Safeway 1997 Annual Report Download - page 17

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The table below reconciles cash paid for property additions
reflected in the Consolidated Statements of Cash Flows to
Safeway’s broader definition of capital expenditures (dollars in
millions), and also details changes in the Company’s store base
during such period:
1997 1996 1995
Cash paid for property
additions $758.2 $541.8 $450.9
Less: Purchases of
previously leased
properties (28.2) (13.2) (9.9)
Plus: Present value of all
lease obligations
incurred 91.3 91.7 62.2
Mortgage notes assumed
in property additions 0.9 ––
Vons first quarter expenditures 7.2 ––
■■■■
Total capital expenditures $829.4 $620.3 $503.2
■■■■
Capital expenditures as a
percent of sales 3.7% 3.6% 3.1%
Vons stores acquired 316 ––
New stores opened 37 30 32
Stores closed or sold 37 37 35
Remodels 181 141 108
Total retail square footage
at year-end (in millions) 53.2 40.7 40.1
Improved operations and lower project costs have raised the
return on capital projects, allowing Safeway to increase capital
expenditures to $829 million in 1997 from $620 million in 1996
and $503 million in 1995. In 1998, Safeway expects to spend
approximately $950 million and plans to open 40 to 45 new
stores, complete more than 200 remodels and finish construc-
tion of the Maryland distribution center.
Management regularly reviews the performance of individual
stores and other facilities on the basis of a variety of economic
factors. Upon reaching the decision to close a store or other
facility, the Company accrues estimated future losses, if any,
which may include lease payments or other costs of holding the
facility, net of estimated future income. As of year-end 1997,
Safeway had an accrued liability of $72.0 million for the antici-
pated future closure of 42 stores and $19.7 million for the
anticipated future closure of other facilities.
Performance-Based Compensation
The Company has performance-based compensation plans
that cover approximately 7,750 management employees.
Performance-based compensation plans set overall bonus
levels based upon both operating results and working capital
management. Individual bonuses are based on job perfor-
mance. Certain employees are covered by capital investment
bonus plans which measure the performance of capital
projects based on operating performance over several years.
14