Income tax expense was 2.1% of pre-tax income in the first quarter of 2013. In the first quarter of 2013, Safeway withdrew $68.7 million from the accumulated cash surrender value of corporate-owned life insurance ("COLI") policies purchased in the early1980s and determined that a majority of remaining cash surrender value would be received in the future through tax-free death benefits. Consequently, Safeway reversed deferred taxes on that remaining cash surrender value and reduced income tax expense by $17.2 million. In addition, income tax expense in the first quarter of 2013 was reduced by $16.7 million due to the resolution of federal income tax matters. Excluding these items, income tax expense was 30.0% of pre-tax income in the first quarter of 2013 compared to 34.0% of pre-tax income in the first quarter of 2012.
In January 2012, Safeway announced the planned sale or closure of its Genuardi's stores. In the first quarter of 2012, Safeway closed three of the Genuardi's stores and incurred impairment and lease exit losses of $14.2 million ($8.6 million, net of tax). The disposition of Genuardi's was completed during 2012.
Net cash flow used by operating activities increased to $555.2 million in the first quarter of 2013 from $541.8 million in 2012 due primarily to an increase in the use of cash for working capital.
Net cash flow used by investing activities declined to $71.6 million in the first quarter of 2013 from $273.0 million in 2012 primarily due to lower capital expenditures in 2013 and cash received from proceeds on COLI policies in 2013, partially offset by lower proceeds from the sale of property in 2013.
Net cash flow provided by financing activities increased to $571.1 million in the first quarter of 2013 from $220.6 million in 2012 due primarily to the repurchase of stock in 2012, partly offset by lower proceeds from the issuance of debt in 2013.
Safeway invested $144.9 million in capital expenditures in the first quarter of 2013. For the year, Safeway expects to invest approximately $1.0 billion to $1.1 billion in capital expenditures.
Safeway did not repurchase any shares of its common stock during the first quarter of 2013 under its previously announced share repurchase program. The remaining board authorization for stock repurchases at quarter-end was approximately $0.8 billion.
Safeway's guidance for 2013 remains unchanged at $2.25 to $2.45 earnings per diluted share. Half of the $0.14 per diluted share of tax benefits was anticipated in the original earnings guidance and half was not. However, the unanticipated tax benefits roughly offset the expected dilution to Safeway's earnings from the Blackhawk IPO. Guidance for nonfuel ID sales growth remains at 2% to 3%, operating profit margin change, excluding fuel, at flat to a positive 10 basis points, and free cash flow at $850 million to $950 million.
Safeway Inc. is a Fortune 100 company and one of the largest food and drug retailers in North America based on sales. The company operates 1,638 stores in the United States and Canada. The company's common stock is traded on the New York Stock Exchange under the symbol SWY.
Safeway Conference Call
Safeway's investor conference call discussing first-quarter results will be broadcast live over the internet at www.safeway.com/investor_relations at 8:00 a.m. PT on April 25, 2013. Click on Upcoming Events to access the call. A replay will be available via webcast for approximately one week following the conference call.
Most Popular Stories
- Mazda Leads the Pack for Fuel Efficiency
- Prius Among Insurance Institute's 39 Top Safety Vehicles
- 2014 Will Be 'Breakthrough Year' for U.S., Obama Says
- Target Overwhelmed by Worried Customers
- Nigella Bites Back Over 'Vilification'
- Judge Grants Order, Keeping Tonsil Surgery Tragedy Girl on Ventilator
- 'American Hustle' Review
- First Family Arrives for Hawaiian Island Holiday
- Congress Ends Turbulent Year with Approving IRS Chief
- Renewable Energy Group to Acquire Syntroleum