8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

December 4, 2003

SAFEWAY INC.

(Exact name of registrant as specified in its charter)

Delaware	1-00041	94-3019135
(State or other jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification Number)

5918 Stoneridge Mall Road, Pleasanton, California	94588-3229
(Address of principal executive offices)	(Zip Code)

(925) 467-3000

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report.)

TABLE OF CONTENTS

	Item 7. Financial Statements and Exhibits.
	Item 9. Regulation FD Disclosure.
	Item 12. Results of Operations and Financial Condition
SIGNATURES
EXHIBIT INDEX
Exhibit 99.1
Exhibit 99.2

Item 7. Financial Statements and Exhibits.

(c) Exhibits.

The following exhibits are furnished with this Form 8-K:

99.1 Press Release dated December 4, 2003.
99.2 Slides Presented at December 4, 2003 Investor Conference.

Item 9. Regulation FD Disclosure.

Item 12. Results of Operations and Financial Condition

The following information is furnished under Item 9 and Item 12 of Form 8-K. The information in this Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

On December 4, 2003, Safeway issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

On December 4, 2003, we held our annual investor conference at which we presented certain slides regarding our recent performance and financial outlook, copies of which are attached hereto as Exhibit 99.2 and incorporated herein by reference. In the investor conference presentation, we used the following financial measures (non-GAAP financial measures) that are not measures of financial performance under U.S. generally accepted accounting principles (GAAP):

• “free cash flow” which is calculated as net cash flow from operating activities less net cash flow used by investing activities;

• “consensus 2003 EPS estimate from continuing operations” (before Dominick’s continuing operations and without giving effect to the impact of the Vons strike); and

• EPS for 2004 without giving effect to the impact of the Vons strike.

We believe that “free cash flow” is a useful indicator of our ability to service debt and fund share repurchases that management believes will enhance stockholder value. A portion of the free cash flow that the Company generates in 2003 is expected to be spent on mandatory debt service requirements or other non-discretionary expenditures.

The analysts’ consensus 2003 EPS estimate from continuing operations (before Dominick’s continuing operations and without giving effect to the impact of the Vons strike) is used as a baseline for estimating our 2003 net income per share (EPS), in that the 2003 fiscal year has not ended and our 2003 financial statements are not yet available. Management is unable to estimate the effect that the Vons strike will have on EPS for 2003 or 2004, and therefore is not able to provide any reconciliation of any amounts set forth herein with respect to the effect of the Vons strike.

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These non-GAAP financial measures should not be considered as alternatives to net income (loss) as a measure of performance, nor as alternatives to net cash from operating activities as a measure of liquidity. These measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Other companies in our industry may calculate “free cash flow” differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, our non-GAAP financial measures should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and use our non-GAAP financial measures supplementally. The following is a reconciliation of the non-GAAP measures to the most directly comparable financial measure calculated and presented in accordance with GAAP.

SAFEWAY INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(Dollars in millions, except per share)
(unaudited)

RECONCILIATION FROM INTERIM CASH FLOW STATEMENT TO FREE CASH FLOW

	2002			2003
Net cash flow from operating activities	$	1,493		$	1,371
Net cash flow used by investing activities		(865	)		(443	)
Free cash flow		628			928
Net cash flow used by financing activities		(656	)		(906	)
Net cash from discontinued operations		40			12
Increase in cash and equivalents	$	12		$	34

FINANCIAL GUIDANCE FOR 2004
RECONCILIATION OF GAAP CASH FLOW MEASURE TO FREE CASH FLOW ESTIMATE

Net cash flow from operating activities	$	1,900		to	2,000
Net cash flow used by investing activities		(1,200	)	to	(1,100	)
Free cash flow from continuing operations	$	700		to	900

RECONCILIATION OF ANALYSTS’ CONSENSUS 2003 EPS ESTIMATE
TO NET INCOME PER SHARE

The Consensus EPS Estimate from Continuing Operations (without giving effect to the impact of the Vons strike) for 2003 of $2.02 combined with Loss From Operations On Dominick’s of $(.01) represents an estimate of the Consensus for Net Income Per Share for 2003 of $2.01 (without giving effect to the impact of the Vons strike). Adjusted Consensus EPS for 2003 is the estimate of Consensus for Net Income Per Share for 2003 adjusted by $(.09) per share representing the amount of depreciation of Dominick’s that would have been recorded in 2003 had Dominick’s not been accounted for as an asset held for sale during the first 44 weeks of 2003, and by $(.05) per share which represents an estimate of the effect of the 2003 fiscal year having 53 weeks instead of 52 weeks. Management is unable to estimate the effect that the Vons strike will have on EPS for 2003 or 2004.

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Forward -Looking Statements

This Current Report on Form 8-K 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. Such statements relate to, among other things, same-store sales, capital expenditures, improvements in operations, gross margin and costs, shrink reduction efforts, centralization of operations and business reinvention, effects of our labor strategy, marketing strategies with respect to perishables and other items and are indicated by words or phrases such as “estimates,” “on-going,” “expects,” “comfortable,” “guidance,” “management believes,” “the Company believes,” “the Company intends,” “we believe,” “we intend,” and similar words or phrases. These statements are based on our current plans and expectations and involve risks and uncertainties. The following are among the principal factors that could cause actual results to differ materially from the forward-looking statements: general business and economic conditions in our operating regions, including the rate of inflation, consumer spending levels, population, employment and job growth in our markets; pricing pressures and competitive factors, which could include pricing strategies, store openings and remodels by our competitors; results of our programs to control or reduce costs including our ability to implement our programs to centralize buying and merchandising and realize savings from that program and the potential operating effects of implementing that program; results of our programs to reduce and control shrink; results of our programs to increase sales, including private-label sales, perishables and our promotional programs; results of our programs to improve capital management; the ability to integrate any companies we acquire and achieve operating improvements at those companies; various risks and uncertainties concerning our strategy of keeping Dominick’s in order to enhance shareholder value; changes in financial performance of other companies in which we have investments, including GroceryWorks and the amount of any inventory adjustment at Casa Ley; increases in labor costs and relations with union bargaining units representing our employees or employees of third-party operators of our distribution centers and the effect of labor strikes, including the current strike in Southern California; changes in state or federal legislation, regulation or judicial developments; the cost and stability of power sources; opportunities or acquisitions that we pursue; the availability and timely delivery of perishables and other products; market valuation assumptions and internal projections of future operating results which affect the valuation of goodwill; the rate of return on our pension assets; and the availability and terms of financing. Consequently, actual events and results may vary significantly from those included in or contemplated or implied by such statements. The Company undertakes no obligation to update forward-looking statements to reflect developments or information obtained after the date hereof and disclaims any obligation to do so.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SAFEWAY INC. (Registrant)
Date: December 4, 2003	By:	/s/ Robert A. Gordon
	Name:	Robert A. Gordon
	Title:	Senior Vice President & General Counsel

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EXHIBIT INDEX

Exhibit
No.___
99.1	Press Release dated December 4, 2003 of Safeway Inc.
99.2	Slides Presented at December 4, 2003 Investor Conference

6 EX-99.1 3 f95008exv99w1.htm EXHIBIT 99.1

EXHIBIT 99.1

Contacts: Julie Hong (925) 467-3832

SAFEWAY INC. HOLDS 2003 INVESTOR CONFERENCE

Company Provides 2004 Earnings Guidance
Company Announces 2004 Capital Expenditure Plans and Cash Flow Expectations

Pleasanton, CA — December 4, 2003 — Safeway Inc. (NYSE: SWY) will hold a conference for analysts and institutional investors today. Safeway will review its recent performance, its strategy to restore growth, its progress on executing the strategy, and its financial outlook.

For the fourth quarter through November 29, 2003, identical store sales, excluding strike affected stores, increased 0.9% excluding Dominick’s, and increased 0.4% including Dominick’s. Excluding the effect of fuel sales, identical store sales declined 0.8% excluding Dominick’s, and declined 1.2% including Dominick’s.

For the year 2004, the company is providing guidance for earnings per share of $1.95–$2.03 without giving effect to any impact from the southern California strike. The impact of the strike cannot be estimated at this time. The guidance includes Dominick’s as part of continuing operations and is based on a 52-week year compared to a 53-week year in 2003. The company also announced that it plans to spend approximately $1.2 billion to $1.4 billion in cash capital expenditures in 2004 and plans to open approximately 45 new stores and remodel 160 to 165 stores. Square footage growth is expected to be approximately 2%. Given plans for modestly higher capital spending in 2004, the company expects to generate free cash flow (cash from operating activities less cash flow used by investing activities) in 2004 in the range of $700 million to $900 million.

“We expect 2004 to be a busy year for Safeway, as we continue to refine and execute our growth strategy,” said Steve Burd, Chairman, President and CEO. “The soft economy has continued to impact our business, and it is unclear when unemployment levels in our markets will improve. In the meantime, we are planning to continue to differentiate our customer offering in order to restore steady growth to our business.”

Safeway Inc. is a Fortune 50 company and one of the largest food and drug retailers in North America. The company operates 1,702 stores in the United States and Canada and had annual sales from continuing operations of $32.4 billion in 2002. The company’s common stock is traded on the New York Stock Exchange under the symbol SWY.

The investor conference will be broadcast live over the Internet from 8:00 AM (PST) to approximately 12:00 PM (PST) at http://www.safeway.com/investor_relations. Click on Webcast Events to access the event. The presentation will be available live only and will not be available in an archived format after the meeting.

This press release 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 capital spending, identical store sales and sales growth, free cash flow, square footage growth, and earnings per share and are indicated by words or phrases such as “guidance”, “estimated”, “expected”, “plans”, and similar words or phrases. These statements are based on Safeway’s current plans and expectations and involve risks and uncertainties that could cause actual events and results to vary significantly from those included in or contemplated or implied by such statements. Please refer to Safeway’s reports and filings with the Securities and Exchange Commission for a further discussion of these risks and uncertainties.

SAFEWAY INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(Dollars in millions, except per share)
(unaudited)

FINANCIAL GUIDANCE FOR 2004
RECONCILIATION OF GAAP CASH FLOW MEASURE TO FREE CASH FLOW ESTIMATE

Net cash flow from operating activities	$	1,900		–	2,000
Net cash flow used by investing activities		(1,200	)	–	(1,100	)
Free cash flow from continuing operations	$	700		–	900

-o0o- EX-99.2 4 f95008exv99w2.htm EXHIBIT 99.2

EXHIBIT 99.2

SLIDES PRESENTED AT DECEMBER 4, 2003 INVESTOR CONFERENCE

This presentation may contain forward-looking statements. Such statements may relate to topics such as sales, pricing, gross margins, earnings growth, earnings estimates, free cash flow, operating improvements, cost reduction, capital spending and returns on capital spending, square footage growth, labor relations and other related subjects. These statements are based on Safeway's current plans and expectations and are subject to risks and uncertainties that could cause actual events and results to vary significantly from those implied by such statements. We ask you to refer to Safeway's reports and filings with the SEC for a further discussion of these risks and uncertainties. Safe Harbor Language

2003 Results - Continuing Operations 36 Wks 36 Wks 2002 2003 Sales 22,388 23,065 Operating Profit 1,682 1,237 EPS $1.88/Share* $1.34/Share Free Cash Flow 628 928 Debt Incr/(Decr) 728 (871) *Before Cumulative Effect Of Accounting Change Note: One-Time Charges 2002-8¢; 2003-4¢ $Millions

Key Cost Components* 2003 2004 Health Care Costs (133) (89) Non-Fuel IDs (120) 60 ** Wages & Fringe (117) (63) Pension Cost (104) (30) Transitional Marketing Issues (70) 0 Shrink (38) 70 *Excludes The Impact Of The Vons Strike **Assumes A 1% Increase In Non-Fuel IDs Estimated Cost Changes $ Millions

Strike Adjusted ID Sales* SKUs 1Q03 -0.005 2Q03 -0.005 3Q03 0.002 4Q03TD* 0.009 Excluding Dominick's *Adjusted To Exclude The Strike Affected Stores

Strike Adjusted ID Sales* SKUs 1Q03 -0.012 2Q03 -0.012 3Q03 -0.004 4Q03TD* 0.004 *Adjusted To Exclude The Strike Affected Stores Including Dominick's

SKUs 1Q03 -0.023 2Q03 -0.022 3Q03 -0.015 4Q03TD* -0.008 Strike Adjusted Non-Fuel ID Sales* Excluding Dominick's *Adjusted To Exclude The Strike Affected Stores

SKUs 1Q03 -0.03 2Q03 -0.029 3Q03 -0.021 4Q03TD* -0.012 Strike Adjusted Non-Fuel ID Sales* Including Dominick's *Adjusted To Exclude The Strike Affected Stores

Financial Guidance For 2004 EPS Range Of $1.95-$2.03 Includes Dominick's As A Continuing Operation Contains One Less Week Than 2003 Represents A 4%-9% Increase Over Adjusted 2003 Consensus Estimate Expected To Generate $700-900 Million Of Free Cash Flow Excluding Vons Strike

2003 Adjusted Consensus EPS Estimate Consensus EPS Estimate From $2.02 1,2 Continuing Operations (Before Dominick's Continuing Operations) Loss From Operations On Dominick's3 (.01) Incremental Depreciation On Dominick's (.09) In 20044 Remove 53rd Week (.05) Adjusted EPS $1.87 For Comparison To 2004 1Based On First Call Consensus Estimate As Of 11/24/03 2Excludes The Effects Of The Vons Strike 3Excludes Any Adjustment To The Fair Value Of Dominick's 4Dominick's Not Depreciated When It Was An Asset Held For Sale During The First 44 Weeks Of 2003

Summary Comments We Are Executing An Operational Strategy That Addresses All Of The O&A And Gross Margin Issues That Have Challenged Us In Recent Years Transitional Gross Margin Issues Are Now Behind Us And Centralization Benefits Are On Track Shrink Reduction Effort Has Been Reengineered And Is Now Consistent With Sales Growth Labor Strategy Has Been Very Successful But Much Work Remains Business Reinvention Is Underway And Should Contribute Significantly For Several Years

Summary Comments We Are Focused On Differentiating Our Offering And Are Making Good Progress Our Rancher's Reserve Is The Best Beef In The Market, And We Are Working Hard On The Other Quality Dimensions We Are On A Path To Having The Best Produce In The Market The Quality Components For Deli, Bakery And Floral Are Further Behind...But We Are Confident Of Creating Points Of Real Difference The Physical Store Environment Is Being Changed To Reinforce Our Perishable Strategy

Summary Comments Price Adjustments Are Being Made To Narrow The Gap With Discount Operations Initial Efforts Do Not Sacrifice Any Gross Margin Later Efforts May Sacrifice Gross Margin Rate But Not Total Dollars Price Changes That Negatively Impact Total Gross Margin Dollars, Will Be Financed With Cost Reduction

Keeping Dominick's Will Enhance Shareholder Value Without A Labor Agreement...We Would Have Needed To Lower The Price We Can Improve The Operation By Closing Some Losing Stores Further Improvements Can Be Achieved With A New President Market Multiples Currently At A Near Low Point

EX-99.1

exv99w1

EX-99.2

exv99w2