11-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 11-K

ANNUAL REPORT

Pursuant to Section 15(d) of the Securities Exchange Act of 1934

[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2001 or

[   ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number 1-41

THE VONS COMPANIES, INC.

PHARMACISTS’ 401(k) PLAN

(Full title of the plan and the address of the plan, if different from that of the issuer named below)

SAFEWAY INC.

5918 Stoneridge Mall Road, Pleasanton, California, 94588-3229

(Name of issuer of the securities held pursuant to the plan and the address of its principal executive office)

TABLE OF CONTENTS

Exhibit A

Exhibit B

THE VONS COMPANIES, INC.

PHARMACISTS’ 401(k) PLAN

REQUIRED INFORMATION

1.	Not required to be furnished by the plan.
2.	Not required to be furnished by the plan.
3.	Not applicable.
4.	Plan financial statements and schedules prepared in accordance with the financial reporting requirements of ERISA are attached hereto as Exhibit A.

EXHIBITS

Exhibit A. Plan financial statements and schedules.

Exhibit B. Consent of Independent Auditors.

2

THE VONS COMPANIES, INC.

PHARMACISTS’ 401(k) PLAN

SIGNATURES

     The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the Benefit Plans Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:	July 15, 2002	By:	/s/ David F. Bond
			David F. Bond Benefit Plans Committee Member
	July 15, 2002		/s/ Dick W. Gonzales
			Dick W. Gonzales Benefit Plans Committee Member

EX-99.A 3 f82960exv99wa.htm EXHIBIT A

THE VONS COMPANIES, INC.
PHARMACISTS’ 401(k) PLAN

Financial Statements as of and for the
Years Ended December 31, 2001 and 2000,
Supplemental Schedule as of December 31,
2001 and Independent Auditors’ Report

THE VONS COMPANIES, INC. PHARMACISTS’ 401(k) PLAN

TABLE OF CONTENTS

		Page
INDEPENDENT AUDITORS’ REPORT			1
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000:
	Statements of Net Assets Available for Benefits		2
	Statements of Changes in Net Assets Available for Benefits		3
	Notes to Financial Statements		4-6
SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 2001 -
	Form 5500, Schedule H, Part IV, Line 4i — Supplemental Schedule of Assets Held for Investment Purposes		7

(DELOITTE & TOUCHE LLP LETTERHEAD)

INDEPENDENT AUDITORS’ REPORT

Benefit Plan Committee of Safeway, Inc.:

We have audited the accompanying statements of net assets available for benefits of The Vons Companies, Inc. Pharmacists’ 401(k) Plan (the “Plan”) as of December 31, 2001 and 2000, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2001 and 2000, and the changes in net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedule of assets held for investment purposes as of December 31, 2001 is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule has been subjected to the auditing procedures applied in our audit of the basic 2001 financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as whole.

/s/ Deloitte & Touche LLP
San Francisco, California
June 26,2002

THE VONS COMPANIES, INC. PHARMACISTS’ 401(K) PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2001 AND 2000 (In thousands)

				2001		2000
ASSETS:
	Investments at fair value:
		Investment funds		$	16,248	$	16,369
		Safeway common stock			199		—
		Short-term investment funds			2,272		1,826
		Participant loans			141		—
			Total investments		18,860		18,195
	Contributions receivable				244		232
			Total assets		19,104		18,427
LIABILITIES:
	Accrued administrative expenses				—		5
	Due to broker for securities purchased				9		—
			Total liabilities		9		5
NET ASSETS AVAILABLE FOR BENEFITS				$	19,095	$	18,422

See notes to financial statements.

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THE VONS COMPANIES, INC. PHARMACISTS’ 401(K) PLAN

STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2001 AND 2000 (IN THOUSANDS)

				2001			2000
ADDITIONS TO NET ASSETS AVAILABLE FOR BENEFITS:
	Investment income (loss):
		Interest and dividend income		$	502		$	922
		Net depreciation in fair value of investments			(1,584	)		(1,003	)
			Total investment income (loss)		(1,082	)		(81	)
	Employee contributions				2,337			2,146
	Employer contributions				243			232
			Total additions		1,498			2,297
DEDUCTIONS FROM NET ASSETS AVAILABLE FOR BENEFITS:
	Benefits paid to participants				795			983
	Administrative expenses				30			31
			Total deductions		825			1,014
NET INCREASE					673			1,283
NET ASSETS AVAILABLE FOR BENEFITS:
	Beginning of year				18,422			17,139
	End of year			$	19,095		$	18,422

See notes to financial statements.

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THE VONS COMPANIES, INC. PHARMACISTS’ 401(k) PLAN

NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2001 AND 2000

1.	PLAN DESCRIPTION
	The following description of the Vons Companies, Inc. Pharmacists’ 401(k) Plan (the “Plan”), is provided for general information only. Participants should refer to the Summary Plan Description for more complete information about the Plan’s provisions. The following description reflects all Plan amendments through December 31, 2001. On April 8, 1997, Safeway Inc. (“Safeway”) acquired all of the outstanding common stock of The Vons Companies, Inc. (“Vons”). Vons has remained the Plan Sponsor. The Plan Administrator is the Benefit Plans Committee of Safeway Inc.
	General - The Plan is a defined contribution plan which generally covers all eligible employees of Vons who are age 21 or older. Eligible employees are defined as any non-probationary pharmacist (i.e. full-time pharmacist who has been employed at least 45 days and any part-time pharmacist who has been employed at least 60 days) who is employed by Vons and who is a member of the United Food and Commercial Workers Local Union. Any eligible employee can become a plan participant on the entry date (first day of each calendar quarter). As of July 1, 2001, entry date is as soon as practicable after meeting eligibility requirements. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).
	Contributions - Employee contributions are made in the form of pretax salary deductions. Employees may elect to contribute 1% to 18% (25% effective July 1, 2001) of their eligible pay, up to a maximum contribution of $10,500 for the years ended December 31, 2001 and 2000. Distributions after age 591/2 are taxed as ordinary income and are subject to withholding. The Sponsor makes an annual matching contribution equal to the lesser of (a) one-half of the employee’s contribution for the Plan Year; (b) $1,000; or (c) for any participant who works less than 1,800 straight-time hours in the Plan Year, a pro rata portion of $1,000 based on hours worked.
	Trustee - The trustee of the plan was T. Rowe Price until June 30, 2001. Effective July 1, 2001, the trustee was changed to Wells Fargo, N.A. The recordkeeper is Merrill Lynch Howard Johnson & Company.
	Participant Accounts - Each participant’s account is credited with the participant’s contribution and income thereon. Participants reimburse the Plan for administrative expenses based on the allocation of a participant’s total assets among the Funds. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
	Payment of Benefits - Benefit payments are determined and disbursed by the Trustee after receiving notice from the employer that a participant’s beneficial interest has matured due to death, disability, retirement or separation. As of July 2001, benefits are no longer permitted when participants incur financial hardship. Upon termination of employment, a participant may elect (a) to leave the balance of his or her account in the Plan until after the year end of the Plan Year of the participant’s death or the attainment of his or her retirement age, whichever comes first, or (b) to receive an immediate lump sum distribution as cash or as a rollover to another qualified plan or Individual Retirement Account.
	Participant Loans - As of July 1, 2001, participants of the Plan may borrow a minimum of $1,000 up to a maximum of 50% of their vested balance, not to exceed $50,000. The participant may choose the term

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of the loan not to exceed 4 years, unless the purpose of the loan is to acquire a principal residence in which case the term may not exceed 15 years. The interest rate on the loan is the prime rate per the Wall Street Journal on the first business day of each calendar week, plus 1%. Loans are repaid per an amortization schedule through weekly payroll deductions. The loan may be prepaid or repaid in full at any time without penalty. Loan repayments are the responsibility of the employee, whether receiving regular paychecks or not. Participants may only have one loan outstanding at a time and are charged a $10.50 servicing fee each quarter for the term of the loan. At December 31, 2001, there were 11 loans outstanding with interest rates ranging from 5.75% to 7.75%.

Allocations and Vesting - Earnings on amounts held in the investment funds are allocated to individual accounts daily, based on the proportion each account bears to the total of all account balances in the specific investment fund. Expenses in excess of available forfeited amounts are allocated on an equal basis to individual accounts quarterly. Participants are 100% vested in their contributions and earnings therein. Participants vest in the Sponsor’s matching contribution as follows:

Years of	Percentage
Vesting Service	Vested
Less than 3		0	%
3		20
4		40
5		60
6		80
7 or more		100

	Forfeited amounts are used first to restore forfeited balances of rehired participants; second, to pay Plan administrative expenses in the calendar quarter; third, to reduce the Sponsor’s contribution.
	Investment Options - Participants may direct their contributions to any one or combination of nine investment funds, as elected by the participant. Participants may change their investment options on a daily basis.
2.	SIGNIFICANT ACCOUNTING POLICIES
	Basis of Accounting - The accompanying financial statements have been prepared on the accrual basis of accounting.
	Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Plan administrator to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of additions and deductions to net assets available for benefits during the reporting period. Actual results could differ from those estimates.
	Payment of benefits are recorded when paid.
	Investments - The investment fund accounts are valued at fair value, which are based upon quoted market prices of the underlying assets. Participants designate the investment funds in which their accounts will be invested. Certain investment funds may use commonly structured derivative financial instruments (including, but not limited to, futures, options, swaps, caps and floors) to manage transaction costs, interest rate risk and maturity risk. The funds hold derivatives only when their use is appropriate and consistent with the investment objectives and policies of each fund. The funds will not invest in any

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	high risk, highly leveraged derivative instrument which is expected to cause the price volatility of the portfolio to be meaningfully different than its asset class. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
	Administrative expenses incurred by the Plan are paid first from forfeitures from employer contributions of nonvested accounts. Any expenses in excess of forfeitures are deducted each calendar quarter on a pro rata basis from the accounts of all participants.
3.	INVESTMENTS
	The fair values of individual investments that represented 5% or more of the Plan’s net assets at December 31, 2001 and 2000 were as follows (in thousands):

		2001		2000
T. Rowe Price Investment Funds:
	SEI Stable Asset Fund	$	2,272	$	—
	PIMCO Total Return Fund		2,239		—
	Alliance Growth & Income Fund		4,814		—
	Merrill Lynch S&P 500 Index Fund		6,797		—
	State Street Research Aurora Fund		1,285		—
	Prime Reserve Fund		—		1,826
	Equity Index Fund		—		9,314
	GNMA Fund		—		1,732
	Equity Income Fund		—		5,323

During the years ended December 31, 2001 and 2000, net depreciation of assets recorded at fair value, including net realized gains and losses, was as follows (in thousands):

	2001			2000
Investment funds	$	(1,553	)	$	(1,003	)
Common stock		(31	)		—
Total	$	(1,584	)	$	(1,003	)

4.	PLAN TERMINATION
	Although it has not expressed any intent to do so, the Sponsor has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of the Plan termination, participants will become 100% vested in the Sponsor’s matching contribution.
5.	TAX STATUS
	The Plan has received a favorable determination letter from the Internal Revenue Service dated November 20, 1996 stating that the Plan qualifies under Sections 401(a) and 401(k) of the Internal Revenue Code (“Code”) and that the trust is exempt from income taxes under Section 501(a) of the Code. The Plan’s administrator and the tax counsel believe that the Plan is still being operated in compliance with the applicable requirements of the Internal Revenue Code, and as of the financial statement date, the Plan was qualified and the related trust was tax-exempt. Therefore, no provision for income taxes has been included in the Plan’s financial statements.

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6.	PARTY-IN-INTEREST TRANSACTIONS
	The Plan’s investments included Safeway Inc. common stock representing party-in-interest transactions that qualify as exempt prohibited transactions.

******

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THE VONS COMPANIES, INC. PHARMACISTS’ 401(K) PLAN

FORM 5500, SCHEDULE H, PART IV, LINE 4i — SUPPLEMENTAL
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001 (In thousands)

Asset Name and Description		Current Value
SHORT-TERM INVESTMENT FUNDS:
	SEI Stable Asset Fund, #191-411	$	2,272
	PIMCO Total Return Fund (214,050 units)		2,239
	Alliance Growth & Income Fund (1,341,077 units)		4,814
	Alliance Premier Growth Fund (25,325 units)		515
	Merrill Lynch S&P 500 Index Fund (482,766 units)		6,797
	Pilgrim International Value Fund (24,033 units)		309
*	Safeway Inc. (4,767 shares)		199
	State Street Research Aurora Fund (39,707 units)		1,285
	TCW Galileo Small Cap Growth Fund (1,537 units)		289
	Participant loans (11 loans, interest rates ranging from 5.75% to 10.50%)		141
Total		$	18,860

* Represents a party-in-interest transaction.

- 8 - EX-99.B 4 f82960exv99wb.htm EXHIBIT B

EXHIBIT B

INDEPENDENT AUDITORS’ CONSENT

We consent to the incorporation by reference in Registration Statement No. 333-64354 of Safeway Inc. on Form S-8 of our report dated June 26, 2002, appearing in this Annual Report on Form 11-K of the Von's Companies, Inc. Pharmacists' 401(k) Plan and Trust for the year ended December 31, 2001.

/s/ Deloitte & Touche LLP
San Francisco, California
July 15, 2002

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EX-99.B

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