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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

OR

Commission file number 1-41

SAFEWAY INC.

(Exact name of Registrant as specified in its charter)

Registrant’s telephone number, including area code: (925) 467-3000

Securities registered pursuant to Section 12(b) of the Act:

(Cover continued on following page)

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Securities registered pursuant to Section 12(g) of the Act:

NONE

(Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K .

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).    Yes  x    No  ¨.

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked for price of such common equity, as of the last business day of the Registrant’s most recently completed second fiscal quarter. Aggregate market value of the voting stock held by non-affiliates of Registrant as of June 14, 2003 was approximately $8.4 billion.

As of March 12, 2004, there were issued and outstanding 444.8 million shares of the Registrant’s common stock.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents are incorporated by reference to the extent specified herein:

SAFEWAY INC. AND SUBSIDIARIES

PART I

Item 1. Business and Item 2. Properties

General:

Information appearing on pages 13 through 15 of the 2003 Annual Report to Stockholders of Safeway Inc. (“Safeway” or the “Company”) is incorporated herein by this reference.

Safeway was incorporated in the state of Delaware in July 1986 as SSI Holdings Corporation and, thereafter, its name was changed to Safeway Stores, Incorporated. In February 1990, the Company changed its name to Safeway Inc.

Safeway’s corporate website is located at www.safeway.com. You may access our SEC filings free of charge at our corporate website promptly after such material is electronically filed with, or furnished to, the SEC. We also maintain certain corporate governance documents on our website, including the Company’s Corporate Governance Guidelines, our Director Independence Standards, the Code of Business Conduct and Ethics for the Company’s Senior Officers, and the charters for our Audit, Nominating and Corporate Governance, and Executive Compensation Committees. We will provide a copy of any such documents to any stockholder who requests it. We do not intend for information found on the Company’s website to be part of this document.

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SAFEWAY INC. AND SUBSIDIARIES

Item 1. Business and Item 2. Properties (continued)

Capital Expenditures:

Information appearing under the caption “Capital Expenditure Program” on pages 14 and 15 of the Company’s 2003 Annual Report to Stockholders is incorporated herein by this reference.

Safeway stores opened, remodels completed, acquired stores and stores closed during the last five years were as follows:

Note A. Defined as store projects (other than maintenance) generally requiring expenditures in excess of $200,000.

Financial Information About Industry Segments:

Note N to the consolidated financial statements, included on page 49 of the Company’s 2003 Annual Report to Stockholders, is incorporated herein by this reference.

Trademarks:

Safeway has invested significantly in the development and protection of the “Safeway” name. The right to use the “Safeway” name is considered to be an important asset. Safeway also owns approximately 400 other trademarks registered or pending in the United States Patent and Trademark Office, including its product line names such as Safeway, Safeway SELECT, Rancher’s Reserve, Lucerne and Mrs. Wright’s, and the marks Pak n’ Save Foods, Vons, Pavilions, Dominick’s, Carrs, Randalls, Tom Thumb and Genuardi’s Family Markets. Each trademark registration is for an initial period of 10 or 20 years, depending on its age, and is renewable for as long as the use of the trademark continues. Safeway considers certain of its trademarks to be of material importance to its business and actively defends and enforces such trademarks. Canada Safeway has also registered certain of its trademarks in Canada.

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SAFEWAY INC. AND SUBSIDIARIES

Item 1. Business and Item 2. Properties (continued)

Working Capital:

At year-end 2003, working capital consisted of $3.5 billion in each of current assets and current liabilities. Normal operating fluctuations in these substantial balances can result in changes to cash flow from operations presented in the consolidated statements of cash flows that are not necessarily indicative of long-term operating trends. There are no unusual industry practices or requirements relating to working capital items.

Competition:

Food retailing is intensely competitive. The number of competitors and the amount of competition experienced by Safeway’s stores varies by market area. The principal competitive factors that affect the Company’s business are location, quality, service, price and consumer loyalty to other brands and stores.

Local, regional and national food chains, as well as independent food stores and markets, comprise the Company’s principal competition. Safeway also faces substantial competition from convenience stores, liquor retailers, membership warehouse clubs, specialty retailers, supercenters, and large-scale drug and pharmaceutical chains. Safeway and its competitors engage in price competition which, from time to time, has adversely affected operating margins in many of the Company’s markets.

Raw Materials:

Various agricultural commodities constitute the principal raw materials used by the Company in the manufacture of its food products. Management believes that raw materials for its products are not in short supply, and all are readily available from a wide variety of independent suppliers.

Compliance with Environmental Laws:

The Company’s compliance with the federal, state, and local provisions which have been enacted or adopted regulating the discharge of materials into the environment or otherwise related to the protection of the environment has not had and is not expected to have a material adverse effect upon the financial position or results of operations of the Company.

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SAFEWAY INC. AND SUBSIDIARIES

Item 1. Business and Item 2. Properties (continued)

Employees:

At year-end 2003, Safeway had more than 208,000 full and part-time employees. Approximately 69% of Safeway’s employees in the United States and Canada are covered by collective bargaining agreements negotiated with local unions affiliated with one of 12 different international unions. There are approximately 400 such agreements, typically having three-year terms, with some agreements having terms of up to five years. Accordingly, Safeway renegotiates a significant number of these agreements every year.

During 2004, collective bargaining agreements covering employees in the Company’s stores in northern California, Colorado, Hawaii, Maryland, Nevada, Washington, Washington DC and Manitoba come up for renewal. In addition, certain collective bargaining agreements covering Dominick’s employees expired in 2003 and certain collective bargaining agreements in Arizona are on an indefinite extension.

Other Labor Matters:

On October 11, 2003, seven UFCW local unions struck the Company’s 289 stores in southern California. Safeway estimates the overall cost of the strike reduced 2003 earnings by $167.5 million before taxes ($0.23 per share). An agreement ending the strike was reached on February 26, 2004 and was ratified by the unions on February 28, 2004. Employees returned to work beginning March 5, 2004. Additional information concerning the strike is set forth under the caption “Strike Impact” on page 19 of the Company’s 2003 Annual Report to Stockholders and is incorporated herein by this reference.

Financial Information About Foreign and Domestic Operations and Export Sales:

Note N to the consolidated financial statements, included on page 49 of the Company’s 2003 Annual Report to Stockholders and incorporated herein by this reference, contains financial information by geographic area.

Information about legal proceedings appearing under the captions “Legal Matters” and “Furr’s and Homeland Charge” as reported in Note L to the consolidated financial statements on pages 48 and 49 of the Company’s 2003 Annual Report to Stockholders is incorporated herein by this reference.

No matters were submitted to a vote of the stockholders during the fourth quarter of 2003.

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SAFEWAY INC. AND SUBSIDIARIES

PART II

The Company’s common stock, $0.01 par value, is listed on the New York Stock Exchange. Information as to quarterly sales prices for the Company’s common stock appears in Note Q to the consolidated financial statements on page 51 of the Company’s 2003 Annual Report to Stockholders and is incorporated herein by this reference. There were 20,559 stockholders of record as of March 12, 2004; however, approximately 97% of the Company’s outstanding stock is held in “street name” by depositories or nominees on behalf of beneficial holders. The price per share of common stock, as reported on the New York Stock Exchange Composite Tape, was $20.45 at the close of business on March 12, 2004.

Holders of common stock are entitled to receive dividends if, as, and when declared by the Board of Directors out of funds legally available therefor, subject to the dividend and liquidation rights of any preferred stock that may be issued. The Company has not paid dividends on common stock through 2003 and has no current plans for dividend payments.

During the 2003 fiscal year, 305,640 shares of Safeway common stock were sold to participants under the Safeway 401(k) Savings Plan (formerly named “The Vons Companies, Inc. 401(k) Savings Plan”) for an aggregate price of $6.1 million. These shares were purchased by the Plan’s trustee on the open market. Such shares, and interests in the Plan, were not registered under the Securities Act. The Plan covers only those employees of The Vons Companies, Inc. who were eligible to participate as of July 1, 1998.

The “Five-Year Summary Financial Information” included on pages 16 and 17 of the Company’s 2003 Annual Report to Stockholders is incorporated herein by this reference. The Five-Year Summary should be read in conjunction with the Company’s consolidated financial statements and accompanying notes incorporated by reference in Item 8, consolidated financial statements.

Information appearing under the caption “Financial Review” on pages 18 through 26 and under the captions “Capital Expenditure Program” and “Market Risk from Financial Instruments” on pages 14 and 15 of the Company’s 2003 Annual Report to Stockholders is incorporated herein by this reference.

Information regarding the terms of outstanding indebtedness appearing in Note D to the consolidated financial statements on pages 39 and 40 of the Company’s 2003 Annual Report to Stockholders is incorporated herein by this reference.

Information appearing under the caption “Market Risk from Financial Instruments” on page 15 of the Company’s 2003 Annual Report to Stockholders is incorporated herein by this reference.

Pages 27 through 53 of the Company’s 2003 Annual Report to Stockholders, which include the consolidated financial statements and the Independent Auditors’ Report as listed in Item 15(a)1 below, are incorporated herein by this reference.

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SAFEWAY INC. AND SUBSIDIARIES

Not applicable.

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its President and Chief Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures which, by their nature, can provide only reasonable assurance regarding management’s control objectives. Management, including the Company’s President and Chief Executive Officer along with the Company’s Principal Financial Officer, concluded that the Company’s disclosure controls and procedures are effective in reaching the level of reasonable assurance regarding management’s control objectives. The Company also has investments in certain unconsolidated entities, including Casa Ley. As the Company does not control or manage these entities, its disclosure controls and procedures with respect to such entities are necessarily more limited than those it maintains with respect to its consolidated subsidiaries.

The Company has carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s President and Chief Executive Officer along with the Company’s Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b). Based upon the foregoing, as of January 3, 2004, the Company’s President and Chief Executive Officer along with the Company’s Principal Financial Officer, or persons performing similar functions, concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s Exchange Act reports. There has been no change during the Company’s fiscal quarter ended January 3, 2004 in the Company’s internal control over financial reporting that was identified in connection with the foregoing evaluation which has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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SAFEWAY INC. AND SUBSIDIARIES

PART III

Directors of the Company. Information on the nominees for election as Directors and the continuing Directors of the Company is incorporated by reference from the Company’s definitive proxy statement for the 2004 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company’s 2003 fiscal year.

Executive Officers of the Company. The names and ages of the current executive officers of the Company and their positions as of March 12, 2004, are set forth below. Unless otherwise indicated, each of the executive officers served in various managerial capacities with the Company over the past five years. None of the executive officers named below is related to any other executive officer or director by blood, marriage or adoption. Officers serve at the discretion of the Board of Directors.

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SAFEWAY INC. AND SUBSIDIARIES

Executive Officers of the Company (continued)

Audit Committee Financial Expert. This information is incorporated by reference from the Company’s definitive proxy statement for the 2004 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company’s 2003 fiscal year.

Identification of the Audit Committee. This information is incorporated by reference from the Company’s definitive proxy statement for the 2004 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company’s 2003 fiscal year.

Section 16(a) Beneficial Ownership. The information called for is incorporated by reference from the Company’s definitive proxy statement for the 2004 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company’s 2003 fiscal year.

Code of Ethics. The Company has adopted a Code of Business Conduct and Ethics for Senior Officers, which is posted on the Company’s website at www.safeway.com/investor_relations. The Code applies to the Company’s principal executive officer, principal financial officer, principal accounting officer, controller and other persons who perform similar functions for the Company.

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SAFEWAY INC. AND SUBSIDIARIES

The information called for by Item 11 is incorporated by reference from the Company’s definitive proxy statement for the 2004 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company’s 2003 fiscal year. Information appearing under the captions “Report of the Compensation Committee; Report of the Section 162(m) subcommittee”; “Report of the Audit Committee” and “Stock Performance Graph” to be included in the Company’s 2004 Proxy Statement is not incorporated herein by this reference.

The information called for by Item 12 is incorporated by reference from the Company’s definitive proxy statement for the 2004 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company’s 2003 fiscal year.

Note K to the consolidated financial statements, included on pages 47 and 48 of the Company’s 2003 Annual Report to Stockholders, is incorporated herein by this reference. The information called for by Item 13 is incorporated by reference from the Company’s definitive proxy statement for the 2004 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company’s 2003 fiscal year.

The information called for by Item 14 is incorporated by reference from the Company’s definitive proxy statement for the 2004 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company’s 2003 fiscal year.

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SAFEWAY INC. AND SUBSIDIARIES

PART IV

(a) The following documents are filed as a part of this report:

Consolidated Statements of Operations for fiscal 2003, 2002, and 2001.

Consolidated Balance Sheets as of the end of fiscal 2003 and 2002.

Consolidated Statements of Cash Flows for fiscal 2003, 2002, and 2001.

Consolidated Statements of Stockholders’ Equity for fiscal 2003, 2002, and 2001.

Notes to Consolidated Financial Statements.

Independent Auditors’ Report.

None required.

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SAFEWAY INC. AND SUBSIDIARIES

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SAFEWAY INC. AND SUBSIDIARIES

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SAFEWAY INC. AND SUBSIDIARIES

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SAFEWAY INC. AND SUBSIDIARIES

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SAFEWAY INC. AND SUBSIDIARIES

On December 5, 2003, the Company filed a current report on Form 8-K under “Item 7. Financial Statements and Exhibits” and “Item 9. Regulation FD Disclosure (Information provided under Item 12. Results of Operations and Financial Condition).”

On December 4, 2003, the Company filed a current report on Form 8-K under “Item 7. Financial Statements and Exhibits” and “Item 9. Regulation FD Disclosure (Information provided under Item 12. Results of Operations and Financial Condition).”

On November 5, 2003, the Company filed a current report on Form 8-K under “Item 5. Other Events” and “Item 7. Financial Statements and Exhibits.”

On October 29, 2003, the Company filed a current report on Form 8-K under “Item 5. Other Events” and “Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.”

On October 16, 2003, the Company filed a current report on Form 8-K under “Item 7. Financial Statements and Exhibits” and “Item 12. Results of Operations and Financial Condition.”

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SAFEWAY INC. AND SUBSIDIARIES

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

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SAFEWAY INC. AND SUBSIDIARIES

Exhibit Index

LIST OF EXHIBITS FILED WITH FORM 10-K FOR THE PERIOD

ENDED January 3, 2004