Safeway 2004 Annual Report Download - page 52

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SAFEWAY INC. AND SUBSIDIARIES
50 SAFEWAY INC. 2004 ANNUAL REPORT
FURR’S AND HOMELAND CHARGE In 1987, Safeway
assigned a number of leases to Furr’s Inc. (“Furr’s”) and
Homeland Stores, Inc. (“Homeland”) as part of the sale of
the Company’s former El Paso, Texas and Oklahoma City,
Oklahoma divisions. Safeway is contingently liable if Furr’s
and Homeland are unable to continue making rental
payments on these leases. In 2001, Safeway recorded a pre-
tax charge to earnings of $42.7 million to recognize the
estimated lease liabilities associated with the Furr’s and
Homeland bankruptcies and for a single lease from
Safeway’s former Florida division. In 2002, Furr’s began the
liquidation process and Homeland emerged from bankruptcy
and, based on the resolution of various leases, Safeway
reversed $12.1 million of this accrual.
Safeway is unable to determine its maximum potential
obligation with respect to other divested operations, should
there be any similar defaults, because information about
the total numbers of leases from these divestitures that are
still outstanding is not available. Based on an internal
assessment by the Company, performed by taking the
The following table presents information about the Company by geographic area (in millions):
U.S. Canada Total
2004
Sales and other revenue $31,463.0 $4,359.9 $35,822.9
Operating profit 928.9 243.9 1,172.8
Income before income taxes 550.2 243.7 793.9
Long-lived assets, net 7,796.9 892.5 8,689.4
Total assets 13,753.5 1,623.9 15,377.4
2003
Sales and other revenue $31,678.7 $4,048.5 $35,727.2
Operating profit 344.1 229.8 573.9
(Loss) income before income taxes (86.2) 227.3 141.1
Long-lived assets, net 7,607.9 797.9 8,405.8
Total assets 13,679.8 1,416.9 15,096.7
2002
Sales and other revenue $31,437.4 $3,479.8 $34,917.2
Operating profit 773.0 174.6 947.6
Income before income taxes and cumulative effect of accounting change 363.3 169.0 532.3
Long-lived assets, net 7,876.8 654.0 8,530.8
Total assets 14,948.8 1,098.4 16,047.2
original inventory of assigned leases at the time of the
divestitures and accounting for the passage of time,
Safeway expects that any potential losses beyond those
recorded, should there be any similar defaults, would not be
material to Safeway’s operating results, cash flow or
financial position.
COMMITMENTS The Company has commitments under
contracts for the purchase of property and equipment and
for the construction of buildings. Portions of such contracts
not completed at year-end are not reflected in the consol-
idated financial statements. These unrecorded commitments
were $139.7 million at year-end 2004.
Note M: Segments
Safeway’s retail grocery business, which represents more
than 98% of consolidated sales and other revenue and
operates in the United States and Canada, is its only
reportable segment.