UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
For the fiscal year ended December 29, 2001
OR
For the transition period from __________ to _________Commission file number 1-41
SAFEWAY INC.
Securities registered pursuant to Section 12(b) of the Act:
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Securities registered pursuant to Section 12(g) of the Act:
NONE
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [X].
Aggregate market value of the voting stock held by non-affiliates of Registrant as of March 12, 2002, was $21.6 billion.
As of March 12, 2002, there were issued and outstanding 486.1 million shares of the Registrant’s common stock.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated by reference to the extent specified herein:
TABLE OF CONTENTS
SAFEWAY INC. AND SUBSIDIARIES
PART I
Item 1. Business and Item 2. Properties
General:
Information appearing on pages 8 through 11 of the 2001 Annual Report to Stockholders of Safeway Inc. (“Safeway” or the “Company”) is incorporated herein by this reference.
Safeway was incorporated in the state of Delaware in July 1986 as SSI Holdings Corporation and, thereafter, its name was changed to Safeway Stores, Incorporated. In February 1990, the Company changed its name to Safeway Inc.
Capital Expenditures:
Information appearing under the caption “Capital Expenditure Program” on pages 10 and 11 of the Company’s 2001 Annual Report to Stockholders is incorporated herein by this reference.
Safeway’s stores opened, remodels completed, acquired stores and stores closed or sold during the last five years were as follows:
Note A. Defined as store projects (other than maintenance) generally requiring expenditures in excess of $200,000.
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Item 1. Business and Item 2. Properties (continued)
Financial Information About Industry Segments:
Note M to the consolidated financial statements, included on page 40 of the Company’s 2001 Annual Report to Stockholders, is incorporated herein by this reference.
Trademarks:
Safeway has invested significantly in the development and protection of the “Safeway” name. The right to use the “Safeway” name is considered to be an important asset. Safeway also owns approximately 400 other trademarks registered or pending in the United States Patent and Trademark Office, including its product line names such as Safeway, Safeway SELECT, Lucerne and Mrs. Wright’s, and the marks Pak n’ Save Foods, Vons, Pavilions, Dominick’s, Carrs, Randalls, Tom Thumb and Genuardi’s Family Markets. Each trademark registration is for an initial period of 10 or 20 years and is renewable for as long as the use of the trademark continues. Safeway considers certain of its trademarks to be of material importance to its business and actively defends and enforces such trademarks. Canada Safeway has also registered certain of its trademarks in Canada.
Working Capital:
At year-end 2001, working capital deficit was composed of $3.3 billion of current assets and $3.9 billion of current liabilities. Normal operating fluctuations in these substantial balances can result in changes to cash flow from operations presented in the consolidated statements of cash flows that are not necessarily indicative of long-term operating trends. There are no unusual industry practices or requirements relating to working capital items.
Competition:
Food retailing is intensely competitive. The number of competitors and the amount of competition experienced by Safeway’s stores vary by market area. The principal competitive factors that affect the Company’s business are location, quality, service, price and consumer loyalty to other brands and stores.
Local, regional, and national food chains as well as independent food stores and markets comprise the Company’s principal competition, although Safeway also faces substantial competition from convenience stores, liquor retailers, membership warehouse clubs, specialty retailers, supercenters, and large-scale drug and pharmaceutical chains. Safeway and its competitors engage in price competition which, from time to time, has adversely affected operating margins in many of the Company’s markets.
Raw Materials:
Various agricultural commodities constitute the principal raw materials used by the Company in the manufacture of its food products. Management believes that raw materials for its products are not in short supply, and all are readily available from a wide variety of independent suppliers.
Compliance with Environmental Laws:
The Company’s compliance with the federal, state, and local provisions which have been enacted or adopted regulating the discharge of materials into the environment or otherwise relate to the protection of the environment has not had and is not expected to have a material adverse effect upon the financial position or results of operations of the Company.
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Employees:
At year-end 2001, Safeway had more than 193,000 full and part-time employees. Approximately 76% of Safeway’s employees in the United States and Canada are covered by collective bargaining agreements negotiated with local unions affiliated with one of 12 different international unions. There are approximately 400 such agreements, typically having three-year terms, with some agreements having terms of up to five years. Accordingly, Safeway renegotiates a significant number of these agreements every year.
During 2002, collective bargaining agreements covering employees in the Company’s stores in Alaska, Oregon, Chicago and California come up for renewal.
Other Labor Matters:
Employees of companies that operate certain of the Company’s distribution centers in northern California, Maryland and Vancouver, British Columbia are covered by collective bargaining agreements. Summit Logistics, a company that operates the Company’s northern California distribution center, was engaged in a 47-day strike during the fourth quarter of 2000 which had an unexpectedly large adverse effect on sales, product costs and distribution expenses at 246 Safeway stores in northern California, Nevada and Hawaii. Safeway estimates that the strike reduced 2000 pre-tax income by approximately $113.8 million ($0.13 per share). Additional information concerning the strike is set forth under the caption “Financial Review” on pages 13 through 18 of the Company’s 2001 Annual Report to Stockholders and is incorporated herein by reference.
During the last three years, there have been no other significant work stoppages affecting the employees of the Company or the operators of the Company’s distribution centers.
Financial Information About Foreign and Domestic Operations and Export Sales:
Note M to the consolidated financial statements, included on page 40 of the Company’s 2001 Annual Report to Stockholders and incorporated herein by this reference, contains financial information by geographic area.
Item 3. Legal Proceedings
Information about legal proceedings appearing under the captions “Legal Matters” and “Furrs and Homeland Charge” as reported in Note L to the consolidated financial statements on pages 38 and 39 of the Company’s 2001 Annual Report to Stockholders is incorporated herein by this reference.
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Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the stockholders during the fourth quarter of 2001.
Executive Officers of the Company
The names and ages of the current executive officers of the Company and their positions as of March 12, 2002, are set forth below. Unless otherwise indicated, each of the executive officers served in various managerial capacities with the Company over the past five years. None of the executive officers named below is related to any other executive officer or director by blood, marriage or adoption. Officers serve at the discretion of the Board of Directors.
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Executive Officers of the Company (continued)
PART II
Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters
The Company’s common stock, $0.01 par value, is listed on the New York Stock Exchange. Information as to quarterly sales prices for the Company’s common stock appears in Note O to the consolidated financial statements on page 41 of the Company’s 2001 Annual Report to Stockholders and is incorporated herein by this reference. There were 18,197 stockholders of record as of March 12, 2002; however, approximately 97% of the Company’s outstanding stock is held in “street name” by depositories or nominees on behalf of beneficial holders. The price per share of common stock, as reported on the New York Stock Exchange Composite Tape, was $44.50 at the close of business on March 12, 2002.
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Holders of common stock are entitled to receive dividends if, as, and when declared by the Board of Directors out of funds legally available therefor, subject to the dividend and liquidation rights of any preferred stock that may be issued. The Company has not paid dividends on common stock through 2001 and has no current plans for dividend payments.
During the 2001 fiscal year, 313,266 shares of Safeway common stock were sold to participants under the Safeway 401(k) Savings Plan (formerly named “The Vons Companies, Inc. 401(k) Savings Plan”) for an aggregate price of $14.9 million. These shares were purchased by the Plan’s trustee on the open market. Such shares, and interests in the Plan, were not registered under the Securities Act. The Plan covers only those employees of The Vons Companies, Inc. who were eligible to participate as of July 1, 1998.
Item 6. Selected Financial Data
The “Five-Year Summary Financial Information” included on page 12 of the Company’s 2001 Annual Report to Stockholders is incorporated herein by this reference. The Five-Year Summary should be read in conjunction with the Company’s consolidated financial statements and accompanying notes incorporated by reference in Item 8, consolidated financial statements.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Information appearing under the caption “Financial Review” on pages 13 through 18 and under the captions “Capital Expenditure Program” and “Market Risk from Financial Instruments” on pages 10 and 11 of the Company’s 2001 Annual Report to Stockholders is incorporated herein by this reference.
Information regarding the terms of outstanding indebtedness appearing in Note D to the consolidated financial statements on pages 29 through 31 of the Company’s 2001 Annual Report to Stockholders is incorporated herein by this reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Information appearing under the caption “Market Risk from Financial Instruments” on page 11 of the Company’s 2001 Annual Report to Stockholders is incorporated herein by this reference.
Item 8. Consolidated Financial Statements
Pages 19 through 43 of the Company’s 2001 Annual Report to Stockholders, which include the consolidated financial statements and the Independent Auditors’ Report as listed in Item 14(a)1 below, are incorporated herein by this reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
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PART III
Item 10. Directors and Executive Officers of the Registrant
Directors of the Company. Information on the nominees for election as Directors and the continuing Directors of the Company is incorporated by reference from the Company’s definitive proxy statement for the 2002 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company’s 2001 fiscal year
Executive Officers of the Company. See PART I under the caption “Executive Officers of the Company”.
Section 16(a) Beneficial Ownership. The information called for is incorporated by reference from the Company’s definitive proxy statement for the 2002 Annual Meeting of stockholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company’s 2001 fiscal year.
Item 11. Executive Compensation
The information called for by Item 11 is incorporated by reference from the Company’s definitive proxy statement for the 2002 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company’s 2001 fiscal year. Information appearing under the captions “Report of the Compensation Committee; Report of the Section 162(m) Committee”; “Report of the Audit Committee” and “Stock Performance Graph” to be included in the Company’s 2002 Proxy Statement is not incorporated herein by this reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information called for by Item 12 is incorporated by reference from the Company’s definitive proxy statement for the 2002 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company’s 2001 fiscal year.
Item 13. Certain Relationships and Related Transactions
Note K to the consolidated financial statements, included on page 38 of the Company’s 2001 Annual Report to Stockholders, is incorporated herein by this reference. The information called for by Item 13 is incorporated by reference from the Company’s definitive proxy statement for the 2002 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company’s 2001 fiscal year.
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PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
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Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (continued)
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On October 1, 2001, the Company filed a current report on Form 8-K under “Item 9. Regulation FD Disclosure.”
On November 5, 2001, the Company filed a current report on Form 8-K under “Item 5. Other Events.”
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Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
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Exhibit Index
LIST OF EXHIBITS FILED WITH FORM 10-K FOR THE PERIODENDED December 29, 2001
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