Safeway 2000 Annual Report Download - page 31

Safeway Inc. and Subsidiaries
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NOTE A: THE COMPANY AND SIGNIFICANT
ACCOUNTING POLICIES
THE COMPANY Safeway Inc. (“Safeway” or the “Company”)
is one of the largest food and drug retailers in North
America, with 1,688 stores as of year-end 2000. Safeway’s
U.S. retail operations are located principally in California,
Oregon, Washington, Alaska, Colorado, Arizona, Texas, the
Chicago metropolitan area and the Mid-Atlantic region. The
Company’s Canadian retail operations are located principally
in British Columbia, Alberta and Manitoba/Saskatchewan.
In support of its retail operations, the Company has an
extensive network of distribution, manufacturing and food
processing facilities.
In February 2001, the Company acquired all of the
assets of Genuardi’s Family Markets, Inc. (“Genuardi’s”) for
approximately $530 million in cash (the “Genuardi’s
Acquisition”). The Genuardi’s Acquisition will be accounted
for as a purchase and was funded through the issuance of
commercial paper and debentures.
During 2000, the Company invested $40 million cash and
entered into strategic alliance and grocery supply agreements
with GroceryWorks.com, an internet grocer, in exchange for
non-voting convertible preferred stock that is not yet exercisable.
This investment is accounted for under the cost method.
In September 1999, Safeway acquired all of the outstand-
ing shares of Randall’s Food Markets, Inc. (“Randall’s”) in
exchange for $1.3 billion consisting of $754 million of cash
and 12.7 million shares of Safeway stock (the “Randall’s
Acquisition”). The Randall’s Acquisition was accounted for
as a purchase and resulted in goodwill of approximately
$1.3 billion which is being amortized over 40 years. Safeway
funded the cash portion of the acquisition, and subsequent
repayment of approximately $403 million of Randall’s debt,
through the issuance of senior notes. Randall’s operating
results have been consolidated with Safeway’s since the
beginning of the fourth quarter of 1999.
In April 1999, Safeway acquired Carr-Gottstein Foods
Co. (“Carrs”) by purchasing all of the outstanding shares of
Carrs for approximately $106 million in cash (the “Carrs
Acquisition”). The Carrs Acquisition was accounted for
as a purchase and resulted in goodwill of approximately
$213 million which is being amortized over 40 years.
Safeway funded the acquisition, and subsequent repayment of
$239 million of Carrs’ debt, with the issuance of commercial
paper. Safeway’s 1999 income statement includes 40 weeks of
Carrs’ operating results.
In November 1998, the Company acquired Dominick’s
Supermarkets, Inc. (“Dominick’s”) by purchasing all of
the outstanding shares of Dominick’s for approximately
$1.2 billion in cash (the “Dominick’s Acquisition”). The
Dominick’s Acquisition was accounted for as a purchase and
resulted in goodwill of approximately $1.6 billion which is
being amortized over 40 years. Dominick’s operating results
have been consolidated with Safeway’s since approximately
midway through the fourth quarter of 1998.
In addition to these operations, the Company has a
49% ownership interest in Casa Ley, S.A. de C.V. (“Casa
Ley”), which operates 97 food and general merchandise
stores in western Mexico.
BASIS OF CONSOLIDATION The consolidated financial state-
ments include Safeway Inc., a Delaware corporation, and all
majority-owned subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolida-
tion. Safeway records its equity in earnings of unconsolidated
affiliate on a one-quarter delay basis.
FISCAL YEAR The Company’s fiscal year ends on the
Saturday nearest December 31. The last three fiscal years
consist of the 52-week periods ended December 30, 2000,
January 1, 2000 and January 2, 1999.
REVENUE RECOGNITION Revenue is recognized at the point
of sale for retail sales.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS