2013 Fact Book

SAFEWAY 2013 FACT BOOK

ABOUT THE SAFEWAY FACT BOOK
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.

CONTENTS
Investor Information Safeway at a Glance Retail Operations Loyalty Marketing Consumer Brands Finance & Administration Financial & Operating Statistics Directors & Executive Officers Corporate History Reconciliations 2 3 4 9 10 12 18 25 30 36

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.

SA FEWAY 20 13 FA CT B OO K

INVESTOR INFORMATION
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

Stock symbol: SWY  Listed on New York Stock Exchange (NYSE)   ransfer Agent: T 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

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  6.35% Senior Notes due August 2017  5.00% Senior Notes due August 2019  3.95% Senior Notes due August 2020  4.75% Senior Notes due December 2021  7.45% Senior Debentures due September 2027  7.25% Senior Debentures due February 2031 

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

NUMBER OF EMPLOYEES

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.

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

 .00% Second Series Notes due March 2014 3 (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

SAFEWAY AT A GLANCE
ABOUT US
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.

STORES BY DIVISION

Carrs Vancouver 72 Alberta 96

Winnipeg 55 Dominicks 72

Northwest (incl. Carrs) 313 Northern California 268

Denver 136 Phoenix 115

Eastern 127

Southern California/ Vons 277

Randalls Texas/ Tom Thumb Randalls Tom112 Thumb 110

Casa Ley 195

SA FEWAY AT A G L ANCE

RETAIL OPERATIONS
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 Store Count by State / Province as of December 29, 2012: United States: Alaska Arizona California Colorado District of Columbia Delaware Hawaii Idaho Illinois Maryland Montana Nebraska Nevada New Jersey New Mexico Oregon Pennsylvania South Dakota Texas Virginia Washington Wyoming Total U.S. Total U.S. & Canada 28 114 506 115 13 4 20 6 72 65 12 5 19 1 4 99 1 3 110 43 168 10 1,418 Total Canada 223 1,641 Canada Provinces: Alberta British Columbia Manitoba Ontario Saskatchewan 93 75 33 6 16 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.

Percentage of Stores with Specialty Departments and Fuel Stations as of December 29, 2012: Departments: Deli Floral Bakery Seafood Pharmacy 4 Starbucks Fuel Stations % 99% 98% 95% 81% 79% 71% 25%

Stores by Operating Area as of December 29, 2012: U.S. Operating Areas: Chicago (Dominicks) Denver Eastern Northern California (includes HI) Northwest (Carrs in AK) Phoenix Southern California (Vons/Pavilions) Texas (Randalls/Tom Thumb) Total U.S. Canadian Operating Areas: Alberta Vancouver Winnipeg Total Canada Total U.S. & Canada 76 47 40 163 1,350 20 25 15 60 291 96 72 55 223 1,641 Greater Than 35,000 Sq. Ft. 70 120 114 204 265 109 206 99 1,187 Less Than 35,000 Sq. Ft. 2 16 13 64 48 6 71 11 231 Total Stores 72 136 127 268 313 115 277 110 1,418

R ETAI L O P ER AT IO NS

PRIMARY COMPETITORS
Safeway U.S. Operating Areas: (banner) Chicago (Dominicks) Denver (Safeway) Eastern (MD, VA, D.C.) (Safeway) Northern California includes HI (Safeway) Northwest includes AK (Safeway/Carrs) Phoenix (Safeway) Southern California (Vons/Pavilions) Texas (Randalls/Tom Thumb)
Note: Over 3% weighted market share.

Primary Conventional: Jewel (Cerberus) King Soopers (Kroger), Albertsons (Cerberus) Giant (Ahold), Food Lion (Delhaize), Shoppers Food Warehouse (SuperValu), A&P Lucky (SaveMart), Raleys, Nob Hill (Raleys) Fred Meyer (Kroger), Albertsons (Cerberus), Quality Food Centers (Kroger) Frys (Kroger), Albertsons (Cerberus), Bashas Albertsons (Cerberus), Ralphs, Food 4 Less (Kroger), Stater Bros. Kroger, Albertsons (Cerberus), H.E. Butt

Other: Walmart Supercenter, Meijer, Aldi, Costco, Sams Club, Whole Foods Walmart Supercenter, Sams Club, Costco, Whole Foods, Target Costco, BJs Wholesale Club, Wegmans, Whole Foods, Walmart Supercenter, Harris Teeter Walmart, Costco, WinCo Foods, Whole Foods, Trader Joes WinCo Foods, Walmart Supercenter, Costco, Haggen Walmart Supercenter, Costco, Sams Club Walmart Supercenter, Costco, Whole Foods, Trader Joes Walmart Supercenter, Sams Club, Costco, Fiesta Mart, Target

Safeway Canadian Operating Areas: Alberta Vancouver

Primary Conventional: Sobeys, Co-op, Save-on-Foods (Overwaitea) Save-on-Foods (Overwaitea), PriceSmart Foods (Overwaitea), Thrifty Foods (Sobeys) IGA (Sobeys), Extra Foods (Loblaw), Co-op

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

Winnipeg

DISTRIBUTION
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.

U.S. Operating Areas: Chicago (Dominicks) Denver Eastern Northern California (includes HI) Northwest (includes Carrs in AK)

Location: Northlake, IL Denver, CO Collington, MD Tracy, CA Auburn, WA Clackamas, OR Spokane, WA Anchorage, AK Tempe, AZ Santa Fe Springs, CA El Monte, CA Houston, TX Dallas, TX

Size (Sq. Ft.): 932,000 1,232,000 915,000 1,922,000 1,208,000 798,000 292,000 233,000 788,000 1,055,000 862,000 686,000 1,019,000 11,942,000

Phoenix Southern California (Vons/Pavilions) Texas (Randalls/Tom Thumb) Total U.S. Canadian Operating Areas: Alberta Vancouver* Winnipeg Total Canada Total U.S. & Canada

Location: Calgary, Alberta Edmonton, Alberta Vancouver, British Columbia Winnipeg, Manitoba

Size (Sq. Ft.): 788,000 442,000 426,000 427,000 2,083,000 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.

R ETAI L O P ER AT IO NS

MANUFACTURING
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.

Manufacturing and food processing facilities by type and location as of December 29, 2012: U.S. Milk plants Bakery plants Ice cream plants Cheese and meat packing plants Soft drink bottling plants Fruit and vegetable processing plants Cake commissary Sandwich commissary Total 6 6 2 4 1 1 20 Canada 3 2 2 1 3 1 12 Total 9 8 4 1 4 4 1 1 32

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 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.

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.

Pharmacist helping a customer at our newly designed pharmacy counter.

LO YALTY marketing

CONSUMER BRANDS
CONSUMER BRANDS
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.

 he Pantry Essentials brand features over 100 items that T 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.  he Deli Counter consists primarily of sliced deli meats, T cheeses and salads.

Core

Premium

 he Safeway brand is our largest Consumer Brand with T 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.  he Lucerne brand has been producing quality dairy T 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.  elaunched in the summer of 2010, refreshe has R 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.  he Snack Artist is our line of great-tasting, clever snacks, T 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.

 he award-winning Safeway SELECT brand is designed T 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.  ur Signature Cafe brand offers a variety of items in O 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.  he Primo Taglio brand is a full line of premium meats T 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.

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 hrough our Ranchers Reserve Tender Beef offering, T we believe we have developed a reputation for having the most tender and flavorful meat available in the market. n January 2009, we introduced waterfront BISTRO I a brand of over 140 seafood selections, entrees and complementary items that make preparing a restaurantquality 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.  ebi Lilly is another example of the solutions we provide D for our shoppers. With a line of unique bouquets, candles, vases and gifts, Debi Lilly continues to grow.

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.

 ating Right, our brand of products for health-conscious E 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.  he Bright Green brand of home care products was T 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 highefficiency light bulbs. n November 2010, Safeway introduced the Open I 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.

 om to Mom rounds out the portfolio with baby M 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

n December 2005, Safeway introduced the first of our I 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

Build Lifestyle Brands

Creating a portfolio that appeals to all shoppers & needs Top Consumer Brands through 15 well positioned brands

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CO NS UM ER BR AND S

FINANCE & ADMINISTRATION

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 earthtoned 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.

Georgetown Store

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Five-Year History of Capital Expenditure Program 2012 Total stores at beginning of year Stores opened: New Replacement Total Stores closed (1) Total stores at year end Remodels completed : Lifestyle remodels Other remodels Total remodels Number of fuel stations at year end Total retail square footage at year end (in millions) Cash capital expenditures (in millions) Cash capital expenditures as a percentage of sales and other revenue Average store size
(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.
(2)

2011 1,694 6 19 25 41 1,678 29 29

2010 1,725 3 11 14 45 1,694 60 7 67

2009 1,739 3 5 8 22 1,725 82 10 92

2008 1,743 8 12 20 24 1,739 232 21 253

1,678 4 5 9 46 1,641 4 8 12

407 77.6 $927.6

400 79.2 $1,094.7

393 79.2 $837.5

388 80.1 $851.6

382 80.4 $1,595.7

2.1% 47,000

2.5% 47,000

2.0% 46,700

2.1% 46,000

3.6% 46,000

TECHNOLOGY
The Safeway Information Technology (IT) department supports the business objectives of increasing sales, reducing costs and creating greater efciencies 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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FI NA NCE & ADM I NI ST RATI O N

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 entrylevel training using multi-media, mentors and on-thejob 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: a state-of-the art corporate fitness center and discounts at local fitness centers; a health clinic at corporate headquarters; an online tool that helps make health care costs transparent; and CareConnect, a service to provide employees and their families with the very best care for breast cancer, prostate cancer and heart disease at premier treatment centers nationwide.

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CORPORATE SOCIAL RESPONSIBILITY

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 selfdirected retirement funds in Safeway stock. 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. 21

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FI NA NCE & ADM I NI ST RATI O N

Supplier Diversity Program Our supplier diversity program provides business opportunities for minority-, women-, LGBT- and servicedisabled, 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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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 transparent standards to calculate, verify and publicly

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.

17

FI NA NCE & ADM I NI ST RATI O N

FINANCIAL & OPERATING STATISTICS

FINANCIAL TRANSACTION HISTORY (All share prices are split-adjusted) 1986

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

n 1986, Safeway was acquired and taken private via a I 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.  rom 1986 through 1988, Safeway closed or sold F approximately 1,000 stores and received proceeds of $2.4 billion, which were used to repay debt.

1994

 etired public debt totaling $292 million through open R market purchases, consisting of $44 million of senior debt and $248 million of senior subordinated debt.

1995

1989

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

1990

 n April 26, 1990, Safeway became a public company O once again by issuing 46 million shares at $2.81 per share, for net proceeds of approximately $120 million.

1991

n January 1995, Safeway acquired 31.8% of the I 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. n May 1995, Safeway entered into a $1.15 billion I unsecured bank credit agreement that was to mature in the year 2000 and had two one-year extension options. n May 1995, Standard & Poors (S&P) upgraded I Safeways unsecured senior debt to BBB-.

n April 1991, Safeway issued another 70 million I shares at $5.13 per share, for net proceeds of approximately $340 million.  1-16-91: Redeemed $565 million of 14.5% Junior 1 Subordinated Debentures.  1-20-91: Issued $300 million of 10.0% Senior 1 Subordinated Notes due 2001.  2-20-91: Redeemed $300 million of 11.75% Senior 1 Subordinated Notes.

1996

 ffective January 30, 1996, Safeway stock split E two-for-one.  n February 5, 1996, 45.9 million shares of Safeway O Inc. were sold to the public by KKR at $12.69 per share, reducing KKRs ownership of Safeway to approximately 51%. n September 1996, S&P upgraded Safeways I unsecured senior debt to BBB. n September and December 1996, Safeway acquired I an additional 13.8% of the limited partnership interests in SSI Equity Associates, L.P. for $127 million with proceeds from bank borrowings.  n December 16, 1996, Safeway Inc. and The Vons O Companies, Inc. jointly announced a denitive 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.

1992

 1-15-92: Issued $300 million of 9.65% Senior 0 Subordinated Debentures due 2004.  2-12-92: Issued $100 million of 9.3% Senior Secured 0 Debentures due 2007, secured by the distribution center in Tracy, CA.  2-24-92: Redeemed $300 million of 11.75% Senior 0 Subordinated Notes.  3-17-92: Issued $250 million of 9.35% Senior 0 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.  9-02-92: Filed a $240 million shelf registration. 0 Subsequently issued $80 million of Medium-Term Notes in 1992 with maturities ranging from three to ten years.

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1997

n January 1997, Moodys upgraded Safeways I unsecured senior debt to Baa3.  n April 8, 1997, Safeway completed the merger with O 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. n connection with the Vons merger, Safeway I repurchased 64.0 million shares of Safeway common stock from a partnership afliated with KKR at $21.50 per share for an aggregate purchase price of $1.376 billion. n April 1997, to facilitate the Vons merger, Safeway I 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. n September 1997, Moodys upgraded Safeways I unsecured senior debt to Baa2.  n September 5, 1997, Safeway completed a tender O 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  afeway simultaneously obtained consents to S proposed amendments to the indentures governing the remaining securities.

was completed at $29.88 per share, reducing KKRs ownership stake to approximately 22%.

1998

 ffective February 25, 1998, Safeway stock split E two-for-one. n July 1998, the public offering of 28.8 million I shares of common stock owned by affiliates of KKR was completed at $45.00 per share, reducing KKRs ownership stake to approximately 17%.  n August 6, 1998, Safeway and Carr-Gottstein Foods O 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.  n October 15, 1998, Safeway and Dominicks O 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.  n November 9, 1998, Safeway issued $1.4 billion O of senior debt associated with the acquisition of Dominicks. The four-tranche public offering consisted of: $400 million of 5.75% Notes due 2000  $400 million of 5.875% Notes due 2001  $350 million of 6.05% Notes due 2003  $250 million of 6.5% Notes due 2008 

 n November 12, 1998, Safeway was added O to the S&P 500 index.  n November 12, 1998, 20 million shares of common O stock were sold by affiliates of KKR to underwriters at $55.00 per share, reducing KKRs ownership stake to approximately 13%.  n November 20, 1998, Safeway completed O the acquisition of Dominicks Supermarkets, Inc.

 n September 5, 1997, the following securities were O issued to partially finance the redemption: $200 million of 6.85% Senior Notes due 2004  $200 million of 7.00% Senior Notes due 2007  $150 million of 7.45% Senior Debentures due 2007 

1999

n December 1997, the public offering of 56.5 million I shares of common stock owned by affiliates of KKR

 n February 10, 1999, 19.75 million shares of O 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

19

FI NA NCI AL & OP ER AT I NG STATI S TI CS

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.

2001

 n January 5, 2001, Safeway entered into an O agreement with the Fleming Companies, Inc. to purchase 11 ABCO stores in Arizona.  n January 31, 2001, Safeway issued $600 million of O 7.25% Debentures due 2031, a portion of which was used to fund the Genuardis acquisition.  n February 5, 2001, Safeway completed the purchase O of the assets of Genuardis Family Markets, Inc.  n February 28, 2001, Safeway completed the O purchase of 11 ABCO stores from the Fleming Companies, Inc.  n March 5, 2001, Safeway issued $1.2 billion of O senior debt to repay borrowings under its commercial paper program. The two-tranche public offering consisted of: $700 million of 6.15% Senior Notes due 2006  $500 million of 6.5% Senior Notes due 2011 

 n April 16, 1999, Safeway completed the acquisition O of Carr-Gottstein Foods Co.  n July 23, 1999, Safeway and Randalls Food O 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.  n September 8, 1999, Safeway issued $1.5 billion O of senior debt associated with the acquisition of Randalls. The three-tranche public offering consisted of: $ 600 million of 7.0% Notes due 2002  $400 million of 7.25% Notes due 2004  $500 million of 7.5% Notes due 2009 

 n September 14, 1999, Safeway completed O the acquisition of Randalls Food Markets, Inc.  n October 5, 1999, the Safeway Board of Directors O authorized a $1.0 billion common stock repurchase program and began repurchasing stock.

 n June 25, 2001, GroceryWorks.com, Safeways O exclusive online grocery channel, established a strategic relationship with Tesco PLC. Concurrently, Tesco made an equity investment for a 35% stake in GroceryWorks.com.  n September 28, 2001, the Safeway Board of O Directors increased the authorized level of Safeways stock repurchase program by $500 million to $1.5 billion.  n November 5, 2001, Safeway issued $400 million O of 3.625% Notes due 2003. n November 2001, all warrants to purchase Safeway I common stock held in SSI Equity Associates L.P. expired unexercised and were accounted for as a reduction to retained earnings.

2000

 n January 27, 2000, Safeway announced it had O repurchased 17.9 million shares of Safeways common stock for $651 million during the fourth quarter of 1999.  n April 28, 2000, two affiliates of KKR completed O the private sale of 13.1 million shares of common stock, including approximately 8 million shares acquired in the Randalls merger.  n June 5, 2000, Safeway and GroceryWorks.com O signed a definitive agreement creating a strategic alliance between the two companies for GroceryWorks.com to be Safeways online grocery channel.  n December 5, 2000, Safeway and Genuardis Family O 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.

2002

 n January 24, 2002, Safeway announced it had O 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.  n July 8, 2002, the Safeway Board of Directors O increased the authorized level of Safeways stock repurchase program by $1.0 billion to $3.5 billion.

20

 n July 16, 2002, Safeway issued $480 million of O 4.80% senior debt due 2007 to repay borrowings under its commercial paper program.  n August 12, 2002, Safeway issued $1.025 billion of O senior debt to repay borrowings under its commercial paper program. The two-tranche offering consisted of: $225 million of 3.8% Senior Notes due 2005  $ 800 million of 5.8% Senior Notes due 2012 

 500 million of 4.95% Senior Notes due 2010 $ (converted to floating rate debt through an interest rate swap agreement) $250 million of 5.625% Senior Notes due 2014 

 uring the second half of 2004, Safeway closed 18 D underperforming stores in Southern California.  rom September 7, 2004 through October 5, 2004, F 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.

n December 2002, Safeway announced plans to begin I the process to sell Dominicks and leave the Chicago market due to labor issues.

2003

 n February 6, 2003, Safeway announced it had O 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.  n October 29, 2003, Safeway issued $650 million of O Senior Notes to refinance upcoming debt maturities. The three-tranche public offering consisted of: $150 million of Floating Rate Senior Notes due 2005  $200 million of 2.5% Senior Notes due 2005   300 million of 4.125% Senior Notes due 2008 $ (converted to floating rate debt through an interest rate swap agreement)

2005

 n April 7, 2005, approximately 4.5 million O replacement options were issued at an exercise price of $20.75 per share.  n May 3, 2005, Safeway commenced expensing O stock options with the first quarter financial results.  n May 25, 2005, the Safeway Board of Directors O declared Safeways first quarterly cash dividend of $0.05 per common share, with an estimated annualized payout of $90.0 million.  n June 1, 2005, Safeway replaced its existing O revolving credit facility with a $1.6 billion 5-year facility.  n June 29, 2005, S&P lowered Safeways corporate O 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.
FI NA NCI AL & OP ER AT I NG STATI S TI CS

 n November 3, 2003, Safeway announced it had O taken Dominicks off the market because the union and the winning bidder could not reach agreement on an acceptable labor contract.

2004

 n January 12, 2004, Safeway announced the closure O of 12 underperforming stores in Chicago.  n May 3, 2004, Safeway announced it would O expense stock options in 2005.  n July 27, 2004, Safeway filed a shelf registration O covering the issuance of up to $2.3 billion of debt securities and/or common stock.  n August 12, 2004, Safeway issued $750 million O of Senior Notes to refinance upcoming debt maturities and to repay borrowings under its commercial paper program. The two-tranche public offering consisted of:

On October 18, 2005, Safeway announced plans to:   evitalize the Texas Division, which included the R closure of 26 underperforming stores.  epatriate $500 million of earnings from its Canadian R subsidiary to the U.S. under the American Jobs Creation Act of 2004.

 n November 18, 2005, Canada Safeway Limited O 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

 n March 28, 2006, Safeway issued $250 million of O Floating Rate Notes due 2009 to repay borrowings under its commercial paper program. n April 2006, Safeway announced it had settled a I federal income tax refund claim for the years 1992 through 1999 for costs associated with debt nancing. 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. n May 2006, the Safeway Board of Directors I approved an increase to Safeways dividend by 15% from $0.05 per share to $0.0575 per share.  n October 3, 2006, Safeway announced the O 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.  n October 24, 2006, Fitch Ratings revised the rating O outlook for Safeway to Stable from Negative based on continued debt reduction and strengthened cash flows, profitability and credit measures.  n December 7, 2006, the Safeway Board of Directors O 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.

 n August 1, 2007, Moodys Investor Services O affirmed Safeways Baa2 rating and revised the outlook to Stable from Negative.  n August 17, 2007, Safeway issued $500 million O of 6.35% Senior Notes due 2017.

2008

 ffective January 10, 2008, Safeway terminated its E interest rate swap agreements on its $500 million debt at a gain of approximately $7.5 million.  n February 21, 2008, Safeway announced it had O 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.  n April 8, 2008, S&P upgraded Safeways credit O 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. n May 2008, the Safeway Board of Directors I 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.  n December 8, 2008, Safeway filed a shelf O 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.  n December 17, 2008, Safeway issued $500 million O 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.

2007

 n February 7, 2007, Safeway announced plans to O revitalize Dominicks, which included remodeling 20 stores, opening one new store in 2007 and closing 14 underperforming stores.  n February 22, 2007, Safeway announced it had O 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. n May 2007, Safeways Board of Directors approved a I 20% increase in the quarterly dividend from $0.0575 to $0.069 per common share.  n July 23, 2007, S&P affirmed Safeways BBB- credit O rating and revised the outlook to Positive from Stable.

2009

 n February 26, 2009, Safeway announced it had O repurchased 12.6 million shares of common stock

22

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.

 n August 3, 2010, Safeway issued $500 million of O 3.95% Senior Notes due 2020 to refinance upcoming debt maturities. n December 2010, the Safeway Board of Directors I increased the authorized level of Safeways stock repurchase program by $1.0 billion to a total of $7.0 billion. n December 2010, the Safeway Board of Directors I 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.

 n April 29, 2009, the Safeway Board of Directors O approved a 21% increase in the quarterly dividend from $0.0828 to $0.10 per common share.  n August 7, 2009, Safeway issued $500 million of O 5.0% Senior Notes due 2019 to refinance upcoming debt maturities. n December 2009, the Safeway Board of Directors I 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.

2011

2010

 n February 25, 2010, Safeway announced it had O 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.  n February 25, 2010, Safeway announced it had O 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.  n March 2, 2010, Safeway announced that during O 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.  n May 19, 2010, the Safeway Board of Directors O approved a 20% increase in the quarterly dividend from $0.10 to $0.12 per common share.

 n February 24, 2011, Safeway announced it had O 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.  n March 8, 2011, Safeway announced that O 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.  n March 31, 2011, Canada Safeway Limited issued O 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.  n May 19, 2011, the Safeway Board of Directors O approved a 21% increase in the quarterly dividend from $0.12 to $0.145 per common share.  n June 1, 2011, Safeway replaced its existing O revolving credit facility with a $1.5 billion 4-year facility.

23 17

FI NA NCI AL & OP ER AT I NG STATI S TI CS

 n October 24, 2011, Safeway filed a shelf registration O 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.  n November 29, 2011, the Safeway Board of O Directors increased the authorized level of Safeways stock repurchase program by $1.0 billion to a total of $8.0 billion.  n December 5, 2011, Safeway issued $400 million O of 3.40% Senior Notes and $400 million of 4.75% Senior Notes which mature on December 1, 2016 and December 1, 2021, respectively. n December 2011, Safeway sold a distribution center I in Burnaby, British Columbia at a gain of $47.1 million.  n December 19, 2011, Safeway entered into a O $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.

 n April 26, 2012, Safeway announced that during the O 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.  n May 15, 2012, the Safeway Board of Directors O approved a 21% increase in the quarterly dividend from $0.145 per share to $0.175 per share.  n September 5, 2012, Safeway announced a O potential initial public offering of a minority ownership stake in Blackhawk Network Holdings, Inc. in the first half of 2013.

2013

 n February 21, 2013, Safeway announced that in O 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.  n April 19, 2013, Safeways subsidiary Blackhawk O 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.

2012

 n January 5, 2012, Safeway announced the sale O 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).  n February 23, 2012, Safeway announced that in O 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. n March 2012, the Safeway Board of Directors I increased the authorized level of Safeways stock repurchase program by $1.0 billion to a total of $9.0 billion.

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DIRECTORS & EXECUTIVE OFFICERS

BOARD OF DIRECTORS
Steven A. Burd (1) Chairman and Chief Executive Officer Safeway Inc. T. Gary Rogers (2) Lead Independent Director Former Chairman and CEO Dreyers Grand Ice Cream, Inc. Former Chairman Levi Strauss & Co. Former Chairman Federal Reserve Bank of San Francisco Janet E. Grove Former Chair and Chief Executive Officer Macys Merchandising Group Former Vice Chair Macys, Inc. Mohan Gyani Vice Chairman Roamware, Inc. Former President and Chief Executive Officer AT&T Wireless Mobility Services, Inc. Frank C. Herringer Chairman and Former Chief Executive Officer Transamerica Corporation George J. Morrow (4) Consultant and Former Executive Vice President Amgen, Inc. Kenneth W. Oder Managing Member Sugar Hollow LLC Former Executive Vice President Safeway Inc. Arun Sarin Former Chief Executive Officer Vodafone Group PLc. William Y. Tauscher Chief Executive Officer Blackhawk Network Holdings, Inc. Managing Member The 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. Griffith Executive Vice President Retail Operations Larree M. Renda Executive Vice President David F. Bond Senior Vice President Finance and Control (Chief Accounting Officer) Robert A. Gordon Senior Vice President Secretary and General Counsel Chief Governance Officer Russell M. Jackson Senior Vice President Human Resources Melissa C. Plaisance Senior Vice President Finance and Investor Relations David R. Stern Senior Vice President Planning and Business Development Jerry Tidwell Senior Vice President Supply Operations
DI R ECT OR S & EXE CUT I VE O FFI CE RS

Donald P. Wright Senior Vice President Real Estate and Engineering Chief Executive Officer Property Development Centers LLC

(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.

25

25

ANNUAL FINANCIAL DATA

(Dollars in millions, except per-share amounts) 52 Weeks 2012 Adjusted Sales and other revenue Fuel sales Sales and other revenue, excluding fuel Identical-store sales (1) Identical-store sales (ex-fuel) Cost of goods sold  Gross profit Gross profit margin Gross profit margin change (bps) Gross profit margin change, ex-fuel (bps) LIFO expense (income) Operating & administrative expense (2) O&A expense margin (2) Operating profit Interest expense Other income, net Income before income taxes
(2) (2) (2) (1)

52 Weeks 2011 Adjusted $43,630.2 $4,596.6 $39,033.6 4.4% 1.0% $31,836.5 $11,793.7 27.03% (125) (45) $35.1 $10,659.1 24.43% $1,134.6 2.6% $272.2 $19.7 $882.1 $518.2 $617.1 $1.49 $1.78 343.8 $0.555 $1,148.8 $1,094.7 $751.4 $15,073.6 $5,410.2 $3,715.3 59.3%

52 Weeks 2010 $41,050.0 $3,187.9 $37,862.1 (0.7%) (2.0%) $29,442.5 $11,607.5 28.28% (34) (7) ($28.0) $10,448.1 25.45% $1,159.4 2.8% $298.5 $20.3 $881.2 $590.6 $590.6 $1.55 $1.55 379.6 $0.46 $1,162.4 $837.5 $1,057.8 $15,148.1 $4,836.3 $5,023.9 49.0%

52 Weeks 2009 Adjusted $40,850.7 $2,688.7 $38,162.0 (5.0%) (2.5%) $29,157.2 $11,693.5 28.62% 24 (35) ($35.2) $10,348.0 25.33% $1,345.5 3.3% $331.7 $7.1 $1,020.9 ($1,097.5) $720.7 ($2.66) $1.74 414.1 $0.3828 $1,171.2 $851.6 $1,490.3 $14,963.6 $4,901.7 $4,972.6 49.6%

53 Weeks 2008 $44,104.0 $3,885.2 $40,218.8 1.4% 0.8% $31,589.2 $12,514.8 28.38% (36) (26) $34.9 $10,662.1 24.17% $1,852.7 4.2% $358.7 $10.6 $1,504.6 $965.3 $965.3 $2.21 $2.21 436.3 $0.3174 $1,141.1 $1,595.7 $681.0 $17,484.7 $5,499.8 $6,812.4 44.7%

$44,206.5 $4,974.2 $39,232.3 1.2% 0.5% $32,486.5 $11,720.0 26.51% (52) (22) $0.7 $10,615.9 24.01% $1,104.1 2.5% $304.0 $28.3 $828.4 $566.2 $537.4 $2.27 $2.15 245.9 $0.670 $1,134.3 $927.6 $971.3 $14,657.0 $5,573.7

Operating profit margin

Income (loss) from continuing operations, as reported Income from continuing operations, as adjusted Diluted earnings (loss) per common share from continuing operations, as reported Diluted earnings per common share from continuing operations, as adjusted (2, 3, 4) Weighted average shares outstanding diluted (2) Cash dividends declared per common share Depreciation expense Cash capital expenditures Free cash flow Total assets Total debt Total equity
(6) (5)

$2,933.4 65.5%

Debt/total capital

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.

26

(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.

QUARTERLY FINANCIAL DATA

(Dollars in millions) Q1 Sales & other revenue 2012 2011 2010 Fuel sales 2012 2011 2010 Sales & other revenue, excluding fuel 2012 2011 2010 Identical-store sales 2012 2011 2010 Identical-store sales (ex-fuel) 2012 2011 2010 Cost of goods sold 2012 2011 2010 Gross profit 2012 2011 2010 Gross profit margin 2012 2011 2010 LIFO expense (income) 2012 2011 2010 O&A expense 2012 2011 2010 O&A expense margin 2012 2011 2010
See Footnotes on p. 29.

Q2 $10,386.9 $10,196.4 $9,519.5 $1,282.9 $1,167.4 $728.4 $9,104.0 $9,029.0 $8,791.1 1.8% 5.1% (1.2%) 0.8% 0.5% (2.5%) $7,657.9 $7,443.4 $6,801.8 $2,729.0 $2,753.0 $2,717.7 26.27% 27.00% 28.55% $0.1 $9.0 $0.0 $2,481.8 $2,476.0 $2,432.5 23.89% 24.28% 25.55%

Q3 $10,049.1 $10,064.3 $9,399.6 $1,147.5 $1,099.6 $760.8 $8,901.6 $8,964.7 $8,638.8 0.5% 4.9% (1.4%) 0.1% 1.5% (2.0%) $7,392.2 $7,347.1 $6,755.0 $2,656.9 $2,717.2 $2,644.6 26.44% 27.00% 28.14% $1.0 $8.4 $0.0 $2,438.6 $2,468.9 $2,402.2 24.27% 24.53% 25.56%

Q4 $13,767.4 $13,597.6 $12,803.7 $1,447.3 $1,393.2 $1,049.2 $12,320.1 $12,204.4 $11,754.5 1.0% 4.0% 0.8% 0.8% 1.5% (0.8%) $10,118.6 $9,965.2 $9,208.2 $3,648.8 $3,632.4 $3,595.5 26.50% 26.71%
FI NA NCI AL & OP ER AT I NG STATI S TI CS

$10,003.0 $9,772.0 $9,327.1 $1,096.5 $936.5 $649.5 $8,906.5 $8,835.5 $8,677.6 1.6% 3.5% (1.4%) 0.0% 0.4% (3.1%) $7,317.8 $7,080.9 $6,677.5 $2,685.2 $2,691.1 $2,649.6 26.84% 27.54% 28.41% $0.5 $4.0 $0.0 $2,495.4 $2,471.9 $2,435.1 24.95% 25.30% 26.11%

28.08% ($0.9) $13.7 ($28.0) $3,200.0 $3,242.3 $3,178.4 23.24% 23.84% 24.82%

25

27

QUARTERLY FINANCIAL DATA

(Dollars in millions, except per-share amounts) Q1 Operating profit 2012 2011 2010 Operating profit margin 2012 2011 2010 Interest expense 2012 2011 2010 Other income, net 2012 2011 2010 Income before income taxes 2012 2011 2010 Income from continuing operations, as reported 2012 2011 2010 2012 2011 2010 2012 (1) 2011 (2) 2010 Weighted average shares outstanding diluted 2012 2011 2010 Cash dividends declared per common share 2012 2011 2010
See Footnotes on p. 29.

Q2 $247.2 $277.0 $285.2 2.38% 2.72% 3.00% $73.5 $61.5 $69.2 $3.9 $3.4 $2.4 $177.6 $218.9 $218.4 $121.7 $146.0 $141.3 $0.50 $0.41 $0.37 $0.50 $0.41 $0.37 239.8 352.3 385.7 $0.1750 $0.1450 $0.1200

Q3 $218.3 $248.3 $242.4 2.17% 2.47% 2.58% $71.3 $60.7 $69.4 $10.6 $8.7 $4.8 $157.6 $196.3 $177.8 $108.0 $130.3 $122.7 $0.45 $0.38 $0.33 $0.45 $0.38 $0.33 237.1 343.0 376.8 $0.1750 $0.1450 $0.1200

Q4 $448.8 $390.1 $417.1 3.26% 2.87% 3.26% $87.7 $84.3 $90.2 $8.5 $3.9 $9.9 $369.6 $309.7 $336.8 $255.0 $216.8 $230.7 $1.06 $0.67 $0.62 $0.94 $0.67 $0.62 237.3 321.6 370.0 $0.1750 $0.1450 $0.1200

$189.8 $219.2 $214.5 1.90% 2.24% 2.30% $71.4 $65.7 $69.7 $5.3 $3.7 $3.3 $123.7 $157.2 $148.1 $81.6 $25.1 $95.8 $0.30 $0.07 $0.25 $0.30 $0.29 $0.25 271.9 366.8 390.0 $0.1450 $0.1200 $0.1000

Diluted earnings per common share from continuing operations, as reported

Diluted earnings per common share from continuing operations, as adjusted

28

QUARTERLY FINANCIAL DATA

(Dollars in millions, except per-share amounts) Q1 Depreciation expense 2012 2011 2010 Cash capital expenditures 2012 2011 2010 Adjusted EBITDA (rolling four fiscal quarters) (3) 2012 2011 2010 Interest coverage (rolling four fiscal quarters) (3) 2012 2011 2010 Free cash flow 2012 2011 2010 Total debt 2012 2011 2010 Total equity (6) 2012 2011 2010 Debt/total capital 2012 2011 2010 Stock price range 2012 2011 2010 $20.20 - $23.16 $20.44 - $22.94 $20.91 - $25.41 $17.53 - $22.21 $21.90 - $25.43 $20.53 - $27.04 $14.73 - $18.31 $16.51 - $24.28 $18.73 - $21.91 $15.00 - $19.36 $15.93 - $21.37 $19.89 - $24.00 70.6% 49.8% 51.8% 72.5% 51.3% 51.7% 69.6% 52.3% 51.9% 65.5% 49.0%
FI NA NCI AL & OP ER AT I NG STATI S TI CS
(5) (3, 4)

Q2 $262.9 $263.9 $269.6 $219.2 $209.0 $192.1

Q3 $260.2 $265.3 $267.5 $159.6 $288.4 $170.7

Q4 $345.4 $354.5 $356.3 $240.4 $412.2 $282.1

$265.8 $265.1 $269.0 $308.4 $185.1 $192.6

$2,386.0 $2,424.0 $2,562.7

$2,351.4 $2,419.4 $2,491.8

$2,386.0 $2,425.7 $2,451.6

$2,410.2 $2,424.5 $2,425.2

8.6x 8.2x 7.9x ($224.2) $111.6 ($58.4) $6,678.3 $4,860.6 $5,409.6 $2,787.1 $4,907.3 $5,043.2

8.1x 8.4x 7.9x $200.1 $4.5 $330.0 $6,901.7 $4,963.2 $5,349.7 $2,618.6 $4,704.9 $4,996.4

7.9x 8.7x 8.0x $505.4 $167.5 $383.3 $6,433.5 $5,048.3 $5,291.8 $2,813.0 $4,596.6 $4,902.7

7.9x 8.9x 8.1x $490.0 $467.8 $402.9 $5,573.7 $5,410.2 $4,836.3 $2,933.4 $3,715.3 $5,023.9

59.3%

(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.

29 29

CORPORATE HISTORY
SIGNIFICANT CORPORATE EVENTS 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.

1963
Safeway enters the Australian market by purchasing three Pratt Supermarkets in the Melbourne area.

1964
Safeway establishes operations in another international market with the acquisition of several Big Bear Basar stores in West Germany.

1928
M.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.

1966
Central data processing is located in Oakland, CA. Quentin Reynolds, who steers Safeway through an era of turbulent social upheaval, follows Robert Magowan as President.

1971
Safeway 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.

1929
Canada Safeway Limited is established in Winnipeg.

1931
Safeway Stores, Inc. merges with 1,400-store MacMarr chain. Company reaches all-time high of 3,257 stores.

1977
Dale 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.

1934
Skaggs relinquishes presidency to Lingan A. Warren.

1955
Warren 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.

1980
Peter A. Magowan, who revises Safeways strategy and redirects its merchandising thrust, succeeds Mitchell as Chairman and Chief Executive Officer.

1962
Company begins operating 11 stores of John Gardner Ltd. to establish roots in the United Kingdom.

1981
Safeway 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.

30 30

1982
Omaha division is sold.

1983
James 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.

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.

1985
Australia Division is sold to Woolworths Ltd. Safeway receives a 20% interest in Woolworths Ltd.

1991
Safeway 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.

1986
Company 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.

1992
Safeway 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.

1987
Company 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.

1993
Peter 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.

1988
Rowland 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.

1994
Safeway retires $292 million of senior and senior subordinated debt in open-market purchases with proceeds from bank borrowings.

1995
CO R PO RATE HI ST O RY

Safeway refinances its Bank Credit Agreement on an unsecured basis and regains investment grade status on its senior unsecured debt from Standard & Poors.

1990
Safeway returns to public status, selling 46.0 million shares in a public offering.

1996
A two-for-one stock split is effected on January 30. Safeway moves its corporate offices to Pleasanton, CA from Oakland, CA.

31

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.

Safeway and Randalls Food Markets, Inc. jointly announce a definitive merger agreement. Safeway completes the acquisition of Randalls.

Pantone Reflex Blue CMYK 100-82-0-2 RGB 0-51-153 Hex 003399

Pantone 186 CMYK 0-91-76-6 RGB 228-23-32 Hex E41720

2000
White CMYK 0-0-0-0 RGB 255-255-255 Hex FFFFFF

1997
On 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.

Safeway announces it has joined ten of the worlds leading retailers as a founding member of the Worldwide Retail Exchange, a web-based business-tobusiness 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 Safeways 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 Safeways online grocery channel. Safeway and Genuardis Family Markets, Inc. announce a definitive agreement in which Safeway will purchase the assets of Genuardis.

1998
A 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 Dominicks Supermarkets, Inc. jointly announce a definitive merger agreement, and on November 20, Safeway completes the acquisition of Dominicks Supermarkets, Inc..

2001
On February 5, Safeway completes the purchase of the assets of Genuardis Family Markets, Inc.

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

Safeway purchases 11 ABCO stores in Arizona from the Fleming Companies, Inc.
Pantone 186 CMYK 0-91-76-6 RGB 228-23-32 Hex E41720 White CMYK 0-0-0-0 RGB 255-255-255 Hex FFFFFF

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

Pantone 186 CMYK 0-91-76-6 RGB 228-23-32 Hex E41720 Pantone 340 CMYK 100-0-74-0 RGB 0-153-102 Hex 009966 White CMYK 0-0-0-0 RGB 255-255-255 Hex FFFFFF

GroceryWorks.com, Safeways exclusive online grocery channel, establishes a strategic relationship with Tesco PLC. Blackhawk Network, Inc., Safeways 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.

1999
On April 16, Safeway completes the acquisition of CarrGottstein Foods Co.

Rebecca Stirn, Vice President, Sales and Marketing of Collagen Aesthetics, Inc., is elected to Safeways Board of Directors.

32

2002
GroceryWorks.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 Dominicks and exit the Chicago market. Safeway completes centralization of the marketing and procurement functions. 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.

2003
Seven locals of the United Food and Commercial Workers Union strike 289 Vons stores in Southern California on October 11. Safeway takes Dominicks off the market because the union and the winning bidder could not reach agreement on an acceptable labor contract.

2005
Peter 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 Safeways 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.

2004
Safeway announces it will declassify the Board of Directors beginning in 2005. Safeway announces closure of 12 underperforming Dominicks stores. Southern California strike ends on February 28.

2006
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. Safeway 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.
CO R PO RATE HI ST O RY

33

33

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 executives 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 states official registry for Greenhouse Gas emissions reduction projects, and takes action to reduce Safeways carbon footprint and reduce air pollution. Blackhawk establishes a United Kingdom office and enters the market with the gift card business.

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.

2008
Safeway 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 Ofcer of Transamerica Corporation, and Kenneth W. Oder, Managing Member, Sugar Hollow LLC and Former Executive Vice President of Safeway, to Safeways Board of Directors. Diane M. Dietz joins Safeway as Executive Vice President and Chief Marketing Officer. Steven Burd receives the U.S. Department of Labors 2008 SPIRIT Award for his leadership in furthering employment and workplace opportunities for people with disabilities. Safeway is named one of Americas Healthiest Grocery Stores by Health magazine.

2007
Safeway announces a plan to revitalize the Dominicks Division, including remodeling 20 stores, opening one new store and closing 14 underperforming stores in 2007. Safeway wins Californias Flex Your Power Award for energy conservation. Safeway receives the California Governors Environmental and Economic Leadership Award for Safeways strong initiatives in promoting green business practices and implementing significant environmental initiatives. Safeway celebrates the opening of the 1,000th Lifestyle store.

2009
Safeway is among the Worlds 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 Safeways Board of Directors.

34

Douglas J. Mackenzie does not stand for re-election to the Safeway Board of Directors in May 2009, but remains on Blackhawks 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.

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.

2012
In April, Robert 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 but remains on Blackhawks board. On August 1, Michael Shannon resigns from the Safeway board. In September, Safeway is named to the Dow Jones Sustainability Index North America for the fourth year in a row. 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 Greenpeace.

2010
In 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. Safeway introduces the just for U personalized pricing and digital coupon campaign in select markets.

2013
Safeway announces that Steven A. Burd, its long-time Chairman and CEO, will retire as CEO and as a director at the May 14, 2013 Annual Meeting. In February, Peter J. Bocian joins Safeway as Executive Vice President and Chief Financial Officer.

2011
Safeway announces the appointment of T. Gary Rogers, former Chairman of the Board and Chief Executive Officer of Dreyers 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.

In March, Bruce L. Everett, EVP Retail Operations, announces his retirement. Kelly P. Griffith is named his successor.
CO R PO RATE HI ST O RY

Safeway is among the Worlds Most Ethical Companies as awarded by the Ethisphere Institute for the third time. Robert L. Edwards succeeds Steven A. Burd as Chief Executive Officer and becomes a director effective May 15, 2013. T. Gary Rogers becomes Non-Executive Chairman of the Board effective May 15, 2013.

35

35

RECONCILIATIONS
Reconciliation of GAAP Cash Flow Measure to Free Cash Flow (in millions)*
Annual Fiscal Year

2012
Net cash flow from operating activities Net cash flow used by investing activities (Increase) decrease in payables related to third-party gift cards, net of receivables Investments and business acquisitions $1,569.7 (572.0) (26.4) -

2011
$2,023.6 (1,014.5) (293.6) 35.9

2010
$1,849.7 (798.8) 6.9 -

2009
$2,549.7 (889.0) (170.4) -

2008
$2,250.9 (1,546.0) (23.9) -

Free cash flow

$971.3

$751.4

$1,057.8

$1,490.3

$681.0

Reconciliation of Net Income Attributable to Safeway Inc. to Adjusted EBITDA (Interest Coverage) (dollars in millions)
Annual 2012 Net income attributable to Safeway Inc. Add (subtract): Property impairment charges and tax expense from discontinued operations Income taxes Interest expense Depreciation expense LIFO expense (income) Share-based employee compensation expense Property impairment charges Equity in earnings of unconsolidated affiliate Dividend received from unconsolidated affiliate 27.7 262.2 304.0 1,134.3 0.7 55.1 46.5 (17.5) 0.7 363.9 272.2 1,148.8 35.1 50.0 44.7 (13.0) 6.1 290.6 298.5 1,162.4 (28.0) 55.5 71.7 (15.3) $596.5 Fiscal Year 2011 $516.7 2010 $589.8

Total Adjusted EBITDA

Adjusted EBITDA as a multiple of interest expense

$2,410.2
7.9x

$2,424.5
8.9x

$2,425.2
8.1x

Reconciliation of Net Cash Flow from Operating Activities to Adjusted EBITDA (Interest Coverage) (dollars in millions)
Annual 2012 Net cash flow from operating activities Add (subtract): Income taxes Interest expense Deferred income taxes Net pension and post-retirement benefits expense Contributions to pension and post-retirement benefit plans Increase in accrued claims and other liabilities Gain on property dispositions and lease exit activities Changes in working capital items Lease exit costs and gain on property dispositions from discontinued operations Other 262.2 304.0 36.0 (150.8) 159.5 (44.8) 79.1 148.0 59.6 (12.3) 363.9 272.2 63.7 (114.3) 176.2 (23.2) 65.6 (385.8) (17.4) 290.6 298.5 31.3 (125.2) 17.7 (36.2) 27.5 67.9 3.4 $1,569.7 Fiscal Year 2011 $2,023.6 2010 $1,849.7

Total Adjusted EBITDA

Adjusted EBITDA as a multiple of interest expense

$2,410.2
7.9x

$2,424.5
8.9x

$2,425.2
8.1x

* 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 Safeways commission, to card partners. Because this cash flow is temporary, it is not available for other uses and therefore is excluded from the companys calculation of free cash flow.

36

Reconciliation of GAAP Cash Flow Measure to Free Cash Flow (in millions)*
2012 Net cash flow (used) provided by operating activities, as reported Net cash flow (used) provided by investing activities Decrease (increase) in payables related to third-party gift cards, net of receivables

Q1
$(541.8) (273.0) 590.6

Q2
$451.0 (191.9) (59.0)

Q3
$449.3 29.0 27.1

Q4
$1,211.2 (136.1) (585.1)

Free cash flow

2011 Net cash flow (used) provided by operating activities Net cash flow used by investing activities Decrease (increase) in payables related to third-party gift cards, net of receivables Investments and business acquisitions

$(224.2) Q1
$(60.0) (188.4) 360.0 -

$200.1 Q2
$247.6 (216.9) (26.2) -

$505.4 Q3
$523.3 (339.1) (16.7) -

$490.0 Q4
$1,312.7 (270.1) (610.7) 35.9

Free cash flow

2010 Net cash flow (used) provided by operating activities Net cash flow used by investing activities Decrease (increase) in payables related to third-party gift cards, net of receivables

$111.6 Q1
$(242.0) (192.7) 376.3

$4.5 Q2
$551.1 (200.9) (20.2)

$167.5 Q3
$537.5 (157.0) 2.8

$467.8 Q4
$1,003.1 (248.2) (352.0)

Free cash flow

$(58.4)

$330.0

$383.3

$402.9

* 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 Safeways commission, to card partners. Because this cash flow is temporary, it is not available for other uses and therefore is excluded from the companys calculation of free cash flow.

Reconciliation of Income and Diluted Earnings Per Share from Continuing Operations, as Reported, to Income and Diluted Earnings Per Share from Continuing Operations, as Adjusted (in millions, except per share amounts)
Fiscal Year 2012 Diluted EPS Income from continuing operations, as reported Gain from legal settlements, net of $17.7 of tax Tax on repatriated earnings from Canada Income from continuing operations, as adjusted $566.2 (28.8) $537.4 $2.27 (0.12) $2.15 $518.2 98.9 $617.1 Fiscal Year 2011 Diluted EPS $1.49 0.29 $1.78

Reconciliations which Adjust Fiscal Year 2009 Financial Results for Goodwill Impairment Charge (in millions, except percents and per share amounts)
Fiscal Year 2009 % of sales Sales and other revenue, as reported Operating loss, as reported Add goodwill impairment charge Operating income, as adjusted Pre-tax loss, as reported Add goodwill impairment charge Pre-tax income, as adjusted Net loss from continuing operations, as reported Add goodwill impairment charge Less tax benefit from goodwill impairment charge* Net income from continuing operations, excluding goodwill impairment charge Diluted loss per share from continuing operations, as reported Less goodwill impairment charge per diluted share, net of tax Diluted earnings per share from continuing operations, excluding goodwill impairment charge Weighted average shares outstanding used for diluted loss per share, as reported Add common shares equivalents Weighted average shares outstanding used for diluted earnings per share, excluding goodwill impairment charge $40,850.7 $(628.7) 1,974.2 $1,345.5 $(953.3) 1,974.2 $1,020.9 $(1,097.5) 1,974.2 (156.0) $720.7 $(2.66) 4.40 $1.74 412.9 1.2 414.1 (1.5%) 4.8% 3.3%

R ECO NCI L IATI O NS

25

37

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

2012 Reconciliation of Net Income Attributable to Safeway Inc. to Adjusted EBITDA (dollars in millions)
Q1 (A+B-C) Rolling Four Quarters Ended March 24, 2012 $564.5 A Year Ended 2011 $516.7 B 12 Weeks Ended March 24, 2012 $72.9 C 12 Weeks Ended March 26, 2011 $25.1

Net income attributable to Safeway Inc. Add (subtract): Property impairment charges and tax benefit from discontinued operations Income taxes Interest expense Depreciation expense LIFO expense Share-based employee compensation Property impairment charges Equity in earnings of unconsolidated affiliates, net Dividend received from unconsolidated affiliate

1.8 273.9 277.9 1,149.5 31.6 50.1 51.1 (14.4) -

363.9 272.2 1,148.8 35.1 50.0 44.7 (13.0) 6.1

1.8 42.1 71.4 265.8 0.5 11.0 13.5 (3.2) -

132.1 65.7 265.1 4.0 10.9 7.1 (1.8) 6.1

Total Adjusted EBITDA Adjusted EBITDA as a multiple of interest expense

Q2

$2,386.0 8.6x
(A+B-C) Rolling Four Quarters Ended June 16, 2012 $541.3

$2,424.5

$475.8

$514.3

A Year Ended 2011 $516.7

B 24 Weeks Ended June 16, 2012 $195.6

C 24 Weeks Ended June 18, 2011 $171.0

Net income attributable to Safeway Inc. Add (subtract): Property impairment charges and tax benefit from discontinued operations Income taxes Interest expense Depreciation expense LIFO expense Share-based employee compensation Property impairment charges Equity in earnings of unconsolidated affiliates, net Dividend received from unconsolidated affiliate

2.5 257.0 290.0 1,148.5 22.7 52.2 51.2 (14.0) -

363.9 272.2 1,148.8 35.1 50.0 44.7 (13.0) 6.1

2.5 98.0 145.0 528.7 0.6 24.3 28.5 (5.4) -

204.9 127.2 529.0 13.0 22.1 22.0 (4.4) 6.1

Total Adjusted EBITDA Adjusted EBITDA as a multiple of interest expense

Q3

$2,351.4 8.1x
(A+B-C) Rolling Four Quarters Ended Sept. 8, 2012 $568.1

$2,424.5

$1,017.8

$1,090.9

A Year Ended 2011 $516.7

B 36 Weeks Ended Sept. 8, 2012 $352.5

C 36 Weeks Ended Sept. 10, 2011 $301.1

Net income attributable to Safeway Inc. Add (subtract): Property impairment charges and tax benefit from discontinued operations Income taxes Interest expense Depreciation expense LIFO expense Share-based employee compensation Property impairment charges Equity in earnings of unconsolidated affiliates, net Dividend received from unconsolidated affiliate

33.8 240.5 300.6 1,143.4 15.3 53.2 45.5 (15.1) 0.7

363.9 272.2 1,148.8 35.1 50.0 44.7 (13.0) 6.1

33.8 147.6 216.3 788.9 1.6 36.6 34.5 (13.2) 0.7

271.0 187.9 794.3 21.4 33.4 33.7 (11.1) 6.1

Total Adjusted EBITDA Adjusted EBITDA as a multiple of interest expense

$2,386.0 7.9x

$2,424.5

$1,599.3

$1,637.8

38

2012 Reconciliation of Net Cash Flow from Operating Activities to Adjusted EBITDA (dollars in millions)
Q1 (A+B-C) Rolling Four Quarters March 24, 2012 $1,541.8 A Year Ended 2011 $2,023.6 B 12 Weeks Ended March 24, 2012 ($541.8) C 12 Weeks Ended March 26, 2011 ($60.0)

Net cash flow provided (used) by operating activities Add (subtract): Income taxes Interest expense Deferred income taxes Net pension and post-retirement benefit expense Contributions to pension and post-retirement plans Increase in accrued claims and other liabilities Gain on property dispositions and lease exit costs, net Changes in working capital items Lease exit costs from discontinued operations Other

273.9 277.9 4.7 (121.5) 199.5 (0.3) 72.2 162.6 (6.8) (18.0)

363.9 272.2 63.7 (114.3) 176.2 (23.2) 65.6 (385.8) (17.4)

42.1 71.4 (32.9) 29.9 (2.4) 8.0 913.9 (6.8) (5.6)

132.1 65.7 59.0 (25.7) 6.6 (25.3) 1.4 365.5 (5.0)

Total Adjusted EBITDA Adjusted EBITDA as a multiple of interest expense

Q2 Net cash flow provided (used) by operating activities Add (subtract): Income taxes Interest expense Deferred income taxes Net pension and post-retirement benefit expense Contributions to pension and post-retirement plans Decrease (increase) in accrued claims and other liabilities Gain (loss) on property retirements and lease exit costs, net Changes in working capital items Lease exit costs and gain on property depositions from discontinued operations Other

$2,386.0 8.6x
(A+B-C) Rolling Four Quarters June 16, 2012 $1,745.2

$2,424.5
A Year Ended 2011 $2,023.6

$475.8
B 24 Weeks Ended June 16, 2012 ($90.8)

$514.3
C 24 Weeks Ended June 18, 2011 $187.6

257.0 290.0 9.1 (129.7) 83.3 12.5 84.1 25.7 (5.0) (20.8)

363.9 272.2 63.7 (114.3) 176.2 (23.2) 65.6 (385.8) (17.4)

98.0 145.0 (66.8) 67.6 2.0 18.4 861.5 (5.0) (12.1)

204.9 127.2 54.6 (51.4) 160.5 (33.7) (0.1) 450.0 (8.7)

Total Adjusted EBITDA Adjusted EBITDA as a multiple of interest expense

Q3 Net cash flow provided by operating activities Add (subtract): Income taxes Interest expense Deferred income taxes Net pension and post-retirement benefit expense Contributions to pension and post-retirement plans Decrease (increase) in accrued claims and other liabilities Gain (loss) on property retirements and lease exit costs, net Changes in working capital items Lease exit costs and gain on property depositions from discontinued operations Other

$2,351.4 8.1x
(A+B-C) Rolling Four Quarters Sept. 8, 2012 $1,671.2

$2,424.5
A Year Ended 2011 $2,023.6

$1,017.8
B 36 Weeks Ended Sept. 8, 2012 $358.5

$1,090.9
C 36 Weeks Ended Sept 10, 2011 $710.9

240.5 300.6 12.0 (138.7) 110.5 18.8 96.8 21.7 75.4 (22.8)

363.9 272.2 63.7 (114.3) 176.2 (23.2) 65.6 (385.8) (17.4)

147.6 216.3 (102.5) 102.6 2.6 28.4 786.8 75.4 (16.4)

271.0 187.9 51.7 (78.1) 168.3

(2.8) 379.3 (11.0)

R ECO NCI L IATI O NS

(39.4)

Total Adjusted EBITDA Adjusted EBITDA as a multiple of interest expense

$2,386.0 7.9x

$2,424.5

$1,599.3

$1,637.8

25

39

2011 Reconciliation of Net Income Attributable to Safeway Inc. to Adjusted EBITDA (dollars in millions)
Q1 (A+B-C) Rolling Four Quarters Ended March 26, 2011 $518.9 A Year Ended January 1, 2011 $589.8 B 12 Weeks Ended March 26, 2011 $25.1 C 12 Weeks Ended March 27, 2010 $96.0

Net income attributable to Safeway Inc. Add (subtract): Income taxes Interest expense Depreciation expense LIFO (income) expense Share-based employee compensation Property impairment charges Equity in earnings of unconsolidated affiliates, net Dividend received from unconsolidated affiliate

370.4 294.5 1,158.5 (24.0) 52.3 61.4 (14.1) 6.1

290.6 298.5 1,162.4 (28.0) 55.5 71.7 (15.3) -

132.1 65.7 265.1 4.0 10.9 7.1 (1.8) 6.1

52.3 69.7 269.0 14.1 17.4 (3.0) -

Total Adjusted EBITDA Adjusted EBITDA as a multiple of interest expense

Q2

$2,424.0 8.2x
(A+B-C) Rolling Four Quarters Ended June 18, 2011 $523.5

$2,425.2

$514.3

$515.5

A Year Ended January 1, 2011 $589.8

B 24 Weeks Ended June 18, 2011 $171.0

C 24 Weeks Ended June 19, 2010 $237.3

Net income attributable to Safeway Inc. Add (subtract): Income taxes Interest expense Depreciation expense LIFO (income) expense Share-based employee compensation Property impairment charges Equity in earnings of unconsolidated affiliates, net Dividend received from unconsolidated affiliate

366.1 286.8 1,152.8 (15.0) 51.4 62.9 (15.2) 6.1

290.6 298.5 1,162.4 (28.0) 55.5 71.7 (15.3) -

204.9 127.2 529.0 13.0 22.1 22.0 (4.4) 6.1

129.4 138.9 538.6 26.2 30.8 (4.5) -

Total Adjusted EBITDA Adjusted EBITDA as a multiple of interest expense

Q3

$2,419.4 8.4x
(A+B-C) Rolling Four Quarters Ended Sept. 10, 2011 $530.8

$2,425.2

$1,090.9

$1,096.7

A Year Ended January 1, 2011 $589.8

B 36 Weeks Ended Sept. 10, 2011 $301.1

C 36 Weeks Ended Sept. 11, 2010 $360.1

Net income attributable to Safeway Inc. Add (subtract): Income taxes Interest expense Depreciation expense LIFO (income) expense Share-based employee compensation Property impairment charges Equity in earnings of unconsolidated affiliates, net Dividend received from unconsolidated affiliate

377.1 278.1 1,150.6 (6.6) 51.6 56.7 (18.7) 6.1

290.6 298.5 1,162.4 (28.0) 55.5 71.7 (15.3) -

271.0 187.9 794.3 21.4 33.4 33.7 (11.1) 6.1

184.5 208.3 806.1 37.3 48.7 (7.7) -

Total Adjusted EBITDA Adjusted EBITDA as a multiple of interest expense

$2,425.7 8.7x

$2,425.2

$1,637.8

$1,637.3

40

2011 Reconciliation of Net Cash Flow from Operating Activities to Adjusted EBITDA (dollars in millions)
Q1 (A+B-C) Rolling Four Quarters March 26, 2011 $2,031.7 A Year Ended January 1, 2011 $1,849.7 B 12 Weeks Ended March 26, 2011 ($60.0) C 12 Weeks Ended March 27, 2010 ($242.0)

Net cash flow provided (used) by operating activities Add (subtract): Income taxes Interest expense Amortization of deferred finance costs Excess tax benefit from exercise of stock options Deferred income taxes Net pension and post-retirement benefit expense Contributions to pension and post-retirement plans Accrued claims and other liabilities Gain (loss) on property retirements and lease exit activities Dividend received from unconsolidated affiliate Changes in working capital items Other

370.4 294.5 (4.8) 1.5 90.3 (121.1) 19.9 (45.1) 39.9 6.1 (258.9) (0.4)

290.6 298.5 (4.8) 1.6 31.3 (125.2) 17.7 (36.2) 27.5 67.9 6.6

132.1 65.7 (1.1) 0.4 59.0 (25.7) 6.6 (25.3) 1.4 6.1 365.5 (10.4)

52.3 69.7 (1.1) 0.5 (29.8) 4.4 (16.4) (11.0) 692.3 (3.4)

Total Adjusted EBITDA

Q2 Net cash flow provided by operating activities Add (subtract): Income taxes Interest expense Amortization of deferred finance costs Excess tax benefit from exercise of stock options Deferred income taxes Net pension and post-retirement benefit expense Contributions to pension and post-retirement plans Accrued claims and other liabilities Gain (loss) on property retirements and lease exit activities Changes in working capital items Other

$2,424.0
(A+B-C) Rolling Four Quarters June 18, 2011 $1,728.2

$2,425.2
A Year Ended January 1, 2011 $1,849.7

$514.3
B 24 Weeks Ended June 18, 2011 $187.6

$515.5
C 24 Weeks Ended June 19, 2010 $309.1

366.1 286.8 (4.8) 1.7 85.9 (118.9) 169.5 (40.5) 41.4 (95.2) (0.8)

290.6 298.5 (4.8) 1.6 31.3 (125.2) 17.7 (36.2) 27.5 67.9 6.6

204.9 127.2 (2.2) 0.8 54.6 (51.4) 160.5 (33.7) (0.1) 450.0 (7.3)

129.4 138.9 (2.2) 0.7 (57.7) 8.7 (29.4) (14.0) 613.1 0.1

Total Adjusted EBITDA

Q3 Net cash flow provided by operating activities Add (subtract): Income taxes Interest expense Amortization of deferred finance costs Excess tax benefit from exercise of stock options Deferred income taxes Net pension and post-retirement benefit expense Contributions to pension and post-retirement plans Accrued claims and other liabilities Gain (loss) on property retirements and lease exit activities Changes in working capital items Other

$2,419.4
(A+B-C) Rolling Four Quarters Sept. 10, 2011 $1,714.0

$2,425.2
A Year Ended January 1, 2011 $1,849.7

$1,090.9
B 36 Weeks Ended Sept. 10, 2011 $710.9

$1,096.7
C 36 Weeks Ended Sept 11, 2010 $846.6

377.1 278.1 (5.1) 2.5 83.0 (116.7) 174.3 (37.1) 23.3 (65.5) (2.2)

290.6 298.5 (4.8) 1.6 31.3 (125.2) 17.7 (36.2) 27.5 67.9 6.6

271.0 187.9 (3.6) 1.6 51.7 (78.1) 168.3 (39.4) (2.8) 379.3 (9.0)

184.5 208.3 (3.3) 0.7 (86.6) 11.7 (38.5) 1.4 512.7 (0.2)

R ECO NCI L IATI O NS

25

Total Adjusted EBITDA

$2,425.7

$2,425.2

$1,637.8

$1,637.3

41

2010 Reconciliation of Net (Loss) Income Attributable to Safeway Inc. to Adjusted EBITDA (dollars in millions)
Q1 (A+B-C) Rolling Four Quarters Ended March 27, 2010 ($1,145.7) A Year Ended 2009 ($1,097.5) B 12 Weeks Ended March 27, 2010 $96.0 C 12 Weeks Ended March 28, 2009 $144.2

Net (loss) income attributable to Safeway Inc. Add (subtract): Income taxes Interest expense Depreciation expense Goodwill impairment charge LIFO (income) expense Share-based employee compensation Property impairment charges Equity in earnings of unconsolidated affiliates, net Dividend received from unconsolidated affiliate

136.2 323.2 1,175.8 1,974.2 (36.6) 61.1 80.0 (11.3) 5.8

144.2 331.7 1,171.2 1,974.2 (35.2) 61.7 73.7 (8.5) 5.8

52.3 69.7 269.0 14.1 17.4 (3.0) -

60.3 78.2 264.4 1.4 14.7 11.1 (0.2) -

Total Adjusted EBITDA Adjusted EBITDA as a multiple of interest expense

Q2

$2,562.7 7.9x
(A+B-C) Rolling Four Quarters Ended June 19, 2010 ($1,243.0)

$2,621.3

$515.5

$574.1

A Year Ended 2009 ($1,097.5)

B 24 Weeks Ended June 19, 2010 $237.3

C 24 Weeks Ended June 20, 2009 $382.8

Net (loss ) income attributable to Safeway Inc. Add (subtract): Income taxes Interest expense Depreciation expense Goodwill impairment charge LIFO income Share-based employee compensation Property impairment charges Equity in earnings of unconsolidated affiliates, net Dividend received from unconsolidated affiliate

168.2 315.2 1,177.1 1,974.2 (35.2) 60.5 79.1 (10.1) 5.8

144.2 331.7 1,171.2 1,974.2 (35.2) 61.7 73.7 (8.5) 5.8

129.4 138.9 538.6 26.2 30.8 (4.5) -

105.4 155.4 532.7 27.4 25.4 (2.9) -

Total Adjusted EBITDA Adjusted EBITDA as a multiple of interest expense

Q3

$2,491.8 7.9x
(A+B-C) Rolling Four Quarters Ended Sept. 11, 2010 ($1,249.0)

$2,621.3

$1,096.7

$1,226.2

A Year Ended 2009 ($1,097.5)

B 36 Weeks Ended Sept. 11, 2010 $360.1

C 36 Weeks Ended Sept. 12, 2009 $511.6

Net (loss) income attributable to Safeway Inc. Add (subtract): Income taxes Interest expense Depreciation expense Goodwill impairment charge LIFO income Share-based employee compensation Property impairment charges Equity in earnings of unconsolidated affiliates, net Dividend received from unconsolidated affiliate

150.8 306.3 1,174.2 1,974.2 (35.2) 57.6 77.2 (10.3) 5.8

144.2 331.7 1,171.2 1,974.2 (35.2) 61.7 73.7 (8.5) 5.8

184.5 208.3 806.1 37.3 48.7 (7.7) -

177.9 233.7 803.1 41.4 45.2 (5.9) -

Total Adjusted EBITDA Adjusted EBITDA as a multiple of interest expense

$2,451.6 8.0x

$2,621.3

$1,637.3

$1,807.0

42

2010 Reconciliation of Net Cash Flow from Operating Activities to Adjusted EBITDA (dollars in millions)
Q1 (A+B-C) Rolling Four Quarters Ended March 27, 2010 $2,458.7 A Year Ended 2009 $2,549.7 B 12 Weeks Ended March 27, 2010 ($242.0) C 12 Weeks Ended March 28, 2009 ($151.0)

Net cash flow provided (used) by operating activities Add (subtract): Income taxes Interest expense Deferred income taxes Net pension and post-retirement benefit expense Contributions to pension and post-retirement plans Accrued claims and other liabilities Loss on property retirements and lease exit activities Changes in working capital items Other

136.2 323.2 145.5 (136.4) 22.3 15.6 (17.4) (355.8) (29.2)

144.2 331.7 142.1 (140.2) 24.4 34.4 (12.7) (426.7) (25.6)

52.3 69.7 (29.8) 4.4 (16.4) (11.0) 692.3 (4.0)

60.3 78.2 (3.4) (33.6) 6.5 2.4 (6.3) 621.4 (0.4)

Total Adjusted EBITDA Adjusted EBITDA as a multiple of interest expense

Q2

$2,562.7 7.9x
(A+B-C) Rolling Four Quarters Ended June 19, 2010 $2,174.7

$2,621.3

$515.5

$574.1

A Year Ended 2009 $2,549.7

B 24 Weeks Ended June 19, 2010 $309.1

C 24 Weeks Ended June 20, 2009 $684.1

Net cash flow provided by operating activities Add (subtract): Income taxes Interest expense Deferred income taxes Net pension and post-retirement benefit expense Contributions to pension and post-retirement plans Accrued claims and other liabilities Loss on property retirements and lease exit activities Changes in working capital items Other

168.2 315.2 152.4 (130.2) 20.1 2.2 (13.1) (186.2) (11.5)

144.2 331.7 142.1 (140.2) 24.4 34.4 (12.7) (426.7) (25.6)

129.4 138.9 (57.7) 8.7 (29.4) (14.0) 613.1 (1.4)

105.4 155.4 (10.3) (67.7) 13.0 2.8 (13.6) 372.6 (15.5)

Total Adjusted EBITDA Adjusted EBITDA as a multiple of interest expense

Q3

$2,491.8 7.9x
(A+B-C) Rolling Four Quarters Ended Sept. 11, 2010 $2,109.0

$2,621.3

$1,096.7

$1,226.2

A Year Ended 2009 $2,549.7

B 36 Weeks Ended Sept. 11, 2010 $846.6

C 36 Weeks Ended Sept. 12, 2009 $1,287.3

Net cash flow provided by operating activities Add (subtract): Income taxes Interest expense Deferred income taxes Net pension and post-retirement benefit expense Contributions to pension and post-retirement plans Accrued claims and other liabilities Gain (loss) on property retirements and lease exit activities Changes in working capital items Other

150.8 306.3 152.3 (130.6) 18.0 0.2 7.5 (153.6) (8.3)

144.2 331.7 142.1 (140.2) 24.4 34.4 (12.7) (426.7) (25.6)

184.5 208.3 (86.6) 11.7 (38.5) 1.4 512.7 (2.8)

177.9 233.7 (10.2) (96.2) 18.1 (4.3) (18.8) 239.6 (20.1)

Total Adjusted EBITDA Adjusted EBITDA as a multiple of interest expense

$2,451.6 8.0x

$2,621.3

$1,637.3

$1,807.0

R ECO NCI L IATI O NS

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NOTES

44

S A F EWAY INC.

www. sa f e wa y. c om

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