10-Q 1 aci-20211204.htm 10-Q aci-20211204
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 4, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number: 001-39350
aci-20211204_g1.jpg
Albertsons Companies, Inc.
(Exact name of registrant as specified in its charter)
Delaware47-4376911
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)

250 Parkcenter Blvd.
Boise, Idaho 83706
(Address of principal executive offices and zip code)

(208395-6200
(Registrant's telephone number, including area code)

Not applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, $0.01 par valueACINew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No
As of January 10, 2022, the registrant had 483,118,147 shares of Class A common stock, par value $0.01 per share, outstanding.



Albertsons Companies, Inc. and Subsidiaries

Page




PART I - FINANCIAL INFORMATION
Item 1 - Condensed Consolidated Financial Statements (unaudited)

Albertsons Companies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in millions, except share data)
(unaudited)


December 4,
2021
February 27,
2021
ASSETS
Current assets
Cash and cash equivalents$2,661.0 $1,717.0 
Receivables, net607.4 550.9 
Inventories, net4,671.0 4,301.3 
Other current assets440.3 418.8 
Total current assets8,379.7 6,988.0 
Property and equipment, net9,249.4 9,412.7 
Operating lease right-of-use assets5,922.8 6,015.6 
Intangible assets, net2,239.5 2,108.8 
Goodwill1,201.0 1,183.3 
Other assets943.7 889.6 
TOTAL ASSETS$27,936.1 $26,598.0 
LIABILITIES
Current liabilities
Accounts payable$4,066.1 $3,487.3 
Accrued salaries and wages1,483.3 1,474.7 
Current maturities of long-term debt and finance lease obligations82.0 212.4 
Current maturities of operating lease obligations627.8 605.3 
Other current liabilities1,202.0 1,052.5 
Total current liabilities7,461.2 6,832.2 
Long-term debt and finance lease obligations7,915.7 8,101.2 
Long-term operating lease obligations5,508.2 5,548.0 
Deferred income taxes684.9 533.7 
Other long-term liabilities2,456.3 2,659.5 
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 December 4, 2021 and February 27, 2021
844.3 844.3 
Series A-1 convertible preferred stock, $0.01 par value; 1,410,000 shares authorized, 826,000 shares issued and outstanding as of December 4, 2021 and February 27, 2021
754.8 754.8 
STOCKHOLDERS' EQUITY
Undesignated preferred stock, $0.01 par value; 96,840,000 shares authorized, no shares issued as of December 4, 2021 and February 27, 2021
  
Class A common stock, $0.01 par value; 1,000,000,000 shares authorized, 587,855,940 and 585,574,666 shares issued as of December 4, 2021 and February 27, 2021, respectively
5.9 5.9 
Class A-1 convertible common stock, $0.01 par value; 150,000,000 shares authorized, no shares issued as of December 4, 2021 and February 27, 2021
  
Additional paid-in capital1,946.1 1,898.9 
Treasury stock, at cost, 120,009,647 shares held as of December 4, 2021 and February 27, 2021
(1,907.0)(1,907.0)
Accumulated other comprehensive income78.6 63.5 
Retained earnings2,187.1 1,263.0 
Total stockholders' equity2,310.7 1,324.3 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$27,936.1 $26,598.0 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
3




Albertsons Companies, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income
(in millions, except per share data)
(unaudited)
12 weeks ended40 weeks ended
December 4,
2021
December 5,
2020
December 4,
2021
December 5,
2020
Net sales and other revenue$16,728.4 $15,408.9 $54,503.5 $53,918.1 
Cost of sales11,898.3 10,900.3 38,765.4 38,063.1 
Gross margin4,830.1 4,508.6 15,738.1 15,855.0 
Selling and administrative expenses4,243.9 4,309.1 13,978.8 14,109.7 
Gain on property dispositions and impairment losses, net(13.4)(59.0)(13.3)(47.0)
Operating income 599.6 258.5 1,772.6 1,792.3 
Interest expense, net111.3 115.9 373.9 425.1 
Loss on debt extinguishment3.7 8.6 3.7 57.7 
Other income, net(38.3)(19.2)(100.7)(27.5)
Income before income taxes
522.9 153.2 1,495.7 1,337.0 
Income tax expense98.4 29.5 331.2 342.6 
Net income $424.5 $123.7 $1,164.5 $994.4 
Other comprehensive (loss) income, net of tax
Recognition of pension gain0.1 0.6 15.3 11.5 
Other(0.2)(0.1)(0.2)1.1 
Other comprehensive (loss) income$(0.1)$0.5 $15.1 $12.6 
Comprehensive income$424.4 $124.2 $1,179.6 $1,007.0 
Net income per Class A common share
Basic net income per Class A common share$0.78 $0.21 $1.97 $1.78 
Diluted net income per Class A common share0.74 0.20 1.95 1.71 
Weighted average Class A common shares outstanding
Basic466.0 468.7 465.4 511.0 
Diluted574.2 472.1 471.2 580.3 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

4




Albertsons Companies, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in millions)
(unaudited)

40 weeks ended
December 4,
2021
December 5,
2020
Cash flows from operating activities:
Net income$1,164.5 $994.4 
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on property dispositions and impairment losses, net(13.3)(47.0)
Depreciation and amortization1,273.2 1,171.7 
Operating lease right-of-use assets amortization478.2 443.9 
LIFO expense58.6 37.5 
Deferred income tax99.4 (16.8)
Contributions to pension and post-retirement benefit plans, net of (income) expense(73.6)(80.6)
(Gain) loss on interest rate swaps and commodity hedges, net(8.8)24.0 
Deferred financing costs16.0 16.1 
Loss on debt extinguishment3.7 57.7 
Equity-based compensation expense75.4 43.4 
Other (48.7)(46.0)
Changes in operating assets and liabilities:
Receivables, net(69.6)(23.1)
Inventories, net(427.4)(322.9)
Accounts payable, accrued salaries and wages and other accrued liabilities627.6 627.1 
Operating lease liabilities(388.2)(357.7)
Self-insurance assets and liabilities34.7 20.6 
Other operating assets and liabilities(18.9)453.7 
Net cash provided by operating activities2,782.8 2,996.0 
Cash flows from investing activities:
Business acquisitions, net of cash acquired(25.4) 
Payments for property, equipment and intangibles, including payments for lease buyouts(1,216.4)(1,083.0)
Proceeds from sale of long-lived assets37.8 143.9 
Other investing activities26.9 (5.2)
Net cash used in investing activities(1,177.1)(944.3)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 3,500.0 
Payments on long-term borrowings(330.6)(3,638.7)
Payments of obligations under finance leases(50.6)(52.0)
Payment of redemption premium on debt extinguishment(2.9)(48.6)
Payments for debt financing costs (15.9)
Dividends paid on common stock(149.0)(47.3)
Dividends paid on convertible preferred stock(88.6)(36.4)
Proceeds from convertible preferred stock 1,680.0 
Third party issuance costs on convertible preferred stock (80.9)
Treasury stock purchase, at cost (1,864.7)
Employee tax withholding on vesting of restricted stock units(28.7)(13.7)
Other financing activities(11.3)(25.7)
Net cash used in financing activities(661.7)(643.9)
Net increase in cash and cash equivalents and restricted cash944.0 1,407.8 
Cash and cash equivalents and restricted cash at beginning of period1,767.6 478.9 
Cash and cash equivalents and restricted cash at end of period$2,711.6 $1,886.7 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
5


Albertsons Companies, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders' Equity
(in millions, except share data)
(unaudited)

Class A Common StockAdditional paid in capitalTreasury StockAccumulated other comprehensive incomeRetained earnings Total stockholders' equity
SharesAmountSharesAmount
Balance as of February 27, 2021585,574,666 $5.9 $1,898.9 120,009,647 $(1,907.0)$63.5 $1,263.0 $1,324.3 
Equity-based compensation— — 22.2 — — — — 22.2 
Shares issued and employee tax withholding on vesting of restricted stock units945,942 — (10.0)— — — — (10.0)
Cash dividends declared on common stock ($0.10 per common share)
— — — — — — (46.5)(46.5)
Dividends accrued on convertible preferred stock— — — — — — (36.4)(36.4)
Net income— — — — — — 444.8 444.8 
Other comprehensive income, net of tax— — — — — 0.1 — 0.1 
Other activity— —  — — — (0.1)(0.1)
Balance as of June 19, 2021586,520,608 $5.9 $1,911.1 120,009,647 $(1,907.0)$63.6 $1,624.8 $1,698.4 
Equity-based compensation— — 26.8 — — — — 26.8 
Shares issued and employee tax withholding on vesting of restricted stock units147,495 — (1.8)— — — — (1.8)
Cash dividends declared on common stock ($0.10 per common share)
— — — — — — (46.5)(46.5)
Dividends accrued on convertible preferred stock— — — — — — (27.3)(27.3)
Net income— — — — — — 295.2 295.2 
Other comprehensive income, net of tax— — — — — 15.1 — 15.1 
Balance as of September 11, 2021586,668,103 $5.9 $1,936.1 120,009,647 $(1,907.0)$78.7 $1,846.2 $1,959.9 
Equity-based compensation— — 26.4 — — — — 26.4 
Shares issued and employee tax withholding on vesting of restricted stock units1,187,837 — (16.9)— — — — (16.9)
Cash dividends declared on common stock ($0.12 per common share)
— — — — — — (56.0)(56.0)
Dividends accrued on convertible preferred stock— — — — — — (27.2)(27.2)
Net income— — — — — — 424.5 424.5 
Other comprehensive loss, net of tax— — — — — (0.1)— (0.1)
Other activity— — 0.5 — — — (0.4)0.1 
Balance as of December 4, 2021587,855,940 $5.9 $1,946.1 120,009,647 $(1,907.0)$78.6 $2,187.1 $2,310.7 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
6


Albertsons Companies, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders' Equity
(in millions, except share data)
(unaudited)

Class A Common StockAdditional paid in capitalTreasury StockAccumulated other comprehensive lossRetained earnings Total stockholders' equity
SharesAmountSharesAmount
Balance as of February 29, 2020582,997,251 $5.8 $1,824.3 3,671,621 $(25.8)$(118.5)$592.3 $2,278.1 
Issuance of common stock to Company's parents1,312,859 — — — — — — — 
Equity-based compensation— — 19.0 — — — — 19.0 
Employee tax withholding on vesting of restricted stock 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, 2020584,310,110 $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 units22,101 — (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 loss, net of tax— — — — — 10.4 — 10.4 
Other activity— — (0.1)— — — — (0.1)
Balance as of September 12, 2020584,332,211 $5.8 $1,875.8 105,283,357 $(1,705.8)$(106.4)$1,432.2 $1,501.6 
Equity-based compensation— — 15.1 — — — — 15.1 
Shares issued and employee tax withholding on vesting of restricted stock units1,198,504 0.1 (7.0)— — — — (6.9)
Repurchase of common stock— — — 13,635,932 (184.7)— — (184.7)
Cash dividends declared on common stock ($0.10 per common share)
— — — — — — (47.3)(47.3)
Dividends accrued on convertible preferred stock— — — — — — (27.3)(27.3)
Net income— — — — — — 123.7 123.7 
Other comprehensive income, net of tax— — — — — 0.5 — 0.5 
Other activity— — (0.1)— — — 0.1  
Balance as of December 5, 2020585,530,715 $5.9 $1,883.8 118,919,289 $(1,890.5)$(105.9)$1,481.4 $1,374.7 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
7


Albertsons Companies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(unaudited)

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying interim Condensed Consolidated Financial Statements include the accounts of Albertsons Companies, Inc. and its subsidiaries (the "Company"). All significant intercompany balances and transactions were eliminated. The Condensed Consolidated Balance Sheet as of February 27, 2021 is derived from the Company's annual audited Consolidated Financial Statements, which should be read in conjunction with these Condensed Consolidated Financial Statements and which are included in the Company's Annual Report on Form 10-K for the fiscal year ended February 27, 2021, filed with the Securities and Exchange Commission (the "SEC") on April 28, 2021. Certain information in footnote disclosures normally included in annual financial statements was condensed or omitted for the interim periods presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). In the opinion of management, the interim data includes all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. The interim results of operations and cash flows are not necessarily indicative of those results and cash flows expected for the year. The Company's results of operations are for the 12 and 40 weeks ended December 4, 2021 and December 5, 2020.

Significant Accounting Policies

Restricted cash: Restricted cash is included in Other current assets or Other assets depending on the remaining term of the restriction and primarily relates to funds held in escrow. The Company had $50.6 million of restricted cash as of December 4, 2021 and February 27, 2021.

Inventories, net: Substantially all of the Company's inventories consist of finished goods valued at the lower of cost or market and net of vendor allowances. The Company uses either item-cost or the retail inventory method to value inventory before application of any last-in, first-out ("LIFO") reserve. Interim LIFO inventory costs are based on management's estimates of expected year-end inventory levels and inflation rates. The Company recorded LIFO expense of $29.5 million and $14.3 million for the 12 weeks ended December 4, 2021 and December 5, 2020, respectively, and $58.6 million and $37.5 million for the 40 weeks ended December 4, 2021 and December 5, 2020, respectively.

Equity-based compensation: Equity-based compensation expense recognized in the Condensed Consolidated Statements of Operations (in millions):
12 weeks ended40 weeks ended
December 4,
2021
December 5,
2020
December 4,
2021
December 5,
2020
RSUs$24.5 $13.6 $69.1 $39.4 
RSAs1.9 1.5 6.3 4.0 
Total equity-based compensation expense $26.4 $15.1 $75.4 $43.4 
Total related tax benefit$6.3 $3.5 $17.8 $10.1 

As of December 4, 2021, there was $113.7 million of unrecognized costs related to 10.0 million unvested granted restricted stock units ("RSUs"). That cost is expected to be recognized over a weighted average period of 1.8 years. As of December 4, 2021, there was $5.5 million of unrecognized costs related to 1.0 million unvested granted restricted common stock ("RSAs"). That cost is expected to be recognized over a weighted average period of 1.9 years.

Convertible Preferred Stock: Subsequent to the end of the 12 weeks ended December 4, 2021, certain holders of the Company's Series A-1 convertible preferred stock ("Series A-1 preferred stock") and Series A convertible preferred stock ("Series A preferred stock" and together with the Series A-1 preferred stock, the "Convertible
8


Preferred Stock") converted approximately 262,601 shares of Convertible Preferred Stock into approximately 15,247,696 shares of the Company's Class A common stock. These conversions represented approximately 15% of the Convertible Preferred Stock outstanding as of the end of the 12 weeks ended December 4, 2021.

Income taxes: Income tax expense was $98.4 million, representing a 18.8% effective tax rate, for the 12 weeks ended December 4, 2021. Income tax expense was $29.5 million, representing a 19.3% effective tax rate, for the 12 weeks ended December 5, 2020. The decrease in the effective income tax rate was primarily driven by incremental discrete state income tax benefits related to expired statutes and audit settlements during the 12 weeks ended December 4, 2021.

Income tax expense was $331.2 million, representing a 22.1% effective tax rate, for the 40 weeks ended December 4, 2021. Income tax expense was $342.6 million, representing a 25.6% effective tax rate, for the 40 weeks ended December 5, 2020. The decrease in the effective income tax rate was primarily driven by the recognition of discrete state income tax benefits during the 40 weeks ended December 4, 2021 and certain nondeductible transaction-related costs incurred during the 40 weeks ended December 5, 2020.

Segments: The Company and its subsidiaries offer grocery products, general merchandise, health and beauty care products, pharmacy, fuel and other items and services in its stores or through digital channels. The Company's operating divisions are geographically based, have similar economic characteristics and similar expected long-term financial performance. The Company's operating segments and reporting units are its 12 operating divisions, which are reported in one reportable segment. Each reporting unit constitutes a business for which discrete financial information is available and for which management regularly reviews the operating results. Across all operating segments, the Company operates primarily one store format. Each division offers through its stores and digital channels the same general mix of products with similar pricing to similar categories of customers, has similar distribution methods, operates in similar regulatory environments and purchases merchandise from similar or the same vendors.

Revenue Recognition: Revenues from the retail sale of products are recognized at the point of sale or delivery to the customer, net of returns and sales tax. Pharmacy sales are recorded upon the customer receiving the prescription. Third-party receivables from pharmacy sales were $269.5 million and $262.5 million as of December 4, 2021 and February 27, 2021, respectively, and are recorded in Receivables, net. For digital related sales, which primarily include home delivery and Drive Up & Go curbside pickup, revenues are recognized upon either pickup in store or delivery to the customer and may include revenue for separately charged delivery services. The Company records a contract liability when rewards are earned by customers in connection with the Company's loyalty programs. As rewards are redeemed or expire, the Company reduces the contract liability and recognizes revenue. The contract liability balance was immaterial as of December 4, 2021 and February 27, 2021.

The Company records a contract liability when it sells its own proprietary gift cards. The Company records a sale when the customer redeems the gift card. The Company's gift cards do not expire. The Company reduces the contract liability and records revenue for the unused portion of gift cards ("breakage") in proportion to its customers' pattern of redemption, which the Company determined to be the historical redemption rate. The Company's contract liability related to gift cards was $103.3 million as of December 4, 2021 and $98.1 million as of February 27, 2021. Breakage amounts were immaterial for the 12 and 40 weeks ended December 4, 2021 and December 5, 2020, respectively.

9


Disaggregated Revenues

The following table represents sales revenue by type of similar product (dollars in millions):
12 weeks ended40 weeks ended
December 4,
2021
December 5,
2020
December 4,
2021
December 5,
2020
Amount (1)% of TotalAmount (1)% of TotalAmount (1)% of TotalAmount (1)% of Total
Non-perishables (2)$7,344.2 43.9 %$7,007.9 45.5 %$23,883.0 43.8 %$24,918.3 46.2 %
Perishables (3)6,798.0 40.6 6,369.7 41.3 22,533.8 41.3 22,579.4 41.9 
Pharmacy1,436.7 8.6 1,272.7 8.3 4,418.7 8.1 3,999.4 7.4 
Fuel906.6 5.4 528.9 3.4 2,874.4 5.3 1,688.9 3.1 
Other (4)242.9 1.5 229.7 1.5 793.6 1.5 732.1 1.4 
Net sales and other revenue
$16,728.4 100.0 %$15,408.9 100.0 %$54,503.5 100.0 %$53,918.1 100.0 %
(1) Digital related sales are included in the categories to which the revenue pertains.
(2) Consists primarily of general merchandise, grocery and frozen foods.
(3) Consists primarily of produce, dairy, meat, deli, floral and seafood.
(4) Consists primarily of wholesale revenue to third parties, commissions and other miscellaneous revenue.

Recently issued accounting standards: In June 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06, "Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity" ("ASU 2020-06"). ASU 2020-06 simplifies the accounting for certain convertible instruments, amends guidance on derivative scope exceptions for contracts in an entity's own equity and modifies the guidance on diluted earnings per share calculations as a result of these changes. ASU 2020-06 will take effect for public entities for annual reporting periods beginning after December 15, 2021, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the effect of this standard on its Consolidated Financial Statements.

NOTE 2 - FAIR VALUE MEASUREMENTS

The accounting guidance for fair value established a framework for measuring fair value and established a three-level valuation hierarchy for disclosure of fair value measurement. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability at the measurement date. The three levels are defined as follows:
Level 1 - Quoted prices in active markets for identical assets or liabilities;
Level 2 - Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and
Level 3 - Unobservable inputs in which little or no market activity exists, requiring an entity to develop its own assumptions that market participants would use to value the asset or liability.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

10


The following table presents assets and liabilities which were measured at fair value on a recurring basis as of December 4, 2021 (in millions):
Fair Value Measurements
TotalQuoted prices in active markets
 for identical assets
(Level 1)
Significant
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Assets:
Short-term investments (1)$12.0 $5.1 $6.9 $ 
Non-current investments (2)128.4 19.8 108.6  
Derivative contracts (3)9.3  9.3  
Total$149.7 $24.9 $124.8 $ 
Liabilities:
Derivative contracts (4)$18.3 $ $18.3 $ 
Total$18.3 $ $18.3 $ 
(1) Primarily relates to Mutual Funds (Level 1) and Certificates of Deposit (Level 2). Included in Other current assets.
(2) Primarily relates to investments in publicly traded stock (Level 1) and certain equity investments, U.S. Treasury Notes and Corporate Bonds (Level 2). Included in Other assets.
(3) Primarily relates to energy derivative contracts. Included in Other assets.
(4) Primarily relates to interest rate swaps. Included in Other current liabilities.
The following table presents assets and liabilities which were measured at fair value on a recurring basis as of February 27, 2021 (in millions):
 Fair Value Measurements
TotalQuoted prices in active markets
 for identical assets
(Level 1)
Significant
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Assets:
Short-term investments (1)$11.9 $4.4 $7.5 $ 
Non-current investments (2)110.2 40.3 69.9  
Total$122.1 $44.7 $77.4 $ 
Liabilities:
Derivative contracts (3)$40.0 $ $40.0 $ 
Total$40.0 $ $40.0 $ 
(1) Primarily relates to Mutual Funds (Level 1) and Certificates of Deposit (Level 2). Included in Other current assets.
(2) Primarily relates to investments in publicly traded stock (Level 1) and U.S. Treasury Notes and Corporate Bonds (Level 2). Included in Other assets.
(3) Primarily relates to interest rate swaps. Included in Other current liabilities.

The estimated fair value of the Company's debt, including current maturities, was based on Level 2 inputs, being market quotes or values for similar instruments, and interest rates currently available to the Company for the issuance of debt with similar terms and remaining maturities as a discount rate for the remaining principal payments. As of December 4, 2021, the fair value of total debt was $7,850.0 million compared to the carrying value of $7,484.9 million, excluding debt discounts and deferred financing costs. As of February 27, 2021, the fair value of total debt was $8,150.7 million compared to the carrying value of $7,815.5 million, excluding debt discounts and deferred financing costs.
11


Assets Measured at Fair Value on a Non-Recurring Basis

The Company measures certain assets at fair value on a non-recurring basis, including long-lived assets and goodwill, which are evaluated for impairment. Long-lived assets include store-related assets such as property and equipment and certain intangible assets. The inputs used to determine the fair value of long-lived assets and a reporting unit are considered Level 3 measurements due to their subjective nature.

NOTE 3 - DERIVATIVE FINANCIAL INSTRUMENTS

The aggregate notional amount of the Company's interest rate swaps as of December 4, 2021 and February 27, 2021, were $1,553.0 million and $1,653.0 million, respectively, of which none were designated as cash flow hedges as defined by GAAP.

Activity related to interest rate swaps, recorded in Other income, net, consisted of the following (in millions):
12 weeks ended40 weeks ended
December 4,
2021
December 5,
2020
December 4,
2021
December 5,
2020
Gain (loss) on interest rate swaps$0.7 $(0.3)$0.4 $(19.7)

NOTE 4 - LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS

The Company's long-term debt and finance lease obligations as of December 4, 2021 and February 27, 2021, net of unamortized debt discounts of $42.2 million and $44.8 million, respectively, and deferred financing costs of $60.1 million and $69.8 million, respectively, consisted of the following (in millions):
December 4,
2021
February 27,
2021
Senior Unsecured Notes due 2023 to 2030, interest rate range of 3.25% to 7.50%
$6,490.0 $6,680.5 
Safeway Inc. Notes due 2027 to 2031, interest rate range of 7.25% to 7.45%
374.4 504.3 
New Albertsons L.P. Notes due 2026 to 2031, interest rate range of 6.52% to 8.70%
471.6 469.1 
Other financing obligations29.2 29.4 
Mortgage notes payable, secured17.4 17.6 
Finance lease obligations 615.1 612.7 
Total debt7,997.7 8,313.6 
Less current maturities(82.0)(212.4)
Long-term portion$7,915.7 $8,101.2 

Senior Unsecured Notes

On October 1, 2021, the Company provided notice to the holders and trustee of its election to redeem the $200.0 million aggregate principal amount outstanding (the "2025 Redemption") of the Company's 5.750% Senior Unsecured Notes due 2025 (the "2025 Notes"). The 2025 Notes were redeemed on November 1, 2021 (the "Redemption Date") using cash on hand, at a redemption price of 101.438% of the principal amount thereof plus accrued and unpaid interest on the 2025 Notes to, but excluding, the Redemption Date. The Company recorded a $3.7 million loss on debt extinguishment related to the 2025 Redemption, comprised of a $2.9 million make-whole premium and a $0.8 million write-off of deferred financing costs.

Safeway Notes

The Company repaid the remaining $130.0 million in aggregate principal amount outstanding of Safeway's 4.75% Notes due 2021 on their maturity date, December 1, 2021.
12



ABL Facility

As of December 4, 2021 and February 27, 2021, there were no amounts outstanding under the Company's asset-based loan facility ("ABL Facility"), and letters of credit ("LOC") issued under the LOC sub-facility were $249.6 million and $354.6 million, respectively.

On December 20, 2021, subsequent to the end of the 12 weeks ended December 4, 2021, the existing ABL Facility was amended and restated to, among other things, extend the maturity date of the facility to December 20, 2026, reduce the unused line fee to 0.25% per annum and reduce the interest rate based on availability.

NOTE 5 - EMPLOYEE BENEFIT PLANS

Pension and Other Post-Retirement Benefits

The following tables provide the components of net pension and post-retirement (income) expense (in millions):
12 weeks ended
PensionOther post-retirement benefits
December 4,
2021
December 5,
2020
December 4,
2021
December 5,
2020
Estimated return on plan assets$(22.1)$(24.3)$ $ 
Service cost4.5 3.7   
Interest cost8.1 9.7  0.1 
Amortization of prior service cost0.1 0.1  0.5 
Amortization of net actuarial loss (gain)0.1 0.4  (0.2)
(Income) expense, net$(9.3)$(10.4)$ $0.4