FILED PURSUANT TO RULE 424(b)(5)
REGISTRATION NUMBER 333-55008
Prospectus supplement to prospectus dated February 12, 2001
SAFEWAY INC.
[SAFEWAY LOGO]
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$350,000,000
3.625% NOTES DUE 2003
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We will pay interest on the Notes on May 5 and November 5 of each year,
beginning May 5, 2002. The Notes will mature on November 5, 2003. We may not
redeem the Notes before maturity.
The Notes will be unsecured obligations and will rank equally with our unsecured
senior indebtedness. The Notes will be issued only in denominations of $1,000
and in integral multiples of $1,000.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS SUPPLEMENT OR THE RELATED PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PER NOTE TOTAL
Public offering price 99.948% $349,818,000
Underwriting discounts and commissions .250% $ 875,000
Proceeds, before expenses, to Safeway 99.698% $348,943,000
The public offering price set forth above does not include accrued interest, if
any. Interest on the Notes will accrue from November 5, 2001.
Joint-Lead Manager-Books Joint-Lead Manager
DEUTSCHE BANC ALEX. BROWN BANC OF AMERICA SECURITIES LLC
BANC ONE CAPITAL MARKETS, INC.
BNY CAPITAL MARKETS, INC.
CREDIT SUISSE FIRST BOSTON
The date of this prospectus supplement is October 30, 2001.
In this prospectus supplement and the accompanying prospectus, unless
otherwise indicated, the "Company," "we," "us" and "our" refer to Safeway Inc.
and its subsidiaries.
FORWARD-LOOKING STATEMENTS
This prospectus supplement, including the documents that we incorporate by
reference, contain certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Such statements relate to, among other things, capital
expenditures, acquisitions, the valuation of our investment in other companies,
including GroceryWorks.com, operating improvements, cost reductions, tax rate
and gross profit improvement, and are indicated by words or phrases such as
"anticipate," "estimate," "plans," "projects," "continuing," "ongoing,"
"expects," "management believes," "the Company believes," "the Company intends,"
"we believe," "we intend" and similar words or phrases. These statements are
based on our current plans and expectations and involve risks and uncertainties.
The following are among the principal factors that could cause actual results to
differ materially from the forward-looking statements:
- general business and economic conditions in our operating regions,
including the rate of inflation, consumer spending levels, population,
employment and job growth in our markets;
- pricing pressures and competitive factors, which could include pricing
strategies, store openings and remodels by our competitors;
- results of our programs to control or reduce costs, improve buying
practices and control shrink;
- results of our programs to increase sales, including private-label
sales, and our promotional programs;
- results of our programs to improve capital management;
- the ability to integrate any companies we acquire and achieve operating
improvements at those companies;
- changes in financial performance of other companies in which we have
investments, including GroceryWorks.com;
- increases in labor costs and relations with union bargaining units
representing our employees or employees of third-party operators of our
distribution centers;
- changes in state or federal legislation or regulation;
- the cost and stability of power sources;
- opportunities or acquisitions that we pursue;
- the rate of return on our pension assets; and
- the availability and terms of financing.
Consequently, actual events and results may vary significantly from those
included in or contemplated or implied by such statements.
S-2
PROSPECTUS SUPPLEMENT SUMMARY
THE COMPANY
We are one of the largest food and drug retailers in North America, with
1,759 stores at September 8, 2001. Our U.S. retail operations are located
principally in California, Oregon, Washington, Alaska, Colorado, Arizona, Texas,
the Chicago metropolitan area and the Mid-Atlantic region. Our Canadian retail
operations are located primarily in British Columbia, Alberta and
Manitoba/Saskatchewan. In support of our retail operations, we have an extensive
network of distribution, manufacturing and food processing facilities. We also
hold a 49% interest in Casa Ley, S.A. de C.V. which, as of September 8, 2001,
operated 99 food and general merchandise stores in western Mexico.
We have recently determined our capital spending plans for the year 2002.
We plan to spend approximately $2.1 billion, open 80-85 new stores, complete 250
remodels and have square footage growth of approximately 4.5% next year.
In September 2001, we announced that our board of directors increased the
authorized level of our stock repurchase program to $1.5 billion from the
previously announced level of $1.0 billion. Through October 30, 2001, we have
repurchased $976.8 million of our common stock, leaving $523.2 available for
repurchases. The timing and volume of future repurchases will depend on market
conditions.
Our principal executive offices are located at 5918 Stoneridge Mall Road,
Pleasanton, California 94588, and our telephone number is (925) 467-3000.
S-3
OFFERING SUMMARY
Securities Offered............ $350,000,000 principal amount of 3.625% Notes
Due 2003.
Maturity Date................. The Notes will mature on November 5, 2003.
Interest Rate................. 3.625% per year, accruing from November 5,
2001.
Optional Redemption........... We may not redeem the Notes before maturity.
Interest Payment Dates........ May 5 and November 5, commencing May 5, 2002.
Covenants..................... The indenture contains covenants that limit our
ability and our subsidiaries' ability to incur
liens securing our indebtedness and to engage
in sale and leaseback transactions. See
"Description of the Notes -- Covenants."
No Limitation on Incurrence of
New Debt...................... The indenture does not limit the amount of debt
that we may issue or provide holders any
protection should we be involved in a highly
leveraged transaction.
Ranking....................... The Notes will be unsecured obligations and
will rank equally with our unsecured senior
indebtedness.
S-4
USE OF PROCEEDS
We anticipate our net proceeds from the sale of these Notes to be
approximately $348.7 million after deducting underwriting discounts and
commissions and estimated offering expenses. We expect to use the net proceeds
to repay borrowings under our commercial paper program. As of September 8, 2001,
the weighted average interest rate on borrowings under our commercial paper
program was 3.85% per annum.
Following the consummation of this offering and the use of proceeds
described above, we expect to issue commercial paper in order to repay $400
million aggregate principal amount of our 5.875% Notes which are due on November
15, 2001.
Pending application for the foregoing purposes, the net proceeds from this
offering will be invested in short-term interest bearing instruments or other
investment grade securities.
Certain of the underwriters or their affiliates are dealers under our
commercial paper program, which is to be repaid in part with the net proceeds
from this offering.
S-5
CAPITALIZATION
The following table sets forth our short-term debt and capitalization as of
September 8, 2001, as adjusted to give effect to this offering of Notes and the
application of the net proceeds therefrom to repay borrowings under our
commercial paper program. You should read this table in conjunction with our
consolidated financial statements and accompanying notes which we incorporate
herein by reference. See "Where You Can Find More Information" in the
accompanying prospectus.
SEPTEMBER 8, 2001
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ACTUAL AS ADJUSTED
--------- -----------
(IN MILLIONS)
Short-Term Debt............................................. $ 567.3 $ 567.3
========= =========
Long-Term Debt
Bank credit agreement..................................... -- --
Commercial paper.......................................... $ 707.2 $ 358.5
Securities offered hereby................................. -- 350.0
Other long-term debt...................................... 4,718.1 4,718.1
Obligations under capital leases.......................... 413.7 413.7
--------- ---------
Total long-term debt................................... 5,839.0 5,840.3
--------- ---------
Stockholders' equity
Common stock, par value $.01 per share; 505.1 shares
outstanding, after deducting 65.2 treasury shares(1)... 5.7 5.7
Additional paid-in capital................................ 1,553.0 1,553.0
Retained earnings......................................... 4,762.2 4,762.2
Accumulated other comprehensive loss...................... (64.3) (64.3)
--------- ---------
Total stockholders' equity............................. 6,256.6 6,256.6
--------- ---------
Total capitalization................................... $12,095.6 $12,096.9
========= =========
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(1) Does not include up to 38.2 million shares of common stock issuable upon
exercise of outstanding stock options.
S-6
SELECTED FINANCIAL DATA
The financial data below are derived from our audited consolidated
financial statements, except for the financial data for the 36-week periods
ended September 8, 2001 and September 9, 2000, which are derived from unaudited
financial statements. You should read the selected financial data in conjunction
with our consolidated financial statements and accompanying notes, which we have
incorporated by reference herein. In the opinion of our management, the results
of operations for the 36 weeks ended September 8, 2001 and September 9, 2000
contain all adjustments that are of a normal and recurring nature necessary to
present fairly the financial position and results of operations for these
periods. The results for the 36 weeks ended September 8, 2001 are not
necessarily indicative of the results expected for the full year.
36 WEEKS ENDED
--------------------------- 52 52 52 53 52
SEPTEMBER 8, SEPTEMBER 9, WEEKS WEEKS WEEKS WEEKS WEEKS
2001(1) 2000 2000 1999(2)(3) 1998(4) 1997(5) 1996
------------ ------------ --------- ---------- --------- --------- ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
RESULTS OF OPERATIONS:
Sales......................... $23,614.6 $21,961.5 $31,976.9 $28,859.9 $24,484.2 $22,483.8 $17,269.0
========= ========= ========= ========= ========= ========= =========
Gross profit.................. 7,295.4 6,548.1 9,494.5 8,510.7 7,124.5 6,414.7 4,774.2
Operating and administrative
expense..................... (5,374.3) (4,808.0) (7,086.6) (6,411.4) (5,466.5) (5,093.2) (3,872.1)
Goodwill amortization......... (96.9) (87.4) (126.2) (101.4) (56.3) (41.8) (10.4)
--------- --------- --------- --------- --------- --------- ---------
Operating profit.............. 1,824.2 1,652.7 2,281.7 1,997.9 1,601.7 1,279.7 891.7
Interest expense.............. (316.1) (322.2) (457.2) (362.2) (235.0) (241.2) (178.5)
Equity in earnings of
unconsolidated
affiliates(5)............... 15.3 18.0 31.2 34.5 28.5 34.9 50.0
Other income (expense), net... (19.1) 6.7 10.8 3.8 1.7 2.9 4.4
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes and
extraordinary loss.......... 1,504.3 1,355.2 1,866.5 1,674.0 1,396.9 1,076.3 767.6
Income taxes.................. (604.0) (562.4) (774.6) (703.1) (590.2) (454.8) (307.0)
--------- --------- --------- --------- --------- --------- ---------
Income before extraordinary
loss........................ 900.3 792.8 1,091.9 970.9 806.7 621.5 460.6
Extraordinary loss, net of tax
benefit of $41.1............ -- -- -- -- -- (64.1) --
--------- --------- --------- --------- --------- --------- ---------
Net income.................... $ 900.3 $ 792.8 $ 1,091.9 $ 970.9 $ 806.7 $ 557.4 $ 460.6
========= ========= ========= ========= ========= ========= =========
Basic earnings per share:
Income before extraordinary
loss...................... 1.78 1.60 2.19 1.95 1.67 1.35 1.06
Extraordinary loss.......... -- -- -- -- -- (0.14) --
--------- --------- --------- --------- --------- --------- ---------
Net income.................. 1.78 1.60 2.19 1.95 1.67 1.21 1.06
Diluted earnings per share:
Income before extraordinary
loss...................... $ 1.75 $ 1.55 $ 2.13 $ 1.88 $ 1.59 $ 1.25 $ 0.97
Extraordinary loss.......... -- -- -- -- -- (0.13) --
--------- --------- --------- --------- --------- --------- ---------
Net income.................. $ 1.75 $ 1.55 $ 2.13 $ 1.88 $ 1.59 $ 1.12 $ 0.97
========= ========= ========= ========= ========= ========= =========
S-7
36 WEEKS ENDED
--------------------------- 52 52 52 53 52
SEPTEMBER 8, SEPTEMBER 9, WEEKS WEEKS WEEKS WEEKS WEEKS
2001(1) 2000 2000 1999(2)(3) 1998(4) 1997(5) 1996
------------ ------------ --------- ---------- --------- --------- ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
FINANCIAL STATISTICS:
Comparable-store sales(6)..... N/A N/A 2.8% 2.2% 4.1% 2.3% 5.8%
Identical-store sales(6)(7)... N/A N/A 2.2 1.7 3.7 1.3 5.1
Gross profit margin........... 30.89% 29.82% 29.69 29.49 29.10 28.53 27.65
Operating and administrative
expense as a percent of
sales(8).................... 23.17 22.29 22.56 22.57 22.56 22.84 22.48
Operating profit margin....... 7.7 7.5 7.1 6.9 6.5 5.7 5.2
EBITDA(9)..................... $ 2,494.2 $ 2,229.6 $ 3,122.1 $ 2,698.5 $ 2,141.9 $ 1,732.3 $ 1,239.5
EBITDA as a percent of
sales....................... 10.56% 10.15% 9.76% 9.35% 8.75% 7.70% 7.18%
Net cash flow from
operations.................. $ 1,697.3 $ 1,491.7 $ 1,901.1 $ 1,488.4 $ 1,252.7 $ 1,221.6 $ 825.2
Net cash flow used by
investing activities........ (1,492.7) (698.8) (1,481.0) (2,064.3) (2,186.4) (607.7) (482.3)
Net cash flow from (used by)
financing activities........ (227.3) (788.9) (434.4) 636.0 903.4 (614.6) (337.5)
Capital expenditures(10)...... 1,199.5 887.9 1,755.7 1,485.6 1,189.7 829.4 620.3
Depreciation and
amortization................ 652.1 566.6 830.7 695.6 531.4 455.8 338.5
Total assets.................. 16,726.7 15,137.3 15,965.3 14,900.3 11,389.6 8,493.9 5,545.2
Total debt.................... 6,406.3 6,168.5 6,495.9 6,956.3 4,972.1 3,340.3 1,984.2
Stockholders' equity.......... 6,256.6 4,961.4 5,389.8 4,085.8 3,082.1 2,149.0 1,186.8
Weighted average shares
outstanding -- diluted (in
millions)................... 515.9 510.0 511.6 515.4 508.8 497.7 475.7
Ratio of earnings to fixed
charges(11)................. 4.05x 3.92x 3.63x 3.95x 4.88x 4.10x 3.63x
Interest coverage ratio(12)... 7.89x 6.92x 6.83x 7.45x 9.11x 7.18x 6.94x
OTHER STATISTICS:
Total stores at period-end.... 1,759 1,680 1,688 1,659 1,497 1,368 1,052
Remodels completed during the
period(13).................. N/A N/A 275 251 234 181 141
Total retail square footage at
period-end (in millions).... 77.4 72.3 73.6 70.8 61.6 53.2 40.7
(Footnotes on following page)
S-8
------------
(1) We completed our acquisition of Genuardi's Family Markets, Inc. in February
2001. The results of operations of Genuardi's are included in our results
of operations since approximately midway through the first quarter of 2001.
(2) We completed our acquisition of Carr-Gottstein Foods Co. in April 1999. The
results of operations of Carr-Gottstein are included in our results of
operations since the beginning of the second quarter of 1999.
(3) We completed our acquisition of Randall's Food Markets, Inc. in September
1999. The results of operations of Randall's are included in our results of
operations since the beginning of the fourth quarter of 1999.
(4) We completed our acquisition of Dominick's Supermarkets, Inc. in November
1998. The results of operations of Dominick's are included in our results
of operations since approximately midway through the fourth quarter of
1998.
(5) We completed our acquisition of The Vons Companies, Inc. in April 1997. The
results of operations of Vons are included in our results of operations
since the beginning of the second quarter of 1997. Periods prior to this
time include our equity in Vons earnings.
(6) Reflects sales increases for stores operating the entire measurement period
in both the current and prior periods. The 1997 and 1996 annual
identical-store sales and comparable-store sales exclude British Columbia
stores, which were closed during a labor dispute in 1996.
(7) Excludes replacement stores.
(8) Includes goodwill amortization.
(9) Defined as FIFO earnings before income taxes, interest, depreciation,
amortization, equity in earnings from unconsolidated affiliates and
extraordinary losses. EBITDA is similar to net cash flow from operations
presented in our consolidated statements of cash flows because it excludes
certain noncash items. However, EBITDA also excludes interest expense and
income taxes. EBITDA should not be considered as an alternative to net
income or cash flows from operating activities (which are determined in
accordance with GAAP), as an indicator of operating performance or a
measure of liquidity. Management believes that EBITDA and related measures
are relevant because they assist investors in evaluating our ability to
service our debt by providing commonly used measures of cash available to
pay interest, and they facilitate comparisons of our results of operations
with those of companies having different capital structures. Other
companies may define EBITDA differently, and, as a result, those measures
may not be comparable to our EBITDA.
(10) Defined as cash paid for property additions plus the present value of all
lease obligations incurred and mortgage notes assumed in property
acquisitions less purchases of previously leased properties.
(11) For these ratios, "earnings" represents income before income taxes,
extraordinary loss, equity in earnings of unconsolidated affiliates,
minority interest in subsidiary and fixed charges (other than capitalized
interest). "Fixed charges" represents interest on indebtedness (including
capitalized interest) and a share of rental expense which is deemed to be
representative of the interest factor.
(12) Defined as our EBITDA as a multiple of interest expense.
(13) Defined as store projects, other than maintenance, generally requiring
expenditures in excess of $200,000.
S-9
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes offered
hereby (referred to in the accompanying prospectus as the "debt securities")
supplements, and to the extent inconsistent replaces, the description of the
general terms and provisions of the debt securities set forth in the
accompanying prospectus.
We will issue the Notes under an indenture between us and The Bank of New
York, as trustee. The Notes will constitute a new series of debt securities
described in the accompanying prospectus. We have summarized select portions of
the indenture below. The summary is not complete and is qualified by reference
to the indenture. Capitalized terms not otherwise defined herein have the
meanings given them in the accompanying prospectus or the indenture.
In this section, "we," "our" and "us" mean Safeway Inc. excluding, unless
the context otherwise requires or as otherwise expressly stated, our
subsidiaries.
GENERAL
The Notes will initially be limited to $350,000,000 aggregate principal
amount and will mature on November 5, 2003. The Notes will bear interest from
November 5, 2001, at the rate shown on the front cover of this prospectus
supplement, payable on May 5 and November 5 of each year, commencing May 5,
2002, to the persons in whose names the Notes are registered on the fifteenth
calendar day preceding the payment date. The Notes will be our senior unsecured
obligations and will be issued in denominations of $1,000 and integral multiples
of $1,000.
We may issue additional Notes from time to time after this offering. These
Notes and any additional Notes subsequently issued under the indenture will be
treated as a single class for all purposes under the indenture. No additional
Notes may be issued if an Event of Default has occurred with respect to the
Notes.
We will pay principal and interest on the Notes, register the transfer of
Notes and exchange the Notes at our office or agency maintained for that purpose
(which initially will be the office of the trustee located at 20 Broad Street,
Lower Level, New York, New York 10005, Attention: Corporate Trust Reorg. Dept.).
So long as the Notes are represented by global debt securities, the interest
payable on the Notes will be paid to Cede & Co., the nominee of the Depositary,
or its registered assigns as the registered owner of such global debt
securities, by wire transfer of immediately available funds on each of the
applicable interest payment dates. If any of the Notes are no longer represented
by a global debt security, we have the option to pay interest by check mailed to
the address of the person entitled to the interest. No service charge will be
made for any transfer or exchange of Notes, but we may require payment of a sum
sufficient to cover any tax or other governmental charge payable.
The Notes are not subject to a sinking fund or to redemption or repurchase
by us at our option or at the option of the holders.
LEVERAGE
As of September 8, 2001, we had approximately $6.41 billion of outstanding
indebtedness. At September 8, 2001, on a pro forma basis after giving effect to
this offering of Notes and the application of the net proceeds of the offering
of the Notes as described under "Use of Proceeds," we would have had
approximately $6.41 billion of outstanding indebtedness and a ratio of total
debt to stockholders' equity of approximately 1.0 to 1.0. See "Capitalization."
We have indebtedness that is substantial in relation to our stockholders'
equity. Our ability to satisfy our obligations with respect to the Notes will be
dependent upon our future performance, which will be subject to financial and
business conditions and other factors.
S-10
RANKING
With respect to our assets, the Notes will be senior unsecured indebtedness
and will rank equal in right of payment with all of our other existing and
future senior unsecured obligations, including our obligations under the Bank
Credit Agreement (which is currently unsecured), and senior in right of payment
to all of our existing and future subordinated debt. We conduct certain of our
operations through direct and indirect wholly owned subsidiaries, including
Canada Safeway Limited, Randall's and Vons. Accordingly, we could be dependent
on the earnings of our subsidiaries to meet our debt obligations, including the
Notes, if our future performance, excluding the operations of our subsidiaries,
is not adequate to allow us to satisfy those obligations. Although such earnings
may be available from our subsidiaries through dividends and payments on
intercompany indebtedness, certain outstanding indebtedness of our subsidiaries
in the future may restrict the payment of dividends to us. In addition, under
applicable law, our subsidiaries may be limited in the amount that they are
permitted to pay as dividends on their capital stock. Also as a result of this
structure, the claims of holders of the Notes effectively will be subordinated
to the claims of creditors of these subsidiaries as to the assets of these
subsidiaries, which claims include trade payables, obligations of Canada Safeway
Limited under the Bank Credit Agreement and certain other indebtedness of these
subsidiaries.
COVENANTS
Limitation on Liens
The indenture provides that we will not, nor will we permit any of our
Subsidiaries to, create, incur, or permit to exist, any Lien on any of our or
their respective properties or assets, whether now owned or hereafter acquired,
or upon any income or profits therefrom, in order to secure any of our
Indebtedness, without effectively providing that the Notes shall be equally and
ratably secured until such time as that Indebtedness is no longer secured by
such Lien, except:
- Liens existing as of the closing date of the offering of these Notes
(the "Closing Date");
- Liens granted after the Closing Date on any of our or our Subsidiaries'
assets or properties securing our Indebtedness created in favor of the
holders of the Notes;
- Liens securing our Indebtedness which is incurred to extend, renew or
refinance Indebtedness which is secured by Liens permitted to be
incurred under the indenture; provided that those Liens do not extend to
or cover any of our or our Subsidiaries' property or assets other than
the property or assets securing the Indebtedness being refinanced and
that the principal amount of such Indebtedness does not exceed the
principal amount of the Indebtedness being refinanced;
- Permitted Liens; and
- Liens created in substitution of or as replacements for any Liens
permitted by the clauses directly above, provided that, based on a good
faith determination of one of our officers, the property or asset
encumbered under any such substitute or replacement Lien is
substantially similar in nature to the property or asset encumbered by
the otherwise permitted Lien which is being replaced.
Notwithstanding the foregoing, we and any of our Subsidiaries may, without
securing the Notes, create, incur or permit to exist Liens which would otherwise
be subject to the restrictions set forth in the preceding paragraph, if after
giving effect thereto and at the time of determination, Exempted Debt does not
exceed the greater of (i) 10% of Consolidated Net Tangible Assets or (ii)
$350,000,000.
S-11
Limitation on Sale and Lease-Back Transactions
The indenture provides that we will not, nor will we permit any of our
Subsidiaries to, enter into any sale and lease-back transaction for the sale and
leasing back of any property or asset, whether now owned or hereafter acquired,
of ours or any of our Subsidiaries, except such transactions:
- entered into prior to the Closing Date;
- for the sale and leasing back to us of any property or asset by one of
our Subsidiaries;
- involving leases for less than three years; or
- in which the lease for the property or asset is entered into within 120
days after the later of the date of acquisition, completion of
construction or commencement of full operations of such property or
asset unless:
- we or the Subsidiary would be entitled under the Limitation on Liens
covenant above to create, incur or permit to exist a Lien on the
assets to be leased in an amount at least equal to the Attributable
Liens in respect of such transaction without equally and ratably
securing the Notes; or
- the proceeds of the sale of the assets to be leased are at least
equal to their fair market value and the proceeds are applied to the
purchase or acquisition (or in the case of real property, the
construction) of assets or to the repayment of our or one of our
Subsidiaries' Indebtedness which by its terms matures not earlier
than one year after the date of such repayment.
Consolidation, Merger and Sale of Assets
The indenture provides that we may not consolidate with or merge with or
into, or convey, transfer or lease all or substantially all of our properties
and assets to, any person (a "successor person") unless:
- we are the surviving corporation or the successor person (if other than
us) is a corporation organized and validly existing under the laws of
any U.S. domestic jurisdiction and expressly assumes our obligations on
the Notes and under the indenture;
- immediately after giving effect to the transaction, no Event of Default,
and no event which, after notice or lapse of time, or both, would become
an Event of Default shall have occurred and be continuing under the
indenture; and
- certain other conditions are met.
EVENTS OF DEFAULT
In addition to the Events of Default set forth in the accompanying
prospectus, the following is an Event of Default with respect to the Notes:
acceleration of $150,000,000 or more, individually or in the aggregate, in
principal amount of our Indebtedness under the terms of the instrument under
which that Indebtedness is issued or secured, except as a result of compliance
with applicable laws, orders or decrees, if that Indebtedness is not discharged
or the acceleration is not annulled within 10 days after written notice.
DEFEASANCE
The provisions described under "Description of Debt
Securities -- Defeasance of Debt Securities and Certain Covenants in Certain
Circumstances" in the accompanying prospectus are applicable to the Notes. If we
effect covenant defeasance with respect to the Notes as described under the
subcaption "-- Defeasance of Certain Covenants" in the accompanying
S-12
prospectus, then the Event of Default described above under "-- Events of
Default" and the covenants described above under "-- Covenants," as well as
certain other covenants set forth in the indenture, will cease to be applicable
to the Notes.
BOOK-ENTRY, DELIVERY AND FORM
The Notes will be represented by one or more global debt securities that
will be deposited with, or on behalf of, the Depositary and registered in the
name of Cede & Co., the nominee of the Depositary.
The Depositary has advised us and the underwriters that it is:
- a limited-purpose trust company organized under the New York Banking
Law;
- a "banking organization" within the meaning of the New York Banking Law;
- a member of the Federal Reserve System;
- a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
- a "clearing agency" registered pursuant to the provisions of Section 17A
of the Exchange Act.
The Depositary was created to hold securities of its participating
organizations ("participants") and to facilitate the clearance and settlement of
securities transactions, such as transfers and pledges, among its participants
in such securities through electronic computerized book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. Participants include securities brokers and dealers
(including the underwriters), banks, trust companies, clearing corporations and
certain other organizations, some of whom (and/or their representatives) own the
Depositary. Access to the Depositary's book-entry system is also available to
others, such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly. Persons who are not participants may beneficially own securities
held by the Depositary only through participants.
Unless and until it is exchanged in whole or in part for certificated debt
securities in definitive form, a global debt security may not be transferred
except as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the Depositary
or by the Depositary or any such nominee to a successor depositary or a nominee
of such successor depositary.
A further description of the Depositary's procedures with respect to the
Notes is set forth in the accompanying prospectus under the heading "Description
of Debt Securities -- Transfer and Exchange -- Global Debt Securities and
Book-Entry System."
CERTAIN DEFINITIONS
"Attributable Liens" means in connection with a sale and lease-back
transaction the lesser of:
- the fair market value of the assets subject to such transaction; and
- the present value (discounted at a rate per annum equal to the average
interest borne by all outstanding securities issued under the indenture
(which may include securities in addition to the Notes offered hereby)
determined on a weighted average basis and compounded semi-annually) of
the obligations of the lessee for rental payments during the term of the
related lease.
S-13
"Bank Credit Agreement" means the Credit Agreement dated as of May 24, 2001
among Safeway Inc. and Canada Safeway Limited, as borrowers, Deutsche Banc 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, N.A. and Citicorp USA, Inc., as syndication
agents, US Bank National Association, as documentation agent, and the other
agents and lenders which are parties thereto, as such agreement may be amended
(including any amendment, restatement, refinancing and successors thereof),
supplemented or otherwise modified from time to time, including any increase in
the principal amount of the obligations thereunder.
"Capital Lease" means any Indebtedness represented by a lease obligation of
a person incurred with respect to real property or equipment acquired or leased
by such person and used in its business that is required to be recorded as a
capital lease in accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock.
"Consolidated Net Tangible Assets" means the total amount of our and our
Subsidiaries' assets (less applicable depreciation, amortization and other
valuation reserves) after deducting therefrom:
- all of our and our Subsidiaries' current liabilities; and
- all goodwill, trade names, trademarks, patents, unamortized debt
discount and expenses and other like intangibles, determined on a
consolidated basis in accordance with GAAP.
"Exempted Debt" means the sum of the following as of the date of
determination:
- our Indebtedness incurred after the Closing Date and secured by Liens
not otherwise permitted by the first sentence under Limitation on Liens
above; and
- our and our Subsidiaries' Attributable Liens in respect of sale and
lease-back transactions entered into after the Closing Date, other than
sale and lease-back transactions permitted by the limitation on sale and
lease-back transactions set forth under Limitation on Sale and
Lease-Back Transactions above.
For purposes of determining whether or not a sale and leaseback transaction
is "permitted" by Limitation on Sale and Lease-Back Transactions,the last
paragraph under Limitation on Liens above (creating an exception for Exempted
Debt) will be disregarded.
"Indebtedness" of any person means, without duplication, any indebtedness,
whether or not contingent, in respect of borrowed money or evidenced by bonds,
notes, debentures or similar instruments or letters of credit (or reimbursement
agreements with respect thereto) or representing the balance deferred and unpaid
of the purchase price of any property (including pursuant to Capital Leases),
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness would appear as a liability
upon a balance sheet of such person prepared on a consolidated basis in
accordance with GAAP (but does not include contingent liabilities which appear
only in a footnote to a balance sheet), and shall also include, to the extent
not otherwise included, the guaranty of items which would be included within
this definition.
"Lien" means any lien, security interest, charge or encumbrance of any kind
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, and any agreement to give any security interest).
"Permitted Liens" means:
- Liens securing our Indebtedness under the Bank Credit Agreement and any
initial or subsequent renewal, extension, refinancing, replacement or
refunding thereof;
S-14
- Liens on accounts receivable, merchandise inventory, equipment, and
patents, trademarks, trade names and other intangibles, securing our
Indebtedness;
- Liens on any of our assets, any of our Subsidiaries' assets, or the
assets of any Joint Venture to which we or any of our Subsidiaries is a
party, created solely to secure obligations incurred to finance the
refurbishment, improvement or construction of such asset, which
obligations are incurred no later than 24 months after completion of
such refurbishment, improvement or construction, and all renewals,
extensions, refinancings, replacements or refundings of such
obligations;
- (a) Liens given to secure the payment of the purchase price incurred in
connection with the acquisition (including acquisition through merger or
consolidation) of property (including shares of stock), including
Capital Lease transactions in connection with any such acquisition, and
(b) Liens existing on property at the time of acquisition thereof or at
the time of acquisition by us or one of our Subsidiaries of any person
then owning such property whether or not such existing Liens were given
to secure the payment of the purchase price of the property to which
they attach; provided that, with respect to clause (a), the Liens shall
be given within 24 months after such acquisition and shall attach solely
to the property acquired or purchased and any improvements then or
thereafter placed thereon;
- Liens in favor of customs and revenue authorities arising as a matter of
law to secure payment of customs duties in connection with the
importation of goods;
- Liens upon specific items of inventory or other goods and proceeds of
any person securing such person's obligations in respect of bankers'
acceptances issued or created for the account of such person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
- Liens securing reimbursement obligations with respect to letters of
credit that encumber documents and other property relating to such
letters of credit and the products and proceeds thereof;
- Liens on key-man life insurance policies granted to secure our
Indebtedness against the cash surrender value thereof;
- Liens encumbering customary initial deposits and margin deposits and
other Liens in the ordinary course of business, in each case securing
our Indebtedness under Interest Swap Obligations and Currency Agreements
and forward contract, option, futures contracts, futures options or
similar agreements or arrangements designed to protect us or any of our
Subsidiaries from fluctuations in interest rates, currencies or the
price of commodities;
- Liens arising out of conditional sale, title retention, consignment or
similar arrangements for the sale of goods entered into by us or any of
our Subsidiaries in the ordinary course of business; and
- Liens in our favor or the favor of any of our Subsidiaries.
"Subsidiary" of any specified person means any corporation, association or
other business entity of which more than 50% of the total voting power of shares
of Capital Stock entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by such person or one or more
of the other Subsidiaries of that person or a combination thereof.
S-15
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement, the
underwriters named below have severally agreed to purchase from us the following
respective principal amounts of Notes listed opposite their names below at the
public offering price less the underwriting discounts and commissions set forth
on the cover page of this prospectus supplement:
PRINCIPAL
UNDERWRITER AMOUNT OF NOTES
----------- ---------------
Deutsche Banc Alex. Brown Inc. ............................. $140,000,000
Banc of America Securities LLC.............................. 105,000,000
Banc One Capital Markets, Inc. ............................. 35,000,000
BNY Capital Markets, Inc. .................................. 35,000,000
Credit Suisse First Boston Corporation...................... 35,000,000
------------
Total.................................................. $350,000,000
============
The underwriting agreement provides that the obligations of the several
underwriters to purchase the Notes offered hereby are subject to certain
conditions precedent and that the underwriters will purchase all of the Notes
offered by this prospectus supplement if any of these Notes are purchased.
We have been advised by the representatives of the underwriters that the
underwriters propose to offer the Notes to the public at the public offering
price set forth on the cover of this prospectus supplement and to dealers at a
price that represents a concession not in excess of 0.150% of the principal
amount of the Notes. The underwriters may allow, and these dealers may re-allow,
a concession of not more than 0.125% of the principal amount of the Notes to
other dealers. After the initial public offering, representatives of the
underwriters may change the offering price and other selling terms.
In addition, we estimate that our share of the total expenses of this
offering, excluding underwriting discounts and commissions, will be
approximately $262,500.
We have agreed to indemnify the underwriters against some specified types
of liabilities, including liabilities under the Securities Act of 1933, and to
contribute to payments the underwriters may be required to make in respect of
any of these liabilities.
The Notes are a new issue of securities with no established trading market.
The Notes will not be listed on any securities exchange or on any automated
dealer quotation system. The underwriters may make a market in the Notes after
completion of the offering, but will not be obligated to do so and may
discontinue any market-making activities at any time without notice. No
assurance can be given as to the liquidity of the trading market for the Notes
or that an active public market for the Notes will develop. If an active public
trading market for the Notes does not develop, the market price and liquidity of
the Notes may be adversely affected.
In connection with the offering, the underwriters may purchase and sell the
Notes in the open market. These transactions may include short sales, purchases
to cover positions created by short sales and stabilizing transactions.
Short sales involve the sale by the underwriters of a greater principal
amount of Notes than they are required to purchase in the offering. The
underwriters must close out any short position by purchasing Notes in the open
market. A short position is more likely to be created if underwriters are
concerned that there may be downward pressure on the price of the Notes in the
open market prior to the completion of the offering.
Stabilizing transactions consist of various bids for or purchases of the
Notes made by the underwriters in the open market prior to the completion of the
offering.
S-16
The underwriters may impose a penalty bid. This occurs when a particular
underwriter repays to the other underwriters a portion of the underwriting
discount received by it because the representatives of the underwriters have
repurchased Notes sold by or for the account of that underwriter in stabilizing
or short covering transactions.
Purchases to cover a short position and stabilizing transactions may have
the effect of preventing or slowing a decline in the market price of the Notes.
Additionally, these purchases, along with the imposition of the penalty bid, may
stabilize, maintain or otherwise affect the market price of the Notes. As a
result, the price of the Notes may be higher than the price that might otherwise
exist in the open market. These transactions may be effected in the over-the-
counter market or otherwise.
The underwriters and their affiliates have provided and in the future may
continue to provide investment banking and other financial services, including
the provision of credit facilities, to us in the ordinary course of business for
which they have received and will receive customary compensation.
LEGAL MATTERS
Latham & Watkins, San Francisco, California will issue an opinion about
certain legal matters with respect to the Notes for Safeway. Sidley Austin Brown
& Wood LLP, San Francisco, California will act as counsel for the underwriters.
S-17
SAFEWAY INC.
DEBT SECURITIES AND COMMON STOCK
----------------------
We may from time to time sell up to $2,000,000,000 aggregate initial
offering price of our debt securities, our common stock, par value $0.01 per
share, or any combination of our debt securities and our common stock.
The debt securities that we may issue may consist of debentures, notes or
other types of debt. We will provide specific terms of these securities in
supplements to this prospectus. You should read this prospectus and any
supplement carefully before you invest.
Our common stock is traded on the New York Stock Exchange under the symbol
"SWY." On February 2, 2001 the last reported sale price for our common stock on
the New York Stock Exchange was $51.23 per share.
Our principal executive offices are located at 5918 Stoneridge Mall Road,
Pleasanton, California 94588, and our telephone number is (925) 467-3000.
----------------------
These securities have not been approved by the Securities and Exchange
Commission or any state securities commission, nor have these organizations
determined that this prospectus is accurate or complete. Any representation to
the contrary is a criminal offense.
----------------------
February 12, 2001
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf registration process, we may sell any combination of the
securities described in this prospectus in one or more offerings up to a total
dollar amount of $2,000,000,000. This prospectus provides you with a general
description of the securities we may offer. Each time we sell securities, we
will provide a prospectus supplement that will contain specific information
about the terms of that offering. The prospectus supplement may also add, update
or change information contained in this prospectus. You should read both this
prospectus and any prospectus supplement together with additional information
described under the next heading "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Commission. You can inspect and copy these reports, proxy
statements and other information at the public reference room of the Commission,
in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. You can also
obtain copies of these materials from the public reference room of the
Commission at prescribed rates. Please call the Commission at 1-800-SEC-0330 for
further information on the public reference room. The Commission also maintains
a web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission
(http://www.sec.gov). You can inspect reports and other information we file at
the office of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005.
We have filed a registration statement and related exhibits with the
Commission under the Securities Act of 1933, as amended (the "Securities Act").
The registration statement contains additional information about us, the debt
securities and our common stock. You may inspect the registration statement and
exhibits without charge at the office of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and you may obtain copies from the Commission at
prescribed rates.
The Commission allows us to "incorporate by reference" the information we
file with it, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is an
important part of this prospectus, and information that we file later with the
Commission will automatically update and supersede this information. We
incorporate by reference the following documents we filed with the Commission
pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than information in such documents that is deemed not to
be filed):
- Annual Report on Form 10-K for the fiscal year ended January 1, 2000
(including information specifically incorporated by reference into our
Form 10-K from our 1999 Annual Report to Stockholders and Proxy Statement
for our 2000 Annual Meeting of Stockholders)
- Quarterly Reports on Form 10-Q for the quarters ended March 25, 2000,
June 17, 2000 and September 9, 2000;
- Current Reports on Form 8-K filed on November 1, 2000, January 26, 2001
and January 31, 2001;
- Description of our common stock contained in our registration statement
on Form 8-A dated February 20, 1990, including the amendment on Form 8
dated March 26, 1990; and
2
- all documents filed by us with the Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus
and before we stop offering the securities under this prospectus (other
than those portions of such documents described in paragraphs (i), (k),
and (l) of Item 402 of Regulation S-K promulgated by the Commission).
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Investor Relations
Safeway Inc.
5918 Stoneridge Mall Road
Pleasanton, California 94588
(925) 467-3790
You should rely only on the information incorporated by reference or
provided in this prospectus and any supplement. We have not authorized anyone
else to provide you with different information.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the documents that we incorporate by reference,
contains forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. Such statements relate to,
among other things, capital expenditures, acquisitions, cost reduction, cash
flow and operating improvements, and are indicated by words or phrases such as
"anticipate," "estimate," "plans," "projects," "continuing," "ongoing,"
"expects," "management believes," "the Company believes," "the Company intends,"
"we believe," "we intend" and similar words or phrases. The following factors
are among the principal factors that could cause actual results to differ
materially from the forward-looking statements: general business and economic
conditions in our operating regions, including the rate of inflation,
population, employment and job growth in our markets; pricing pressures and
other competitive factors, which could include pricing strategies, store
openings and remodels; results of our programs to control costs; results of our
programs to increase sales; results of our programs to improve capital
management; our ability to integrate any companies we acquire and achieve
operating improvements at those companies; increases in labor costs, effects of
labor disputes and relations with union bargaining units representing our
employees; opportunities or acquisitions that we pursue; and the availability
and terms of financing. Consequently, actual events and results may vary
significantly from those included in or contemplated or implied by such
statements.
THE COMPANY
We are one of the largest food and drug retailers in North America, with
1,688 stores at December 30, 2000. Our U.S. retail operations are located
principally in California, Oregon, Washington, Alaska, Colorado, Arizona, Texas,
the Chicago metropolitan area and the Mid-Atlantic region. Our Canadian retail
operations are located primarily in British Columbia, Alberta and
Manitoba/Saskatchewan. In support of our retail operations, we have an extensive
network of distribution, manufacturing and food processing facilities.
We have made a number of significant acquisitions in recent years. In 1997,
we acquired The Vons Companies, Inc. in a merger valued at approximately $1.7
billion. In November 1998, we acquired Dominick's Supermarkets, Inc. in a cash
transaction valued at approximately $1.2 billion, and in April 1999, we acquired
Carr-Gottstein Foods Co. in a cash merger transaction valued at approximately
$106 million. In September 1999, we acquired Randall's Food Markets, Inc. for a
total consideration of approximately $1.3 billion, consisting of
3
approximately $754 million in cash and 12.7 million shares of our common stock.
In February 2001, we acquired the business of Genuardi's Family Markets, Inc. in
a cash transaction valued at slightly in excess of $500 million. We also hold a
49% interest in Casa Ley, S.A. de C.V. which, as of December 30, 2000, operated
97 food and general merchandise stores in western Mexico.
We intend to continue to focus on four key priorities: (1) increasing
sales; (2) controlling costs; (3) improving capital management; and (4) pursuing
acquisitions, to enhance the performance of our operations, including the
operations of Genuardi's.
USE OF PROCEEDS
Unless we indicate otherwise in the applicable prospectus supplement, we
anticipate that any net proceeds will be used for general corporate purposes,
including repaying or refinancing bank or commercial paper borrowings, and for
working capital, capital expenditures and other acquisitions. The factors which
we will consider in any refinancing will include the amount and characteristics
of any debt securities issued and may include, among others, the impact of such
refinancing on our interest coverage, debt-to-capital ratio, liquidity and
earnings per share. We will set forth in the prospectus supplement our intended
use for the net proceeds received from the sale of any securities. Pending the
application of the net proceeds, we expect to reduce indebtedness under our
commercial paper program or bank credit agreement.
RATIO OF EARNINGS TO FIXED CHARGES
Our ratio of earnings to fixed charges for the periods indicated are as
follows:
FISCAL YEAR
-------------------------------------
2000 1999 1998 1997 1996
----- ----- ----- ----- -----
Ratio of earnings to fixed charges(a)............. 3.63x 3.95x 4.88x 4.10x 3.63x
------------
(a) For these ratios, "earnings" represents income before income taxes,
extraordinary loss, the cumulative effect of accounting changes, equity in
earnings of unconsolidated affiliates, minority interest in subsidiary and
fixed charges (other than capitalized interest). "Fixed charges" represents
interest on indebtedness (including capitalized interest) and a share of
rental expense which is deemed to be representative of the interest factor.
DESCRIPTION OF DEBT SECURITIES
This prospectus describes certain general terms and provisions of our debt
securities. When we offer to sell a particular series of debt securities, we
will describe the specific terms of the series in a supplement to this
prospectus. We will also indicate in the supplement whether the general terms
and provisions described in this prospectus apply to a particular series of debt
securities.
We may offer under this prospectus up to $2,000,000,000 aggregate principal
amount of debt securities, or if debt securities are issued at a discount, or in
a foreign currency or composite currency, such principal amount as may be sold
for an initial public offering price of up to $2,000,000,000. Unless otherwise
specified in a supplement to this prospectus, the debt securities will be our
direct, unsecured obligations and will rank equally with all of our other
unsecured and unsubordinated indebtedness.
The debt securities will be issued under an indenture between us and The
Bank of New York, as trustee. We have summarized select portions of the
indenture below. The summary is not complete. The form of the indenture has been
incorporated by reference as an exhibit to the registration statement and you
should read the indenture for provisions that may be important
4
to you. In the summary below, we have included references to the section numbers
of the indenture so that you can easily locate these provisions. Capitalized
terms used in the summary have the meaning specified in the indenture.
When we refer to "we," "our" and "us" in this section, we mean Safeway Inc.
excluding, unless the context otherwise requires or as otherwise expressly
stated, our subsidiaries.
GENERAL
The terms of each series of debt securities will be established by or
pursuant to a resolution of our Board of Directors and set forth or determined
in the manner provided in an officers' certificate or by a supplemental
indenture. (Section 2.2) The particular terms of each series of debt securities
will be described in a prospectus supplement relating to such series (including
any pricing supplement).
We can issue an unlimited amount of debt securities under the indenture
that may be in one or more series with the same or various maturities, at par,
at a premium, or at a discount. We will set forth in a prospectus supplement
(including any pricing supplement) relating to any series of debt securities
being offered, the aggregate principal amount and the following terms of the
debt securities:
- the title of the debt securities;
- the price or prices (expressed as a percentage of the principal amount)
at which we will sell the debt securities;
- any limit on the aggregate principal amount of the debt securities;
- the date or dates on which we will pay the principal on the debt
securities;
- the rate or rates (which may be fixed or variable) per annum or the
method used to determine the rate or rates (including any commodity,
commodity index, stock exchange index or financial index) at which the
debt securities will bear interest, the date or dates from which
interest will accrue, the date or dates on which interest will commence
and be payable and any regular record date for the interest payable on
any interest payment date;
- the place or places where principal of, premium and interest on the debt
securities will be payable;
- the terms and conditions upon which we may redeem the debt securities;
- any obligation we have to redeem or purchase the debt securities
pursuant to any sinking fund or analogous provisions or at the option of
a holder of debt securities;
- the dates on which and the price or prices at which we will repurchase
debt securities at the option of the holders of debt securities and
other detailed terms and provisions of these repurchase obligations;
- the denominations in which the debt securities will be issued, if other
than denominations of $1,000 and any integral multiple thereof;
- whether the debt securities will be issued in the form of certificated
debt securities or global debt securities;
- the portion of principal amount of the debt securities payable upon
declaration of acceleration of the maturity date, if other than the
principal amount;
- the currency of denomination of the debt securities;
5
- the designation of the currency, currencies or currency units in which
payment of principal of, premium and interest on the debt securities
will be made;
- if payments of principal of, premium or interest on the debt securities
will be made in one or more currencies or currency units other than that
or those in which the debt securities are denominated, the manner in
which the exchange rate with respect to these payments will be
determined;
- the manner in which the amounts of payment of principal of, premium or
interest on the debt securities will be determined, if these amounts may
be determined by reference to an index based on a currency or currencies
other than that in which the debt securities are denominated or
designated to be payable or by reference to a commodity, commodity
index, stock exchange index or financial index;
- any provisions relating to any security provided for the debt
securities;
- any addition to or change in the Events of Default described in this
prospectus or in the indenture with respect to the debt securities and
any change in the acceleration provisions described in this prospectus
or in the indenture with respect to the debt securities;
- any addition to or change in the covenants described in this prospectus
or in the indenture with respect to the debt securities;
- any other terms of the debt securities, which may modify or delete any
provision of the indenture as it applies to that series; and
- any depositaries, interest rate calculation agents, exchange rate
calculation agents or other agents with respect to the debt securities.
(Section 2.2)
In addition, the indenture does not limit our ability to issue convertible
or subordinated debt securities. Any conversion or subordination provisions of a
particular series of debt securities will be set forth in the officer's
certificate or supplemental indenture related to that series of debt securities
and will be described in the relevant prospectus supplement. Such terms may
include provisions for conversion, either mandatory, at the option of the holder
or at our option, in which case the number of shares of common stock or other
securities to be received by the holders of debt securities would be calculated
as of a time and in the manner stated in the prospectus supplement.
We may issue debt securities that provide for an amount less than their
stated principal amount to be due and payable upon declaration of acceleration
of their maturity pursuant to the terms of the indenture. We will provide you
with information on the federal income tax considerations and other special
considerations applicable to any of these debt securities in the applicable
prospectus supplement.
If we denominate the purchase price of any of the debt securities in a
foreign currency or currencies or a foreign currency unit or units, or if the
principal of and any premium and interest on any series of debt securities is
payable in a foreign currency or currencies or a foreign currency unit or units,
we will provide you with information on the restrictions, elections, general tax
considerations, specific terms and other information with respect to that issue
of debt securities and such foreign currency or currencies or foreign currency
unit or units in the applicable prospectus supplement.
TRANSFER AND EXCHANGE
Each debt security will be represented by either one or more global
securities registered in the name of The Depository Trust Company, as Depositary
(the "Depositary"), or a nominee (we will refer to any debt security represented
by a global debt security as a "book-entry debt
6
security"), or a certificate issued in definitive registered form (we will refer
to any debt security represented by a certificated security as a "certificated
debt security") as set forth in the applicable prospectus supplement. Except as
set forth under the heading "Global Debt Securities and Book-Entry System"
below, book-entry debt securities will not be issuable in certificated form.
CERTIFICATED DEBT SECURITIES. You may transfer or exchange certificated
debt securities at any office we maintain for this purpose in accordance with
the terms of the indenture. No service charge will be made for any transfer or
exchange of certificated debt securities, but we may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
with a transfer or exchange.
You may effect the transfer of certificated debt securities and the right
to receive the principal of, premium and interest on certificated debt
securities only by surrendering the certificate representing those certificated
debt securities and either reissuance by us or the trustee of the certificate to
the new holder or the issuance by us or the trustee of a new certificate to the
new holder.
GLOBAL DEBT SECURITIES AND BOOK-ENTRY SYSTEM. Each global debt security
representing book-entry debt securities will be deposited with, or on behalf of,
the Depositary, and registered in the name of the Depositary or a nominee of the
Depositary.
The Depositary has indicated it intends to follow the following procedures
with respect to book-entry debt securities.
Ownership of beneficial interests in book-entry debt securities will be
limited to persons that have accounts with the Depositary for the related global
debt security ("participants") or persons that may hold interests through
participants. Upon the issuance of a global debt security, the Depositary will
credit, on its book-entry registration and transfer system, the participants'
accounts with the respective principal amounts of the book-entry debt securities
represented by such global debt security beneficially owned by such
participants. The accounts to be credited will be designated by any dealers,
underwriters or agents participating in the distribution of the book-entry debt
securities. Ownership of book-entry debt securities will be shown on, and the
transfer of such ownership interests will be effected only through, records
maintained by the Depositary for the related global debt security (with respect
to interests of participants) and on the records of participants (with respect
to interests of persons holding through participants). The laws of some states
may require that certain purchasers of securities take physical delivery of such
securities in definitive form. These laws may impair the ability to own,
transfer or pledge beneficial interests in book-entry debt securities.
So long as the Depositary for a global debt security, or its nominee, is
the registered owner of that global debt security, the Depositary or its
nominee, as the case may be, will be considered the sole owner or holder of the
book-entry debt securities represented by such global debt security for all
purposes under the indenture. Except as described below, beneficial owners of
book-entry debt securities will not be entitled to have securities registered in
their names, will not receive or be entitled to receive physical delivery of a
certificate in definitive form representing securities and will not be
considered the owners or holders of those securities under the indenture.
Accordingly, each person beneficially owning book-entry debt securities must
rely on the procedures of the Depositary for the related global debt security
and, if such person is not a participant, on the procedures of the participant
through which such person owns its interest, to exercise any rights of a holder
under the indenture.
We understand, however, that under existing industry practice, the
Depositary will authorize the persons on whose behalf it holds a global debt
security to exercise certain rights of holders of debt securities, and the
indenture provides that we, the trustee and our respective agents will treat as
the holder of a debt security the persons specified in a written statement of
the
7
Depositary with respect to that global debt security for purposes of obtaining
any consents or directions required to be given by holders of the debt
securities pursuant to the indenture. (Section 2.14.6)
We will make payments of principal of, and premium and interest on
book-entry debt securities to the Depositary or its nominee, as the case may be,
as the registered holder of the related global debt security. (Section 2.14.5)
Safeway, the trustee and any other agent of ours or agent of the trustee will
not have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in a global
debt security or for maintaining, supervising or reviewing any records relating
to beneficial ownership interests.
We expect that the Depositary, upon receipt of any payment of principal of,
premium or interest on a global debt security, will immediately credit
participants' accounts with payments in amounts proportionate to the respective
amounts of book-entry debt securities held by each participant as shown on the
records of such Depositary. We also expect that payments by participants to
owners of beneficial interests in book-entry debt securities held through those
participants will be governed by standing customer instructions and customary
practices, as is now the case with the securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of those participants.
We will issue certificated debt securities in exchange for each global debt
security if the Depositary is at any time unwilling or unable to continue as
Depositary or ceases to be a clearing agency registered under the Exchange Act,
and a successor Depositary registered as a clearing agency under the Exchange
Act is not appointed by us within 90 days. In addition, we may at any time and
in our sole discretion determine not to have the book-entry debt securities of
any series represented by one or more global debt securities and, in that event,
will issue certificated debt securities in exchange for the global debt
securities of that series. Global debt securities will also be exchangeable by
the holders for certificated debt securities if an Event of Default with respect
to the book-entry debt securities represented by those global debt securities
has occurred and is continuing. Any certificated debt securities issued in
exchange for a global debt security will be registered in such name or names as
the Depositary shall instruct the trustee. We expect that such instructions will
be based upon directions received by the Depositary from participants with
respect to ownership of book-entry debt securities relating to such global debt
security.
We have obtained the foregoing information concerning the Depositary and
the Depositary's book-entry system from sources we believe to be reliable, but
we take no responsibility for the accuracy of this information.
NO PROTECTION IN THE EVENT OF A CHANGE OF CONTROL
Unless we state otherwise in the applicable prospectus supplement, the debt
securities will not contain any provisions which may afford holders of the debt
securities protection in the event we have a change in control or in the event
of a highly leveraged transaction (whether or not such transaction results in a
change in control) which could adversely affect holders of debt securities.
COVENANTS
We will set forth in the applicable prospectus supplement any restrictive
covenants applicable to any issue of debt securities.
8
CONSOLIDATION, MERGER AND SALE OF ASSETS
We may not consolidate with or merge with or into, or convey, transfer or
lease all or substantially all of our properties and assets to, any person (a
"successor person") unless:
- we are the surviving corporation or the successor person (if other than
Safeway) is a corporation organized and validly existing under the laws
of any U.S. domestic jurisdiction and expressly assumes our obligations
on the debt securities and under the indenture;
- immediately after giving effect to the transaction, no Event of Default,
and no event which, after notice or lapse of time, or both, would become
an Event of Default, shall have occurred and be continuing under the
indenture; and
- certain other conditions are met. (Section 5.1)
EVENTS OF DEFAULT
"Event of Default" means with respect to any series of debt securities, any
of the following:
- default in the payment of any interest upon any debt security of that
series when it becomes due and payable, and continuance of that default
for a period of 30 days (unless the entire amount of the payment is
deposited by us with the trustee or with a paying agent prior to the
expiration of the 30-day period);
- default in the payment of principal of or premium on any debt security
of that series when due and payable;
- default in the deposit of any sinking fund payment, when and as due in
respect of any debt security of that series;
- default in the performance or breach of any other covenant or warranty
by us in the indenture (other than a covenant or warranty that has been
included in the indenture solely for the benefit of a series of debt
securities other than that series), which default continues uncured for
a period of 60 days after we receive written notice from the trustee or
we and the trustee receive written notice from the holders of not less
than a majority in principal amount of the outstanding debt securities
of that series as provided in the indenture;
- certain events of bankruptcy, insolvency or reorganization of Safeway;
and
- any other Event of Default provided with respect to debt securities of
that series that is described in the applicable prospectus supplement
accompanying this prospectus.
No Event of Default with respect to a particular series of debt securities
(except as to certain events of bankruptcy, insolvency or reorganization)
necessarily constitutes an Event of Default with respect to any other series of
debt securities. (Section 6.1) The occurrence of an Event of Default may
constitute an event of default under our bank credit agreements in existence
from time to time. In addition, the occurrence of certain Events of Default or
an acceleration under the indenture may constitute an event of default under
certain of our other indebtedness outstanding from time to time.
If an Event of Default with respect to debt securities of any series at the
time outstanding occurs and is continuing, then the trustee or the holders of
not less than a majority in principal amount of the outstanding debt securities
of that series may, by a notice in writing to us (and to the trustee if given by
the holders), declare to be due and payable immediately the principal (or, if
the debt securities of that series are discount securities, that portion of the
principal amount as may be specified in the terms of that series) of and accrued
and unpaid interest, if
9
any, on all debt securities of that series. In the case of an Event of Default
resulting from certain events of bankruptcy, insolvency or reorganization, the
principal (or such specified amount) of and accrued and unpaid interest, if any,
on all outstanding debt securities will become and be immediately due and
payable without any declaration or other act on the part of the trustee or any
holder of outstanding debt securities. At any time after a declaration of
acceleration with respect to debt securities of any series has been made, but
before a judgment or decree for payment of the money due has been obtained by
the trustee, the holders of a majority in principal amount of the outstanding
debt securities of that series may rescind and annul the acceleration if all
Events of Default, other than the non-payment of accelerated principal and
interest, if any, with respect to debt securities of that series, have been
cured or waived as provided in the indenture. (Section 6.2) We refer you to the
prospectus supplement relating to any series of debt securities that are
discount securities for the particular provisions relating to acceleration of a
portion of the principal amount of such discount securities upon the occurrence
of an Event of Default.
The indenture provides that the trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
holder of outstanding debt securities, unless the trustee receives indemnity
satisfactory to it against any loss, liability or expense. (Section 7.1(e))
Subject to certain rights of the trustee, the holders of a majority in principal
amount of the outstanding debt securities of any series will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the trustee or exercising any trust or power conferred on the
trustee with respect to the debt securities of that series. (Section 6.12)
No holder of any debt security of any series will have any right to
institute any proceeding, judicial or otherwise, with respect to the indenture
or for the appointment of a receiver or trustee, or for any remedy under the
indenture, unless:
- that holder has previously given to the trustee written notice of a
continuing Event of Default with respect to debt securities of that
series; and
- the holders of at least a majority in principal amount of the
outstanding debt securities of that series have made written request,
and offered reasonable indemnity, to the trustee to institute the
proceeding as trustee, and the trustee has not received from the holders
of a majority in principal amount of the outstanding debt securities of
that series a direction inconsistent with that request and has failed to
institute the proceeding within 60 days. (Section 6.7)
Notwithstanding the foregoing, the holder of any debt security will have an
absolute and unconditional right to receive payment of the principal of, premium
and any interest on that debt security on or after the due dates expressed in
that debt security and to institute suit for the enforcement of payment.
(Section 6.8)
The indenture requires us, within 120 days after the end of our fiscal
year, to furnish to the trustee a statement as to compliance with the indenture.
(Section 4.3) The indenture provides that the trustee may withhold notice to the
holders of debt securities of any series of any Default or Event of Default
(except in payment on any debt securities of that series) with respect to debt
securities of that series if it in good faith determines that withholding notice
is in the interest of the holders of those debt securities. (Section 7.5)
MODIFICATION AND WAIVER
We may modify and amend the indenture with the consent of the holders of at
least a majority in principal amount of the outstanding debt securities of each
series affected by the
10
modifications or amendments. We may not make any modification or amendment
without the consent of the holders of each affected debt security then
outstanding if that amendment will:
- reduce the amount of debt securities whose holders must consent to an
amendment or waiver;
- reduce the rate of or extend the time for payment of interest (including
default interest) on any debt security;
- reduce the principal of or premium on or change the fixed maturity of
any debt security or reduce the amount of, or postpone the date fixed
for, the payment of any sinking fund or analogous obligation with
respect to any series of debt securities;
- reduce the principal amount of discount securities payable upon
acceleration of maturity;
- waive a default in the payment of the principal of, premium or interest
on any debt security (except a rescission of acceleration of the debt
securities of any series by the holders of at least a majority in
aggregate principal amount of the then outstanding debt securities of
that series and a waiver of the payment default that resulted from such
acceleration);
- make the principal of or premium or interest on any debt security
payable in currency other than that stated in the debt security;
- make any change to certain provisions of the indenture relating to,
among other things, the right of holders of debt securities to receive
payment of the principal of, premium and interest on those debt
securities and to institute suit for the enforcement of any such payment
and to waivers or amendments; or
- waive a redemption payment with respect to any debt security. (Section
9.3)
Except for certain specified provisions, the holders of at least a majority
in principal amount of the outstanding debt securities of any series may on
behalf of the holders of all debt securities of that series waive our compliance
with provisions of the indenture. (Section 9.2) The holders of a majority in
principal amount of the outstanding debt securities of any series may on behalf
of the holders of all the debt securities of such series waive any past default
under the indenture with respect to that series and its consequences, except a
default in the payment of the principal of, premium or any interest on any debt
security of that series or in respect of a covenant or provision which cannot be
modified or amended without the consent of the holder of each outstanding debt
security of the series affected; provided, however, that the holders of a
majority in principal amount of the outstanding debt securities of any series
may rescind an acceleration and its consequences, including any related payment
default that resulted from the acceleration. (Section 6.13)
DEFEASANCE OF DEBT SECURITIES AND CERTAIN COVENANTS IN CERTAIN CIRCUMSTANCES
LEGAL DEFEASANCE. The indenture provides that, unless otherwise provided
by the terms of the applicable series of debt securities, we may be discharged
from any and all obligations in respect of the debt securities of any series
(except for certain obligations to register the transfer or exchange of debt
securities of such series, to replace stolen, lost or mutilated debt securities
of such series, and to maintain paying agencies and certain provisions relating
to the treatment of funds held by paying agents). We will be so discharged upon
the deposit with the trustee, in trust, of money and/or U.S. Government
Obligations or, in the case of debt securities denominated in a single currency
other than U.S. Dollars, Foreign Government Obligations, that, through the
payment of interest and principal in accordance with their terms, will provide
money in an amount sufficient in the opinion of a nationally recognized firm of
independent public accountants to pay and discharge each installment of
principal, premium and interest on and any mandatory sinking fund payments in
respect of the debt securities of that
11
series on the stated maturity of those payments in accordance with the terms of
the indenture and those debt securities.
This discharge may occur only if, among other things, we have delivered to
the trustee an opinion of counsel stating that we have received from, or there
has been published by, the United States Internal Revenue Service a ruling or,
since the date of execution of the indenture, there has been a change in the
applicable United States federal income tax law, in either case to the effect
that, and based thereon such opinion shall confirm that, the holders of the debt
securities of that series will not recognize income, gain or loss for United
States federal income tax purposes as a result of the deposit, defeasance and
discharge and will be subject to United States federal income tax on the same
amounts and in the same manner and at the same times as would have been the case
if the deposit, defeasance and discharge had not occurred. (Section 8.3)
DEFEASANCE OF CERTAIN COVENANTS. The indenture provides that, unless
otherwise provided by the terms of the applicable series of debt securities,
upon compliance with certain conditions:
- we may omit to comply with the covenant described under the heading
"Consolidation, Merger and Sale of Assets" and certain other covenants
set forth in the indenture, as well as any additional covenants which
may be set forth in the applicable prospectus supplement; and
- any omission to comply with those covenants will not constitute a
Default or an Event of Default with respect to the debt securities of
that series ("covenant defeasance").
The conditions include:
- depositing with the trustee money and/or U.S. Government Obligations or,
in the case of debt securities denominated in a single currency other
than U.S. Dollars, Foreign Government Obligations, that, through the
payment of interest and principal in accordance with their terms, will
provide money in an amount sufficient in the opinion of a nationally
recognized firm of independent public accountants to pay and discharge
each installment of principal of, premium and interest on and any
mandatory sinking fund payments in respect of the debt securities of
that series on the stated maturity of those payments in accordance with
the terms of the indenture and those debt securities; and
- delivering to the trustee an opinion of counsel to the effect that the
holders of the debt securities of that series will not recognize income,
gain or loss for United States federal income tax purposes as a result
of the deposit and related covenant defeasance and will be subject to
United States federal income tax on the same amounts and in the same
manner and at the same times as would have been the case if the deposit
and related covenant defeasance had not occurred. (Section 8.4)
COVENANT DEFEASANCE AND EVENTS OF DEFAULT. In the event we exercise our
option to effect covenant defeasance with respect to any series of debt
securities and the debt securities of that series are declared due and payable
because of the occurrence of any Event of Default, the amount of money and/or
U.S. Government Obligations or Foreign Government Obligations on deposit with
the trustee will be sufficient to pay amounts due on the debt securities of that
series at the time of their stated maturity but may not be sufficient to pay
amounts due on the debt securities of that series at the time of the
acceleration resulting from the Event of Default. However, we shall remain
liable for those payments.
12
"FOREIGN GOVERNMENT OBLIGATIONS" means, with respect to debt securities of
any series that are denominated in a currency other than U.S. Dollars:
- direct obligations of the government that issued or caused to be issued
such currency for the payment of which obligations its full faith and
credit is pledged which are not callable or redeemable at the option of
the issuer thereof; or
- obligations of a person controlled or supervised by or acting as an
agency or instrumentality of that government the timely payment of which
is unconditionally guaranteed as a full faith and credit obligation by
that government which are not callable or redeemable at the option of
the issuer thereof.
GOVERNING LAW
The indenture and the debt securities will be governed by, and construed in
accordance with, the internal laws of the State of New York. (Section 10.10)
PLAN OF DISTRIBUTION
We may sell the securities to one or more underwriters for public offering
and sale by them and may also sell the securities to investors directly or
through agents. We will name any underwriter or agent involved in the offer and
sale of securities in the applicable prospectus supplement. We have reserved the
right to sell or exchange securities directly to investors on our own behalf in
those jurisdictions where we are authorized to do so.
We may distribute the securities from time to time in one or more
transactions:
- at a fixed price or prices, which may be changed;
- at market prices prevailing at the time of sale;
- at prices related to such prevailing market prices; or
- at negotiated prices.
We may also, from time to time, authorize dealers, acting as our agents, to
offer and sell securities upon the terms and conditions set forth in the
applicable prospectus supplement. In connection with the sale of securities, we,
or the purchasers of securities for whom the underwriters may act as agents, may
compensate underwriters in the form of underwriting discounts or commissions.
Underwriters may sell the securities to or through dealers, and those dealers
may receive compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions from the purchasers for whom they may
act as agent. Unless otherwise indicated in a prospectus supplement, an agent
will be acting on a best efforts basis and a dealer will purchase securities as
a principal, and may then resell the securities at varying prices to be
determined by the dealer.
We will describe in the applicable prospectus supplement any compensation
we pay to underwriters or agents in connection with the offering of securities,
and any discounts, concessions or commissions allowed by underwriters to
participating dealers. Dealers and agents participating in the distribution of
securities may be deemed to be underwriters, and any discounts and commissions
received by them and any profit realized by them on resale of the securities may
be deemed to be underwriting discounts and commissions. We may enter into
agreements to indemnify underwriters, dealers and agents against certain civil
liabilities, including liabilities under the Securities Act, and to reimburse
these persons for certain expenses.
To facilitate the offering of securities, certain persons participating in
the offering may engage in transactions that stabilize, maintain, or otherwise
affect the price of the securities.
13
This may include over-allotments or short sales of the securities, which involve
the sale by persons participating in the offering of more securities than we
sold to them. In these circumstances, these persons would cover such
over-allotments or short positions by making purchases in the open market or by
exercising their over-allotment option, if any. In addition, these persons may
stabilize or maintain the price of the securities by bidding for or purchasing
securities in the open market or by imposing penalty bids, whereby selling
concessions allowed to dealers participating in the offering may be reclaimed if
securities sold by them are repurchased in connection with stabilization
transactions. The effect of these transactions may be to stabilize or maintain
the market price of the securities at a level above that which might otherwise
prevail in the open market. These transactions may be discontinued at any time.
Certain of the underwriters, dealers or agents and their associates may
engage in transactions with and perform services for us in the ordinary course
of our business.
LEGAL MATTERS
Latham & Watkins, San Francisco, California, will issue an opinion about
certain legal matters with respect to the securities for Safeway. Any
underwriters will be advised about the other issues relating to any offering by
their own legal counsel.
EXPERTS
The consolidated financial statements as of January 1, 2000 and January 2,
1999 and for each of the three fiscal years in the period ended January 1, 2000,
which are incorporated by reference herein from the Annual Report on Form 10-K
for the year ended January 1, 2000, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is also incorporated by
reference herein, and have been so incorporated in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.
14
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. WE ARE
OFFERING TO SELL THE SECURITIES, AND SEEKING OFFERS TO BUY THE SECURITIES, ONLY
IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE INFORMATION CONTAINED
IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IS ACCURATE ONLY
AS OF THE DATE OF THIS PROSPECTUS SUPPLEMENT AND THE DATE OF THE ACCOMPANYING
PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR
ANY SALES OF THE SECURITIES.
----------------------
TABLE OF CONTENTS
PAGE
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PROSPECTUS SUPPLEMENT
Forward-Looking Statements.......... S-2
Prospectus Supplement Summary....... S-3
Use of Proceeds..................... S-5
Capitalization...................... S-6
Selected Financial Data............. S-7
Description of the Notes............ S-10
Underwriting........................ S-16
Legal Matters....................... S-17
PROSPECTUS
About this Prospectus............... 2
Where You Can Find More
Information....................... 2
Disclosure Regarding Forward-
Looking Statements................ 3
The Company......................... 3
Use of Proceeds..................... 4
Ratio of Earnings to Fixed
Charges........................... 4
Description of Debt Securities...... 4
Plan of Distribution................ 13
Legal Matters....................... 14
Experts............................. 14
(SAFEWAY INC. LOGO)
$350,000,000
SAFEWAY INC.
3.625% NOTES DUE 2003
Joint-Lead Manager-Books
DEUTSCHE BANC ALEX. BROWN
Joint-Lead Manager
BANC OF AMERICA SECURITIES LLC
BANC ONE CAPITAL MARKETS, INC.
BNY CAPITAL MARKETS, INC.
CREDIT SUISSE FIRST BOSTON
PROSPECTUS SUPPLEMENT
OCTOBER 30, 2001