Safeway 2009 Annual Report Download - page 83

SAFEWAY INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The Company’s accrued postretirement benefit obligation (“APBO”) was $65.5 million at year-end 2009 and $52.6
million at year-end 2008. The APBO represents the actuarial present value of the benefits expected to be paid after
retirement. Postretirement benefit expense was $6.2 million in 2009, $7.2 million in 2008 and $7.6 million in 2007.
Estimated Future Benefit Payments The following benefit payments, which reflect expected future service as
appropriate, are expected to be paid (in millions):
Pension
benefits
Other
benefits
2010 $ 121.2 $ 4.7
2011 125.5 4.9
2012 131.7 5.1
2013 136.8 5.3
2014 141.4 5.5
2015 – 2019 767.9 29.7
Multi-Employer Pension Plans Safeway participates in various multi-employer retirement plans, covering substantially
all Company employees not covered under the Company's non-contributory retirement plans, generally defined benefit
plans, pursuant to agreements between the Company and various unions. In many cases, specific benefit levels are not
negotiated with contributing employers or in some cases even known by contributing employers. Contributions of $278.1
million in 2009, $286.9 million in 2008 and $270.1 million in 2007 were made and charged to expense.
Note L: Investment in Unconsolidated Affiliates
At year-end 2009, 2008 and 2007, Safeway’s investment in unconsolidated affiliates includes a 49% ownership interest
in Casa Ley, which operated 156 food and general merchandise stores in Western Mexico at year-end 2009.
Equity in earnings from Safeway’s unconsolidated affiliates, which is included in other income, was income of $8.5 million
in 2009, a loss of $2.5 million in 2008 and income of $8.7 million in 2007.
Note M: 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 (now ex. rel. Jerry Brown)
v. Safeway Inc. dba Vons, et al., against the Company; 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’ motion for summary judgment based on
the federal non-statutory labor exemption to the antitrust laws was denied by the court on May 25, 2005 and again on
March 6, 2008. The Attorney General’s motion for summary judgment arguing that the MSAA was a per se antitrust
violation was denied by the court on December 7, 2006. On March 27, 2008, pursuant to a stipulation of the parties, the
court entered a final judgment in favor of the defendants. Both sides have appealed issues to the Ninth Circuit Court of
Appeals. The Ninth Circuit heard oral argument on October 8, 2009.
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.
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