SAFEWAY INC. AND SUBSIDIARIES
FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K for Safeway Inc. (“Safeway,” the “Company,” “we” or “our”) contains certain 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. We also provide forward-looking statements in other materials which are released to the public, as well as oral forward-looking statements. Forward-looking statements contain information about our future operating or financial performance. Forward-looking statements are based on our current expectations and involve risks and uncertainties, which may be beyond our control, as well as assumptions. If assumptions prove to be incorrect or if known or unknown risks and uncertainties materialize into actual events or circumstances, actual results could differ materially from those included in or contemplated or implied by these statements. Forward-looking statements do not strictly relate to historic or current facts. Forward-looking statements are indicated by words or phrases such as “continuing,” “ongoing,” “expects,” “estimates,” “anticipates,” “believes,” “guidance” and similar words or phrases and the negative of such words or phrases. This Annual Report on Form 10-K includes forward-looking statements relating to, among other things: a potential transaction involving the sale of the Company; the distribution of the our shares of Blackhawk Network Holdings, Inc. (“Blackhawk”) to our stockholders; the potential monetization of our ownership interest in Casa Ley S.A. de C.V. (“Casa Ley”); changes to the total closed store reserve; uses of cash; ability to borrow under commercial paper program and/or bank credit facilities; sufficiency of liquidity; repayment of borrowings and debt reduction; interest expense; indemnification obligations; dividend payments on common stock; cash capital expenditures; outcomes of legal proceedings; the effect of new accounting standards; compliance with laws and regulations; amount of indebtedness; realization of deferred tax liability; expansion of proprietary private-label brands; sale of Dominick’s locations; multiemployer pension plan withdrawal liability; pension plan expense and contributions; obligations and contributions under benefit plans; the rate of return on pension assets; amounts to be recognized as a component of net periodic benefit cost; results of shrink programs; unrecognized tax benefits; unrecognized compensation cost; and repurchases of common stock. The following are among the principal factors that could cause actual results to differ materially from those included in or contemplated or implied by the forward-looking statements: • The Company’s ability to consummate a transaction involving the sale of the Company; • The Company’s ability to execute plans to distribute its Blackhawk stock to Safeway stockholders; • The Company’s ability to monetize its investment in Casa Ley;
• General business and economic conditions in our operating regions, including the rate of inflation or deflation, consumer spending levels, currency valuations, population, employment and job growth and/or losses in our markets;
• Sales volume levels and price per item trends;
• Pricing pressures and competitive factors, which could include pricing strategies, store openings, remodels or acquisitions by our competitors;
• Results of our programs to control or reduce costs, improve buying practices and control shrink; • Results of our programs to increase sales; • Results of our continuing efforts to expand corporate brands; • Results of our programs to improve our perishables and center of store departments; • The impact of generic drugs on pharmacy sales and identical-store sales; • Results of our promotional programs; • Results of our capital program;
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• Results of our efforts to improve working capital; • Results of any ongoing litigation in which we are involved or any litigation in which we may become involved; • The resolution of uncertain tax positions;
• The outcome of the agreement to sell substantially all the net assets of Canada Safeway Limited to Sobeys Inc. including the ability to use proceeds as described in this Form 10-K and the ability to project the impact of the transaction on our ongoing operations;
• The outcome of exiting the Chicago market; • The ability to achieve satisfactory operating results in all geographic areas where we operate; • Changes in the financial performance of our equity investments;
• Labor costs, including benefit plan costs and severance payments, or labor disputes that may arise from time to time and work stoppages that could occur in areas where certain collective bargaining agreements have expired or are on indefinite extensions or are scheduled to expire in the near future;
• Potential costs and risks associated with actual or potential cyber attacks; • Data security or other information technology issues that may arise;
• Failure to fully realize or delay in realizing growth prospects for existing or new business ventures, including our Blackhawk and Property Development Centers subsidiaries;
• Legislative, regulatory, tax, accounting or judicial developments, including with respect to Blackhawk; • The cost and stability of fuel, energy and other power sources; • The impact of the cost of fuel on gross margin and identical-store sales; • Discount rates used in actuarial calculations for pension obligations and self-insurance reserves; • The rate of return on our pension assets; • The availability and terms of financing, including interest rates; • Adverse developments with regard to food and drug safety and quality issues or concerns that may arise; • Loss of key members of senior management; • Unanticipated events or changes in real estate matters, including acquisitions, dispositions and impairments; • Adverse weather conditions and effects from natural disasters; • Performance in new business ventures or other opportunities that we pursue; and • The capital investment in and financial results from our retail stores. We undertake no obligation to update forward-looking statements to reflect new information, events or developments after the date hereof. For additional information regarding these risks and uncertainties, see “Item 1A. Risk Factors.” These are not intended to be a discussion of all potential risks or uncertainties, as it is not possible to predict or identify all risk factors.
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