Safeway 2012 Annual Report Download

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2012 Annual Report

Table of contents

  • Page 1
    2012 Annual Report

  • Page 2
    One of the Largest Food and Drug Retailers in North America As of December 29, 2012, the company operated 1,641 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 ...

  • Page 3
    Delivering Exceptional Value SALES ADJUSTED EPS FREE CASH FLOW $44.2B +21% $971M Sales and other revenue increased to $44.2 billion, compared with $43.6 billion in 2011. Adjusted diluted earnings per share from continuing operations grew by nearly 21% between 2011 and 2012, from $1.78 to $2....

  • Page 4
    ... OF STORES WITH SPECIALTY DEPARTMENTS AND FUEL STATIONS MANUFACTURING AND FOOD PROCESSING FACILITIES Year-end 2012 U.S. 'HQYHU Dominick's Eastern NorCal Northwest Phoenix Randalls Vons Subtotal TOTAL  72 127 268 313 115 110 277 1,418 Canada $OEHUWD Vancouver Winnipeg  72 55 Year-end 2012...

  • Page 5
    ...provide outstanding value and inspired solutions every day. We offer our customers a unique shopping experience in our Lifestyle stores, attractive everyday pricing, Club Card specials and personalized savings, high-quality perishables, proprietary private label brands, health and wellness offerings...

  • Page 6
    ...HSZVPTWYV]LKJVUZ\TLYJVUÄKLUJL SALES ;V[HSZHSLZNYL^[V IPSSPVUPUH PUJYLHZLV]LY...KPS\[LK LHYUPUNZWLYZOHYLNYL^  FREE CASH FLOW NET INCOME 0UJVTLMYVTJVU[PU\PUN...just for Uâ„¢HUUV\UJLKM\LSWHY[ULYZOPWZHUKTHKLWYVNYLZZVUV\Y^LSSULZZPUP[PH[P]L GROWTH...

  • Page 7
    ...NYV^[OHZJ\Z[VTLYZLTIYHJLP[ZJVU]LUPLUJL >P[Ojust for U^LILSPL]L^LHYLH[[OLMVYLMYVU[VM...^H`»ZJ\Z[VTLYZ LEVERAGING OUR ASSETS ;OLZ\IZPKPHYPLZ^LKL]...OH[OHZ[OLWV[LU[PHS[V[YHUZMVYT[OLJVTWHU` :PUJLYLS` EMPLOYEES IN THE COMMUNITY :[L]LU()\YK *OHPYTHUHUK*OPLM,_LJ\[P]L6M...

  • Page 8
    ...extra savings. Customers who sign up for the program receive a unique offer set of Personalized Deals, Coupons and a personalized group of Club Card VSHFLDOV2YHUðYHPLOOLRQFXVWRPHUVKDYH already joined just for U, and the number continues to grow. PERSONALIZED DEALS Customers receive special...

  • Page 9
    ... easily access just for U and their shopping lists while they are on the go. Through just for U, our customers can enjoy additional savings on top of our already great Club Card prices. Fuel Loyalty Fuel is an important element of most people's budgets, and with our Reward Points program, we help...

  • Page 10
    ... 100% natural Open Natureâ„¢ brand was the fastest growing brand in our stores in 2012. We will be launching several new products across the portfolio in 2013! Growth Initiatives At Safeway, we look for ways to leverage our assets to create new revenue opportunities. For example, Blackhawk Network...

  • Page 11
    ...QXWULWLRQEHQHðWVRU lifestyle attributes, helping customers make better nutrition choices in our stores. PROPERTY DEVELOPMENT CENTERS (PDC) WELLNESS PDC develops neighborhood and community shopping centers that are typically anchored by a Safeway store, like our development in Honolulu (shown...

  • Page 12
    ...Managing Member Sugar Hollow LLC Former Executive Vice President Safeway Inc. Russell M. Jackson Senior Vice President Human Resources Chuck Mulvenna Canada Division Steven J. Neibergall Eastern Division Melissa C. Plaisance Senior Vice President Finance and Investor Relations Lori J. Raya Vons...

  • Page 13
    ..., $0.01 par value per share 7.45% Senior Debentures due 2027 Name of each exchange on which registered New York Stock Exchange New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: (Title of class) NONE Indicate by check mark if the registrant is a well-known seasoned...

  • Page 14
    ..., 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 16, 2012 was approximately $4.3 billion. As of...

  • Page 15
    ... 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 16
    ... job growth and/ or losses in our markets; Sales volume levels and price per item trends; Pricing pressures and competitive factors, which could include pricing strategies, store openings, remodels or acquisitions by our competitors; Results of our programs to control or reduce costs, improve buying...

  • Page 17
    ... Safeway, provides gift cards, other prepaid products and payment services to consumers through a network of retail store locations in the United States, Canada, Europe, Mexico and Australia and various online channels. Prepaid products include: closed loop cards, open loop cards, financial services...

  • Page 18
    .... Merchandising Safeway's operating strategy is to provide value to its customers by maintaining high store standards and a wide selection of high-quality products at competitive prices. To provide one-stop shopping for today's busy shoppers, the Company emphasizes high-quality produce and meat and...

  • Page 19
    ...dairy, meat, canned vegetables and paper goods, to name just a few. During 2012, Safeway continued to roll out the just for Uâ„¢ personalized pricing and digital marketing program in U.S. markets. This program downloads personalized pricing and digital coupons to the Safeway Club Card. Manufacturing...

  • Page 20
    ... Lifestyle remodels rather than opening new stores while, at the same time, selling or closing underperforming stores. In 2012, the Company disposed of 25 of its Genuardi's stores. See Note Q to the consolidated financial statements set forth in Part II, Item 8 of this report. Financial Information...

  • Page 21
    ... the card partners early in the first quarter of the following year. Safeway's first three fiscal quarters contain 12 weeks. The fourth quarters of 2012, 2011 and 2010 contain 16 weeks. See Note R to the consolidated financial statements set forth in Part II, Item 8 of this report. Competition Food...

  • Page 22
    ... 54,000 employees, primarily in stores in the Company's Northern California, Eastern, Phoenix, Denver and Northwest divisions were ratified. Available Information Safeway's corporate Web site is located at www.safeway.com. You may access our Securities and Exchange Commission ("SEC") filings...

  • Page 23
    ... new marketing programs, new advertising campaigns, productivity improvements, shrink reduction, distribution center efficiencies, energy efficiency programs and other similar strategies. Our failure to achieve forecasted cost reductions, revenue growth or gross margin improvement across the Company...

  • Page 24
    ... in card association and debit network fees or products or interchange rates; and Blackhawk has operations in several international locations, and it may find a different business or competitive environment in markets outside the U.S. that could adversely affect its profitability. • New Business...

  • Page 25
    ... the availability of our cash flow to fund working capital, capital expenditures, dividends on common stock, stock repurchases, acquisitions, development efforts and other general corporate purposes; (ii) our flexibility in planning for, or reacting to, changes in our business may be limited; (iii...

  • Page 26
    ...fiscal 2012, 2011 and 2010. Information Technology Risks The Company has large, complex information technology systems that are important to the successful operation of its business operations and marketing initiatives. If we were to experience difficulties accessing data stored in these systems, or...

  • Page 27
    .... Item 2. Properties Unresolved Staff Comments The information required by this item is set forth in Part I, Item 1 of this report. Item 3. Legal Proceedings Information about legal proceedings appears under the caption "Legal Matters" in Note M to the consolidated financial statements set forth...

  • Page 28
    ...the Company as Chief Financial Officer effective February 19, 2013. Prior to that, Mr. Bocian served as Executive Vice President, Head of Corporate Services and Finance at JPMorgan Chase & Co. since 2011. From 2008 until 2011, he served as Executive Vice President and Chief Administrative Officer of...

  • Page 29
    ... value, is listed on the New York Stock Exchange. Information on dividends declared per common share is set forth in Part II, Item 7 of this report. The following table presents quarterly high and low sales prices for the Company's common stock. 2012 Quarter 4 (16 weeks) Quarter 3 (12 weeks) Quarter...

  • Page 30
    SAFEWAY INC. AND SUBSIDIARIES Issuer Purchases of Equity Securities Total number of shares purchased as part of publicly announced plans or programs - - - - - Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions) (2) $ 827.0 827.0 827.0 827.0 827.0 ...

  • Page 31
    ...., Loblaw Companies Limited, SUPERVALU INC., and Whole Foods Market, Inc. The performance graph above is being furnished solely to accompany this annual report on Form 10-K pursuant to Item 201(e) of Regulation S-K, and is not being filed for purposes of Section 18 of the Securities Exchange Act of...

  • Page 32
    ... 965.3 - (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) Interest expense Other income, net Income (loss) before income taxes Income taxes Income (loss...

  • Page 33
    ...(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(3,4) Other Statistics Stores opened during the year Stores closed...

  • Page 34
    ... rates. Additional marketing expenses were incurred in 2012 to roll out the just for U digital marketing program, a platform which downloads personalized pricing and digital coupons to the Safeway Club Card. Total debt increased $163.5 million in 2012 compared to 2011. During the first half of 2012...

  • Page 35
    ...% of sales in 2010. The impact from fuel sales decreased gross profit margin 80 basis points. The remaining 45 basispoint 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 36
    ....43% of sales in 2011 from 25.45% of sales in 2010. Higher fuel sales in 2011 decreased operating and administrative expense margin by 69 basis points. The impact from the change related to gift card commissions reduced operating and administrative expense 28 basis points, and net gains on property...

  • Page 37
    ...% in 2012, 0.75% in 2011 and 2.00% in 2010. A 25-basis-point change in the discount rate affects the self-insured liability by approximately $5 million. The majority of the Company's workers' compensation liability is from claims occurring in California. California workers' compensation has received...

  • Page 38
    ... rate of return. The following table summarizes actual allocations for Safeway's plans at year-end: Plan assets 2012 2011 64.3% 65.5% 33.0 33.3 2.7 1.2 100.0% 100.0% Asset category Equity Fixed income Cash and other Total Target 65% 35 - 100% The investment policy with regard to Safeway's pension...

  • Page 39
    ...2010. Net cash flow from operating activities declined in 2012 compared to 2011 primarily due to a greater use of cash flow for working capital which was largely calender driven. Blackhawk receives significant cash inflow from the sale of third-party gift cards late in the fourth quarter of the year...

  • Page 40
    ... levels or that the Company will maintain its ability to borrow under its commercial paper program and credit agreement. Free cash flow Free cash flow is calculated as (1) net cash flow from operating activities adjusted to exclude payables related to third-party gift cards, net of receivables...

  • Page 41
    ... the Company's business. Free cash flow is also a useful indicator of Safeway's ability to service debt and fund share repurchases that management believes will enhance stockholder value. This non-U.S. GAAP financial measure should not be considered as an alternative to net cash flow from operating...

  • Page 42
    .... As of December 29, 2012, $1.95 billion of securities were available for issuance under the board's authorization. Commercial Paper Information about the Company's commercial paper borrowings appear in Note D to the consolidated financial statements set forth in Part II, Item 8 of this report. 30

  • Page 43
    ... information regarding dividends paid on Safeway's common stock during fiscal 2012, 2011 and 2010. (in millions, except per-share amounts) 2012 Quarter 4 Quarter 3 Quarter 2 Quarter 1 2011 Quarter 4 Quarter 3 Quarter 2 Quarter 1 2010 Quarter 4 Quarter 3 Quarter 2 Quarter 1 Record Date Per-Share...

  • Page 44
    ...depend on factors such as Safeway's day-to-day business needs as well as its stock price and economic and market conditions. Stock repurchases may be affected from time to time through open market purchases or pursuant to a Rule 10b5-1 plan. The stock repurchase program may be accelerated, suspended...

  • Page 45
    ...on the Company's financial statements. Letters of Credit The Company had letters of credit of $50.9 million outstanding at year-end 2012. The letters of credit are maintained primarily to support performance, payment, deposit or surety obligations of the Company. The Company pays commissions ranging...

  • Page 46
    SAFEWAY INC. AND SUBSIDIARIES Item 8. Financial Statements and Supplementary Data Page Management's Annual Report on Internal Control over Financial Reporting Report of Independent Registered Public Accounting Firm Consolidated Statements of Income for fiscal 2012, 2011 and 2010 Consolidated ...

  • Page 47
    ... financial 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 and Chief Executive Officer...

  • Page 48
    ...December 29, 2012 and December 31, 2011, and the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended December 29, 2012. We also have audited the Company's internal control over financial reporting as of...

  • Page 49
    ..., the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Safeway Inc. and subsidiaries as of December 29, 2012 and December 31, 2011, and the results of their operations and their cash flows for each of the three years in the...

  • Page 50
    SAFEWAY INC. AND SUBSIDIARIES Consolidated Statements of Income (In millions, except per-share amounts) 52 Weeks 52 Weeks 52 Weeks 2012 2011 2010 $ 44,206.5 $ 43,630.2 $ 41,050.0 (32,486.5) (31,836.5) (29,442.5) 11,720.0 11,793.7 11,607.5 (10,615.9) (10,659.1) (10,448.1) 1,104.1 1,...

  • Page 51
    SAFEWAY INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (In millions) 52 Weeks 2012 Net income before allocation to noncontrolling interests $ Other comprehensive (loss) income: Translation adjustments, net of tax Pension and post-retirement benefits adjustment to funded status...

  • Page 52
    ... Balance Sheets (In millions, except per-share amounts) Year-end 2012 Assets Current assets: Cash and equivalents Receivables Merchandise inventories, net of LIFO reserve of $70.5 and $70.1 Prepaid expenses and other current assets Total current assets Property: Land Buildings Leasehold improvements...

  • Page 53
    ...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 54
    ... in working capital items: Receivables Inventories at FIFO cost Prepaid expenses and other current assets Income taxes Payables and accruals Payables related to third-party gift cards, net of receivables Net cash flow from operating activities Investing Activities: Cash paid for property additions...

  • Page 55
    ... End of year Other Cash Information: Cash payments during the year for: Interest Income taxes, net of refunds Non-cash Investing and Financing Activities: Capital lease obligations entered into Purchases of property, plant and equipment included in accounts payable Notes received in the sale of real...

  • Page 56
    ...) 52 Weeks 2012 Common Stock: Balance, beginning of year Options exercised Balance, end of year Additional Paid-In Capital: Balance, beginning of year Share-based employee compensation Options exercised/cancelled, net Other Balance, end of year Treasury Stock: Balance, beginning of year Purchase of...

  • Page 57
    SAFEWAY INC. AND SUBSIDIARIES Consolidated Statements of Stockholders' Equity (In millions) 52 Weeks 2012 Common Stock: Balance, beginning of year Options exercised Restricted stock grants Balance, end of year 604.5 0.1 0.7 605.3 599.8 3.2 1.5 604.5 592.6 6.1 1.1 599.8 52 Weeks 2011 52 Weeks 2010 ...

  • Page 58
    ... Safeway, provides gift cards, other prepaid products and payment services to consumers through a network of retail store locations in the United States, Canada, Europe, Mexico and Australia and various online channels. Prepaid products include: closed loop cards, open loop cards, financial services...

  • Page 59
    ... million in 2012, 2011 and 2010, respectively. The Company, through its Blackhawk subsidiary, also sells third-party gift cards through Safeway retail operations and through other grocery and convenience store retailers. Safeway earns a commission which is recorded as other revenue when the third...

  • Page 60
    ... 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 2012, 0.75% in 2011 and 2.00% in 2010. A summary of changes in Safeway's self-insurance liability is as follows (in millions): 2012 2011 2010 $ 470...

  • Page 61
    ... Disclosures of the fair value of certain financial instruments are required, whether or not recognized in the balance sheet. The Company estimated the fair values presented below using appropriate valuation methodologies and market information available as of year end. Considerable judgment is...

  • Page 62
    ... 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 63
    ... 16, 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 after close and...

  • Page 64
    ... company method and the discounted cash flow method. These methods are based on historical and forecasted amounts specific 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...

  • Page 65
    ...matures in 2015. During 2012, the average commercial paper borrowing was $681.7 million and had a weighted-average interest rate of 0.86%. During 2011, the average commercial paper borrowing was $395.8 million which had a weighted-average interest rate of 0.39%. Bank Credit Agreement The Company has...

  • Page 66
    ... amount available to be drawn under the 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...

  • Page 67
    ... of the letters of credit. Fair Value At year-end 2012 and year-end 2011, the estimated fair value of debt, including current maturities, was $5,408.2 million and $5,371.3 million, respectively. Note E: Financial Instruments Safeway manages interest rate risk through the strategic use of fixed- and...

  • Page 68
    ... Consolidated Financial Statements The following table presents assets and liabilities which are measured at fair value on a recurring basis at December 29, 2012 (in millions): Fair Value Measurements Quoted prices in active markets Significant for identical observable assets inputs (Level 1) (Level...

  • Page 69
    ... 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 2012, long-lived assets with a carrying value...

  • Page 70
    ...typically with increased rental rates during the option period. Certain of these leases contain options to purchase the property at amounts that approximate fair market value. As of year-end 2012, future minimum rental payments applicable to non-cancelable capital and operating leases with remaining...

  • Page 71
    SAFEWAY INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Note H: Interest Expense Interest expense consisted of the following (in millions): 2012 Commercial paper Bank credit agreement Term credit agreement Other bank borrowings Mortgage notes payable 4.95% Senior Notes due 2010 6.50...

  • Page 72
    ...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 29, 2012, 13.6 million shares of common stock were available for issuance under this plan. Shares...

  • Page 73
    ...average period of 2.3 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. The...

  • Page 74
    ...of 1.6 years. Total share-based compensation expenses recognized as a component of operating and administrative expense is as follows (in millions): 2012 55.1 $ (20.8) 34.3 $ 2011 2010 50.0 $ 55.5 (18.8) (20.8) 31.2 $ 34.7 Share-based compensation expense Income tax benefit Share-based compensation...

  • Page 75
    ... Safeway began to accrue repatriation taxes on the earnings of its Canadian subsidiary in the second quarter of 2011. As a result of this change in policy, income tax expense was reduced by $28.5 million in 2011 and $25.1 million in 2012 as Safeway will use foreign tax credits to reduce the U.S. tax...

  • Page 76
    ... at year end are as follows (in millions): 2012 Deferred tax assets: Pension liability Workers' compensation and other claims Employee benefits Accrued claims and other liabilities Reserves not currently deductible Foreign tax credit carryforwards State tax credit carryforwards Operating loss...

  • Page 77
    ... for a bilateral Advance Pricing Agreement between the Canada Revenue Agency and the Internal Revenue Service for the years 2007 through 2011. The Agreement would determine an arm's length royalty charge that the Company's Canadian subsidiary must pay for use of intellectual property and know-how...

  • Page 78
    ... totaled $11.6 million in 2012, $11.5 million in 2011 and $10.7 million in 2010. Other Post-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...

  • Page 79
    ... Financial Statements The following table provides a reconciliation of the changes in the retirement plans' benefit obligation and fair value of assets over the two-year period ended December 29, 2012 and a statement of the funded status as of year-end 2012 and year-end 2011 (in millions): Pension...

  • Page 80
    ...INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Information for Safeway's pension plans, all of which have an accumulated benefit obligation in excess of plan assets as of year-end 2012 and 2011, is shown below (in millions): 2012 2,635.4 $ 2,554.5 1,845.7 2011 2,424.5 2,347.5 1,641...

  • Page 81
    SAFEWAY INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The actuarial assumptions used to determine year-end projected benefit obligations for pension plans were as follows: 2012 Discount rate: United States plans Canadian plans Combined weighted-average rate Rate of compensation ...

  • Page 82
    ... Value Measurements Quoted prices in active markets for identical assets (Level 1) 24.1 $ - 256.1 50.6 330.8 $ Asset category: Cash and cash equivalents (1) Short-term investment collective trust Common and preferred stock: (3) International common stock Common collective trust funds (2) Corporate...

  • Page 83
    ... to Consolidated Financial Statements (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...

  • Page 84
    ...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, expressed...

  • Page 85
    ... Consolidated Financial Statements A reconciliation of the beginning and ending balances for Level 3 assets for the year ended December 31, 2011 follows (in millions): Fair Value Measured Using Significant Unobservable Inputs (Level 3) Total Balance, beginning of year Purchases, sales, settlements...

  • Page 86
    ... the Plan Number ("PN"), if applicable. Unless otherwise noted, the most recent Pension Protection Act ("PPA") zone status available in 2012 and 2011 is for the plan's year ending at December 31, 2012, and December 31, 2011, respectively. The zone status is based on information that Safeway received...

  • Page 87
    ... Union-Industry Pension Fund Washington Meat Industry Pension Trust Safeway Multiple Employer Retirement Plan (3) Alaska United Food and Commercial Workers Pension Trust Retail Food Employers and UFCW Local 711 Pension Trust Fund Central Pension Fund of the International Union of Operating...

  • Page 88
    ... 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 2012 2011 2010 Surcharge imposed (1) Expiration date of collective bargaining agreements...

  • Page 89
    ...United Food & Commercial Workers International Union-Industry Pension Fund Washington Meat Industry Pension Trust Safeway Multiple Employer Retirement Plan (3) Alaska United Food and Commercial Workers Pension Trust Retail Food Employers and UFCW Local 711 Pension Trust Fund 2012 2011 Surcharge 2010...

  • Page 90
    ... Statements The following two tables contain information about Safeway's Canadian multiemployer pension plans. Since plan level information is not publicly available for these plans, additional disclosures have been provided. Actuarial present value of accumulated benefits (in millions) 2011 2010...

  • Page 91
    ... reflected in the consolidated financial statements. These purchase commitments were $553.9 million at year-end 2012. Note N: Segments Safeway's retail business, which represents approximately 98% of consolidated sales and other revenue, operates in the U.S. and Canada. Safeway is organized into 11...

  • Page 92
    SAFEWAY INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The following table presents information about the Company by geographic area (in millions): U.S. 2012 Sales and other revenue Operating profit Income before income taxes Long-lived assets, net Total assets 2011 Sales and other...

  • Page 93
    ... - 1.56 Anti-dilutive shares totaling 21.6 million in 2012, 25.1 million in 2011 and 26.4 million in 2010 have been excluded from diluted weightedaverage shares outstanding. Note P: Guarantees Safeway applies the accounting guidance for guarantees to the Company's agreements that contain guarantee...

  • Page 94
    ... effect on the Company's financial condition or results of operations. Note Q: Discontinued Operations In January 2012, Safeway announced the planned sale or closure of its Genuardi's stores, located in the Eastern United States. These transactions were completed during 2012 with cash proceeds of...

  • Page 95
    ... In millions, except per-share amounts.) 52 Weeks 2012 Sales and other revenue Gross profit Operating profit (1) Income before income taxes (1) Income from continuing operations, net of tax (1) Gain (loss) from discontinued operations, net of tax (2) Net income attributable to Safeway Inc. (1) Basic...

  • Page 96
    ... Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its President and Chief Executive Officer and Chief Financial Officer...

  • Page 97
    ...Regulation 14A under the Exchange Act no later than 120 days after the end of the Company's 2012 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...

  • Page 98
    ... of this report: Restated Certificate of Incorporation of Safeway Inc., as amended May 19, 2010, June 17, 2004, May 12, 1998 and May 14, 1996 (incorporated by reference to Exhibit 3.1 to the registrant's Form 10-Q for the quarterly period ended September 10, 2011). Specimen Common Stock Certificate...

  • Page 99
    ... 10-K for the year ended January 1, 1994). Form of stock option agreement for former directors of The Vons Companies, Inc. (incorporated by reference to Exhibit 10(iii).12 of the registrant's Form 10-K for the year ended December 28, 1996). Safeway Executive Deferred Compensation Plan and Deferral...

  • Page 100
    ... Association, as documentation agents, and the 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). Blackhawk Marketing Services, Inc. 2006 Restricted Stock Plan for Eligible Employees...

  • Page 101
    ... Plan for Safeway Non-Employee Directors II, adopted October 20, 2010, amended and restated effective January 1, 2011 (incorporated by reference to the registrant's Form 10-K for the year ended January 1, 2011). Updated Form of Stock Option Grant Notice and Stock Option Agreement under the Safeway...

  • Page 102
    ... 10-K for the year ended January 2, 2010). Safeway Inc. 2011 Equity and Incentive Award Plan (incorporated by reference to Exhibit 10 (iii).36 to the registrant's Current Report on Form 8-K dated May 19, 2011). Form of Stock Option Grant Notice and Stock Option Agreement - Non Canadian Participants...

  • Page 103
    ... duly authorized. SAFEWAY INC. By /s/ Steven A. Burd Steven A. Burd Chairman and Chief Executive Officer (Principal Executive Officer) Date: February 26, 2013 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf...

  • Page 104
    SAFEWAY INC. AND SUBSIDIARIES Signatures /s/ Arun Sarin Arun Sarin, Director /s/ William Y. Tauscher William Y. Tauscher, Director Date: February 26, 2013 Date: February 26, 2013 92

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    Investor Information :HML^H`0UJHUK:\IZPKPHYPLZ EXECUTIVE OFFICES ANNUAL MEETING ;OL(UU\HS4LL[PUNVM:[VJR OVSKLYZ^PSSILOLSKVU4H UV[PJLVM[OLTLL[PUN[VNL[OLY^P[O HWYV_`Z[H[LTLU[HUKH...

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    ;OPZWHWLYOHZILLUJLY[PÄLK[VTLL[[OLLU]PYVUTLU[HSHUKZVJPHSZ[HUKHYKZVM[OL -VYLZ[:[L^HYKZOPW*V\UJPS™-:*®HUKJVTLZMYVT^LSSTHUHNLKMVYLZ[Z HUKV[OLYYLZWVUZPISLZV\YJLZ S A F E WAY I N C . PO BOX 99 P LEA S A NTO N, CA 94566- 0009 www. sa f e wa y. c om