Amendment No. 3 to Form S-1 Table of Contents SAFEWAY INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The Company also has a 49% ownership interest in Casa Ley, S.A. de C.V. ("Casa Ley"), which operates 206 food and general merchandise stores in Western Mexico. See Note V. Basis of Presentation The consolidated financial statements include Safeway Inc., a Delaware corporation, and all majority- owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America. Intercompany transactions and balances have been eliminated in consolidation. The Company's investment in Casa Ley is reported using the equity method. Safeway's equity in earnings of Casa Ley is based on financial information prepared in accordance with accounting principles generally accepted in the United States and is recorded on a one-month delay basis because financial information for the latest month is not available from Casa Ley in time to be included in Safeway's consolidated results until the following reporting period. Fiscal Year The Company's fiscal year ends on the Saturday nearest December 31. The last three fiscal years consist of the 53- week period ended January 3, 2015 ("fiscal 201C or "2014"), the 52-week period ended December 28, 2013 ("fiscal 2013" or '2013") and the 52-week period ended December 29, 2012 ("fiscal 2012" or "2012"). Correction to Cash Flow Classification Subsequent to the issuance of the fiscal 2013 consolidated financial statements, the Company determined that the $57.4 million loss on foreign currency translation within the 2013 consolidated statement of cash flows was reflected as a reduction in net cash flow from operating activities, and should not have reduced operating cash flow for U.S. GAAP purposes. As a result, the 2013 presentation has been corrected to increase cash flows from operating activities—continuing operations by $57.4 million with an offset to the