020324 Safeway Takes Charge for Future Beef Bankruptcy

Pleasanton, CA - Number 3 grocery chain Safeway Inc. said it took a charge of $30.5 million against previously reported 2001 earnings related to the bankruptcy of meat processor Future Beef Operations LLC.

Safeway owns 15 percent of Denver-based Future Beef and has a contract to purchase beef from the company.

Safeway said its 2001 net income was $1.25 million, or $2.44 per share, after the charge, which amounted to 6 cents per share. Safeway said the charge covers potential payments under contractual obligations and other liquidation costs.

Safeway said it has an agreement that states that if Future Beef is liquidated and proceeds from its sale do not fully repay its loan to its principal lender, Safeway must pay the lender up to $40 million. Future Beef filed for bankruptcy on March 4.

First Beef's first plant in Arkansas City, Kansas, began operating in August 2001 and failed to meet performance expectations, Safeway said.

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