The information in this Form 8-K, including the exhibit, 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 Safeway Inc., whether made before or after the date hereof, regardless of any general incorporation language in such filing.

On February 26, 2009, we issued our earnings press release for the fourth fiscal quarter and full year 2008. A copy of our press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

In the press release and our other public statements in connection with the press release, we use the following financial measures that are not measures of financial performance under U.S. generally accepted accounting principles (non-GAAP financial measures):

• "Adjusted EBITDA" which is defined by our bank credit agreement as EBITDA (earnings before interest, income taxes, depreciation and amortization), excluding the following:

• LIFO expense;

• Stock option expense;

• Property impairment charges; and

• Equity in losses of unconsolidated affiliates.

• "Adjusted Debt" which is defined by our bank credit agreement as total debt less cash and equivalents in excess of $75.0 million.

• "Adjusted EBITDA as a multiple of interest expense" which is calculated by dividing Adjusted EBITDA by interest expense.

• "Adjusted Debt to Adjusted EBITDA" which is calculated by dividing Adjusted Debt by Adjusted EBITDA.

• "free cash flow" which is calculated as net cash flow from operating activities, as adjusted to exclude payables related to third-party gift cards, net of receivables, less net cash flow used by investing activities. Cash from the sale of third-party gift cards is held for a short period of time and then remitted, less our commission, to card partners. Because this cash flow is temporary, it is not available for other uses, and it is therefore excluded from our calculation of free cash flow.

• "adjusted earnings per share" for fiscal 2008 and the fourth quarter of fiscal 2008, which is defined as reported diluted earnings per share, excluding the estimated effect of Hurricane Ike.

Management believes that "Adjusted EBITDA," "Adjusted Debt" and the related ratios are useful measures of operating performance that facilitate management's evaluation of our ability to service debt and our capability to incur more debt to generate the cash needed to grow the business (including at times when interest rates fluctuate). Omitting interest, taxes and the other enumerated items provides a financial measure that is useful to management in assessing operating performance because the cash our business operations generate enables us to incur debt and thus to grow.

Management believes that "Adjusted EBITDA" and the related ratios also facilitate comparisons of our results of operations with those of companies having different capital structures. Since the levels of indebtedness, tax structures, methodologies in calculating LIFO expense and unconsolidated affiliates that other companies have are different from ours, we omit these amounts to facilitate investors' ability to make these comparisons. Similarly, we omit depreciation and amortization because other companies may employ a greater or lesser amount of owned property, and because, in management's experience, whether a store is new or one that is fully or mostly depreciated does not necessarily correlate to the contribution that such store makes to operating performance.

Management also believes that investors, analysts and other interested parties view our ability to generate "Adjusted EBITDA" as an important measure of our operating performance and that of other companies in our industry.

"Adjusted EBITDA," "Adjusted Debt," "free cash flow" and the related ratios are useful indicators of Safeway's ability to service debt and fund share repurchases that management believes will enhance stockholder value. Adjusted EBITDA also is a useful indicator of cash available for investing activities. A portion of the free cash flow that the Company generates in fiscal 2009 is expected to be spent on mandatory debt service requirements or other non-discretionary expenditures.

These non-GAAP financial measures should not be considered as an alternative to net cash from operating activities or other increases and decreases in cash as shown on our Consolidated Statements of Cash Flows for the periods indicated 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 "Adjusted EBITDA," "Adjusted Debt" and "free cash flow" differently than we do, limiting their usefulness as comparative measures.

Additional limitations include:

• "Adjusted EBITDA" does not reflect our cash expenditures for capital expenditures;

• "Adjusted EBITDA" does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;

• "Adjusted EBITDA" does not reflect cash requirements for income taxes paid; and

• Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and "Adjusted EBITDA" does not reflect any cash requirements for such replacements.

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.

RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE TO GAAP DILUTED EARNINGS
PER SHARE



                                                                   17 Weeks        53 Weeks
                                                                     Ended           Ended
                                                                  January 3,      January 3,
                                                                     2009            2009
Reported diluted earnings per share                               $      0.79     $      2.21
Adjustment to eliminate the estimated effect of Hurricane Ike            0.01            0.01

Adjusted diluted earnings per share                               $      0.80     $      2.22

(d) Exhibits.

99.1 Press Release dated February 26, 2009 of Safeway Inc.