FORM 10-Q
                                                 




                       SECURITIES AND EXCHANGE COMMISSION


                             Washington, D.C. 20549





                         -------------------------------


                                    FORM 10-Q



                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


       For 39 Weeks Ended: October 29, 1998 Commission File Number: 1-6187



                                ALBERTSON'S, INC.
              -----------------------------------------------------
             (Exact name of Registrant as specified in its charter)


                               Delaware 82-0184434
      ------------------------------- ------------------------------------
      (State or other jurisdiction of (I.R.S. Employer Identification No.)
                         incorporation or organization)


              250 Parkcenter Blvd., P.O. Box 20, Boise, Idaho 83726
           ----------------------------------------------- ----------
                              (Address) (Zip Code)


       Registrant's telephone number, including area code: (208) 395-6200
                                                           --------------


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

     Number of Registrant's $1.00 par value
     common shares outstanding at December 4, 1998:         245,593,266


                                      Page 1
<PAGE>


                          PART I. FINANCIAL INFORMATION



                                ALBERTSON'S, INC.
                              CONSOLIDATED EARNINGS
                      (in thousands except per share data)
                                   (unaudited)
<TABLE>
<CAPTION>


                                                               13 WEEKS ENDED                            39 WEEKS ENDED
                                                 --------------------------------------     -------------------------------------
                                                       October 29,        October 30,            October 29,        October 30,
                                                              1998               1997                   1998               1997
                                                 ------------------- ------------------    ------------------- ------------------
<S>                                              <C>                 <C>                   <C>                 <C>    

Sales                                                   $3,990,459         $3,612,032            $11,833,764        $10,900,082
Cost of sales                                            2,885,303          2,637,952              8,634,794          8,065,336
                                                 ------------------- ------------------    ------------------- ------------------
Gross profit                                             1,105,156            974,080              3,198,970          2,834,746

Selling, general and
  administrative expenses                                  856,013            751,676              2,501,640          2,230,008
Impairment - store closures                                                                           29,423
                                                 ------------------- ------------------    ------------------- ------------------
Operating profit                                           249,143            222,404                667,907            604,738

Other (expenses) income:
  Interest, net                                            (27,013)           (22,388)               (78,123)           (61,243)
  Other, net                                                (1,737)            (1,104)                13,040              7,941
                                                 ------------------- ------------------    ------------------- ------------------
Earnings before income taxes                               220,393            198,912                602,824            551,436
Income taxes                                                82,647             75,507                226,059            209,325
                                                 ------------------- ------------------    ------------------- ------------------

NET EARNINGS                                            $  137,746         $  123,405             $  376,765         $  342,111
                                                 =================== ==================    =================== ==================

EARNINGS PER SHARE:
  Basic                                                      $0.56              $0.50                  $1.53              $1.38
  Diluted                                                    $0.56              $0.50                  $1.53              $1.37

WEIGHTED AVERAGE COMMON
 SHARES OUTSTANDING:
  Basic                                                    245,536            245,646                245,643            248,433
  Diluted                                                  246,678            246,295                246,790            249,114

DIVIDENDS DECLARED PER SHARE                                 $0.17              $0.16                  $0.51              $0.48
</TABLE>


















See Notes to Consolidated Financial Statements.

                                      Page 2

<PAGE>


                                ALBERTSON'S, INC.
                           CONSOLIDATED BALANCE SHEETS
                             (dollars in thousands)
<TABLE>
<CAPTION>

                                                                              October 29, 1998
                                                                                   (unaudited)             January 29, 1998
                                                                    --------------------------    -------------------------
                   ASSETS
                   ------ 
<S>                                                                 <C>                          <C>
CURRENT ASSETS:
  Cash and cash equivalents                                                         $   55,140                   $  108,083
  Accounts and notes receivable                                                        146,932                      121,023
  Inventories                                                                        1,448,872                    1,308,578
  Prepaid expenses                                                                      56,056                       44,426
  Deferred income taxes                                                                 50,440                       45,747
                                                                    --------------------------    -------------------------
           TOTAL CURRENT ASSETS                                                      1,757,440                    1,627,857

OTHER ASSETS                                                                           255,450                      207,360

GOODWILL (net of accumulated amortization
  of $1,803)                                                                           158,071

LAND, BUILDINGS AND EQUIPMENT (net of
  accumulated depreciation and amortization
  of $2,064,260 and $1,822,263,
  respectively)                                                                      3,867,306                    3,383,373
                                                                    ==========================    =========================
                                                                                    $6,038,267                   $5,218,590
                                                                    ==========================    =========================

     LIABILITIES AND STOCKHOLDERS' EQUITY
     ------------------------------------

CURRENT LIABILITIES:
  Accounts payable                                                                  $  867,212                   $  742,557
  Salaries and related liabilities                                                     163,682                      149,898
  Taxes other than income taxes                                                        100,596                       80,842
  Income taxes                                                                           5,654                       37,657
  Self-insurance                                                                        73,803                       69,982
  Unearned income                                                                       63,469                       46,069
  Other current liabilities                                                             71,192                       52,395
  Current maturities of long-term debt                                                   5,662                       86,511
  Current capitalized lease obligations                                                 11,044                        9,608
                                                                    --------------------------    -------------------------
           TOTAL CURRENT LIABILITIES                                                 1,362,314                    1,275,519

LONG-TERM DEBT                                                                       1,474,811                      989,650

CAPITALIZED LEASE OBLIGATIONS                                                          154,333                      140,957

DEFERRED INCOME TAXES                                                                   27,063                       17,520
UNEARNED INCOME                                                                         55,414                       81,931
OTHER L/T LIABILITIES AND DEFERRED CREDITS                                             306,744                      293,557

STOCKHOLDERS' EQUITY:
  Preferred stock - $1 par value; authorized - 10,000,000 shares; issued - none
  Common stock - $1 par  value;  authorized  -  1,200,000,000  shares;  issued -
    245,555,861 shares and 245,735,633
    shares, respectively                                                               245,556                      245,736
  Capital in excess of par value                                                         1,134                        4,271
  Retained earnings                                                                  2,410,898                    2,169,449
                                                                    --------------------------    -------------------------
                                                                                     2,657,588                    2,419,456
                                                                    ==========================    =========================
                                                                                    $6,038,267                   $5,218,590
                                                                    ==========================    =========================
</TABLE>
See Notes to Consolidated Financial Statements.


                                      Page 3
<PAGE>


                                ALBERTSON'S, INC.
                             CONSOLIDATED CASH FLOWS
                                 (in thousands)
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                                              39 WEEKS ENDED
                                                                            -----------------------------------------------
                                                                                      October 29,               October 30,
                                                                                             1998                      1997
                                                                            ----------------------    ----------------------
<S>                                                                         <C>                       <C>   
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net earnings                                                                         $ 376,765                 $ 342,111
   Adjustments to reconcile net earnings to
     net cash provided by operating activities:
       Depreciation and amortization                                                      274,797                   243,987
       Net deferred income taxes                                                             (768)                  (14,432)
       Increase in cash surrender value of
         Company-owned life insurance                                                      (7,342)                   (8,565)
       Impairment - store closures                                                         29,423
       Changes in operating assets and
         liabilities:
           Receivables and prepaid expenses                                               (48,892)                    1,805
           Inventories                                                                    (90,390)                  (43,248)
           Accounts payable                                                                93,296                    49,722
           Other current liabilities                                                        8,419                    52,798
           Self-insurance                                                                   1,775                    10,587
           Unearned income                                                                 (9,216)                   (2,425)
           Other long-term liabilities                                                      6,053                     6,167
                                                                            ----------------------    ----------------------
       Net cash provided by operating activities                                          633,920                   638,507

CASH FLOWS FROM INVESTING ACTIVITIES:
   Net capital expenditures excluding
     noncash activities                                                                  (599,227)                 (457,176)
   Business acquisitions, net of cash acquired                                           (262,098)
   Increase in other assets                                                               (16,818)                  (10,037)
                                                                            ----------------------    ----------------------
       Net cash used in investing activities                                             (878,143)                 (467,213)

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from long-term borrowings                                                     317,000                   200,000
   Payments on long-term borrowings                                                      (151,017)                   (6,141)
   Net commercial paper activity                                                          162,796                   (49,607)
   Proceeds from stock options exercised                                                    1,859                     2,844
   Cash dividends                                                                        (122,840)                 (116,969)
   Stock purchased and retired                                                            (16,518)                 (193,974)
                                                                            ----------------------    ----------------------
       Net cash provided by (used in)
       financing activities                                                               191,280                  (163,847)
                                                                            ----------------------    ----------------------

NET (DECREASE) INCREASE IN CASH AND
   CASH EQUIVALENTS                                                                       (52,943)                    7,447

CASH AND CASH EQUIVALENTS AT BEGINNING
  OF PERIOD                                                                               108,083                    90,865
                                                                            ----------------------    ----------------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                              $  55,140                 $  98,312
                                                                            ======================    ======================

</TABLE>






See notes to Consolidated Financial Statements


                                      Page 4
<PAGE>


                                ALBERTSON'S, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

Basis of Presentation
---------------------
   The accompanying  unaudited  consolidated  financial  statements  include the
results of  operations,  account  balances and cash flows of the Company and its
wholly  owned  subsidiaries.   All  material  intercompany  balances  have  been
eliminated.

   In  the  opinion  of  management,  the  accompanying  unaudited  consolidated
financial statements include all adjustments necessary to present fairly, in all
material  respects,  the  results of  operations  of the Company for the periods
presented.  Such adjustments consisted only of normal recurring items except for
the impairment  charge discussed under  "Impairment - Store Closures" below. The
statements  have  been  prepared  by  the  Company  pursuant  to the  rules  and
regulations of the Securities and Exchange  Commission.  Certain information and
footnote  disclosures  normally  included in  financial  statements  prepared in
accordance with generally accepted accounting  principles have been condensed or
omitted  pursuant  to such rules and  regulations.  It is  suggested  that these
consolidated  financial  statements be read in conjunction with the consolidated
financial  statements and the accompanying  notes included in the Company's 1997
Annual Report.

   The  balance  sheet at January  29,  1998,  has been  taken from the  audited
financial statements at that date.

   The  preparation  of the  Company's  consolidated  financial  statements,  in
conformity with generally accepted accounting principles, requires management to
make  estimates and  assumptions.  These  estimates and  assumptions  affect the
reported  amounts of assets and  liabilities  and the  disclosure  of contingent
assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses  during the reporting  period.  Actual  results
could differ from these estimates.

   Historical  operating  results  are  not  necessarily  indicative  of  future
results.

Reclassifications
-----------------
   Certain  reclassifications  have  been  made in the  prior  year's  financial
statements to conform to classifications used in the current year.

Impairment - Store Closures
---------------------------
   The  Company  recorded  a charge to  earnings  in the first  quarter  of 1998
related to management's decision to close 16 underperforming  stores in 8 states
during the fiscal year. The charge includes  impaired real estate and equipment,
as well as the present  value of  remaining  liabilities  under  leases,  net of
expected  sublease  recoveries.  As of October 29, 1998,  12 of these stores had
been closed.

                                      Page 5
<PAGE>

Supplemental Cash Flow Information
----------------------------------
   Selected cash payments and noncash activities were as follows (in thousands):

<TABLE>
<CAPTION>

                                                                       39 Weeks Ended              39 Weeks Ended
                                                                     October 29, 1998            October 30, 1997


                                                               -----------------------     -----------------------
<S>                                                            <C>                         <C>      
   Cash payments for:
     Income taxes                                                            $255,234                    $213,324
     Interest, net of amounts
       capitalized                                                             54,507                      36,073
   Noncash activities:
     Tax benefits related to stock
       options                                                                  2,173                       1,990
     Fair Market Value of stock
       exchanged for options and related
       tax withholdings                                                         1,753                       1,918
     Capitalized leases incurred                                               18,819                      12,395
     Capitalized leases terminated                                              5,509                         671
     Note payable related to
       business acquisition                                                     8,000
     Liabilities assumed in connection
       with asset acquisition                                                   1,340

</TABLE>

Business Acquisitions
---------------------
   On January 30, 1998, the Company  acquired Seessel  Holdings,  Inc., a wholly
owned subsidiary of Bruno's,  Inc. for cash  consideration of approximately  $88
million. This acquisition included 10 grocery stores in the Memphis,  Tennessee,
area and a central bakery and central kitchen which manufacture fresh bakery and
prepared  foods  for  distribution  to the  Seessel's  stores.  The  Company  is
continuing to operate these stores under the Seessel's name.

   On April 20, 1998, the Company acquired Smitty's Super Markets, Inc. for cash
consideration  of approximately  $36 million plus an $8 million  unsecured note.
This  acquisition  included  10  combination  stores  and 3  fuel  centers  with
convenience stores in the Springfield and Joplin,  Missouri,  areas. The Company
is continuing to operate these stores under the Smitty's name.

   On October 1, 1998, the Company acquired Buttrey Food and Drug Stores Company
for cash consideration of approximately $142 million.  This acquisition included
44 stores  in   Montana,  North Dakota, and  Wyoming.  In  compliance  with the 
agreement with the Federal Trade Commission, 9 Buttrey stores and 6  Albertson's
stores were simultaneously divested with the purchase.  The Company is operating
these stores under the Albertson's banner.

   All acquisitions  were accounted for using the purchase method of accounting.
The results of operations of the acquired  businesses  have been included in the
consolidated  financial  statements  from their date of  acquisition.  Pro forma
results of operations  have not been presented due to the immaterial  effects of
these acquisitions on the Company's consolidated  operations.  For each of these
acquisitions  the excess of the purchase price over the fair market value of net
assets  acquired was  allocated  to goodwill  which is being  amortized  over 40
years. The Company has not finalized its purchase price  allocation  relative to
any acquisition, however, the final purchase price allocations should not differ
significantly  from the preliminary  purchase price  allocations  recorded as of
October 29, 1998.

                                      Page 6
<PAGE>

   On August 24,  1998,  the Company  purchased  the assets of 15 Bruno's,  Inc.
stores.  This  acquisition  included  14  operating  stores  and 1  store  under
construction  which, when completed,  will replace a store currently  operating.
The stores are located in the Nashville and Chattanooga, Tennessee, metropolitan
areas.  The  Chattanooga  area stores include a store in northern  Georgia.  The
Company is operating these stores under the Albertson's banner.

Indebtedness
------------
   The Company  issued  medium term notes of $84 million in February  1998,  $77
million in April 1998 and $156  million in June 1998 under a shelf  registration
statement filed with the Securities and Exchange Commission in 1997.

   The $84  million of  medium-term  notes  issued in  February  1998  mature at
various  dates  between  February  2013  and  February  2028.  Interest  is paid
semiannually at rates ranging from 6.34% to 6.57%. The weighted average interest
rate is 6.47%.

   The $77  million of  medium-term  notes  issued in April 1998 mature in April
2028, of which $50 million  contain a put option which would require the Company
to repay the notes in April 2008,  if the holder of the note so elects by giving
the Company a 60 day notice. Interest is paid semiannually at rates ranging from
6.10% to 6.53%. The weighted average interest rate is 6.25%.

   The $156  million of  medium-term  notes  issued in June 1998  mature in June
2028. Interest is paid semiannually at a rate of 6.63%.

   Proceeds from these issuances were used primarily to repay  borrowings  under
the Company's commercial paper program.  Medium-term notes of up to $183 million
remain available for issuance under the 1997 registration statement.

Capital Stock
-------------
   Since  1987 the  Board of  Directors  had  continuously  adopted  or  renewed
programs under which the Company was authorized,  but not required,  to purchase
and retire shares of its common stock.  The  remaining  authorization  under the
program adopted by the Board on March 2, 1998,  which  authorized the Company to
purchase and retire up to 5 million shares through March 31, 1999, was rescinded
in contemplation of the proposed merger with American Stores Company.

Subsequent Events
-----------------
   On  November  12,  1998,   in  separate   special   stockholders'   meetings,
stockholders  of  Albertson's  and American  Stores  Company (ASC)  approved the
previously   announced   merger  of  the two  retail food  and  drug  companies.
Albertson's   stockholders   approved  the  issuance  of  shares  of Albertson's
Common Stock  pursuant  to the merger agreement with American Stores Company  at
an exchange ratio of 0.63 shares of Albertson's, Inc. Common Stock  in  exchange
for each share of ASC Common Stock ("Exchange Ratio"),  with cash being paid  in
lieu of fractional shares (the "Consideration").  As  a  result  of  the merger,
former stockholders of  ASC  will hold  approximately  41.3%  of the outstanding
Albertson's  Common  Stock  (assuming  no  conversion  of  outstanding options).
The Company believes the  merger  will  qualify  as  a  pooling of interests for
accounting and financial reporting purposes and as a tax-free  transaction.  The
transaction is subject to certain regulatory clearances and is expected to close
in early 1999.

                                      Page 7
<PAGE>

   In  addition,  the  stockholders  also  voted to  approve  amendments  to the
Albertson's  Stock-Based  Incentive  Plan.  Subject to the closing of the merger
with ASC this will  increase  the  number of shares  from  10,000,000  shares to
30,000,000  shares of Albertson's  Common Stock available for issuance under the
plan.



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations
---------------------
Results for the quarter:

   The following table sets forth certain income statement  components expressed
as a percent to sales and the  percentage  change from the previous  year in the
amounts of such components:

<TABLE>
<CAPTION>

                                                     Percent to Sales
                                             ----------------------------------
                                                      13 weeks ended                       Percentage
                                             ----------------------------------
                                                    10-29-98          10-30-97               Increase
                                             ----------------- ----------------     ------------------

<S>                                          <C>               <C>                  <C>    
   Sales                                            100.00%           100.00%                  10.5%
   Gross profit                                      27.69             26.97                   13.5
   Selling, general and
     administrative
     expenses                                        21.45             20.81                   13.9
   Operating profit                                   6.24              6.16                   12.0
   Net interest expense                               0.68              0.62                   20.7
   Earnings before
     income taxes                                     5.52              5.51                   10.8
   Net earnings                                       3.45              3.42                   11.6

</TABLE>

   Sales  increased  due to improved  identical  store  sales and the  continued
expansion of net retail square footage. Identical store sales increased 1.5% and
comparable  store sales  (which  include  replacement  stores)  increased  1.7%.
Management  estimates  that there was deflation in products the Company sells of
approximately 0.1%  (annualized).  During the 13 weeks, 62 stores were opened, 9
stores were closed (which  included 6 Albertson's  stores divested in connection
with the Buttrey  acquisition) and 9 store remodels were completed.  Included in
store openings are 49 acquired stores (net of 9 Buttrey stores divested). Retail
square  footage  increased to 47.6 million  square feet, a net increase of 14.6%
from October 30, 1997.

   In addition to new store  development,  the Company  plans to increase  sales
through its continued  investment  in programs  initiated in 1997 and 1996 which
are designed to provide solutions to customer needs. These programs include: the
Front End Manager program;  the home meal solutions process called "Quick Fixin'
Ideas;"  special   destination   categories  such  as  Albertson's  Better  Care
pharmacies and baby care, pet care,  snack and beverage  centers;  and increased
emphasis on training  programs  utilizing  Computer Guided Training.  To provide
additional   solutions   to   customer   needs,   the  Company  has  added  new,
gourmet-quality  bakery  products and organic  grocery and produce items.  Other
solutions include neighborhood marketing, targeted advertising, and exciting new
and remodeled stores.

                                      Page  8
<PAGE>

   Gross  profit,  as a percent  to sales,  increased  primarily  as a result of
improvements made in retail stores. Gross profit improvements were also realized
through the continued utilization of Company-owned  distribution  facilities and
increased  buying  efficiencies.  The Company's  distribution  centers  provided
approximately  75% of  retail  store  purchases.  Utilization  of the  Company's
distribution centers has enabled the Company to improve its control over product
costs and product distribution.  The pre-tax LIFO charge reduced gross profit by
$5.2  million  (0.13% to sales) for the 13 weeks  ended  October  29,  1998,  as
compared to $3.75  million  (0.10% to sales) for the 13 weeks ended  October 30,
1997.

     Selling,  general and  administrative  expenses, as  a  percent  to  sales,
increased due primarily to increased  labor and related  benefit costs resulting
from the Company's initiatives to increase sales, expenses incurred to integrate
acquired stores into the Company's systems, and  increased  depreciation expense
associated with the Company's expansion program.

   The increase in net interest expense  resulted  primarily from higher average
outstanding  debt during the 13 weeks ended October 29, 1998, as compared to the
13 weeks ended October 30, 1997. The average outstanding debt has increased as a
result of the Company's continued investment in new and acquired stores.


Year-to-date results:

   The following table sets forth certain income statement  components expressed
as a percent to sales and the  percentage  change from the previous  year in the
amounts of such components:

<TABLE>
<CAPTION>
                                                     Percent to Sales
                                             ----------------------------------
                                                      39 Weeks ended                     Percentage
                                             ----------------------------------
                                                     10-29-98         10-30-97             Increase
                                             ----------------- ----------------     ----------------

<S>                                          <C>               <C>                  <C>
   Sales                                            100.00%           100.00%                  8.6%
   Gross profit                                      27.03             26.01                  12.9
   Selling, general and
     administrative
     expenses                                        21.14             20.46                  12.2
   Impairment - store
     closures                                         0.25                                     N.A.
   Operating profit                                   5.64              5.55                  10.4
   Net interest
     expense                                          0.66              0.56                  27.6
   Earnings before
     income taxes                                     5.09              5.06                   9.3
   Net earnings                                       3.18              3.14                  10.1

</TABLE>

   Sales  increased  primarily  as a result of the  continued  expansion  of net
retail square footage. Identical store sales increased 0.5% and comparable store
sales (which include  replacement stores) increased 0.7%.  Management  estimates
that there was  deflation in products the Company  sells of  approximately  0.1%
(annualized). During the 39 weeks, 115 stores were opened, 24 stores were closed
(which  included 6 Albertson's  stores  divested in connection  with the Buttrey
acquisition)  and 16 store remodels were  completed.

                                      Page 9
<PAGE>

   Included in store openings are 73 acquired stores  (net of 9  Buttrey  stores
divested). Retail square footage increased to 47.6 million  square  feet,  a net
increase of 14.6% from October 30, 1997.

   In addition to new store  development,  the Company  plans to increase  sales
through its continued  investment  in programs  initiated in 1997 and 1996 which
are designed to provide solutions to customer needs. These programs include: the
Front End Manager program;  the home meal solutions process called "Quick Fixin'
Ideas;"  special   destination   categories  such  as  Albertson's  Better  Care
pharmacies and baby care, pet care,  snack and beverage  centers;  and increased
emphasis on training  programs  utilizing  Computer Guided Training.  To provide
additional   solutions   to   customer   needs,   the  Company  has  added  new,
gourmet-quality  bakery  products and organic  grocery and produce items.  Other
solutions include neighborhood marketing, targeted advertising, and exciting new
and remodeled stores.

   Gross  profit,  as a percent  to sales,  increased  primarily  as a result of
improvements made in retail stores. Gross profit improvements were also realized
through the continued utilization of Company-owned  distribution  facilities and
increased  buying  efficiencies.  The Company's  distribution  centers  provided
approximately  75% of  retail  store  purchases.  Utilization  of the  Company's
distribution centers has enabled the Company to improve its control over product
costs and product distribution.  The pre-tax LIFO charge reduced gross profit by
$18.4  million  (0.16% to sales) for the 39 weeks  ended  October 29,  1998,  as
compared to $25.6  million  (0.23% to sales) for the 39 weeks ended  October 30,
1997.

   Selling,  general  and  administrative  expenses,  as  a  percent  to  sales,
increased due primarily to increased  labor and related  benefit costs resulting
from the Company's initiatives to increase sales, expenses incurred to integrate
acquired stores into the Company's systems,  and increased  depreciation expense
associated with the Company's expansion program.

   The Company  recorded a charge to earnings  (Impairment - store  closures) in
the  first  quarter  of 1998  related  to  management's  decision  to  close  16
underperforming  stores in 8 states during the fiscal year. The charge  includes
impaired  real estate and  equipment,  as well as the present value of remaining
liabilities under leases, net of expected sublease recoveries. As of October 29,
1998,  12 of these stores had been closed and  management  believes the original
charge and remaining reserve are adequate.

   The increase in net interest expense  resulted  primarily from higher average
outstanding  debt during the 39 weeks ended October 29, 1998, as compared to the
prior  year.  The  average  outstanding  debt has  increased  as a result of the
Company's continued investment in new and acquired stores.

Liquidity and Capital Resources
-------------------------------

   The Company's  operating  results continue to enhance its financial  position
and  ability to  continue  its  planned  expansion  program.  Cash  provided  by
operating  activities  during the 39 weeks  ended  October  29,  1998,  was $634
million  compared to $639  million in the prior year.  During the 39 weeks ended
October 29, 1998, the Company invested $599 million for net capital expenditures
and  $262  million  acquiring  multiple  businesses.   The  Company's  financing
activities  for the 39 weeks ended  October 29,  1998,  included  new  long-term
borrowings of $166 million,  a net increase of  commercial  paper  borrowings of

                                      Page 10
<PAGE>

$163 million,  $123 million for the payment of dividends and $17 million for the
purchase and retirement of the Company's common stock.

   The Company  utilizes its  commercial  paper program  primarily to supplement
cash requirements  from seasonal  fluctuations in working capital resulting from
operations  and  the  Company's  capital   expenditure   program.   Accordingly,
commercial  paper  borrowings  will  fluctuate  between the Company's  quarterly
reporting  periods.  The Company had $446 million of commercial paper borrowings
outstanding  at October 29, 1998,  compared to $283 million at January 29, 1998,
and $279 million at October 30, 1997.

   The Company  issued $317  million of  medium-term  notes  during the 39 weeks
ended  October  29,  1998.  The notes  were  issued  under a shelf  registration
statement  filed with the Securities and Exchange  Commission in 1997.  Proceeds
from the issuances were primarily used to repay  borrowings  under the Company's
commercial paper program.  Medium-term notes up to $183 million remain available
for issuance under the 1997 shelf registration statement.

   Since  1987 the  Board of  Directors  had  continuously  adopted  or  renewed
programs under which the Company was authorized,  but not required,  to purchase
and retire shares of its common stock.  The  remaining  authorization  under the
program adopted by the Board on March 2, 1998,  which  authorized the Company to
purchase and retire up to 5 million shares through March 31, 1999, was rescinded
in connection with the proposed merger with American Stores Company.  During the
39 weeks ended October 29, 1998, 349,300 shares were purchased and retired prior
to the authorization being rescinded.

Year 2000 Compliance
--------------------
   The Year 2000 issue  results from computer  programs  being written using two
digits  rather  than  four to  define  the  applicable  year.  As the year  2000
approaches,  systems  using such  programs may be unable to  accurately  process
certain  date-based  information.  To the  extent  that the  Company's  software
applications  contain source code that is unable to interpret  appropriately the
upcoming  calendar  year  2000  and  beyond,   some  level  of  modification  or
replacement of such  applications will be necessary to avoid system failures and
the  temporary  inability  to  process  transactions  or engage in other  normal
business activities.

   In September  1995 the Company  formed a project team to assess the impact of
the Year 2000 issue on the  software  and  hardware  utilized  in the  Company's
internal operations.  The project team is staffed primarily with representatives
of the Company's  Information Systems and Technology department and reports on a
regular basis to senior management and the Company's Board of Directors.

   The initial phase of the Year 2000 project was assessment and planning.  This
phase is  substantially  complete  and  included an  assessment  of all computer
hardware,  software,  systems and processes ("IT  Systems") and  non-information
technology   systems  such  as   telephones,   clocks,   scales,   refrigeration
controllers,  and other equipment containing embedded microprocessor  technology
("Non-IT  Systems"). The  completion of  upgrading,  validation and forward date
testing is scheduled for early 1999 although many systems  will  be completed by
the end of 1998. The Company expects to successfully  implement  the remediation
of the IT Systems and Non-IT Systems.

                                      Page 11
<PAGE>

   In addition to the  remediation  of the IT systems  and Non-IT  systems,  the
Company has  identified  relationships  with third parties,  including  vendors,
suppliers and service providers,  which the Company believes are critical to its
business  operations.  The Company is in the process of communicating with these
third parties  through  questionnaires,  letters and  interviews in an effort to
determine  the extent to which they are  addressing  their Year 2000  Compliance
issues.  The Company will continue to communicate  with,  assess and monitor the
progress of these third parties in resolving Year 2000 issues.

   The total costs to address the Company's Year 2000 issues are estimated to be
approximately $14 million, of which approximately $4 million has been or will be
expensed and  approximately  $10 million has been or will be capitalized.  These
costs include  expenditures  accelerated for year 2000 compliance.  To date, the
Company has spent  approximately  60% of the estimated  costs.  These costs have
been funded through  operating cash flow and represent an immaterial  portion of
the Company's IT budget.

   The Company is  dependent on the proper  operation  of its internal  computer
systems  and  software  for  several  key  aspects  of its  business  operations
including  store  operations,   merchandise  purchasing,  inventory  management,
pricing,   sales,   warehousing,   transportation,   financial   reporting   and
administrative  functions. The Company is also dependent on the proper operation
of the computer systems and software of third parties  providing  critical goods
and   services  to  the  Company   including   vendors,   utilities,   financial
institutions,  government  entities and others.  The Company  believes  that its
efforts will result in Year 2000 compliance. However, the failure or malfunction
of internal or external  systems could impair the  Company's  ability to operate
its business in the ordinary course and could have a material, adverse effect on
its results of operations.

   The  Company is currently  developing its  contingency  plan and  intends  to
formalize plans with respect to its most critical applications  during the first
half  of  1999.   Contingency   plans   include  manual  workarounds,  increased
inventories and extra staffing.


Cautionary Statement for Purposes of "Safe Harbor Provisions"
of the Private Securities Litigation Reform Act of 1995
-------------------------------------------------------------
   From time to time, information provided by the Company,  including written or
oral  statements  made  by  its  representatives,  may  contain  forward-looking
information as defined in the Private Securities  Litigation Reform Act of 1995,
including  statements  about the  ability of the  Company  and ASC to obtain the
necessary  regulatory  approvals and satisfy other  conditions to the closing of
the  merger  transaction  and with  respect  to the  future  performance  of the
combined companies.  All statements,  other than statements of historical facts,
which address  activities,  events or  developments  that the Company expects or
anticipates will or may occur in the future,  including such things as expansion
and  growth of the  Company's  business,  future  capital  expenditures  and the
Company's business strategy, contain forward-looking  information.  In reviewing
such  information  it should  be kept in mind that  actual  results  may  differ
materially   from  those   projected  or   suggested  in  such   forward-looking
information.  This  forward-looking  information is based on various factors and
was  derived  utilizing  numerous  assumptions.   Many  of  these  factors  have
previously  been identified in filings or statements made by or on behalf of the
Company.

                                      Page 12
<PAGE>

   Important  assumptions  and other  important  factors that could cause actual
results  to  differ  materially  from  those  set  forth in the  forward-looking
information  include:  changes  in the  general  economy,  changes  in  consumer
spending, competitive factors and other factors affecting the Company's business
in or beyond the Company's control. These factors include changes in the rate of
inflation,  changes  in state or  federal  legislation  or  regulation,  adverse
determinations   with  respect  to   litigation   or  other  claims   (including
environmental  matters),  labor  negotiations,  adverse  effects  of  failure to
achieve  Year 2000  compliance,  the  Company's  ability to recruit  and develop
employees,  its ability to develop new stores or complete remodels as rapidly as
planned,  its ability to  successfully  implement new  technology,  stability of
product  costs,  the  inability  of the Company  and ASC to obtain the  required
regulatory  approvals  on terms  acceptable  to  them,  adverse  changes  in the
business or  financial  condition  of the Company or ASC prior to the closing of
the merger  transaction and the Company's ability to integrate the operations of
ASC.

   Other  factors  and  assumptions  not  identified  above could also cause the
actual results to differ materially from those set forth in the  forward-looking
information.   The  Company  does  not   undertake  to  update   forward-looking
information contained herein or elsewhere to reflect actual results,  changes in
assumptions  or  changes  in  other  factors   affecting  such   forward-looking
information.


                         PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings
--------------------------
    Three civil lawsuits filed in September  1996 as purported  statewide  class
actions in  Washington,  California  and Florida and two civil lawsuits filed in
April 1997 in federal  court in Boise,  Idaho,  as purported  multi-state  class
actions  (including  the remaining  states in which the Company  operated at the
time) have been brought against the Company raising various issues that include:
(i)  allegations  that the Company has a widespread  practice of permitting  its
employees  to work  "off-the-clock"  without  being paid for their work and (ii)
allegations  that the  Company's  bonus  and  workers'  compensation  plans  are
unlawful.  Four of these suits are being  sponsored  and  financed by the United
Food and Commercial Workers (UFCW) International Union. The five suits have been
consolidated in Boise,  Idaho. In addition,  three other similar suits have been
filed as purported  class actions in Colorado,  New Mexico and Nevada which,  in
effect, duplicate the coverage of the UFCW-sponsored  suits.   These three cases
have been transferred to the federal court in Boise, Idaho.

   The  Company  is  committed  to full  compliance  with all  applicable  laws.
Consistent with this commitment, the Company has firm and long-standing policies
in  place  prohibiting  off-the-clock  work and has  structured  its  bonus  and
workers'  compensation plans to comply with applicable law. The Company believes
that the UFCW-sponsored suits are part of a broader and continuing effort by the
UFCW and some of its locals to pressure  the Company to unionize  employees  who
have not expressed a desire to be represented by a union. The Company intends to
vigorously  defend  against  all of these  lawsuits,  and,  at this stage of the
litigation, the Company believes that it has strong defenses against them.

                                      Page 13
<PAGE>

   Although  these  lawsuits  are subject to the  uncertainties  inherent in the
litigation process, based on the information presently available to the Company,
management  does not expect the ultimate  resolution  of these actions to have a
material  adverse  effect  on the  Company's  financial  condition,  results  of
operations or cash flows.

   The Company is also involved in routine litigation  incidental to operations.
In the opinion of management, the ultimate resolution of these legal proceedings
will not have a material  adverse effect on the Company's  financial  condition,
results of operations or cash flows.


Item 2.  Changes in Securities
------------------------------
   In accordance with the Company's $600 million revolving credit agreement, the
Company's  consolidated  tangible net worth, as defined,  shall not be less than
$750 million.


Item 3.  Defaults upon Senior Securities
----------------------------------------
   Not applicable.


Item 4.  Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
   The Company held a Special  Meeting of Stockholders on November 12, 1998, and
transacted the following business:

     (a)  Approval of the issuance of shares of Albertson's,  Inc. Common Stock,
          par value  $1.00 per  share,  pursuant  to the  Agreement  and Plan of
          Merger, dated as of August 2, 1998, among Albertson's, American Stores
          Company and a wholly owned  subsidiary of Albertson's,  at an exchange
          ratio of 0.63 shares of Albertson's  common stock for each outstanding
          share of  common  stock,  par value of $1.00 per  share,  of  American
          Stores, with cash paid in lieu of any fractional shares:

                            Votes                        Broker
           Votes For       Against      Abstentions     Nonvotes
         -------------   -----------    -----------    ----------
         193,716,622       576,497         611,095         0

     (b)  Approval  of the  amendments  to  Albertson's  Inc.  1995  Stock-Based
          Incentive  Plan to, among other things,  increase the number of shares
          available  for  issuance  under the plan from 10 million to 30 million
          shares:

                            Votes                        Broker
           Votes For       Against      Abstentions     Nonvotes
         -------------   -----------    -----------    ----------
         176,619,964     17,255,923      1,028,327         0


Item 5.  Other Information
--------------------------
   Not applicable.

                                      Page 14
<PAGE>

Item 6.  Exhibits and Reports on Form 8-K
-----------------------------------------
   a.  Exhibits

       Number         Description
       ------         -----------  

       10.18.1        Amendment  to  Executive  Pension  Makeup Trust
                      (dated December 1, 1998)*

       10.19.1        Amendment  to  Executive  Deferred Compensation Trust
                      (dated December 1, 1998)*

       10.20.3        Amendment to  1990  Deferred  Compensation Plan
                      (dated November 1, 1998)*

       10.22.1        Amendment  to  1990 Deferred Compensation Trust
                      (dated December 1, 1998)*

       10.26          Amended and Restated 1995 Stock-Based Incentive Plan
                      (dated November 12, 1998)*

       27             Financial data schedule for the 39 weeks ended
                      October 29, 1998

                   *  Identifies  management  contracts or compensatory plans or
                      arrangements required to be filed as an exhibit hereto.

     b. The following  reports on Form 8-K were filed  subsequent to the quarter
        ended October 29, 1998:

             Current  Report on Form 8-K dated  November 3, 1998,  regarding the
             Company's  sales trend release for the four-week and  thirteen-week
             periods ended October 29, 1998.

             Current Report on Form 8-K dated  November 19, 1998,  regarding the
             Company's  Special  Meeting of  Stockholders  and the press release
             issued in connection with that meeting.

                                      Page 15
<PAGE>


                               SIGNATURE


   Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                                ALBERTSON'S, INC.
                                       ---------------------------------
                                                  (Registrant)



Date:    December 11, 1998              /S/ A. Craig Olson
       ---------------------           ---------------------------------
                                        A. Craig Olson
                                        Senior Vice President, Finance
                                        and Chief Financial Officer


                                      Page 16
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