Safeway 2011 Annual Report Download - page 71

Download and view the complete annual report

Please find page 71 of the 2011 Safeway annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 108

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108

SAFEWAY INC. 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 January 1, 2011
(in millions):
Fair Value Measurements
Assets: Total
Quoted prices in
active markets
for identical
assets
(Level 1)
Significant
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Cash equivalents $222.2 $ – $222.2 $ –
Short-term investments 159.9 59.8 0.1 –
Non-current investments 229.1 – 29.1 –
Interest rate swap 211.6 – 11.6 –
Total $322.8 $59.8 $263.0 $ –
Liabilities:
Contingent consideration 3$ 3.0 $ – $ – $3.0
Total $ 3.0 $ – $ – $3.0
(1) Included in Prepaid Expense and Other Current Assets on the balance sheet.
(2) Included in Other Assets on the balance sheet.
(3) Included in Other Accrued Liabilities on the balance sheet.
A reconciliation of the beginning and ending balances for Level 3 liabilities for the year ended January 1, 2011 follows (in
millions):
Contingent
consideration
Balance, beginning of year $–
Additions 3.0
Balance, end of year $ 3.0
In determining the fair value of assets and liabilities, the Company maximizes the use of quoted market prices and
minimizes the use of unobservable inputs. The Level 1 fair values are based on quoted market values for identical assets.
The fair values of Level 2 assets and liabilities are determined using prices from pricing agencies and financial institutions
that develop values based on observable inputs in active markets. Level 3 fair values are determined from industry
valuation models based on externally developed inputs.
In connection with the Company’s evaluation of long-lived assets for impairment, certain long-lived assets were measured
at fair value on a nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy. Fair value of long-lived
assets is determined by estimating the amount and timing of net future cash flows (including rental expense for leased
properties, sublease rental income, common area maintenance costs and real estate 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 $64.1 million were written down to their fair value of $19.4 million, resulting in an impairment charge
of $44.7 million. During fiscal 2010, long-lived assets with a carrying value of $99.0 million were written down to their
fair value of $27.3 million, resulting in an impairment charge of $71.7 million.
53