Safeway 2012 Annual Report Download - page 21

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SAFEWAY INC. AND SUBSIDIARIES
9
Rancher’s Reserve, O ORGANICS, Lucerne, Primo Taglio, Eating Right, mom to mom, waterfront BISTRO,
Bright Green, Pantry Essentials, Open Nature, Refreshe, Snack Artist, Signature Café and Priority, and other
trademarks such as Pak’N Save Foods, Vons, Pavilions, Dominick’s, Randalls, Tom Thumb, and Carrs
Quality Centers. Each trademark registration is for an initial period of 10 or 20 years, depending on the
registration date, and may be renewed so long as it is in continued use in commerce.
Canada Safeway also has registered numerous trademarks in Canada. Canada Safeway has invested
significantly in “Safeway” both as a trade name and a trademark and considers it to be an important asset
in Canada. Canada Safeway owns and has registered in Canada approximately 200 trademarks, most of
which replicate trademarks owned in the United States by Safeway. In addition to those trademarks used in
common with Safeway, Canada Safeway owns certain trademarks unique to its business in Canada. For
example, Canada Safeway has registered the trademarks, “Macdonalds Consolidated” and “Family
Foods” in connection with wholesale distribution of merchandise to independent grocers. In Canada, each
trademark registration is for an initial period of 15 years, and may be renewed for additional periods of 15
years, as long as the trademark continues to be used in commerce.
Safeway considers its trademarks to be of material importance to its business and actively defends and
enforces its rights.
Working Capital At year-end 2012, working capital consisted of $4.2 billion in current assets and $4.6
billion in current liabilities. Normal operating fluctuations in these substantial balances can result in changes
to cash flow from operations presented in the consolidated statements of cash flows that are not necessarily
indicative of long-term operating trends. There are no unusual industry practices or requirements relating to
working capital items.
Seasonality Blackhawk receives a significant portion of the cash inflow from the sale of third-party prepaid
cards late in the fourth quarter of the year and generally remits the cash, less commissions, to 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 retailing is very competitive. The principal competitive factors that affect the Company’s
business are location, quality, price, service, selection and condition of assets.
We face intense competition from traditional grocery retailers, non-traditional competitors such as
supercenters and club stores, as well as from specialty and niche supermarkets, drug stores, dollar stores,
convenience stores and restaurants. Safeway and its competitors engage in price competition which, from
time to time, has adversely affected operating margins in the Company’s markets.
Raw Materials Various agricultural commodities constitute the principal raw materials used by the
Company in the manufacture of its food products. Management believes that raw materials for its products
are not in short supply, and all are readily available from a wide variety of independent suppliers.
Compliance with Environmental Laws The Company’s compliance with the federal, state, local and
foreign laws and regulations which have been enacted or adopted regulating the discharge of materials into
the environment or otherwise related to the protection of the environment has not had and is not expected
to have a material adverse effect upon the Company’s financial position or results of operations.
Employees At year-end 2012, Safeway had more than 171,000 full- and part-time employees. Almost 80%
of Safeway's employees in the United States and Canada are covered by collective bargaining agreements
negotiated with union locals affiliated with one of nine different international unions. There are over 430 such
agreements, typically having three- to five-year terms. Accordingly, Safeway renegotiates a significant
number of these agreements every year.