Safeway 2001 Annual Report Download - page 39

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gains of $9.3 million in 2001 and $15.0 million in 2000 as a result
of transfers of employees and their related accrued benefits and
assets from the Safeway Plan to the Multiple Employer Plan.
The actuarial assumptions used to determine year-end plan
status were as follows:
2001 2000 1999
Discount rate used to determine
the projected benefit obligation:
United States Plans 7.5% 7.8% 7.8%
Canadian Plans 7.0 7.0 7.5
Combined weighted average rate 7.4 7.6 7.7
Expected return on plan assets:
United States Plans 9.0% 9.0% 9.0%
Canadian Plans 8.0 8.0 8.0
Rate of compensation increase:
United States Plans 5.0% 5.0% 5.0%
Canadian Plans 5.0 5.0 5.0
RETIREMENT RESTORATION PLAN The Retirement Restoration
Plan provides death benefits and supplemental income payments
for senior executives after retirement. The Company recognized
expense of $5.5 million in 2001, $4.7 million in 2000 and $5.4
million in 1999. The aggregate projected benefit obligation of
the Retirement Restoration Plan was approximately $55.8 mil-
lion at year-end 2001 and $53.1 million at year-end 2000.
MULTI-EMPLOYER PENSION PLANS Safeway participates in var-
ious multi-employer pension plans, covering virtually all
Company employees not covered under the Company’s non-
contributory pension plans, pursuant to agreements between the
Company and employee bargaining units that are members of
such plans. These plans are generally defined benefit plans; how-
ever, in many cases, specific benefit levels are not negotiated with
or known by the employer-contributors. Contributions of $158
million in 2001, $154 million in 2000 and $144 million in
1999 were made and charged to expense.
Under U.S. legislation regarding such pension plans, a company
is required to continue funding its proportionate share of a plan’s
unfunded vested benefits in the event of withdrawal (as defined by the
legislation) from a plan or plan termination. Safeway participates in
a number of these pension plans, and the potential obligation as a
participant in these plans may be significant. The information
required to determine the total amount of this contingent obliga-
tion, as well as the total amount of accumulated benefits and net
assets of such plans, is not readily available. During 1988 and 1987,
the Company sold certain operations. In most cases, the party
acquiring the operation agreed to continue making contributions to
the plans. Safeway is relieved of the obligations related to these sold
operations to the extent that the acquiring parties continue to make
contributions. Whether such sales could result in withdrawal under
ERISA and, if so, whether such withdrawals could result in liability
to the Company, is not determinable at this time.
COLLECTIVE BARGAINING AGREEMENTS At year-end 2001,
Safeway had more than 193,000 full and part-time employees.
Approximately 76% of Safeway’s employees in the United States
and Canada are covered by collective bargaining agreements nego-
tiated with local unions affiliated with one of 12 different interna-
tional unions. There are approximately 400 such agreements,
typically having three-year terms, with some agreements having
terms of up to five years. Accordingly, Safeway negotiates a sig-
nificant number of these agreements every year.
Note J: Investment in
Unconsolidated Affiliates
At year-end 2001, 2000 and 1999, Safeway’s investment in uncon-
solidated affiliates includes a 49% ownership interest in Casa Ley,
which operates 99 food and general merchandise stores in western
Mexico. At year-end 2001, Safeway’s investment in unconsolidated
affiliates also included a 50% voting interest in GroceryWorks, an
Internet grocer, and a 15% ownership interest in FBO, a beef pro-
cessing operation.
Equity in earnings, net from Safeway’s unconsolidated affili-
ates, which is included in other (loss) income, was $20.2 million
in 2001, $31.2 million in 2000, and $34.5 million in 1999.
Additionally, Safeway recorded a $30.1 million impairment