Item 8.01. Other Events.
As described in Note 6 to the Notes to the Condensed Consolidated Financial
Statements in the Quarterly Report on Form 10-Q for the quarterly period ended
September 12, 2020, filed by Albertsons Companies, Inc. (the "Company") on
October 21, 2020, the Company disclosed that it expected to reach final
agreements (the "Final Agreements") regarding the combination of the Food
Employers Labor Relations Association and United Food and Commercial Workers
Pension Plan ("FELRA") and the Mid-Atlantic UFCW and Participating Pension Fund
("MAP") (the "Combined Plan") no later than December 31, 2020 (the "Prior
Disclosure"). On December 31, 2020, the Final Agreements were executed by the
Company and the other parties to the Final Agreements. The material terms and
conditions of the Final Agreements are as set forth in the Prior Disclosure.
As a result, commencing February 2021, the Company is required to annually pay
$23.2 million to the Combined Plan for the next 25 years. This payment replaces
the Company's previous annual contribution to both MAP and FELRA, which was a
combined $26.2 million in fiscal 2019. Immediately after the combination, the
Company received a release of all withdrawal liability and mass withdrawal
liability from FELRA, MAP, the Combined Plan and the Pension Benefit Guaranty
Corporation ("PBGC"). In addition to the $23.2 million annual payment, the
Company will contribute to a new multiemployer pension plan. These contributions
are expected to commence in June 2022 and are currently estimated to be between
approximately $10.0-$12.0 million annually for 10 years. This new multiemployer
plan is limited to providing benefits to the former participants in MAP and
FELRA in excess of the benefits the PBGC insures under law. The Company
preliminarily expects to record a non-cash pre-tax charge of approximately
$595 million ($445 million, net of tax) in its fourth quarter to record the
pension obligation for these benefits earned for prior service. This charge will
not affect Adjusted EBITDA and Adjusted net income for fiscal 2020 as those
measures exclude such pension settlement charges. The evaluation of the
accounting charge is ongoing, and the estimated impact is preliminary and
subject to change.
The Company also established and will begin contributions to a new variable
defined benefit plan that provides benefits to participants for future services.
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