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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 9 Months Ended
Dec. 04, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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
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.
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.