2013 Fact Book Finals

2013 Fact Book

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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 2012 Annual Report on Form 10-K,

quarterly reports on Form 10-Q and current

reports on Form 8-K, and therefore does not

include the companys consolidated financial

statements and notes.

The majority of the information in this Fact

Book is based on fiscal year 2012 data unless

otherwise noted.

Safeway believes that the information

contained in this Fact Book is correct in all

material respects as of April 2013. However,

such information is subject to change.

ABOUT THE SAFEWAY FACT BOOK

Investor Information 2

Safeway at a Glance 3

Retail Operations 4

Loyalty Marketing 9

Consumer Brands 10

Finance & Administration 12

Financial & Operating Statistics 18

Directors & Executive Officers 25

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 Safeways 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 Safeways reports filed with the Securities and Exchange Commission.

SAFEWAY 2013 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

2012 Data: 239.5 million common shares outstanding as of December 29, 2012

245.9 million weighted average shares outstanding (diluted)

$164 million cash paid for dividends on common stock

$1.3 billion cash paid for common stock repurchases

Year-end 2012: 171,000

Year-end 2011: 178,000

Year-end 2010: 180,000

At year-end 2012, almost 80% of our employees

were covered by collective bargaining agreements.

BOND INFORMATION (As of April 2013)

Floating Rate Senior Notes due December 2013

5.625% Senior Notes due August 2014

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

2012, Safeway operated 1,641 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, Inc.

(Blackhawk), we provide prepaid gift cards, other

prepaid products and payment services to consumers

through a network of retail store locations in the

United States and 18 other countries as well as various

online channels. Blackhawk is publicly traded under the

symbol HAWK.

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

C.V., which at year-end 2012 operated 195 food and

general merchandise stores in western Mexico.

ABOUT US

STORES BY DIVISION

Randalls Tom Thumb

112

Carrs

Alberta 96

Denver 136

Dominicks72

Eastern127

Texas/Randalls

Tom Thumb110

Southern California/

Vons277

NorthernCalifornia

268

Vancouver 72

Winnipeg 55

Phoenix 115

Casa Ley195

Northwest (incl. Carrs)

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SAFEWAY AT A GLANCE

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OVERVIEW

Safeways 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 and weekly

promotions through our Club Card and just for U

program. 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. Safeways store employees

also deliver superior service to customers.

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

At year-end 2012, approximately 82% of Safeways

stores were 35,000 square feet or larger.

Store Count by State / Province as of December 29, 2012:

Percentage of Stores with Specialty Departments and Fuel Stations as of December 29, 2012:

Departments: %

Deli 99%

Floral 98%

Bakery 95%

Seafood 81%

Pharmacy 79%

Starbucks 71%

Fuel Stations 25%

United States: Canada Provinces:

Alaska 28 Alberta 93

Arizona 114 British Columbia 75

California 506 Manitoba 33

Colorado 115 Ontario 6

District of Columbia 13 Saskatchewan 16

Delaware 4

Hawaii 20

Idaho 6

Illinois 72

Maryland 65

Montana 12

Nebraska 5

Nevada 19

New Jersey 1

New Mexico 4

Oregon 99

Pennsylvania 1

South Dakota 3

Texas 110

Virginia 43

Washington 168

Wyoming 10

Total U.S. 1,418 Total Canada 223

Total U.S. & Canada 1,641

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Stores by Operating Area as of December 29, 2012:

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

Less Than 35,000 Sq. Ft. Total Stores

Chicago (Dominicks) 70 2 72

Denver 120 16 136

Eastern 114 13 127

Northern California (includes HI) 204 64 268

Northwest (Carrs in AK) 265 48 313

Phoenix 109 6 115

Southern California (Vons/Pavilions) 206 71 277

Texas (Randalls/Tom Thumb) 99 11 110

Total U.S. 1,187 231 1,418

Canadian Operating Areas:

Alberta 76 20 96

Vancouver 47 25 72

Winnipeg 40 15 55

Total Canada 163 60 223

Total U.S. & Canada 1,350 291 1,641

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

Chicago (Dominicks)

Jewel (Cerberus) Walmart Supercenter, Meijer, Aldi, Costco, Sams Club, Whole Foods

Denver (Safeway)

King Soopers (Kroger), Albertsons (Cerberus)

Walmart Supercenter, Sams Club, Costco, Whole Foods, Target

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

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

Costco, BJs Wholesale Club, Wegmans, Whole Foods, Walmart Supercenter, Harris Teeter

Northern California includes HI (Safeway)

Lucky (SaveMart), Raleys, Nob Hill (Raleys)

Walmart, Costco, WinCo Foods, Whole Foods, Trader Joes

Northwestincludes AK (Safeway/Carrs)

Fred Meyer (Kroger), Albertsons (Cerberus), Quality Food Centers (Kroger)

WinCo Foods, Walmart Supercenter, Costco, Haggen

Phoenix (Safeway)

Frys (Kroger), Albertsons (Cerberus), Bashas

Walmart Supercenter, Costco, Sams Club

Southern California (Vons/Pavilions)

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

Walmart Supercenter, Costco, Whole Foods, Trader Joes

Texas (Randalls/Tom Thumb)

Kroger, Albertsons (Cerberus), H.E. Butt Walmart Supercenter, Sams Club, Costco, Fiesta Mart, Target

PRIMARY COMPETITORS

Safeway Canadian Operating Areas: Primary Conventional: Other:

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

Real Canadian Superstore (Loblaw), Costco, Walmart

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

Real Canadian Superstore (Loblaw), Costco, Walmart

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

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

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Note: Over 3% weighted market share.

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DISTRIBUTION

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

Chicago (Dominicks) Northlake, IL 932,000

Denver Denver, CO 1,232,000

Eastern Collington, MD 915,000

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

Northwest (includes Carrs in AK) Auburn, WAClackamas, OR Spokane, WA Anchorage, AK

1,208,000 798,000292,000 233,000

Phoenix Tempe, AZ 788,000

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

788,000 442,000

Vancouver* Vancouver, British Columbia 426,000

Winnipeg Winnipeg, Manitoba 427,000

Total Canada 2,083,000

Total U.S. & Canada 14,025,000

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 Safeways 11 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

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 29, 2012:

The principal function of Safeways 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 13% of

Safeways private label merchandise is manufactured in

company-owned plants, and the remainder is purchased

from third parties.

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Sign showing our fuel partnership with Chevron in our Southern California (Vons) Division.

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LOYALTY MARKETING

LOYALTY MARKETING

In addition to providing value through our Everyday Low

prices and weekly Club Card specials, we offer personalized

savings through our proprietary just for U program. Just

for U gives shoppers digital coupons and deals on items they

regularly buy in our stores, and we make it easy to access

just for U through desktop computers and our Safeway App

for tablets and smart phones.

Our Gas Reward Points program enhances the loyalty of

our customers by offering additional savings at the pump.

Customers can earn Reward Points through eligible grocery,

gift card and pharmacy item purchases. In addition to our

Safeway-branded fuel stations, customers are now able

to redeem their Reward Points at participating Chevron,

Texaco, Exxon and Mobil locations.

Our in-store pharmacies further enhance loyalty by

continually engaging our shoppers with relevant offers

throughout the year on immunizations and prescription

refills. Our pharmacies also create loyalty by offering

convenience for our customers. Our pharmacists not only

fill scripts, but also offer value to our customers through

patient consulting. Safeway was one of the first retailers to

offer immunizations, and we recently announced a smoking

cessation program through an alliance with the UCSF School

of Pharmacy.

Our engagement on social media platforms such as

Facebook, Twitter and Pinterest continues to grow and has

developed a loyal following, including bloggers who have

encouraged their fans to try our loyalty programs.

Pharmacist helping a customer at our newly designed pharmacy counter.

Safeways 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 20 categories, offering over 400 items such as milk, cheese, sour cream, cottage cheese, ice cream and eggs. About 70% of Lucernes portfolio is now rBST free.

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 delivers 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, frozen entrees, hors doeuvres, pastas and sauces, olive oils, freshly baked artisan breads, whole bean coffees and desserts. Currently, there are over 1,000 items in 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 BBQ pork ribs. It also offers a variety of meals, which we reformulated and repackaged in 2009, thereby providing even more meal solutions for todays 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 80 items.

CONSUMER BRANDS

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CONSUMER BRANDS

Through our Ranchers 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 140 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 Lilly 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 rounds out the portfolio with baby products created by moms, for moms and their babies. Products include essentials of baby care from diapers, baby wipes, toiletries, lotions, infant formula and toddler fruit pouches. Every item was developed with that special mothers touch to help make those first

years of parenting just a little bit easier.

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. With carefully balanced ingredients and targeted nutrition for a variety of needs, Eating Right makes it easy for our shoppers to eat whats right for them. The line includes over 100 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 44 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 450 skus made with 100% natural ingredients from natural sources, with nothing artificial added. Open Nature is Safeways 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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Build Lifestyle BrandsCreating a portfolio that appeals to all shoppers & needs

through 15 well positioned brandsTop Consumer Brands

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 2012, we opened nine

new stores and completed four Lifestyle remodels.

These stores showcase Safeways 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 2012, 1,449 stores, or 88% of the store base,

were Lifestyle stores.

At year-end 2012, Safeway owned approximately 45%

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 Safeways real estate core competency.

PDC completed several projects in 2012, and with many

more under development, PDC is expected to generate

value for Safeway.

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FINANCE & ADMINISTRATION

Georgetown Store

2012 2011 2010 2009 2008

Total stores at beginning of year 1,678 1,694 1,725 1,739 1,743

Stores opened: New Replacement

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Total 9 25 14 8 20

Stores closed(1) 46 41 45 22 24

Total stores at year end 1,641 1,678 1,694 1,725 1,739

Remodels completed (2): Lifestyle remodels Other remodels

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Total remodels 12 29 67 92 253

Number of fuel stations at year end 407 400 393 388 382

Total retail square footage at year end (in millions) 77.6 79.2 79.2 80.1 80.4

Cash capital expenditures (in millions) $927.6 $1,094.7 $837.5 $851.6 $1,595.7

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

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

Five-Year History of Capital Expenditure Program

(1) In 2012, the company disposed of 25 Genuardis stores.

(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 Safeways 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 We believe a diverse workforce leads to better

teamwork, increased productivity, creative thinking and

innovation - which help us achieve business priorities.

Safeways view of diversity is all-inclusive and covers

the many ways employees may be different, including

an individuals 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 more than

171,000 employees of which almost 80% 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.

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, Safeways

training and development programs are designed to

provide individuals with a solid foundation to perform

their best in their current position, while preparing

them for future opportunities. Safeway provides entry-

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

job training. Areas of concentration include: customer

service, technical skills, product knowledge, 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 Strong store management is essential to the success

of Safeway. Our store managers are a significant group

of leaders who are responsible for running our daily

operations. Potential management personnel are selected

from high-performing assistant store managers, store

employees, qualified external store managers and other

outside candidates. Store manager candidates are given

in-depth training on leadership, strategy, store operations,

report analysis and financial business acumen. We also

offer leadership programs to help managers move from

front line supervision to mid-level management and

executive leadership. Managers receive developmental

feedback, which helps them focus on strengthening their

competencies to excel in their roles.

Safeway developed a military recruiting program to

hire and train junior military officers after they return

from active duty. The Safeway retail management

development program prepares Safeways 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-theartcorporatefitnesscenterand discounts at local fitness centers;

ahealthclinicatcorporateheadquarters; anonlinetoolthathelpsmakehealthcarecosts transparent; and

CareConnect,aservicetoprovideemployeesand their 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 number 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. Safeways 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 non-union employees

and several multi-employer pension plans.

Stock Ownership A payroll deduction plan allows employees at all levels

to buy Safeway stock commission-free. Safeways 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 make a real, positive difference in the neighborhoods

we serve. We are committed to Creating better lives,

vibrant neighborhoods, and a healthier planet. We

focus our corporate social responsibility (CSR) efforts

on four key areas: People, Products, Community and

Planet, as described below. 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 offer a selection of healthy

products and services. In addition, our pharmacies

offer prescription-filling, immunizations, travel

medicines, medication therapy management,

point-of-care screening and health-related advice,

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.

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.

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Supplier Diversity Program

Our supplier diversity program provides business

opportunities for minority-, women-, LGBT- and service-

disabled, veteran-owned businesses 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.

Supply Chain Transparency

Beginning in 2011, we engaged our suppliers to

address human trafficking and collaborate on finding

solutions to any identified issues. Approximately 900

Safeway employees have successfully completed training

regarding the prevention of human trafficking in

business operations and supply chains.

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. In May of 2012, Safeway announced

progress toward gestation stall-free pork supply

chain. In December, Safeway became the first major

grocery retailer in the United States to make a national

commitment to offer Certified Humane cage-free eggs.

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. In addition,

Safeway launched its Safeway brand skipjack

(chunk-light) canned tuna that is responsibly caught

using free-school purse-seine methods.

Food Safety & Packaging

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.

Our innovations in packaging, such as reducing the

weight of our refreshe 500 ml water bottles and use

of Reusable Plastic Containers (RPCs) to ship produce,

instead of cardboard boxes, have helped us reduce

our carbon footprint. In 2011, 8.6 million RPCs were

used, which eliminated 17 million pounds of cardboard

packaging. In 2012, over 16.9 million RPCs were used.

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 2012, our employees achieved

one million volunteer hours logged for the second

consecutive year.

The major areas of support for both Safeway

and The Safeway Foundation are: hunger relief,

education, health and human services, and people

with special needs.

Hunger Relief

In 2012, Safeway and The Safeway Foundation

donated nearly $120 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.

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report greenhouse gas emissions into a single registry. In

2012, 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. Currently five

of our manufacturing plants and 11 of our distribution

centers are zero waste facilities.

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. In addition, Safeway actively

monitors water use and looks for fluctuations in

consumption that may indicate a leak.

Improving Efficiencies in our Supply Chain

Transporting our products to over 1,600 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. Two one-megawatt

wind turbines at our Tracy, California distribution center

are projected to provide 15% of the power needs of

the facility.

Designing Stores Sustainably

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 Councils

Leadership in Energy and Environmental Design (LEED)

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

several projects in the LEED certification process.

Health and Human Services

Safeway and The Safeway Foundation support a wide

array of cutting-edge cancer research at some of North

Americas top cancer centers. Safeway and The Safeway

Foundation are among the largest corporate supporters

in the research and prevention of breast and prostate

cancer. In 2013, we expect to exceed the $200 million

milestone in the amount of money raised and donated

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 $128 million for the benefit of Easter

Seals programs which we have supported for over

25 years. Since 2008, we have raised over $9 million

to the Special Olympics. Since we began, Safeway

and The Safeway Foundation raised approximately

$65 million for the Muscular Dystrophy Association

(MDA), a national voluntary health agency dedicated to

conquering more than 40 neuromuscular diseases.

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

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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 $1.15 billion unsecured bank credit agreement that was to mature in the year 2000 and had two one-year extension options.

In May 1995, Standard & Poors (S&P) upgraded Safeways 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 KKRs ownership of Safeway to approximately 51%.

In September 1996, S&P upgraded Safeways 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 of Vons common stock that Safeway did not currently own. Safeway owned approximately 35% of Vons.

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

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FINANCIAL & OPERATING STATISTICS

1997 In January 1997, Moodys upgraded Safeways

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, Moodys upgraded Safeways 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 KKRs 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 KKRs 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 Dominicks Supermarkets, Inc. jointly announced a definitive merger agreement pursuant to which Safeway would acquire all outstanding shares of Dominicks for $49.00 cash per share and repay approximately $560 million of Dominicks debt and lease obligations.

On November 9, 1998, Safeway issued $1.4 billion of senior debt associated with the acquisition of Dominicks. 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 KKRs ownership stake to approximately 13%.

On November 20, 1998, Safeway completed the acquisition of Dominicks 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 KKRs ownership

stake to approximately 9%. In connection with the

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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 Randalls Food Markets, Inc. jointly announced a definitive merger agreement pursuant to which Safeway would acquire all the outstanding shares of Randalls for a total consideration of $1.3 billion and repay approximately $403 million of Randalls debt.

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




On September 14, 1999, Safeway completed the acquisition of Randalls 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 Safeways 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 Randalls 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 Safeways online grocery channel.

On December 5, 2000, Safeway and Genuardis Family Markets, Inc. jointly announced a definitive agreement pursuant to which Safeway would acquire the assets of Genuardis 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 Genuardis acquisition.

On February 5, 2001, Safeway completed the purchase of the assets of Genuardis 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, Safeways 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 Safeways 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, Safeways Board of Directors increased the authorized level of Safeways 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 Safeways stock repurchase program by $1.0 billion to $3.5 billion.

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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 Dominicks 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 Dominicks 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 rate 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 Safeways 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 Safeways 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 Safeways 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 Safeways 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 Dominicks, 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, Safeways 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 Safeways BBB- credit rating and revised the outlook to Positive from Stable.

On August 1, 2007, Moodys Investor Services affirmed Safeways 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 Safeways credit and senior unsecured ratings to BBB with a Stable

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

In May 2008, Safeways 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 Safeways 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 Safeways U.S. commercial paper program, revolving credit facility and money market bank credit facilities.


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 Safeways 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 Safeways 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 Safeways 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 boards 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 Safeways 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 Genuardis stores, located in the eastern United States. Additionally, Safeway announced that it planned to close or sell the remaining Genuardis stores. These transactions were completed during 2012 with cash proceeds of $107.0 million and a pre-tax gain of $52.4 million ($31.9 million after tax).

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 Safeways 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.

On May 15, 2012, the Safeway Board of Directors approved a 21% increase in the quarterly dividend from $0.145 per share to $0.175 per share.

On September 5, 2012, Safeway announced a potential initial public offering of a minority ownership stake in Blackhawk Network Holdings, Inc. in the first half of 2013.

2013 On February 21, 2013, Safeway announced that in

2012 it had repurchased 57.6 million shares of its common stock at an average cost of $21.51 per share and a total cost of approximately $1.2 billion. The remaining board authorization for stock repurchases as of year-end 2012 was approximately $0.8 billion.

On April 19, 2013, Safeways subsidiary Blackhawk Network Holdings, Inc. began trading on NASDAQ under the symbol HAWK. The initial public offering of 11.5 million shares of Blackhawks Class A common stock at $23.00 per share included the exercise by the underwriters for the offering of an option to purchase 1.5 million shares of Class A common stock. The offering consisted solely of shares offered by existing stockholders, including Safeway. Safeways estimated proceeds were approximately $155 million, net of taxes, the underwriting discount and professional service fees, reducing the Companys ownership from approximately 95% to approximately 73% of Blackhawks total outstanding shares of common stock.

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BOARD OF DIRECTORS

Steven A. Burd (1)Chairman and Chief Executive OfficerSafeway Inc.

T. Gary Rogers (2)Lead Independent DirectorFormer Chairman and CEO Dreyers Grand Ice Cream, Inc.Former ChairmanLevi Strauss & Co.Former ChairmanFederal Reserve Bank of San Francisco

Janet E. GroveFormer Chair and Chief Executive OfficerMacys Merchandising GroupFormer Vice ChairMacys, Inc.

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

Frank C. HerringerChairman and Former Chief Executive OfficerTransamerica Corporation

George J. Morrow (4)Consultant and FormerExecutive Vice PresidentAmgen, Inc.

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

Arun SarinFormer Chief Executive Officer Vodafone Group PLc.

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

EXECUTIVE OFFICERS

Steven A. Burd (1)Chairman and Chief Executive Officer

Robert L. Edwards (2)President

Peter J. Bocian (3) Executive Vice President and Chief Financial Officer

Diane M. Dietz Executive Vice President and Chief Marketing Officer

Kelly P. GriffithExecutive Vice PresidentRetail Operations

Larree M. Renda Executive Vice President

David F. BondSenior Vice PresidentFinance and Control (Chief Accounting 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 EngineeringChief Executive OfficerProperty Development Centers LLC

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(1) Mr. Burd will retire as Chief Executive Officer and as a director at the May 14, 2013 Annual Meeting of Stockholders.

(2) Effective May 15, 2013, Mr. Rogers will become Non-Executive Chairman of the Board. Mr. Edwards will become President, CEO and a director.

(3) Mr. Bocian joined the company as Executive Vice President and Chief Financial Officer effective February 19, 2013.

(4) Mr. Morrow is standing for election at the May 14, 2013 Annual Meeting of Stockholders.

DIRECTORS & EXECUTIVE OFFICERS

26

ANNUAL FINANCIAL DATA

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

(1) Defined as stores operating in the same period in both the current year and the prior year, comparing sales on a daily basis. Stores that are open during remodeling are included in ID Sales. Internet sales are included in ID Sales if the store fulfilling the orders is included in the ID Sales calculation. 2008 is based on a comparable 53-week period in 2007.

(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) 2011 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.

(4) 2012 has been adjusted to exclude a gain of $46.5 million ($28.8 million, net of tax) from legal settlements.

(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.

(6) Total equity in 2008 through 2011 has been increased $26.2 million due to a correction in the accounting for real estate taxes.

(Dollars in millions, except per-share amounts)

52 Weeks 2012

Adjusted

52 Weeks 2011

Adjusted 52 Weeks

2010

52 Weeks 2009

Adjusted53 Weeks

2008

Sales and other revenue $44,206.5 $43,630.2 $41,050.0 $40,850.7 $44,104.0

Fuel sales $4,974.2 $4,596.6 $3,187.9 $2,688.7 $3,885.2

Sales and other revenue, excluding fuel $39,232.3 $39,033.6 $37,862.1 $38,162.0 $40,218.8

Identical-store sales (1) 1.2% 4.4% (0.7%) (5.0%) 1.4%

Identical-store sales (ex-fuel) (1) 0.5% 1.0% (2.0%) (2.5%) 0.8%

Cost of goods sold $32,486.5 $31,836.5 $29,442.5 $29,157.2 $31,589.2

Gross profit $11,720.0 $11,793.7 $11,607.5 $11,693.5 $12,514.8

Gross profit margin 26.51% 27.03% 28.28% 28.62% 28.38%

Gross profit margin change (bps) (52) (125) (34) 24 (36)

Gross profit margin change, ex-fuel (bps) (22) (45) (7) (35) (26)

LIFO expense (income) $0.7 $35.1 ($28.0) ($35.2) $34.9

Operating & administrative expense (2) $10,615.9 $10,659.1 $10,448.1 $10,348.0 $10,662.1

O&A expense margin (2) 24.01% 24.43% 25.45% 25.33% 24.17%

Operating profit (2) $1,104.1 $1,134.6 $1,159.4 $1,345.5 $1,852.7

Operating profit margin (2) 2.5% 2.6% 2.8% 3.3% 4.2%

Interest expense $304.0 $272.2 $298.5 $331.7 $358.7

Other income, net $28.3 $19.7 $20.3 $7.1 $10.6

Income before income taxes (2) $828.4 $882.1 $881.2 $1,020.9 $1,504.6

Income (loss) from continuing operations, as reported $566.2 $518.2 $590.6 ($1,097.5) $965.3

Income from continuing operations, as adjusted $537.4 $617.1 $590.6 $720.7 $965.3

Diluted earnings (loss) per common share from continuing operations, as reported $2.27 $1.49 $1.55 ($2.66) $2.21

Diluted earnings per common share from continuing operations, as adjusted (2, 3, 4) $2.15 $1.78 $1.55 $1.74 $2.21

Weighted average shares outstanding - diluted (2) 245.9 343.8 379.6 414.1 436.3

Cash dividends declared per common share $0.670 $0.555 $0.46 $0.3828 $0.3174

Depreciation expense $1,134.3 $1,148.8 $1,162.4 $1,171.2 $1,141.1

Cash capital expenditures $927.6 $1,094.7 $837.5 $851.6 $1,595.7

Free cash flow (5) $971.3 $751.4 $1,057.8 $1,490.3 $681.0

Total assets $14,657.0 $15,073.6 $15,148.1 $14,963.6 $17,484.7

Total debt $5,573.7 $5,410.2 $4,836.3 $4,901.7 $5,499.8

Total equity (6) $2,933.4 $3,715.3 $5,023.9 $4,972.6 $6,812.4

Debt/total capital 65.5% 59.3% 49.0% 49.6% 44.7%

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QUARTERLY FINANCIAL DATA

(Dollars in millions)

Q1 Q2 Q3 Q4

Sales & other revenue

2012 $10,003.0 $10,386.9 $10,049.1 $13,767.4

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

Fuel sales

2012 $1,096.5 $1,282.9 $1,147.5 $1,447.3

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

2010 $649.5 $728.4 $760.8 $1,049.2

Sales & other revenue, excluding fuel

2012 $8,906.5 $9,104.0 $8,901.6 $12,320.1

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

Identical-store sales

2012 1.6% 1.8% 0.5% 1.0%

2011 3.5% 5.1% 4.9% 4.0%

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

Identical-store sales (ex-fuel)

2012 0.0% 0.8% 0.1% 0.8%

2011 0.4% 0.5% 1.5% 1.5%

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

Cost of goods sold

2012 $7,317.8 $7,657.9 $7,392.2 $10,118.6

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

Gross profit

2012 $2,685.2 $2,729.0 $2,656.9 $3,648.8

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

Gross profit margin

2012 26.84% 26.27% 26.44% 26.50%

2011 27.54% 27.00% 27.00% 26.71%

2010 28.41% 28.55% 28.14% 28.08%

LIFO expense (income)

2012 $0.5 $0.1 $1.0 ($0.9)

2011 $4.0 $9.0 $8.4 $13.7

2010 $0.0 $0.0 $0.0 ($28.0)

O&A expense

2012 $2,495.4 $2,481.8 $2,438.6 $3,200.0

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

O&A expense margin

2012 24.95% 23.89% 24.27% 23.24%

2011 25.30% 24.28% 24.53% 23.84%

2010 26.11% 25.55% 25.56% 24.82%

See Footnotes on p. 29.

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Q1 Q2 Q3 Q4

Operating profit

2012 $189.8 $247.2 $218.3 $448.8

2011 $219.2 $277.0 $248.3 $390.1

2010 $214.5 $285.2 $242.4 $417.1

Operating profit margin

2012 1.90% 2.38% 2.17% 3.26%

2011 2.24% 2.72% 2.47% 2.87%

2010 2.30% 3.00% 2.58% 3.26%

Interest expense

2012 $71.4 $73.5 $71.3 $87.7

2011 $65.7 $61.5 $60.7 $84.3

2010 $69.7 $69.2 $69.4 $90.2

Other income, net

2012 $5.3 $3.9 $10.6 $8.5

2011 $3.7 $3.4 $8.7 $3.9

2010 $3.3 $2.4 $4.8 $9.9

Income before income taxes

2012 $123.7 $177.6 $157.6 $369.6

2011 $157.2 $218.9 $196.3 $309.7

2010 $148.1 $218.4 $177.8 $336.8

Income from continuing operations, as reported

2012 $81.6 $121.7 $108.0 $255.0

2011 $25.1 $146.0 $130.3 $216.8

2010 $95.8 $141.3 $122.7 $230.7

Diluted earnings per common share from continuing operations, as reported

2012 $0.30 $0.50 $0.45 $1.06

2011 $0.07 $0.41 $0.38 $0.67

2010 $0.25 $0.37 $0.33 $0.62

Diluted earnings per common share from continuing operations, as adjusted

2012 (1) $0.30 $0.50 $0.45 $0.94

2011 (2) $0.29 $0.41 $0.38 $0.67

2010 $0.25 $0.37 $0.33 $0.62

Weighted average shares outstanding diluted

2012 271.9 239.8 237.1 237.3

2011 366.8 352.3 343.0 321.6

2010 390.0 385.7 376.8 370.0

Cash dividends declared per common share

2012 $0.1450 $0.1750 $0.1750 $0.1750

2011 $0.1200 $0.1450 $0.1450 $0.1450

2010 $0.1000 $0.1200 $0.1200 $0.1200

See Footnotes on p. 29.

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Q1 Q2 Q3 Q4

Depreciation expense

2012 $265.8 $262.9 $260.2 $345.4

2011 $265.1 $263.9 $265.3 $354.5

2010 $269.0 $269.6 $267.5 $356.3

Cash capital expenditures

2012 $308.4 $219.2 $159.6 $240.4

2011 $185.1 $209.0 $288.4 $412.2

2010 $192.6 $192.1 $170.7 $282.1

Adjusted EBITDA (rolling four fiscal quarters) (3)

2012 $2,386.0 $2,351.4 $2,386.0 $2,410.2

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

Interest coverage (rolling four fiscal quarters) (3)

2012 8.6x 8.1x 7.9x 7.9x

2011 8.2x 8.4x 8.7x 8.9x

2010 7.9x 7.9x 8.0x 8.1x

Free cash flow (3, 4)

2012 ($224.2) $200.1 $505.4 $490.0

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

2010 ($58.4) $330.0 $383.3 $402.9

Total debt

2012 $6,678.3 $6,901.7 $6,433.5 $5,573.7

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

Total equity (6)

2012 $2,787.1 $2,618.6 $2,813.0 $2,933.4

2011 $4,907.3 $4,704.9 $4,596.6 $3,715.3

2010 $5,043.2 $4,996.4 $4,902.7 $5,023.9

Debt/total capital

2012 70.6% 72.5% 69.6% 65.5%

2011 49.8% 51.3% 52.3% 59.3%

2010 51.8% 51.7% 51.9% 49.0%

Stock price range

2012 $20.20 - $23.16 $17.53 - $22.21 $14.73 - $18.31 $15.00 - $19.36

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


(1) Q4, 2012 has been adjusted to exclude a gain of $46.5 million from legal settlements.

(2) Q1, 2011 has been adjusted to exclude a tax expense of $80.2 million from the Canadian dividend.

(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.

(6) Total equity in 2008 through 2011 has been increased $26.2 million due to a correction in accounting for real estate taxes.

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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 worlds 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 Safeways 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 Safeways 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 Woolworths Ltd. Safeway

receives a 20% interest in Woolworths 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

Woolworths 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 Safeways 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.

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