Safeway 2011 Annual Report Download

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®
2011 ANNUAL REPORT
BUILDING LOYALTY
FOSTERING GROWTH

Table of contents

  • Page 1
    ® BUILDING LOYALTY FOSTERING GROWTH 2011 ANNUAL REPORT

  • Page 2
    MANUFACTURING AND FOOD PROCESSING FACILITIES Year-end 2011 Milk Plants Bakery Plants Ice Cream Plants Cheese & Meat Packing Plants Soft Drink Bottling Plants Fruit & Vegetable Processing Plants Cake Commissary Sandwich Commissary TOTAL STORE COUNTS Year-end 2011 U.S. 6 6 2 - 4 1 1 - 20 Canada 3 2...

  • Page 3
    ... December 31, 2011, the company operated 1,678 stores in the Western, Southwestern, Rocky Mountain, Midwestern and Mid-Atlantic regions of the United States and in western Canada. In support of its stores, Safeway has an extensive network of distribution, manufacturing and food processing facilities...

  • Page 4
    ...80.1 1,725 Sales and other revenue Gross profit Operating profit (loss) Net income (loss) attributable to Safeway Inc. Diluted earnings (loss) per share Adjusted diluted earnings per share1 Cash paid for capital expenditures At year-end Common shares outstanding (in millions) Retail square feet (in...

  • Page 5
    ... FCF $ 43.6 Total sales increased to $43.6 billion, compared with $41.1 billion in 2010. 15 % Adjusted diluted earnings per share grew at nearly 15% between 2010 and 2011, from $1.55 to $1.78.1 $ 751 We generated strong free cash flow of $751 million2 in 2011 and returned over $1.7 billion...

  • Page 6
    ... interest rates and a low stock price environment, increasing our debt at the end of 2011 to allow for an increase in our stock repurchases. During 2011, we opened 25 new stores, completed 29 Lifestyle remodels and closed 41 stores, which brought our store base to 1,678 locations at year-end. With...

  • Page 7
    ... had competitive everyday pricing and attractive Club Card specials, the initial roll-out of our just for Uâ„¢ digital marketing program has created a personalized way to deliver meaningful offers to enhance the value our customers receive in our stores. At the same time, we added new items to...

  • Page 8
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  • Page 9
    GREAT QUALITY BUILDS LOYALTY, AND WE INSIST ON EXCELLENCE-IN OUR PRODUCTS, OUR SERVICE AND THE EXCEPTIONAL SHOPPING EXPERIENCE WE PROVIDE. Our customers tell us quality and consistency are two of the reasons they shop with us. In our stores, customers find an exceptionally high-quality selection of...

  • Page 10
    ... "pre-shop" tool to save money on groceries. Customers who sign up receive personalized prices and digital coupons- all downloadable directly to their Club Cards. We added features this year and developed a mobile app so customers can access their just for U account at their convenience. We strive...

  • Page 11
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  • Page 12
    ... TO OUR STRATEGY OF DIFFERENTIATING OURSELVES FROM COMPETITORS. For years, our Consumer Brands group has provided innovative products and brands, such as O Organics and Eating Right, building a strong Health & Wellness portfolio. This year, we expanded Open Nature, our line of 100% natural products...

  • Page 13
    NEW ITEMS 949 In 2011 alone, we created 949 new private-label products, including Open Nature items and Safeway SELECT marinated meats and frozen appetizers, among others. Many of these were developed in our state-of-the-art culinary center, Safeway Culinary Kitchens. We also began rebranding our...

  • Page 14
    ... Our Property Development Centers (PDC) subsidiary develops retail shopping center properties. PDC completed several projects in 2011, and with many more under development, PDC is expected to generate value for Safeway. We also continue to explore opportunities in the health and wellness area. Page...

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  • Page 18
    ... Former Chief Executive Officer Vodafone Group Plc. David R. Stern Senior Vice President Planning and Business Development Daniel J. Valenzuela Phoenix Division Michael S. Shannon Managing Director KSL Capital Partners LLC Jerry Tidwell Senior Vice President Supply Operations EQUIT Y AFFILIATE...

  • Page 19
    ... of principal executive offices) Registrant's telephone number, including area code: 94-3019135 (I.R.S. Employer Identification No.) 94588-3229 (Zip Code) (925) 467-3000 Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock, $0.01 par value per share 7.45...

  • Page 20
    ... sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter. The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 18, 2011 was approximately $7.9 billion...

  • Page 21
    ... Financial Statement Schedules Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accountant...

  • Page 22
    ...on gross margin and identical-store sales; Discount rates used in actuarial calculations for pension obligations and self-insurance reserves; The rate of return on our pension assets; The availability and terms of financing, including interest rates; Adverse developments with regard to food and drug...

  • Page 23
    ... 2011 ("fiscal 2010" or "2010") and the 52-week period ended January 2, 2010 ("fiscal 2009" or "2009"). Safeway Inc. is one of the largest food and drug retailers in North America, with 1,678 stores at year-end 2011. The Company's U.S. retail operations are located principally in California, Hawaii...

  • Page 24
    ...100% Square footage Less than 30,000 30,000 to 50,000 More than 50,000 Total stores Store Ownership At year-end 2011, Safeway owned 42% of its stores and leased its remaining stores. Merchandising Safeway's operating strategy is to provide value to its customers by maintaining high store standards...

  • Page 25
    ...of the Company's long-term growth strategy is its capital expenditure program. The Company's capital expenditure program funds, among other things, new stores, remodels, retail shopping center development, manufacturing plants, distribution facilities and information technology. Safeway's management...

  • Page 26
    ... II, Item 8 of this report provides financial information about the Company's segments, geographic areas and sales revenue by type of similar product. Trade Names and Trademarks Safeway has invested significantly in the development and protection of "Safeway" both as a trade name and a trademark and...

  • Page 27
    ... 34,000 employees, primarily in stores in the Company's Vons, Seattle and Northern California (Hawaii) divisions, as well as stores in Alberta, Canada, were ratified. Available Information Safeway's corporate Web site is located at www.safeway.com. You may access our Securities and Exchange...

  • Page 28
    ... or maintain our profit margins, we develop strategies to increase revenues, reduce costs and increase gross margins, such as new marketing programs, new advertising campaigns, productivity improvements, shrink reduction, distribution center efficiencies, energy efficiency programs and other similar...

  • Page 29
    ... between the fair value of the plan assets and the projected benefit obligation) is a significant factor in determining annual pension expense as well as cash contributions to fund the plans. Historically, Safeway's retirement plans have been well funded, and prior to 2011, cash contributions to the...

  • Page 30
    ..., the projected benefit obligation exceeded the fair value of the plan assets. As a result, cash contributions to pension and post-retirement plans increased from $17.7 million in 2010 to approximately $176.2 million in 2011 and are expected to be $160.0 million in 2012. If financial markets do not...

  • Page 31
    ...California workers' compensation has received intense scrutiny from the state's politicians, insurers, employers and providers, as well as the public in general. Recent years have seen escalation in the number of legislative reforms, judicial rulings and social phenomena affecting our business. Some...

  • Page 32
    ... Safeway also sells fuel. Significant increases in wholesale fuel costs could result in retail price increases and in lower gross profit on fuel sales. Additionally, consumer demand for fuel may decline if retail prices increase. Such volatility and the impact to our operations and financial results...

  • Page 33
    ... and Chief Executive Officer Diane M. Dietz (1) Executive Vice President and Chief Marketing Officer Robert L. Edwards Executive Vice President and Chief Financial Officer Bruce L. Everette Executive Vice President Retail Operations Larree M. Renda Executive Vice President President, Safeway Health...

  • Page 34
    ... as Executive Vice President in 2007, she served Procter & Gamble in various positions since 1989. (2) Russell M. Jackson was appointed as Senior Vice President, Human Resources, of the Company in March 2007. Prior to joining Safeway, he was employed with PG&E Corporation for 27 years, where...

  • Page 35
    ... in "street name" by depositories or nominees on behalf of beneficial holders. The closing price per share of common stock, as reported on the New York Stock Exchange Composite Tape, was $22.67 at the close of business on February 22, 2012. Although the Company expects to continue to pay quarterly...

  • Page 36
    ... Equity Securities Total number of shares purchased as part of publicly announced plans or programs - 13,550,000 14,850,000 14,937,000 43,337,000 Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions) (3) $ 925.9 669.1 1,379.3 1,067.3 $ 1,067.3 Fiscal...

  • Page 37
    ... total stockholder return on its common stock for the period from the end of its 2006 fiscal year to the end of its 2011 fiscal year to that of the Standard & Poor's ("S&P") 500 and a group of peer companies(*) in the retail grocery industry and assumes reinvestment of dividends. The stock price...

  • Page 38
    ... Weeks 2007 $ 42,286.0 12,152.9 (10,380.8) - 1,772.1 (388.9) 20.4 1,403.6 (515.2) 888.4 - 888.4 2.02 1.99 (Dollars in millions, except per-share amounts) Results of Operations Sales and other revenue Gross profit Operating and administrative expense Goodwill impairment charge Operating profit (loss...

  • Page 39
    ...-store sales increases (decreases) without fuel (1) Gross profit margin Operating & administrative expense as a percentage of sales (2) Operating profit (loss) as a percentage of sales (3) Cash paid for property additions Depreciation expense Total assets (3) Total debt Total equity (3) Other...

  • Page 40
    ... Network distribution commissions on the sale of certain gift cards, net of commissions shared with other retailers. In the first quarter of 2011, Safeway determined that these commissions should be reported on a gross basis. This change increased both revenue and cost of goods sold in fiscal 2011...

  • Page 41
    ... of sales in 2010. The impact from fuel sales decreased gross profit margin 80 basis points. The remaining 45 basis-point decline was largely the result of a 53 basis-point decline due to cost increases and investments in price, a 32 basis-point decline from the change in the reporting for gift card...

  • Page 42
    ...Treasury Note rates for the estimated average claim life of five years, was 0.75% in 2011, 2.00% in 2010 and 2.75% in 2009. A 25-basis-point change in the discount rate affects the self-insured liability between $4 million and $5 million. The majority of the Company's workers' compensation liability...

  • Page 43
    ... of the pension benefits. The discount rate used to determine 2011 pension expense was 5.6%. A lower discount rate increases the present value of benefit obligations and increases pension expense. Expected return on pension plan assets is based on historical experience of the Company's portfolio and...

  • Page 44
    ... in 2012. If return on plan assets is less than expected, or if discount rates decline, plan contributions could increase significantly in 2012 and beyond. Net cash flow used by investing activities, which consists principally of cash paid for property additions, was $1,014.5 million in 2011, $798...

  • Page 45
    ...uses. Fiscal Year (in millions) Net cash flow from operating activities (Increase) decrease in payables related to third-party gift cards, net of receivables Net cash flow from operating activities, as adjusted Net cash flow used by investing activities Investments and business acquisitions Net cash...

  • Page 46
    ...cash flow from operating activities by $396 million and reduced cash flow used by financing activities by $17 million. Bank Credit Agreement and Term Loan Agreement Information about the Company's bank credit agreement and term loan agreement appear in Note D to the consolidated financial statements...

  • Page 47
    ...Dividends Paid on Common Stock The following table presents information regarding dividends paid on Safeway's common stock during fiscal 2011, 2010 and 2009. Record Date 9/22/2011 6/23/2011 3/24/2011 12/23/2010 Per-Share Amounts $ 0.1450 0.1450 0.1200 0.1200 Year-to-date Total $ 188.0 138.7 88.0 44...

  • Page 48
    ... were executed in fiscal 2011 but were settled in fiscal 2012. The average price per share, excluding commissions, was $20.85. Taking into consideration stock prices, low interest rates and management's belief regarding our potential to grow operating profit over the next several years, Safeway used...

  • Page 49
    ...(1) The fair value of the interest rate swaps at year-end 2011 was an asset of $4.4 million. Foreign Currency Exchange Risk Safeway is exposed to foreign currency risk, primarily through its operations in Canada. Certain transactions and the Company's net equity investment in Canada are exposed to...

  • Page 50
    ... Management's Annual Report on Internal Control over Financial Reporting Report of Independent Registered Public Accounting Firm Consolidated Statements of Operations for fiscal 2011, 2010 and 2009 Consolidated Statements of Comprehensive Income (Loss) for fiscal 2011, 2010 and 2009 Consolidated...

  • Page 51
    ... statements and the Company's internal control over financial reporting. The report of the independent registered public accounting firm is included in this Annual Report on Form 10-K and begins on the following page. /s/ Steven A. Burd STEVEN A. BURD Chairman, President and Chief Executive Officer...

  • Page 52
    ... 31, 2011 and January 1, 2011, and the related consolidated statements of operations, comprehensive income (loss), stockholders' equity and cash flows for each of the three years in the period ended December 31, 2011. We also have audited the Company's internal control over financial reporting as of...

  • Page 53
    ... Consolidated Statements of Operations (In millions, except per-share amounts) 52 Weeks 2011 Sales and other revenue Cost of goods sold Gross profit Operating and administrative expense Goodwill impairment charge Operating profit (loss) Interest expense Other income, net Income (loss) before...

  • Page 54
    ...52 Weeks 2011 Net income (loss) before allocation to noncontrolling interests Other comprehensive income (loss): Translation adjustments, net of tax Pension and post-retirement benefits adjustment to funded status, net of tax Recognition of pension and post-retirement benefits actuarial loss, net of...

  • Page 55
    ... per-share amounts) Year-end 2011 Assets Current assets: Cash and equivalents Receivables Merchandise inventories, net of LIFO reserve of $70.1 and $35.1 Prepaid expenses and other current assets Total current assets Property: Land Buildings Leasehold improvements Fixtures and equipment Property...

  • Page 56
    ...leases Accounts payable Accrued salaries and wages Deferred income taxes Other accrued liabilities Total current liabilities Long-term debt: Notes and debentures Obligations under capital leases Total long-term debt Deferred income taxes Pension and post-retirement benefit obligations Accrued claims...

  • Page 57
    ... Payables related to third-party gift cards, net of receivables Net cash flow from operating activities Investing Activities: Cash paid for property additions Proceeds from sale of property Investments and business acquisitions Other Net cash used by investing activities 52 Weeks 2010 52 Weeks 2009...

  • Page 58
    ... exercise of stock options Excess tax benefit from share-based employee compensation Income tax refund related to prior years' debt financing Payment of debt issuance costs Other Net cash flow used by financing activities Effect of changes in exchange rates on cash (Decrease) increase in cash and...

  • Page 59
    ... of year Share-based employee compensation Options exercised Other Balance, end of year Treasury Stock: Balance, beginning of year Purchase of treasury stock Options exercised Other Balance, end of year Retained Earnings: Balance, beginning of year Net income (loss) attributable to Safeway Inc. Cash...

  • Page 60
    ...Balance, end of year 52 Weeks 2010 52 Weeks 2009 Number of Shares Issued 599.8 3.2 1.5 604.5 592.6 6.1 1.1 599.8 Number of Shares Treasury Stock: Balance, beginning of year Purchase of treasury stock Other Balance, end of year See accompanying notes to consolidated financial statements. (231.8) (76...

  • Page 61
    ... Financial Statements Note A: The Company and Significant Accounting Policies The Company Safeway Inc. ("Safeway" or the "Company") is one of the largest food and drug retailers in North America, with 1,678 stores as of year-end 2011. Safeway's U.S. retail operations are located principally...

  • Page 62
    ... on claims filed and an estimate of claims incurred but not yet reported, and is discounted using a risk-free rate of interest. The present value of such claims was calculated using a discount rate of 0.75% in 2011, 2.00% in 2010 and 2.75% in 2009. A summary of changes in Safeway's self-insurance...

  • Page 63
    ... Financial Statements The current portion of the self-insurance liability is included in other accrued liabilities, and the long-term portion is included in accrued claims and other liabilities in the consolidated balance sheets. The total undiscounted liability was $485.7 million at year-end 2011...

  • Page 64
    ... traded debt. To estimate the fair value of debt issues that are not quoted in public markets, the Company uses those interest rates that are currently available to it for issuance of debt with similar terms and remaining maturities as a discount rate for the remaining principal payments. Store...

  • Page 65
    ... Canada. On September 15, 2011, Blackhawk acquired Cardpool, Inc., a prepaid card exchange company where customers can buy, sell or trade previously issued prepaid cards. The purchase consideration was $42.3 million, consisting of $9.9 million cash paid at close, a $9.2 million payment due one year...

  • Page 66
    ...to each reporting unit and consider sales, gross profit, operating profit and cash flows and general economic and market conditions, as well as the impact of planned business and operational strategies. We base our fair value estimates on assumptions we believe to be reasonable at the time, but such...

  • Page 67
    ...of the following at year end (in millions): 2011 Commercial paper Bank credit agreement, unsecured Other bank borrowings, unsecured Mortgage notes payable, secured 6.50% Senior Notes due 2011, unsecured 5.80% Senior Notes due 2012, unsecured 3.00% Second Series Notes due 2014, unsecured 6.25% Senior...

  • Page 68
    ... term credit agreement. Shelf Registration On October 24, 2011, the Company filed a shelf registration statement (the "Shelf") with the SEC which enables Safeway to issue an unlimited amount of debt securities and/or common stock. The Shelf expires on October 24, 2014. The Safeway Board of Directors...

  • Page 69
    ... INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Annual Debt Maturities As of year-end 2011, annual debt maturities (principal payments only, excluding the interest rate swap fair value adjustment) were as follows (in millions): 2012 2013 2014 2015 2016 Thereafter $ 806.9 1.6 1,048...

  • Page 70
    ...AND SUBSIDIARIES Notes to Consolidated Financial Statements The following table presents assets and liabilities which are measured at fair value on a recurring basis at December 31, 2011 (in millions): Fair Value Measurements Quoted prices in active markets for identical assets (Level 1) $ 290.0 22...

  • Page 71
    ... taxes) and discounting them using a risk-adjusted rate of interest. Safeway estimates future cash flows based on its experience and knowledge of the market in which the store is located and, when necessary, uses real estate brokers. During fiscal 2011, long-lived assets with a carrying value of $64...

  • Page 72
    ...the property at amounts that approximate fair market value. As of year-end 2011, future minimum rental payments applicable to non-cancelable capital and operating leases with remaining terms in excess of one year were as follows (in millions): Capital leases 2012 2013 2014 2015 2016 Thereafter Total...

  • Page 73
    ... time prior to the expiration date of six to 15 years from the date of the grant. Shares issued, as a result of stock option exercises, will be funded with the issuance of new shares. The 2007 Equity and Incentive Award Plan (the "2007 Plan") and the 2011 Equity and Incentive Award Plan (the "2011...

  • Page 74
    ...Chief Executive Officer. Safeway may grant incentive and non-qualified options to purchase common stock at an exercise price equal to or greater than the fair market value at the grant date. At December 31, 2011, 19.2 million shares of common stock were available for issuance under this plan. Shares...

  • Page 75
    ... average period of 2.5 years. Additional Stock Plan Information Safeway accounts for stock-based employee compensation in accordance with generally accepted accounting principles for stock compensation. The Company determines fair value of such awards using the Black-Scholes option pricing model...

  • Page 76
    ... to Consolidated Financial Statements Total share-based compensation expenses recognized as a component of operating and administrative expense is as follows (in millions): 2011 Share-based compensation expense Income tax benefit Share-based compensation expense recognized in earnings, net of tax...

  • Page 77
    ... returns for 2004 and 2005. Significant components of the Company's net deferred tax liability at year end were as follows (in millions): 2011 Deferred tax assets: Pension liability Workers' compensation and other claims Employee benefits Accrued claims and other liabilities Reserves not currently...

  • Page 78
    ...for fiscal years before 2006. The Company does not anticipate that unrecognized tax benefits will significantly change in the next 12 months. Note K: Employee Benefit Plans and Collective Bargaining Agreements Pension Plans The Company maintains defined benefit, non-contributory retirement plans for...

  • Page 79
    ...-Retirement Benefits In addition to the Company's pension plans, the Company sponsors plans that provide postretirement medical and life insurance benefits to certain employees. Retirees share a portion of the cost of the postretirement medical plans. Safeway pays all the costs of the life insurance...

  • Page 80
    ...of plan assets. The Company uses its fiscal year-end date as the measurement date for its plans. The actuarial assumptions used to determine year-end projected benefit obligations for pension plans were as follows: 2011 Discount rate: United States plans Canadian plans Combined weighted-average rate...

  • Page 81
    ... Financial Statements The actuarial assumptions used to determine net periodic benefit costs for pension plans were as follows: 2011 Discount rate: United States plans Canadian plans Combined weighted-average rate Expected return on plan assets: United States plans (1) Canadian plans (2) Rate...

  • Page 82
    .... (6) These investments are publicly traded investments which are valued using the NAV. The NAV of the mutual funds is a quoted price in an active market. The NAV is determined once a day after the closing of the exchange based upon the underlying assets in the fund, less the fund's liabilities...

  • Page 83
    ... 3) Corporate bonds $ 3.1 0.1 (0.5) $ 2.7 U.S. government securities $ 0.7 (0.6) - $ 0.1 Total Balance, beginning of year Purchases, sales, settlements, net Unrealized gains Balance, end of year $ 3.8 (0.5) (0.5) $ 2.8 The fair value of Safeway's pension plan assets at January 1, 2011, excluding...

  • Page 84
    ... Multiemployer Pension Plans Safeway contributes to a number of multiemployer defined benefit pension plans in the U.S. and Canada under the terms of collective bargaining agreements that cover its union-represented employees. Benefits generally are based on a fixed amount for each year of service...

  • Page 85
    ... to Consolidated Financial Statements The risks of participating in U.S. multiemployer pension plans are different from single-employer pension plans in the following aspects: a. b. c. Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other...

  • Page 86
    ... Pension Plan Southern California United Food & Commercial Workers Unions and Food Employers Joint Pension Plan Food Employers Labor Relations Association and United Food and Commercial Workers Pension Fund 916145047 - 001 Safeway 5% of total FIP/RP status plan contributions pending/ 2010 2009...

  • Page 87
    ... Relations Association and United Food and Commercial Workers Pension Fund $ 23.2 $ 21.9 $ 20.7 United Food and Commercial Workers Unions and Employers Midwest Pension Plan Yes 3/31/2012 to 4/21/2012 8 5 3/31/2012 96% $ 17.5 $ 5.1 $ 4.7 Yes 10/27/2012 to 3/30/2013 6/19/2010 to 3/2/2014...

  • Page 88
    ...) Pension fund 2011 2010 Expiration Most significant collective date of Total bargaining agreement(s) collective collective Surcharge bargaining bargaining % 2009 imposed (1) agreements agreements Count Expiration headcount (2) 1.6 No 2/26/2012 to 5/19/2013 3 2 2/26/2012 97% Retail Food Employers...

  • Page 89
    ... bargaining agreement(s) Count Expiration % headcount(2) 8 3 3/22/2014 3/31/2013 67% 100% Other Canadian Funds Total Safeway contributions to Canadian multiemployer pension plans $49.5 $46.9 $41.3 (1) Plan information is not publicly available. This plan provides monthly retirement payments...

  • Page 90
    ... mix of products with similar pricing to similar categories of customers. Safeway does not operate supercenters, warehouse formats, combination clothing/grocery stores or discount stores. These 12 operating segments have been aggregated into one reportable segment because, in the Company's judgment...

  • Page 91
    ... Network distribution commissions on the sale of certain gift cards, net of commissions shared with other retailers. In the first quarter of 2011, Safeway determined that these commissions should be reported on a gross basis. This change increased both revenue and cost of goods sold in fiscal 2011...

  • Page 92
    ... loss would not have a material effect on the Company's financial condition or results of operations. Note Q: Subsequent Event In January 2012, Safeway announced the sale of 16 of its Genuardi's stores, located in the Eastern United States. The transaction is subject to customary closing conditions...

  • Page 93
    ... 0.67 0.67 Last 16 Weeks $ 0.38 0.38 Third 12 Weeks $ 0.42 0.41 $ 0.07 0.07 First 12 Weeks 52 Weeks 2010 Sales and other revenue Gross profit Operating profit Income before income taxes Net income attributable to Safeway Inc. Income per common share attributable to Safeway Inc. Basic Diluted...

  • Page 94
    ... Chief Executive Officer along with the Company's Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b). Based upon the foregoing, as of the end of the period covered by this Annual Report...

  • Page 95
    ...2011 fiscal year. Code of Ethics The Company has adopted a Code of Business Conduct and Ethics (the "Code of Ethics"), which is posted on the Company's Web site at www.safeway.com/investor_relations. The Code of Ethics applies to the Company's principal executive officer, principal financial officer...

  • Page 96
    ...Notes (incorporated by reference to Exhibits 4.2, 4.3, 4.4 and 4.5 to the registrant's Current Report on Form 8-K dated December 5, 2011). Form of Officers' Certificate establishing the terms of the registrant's 5.80% Notes due 2012, including the form of Notes (incorporated by reference to Exhibits...

  • Page 97
    ... and Financial Statement Schedules (continued) Form of Officers' Certificate establishing the terms of the registrant's 5.00% Notes due 2019, including the form of Notes (incorporated by reference to Exhibits 4.2 and 4.3 to the registrant's Current Report on Form 8-K dated August 7, 2009). Form...

  • Page 98
    ... lenders that are party to the Credit Agreement (incorporated by reference to Exhibit 10(iii).40 to the registrant's Current Report on Form 8-K dated June 1, 2011). Exhibit 10(iii).18* Blackhawk Marketing Services, Inc. 2006 Restricted Stock Plan for Eligible Employees of Safeway Inc. (incorporated...

  • Page 99
    ... year ended January 1, 2011). Exhibit 10(iii).33* Updated Form of Stock Option Grant Notice and Stock Option Agreement under the Safeway Inc. 2007 Equity and Incentive Award Plan (incorporated by reference to Exhibit 10(iii).34 to the registrant's Current Report on Form 8-K dated February 18, 2009...

  • Page 100
    ... Charges. Safeway Inc. Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14 to the registrant's Current Report on Form 8-K dated March 10, 2005). Schedule of Subsidiaries. Consent of Independent Registered Public Accounting Firm. Rule 13(a)-14(a)/15d-14(a) Certification. Rule...

  • Page 101
    ... of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: February 27, 2012 /s/ Robert L. Edwards Robert L. Edwards Executive Vice President and Chief Financial Officer...

  • Page 102
    SAFEWAY INC. AND SUBSIDIARIES Signatures /s/ Arun Sarin Arun Sarin, Director /s/ Michael S. Shannon Michael S. Shannon, Director /s/ William Y. Tauscher William Y. Tauscher, Director Date: February 27, 2012 Date: February 27, 2012 Date: February 27, 2012 84

  • Page 103
    ... to Safeway Inc., as reported Less goodwill impairment charge per diluted share, net of tax Diluted earnings per share, excluding goodwill impairment charge Weighted shares outstanding used for diluted loss per share, as reported Add common share equivalents Weighted average shares outstanding used...

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  • Page 107
    ... employer, Safeway values and actively supports diversity in the workplace. A copy of the company's 2011 summary EEO-1 report, filed with the federal Equal Employment Opportunity Commission, is available upon request at our executive offices. Deloitte & Touche LLP San Francisco, CA INVESTOR...

  • Page 108
    Cover and editorial section of this annual report are printed on FSC-Certified paper. This paper contains wood from well-managed forests, controlled sources. This is certified in accordance with the rules of the Forest Stewardship Council. Made with certified renewable energy. S A F E WAY I N C . ...