Safeway 2006 Annual Report Download - page 40

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SAFEWAY INC. AND SUBSIDIARIES
In 2004 Safeway was notified that it was required to contribute an additional $31.1 million before tax ($0.04 per
diluted share) during the year to two Northern California multi-employer health and welfare plans for its share of
funding deficits.
On February 7, 2005, the Office of the Chief Accountant of the Securities and Exchange Commission issued a letter to
the American Institute of Certified Public Accountants expressing its view regarding certain lease-related accounting
issues and their application under generally accepted accounting principles (“GAAP”). In light of this letter, Safeway
determined that its then-current method of accounting for rent holidays was not in accordance with GAAP.
Historically, the Company recognized rent expense on a straight-line basis beginning at the first rent payment. The
Company now recognizes rent expense on a straight-line basis when it takes possession and control of the property.
Safeway recorded a $10.6 million before-tax charge ($0.01 per diluted share) in 2004 to correct this error. However,
most of the adjustment was accumulated over many years.
Sales Total sales increased 4.6% to $40.2 billion in 2006 from $38.4 billion in 2005 primarily because of Safeway’s
marketing strategy, Lifestyle store execution and increased fuel sales.
Same-store sales increases for 2006 were as follows:
Comparable-store
sales (includes
replacement stores)
Identical-store sales
(excludes
replacement stores)
Including fuel 4.4% 4.1%
Excluding fuel 3.5% 3.3%
Total sales increased 7.2% to $38.4 billion in 2005 from $35.8 billion in 2004, primarily because of Safeway’s
marketing strategy, Lifestyle store execution and increased fuel sales.
Same-store sales increases for 2005 were as follows:
Comparable-store
sales (includes
replacement stores)
Identical-store sales
(excludes
replacement stores)
Including fuel:
Excluding strike-affected stores 4.6% 4.4%
Including strike-affected stores 5.9% 5.8%
Excluding fuel:
Excluding strike-affected stores 3.0% 2.9%
Including strike-affected stores 4.4% 4.3%
In 2004 total sales increased only slightly to $35.8 billion from $35.7 billion in 2003, primarily because of the Southern
California strike and because fiscal 2004 had one fewer week than fiscal 2003.
Same-store sales increases (decreases) for 2004 were as follows:
Comparable-store
sales (includes
replacement stores)
Identical-store sales
(excludes
replacement stores)
Including fuel:
Excluding strike-affected stores 1.5% 0.9%
Including strike-affected stores 0.9% 0.3%
Excluding fuel:
Excluding strike-affected stores (0.2%) (0.8%)
Including strike-affected stores (0.7%) (1.3%)
22