GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Feb. 25, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

NOTE 6—GOODWILL AND INTANGIBLE ASSETS

Changes in Supervalu’s Goodwill and Intangible assets, net consisted of the following:



	February 28, 2015			Additions			Impairments			Other net adjustments			February 27, 2016			Additions			Impairments			Other net adjustments			February 25, 2017
Goodwill:
Wholesale	$	710		$	—		$	—		$	—		$	710		$	—		$	—		$	—		$	710
Retail	14			1			—			—			15			—			(15		)	—			—
Total goodwill	$	724		$	1		$	—		$	—		$	725		$	—		$	(15	)	$	—		$	710

Intangible assets:
Favorable operating leases, prescription files, customer lists and other	$	120		$	22		$	(6	)	$	(1	)	$	135		$	2		$	—		$	4		$	141
Tradenames and trademarks—indefinite useful lives	9			—			—			—			9			—			—			(4		)	5
Total intangible assets	129			22			(6		)	(1		)	144			2			—			—			146
Accumulated amortization	(88		)	(10		)	—			1			(97		)	(11		)	—			1			(107		)
Total intangible assets, net	$	41											$	47											$	39

Supervalu applies a fair value based impairment test to the net book value of goodwill and intangible assets with indefinite useful lives on an annual basis and on an interim basis if events or circumstances indicate that an impairment loss may have occurred.

During the third quarter of fiscal 2017, Supervalu conducted an interim impairment review of the carrying value of Supervalu’s reporting units in conjunction with its impairment review of Save-A-Lot’s goodwill and due to declines in sales and cash flows within Retail. The review indicated that the estimated fair value of the Wholesale reporting unit was substantially in excess of its carrying value. The review also indicated that the carrying value of the Retail reporting unit exceeded its estimated fair value, as determined utilizing the income approach and market approach. As a result, Supervalu performed the step 2 assessment and recorded a non-cash goodwill impairment charge of $15 in the Retail segment during the third quarter of fiscal 2017. The calculation of the impairment charge contains significant judgments and estimates including weighted average cost of capital, future revenue, profitability, cash flows and fair values of assets and liabilities.

Supervalu conducted an annual impairment review of the net book value of goodwill and intangible assets with indefinite useful lives during the fourth quarter of fiscal 2017, which indicated that it is not more than likely that the fair value of each goodwill reporting unit is less than their respective carrying values and the carrying value of intangible assets were in excess of their fair value. As a result, the first and second steps of goodwill and intangible assets impairment testing was unnecessary.

In the first quarter ended June 20, 2015, Supervalu recorded intangible assets using valuations based on Level 3 inputs consisting primarily of certain distribution center operation rights, purchase options and other intangibles received by Supervalu under the letter agreement Supervalu entered into with Albertson’s dated May 28, 2015, as described in Note 15—Commitments, Contingencies and Off-Balance Sheet Arrangements.

In the third quarter ended December 5, 2015, Supervalu received a notice pursuant to which Supervalu could exercise certain purchase options under the letter agreement. As a result, Supervalu performed a review of the associated intangible assets for impairment, which indicated the carrying value of the intangible exceeded its estimated value. Supervalu recorded a non-cash intangible impairment charge of $6 within its Wholesale segment.

Annual impairment testing and the related calculation of the impairment charges contain significant judgments and estimates including weighted average cost of capital, future revenue, profitability, cash flows and fair values of assets and liabilities.

Amortization expense of intangible assets with definite useful lives of $11, $10 and $8 was recorded in fiscal 2017, 2016 and 2015, respectively. The estimated future amortization expense for the next five fiscal years on intangible assets outstanding as of February 25, 2017 consists of the following:



Fiscal Year
2018	$	9
2019	5
2020	3
2021	3
2022	3
Thereafter	11

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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