EFTA01382493

Amendment No. 3 to Form S-1 Table of Contents SAFEWAY INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The actuarial assumptions used to determine year-end projected benefit obligations for pension plans were as follows: 2014 2013 2012 Discount rate: United States plans 4.00% 4.90% 4.20% Canadian plans NA NA 4.00% Combined weighted-average rate NA NA 4.16% Rate of compensation increase: United States plans 3.00% 3.00% 3.00% Canadian plans NA NA 2.75% The actuarial assumptions used to determine net periodic benefit costs for pension plans were as follows: 2014 2013 2012 Discount rate 4.90% 4.20% 4.94% Expected return on plan assets: 7.50% 7.50% 7.75% Rate of compensation increase 3.00% 3.00% 3.00% The Company has adopted and implemented an investment policy for the defined benefit pension plans that incorporates a strategic long-term asset allocation mix designed to meet the Company's long-term pension requirements. This asset allocation policy is reviewed annually and, on a regular basis, actual allocations are rebalanced to the prevailing targets. The following table summarizes actual allocations for Safeway's plans at year-end: Plan assets Asset category Target 2014 2013 Equity 65% 65.8% 66.4% Fixed income 35% 32.9% 31.9% Cash and other — 1.3% 1.7% Total 100% 100.0% 100.0% The investment policy also emphasizes the following key objectives: (1) maintain a diversified portfolio among asset classes and investment styles; (2) maintain an acceptable level of risk in pursuit of long-term economic benefit; (3) maximize the opportunity for value-added returns from active investment management while establishing investment guidelines and monitoring procedures for each investment manager to ensure the characteristics of the portfolio are consistent with the original investment mandate; and (4) maintain adequate controls over administrative costs. Expected return on pension plan assets is based on historical experience of the Company's portfolio and the review of projected returns by asset class on broad, publicly traded equity and fixed-income indices, as well as target asset allocation. Safeway's target asset allocation mix is designed to meet the Company's long-term pension requirements. F-127 (Continued) hue. %kW V.. sce.go% Archk es edgar data' 1646972 000119312515335826'd900395dsla.htm110 14'2015 9:03:02 AR CONFIDENTIAL - PURSUANT TO FED. R. GRIM. P. 6(e) CONFIDENTIAL DB-SDNY-0081877 SDNY_GM_00228061 EFTA01382493