Safeway 2007 Annual Report Download - page 84

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SAFEWAY INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note K: Commitments and Contingencies
Legal Matters On February 2, 2004, the Attorney General for the State of California filed an action in the United States
District Court for the Central District of California, entitled State of California, ex rel. Bill Lockyer v. Safeway Inc. dba Vons,
et al., against the Company’s subsidiary, The Vons Companies, Inc., Albertsons, Inc. and Ralphs Grocery Company, a
division of the Kroger Company. The complaint alleges that certain provisions of a Mutual Strike Assistance Agreement
(“MSAA”) entered into by the defendants in connection with the Southern California grocery strike that began on
October 11, 2003 constituted a violation of section 1 of the Sherman Antitrust Act. The complaint seeks declaratory and
injunctive relief. The Attorney General has also indicated that it will seek an order requiring the return of any funds
received pursuant to the MSAA. Pursuant to the MSAA, the Company received $83.5 million of payments in 2004, which
it recorded as reductions to cost of sales of $51.5 million and $32 million in the fourth quarter of 2003 and the first
quarter of 2004, respectively. Defendants filed a motion for summary judgment based on the federal non-statutory labor
exemption to the antitrust laws, which motion was denied by the court on May 25, 2005. On November 25, 2005, the
Ninth Circuit issued an order refusing to hear an interlocutory appeal of the order denying defendants’ summary
judgment motion. In July of 2006, the Attorney General filed a motion for summary judgment arguing that the MSAA
was a per se antitrust violation, which motion was denied by the court on December 7, 2006. On October 16, 2006, the
Attorney General filed a second amended complaint naming Safeway Inc. as an additional defendant. Safeway’s motion
to dismiss was denied on December 11, 2006, and Safeway answered the second amended complaint shortly thereafter.
Trial is scheduled for April 15, 2008.
There are also pending against the Company various claims and lawsuits arising in the normal course of business, some of
which seek damages and other relief, which, if granted, would require very large expenditures.
It is management’s opinion that, although the amount of liability with respect to all of the above matters cannot be
ascertained at this time, any resulting liability, including any punitive damages, will not have a material adverse effect on
the Company’s financial statements taken as a whole.
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 consolidated
financial statements. These purchase commitments were $307.9 million at year-end 2007.
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