Safeway 2004 Annual Report Download - page 53

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SAFEWAY INC. 2004 ANNUAL REPORT 51
SAFEWAY INC. AND SUBSIDIARIES
Note N: Computation of Earnings (Loss) Per Share
(In millions, except per-share amounts) 2004 2003 2002
Diluted Basic Diluted Basic Diluted Basic
Income (loss) before cumulative effect of
accounting change $ 560.2 $ 560.2 $(169.8) $(169.8) $(128.1) $(128.1)
Cumulative effect of accounting change –– ––(700.0) (700.0)
Net income (loss) $ 560.2 $ 560.2 $(169.8) $(169.8) $(828.1) $(828.1)
Weighted average common shares outstanding 445.6 445.6 441.9 441.9 467.3 467.3
Common share equivalents 3.5
Weighted average shares outstanding 449.1
Earnings (loss) per common share and
common share equivalent:
Income (loss) before cumulative effect of
accounting change $ 1.25 $ 1.26 $ (0.38) $ (0.38) $ (0.27) $ (0.27)
Cumulative effect of accounting change –– ––(1.50) (1.50)
Net income (loss) $ 1.25 $ 1.26 $ (0.38) $ (0.38) $ (1.77) $ (1.77)
Calculation of common share equivalents:
Options to purchase common shares 12.6
Common shares assumed purchased with
potential proceeds (9.1)
Common share equivalents 3.5
Calculation of common shares assumed
purchased with potential proceeds:
Potential proceeds from exercise of options
to purchase common shares $ 192.8
Common stock price used under the treasury
stock method $ 21.26
Common shares assumed purchased with
potential proceeds 9.1
Anti-dilutive shares totaling 22.3 million in 2004, 26.2 million in 2003 and 21.7 million in 2002 have been excluded from diluted weighted average shares outstanding.
Note O: Guarantees
Safeway has applied the measurement and disclosure
provisions of FASB Interpretation (“FIN”) No. 45 to the
Company’s agreements that contain guarantee and indemni-
fication clauses. FIN No. 45 requires that upon issuance of
a guarantee, the guarantor must disclose and recognize a
liability for the fair value of the obligation it assumes under
the guarantee. The initial recognition and measurement
provisions of FIN No. 45 were effective for guarantees issued
or modified after December 31, 2002. As of January 1, 2005,
Safeway did not have any material guarantees that were
issued or modified subsequent to December 31, 2002.
However, the Company is party to a variety of contractual
agreements under which Safeway may be obligated to
indemnify the other party for certain matters. These contracts
primarily relate to Safeway’s commercial contracts,
operating leases and other real estate contracts, trademarks,
intellectual property, financial agreements and various other
agreements. Under these agreements, the Company may
provide certain routine indemnifications relating to
representations and warranties (for example ownership of
assets, environmental or tax indemnifications) or personal
injury matters. The terms of these indemnifications range in
duration and may not be explicitly defined. Historically,
Safeway has not made significant payments for these
indemnifications. The Company believes that if it were to
incur a loss in any of these manners, the loss would not
have a material effect on the Company’s financial condition
or results of operations.