Safeway 8-K 2005
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 24, 2005
(Exact name of registrant as specified in its charter)
(Registrants telephone number, including area code)
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Item 2.02. Results of Operations and Financial Condition.
The information in this Form 8-K, including the exhibit, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
On February 24, 2005, we issued our fourth quarter 2004 earnings press release. A copy of our press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
In the press release and our other public statements in connection with the press release, we use the following financial measures that are not measures of financial performance under U.S. generally accepted accounting principles (non-GAAP financial measures):
Reconciliations of adjusted earnings per share to GAAP earnings per share and free cash flow to GAAP cash flow are provided in the press release. Reconciliations of Adjusted EBITDA to the most directly comparable GAAP financial measures net income and net cash flow from operating activities also are provided in the press release. Each of these non-GAAP financial measures provide information regarding various aspects of the cash that our business generates, which management believes is useful to understanding our business.
Management believes that Adjusted EBITDA and the related ratios are useful measures of operating performance that facilitate managements evaluation of our ability to service debt and our capability to incur more debt to generate the cash needed to grow the business (including at times when interest rates fluctuate). Omitting interest, taxes and the enumerated non-cash items provides a financial measure that is useful to management in assessing operating performance because the cash our business operations generate enables us to incur debt and thus to grow.
Management believes that Adjusted EBITDA and the related ratios also facilitate comparisons of our results of operations with those of companies having different capital structures. Since the levels of indebtedness, tax structures, methodologies in calculating LIFO expense and unconsolidated affiliates that other companies have are different from ours, we omit these amounts to facilitate investors ability to make these comparisons. Similarly, we omit depreciation and amortization because other companies may employ a greater or lesser amount of owned property, and because, in managements experience, whether a store is new or one that is fully or mostly depreciated does not necessarily correlate to the contribution that that store makes to operating performance.
Management also believes that investors, analysts and other interested parties view our ability to generate Adjusted EBITDA as an important measure of our operating performance and that of other companies in our industry.
The non-cash charges included in adjusted earnings per share relate to (i) goodwill and asset impairment charges at Dominicks and Randalls, (ii) an expense adjustment for lease rent holidays, (iii) miscellaneous investments write-off, and (iv) inventory adjustments. These non-cash and all other adjustments are described in the press release. Management believes that excluding these items provides a useful financial measure that will facilitate comparisons of our operating results before, during and after such expenses are incurred, as well as facilitating comparisons of our performance with that of other companies that might not have the non-cash charges, store closures, health and welfare plan contribution and strike effects that we have experienced.
Management also believes that investors, analysts and other interested parties view our adjusted earnings per share as an indicator of our ongoing operating performance.
Free cash flow, Adjusted EBITDA and the related ratios are useful indicators of Safeways ability to service debt and fund share repurchases that management believes will enhance stockholder value. Adjusted EBITDA also is a useful indicator of cash available for investing
activities. A portion of the free cash flow that the Company generates in 2005 is expected to be spent on mandatory debt service requirements or other non-discretionary expenditures. These non-GAAP financial measures should not be considered as an alternative to GAAP earnings per share as a measure of performance, or as an alternative to net cash from operating activities or other increases and decreases in cash as shown on Safeways Consolidated Statement of Cash Flows for the periods indicated as a measure of liquidity. These measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Other companies in our industry may calculate adjusted earnings per share, free cash flow and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.
Additional limitations include:
Because of these limitations, our non-GAAP financial measures should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and use our non-GAAP financial measures supplementally.
Item 9.01. Financial Statements and Exhibits.
The following exhibit is furnished pursuant to Item 2.02 of Form 8-K:
99.1 Press Release dated February 24, 2005.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.