Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - SAFEWAY INC | d8k.htm |
| EX-99.1 - PRESS RELEASE - SAFEWAY INC | dex991.htm |
 Reconciliations and
Financial Slides from the Safeway Investor Conference March 3, 2010 Exhibit 99.2 |
 2 This presentation may contain forward-looking statements. Such statements may relate to topics such as sales, margins, earnings growth, earnings estimates, guidance, free cash flow, operating profit, operating improvements, capital spending, Lifestyle stores and other related subjects. These statements are based on Safeway’s current plans and expectations and are subject to risks and uncertainties that could cause actual events and results to vary significantly from those implied by such statements. We ask you to refer to Safeway’s reports and filings with the SEC for a further discussion of these risks and uncertainties. Safe Harbor Language |
 3 $ Millions 2009 2008 2007 2006 2005 2004 2003 Net (loss) income ($1,097.5) $965.3 $888.4 $870.6 $561.1 $560.2 ($169.8) Add (subtract): Income taxes 144.2 539.3 515.2 369.4 287.9 233.7 310.9 Interest expense 331.7 358.7 388.9 396.1 402.6 411.2 442.4 Depreciation 1,171.2 1,141.1 1,071.2 991.4 932.7 894.6 863.6 LIFO (income) expense (35.2) 34.9 13.9 1.2 (0.2) (15.2) (1.3) Stock option expense 57.4 62.3 48.4 51.2 59.7 - - Property impairment charges 73.7 40.3 27.1 39.2 78.9 39.4 344.9 Miscellaneous equity investment impairment charge - - - - - - 10.6 Goodwill impairment charges 1,974.2 - - - - - 729.1 Equity in (earnings) losses of unconsolidated affiliate (8.5) 2.5 (8.7) (21.1) (15.8) (12.6) 7.1 Dividend received from unconsolidated affiliate 5.8 - 8.9 9.0 - - - Total Adjusted EBITDA $2,617.0 $3,144.4 $2,953.3 $2,707.0 $2,306.9 $2,111.3 $2,537.5 Adjusted EBITDA as a multiple of interest expense 7.9x 8.8x 7.6x 6.8x 5.7x 5.1x 5.7x Reconciliation of Net (Loss) Income to
Adjusted EBITDA (Interest Coverage) |
 4 Reconciliation of Net Cash Flow from Operating Activities to Adjusted EBITDA $ Millions 2009 2008 2007 2006 2005 2004 2003 Net cash flow from operating activities $2,549.7 $2,250.9 $2,190.5 $2,175.0 $1,881.0 $2,226.4 $1,609.6 Add (subtract): Income taxes 144.2 539.3 515.2 369.4 287.9 233.7 310.9 Interest expense 331.7 358.7 388.9 396.1 402.6 411.2 442.4 Amortization of deferred finance cost (4.8) (5.1) (5.3) - - - - Excess tax benefit from exercise
of stock options 0.1 1.5 38.3 - - - - Deferred income taxes 142.1 (171.7) (130.8) (1.1) 215.9 29.2 77.9 Net pension expense (130.2) (84.6) (72.1) (83.1) (115.6) (112.9) (130.9) Contribution to pension plans 16.7 33.8 33.0 29.2 18.1 15.1 12.1 Accrued claims and other liabilities 32.1 (24.4) 5.8 (10.8) (44.1) (118.1) (52.7) (Loss) gain on property retirements and lease exit activities, net (12.7) 19.0 42.3 17.8 (13.6) (20.6) 13.4 Changes in working capital items (426.7) 225.5 (45.6) (181.4) (310.9) (538.2) 263.0 Other (25.2) 1.5 (6.9) (4.1) (14.4) (14.5) (8.2) Total Adjusted EBITDA $2,617.0 $3,144.4 $2,953.3 $2,707.0 $2,306.9 $2,111.3 $2,537.5 |
 5 Reconciliation of Gross Margin BP Change Excluding Fuel Basis point (decrease) increase over prior year: 2009 2008 2007 2006 Basis point change in gross margin 24 (36) (8) (11) Fuel (59) 10 20 28 Basis point change in gross margin, excluding fuel (35) (26) 12 17 |
 6 Reconciliation of Gross Margin BP Change Excluding Fuel 2009 Basis point (decrease) increase over prior quarter: Q1 Q2 Q3 Q4 Basis point change in gross margin (7) 56 78 (14) Fuel (79) (99) (84) (2) Basis point change in gross margin, excluding fuel (86) (43) (6) (16) 2008 Q1 Q2 Q3 Q4 Basis point change in gross margin (50) (20) (102) 9 Fuel 38 46 55 (67) Basis point change in gross margin, excluding fuel (12) 26 (47) (58) |
 7 Excluding Fuel and Unusual Items 2009 2008 2007 2006 2005 2004 Basis point change in operating and administrative expense 116 (38) (29) (93) (53) (7) Unusual items: Texas store closures - - - 29 (29) - Impairment charges (incl. Dominick’s) - - - - 13 77 Vons strike - - - - - (22) Labor buyout and health and welfare contributions - - - 15 (7) - Stock option expense - - - - (15) - Fuel impact (56) 11 16 13 32 39 Basis point change in operating and administrative expense, excluding fuel and unusual items 60 (27) (13) (36) (59) 87 Reconciliation of Operating
& Administrative Expense BP Change Basis point (decrease) increase over prior year: |
 8 $ Millions Reconciliation of GAAP Cash Flow Measure to Free Cash Flow Low High Low High Low High Low High Low High Low High Net cash flow from operating activities 2,450 $ 2,550 $ 2,350 $ 2,450 $ 2,150 $ 2,250 $ 2,050 $ 2,150 $ 1,950 $ 2,050 $ 2,200 $ 2,350 $ 2009 Original Guidance 2014F 2010G 2011F 2012F 2013F Low High 2,100 $ 2,250 $ 2009 Revised Guidance Net cash flow used by investing activities (1,150) (1,050) (1,150) (1,050) (1,050) (950) (1,050) (950) (1,050) (950) (1,200) (1,150) Free cash flow 1,300 $ 1,500 $ 1,200 $ 1,400 $ 1,100 $ 1,300 $ 1,000 $ 1,200 $ 900 $ 1,100 $ 1,000 $ 1,200 $ (1,000) (950) 1,100 $ 1,300 $ |
 9 $ Millions Reconciliation of GAAP Cash Flow Measure to Free Cash Flow* *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. Net cash flow from operating activities Increase in payables related to third party gift cards, net of receivables Interest earned on favorable income tax settlement, net of tax Net cash flow from operating activities, as adjusted Net cash flow used by investing activities Cash used to acquire businesses/stores, net of tax benefits Net cash flow used by investing activities, as adjusted Free cash flow 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 2,549 $ 2,251 $ 2,190 $ 2,175 $ 1,881 $ 2,226 $ 1,609 $ 2,035 $ 2,232 $ 1,901 $ (170) (24) (84) (71) (48) - - - - - - - - (63) - - - - - - 2,379 2,227 2,106 2,041 1,833 2,226 1,609 2,035 2,232 1,901 (889) (1,546) (1,686) (1,735) (1,314) (1,070) (795) (1,396) (2,242) (1,481) - - - 50 - - - - 523 - (889) (1,546) (1,686) (1,685) (1,314) (1,070) (795) (1,396) (1,719) (1,481) 1,490 $ 681 $ 420 $ 356 $ 519 $ 1,156 $ 814 $ 639 $ 513 $ 420 $ |
 10 2010G 2009G Basis point (decrease) increase over prior year Low High Low High 2009 2008 2007 2006 2005 2004 Basis point change in operating profit margin (5) 10 (5) 10 (574) 1 21 82 (11) 167 Unusual items: Texas store closures - - - - - - - (29) 29 - Goodwill impairment charges - - - - 483 - - - - (204) Impairment charges (including Dominick’s) - - - - - - - - (13) (77) Vons strike - - - - - - - - - 63 Labor buyout and health and welfare contributions - - - - - - - (15) 7 - Stock option expense - - - - - - - - 15 - Fuel impact (5) (5) 10 10 (4) - 4 15 6 1 Basis point change in operating profit margin, excluding fuel and unusual items (10) 5 5 20 (95) 1 25 53 33 (50) Reconciliation of Operating Profit Margin Basis Point Change Excluding Fuel & Unusual Items |
 11 X-Fuel ID Sales 2.0% - 3.0% (1.0)% - (1.7)% (2.5)% Operating Profit Margin 5 - 20 bps NG (95) Improvement (X-Fuel) Cash Capital ~ $1.2B ~ $1.0B $0.9B Expenditures Free Cash Flow 1 $1.0 - $1.2B $1.1 - $1.3B $1.5B Earnings Per Share $2.34 - $2.44 $1.70 - $1.90 $1.74 2 2009 Guidance Original Revised Actual 1 Excludes Blackhawk gift card payables, net of receivables 2 Adjusted to exclude goodwill impairment charge See website for reconciliation |
 12 2010 Guidance Earnings per Share $1.65 – $1.85 ID Sales 1 0.0% – 1.0% Operating Profit Margin Chg 1 (10) – 5 bps Cash Capital Expenditures $0.9 – $1.0B Free Cash Flow 2 $0.9 – $1.1B 1 X-Fuel 2 See website for reconciliation |
 13 2010 EPS Growth Over Adjusted 2009 2009 reported earnings $(2.66) Add goodwill impairment charge 4.40 Adjusted 2009 earnings $1.74 Remove tax benefit (0.18) $1.56 Earnings guidance increase $1.65 - $1.85 +6 - 19% $0.09 - $0.29 |
 14 Approaching Completion of Lifestyle Rollout 19 92 293 82 80 32 21 276 232 253 20 8 20 20 17 1 2003 2004 2005 2006 2007 2008 2009 2010 New Remodels Store Base 20 1% 8% 26% 43% 59% 73% 79% 85% 124 314 293 273 252 90 85% Complete at YE 2010 100 |
 15 Capital spending levels will remain below 3% of sales for six years % Sales 3.4% 3.6% 4.2% 4.2% 3.6% 2.1% 2.4% 2.3% 2.3% 2.4% 2.4% 2.3% '04 '05 '06 '07 '08 '09 '10F '11F '12F '13F '14F '09- '14 $1.2 $1.4 $1.7 $1.8 $1.6 $0.9 $1.0 $1.0 $1.0 $1.1 $1.1 $ Million 11 year average = 3.0% |
 16 0.5 0.4 0.4 0.7 1.5 0.9 - 1.1 1.3 - 1.5 1.2 - 1.4 1.1 - 1.3 1.0 - 1.2 2005 2006 2007 2008 2009 2010F 2011F 2012F 2013F 2014F Free Cash Flow $ Billions 1.4 1.7 1.7 1.6 0.9 1.0 1.0 1.0 1.1 1.1 Capital Spending See website for reconciliation Excludes Blackhawk gift card payables, net of receivables |
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