2 0 1 2 FA C T B O O K
SAFEWAY 2012 FACT BOOK
ABOUT THE SAFEWAY FACT BOOK
This Fact Book provides certain financial and
operating information about Safeway. It is
intended to be used as a supplement to the
Safeway 2011 Annual Report on Form 10-K,
as amended, quarterly reports on Form 10-Q
and current reports on Form 8-K, and therefore
does not include the company’s consolidated
financial statements and notes.
The majority of the information in this Fact
Book is based on fiscal year 2011 data unless
otherwise noted.
Safeway believes that the information
contained in this Fact Book is correct in all
material respects as of April 2012. However,
such information is subject to change.
CONTENTS
2
3
4
8
10
12
18
29
30
36
Note: This Fact Book contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Such statements relate to, among other things, real estate development and
Lifestyle stores and are indicated by words or phrases such as “continuing,” “ongoing,” “expects,” “plans,” “will” and similar
words or phrases. These statements are based on Safeway’s current plans and expectations and involve risks and uncertainties
that could cause actual events and results to vary significantly from those included in, or contemplated or implied by, such
statements. Certain risks and uncertainties are described in Safeway’s reports filed with the Securities and Exchange Commission.
SA FEWAY 20 12 FACT BO OK
Investor Information Safeway at a Glance Retail Operations Manufacturing & Distribution Consumer Brands Finance & Administration Financial & Operating Statistics Directors & Executive Officers Corporate History Reconciliations 1
INVESTOR INFORMATION
CORPORATE OFFICE
INVESTOR CONTACTS
Safeway Inc.
5918 Stoneridge Mall Road
Pleasanton, CA 94588-3229
Phone: (925) 467-3000
www.safeway.com
Christiane Pelz
Vice President, Investor Relations
Phone: (925) 467-3832
STOCK INFORMATION
•
Stock symbol: SWY
•
Listed on New York Stock Exchange (“NYSE”)
•
ransfer Agent:
T
Computershare Trust Company, N.A.
P.O. Box 43078
Providence, RI 02940-3078
Phone: (877) 498-8861
Hearing impaired: (800) 952-9245
www.computershare.com
•
•
296.6 million common shares
outstanding as of December 31, 2011
240.4 million common shares
outstanding as of April 25, 2012
2011 Data:
• 343.8 million weighted average shares
outstanding (diluted)
•
ange of trading prices, NYSE:
R
$15.93 to $25.43
•
$188 million of dividends paid on common stock
•
$1.6 billion of common stock repurchased
NUMBER OF EMPLOYEES
•
Year-end 2011: 178,000
•
Year-end 2010: 180,000
•
Year-end 2009: 186,000
Melissa Plaisance
Senior Vice President, Finance & Investor Relations
Phone: (925) 467-3136
General Inquiries
www.safeway.com/investor_relations
Phone: (925) 467-3717
BOND INFORMATION (As of April 2012)
•
5.80% Senior Notes due August 2012
•
5.625% Senior Notes due August 2014
•
6.25% Senior Notes due March 2014
•
3.40% Senior Notes due December 2016
•
6.35% Senior Notes due August 2017
•
5.00% Senior Notes due August 2019
•
3.95% Senior Notes due August 2020
•
4.75% Senior Notes due December 2021
•
7.45% Senior Debentures due September 2027
•
7.25% Senior Debentures due February 2031
Trustee & Paying Agent:
The Bank of New York Mellon
Bondholder Relations Department
Corporate Trust Division
Fiscal Agencies Department
101 Barclay Street, 7-East
New York, NY 10286
Phone: (800) 548-5075
•
At year-end 2011, approximately 75% of our
employees were covered by collective bargaining
agreements.
2
.00% Second Series Notes due March 2014
3
(Canada Safeway Limited)
Trustee & Paying Agent:
BNY Trust Company of Canada
4 King Street West, Suite 1101
Toronto, Ontario MSH 1B6
Phone: (416) 933-8500
SAFEWAY AT A GLANCE
ABOUT US
Through our subsidiary, Blackhawk Network Holdings,
Inc., we provide prepaid gift cards and financial services
products to consumers and businesses through a
network of retail store locations in the United States,
Canada, Europe, Mexico and Australia and various
online channels.
Safeway Inc. (Safeway) is one of the largest food and
drug retailers in North America. At year-end 2011,
Safeway operated 1,6781 stores in the Western,
Southwestern, Rocky Mountain, Midwestern and
Mid-Atlantic regions of the United States and in
western Canada. In support of our stores, Safeway has
an extensive network of distribution, manufacturing
and food processing facilities.
Safeway also holds a 49% interest in Casa Ley, S.A. de
C.V., which at year-end 2011 operated 185 food and
general merchandise stores in western Mexico.
Safeway owns and operates GroceryWorks.com,
an Internet grocer doing business under the names
Safeway.com and Vons.com.
STORES BY DIVISION
Carrs
Vancouver
75
Alberta
96
Winnipeg
54
Chicago/
Dominick’s
76
Seattle 199
(incl. Carrs)
Portland
114
Northern
California
268
Denver
137
Southern
California/
Vons
277
Phoenix
116
Eastern/
Genuardi’s1
155
Randalls
Texas/
Tom
Thumb
Randalls
Tom112
Thumb
111
1
SA FEWAY AT A GL ANCE
Casa Ley
185
Includes 27 Genuardi’s stores, which were announced for sale or closure on January 5, 2012.
3
3
RETAIL OPERATIONS
OVERVIEW
Safeway’s operating strategy is to provide outstanding
value to our customers by offering a unique shopping
experience, including maintaining superior store
standards and a wide selection of high-quality
products at attractive, everyday prices. Through our
Lifestyle stores, we emphasize high-quality meat and
produce, in-store bakeries, deli and food service areas
and outstanding floral and pharmacy departments.
Safeway’s store employees also deliver superior service
to customers.
Below is a list of our stores by operating area and size.
At year-end 2011, approximately 82% of Safeway’s
stores were 35,000 square feet or larger.
Stores by Operating Area as of December 31, 2011:
Greater Than
35,000 Sq. Ft.
U.S. Operating Areas:
Chicago (Dominick’s)
Less Than
35,000 Sq. Ft.
Total Stores
74
2
76
121
16
137
Eastern (Safeway/Genuardi’s)
138
17
155
Northern California (includes HI)
202
66
268
Phoenix
110
6
116
Portland
97
17
114
Seattle (Safeway/Carrs in AK)
167
32
199
Southern California (Vons/Pavilions)
206
71
277
Denver
1
Texas (Randalls/Tom Thumb)
100
11
111
1,215
238
1,453
76
20
96
Vancouver
47
28
75
Winnipeg
39
15
54
162
63
225
1,377
301
1,678
Total U.S.
Canadian Operating Areas:
Alberta
Total Canada
Total U.S. & Canada
1
4
Includes 27 Genuardi’s stores, which were announced for sale or closure on January 5, 2012.
Store Count by State / Province as of December 31, 2011:
United States:
Alaska
Canada – Provinces:
28
Alberta
93
Arizona
115
British Columbia
78
California
507
Manitoba
33
Colorado
116
Ontario
District of Columbia
Delaware
14
19
Idaho
6
Illinois
76
Maryland
66
Montana
12
Nebraska
5
New Jersey
New Mexico
4
4
99
Pennsylvania
24
South Dakota
3
Virginia
Washington
Wyoming
Total U.S.
15
19
Oregon
Texas
Saskatchewan
4
Hawaii
Nevada
6
111
43
168
10
1,453
Total U.S. & Canada
Total Canada
225
1,678
Percentage of Stores with Specialty Departments and Fuel Stations
as of December 31, 2011:
%
Deli
99%
Floral
97%
Bakery
96%
Seafood
81%
Pharmacy
78%
Starbucks
70%
Fuel Stations
24%
R ETA IL OP ER ATI O NS
Department
5
PRIMARY COMPETITORS
Safeway U.S.
Operating Areas:
(banner)
Primary Conventional:
Other:
Chicago
(Dominick’s)
Jewel (SuperValu)
Walmart Supercenter, Meijer, Aldi,
Costco, Sam’s Club, Whole Foods
Denver
(Safeway)
King Soopers (Kroger), Albertsons
(Cerberus)
Walmart Supercenter, Sam’s Club,
Whole Foods, Target
Eastern (MD, VA, D.C.)
(Safeway)
Giant (Ahold), Food Lion (Delhaize),
Shoppers Food Warehouse (SuperValu),
A&P
Costco, BJ’s Wholesale Club, Wegmans,
Whole Foods, Walmart Supercenter
Northern California
includes HI
(Safeway)
Lucky (SaveMart), Raley’s, Nob Hill
(Raley’s)
Walmart, Costco, WinCo Foods,
Whole Foods, Trader Joe’s
Phoenix
(Safeway)
Fry’s (Kroger), Albertsons (Cerberus),
Bashas’
Walmart Supercenter, Costco,
Sam’s Club
Portland
(Safeway)
Fred Meyer (Kroger),
Albertsons (SuperValu)
WinCo Foods, Walmart Supercenter,
Costco
Seattle
includes AK
(Safeway/Carrs)
Albertsons (SuperValu),
Fred Meyer, Quality Food Centers
(Kroger), Haggen
Walmart Supercenter, Costco,
WinCo Foods
Southern California
(Vons/Pavilions)
Albertsons (SuperValu),
Ralphs, Food 4 Less (Kroger),
Stater Bros.
Walmart Supercenter, Costco,
Whole Foods, Trader Joe’s
Texas
(Randalls/Tom Thumb)
Kroger, Albertsons (Cerberus), H.E. Butt
Walmart Supercenter, Sam’s Club,
Fiesta Mart, Target
Note: Over 3% weighted market share.
6
Safeway Canadian
Operating Areas:
Primary Conventional:
Other:
Alberta
Sobeys, IGA (Sobeys),
Co-op, Extra Foods (Loblaw),
Save-on-Foods (Overwaitea)
Real Canadian Superstore (Loblaw),
Costco, Walmart
Vancouver
Save-on-Foods (Overwaitea),
PriceSmart foods (Overwaitea),
Extra Foods (Loblaw),
Thrifty Foods (Sobeys)
Real Canadian Superstore (Loblaw),
Costco, Walmart
Winnipeg
IGA (Sobeys), Co-op,
Extra Foods (Loblaw)
Real Canadian Superstore (Loblaw),
Costco, Walmart, Real Canadian
Wholesale Club (Loblaw)
R ETA IL OP ER ATI O NS
Calgary Store
7
MANUFACTURING & DISTRIBUTION
DISTRIBUTION
Each of Safeway’s 12 retail operating areas is served
by a regional distribution center consisting of one or
more facilities. Safeway currently has 17 distribution/
warehousing centers (13 in the United States and
U.S. Operating Areas:
Location:
Chicago (Dominick’s)
Northlake, IL
Denver
Denver, CO
four in Canada*), which collectively provide the
majority of products to stores we operate. Our
distribution centers in Maryland and British Columbia
are operated by third parties.
Size (Sq. Ft.):
932,000
1,232,000
Eastern
Collington, MD
Northern California (includes HI)
Tracy, CA
Phoenix
Tempe, AZ
788,000
Portland
Clackamas, OR
798,000
Seattle (includes Carrs in AK)
Auburn, WA
Spokane, WA
Anchorage, AK
1,208,000
292,000
233,000
Southern California (Vons/Pavilions)
Santa Fe Springs, CA
El Monte, CA
1,055,000
862,000
Texas (Randalls/Tom Thumb)
Houston, TX
Dallas, TX
686,000
1,019,000
Total U.S.
915,000
1,922,000
11,942,000
Canadian Operating Areas:
Location:
Alberta
Calgary, Alberta
Edmonton, Alberta
Size (Sq. Ft.):
791,000
442,000
Vancouver*
Vancouver, British Columbia
418,000
Winnipeg
Winnipeg, Manitoba
427,000
Total Canada
Total U.S. & Canada
2,078,000
14,020,000
Note: Listing of major distribution facilities. Safeway also sources product from additional warehouses in the U.S. and Canada.
*We sold our distribution center in British Columbia in 2011, and the activity was moved to a third-party facility.
8
8
MANUFACTURING
As measured by sales dollars, approximately 14% of
Safeway’s private label merchandise is manufactured in
company-owned plants, and the remainder is purchased
from third parties.
The principal function of Safeway’s manufacturing
operations is to purchase, manufacture and process
private label merchandise sold in stores we operate.
We utilize excess capacity in some of our plants to
produce products for third parties.
U.S.
Canada
Total
Milk plants
6
3
9
Bakery plants
6
2
8
Ice cream plants
2
2
4
Cheese and meat packing plants
-
1
1
Soft drink bottling plants
4
-
4
Fruit and vegetable processing plants
1
3
4
Cake commissary
1
-
1
Sandwich commissary
-
1
1
20
12
32
Total
M ANUFAC TU RI NG & DI S TR IB UT IO N
Manufacturing and food processing facilities by type and location as of December 31, 2011:
9
9
CONSUMER BRANDS
CONSUMER BRANDS
Safeway’s private label offering of Consumer Brands
is dedicated to meeting diverse shopper needs while
building loyalty to Safeway. Our portfolio is designed
to provide high-quality products and a differentiated
experience to our shoppers.
We divide our brands into three portfolios: Core,
Premium and Health & Wellness. Core
•
T he Safeway brand is our largest Consumer Brand with
more than 4,000 items across 350 categories ranging
from cereal and spaghetti to hand sanitizer and laundry
detergent. The Safeway brand offers shoppers the same
quality and taste of name brands, at a lower price. We
recently redesigned the packaging and are in the process
of rebranding the core Safeway brand into four labels:
Safeway Kitchens, Farms, Home and Care.
•
T he Lucerne® brand has been producing quality dairy
products since 1904. It can be found in 19 categories,
offering over 400 items such as milk, cheese, sour cream,
cottage cheese, ice cream and eggs. About 70% of
Lucerne’s portfolio is now rBST free. Pantry Essentials™ is
our second label in dairy and is positioned as a value line.
•
•
10
elaunched in the summer of 2010, refreshe™ has brought
R
fun back to the beverage category. With over 40 different
varieties of beverages, from carbonated soft drinks to
vitamin-enhanced water, our mega beverage brand,
refreshe, continues to be a one-stop brand for thirsty
shoppers.
The Snack Artist™ is our line of great-tasting, clever snacks,
which also deliver value. In 2012, we added pretzels, trail
mix and frozen appetizers to the variety of salty snacks with
which we launched the brand in 2010.
•
T he Pantry Essentials brand features over 100 items that
are positioned to meet the needs of consumers looking
for basic items that are priced right on a day-in-day-out
basis. Pantry Essentials spans over 45 categories including
dairy, meat, canned vegetables and paper goods, to
name just a few.
•
T he Deli Counter™ consists primarily of sliced deli meats,
cheeses and salads.
Premium
•
T he award-winning Safeway SELECT® brand is designed to
offer premium quality products that we believe are equal
or superior in quality to comparable bestselling, nationally
advertised brands, or are unique to their category and not
available from national brand manufacturers. Since 1993,
hundreds of products have been developed under the
Safeway SELECT brand, including unique salsas, bagged
salads, frozen entrees, hors d’oeuvres, pastas and sauces,
olive oils, freshly baked artisan breads, whole bean coffees
and desserts. Currently, there are over 500 items in
approximately 60 categories.
•
ur Signature Cafe® brand offers a variety of items in
O
the deli/food service department, including sandwiches,
soups, salads, side dishes and precooked hot meats such
as meatloaf, roasted chicken and rosemary pork loin. It
also offers a variety of meals, which we reformulated and
repackaged in 2009, thereby providing even more meal
solutions for today’s busy shoppers.
•
T he Primo Taglio® brand is a full line of premium meats
and cheeses, all crafted using traditional, time-honored
practices. Primo Taglio has no fillers, binders, artificial
flavors or MSG. It was launched in 1999 and has over
100 items.
T hrough our Rancher’s Reserve® Tender Beef offering,
we believe we have developed a reputation for having
the most tender and flavorful meat available in the
market.
•
In January 2009, we introduced waterfront BISTRO®–
a brand of over 100 seafood selections, entrees and
complementary items that make preparing a restaurantquality meal at home easy. Some items come with simple
recipes for “do-it-yourself” entrees and appetizers, and
others are pre-made entrees that are ready in minutes.
•
ebi Lily is another example of the solutions we provide
D
for our shoppers. With a line of unique bouquets,
candles, vases and gifts, Debi Lilly continues to grow.
•
om to Mom® and In-Kind™ round out the portfolio
M
with baby products created by moms, for moms, and a
personal care line made from 90% natural ingredients,
respectively.
•
E ating Right®, our brand of products for health-conscious
consumers, debuted during the second quarter of
2007. Eating Right products combine great taste with
nutritional efficacy and feature a unique nutritional
icon system to help consumers quickly identify product
attributes that they seek. The line includes about 200
great-tasting, better-for-you items.
•
T he Bright Green™ brand of home care products was
launched in October 2008 as a highly effective and
affordable solution for everyone to care for their homes
and contribute to a cleaner and healthier community.
The Bright Green brand currently features nearly 50
items, including cleaning and laundry products made
with naturally derived and biodegradable ingredients,
paper products made from 100% recycled content and
high-efficiency light bulbs.
•
In November 2010, Safeway introduced the Open
Nature™ line of 100% natural foods, continuing our
leadership in the retail food industry as an innovator in
health and nutrition. Open Nature today offers more
than 100 products made with 100% natural ingredients
from natural sources, with nothing artificial added. Open
Nature is Safeway’s way of providing shoppers access to
simple, flavorful food made from all-natural ingredients
that is as close to nature as possible.
™
Health & Wellness
•
Toddler products, offering a complete line of wholesome,
great tasting and affordable organic food for children.
In December 2005, Safeway introduced the first of our
“wellness” brands, O Organics. This line has grown to
over 1,300 USDA-certified organic food and beverage
products. All O Organics products have passed strict
federal government standards for organic farming,
processing and handling. In the spring of 2007, Safeway
introduced O Organics for Baby and O Organics for
Safeway’s
Distinctive
Portfolio
Safeway’s
Distinctive
Portfolio
Safeway’s
Distinctive
Portfolio
Safeway’s
Portfolio
of Consumer
Brands
of Distinctive
Consumer
Brands
of
Consumer
Brands
Top Brands
of Consumer
Brands
Core Core
Core
Core
Premium
Premium
Premium
Premium
Health & Health
Wellness
& Wellness
Health & Wellness
Health & Wellness
CO NS UM ER BR AND S
•
11
1
1
1
1
FINANCE & ADMINISTRATION
REAL ESTATE
Since 2004, we have transformed our stores into
“Lifestyle” stores. While Safeway has focused on
an aggressive remodel program, we have also built
a number of new stores each year. New stores are
typically 55,000 square feet. In 2011, we opened 25
new stores and completed 29 Lifestyle remodels. This
was a larger new store program than in the previous
two years. In 2012, Safeway plans to open 10 new
Lifestyle stores and complete 10 Lifestyle remodels.
These stores showcase Safeway’s commitment to
quality, particularly in the perishables departments.
The stores are dramatically redesigned with earthtoned decor, subdued lighting, custom flooring,
unique display fixtures and other special features to
create a warm, inviting ambience that Safeway believes
significantly enhances the shopping experience. At
year-end 2011, 1,459 stores, or 87% of the store base,
were Lifestyle stores.
At year-end 2011, Safeway owned approximately 42%
of our stores and leased the remaining stores. Safeway
Georgetown Store
12
prefers ownership because it provides control and
flexibility with respect to remodels, expansions, closures
and financing terms.
Safeway employs an analytical and disciplined approach
to all capital spending. To be approved, all new stores
and Lifestyle remodel plans must exceed an internal
cash-on-cash hurdle rate of 22.5%. Post-capital audits
are conducted at the end of the first and third years
after the completion of a project in order to monitor
ongoing performance. The executive officers who are
responsible for making capital decisions are eligible for
capital performance-based compensation, payment of
which is partially contingent on capital investments of
Safeway achieving targeted rates of return.
Our Property Development Centers (PDC) subsidiary
specializes in retail shopping center development and
capitalizes on Safeway’s real estate core competency.
PDC completed several projects in 2011, and with many
more under development, PDC is expected to generate
value for Safeway.
Five-Year History of Capital Expenditure Program
2011
2010
2009
2008
2007
1,694
1,725
1,739
1,743
1,761
Stores opened:
New
Replacement
6
19
3
11
3
5
8
12
13
7
Total
25
14
8
20
20
Stores closed
41
45
22
24
38 (1)
1,678
1,694
1,725
1,739
1,743
Remodels completed :
Lifestyle remodels
Other remodels
29
-
60
7
82
10
232
21
253
15
Total remodels
29
67
92
253
268
2
27
2
65
5
87
5
248
5
263
Number of fuel stations at
year end
400
393
388
382
361
Total retail square footage at
year end (in millions)
79.2
79.2
80.1
80.4
80.3
$1,094.7
$837.5
$851.6
$1,595.7
$1,768.7
2.5%
2.0%
2.1%
3.6%
4.2%
47,000
46,700
46,000
46,000
46,000
Total stores at beginning of year
Total stores at year end
(2)
Expansions
Four-wall remodels
Cash capital expenditures
(in millions)
Cash capital expenditures as a
percentage of sales and other
revenue
Average store size
(1)Closed 14 underperforming stores at Dominick’s in 2007.
(2)Defined as store remodel projects (other than maintenance) generally requiring expenditures in excess of $0.2 million. Excludes pharmacy refurbishments.
The Safeway Information Technology (IT) department
supports the business objectives of increasing sales,
reducing costs and creating greater efficiencies that
ultimately improve the overall customer experience.
The IT department works with various business units
to develop and implement technology solutions to
meet business goals. The department delivers solutions
covering all aspects of Safeway’s business including
marketing and merchandising, retail, supply chain,
eCommerce, business intelligence and administration.
Most recently, IT has been involved with the
development of our proprietary just for U™ digital
loyalty platform. Through just for U, customers are able
to download personalized prices and digital coupons to
their Club Cards. Recently, mobile apps were added in
order to provide customers with more convenient access
to just for U.
Safeway operates a data center in Salt Lake City, Utah
and another in Phoenix, Arizona. Each data center
houses mission-critical information and is equipped to
function as a back-up system in the event of a disaster.
FI NA NCE & ADM I NI ST RAT IO N
TECHNOLOGY
13
HUMAN RESOURCES
Diversity and Inclusion
The diversity of our workforce is a key reason why
Safeway remains a desired employer for people of all
backgrounds from every segment of the communities
we serve. We foster an inclusive working environment
and value the varying strengths and perspectives of
our employees. We believe a diverse workforce leads
to better teamwork, increased productivity, creative
thinking and innovation - which help us achieve business
priorities.
Safeway’s view of diversity is all-inclusive and covers the
many ways employees may be different, including an
individual’s race, color, religion, gender, national origin,
age, disability, ancestry, medical condition, genetic
information, marital status, covered veteran status,
citizenship status, sexual orientation, gender identity
and gender expression. Safeway provides reasonable
accommodations for applicants and employees with
disabilities. Safeway employs approximately 178,000
employees of which 75% are covered by collective
bargaining agreements.
Safeway supports employee resource groups, which
are individually sponsored by a senior member of our
management team. Employees have formed over ten
groups, thereby increasing employee engagement,
providing networking and mentoring opportunities and
helping connect employees to the community.
Not only are Safeway employees diverse, our suppliers of
goods and services are too. Safeway’s supplier diversity
program includes minority, service-disabled veteran and
women-owned businesses.
Employee Development
Our employees are our most valuable resource. We
provide employees with training and developmental
opportunities that enable them to acquire the necessary
knowledge, skills and abilities, which we believe have
contributed significantly to Safeway becoming a
leading retailer in our markets. Whether it is providing
world-class customer service, offering exceptional
products at a competitive price or mastering the latest
in merchandising and display techniques, Safeway’s
training and development programs are designed to
provide individuals with a solid foundation to perform
their best in their current position, and prepare them
14
for future opportunities. Safeway provides entry-level
training using multi-media, mentors and on-the-job
training. Areas of concentration include: customer service,
diversity, food safety, workplace safety, financial analysis
and a host of other topics, as they relate to each position.
Strong performers are offered further opportunities in
management positions.
Retail Management Training/Leadership
Development Program
Store managers are an essential and significant group of
leaders who run the daily operations of Safeway. Potential
store managers are selected from high-performing
assistant store managers, qualified external store
managers, store employees and other outside candidates.
Safeway developed a military recruiting program to hire
and train junior military officers after they return from
active duty. Store manager candidates are given in-depth
training on leadership, strategy, store operations, report
analysis and financial business acumen. The Safeway retail
management development program prepares Safeway’s
retail leaders for everyday operating challenges by
providing them with the proper training, experience and
tools necessary to adapt and excel in the competitive and
constantly changing grocery industry.
Health and Wellness
In addition to employing and training a diverse workforce,
Safeway offers a number of benefits and programs to
help employees manage all aspects of their total health–
physical, emotional and financial well-being. Our Live
Life, Live Long, Live Well™ programs are available to help
our employees and their families manage their physical,
emotional and financial well-being. Healthy Measures
helps employees understand their major health risks
and take steps to stay or become healthy. Participating
employees qualify for substantial discounts on their health
insurance premiums. Other programs include:
• a state-of-the art corporate fitness center and discounts at local fitness centers;
• an online tool that helps make health care costs transparent; and
• CareConnect, a service to provide employees and their families with the very best care for breast cancer, prostate cancer and heart disease at premier treatment
centers nationwide.
Stock Ownership
A payroll deduction plan allows employees at all levels
to buy Safeway stock commission-free. Safeway’s 401(k)
plan provides eligible employees an option to invest selfdirected retirement funds in Safeway stock.
CORPORATE SOCIAL RESPONSIBILITY
For years, Safeway has taken responsibility for
environmental and community stewardship. We strive
to have a positive and measurable impact on the lives
of our customers and employees, and we have been a
leading fundraiser for many organizations. We focus
our corporate social responsibility (CSR) efforts on four
key areas: People, Products, Community and Planet.
The following is an overview of our accomplishments
in these areas. Please see our CSR website for more
details: www.safeway.com/csr.
People
As previously mentioned, Safeway takes pride in
employing and training a diverse workforce, and we are
also committed to our Live Life, Live Long, Live Well™
health and well-being programs.
For our customers, we strive to offer a selection of
healthy products and services. Safeway’s pharmacies
offer more than just prescription-filling and healthrelated advice. They also provide immunizations, travel
medicines, medication therapy management and pointof-care screening, among other services.
Products
Sourcing safe, high-quality products and offering a
selection of healthy and more sustainable products is
very important to us.
Consumer Brands
Our private label product team continues to expand
item selection in the Health & Wellness portfolio of
brands which includes O Organics™, Eating Right®, Bright
Green™ and Open Nature™, the newest line with 100%
natural ingredients from natural sources, with nothing
artificial added. We also began removing high fructose
corn syrup from our Eating Right products, a project
which is nearly completed.
SimpleNutrition
In 2011, we introduced SimpleNutrition, an “at the
shelf” labeling program we developed in partnership
with registered dietitians and food labeling experts.
Green shelf tags identify certain nutrition and ingredient
benefits for a given product, helping our customers to
receive critical nutrition information at a glance.
Locally Grown
Safeway has spent decades working with hundreds of
local growers across the country to bring the finest and
freshest produce to our consumers. We give buying
preference to our local vendor partners, supporting the
vitality of regional farms and reducing greenhouse gas
emissions by limiting transportation miles.
Supplier Diversity Program
We encourage businesses owned by minorities, women
and disabled veterans to present their goods or services
to Safeway for consideration. Potential suppliers are
guided through the evaluation process by a designated
diversity contact person and the appropriate category
decision maker.
FI NA NCE & ADM I NI ST RAT IO N
Incentive Programs and Benefits
We have a wide range of bonus programs to motivate,
reward and retain eligible employees and to encourage
individual and team behavior that helps the company
achieve both short- and long-term performance
objectives. Safeway’s bonus programs extend to more
than 21,000 employees from in-store department
managers to senior management. Safeway also
contributes to a pension plan for corporate-level
employees and several multi-employer pension plans.
15
21
Animal Welfare and Seafood Sustainability
Safeway is an industry leader in animal welfare. We
believe animals should be raised, transported and
processed using procedures that are clean, safe and
free from cruelty, abuse or neglect. The mandate of our
Animal Welfare Council, comprised of Safeway experts
and a number of animal welfare scientists from top
universities, is to provide guidance on matters relating
to the humane treatment of animals in the food
production system.
Safeway adopted a far-reaching seafood sustainability
policy in 2008 to help ensure this food source is
enjoyed for generations to come. The policy focuses
on four key areas: sourcing, supplier assessment and
employee and customer education. In January 2010,
we joined FishWise, a non-profit organization focused
on improving the sustainability performance of seafood
retailers, distributors and producers. In May 2012,
Greenpeace ranked Safeway number one among the
top U.S. grocery retailers for the sustainability of our
seafood practices.
Quality Assurance
In 2010, we initiated a multi-year program to improve
practices that safeguard the integrity of our products.
Our program includes certification with the Global
Food Safety Initiative (GFSI), a collaboration among
food safety experts from retail, manufacturing and
food service, as well as service providers. The GFSI
benchmarks existing food standards against food safety
criteria and develops ways to share information in the
supply chain, raise consumer awareness and review
existing retail practices.
Packaging
Our sustainability strategy calls for us to reduce
our carbon footprint and support the growth of
recycling industries in North America. Our innovations
in packaging, such as reducing the weight of our
refreshe™ 500 ml water bottles and use of Reusable
Plastic Containers to ship produce, instead of cardboard
boxes, have helped us make significant progress against
those objectives. In addition, through our participation
in the Global Packaging Project, we helped establish the
Global Protocol on Packaging Sustainability metrics.
16
Community
We have a longstanding reputation for making
meaningful contributions to the causes our customers
and employees care about. Our Safeway Volunteer
website links our employees with more than 70,000
nonprofit agencies and local volunteer opportunities
such as mentoring programs, food banks and school
youth programs. In 2011, our employees achieved a
milestone of one million volunteer hours logged.
Much of our charitable giving happens through The
Safeway Foundation. The major areas of support for
both Safeway and our foundation are: hunger relief,
education, health and human services, and people with
special needs.
Hunger Relief
In 2011, Safeway and The Safeway Foundation donated
approximately $116.5 million in food and products to
regional food banks, food pantries and other hunger
relief agencies.
Education
Safeway contributes more than $20 million annually to
schools through eScrip and other fundraising programs.
The eScrip program allows enrolled shoppers to raise
money for their designated schools simply by making
purchases at participating merchants.
Health and Human Services
Safeway and The Safeway Foundation support a wide
array of cutting-edge cancer research at some of North
America’s top cancer centers. Safeway and The Safeway
Foundation are among the largest corporate supporters
in the research and prevention of breast and prostate
cancer, having raised and donated over $180 million
since 2001.
People with Special Needs
Safeway is one of the largest corporate fundraisers
for Easter Seals and Special Olympics. We have raised
more than $110 million for the benefit of Easter Seals
programs and have supported Special Olympics for
approximately 20 years. Since we began, Safeway
and The Safeway Foundation raised approximately
$58 million for the Muscular Dystrophy Association
(MDA), a national voluntary health agency dedicated to
conquering more than 40 neuromuscular diseases.
Planet
The protection of our natural resources, such as air,
water, soil and vegetation, is paramount to the health
and sustainability of our planet for future generations
to come. Safeway was one of the first retailers to
recycle and one of the first to offer reusable shopping
bags. We have made substantial progress in our goals
to reduce our energy consumption and greenhouse gas
emissions, divert waste, reduce water usage, increase
efficiencies in our supply chain and build new stores
more sustainably while improving the sustainability of
our existing stores.
Cutting Energy Consumption
and Reducing Greenhouse Gases
In 2006, Safeway was the first retailer to join the
Chicago Climate Exchange, committing to reduce our
carbon footprint over four years by 6% below our 2000
baseline. We completed our 2010 audit and exceeded
our target, reducing our greenhouse gas emissions
by 11.8% from our 2000 baseline. In 2012, Safeway
joined The Climate Registry, a nonprofit collaboration
among North American states, provinces, territories
and Native Sovereign Nations that sets consistent
and transparent standards to calculate, verify and
publicly report greenhouse gas emissions into a single
registry. In 2011, we purchased enough green power
from biogas, solar and wind to offset the power used
by all of our U.S. fuel stations, corporate offices in
Pleasanton, California and all of our stores in San
Francisco, California and Boulder, Colorado.
Reducing Water Usage
Water is a critical natural resource that must be managed
responsibly. Over the past few years Safeway has
implemented a number of water-saving initiatives across
our retail stores, distribution centers, and manufacturing
plants. For example, by installing new water cooling
tower technology, we have significantly reduced water
intake needs in many of our refrigeration systems, saving
millions of gallons of water.
Improving Efficiencies in our Supply Chain
Transporting our products to nearly 1,700 stores is a big
task, and doing so efficiently takes skill and innovation.
One innovative approach we took in 2011 was to recycle
fryer grease from our Northern California stores into biodiesel which was used by the Vons transportation fleet.
In addition, by loading our trucks more efficiently, we
reduced the amount of diesel fuel consumption in our
outbound trucks significantly. We also completed the
installation of two, one-megawatt wind turbines at our
Tracy, California distribution center.
Store Sustainability
We strive to minimize environmental impacts in the
design and building of new stores. Since we opened our
first store certified by the US Green Building Council’s
Leadership in Energy and Environmental Design (LEED)
program in 2010 in Santa Cruz, California, we now have
several projects in the LEED certification process.
FI NA NCE & ADM I NI ST RAT IO N
Diverting Waste
Safeway supports the global drive towards zero
waste business practices. Our stores, corporate
offices, distribution centers and manufacturing plants
participate in a number of diversion programs. We
recycle or divert to alternative uses items such as
cardboard, plastics, compostable material, cooking
oil, bone and fat, as well as construction materials on
building sites.
17
23
FINANCIAL & OPERATING STATISTICS
FINANCIAL TRANSACTION HISTORY (All share prices are split-adjusted)
1986
•
•
In 1986, Safeway was acquired and taken private via a
leveraged buyout by partnerships formed by Kohlberg
Kravis Roberts & Co. (“KKR”) and Safeway senior
management. At year-end 1986, total debt was
$5.7 billion.
F rom 1986 through 1988, Safeway closed or sold
approximately 1,000 stores and received proceeds
of $2.4 billion, which were used to repay debt.
1989
•
1993
Issued $80 million of Medium-Term Notes in 1993,
with maturities ranging from two to ten years.
•
1994
•
1995
•
In January 1995, Safeway acquired 31.8% of the
partnership interests in SSI Equity Associates, L.P. for
$113 million with proceeds from bank borrowings. In
October 1995, Safeway acquired an additional 18.9%
of such partnership interests for $83 million with
proceeds from bank borrowings. SSI Equity Associates,
L.P. was a limited partnership whose sole asset
consisted of warrants to purchase Safeway common
stock at $0.50 per share.
•
In May 1995, Safeway entered into a new $1.15 billion
unsecured bank credit agreement that extended the
maturity date and provided lower borrowing costs.
The new credit agreement was to mature in the year
2000 and had two one-year extension options. In
connection with obtaining the new credit agreement,
all collateral securing the prior credit agreement and
the company’s subordinated debt was released.
•
In May 1995, Standard & Poor’s (“S&P”) upgraded
Safeway’s unsecured senior debt to BBB-.
At year-end 1989, total debt was $3.1 billion.
1990
•
n April 26, 1990, Safeway became a public company
O
once again by issuing 46 million shares at $2.81 per
share, for net proceeds of approximately $120 million.
1991
•
In April 1991, Safeway issued another 70 million
shares at $5.13 per share, for net proceeds of
approximately $340 million.
•
1-16-91: Redeemed $565 million of 14.5% Junior
1
Subordinated Debentures.
•
1-20-91: Issued $300 million of 10.0% Senior
1
Subordinated Notes due 2001.
•
2-20-91: Redeemed $300 million of 11.75% Senior
1
Subordinated Notes.
1992
18
12
•
1-15-92: Issued $300 million of 9.65% Senior
0
Subordinated Debentures due 2004.
•
2-12-92: Issued $100 million of 9.3% Senior Secured
0
Debentures due 2007, secured by the distribution
center in Tracy, CA.
etired public debt totaling $292 million through open
R
market purchases, consisting of $44 million of senior
debt and $248 million of senior subordinated debt.
1996
•
E ffective January 30, 1996, Safeway stock split
two-for-one.
•
n February 5, 1996, 45.9 million shares of Safeway
O
Inc. were sold to the public by KKR at $12.69 per
share, reducing KKR’s ownership of Safeway to
approximately 51%.
•
In September 1996, S&P upgraded Safeway’s
unsecured senior debt to BBB.
•
2-24-92: Redeemed $300 million of 11.75% Senior
0
Subordinated Notes.
•
3-17-92: Issued $250 million of 9.35% Senior
0
Subordinated Debentures due 1999 and $150 million
of 9.875% Senior Subordinated Debentures due 2007.
•
4-23-92: Redeemed remaining $150 million of
0
11.75% Senior Subordinated Notes and redeemed
$250 million of 12.0% Senior Subordinated
Debentures.
•
In September and December 1996, Safeway acquired
an additional 13.8% of the limited partnership
interests in SSI Equity Associates, L.P. for $127 million
with proceeds from bank borrowings.
•
9-02-92: Filed a $240 million shelf registration.
0
Subsequently
issued $80 million of Medium-Term
Notes in 1992 with maturities ranging from three to
ten years.
•
n December 16, 1996, Safeway Inc. and The Vons
O
Companies, Inc. jointly announced a definitive
agreement pursuant to which Safeway would issue
1.425 shares of Safeway common stock for each share
•
1997
•
•
•
•
In January 1997, Moody’s upgraded Safeway’s
unsecured senior debt to Baa3.
n April 8, 1997, Safeway completed the merger with
O
Vons pursuant to which Safeway issued 83.2 million
shares of Safeway common stock for all of the shares
of Vons stock that Safeway did not already own.
In connection with the Vons merger, Safeway
repurchased 64.0 million shares of Safeway common
stock from a partnership affiliated with KKR at
$21.50 per share for an aggregate purchase price
of $1.376 billion.
In April 1997, to facilitate the Vons merger, Safeway
entered into a new $3.0 billion bank credit agreement.
It provided for, among other things, increased
borrowing capacity, extended maturities and the
opportunity to pay lower interest rates based on
interest coverage ratios or public debt ratings.
•
In September 1997, Moody’s upgraded Safeway’s
unsecured senior debt to Baa2.
•
n September 5, 1997, Safeway completed a tender
O
offer for debt securities in the principal amount of
approximately $588 million:
•
95 million of 9.35% Senior Subordinated Notes
$
due 1999
•
161 million of 10.00% Senior Subordinated Notes
$
due 2001
•
In December 1997, the public offering of 56.5 million
shares of common stock owned by affiliates of KKR
was completed at $29.88 per share, reducing KKR’s
ownership stake to approximately 22%.
1998
•
E ffective February 25, 1998, Safeway stock split
two-for-one.
•
In July 1998, the public offering of 28.8 million
shares of common stock owned by affiliates of KKR
was completed at $45.00 per share, reducing KKR’s
ownership stake to approximately 17%.
•
n August 6, 1998, Safeway and Carr-Gottstein Foods
O
Co., a grocery retailer operating in Alaska, jointly
announced a definitive merger agreement pursuant to
which Safeway would acquire all outstanding shares
of Carr-Gottstein for $12.50 cash per share and repay
approximately $239 million of Carrs’ debt.
•
n October 15, 1998, Safeway and Dominick’s
O
Supermarkets, Inc. jointly announced a definitive
merger agreement pursuant to which Safeway would
acquire all outstanding shares of Dominick’s for
$49.00 cash per share and repay approximately $560
million of Dominick’s debt and lease obligations.
•
n November 9, 1998, Safeway issued $1.4 billion
O
of senior debt associated with the acquisition of
Dominick’s. The four-tranche public offering
consisted of:
•
$400 million of 5.75% Notes due 2000
•
$400 million of 5.875% Notes due 2001
$53 million of 10.00% Senior Notes due 2002
•
$350 million of 6.05% Notes due 2003
•
147 million of 9.65% Senior Subordinated
$
Debentures due 2004
•
$250 million of 6.5% Notes due 2008
•
46 million of 9.30% Senior Secured Debentures
$
due 2007
•
86 million of 9.875% Senior Subordinated
$
Debentures due 2007
•
S afeway simultaneously obtained consents to
proposed amendments to the indentures governing
the remaining securities.
•
n September 5, 1997, the following securities were
O
issued to partially finance the redemption:
•
$200 million of 6.85% Senior Notes due 2004
•
$200 million of 7.00% Senior Notes due 2007
•
$150 million of 7.45% Senior Debentures due 2007
•
n November 12, 1998, Safeway was added
O
to the S&P 500 index.
•
n November 12, 1998, 20 million shares of common
O
stock were sold by affiliates of KKR to underwriters at
$55.00 per share, reducing KKR’s ownership stake to
approximately 13%.
•
n November 20, 1998, Safeway completed
O
the acquisition of Dominick’s Supermarkets, Inc.
1999
•
n February 10, 1999, 19.75 million shares of
O
common stock were sold to the public by affiliates of
KKR at $52.69 per share, reducing KKR’s ownership FI NA NCI AL & OP ER ATI NG STATI S TI CS
of Vons common stock that Safeway did not currently
own. Safeway owned approximately 35% of Vons.
19
stake to approximately 9%. In connection with the
secondary offering, all warrants attributable to SSI
Equity Associates partners other than Safeway were
exercised. This resulted in Safeway holding 100% of
the limited partnership interests in SSI Equity
Associates.
•
•
•
n April 16, 1999, Safeway completed the acquisition
O
of Carr-Gottstein Foods Co.
n July 23, 1999, Safeway and Randall’s Food
O
Markets, Inc. jointly announced a definitive merger
agreement pursuant to which Safeway would acquire
all the outstanding shares of Randall’s for a total
consideration of $1.3 billion and repay approximately
$403 million of Randall’s debt.
n September 8, 1999, Safeway issued $1.5 billion
O
of senior debt associated with the acquisition of
Randall’s. The three-tranche public offering
consisted of:
•
$ 600 million of 7.0% Notes due 2002
•
$400 million of 7.25% Notes due 2004
•
$500 million of 7.5% Notes due 2009
•
n September 14, 1999, Safeway completed
O
the acquisition of Randall’s Food Markets, Inc.
•
n October 5, 1999, the Safeway Board of Directors
O
authorized a $1.0 billion common stock repurchase
program and began repurchasing stock.
2000
•
•
20
n January 27, 2000, Safeway announced it had
O
repurchased 17.9 million shares of Safeway’s common
stock for $651 million during the fourth quarter of
1999.
n April 28, 2000, two affiliates of KKR completed
O
the private sale of 13.1 million shares of common
stock, including approximately 8 million shares
acquired in the Randall’s merger.
•
n June 5, 2000, Safeway and GroceryWorks.com
O
signed a definitive agreement creating a strategic
alliance between the two companies for
GroceryWorks.com to be Safeway’s online grocery
channel.
•
n December 5, 2000, Safeway and Genuardi’s Family
O
Markets, Inc. jointly announced a definitive agreement
pursuant to which Safeway would acquire the assets
of Genuardi’s in a cash transaction for approximately
$530 million.
2001
•
n January 5, 2001, Safeway entered into an
O
agreement with the Fleming Companies, Inc. to
purchase 11 ABCO stores in Arizona.
•
n January 31, 2001, Safeway issued $600 million of
O
7.25% Debentures due 2031, a portion of which was
used to fund the Genuardi’s acquisition.
•
n February 5, 2001, Safeway completed the purchase
O
of the assets of Genuardi’s Family Markets, Inc.
•
n February 28, 2001, Safeway completed the
O
purchase of 11 ABCO stores from the Fleming
Companies, Inc.
•
n March 5, 2001, Safeway issued $1.2 billion of
O
senior debt to repay borrowings under its commercial
paper program. The two-tranche public offering
consisted of:
•
$700 million of 6.15% Senior Notes due 2006
•
$500 million of 6.5% Senior Notes due 2011
•
n June 25, 2001, GroceryWorks.com, Safeway’s
O
exclusive online grocery channel, established a
strategic relationship with Tesco PLC. Concurrently,
Tesco made an equity investment for a 35% stake in
GroceryWorks.com.
•
n September 28, 2001, the Safeway Board of
O
Directors increased the authorized level of Safeway’s
stock repurchase program by $500 million to
$1.5 billion.
•
n November 5, 2001, Safeway issued $400 million
O
of 3.625% Notes due 2003.
•
In November 2001, all warrants to purchase Safeway
common stock held in SSI Equity Associates L.P.
expired unexercised and were accounted for as a
reduction to retained earnings.
2002
•
n January 24, 2002, Safeway announced it had
O
repurchased 18.9 million shares of its common stock
for $781.3 million during 2001. Also, Safeway’s
Board of Directors increased the authorized level of
Safeway’s stock repurchase program by $1.0 billion
to $2.5 billion. At year-end 2001, Safeway had bought
back a total of $1.4 billion of its shares, leaving
$1.1 billion available for repurchases under the
$2.5 billion program.
•
n July 8, 2002, the Safeway Board of Directors
O
increased the authorized level of Safeway’s stock
•
•
n July 16, 2002, Safeway issued $480 million of
O
4.80% senior debt due 2007 to repay borrowings
under its commercial paper program.
n August 12, 2002, Safeway issued $1.025 billion of
O
senior debt to repay borrowings under its commercial
paper program. The two-tranche offering consisted of:
•
$225 million of 3.8% Senior Notes due 2005
•
$ 800 million of 5.8% Senior Notes due 2012
•
•
n February 6, 2003, Safeway announced it had
O
repurchased 50.1 million shares of its common stock
for $1.5 billion during 2002. At year-end 2002,
Safeway had bought back a total of $2.9 billion of its
shares, leaving $0.6 billion available for repurchases
under the $3.5 billion program.
•
$250 million of 5.625% Senior Notes due 2014
•
uring the second half of 2004, Safeway closed 18
D
underperforming stores in Southern California.
•
F rom September 7, 2004 through October 5, 2004,
Safeway conducted a stock option exchange tender
offer that allowed eligible employee optionees to
exchange outstanding stock options with an exercise
price greater than $35 per share for a number of
replacement options according to an exchange
formula.
2005
•
n April 7, 2005, approximately 4.5 million
O
replacement options were issued at an exercise price
of $20.75 per share.
•
n May 3, 2005, Safeway commenced expensing
O
stock options with the first quarter financial results.
•
n May 25, 2005, the Safeway Board of Directors
O
declared Safeway’s first quarterly cash dividend
of $0.05 per common share, with an estimated
annualized payout of $90.0 million.
•
n June 1, 2005, Safeway replaced its existing
O
revolving credit facility with a $1.6 billion 5-year
facility.
•
n June 29, 2005, S&P lowered Safeway’s corporate
O
credit and senior debt ratings to BBB- with a Stable
outlook from BBB. The analyst attributed the
downgrade to increased business risk, reflected in
the difficult operating environment for traditional
supermarket operators.
•
On October 18, 2005, Safeway announced plans to:
n October 29, 2003, Safeway issued $650 million of
O
Senior Notes to refinance upcoming debt maturities.
The three-tranche public offering consisted of:
•
$150 million of Floating Rate Senior Notes due 2005
•
$200 million of 2.5% Senior Notes due 2005
•
300 million of 4.125% Senior Notes due 2008
$
(converted to floating rate debt through an interest
rate swap agreement)
•
500 million of 4.95% Senior Notes due 2010
$
(converted to floating rate debt through an interest
swap agreement)
In December 2002, Safeway announced plans to begin
the process to sell Dominick’s and leave the Chicago
market due to labor issues.
2003
•
•
n November 3, 2003, Safeway announced it had
O
taken Dominick’s off the market because the union
and the winning bidder could not reach agreement on
an acceptable labor contract.
2004
•
n January 12, 2004, Safeway announced the closure
O
of 12 underperforming stores in Chicago.
•
n May 3, 2004, Safeway announced it would
O
expense stock options in 2005.
•
n July 27, 2004, Safeway filed a shelf registration
O
covering the issuance of up to $2.3 billion of debt
securities and/or common stock.
•
n August 12, 2004, Safeway issued $750 million
O
of Senior Notes to refinance upcoming debt maturities
and to repay borrowings under its commercial paper
program. The two-tranche public offering consisted of:
•
evitalize the Texas Division, which included the
R
closure of 26 underperforming stores.
•
epatriate $500 million of earnings from its Canadian
R
subsidiary to the U.S. under the American Jobs
Creation Act of 2004.
•
FI NA NCI AL & OP ER ATI NG STATI S TI CS
repurchase program by $1.0 billion to $3.5 billion.
n November 18, 2005, Canada Safeway Limited
O
issued $260 million (CAD300 million) of Senior Notes
due 2008 to repatriate funds to the United States
utilizing a lower tax rate made available under the
American Jobs Creation Act of 2004. Repatriated
funds were used to pay down debt in the U.S.
21
15
2006
•
n March 28, 2006, Safeway issued $250 million of
O
Floating Rate Notes due 2009 to repay borrowings
under its commercial paper program.
•
n August 1, 2007, Moody’s Investor Services
O
affirmed Safeway’s Baa2 rating and revised the
outlook to Stable from Negative.
•
In April 2006, Safeway announced it had settled a
federal income tax refund claim for the years 1992
through 1999 for costs associated with debt financing.
The federal refund consisted of a tax refund of
$259.2 million and interest, net of tax, earned on that
refund of $60.8 million. The state income tax refunds
received in 2006 consisted of $3.1 million of tax and
$1.8 million of interest, net of tax.
•
n August 17, 2007, Safeway issued $500 million
O
of 6.35% Senior Notes due 2017.
•
In May 2006, the Safeway Board of Directors
approved an increase to Safeway’s dividend by 15%
from $0.05 per share to $0.0575 per share.
•
n October 3, 2006, Safeway announced the
O
purchase of the remaining 43.8% of the equity
interests in the parent company of GroceryWorks.com
that it did not already own, making GroceryWorks.com
an indirect, wholly owned subsidiary.
•
n October 24, 2006, Fitch Ratings revised the rating
O
outlook for Safeway to Stable from Negative based
on continued debt reduction and strengthened cash
flows, profitability and credit measures.
•
n December 7, 2006, the Safeway Board of Directors
O
increased the authorized level of Safeway’s stock
repurchase program by $500 million to $4 billion. The
remaining board authorization for stock repurchases
was $747 million.
2008
•
E ffective January 10, 2008, Safeway terminated its
interest rate swap agreements on its $500 million debt
at a gain of approximately $7.5 million.
•
n February 21, 2008, Safeway announced it had
O
repurchased 6.7 million shares of common stock
at an average cost of $33.57 per share and a total
cost of $226 million in 2007. The remaining board
authorization for stock repurchases as of year-end
2007 was $521.1 million.
•
n April 8, 2008, S&P upgraded Safeway’s credit
O
and senior unsecured ratings to BBB with a Stable
outlook. The short-term rating was raised to A-2.
•
In May 2008, Safeway’s Board of Directors approved
a 20% increase in the quarterly dividend from $0.069
to $0.0828 per common share.
•
In May 2008, the Safeway Board of Directors
increased the authorized level of Safeway’s stock
repurchase program by $1.0 billion to $5.0 billion.
The remaining board authorization for stock
repurchases was $1.45 billion.
•
n December 8, 2008, Safeway filed a shelf
O
registration statement with the Securities and
Exchange Commission, enabling Safeway to issue an
unlimited amount of debt securities and/or common
stock. It expired on December 8, 2011. The Safeway
Board of Directors authorized the issuance of up to
$2.0 billion of securities under the shelf.
•
n December 17, 2008, Safeway issued $500 million
O
of 6.25% Senior Notes due 2014 to repay a portion
of the outstanding borrowings under Safeway’s U.S.
commercial paper program, revolving credit facility
and money market bank credit facilities.
2007
22
•
n February 7, 2007, Safeway announced plans to
O
revitalize Dominick’s, which included remodeling 20
stores, opening one new store in 2007 and closing 14
underperforming stores.
•
n February 22, 2007, Safeway announced it had
O
repurchased 12 million shares of common stock at an
average price of $26.53 per share and a total cost of
$318 million in 2006.
•
In May 2007, Safeway’s Board of Directors approved a
20% increase in the quarterly dividend from $0.0575
to $0.069 per common share.
•
n July 23, 2007, S&P affirmed Safeway’s BBB- credit
O
rating and revised the outlook to Positive from Stable.
2009
•
n February 26, 2009, Safeway announced it had
O
repurchased 12.6 million shares of common stock
•
n April 29, 2009, the Safeway Board of Directors
O
approved a 21% increase in the quarterly dividend
from $0.0828 to $0.10 per common share.
•
n August 7, 2009, Safeway issued $500 million of
O
5.0% Senior Notes due 2019 to refinance upcoming
debt maturities.
•
In December 2009, the Safeway Board of Directors
increased the authorized level of Safeway’s stock
repurchase program by $1.0 billion to a total of
$6.0 billion.
•
In December 2009, Safeway converted $800 million
of 5.80% fixed-rate debt due 2012 to floating-rate
debt through interest rate swap agreements.
•
n August 3, 2010, Safeway issued $500 million of
O
3.95% Senior Notes due 2020 to refinance upcoming
debt maturities.
•
In December 2010, the Safeway Board of Directors
increased the authorized level of Safeway’s stock
repurchase program by $1.0 billion to a total of
$7.0 billion.
•
In December 2010, the Safeway Board of Directors
increased the amount of securities authorized to be
issued under its U.S. shelf registration statement by
$0.5 million to a total of $2.5 billion. As of year-end,
$1.0 billion of securities were available for issuance
under the board’s authorization.
2011
•
n February 24, 2011, Safeway announced it had
O
repurchased 27.4 million shares of its common stock
at an average cost of $22.67 per share and a total
cost of $621 million in 2010. The remaining board
authorization for stock repurchases as of year-end
2010 was approximately $1.7 billion.
•
n March 8, 2011, Safeway announced that
O
the Safeway Board of Directors had approved a
$1.1 billion dividend from Canada to the United States,
to be paid in two installments. The first installment
was paid in the first quarter of 2011 with cash on
hand in Canada. The second installment was paid
in the second quarter of 2011. The funds were used
to pay down $600 million of U.S. debt, with the
remaining after-tax balance of the dividend intended
for stock repurchases.
•
n March 31, 2011, Canada Safeway Limited issued
O
CAD300 million of 3.00% Second Series Notes due
2014 to be used for general corporate purposes, in
conjunction with plans to repatriate funds to the
United States.
•
n May 19, 2011, the Safeway Board of Directors
O
approved a 21% increase in the quarterly dividend
from $0.12 to $0.145 per common share.
•
n June 1, 2011, Safeway replaced its existing
O
revolving credit facility with a $1.5 billion 4-year
facility.
2010
•
•
•
•
n February 25, 2010, Safeway announced it had
O
recorded a non-cash goodwill impairment charge of
$1,974.2 million ($1,818.2 million, net of tax) in the
fourth quarter of 2009. The impairment was due
primarily to Safeway’s reduced market capitalization
and a weak economy. The divisions affected were
primarily Vons and Eastern. The goodwill originated
from previous acquisitions.
n February 25, 2010, Safeway announced it had
O
repurchased 42.5 million shares of common stock
at an average cost of $20.80 per share and a total
cost of $885 million in 2009. The remaining board
authorization for stock repurchases as of year-end
2009 was approximately $1.3 billion.
n March 2, 2010, Safeway announced that during
O
2009, it received tax refunds of $413 million as
follows: (1) certain accelerated tax deductions for its
2008 income tax returns resulting in approximately
$224 million of tax refunds; and (2) the resolution
of certain other income tax matters resulting in tax
refunds of approximately $189 million.
n May 19, 2010, the Safeway Board of Directors
O
approved a 20% increase in the quarterly dividend
from $0.10 to $0.12 per common share.
FI NA NCI AL & OP ER ATI NG STATI S TI CS
at an average cost of $28.45 per share and a total
cost of $360 million in 2008. The remaining board
authorization for stock repurchases as of year-end
2008 was approximately $1.2 billion.
23
17
•
n October 24, 2011, Safeway filed a shelf registration
O
statement with the Securities and Exchange
Commission, enabling Safeway to issue an unlimited
amount of debt securities and/or common stock.
It expires on October 24, 2014. The Safeway Board
of Directors authorized the issuance of up to
$3.0 billion of securities under the shelf.
•
n November 29, 2011, the Safeway Board of
O
Directors increased the authorized level of Safeway’s
stock repurchase program by $1.0 billion to a total of
$8.0 billion.
•
n December 5, 2011, Safeway issued $400 million
O
of 3.40% Senior Notes and $400 million of 4.75%
Senior Notes which mature on December 1, 2016
and December 1, 2021, respectively.
•
•
24
In December 2011, Safeway sold a distribution center
in Burnaby, British Columbia at a gain of $47.1 million.
n December 19, 2011, Safeway entered into a
O
$700 million term credit agreement with a syndicate
of banks which matures on March 19, 2015. The
agreement is a delayed draw term credit facility which
allowed two draws from the closing date through,
on or prior to, April 19, 2012.
2012
•
n January 5, 2012, Safeway announced the sale
O
of 16 of its Genuardi’s stores, located in the eastern
United States. The transaction is subject to customary
closing conditions, including regulatory approval.
Additionally, Safeway announced that it planned to
close or sell the remaining Genuardi’s stores.
•
n February 23, 2012, Safeway announced that in
O
2011 it had repurchased 76.1 million shares of its
common stock at an average cost of $20.85 per share
and a total cost of approximately $1.6 billion. The
remaining board authorization for stock repurchases
as of year-end 2011 was approximately $1.1 billion.
•
In March 2012, the Safeway Board of Directors
increased the authorized level of Safeway’s stock
repurchase program by $1.0 billion to a total of
$9.0 billion.
•
n April 26, 2012, Safeway announced that during
O
the first quarter of 2012, it had purchased 46.0 million
shares of its common stock at an average cost of
$21.70 per share and a total cost of $1.0 billion. The
remaining board authorization for stock repurchases
was $1.1 billion. In addition, from the end of the first
quarter of 2012 through April 25, 2012, Safeway had
purchased 10.6 million shares of its common stock at
an average cost of $20.78 per share and a total cost of
$219.5 million.
ANNUAL FINANCIAL DATA
Sales and other revenue
52 Weeks
2011
Adjusted (1)
52 Weeks
2010
52 Weeks
2009
Adjusted (2)
53 Weeks
2008
52 Weeks
2007
$43,630.2
$41,050.0
$40,850.7
$44,104.0
$42,286.0
$4,596.6
$3,187.9
$2,688.7
$3,885.2
$3,487.8
$39,033.6
$37,862.1
$38,162.0
$40,218.8
$38,798.2
4.4%
(0.7%)
(5.0%)
1.4%
4.1%
1.0%
(2.0%)
(2.5%)
0.8%
3.4%
Cost of goods sold
$31,836.5
$29,442.5
$29,157.2
$31,589.2
$30,133.1
Gross profit
$11,793.7
$11,607.5
$11,693.5
$12,514.8
$12,152.9
27.03%
28.28%
28.62%
28.38%
28.74%
(125)
(34)
24
(36)
(8)
(45)
(7)
(35)
(26)
12
Fuel sales
Sales and other revenue, excluding fuel
Identical-store sales (3)
Identical-store sales (ex-fuel)
(3)
Gross profit margin
Gross profit margin change (bps)
Gross profit margin change,
ex-fuel (bps)
$35.1
($28.0)
($35.2)
$34.9
$13.9
$10,659.1
$10,448.1
$10,348.0
$10,662.1
$10,380.8
O&A expense margin (4)
24.43%
25.45%
25.33%
24.17%
24.55%
Operating profit
$1,134.6
$1,159.4
$1,345.5
$1,852.7
$1,772.1
LIFO expense (income)
Operating & administrative expense
2.6%
2.8%
3.3%
4.2%
4.2%
$272.2
$298.5
$331.7
$358.7
$388.9
$19.7
$20.3
$7.1
$10.6
$20.4
Income before income taxes
$882.1
$881.2
$1,020.9
$1,504.6
$1,403.6
Net income attributable to Safeway, Inc.
Operating profit margin
Interest expense
Other income, net
$516.7
$589.8
$720.7
$965.3
$888.4
Diluted earnings per share (1, 2)
$1.78
$1.55
$1.74
$2.21
$1.99
Weighted average shares
outstanding - diluted (2)
343.8
379.6
414.1
436.3
445.7
$0.555
$0.46
$0.3828
$0.3174
$0.2645
Depreciation expense
$1,148.8
$1,162.4
$1,171.2
$1,141.1
$1,071.2
Cash capital expenditures
$1,094.7
$837.5
$851.6
$1,595.7
$1,768.7
$751.4
$1,057.8
$1,490.3
$681.0
$420.0
Total assets
$15,073.6
$15,148.1
$14,963.6
$17,484.7
$17,651.0
Total debt
$5,410.2
$4,836.3
$4,901.7
$5,499.8
$5,655.1
Total equity
$3,689.1
$4,997.7
$4,946.4
$6,786.2
$6,701.8
59.5%
49.2%
49.8%
44.8%
45.8%
Cash dividends declared per
common share
Free cash flow (5)
Debt/total capital
Note: Financial information contained in this section is not comprehensive and should be read in conjunction with Safeway’s reports and filings with the SEC.
(1)2011 earnings per share has been adjusted to exclude a tax expense of $98.9 million from the $1.1 billion Canadian dividend paid in the first half of 2011. See
Reconciliations at the end of this Fact Book.
(2)2009 has been adjusted to exclude a non-cash goodwill impairment charge of $1,974.2 million ($1,818.2 million, net of tax). In addition, “weighted average shares
outstanding – diluted” includes common stock equivalents of 1.2 million for the calculation of diluted earnings per share, as adjusted. Reported diluted loss per share
excluded common stock equivalents since they are anti-dilutive. See Reconciliations at the end of this Fact Book.
(3)Defined as stores operating the same period in both the current year and the previous year. Excludes replacement stores. 2008 is based on a comparable 53-week
period in 2007.
(4)Management believes this ratio is relevant because it assists investors in evaluating the ability of Safeway to control costs.
(5)Defined as cash flow from operating activities as adjusted for the increase or decrease in payables related to third-party gift cards, net of receivables, less cash flow
used by investing activities. A reconciliation of cash flow calculated under generally accepted accounting principles (“GAAP”) to free cash flow is located under
Reconciliations at the end of this Fact Book.
FI NA NCI AL & OP ER ATI NG STATI S TI CS
(Dollars in millions, except per-share amounts)
25
25
QUARTERLY FINANCIAL DATA
(Dollars in millions)
Q1
Q2
Q3
Q4
Sales & other revenue
2011
$9,772.0
$10,196.4
$10,064.3
$13,597.6
2010
$9,327.1
$9,519.5
$9,399.6
$12,803.7
2009
$9,236.4
$9,462.1
$9,458.3
$12,693.9
2011
$936.5
$1,167.4
$1,099.6
$1,393.2
2010
$649.5
$728.4
$760.8
$1,049.2
2009
$504.5
$620.7
$712.4
$851.1
2011
$8,835.5
$9,029.0
$8,964.7
$12,204.4
2010
$8,677.6
$8,791.1
$8,638.8
$11,754.5
2009
$8,731.9
$8,841.4
$8,745.9
$11,842.8
3.5%
5.1%
4.9%
4.0%
Fuel sales
Sales & other revenue, excluding fuel
Identical-store sales
2011
2010
(1.4%)
(1.2%)
(1.4%)
0.8%
2009
(3.4%) (2)
(6.3%) (2)
(6.4%)
(4.0%)
2011
0.4%
0.5%
1.5%
1.5%
2010
(3.1%)
Identical-store sales (ex-fuel)
(2.5%)
(2.0%)
(0.8%)
0.2% (1)
(2.2%) (1)
(3.0%)
(4.1%)
$7,080.9
$7,443.4
$7,347.1
$9,965.2
2010
$6,677.5
$6,801.8
$6,755.0
$9,208.2
2009
$6,583.5
$6,730.6
$6,784.2
$9,058.9
2011
$2,691.1
$2,753.0
$2,717.2
$3,632.4
2010
$2,649.6
$2,717.7
$2,644.6
$3,595.5
2009
$2,652.9
$2,731.5
$2,674.1
$3,635.0
2011
27.5%
27.0%
27.0%
26.7%
2010
28.4%
28.5%
28.1%
28.1%
2009
28.7%
28.9%
28.3%
28.6%
2011
$4.0
$9.0
$8.4
$13.7
2010
$0.0
$0.0
$0.0
($28.0)
2009
$1.4
($1.4)
$0.0
($35.2)
2011
$2,471.9
$2,476.0
$2,468.9
$3,242.3
2010
$2,435.1
$2,432.5
$2,402.2
$3,178.4
2009
$2,371.4
$2,373.9
$2,396.0
$3,206.7
2009
Cost of goods sold
2011
Gross profit
Gross profit margin
LIFO expense (income)
O&A expense
26
See Footnotes on p. 28.
QUARTERLY FINANCIAL DATA
(Dollars in millions, except per-share amounts)
Q1
Q2
Q3
Q4
2011
25.3%
2010
26.1%
24.3%
24.5%
23.8%
25.6%
25.6%
24.8%
2009
25.7%
25.1%
25.3%
25.3%
O&A expense margin
Operating profit
2011
$219.2
$277.0
$248.3
$390.1
2010
$214.5
$285.2
$242.4
$417.1
2009 (adj.) (2)
$281.5
$357.6
$278.1
$428.3
2.2%
2.7%
2.5%
2.9%
Operating profit margin
2011
2010
2.3%
3.0%
2.6%
3.3%
2009 (adj.) (2)
3.0%
3.8%
2.9%
3.4%
$65.7
$61.5
$60.7
$84.3
2010
$69.7
$69.2
$69.4
$90.2
2009
$78.2
$77.2
$78.3
$98.0
2011
$3.7
$3.4
$8.7
$3.9
2010
$3.3
$2.4
$4.8
$9.9
2009
$1.2
$3.3
$1.5
$1.1
$157.2
$218.9
$196.3
$309.7
Interest expense
2011
Other income, net
Income before income taxes
2011
2010
$148.1
$218.4
$177.8
$336.8
2009 (adj.) (2)
$204.5
$283.7
$201.3
$331.4
$25.1
$145.8
$130.2
$215.6
Net income attributable to Safeway Inc.
2011
2010
$96.0
$141.3
$122.8
$229.6
$144.2
$238.6
$128.8
$209.1
2011 (adj.) (1)
$0.29
$0.41
$0.38
$0.67
2010
$0.25
$0.37
$0.33
$0.62
$0.34
$0.57
$0.31
$0.53
366.8
352.3
343.0
321.6
390.0
385.7
376.8
370.0
429.2
422.3
411.9
398.2
2011
$0.1200
$0.1450
$0.1450
$0.1450
2010
$0.1000
$0.1200
$0.1200
$0.1200
2009
$0.0828
$0.1000
$0.1000
$0.1000
2009 (adj.) (2)
2009 (adj.)
(1)
Weighted average shares outstanding – diluted
2011
2010
2009 (adj.)
(2)
Cash dividends declared per common share
See Footnotes on p. 28.
FI NA NCI AL & OP ER ATI NG STATI S TI CS
Diluted EPS
27
25
QUARTERLY FINANCIAL DATA
(Dollars in millions, except per-share amounts)
Q1
Q2
Q3
Q4
Depreciation expense
2011
$265.1
$263.9
$265.3
$354.5
2010
$269.0
$269.6
$267.5
$356.3
2009
$264.4
$268.3
$270.4
$368.1
2011
$185.1
$209.0
$288.4
$412.2
2010
$192.6
$192.1
$170.7
$282.1
2009
$243.5
$202.1
$157.2
$248.8
2011
$2,424.0
$2,419.4
$2,425.7
$2,424.5
2010
$2,562.7
$2,491.8
$2,451.6
$2,425.2
2009
$3,031.5
$2,933.9
$2,835.7
$2,621.3
2011
8.2x
8.4x
8.7x
8.9x
2010
7.9x
7.9x
8.0x
8.1x
8.6x
8.4x
8.2x
7.9x
$111.6
$4.5
$167.5
$467.8
Cash capital expenditures
Adjusted EBITDA
(rolling four fiscal quarters) (3)
Interest coverage
(rolling four fiscal quarters) (3)
2009
Free cash flow
(3, 4)
2011 (5)
2010
($58.4)
$330.0
$383.3
$402.9
2009
($186.7)
$595.8
$455.7
$625.5
2011
$4,860.6
$4,963.2
$5,048.3
$5,410.2
2010
$5,409.6
$5,349.7
$5,291.8
$4,836.3
2009
$5,728.4
$5,427.9
$5,368.1
$4,901.7
$4,881.1
$4,678.7
$4,570.4
$3,689.1
Total debt
Total equity
2011
2010
$5,017.0
$4,970.2
$4,876.5
$4,997.7
2009
$6,783.4
$6,938.8
$6,959.4
$4,946.4
49.9%
51.5%
52.5%
59.5%
Debt/total capital
2011
2010
51.9%
51.8%
52.0%
49.2%
2009
45.8%
43.9%
43.5%
49.8%
Stock price range
2011
$20.44 - $22.94
$21.90 - $25.43
$16.51 - $24.28
$15.93 - $21.37
2010
$20.91 - $25.41
$20.53 - $27.04
$18.73 - $21.91
$19.89 - $24.00
2009
$17.19 - $24.25
$18.98 - $21.73
$17.87 - $21.15
$19.15 - $23.63
(1)Q1 and Q2 2009 reflect the Easter holiday shift.
(2)Q4 2009 has been adjusted to exclude a non-cash goodwill impairment charge of $1,974.2 million ($1,818.2 million, net of tax). In addition, “weighted average
shares outstanding – diluted” includes common stock equivalents of 1.5 million for the calculation of diluted earnings per share, as adjusted. Reported diluted loss
per share excluded common stock equivalents since they are anti-dilutive. See Reconciliations at the end of this Fact Book.
(3)Reconciliations of net income and net cash flow from operating activities to adjusted EBITDA and GAAP cash flow to free cash flow are located under
“Reconciliations” later in this Fact Book.
(4)Defined as cash flow from operating activities as adjusted for the increase or decrease in payables related to third-party gift cards, net of receivables, less cash flow
used by investing activities.
28
(5)In Q2 2011, free cash flow was reduced by $153.9 million of contributions to pension and post-retirement plans and approximately $99 million of taxes paid on
Canadian dividends.
DIRECTORS & EXECUTIVE OFFICERS
BOARD OF DIRECTORS
EXECUTIVE OFFICERS
Steven A. Burd
Chairman and Chief Executive Officer
Safeway Inc.
Steven A. Burd
Chairman and Chief Executive Officer
Janet E. Grove
Former Chair and Chief Executive Officer
Macy’s Merchandising Group
Former Vice Chair
Macy’s, Inc.
Mohan Gyani
Vice Chairman
Roamware, Inc.
Former President and
Chief Executive Officer
AT&T Wireless Mobility Services, Inc.
Robert L. Edwards
President and Chief Financial Officer
Diane M. Dietz
Executive Vice President and
Chief Marketing Officer
Bruce L. Everette
Executive Vice President
Retail Operations
Larree M. Renda
Executive Vice President
David F. Bond
Senior Vice President
Finance and Control
(Chief Accounting Officer)
David T. Ching
Senior Vice President
Chief Information Officer
Paul Hazen (1)
Former Chairman and
Chief Executive Officer
Wells Fargo & Co.
Robert A. Gordon
Senior Vice President
Secretary and General Counsel
Chief Governance Officer
Frank C. Herringer
Chairman and Former
Chief Executive Officer
Transamerica Corporation
Russell M. Jackson
Senior Vice President
Human Resources
Kenneth W. Oder
Managing Member
Sugar Hollow LLC
Former Executive Vice President
Safeway Inc.
Arun Sarin
Former Chief Executive Officer
Vodafone Group PLc.
Michael S. Shannon
Managing Director
KSL Capital Partners LLC
William Y. Tauscher
Chief Executive Officer
Blackhawk Network Holdings, Inc.
Managing Member
The Tauscher Group
Melissa C. Plaisance
Senior Vice President
Finance and Investor Relations
David R. Stern
Senior Vice President
Planning and Business
Development
Jerry Tidwell
Senior Vice President
Supply Operations
DI R ECT OR S & EXE CUT I VE O FFI CE RS
T. Gary Rogers
Lead Independent Director
Former Chairman and CEO
Dreyer’s Grand Ice Cream, Inc.
Former Chairman
Levi Strauss & Co.
Former Chairman
Federal Reserve Bank of San Francisco
Donald P. Wright
Senior Vice President
Real Estate and Engineering
(1)Did not stand for re-election at the May 15, 2012 Annual Meeting of Stockholders.
29
29
CORPORATE HISTORY
SIGNIFICANT CORPORATE EVENTS
1926
1963
Merrill Lynch forms a holding company and acquires
the assets of Safeway Stores, Inc. The new company is
incorporated in Maryland.
Safeway enters the Australian market by purchasing
three Pratt Supermarkets in the Melbourne area.
At year end, Safeway is operating 766 stores and is one
of the first companies to offer cash-and-carry service.
Safeway establishes operations in another international
market with the acquisition of several Big Bear Basar
stores in West Germany.
1928
M.B. Skaggs becomes President of Safeway Stores, Inc.
1964
1966
Central data processing is located in Oakland, CA.
Safeway makes numerous acquisitions in Washington,
D.C., Virginia and Maryland; others in Arkansas, Iowa,
Kansas, Missouri and Texas.
Total store count at year end is 2,020, of which 855
contain meat markets.
Safeway stock is listed on the NYSE.
Quentin Reynolds, who steers Safeway through an era
of turbulent social upheaval, follows Robert Magowan
as President.
1971
Safeway divests itself of Super S drug stores after
several unprofitable years.
Safeway Stores, Inc. merges with 1,400-store MacMarr
chain.
Robert Magowan steps down as Chairman and Chief
Executive Officer; Reynolds assumes both posts. William
S. Mitchell, under whose administration Safeway passes
A&P to become the world’s largest food retailer, follows
Reynolds as President. Magowan stays on as Chairman
of the Executive Committee.
Company reaches all-time high of 3,257 stores.
1977
1929
Canada Safeway Limited is established in Winnipeg.
1931
1934
Skaggs relinquishes presidency to Lingan A. Warren.
Dale L. Lynch succeeds Mitchell as President of
Safeway and spearheads Safeway’s move into one-stop
shopping superstores that feature a variety of specialty
departments.
1955
Warren retires as President and Director. Robert A.
Magowan, who gives operational autonomy to Safeway
divisions, leaves Merrill Lynch to become Chairman.
Milton A. Selby is President, a post he would later
relinquish to Magowan.
Safeway consolidates its manufacturing divisions in a
modern Walnut Creek, CA, complex.
1980
1962
Peter A. Magowan, who revises Safeway’s strategy and
redirects its merchandising thrust, succeeds Mitchell as
Chairman and Chief Executive Officer.
Company begins operating 11 stores of John Gardner
Ltd. to establish roots in the United Kingdom.
1981
Safeway enters into a joint venture agreement with
Casa Ley, S.A. de C.V., giving Safeway a 49% interest in
the 13-store chain in Western Mexico.
30
30
1982
Omaha division is sold.
1983
Company announces five-year, $3.2 billion capital
expenditure program.
James A. Rowland succeeds Lynch as President.
New company name adopted: Safeway Inc.
San Diego and Los Angeles divisions merge to form
Southern California Division; Tulsa and Oklahoma City
divisions are combined to form Oklahoma Division.
Paul Hazen, President and Chief Operating Officer
of Wells Fargo & Co., and a member of its board, is
elected to the Safeway Board of Directors.
1985
1991
Australia Division is sold to Woolworth’s Ltd. Safeway
receives a 20% interest in Woolworth’s Ltd.
Safeway sells an additional 70.0 million shares of
common stock at $5.125 per share.
1986
Safeway retires $565 million of 14.5% LBO-related debt
with a combination of cash and bank debt.
Company is taken private via a leveraged buyout
by Kohlberg Kravis Roberts & Co. (“KKR”) and
reincorporates in Delaware.
Robert MacDonnell, Henry Kravis and George Roberts,
General Partners of KKR, are elected to the Safeway
Board of Directors.
Safeway sells its 20% interest in Australian retailer
Woolworth’s Ltd.
1987
Company divests United Kingdom, Dallas, Salt Lake City,
Liquor Barn, El Paso and Oklahoma divisions.
James Greene, Jr. and Michael Tokarz, General Partners
of KKR, are elected to Safeway’s Board of Directors.
1988
Rowland retires. Peter Magowan assumes additional
title of President.
Company divests Kansas City, Little Rock, Houston
and parts of Richmond divisions.
1992
Safeway completes refinancing of $1.0 billion of public
subordinated debt.
Steven A. Burd, a long-time consultant to Safeway,
is appointed President. Peter Magowan remains as
Chairman and Chief Executive Officer.
1993
Peter Magowan steps down as Chief Executive Officer
but continues to serve as Chairman of the Board.
Burd is elected Chief Executive Officer and becomes a
member of the Safeway Board of Directors.
Safeway sells 15 stores in the Richmond, VA area to
Farm Fresh, Inc.
1994
Safeway retires $292 million of senior and senior
subordinated debt in open-market purchases with
proceeds from bank borrowings.
Safeway refinances its Bank Credit Agreement on an
unsecured basis and regains investment grade status on
its senior unsecured debt from Standard & Poor’s.
1990
1996
Safeway returns to public status, selling 46.0 million
shares in a public offering.
A two-for-one stock split is effected on January 30.
Safeway moves its corporate offices to Pleasanton, CA
from Oakland, CA.
CO R PO RAT E HI S TO RY
1995
Safeway sells Southern California Division to The Vons
Companies, Inc. Safeway receives a 30% interest in
Vons, in addition to cash proceeds.
31
Safeway and Randall’s Food Markets, Inc. jointly
announce a definitive merger agreement.
Safeway Inc. and Vons jointly announce a definitive
agreement for a business combination of the two
companies.
Safeway completes the acquisition of Randall’s.
In connection with the Vons merger, Safeway agrees
to repurchase 64 million shares of common stock from
partnerships controlled by KKR.
1997
On April 8, Safeway completes the acquisition of Vons.
The combined company is the second largest grocery
store chain in North America, with 1,377 stores and
sales in excess of $22 billion.
1998
A two-for-one stock split is effected on February 25.
2000
Pantone® 186
CMYK 0-91-76-6
RGB 228-23-32
Hex E41720
White
CMYK 0-0-0-0
RGB 255-255-255
Hex FFFFFF
Safeway announces it has joined ten of the world’s
leading retailers as a founding member of the
Worldwide Retail Exchange, a web-based business-tobusiness exchange for retailers operating in the food,
general merchandise and drug retailing sectors.
Hector Ley Lopez, General Director of Casa Ley, S.A.
de C.V., is elected to Safeway’s Board of Directors,
replacing Henry Kravis of KKR.
Peter Magowan, Chairman of the Board, retires
but remains a director. Steven A. Burd is appointed
Chairman of the Board.
Safeway and GroceryWorks.com sign a definitive
agreement creating a strategic alliance between the
two companies for GroceryWorks.com to be Safeway’s
online grocery channel.
William Tauscher, Chairman and Chief Executive Officer
of Vanstar Corporation, is elected to the Safeway Board
of Directors.
Safeway and Genuardi’s Family Markets, Inc. announce
a definitive agreement in which Safeway will purchase
the assets of Genuardi’s.
Safeway Inc. and Carr-Gottstein Foods Co. jointly
announce a definitive merger agreement.
Safeway Inc. and Dominick’s Supermarkets, Inc. jointly
announce a definitive merger agreement, and on
November 20, Safeway completes the acquisition of
Dominick’s Supermarkets, Inc..
Safeway is added to the S&P 500 on November 12.
Pantone® 186
CMYK 0-91-76-6
RGB 228-23-32
Hex E41720
Pantone® 340
CMYK 100-0-74-0
RGB 0-153-102
Hex 009966
White
CMYK 0-0-0-0
RGB 255-255-255
Hex FFFFFF
1999
32
Pantone® Reflex Blue
CMYK 100-82-0-2
RGB 0-51-153
Hex 003399
2001
On February 5, Safeway completes the purchase of the
assets of Genuardi’s Family Markets, Inc.
Safeway purchases 11 ABCO stores in Arizona from the
Fleming Companies, Inc.
Pantone® 340
CMYK 100-0-74-0
RGB 0-153-102
Hex 009966
Pantone® 186
CMYK 0-91-76-6
RGB 228-23-32
Hex E41720
White
CMYK 0-0-0-0
RGB 255-255-255
Hex FFFFFF
GroceryWorks.com, Safeway’s exclusive online
grocery channel, establishes a strategic relationship
with Tesco PLC.
On April 16, Safeway completes the acquisition of CarrGottstein Foods Co.
Blackhawk Network, Inc., Safeway’s prepaid and gift
card business, is established.
Rebecca Stirn, Vice President, Sales and Marketing of
Collagen Aesthetics, Inc., is elected to Safeway’s Board
of Directors.
In the months following September 11, Safeway
mobilizes the retail operating divisions across the
U.S. and Canada in a fundraising campaign to
benefit the American Red Cross Disaster Relief Fund.
Approximately $4 million is raised, largely through
customer and employee contributions.
2002
GroceryWorks.com (doing business as Safeway.com)
formally launches Internet grocery service in Portland,
OR and Vancouver, WA. GroceryWorks.com becomes
available in Northern California, Southern California
and Las Vegas, NV.
Safeway purchases five stores in Houston from
Albertsons and three stores in Dallas from Winn-Dixie.
Safeway plans to sell Dominick’s and exit the
Chicago market.
Safeway completes centralization of the marketing
and procurement functions.
2003
During the second half of 2004, Safeway closes 18
underperforming stores in the Vons Division.
In October, Safeway announces the appointments
of Mohan Gyani, former President and Chief Executive
Officer of AT&T Wireless Mobility Group, and Janet
Grove, Chair and Chief Executive Officer of Federated
Merchandising Group and Corporate Vice Chair of
Federated Department Stores, Inc., to the Board of
Directors. They replace retiring board members George
Roberts and James Greene, Jr. In December, Safeway
announces the appointment of Raymond G. Viault,
retired Vice Chairman of General Mills, to the Board
of Directors to replace retiring board member Hector
Ley Lopez.
Seven locals of the United Food and Commercial
Workers Union strike 289 Vons stores in Southern
California on October 11.
2005
Safeway takes Dominick’s off the market because
the union and the winning bidder could not reach
agreement on an acceptable labor contract.
Safeway announces the appointment of Douglas
Mackenzie, a partner at venture capital firm Kleiner
Perkins Caufield & Byers, to Safeway’s Board of
Directors.
Peter Magowan retires from the Safeway Board of
Directors.
2004
Safeway announces it will declassify the Board of
Directors beginning in 2005.
Safeway launches the “Ingredients for life.®” branding
campaign at the NYSE to reposition the Safeway brand.
Safeway announces closure of 12 underperforming
Dominick’s stores.
Safeway announces a plan to revitalize the
Texas Division, including the closure of 26
underperforming stores.
Southern California strike ends on February 28.
Safeway amends bylaws to establish a majority vote
standard for the election of directors.
Brian C. Cornell joins Safeway as Executive Vice
President and Chief Marketing Officer.
Safeway receives the Catalyst Award for the
outstanding diversity initiative that results in the
development and advancement of women and
women of color.
Safeway announces corporate governance
enhancements. Major changes include a commitment
to replace three board members before year end
and the election of Paul Hazen as Lead Independent
Director.
CO R PO RAT E HI S TO RY
2006
Robert L. Edwards joins Safeway as Executive Vice
President and Chief Financial Officer.
On October 3, 2006, Safeway announces the purchase
of the remaining 43.8% of the equity interests in the
parent company of GroceryWorks.com it did not already
own, making GroceryWorks.com an indirect, wholly
owned subsidiary.
33
33
On October 5, 2006, Blackhawk announces its
acquisition of EWI Holdings, a provider of prepaid
payment processing technology.
Safeway establishes guidelines for stock ownership
by executive officers to further link the interests of
executives and stockholders.
Safeway adopts a policy on severance agreements
specifying that Safeway will not enter into any
severance agreement with an executive officer that
provides severance benefits in excess of 2.99 times
that executive’s most recent salary plus bonus, without
stockholder approval.
Safeway joins the Chicago Climate Exchange, making
a voluntary but legally binding commitment to reduce
greenhouse gas emissions by 6% over four years.
Safeway also becomes a voluntary member of the
California Climate Action Registry, the state’s official
registry for Greenhouse Gas emissions reduction
projects, and takes action to reduce Safeway’s carbon
footprint and reduce air pollution.
Blackhawk establishes a United Kingdom office and
enters the market with the gift card business.
2007
Safeway announces a plan to revitalize the Dominick’s
Division, including remodeling 20 stores, opening one
new store and closing 14 underperforming stores
in 2007.
Safeway wins California’s Flex Your Power Award for
energy conservation.
Safeway receives the California Governor’s
Environmental and Economic Leadership Award for
Safeway’s strong initiatives in promoting green business
practices and implementing significant environmental
initiatives.
Safeway celebrates the opening of the 1,000th
Lifestyle store.
34
Blackhawk expands the gift card program to Australia.
Safeway unveils the first solar-powered grocery store
in Dublin, CA and announces plans to convert 39
additional stores as part of a broader renewable energy
initiative.
2008
Safeway announces the formation of the Better
Living Brands™ Alliance to market O Organics™ and
Eating Right® products across all retail channels in the
U.S. and select channels internationally.
Safeway announces the appointments of Frank C.
Herringer, Chairman and former Chief Executive Officer
of Transamerica Corporation, and Kenneth W. Oder,
Managing Member, Sugar Hollow LLC and Former
Executive Vice President of Safeway, to Safeway’s Board
of Directors.
Diane M. Dietz joins Safeway as Executive Vice President
and Chief Marketing Officer.
Steven Burd receives the U.S. Department of Labor’s
2008 SPIRIT Award for his leadership in furthering
employment and workplace opportunities for people
with disabilities.
Safeway is named one of “America’s Healthiest Grocery
Stores” by Health magazine.
2009
Safeway is among the “World’s Most Ethical
Companies” as awarded by the Ethisphere Institute.
In November, Safeway opens a store in Santa Cruz, CA
that is a model for the green retail grocery. It is built
from the ground up with sustainability in mind, and in
accordance with the gold certification standards set by
Leadership in Energy and Environmental Design (LEED).
Safeway announces the appointment of Arun Sarin,
former Chief Executive Officer of Vodaphone Group
PLC, and Michael S. Shannon, founder of KSL Recreation
Group, KSL Resorts and KSL Capital Partners LLC, to
Safeway’s Board of Directors.
2011
In September, Safeway is added to the Dow Jones
Sustainability Index North America.
Safeway receives the Champion of Diversity Award
from Supermarket News for the second year in a row.
2010
In January, Safeway announces that it will work
with FishWise, a non-profit organization focused on
improving the sustainability and financial performance of
seafood retailers, distributors, and producers, to develop
and implement a more comprehensive sustainable
seafood policy.
In March, Safeway announces that it is the first U.S.based retail grocery chain and manufacturer of private
label merchandise to join The Sustainability Consortium
in support of a more sustainable global supply chain.
Robert I. MacDonnell, Rebecca A. Stirn and Raymond G.
Viault do not stand for re-election to the Safeway Board
of Directors in May 2010.
Safeway raises or donates more than $2.6 million for the
victims of the Haiti earthquake.
In September, Safeway is named to the Dow Jones
Sustainability Index North America for the second year
in a row.
Safeway introduces the just for U™ personalized pricing
and digital coupon campaign in select markets.
Safeway announces the appointment of T. Gary Rogers,
former Chairman of the Board and Chief Executive
Officer of Dreyer’s Grand Ice Cream, Inc., to the Safeway
Board of Directors.
Safeway announces the SimpleNutrition program, an instore shelf tag system that makes it easier for shoppers to
make better nutrition choices on food and beverages.
Safeway receives the 2011 Freeman Philanthropic
Services Award for Outstanding Corporation by the
Association of Fundraising Professionals.
Greenpeace ranks Safeway number one among the
top 20 grocery retailers on the sustainability of seafood
practices.
Safeway is a recipient of the Waste Reduction Award
Program for the 13th consecutive year.
2012
Robert L. Edwards is named President. Steven A.
Burd remains Chairman and Chief Executive Officer.
Larree M. Renda, Executive Vice President, assumes
additional responsibilities for real estate and information
technology.
Paul Hazen does not stand for re-election to the Safeway
Board of Directors in May 2012.
Safeway is among the “World’s Most Ethical Companies”
as awarded by the Ethisphere Institute.
Safeway is ranked number one and is one of the first
to earn a “green” or “good” rating among top grocery
retailers on the sustainability of seafood practices by
Greenpeace.
CO R PO RAT E HI S TO RY
Douglas J. Mackenzie does not stand for re-election
to the Safeway Board of Directors in May 2009, but
remains on Blackhawk’s board.
35
35
RECONCILIATIONS
Reconciliation of GAAP Cash Flow Measure to Free Cash Flow (in millions)*
Annual
Fiscal Year
2011
2010
2009
Net cash flow from operating activities
$2,023.6
$1,849.7
$2,549.7
$2,250.9
$2,190.5
Net cash flow used by investing activities
(1,014.5)
(798.8)
(889.0)
(1,546.0)
(1,686.4)
(293.6)
6.9
(170.4)
(23.9)
(84.1)
(Increase) decrease in payables related to third-party gift cards, net of receivables
Investments and business acquisitions
Free cash flow
2008
2007
35.9
-
-
-
-
$751.4
$1,057.8
$1,490.3
$681.0
$420.0
Reconciliation of Net Income (Loss) Attributable to Safeway Inc. to Adjusted EBITDA
(Interest Coverage) (dollars in millions)
Annual
Net income (loss) attributable to Safeway Inc.
Fiscal Year
2011
2010
2009
$516.7
$589.8
($1,097.5)
363.9
290.6
144.2
Add (subtract):
Income taxes
Interest expense
272.2
298.5
331.7
1,148.8
1,162.4
1,171.2
35.1
(28.0)
(35.2)
Share-based employee compensation expense
50.0
55.5
61.7
Property impairment charges
44.7
71.7
73.7
Goodwill impairment charge
-
-
1,974.2
(13.0)
(15.3)
(8.5)
6.1
-
5.8
$2,424.5
$2,425.2
$2,621.3
8.9x
8.1x
7.9x
Depreciation expense
LIFO expense (income)
Equity in earnings of unconsolidated affiliate
Dividend received from unconsolidated affiliate
Total Adjusted EBITDA
Adjusted EBITDA as a multiple of interest expense
Reconciliation of Net Cash Flow from Operating Activities to Adjusted EBITDA
(Interest Coverage) (dollars in millions)
Annual
Net cash flow from operating activities
Fiscal Year
2011
2010
2009
$2,023.6
$1,849.7
$2,549.7
Add (subtract):
Income taxes
363.9
290.6
144.2
Interest expense
272.2
298.5
331.7
Deferred income taxes
63.7
31.3
142.1
(114.3)
(125.2)
(140.1)
Contributions to pension and post-retirement benefit plans
176.2
17.7
24.4
(Increase)/decrease in accrued claims and other liabilities
(23.2)
(36.2)
34.3
65.6
27.5
(12.7)
(385.8)
67.9
(426.7)
(17.4)
3.4
(25.6)
$2,424.5
$2,425.2
$2,621.3
8.9x
8.1x
7.9x
Net pension and post-retirement benefits expense
Gain/(loss) on property dispositions and lease exit activities
Changes in working capital items
Other
Total Adjusted EBITDA
Adjusted EBITDA as a multiple of interest expense
*Excludes cash flow from payables related to third-party gift cards, net of receivables. Cash from the sale of third-party gift cards is held for a short period of time and
then remitted, less Safeway’s commission, to card partners. Because this cash flow is temporary, it is not available for other uses and therefore is excluded from the
company’s calculation of free cash flow.
36
Reconciliation of GAAP Cash Flow Measure to Free Cash Flow (in millions)*
2011
Q1
Q2
Q3
Q4
Net cash flow (used) provided by operating activities
$(60.0)
$247.6
$523.3
$1,312.7
Net cash flow used by investing activities
(188.4)
(216.9)
(339.1)
(270.1)
360.0
(26.2)
(16.7)
(610.7)
-
-
-
35.9
$111.6
$4.5
$167.5
$467.8
Decrease (increase) in payables related to third-party gift cards, net of receivables
Investments and business acquisitions
Free cash flow
2010
Net cash flow (used) provided by operating activities
Net cash flow used by investing activities
Decrease (increase) in payables related to third-party gift cards, net of receivables
Free cash flow
2009
Net cash flow (used) provided by operating activities
Net cash flow used by investing activities
Decrease (increase) in payables related to third-party gift cards, net of receivables
Free cash flow
Q1
Q2
Q3
Q4
$(242.0)
$551.1
$537.5
$1,003.1
(192.7)
(200.9)
(157.0)
(248.2)
376.3
(20.2)
2.8
(352.0)
$(58.4)
$330.0
$383.3
$402.9
Q1
Q2
Q3
Q4
$(151.0)
$835.1
$603.2
$1,262.4
(252.8)
(208.4)
(166.3)
(261.5)
217.1
(30.9)
18.8
(375.4)
$(186.7)
$595.8
$455.7
$625.5
*Excludes cash flow from payables related to third-party gift cards, net of receivables. Cash from the sale of third-party gift cards is held for a short period of time and
then remitted, less Safeway’s commission, to card partners. Because this cash flow is temporary, it is not available for other uses and therefore is excluded from the
company’s calculation of free cash flow.
Reconciliation of 2011 Diluted Earnings Per Share as Reported to Diluted Earnings Per Share
Excluding the Tax Charge on Canadian Dividend
Fiscal Year 2011
Diluted EPS
As reported
$1.49
Tax charge on Canadian dividend
0.29
Excluding tax charge on Canadian dividend
$1.78
Reconciliations which Adjust 2009 Financial Results for Goodwill Impairment Charge
(in millions, except percents and per share amounts)
Fourth Quarter 2009
Fiscal Year 2009
% of sales
$12,693.9
Operating loss, as reported
$40,850.7
$(1,545.9)
(12.2%)
$(628.7)
(1.5%)
Add goodwill impairment charge
1,974.2
15.6%
1,974.2
4.8%
Operating income, as adjusted
$428.3
3.4%
$1,345.5
3.3%
Pre-tax loss, as reported
Add goodwill impairment charge
$(1,642.8)
$(953.3)
1,974.2
1,974.2
$331.4
$1,020.9
$(1,609.1)
$(1,097.5)
Add goodwill impairment charge
1,974.2
1,974.2
Less tax benefit from goodwill impairment charge*
(156.0)
(156.0)
Pre-tax income, as adjusted
Net loss attributable to Safeway Inc., as reported
Net income, excluding goodwill impairment charge
$209.1
$720.7
Diluted loss per share attributable to Safeway Inc., as reported
$(4.06)
$(2.66)
4.59
4.40
Diluted earnings per share, excluding goodwill impairment charge
$0.53
$1.74
Weighted average shares outstanding used for diluted loss per share, as reported
396.7
412.9
1.5
1.2
398.2
414.1
Less goodwill impairment charge per diluted share, net of tax
Add common shares equivalents
Weighted average shares outstanding used for diluted earnings per share,
excluding goodwill impairment charge
*Represents the tax deduction from the impairment of goodwill that arose from taxable asset acquisitions, tax-affected at Safeway’s incremental rate of 38.6%.
R ECO NCI L IAT IO NS
Sales and other revenue, as reported
% of sales
37
25
2011 Reconciliation of Net Income Attributable to Safeway Inc. to Adjusted EBITDA (dollars in millions)
Q1
Net income attributable to Safeway Inc.
(A+B-C)
Rolling Four Quarters
Ended March 26, 2011
A
Year Ended
January 1, 2011
B
12 Weeks Ended
March 26, 2011
C
12 Weeks Ended
March 27, 2010
$518.9
$589.8
$25.1
$96.0
370.4
290.6
132.1
52.3
Add (subtract):
Income taxes
Interest expense
Depreciation expense
LIFO (income) expense
294.5
298.5
65.7
69.7
1,158.5
1,162.4
265.1
269.0
(24.0)
(28.0)
4.0
-
Share-based employee compensation
52.3
55.5
10.9
14.1
Property impairment charges
61.4
71.7
7.1
17.4
(14.1)
(15.3)
(1.8)
(3.0)
6.1
-
6.1
-
$2,424.0
$2,425.2
$514.3
$515.5
(A+B-C)
Rolling Four Quarters
Ended June 18, 2011
A
Year Ended
January 1, 2011
B
24 Weeks Ended
June 18, 2011
C
24 Weeks Ended
June 19, 2010
$523.5
$589.8
$171.0
$237.3
366.1
290.6
204.9
129.4
Equity in earnings of unconsolidated affiliates, net
Dividend received from unconsolidated affiliate
Total Adjusted EBITDA
Adjusted EBITDA as a multiple of interest
expense
Q2
Net income attributable to Safeway Inc.
8.2x
Add (subtract):
Income taxes
Interest expense
286.8
298.5
127.2
138.9
1,152.8
1,162.4
529.0
538.6
(15.0)
(28.0)
13.0
-
Share-based employee compensation
51.4
55.5
22.1
26.2
Property impairment charges
62.9
71.7
22.0
30.8
(15.2)
(15.3)
(4.4)
(4.5)
Depreciation expense
LIFO (income) expense
Equity in earnings of unconsolidated affiliates, net
Dividend received from unconsolidated affiliate
Total Adjusted EBITDA
Adjusted EBITDA as a multiple of interest
expense
Q3
Net income attributable to Safeway Inc.
6.1
-
6.1
-
$2,419.4
$2,425.2
$1,090.9
$1,096.7
(A+B-C)
Rolling Four Quarters
Ended Sept. 10, 2011
A
Year Ended
January 1, 2011
B
36 Weeks Ended
Sept. 10, 2011
C
36 Weeks Ended
Sept. 11, 2010
$530.8
$589.8
$301.1
$360.1
8.4x
Add (subtract):
Income taxes
377.1
290.6
271.0
184.5
Interest expense
278.1
298.5
187.9
208.3
806.1
Depreciation expense
1,150.6
1,162.4
794.3
LIFO (income) expense
(6.6)
(28.0)
21.4
-
Share-based employee compensation
51.6
55.5
33.4
37.3
Property impairment charges
Equity in earnings of unconsolidated affiliates, net
Dividend received from unconsolidated affiliate
Total Adjusted EBITDA
Adjusted EBITDA as a multiple of interest
expense
38
56.7
71.7
33.7
48.7
(18.7)
(15.3)
(11.1)
(7.7)
6.1
-
6.1
-
$2,425.7
$2,425.2
$1,637.8
$1,637.3
8.7x
2011 Reconciliation of Net Cash Flow from Operating Activities to Adjusted EBITDA (dollars in millions)
Q1
(A+B-C)
Rolling Four Quarters
March 26, 2011
A
Year Ended
January 1, 2011
B
12 Weeks Ended
March 26, 2011
C
12 Weeks Ended
March 27, 2010
$2,031.7
$1,849.7
($60.0)
($242.0)
Income taxes
370.4
290.6
132.1
52.3
Interest expense
294.5
298.5
65.7
69.7
(4.8)
(4.8)
(1.1)
(1.1)
1.5
1.6
0.4
0.5
Net cash flow provided (used) by operating activities
Add (subtract):
Amortization of deferred finance costs
Excess tax benefit from exercise of stock options
Deferred income taxes
Net pension and post-retirement benefit expense
Contributions to pension and post-retirement plans
Accrued claims and other liabilities
Gain (loss) on property retirements and lease exit activities
Dividend received from unconsolidated affiliate
90.3
31.3
59.0
-
(121.1)
(125.2)
(25.7)
(29.8)
19.9
17.7
6.6
4.4
(45.1)
(36.2)
(25.3)
(16.4)
39.9
27.5
1.4
(11.0)
6.1
-
6.1
-
(258.9)
67.9
365.5
692.3
(0.4)
6.6
(10.4)
(3.4)
$2,424.0
$2,425.2
$514.3
$515.5
(A+B-C)
Rolling Four Quarters
June 18, 2011
A
Year Ended
January 1, 2011
B
24 Weeks Ended
June 18, 2011
C
24 Weeks Ended
June 19, 2010
$1,728.2
$1,849.7
$187.6
$309.1
Income taxes
366.1
290.6
204.9
129.4
Interest expense
286.8
298.5
127.2
138.9
(4.8)
(4.8)
(2.2)
(2.2)
1.7
1.6
0.8
0.7
Changes in working capital items
Other
Total Adjusted EBITDA
Q2
Net cash flow provided by operating activities
Add (subtract):
Amortization of deferred finance costs
Excess tax benefit from exercise of stock options
Deferred income taxes
Net pension and post-retirement benefit expense
85.9
31.3
54.6
-
(118.9)
(125.2)
(51.4)
(57.7)
Contributions to pension and post-retirement plans
169.5
17.7
160.5
8.7
Accrued claims and other liabilities
(40.5)
(36.2)
(33.7)
(29.4)
41.4
27.5
(0.1)
(14.0)
(95.2)
67.9
450.0
613.1
(0.8)
6.6
(7.3)
0.1
$2,419.4
$2,425.2
$1,090.9
$1,096.7
(A+B-C)
Rolling Four Quarters
Sept. 10, 2011
A
Year Ended
January 1, 2011
B
36 Weeks Ended
Sept. 10, 2011
C
36 Weeks Ended
Sept 11, 2010
$1,714.0
$1,849.7
$710.9
$846.6
Income taxes
377.1
290.6
271.0
184.5
Interest expense
278.1
298.5
187.9
208.3
(5.1)
(4.8)
(3.6)
(3.3)
2.5
1.6
1.6
0.7
Gain (loss) on property retirements and lease exit activities
Changes in working capital items
Other
Total Adjusted EBITDA
Q3
Net cash flow provided by operating activities
Amortization of deferred finance costs
Excess tax benefit from exercise of stock options
Deferred income taxes
83.0
31.3
51.7
-
(116.7)
(125.2)
(78.1)
(86.6)
Contributions to pension and post-retirement plans
174.3
17.7
168.3
11.7
Accrued claims and other liabilities
(37.1)
(36.2)
(39.4)
(38.5)
23.3
27.5
(2.8)
1.4
(65.5)
67.9
379.3
512.7
(2.2)
6.6
(9.0)
(0.2)
$2,425.7
$2,425.2
$1,637.8
$1,637.3
Net pension and post-retirement benefit expense
Gain (loss) on property retirements and lease exit activities
Changes in working capital items
Other
Total Adjusted EBITDA
R ECO NCI L IAT IO NS
Add (subtract):
39
25
2010 Reconciliation of Net (Loss) Income Attributable to Safeway Inc. to Adjusted EBITDA (dollars in millions)
Q1
Net (loss) income attributable to Safeway Inc.
(A+B-C)
Rolling Four Quarters
Ended March 27, 2010
A
Year Ended
2009
B
12 Weeks Ended
March 27, 2010
C
12 Weeks Ended
March 28, 2009
($1,145.7)
($1,097.5)
$96.0
$144.2
136.2
144.2
52.3
60.3
Add (subtract):
Income taxes
Interest expense
323.2
331.7
69.7
78.2
Depreciation expense
1,175.8
1,171.2
269.0
264.4
Goodwill impairment charge
1,974.2
1,974.2
-
-
(36.6)
(35.2)
-
1.4
61.1
61.7
14.1
14.7
LIFO (income) expense
Share-based employee compensation
Property impairment charges
80.0
73.7
17.4
11.1
(11.3)
(8.5)
(3.0)
(0.2)
5.8
5.8
-
-
$2,562.7
$2,621.3
$515.5
$574.1
(A+B-C)
Rolling Four Quarters
Ended June 19, 2010
A
Year Ended
2009
B
24 Weeks Ended
June 19, 2010
C
24 Weeks Ended
June 20, 2009
($1,243.0)
($1,097.5)
$237.3
$382.8
Income taxes
168.2
144.2
129.4
105.4
Interest expense
315.2
331.7
138.9
155.4
Depreciation expense
1,177.1
1,171.2
538.6
532.7
Goodwill impairment charge
1,974.2
1,974.2
-
-
(35.2)
(35.2)
-
-
60.5
61.7
26.2
27.4
Equity in earnings of unconsolidated affiliates, net
Dividend received from unconsolidated affiliate
Total Adjusted EBITDA
Adjusted EBITDA as a multiple of interest
expense
Q2
Net (loss ) income attributable to Safeway Inc.
7.9x
Add (subtract):
LIFO income
Share-based employee compensation
Property impairment charges
Equity in earnings of unconsolidated affiliates, net
Dividend received from unconsolidated affiliate
79.1
73.7
30.8
25.4
(10.1)
(8.5)
(4.5)
(2.9)
5.8
5.8
-
-
$2,491.8
$2,621.3
$1,096.7
$1,226.2
(A+B-C)
Rolling Four Quarters
Ended Sept. 11, 2010
A
Year Ended
2009
B
36 Weeks Ended
Sept. 11, 2010
C
36 Weeks Ended
Sept. 12, 2009
($1,249.0)
($1,097.5)
$360.1
$511.6
Income taxes
150.8
144.2
184.5
177.9
Interest expense
306.3
331.7
208.3
233.7
Depreciation expense
1,174.2
1,171.2
806.1
803.1
Goodwill impairment charge
1,974.2
1,974.2
-
-
(35.2)
(35.2)
-
-
Total Adjusted EBITDA
Adjusted EBITDA as a multiple of interest
expense
Q3
Net (loss) income attributable to Safeway Inc.
7.9x
Add (subtract):
LIFO income
Share-based employee compensation
57.6
61.7
37.3
41.4
Property impairment charges
77.2
73.7
48.7
45.2
(10.3)
(8.5)
(7.7)
(5.9)
Equity in earnings of unconsolidated affiliates, net
Dividend received from unconsolidated affiliate
Total Adjusted EBITDA
Adjusted EBITDA as a multiple of interest
expense
40
5.8
5.8
-
-
$2,451.6
$2,621.3
$1,637.3
$1,807.0
8.0x
2010 Reconciliation of Net Cash Flow from Operating Activities to Adjusted EBITDA (dollars in millions)
Q1
(A+B-C)
Rolling Four
Quarters Ended
March 27, 2010
A
Year Ended
2009
B
12 Weeks Ended
March 27, 2010
C
12 Weeks Ended
March 28, 2009
$2,458.7
$2,549.7
($242.0)
($151.0)
Income taxes
136.2
144.2
52.3
60.3
Interest expense
323.2
331.7
69.7
78.2
Net cash flow provided (used) by operating activities
Add (subtract):
Deferred income taxes
Net pension and post-retirement benefit expense
Contributions to pension and post-retirement plans
Accrued claims and other liabilities
145.5
142.1
-
(3.4)
(136.4)
(140.2)
(29.8)
(33.6)
22.3
24.4
4.4
6.5
15.6
34.4
(16.4)
2.4
(17.4)
(12.7)
(11.0)
(6.3)
(355.8)
(426.7)
692.3
621.4
(29.2)
(25.6)
(4.0)
(0.4)
$2,562.7
$2,621.3
$515.5
$574.1
(A+B-C)
Rolling Four
Quarters Ended
June 19, 2010
A
Year Ended
2009
B
24 Weeks Ended
June 19, 2010
C
24 Weeks Ended
June 20, 2009
$2,174.7
$2,549.7
$309.1
$684.1
Income taxes
168.2
144.2
129.4
105.4
Interest expense
315.2
331.7
138.9
155.4
Loss on property retirements and lease exit activities
Changes in working capital items
Other
Total Adjusted EBITDA
Adjusted EBITDA as a multiple of interest expense
Q2
Net cash flow provided by operating activities
7.9x
Add (subtract):
Deferred income taxes
Net pension and post-retirement benefit expense
Contributions to pension and post-retirement plans
152.4
142.1
-
(10.3)
(130.2)
(140.2)
(57.7)
(67.7)
20.1
24.4
8.7
13.0
2.2
34.4
(29.4)
2.8
(13.1)
(12.7)
(14.0)
(13.6)
(186.2)
(426.7)
613.1
372.6
(11.5)
(25.6)
(1.4)
(15.5)
$2,491.8
$2,621.3
$1,096.7
$1,226.2
(A+B-C)
Rolling Four
Quarters Ended
Sept. 11, 2010
A
Year Ended
2009
B
36 Weeks Ended
Sept. 11, 2010
C
36 Weeks Ended
Sept. 12, 2009
$2,109.0
$2,549.7
$846.6
$1,287.3
Income taxes
150.8
144.2
184.5
177.9
Interest expense
306.3
331.7
208.3
233.7
Deferred income taxes
152.3
142.1
-
(10.2)
(130.6)
(140.2)
(86.6)
(96.2)
Accrued claims and other liabilities
Loss on property retirements and lease exit activities
Changes in working capital items
Other
Total Adjusted EBITDA
Adjusted EBITDA as a multiple of interest expense
Q3
Net cash flow provided by operating activities
7.9x
Net pension and post-retirement benefit expense
Contributions to pension and post-retirement plans
Accrued claims and other liabilities
Gain (loss) on property retirements and lease exit activities
Changes in working capital items
Other
Total Adjusted EBITDA
Adjusted EBITDA as a multiple of interest expense
18.0
24.4
11.7
18.1
0.2
34.4
(38.5)
(4.3)
7.5
(12.7)
1.4
(18.8)
(153.6)
(426.7)
512.7
239.6
(8.3)
(25.6)
(2.8)
(20.1)
$2,451.6
$2,621.3
$1,637.3
$1,807.0
R ECO NCI L IAT IO NS
Add (subtract):
8.0x
41
25
2009 Reconciliation of Net Income Attributable to Safeway Inc. to Adjusted EBITDA (dollars in millions)
Q1
Net income attributable to Safeway Inc.
(A+B-C)
Rolling Four Quarters
Ended March 28, 2009
A
Year Ended
2008
B
12 Weeks Ended
March 28, 2009
C
12 Weeks Ended
March 22, 2008
$916.1
$965.3
$144.2
$193.4
476.0
539.3
60.3
123.6
Add (subtract):
Income taxes
Interest expense
Depreciation expense
352.4
358.7
78.2
84.5
1,153.6
1,141.1
264.4
251.9
LIFO expense
30.9
34.9
1.4
5.4
Share-based employee compensation
64.5
64.3
14.7
14.5
Property impairment charges
38.5
40.3
11.1
12.9
Equity in (earnings) losses of unconsolidated
affiliates, net
Total Adjusted EBITDA
Adjusted EBITDA as a multiple of interest
expense
Q2
Net income attributable to Safeway Inc.
(0.5)
2.5
(0.2)
2.8
$3,031.5
$3,146.4
$574.1
$689.0
(A+B-C)
Rolling Four Quarters
Ended June 20, 2009
A
Year Ended
2008
B
24 Weeks Ended
June 20, 2009
C
24 Weeks Ended
June 14, 2008
$920.4
$965.3
$382.8
$427.7
8.6x
Add (subtract):
Income taxes
383.5
539.3
105.4
261.2
Interest expense
347.9
358.7
155.4
166.2
1,161.7
1,141.1
532.7
512.1
Depreciation expense
LIFO expense
21.7
34.9
-
13.2
Share-based employee compensation
63.1
64.3
27.4
28.6
Property impairment charges
40.0
40.3
25.4
25.7
Equity in (earnings) losses of unconsolidated
affiliates, net
(4.4)
2.5
(2.9)
4.0
$2,933.9
$3,146.4
$1,226.2
$1,438.7
(A+B-C)
Rolling Four Quarters
Ended Sept. 12, 2009
A
Year Ended
2008
B
36 Weeks Ended
Sept. 12, 2009
C
36 Weeks Ended
Sept. 6, 2008
$849.5
$965.3
$511.6
$627.4
Income taxes
343.7
539.3
177.9
373.5
Interest expense
346.2
358.7
233.7
246.2
Total Adjusted EBITDA
Adjusted EBITDA as a multiple of interest
expense
Q3
Net income attributable to Safeway Inc.
8.4x
Add (subtract):
Depreciation expense
1,173.4
1,141.1
803.1
770.8
LIFO expense
11.7
34.9
-
23.2
Share-based employee compensation
61.9
64.3
41.4
43.8
Property impairment charges
54.0
40.3
45.2
31.5
Equity in (earnings) losses of unconsolidated
affiliates, net
(4.7)
2.5
(5.9)
1.3
$2,835.7
$3,146.4
$1,807.0
$2,117.7
Total Adjusted EBITDA
Adjusted EBITDA as a multiple of interest
expense
42
8.2x
2009 Reconciliation of Net Cash Flow from Operating Activities to Adjusted EBITDA (dollars in millions)
Q1
(A+B-C)
Rolling Four
Quarters Ended
March 28, 2009
A
Year Ended
2008
B
12 Weeks Ended
March 28, 2009
C
12 Weeks Ended
March 22, 2008
$2,141.1
$2,250.9
($151.0)
($41.2)
Income taxes
476.0
539.3
60.3
123.6
Interest expense
352.4
358.7
78.2
84.5
Deferred income taxes
(168.7)
(171.7)
(3.4)
(6.4)
Net pension and post-retirement benefit expense
(108.2)
(96.7)
(33.6)
(22.1)
33.3
42.5
6.5
15.7
(10.2)
(21.1)
2.4
(8.5)
12.2
19.0
(6.3)
0.5
305.0
226.0
621.4
542.4
(1.4)
(0.5)
(0.4)
0.5
$3,031.5
$3,146.4
$574.1
$689.0
(A+B-C)
Rolling Four
Quarters Ended
June 20, 2009
A
Year Ended
2008
B
24 Weeks Ended
June 20, 2009
C
24 Weeks Ended
June 14, 2008
$2,222.1
$2,250.9
$684.1
$712.9
Income taxes
383.5
539.3
105.4
261.2
Interest expense
347.9
358.7
155.4
166.2
Deferred income taxes
(175.6)
(171.7)
(10.3)
(6.4)
Net pension and post-retirement benefit expense
(119.7)
(96.7)
(67.7)
(44.7)
Net cash flow provided (used) by operating activities
Add (subtract):
Contributions to pension and post-retirement benefit plans
Accrued claims and other liabilities
Gain (loss) on property retirements and lease exit activities
Changes in working capital items
Other
Total Adjusted EBITDA
Adjusted EBITDA as a multiple of interest expense
Q2
Net cash flow provided by operating activities
8.6x
Add (subtract):
Contributions to pension and post-retirement benefit plans
30.4
42.5
13.0
25.1
Accrued claims and other liabilities
(3.9)
(21.1)
2.8
(14.4)
Gain (loss) on property retirements and lease exit activities
10.3
19.0
(13.6)
(4.9)
Changes in working capital items
253.0
226.0
372.6
345.6
Other
(14.1)
(0.5)
(15.5)
(1.9)
$2,933.9
$3,146.4
$1,226.2
$1,438.7
(A+B-C)
Rolling Four
Quarters Ended
Sept. 12, 2009
A
Year Ended
2008
B
36 Weeks Ended
Sept. 12, 2009
C
36 Weeks Ended
Sept. 6, 2008
$2,253.4
$2,250.9
$1,287.3
$1,284.8
343.7
539.3
177.9
373.5
Total Adjusted EBITDA
Adjusted EBITDA as a multiple of interest expense
Q3
Net cash flow provided by operating activities
8.4x
Income taxes
346.2
358.7
233.7
246.2
Deferred income taxes
Interest expense
(175.5)
(171.7)
(10.2)
(6.4)
Net pension and post-retirement benefit expense
(126.1)
(96.7)
(96.2)
(66.8)
Contributions to pension and post-retirement benefit plans
Accrued claims and other liabilities
Gain (loss) on property retirements and lease exit activities
29.7
42.5
18.1
30.9
(12.5)
(21.1)
(4.3)
(12.9)
1.8
19.0
(18.8)
(1.6)
Changes in working capital items
191.6
226.0
239.6
274.0
Other
(16.6)
(0.5)
(20.1)
(4.0)
$2,835.7
$3,146.4
$1,807.0
$2,117.7
Total Adjusted EBITDA
Adjusted EBITDA as a multiple of interest expense
R ECO NCI L IAT IO NS
Add (subtract):
8.2x
43
25
NOTES
44
Safeway Inc.
www.safeway.com