2012 fact book - safewayrealtyholdings.com fact book.pdf · safeway 2012 fact book this fact book...

2 0 1 2 F A C T B O O K

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This Fact Book provides certain financial and

operating information about Safeway. It is

intended to be used as a supplement to the

Safeway 2011 Annual Report on Form 10-K,

as amended, quarterly reports on Form 10-Q

and current reports on Form 8-K, and therefore

does not include the company’s consolidated

financial statements and notes.

The majority of the information in this Fact

Book is based on fiscal year 2011 data unless

otherwise noted.

Safeway believes that the information

contained in this Fact Book is correct in all

material respects as of April 2012. However,

such information is subject to change.

ABOUT THE SAFEWAY FACT BOOK

Investor Information 2

Safeway at a Glance 3

Retail Operations 4

Manufacturing & Distribution 8

Consumer Brands 10

Finance & Administration 12

Financial & Operating Statistics 18

Directors & Executive Officers 29

Corporate History 30

Reconciliations 36

CONTENTS

Note: This Fact Book contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements relate to, among other things, real estate development and Lifestyle stores and are indicated by words or phrases such as “continuing,” “ongoing,” “expects,” “plans,” “will” and similar words or phrases. These statements are based on Safeway’s current plans and expectations and involve risks and uncertainties that could cause actual events and results to vary significantly from those included in, or contemplated or implied by, such statements. Certain risks and uncertainties are described in Safeway’s reports filed with the Securities and Exchange Commission.

SAFEWAY 2012 FACT BOOK

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CORPORATE OFFICE

Safeway Inc.

5918 Stoneridge Mall Road

Pleasanton, CA 94588-3229

Phone: (925) 467-3000

www.safeway.com

INVESTOR CONTACTS

Christiane Pelz

Vice President, Investor Relations

Phone: (925) 467-3832

Melissa Plaisance

Senior Vice President, Finance & Investor Relations

Phone: (925) 467-3136

General Inquiries

www.safeway.com/investor_relations

Phone: (925) 467-3717

STOCK INFORMATION

NUMBER OF EMPLOYEES

• Stock symbol: SWY

• Listed on New York Stock Exchange (“NYSE”)

• Transfer Agent: Computershare Trust Company, N.A. P.O. Box 43078 Providence, RI 02940-3078 Phone: (877) 498-8861 Hearing impaired: (800) 952-9245 www.computershare.com

• 296.6 million common shares outstanding as of December 31, 2011

• 240.4 million common shares outstanding as of April 25, 2012

2011 Data:• 343.8 million weighted average shares outstanding (diluted)

• Range of trading prices, NYSE: $15.93 to $25.43

• $188 million of dividends paid on common stock

• $1.6 billion of common stock repurchased

• Year-end 2011: 178,000

• Year-end 2010: 180,000

• Year-end 2009: 186,000

At year-end 2011, approximately 75% of our

employees were covered by collective bargaining

agreements.

BOND INFORMATION (As of April 2012)

• 5.80% Senior Notes due August 2012


• 6.25% Senior Notes due March 2014

• 3.40% Senior Notes due December 2016




• 4.75% Senior Notes due December 2021

• 7.45% Senior Debentures due September 2027

• 7.25% Senior Debentures due February 2031

Trustee & Paying Agent:The Bank of New York Mellon Bondholder Relations Department Corporate Trust Division Fiscal Agencies Department 101 Barclay Street, 7-East New York, NY 10286 Phone: (800) 548-5075

• 3.00% Second Series Notes due March 2014 (Canada Safeway Limited)

Trustee & Paying Agent: BNY Trust Company of Canada 4 King Street West, Suite 1101 Toronto, Ontario MSH 1B6 Phone: (416) 933-8500

INVESTOR INFORMATION

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Safeway Inc. (Safeway) is one of the largest food and

drug retailers in North America. At year-end 2011,

Safeway operated 1,6781 stores in the Western,

Southwestern, Rocky Mountain, Midwestern and

Mid-Atlantic regions of the United States and in

western Canada. In support of our stores, Safeway has

an extensive network of distribution, manufacturing

and food processing facilities.

Safeway owns and operates GroceryWorks.com,

an Internet grocer doing business under the names

Safeway.com and Vons.com.

Through our subsidiary, Blackhawk Network Holdings,

Inc., we provide prepaid gift cards and financial services

products to consumers and businesses through a

network of retail store locations in the United States,

Canada, Europe, Mexico and Australia and various

online channels.

Safeway also holds a 49% interest in Casa Ley, S.A. de

C.V., which at year-end 2011 operated 185 food and

general merchandise stores in western Mexico.

ABOUT US

STORES BY DIVISION

Randalls Tom Thumb

112

Carrs

Alberta 96

Denver 137

Chicago/Dominick’s

76

Eastern/Genuardi’s1

155

Texas/Randalls

Tom Thumb111

Southern California/

Vons277

NorthernCalifornia

268

Vancouver 75

Winnipeg 54

Phoenix 116

Casa Ley185

Seattle 199 (incl. Carrs)

Portland 114

SAFEWAY AT A GLANCE

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1 Includes 27 Genuardi’s stores, which were announced for sale or closure on January 5, 2012.

OVERVIEW

Safeway’s operating strategy is to provide outstanding

value to our customers by offering a unique shopping

experience, including maintaining superior store

standards and a wide selection of high-quality

products at attractive, everyday prices. Through our

Lifestyle stores, we emphasize high-quality meat and

produce, in-store bakeries, deli and food service areas

and outstanding floral and pharmacy departments.

Safeway’s store employees also deliver superior service

to customers.

Below is a list of our stores by operating area and size.

At year-end 2011, approximately 82% of Safeway’s

stores were 35,000 square feet or larger.

Stores by Operating Area as of December 31, 2011:

U.S. Operating Areas: Greater Than 35,000 Sq. Ft.

Less Than 35,000 Sq. Ft. Total Stores

Chicago (Dominick’s) 74 2 76

Denver 121 16 137

Eastern (Safeway/Genuardi’s)1 138 17 155

Northern California (includes HI) 202 66 268

Phoenix 110 6 116

Portland 97 17 114

Seattle (Safeway/Carrs in AK) 167 32 199

Southern California (Vons/Pavilions) 206 71 277

Texas (Randalls/Tom Thumb) 100 11 111

Total U.S. 1,215 238 1,453

Canadian Operating Areas:

Alberta 76 20 96

Vancouver 47 28 75

Winnipeg 39 15 54

Total Canada 162 63 225

Total U.S. & Canada 1,377 301 1,678

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RETAIL OPERATIONS

1 Includes 27 Genuardi’s stores, which were announced for sale or closure on January 5, 2012.

Store Count by State / Province as of December 31, 2011:

Percentage of Stores with Specialty Departments and Fuel Stations as of December 31, 2011:

Department %

Deli 99%

Floral 97%

Bakery 96%

Seafood 81%

Pharmacy 78%

Starbucks 70%

Fuel Stations 24%

United States: Canada – Provinces:

Alaska 28 Alberta 93

Arizona 115 British Columbia 78

California 507 Manitoba 33

Colorado 116 Ontario 6

District of Columbia 14 Saskatchewan 15

Delaware 4

Hawaii 19

Idaho 6

Illinois 76

Maryland 66

Montana 12

Nebraska 5

Nevada 19

New Jersey 4

New Mexico 4

Oregon 99

Pennsylvania 24

South Dakota 3

Texas 111

Virginia 43

Washington 168

Wyoming 10

Total U.S. 1,453 Total Canada 225

Total U.S. & Canada 1,678

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Safeway U.S. Operating Areas: (banner) Primary Conventional: Other:

Chicago (Dominick’s)

Jewel (SuperValu) Walmart Supercenter, Meijer, Aldi, Costco, Sam’s Club, Whole Foods

Denver (Safeway)

King Soopers (Kroger), Albertsons (Cerberus)

Walmart Supercenter, Sam’s Club, Whole Foods, Target

Eastern (MD, VA, D.C.) (Safeway)

Giant (Ahold), Food Lion (Delhaize), Shoppers Food Warehouse (SuperValu), A&P

Costco, BJ’s Wholesale Club, Wegmans, Whole Foods, Walmart Supercenter

Northern California includes HI (Safeway)

Lucky (SaveMart), Raley’s, Nob Hill (Raley’s)

Walmart, Costco, WinCo Foods, Whole Foods, Trader Joe’s

Phoenix (Safeway)

Fry’s (Kroger), Albertsons (Cerberus), Bashas’

Walmart Supercenter, Costco, Sam’s Club

Portland (Safeway)

Fred Meyer (Kroger), Albertsons (SuperValu)

WinCo Foods, Walmart Supercenter, Costco

Seattle includes AK (Safeway/Carrs)

Albertsons (SuperValu), Fred Meyer, Quality Food Centers (Kroger), Haggen

Walmart Supercenter, Costco, WinCo Foods

Southern California (Vons/Pavilions)

Albertsons (SuperValu), Ralphs, Food 4 Less (Kroger), Stater Bros.

Walmart Supercenter, Costco, Whole Foods, Trader Joe’s

Texas (Randalls/Tom Thumb)

Kroger, Albertsons (Cerberus), H.E. Butt Walmart Supercenter, Sam’s Club, Fiesta Mart, Target

PRIMARY COMPETITORS

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Note: Over 3% weighted market share.

Safeway Canadian Operating Areas: Primary Conventional: Other:

Alberta Sobeys, IGA (Sobeys), Co-op, Extra Foods (Loblaw), Save-on-Foods (Overwaitea)

Real Canadian Superstore (Loblaw), Costco, Walmart

Vancouver Save-on-Foods (Overwaitea), PriceSmart foods (Overwaitea), Extra Foods (Loblaw), Thrifty Foods (Sobeys)

Real Canadian Superstore (Loblaw), Costco, Walmart

Winnipeg IGA (Sobeys), Co-op, Extra Foods (Loblaw)

Real Canadian Superstore (Loblaw), Costco, Walmart, Real Canadian Wholesale Club (Loblaw)

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Calgary Store

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DISTRIBUTION

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U.S. Operating Areas: Location: Size (Sq. Ft.):

Chicago (Dominick’s) Northlake, IL 932,000

Denver Denver, CO 1,232,000

Eastern Collington, MD 915,000

Northern California (includes HI) Tracy, CA 1,922,000

Phoenix Tempe, AZ 788,000

Portland Clackamas, OR 798,000

Seattle (includes Carrs in AK) Auburn, WA Spokane, WA Anchorage, AK

1,208,000 292,000 233,000

Southern California (Vons/Pavilions) Santa Fe Springs, CA El Monte, CA

1,055,000 862,000

Texas (Randalls/Tom Thumb) Houston, TX Dallas, TX

686,000 1,019,000

Total U.S. 11,942,000

Canadian Operating Areas: Location: Size (Sq. Ft.):

Alberta Calgary, Alberta Edmonton, Alberta

791,000 442,000

Vancouver* Vancouver, British Columbia 418,000

Winnipeg Winnipeg, Manitoba 427,000

Total Canada 2,078,000

Total U.S. & Canada 14,020,000

Note: Listing of major distribution facilities. Safeway also sources product from additional warehouses in the U.S. and Canada.

*We sold our distribution center in British Columbia in 2011, and the activity was moved to a third-party facility.

Each of Safeway’s 12 retail operating areas is served

by a regional distribution center consisting of one or

more facilities. Safeway currently has 17 distribution/

warehousing centers (13 in the United States and

four in Canada*), which collectively provide the

majority of products to stores we operate. Our

distribution centers in Maryland and British Columbia

are operated by third parties.

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MANUFACTURING & DISTRIBUTION

MANUFACTURING

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U.S. Canada Total

Milk plants 6 3 9

Bakery plants 6 2 8

Ice cream plants 2 2 4

Cheese and meat packing plants - 1 1

Soft drink bottling plants 4 - 4

Fruit and vegetable processing plants 1 3 4

Cake commissary 1 - 1

Sandwich commissary - 1 1

Total 20 12 32

Manufacturing and food processing facilities by type and location as of December 31, 2011:

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The principal function of Safeway’s manufacturing

operations is to purchase, manufacture and process

private label merchandise sold in stores we operate.

We utilize excess capacity in some of our plants to

produce products for third parties.

As measured by sales dollars, approximately 14% of

Safeway’s private label merchandise is manufactured in

company-owned plants, and the remainder is purchased

from third parties.

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Safeway’s private label offering of Consumer Brands

is dedicated to meeting diverse shopper needs while

building loyalty to Safeway. Our portfolio is designed

to provide high-quality products and a differentiated

experience to our shoppers.

We divide our brands into three portfolios: Core,

Premium and Health & Wellness.

Core• The Safeway brand is our largest Consumer Brand with

more than 4,000 items across 350 categories ranging from cereal and spaghetti to hand sanitizer and laundry detergent. The Safeway brand offers shoppers the same quality and taste of name brands, at a lower price. We recently redesigned the packaging and are in the process of rebranding the core Safeway brand into four labels: Safeway Kitchens, Farms, Home and Care.

• The Lucerne® brand has been producing quality dairy products since 1904. It can be found in 19 categories, offering over 400 items such as milk, cheese, sour cream, cottage cheese, ice cream and eggs. About 70% of Lucerne’s portfolio is now rBST free. Pantry Essentials™ is our second label in dairy and is positioned as a value line.

• Relaunched in the summer of 2010, refreshe™ has brought fun back to the beverage category. With over 40 different varieties of beverages, from carbonated soft drinks to vitamin-enhanced water, our mega beverage brand, refreshe, continues to be a one-stop brand for thirsty shoppers.

• The Snack Artist™ is our line of great-tasting, clever snacks, which also deliver value. In 2012, we added pretzels, trail mix and frozen appetizers to the variety of salty snacks with

which we launched the brand in 2010.

• The Pantry Essentials brand features over 100 items that are positioned to meet the needs of consumers looking for basic items that are priced right on a day-in-day-out basis. Pantry Essentials spans over 45 categories including dairy, meat, canned vegetables and paper goods, to

name just a few.

• The Deli Counter™ consists primarily of sliced deli meats, cheeses and salads.

Premium• The award-winning Safeway SELECT® brand is designed to

offer premium quality products that we believe are equal or superior in quality to comparable bestselling, nationally advertised brands, or are unique to their category and not available from national brand manufacturers. Since 1993, hundreds of products have been developed under the Safeway SELECT brand, including unique salsas, bagged salads, frozen entrees, hors d’oeuvres, pastas and sauces, olive oils, freshly baked artisan breads, whole bean coffees and desserts. Currently, there are over 500 items in approximately 60 categories.

• Our Signature Cafe® brand offers a variety of items in the deli/food service department, including sandwiches, soups, salads, side dishes and precooked hot meats such as meatloaf, roasted chicken and rosemary pork loin. It also offers a variety of meals, which we reformulated and repackaged in 2009, thereby providing even more meal solutions for today’s busy shoppers.

• The Primo Taglio® brand is a full line of premium meats and cheeses, all crafted using traditional, time-honored practices. Primo Taglio has no fillers, binders, artificial flavors or MSG. It was launched in 1999 and has over 100 items.

CONSUMER BRANDS

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CONSUMER BRANDS

• Through our Rancher’s Reserve® Tender Beef offering, we believe we have developed a reputation for having the most tender and flavorful meat available in the market.

• In January 2009, we introduced waterfront BISTRO®– a brand of over 100 seafood selections, entrees and complementary items that make preparing a restaurant-quality meal at home easy. Some items come with simple recipes for “do-it-yourself” entrees and appetizers, and others are pre-made entrees that are ready in minutes.

• Debi Lily™ is another example of the solutions we provide for our shoppers. With a line of unique bouquets, candles, vases and gifts, Debi Lilly continues to grow.

• Mom to Mom® and In-Kind™ round out the portfolio with baby products created by moms, for moms, and a personal care line made from 90% natural ingredients,

respectively.

Health & Wellness• In December 2005, Safeway introduced the first of our

“wellness” brands, O Organics. This line has grown to over 1,300 USDA-certified organic food and beverage products. All O Organics products have passed strict federal government standards for organic farming, processing and handling. In the spring of 2007, Safeway introduced O Organics for Baby and O Organics for

Toddler products, offering a complete line of wholesome, great tasting and affordable organic food for children.

• Eating Right®, our brand of products for health-conscious consumers, debuted during the second quarter of 2007. Eating Right products combine great taste with nutritional efficacy and feature a unique nutritional icon system to help consumers quickly identify product attributes that they seek. The line includes about 200 great-tasting, better-for-you items.

• The Bright Green™ brand of home care products was launched in October 2008 as a highly effective and affordable solution for everyone to care for their homes and contribute to a cleaner and healthier community. The Bright Green brand currently features nearly 50 items, including cleaning and laundry products made with naturally derived and biodegradable ingredients, paper products made from 100% recycled content and high-efficiency light bulbs.

• In November 2010, Safeway introduced the Open Nature™ line of 100% natural foods, continuing our leadership in the retail food industry as an innovator in health and nutrition. Open Nature today offers more than 100 products made with 100% natural ingredients from natural sources, with nothing artificial added. Open Nature is Safeway’s way of providing shoppers access to simple, flavorful food made from all-natural ingredients that is as close to nature as possible.

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Top Brands

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Safeway’s Distinctive Portfolio of Consumer Brands

Health & WellnessCore Premium

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REAL ESTATE

Since 2004, we have transformed our stores into

“Lifestyle” stores. While Safeway has focused on

an aggressive remodel program, we have also built

a number of new stores each year. New stores are

typically 55,000 square feet. In 2011, we opened 25

new stores and completed 29 Lifestyle remodels. This

was a larger new store program than in the previous

two years. In 2012, Safeway plans to open 10 new

Lifestyle stores and complete 10 Lifestyle remodels.

These stores showcase Safeway’s commitment to

quality, particularly in the perishables departments.

The stores are dramatically redesigned with earth-

toned decor, subdued lighting, custom flooring,

unique display fixtures and other special features to

create a warm, inviting ambience that Safeway believes

significantly enhances the shopping experience. At

year-end 2011, 1,459 stores, or 87% of the store base,

were Lifestyle stores.

At year-end 2011, Safeway owned approximately 42%

of our stores and leased the remaining stores. Safeway

prefers ownership because it provides control and

flexibility with respect to remodels, expansions, closures

and financing terms.

Safeway employs an analytical and disciplined approach

to all capital spending. To be approved, all new stores

and Lifestyle remodel plans must exceed an internal

cash-on-cash hurdle rate of 22.5%. Post-capital audits

are conducted at the end of the first and third years

after the completion of a project in order to monitor

ongoing performance. The executive officers who are

responsible for making capital decisions are eligible for

capital performance-based compensation, payment of

which is partially contingent on capital investments of

Safeway achieving targeted rates of return.

Our Property Development Centers (PDC) subsidiary

specializes in retail shopping center development and

capitalizes on Safeway’s real estate core competency.

PDC completed several projects in 2011, and with many

more under development, PDC is expected to generate

value for Safeway.

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FINANCE & ADMINISTRATION

Georgetown Store

2011 2010 2009 2008 2007

Total stores at beginning of year 1,694 1,725 1,739 1,743 1,761

Stores opened: New Replacement

6

19

3

11

3 5

8

12

13 7

Total 25 14 8 20 20

Stores closed 41 45 22 24 38(1)

Total stores at year end 1,678 1,694 1,725 1,739 1,743

Remodels completed (2): Lifestyle remodels Other remodels

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232

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253

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Total remodels 29 67 92 253 268

Expansions Four-wall remodels

2 27

2 65

5 87

5 248

5 263

Number of fuel stations at year end 400 393 388 382 361

Total retail square footage at year end (in millions) 79.2 79.2 80.1 80.4 80.3

Cash capital expenditures (in millions) $1,094.7 $837.5 $851.6 $1,595.7 $1,768.7

Cash capital expenditures as a percentage of sales and other revenue 2.5% 2.0% 2.1% 3.6% 4.2%

Average store size 47,000 46,700 46,000 46,000 46,000

Five-Year History of Capital Expenditure Program

(1) Closed 14 underperforming stores at Dominick’s in 2007.

(2) Defined as store remodel projects (other than maintenance) generally requiring expenditures in excess of $0.2 million. Excludes pharmacy refurbishments.

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TECHNOLOGY

The Safeway Information Technology (IT) department

supports the business objectives of increasing sales,

reducing costs and creating greater efficiencies that

ultimately improve the overall customer experience.

The IT department works with various business units

to develop and implement technology solutions to

meet business goals. The department delivers solutions

covering all aspects of Safeway’s business including

marketing and merchandising, retail, supply chain,

eCommerce, business intelligence and administration.

Most recently, IT has been involved with the

development of our proprietary just for U™ digital

loyalty platform. Through just for U, customers are able

to download personalized prices and digital coupons to

their Club Cards. Recently, mobile apps were added in

order to provide customers with more convenient access

to just for U.

Safeway operates a data center in Salt Lake City, Utah

and another in Phoenix, Arizona. Each data center

houses mission-critical information and is equipped to

function as a back-up system in the event of a disaster.

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HUMAN RESOURCES

Diversity and Inclusion

The diversity of our workforce is a key reason why

Safeway remains a desired employer for people of all

backgrounds from every segment of the communities

we serve. We foster an inclusive working environment

and value the varying strengths and perspectives of

our employees. We believe a diverse workforce leads

to better teamwork, increased productivity, creative

thinking and innovation - which help us achieve business

priorities.

Safeway’s view of diversity is all-inclusive and covers the

many ways employees may be different, including an

individual’s race, color, religion, gender, national origin,

age, disability, ancestry, medical condition, genetic

information, marital status, covered veteran status,

citizenship status, sexual orientation, gender identity

and gender expression. Safeway provides reasonable

accommodations for applicants and employees with

disabilities. Safeway employs approximately 178,000

employees of which 75% are covered by collective

bargaining agreements.

Safeway supports employee resource groups, which

are individually sponsored by a senior member of our

management team. Employees have formed over ten

groups, thereby increasing employee engagement,

providing networking and mentoring opportunities and

helping connect employees to the community.

Not only are Safeway employees diverse, our suppliers of

goods and services are too. Safeway’s supplier diversity

program includes minority, service-disabled veteran and

women-owned businesses.

Employee Development Our employees are our most valuable resource. We

provide employees with training and developmental

opportunities that enable them to acquire the necessary

knowledge, skills and abilities, which we believe have

contributed significantly to Safeway becoming a

leading retailer in our markets. Whether it is providing

world-class customer service, offering exceptional

products at a competitive price or mastering the latest

in merchandising and display techniques, Safeway’s

training and development programs are designed to

provide individuals with a solid foundation to perform

their best in their current position, and prepare them

for future opportunities. Safeway provides entry-level

training using multi-media, mentors and on-the-job

training. Areas of concentration include: customer service,

diversity, food safety, workplace safety, financial analysis

and a host of other topics, as they relate to each position.

Strong performers are offered further opportunities in

management positions.

Retail Management Training/Leadership Development Program

Store managers are an essential and significant group of

leaders who run the daily operations of Safeway. Potential

store managers are selected from high-performing

assistant store managers, qualified external store

managers, store employees and other outside candidates.

Safeway developed a military recruiting program to hire

and train junior military officers after they return from

active duty. Store manager candidates are given in-depth

training on leadership, strategy, store operations, report

analysis and financial business acumen. The Safeway retail

management development program prepares Safeway’s

retail leaders for everyday operating challenges by

providing them with the proper training, experience and

tools necessary to adapt and excel in the competitive and

constantly changing grocery industry.

Health and Wellness

In addition to employing and training a diverse workforce,

Safeway offers a number of benefits and programs to

help employees manage all aspects of their total health–

physical, emotional and financial well-being. Our Live

Life, Live Long, Live Well™ programs are available to help

our employees and their families manage their physical,

emotional and financial well-being. Healthy Measures

helps employees understand their major health risks

and take steps to stay or become healthy. Participating

employees qualify for substantial discounts on their health

insurance premiums. Other programs include:

• astate-of-theartcorporatefitnesscenteranddiscounts

at local fitness centers;

• anonlinetoolthathelpsmakehealthcarecosts

transparent; and

• CareConnect,aservicetoprovideemployeesandtheir

families with the very best care for breast cancer,

prostate cancer and heart disease at premier treatment

centers nationwide.

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Incentive Programs and Benefits We have a wide range of bonus programs to motivate,

reward and retain eligible employees and to encourage

individual and team behavior that helps the company

achieve both short- and long-term performance

objectives. Safeway’s bonus programs extend to more

than 21,000 employees from in-store department

managers to senior management. Safeway also

contributes to a pension plan for corporate-level

employees and several multi-employer pension plans.

Stock Ownership A payroll deduction plan allows employees at all levels

to buy Safeway stock commission-free. Safeway’s 401(k)

plan provides eligible employees an option to invest self-

directed retirement funds in Safeway stock.

CORPORATE SOCIAL RESPONSIBILITY

For years, Safeway has taken responsibility for

environmental and community stewardship. We strive

to have a positive and measurable impact on the lives

of our customers and employees, and we have been a

leading fundraiser for many organizations. We focus

our corporate social responsibility (CSR) efforts on four

key areas: People, Products, Community and Planet.

The following is an overview of our accomplishments

in these areas. Please see our CSR website for more

details: www.safeway.com/csr.

People As previously mentioned, Safeway takes pride in

employing and training a diverse workforce, and we are

also committed to our Live Life, Live Long, Live Well™

health and well-being programs.

For our customers, we strive to offer a selection of

healthy products and services. Safeway’s pharmacies

offer more than just prescription-filling and health-

related advice. They also provide immunizations, travel

medicines, medication therapy management and point-

of-care screening, among other services.

Products

Sourcing safe, high-quality products and offering a

selection of healthy and more sustainable products is

very important to us.

Consumer Brands

Our private label product team continues to expand

item selection in the Health & Wellness portfolio of

brands which includes O Organics™, Eating Right®, Bright

Green™ and Open Nature™, the newest line with 100%

natural ingredients from natural sources, with nothing

artificial added. We also began removing high fructose

corn syrup from our Eating Right products, a project

which is nearly completed.

SimpleNutrition

In 2011, we introduced SimpleNutrition, an “at the

shelf” labeling program we developed in partnership

with registered dietitians and food labeling experts.

Green shelf tags identify certain nutrition and ingredient

benefits for a given product, helping our customers to

receive critical nutrition information at a glance.

Locally Grown

Safeway has spent decades working with hundreds of

local growers across the country to bring the finest and

freshest produce to our consumers. We give buying

preference to our local vendor partners, supporting the

vitality of regional farms and reducing greenhouse gas

emissions by limiting transportation miles.

Supplier Diversity Program

We encourage businesses owned by minorities, women

and disabled veterans to present their goods or services

to Safeway for consideration. Potential suppliers are

guided through the evaluation process by a designated

diversity contact person and the appropriate category

decision maker.

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Animal Welfare and Seafood Sustainability

Safeway is an industry leader in animal welfare. We

believe animals should be raised, transported and

processed using procedures that are clean, safe and

free from cruelty, abuse or neglect. The mandate of our

Animal Welfare Council, comprised of Safeway experts

and a number of animal welfare scientists from top

universities, is to provide guidance on matters relating

to the humane treatment of animals in the food

production system.

Safeway adopted a far-reaching seafood sustainability

policy in 2008 to help ensure this food source is

enjoyed for generations to come. The policy focuses

on four key areas: sourcing, supplier assessment and

employee and customer education. In January 2010,

we joined FishWise, a non-profit organization focused

on improving the sustainability performance of seafood

retailers, distributors and producers. In May 2012,

Greenpeace ranked Safeway number one among the

top U.S. grocery retailers for the sustainability of our

seafood practices.

Quality Assurance

In 2010, we initiated a multi-year program to improve

practices that safeguard the integrity of our products.

Our program includes certification with the Global

Food Safety Initiative (GFSI), a collaboration among

food safety experts from retail, manufacturing and

food service, as well as service providers. The GFSI

benchmarks existing food standards against food safety

criteria and develops ways to share information in the

supply chain, raise consumer awareness and review

existing retail practices.

Packaging

Our sustainability strategy calls for us to reduce

our carbon footprint and support the growth of

recycling industries in North America. Our innovations

in packaging, such as reducing the weight of our

refreshe™ 500 ml water bottles and use of Reusable

Plastic Containers to ship produce, instead of cardboard

boxes, have helped us make significant progress against

those objectives. In addition, through our participation

in the Global Packaging Project, we helped establish the

Global Protocol on Packaging Sustainability metrics.

Community

We have a longstanding reputation for making

meaningful contributions to the causes our customers

and employees care about. Our Safeway Volunteer

website links our employees with more than 70,000

nonprofit agencies and local volunteer opportunities

such as mentoring programs, food banks and school

youth programs. In 2011, our employees achieved a

milestone of one million volunteer hours logged.

Much of our charitable giving happens through The

Safeway Foundation. The major areas of support for

both Safeway and our foundation are: hunger relief,

education, health and human services, and people with

special needs.

Hunger Relief

In 2011, Safeway and The Safeway Foundation donated

approximately $116.5 million in food and products to

regional food banks, food pantries and other hunger

relief agencies.

Education

Safeway contributes more than $20 million annually to

schools through eScrip and other fundraising programs.

The eScrip program allows enrolled shoppers to raise

money for their designated schools simply by making

purchases at participating merchants.

Health and Human Services

Safeway and The Safeway Foundation support a wide

array of cutting-edge cancer research at some of North

America’s top cancer centers. Safeway and The Safeway

Foundation are among the largest corporate supporters

in the research and prevention of breast and prostate

cancer, having raised and donated over $180 million

since 2001.

People with Special Needs

Safeway is one of the largest corporate fundraisers

for Easter Seals and Special Olympics. We have raised

more than $110 million for the benefit of Easter Seals

programs and have supported Special Olympics for

approximately 20 years. Since we began, Safeway

and The Safeway Foundation raised approximately

$58 million for the Muscular Dystrophy Association

(MDA), a national voluntary health agency dedicated to

conquering more than 40 neuromuscular diseases.

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Reducing Water Usage

Water is a critical natural resource that must be managed

responsibly. Over the past few years Safeway has

implemented a number of water-saving initiatives across

our retail stores, distribution centers, and manufacturing

plants. For example, by installing new water cooling

tower technology, we have significantly reduced water

intake needs in many of our refrigeration systems, saving

millions of gallons of water.

Improving Efficiencies in our Supply Chain

Transporting our products to nearly 1,700 stores is a big

task, and doing so efficiently takes skill and innovation.

One innovative approach we took in 2011 was to recycle

fryer grease from our Northern California stores into bio-

diesel which was used by the Vons transportation fleet.

In addition, by loading our trucks more efficiently, we

reduced the amount of diesel fuel consumption in our

outbound trucks significantly. We also completed the

installation of two, one-megawatt wind turbines at our

Tracy, California distribution center.

Store Sustainability

We strive to minimize environmental impacts in the

design and building of new stores. Since we opened our

first store certified by the US Green Building Council’s

Leadership in Energy and Environmental Design (LEED)

program in 2010 in Santa Cruz, California, we now have

several projects in the LEED certification process.

Planet The protection of our natural resources, such as air,

water, soil and vegetation, is paramount to the health

and sustainability of our planet for future generations

to come. Safeway was one of the first retailers to

recycle and one of the first to offer reusable shopping

bags. We have made substantial progress in our goals

to reduce our energy consumption and greenhouse gas

emissions, divert waste, reduce water usage, increase

efficiencies in our supply chain and build new stores

more sustainably while improving the sustainability of

our existing stores.

Cutting Energy Consumption

and Reducing Greenhouse Gases

In 2006, Safeway was the first retailer to join the

Chicago Climate Exchange, committing to reduce our

carbon footprint over four years by 6% below our 2000

baseline. We completed our 2010 audit and exceeded

our target, reducing our greenhouse gas emissions

by 11.8% from our 2000 baseline. In 2012, Safeway

joined The Climate Registry, a nonprofit collaboration

among North American states, provinces, territories

and Native Sovereign Nations that sets consistent

and transparent standards to calculate, verify and

publicly report greenhouse gas emissions into a single

registry. In 2011, we purchased enough green power

from biogas, solar and wind to offset the power used

by all of our U.S. fuel stations, corporate offices in

Pleasanton, California and all of our stores in San

Francisco, California and Boulder, Colorado.

Diverting Waste

Safeway supports the global drive towards zero

waste business practices. Our stores, corporate

offices, distribution centers and manufacturing plants

participate in a number of diversion programs. We

recycle or divert to alternative uses items such as

cardboard, plastics, compostable material, cooking

oil, bone and fat, as well as construction materials on

building sites.

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1986

• In 1986, Safeway was acquired and taken private via a leveraged buyout by partnerships formed by Kohlberg Kravis Roberts & Co. (“KKR”) and Safeway senior management. At year-end 1986, total debt was $5.7 billion.

• From 1986 through 1988, Safeway closed or sold approximately 1,000 stores and received proceeds of $2.4 billion, which were used to repay debt.

1989 • At year-end 1989, total debt was $3.1 billion.

1990 • On April 26, 1990, Safeway became a public company

once again by issuing 46 million shares at $2.81 per share, for net proceeds of approximately $120 million.

1991 • In April 1991, Safeway issued another 70 million

shares at $5.13 per share, for net proceeds of approximately $340 million.

• 11-16-91: Redeemed $565 million of 14.5% Junior Subordinated Debentures.

• 11-20-91: Issued $300 million of 10.0% Senior Subordinated Notes due 2001.

• 12-20-91: Redeemed $300 million of 11.75% Senior Subordinated Notes.

1992• 01-15-92: Issued $300 million of 9.65% Senior

Subordinated Debentures due 2004.

• 02-12-92: Issued $100 million of 9.3% Senior Secured Debentures due 2007, secured by the distribution center in Tracy, CA.

• 02-24-92: Redeemed $300 million of 11.75% Senior Subordinated Notes.

• 03-17-92: Issued $250 million of 9.35% Senior Subordinated Debentures due 1999 and $150 million of 9.875% Senior Subordinated Debentures due 2007.

• 04-23-92: Redeemed remaining $150 million of 11.75% Senior Subordinated Notes and redeemed $250 million of 12.0% Senior Subordinated Debentures.

• 09-02-92: Filed a $240 million shelf registration. Subsequently issued $80 million of Medium-Term Notes in 1992 with maturities ranging from three to ten years.

1993• Issued $80 million of Medium-Term Notes in 1993, with maturities ranging from two to ten years.

1994 • Retired public debt totaling $292 million through open

market purchases, consisting of $44 million of senior debt and $248 million of senior subordinated debt.

1995 • In January 1995, Safeway acquired 31.8% of the

partnership interests in SSI Equity Associates, L.P. for $113 million with proceeds from bank borrowings. In October 1995, Safeway acquired an additional 18.9% of such partnership interests for $83 million with proceeds from bank borrowings. SSI Equity Associates, L.P. was a limited partnership whose sole asset consisted of warrants to purchase Safeway common stock at $0.50 per share.

• In May 1995, Safeway entered into a new $1.15 billion unsecured bank credit agreement that extended the maturity date and provided lower borrowing costs. The new credit agreement was to mature in the year 2000 and had two one-year extension options. In connection with obtaining the new credit agreement, all collateral securing the prior credit agreement and the company’s subordinated debt was released.

• In May 1995, Standard & Poor’s (“S&P”) upgraded Safeway’s unsecured senior debt to BBB-.

1996 • Effective January 30, 1996, Safeway stock split

two-for-one.

• On February 5, 1996, 45.9 million shares of Safeway Inc. were sold to the public by KKR at $12.69 per share, reducing KKR’s ownership of Safeway to approximately 51%.

• In September 1996, S&P upgraded Safeway’s unsecured senior debt to BBB.

• In September and December 1996, Safeway acquired an additional 13.8% of the limited partnership interests in SSI Equity Associates, L.P. for $127 million with proceeds from bank borrowings.

• On December 16, 1996, Safeway Inc. and The Vons Companies, Inc. jointly announced a definitive agreement pursuant to which Safeway would issue 1.425 shares of Safeway common stock for each share

FINANCIAL TRANSACTION HISTORY (All share prices are split-adjusted)

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FINANCIAL & OPERATING STATISTICS

of Vons common stock that Safeway did not currently own. Safeway owned approximately 35% of Vons.

1997 • In January 1997, Moody’s upgraded Safeway’s

unsecured senior debt to Baa3.

• On April 8, 1997, Safeway completed the merger with Vons pursuant to which Safeway issued 83.2 million shares of Safeway common stock for all of the shares of Vons stock that Safeway did not already own.

• In connection with the Vons merger, Safeway repurchased 64.0 million shares of Safeway common stock from a partnership affiliated with KKR at $21.50 per share for an aggregate purchase price of $1.376 billion.

• In April 1997, to facilitate the Vons merger, Safeway entered into a new $3.0 billion bank credit agreement. It provided for, among other things, increased borrowing capacity, extended maturities and the opportunity to pay lower interest rates based on interest coverage ratios or public debt ratings.

• In September 1997, Moody’s upgraded Safeway’s unsecured senior debt to Baa2.

• On September 5, 1997, Safeway completed a tender offer for debt securities in the principal amount of approximately $588 million:

• $95 million of 9.35% Senior Subordinated Notes due 1999

• $161 million of 10.00% Senior Subordinated Notes due 2001

• $53 million of 10.00% Senior Notes due 2002

• $147 million of 9.65% Senior Subordinated Debentures due 2004

• $46 million of 9.30% Senior Secured Debentures due 2007

• $86 million of 9.875% Senior Subordinated Debentures due 2007

• Safeway simultaneously obtained consents to proposed amendments to the indentures governing the remaining securities.

• On September 5, 1997, the following securities were issued to partially finance the redemption:



• $150 million of 7.45% Senior Debentures due 2007

• In December 1997, the public offering of 56.5 million shares of common stock owned by affiliates of KKR was completed at $29.88 per share, reducing KKR’s ownership stake to approximately 22%.

1998 • Effective February 25, 1998, Safeway stock split

two-for-one.

• In July 1998, the public offering of 28.8 million shares of common stock owned by affiliates of KKR was completed at $45.00 per share, reducing KKR’s ownership stake to approximately 17%.

• On August 6, 1998, Safeway and Carr-Gottstein Foods Co., a grocery retailer operating in Alaska, jointly announced a definitive merger agreement pursuant to which Safeway would acquire all outstanding shares of Carr-Gottstein for $12.50 cash per share and repay approximately $239 million of Carrs’ debt.

• On October 15, 1998, Safeway and Dominick’s Supermarkets, Inc. jointly announced a definitive merger agreement pursuant to which Safeway would acquire all outstanding shares of Dominick’s for $49.00 cash per share and repay approximately $560 million of Dominick’s debt and lease obligations.

• On November 9, 1998, Safeway issued $1.4 billion of senior debt associated with the acquisition of Dominick’s. The four-tranche public offering consisted of:

• $400 million of 5.75% Notes due 2000




• On November 12, 1998, Safeway was added to the S&P 500 index.

• On November 12, 1998, 20 million shares of common stock were sold by affiliates of KKR to underwriters at $55.00 per share, reducing KKR’s ownership stake to approximately 13%.

• On November 20, 1998, Safeway completed the acquisition of Dominick’s Supermarkets, Inc.

1999 • On February 10, 1999, 19.75 million shares of

common stock were sold to the public by affiliates of KKR at $52.69 per share, reducing KKR’s ownership

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stake to approximately 9%. In connection with the secondary offering, all warrants attributable to SSI Equity Associates partners other than Safeway were exercised. This resulted in Safeway holding 100% of the limited partnership interests in SSI Equity Associates.

• On April 16, 1999, Safeway completed the acquisition of Carr-Gottstein Foods Co.

• On July 23, 1999, Safeway and Randall’s Food Markets, Inc. jointly announced a definitive merger agreement pursuant to which Safeway would acquire all the outstanding shares of Randall’s for a total consideration of $1.3 billion and repay approximately $403 million of Randall’s debt.

• On September 8, 1999, Safeway issued $1.5 billion of senior debt associated with the acquisition of Randall’s. The three-tranche public offering consisted of:




• On September 14, 1999, Safeway completed the acquisition of Randall’s Food Markets, Inc.

• On October 5, 1999, the Safeway Board of Directors authorized a $1.0 billion common stock repurchase program and began repurchasing stock.

2000 • On January 27, 2000, Safeway announced it had

repurchased 17.9 million shares of Safeway’s common stock for $651 million during the fourth quarter of 1999.

• On April 28, 2000, two affiliates of KKR completed the private sale of 13.1 million shares of common stock, including approximately 8 million shares acquired in the Randall’s merger.

• On June 5, 2000, Safeway and GroceryWorks.com signed a definitive agreement creating a strategic alliance between the two companies for GroceryWorks.com to be Safeway’s online grocery channel.

• On December 5, 2000, Safeway and Genuardi’s Family Markets, Inc. jointly announced a definitive agreement pursuant to which Safeway would acquire the assets of Genuardi’s in a cash transaction for approximately $530 million.

2001 • On January 5, 2001, Safeway entered into an

agreement with the Fleming Companies, Inc. to purchase 11 ABCO stores in Arizona.

• On January 31, 2001, Safeway issued $600 million of 7.25% Debentures due 2031, a portion of which was used to fund the Genuardi’s acquisition.

• On February 5, 2001, Safeway completed the purchase of the assets of Genuardi’s Family Markets, Inc.

• On February 28, 2001, Safeway completed the purchase of 11 ABCO stores from the Fleming Companies, Inc.

• On March 5, 2001, Safeway issued $1.2 billion of senior debt to repay borrowings under its commercial paper program. The two-tranche public offering consisted of:



• On June 25, 2001, GroceryWorks.com, Safeway’s exclusive online grocery channel, established a strategic relationship with Tesco PLC. Concurrently, Tesco made an equity investment for a 35% stake in GroceryWorks.com.

• On September 28, 2001, the Safeway Board of Directors increased the authorized level of Safeway’s stock repurchase program by $500 million to $1.5 billion.

• On November 5, 2001, Safeway issued $400 million of 3.625% Notes due 2003.

• In November 2001, all warrants to purchase Safeway common stock held in SSI Equity Associates L.P. expired unexercised and were accounted for as a reduction to retained earnings.

2002 • On January 24, 2002, Safeway announced it had

repurchased 18.9 million shares of its common stock for $781.3 million during 2001. Also, Safeway’s Board of Directors increased the authorized level of Safeway’s stock repurchase program by $1.0 billion to $2.5 billion. At year-end 2001, Safeway had bought back a total of $1.4 billion of its shares, leaving $1.1 billion available for repurchases under the $2.5 billion program.

• On July 8, 2002, the Safeway Board of Directors increased the authorized level of Safeway’s stock

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repurchase program by $1.0 billion to $3.5 billion.

• On July 16, 2002, Safeway issued $480 million of 4.80% senior debt due 2007 to repay borrowings under its commercial paper program.

• On August 12, 2002, Safeway issued $1.025 billion of senior debt to repay borrowings under its commercial paper program. The two-tranche offering consisted of:



• In December 2002, Safeway announced plans to begin the process to sell Dominick’s and leave the Chicago market due to labor issues.

2003 • On February 6, 2003, Safeway announced it had

repurchased 50.1 million shares of its common stock for $1.5 billion during 2002. At year-end 2002, Safeway had bought back a total of $2.9 billion of its shares, leaving $0.6 billion available for repurchases under the $3.5 billion program.

• On October 29, 2003, Safeway issued $650 million of Senior Notes to refinance upcoming debt maturities. The three-tranche public offering consisted of:

• $150 million of Floating Rate Senior Notes due 2005


• $300 million of 4.125% Senior Notes due 2008 (converted to floating rate debt through an interest rate swap agreement)

• On November 3, 2003, Safeway announced it had taken Dominick’s off the market because the union and the winning bidder could not reach agreement on an acceptable labor contract.

2004 • On January 12, 2004, Safeway announced the closure

of 12 underperforming stores in Chicago.

• On May 3, 2004, Safeway announced it would expense stock options in 2005.

• On July 27, 2004, Safeway filed a shelf registration covering the issuance of up to $2.3 billion of debt securities and/or common stock.

• On August 12, 2004, Safeway issued $750 million of Senior Notes to refinance upcoming debt maturities and to repay borrowings under its commercial paper program. The two-tranche public offering consisted of:

• $500 million of 4.95% Senior Notes due 2010 (converted to floating rate debt through an interest swap agreement)


• During the second half of 2004, Safeway closed 18 underperforming stores in Southern California.

• From September 7, 2004 through October 5, 2004, Safeway conducted a stock option exchange tender offer that allowed eligible employee optionees to exchange outstanding stock options with an exercise price greater than $35 per share for a number of replacement options according to an exchange formula.

2005

• On April 7, 2005, approximately 4.5 million replacement options were issued at an exercise price of $20.75 per share.

• On May 3, 2005, Safeway commenced expensing stock options with the first quarter financial results.

• On May 25, 2005, the Safeway Board of Directors declared Safeway’s first quarterly cash dividend of $0.05 per common share, with an estimated annualized payout of $90.0 million.

• On June 1, 2005, Safeway replaced its existing revolving credit facility with a $1.6 billion 5-year facility.

• On June 29, 2005, S&P lowered Safeway’s corporate credit and senior debt ratings to BBB- with a Stable outlook from BBB. The analyst attributed the downgrade to increased business risk, reflected in the difficult operating environment for traditional supermarket operators.

• On October 18, 2005, Safeway announced plans to:

• Revitalize the Texas Division, which included the closure of 26 underperforming stores.

• Repatriate $500 million of earnings from its Canadian subsidiary to the U.S. under the American Jobs Creation Act of 2004.

• On November 18, 2005, Canada Safeway Limited issued $260 million (CAD300 million) of Senior Notes due 2008 to repatriate funds to the United States utilizing a lower tax rate made available under the American Jobs Creation Act of 2004. Repatriated funds were used to pay down debt in the U.S.

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2006 • On March 28, 2006, Safeway issued $250 million of

Floating Rate Notes due 2009 to repay borrowings under its commercial paper program.

• In April 2006, Safeway announced it had settled a federal income tax refund claim for the years 1992 through 1999 for costs associated with debt financing. The federal refund consisted of a tax refund of $259.2 million and interest, net of tax, earned on that refund of $60.8 million. The state income tax refunds received in 2006 consisted of $3.1 million of tax and $1.8 million of interest, net of tax.

• In May 2006, the Safeway Board of Directors approved an increase to Safeway’s dividend by 15% from $0.05 per share to $0.0575 per share.

• On October 3, 2006, Safeway announced the purchase of the remaining 43.8% of the equity interests in the parent company of GroceryWorks.com that it did not already own, making GroceryWorks.com an indirect, wholly owned subsidiary.

• On October 24, 2006, Fitch Ratings revised the rating outlook for Safeway to Stable from Negative based on continued debt reduction and strengthened cash flows, profitability and credit measures.

• On December 7, 2006, the Safeway Board of Directors increased the authorized level of Safeway’s stock repurchase program by $500 million to $4 billion. The remaining board authorization for stock repurchases was $747 million.

2007 • On February 7, 2007, Safeway announced plans to

revitalize Dominick’s, which included remodeling 20 stores, opening one new store in 2007 and closing 14 underperforming stores.

• On February 22, 2007, Safeway announced it had repurchased 12 million shares of common stock at an average price of $26.53 per share and a total cost of $318 million in 2006.

• In May 2007, Safeway’s Board of Directors approved a 20% increase in the quarterly dividend from $0.0575 to $0.069 per common share.

• On July 23, 2007, S&P affirmed Safeway’s BBB- credit rating and revised the outlook to Positive from Stable.

• On August 1, 2007, Moody’s Investor Services affirmed Safeway’s Baa2 rating and revised the outlook to Stable from Negative.

• On August 17, 2007, Safeway issued $500 million of 6.35% Senior Notes due 2017.

2008• Effective January 10, 2008, Safeway terminated its

interest rate swap agreements on its $500 million debt at a gain of approximately $7.5 million.

• On February 21, 2008, Safeway announced it had repurchased 6.7 million shares of common stock at an average cost of $33.57 per share and a total cost of $226 million in 2007. The remaining board authorization for stock repurchases as of year-end 2007 was $521.1 million.

• On April 8, 2008, S&P upgraded Safeway’s credit and senior unsecured ratings to BBB with a Stable

outlook. The short-term rating was raised to A-2.

• In May 2008, Safeway’s Board of Directors approved a 20% increase in the quarterly dividend from $0.069 to $0.0828 per common share.

• In May 2008, the Safeway Board of Directors increased the authorized level of Safeway’s stock repurchase program by $1.0 billion to $5.0 billion. The remaining board authorization for stock repurchases was $1.45 billion.

• On December 8, 2008, Safeway filed a shelf registration statement with the Securities and Exchange Commission, enabling Safeway to issue an unlimited amount of debt securities and/or common stock. It expired on December 8, 2011. The Safeway Board of Directors authorized the issuance of up to $2.0 billion of securities under the shelf.

• On December 17, 2008, Safeway issued $500 million of 6.25% Senior Notes due 2014 to repay a portion of the outstanding borrowings under Safeway’s U.S. commercial paper program, revolving credit facility and money market bank credit facilities.

2009• On February 26, 2009, Safeway announced it had

repurchased 12.6 million shares of common stock

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at an average cost of $28.45 per share and a total cost of $360 million in 2008. The remaining board authorization for stock repurchases as of year-end 2008 was approximately $1.2 billion.

• On April 29, 2009, the Safeway Board of Directors approved a 21% increase in the quarterly dividend from $0.0828 to $0.10 per common share.

• On August 7, 2009, Safeway issued $500 million of 5.0% Senior Notes due 2019 to refinance upcoming debt maturities.

• In December 2009, the Safeway Board of Directors increased the authorized level of Safeway’s stock repurchase program by $1.0 billion to a total of $6.0 billion.

• In December 2009, Safeway converted $800 million of 5.80% fixed-rate debt due 2012 to floating-rate debt through interest rate swap agreements.


recorded a non-cash goodwill impairment charge of $1,974.2 million ($1,818.2 million, net of tax) in the fourth quarter of 2009. The impairment was due primarily to Safeway’s reduced market capitalization and a weak economy. The divisions affected were primarily Vons and Eastern. The goodwill originated from previous acquisitions.

• On February 25, 2010, Safeway announced it had repurchased 42.5 million shares of common stock at an average cost of $20.80 per share and a total cost of $885 million in 2009. The remaining board authorization for stock repurchases as of year-end 2009 was approximately $1.3 billion.

• On March 2, 2010, Safeway announced that during 2009, it received tax refunds of $413 million as follows: (1) certain accelerated tax deductions for its 2008 income tax returns resulting in approximately $224 million of tax refunds; and (2) the resolution of certain other income tax matters resulting in tax refunds of approximately $189 million.

• On May 19, 2010, the Safeway Board of Directors approved a 20% increase in the quarterly dividend from $0.10 to $0.12 per common share.

• On August 3, 2010, Safeway issued $500 million of 3.95% Senior Notes due 2020 to refinance upcoming debt maturities.

• In December 2010, the Safeway Board of Directors increased the authorized level of Safeway’s stock repurchase program by $1.0 billion to a total of

$7.0 billion.

• In December 2010, the Safeway Board of Directors increased the amount of securities authorized to be issued under its U.S. shelf registration statement by

$0.5 million to a total of $2.5 billion. As of year-end, $1.0 billion of securities were available for issuance under the board’s authorization.


repurchased 27.4 million shares of its common stock at an average cost of $22.67 per share and a total cost of $621 million in 2010. The remaining board authorization for stock repurchases as of year-end 2010 was approximately $1.7 billion.

• On March 8, 2011, Safeway announced that the Safeway Board of Directors had approved a $1.1 billion dividend from Canada to the United States, to be paid in two installments. The first installment was paid in the first quarter of 2011 with cash on hand in Canada. The second installment was paid in the second quarter of 2011. The funds were used to pay down $600 million of U.S. debt, with the remaining after-tax balance of the dividend intended for stock repurchases.

• On March 31, 2011, Canada Safeway Limited issued CAD300 million of 3.00% Second Series Notes due 2014 to be used for general corporate purposes, in conjunction with plans to repatriate funds to the United States.

• On May 19, 2011, the Safeway Board of Directors approved a 21% increase in the quarterly dividend from $0.12 to $0.145 per common share.

• On June 1, 2011, Safeway replaced its existing revolving credit facility with a $1.5 billion 4-year facility.

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• On October 24, 2011, Safeway filed a shelf registration statement with the Securities and Exchange Commission, enabling Safeway to issue an unlimited amount of debt securities and/or common stock. It expires on October 24, 2014. The Safeway Board of Directors authorized the issuance of up to $3.0 billion of securities under the shelf.

• On November 29, 2011, the Safeway Board of Directors increased the authorized level of Safeway’s stock repurchase program by $1.0 billion to a total of $8.0 billion.

• On December 5, 2011, Safeway issued $400 million of 3.40% Senior Notes and $400 million of 4.75% Senior Notes which mature on December 1, 2016 and December 1, 2021, respectively.

• In December 2011, Safeway sold a distribution center in Burnaby, British Columbia at a gain of $47.1 million.

• On December 19, 2011, Safeway entered into a $700 million term credit agreement with a syndicate of banks which matures on March 19, 2015. The agreement is a delayed draw term credit facility which allowed two draws from the closing date through, on or prior to, April 19, 2012.

2012• On January 5, 2012, Safeway announced the sale

of 16 of its Genuardi’s stores, located in the eastern United States. The transaction is subject to customary closing conditions, including regulatory approval. Additionally, Safeway announced that it planned to close or sell the remaining Genuardi’s stores.

• On February 23, 2012, Safeway announced that in 2011 it had repurchased 76.1 million shares of its common stock at an average cost of $20.85 per share and a total cost of approximately $1.6 billion. The remaining board authorization for stock repurchases as of year-end 2011 was approximately $1.1 billion.

• In March 2012, the Safeway Board of Directors increased the authorized level of Safeway’s stock repurchase program by $1.0 billion to a total of $9.0 billion.

• On April 26, 2012, Safeway announced that during the first quarter of 2012, it had purchased 46.0 million shares of its common stock at an average cost of $21.70 per share and a total cost of $1.0 billion. The remaining board authorization for stock repurchases was $1.1 billion. In addition, from the end of the first quarter of 2012 through April 25, 2012, Safeway had purchased 10.6 million shares of its common stock at an average cost of $20.78 per share and a total cost of $219.5 million.

ANNUAL FINANCIAL DATA

Note: Financial information contained in this section is not comprehensive and should be read in conjunction with Safeway’s reports and filings with the SEC.

(1) 2011 earnings per share has been adjusted to exclude a tax expense of $98.9 million from the $1.1 billion Canadian dividend paid in the first half of 2011. See Reconciliations at the end of this Fact Book.

(2) 2009 has been adjusted to exclude a non-cash goodwill impairment charge of $1,974.2 million ($1,818.2 million, net of tax). In addition, “weighted average shares outstanding – diluted” includes common stock equivalents of 1.2 million for the calculation of diluted earnings per share, as adjusted. Reported diluted loss per share excluded common stock equivalents since they are anti-dilutive. See Reconciliations at the end of this Fact Book.

(3) Defined as stores operating the same period in both the current year and the previous year. Excludes replacement stores. 2008 is based on a comparable 53-week period in 2007.

(4) Management believes this ratio is relevant because it assists investors in evaluating the ability of Safeway to control costs.

(5) Defined as cash flow from operating activities as adjusted for the increase or decrease in payables related to third-party gift cards, net of receivables, less cash flow used by investing activities. A reconciliation of cash flow calculated under generally accepted accounting principles (“GAAP”) to free cash flow is located under Reconciliations at the end of this Fact Book.

(Dollars in millions, except per-share amounts)

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52 Weeks 2011

Adjusted (1)52 Weeks

2010

52 Weeks 2009

Adjusted (2)53 Weeks

200852 Weeks

2007

Sales and other revenue $43,630.2 $41,050.0 $40,850.7 $44,104.0 $42,286.0

Fuel sales $4,596.6 $3,187.9 $2,688.7 $3,885.2 $3,487.8

Sales and other revenue, excluding fuel $39,033.6 $37,862.1 $38,162.0 $40,218.8 $38,798.2

Identical-store sales (3) 4.4% (0.7%) (5.0%) 1.4% 4.1%

Identical-store sales (ex-fuel) (3) 1.0% (2.0%) (2.5%) 0.8% 3.4%

Cost of goods sold $31,836.5 $29,442.5 $29,157.2 $31,589.2 $30,133.1

Gross profit $11,793.7 $11,607.5 $11,693.5 $12,514.8 $12,152.9

Gross profit margin 27.03% 28.28% 28.62% 28.38% 28.74%

Gross profit margin change (bps) (125) (34) 24 (36) (8)

Gross profit margin change, ex-fuel (bps) (45) (7) (35) (26) 12

LIFO expense (income) $35.1 ($28.0) ($35.2) $34.9 $13.9

Operating & administrative expense $10,659.1 $10,448.1 $10,348.0 $10,662.1 $10,380.8

O&A expense margin (4) 24.43% 25.45% 25.33% 24.17% 24.55%

Operating profit $1,134.6 $1,159.4 $1,345.5 $1,852.7 $1,772.1

Operating profit margin 2.6% 2.8% 3.3% 4.2% 4.2%

Interest expense $272.2 $298.5 $331.7 $358.7 $388.9

Other income, net $19.7 $20.3 $7.1 $10.6 $20.4

Income before income taxes $882.1 $881.2 $1,020.9 $1,504.6 $1,403.6

Net income attributable to Safeway, Inc. $516.7 $589.8 $720.7 $965.3 $888.4

Diluted earnings per share (1, 2) $1.78 $1.55 $1.74 $2.21 $1.99

Weighted average shares outstanding - diluted (2) 343.8 379.6 414.1 436.3 445.7

Cash dividends declared per common share $0.555 $0.46 $0.3828 $0.3174 $0.2645

Depreciation expense $1,148.8 $1,162.4 $1,171.2 $1,141.1 $1,071.2

Cash capital expenditures $1,094.7 $837.5 $851.6 $1,595.7 $1,768.7

Free cash flow (5) $751.4 $1,057.8 $1,490.3 $681.0 $420.0

Total assets $15,073.6 $15,148.1 $14,963.6 $17,484.7 $17,651.0

Total debt $5,410.2 $4,836.3 $4,901.7 $5,499.8 $5,655.1

Total equity $3,689.1 $4,997.7 $4,946.4 $6,786.2 $6,701.8

Debt/total capital 59.5% 49.2% 49.8% 44.8% 45.8%

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26

QUARTERLY FINANCIAL DATA

(Dollars in millions)

Q1 Q2 Q3 Q4

Sales & other revenue

2011 $9,772.0 $10,196.4 $10,064.3 $13,597.6

2010 $9,327.1 $9,519.5 $9,399.6 $12,803.7

2009 $9,236.4 $9,462.1 $9,458.3 $12,693.9

Fuel sales

2011 $936.5 $1,167.4 $1,099.6 $1,393.2

2010 $649.5 $728.4 $760.8 $1,049.2

2009 $504.5 $620.7 $712.4 $851.1

Sales & other revenue, excluding fuel

2011 $8,835.5 $9,029.0 $8,964.7 $12,204.4

2010 $8,677.6 $8,791.1 $8,638.8 $11,754.5

2009 $8,731.9 $8,841.4 $8,745.9 $11,842.8

Identical-store sales

2011 3.5% 5.1% 4.9% 4.0%

2010 (1.4%) (1.2%) (1.4%) 0.8%

2009 (3.4%) (2) (6.3%) (2) (6.4%) (4.0%)

Identical-store sales (ex-fuel)

2011 0.4% 0.5% 1.5% 1.5%

2010 (3.1%) (2.5%) (2.0%) (0.8%)

2009 0.2% (1) (2.2%) (1) (3.0%) (4.1%)

Cost of goods sold

2011 $7,080.9 $7,443.4 $7,347.1 $9,965.2

2010 $6,677.5 $6,801.8 $6,755.0 $9,208.2

2009 $6,583.5 $6,730.6 $6,784.2 $9,058.9

Gross profit

2011 $2,691.1 $2,753.0 $2,717.2 $3,632.4

2010 $2,649.6 $2,717.7 $2,644.6 $3,595.5

2009 $2,652.9 $2,731.5 $2,674.1 $3,635.0

Gross profit margin

2011 27.5% 27.0% 27.0% 26.7%

2010 28.4% 28.5% 28.1% 28.1%

2009 28.7% 28.9% 28.3% 28.6%

LIFO expense (income)

2011 $4.0 $9.0 $8.4 $13.7

2010 $0.0 $0.0 $0.0 ($28.0)

2009 $1.4 ($1.4) $0.0 ($35.2)

O&A expense

2011 $2,471.9 $2,476.0 $2,468.9 $3,242.3

2010 $2,435.1 $2,432.5 $2,402.2 $3,178.4

2009 $2,371.4 $2,373.9 $2,396.0 $3,206.7

See Footnotes on p. 28.

27



Q1 Q2 Q3 Q4

O&A expense margin

2011 25.3% 24.3% 24.5% 23.8%

2010 26.1% 25.6% 25.6% 24.8%

2009 25.7% 25.1% 25.3% 25.3%

Operating profit

2011 $219.2 $277.0 $248.3 $390.1

2010 $214.5 $285.2 $242.4 $417.1

2009 (adj.) (2) $281.5 $357.6 $278.1 $428.3

Operating profit margin

2011 2.2% 2.7% 2.5% 2.9%

2010 2.3% 3.0% 2.6% 3.3%

2009 (adj.) (2) 3.0% 3.8% 2.9% 3.4%

Interest expense

2011 $65.7 $61.5 $60.7 $84.3

2010 $69.7 $69.2 $69.4 $90.2

2009 $78.2 $77.2 $78.3 $98.0

Other income, net

2011 $3.7 $3.4 $8.7 $3.9

2010 $3.3 $2.4 $4.8 $9.9

2009 $1.2 $3.3 $1.5 $1.1

Income before income taxes

2011 $157.2 $218.9 $196.3 $309.7

2010 $148.1 $218.4 $177.8 $336.8

2009 (adj.) (2) $204.5 $283.7 $201.3 $331.4

Net income attributable to Safeway Inc.

2011 $25.1 $145.8 $130.2 $215.6

2010 $96.0 $141.3 $122.8 $229.6

2009 (adj.) (2) $144.2 $238.6 $128.8 $209.1

Diluted EPS

2011 (adj.) (1) $0.29 $0.41 $0.38 $0.67

2010 $0.25 $0.37 $0.33 $0.62

2009 (adj.) (1) $0.34 $0.57 $0.31 $0.53

Weighted average shares outstanding – diluted

2011 366.8 352.3 343.0 321.6

2010 390.0 385.7 376.8 370.0

2009 (adj.) (2) 429.2 422.3 411.9 398.2

Cash dividends declared per common share

2011 $0.1200 $0.1450 $0.1450 $0.1450

2010 $0.1000 $0.1200 $0.1200 $0.1200

2009 $0.0828 $0.1000 $0.1000 $0.1000 25FIN

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See Footnotes on p. 28.

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Q1 Q2 Q3 Q4

Depreciation expense

2011 $265.1 $263.9 $265.3 $354.5

2010 $269.0 $269.6 $267.5 $356.3

2009 $264.4 $268.3 $270.4 $368.1

Cash capital expenditures

2011 $185.1 $209.0 $288.4 $412.2

2010 $192.6 $192.1 $170.7 $282.1

2009 $243.5 $202.1 $157.2 $248.8

Adjusted EBITDA (rolling four fiscal quarters) (3)

2011 $2,424.0 $2,419.4 $2,425.7 $2,424.5

2010 $2,562.7 $2,491.8 $2,451.6 $2,425.2

2009 $3,031.5 $2,933.9 $2,835.7 $2,621.3

Interest coverage (rolling four fiscal quarters) (3)

2011 8.2x 8.4x 8.7x 8.9x

2010 7.9x 7.9x 8.0x 8.1x

2009 8.6x 8.4x 8.2x 7.9x

Free cash flow (3, 4)

2011 (5) $111.6 $4.5 $167.5 $467.8

2010 ($58.4) $330.0 $383.3 $402.9

2009 ($186.7) $595.8 $455.7 $625.5

Total debt

2011 $4,860.6 $4,963.2 $5,048.3 $5,410.2

2010 $5,409.6 $5,349.7 $5,291.8 $4,836.3

2009 $5,728.4 $5,427.9 $5,368.1 $4,901.7

Total equity

2011 $4,881.1 $4,678.7 $4,570.4 $3,689.1

2010 $5,017.0 $4,970.2 $4,876.5 $4,997.7

2009 $6,783.4 $6,938.8 $6,959.4 $4,946.4

Debt/total capital

2011 49.9% 51.5% 52.5% 59.5%

2010 51.9% 51.8% 52.0% 49.2%

2009 45.8% 43.9% 43.5% 49.8%

Stock price range

2011 $20.44 - $22.94 $21.90 - $25.43 $16.51 - $24.28 $15.93 - $21.37

2010 $20.91 - $25.41 $20.53 - $27.04 $18.73 - $21.91 $19.89 - $24.00

2009 $17.19 - $24.25 $18.98 - $21.73 $17.87 - $21.15 $19.15 - $23.63


(1) Q1 and Q2 2009 reflect the Easter holiday shift.

(2) Q4 2009 has been adjusted to exclude a non-cash goodwill impairment charge of $1,974.2 million ($1,818.2 million, net of tax). In addition, “weighted average shares outstanding – diluted” includes common stock equivalents of 1.5 million for the calculation of diluted earnings per share, as adjusted. Reported diluted loss per share excluded common stock equivalents since they are anti-dilutive. See Reconciliations at the end of this Fact Book.

(3) Reconciliations of net income and net cash flow from operating activities to adjusted EBITDA and GAAP cash flow to free cash flow are located under “Reconciliations” later in this Fact Book.

(4) Defined as cash flow from operating activities as adjusted for the increase or decrease in payables related to third-party gift cards, net of receivables, less cash flow used by investing activities.

(5) In Q2 2011, free cash flow was reduced by $153.9 million of contributions to pension and post-retirement plans and approximately $99 million of taxes paid on Canadian dividends.

29

BOARD OF DIRECTORS

Steven A. BurdChairman and Chief Executive OfficerSafeway Inc.

T. Gary Rogers Lead Independent DirectorFormer Chairman and CEO Dreyer’s Grand Ice Cream, Inc.Former ChairmanLevi Strauss & Co.Former ChairmanFederal Reserve Bank of San Francisco

Janet E. GroveFormer Chair and Chief Executive OfficerMacy’s Merchandising GroupFormer Vice ChairMacy’s, Inc.

Mohan GyaniVice ChairmanRoamware, Inc.Former President and Chief Executive OfficerAT&T Wireless Mobility Services, Inc.

Paul Hazen (1)

Former Chairman and Chief Executive OfficerWells Fargo & Co.

Frank C. HerringerChairman and Former Chief Executive OfficerTransamerica Corporation

Kenneth W. OderManaging Member Sugar Hollow LLCFormer Executive Vice PresidentSafeway Inc.

Arun SarinFormer Chief Executive Officer Vodafone Group PLc.

Michael S. ShannonManaging DirectorKSL Capital Partners LLC

William Y. TauscherChief Executive OfficerBlackhawk Network Holdings, Inc.Managing MemberThe Tauscher Group

EXECUTIVE OFFICERS

Steven A. BurdChairman and Chief Executive Officer

Robert L. Edwards President and Chief Financial Officer

Diane M. Dietz Executive Vice President and Chief Marketing Officer

Bruce L. EveretteExecutive Vice PresidentRetail Operations

Larree M. Renda Executive Vice President

David F. BondSenior Vice PresidentFinance and Control (Chief Accounting Officer)

David T. ChingSenior Vice PresidentChief Information Officer

Robert A. Gordon Senior Vice PresidentSecretary and General CounselChief Governance Officer

Russell M. JacksonSenior Vice PresidentHuman Resources

Melissa C. PlaisanceSenior Vice PresidentFinance and Investor Relations

David R. SternSenior Vice PresidentPlanning and Business Development

Jerry TidwellSenior Vice PresidentSupply Operations

Donald P. WrightSenior Vice PresidentReal Estate and Engineering

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(1) Did not stand for re-election at the May 15, 2012 Annual Meeting of Stockholders.

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DIRECTORS & EXECUTIVE OFFICERS

30

1926 Merrill Lynch forms a holding company and acquires

the assets of Safeway Stores, Inc. The new company is

incorporated in Maryland.

At year end, Safeway is operating 766 stores and is one

of the first companies to offer cash-and-carry service.

1928M.B. Skaggs becomes President of Safeway Stores, Inc.

Safeway makes numerous acquisitions in Washington,

D.C., Virginia and Maryland; others in Arkansas, Iowa,

Kansas, Missouri and Texas.

Total store count at year end is 2,020, of which 855

contain meat markets.

Safeway stock is listed on the NYSE.

1929Canada Safeway Limited is established in Winnipeg.

1931Safeway Stores, Inc. merges with 1,400-store MacMarr

chain.

Company reaches all-time high of 3,257 stores.

1934Skaggs relinquishes presidency to Lingan A. Warren.

1955Warren retires as President and Director. Robert A.

Magowan, who gives operational autonomy to Safeway

divisions, leaves Merrill Lynch to become Chairman.

Milton A. Selby is President, a post he would later

relinquish to Magowan.

1962Company begins operating 11 stores of John Gardner

Ltd. to establish roots in the United Kingdom.

1963Safeway enters the Australian market by purchasing

three Pratt Supermarkets in the Melbourne area.

1964Safeway establishes operations in another international

market with the acquisition of several Big Bear Basar

stores in West Germany.

1966Central data processing is located in Oakland, CA.

Quentin Reynolds, who steers Safeway through an era

of turbulent social upheaval, follows Robert Magowan

as President.

1971Safeway divests itself of Super S drug stores after

several unprofitable years.

Robert Magowan steps down as Chairman and Chief

Executive Officer; Reynolds assumes both posts. William

S. Mitchell, under whose administration Safeway passes

A&P to become the world’s largest food retailer, follows

Reynolds as President. Magowan stays on as Chairman

of the Executive Committee.

1977Dale L. Lynch succeeds Mitchell as President of

Safeway and spearheads Safeway’s move into one-stop

shopping superstores that feature a variety of specialty

departments.

Safeway consolidates its manufacturing divisions in a

modern Walnut Creek, CA, complex.

1980Peter A. Magowan, who revises Safeway’s strategy and

redirects its merchandising thrust, succeeds Mitchell as

Chairman and Chief Executive Officer.

1981Safeway enters into a joint venture agreement with

Casa Ley, S.A. de C.V., giving Safeway a 49% interest in

the 13-store chain in Western Mexico.

SIGNIFICANT CORPORATE EVENTS

30

CORPORATE HISTORY

1982Omaha division is sold.

1983James A. Rowland succeeds Lynch as President.

San Diego and Los Angeles divisions merge to form

Southern California Division; Tulsa and Oklahoma City

divisions are combined to form Oklahoma Division.

1985Australia Division is sold to Woolworth’s Ltd. Safeway

receives a 20% interest in Woolworth’s Ltd.

1986Company is taken private via a leveraged buyout

by Kohlberg Kravis Roberts & Co. (“KKR”) and

reincorporates in Delaware.

Robert MacDonnell, Henry Kravis and George Roberts,

General Partners of KKR, are elected to the Safeway

Board of Directors.

Safeway sells its 20% interest in Australian retailer

Woolworth’s Ltd.

1987Company divests United Kingdom, Dallas, Salt Lake City,

Liquor Barn, El Paso and Oklahoma divisions.

James Greene, Jr. and Michael Tokarz, General Partners

of KKR, are elected to Safeway’s Board of Directors.

1988Rowland retires. Peter Magowan assumes additional

title of President.

Company divests Kansas City, Little Rock, Houston

and parts of Richmond divisions.

Safeway sells Southern California Division to The Vons

Companies, Inc. Safeway receives a 30% interest in

Vons, in addition to cash proceeds.

1990Safeway returns to public status, selling 46.0 million

shares in a public offering.

Company announces five-year, $3.2 billion capital

expenditure program.

New company name adopted: Safeway Inc.

Paul Hazen, President and Chief Operating Officer

of Wells Fargo & Co., and a member of its board, is

elected to the Safeway Board of Directors.

1991Safeway sells an additional 70.0 million shares of

common stock at $5.125 per share.

Safeway retires $565 million of 14.5% LBO-related debt

with a combination of cash and bank debt.

1992Safeway completes refinancing of $1.0 billion of public

subordinated debt.

Steven A. Burd, a long-time consultant to Safeway,

is appointed President. Peter Magowan remains as

Chairman and Chief Executive Officer.

1993Peter Magowan steps down as Chief Executive Officer

but continues to serve as Chairman of the Board.

Burd is elected Chief Executive Officer and becomes a

member of the Safeway Board of Directors.

Safeway sells 15 stores in the Richmond, VA area to

Farm Fresh, Inc.

1994Safeway retires $292 million of senior and senior

subordinated debt in open-market purchases with

proceeds from bank borrowings.

1995Safeway refinances its Bank Credit Agreement on an

unsecured basis and regains investment grade status on

its senior unsecured debt from Standard & Poor’s.

1996A two-for-one stock split is effected on January 30.

Safeway moves its corporate offices to Pleasanton, CA

from Oakland, CA.

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Safeway Inc. and Vons jointly announce a definitive

agreement for a business combination of the two

companies.

In connection with the Vons merger, Safeway agrees

to repurchase 64 million shares of common stock from

partnerships controlled by KKR.

1997On April 8, Safeway completes the acquisition of Vons.

The combined company is the second largest grocery

store chain in North America, with 1,377 stores and

sales in excess of $22 billion.

1998A two-for-one stock split is effected on February 25.

Peter Magowan, Chairman of the Board, retires

but remains a director. Steven A. Burd is appointed

Chairman of the Board.

William Tauscher, Chairman and Chief Executive Officer

of Vanstar Corporation, is elected to the Safeway Board

of Directors.

Safeway Inc. and Carr-Gottstein Foods Co. jointly

announce a definitive merger agreement.

Safeway Inc. and Dominick’s Supermarkets, Inc. jointly

announce a definitive merger agreement, and on

November 20, Safeway completes the acquisition of

Dominick’s Supermarkets, Inc..

Safeway is added to the S&P 500 on November 12.

1999On April 16, Safeway completes the acquisition of Carr-

Gottstein Foods Co.

Rebecca Stirn, Vice President, Sales and Marketing of

Collagen Aesthetics, Inc., is elected to Safeway’s Board

of Directors.

Safeway and Randall’s Food Markets, Inc. jointly

announce a definitive merger agreement.

Safeway completes the acquisition of Randall’s.

2000Safeway announces it has joined ten of the world’s

leading retailers as a founding member of the

Worldwide Retail Exchange, a web-based business-to-

business exchange for retailers operating in the food,

general merchandise and drug retailing sectors.

Hector Ley Lopez, General Director of Casa Ley, S.A.

de C.V., is elected to Safeway’s Board of Directors,

replacing Henry Kravis of KKR.

Safeway and GroceryWorks.com sign a definitive

agreement creating a strategic alliance between the

two companies for GroceryWorks.com to be Safeway’s

online grocery channel.

Safeway and Genuardi’s Family Markets, Inc. announce

a definitive agreement in which Safeway will purchase

the assets of Genuardi’s.

2001On February 5, Safeway completes the purchase of the

assets of Genuardi’s Family Markets, Inc.

Safeway purchases 11 ABCO stores in Arizona from the

Fleming Companies, Inc.

GroceryWorks.com, Safeway’s exclusive online

grocery channel, establishes a strategic relationship

with Tesco PLC.

Blackhawk Network, Inc., Safeway’s prepaid and gift

card business, is established.

In the months following September 11, Safeway

mobilizes the retail operating divisions across the

U.S. and Canada in a fundraising campaign to

benefit the American Red Cross Disaster Relief Fund.

Approximately $4 million is raised, largely through

customer and employee contributions.

Pantone® 340CMYK 100-0-74-0RGB 0-153-102Hex 009966

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2002GroceryWorks.com (doing business as Safeway.com)

formally launches Internet grocery service in Portland,

OR and Vancouver, WA. GroceryWorks.com becomes

available in Northern California, Southern California

and Las Vegas, NV.

Safeway purchases five stores in Houston from

Albertsons and three stores in Dallas from Winn-Dixie.

Safeway plans to sell Dominick’s and exit the

Chicago market.

Safeway completes centralization of the marketing

and procurement functions.

2003Seven locals of the United Food and Commercial

Workers Union strike 289 Vons stores in Southern

California on October 11.

Safeway takes Dominick’s off the market because

the union and the winning bidder could not reach

agreement on an acceptable labor contract.

2004Safeway announces it will declassify the Board of

Directors beginning in 2005.

Safeway announces closure of 12 underperforming

Dominick’s stores.

Southern California strike ends on February 28.

Robert L. Edwards joins Safeway as Executive Vice

President and Chief Financial Officer.

Brian C. Cornell joins Safeway as Executive Vice

President and Chief Marketing Officer.

Safeway announces corporate governance

enhancements. Major changes include a commitment

to replace three board members before year end

and the election of Paul Hazen as Lead Independent

Director.

During the second half of 2004, Safeway closes 18

underperforming stores in the Vons Division.

In October, Safeway announces the appointments

of Mohan Gyani, former President and Chief Executive

Officer of AT&T Wireless Mobility Group, and Janet

Grove, Chair and Chief Executive Officer of Federated

Merchandising Group and Corporate Vice Chair of

Federated Department Stores, Inc., to the Board of

Directors. They replace retiring board members George

Roberts and James Greene, Jr. In December, Safeway

announces the appointment of Raymond G. Viault,

retired Vice Chairman of General Mills, to the Board

of Directors to replace retiring board member Hector

Ley Lopez.

2005Peter Magowan retires from the Safeway Board of

Directors.

Safeway announces the appointment of Douglas

Mackenzie, a partner at venture capital firm Kleiner

Perkins Caufield & Byers, to Safeway’s Board of

Directors.

Safeway launches the “Ingredients for life.®” branding

campaign at the NYSE to reposition the Safeway brand.

Safeway announces a plan to revitalize the

Texas Division, including the closure of 26

underperforming stores.

2006Safeway amends bylaws to establish a majority vote

standard for the election of directors.

Safeway receives the Catalyst Award for the

outstanding diversity initiative that results in the

development and advancement of women and

women of color.

On October 3, 2006, Safeway announces the purchase

of the remaining 43.8% of the equity interests in the

parent company of GroceryWorks.com it did not already

own, making GroceryWorks.com an indirect, wholly

owned subsidiary.

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On October 5, 2006, Blackhawk announces its

acquisition of EWI Holdings, a provider of prepaid

payment processing technology.

Safeway establishes guidelines for stock ownership

by executive officers to further link the interests of

executives and stockholders.

Safeway adopts a policy on severance agreements

specifying that Safeway will not enter into any

severance agreement with an executive officer that

provides severance benefits in excess of 2.99 times

that executive’s most recent salary plus bonus, without

stockholder approval.

Safeway joins the Chicago Climate Exchange, making

a voluntary but legally binding commitment to reduce

greenhouse gas emissions by 6% over four years.

Safeway also becomes a voluntary member of the

California Climate Action Registry, the state’s official

registry for Greenhouse Gas emissions reduction

projects, and takes action to reduce Safeway’s carbon

footprint and reduce air pollution.

Blackhawk establishes a United Kingdom office and

enters the market with the gift card business.

2007Safeway announces a plan to revitalize the Dominick’s

Division, including remodeling 20 stores, opening one

new store and closing 14 underperforming stores

in 2007.

Safeway wins California’s Flex Your Power Award for

energy conservation.

Safeway receives the California Governor’s

Environmental and Economic Leadership Award for

Safeway’s strong initiatives in promoting green business

practices and implementing significant environmental

initiatives.

Safeway celebrates the opening of the 1,000th

Lifestyle store.

Blackhawk expands the gift card program to Australia.

Safeway unveils the first solar-powered grocery store

in Dublin, CA and announces plans to convert 39

additional stores as part of a broader renewable energy

initiative.

2008Safeway announces the formation of the Better Living Brands™ Alliance to market O Organics™ and Eating Right® products across all retail channels in the U.S. and select channels internationally.

Safeway announces the appointments of Frank C.

Herringer, Chairman and former Chief Executive Officer

of Transamerica Corporation, and Kenneth W. Oder,

Managing Member, Sugar Hollow LLC and Former

Executive Vice President of Safeway, to Safeway’s Board

of Directors.

Diane M. Dietz joins Safeway as Executive Vice President

and Chief Marketing Officer.

Steven Burd receives the U.S. Department of Labor’s

2008 SPIRIT Award for his leadership in furthering

employment and workplace opportunities for people

with disabilities.

Safeway is named one of “America’s Healthiest Grocery

Stores” by Health magazine.

2009Safeway is among the “World’s Most Ethical

Companies” as awarded by the Ethisphere Institute.

In November, Safeway opens a store in Santa Cruz, CA

that is a model for the green retail grocery. It is built

from the ground up with sustainability in mind, and in

accordance with the gold certification standards set by

Leadership in Energy and Environmental Design (LEED).

Safeway announces the appointment of Arun Sarin,

former Chief Executive Officer of Vodaphone Group

PLC, and Michael S. Shannon, founder of KSL Recreation

Group, KSL Resorts and KSL Capital Partners LLC, to

Safeway’s Board of Directors.

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Douglas J. Mackenzie does not stand for re-election

to the Safeway Board of Directors in May 2009, but

remains on Blackhawk’s board.

In September, Safeway is added to the Dow Jones

Sustainability Index North America.

Safeway receives the Champion of Diversity Award

from Supermarket News for the second year in a row.

2010In January, Safeway announces that it will work with FishWise, a non-profit organization focused on improving the sustainability and financial performance of seafood retailers, distributors, and producers, to develop and implement a more comprehensive sustainable seafood policy.

In March, Safeway announces that it is the first U.S.-based retail grocery chain and manufacturer of private label merchandise to join The Sustainability Consortium in support of a more sustainable global supply chain.

Robert I. MacDonnell, Rebecca A. Stirn and Raymond G. Viault do not stand for re-election to the Safeway Board of Directors in May 2010.

Safeway raises or donates more than $2.6 million for the victims of the Haiti earthquake.

In September, Safeway is named to the Dow Jones Sustainability Index North America for the second year in a row.

Safeway introduces the just for U™ personalized pricing and digital coupon campaign in select markets.

2011Safeway announces the appointment of T. Gary Rogers,

former Chairman of the Board and Chief Executive

Officer of Dreyer’s Grand Ice Cream, Inc., to the Safeway

Board of Directors.

Safeway announces the SimpleNutrition program, an in-

store shelf tag system that makes it easier for shoppers to

make better nutrition choices on food and beverages.

Safeway receives the 2011 Freeman Philanthropic

Services Award for Outstanding Corporation by the

Association of Fundraising Professionals.

Greenpeace ranks Safeway number one among the

top 20 grocery retailers on the sustainability of seafood

practices.

Safeway is a recipient of the Waste Reduction Award Program for the 13th consecutive year.

2012Robert L. Edwards is named President. Steven A.

Burd remains Chairman and Chief Executive Officer.

Larree M. Renda, Executive Vice President, assumes

additional responsibilities for real estate and information

technology.

Paul Hazen does not stand for re-election to the Safeway

Board of Directors in May 2012.

Safeway is among the “World’s Most Ethical Companies”

as awarded by the Ethisphere Institute.

Safeway is ranked number one and is one of the first

to earn a “green” or “good” rating among top grocery

retailers on the sustainability of seafood practices by

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Annual Fiscal Year

2011 2010 2009 2008 2007

Net cash flow from operating activities $2,023.6 $1,849.7 $2,549.7 $2,250.9 $2,190.5

Net cash flow used by investing activities (1,014.5) (798.8) (889.0) (1,546.0) (1,686.4)

(Increase) decrease in payables related to third-party gift cards, net of receivables (293.6) 6.9 (170.4) (23.9) (84.1)

Investments and business acquisitions 35.9 - - - -

Free cash flow $751.4 $1,057.8 $1,490.3 $681.0 $420.0

Annual Fiscal Year

2011 2010 2009

Net income (loss) attributable to Safeway Inc. $516.7 $589.8 ($1,097.5)

Add (subtract):

Income taxes 363.9 290.6 144.2

Interest expense 272.2 298.5 331.7

Depreciation expense 1,148.8 1,162.4 1,171.2

LIFO expense (income) 35.1 (28.0) (35.2)

Share-based employee compensation expense 50.0 55.5 61.7

Property impairment charges 44.7 71.7 73.7

Goodwill impairment charge - - 1,974.2

Equity in earnings of unconsolidated affiliate (13.0) (15.3) (8.5)

Dividend received from unconsolidated affiliate 6.1 - 5.8

Total Adjusted EBITDA $2,424.5 $2,425.2 $2,621.3

Adjusted EBITDA as a multiple of interest expense 8.9x 8.1x 7.9x

Annual Fiscal Year

2011 2010 2009

Net cash flow from operating activities $2,023.6 $1,849.7 $2,549.7

Add (subtract):

Income taxes 363.9 290.6 144.2

Interest expense 272.2 298.5 331.7

Deferred income taxes 63.7 31.3 142.1

Net pension and post-retirement benefits expense (114.3) (125.2) (140.1)

Contributions to pension and post-retirement benefit plans 176.2 17.7 24.4

(Increase)/decrease in accrued claims and other liabilities (23.2) (36.2) 34.3

Gain/(loss) on property dispositions and lease exit activities 65.6 27.5 (12.7)

Changes in working capital items (385.8) 67.9 (426.7)

Other (17.4) 3.4 (25.6)

Total Adjusted EBITDA $2,424.5 $2,425.2 $2,621.3

Adjusted EBITDA as a multiple of interest expense 8.9x 8.1x 7.9x

Reconciliation of GAAP Cash Flow Measure to Free Cash Flow (in millions)*

Reconciliation of Net Income (Loss) Attributable to Safeway Inc. to Adjusted EBITDA (Interest Coverage) (dollars in millions)

Reconciliation of Net Cash Flow from Operating Activities to Adjusted EBITDA (Interest Coverage) (dollars in millions)

* 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.

36

RECONCILIATIONS

2011 Q1 Q2 Q3 Q4

Net cash flow (used) provided by operating activities $(60.0) $247.6 $523.3 $1,312.7

Net cash flow used by investing activities (188.4) (216.9) (339.1) (270.1)

Decrease (increase) in payables related to third-party gift cards, net of receivables 360.0 (26.2) (16.7) (610.7)

Investments and business acquisitions - - - 35.9

Free cash flow $111.6 $4.5 $167.5 $467.8

2010 Q1 Q2 Q3 Q4



Decrease (increase) in payables related to third-party gift cards, net of receivables 376.3 (20.2) 2.8 (352.0)

Free cash flow $(58.4) $330.0 $383.3 $402.9

2009 Q1 Q2 Q3 Q4



Decrease (increase) in payables related to third-party gift cards, net of receivables 217.1 (30.9) 18.8 (375.4)

Free cash flow $(186.7) $595.8 $455.7 $625.5

Fiscal Year 2011

Diluted EPS

As reported $1.49

Tax charge on Canadian dividend 0.29

Excluding tax charge on Canadian dividend $1.78

Reconciliation of GAAP Cash Flow Measure to Free Cash Flow (in millions)*

Reconciliation of 2011 Diluted Earnings Per Share as Reported to Diluted Earnings Per Share Excluding the Tax Charge on Canadian Dividend

Reconciliations which Adjust 2009 Financial Results for Goodwill Impairment Charge (in millions, except percents and per share amounts)

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* 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.

* Represents the tax deduction from the impairment of goodwill that arose from taxable asset acquisitions, tax-affected at Safeway’s incremental rate of 38.6%. 37

Fourth Quarter 2009 Fiscal Year 2009

% of sales % of sales

Sales and other revenue, as reported $12,693.9 $40,850.7

Operating loss, as reported $(1,545.9) (12.2%) $(628.7) (1.5%)

Add goodwill impairment charge 1,974.2 15.6% 1,974.2 4.8%

Operating income, as adjusted $428.3 3.4% $1,345.5 3.3%

Pre-tax loss, as reported $(1,642.8) $(953.3)

Add goodwill impairment charge 1,974.2 1,974.2

Pre-tax income, as adjusted $331.4 $1,020.9

Net loss attributable to Safeway Inc., as reported $(1,609.1) $(1,097.5)

Add goodwill impairment charge 1,974.2 1,974.2

Less tax benefit from goodwill impairment charge* (156.0) (156.0)

Net income, excluding goodwill impairment charge $209.1 $720.7

Diluted loss per share attributable to Safeway Inc., as reported $(4.06) $(2.66)

Less goodwill impairment charge per diluted share, net of tax 4.59 4.40

Diluted earnings per share, excluding goodwill impairment charge $0.53 $1.74

Weighted average shares outstanding used for diluted loss per share, as reported 396.7 412.9

Add common shares equivalents 1.5 1.2

Weighted average shares outstanding used for diluted earnings per share, excluding goodwill impairment charge 398.2 414.1

38

Q1 (A+B-C) Rolling Four Quarters Ended March 26, 2011

A Year Ended

January 1, 2011

B 12 Weeks Ended

March 26, 2011

C 12 Weeks Ended

March 27, 2010

Net income attributable to Safeway Inc. $518.9 $589.8 $25.1 $96.0

Add (subtract):

Income taxes 370.4 290.6 132.1 52.3

Interest expense 294.5 298.5 65.7 69.7

Depreciation expense 1,158.5 1,162.4 265.1 269.0

LIFO (income) expense (24.0) (28.0) 4.0 -

Share-based employee compensation 52.3 55.5 10.9 14.1

Property impairment charges 61.4 71.7 7.1 17.4

Equity in earnings of unconsolidated affiliates, net (14.1) (15.3) (1.8) (3.0)

Dividend received from unconsolidated affiliate 6.1 - 6.1 -

Total Adjusted EBITDA $2,424.0 $2,425.2 $514.3 $515.5

Adjusted EBITDA as a multiple of interest expense 8.2x

Q2 (A+B-C) Rolling Four Quarters

Ended June 18, 2011

A Year Ended

January 1, 2011

B 24 Weeks Ended

June 18, 2011

C 24 Weeks Ended

June 19, 2010


Add (subtract):

Income taxes 366.1 290.6 204.9 129.4








Total Adjusted EBITDA $2,419.4 $2,425.2 $1,090.9 $1,096.7


Q3 (A+B-C) Rolling Four Quarters Ended Sept. 10, 2011

A Year Ended

January 1, 2011

B 36 Weeks Ended

Sept. 10, 2011

C 36 Weeks Ended

Sept. 11, 2010


Add (subtract):

Income taxes 377.1 290.6 271.0 184.5










2011 Reconciliation of Net Income Attributable to Safeway Inc. to Adjusted EBITDA (dollars in millions)

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March 26, 2011

A Year Ended

January 1, 2011

B 12 Weeks Ended

March 26, 2011

C 12 Weeks Ended

March 27, 2010

Net cash flow provided (used) by operating activities $2,031.7 $1,849.7 ($60.0) ($242.0)

Add (subtract):

Income taxes 370.4 290.6 132.1 52.3


Amortization of deferred finance costs (4.8) (4.8) (1.1) (1.1)

Excess tax benefit from exercise of stock options 1.5 1.6 0.4 0.5

Deferred income taxes 90.3 31.3 59.0 -

Net pension and post-retirement benefit expense (121.1) (125.2) (25.7) (29.8)

Contributions to pension and post-retirement plans 19.9 17.7 6.6 4.4

Accrued claims and other liabilities (45.1) (36.2) (25.3) (16.4)

Gain (loss) on property retirements and lease exit activities 39.9 27.5 1.4 (11.0)


Changes in working capital items (258.9) 67.9 365.5 692.3

Other (0.4) 6.6 (10.4) (3.4)



June 18, 2011

A Year Ended

January 1, 2011

B 24 Weeks Ended

June 18, 2011

C 24 Weeks Ended

June 19, 2010

Net cash flow provided by operating activities $1,728.2 $1,849.7 $187.6 $309.1

Add (subtract):

Income taxes 366.1 290.6 204.9 129.4








Gain (loss) on property retirements and lease exit activities 41.4 27.5 (0.1) (14.0)


Other (0.8) 6.6 (7.3) 0.1



Sept. 10, 2011

A Year Ended

January 1, 2011

B 36 Weeks Ended

Sept. 10, 2011

C 36 Weeks Ended

Sept 11, 2010


Add (subtract):

Income taxes 377.1 290.6 271.0 184.5








Gain (loss) on property retirements and lease exit activities 23.3 27.5 (2.8) 1.4


Other (2.2) 6.6 (9.0) (0.2)


2011 Reconciliation of Net Cash Flow from Operating Activities to Adjusted EBITDA (dollars in millions)

40

Q1 (A+B-C) Rolling Four Quarters Ended March 27, 2010

A Year Ended

2009

B 12 Weeks Ended

March 27, 2010

C 12 Weeks Ended March 28, 2009

Net (loss) income attributable to Safeway Inc. ($1,145.7) ($1,097.5) $96.0 $144.2

Add (subtract):

Income taxes 136.2 144.2 52.3 60.3



Goodwill impairment charge 1,974.2 1,974.2 - -

LIFO (income) expense (36.6) (35.2) - 1.4




Dividend received from unconsolidated affiliate 5.8 5.8 - -




Ended June 19, 2010

A Year Ended

2009

B 24 Weeks Ended

June 19, 2010

C 24 Weeks Ended

June 20, 2009

Net (loss ) income attributable to Safeway Inc. ($1,243.0) ($1,097.5) $237.3 $382.8

Add (subtract):

Income taxes 168.2 144.2 129.4 105.4




LIFO income (35.2) (35.2) - -








A Year Ended

2009

B 36 Weeks Ended

Sept. 11, 2010

C 36 Weeks Ended

Sept. 12, 2009

Net (loss) income attributable to Safeway Inc. ($1,249.0) ($1,097.5) $360.1 $511.6

Add (subtract):

Income taxes 150.8 144.2 184.5 177.9




LIFO income (35.2) (35.2) - -







2010 Reconciliation of Net (Loss) Income Attributable to Safeway Inc. to Adjusted EBITDA (dollars in millions)

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Q1 (A+B-C) Rolling Four

Quarters Ended March 27, 2010

A Year Ended

2009

B 12 Weeks Ended

March 27, 2010



Add (subtract):

Income taxes 136.2 144.2 52.3 60.3


Deferred income taxes 145.5 142.1 - (3.4)



Accrued claims and other liabilities 15.6 34.4 (16.4) 2.4

Loss on property retirements and lease exit activities (17.4) (12.7) (11.0) (6.3)

Changes in working capital items (355.8) (426.7) 692.3 621.4

Other (29.2) (25.6) (4.0) (0.4)




Quarters Ended June 19, 2010

A Year Ended

2009

B 24 Weeks Ended

June 19, 2010

C 24 Weeks Ended

June 20, 2009


Add (subtract):

Income taxes 168.2 144.2 129.4 105.4





Accrued claims and other liabilities 2.2 34.4 (29.4) 2.8

Loss on property retirements and lease exit activities (13.1) (12.7) (14.0) (13.6)


Other (11.5) (25.6) (1.4) (15.5)




Quarters Ended Sept. 11, 2010

A Year Ended

2009

B 36 Weeks Ended

Sept. 11, 2010

C 36 Weeks Ended

Sept. 12, 2009

Net cash flow provided by operating activities $2,109.0 $2,549.7 $846.6 $1,287.3

Add (subtract):

Income taxes 150.8 144.2 184.5 177.9





Accrued claims and other liabilities 0.2 34.4 (38.5) (4.3)

Gain (loss) on property retirements and lease exit activities 7.5 (12.7) 1.4 (18.8)


Other (8.3) (25.6) (2.8) (20.1)




42


Ended March 28, 2009

A Year Ended

2008

B 12 Weeks Ended March 28, 2009



Add (subtract):

Income taxes 476.0 539.3 60.3 123.6



LIFO expense 30.9 34.9 1.4 5.4



Equity in (earnings) losses of unconsolidated affiliates, net (0.5) 2.5 (0.2) 2.8



Q2 (A+B-C) Rolling Four Quarters Ended June 20, 2009

A Year Ended

2008

B 24 Weeks Ended

June 20, 2009

C 24 Weeks Ended

June 14, 2008


Add (subtract):

Income taxes 383.5 539.3 105.4 261.2



LIFO expense 21.7 34.9 - 13.2







A Year Ended

2008

B 36 Weeks Ended

Sept. 12, 2009

C 36 Weeks Ended

Sept. 6, 2008


Add (subtract):

Income taxes 343.7 539.3 177.9 373.5



LIFO expense 11.7 34.9 - 23.2






2009 Reconciliation of Net Income Attributable to Safeway Inc. to Adjusted EBITDA (dollars in millions)

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Quarters Ended March 28, 2009

A Year Ended

2008

B 12 Weeks Ended March 28, 2009



Add (subtract):

Income taxes 476.0 539.3 60.3 123.6


Deferred income taxes (168.7) (171.7) (3.4) (6.4)


Contributions to pension and post-retirement benefit plans 33.3 42.5 6.5 15.7

Accrued claims and other liabilities (10.2) (21.1) 2.4 (8.5)

Gain (loss) on property retirements and lease exit activities 12.2 19.0 (6.3) 0.5

Changes in working capital items 305.0 226.0 621.4 542.4

Other (1.4) (0.5) (0.4) 0.5




Quarters Ended June 20, 2009

A Year Ended

2008

B 24 Weeks Ended

June 20, 2009

C 24 Weeks Ended

June 14, 2008


Add (subtract):

Income taxes 383.5 539.3 105.4 261.2





Accrued claims and other liabilities (3.9) (21.1) 2.8 (14.4)



Other (14.1) (0.5) (15.5) (1.9)




Quarters Ended Sept. 12, 2009

A Year Ended

2008

B 36 Weeks Ended

Sept. 12, 2009

C 36 Weeks Ended

Sept. 6, 2008

Net cash flow provided by operating activities $2,253.4 $2,250.9 $1,287.3 $1,284.8

Add (subtract):

Income taxes 343.7 539.3 177.9 373.5








Other (16.6) (0.5) (20.1) (4.0)




NOTES

44

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