1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 3, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to _________ Commission file number 1-41 SAFEWAY INC. (Exact name of Registrant as specified in its charter) Delaware 94-3019135 - ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization 5918 Stoneridge Mall Road Pleasanton, California 94588 ------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (925) 467-3000 Securities registered pursuant to Section 12(b) of the Act: <TABLE> <CAPTION> Name of each exchange on Title of each class which registered ------------------- ------------------------ <S> <C> <C> Common Stock, $0.01 par value per share New York Stock Exchange 9.30% Senior Secured Debentures due 2007 New York Stock Exchange 10% Senior Notes due 2002 New York Stock Exchange 9.35% Senior Subordinated Notes due 1999 New York Stock Exchange 10% Senior Subordinated Notes due 2001 New York Stock Exchange 9.65% Senior Subordinated Debentures due 2004 New York Stock Exchange 9.875% Senior Subordinated Debentures due 2007 New York Stock Exchange 6.85% Senior Notes due 2004 New York Stock Exchange 7.00% Senior Notes due 2007 New York Stock Exchange 7.45% Senior Debentures due 2027 New York Stock Exchange </TABLE> (Cover continued on following page) ================================================================================
2 (Cover continued from previous page) SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE (Title of Class) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ]. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [ ]. Aggregate market value of the voting stock held by non-affiliates of Registrant as of March 17, 1998, was $13.2 billion. As of March 17, 1998, there were issued and outstanding 478.7 million shares of the Registrant's common stock. DOCUMENTS INCORPORATED BY REFERENCE The following documents are incorporated by reference to the extent specified herein: <TABLE> <CAPTION> Document Description 10-K Part -------------------- --------- <S> <C> 1997 Annual Report to Stockholders I, II, III, IV 1998 Proxy Statement dated March 27, 1998 III </TABLE>
3 SAFEWAY INC. AND SUBSIDIARIES PART I ITEM 1. BUSINESS AND ITEM 2. PROPERTIES GENERAL: Information appearing under the caption "Company in Review" beginning on page 12 of the Company's 1997 Annual Report to Stockholders is incorporated herein by this reference. RETAIL OPERATIONS: Information appearing under the captions "Retail Operations" and "Distribution" on pages 12 and 13 of the Company's 1997 Annual Report to Stockholders is incorporated herein by this reference. MANUFACTURING AND WHOLESALE OPERATIONS: Information appearing under the caption "Manufacturing and Wholesale Operations" on page 13 of the Company's 1997 Annual Report to Stockholders is incorporated herein by this reference. Various agricultural commodities constitute the principal raw materials used by the Company in the manufacture of its food products. Management believes that raw materials for its products are not in short supply, and all are readily available from a wide variety of independent suppliers. CAPITAL EXPENDITURES: Information appearing under the caption "Capital Expenditure Program" on pages 13 and 14 of the Company's 1997 Annual Report to Stockholders is incorporated herein by this reference. Safeway's new stores, remodels, and closures during the last five years were as follows: <TABLE> <CAPTION> Total Five Years 1997 1996 1995 1994 1993 ----- ---- ---- ---- ---- ---- <S> <C> <C> <C> <C> <C> <C> New stores: New locations 53 15 14 10 6 8 Replacements 80 22 16 22 14 6 --- -- -- -- -- -- 133 37 30 32 20 14 === == == == == == Remodels: (Note A) Expansions 110 34 29 13 7 27 "Four-Wall" remodels 436 147 112 95 64 18 --- --- --- -- -- -- 546 181 141 108 71 45 === === === === == == Vons stores acquired 316 316 - - - - Closures 184 37 37 35 36 39 Stores at year-end 1,368 1,052 1,059 1,062 1,078 </TABLE> Note A. Defined as store projects (other than maintenance) generally requiring expenditures in excess of $200,000. 3
4 SAFEWAY INC. AND SUBSIDIARIES ITEM 1. BUSINESS AND ITEM 2. PROPERTIES (CONTINUED) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS: This information is omitted because the Company has no significant lines of business or industry segments except the principal business of operating retail supermarkets. TRADEMARKS: The Company has invested significantly in the development and protection of the "Safeway" name. The right to use the "Safeway" name is considered to be an important asset. Safeway also owns approximately 100 other trademarks registered or pending in the United States Patent and Trademark Office, including its product line names such as Safeway, Safeway SELECT, Lucerne and Mrs. Wright's, and the marks Vons and Pavilions. Each trademark registration is for an initial period of 10 or 20 years and is renewable for as long as the use of the trademark continues. Safeway considers certain of its trademarks to be of material importance to its business and actively defends and enforces such trademarks. Safeway has also registered certain of its trademarks in Canada. WORKING CAPITAL: At year-end 1997, working capital deficit was composed of $2.0 billion of current assets and $2.5 billion of current liabilities. Normal operating fluctuations in these substantial balances can result in changes to cash flow from operations presented in the Consolidated Statements of Cash Flows that are not necessarily indicative of long-term operating trends. There are no unusual industry practices or requirements relating to working capital items. COMPETITION: Food retailing is intensely competitive. The number of competitors and the amount of competition experienced by Safeway's stores vary by market area. The principal competitive factors that affect the Company's business are location, quality, service, price and consumer loyalty to other brands and stores. Local, regional, and national food chains as well as independent food stores and markets comprise the principal competition, although Safeway also faces substantial competition from convenience stores, liquor retailers, membership warehouse clubs, specialty retailers, supercenters, and large-scale drug and pharmaceutical chains. Safeway and its competitors engage in price competition which, from time to time, has adversely affected operating margins in many of its markets. COMPLIANCE WITH ENVIRONMENTAL LAWS: The Company's compliance with the federal, state, and local provisions which have been enacted or adopted regulating the discharge of materials into the environment or otherwise relate to the protection of the environment has not had and is not expected to have a material adverse effect upon the financial position or results of operations of the Company. 4
5 SAFEWAY INC. AND SUBSIDIARIES ITEM 1. BUSINESS AND ITEM 2. PROPERTIES (CONTINUED) EMPLOYEES: At year-end 1997, Safeway Inc. ("Safeway" or the "Company") had approximately 147,000 full and part-time employees. Approximately 90% of Safeway's employees in the United States and Canada are covered by collective bargaining agreements negotiated with local unions affiliated with one of 12 different international unions. There are approximately 400 such agreements, typically having three-year terms, with some agreements having terms of up to five years. Accordingly, Safeway renegotiates a significant number of these agreements every year. By year-end 1997, Safeway had concluded early negotiations and signed new labor contracts covering employees whose collective bargaining agreements had been due to expire in 1998. Certain of these contracts were with employees represented by the United Food and Commercial Workers Union in northern California and Spokane, Washington. In addition, union members in British Columbia ratified a new labor contract. Management considers the terms of these new contracts to be satisfactory. As a result of these early negotiations, the only significant remaining labor contracts due to expire in 1998 are in the Seattle and Winnipeg operating areas covering approximately 110 stores. In the last three years there have been four significant work stoppages. During the second quarter of 1997, Safeway was engaged in a 75-day labor dispute affecting 74 stores in the Alberta, Canada operating area. The Company continued to operate the affected stores with a combination of replacement workers, management and employees who returned to work. During the second and third quarters of 1996, Safeway was engaged in a labor dispute in British Columbia which lasted 40 days and affected 86 stores. Under Provincial law in British Columbia, replacement workers could not be hired, and therefore all the affected stores were closed throughout the strike-lockout. Separately, the Company was engaged in a strike-lockout in the Denver operating area which lasted 44 days also during the second and third quarters of 1996. All of the Denver stores operated during the strike-lockout, largely with replacement workers. A nine-day strike during the second quarter of 1995 affected 208 stores in northern California. These work stoppages were resolved in a manner that management considered generally satisfactory. Safeway estimates that the Alberta strike reduced 1997 net income by approximately $0.04 per share, that the combined impact of the disputes in Denver and British Columbia reduced 1996 earnings by approximately $0.07 per share, and that the dispute in northern California reduced 1995 earnings by an estimated $0.01 per share. FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES: Note L to the consolidated financial statements, included on page 36 of the Company's 1997 Annual Report to Stockholders and incorporated herein by this reference, contains financial information by geographic area. At year-end 1997, the Company's foreign operations were composed of retail grocery and wholesale operations in Canada and a 49% equity investment in Casa Ley, S.A. de C.V. ("Casa Ley"), a Mexican company. Other than the competitive nature of the retail food business and the economic situation in Mexico, the Company is not aware of any significant risks of operating in these foreign countries. 5
6 SAFEWAY INC. AND SUBSIDIARIES The Company's policy for translating Casa Ley's financial statements into U.S. dollars is described under the caption "Translation of Foreign Currencies" on page 25 of the Company's 1997 Annual Report to Stockholders. Casa Ley had total assets of $319.0 million and $263.1 million as of September 30, 1997 and 1996, based on financial information provided by Casa Ley. Sales and net income for Casa Ley were as follows (in millions): <TABLE> <CAPTION> 12 months ended September 30, ---------------------------------- 1997 1996 1995 ------ ------ ------ <S> <C> <C> <C> Sales $943.8 $810.1 $861.4 ====== ====== ====== Net income $ 38.6 $ 33.8 $ 17.9 ====== ====== ====== </TABLE> ITEM 3. LEGAL PROCEEDINGS Information about legal proceedings appearing under the caption "Legal Matters" as reported in Note K to the consolidated financial statements on page 35 of the Company's 1997 Annual Report to Stockholders is incorporated herein by this reference. 6
7 SAFEWAY INC. AND SUBSIDIARIES ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of the stockholders during the fourth quarter of 1997. EXECUTIVE OFFICERS OF THE COMPANY The names and ages of the current executive officers of the Company and their positions as of March 17, 1998, are set forth below. Unless otherwise indicated, each of the executive officers served in various managerial capacities with the Company over the past five years. None of the executive officers named below is related to any other executive officer or director by blood, marriage or adoption. Officers serve at the discretion of the Board of Directors. <TABLE> <CAPTION> Year First Elected Name and all Positions with the Company ------------------------- Held at March 17, 1998 Age Officer Present Office - ---------------------- --- ------- -------------- <S> <C> <C> <C> Steven A. Burd 48 1992 1992 President and Chief Executive Officer Kenneth W. Oder(1) 50 1993 1993 Executive Vice President Labor Relations, Human Resources, Law and Public Affairs Julian C. Day(2) 45 1993 1993 Executive Vice President and Chief Financial Officer David F. Bond(3) 44 1997 1997 Senior Vice President Finance and Control David T. Ching(4) 45 1994 1994 Senior Vice President and Chief Information Officer Lawrence V. Jackson(5) 44 1997 1997 Senior Vice President Supply Operations Diane Peck 49 1990 1995 Senior Vice President Human Resources Melissa C. Plaisance 38 1993 1995 Senior Vice President Finance and Public Affairs </TABLE> 7
8 SAFEWAY INC. AND SUBSIDIARIES ITEM 4. EXECUTIVE OFFICERS OF THE COMPANY (CONTINUED) <TABLE> <CAPTION> Year First Elected Name and all Positions with the Company ------------------------- Held at March 17, 1998 Age Officer Present Office - ---------------------- --- ------- -------------- <S> <C> <C> <C> Larree M. Renda 39 1991 1994 Senior Vice President Corporate Retail Operations Michael C. Ross(1) 50 1993 1993 Senior Vice President Secretary and General Counsel Gary D. Smith 55 1988 1995 Senior Vice President and Director of Marketing Richard A. Wilson 64 1988 1988 Vice President Tax Donald P. Wright 45 1991 1991 Senior Vice President Real Estate and Engineering </TABLE> - ---------- (1) Mr. Oder and Mr. Ross were previously partners at the law firm of Latham & Watkins. (2) Mr. Day was previously self-employed as an independent consultant. (3) Mr. Bond was previously a partner at the accounting firm of Deloitte & Touche LLP. (4) During 1994, Mr. Ching was the General Manager -- North America for the British American Consulting Group. From 1979 to 1994, he was employed by Lucky Stores, Inc., where he was the Senior Vice President of Information Systems beginning in 1989. (5) Mr. Jackson was previously the Senior Vice President, Worldwide Operations of PepsiCo Food Systems, a division of PepsiCo, Inc. from 1995-97, and Vice President and General manager of Pepsi-Cola Company, a unit of PepsiCo, Inc., from 1992-95. Section 16(a) Beneficial Ownership. Information appearing under the caption "Section 16(a) Beneficial Ownership Reporting Compliance" in the Company's 1998 Proxy Statement is incorporated herein by this reference. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's common stock, $0.01 par value, is listed on the New York Stock Exchange. Information as to quarterly sales prices for the Company's common stock appears in Note M to the consolidated financial statements on page 37 of the Company's 1997 Annual Report to Stockholders and is incorporated herein by this reference. There were 9,162 stockholders of record as of March 17, 1998; however, approximately 76% of the Company's outstanding stock is held in "street name" by depositories or nominees on behalf of beneficial holders. The price per share of common stock, as reported on the New York Stock Exchange Composite Tape, was $35 1/2 at the close of business on March 17, 1998. 8
9 SAFEWAY INC. AND SUBSIDIARIES ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS (CONTINUED) Holders of common stock are entitled to receive dividends if, as, and when declared by the Board of Directors out of funds legally available therefor, subject to the dividend and liquidation rights of any preferred stock that may be issued. The Company has not paid dividends on common stock through 1997 and has no current plans for dividend payments. ITEM 6. SELECTED FINANCIAL DATA The "Five-Year Summary Financial Information" included on page 15 of the Company's 1997 Annual Report to Stockholders is incorporated herein by this reference. The Five-Year Summary should be read in conjunction with the Company's consolidated financial statements and accompanying notes incorporated by reference in Item 8, Consolidated Financial Statements and Supplementary Data. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Information appearing under the caption "Financial Review" on pages 16 through 18 and under the caption "Capital Expenditure Program" on pages 13 and 14 of the Company's 1997 Annual Report to Stockholders is incorporated herein by this reference. Information regarding the terms of outstanding indebtedness appearing in Note C to the consolidated financial statements on pages 27 through 28 of the Company's 1997 Annual Report to Stockholders is incorporated herein by this reference. YEAR 2000 COMPLIANCE The Year 2000 issue is the result of computer programs that were written using two digits rather than four to define the applicable year. For example, computer programs that have time-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. To the extent that the Company's software applications contain source code that is unable to appropriately interpret the uncoming calendar year 2000 and beyond, some level of modification or replacement of such applications will be necessary to avoid system failures and the temporary inability to process transactions or engage in other normal business activities. The Company utilizes a significant number of computer software programs and operating systems across its entire organization, including applications used in stores, manufacturing, product development, financial business systems and various administrative functions. In addition, the Company is communicating with major vendors to determine the extent to which the Company is vulnerable to third-party Year 2000 compliance issues. Given information known at this time about the Company's systems that are non-compliant, coupled with the Company's ongoing, normal course-of-business efforts to upgrade or replace critical systems, as necessary, management does not expect Year 2000 compliance costs to have any material adverse impact on the Company's liquidity or ongoing results of operations. 9
10 SAFEWAY INC. AND SUBSIDIARIES By year-end 1997, Safeway had concluded early negotiations and signed new labor contracts covering employees whose collective bargaining agreements had been due to expire in 1998. Certain of these contracts were with employees represented by the United Food and Commercial Workers Union in northern California and Spokane, Washington. In addition, union members in British Columbia ratified a new labor contract. Management considers the terms of these new contracts to be satisfactory. As a result of these early negotiations, the only significant remaining labor contracts due to expire in 1998 are in the Seattle and Winnipeg operating areas covering approximately 110 stores. ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Pages 19 through 39 of the Company's 1997 Annual Report to Stockholders, which include the consolidated financial statements, Computation of Earnings Per Common Share and Common Share Equivalent (listed as Exhibit 11.1 to Item 14(a)3), and the Independent Auditors' Report as listed in Item 14(a)1, are incorporated herein by this reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT AND COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT Directors of the Company. Information on the nominees for election as Directors and the continuing Directors of the Company, which appears under the caption "Election of Directors" in the Company's 1998 Proxy Statement, is incorporated herein by this reference. Executive Officers of the Company. See PART I under the caption "Executive Officers of the Company". ITEM 11. EXECUTIVE COMPENSATION Information appearing under the captions "Executive Compensation" and "Pension Plans" in the Company's 1998 Proxy Statement is incorporated herein by this reference. Information appearing under the captions "Report of the Compensation and Stock Option Committee; Report of the Section 162(m) Committee" and "Stock Performance Graph" in the Company's 1998 Proxy Statement is not incorporated herein by this reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Information appearing under the caption "Beneficial Ownership of Securities" in the Company's 1998 Proxy Statement is incorporated herein by this reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Note J to the consolidated financial statements, included on page 34 of the Company's 1997 Annual Report to Stockholders, and the captions "Certain Relationships and Transactions" and "Compensation Committee Interlocks and Insider Participation" in the Company's 1998 Proxy Statement contain information about certain relationships and related transactions and are incorporated herein by this reference. 10
11 SAFEWAY INC. AND SUBSIDIARIES PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) THE FOLLOWING DOCUMENTS ARE FILED AS A PART OF THIS REPORT: 1. Consolidated Financial Statements of the Company are incorporated by reference in PART II, Item 8: Consolidated Statements of Income for fiscal 1997, 1996, and 1995. Consolidated Balance Sheets as of the end of fiscal 1997 and 1996. Consolidated Statements of Cash Flows for fiscal 1997, 1996, and 1995. Consolidated Statements of Stockholders' Equity for fiscal 1997, 1996, and 1995. Notes to Consolidated Financial Statements. Independent Auditors' Report. 2. Consolidated Financial Statement Schedules: None required 3. The following exhibits are filed as part of this report: <TABLE> <S> <C> Exhibit 2.1 Agreement and Plan of Merger dated as of December 15, 1996, by and among Safeway Inc., SSCI Merger Sub, Inc. and The Vons Companies, Inc., as amended on January 8, 1997 (incorporated by reference to Exhibit 2.1 to Registrant's Registration on Form S-4 No. 333-22837 dated March 5, 1997). Exhibit 2.2 Amended and Restated Stock Repurchase Agreement, dated as of January 8, 1997 by and between Safeway Inc. and SSI Associates, L.P. (incorporated by reference to Exhibit 2.1 to Registrant's Current Report on Form 8-K dated January 8, 1997). Exhibit 3.1 Restated Certificate of Incorporation of the Company and Certificate of Amendment of Restated Certificate of Incorporation by the Company (incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 15, 1996). Exhibit 3.2 Form of By-laws of the Company as amended (incorporated by reference to Exhibit 3.2 to Registration Statement No. 33-33388), and Amendment to the Company's By-laws effective March 8, 1993 (incorporated by reference to Exhibit 3.2 to Registrant's Form 10-K for the year ended January 2, 1993). Exhibit 4(i).1 Specimen Common Stock Certificate (incorporated by reference to Exhibit 4(i).2 to Registration Statement No. 33-33388). Exhibit 4(i).2 Registration Rights Agreement dated November 25, 1986 between the Company and certain limited partnerships (incorporated by reference to Exhibit 4(i).4 to Registration Statement No. 33-33388). Exhibit 4(i).3 Indenture dated as of November 20, 1991 between the Company and The Bank of New York, as Trustee, relating to the Company's Senior Subordinated Debt Securities (incorporated by reference to Exhibit 4.1 of Registrant's Form 8-K dated November 13, 1991), as supplemented by the Supplemental Indenture dated as of September 4, 1997. </TABLE> 11
12 SAFEWAY INC. AND SUBSIDIARIES ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (CONTINUED) <TABLE> <S> <C> Exhibit 4(i).4 Form of Officers' Certificate establishing the terms of the 10% Senior Subordinated Notes due December 1, 2001, including the form of Note (incorporated by reference to Exhibit 4.4 of Registrant's Form 8-K dated November 13, 1991). Exhibit 4(i).5 Form of Officers' Certificate establishing the terms of the 9.65% Senior Subordinated Debentures due January 15, 2004, including the form of Debenture (incorporated by reference to Exhibit 4.1 of Registrant's Form 8-K dated January 15, 1992). Exhibit 4(i).6 Indenture dated as of February 1, 1992 between the Company and The First National Bank of Chicago, as Trustee, relating to the Company's 9.30% Senior Secured Debentures due 2007, including the form of Debenture and the forms of Deed of Trust and Environmental Indemnity Agreement attached as exhibits thereto (incorporated by reference to Exhibit 4(i).14 of Registrant's Form 10-K for the year ended December 28, 1991), as supplemented by the Supplemental Indenture dated as of September 4, 1997. Exhibit 4(i).7 Indenture dated as of March 15, 1992 between the Company and Harris Trust and Savings Bank, as Trustee, relating to the Company's Senior Subordinated Debt Securities (incorporated by reference to Exhibit 4.1 of Registrant's Form 8-K dated March 17, 1992), as supplemented by the Supplemental Indenture dated as of September 4, 1997. Exhibit 4(i).8 Form of Officers' Certificate establishing the terms of the 9.35% Senior Subordinated Notes due March 15, 1999 and the 9.875% Senior Subordinated Debentures due March 15, 2007, including the form of Note and form of Debenture (incorporated by reference to Exhibit 4.2 of Registrant's Form 8-K dated March 17, 1992). Exhibit 4(i).9 Indenture dated as of September 1, 1992 between the Company and The Chase Manhattan Bank (National Association), as Trustee, relating to the Company's Debt Securities (incorporated by reference to Exhibit 4.1 of Registrant's Form 8-K dated September 16, 1992), as supplemented by the Supplemental Indenture dated as of September 4, 1997. Exhibit 4(i).10 Form of Officers' Certificate relating to the Company's Fixed Rate Medium-Term Notes and the Company's Floating Rate Medium-Term Notes, form of Fixed Rate Note and form of Floating Rate Note (incorporated by reference to Exhibits 4.2, 4.3 and 4.4 of Registrant's Form 8-K dated September 16, 1992). Exhibit 4(i).11 Form of Officers' Certificate establishing the terms of a separate series of Safeway Inc.'s Medium-Term Notes entitled 10% Senior Notes due November 1, 2002, including the form of Note (incorporated by reference to Exhibits 4.1 and 4.2 of Registrant's Form 8-K dated November 5, 1992). Exhibit 4(i).12 Form of Officers' Certificate establishing the terms of a separate series of Safeway Inc.'s Medium-Term Notes entitled Medium-Term Notes due June 1, 2003 (Series OPR-1), including the form of Note (incorporated by reference to Exhibits 4.1 and 4.2 of Registrant's Form 8-K dated June 1, 1993). </TABLE> 12
13 SAFEWAY INC. AND SUBSIDIARIES ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (CONTINUED) <TABLE> <S> <C> Exhibit 4(i).13 Common Stock Purchase Warrants to purchase 14,148,969 shares of Safeway Inc. common stock. Exhibit 4(i).14 Credit Agreement dated as of April 8, 1997 among Safeway Inc., The Vons Companies, Inc. and Canada Safeway Limited as Borrowers; Bankers Trust Company as Administrative Agent; The Chase Manhattan Bank as Syndication Agent; The Bank of Nova Scotia and Bank of America National Trust and Savings Association as Documentation Agents; the agents listed therein as Agents; and the lenders listed therein as Lenders. (incorporated by reference to Exhibit 4(i).1 of the Registrant's Form 10-Q for the quarterly period ended March 22, 1997). Exhibit 4(i).15 Indenture, dated as of September 10, 1997, between Safeway Inc. And The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.1 to Registrant's Form 8-K dated September 10, 1997). Exhibit 4(i).16 Form of Officers' Certificate establishing the terms of the Registrant's 6.85% Senior Notes due 2004, the Registrant's 7.00% Senior Notes due 2007 and the company's 7.45% Senior Debentures due 2027 (incorporated by reference to Exhibit 4.2 to Registrant's Form 8-K dated September 10, 1997). Exhibit 4(i).17 Form of 6.85% Senior Note due 2004 (incorporated by reference to Exhibit 4.3 to Registrant's Form 8-K dated September 10, 1997). Exhibit 4(i).18 Form of 7.00% Senior Note due 2007 (incorporated by reference to Exhibit 4.4 to Registrant's Form 8-K dated September 10, 1997). Exhibit 4(i).19 Form of 7.45% Senior Debenture due 2027 (incorporated by reference to Exhibit 4.6 to Registrant's Form 8-K dated September 10, 1997). Exhibit 4(iii) Registrant agrees to provide the Securities and Exchange Commission, upon request, with copies of instruments defining the rights of holders of long-term debt of the Registrant and all of its subsidiaries for which consolidated financial statements are required to be filed with the Securities and Exchange Commission. Exhibit 10(iii).1* Safeway Inc. Outside Director Equity Purchase Plan (incorporated by reference to Exhibit 4.1 to Registration Statement No. 33-36753), and First Amendment to the Safeway Inc. Outside Director Equity Purchase Plan dated as of July 5, 1994 (incorporated by reference to Exhibit 10(iii).1 to Registrant's Form 10-Q for the quarterly period ended September 10, 1994). Exhibit 10(iii).2* Share Appreciation Rights Plan of Canada Safeway Limited (incorporated by reference to Exhibit 10(iii).17 to Registrant's Form 10-K for the year ended December 29, 1990) and Amendment No. 1 thereto dated December 13, 1991 (incorporated by reference to Exhibit 10(iii).17 to Registrant's Form 10-K for the year ended December 28, 1991). Exhibit 10(iii).3* Share Appreciation Rights Plan of Lucerne Foods Ltd. (incorporated by reference to Exhibit 10(iii).18 to Registrant's Form 10-K for the year ended December 29, 1990) and Amendment No. 1 thereto dated December 13, 1991 (incorporated by reference to Exhibit 10(iii).18 to Registrant's Form 10-K for the year ended December 28, 1991). Exhibit 10(iii).4* Stock Option Plan for Consultants of Safeway Inc. (incorporated by reference to Exhibit 10(iii).7 to Registrant's Form 10-Q for the quarterly period ending June 19, 1993). </TABLE> * Management contract, or compensatory plan or arrangement. 13
14 SAFEWAY INC. AND SUBSIDIARIES ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (CONTINUED) <TABLE> <S> <C> Exhibit 10(iii).5* First Amendment to the Stock Option Plan for Consultants of Safeway Inc. (incorporated by reference to Exhibit 10(iii).7 to Registrant's Form 10-K for the year ended January 1, 1994). Exhibit 10(iii).6* 1994 Amended and Restated Stock Option and Incentive Plan for Key Employees of Safeway Inc. (incorporated by reference to Exhibit 10(iii).8 to Registrant's Form 10-K for the year ended January 1, 1994) and First Amendment thereto dated March 1, 1995 (incorporated by reference to Exhibit 10(iii).7 of Registrant's Form 10-K/A for the year ended December 31, 1994). Exhibit 10(iii).7* Operating Performance Bonus Plan for Executive Officers of Safeway Inc. (incorporated by reference to Exhibit 10(iii).9 to Registrant's Form 10-K for the year ended January 1, 1994); First Amendment thereto dated January 1, 1997. (incorporated by reference to Exhibit 110(iii).12 of Registrant's Form 10-K for the year ended December 28, 1996); Second Amendment thereto dated October 7, 1997; and Third Amendment thereto dated March 10, 1998. Exhibit 10(iii).8* Capital Performance Bonus Plan for Executive Officers of Safeway Inc. Exhibit 10(iii).9* Retirement Restoration Plan of Safeway Inc. (incorporated by reference to Exhibit 10(iii).11 to Registrant's Form 10-K for the year ended January 1, 1994). Exhibit 10(iii).10* Deferred Compensation Plan for Safeway Directors (incorporated by reference to Exhibit 10(iii).11 of Registrant's Form 10-K for the year ended December 31, 1994). Exhibit 10(iii).11* Form of stock option agreement for former directors of The Vons Companies, Inc. (incorporated by reference to Exhibit 10(iii).12 of Registrant's Form 10-K for the year ended December 28, 1996). Exhibit 10(iii).12* The Vons Companies, Inc. Management Stock Option Plan (incorporated by reference to Exhibit 10.3 to The Vons Companies, Inc. Annual Report on Form 10-K for the twenty-seven weeks ended January 3, 1988). Exhibit 10(iii).13* The Vons Companies, Inc. 1990 Stock Option and Restricted Stock Plan (incorporated by reference to Appendix A to The Vons Companies, Inc. Proxy Statement for its May 17, 1990 Annual Meeting of Shareholders). Exhibit 10(iii).14* Amendment, dated February 17, 1993, to The Vons Companies, Inc. 1990 Stock Option and Restricted Stock Plan (incorporated by reference to Exhibit 10.13.1 to The Vons Companies, Inc. Form 10-Q for the quarterly period ended March 28, 1993). Exhibit 10(iii).15* Amendment, effective as of December 13, 1996, to The Vons Companies, Inc. 1990 Stock Option and Restricted Stock Plan (incorporated by reference to Exhibit 10.7.2 to The Vons Companies, Inc. Form 10-K for the fiscal year ended December 29, 1996). Exhibit 10(iii).16* Form of Amendments, dated April 8, 1997, to The Vons Companies, Inc. Management Stock Option Plan and The Vons Companies, Inc. 1990 Stock Option and Restricted Stock Plan (incorporated by reference to Exhibit 4.5 to Registrant's Form S-4 filed on March 5, 1997). </TABLE> 14
15 SAFEWAY INC. AND SUBSIDIARIES ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (CONTINUED) <TABLE> <S> <C> Exhibit 11.1 Computation of Earnings Per Share (incorporated by reference to page 38 of the Company's 1997 Annual Report to Stockholders). Exhibit 12.1 Computation of Ratio of Earnings to Fixed Charges. Exhibit 13.1 Registrant's 1997 Annual Report to Stockholders (considered filed to the extent specified in Item 1, Item 2, Item 3, Item 5, Item 6, Item 7, Item 8, Item 13 and Exhibit 11.1 above). Exhibit 22.1 Schedule of Subsidiaries. Exhibit 23.1 Independent Auditors' Consent. Exhibit 27 Financial Data Schedule (electronic filing only). </TABLE> - -------------- * Management contract, or compensatory plan or arrangement. (b) REPORTS ON FORM 8-K: On September 10, 1997, the Company filed a Current Report on Form 8-K stating under "Item 5. Other Events" that on that day it had completed an underwritten offering of $200 million aggregate principal amount of its 6.85% Senior Notes due 2004, $250 million aggregate principal amount of its 7.00% Senior Notes due 2007, and $150 million aggregate principal amount of its 7.45% Senior Debentures due 2027 under its Registration Statement on Form S-3 filed with the Securities and Exchange Commission on August 4, 1997 (File no. 333-32741). 15
16 SAFEWAY INC. AND SUBSIDIARIES SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. By: /s/ Steven A. Burd Date: March 24, 1998 - ------------------------ --------------------- SAFEWAY INC. Steven A. Burd President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: <TABLE> <S> <C> /s/ Julian C. Day /s/ David F. Bond - ------------------ ----------------- Julian C. Day David F. Bond Executive Vice President and Senior Vice President Chief Financial Officer Finance and Control Date: March 24, 1998 Date: March 24, 1998 </TABLE> <TABLE> <CAPTION> Director Date -------- ---- <S> <C> /s/Steven A. Burd March 24, 1998 - ----------------- -------------- Steven A. Burd /s/ Sam Ginn March 24, 1998 - ------------ -------------- Sam Ginn /s/ James H. Greene, Jr. March 24, 1998 - ------------------------ -------------- James H. Greene, Jr. /s/ Paul Hazen March 24, 1998 - -------------- -------------- Paul Hazen /s/ Henry R. Kravis March 24, 1998 - -------------------------- -------------- Henry R. Kravis /s/ Robert I. MacDonnell March 24, 1998 - -------------------------- -------------- Robert I. MacDonnell /s/ Peter A. Magowan March 24, 1998 - -------------------- -------------- Peter A. Magowan /s/ George R. Roberts March 24, 1998 - --------------------- -------------- George R. Roberts /s/ Michael T. Tokarz March 24, 1998 - --------------------- -------------- Michael T. Tokarz </TABLE> 16
17 SAFEWAY INC, AND SUBSIDIARIES Exhibit Index LIST OF EXHIBITS FILED WITH FORM 10-K FOR THE PERIOD ENDED JANUARY 3, 1998 Exhibit 4(i).3 Supplemental Indenture dated as of September 4, 1997 between the Company and The Bank of New York, as Trustee, relating to the Company's Senior Subordinated Debt Securities. Exhibit 4(i).6 Supplemental Indenture dated as of September 4, 1997 between the Company and The First National Bank of Chicago, as Trustee, relating to the Company's 9.30% Senior Secured Debentures due 2007. Exhibit 4(i).7 Supplemental Indenture dated as of September 4, 1997 between the Company and Harris Trust and Savings Bank, as Trustee, relating to the Company's Senior Subordinated Debt Securities. Exhibit 4(i).9 Supplemental Indenture dated as of September 4, 1997 between the Company and The Chase Manhattan Bank (National Association), as Trustee, relating to the Company's Debt Securities. Exhibit 4(i).13 Common Stock Purchase Warrants to purchase 14,148,969 shares of Safeway Inc. common stock. Exhibit 10(iii).7 Second Amendment to the Operating Performance Bonus Plan for Executive Officers of Safeway Inc. dated October 7, 1997 and Third Amendment to the Operating Performance Bonus Plan for Executive Officers of Safeway Inc. dated March 10, 1988. Exhibit 10(iii).8 The Capital Performance Bonus Plan for Executive Officers of Safeway Inc. Exhibit 11.1 Computation of Earnings Per Share (incorporated by reference to page 38 of the Company's 1997 Annual Report to Stockholders). Exhibit 12.1 Computation of Ratio of Earnings to Fixed Charges Exhibit 13.1 Registrant's 1997 Annual Report to Stockholders (considered filed to the extent specified in Item 1, Item 2, Item 3, Item 5, Item 6, Item 7, Item 8, Item 13 and Exhibit 11.1 above). Exhibit 22.1 Schedule of Subsidiaries Exhibit 23.1 Independent Auditors' Consent. Exhibit 27 Financial Data Schedule (electronic filing only)