2. Safe Harbor Language
This presentation may contain forward-looking statements. Such statements may relate to
topics such as sales, gross margins, earnings growth, earnings estimates, guidance, free
cash flow, operating profit, operating improvements, cost reduction, capital spending, new
business ventures, additional growth vehicles, depreciation 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.
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Reconciliation_Mar08
3. Reconciliation of Operating Profit Margin
Basis Point Change Excluding Fuel
2008 Guidance
Basis point increase over prior year:
Low High
Operating Profit Margin 10 30
Fuel Impact 5 5
Operating Profit Margin
15 35
Excluding Fuel
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Reconciliation_Mar08
5. Reconciliation of GAAP Cash Flow
Measure to Free Cash Flow*
$ Millions
Year Ended
Forecasted Range
2007 2006 2005 Fiscal 2008
Net cash flow from operating
activities $2,190.5 $2,175.0 $1,881.0
Increase in payables related to third
party gift cards, net of receivables (84.1) (71.1) (48.2)
Interest earned on favorable income
tax settlement, net of tax - (62.6) -
Net cash flow from operating
activities as adjusted 2,106.4 2,041.3 1,832.8 $2,220.0 $2,350.0
Net cash flow used by investing
activities (1,686.4) (1,734.7) (1,313.5) (1,720.0) (1,650.0)
Cash used to acquire
businesses/stores, net of tax benefits - 49.5 - - -
Net cash flow used by investing
activities as adjusted (1,686.4) (1,685.2) (1,313.5) (1,720.0) (1,650.0)
Free cash flow $420.0 $356.1 $519.3 $500.0 $700.0
*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. Free cash flow in 2006 and 2005 has been reclassified
to conform with the 2007 presentation. Free cash flow in 2006 was originally reported as $427.2 million and free cash flow in 2005 was
originally reported as $567.5 million because it included payables related to third-party gift cards, net of receivables.
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Reconciliation_Mar08
6. Gross Profit Margin Change
Fourth Quarter 2007 vs. Fourth Quarter 2006
Adjusted to Eliminate Impact of Fuel Sales
Basis point decline in gross profit margin, as reported (44)
Impact of higher fuel sales (which have a lower gross profit margin 50
Basis point increase in gross profit margin, excluding fuel sales 6
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Reconciliation_Mar08
7. Adjusted IDs – Last 3 Quarters
2007
As Reported Adj. for Generics / ABS
Closures
3.7
3.2
3.0
3.0 2.9
2.7
Q2 Q3 Q4 Q2 Q3 Q4
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Reconciliation_Mar08
8. Financial Guidance For 2008
EPS (53 wks) $2.25 - $2.35
(52 wks) $2.21 - $2.31
Non fuel ID sales 3.0% - 3.2%
Operating profit margin change1 15 - 35 bps
Cash capital spending $1.70 - $1.75B
Free cash flow2 $500 - $700M
1Excludes Fuel, see website for reconciliation
2Excludes BHN Gift Card payables, net of receivables
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Reconciliation_Mar08
9. Long Term Outlook
ID Sales X-Fuel 3.0% - 4.0%
Operating Profit Margin X-Fuel 6.0% - 6.5%
Depreciation 2.5%
Annual EPS Growth 12.0% - 15.0%
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Reconciliation_Mar08