Safeway 2000 Annual Report Download - page 4

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2
TO OUR STOCKHOLDERS
Safeway continued to perform exceptionally well
in 2000, the company’s 75th year of operation.
We exceeded $1 billion in earnings for the first
time, improved our already strong gross profit and
operating cash flow margins, accelerated our capi-
tal spending program and initiated another
promising acquisition.
OPERATING AND FINANCIAL RESULTS
As indicated in the highlights below, we recorded
strong operating results in 2000.
■■Net income increased 12.5% to $1.1 billion
($2.13 per share) from $971 million ($1.88 per share)
in 1999. Excluding the estimated effects of a strike
involving the operator of our northern California
distribution center described below, net income in
2000 was up 19.3% to $1.2 billion ($2.26 per share).
■■Total sales rose 11% to $32.0 billion, primarily due
to strong store operations, new store openings and the
Randall’s acquisition completed in the fourth quarter
of 1999. On a strike-adjusted basis, comparable-store
sales increased 3.3%, while identical-store sales (which
exclude replacement stores) were up 2.7%.
■■Gross profit, adjusted for the effects of the strike,
improved 64 basis points to 29.93% of sales from pro
forma results in 1999. The increase reflects continuing
improvements in buying practices and product mix.
■■On a pro forma basis, operating and administra-
tive expense, excluding the effects of the strike,
declined 11 basis points to 22.49% of sales. This
was the eighth consecutive year of improvement in
our O&A expense-to-sales ratio.
■■Operating cash flow as a percentage of sales
on a strike-adjusted basis reached 10.05%, our
best ever and one of the highest EBITDA levels
in the industry.
■■Our interest coverage ratio (operating cash flow
divided by interest expense) remained a strong