Safeway 2012 Annual Report Download - page 17

SAFEWAY INC. AND SUBSIDIARIES
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• Legislative, regulatory, tax, accounting or judicial developments, including with respect to Blackhawk;
• The cost and stability of fuel, energy and other power sources;
• The impact of the cost of fuel on gross margin and identical-store sales;
• Loss of a key member of senior management, including the failure to effectively manage the succession
of our departing Chairman and Chief Executive Officer or Chief Information Officer;
• 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 safety and quality issues or concerns that may
arise;
• Data security or other information technology issues that may arise;
• Unanticipated events or changes in real estate matters, including acquisitions, dispositions and
impairments;
• Adverse weather conditions and effects from natural disasters;
• Performance in new business ventures or other opportunities that we pursue; and
• The capital investment in and financial results from our Lifestyle stores.
We undertake no obligation to update forward-looking statements to reflect new information, events or
developments after the date hereof. For additional information regarding these risks and uncertainties, see
“Item 1A. Risk Factors.” These are not intended to be a discussion of all potential risks or uncertainties, as
it is not possible to predict or identify all risk factors.
PART I
Item 1. Business
General The Company began operations in 1926. In July 1986, Safeway was incorporated in the state
of Delaware as SSI Holdings Corporation and, thereafter, its name was changed to Safeway Stores,
Incorporated. In February 1990, the Company changed its name to Safeway Inc. The Company’s fiscal year
ends on the Saturday nearest December 31. The last three fiscal years consist of the 52-week period ended
December 29, 2012 (“fiscal 2012” or “2012”), the 52-week period ended December 31, 2011 (“fiscal 2011”
or “2011”) and the 52-week period ended January 1, 2011 (“fiscal 2010” or “2010”).
Safeway Inc. is one of the largest food and drug retailers in North America, with 1,641 stores at year-end
2012. The Company’s U.S. retail operations are located principally in California, Hawaii, Oregon, Washington,
Alaska, Colorado, Arizona, Texas, the Chicago metropolitan area and the Mid-Atlantic region. The Company’s
Canadian retail operations are located principally in British Columbia, Alberta and Manitoba/Saskatchewan.
In support of its retail operations, the Company has an extensive network of distribution, manufacturing and
food-processing facilities.
Safeway owns and operates GroceryWorks.com Operating Company, LLC (“GroceryWorks”), an online
grocery channel doing business under the names Safeway.com and Vons.com (collectively “Safeway.com”).
Safeway also has a 49% ownership interest in Casa Ley, S.A. de C.V. (“Casa Ley”) which operates 195 food
and general merchandise stores in Western Mexico.
Blackhawk Network, Inc. (“Blackhawk”), a majority-owned subsidiary of 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 products and telecom products. Additionally, Blackhawk
provides card production services and a secondary market for prepaid cards.
Stores Safeway’s average store size is approximately 47,000 square feet. The Company determines the
size of a new store based on a number of considerations, including the needs of the community the store