aci-20210619

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 June 19, 2021

☐ 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

Albertsons Companies, Inc.

(Exact name of registrant as specified in its charter)


Delaware						47-4376911
(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)

(208) 395-6200

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

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller 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 July 28, 2021, the registrant had 466,535,671 shares of Class A common stock, par value $0.01 per share, outstanding.

Albertsons Companies, Inc. and Subsidiaries



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	7










	Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations	18
	Item 3 - Quantitative and Qualitative Disclosures About Market Risk	29
	Item 4 - Controls and Procedures	30

PART II - OTHER INFORMATION
	Item 1 - Legal Proceedings	31
	Item 1A - Risk Factors	31
	Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds	31
	Item 3 - Defaults Upon Senior Securities	31
	Item 4 - Mine Safety Disclosures	31
	Item 5 - Other Information	31
	Item 6 - Exhibits	31

SIGNATURES		33

Table of Contents

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)


		June 19, 2021		February 27, 2021
ASSETS
Current assets
	Cash and cash equivalents	$	2,173.8	$	1,717.0
	Receivables, net	618.7		550.9
	Inventories, net	4,271.9		4,301.3
	Other current assets	313.1		418.8
	Total current assets	7,377.5		6,988.0

Property and equipment, net		9,295.1		9,412.7
Operating lease right-of-use assets		5,857.3		6,015.6
Intangible assets, net		2,149.1		2,108.8
Goodwill		1,200.5		1,183.3
Other assets		902.4		889.6
TOTAL ASSETS		$	26,781.9	$	26,598.0

LIABILITIES
Current liabilities
	Accounts payable	$	3,386.3	$	3,487.3
	Accrued salaries and wages	1,365.4		1,474.7
	Current maturities of long-term debt and finance lease obligations	214.3		212.4
	Current maturities of operating lease obligations	610.9		605.3
	Other current liabilities	1,127.3		1,052.5
	Total current liabilities	6,704.2		6,832.2

Long-term debt and finance lease obligations		8,145.8		8,101.2
Long-term operating lease obligations		5,464.5		5,548.0
Deferred income taxes		534.6		533.7
Other long-term liabilities		2,635.3		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 June 19, 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 June 19, 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 June 19, 2021 and February 27, 2021	—		—
	Class A common stock, $0.01 par value; 1,000,000,000 shares authorized, 586,520,608 and 585,574,666 shares issued as of June 19, 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 June 19, 2021 and February 27, 2021	—		—
	Additional paid-in capital	1,911.1		1,898.9
	Treasury stock, at cost, 120,009,647 shares held as of June 19, 2021 and February 27, 2021	(1,907.0)		(1,907.0)
	Accumulated other comprehensive income	63.6		63.5
	Retained earnings	1,624.8		1,263.0
	Total stockholders' equity	1,698.4		1,324.3
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	26,781.9	$	26,598.0

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

Table of Contents

Albertsons Companies, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income

(in millions, except per share data)

(unaudited)


	16 weeks ended
	June 19, 2021		June 20, 2020
Net sales and other revenue	$	21,269.4	$	22,751.6
Cost of sales	15,078.4		15,980.1
Gross profit	6,191.0		6,771.5

Selling and administrative expenses	5,503.6		5,769.4
Loss on property dispositions and impairment losses, net	0.3		30.3

Operating income	687.1		971.8

Interest expense, net	153.3		180.6

Other (income) expense, net	(43.5)		3.1
Income before income taxes	577.3		788.1

Income tax expense	132.5		201.9
Net income	$	444.8	$	586.2

Other comprehensive income, net of tax
Recognition of pension gain	0.1		0.8

Other	—		0.9
Other comprehensive income	$	0.1	$	1.7

Comprehensive income	$	444.9	$	587.9

Net income per Class A common share
Basic net income per Class A common share	$	0.80	$	1.03
Diluted net income per Class A common share	0.78		1.00
Weighted average Class A common shares outstanding
Basic	465.1		568.0
Diluted	571.4		583.7

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

Table of Contents

Albertsons Companies, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in millions)

(unaudited)


	16 weeks ended
	June 19, 2021		June 20, 2020
Cash flows from operating activities:
Net income	$	444.8	$	586.2
Adjustments to reconcile net income to net cash provided by operating activities:
Loss on property dispositions and impairment losses, net	0.3		30.3
Depreciation and amortization	504.2		460.1
Operating lease right-of-use assets amortization	189.3		176.4

LIFO expense	14.5		13.1
Deferred income tax	(17.9)		(51.2)

Contributions to pension and post-retirement benefit plans, net of (income) expense	(14.5)		(63.5)
(Gain) loss on interest rate swaps and commodity hedges, net	(6.3)		24.5


Equity-based compensation expense	22.2		19.0
Other	(22.9)		(1.8)
Changes in operating assets and liabilities:
Receivables, net	(74.7)		(4.7)
Inventories, net	14.8		67.8
Accounts payable, accrued salaries and wages and other accrued liabilities	(31.3)		733.1
Operating lease liabilities	(109.5)		(98.7)
Self-insurance assets and liabilities	27.5		24.1
Other operating assets and liabilities	118.5		177.2
Net cash provided by operating activities	1,059.0		2,091.9

Cash flows from investing activities:
Business acquisitions, net of cash acquired	(23.5)		—
Payments for property, equipment and intangibles, including payments for lease buyouts	(513.4)		(402.3)
Proceeds from sale of long-lived assets	15.2		6.7
Other investing activities	28.7		(3.8)
Net cash used in investing activities	(493.0)		(399.4)

Cash flows from financing activities:
Proceeds from issuance of long-term debt	—		2,000.0
Payments on long-term borrowings	(0.3)		(2,001.4)
Payments of obligations under finance leases	(14.1)		(14.1)


Dividends paid on common stock	(46.5)		—
Dividends paid on convertible preferred stock	(29.5)		—
Proceeds from convertible preferred stock	—		1,680.0
Third party issuance costs on convertible preferred stock	—		(80.9)
Treasury stock purchase, at cost	—		(1,680.0)
Employee tax withholding on vesting of restricted stock units	(10.0)		(6.2)
Other financing activities	(8.8)		(4.3)
Net cash used in financing activities	(109.2)		(106.9)

Net increase in cash and cash equivalents and restricted cash	456.8		1,585.6
Cash and cash equivalents and restricted cash at beginning of period	1,767.6		478.9
Cash and cash equivalents and restricted cash at end of period	$	2,224.4	$	2,064.5

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

Table of Contents

Albertsons Companies, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders' Equity

(in millions, except share data)

(unaudited)


	Class A Common Stock			Additional paid in capital		Treasury Stock			Accumulated other comprehensive income	Retained earnings	Total stockholders' equity
	Shares	Amount				Shares	Amount
Balance as of February 27, 2021	585,574,666	$	5.9	$	1,898.9	120,009,647	$	(1,907.0)	$

SEC Form 10-Q filed by Albertsons Companies, Inc.