Safeway 2006 Annual Report Download - page 79

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SAFEWAY INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note M: Computation of Earnings Per Share
(In millions, except per-share amounts) 2006 2005 2004
Diluted Basic Diluted Basic Diluted Basic
Net income $ 870.6 $ 870.6 $ 561.1 $ 561.1 $ 560.2 $ 560.2
Weighted average common shares
outstanding 444.9 444.9 447.9 447.9 445.6 445.6
Common share equivalents 2.9 1.9 3.5
Weighted average shares outstanding 447.8 449.8 449.1
Earnings per share $ 1.94 $ 1.96 $ 1.25 $ 1.25 $ 1.25 $ 1.26
Anti-dilutive shares totaling 22.3 million in 2006, 28.4 million in 2005 and 22.3 million in 2004 have been excluded
from diluted weighted average shares outstanding.
Note N: Guarantees
Safeway has applied the measurement and disclosure provisions of FIN No. 45, “Guarantor’s Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others,” to the Company’s
agreements that contain guarantee and indemnification 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 December 30, 2006, 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 matters, the loss would not have a material effect on the Company’s financial condition or results
of operations.
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