Safeway 2005 Annual Report Download - page 79

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SAFEWAY INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
59
Note M: Computation of Earnings (Loss) Per Share
(In millions, except per-share amounts) 2005 2004 2003
Diluted Basic Diluted Basic Diluted Basic
Net income (loss) $ 561.1 $ 561.1 $ 560.2 $ 560.2 $ (169.8) $ (169.8)
Weighted average common shares
outstanding 447.9 447.9 445.6 445.6 441.9 441.9
Common share equivalents 1.9 3.5
Weighted average shares
outstanding 449.8 449.1
Earnings (loss) per share $ 1.25 $ 1.25 $ 1.25 $ 1.26 $ (0.38) $ (0.38)
Calculation of common share
equivalents:
Options to purchase common
shares 4.9 12.6
Common shares assumed
purchased with potential
proceeds (3.0) (9.1)
Common share equivalents 1.9 3.5
Calculation of common shares
assumed purchased with
potential proceeds:
Potential proceeds from exercise
of options to purchase common
shares $ 65.4 $ 192.8
Common stock price used under
the treasury stock method $ 22.09 $ 21.26
Common shares assumed
purchased with potential
proceeds 3.0 9.1
Anti-dilutive shares totaling 28.4 million in 2005, 22.3 million in 2004 and 26.2 million in 2003 have been excluded from diluted weighted
average shares outstanding.
Note N: Guarantees
Safeway has applied the measurement and disclosure provisions of FIN No. 45, “Guarantor’s Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others,” to the Company’s agreements that
contain guarantee and indemnification clauses. FIN No. 45 requires that upon issuance of a guarantee, the guarantor must
disclose and recognize a liability for the fair value of the obligation it assumes under the guarantee. The initial recognition
and measurement provisions of FIN No. 45 were effective for guarantees issued or modified after December 31, 2002. As of
December 31, 2005, Safeway did not have any material guarantees that were issued or modified subsequent to December
31, 2002.
However, the Company is party to a variety of contractual agreements under which Safeway may be obligated to indemnify
the other party for certain matters. These contracts primarily relate to Safeway’s commercial contracts, operating leases and
other real estate contracts, trademarks, intellectual property, financial agreements and various other agreements. Under
these agreements, the Company may provide certain routine indemnifications relating to representations and warranties (for