2. 2006 & 2007 EPS
As adjusted for unusual items
2006 2007 % Change
EPS as reported $1.94 $1.99 2.6%
Certain tax
($0.08) - 4.4%
adjustments
Tax settlement ($0.14) - 8.7%
EPS as adjusted $1.72 $1.99 15.7%
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Reconciliation_RecentConferences_Nov08
3. Reconciliation of Net Income to Adjusted
EBITDA (Interest Coverage)
$ Millions
2007 2006 2005 2004 2003 2002
$(828.1)
Net income (loss) $888.4 $870.6 $561.1 $560.2 $(169.8)
Add (subtract):
Income taxes 515.2 369.4 287.9 233.7 310.9 660.4
Interest expense 388.9 396.1 402.6 411.2 442.4 430.8
Depreciation 1,071.2 991.4 932.7 894.6 863.6 888.3
LIFO expense (income) 13.9 1.2 (0.2) (15.2) (1.3) (17.6)
Stock option expense 48.4 51.2 59.7 - - -
Property impairment charges 27.1 39.2 78.9 39.4 344.9 213.1
Miscellaneous equity investment
impairment charge - - - - 10.6 -
- - - - 729.1 1,288.0
Goodwill impairment charges
- - - - - 700.0
Cumulative effect of accounting change
Equity in (earnings) losses of
(8.7) (21.1) (15.8) (12.6) 7.1 0.2
unconsolidated affiliates
Dividend received from unconsolidated
8.9 9.0 - - - -
affiliate
$2,953.3 $2,707.0 $2,306.9 $2,111.3 $2,537.5 $3,335.1
Total Adjusted EBITDA
Adjusted EBITDA as a multiple of interest
7.6x 6.8x 5.7x 5.1x 5.7x 7.7x
expense
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Reconciliation_RecentConferences_Nov08
4. Reconciliation of Net Income to Adjusted
EBITDA (Interest Coverage)
$ Millions
(A+B-C)
Rolling A B C
Four Quarters Year Ended 36 Weeks Ended 36 Weeks Ended
Sept 6, 2008 Dec 29, 2007 Sept 6, 2008 Sept 8, 2007
Net income $928.6 $888.4 $627.4 $587.2
Add (subtract):
Income taxes 552.6 515.2 373.5 336.1
Interest expense 366.6 388.9 246.2 268.5
Depreciation and amortization 1,114.0 1,071.2 770.8 728.0
LIFO expense 30.2 13.9 23.2 6.9
Stock-based employee compensation 55.6 48.4 42.4 35.2
Property impairment charges 37.7 27.1 31.5 20.9
Equity in loss (earnings) of
3.1 (8.7) 1.3 (10.5)
unconsolidated affiliate
Dividend received from unconsolidated
- 8.9 - 8.9
affiliate
$3,088.4 $2,953.3 $2,116.3 $1,981.2
Adjusted EBITDA
Adjusted EBITDA as a multiple of interest
8.4x
expense
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Reconciliation_RecentConferences_Nov08
5. Reconciliation of GAAP Cash Flow
Measure to Free Cash Flow*
$ Millions
12 Weeks Ended 36 Weeks Ended
Sept 6, 2008 Sept 8, 2007 Sept 6, 2008 Sept 8, 2007
Net cash flow from operating
$571.9 $595.9 $1,284.8 $1,248.0
activities
Decrease in payables related to third
party gift cards, net of receivables 12.5 33.7 194.6 141.2
Net cash flow from operating
activities, as adjusted 584.4 629.6 1,479.4 1,389.2
Net cash flow used by investing
activities (323.1) (490.4) (980.1) (1,183.2)
Free cash flow $261.3 $139.2 $499.3 $206.0
*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.
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Reconciliation_RecentConferences_Nov08
