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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
October 16, 2003
SAFEWAY INC.
(Exact name of registrant as specified in its charter)
Delaware 1-00041 94-3019135
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(State or other jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification Number)
5918 Stoneridge Mall Road, Pleasanton, California 94588-3229
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(Address of principal executive offices) (Zip Code)
(925) 467-3000
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(Registrant's telephone number, including area code)
N/A
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(Former name or former address, if changed since last report.)
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
The following exhibit is furnished pursuant to Item 12 of Form 8-K:
99. Press Release dated October 16, 2003.
Item 12. Results of Operations and Financial Condition.
Pursuant to Securities and Exchange Commission Release No. 33-8216 dated March
27, 2003, the following information is being furnished under Item 12 of Form
8-K. 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 October 16, 2003, we issued our third quarter 2003 earnings press release. A
copy of our press release is attached hereto as Exhibit 99.
In 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):
-- "adjusted EBITDA from continuing operations" which is defined as EBITDA
(earnings before interest, income taxes, depreciation and amortization)
excluding the following:
-- LIFO expense;
-- equity in (earnings) losses of unconsolidated affiliates, net;
-- cumulative effect of accounting change; and
-- loss (income) on discontinued operations, net of tax.
-- "adjusted EBITDA from continuing operations as a percentage of sales" which
is calculated by dividing "adjusted EBITDA from continuing operations" by
sales.
-- "interest coverage ratio" which is calculated by dividing "adjusted EBITDA
from continuing operations" by interest expense.
-- "free cash flow" which is calculated as net cash flow from operating
activities less net cash flow used by investing activities.
Reconciliations of "adjusted EBITDA from continuing operations" to the most
directly comparable GAAP financial measures - net income (loss) and net cash
flow from operating activities - are provided in the press release. These four
measures provide information regarding various aspects of the cash that our
business generates, which management believes is useful to understanding our
business.
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Management believes that "adjusted EBITDA from continuing operations" and the
related ratios are useful measures of operating performance that facilitate
management's 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, the enumerated
non-cash items and items related to discontinued operations from net income
(loss) 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 from continuing operations" 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
management's 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 from continuing operations" as an
important measure of our operating performance and that of other companies in
our industry.
"Free cash flow," "adjusted EBITDA from continuing operations" and the related
ratios are useful indicators of our ability to service debt and fund share
repurchases that management believes will enhance stockholder value. Adjusted
EBITDA from continuing operations also is a useful indicator of cash available
for investing activities. A portion of the free cash flow that the Company
generates in 2003 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 alternatives to
net income (loss) as a measure of performance, nor as alternatives to net cash
from operating activities 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 EBITDA from continuing
operations" and "free cash flow" differently than we do, limiting their
usefulness as comparative measures. Additional limitations include:
-- "Adjusted EBITDA from continuing operations" does not reflect our cash
expenditures for capital expenditures;
-- "Adjusted EBITDA from continuing operations" does not reflect the
significant interest expense, or the cash requirements necessary to service
interest or principal payments, on our debts; and
-- Although depreciation and amortization are non-cash charges, the assets
being depreciated and amortized will often have to be replaced in the
future, and "adjusted EBITDA from continuing operations" does not reflect
any cash requirements for such replacements.
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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.
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SIGNATURES
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.
SAFEWAY INC.
(Registrant)
Date: October 16, 2003 By: /s/ Robert A. Gordon
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Name: Robert A. Gordon
Title: Senior Vice President
& General Counsel
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EXHIBIT INDEX
Exhibit
No.
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99. Press Release dated October 16, 2003 of Safeway Inc.
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