Safeway 2007 Annual Report Download - page 86

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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) 2007 2006 2005
Diluted Basic Diluted Basic Diluted Basic
Net income $ 888.4 $ 888.4 $ 870.6 $ 870.6 $ 561.1 $ 561.1
Weighted-average common shares
outstanding 440.3 440.3 444.9 444.9 447.9 447.9
Common share equivalents 5.4 2.9 1.9
Weighted-average shares outstanding 445.7 447.8 449.8
Earnings per share $ 1.99 $ 2.02 $ 1.94 $ 1.96 $ 1.25 $ 1.25
Anti-dilutive shares totaling 15.0 million in 2007, 22.3 million in 2006 and 28.4 million in 2005 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 29, 2007, 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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