SC TO-I/A

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE TO/A

(AMENDMENT NO. 1)

(RULE 13E-4)

TENDER OFFER STATEMENT UNDER SECTION 14(D)(1) OR SECTION 13(E)(1)

OF THE SECURITIES EXCHANGE ACT OF 1934

SAFEWAY INC.

(NAME OF SUBJECT COMPANY (ISSUER) AND FILING PERSON (OFFEROR))

OPTIONS TO PURCHASE COMMON STOCK, PAR VALUE $0.01 PER SHARE

WITH AN EXERCISE PRICE GREATER THAN US$35.00 PER SHARE

(TITLE OF CLASS OF SECURITIES)

786514

(CUSIP NUMBER OF CLASS OF SECURITIES)

ROBERT A. GORDON

SENIOR VICE PRESIDENT AND GENERAL COUNSEL

SAFEWAY INC.

5918 STONERIDGE MALL ROAD

PLEASANTON, CALIFORNIA 94588-3229

(925) 467-3000

(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE

NOTICES AND COMMUNICATIONS ON BEHALF OF THE FILING PERSON)

COPY TO:

SCOTT R. HABER, ESQ.

KIMBERLY L. WILKINSON, ESQ.

LATHAM & WATKINS LLP

505 MONTGOMERY ST., SUITE 1900

SAN FRANCISCO, CALIFORNIA 94111

(415) 391-0600

CALCULATION OF FILING FEE

TRANSACTION VALUATION*	AMOUNT OF FILING FEE
$484,597,083	$61,399.00

* Calculated solely for purposes of determining the filing fee. This amount assumes that options to purchase 23,824,832 shares of common stock of Safeway Inc. having an aggregate value of $484,597,083 as of August 31, 2004, will be surrendered and/or cancelled pursuant to this offer. The aggregate value of such options was calculated based on the Black-Scholes option pricing model. The amount of the filing fee, calculated in accordance with Rule 0-11(b)(2) of the Securities Exchange Act of 1934, as amended, equals $126.70 per million dollars of the value of the transaction.

x Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

Amount Previously Paid: $61,399.00	Filing party: Safeway Inc.
Form or Registration No.: Schedule TO	Date Filed: September 7, 2004

¨ Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

Check the appropriate boxes below to designate any transactions to which the statement relates:

¨ third-party tender offer subject to Rule 14d-1

x issuer tender offer subject to Rule 13e-4

¨ going private transaction subject to Rule 13e-3

¨ amendment to Schedule 13D under Rule 13d-2

Check the following box if the filing is a final amendment reporting the results of the tender offer ¨

This Amendment No. 1 amends and supplements the Tender Offer Statement on Schedule TO (the “Schedule TO”) filed with the Securities and Exchange Commission on September 7, 2004 relating to an offer by Safeway Inc., a Delaware corporation (“Safeway”), to exchange (a) options with an exercise price of greater than US$35.00 (the “options”) to purchase shares of Safeway’s common stock (“common stock”), par value $0.01 per share, outstanding under the 1999 Amended and Restated Equity Participation Plan of Safeway Inc., as amended (the “1999 Equity Participation Plan”), and held by eligible employees, for replacement options (the “replacement options”) to purchase shares of common stock to be granted under the 1999 Equity Participation Plan, and (b) stock rights (“Rights”) consisting of an option to purchase shares of common stock outstanding under the 1999 Equity Participation Plan, together with a corresponding stock appreciation right (“SAR”) outstanding under the 2001 Amended and Restated Share Appreciation Rights Plan of Canada Safeway Limited, as amended (“Share Appreciation Rights Plan”) and having a base price (“base price”) greater than US$35.00 per share (an “eligible Right”), for replacement Rights granted under the 1999 Equity Participation Plan and the Share Appreciation Rights Plan, upon the terms and subject to the conditions set forth in the Offer to Exchange Certain Outstanding Options, dated September 7, 2004 (the “offer to exchange”), and the related Stock Option Exchange Form (the “election form” and, together with the offer to exchange, as they may be amended from time to time, the “offer”).

This Amendment No. 1 to the Tender Offer Statement on Schedule TO is intended to satisfy the reporting requirements of Section 13(e) of the Securities Exchange Act of 1934, as amended.

Item 12. Exhibits

Item 12 of the Schedule TO is hereby amended and restated as follows so as to add Exhibit (a)(1)(xv), attached hereto, to supplement the previously filed Exhibit (a)(1)(i), and to amend the previously filed Exhibits (a)(1)(vi) and (a)(1)(viii). The information in the Offer to Exchange, the Stock Option Exchange Form, the Amended Reminder Communication to Eligible Safeway Employees to be delivered on or around September 21, 2004, a copy of which is filed with this Schedule TO as Exhibit (a)(1)(vi), the Amended Form of Communication to Tendering Option Holders regarding final election confirmation to be delivered on or around October 7, 2004, a copy of which is filed with this Schedule TO as Exhibit (a)(1)(viii), and the Supplement to the Offer to Exchange Certain Outstanding Options dated September 21, 2004, a copy of which is filed with this Schedule TO as Exhibit (a)(1)(xv), are incorporated herein by reference in answer to items 1 through 11 in this Amendment No. 1 to the Tender Offer Statement on
Schedule TO. The following items are inapplicable: Item 7 (the information required by Item 1007(d) of Regulation M-A); Item 9 (the information required by Item 1009(a) of Regulation M-A); Item 10 (the information required by Item 1010(b) of Regulation
M-A); and Item 13.

(a)(1)(i)	Offer to Exchange Certain Outstanding Options, dated September 7, 2004.*
(a)(1)(ii)	Safeway Stock Option Exchange Form.*
(a)(1)(iii)	Communication to Safeway Employees from Lina Naumann, Compensation Manager, dated September 7, 2004.*
(a)(1)(iv)	Email Communication to certain officers of Safeway, dated September 7, 2004.*
(a)(1)(v)	Form of Communication to Tendering Option Holders Confirming Receipt of Safeway Stock Option Exchange Form.*
(a)(1)(vi)	Reminder Communication to Eligible Safeway Employees to be delivered on or around September 21, 2004.
(a)(1)(vii)	Final Reminder Communication to certain officers of Safeway to be delivered on or around September 27, 2004.*
(a)(1)(viii)	Form of Communication to Tendering Option Holders regarding final election confirmation to be delivered on or around October 7, 2004.
(a)(1)(ix)	Form of Communication to Non-Participating Tendering Option Holders to be delivered on or around October 7, 2004.*
(a)(1)(x)	Form of Communication to Participating Eligible Safeway Employees to be delivered on or after April 7, 2005.*
(a)1(xi)	Form Script of video presentation made available to eligible employees after September 7, 2004.*
(a)(1)(xii)	Safeway’s Annual Report on Form 10-K, as amended, for the period ended January 3, 2004. Filed with the Securities and Exchange Commission and incorporated herein by reference.
(a)(1)(xiii)	Safeway’s Quarterly Report on Form 10-Q, as amended, for the period ended March 27, 2004. Filed with the Securities and Exchange Commission and incorporated herein by reference.
(a)(1)(xiv)	Safeway’s Quarterly Report on Form 10-Q for the period ended June 19, 2004. Filed with the Securities and Exchange Commission and incorporated herein by reference.

(a)(1)(xv)	Supplement to the Offer to Exchange Certain Outstanding Options, dated September 21, 2004.
(a)(2)	Not applicable.
(a)(3)	Not applicable.
(a)(4)	Not applicable.
(a)(5)(i)	Safeway’s Definitive Proxy Statement on Schedule 14A for Safeway’s 2004 Annual Stockholders’ Meeting. Filed with the Securities and Exchange Commission and incorporated herein by reference.
(a)(5)(ii)	Communication to employees of Safeway dated August 27, 2004. Filed with the Securities and Exchange Commission on Schedule TO-C on August 27, 2004.
(a)(5)(iii)	Email Communication to certain officers of Safeway, dated August 27, 2004. Filed with the Securities and Exchange Commission on Schedule TO-C on August 27, 2004.
(a)(5)(iv)	Communication to employees of Safeway dated September 2, 2004. Filed with the Securities and Exchange Commission on Schedule TO-C on September 2, 2004.
(b)	Not applicable.
(d)(1)	Restated Certificate of Incorporation of Safeway Inc. as amended June 17, 2004, May 12, 1998 and May 14, 1996. Filed as Exhibit 3.1 to Safeway’s Quarterly Report on Form 10-Q for the quarterly period ended June 19, 2004 and incorporated by reference herein.
(d)(2)	Form of By-laws of Safeway, as amended and restated. Filed as Exhibit 3.2 to Safeway’s Quarterly Report on Form 10-Q for the quarterly period ended September 9, 2000 and incorporated by reference herein.
(d)(3)	1999 Amended and Restated Equity Participation Plan of Safeway Inc. Filed as Exhibit 10(iii).1 to Safeway’s Quarterly Report on Form 10-Q for the quarterly period ending June 19, 1999 and incorporated by reference herein.
(d)(4)	Amendment to the 1999 Amended and Restated Equity Participation Plan of Safeway Inc. Filed as Exhibit 4.3 to Safeway’s Registration Statement on Form S-8 No. 333-112976 and incorporated by reference herein.
(d)(5)	Amendments dated February 26, 2004, May 2, 2004 and June 2, 2004 to the Amended and Restated 1999 Equity Participation Plan of Safeway Inc. and Form of Non-Qualified Stock Option Agreement for U.S. Employees for the Amended and Restated 1999 Equity Participation Plan. Filed as Exhibits 10(iii).27, 10(iii).28, 10(iii).29 and 10(iii).30 to Safeway’s Quarterly Report on Form 10-Q for the quarterly period ending June 19, 2004 and incorporated by reference herein.
(d)(6)	The 2001 Amended and Restated Share Appreciation Rights Plan of Canada Safeway Limited. Filed as Exhibit 10(iii).33 to Safeway’s Quarterly Report on Form 10-Q for the quarterly period ending June 19, 2004 and incorporated by reference herein.
(d)(7)	Form of Stock Rights Agreement for the Amended and Restated 1999 Equity Participation Plan of Safeway Inc. and the 2001 Amended and Restated Share Appreciation Rights Plan of Canada Safeway Limited. Filed as Exhibit 10(iii).34 to Safeway’s Quarterly Report on Form 10-Q for the quarterly period ending June 19, 2004 and incorporated by reference herein.
(d)(8)	Indenture, dated as of September 1, 1992, between Safeway Inc. and The Chase Manhattan Bank (National Association), as Trustee, relating to Safeway’s Debt Securities, filed as Exhibit 4.1 of Safeway’s Form 8-K dated September 16, 1992 and incorporated by reference herein, as supplemented by the Supplemental Indenture dated as of September 4, 1997, filed as Exhibit 4(i).9 to Safeway’s Form 10-K for the year ended January 3, 1998 and incorporated by reference herein.
(d)(9)	Form of Officers’ Certificate relating to Safeway’s Fixed Rate Medium-Term Notes and Safeway’s Floating Rate Medium-Term Notes, form of Fixed Rate Note and form of Floating Rate Note, filed as Exhibits 4.2, 4.3 and 4.4 of Registrant’s Form 8-K dated September 16, 1992 and incorporated by reference herein.
(d)(10)	Credit Agreement, dated as of May 24, 2001, among Safeway Inc. and Canada Safeway Limited as Borrowers; Deutsche Bank Alex. Brown Inc. and J.P. Morgan Securities Inc. as Co-Arrangers; The Bank of Nova Scotia as Administrative Agent; Deutsche Bank AG New York Branch, The Chase Manhattan Bank, Bank of America, NA and Citicorp USA, Inc. as Co-Syndication Agents, US Bank National Association as Documentation Agent; the agents listed therein as Agents; and the lenders listed therein as Lenders. Filed as Exhibit 4(i).1 of Safeway’s Form 10-Q for the quarterly period ended June 16, 2001 and incorporated by reference herein.

(d)(11)	Form of First Amendment dated May 22, 2003 to Credit Agreement dated as of May 24, 2001 among Safeway Inc. and Canada Safeway Limited as Borrowers; Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. as Co-Arrangers; Deutsche Bank AG New York Branch as Administrative Agent; JPMorgan Chase Bank, Bank of America, NA and US Bank National Association as Co-Syndication Agents; and the lenders listed therein as Lenders. Filed as Exhibit 4(i).1 of Safeway’s Form 10-Q for the quarterly period ended June 19, 2004 and incorporated by reference herein.
(d)(12)	Form of Second Amendment dated May 20, 2004 to Credit Agreement dated as of May 24, 2001 among Safeway Inc. and Canada Safeway Limited as Borrowers; Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. as Co-Arrangers; Deutsche Bank AG New York Branch as Administrative Agent; JPMorgan Chase Bank, Bank of America, NA and US Bank National Association as Co-Syndication Agents; and the lenders listed therein as Lenders. Filed as Exhibit 4(i).2 of Safeway’s Form 10-Q for the quarterly period ended June 19, 2004 and incorporated by reference herein.
(d)(13)	Indenture, dated as of September 10, 1997, between Safeway Inc. and The Bank of New York, as Trustee. Filed as Exhibit 4.1 to Safeway’s Form 8-K, dated September 10, 1997, and incorporated by reference herein.
(d)(14)	Form of Officers’ Certificate establishing the terms of Safeway’s 6.85% Senior Notes due 2004, Safeway’s 7.00% Senior Notes due 2007 and Safeway’s 7.45% Senior Debentures due 2027, including the forms of Notes. Filed as Exhibits 4.2, 4.3, 4.4, 4.5 and 4.6 to Safeway’s Form 8-K, dated September 10, 1997, and incorporated by reference herein.
(d)(15)	Form of Officers’ Certificate establishing the terms of Safeway’s 6.05% Notes due 2003 and 6.50% Notes due 2008, including forms of Notes. Filed as Exhibits 4.2, 4.5 and 4.6 to Safeway’s Form 8-K, dated November 9, 1998, and incorporated by reference herein.
(d)(16)	Form of Officers’ Certificate establishing terms of Safeway’s 7.25% Notes due 2004 and 7.5% Notes due 2009, including the forms of Notes. Filed as Exhibits 4.2, 4.4, 4.5 and 4.6 to Safeway’s Form 8-K, dated September 14, 1999, and incorporated by reference herein.
(d)(17)	Form of Officers’ Certificate establishing terms of Safeway’s 7.25% Debentures due 2031, including the forms of Notes. Filed as Exhibits 4.2, 4.3, 4.4, 4.5 and 4.6 to Safeway’s Form 8-K, dated January 31, 2001, and incorporated by reference herein.
(d)(18)	Form of Officers’ Certificate establishing terms of Safeway’s 6.15% Notes due 2006 and 6.50% Notes due 2011, including the forms of Notes. Filed as Exhibits 4.2, 4.3, 4.4, 4.5 and 4.6 to Safeway’s Form 8-K, dated March 5, 2001, and incorporated by reference herein.
(d)(19)	Form of Officers’ Certificate establishing terms of Safeway’s 4.80% Notes due 2007, including the forms of Notes. Filed as Exhibits 4.2, 4.3, 4.4, 4.5 and 4.6 to Safeway’s Form 8-K, dated July 16, 2002, and incorporated by reference herein.
(d)(20)	Form of Officers’ Certificate establishing terms of Safeway’s 3.80% Notes due 2005 and 5.80% Notes due 2012, including the forms of Notes. Filed as Exhibits 4.2, 4.3, 4.4, 4.5 and 4.6 to Safeway’s Form 8-K, dated August 13, 2002, and incorporated by reference herein.
(d)(21)	Form of Officers’ Certificate establishing terms of Safeway’s Floating Rate Notes due 2005, 2.50% Notes due 2005, and 4.125% Notes due 2008 including the forms of Notes. Filed as Exhibits 4.2, 4.3, 4.4 and 4.5 to Safeway’s Form 8-K dated October 29, 2003 and incorporated by reference herein.
(d)(22)	Officers’ Certificate establishing terms of Safeway’s 4.950% Notes due 2010 and 5.625% Notes due 2014 including the Notes. Filed as Exhibits 4.2, 4.3 and 4.4 to Safeway’s Form 8-K dated August 12, 2004 and incorporated by reference herein.
(d)(23)	Share Appreciation Rights Plan of Lucerne Foods Ltd., filed as Exhibit 10(iii).18 to Safeway’s Form 10-K for the year ended December 29, 1990 and incorporated by reference herein, and Amendment No. 1 thereto dated December 13, 1991, filed as Exhibit 10(iii).18 to Safeway’s Form 10-K for the year ended December 28, 1991 and incorporated by reference herein.
(d)(24)	Amended and Restated 1997 Stock Purchase and Option Plan for Key Employees for Randall’s Food Markets, Inc. and Subsidiaries. Filed as Exhibit 4.3 to Randall’s Food Markets, Inc.’s Registration Statement on Form S-8, dated January 19, 1999, and incorporated by reference herein.
(d)(25)	Randall’s Food Markets, Inc. Stock Option Plan and Restricted Stock Plan. Filed as Exhibit 4.2 of Registration Statement 333-84749 and incorporated by reference herein.

(d)(26)	Amendment, dated September 11, 1999, to the Randall’s Food Markets, Inc. Stock Option and Restricted Stock and the Amended and Restated 1997 Stock Purchase and Option Plan for Randall’s Food Markets, Inc. and Subsidiaries. Filed as Exhibit 4.3 of Registration Statement No. 333-84749 and incorporated by reference herein.
(d)(27)	The 1996 Equity Participation Plan of Dominick’s Supermarkets, Inc. Filed as Exhibit 10.13 to Dominick’s Supermarkets, Inc.’s Form 10-K for the year ended November 1, 1996 and incorporated by reference herein.
(d)(28)	The 1995 Amended and Restated Stock Option Plan of Dominick’s Supermarkets, Inc. Filed as Exhibit 10.12 to Dominick’s Supermarkets, Inc.’s Form 10-K for the year ended November 1, 1996 and incorporated by reference herein.
(d)(29)	Form of Amendment to Stock Option Agreements under The 1996 Equity Participation Plan of Dominick’s Supermarkets, Inc., and the 1995 Amended and Restated Stock Option Plan of Dominick’s Supermarkets, Inc. Filed as Exhibit 4.5 to Safeway’s Registration Statement on Form S-8 No. 333-67575 dated November 19, 1998 and incorporated by reference herein.
(d)(30)	Retirement Restoration Plan of Safeway Inc. Filed as Exhibit 10(iii).11 to Safeway’s Form 10-K for the year ended January 1, 1994 and incorporated by reference herein.
(d)(31)	Form of stock option agreement for former directors of The Vons Companies, Inc. Filed as Exhibit 10(iii).12 of Safeway’s Form 10-K for the year ended December 28, 1996 and incorporated by reference herein.
(d)(32)	The Vons Companies, Inc. 1990 Stock Option and Restricted Stock Plan. Filed as Appendix A to The Vons Companies, Inc. Proxy Statement for its May 17, 1990 Annual Meeting of Shareholders and incorporated by reference herein.
(d)(33)	Amendment, dated February 17, 1993, to The Vons Companies, Inc. 1990 Stock Option and Restricted Stock Plan. Filed as Exhibit 10.13.1 to The Vons Companies, Inc. Form 10-Q for the quarterly period ended March 28, 1993 and incorporated by reference herein.
(d)(34)	Canada Safeway Limited Executive Deferred Compensation Plan and Deferral Election Form, filed as Exhibit 10(iii).19 to Safeway’s Form 10-K for the year ended January 1, 2000 and incorporated by reference herein, and Safeway Inc. Stock Option Gain Deferred Compensation Plan and Deferral Election Form, filed as Exhibit 10(iii).20 to Safeway’s Form 10-K for the year ended January 1, 2000 and incorporated by reference herein.
(d)(35)	Amendment, effective as of December 13, 1996, to The Vons Companies, Inc. 1990 Stock Option and Restricted Stock Plan. Filed as Exhibit 10.7.2 to The Vons Companies, Inc. Form 10-K for the fiscal year ended December 29, 1996 and incorporated by reference herein.
(d)(36)	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. Filed as Exhibit 4.5 to Safeway’s Form S-4 filed on March 5, 1997 and incorporated by reference herein.
(d)(37)	Employment Agreement, dated as of April 10, 2004, by and between Safeway Inc. and Brian Cornell. Filed as Exhibit 10 to Safeway’s Quarterly Report on Form 10-Q for the quarter ended March 27, 2004 and incorporated by reference herein.
(d)(38)	The 2002 Equity Incentive Plan of Safeway Inc. Filed as Exhibit 4.1 to Safeway’s Registration Statement No. 333-98103 on Form S-8, dated August 14, 2002, and incorporated by reference herein.
(d)(39)	Amendment dated May 2, 2004 to the 2002 Equity Incentive Plan of Safeway Inc. Filed as Exhibit 10(iii).31 to Safeway’s Quarterly Report on Form 10-Q for the quarterly period ending June 19, 2004 and incorporated by reference herein.
(d)(40)	Deferred Compensation Plan for Safeway Non-Employee Directors, Amended and Restated June 2, 2004. Filed as Exhibit 10(iii).32 to Safeway’s Quarterly Report on Form 10-Q for the quarterly period ending June 19, 2004 and incorporated by reference herein.
(g)	Not applicable.
(h)	Not applicable.

* Previously filed.

SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Dated: September 21, 2004	SAFEWAY INC.
	By:	/s/ Robert A. Gordon
		Name:  Robert A. Gordon
		Title:    Senior Vice President and General Counsel

EXHIBIT INDEX

(a)(1)(i)	Offer to Exchange Certain Outstanding Options, dated September 7, 2004.*
(a)(1)(ii)	Safeway Stock Option Exchange Form.*
(a)(1)(iii)	Communication to Safeway Employees from Lina Naumann, Compensation Manager, dated September 7, 2004.*
(a)(1)(iv)	Email Communication to certain officers of Safeway, dated September 7, 2004.*
(a)(1)(v)	Form of Communication to Tendering Option Holders Confirming Receipt of Safeway Stock Option Exchange Form.*
(a)(1)(vi)	Reminder Communication to Eligible Safeway Employees to be delivered on or around September 21, 2004.
(a)(1)(vii)	Final Reminder Communication to certain officers of Safeway to be delivered on or around September 27, 2004.*
(a)(1)(viii)	Form of Communication to Tendering Option Holders regarding final election confirmation to be delivered on or around October 7, 2004.
(a)(1)(ix)	Form of Communication to Non-Participating Tendering Option Holders to be delivered on or around October 7, 2004.*
(a)(1)(x)	Form of Communication to Participating Eligible Safeway Employees to be delivered on or after April 7, 2005.*
(a)1(xi)	Form Script of video presentation made available to eligible employees after September 7, 2004.*
(a)(1)(xii)	Safeway’s Annual Report on Form 10-K, as amended, for the period ended January 3, 2004. Filed with the Securities and Exchange Commission and incorporated herein by reference.
(a)(1)(xiii)	Safeway’s Quarterly Report on Form 10-Q, as amended, for the period ended March 27, 2004. Filed with the Securities and Exchange Commission and incorporated herein by reference.
(a)(1)(xiv)	Safeway’s Quarterly Report on Form 10-Q for the period ended June 19, 2004. Filed with the Securities and Exchange Commission and incorporated herein by reference.
(a)(1)(xv)	Supplement to the Offer to Exchange Certain Outstanding Options, dated September 21, 2004.
(a)(2)	Not applicable.
(a)(3)	Not applicable.
(a)(4)	Not applicable.
(a)(5)(i)	Safeway’s Definitive Proxy Statement on Schedule 14A for Safeway’s 2004 Annual Stockholders’ Meeting. Filed with the Securities and Exchange Commission and incorporated herein by reference.
(a)(5)(ii)	Communication to employees of Safeway dated August 27, 2004. Filed with the Securities and Exchange Commission on Schedule TO-C on August 27, 2004.
(a)(5)(iii)	Email Communication to certain officers of Safeway, dated August 27, 2004. Filed with the Securities and Exchange Commission on Schedule TO-C on August 27, 2004.
(a)(5)(iv)	Communication to employees of Safeway dated September 2, 2004. Filed with the Securities and Exchange Commission on Schedule TO-C on September 2, 2004.
(b)	Not applicable.
(d)(1)	Restated Certificate of Incorporation of Safeway Inc. as amended June 17, 2004, May 12, 1998 and May 14, 1996. Filed as Exhibit 3.1 to Safeway’s Quarterly Report on Form 10-Q for the quarterly period ended June 19, 2004 and incorporated by reference herein.
(d)(2)	Form of By-laws of Safeway, as amended and restated. Filed as Exhibit 3.2 to Safeway’s Quarterly Report on Form 10-Q for the quarterly period ended September 9, 2000 and incorporated by reference herein.
(d)(3)	1999 Amended and Restated Equity Participation Plan of Safeway Inc. Filed as Exhibit 10(iii).1 to Safeway’s Quarterly Report on Form 10-Q for the quarterly period ending June 19, 1999 and incorporated by reference herein.
(d)(4)	Amendment to the 1999 Amended and Restated Equity Participation Plan of Safeway Inc. Filed as Exhibit 4.3 to Safeway’s Registration Statement on Form S-8 No. 333-112976 and incorporated by reference herein.

(d)(5)	Amendments dated February 26, 2004, May 2, 2004 and June 2, 2004 to the Amended and Restated 1999 Equity Participation Plan of Safeway Inc. and Form of Non-Qualified Stock Option Agreement for U.S. Employees for the Amended and Restated 1999 Equity Participation Plan. Filed as Exhibits 10(iii).27, 10(iii).28, 10(iii).29 and 10(iii).30 to Safeway’s Quarterly Report on Form 10-Q for the quarterly period ending June 19, 2004 and incorporated by reference herein.
(d)(6)	The 2001 Amended and Restated Share Appreciation Rights Plan of Canada Safeway Limited. Filed as Exhibit 10(iii).33 to Safeway’s Quarterly Report on Form 10-Q for the quarterly period ending June 19, 2004 and incorporated by reference herein.
(d)(7)	Form of Stock Rights Agreement for the Amended and Restated 1999 Equity Participation Plan of Safeway Inc. and the 2001 Amended and Restated Share Appreciation Rights Plan of Canada Safeway Limited. Filed as Exhibit 10(iii).34 to Safeway’s Quarterly Report on Form 10-Q for the quarterly period ending June 19, 2004 and incorporated by reference herein.
(d)(8)	Indenture, dated as of September 1, 1992, between Safeway Inc. and The Chase Manhattan Bank (National Association), as Trustee, relating to Safeway’s Debt Securities, filed as Exhibit 4.1 of Safeway’s Form 8-K dated September 16, 1992 and incorporated by reference herein, as supplemented by the Supplemental Indenture dated as of September 4, 1997, filed as Exhibit 4(i).9 to Safeway’s Form 10-K for the year ended January 3, 1998 and incorporated by reference herein.
(d)(9)	Form of Officers’ Certificate relating to Safeway’s Fixed Rate Medium-Term Notes and Safeway’s Floating Rate Medium-Term Notes, form of Fixed Rate Note and form of Floating Rate Note, filed as Exhibits 4.2, 4.3 and 4.4 of Registrant’s Form 8-K dated September 16, 1992 and incorporated by reference herein.
(d)(10)	Credit Agreement, dated as of May 24, 2001, among Safeway Inc. and Canada Safeway Limited as Borrowers; Deutsche Bank Alex. Brown Inc. and J.P. Morgan Securities Inc. as Co-Arrangers; The Bank of Nova Scotia as Administrative Agent; Deutsche Bank AG New York Branch, The Chase Manhattan Bank, Bank of America, NA and Citicorp USA, Inc. as Co-Syndication Agents, US Bank National Association as Documentation Agent; the agents listed therein as Agents; and the lenders listed therein as Lenders. Filed as Exhibit 4(i).1 of Safeway’s Form 10-Q for the quarterly period ended June 16, 2001 and incorporated by reference herein.
(d)(11)	Form of First Amendment dated May 22, 2003 to Credit Agreement dated as of May 24, 2001 among Safeway Inc. and Canada Safeway Limited as Borrowers; Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. as Co-Arrangers; Deutsche Bank AG New York Branch as Administrative Agent; JPMorgan Chase Bank, Bank of America, NA and US Bank National Association as Co-Syndication Agents; and the lenders listed therein as Lenders. Filed as Exhibit 4(i).1 of Safeway’s Form 10-Q for the quarterly period ended June 19, 2004 and incorporated by reference herein.
(d)(12)	Form of Second Amendment dated May 20, 2004 to Credit Agreement dated as of May 24, 2001 among Safeway Inc. and Canada Safeway Limited as Borrowers; Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. as Co-Arrangers; Deutsche Bank AG New York Branch as Administrative Agent; JPMorgan Chase Bank, Bank of America, NA and US Bank National Association as Co-Syndication Agents; and the lenders listed therein as Lenders. Filed as Exhibit 4(i).2 of Safeway’s Form 10-Q for the quarterly period ended June 19, 2004 and incorporated by reference herein.
(d)(13)	Indenture, dated as of September 10, 1997, between Safeway Inc. and The Bank of New York, as Trustee. Filed as Exhibit 4.1 to Safeway’s Form 8-K, dated September 10, 1997, and incorporated by reference herein.
(d)(14)	Form of Officers’ Certificate establishing the terms of Safeway’s 6.85% Senior Notes due 2004, Safeway’s 7.00% Senior Notes due 2007 and Safeway’s 7.45% Senior Debentures due 2027, including the forms of Notes. Filed as Exhibits 4.2, 4.3, 4.4, 4.5 and 4.6 to Safeway’s Form 8-K, dated September 10, 1997, and incorporated by reference herein.
(d)(15)	Form of Officers’ Certificate establishing the terms of Safeway’s 6.05% Notes due 2003 and 6.50% Notes due 2008, including forms of Notes. Filed as Exhibits 4.2, 4.5 and 4.6 to Safeway’s Form 8-K, dated November 9, 1998, and incorporated by reference herein.
(d)(16)	Form of Officers’ Certificate establishing terms of Safeway’s 7.25% Notes due 2004 and 7.5% Notes due 2009, including the forms of Notes. Filed as Exhibits 4.2, 4.4, 4.5 and 4.6 to Safeway’s Form 8-K, dated September 14, 1999, and incorporated by reference herein.

(d)(17)	Form of Officers’ Certificate establishing terms of Safeway’s 7.25% Debentures due 2031, including the forms of Notes. Filed as Exhibits 4.2, 4.3, 4.4, 4.5 and 4.6 to Safeway’s Form 8-K, dated January 31, 2001, and incorporated by reference herein.
(d)(18)	Form of Officers’ Certificate establishing terms of Safeway’s 6.15% Notes due 2006 and 6.50% Notes due 2011, including the forms of Notes. Filed as Exhibits 4.2, 4.3, 4.4, 4.5 and 4.6 to Safeway’s Form 8-K, dated March 5, 2001, and incorporated by reference herein.
(d)(19)	Form of Officers’ Certificate establishing terms of Safeway’s 4.80% Notes due 2007, including the forms of Notes. Filed as Exhibits 4.2, 4.3, 4.4, 4.5 and 4.6 to Safeway’s Form 8-K, dated July 16, 2002, and incorporated by reference herein.
(d)(20)	Form of Officers’ Certificate establishing terms of Safeway’s 3.80% Notes due 2005 and 5.80% Notes due 2012, including the forms of Notes. Filed as Exhibits 4.2, 4.3, 4.4, 4.5 and 4.6 to Safeway’s Form 8-K, dated August 13, 2002, and incorporated by reference herein.
(d)(21)	Form of Officers’ Certificate establishing terms of Safeway’s Floating Rate Notes due 2005, 2.50% Notes due 2005, and 4.125% Notes due 2008 including the forms of Notes. Filed as Exhibits 4.2, 4.3, 4.4 and 4.5 to Safeway’s Form 8-K dated October 29, 2003 and incorporated by reference herein.
(d)(22)	Officers’ Certificate establishing terms of Safeway’s 4.950% Notes due 2010 and 5.625% Notes due 2014 including the Notes. Filed as Exhibits 4.2, 4.3 and 4.4 to Safeway’s Form 8-K dated August 12, 2004 and incorporated by reference herein.
(d)(23)	Share Appreciation Rights Plan of Lucerne Foods Ltd., filed as Exhibit 10(iii).18 to Safeway’s Form 10-K for the year ended December 29, 1990 and incorporated by reference herein, and Amendment No. 1 thereto dated December 13, 1991, filed as Exhibit 10(iii).18 to Safeway’s Form 10-K for the year ended December 28, 1991 and incorporated by reference herein.
(d)(24)	Amended and Restated 1997 Stock Purchase and Option Plan for Key Employees for Randall’s Food Markets, Inc. and Subsidiaries. Filed as Exhibit 4.3 to Randall’s Food Markets, Inc.’s Registration Statement on Form S-8, dated January 19, 1999, and incorporated by reference herein.
(d)(25)	Randall’s Food Markets, Inc. Stock Option Plan and Restricted Stock Plan. Filed as Exhibit 4.2 of Registration Statement 333-84749 and incorporated by reference herein.
(d)(26)	Amendment, dated September 11, 1999, to the Randall’s Food Markets, Inc. Stock Option and Restricted Stock and the Amended and Restated 1997 Stock Purchase and Option Plan for Randall’s Food Markets, Inc. and Subsidiaries. Filed as Exhibit 4.3 of Registration Statement No. 333-84749 and incorporated by reference herein.
(d)(27)	The 1996 Equity Participation Plan of Dominick’s Supermarkets, Inc. Filed as Exhibit 10.13 to Dominick’s Supermarkets, Inc.’s Form 10-K for the year ended November 1, 1996 and incorporated by reference herein.
(d)(28)	The 1995 Amended and Restated Stock Option Plan of Dominick’s Supermarkets, Inc. Filed as Exhibit 10.12 to Dominick’s Supermarkets, Inc.’s Form 10-K for the year ended November 1, 1996 and incorporated by reference herein.
(d)(29)	Form of Amendment to Stock Option Agreements under The 1996 Equity Participation Plan of Dominick’s Supermarkets, Inc., and the 1995 Amended and Restated Stock Option Plan of Dominick’s Supermarkets, Inc. Filed as Exhibit 4.5 to Safeway’s Registration Statement on Form S-8 No. 333-67575 dated November 19, 1998 and incorporated by reference herein.
(d)(30)	Retirement Restoration Plan of Safeway Inc. Filed as Exhibit 10(iii).11 to Safeway’s Form 10-K for the year ended January 1, 1994 and incorporated by reference herein.
(d)(31)	Form of stock option agreement for former directors of The Vons Companies, Inc. Filed as Exhibit 10(iii).12 of Safeway’s Form 10-K for the year ended December 28, 1996 and incorporated by reference herein.
(d)(32)	The Vons Companies, Inc. 1990 Stock Option and Restricted Stock Plan. Filed as Appendix A to The Vons Companies, Inc. Proxy Statement for its May 17, 1990 Annual Meeting of Shareholders and incorporated by reference herein.
(d)(33)	Amendment, dated February 17, 1993, to The Vons Companies, Inc. 1990 Stock Option and Restricted Stock Plan. Filed as Exhibit 10.13.1 to The Vons Companies, Inc. Form 10-Q for the quarterly period ended March 28, 1993 and incorporated by reference herein.

(d)(34)	Canada Safeway Limited Executive Deferred Compensation Plan and Deferral Election Form, filed as Exhibit 10(iii).19 to Safeway’s Form 10-K for the year ended January 1, 2000 and incorporated by reference herein, and Safeway Inc. Stock Option Gain Deferred Compensation Plan and Deferral Election Form, filed as Exhibit 10(iii).20 to Safeway’s Form 10-K for the year ended January 1, 2000 and incorporated by reference herein.
(d)(35)	Amendment, effective as of December 13, 1996, to The Vons Companies, Inc. 1990 Stock Option and Restricted Stock Plan. Filed as Exhibit 10.7.2 to The Vons Companies, Inc. Form 10-K for the fiscal year ended December 29, 1996 and incorporated by reference herein.
(d)(36)	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. Filed as Exhibit 4.5 to Safeway’s Form S-4 filed on March 5, 1997 and incorporated by reference herein.
(d)(37)	Employment Agreement, dated as of April 10, 2004, by and between Safeway Inc. and Brian Cornell. Filed as Exhibit 10 to Safeway’s Quarterly Report on Form 10-Q for the quarter ended March 27, 2004 and incorporated by reference herein.
(d)(38)	The 2002 Equity Incentive Plan of Safeway Inc. Filed as Exhibit 4.1 to Safeway’s Registration Statement No. 333-98103 on Form S-8, dated August 14, 2002, and incorporated by reference herein.
(d)(39)	Amendment dated May 2, 2004 to the 2002 Equity Incentive Plan of Safeway Inc. Filed as Exhibit 10(iii).31 to Safeway’s Quarterly Report on Form 10-Q for the quarterly period ending June 19, 2004 and incorporated by reference herein.
(d)(40)	Deferred Compensation Plan for Safeway Non-Employee Directors, Amended and Restated June 2, 2004. Filed as Exhibit 10(iii).32 to Safeway’s Quarterly Report on Form 10-Q for the quarterly period ending June 19, 2004 and incorporated by reference herein.
(g)	Not applicable.
(h)	Not applicable.

* Previously filed.

EX-99.(A)(1)(VI)

EXHIBIT (a)(1)(vi)

To:	Stock Option Exchange Eligible Employees
From:	Lina Naumann
Date:	September 21, 2004
Re:	Safeway Stock Option Exchange Program Reminder and Update to Option Exchange Documents

The Safeway Stock Option Exchange program is currently underway and will end on October 5, 2004 at 5:00 p.m. Pacific (California) Time, unless the offer is extended.

We have prepared a supplemental document, which is included with this reminder notice, to the Offer to Exchange Certain Outstanding Options that was mailed to you on September 7, 2004. The supplemental document contains some additional financial information about Safeway and minor changes to certain provisions of that Offer to Exchange document. The principal terms and conditions of the Offer to Exchange otherwise remain the same. The supplemental document is available on the Safeway Stock Option Exchange web site at https://www.safewayexchange.com.

All employees considering participating in the Stock Option Exchange program are advised to read both the Offer to Exchange Certain Outstanding Options dated September 7, 2004 and the enclosed supplement.

If you wish to participate in the Safeway Stock Option Exchange program you must submit (and we must receive) your election at any time before 5:00 p.m. Pacific (California) Time on October 5, 2004, by

1. visiting the Safeway Stock Option Exchange web site at https://www.safewayexchange.com and submitting a new electronic election, or

2. sending a new Safeway Stock Option Exchange Form to us by interoffice mail or facsimile at (925) 226-5314, or

3. mailing a new Safeway Stock Option Exchange Form to

Nicole Callender

Stock Administration

4410 Rosewood Drive

Pleasanton, CA 94588

unless this offer is extended, in which case we will accept your options (or Rights) by the deadline of the expiration of the extended period. If you do not submit and we do not receive an election by this deadline, you will forfeit your right to participate in this Stock Option Exchange program. The most current election submitted and received by our office before the above deadline will be the one considered for the acceptance to exchange.

If you have any questions regarding the program you may call the Safeway Stock Option Exchange hotline at (877) SWY-EXCH or (877) 799-3924 or send an e-mail to info@safewayexchange.com.

EX-99.(A)(1)(VIII)

EXHIBIT (a)(1)(viii)

Safeway Stock Option Exchange

Final Election Confirmation Statement

Dear [Name of Participating Safeway Employee]:

Under the terms of the Safeway Stock Option Exchange program, outlined below are the options (and Rights, if you hold eligible Rights) you have submitted as your final elections for the stock option exchange program:

Grant #	Grant	Options/Rights	Grant/Base	Options/Rights	Replacement
	Date	Granted	Price	Exchanged	Options/Rights

Please keep this letter for your records.

We confirm with this letter that we have accepted your Exchange Form and have cancelled your surrendered options (or Rights, if you are an employee exchanging eligible Rights) elected for exchange. Subject to your continued employment, your continued status as a resident of the United States or Canada, and certain other terms described in the Offer to Exchange Certain Outstanding Options dated September 7, 2004 and the Supplement to the Offer to Exchange Certain Outstanding Options dated September 21, 2004 (the “Supplement”), you now have the right to receive your replacement stock options (or replacement Rights, if you are an employee exchanging eligible Rights) which will have a per share exercise price equal to the closing sales price of our common stock as quoted on the New York Stock Exchange on the replacement grant date (the per share base price of the SAR component of a replacement Right will be the Canadian dollar equivalent of such closing sales price of our common stock as determined by reference to the Canadian dollar/U.S. dollar exchange rate as reported on the Wall Street Journal on the replacement grant date). We will issue the replacement options and replacement Rights on the first business day that is six months and one day from the date that we cancelled the options and Rights accepted for exchange. Please review the terms and conditions of the option exchange program in the Offer to Exchange Certain Outstanding Options and the Supplement previously mailed to your home. If you have questions regarding the information above, you may call the Safeway Stock Exchange hotline at (877) SWY-EXCH or (877) 799-3924 or send an email to info@safewayexchange.com no later than October 20, 2004.

You will receive no further communication concerning your options or Rights cancelled under this option exchange program. This confirmation notice does not constitute a guarantee of employment with Safeway or any of its subsidiaries for any period.

EX-99.(A)(1)(XV)

EXHIBIT (a)(1)(xv)

SAFEWAY INC.

SUPPLEMENT TO OFFER TO EXCHANGE CERTAIN OUTSTANDING OPTIONS

TO PURCHASE COMMON STOCK

FOR A NUMBER OF REPLACEMENT OPTIONS ACCORDING TO AN EXCHANGE FORMULA

THIS OFFER AND WITHDRAWAL RIGHTS EXPIRE

AT 5:00 P.M., PACIFIC (CALIFORNIA) TIME ON OCTOBER 5, 2004

UNLESS THIS OFFER IS EXTENDED

Safeway Inc. hereby supplements and amends the Offer to Exchange Certain Outstanding Options, dated September 7, 2004 (the “Offer to Exchange”), as follows:

INTRODUCTION

Shares of our common stock are quoted on the New York Stock Exchange under the symbol “SWY.” On September 17, 2004, the closing sales price of our common stock as quoted on the New York Stock Exchange was $19.72 per share. We recommend that you obtain current market quotations for our common stock before deciding whether to elect to exchange your options.

As of September 17, 2004, options to purchase approximately 38,164,466 shares of our common stock were issued and outstanding under all of Safeway’s stock option plans. Of these options, eligible employees held eligible options to purchase a total of approximately 23,824,832 shares of our common stock. The shares of common stock issuable upon exercise of options we are offering to exchange represent approximately 5.33% of the total shares of our common stock outstanding as of September 17, 2004.

SUMMARY TERM SHEET; FREQUENTLY ASKED QUESTIONS.

The responses to Questions 3, 12, 29 and 31 in the Frequently Asked Questions portion of the Summary Term Sheet are hereby amended and replaced with the following:

QUESTION 3: HOW DOES THIS EXCHANGE WORK?

We are offering to exchange eligible options that have an exercise price greater than US$35.00 per share for a predetermined number of replacement options, rounded down to the nearest whole share, based on the exchange formula described below. The options that you hold give you the right to purchase shares of our common stock once you exercise those options by paying the applicable exercise price of those options. Thus, when we use the term “option” in this offer, we refer to the actual options you hold (or the actual Rights you hold) to purchase shares of our common stock and not the shares underlying those options.

New stock options (also referred to as replacement options) will be granted on or promptly after the first business day that is at least six months plus one day after the surrendered options are cancelled at an exercise price equal to the closing sales price of our common stock on the date of the grant as quoted on the New York Stock Exchange. If you elect to exchange Rights, the base price of the SAR component of your replacement Rights will be the Canadian dollar equivalent of the closing sales price of our common stock on the date of the grant as quoted on the New York Stock Exchange, as determined by reference to the Canadian/U.S. dollar exchange rate as reported in the Wall Street Journal on the replacement grant date.

Participating in the exchange program requires an eligible employee to make a voluntary election to tender eligible stock options before 5:00 p.m. Pacific (California) Time on October 5, 2004, unless this offer is extended, after which time such election will be irrevocable.

The exchange formula is intended to provide participating employees with replacement options having an estimated value equal to the estimated value of their surrendered options. After consultation with Watson Wyatt Worldwide, an independent third party compensation consultant, we developed a valuation methodology by which we calculated, using the Black-Scholes valuation option pricing model and assumptions developed under that model, the estimated value of each surrendered option

and the estimated value of each replacement option. The estimated aggregate value of the surrendered option is divided by the estimated value of the replacement option per share to determine the number of shares subject to replacement options that will be granted on the replacement date. If you elect to exchange Rights, the same exchange formula will be applied to determine the number of replacement Rights you will be eligible to receive in exchange for your eligible Rights that are accepted for exchange and cancelled. (See Section 7 of the Offer to Exchange for more information.)

Unless prevented by law or applicable regulations, options accepted for exchange will be replaced with options granted under the 1999 Equity Participation Plan, and Rights accepted for exchange will be replaced with Rights granted under the 1999 Equity Participation Plan and the Share Appreciation Rights Plan. (See Sections 1, 7 and 10 of the Offer to Exchange for more information.)

Vesting and exercisability of replacement options for eligible employees will begin one year from the replacement grant date of the replacement options. This means that all replacement options will be completely unvested and unexercisable on the replacement grant date, regardless of whether the surrendered options were partially or wholly vested or exercisable.

Replacement options for vested and unvested surrendered options will vest in five equal annual increments beginning one year from the replacement grant date of the replacement options. Replacement options and replacement Rights will expire six years after the replacement grant date, unless terminated earlier under their terms. (See Section 7 of the Offer to Exchange for more information.)

QUESTION 12. WHAT HAPPENS TO ELIGIBLE OPTIONS THAT I CHOOSE NOT TO EXCHANGE OR THAT YOU DO NOT ACCEPT FOR EXCHANGE?

Upon the terms and subject to the conditions of this offer, we will accept and cancel all eligible options that are surrendered by eligible employees and not validly withdrawn before the expiration time. Subject to our rights to extend, terminate and amend the offer, discussed in Section 14 of the Offer to Exchange, we currently expect that we will accept all eligible, surrendered options that are not validly withdrawn by 5:00 p.m., Pacific (California) time on October 5, 2004. Eligible options that you choose not to exchange or that we do not accept for exchange remain outstanding and retain their existing terms, including the existing exercise price, vesting schedule and expiration date. (See Section 1 of the Offer to Exchange for a discussion of eligibility.)

QUESTION 29. WHAT IF MY EMPLOYMENT WITH SAFEWAY OR ANY OF ITS SUBSIDIARIES IS TERMINATED AFTER THE REPLACEMENT OPTIONS ARE GRANTED?

If your employment with Safeway or any of its subsidiaries is terminated for any reason after the replacement option has been granted, you will forfeit your replacement options that are unvested at the date of your termination. You will generally have the earlier of the expiration of the replacement option or three months from the date of your termination to exercise the vested portion of your replacement option.

All eligible options we accept pursuant to the offer will be cancelled shortly following the expiration of the offer, currently scheduled for 5:00 p.m. Pacific (California) Time on October 5, 2004, and options accepted for exchange and cancelled will no longer be exercisable after that time, regardless of whether the surrendered options were partially vested or fully vested on the cancellation date, and will not be returned to the option holder after such time.

If an employee ceases employment with Safeway or a subsidiary before the expiration date but after surrendering his or her options, Safeway would not accept the surrendered options for exchange because the employee did not remain an employee through the expiration date of the offer in accordance with the terms and conditions of the offer. Accordingly, the surrendered options would be returned to the employee who would then be able to exercise the options subject to and upon the terms and conditions in his or her applicable stock option plan and agreement. (See Section 7 of the Offer to Exchange for more information.)

QUESTION 31. WHAT HAPPENS IF SAFEWAY IS SUBJECT TO A CHANGE IN CONTROL BEFORE THE REPLACEMENT OPTIONS ARE GRANTED?

If we merge with or are acquired by another company after your eligible options are cancelled but before we grant the replacement options, we cannot guarantee that the acquiring company would be bound by our obligation to grant replacement options. It is possible that you would not receive any replacement options, securities of the acquiring company or any other compensation for your cancelled options. It is also possible that the acquiring company would not be bound to honor any outstanding options that are not surrendered in the offer to exchange. If the acquiring company is bound by or assumes our obligations with respect to the offer to exchange, the replacement options could become options to purchase stock or other securities of the acquiring company, which might result in the right to receive options to purchase more or fewer of the acquiring company’s securities that the number of shares of Safeway common stock to be covered by your replacement options. Similarly, any options that are not exchanged in the offer that remain outstanding at the time of the acquisition could become options to purchase stock or other securities of the acquiring company.

Although we are currently not contemplating a merger or similar transaction that could result in a change in control of our company, we are reserving the right to take any actions that we deem necessary or appropriate to complete a transaction that our board of directors believes is in the best interest of our company and our stockholders. This could include terminating your right to receive replacement options under this offer to exchange. If we were to terminate your right to receive replacement options under this offer in connection with such a transaction, eligible employees who have surrendered options for cancellation pursuant to this offer would not receive options to purchase securities of the acquiror or any other consideration for their surrendered options. In this case, we would not return surrendered options to the eligible employees, and such eligible employees would be left with no options or other consideration in return for their previously surrendered options, even if they were partially or fully vested.

Any change in control transaction could potentially have a substantial effect on our stock price, including substantial appreciation in the price of our common stock. Depending on the timing and structure of such a transaction, you might lose the benefit of any price appreciation in our common stock resulting from a merger or acquisition. The exercise price of replacement options granted to you, if any, after the announcement of a merger or other acquisition would reflect any appreciation in our stock price resulting from the announcement and could, therefore, exceed the exercise price of your current options. This could result in options holders who do not participate in the offer receiving a greater financial benefit than option holders who do participate. In addition, your replacement options may be exercisable for stock of the acquiring company, not Safeway common stock, while option holders who decide not to participate in the offer could exercise their vested options before the effective date of the merger or acquisition and sell their Safeway common stock before the effective date. (See Section 2 of the Offer to Exchange for more information.)

1. ELIGIBILITY; NUMBER OF OPTIONS; EXPIRATION TIME

The ninth paragraph of Section 1 of the Offer to Exchange is amended and replaced with the following:

The exchange formula is intended to provide participating employees with replacement options having an estimated value equal to the estimated value of their surrendered options. After consultation with Watson Wyatt Worldwide, an independent third party compensation consultant, we developed a valuation methodology by which we calculated, using the Black-Scholes valuation option pricing model and assumptions developed under that model, the estimated value of each surrendered option and the estimated value of each replacement option. The estimated aggregate value of the surrendered option is divided by the estimated value of the replacement option per share to determine the number of shares subject to replacement options that will be granted on the replacement date. If you elect to exchange eligible Rights, the same exchange formula will be applied to determine the number of replacement Rights you will be eligible to receive in exchange for your eligible Rights that are accepted for exchange and cancelled. (See Section 7 of the Offer to Exchange for more information.)

8. INFORMATION CONCERNING SAFEWAY.

Additional Financial Information. We have provided the following additional financial information of Safeway and its consolidated subsidiaries for your reference.

Summary Financial Data
(in millions, except per share amounts)	Year ended						12 Weeks ended						24 Weeks ended
	January 3, 2004			December 28, 2002			June 19, 2004			June 14, 2003			June 19, 2004			June 14, 2003
							(unaudited)			(unaudited)			(unaudited)			(unaudited)
Results of Operations
Sales	$	35,552.7		$	34,767.5		$	8,361.1		$	8,248.1		$	15,999.9		$	16,291.4
Gross profit		10,533.8			10,812.0			2,403.7			2,483.8			4,680.3			4,872.1
Operating and administrative expense		(9,230.8	)		(8,576.4	)		(2,086.7	)		(2,126.4	)		(4,208.1	)		(4,146.1	)
Goodwill impairment charges		(729.1	)		(1,288.0	)		—			—			—			(256.5	)
Operating profit		573.9			947.6			317.0			357.4			472.2			469.5
Interest expense		(442.4	)		(430.8	)		(95.5	)		(102.0	)		(191.7	)		(205.7	)
Other income, net		9.6			15.5			4.7			2.7			7.8			5.2
Income before income taxes and cumulative effect of accounting change		141.1			532.3			226.2			258.1			288.3			269.0
Income taxes (expense) benefit		(310.9	)		(660.4	)		(71.0	)		(97.1	)		(90.0	)		54.6
(Loss) income before cumulative effect of accounting change		(169.8	)		(128.1	)		155.2			161.0			198.3			323.6
Cumulative effect of accounting change		—			(700.0	)		—			—			—			—
Net (loss) income	$	(169.8	)	$	(828.1	)	$	155.2		$	161.0		$	198.3		$	323.6
Basic (loss) earnings per share:
(Loss) income before cumulative effect of accounting change	$	(0.38	)	$	(0.27	)	$	0.35		$	0.36		$	0.45		$	0.73
Cumulative effect of accounting change		—			(1.50	)		—			—			—			—
Net (loss) income per share	$	(0.38	)	$	(1.77	)	$	0.35		$	0.36		$	0.45		$	0.73
Diluted (loss) earnings per share:
(Loss) income before cumulative effect of accounting change	$	(0.38	)	$	(0.27	)	$	0.35		$	0.36		$	0.44		$	0.73
Cumulative effect of accounting change		—			(1.50	)		—			—			—			—
Net (loss) income per share	$	(0.38	)	$	(1.77	)	$	0.35		$	0.36		$	0.44		$	0.73
Weighted average shares outstanding – basic		441.9			467.3			445.6			441.4			444.8			441.3
Weighted average shares outstanding – diluted		441.9			467.3			449.4			445.8			448.8			445.9

Balance Sheet Data
(in millions, except per share amounts)	Year ended				Quarter ended
	January 3, 2004		December 28, 2002		June 19, 2004		June 14, 2003
					(unaudited)		(unaudited)
Total current assets	$	3,507.7	$	3,458.5	$	3,345.0	$	3,404.5
Total assets		15,096.7		16,047.2		14,887.0		15,607.2
Total liabilities		11,452.4		12,419.7		11,079.7		11,515.4
Total stockholders’ equity		3,644.3		3,627.5		3,807.3		4,091.8
Book value per share(1)		8.20		8.23		8.52		9.27

(1) Book value per share is calculated as total stockholders’ equity divided by the number of outstanding shares of Safeway common stock at the end of the applicable period. Book value per share does not include the effect of options or other common stock equivalents outstanding during the period.

Ratio of Earnings to Fixed Charges	Year ended		24 weeks ended
	January 3, 2004	December 28, 2002	June 19, 2004	June 14, 2003
			(unaudited)	(unaudited)
	1.16	1.69	1.86	1.76

See “Additional Information” under Section 16 of the Offer to Exchange for instructions on how you can obtain copies of our SEC reports that contain our audited financial statements and unaudited financial data.

17. MISCELLANEOUS.

This offer to exchange and our SEC reports referred to above include “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of such terms or other comparable terminology. These statements involve known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. These factors include, among other things, those listed in our most recently filed report on Form 10-K or Form 10-Q.

The safe harbor provided in the Private Securities Litigation Reform Act of 1995, by its terms, does not apply to statements made in connection with this tender offer.

We are not aware of any jurisdiction where the making of this offer is not in compliance with applicable law. If we become aware of any jurisdiction where the making of this offer is not in compliance with any valid applicable law, we will make a good faith effort to comply with such law. If, after such good faith effort, we cannot comply with such law, this offer will not be made to, nor will elections to exchange options be accepted from or on behalf of, the option holders residing in such jurisdiction.

WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF AS TO WHETHER YOU SHOULD ELECT TO EXCHANGE OR REFRAIN FROM EXCHANGING YOUR OPTIONS PURSUANT TO THIS OFFER. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR OTHER INFORMATION TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFER OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THIS DOCUMENT OR IN THE RELATED STOCK OPTION EXCHANGE FORM. IF ANYONE MAKES ANY RECOMMENDATION OR REPRESENTATION TO YOU OR GIVES YOU ANY INFORMATION, YOU MUST NOT RELY UPON THAT RECOMMENDATION, REPRESENTATION OR INFORMATION AS HAVING BEEN AUTHORIZED BY US.

CORRESP

[Safeway Letterhead]

September 21, 2004

VIA FACSIMILE AND EDGAR

Celeste M. Murphy

Attorney-Advisor

Office of Mergers & Acquisitions

Division of Corporation Finance

Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, D.C. 20549-0303

RE: Safeway Inc.

Schedule TO-I filed by Safeway Inc., on September 7, 2004

Schedule TO-C filed on September 2, 2004

Schedule TO-C filed on August 27, 2004

File No. 005-14150                                                                         

Dear Ms. Murphy:

We are responding to the Staff’s comment letter dated September 15, 2004 on behalf of Safeway Inc. (“Safeway”). A courtesy copy of this letter and the amendment to the Schedule TO (“Amendment”) to be filed in response to the Staff’s comments are being submitted to the Staff via facsimile transmission.

The Staff’s comment is set forth below in bold, followed by Safeway’s response to the comment.

Celeste M. Murphy

Securities and Exchange Commission

September 21, 2004

Page 2

General

1. We note that you provided a description of the exchange offer as a proposal in your proxy materials sent to shareholders in connection with the company’s annual meeting. It appears that the disclosure constituted the first public announcement of the exchange offer and you should have filed the relevant portions of the proxy materials under cover of Schedule TO-C in accordance with Rule 13e-4(c)(1).

By a resolution adopted at a meeting of Safeway’s board of directors on August 17, 2004, Safeway’s board formally approved the commencement of the exchange offer after receiving stockholder approval for the offer at Safeway’s annual meeting of stockholders. We filed Safeway’s definitive proxy statement containing a description of the exchange offer as a proposal on Schedule TO-C on August 27, 2004, the date that Safeway first announced to its employees and the public that it had determined to proceed with commencement of the stock option exchange program. We supplementally confirm that we will comply with Rule 13e-4(c)(1), including the requirement that we file all written communications made by Safeway relating to its tender offer, as soon as practicable on the date of the communication.

Schedule TO-I

Summary Term Sheet; Frequently Asked Questions

Question 12. What happens to eligible options that I choose not to exchange or that you do not accept for exchange?

2. Describe under what circumstances you would not accept options for exchange.

In response to the Staff’s comment, we have revised the response to Question 12 in the section “Frequently Asked Questions” to include a description of the circumstances under which Safeway would not accept options for exchange.

Question 29. What if my employment with Safeway or any of its subsidiaries is terminated after the replacement options are granted?

3. Please include a statement to explain, if true, that after the expiration date, vested options tendered during the offer period are canceled and will not be returned to the option holder after the holder tenders such options. Further, describe what happens to vested options tendered for exchange before the expiration date by someone who ceases employment. May such tender be withdrawn?

In response to the Staff’s first comment, we have revised the response to Question 29 in the section “Frequently Asked Questions” to include a statement to the effect that after the expiration date, vested options tendered during the offer period are cancelled and will not be returned to the option holder after the holder tenders such options.

In response to the Staff’s second comment, we have further revised the response to Question 29 in the section “Frequently Asked Questions” to include statements regarding the status of vested options tendered for exchange before the expiration date by someone who ceases employment. We supplementally advise the Staff that an employee is only eligible to exchange his/her eligible options in the offer to exchange if he/she remains an employee of Safeway or one of its subsidiaries through the expiration date of the offer, as described in the response to Question 6 of the Frequently Asked Questions

Celeste M. Murphy

Securities and Exchange Commission

September 21, 2004

Page 3

section. Accordingly, if an employee ceases employment with Safeway or a subsidiary before the expiration date, Safeway would not accept the surrendered options for exchange, the surrendered options would be returned to the employee who would then generally have three months from the termination of his/her employment to exercise his/her vested options, subject to and upon the terms and conditions in the 1999 Amended and Restated Equity Participation Plan of Safeway.

Question 31. What happens if Safeway is subject to a change in control BEFORE the replacement options are granted?

4. Your discussion of this matter should be balanced. Because you describe possible scenarios in case of change of control, including the termination of the exchange offer, and receipt of options to purchase shares of a different issuer, etc., you should also include possible scenarios for those holding options untendered. For example, what happens to these options? Presumably, a likely scenario would include current Safeway optionholders receiving options to purchase shares of a different issuer following a change of control. Further, we note that you include another example, where termination of the right to receive replacement options after surrender of options might not include receipt of options to purchase securities of the acquirer or any other consideration of the surrendered options. Please state clearly that in such case, you may not return surrendered options and that such optionholders would be left with no options and no other consideration, if true.

In response to the Staff’s comment, we have revised the response to Question 31 in the section “Frequently Asked Questions” to describe possible scenarios for option holders holding untendered options in the event of a change of control and to clarify that optionholders may be left with no options and no other consideration if, in the event of a change of control, we terminate the right to receive replacement options.

This Offer

Eligibility

5. We note that the executives listed are not eligible to participate in the exchange program. Advise us, in a supplemental analysis, why such individuals are precluded from participation in the exchange program.

Our offer contemplates the exchange of certain employee stock options with exercise prices that are well above our current trading price for new options with an exercise price to be set at a trading price six months and a day from the expiration of the Offer to Exchange. The purpose of the offer is to provide employees with an opportunity to effectively reprice their options at a lower exercise price, providing employees with the compensatory incentives intended at the time of the issuance of their stock options.

As a result of the overall market decline over the past several years, a major component of our employees’ total compensation has been significantly weakened. Many of our employees who hold underwater stock options also have received minimal or no bonuses for the past couple of years as a result of the market downturn. For other employees, stock options represent the only form of compensation

Celeste M. Murphy

Securities and Exchange Commission

September 21, 2004

Page 4

they receive other than their base pay. Many employees perceive that their options are of very limited or no value, which means that a substantial portion of our stock options may no longer be effective as incentives to motivate and retain employees.

We do not believe those same justifications apply for our executive officers. In addition to stock options, we use other forms of compensation to retain and motivate our executive officers to improve Company performance. For example, certain of our executive officers are eligible to receive annual bonuses tied to the performance of the Company under our Capital Bonus Plan. Our executive officers also are eligible for and periodically receive restricted stock grants, and the restrictions typically lapse in annual increments over four years if the executive remains employed by the Company on the applicable lapse date. New executives may receive hiring bonuses and/or relocation expense payments. Also, executives’ base salaries obviously are higher than those of line employees.

The Company views this option exchange as a way of rewarding the hard work of dedicated employees who receive few, if any, other perquisites.

We believe that we are exempt from the “all holders rule” that would require us to offer the same compensation to all security holders of the class of securities subject to the tender offer, because we satisfy the provisions of the Exemptive Order for issuer exchange offers that are conducted for compensatory purposes (issued by the Division of Corporation Finance on March 21, 2001). We also believe that limiting the offer to non-executives is consistent with the stated policy of the Exemptive Order to allow us maximum flexibility in crafting our compensation practices and policies.

6. Please name the independent third party compensation consultant with whom you consulted in developing a valuation methodology for the exchange formula. Please make conforming changes to the entirety of your filing.

Safeway consulted Watson Wyatt Worldwide, an independent third party compensation consultant, to assist it in developing a valuation methodology for the exchange formula. In response to the Staff’s comment, we have made conforming changes to the Schedule TO and the Supplement to the Offer to Exchange Outstanding Options to name Watson Wyatt Worldwide as its independent third party compensation consultant.

Procedures for Electing to Exchange Options

7. We understand that you will not grant new options to participating option holders until at least six months and one day after the date you cancel the old options. Please advise us of the reasons why you believe that this delayed grant satisfies the prompt payment requirement under Rules 13e-4(f)(5) and 14e-1(c). In you response, explain whether option holders will promptly receive any agreements or other documents that evidence their right to this stock option grant, such as the final election confirmation statement, and whether your obligation will be enforceable under applicable state law.

We supplementally respond that we believe we satisfy the prompt payment requirements of Rules 134-4(f)(5) and 14e-1(c). All tendering option holders whose surrendered options are accepted for exchange by Safeway will receive a confirmation notice promptly following the expiration of the offer

Celeste M. Murphy

Securities and Exchange Commission

September 21, 2004

Page 5

confirming that the surrendered options have been accepted for exchange and cancelled. This confirmation notice also will confirm each option holder’s right to receive his or her replacement grant(s). We have revised the confirmation notice, filed as Exhibit (a)(1)(viii) to our Schedule TO, to clarify the above. We also provide disclosure in the Offer to Exchange dated September 7, 2004 in Section 3 under “Our Acceptance Constitutes an Agreement” to the effect that our acceptance of the surrendered options constitutes a binding agreement. We supplementally confirm that our obligation to issue the replacement options upon the terms and conditions of the offer is enforceable under applicable state laws.

Information Concerning Safeway

8. We note that you incorporate by reference the financial information required by Item 1010(a) of Regulation M-A. However, Item 1010(c) of Regulation M-A requires that at least a summary of that information be disseminated to option holders, even when you incorporate be reference. See Instruction 6 to Item 10 of Schedule TO and Regulation M-A telephone interpretation H.7 available at www.sec.gov in the July 2001 Supplement to the Division of Corporation Finance’s Manual of Publicly Available Telephone Interpretations. Please revise to include at least the summary financial information required by Item 1010(c) and advise the staff as to how the company intends to disseminate the information.

We have prepared a Supplement to the Offer to Exchange Outstanding Options, dated September 21, 2004 (the “Supplement”), a copy of which has been filed as Exhibit (a)(1)(xv) to our amended Schedule TO-I/A. As requested, the Supplement includes the summary financial information described in Item 1010(c) of Regulation M-A. We intend to disseminate the Supplement to all of our eligible employees and eligible officers via mail delivery. We also intend to post the Supplement on Safeway’s stock option exchange website at www.safewayexchange.com. We hereby supplementally inform the Staff that at least five business days will remain of the offer at the time these new materials are disseminated.

9. You disclose that the replacement options will be non-qualified stock options. Please advise whether any option holders eligible to participate in the offer currently hold incentive stock options. If so, expand this section to explain the consequences of the fact that the new options will be non-qualified, as opposed to incentive, stock options. Additionally, revise to discuss the tax consequences of the exchange offer to non-tendering option holders who currently hold incentive stock options, if any.

We supplementally confirm that no option holders eligible to participate in the offer hold incentive stock options. As a result, we believe that no additional disclosure is required to be made in the Schedule TO in response to the Staff’s comment.

Miscellaneous

10. We reference your statement that you undertake no obligation to update or revise the forward-looking statements contained in or incorporated by reference in your offer document. This statement seems inconsistent with your obligations to revise the offer materials to reflect any material changes in the information disseminated to option holders. See Rule 13e-4(e)(3). Please revise or delete.

Celeste M. Murphy

Securities and Exchange Commission

September 21, 2004

Page 6

In response to the Staff’s comment, we have revised Section 17 of the Schedule TO to delete the sentence indicating that Safeway undertakes no obligation to update or revise any forward-looking statements.

Closing Information

We also hereby acknowledge the following:

• Safeway is responsible for the adequacy and accuracy of the disclosure in the above-referenced filings;

• staff comments or changes to disclosure in response to staff comments in the filings reviewed by the staff do not foreclose the Commission from taking any action with respect to the above-referenced filing; and

• Safeway may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Any comments or questions regarding the foregoing should be directed to Kimberly L. Wilkinson of Latham & Watkins LLP at (415) 395-8087 or Scott R. Haber of Latham & Watkins LLP at (415) 395-8137.

Sincerely,

/s/ Robert A. Gordon

Robert A. Gordon

Senior Vice President and General Counsel

cc: Linda Sayler, Esq.

Scott R. Haber, Esq. (Latham & Watkins LLP)

Kimberly L. Wilkinson, Esq. (Latham & Watkins LLP)