8	74.9
Total Stores	2,252	2,262	100.0	%	100.0	%	112.3	112.8


	12 weeks ended
	September 12, 2020		% of Sales		September 7, 2019		% of Sales
Net sales and other revenue	$	15,757.6	100.0	%	$	14,176.7	100.0	%
Cost of sales	11,182.7		71.0		10,235.2		72.2
Gross profit	4,574.9		29.0		3,941.5		27.8
Selling and administrative expenses	4,031.2		25.6		3,794.6		26.8
Gain on property dispositions and impairment losses, net	(18.3)		(0.1)		(435.5)		(3.1)

Operating income	562.0		3.5		582.4		4.1
Interest expense, net	128.6		0.8		177.5		1.3
Loss on debt extinguishment	49.1		0.3		23.1		0.2
Other (income) expense, net	(11.4)		(0.1)		5.1		—
Income before income taxes	395.7		2.5		376.7		2.6
Income tax expense	111.2		0.7		81.9		0.6
Net income	$	284.5	1.8	%	$	294.8	2.0	%

	28 weeks ended
	September 12, 2020		% of Sales		September 7, 2019		% of Sales
Net sales and other revenue	$	38,509.2	100.0	%	$	32,915.1	100.0	%
Cost of sales	27,162.8		70.5		23,734.0		72.1
Gross profit	11,346.4		29.5		9,181.1		27.9
Selling and administrative expenses	9,800.6		25.5		8,741.2		26.6
Loss (gain) on property dispositions and impairment losses, net	12.0		—		(464.0)		(1.4)

Operating income	1,533.8		4.0		903.9		2.7
Interest expense, net	309.2		0.8		402.7		1.2
Loss on debt extinguishment	49.1		0.1		65.8		0.2
Other income, net	(8.3)		—		(6.0)		—
Income before income taxes	1,183.8		3.1		441.4		1.3
Income tax expense	313.1		0.8		97.6		0.3
Net income	$	870.7	2.3	%	$	343.8	1.0	%


Second quarter of fiscal 2020 vs. Second quarter of fiscal 2019			Basis point increase (decrease)
Shrink			44
Advertising and sales mix			44
Distribution, warehousing and supplies			11
Depreciation and rent expense			3
COVID-19 pandemic related costs			(14)

Other			(3)
Total			85


First 28 weeks of fiscal 2020 vs. First 28 weeks of fiscal 2019			Basis point increase (decrease)
Shrink			71
Advertising and sales mix			19
Distribution, warehousing and supplies			7
Depreciation and rent expense			4
COVID-19 pandemic related costs			(21)


Total			80


	28 weeks ended
	September 12, 2020		September 7, 2019
Cash and cash equivalents and restricted cash at end of period	$	2,431.9	$	464.7
Cash flows provided by operating activities	2,720.8		1,084.8
Cash flows (used in) provided by investing activities	(687.1)		307.7
Cash flows used in financing activities	(80.7)		(1,895.5)


Date:	October 21, 2020	By:	/s/ Robert B. Dimond
			Robert B. Dimond
			Executive Vice President and Chief Financial Officer (Principal Financial Officer)


			I, Vivek Sankaran, certify that:


1.			I have reviewed this Quarterly Report on Form 10-Q of Albertsons Companies, Inc.;


Second quarter of fiscal 2020 vs. Second quarter of fiscal 2019			Basis point increase (decrease)
Employee wage and benefit costs			(53)
Depreciation and amortization			(53)
Rent and occupancy costs			(48)
Third-party fees and services			(29)
COVID-19 pandemic related costs, excluding incremental employee wages and benefits			10
Other			(2)
Total			(175)


2.			Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.			Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.			The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


			a)			Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


			b)			Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


			c)			Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


			d)			Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


			a)			All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


			b)			Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


1.			The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


2.			The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.