Safeway (SWY)

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On March 28, 2006, we completed an underwritten offering of $250,000,000 aggregate principal amount of our Floating Rate Notes Due 2009 (the “Notes”) under our registration statement on Form S-3, filed with the Securities and Exchange Commission (the “Commission”) on July 27, 2004 (File No. 333-117692), as amended by Pre-Effective Amendment No. 1 as filed with the Commission on August 4, 2004, a base prospectus dated August 4, 2004 and an accompanying prospectus supplement dated March 23, 2006 relating to the offer and sale of the Notes.

The terms and conditions of the Notes and related matters are set forth in the Indenture dated as of September 10, 1997, between us and The Bank of New York Trust Company, N.A., as trustee and successor in interest to The Bank of New York (the “Indenture”), and, pursuant to Sections 2.2 and 10.4 of the Indenture, the Officers’ Certificate filed as Exhibit 4.2 hereto.

The sale of the Notes was underwritten by Banc of America Securities LLC, J.P. Morgan Securities Inc., Barclays Capital Inc., Credit Suisse Securities (USA) LLC and Greenwich Capital Markets, Inc., pursuant to an Underwriting Agreement dated March 23, 2006 (the “Underwriting Agreement).

Interest on the Notes will be equal to LIBOR plus 0.35% and will be reset quarterly. We will pay interest on the Notes quarterly in arrears on each March 27, June 27, September 27 and December 27, beginning on June 27, 2006.

We may redeem the Notes on any interest payment date that is on or after September 27, 2006, in whole or in part, at a price equal to 100% of the principal amount of the Notes being redeemed plus accrued and unpaid interest thereon.

The description in this Current Report of the Indenture, the Notes and the Underwriting Agreement is not intended to be a complete description of the documents, and the description is qualified in its entirety by the full text of the documents which are attached as exhibits to and incorporated by reference in this Current Report on Form 8-K.