Safeway 2013 Annual Report Download - page 90

Table of Contents
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Safeway’s retail business operates in the United States. Safeway is organized into seven geographic retail operating segments (Denver,
Eastern, Northern California, Phoenix, Northwest, Texas and Southern California). Across all seven retail operating segments, the
Company operates primarily one store format, where each store offers the same general 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.
The seven operating segments have been aggregated into one reportable segment called Safeway, because, in the Company’s judgment,
the operating segments have similar historical economic characteristics and are expected to have similar economic characteristics and
similar long-term financial performance in the future. The principal measures and factors the Company considered in determining whether
the economic characteristics are similar are gross margin percentage, operating profit margin, sales growth, capital expenditures, competitive
risks, operational risks and challenges, retail store sales, costs of goods sold and employees. In addition, each operating segment has
similar products, similar production processes, similar types of customers, similar methods of distribution and a similar regulatory
environment. The Company believes that disaggregating its operating segments would not provide material or meaningful additional
information.
As a result of the Blackhawk IPO, the Company presents Blackhawk as a separate reportable segment. Blackhawk is a leading prepaid
payment network utilizing proprietary technology to offer a broad range of gift cards, other prepaid products and payment services.
Blackhawk’s payment network supports its three primary constituents: consumers who purchase the products and services Blackhawk
offers, content providers who offer branded products that are redeemable for goods and services, and distribution partners who sell those
products. Blackhawk’s product offerings include gift cards, prepaid telecom products and prepaid financial services products, including general
purpose reloadable ("GPR") cards and Blackhawk’s reload network. In the fourth quarter of 2013, Blackhawk acquired InteliSpend Prepaid
Solutions TM, a leader in the corporate incentives and consumer promotions marketplace, and Retailo AG, a leading third-party gift card
distribution network in Germany, Austria and Switzerland.
The following tables present information about the Company by segment (in millions):
Safeway
Blackhawk
Total
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2012
Sales and other revenue $35,119.8
$948.5
$36,068.3
Operating profit 635.5
73.8
709.3
Income before income taxes 361.4
75.0
436.4
2011
Sales and other revenue $34,613.4
$743.3
$35,356.7
Operating profit 649.0
59.8
708.8
Income before income taxes 397.7
60.7
458.4
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