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 13 Weeks Ended: August 1, 2002                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 September 6, 2002: 398,876,409


                                       1
<PAGE>


PART I.  FINANCIAL INFORMATION

                                ALBERTSON'S, INC.
                              CONSOLIDATED EARNINGS
                       (in millions except per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                             13 WEEKS ENDED                          26 WEEKS ENDED
                                                   ----------------------------------    --------------------------------------
                                                         August 1,        August 2,             August 1,          August 2,
                                                              2002             2001                  2002               2001
                                                   ---------------- -----------------    ------------------ -------------------

<S>                                                         <C>              <C>                  <C>                <C>
Sales                                                       $8,941           $9,235               $17,862            $18,229
Cost of sales                                                6,317            6,648                12,631             13,071
                                                   ---------------- -----------------    ------------------ -------------------
Gross profit                                                 2,624            2,587                 5,231              5,158

Selling, general and administrative expenses                 2,148            2,256                 4,269              4,410
Restructuring (credits) charges and other                      (37)             475                   (22)               475
Merger-related credits                                                           (1)                                     (15)
                                                   ---------------- -----------------    ------------------ -------------------
Operating profit (loss)                                        513             (143)                  984                288

Other expenses:
  Interest, net                                               (103)            (109)                 (208)              (216)
  Other, net                                                   (14)              (1)                  (17)               (12)
                                                   ---------------- -----------------    ------------------ -------------------
Earnings (loss) from continuing operations
  before income taxes                                          396             (253)                  759                 60
Income tax expense (benefit)                                   156              (99)                  297                 30
                                                   ---------------- -----------------    ------------------ -------------------

Net earnings (loss) from continuing operations                 240             (154)                  462                 30
Discontinued operations:
  Operating profit (loss)                                       20                6                  (434)                 9
  Income tax expense (benefit)                                   7                3                  (144)                 4
                                                   ---------------- -----------------    ------------------ -------------------
Net Earnings (loss) from discontinued operations                13                3                  (290)                 5
                                                   ---------------- -----------------    ------------------ -------------------
NET EARNINGS (LOSS)                                         $  253           $ (151)              $   172            $    35
                                                   ---------------- -----------------    ------------------ -------------------


EARNINGS (LOSS) PER SHARE:
  Basic                                                     $ 0.62           $(0.37)              $  0.42            $  0.09
  Diluted                                                     0.62            (0.37)                 0.42               0.09

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING:
  Basic                                                        407              406                   407                406
  Diluted                                                      409              406                   409                408
</TABLE>









See Notes to Consolidated Financial Statements.


                                       2
<PAGE>


                                ALBERTSON'S, INC.
                           CONSOLIDATED BALANCE SHEETS
                         (in millions except par value)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                           August 1, 2002            January 31, 2002
                                                                     ----------------------    ------------------------
<S>                                                                                 <C>                          <C>
                   ASSETS

CURRENT ASSETS:
   Cash and cash equivalents                                                     $    820                    $     85
   Accounts and notes receivable, net                                                 592                         695
   Inventories                                                                      2,984                       3,196
   Prepaid expenses                                                                    99                         149
   Refundable income taxes                                                             51
   Assets held for sale                                                               221                         326
   Deferred income taxes                                                              145                         172
                                                                     ----------------------    ------------------------
                TOTAL CURRENT ASSETS                                                4,912                       4,623

LAND, BUILDINGS AND EQUIPMENT (net of
  accumulated depreciation and amortization
  of $5,856 and $5,753, respectively)                                               8,815                       9,282

GOODWILL, net                                                                       1,399                       1,468

INTANGIBLES, net                                                                      191                         210

OTHER ASSETS                                                                          330                         398
                                                                     ----------------------    ------------------------
                                                                                 $ 15,647                    $ 15,981
                                                                     ======================    ========================

     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable                                                              $  2,012                    $  2,107
   Salaries and related liabilities                                                   539                         584
   Taxes other than income taxes                                                      173                         153
   Income taxes payable                                                                                            51
   Self-insurance                                                                     205                         198
   Unearned income                                                                     80                          88
   Restructuring reserves                                                              52                          61
   Current portion of capitalized lease obligations                                    13                          14
   Current maturities of long-term debt                                               130                         123
   Other                                                                              204                         217
                                                                     ----------------------    ------------------------
                TOTAL CURRENT LIABILITIES                                           3,408                       3,596

LONG-TERM DEBT                                                                      4,954                       5,060

CAPITALIZED LEASE OBLIGATIONS                                                         285                         276

SELF-INSURANCE                                                                        321                         307

DEFERRED INCOME TAXES                                                                  51                          71

OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS                                      745                         756

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
   Preferred stock - $1.00 par value; authorized
     - 10 shares; designated - 3 shares of Series A
     Junior Participating; issued - none
   Common stock - $1.00 par value; authorized - 1,200 shares;
     issued - 404 shares and 407 shares, respectively                                 404                         407
   Capital in excess of par                                                           120                          94
   Accumulated other comprehensive loss                                               (19)                        (19)
   Retained earnings                                                                5,378                       5,433
                                                                     ----------------------    ------------------------
                                                                                    5,883                       5,915
                                                                     ----------------------    ------------------------
                                                                                 $ 15,647                    $ 15,981
                                                                     ======================    ========================
</TABLE>

See Notes to Consolidated Financial Statements.

                                       3
<PAGE>


                                ALBERTSON'S, INC.
                             CONSOLIDATED CASH FLOWS
                                  (in millions)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                                 26 WEEKS ENDED
                                                                                     ----------------------------------------
                                                                                          August 1,               August 2,
                                                                                               2002                    2001
                                                                                     ----------------      ------------------

<S>                                                                                         <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net earnings                                                                             $   172                 $    35
     Adjustments to reconcile net earnings to net cash provided by operating
     activities:
       Depreciation and amortization                                                            496                     495
       Goodwill amortization                                                                                             28
       Discontinued operations noncash charges                                                  356
       Restructuring and other noncash (credits) charges                                         (3)                    454
       Noncash merger-related credits                                                                                   (13)
       Net loss on asset sales                                                                                           12
       Net deferred income taxes and other                                                       18                    (199)
       Decrease in cash surrender value of Company-owned life insurance                          18                      13
     Changes in operating assets and liabilities:
         Receivables and prepaid expenses                                                       152                      92
         Inventories                                                                            244                      80
         Accounts payable                                                                       (96)                    (31)
         Other current liabilities                                                             (149)                    110
         Self-insurance                                                                          21                      30
         Unearned income                                                                         (6)                    (25)
         Other long-term liabilities                                                            (12)                    (49)
                                                                                    ----------------     -------------------
   Net cash provided by operating activities                                                  1,211                   1,032

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures                                                                        (683)                   (742)
   Proceeds from disposal of land, buildings and equipment                                       78                      34
   Proceeds from disposal of assets held for sale                                               430                      85
   Decrease (increase) in other assets                                                           21                      (5)
                                                                                    ----------------     -------------------
   Net cash used in investing activities                                                       (154)                   (628)

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from long-term borrowings                                                                                   613
   Net commercial paper and bank line activity                                                                         (743)
   Payments on long-term borrowings                                                            (107)                    (52)
   Cash dividends paid                                                                         (154)                   (154)
   Proceeds from stock options exercised                                                         15                      15
   Common Stock purchased and retired                                                           (76)
                                                                                    ----------------     -------------------
   Net cash used in financing activities                                                       (322)                   (321)
                                                                                    ----------------     -------------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                                       735                      83

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                 85                      57
                                                                                    ----------------     -------------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                  $   820                 $   140
                                                                                    ================     ===================
</TABLE>




See Notes to Consolidated Financial Statements.

                                       4
<PAGE>


                                ALBERTSON'S, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (dollars in millions, except per share data)
                                   (unaudited)

Description of Business
   Albertson's,  Inc. (the Company) is incorporated  under the laws of the State
of Delaware  and is the  successor  to a business  founded by J.A.  Albertson in
1939.  Based on sales,  the Company is one of the world's  largest food and drug
retailers.

   As of August 1,  2002,  the  Company  operated  2,267  stores in 31  Western,
Midwestern,   Eastern  and  Southern   states  and  17   distribution   centers,
strategically  located in the  Company's  operating  markets.  The Company  also
operated 174 fuel centers near existing stores.

Basis of Presentation
   The accompanying  unaudited  consolidated  financial  statements  include the
results of operations,  financial position and cash flows of the Company and its
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.  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  accounting  principles  generally  accepted in the
United  States  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 accompanying
notes  included in the Company's 2001 Annual Report on Form 10-K. The results of
operations for the 26 weeks ended August 1, 2002, are not necessarily indicative
of results for a full year.

   The Company's  Consolidated  Balance  Sheet as of January 31, 2002,  has been
derived from the audited consolidated financial statements as of that date.

   The  preparation  of the  Company's  consolidated  financial  statements,  in
conformity with accounting  principles  generally accepted in the United States,
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 as of 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.

Inventory
   Net earnings  reflects the  application of the LIFO method of valuing certain
inventories, based upon estimated annual inflation ("LIFO Indices"). Albertson's
recorded  pretax LIFO  expense of $10 and $15 for the 26 weeks  ended  August 1,
2002,  and August 2, 2001,  respectively.  Actual LIFO  Indices  are  calculated
during the fourth  quarter of the year based upon a statistical  sampling of the
cost of inventories.

Earnings Per Share ("EPS")
   Basic EPS is based on the weighted average outstanding common shares. Diluted
EPS is based on the weighted  average  outstanding  common shares reduced by the
dilutive effect of stock options.


                                       5
<PAGE>



The following table details the computation of EPS (shares in millions):

<TABLE>
<CAPTION>
                                                        13 Weeks Ended                         26 Weeks Ended
                                              -----------------------------------    ----------------------------------
                                                  August 1,           August 2,         August 1,           August 2,
                                                       2002                2001              2002                2001
                                              ---------------    ----------------    --------------    ----------------
<S>                                                   <C>                <C>                <C>                 <C>
Basic EPS:
    Net earnings (loss)                               $ 253              $ (151)            $ 172               $  35
                                              ===============    ================    ==============    ================
    Weighted average common shares
       outstanding                                      407                 406               407                 406
                                              ---------------    ----------------    --------------    ----------------
    Basic EPS                                         $0.62              $(0.37)            $0.42               $0.09
                                              ===============    ================    ==============    ================

Diluted EPS:
    Net earnings (loss)                               $ 253              $ (151)            $ 172               $  35
                                              ===============    ================    ==============    ================
    Weighted average common shares
       outstanding                                      407                 406               407                 406
    Potential common share equivalents
                                                          2                   -                 2                   2
                                              ---------------    ----------------    --------------    ----------------
    Weighted average shares outstanding
                                                        409                 406               409                 408
                                              ---------------    ----------------    --------------    ----------------
    Diluted  EPS                                      $0.62              $(0.37)            $0.42               $0.09
                                              ===============    ================    ==============    ================


Calculation of potential common share equivalents:
    Options to purchase potential common
       shares                                            16                 N.A.               16                  11
    Common shares assumed purchased with
       potential proceeds                               (14)                N.A.              (14)                 (9)
                                              ---------------    ----------------    --------------    ----------------
    Potential common share equivalents                    2                 N.A.                2                   2
                                              ===============    ================    ==============    ================

Calculation of potential common shares assumed purchased with potential
  proceeds:
    Potential proceeds from exercise of
       options to purchase common shares               $429                 N.A.             $439                $265
    Common stock price used under the
       treasury stock method                         $31.08                 N.A.           $31.42              $29.80
    Potential common shares assumed
       purchased with potential proceeds                 14                 N.A.               14                   9
</TABLE>

N.A. - Not applicable.  Due  to  the  operating  loss  for  the  13  weeks ended
       August 2, 2001,  potential common share equivalents have an anti-dilutive
       effect on EPS.

   Outstanding  options to purchase shares excluded from potential  common share
equivalents  (option price  exceeded the average market price during the period)
amounted to 13 million  shares for the 13 and 26 week  periods  ended  August 1,
2002 and 15 million shares for the 13 and 26 week periods ended August 2, 2001.

Comprehensive Income
   Comprehensive income refers to revenues,  expenses, gains and losses that are
not included in net earnings but rather are recorded  directly in  stockholders'
equity. Items of comprehensive income other than net earnings were insignificant
for the periods ended August 1, 2002, and August 2, 2001.

                                       6
<PAGE>



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

Reporting Periods
   The  Company's  quarterly  reporting  periods  are  generally  13  weeks  and
periodically  consist of 14 weeks because the Company's  fiscal year ends on the
Thursday nearest to January 31 each year.

Discontinued Operations / Market Exits
   On March 13, 2002, the Company's Board of Directors approved the second phase
of the Company's restructuring plan designed to improve future financial results
and to  drive  future  competitiveness.  This  phase of the  plan  included  the
complete exit of four underperforming markets:  Memphis,  Tennessee;  Nashville,
Tennessee;  Houston,  Texas; and San Antonio,  Texas.  This involved the sale or
closure of 95 stores and two distribution centers. These sales and closures were
evaluated  for lease  liability  or asset  impairment,  including  goodwill,  in
accordance with the Company's policy. The operating results and gains and losses
related to these market exits have been included in  discontinued  operations in
the  Company's   Consolidated  Earnings  statements.   Discontinued   operations
presentation  is required for all current and prior periods  under  Statement of
Financial  Accounting  Standard  (SFAS)  No.  144  (refer to  "Recently  Adopted
Accounting Standards").

   The discontinued operations generated sales of $290 and $680 for the 26 weeks
ended August 1, 2002, and August 2, 2001, respectively,  and an operating profit
(loss) of $(434) and $9,  respectively.  For the 26 weeks ended  August 1, 2002,
the discontinued operations operating loss of $434 consisted of operating losses
of $38 and asset  impairments,  lease  liabilities  and  other  costs of $396 as
described in the following table:

<TABLE>
<CAPTION>
                                                                                                       Other
                                                     Asset Impairments      Lease Liabilities          Costs          Total
                                                    --------------------   --------------------    -----------    -----------
<S>                                                              <C>                     <C>           <C>            <C>
     Additions                                                   $ 401                   $ 26           $ 17          $ 444
     Adjustments                                                   (45)                   (11)             8            (48)
     Utilization                                                  (356)                    (2)           (25)          (383)
                                                    --------------------   --------------------    -----------    -----------
  Reserve Balance at August 1, 2002                              $   -                   $ 13           $  -            $13
                                                    ====================   ====================    ===========    ===========
</TABLE>

   Asset  impairment  adjustments  resulted  from the  Company  realizing  sales
proceeds in excess of amounts  originally  estimated  on stores  disposed of and
increases to net  realizable  values for stores under  contract for sale.  Lease
liability adjustments  represent more favorable negotiated  settlements than had
been originally estimated.

   Other  costs  consist  of  amounts  paid  in  connection  with   notification
regulations and negotiated contract terminations.

   Assets related to discontinued operations are recorded at their estimated net
realizable  value of $108 as of August 1, 2002 and  reported  as assets held for
sale in the Company's  Consolidated  Balance  Sheet.  These assets include land,
buildings,  equipment,  leasehold  improvements  and  inventory  and  are  being
actively  marketed.  As of August 1,  2002,  all 95 stores had been  closed.  In
addition,  79 of the 95 stores and both  distribution  centers  had been sold or
were under contract for sale as of August 1, 2002.

                                        7
<PAGE>



Restructuring
   On July 17, 2001, the Company's Board of Directors approved the initial phase
of a  restructuring  plan designed to improve  future  financial  results and to
drive future competitiveness.  The plan included certain exit costs and employee
termination benefits, as described below.

<TABLE>
<CAPTION>
         Action                                                          Status

<S>     <C>                                                              <C>
         Reduction in administrative and corporate overhead              Substantially complete

         Closure of 165 underperforming retail stores                    155 closed as of August 1, 2002

         Consolidation and elimination of four division offices          Completed

         Process streamlining                                            Ongoing
</TABLE>

   In connection  with this  restructuring  plan, the Company  recorded  pre-tax
credits of $13, consisting of $20 of restructuring credits and $7 of other costs
for the 26 weeks ended August 1, 2002. The following  table presents the pre-tax
credits  and  charges,   incurred  by  category  of  expenditure,   and  related
restructuring reserves included in the Company's Consolidated Balance Sheets:


<TABLE>
<CAPTION>
                                                      Employee
                                                     Severance                 Asset                  Lease
                                                         Costs           Impairments            Liabilities          Total
                                                  --------------    ------------------    -------------------    -----------
<S>                                                       <C>                    <C>                   <C>            <C>
  Balance at January 31, 2002                             $ 11                   $ -                   $ 50           $ 61
     Adjustments                                             5                    (7)                   (11)           (13)
     Utilization                                            (8)                    7                     (8)            (9)
                                                  --------------    ------------------    -------------------    -----------
  Balance at August 1, 2002                               $  8                   $ -                   $ 31           $ 39
                                                  ==============    ==================    ===================    ===========
</TABLE>

   Asset  impairment  adjustments  resulted  from the  Company  realizing  sales
proceeds in excess of amounts  originally  estimated  on stores  disposed of and
increases to the net realizable values for stores under contract for sale. Lease
liability adjustments  represent more favorable negotiated  settlements than had
been originally estimated.

   Employee  severance costs consist of severance pay, health care  continuation
costs,  and  outplacement  service costs for employees who  participated  in the
Company's  Voluntary  Separation  Plan and for employees who were  terminated or
notified of termination under the Company's  Involuntary  Severance Plan. In the
initial phase of the  restructuring  plan, 1,341  managerial and  administrative
positions  above store level were  identified for  termination.  As of August 1,
2002, 1,200 positions had been terminated.

   As  part  of  the  Company's   restructuring   plan,  all  stores'  financial
performance  were reviewed  utilizing a methodology  based on return on invested
capital.  Based on these reviews,  the Company identified and committed to close
and dispose 165  underperforming  stores in 25 states. All stores identified for
closure  were  evaluated  for lease  liability  or asset  impairment,  including
goodwill,  in  accordance  with  the  Company's  policy.  As  of August 1, 2002,
155 stores had been  closed.  The Company is planning on closing the majority of
the remaining stores by fiscal year end.

   Assets to be  disposed  of  include  land,  buildings,  equipment,  leasehold
improvements and inventory for stores that were included in the initial phase of
the  restructuring  plan.  These  assets are  recorded  at their  estimated  net
realizable  value of $66 as of August 1, 2002 and  reported  as assets  held for
sale in the Company's Consolidated Balance Sheet.

                                       8
<PAGE>



Closed Store Reserves
   When  executive  management  approves and commits to closing or  relocating a
store, the remaining investment in land, building,  leasehold,  and equipment is
reviewed for impairment and the difference between book value and estimated fair
market  value,  less  selling  costs,  is  recorded  in  selling,   general  and
administrative  expenses.  For properties under long-term lease agreements,  the
present  value of any  remaining  liability  under the lease,  discounted  using
risk-free  rates and net of  expected  sublease  recovery,  is  recognized  as a
liability  and  expensed.  The following  table shows the pre-tax  expense,  and
related reserves, for closed stores and other surplus property:

<TABLE>
<CAPTION>
                                                                 Lease                     Asset
                                                           Liabilities               Impairments                Total
                                                  ----------------------    ----------------------      ---------------
<S>                                                               <C>                         <C>                <C>
Balance at January 31, 2002                                       $ 39                      $  -                 $ 39
    Additions                                                        4                        10                   14
    Adjustments                                                      3                        10                   13
    Utilization                                                    (11)                      (20)                 (31)
                                                  ----------------------    ----------------------      ---------------
Balance at August 1, 2002                                         $ 35                      $  -                 $ 35
                                                  ======================    ======================      ===============
</TABLE>

   As of August 1, 2002,  $28 of the reserve  balance was included with accounts
payable and the remaining $7 was included with other  long-term  liabilities and
deferred credits in the Company's Consolidated Balance Sheet. The related assets
are recorded at their estimated realizable value of $47 as of August 1, 2002 and
reported as assets held for sale in the Company's Consolidated Balance Sheet.

Indebtedness
   In support of the Company's  commercial paper program,  the Company has three
credit facilities  totaling $1,400.  These agreements contain certain covenants,
the most  restrictive  of which  requires  the Company to maintain  consolidated
tangible net worth,  as defined,  of at least $3,000 and a fixed charge coverage
of at least 2.7 times. As of August 1, 2002, the Company's consolidated tangible
net worth, as defined,  was approximately  $4,268, and the fixed charge coverage
was 4.3 times. No borrowings were outstanding  under these credit  facilities as
of August 1, 2002.

Supplemental Cash Flow Information
   Selected cash payments and noncash activities were as follows:

<TABLE>
<CAPTION>
                                                                                  26 Weeks Ended
                                                                ----------------------------------------------------
                                                                        August 1, 2002              August 2, 2001
                                                                ------------------------    ------------------------
<S>                                                                              <C>                         <C>
     Cash payments for:
        Income taxes                                                             $ 247                       $ 278
        Interest, net of amounts capitalized                                       213                         141
     Noncash transactions:
        Capitalized leases incurred                                                 18                          25
        Capitalized leases terminated                                                5
        Tax benefits related to stock options                                        2                           2
        Decrease in cash surrender value of Company-owned
           life insurance                                                           18                          13
        Deferred stock units expense                                                 9                          10
</TABLE>


Capital Stock
   The Board of Directors adopted a program on December 3, 2001, authorizing, at
management's  discretion,  the Company to purchase  and retire up to $500 of the
Company's common stock beginning  December 6, 2001 through December 31, 2002. On
September 5, 2002, the Board of Directors authorized an increase of $500 to this
program  for a total  of  $1,000  of the  Company's  common  stock  that  may be
purchased and retired by the Company through  December 31, 2002.  Through August
1, 2002,  2.7  million  shares  were  purchased  and  retired for $76 under this
program. Subsequent to August 1, 2002 and through September 6, 2002, the Company
had purchased and retired an additional  5.6 million  shares for $154 under this
program.

                                       9
<PAGE>

Recently Adopted Accounting Standards
   In June 2001, the Financial  Accounting  Standards Board ("FASB") issued SFAS
No. 142 "Goodwill and Other Intangible Assets" which requires that an intangible
asset that is acquired  shall be initially  recognized and measured based on its
fair value.  The statement also provides that goodwill  should not be amortized,
but shall be tested for impairment annually, or more frequently if circumstances
indicate  potential  impairment,  through  a  comparison  of fair  value  to its
carrying amount.

   The Company  adopted the  provisions of SFAS No. 142 on February 1, 2002, and
accordingly  no  goodwill  amortization  was  recorded  for  the  26 weeks ended
August 1, 2002.  The Company has completed its transitional impairment review of
its goodwill  as of  February 1, 2002.  The review  was performed  based  on the
Company's reporting  units which have been  defined as the  Company's 11 current
operating divisions. Historically,  goodwill balances from business combinations
accounted  for as purchases  were allocated  to each  acquired store.  When this
statement was adopted,  the aggregate of the goodwill allocated to the stores in
each reporting unit became the reporting  units' goodwill  balance.  In order to
determine if a reporting unit's goodwill was impaired, a combination of internal
analysis,  focusing on  each  reporting  unit's  implied  EBITDA  multiple,  and
estimates of fair value from a  valuation specialists  firm were used.  Based on
these analyses, there was no  impairment of goodwill at the  adoption date.  The
Company will analyze  goodwill for impairment  annually  beginning in the fourth
quarter 2002 unless circumstances change that would warrant an interim review as
required by the statement.

   The following table shows the effect of no longer amortizing goodwill:

<TABLE>
<CAPTION>
                                                         13 Weeks Ended                        26 Weeks Ended
                                               --------------------------------     ---------------------------------
                                                  August 1,         August 2,          August 1,          August 2,
                                                       2002              2001               2002               2001
                                               --------------    --------------     --------------     --------------
<S>                                                    <C>              <C>                 <C>                <C>
Net earnings (loss) as reported                        $253             $(151)              $172               $ 35

Add back goodwill amortization, net of tax                                 13                                    27
                                               --------------    --------------     --------------     --------------
Adjusted net earnings                                  $253             $(138)              $172               $ 62
                                               ==============    ==============     ==============     ==============


Basic and Diluted EPS                                 $0.62            $(0.37)             $0.42              $0.09

Add back goodwill amortization, net of tax                               0.03                                  0.06
                                               --------------    --------------     --------------     --------------
Adjusted Basic and Diluted EPS                        $0.62            $(0.34)             $0.42              $0.15
                                               ==============    ==============     ==============     ==============

   Changes in the carrying amount of goodwill were as follows:

Goodwill as of January 31, 2002                                                                              $1,467
Write-off due to market exits                                                                                   (68)
                                                                                                       --------------
Goodwill as of August 1, 2002                                                                                $1,399
                                                                                                       ==============
</TABLE>

   In connection with the complete exit of certain markets  discussed above, the
Company wrote off $68 of goodwill,  net for the quarter  ended May 2, 2002.  The
goodwill written off arose from the original acquisition of the operating assets
in those markets.

                                       10
<PAGE>



   The  carrying  amount of  intangible  assets as of  August  1,  2002,  was as
follows:

Amortized:
    FMV of operating leases                                          $ 243
    Customer lists and other contracts                                  51
                                                            ----------------
                                                                       294
    Accumulated amortization                                          (171)
                                                            ----------------
                                                                       123
Non-Amortized:
    Liquor licenses                                                     39
    Pension related intangible assets                                   29
                                                            ----------------
                                                                        68
                                                            ----------------
                                                                     $ 191
                                                            ================

   Amortized  intangible  assets have remaining useful lives from 2 to 38 years.
Projected amortization expense for intangible assets is: $24, $21, $18, $12, and
$7 for Fiscal 2002, 2003, 2004, 2005 and 2006, respectively.

   The Company adopted SFAS No. 144,  "Accounting for the Impairment or Disposal
of Long-Lived  Assets,"  effective  February 1, 2002. SFAS No. 144 replaces SFAS
No. 121 regarding  impairment losses on long-lived assets to be held and used or
to be disposed of. The adoption of this standard did not have a material  impact
on  the  Company's  impairment  policy.   However,  the  standard  broadens  the
definition of what constitutes a discontinued operation and how the results of a
discontinued  operation  are to be  measured  and  presented.  This  resulted in
classifying the operations of certain stores as  discontinued  operations in the
Company's Consolidated Earnings statements.  Under this standard, a discontinued
operation  is based on  identifiable  cash flows and  therefore is defined as an
individual  store.  Individual,  insignificant  discontinued  operations must be
aggregated together for presentation purposes.

New Accounting Standards
   In July 2001, the FASB issued SFAS No. 143,  "Accounting for Asset Retirement
Obligations."  SFAS No. 143 will become effective for Albertson's on January 31,
2003. The Company is currently analyzing the effect that this standard will have
on its financial statements.

   In June 2002, the FASB issued SFAS No. 146,  "Accounting for Costs Associated
with Exit or Disposal  Activities." SFAS No. 146 addresses financial  accounting
and  reporting  for  costs  associated  with  exit or  disposal  activities  and
nullifies  EITF Issue No.  94-3,  "Liability  Recognition  for Certain  Employee
Termination  Benefits  and Other  Costs to Exit an Activity  (including  Certain
Costs  Incurred in a  Restructuring)."  SFAS No. 146 requires  recognition  of a
liability for the costs  associated  with an exit or disposal  activity when the
liability is incurred,  as opposed to when the entity commits to an exit plan as
required  under EITF Issue No.  94-3.  The Company is required to adopt SFAS No.
146 for exit or disposal  activities that are initiated after December 31, 2002.
Statement 146  will  primarily impact  the timing  of the  recognition of  costs
associated with any future exit or disposal activities.

Legal Proceedings
   In March 2000, a class action complaint was filed against Albertson's as well
as American Stores Company, American Drug Stores, Inc., Sav-on Drug Stores, Inc.
and  Lucky  Stores,  Inc.,  wholly-owned  subsidiaries  of the  Company,  in the
Superior Court for the County of Los Angeles,  California (Mario Gardner, et al.
v.  Albertson's,  Inc.,  American  Stores Company,  American Drug Stores,  Inc.,
Sav-on Drug Stores,  Inc. and Lucky Stores,  Inc.) by bonusing  managers seeking
recovery of additional bonus payments due to plaintiffs' allegation that the net
profit upon which their bonuses were  calculated  improperly  included  workers'
compensation  costs, cash shortages,  premises  liability and "shrink" losses in
violation of California law. In October 2001 the court granted summary  judgment
in favor of the Sav-on Drug  Stores  plaintiffs  on this  liability  theory.  In
August 2001 a class action  complaint with very similar  claims,  also involving
the bonusing  managers,  was filed against  Albertson's as well as Lucky Stores,
Inc. and American Stores Company,  wholly-owned  subsidiaries of the Company, in

                                       11
<PAGE>

the Superior Court for the County of Los Angeles,  California  (Taft Petersen et
al. v. Lucky Stores,  Inc.,  American Stores Company and Albertson's,  Inc.). In
June 2002 the cases were  consolidated  and in August  2002 a class  action with
respect to the  consolidated  case was  certified by the court.  The Company has
strong defenses against this lawsuit,  and is vigorously  defending it. Although
this lawsuit is subject to the uncertainties inherent in the litigation process,
based on the information presently available to the Company, management does not
expect that the ultimate  resolution of this action will have a material adverse
effect on the  Company's  financial  condition,  results of  operations  or cash
flows.

   In April 2000 a class action complaint was filed against  Albertson's as well
as American Stores Company, American Drug Stores, Inc., Sav-on Drug Stores, Inc.
and  Lucky  Stores,  Inc.,  wholly-owned  subsidiaries  of the  Company,  in the
Superior Court for the County of Los Angeles,  California (Mario Gardner, et al.
v. American  Stores  Company,  Albertson's,  Inc.,  American Drug Stores,  Inc.,
Sav-on Drug Stores,  Inc.  and Lucky  Stores,  Inc.) by  assistant  managers and
operating  managers seeking  recovery of overtime due to plaintiffs'  allegation
that they were  improperly  classified as exempt under  California  law. A class
action with respect to Sav-on Drug Stores  assistant  managers was  certified by
the  court.  A case with very  similar  claims,  also  involving  the  assistant
managers and operating  managers,  was filed  against the  Company's  subsidiary
Sav-on Drug Stores,  Inc. in the  Superior  Court for the County of Los Angeles,
California  (Rocher,  Dahlin et al. v.  Sav-on Drug  Stores,  Inc.) and was also
certified as a class action.  In April 2002, the Court of Appeal of the State of
California Second Appellate  District  reversed the Rocher class  certification,
leaving  only  two  plaintiffs.   The  California  Supreme  Court  has  accepted
plaintiffs'   request   for   review   of  this   class   decertification.   The
decertification  of the  Gardner  case  is on hold  pending  the  result  in the
California  Supreme  Court.  The  Company  has  strong  defenses  against  these
lawsuits,  and is vigorously defending them. 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 that
the ultimate resolution of these lawsuits will have a material adverse effect on
the Company's financial condition, results of operations or cash flows.

   In August 2000 a class action  complaint was filed against Jewel Food Stores,
Inc., a  wholly-owned  subsidiary  of the Company,  in the Circuit Court of Cook
County,  Illinois  (Maureen  Baker,  et al.,  v. Jewel  Food  Stores,  Inc.  and
Dominick's Supermarkets,  Inc., Case No. 00L 009664) alleging milk price fixing.
In December 2001 the Company's motion for summary judgment was denied, and leave
to appeal  was  denied  in April  2002.  In July  2002,  a class was  certified,
consisting  of all people  residing in the  Chicagoland  area who bought milk at
retail  from  either  or  both  of  the  defendants  between August 23, 1996 and
August 23, 2000.  Trial is scheduled for January,  2003.  The Company has strong
defenses against this lawsuit,  and is vigorously  defending it.   Although this
lawsuit is subject to the uncertainties  inherent  in  the  litigation  process,
based on the information presently available to the Company, management does not
expect that the ultimate resolution of this action will have a material  adverse
effect on the Company's financial condition,  results  of  operations,  or  cash
flows.

   An agreement has been reached,  and court approval  granted,  to settle eight
purported class and/or collective  actions which were consolidated in the United
States  District Court in Boise,  Idaho,  which raised various issues  including
"off the clock" work  allegations and  allegations  regarding  certain  salaried
grocery  managers' exempt status.  Under the settlement  agreement,  current and
former  employees  who meet  eligibility  criteria  have been allowed to present
their claims to a  settlement  administrator.  Additionally,  current and former
grocery  managers  employed  in the State of  California  have been  allowed  to
present their exempt status claims to a settlement  administrator.  Although the
general  deadline for the submission of claims has passed,  certain  individuals
(including  individuals whose initial claim submissions were deemed defective or
untimely)  have been  granted  additional  time to  submit,  correct  or seek to
establish the timely submission of their claims. The Company is presently unable
to determine the number of individuals who may ultimately submit valid claims or
the  amounts  that it may  ultimately  be  required  to pay in  respect of valid
claims.  The $37 pre-tax ($22 after-tax)  charge recorded by the Company in 1999

                                       12
<PAGE>

continues  to reflect  the  Company's  current  estimate  of its total  monetary
liability,  including  attorney fees payable to counsel for the plaintiff class,
for all eight cases.  During the first  quarter of 2001 this accrual was reduced
by an $18 cash payment of attorney fees to counsel for the plaintiff class.

   The statements above reflect  management's  current expectations based on the
information presently available to the Company.  However, these expectations are
subject to  various  uncertainties,  and if the  outcome of one or more of these
matters is unfavorable, the adverse effect on the Company's financial condition,
results of operations or cash flows could be material.

   The  Company is also  involved in routine  legal  proceedings  incidental  to
operations.   The  Company  utilizes  various  methods  of  alternative  dispute
resolution,   including  settlement   discussions,   to  manage  the  costs  and
uncertainties  inherent in the litigation  process.  Management  does not expect
that the ultimate  resolution  of these legal  proceedings  will have a material
adverse effect on the Company's  financial  condition,  results of operations or
cash flows.

                                       13
<PAGE>



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  (dollars in millions, except per share data)

Operational Initiatives
   The Company  continues  to be focused on its five  strategic  imperatives  as
discussed  on  pages  49  and  50  of  the  Company's   2001  Annual  Report  to
Stockholders.

1) Aggressive Cost and Process Control. Through the continued focus on expenses,
   overhead and store  processes the Company has achieved its initial  target of
   $250 in annualized expense reductions and remains on track to reduce costs by
   a total of $500 by second  quarter 2003.  The tougher than  expected  economy
   coupled with a more robust competitive  environment has driven the Company to
   increase its annualized expense reduction target to $750.

2) Maximize Return on Invested Capital.  The  restructuring  plan  announced  on
   July 18, 2001,  that  involved  the  closing  and  disposition  of 165 under-
   performing  stores  is  proceeding  as planned.  As of August 1, 2002, 155 of
   these stores had been sold or closed.  The Company is planning on closing the
   majority of the remaining stores by fiscal year end. In  connection  with the
   Company's market exit plan  announced on March 13, 2002, the Company has sold
   or closed all 95 stores and two distribution centers located in non-strategic
   markets.

3) Customer-focused   Approach  to  Growth.   The  Company's  "Focus  on  Fresh"
   initiative  has resulted in strong gross profit  performance in the Company's
   fresh departments. The Company plans to continue the roll out of dual branded
   stores and loyalty card programs to additional  markets  during the remainder
   of Fiscal 2002.

4) Company-wide  Focus on  Technology.  The Company has embraced a  company-wide
   focus on technology with the goal of becoming an industry leader. The Company
   has committed a greater share of its capital  expenditures to information and
   process technology to serve customers and improve operating efficiencies. The
   Company  plans to continue to roll out its  Albertsons.com  on-line  shopping
   service to additional markets.

5) Energized   Associates.   The  Company  has   continued  to  build   stronger
   communication   systems,   improve   training   programs  and  implement  new
   performance-based reward programs in order to energize associates.

Comparability of Company's Operating Results
   The  financial  statement  presentation  for  two  significant  restructuring
initiatives  that  have  been  implemented  in the  past  two  years  should  be
considered in order to analyze the Company's  accompanying  operating results in
2002 and 2001. Even though the Company's decision to sell or close 165 stores on
July 18,  2001 was  similar to its  decision  to sell or close 95 stores and two
distribution centers on March 13, 2002, the adoption of SFAS No. 144 "Accounting
for the  Impairment or Disposal of Long-Lived  Assets" after the first phase but
before the second  phase of the  restructuring  caused the  financial  statement
presentation  of these  actions to be  dissimilar.  (SFAS 144 does not allow for
retroactive  application of its provisions,  so each phase of the  restructuring
plan followed  different  reporting  guidelines.)  The Company's  2001 financial
statements  have been restated to classify the results of operations  for the 95
stores and two  distribution  centers as  "discontinued  operations";  their net
sales, cost of sales, and selling, general and administrative expenses have been
reflected  on a net  basis in the  "discontinued  operations:  operating  profit
(loss)" line in the consolidated  earnings  statements.  The net sales,  cost of
sales, and selling,  general and  administrative  expenses  generated by the 165
stores are  included  in those  respective  lines in the  consolidated  earnings
statements for the periods prior to their sale or closure.

                                       14
<PAGE>

Results of Operations - Second Quarter
   The following table sets forth certain income statement  components expressed
as a percent to sales and the year-to-year  percentage changes in the amounts of
such components:

<TABLE>
<CAPTION>
                                                                        Percent to Sales
                                                                         13 weeks ended                    Percentage
                                                             --------------------------------------          Increase
                                                              August 1, 2002       August 2, 2001           (Decrease)
                                                             -----------------     ----------------    ----------------

<S>                                                                  <C>                  <C>                 <C>
    Sales                                                             100.00%              100.00%              (3.2)%
    Gross profit                                                       29.34                28.01                1.4
    Selling, general and administrative expenses                       24.02                24.43               (4.8)
    Restructuring (credits) charges and other                          (0.41)                5.15                n.m.
    Operating profit (loss)                                             5.73                (1.55)               n.m.
    Interest, net                                                      (1.15)               (1.18)              (5.8)
    Other expenses, net                                                (0.16)               (0.01)               n.m.
    Earnings (loss) from continuing operations before income
       taxes                                                            4.42                (2.74)               n.m.
    Net earnings (loss) from continuing operations                      2.67                (1.68)               n.m.
    Net earnings from discontinued operations                           0.15                 0.04                n.m.
    Net earnings (loss)                                                 2.82                (1.64)               n.m.

   n.m. - not meaningful
</TABLE>

   Sales  for the 13  weeks  ended  August  2,  2001  have  been  restated  from
previously  reported  amounts  to exclude  sales  associated  with  discontinued
operations  which  represent  sales of the 95 stores  included in the  Company's
market exit plan.  The decrease in reported sales is primarily  attributable  to
the Company's restructuring plan initiated in July 2001, which included the sale
or closure of 165 stores,  and the sale of 80 New England Osco drugstores in the
fourth  quarter of 2001.  (These stores' sales are included in the 2001 and 2002
periods until their closure.) Sales were also  impacted  by  continued  softness
in the economy.  The sales decrease was offset in part, by the Company's capital
expansion  program.  Identical store sales  decreased 0.6% and comparable  store
sales,  which include  replacement  stores,  decreased  0.1%.  During the second
quarter  of  2002, the Company  opened 13  combination  food and drug stores and
9 stand alone  drugstores,  while  closing 42 combination  food and drug stores,
11 conventional  stores,  and 17  drugstores.  Of the  total 70 store  closings,
54 related to the  Company's  restructuring  plan.  Net  retail  square  footage
decreased by 9.1% from the prior year.  Management  estimates  that  during  the
current   quarter   overall   deflation  in  products   the  Company  sells  was
approximately 0.5% as compared to inflation of 1.0% in the second quarter of the
prior year.

   In addition to store development, the Company has increased sales through its
continued  implementation  of  best  practices  across  its  divisions  and  its
customer-focused  approach  to growth.  These  programs  include:  the "Focus on
Fresh"  initiative;  a renewed  focus on customer  service  through the "Service
First, Second to None" program; expansion of the preferred loyalty card program;
dual branded combination stores; and expansion of the on-line shopping service.

   Gross  profit,  as a  percent  to  sales,  increased  as a result  of  strong
performance in the fresh  departments,  improvements in the pharmacy  department
and  improved  shrink  and  inventory  control  processes.  Improvements  in the
pharmacy  department  resulted  from  the  increased  generic  substitution  and
improved procurement practices.  The pre-tax LIFO charge reduced gross profit by
$5 (0.06% to sales)  for the 13 weeks  ended  August 1,  2002,  and $8 (0.08% to
sales) for the 13 weeks ended August 2, 2001.

                                       15
<PAGE>

   Total selling,  general and administrative  (SG&A) expenses,  as a percent to
sales, decreased as a result of the following:  the Company's restructuring plan
adopted  in the  second  quarter  of  2001  included  a plan to  accelerate  the
disposition of surplus  property  through  negotiated  lease buyouts and selling
properties  through  auctions  which  resulted  in pre-tax  charges of $48 being
recorded  in SG&A  during  the 13 weeks  ended  August 2,  2001;  the  Company's
continued  emphasis on cost control and  implementing  best practices across the
Company through its SWIFT programs  resulted in reduced labor costs as a percent
to sales; and, the discontinuation of goodwill amortization in the current year.
These  decreases  were offset by increased  benefits  and workers'  compensation
costs.

   Other expenses,  as a percent to sales,  increased due to charges  associated
with  decreases in the cash  surrender  value of  Company-owned  life  insurance
policies.  Cash surrender values of these policies are adjusted for fluctuations
in the market value of  underlying  investments.  Since the middle of July 2002,
the underlying  investments have been converted to fixed income  securities from
equities in order to mitigate the market volatility.

Discontinued Operations, Restructuring and Other Non-Routine Items
   Discontinued  Operations / Market Exits - On March 13,  2002,  the  Company's
Board of Directors approved the second phase of the Company's restructuring plan
designed   to   improve   future   financial   results   and  to  drive   future
competitiveness. As a result, the Company completely exited four underperforming
markets:  Memphis,  Tennessee;  Nashville,  Tennessee;  Houston,  Texas; and San
Antonio,  Texas.  These market exits were accomplished  through a combination of
store closures and store sales and involved a total of 95 stores.  In connection
with the market exits,  Albertson's sold its Tulsa, Oklahoma distribution center
to Fleming Companies,  Inc. and closed its Houston,  Texas distribution  center.
The operations and resulting gains and losses related to these market exits have
been  presented as  discontinued  operations in accordance  with the adoption of
SFAS No. 144.

   In connection with the market exit plan, the Company recorded pre-tax credits
from  discontinued  operations  of $20 during the 13 weeks ended August 1, 2002.
Pre-tax  credits  of  $45  were  recognized  for  asset  impairment  adjustments
resulting  from the  Company  realizing  sales  proceeds  in excess  of  amounts
originally  estimated  on stores  disposed of and  increases  to net  realizable
values  for  stores  under  contract  for  sale.  Pre-tax  credits  of $11  were
recognized  for lease  liability  adjustments  where more  favorable  negotiated
settlements  have  been  reached  than had been  originally  estimated.  Pre-tax
charges of $36 were recognized for operating  losses.  During the 13 weeks ended
August 2, 2001 the Company  recorded  pre-tax  operating  profit of $6 for these
discontinued operations.

   Restructuring - On July 17, 2001, the Company's Board of Directors approved a
restructuring  plan designed to improve  future  financial  results and to drive
future  competitiveness.  The plan  included  certain  exit  costs and  employee
termination benefits as described below.

<TABLE>
<CAPTION>
         Action                                                          Status

<S>     <C>                                                              <C>
         Reduction in administrative and corporate overhead              Substantially complete

         Closure of 165 underperforming retail stores                    155 closed as of August 1, 2002

         Consolidation and elimination of four division offices          Completed

         Process streamlining                                            Ongoing
</TABLE>

                                       16
<PAGE>

   As a result of this  restructuring  plan,  the Company  recorded  net pre-tax
credits of $31 for the 13 weeks ended August 1, 2002. Pretax credits of $17 were
recognized  for  assets  impairment   adjustments  resulting  from  the  Company
realizing  sales  proceeds in excess of amounts  originally  estimated on stores
disposed of and increases to the net realizable values for stores under contract
for sale. Pre-tax credits of $19 were recognized for lease liability adjustments
where more  favorable  negotiated  settlements  have been  reached than had been
originally estimated and pre-tax charges of $5 were recognized for severance and
other  costs.  In the  second  quarter of the prior  year the  Company  recorded
pre-tax  charges of $558 consisting of $35 for inventory  write-downs,  $416 for
assets writedowns, $63 in lease liabilities in excess of related sublease income
and $44 of severance costs.

   Summary of Discontinued Operations, Restructuring and Other Non-Routine Items
- Due to the  significance of discontinued  operations,  restructuring  charges,
merger-related charges (credits), other non-routine items and the discontinuance
of goodwill  amortization and their effect on operating  results,  the following
table is presented to assist in the  comparison of selected  earnings  statement
components as reported and as provided  supplementally to reflect adjustments to
exclude the effects of these charges and credits:

<TABLE>
<CAPTION>
                                                       13 Weeks Ended                              13 Weeks Ended
                                                       August 1, 2002                              August 2, 2001
                                         -------------------------------------------    ------------------------------------------
                                          As Reported             Adj.   As Adjusted     As Reported           Adj.    As Adjusted
                                         ------------  ---------------  ------------    ------------  --------------  ------------
<S>                                            <C>             <C>            <C>             <C>           <C>             <C>
Sales                                          $8,941                         $8,941          $9,235                        $9,235

Cost of sales                                   6,317                          6,317           6,648        $(35)(a)         6,613

Selling, general and administrative
 expenses                                       2,148          $(4)(a)         2,144           2,256         (48)(a)         2,192
                                                                                                             (14)(b)
                                                                                                              (2)(c)

Restructuring (credits) charges and other         (37)          35 (a)             -             475        (475)(a)             -
                                                                 2 (c)

Merger-related credits                                                                            (1)          1 (c)             -

Other expenses:
 Interest, net                                   (103)                          (103)           (109)                         (109)
 Other, net                                       (14)                           (14)             (1)                           (1)

Income tax expense                                156          (13)(d)           143             (99)        225 (d)           126

Discontinued operations:
 Operating (loss)income                            20          (20)(e)             -               6          (6)(e)             -
 Tax (benefit) expense                              7           (7)(e)             -               3          (3)(e)             -
</TABLE>


   (a) Relates to the Company's restructuring plan adopted on July 17, 2001
   (b) Adjustment to exclude goodwill amortization
   (c) Other costs and adjustments related to the Company's merger with American
       Stores Company
   (d) Tax effect of the various adjustments
   (e) Relates to the Company's market exit plan adopted on March 13, 2002

   Note:  The net earnings per share impact of the supplemental items was to
          reduce reported EPS by $0.08 for the 13 weeks ended August 1, 2002
          and increase reported EPS by $0.85 for the 13 weeks August 2, 2001.

                                       17
<PAGE>

Results of Operations - Year-to-Date
   The following table sets forth certain income statement  components expressed
as a percent to sales and the year-to-year  percentage changes in the amounts of
such components:

<TABLE>
<CAPTION>
                                                                        Percent to Sales
                                                                         26 weeks ended                    Percentage
                                                             --------------------------------------          Increase
                                                              August 1, 2002       August 2, 2001           (Decrease)
                                                             -----------------     ----------------    ----------------

<S>                                                                  <C>                  <C>                 <C>
    Sales                                                            100.00%              100.00%             (2.0)%
    Gross profit                                                      29.29                28.29               1.4
    Selling, general and administrative expenses                      23.90                24.19              (3.2)
    Restructuring (credits) charges and other                         (0.12)                2.61               n.m.
    Merger-related credits                                                                 (0.08)              n.m.
    Operating profit                                                   5.51                 1.57               n.m.
    Interest, net                                                     (1.16)               (1.18)             (3.6)
    Other expenses, net                                               (0.09)               (0.07)              n.m.

    Earnings from continuing operations before income taxes            4.25                 0.32               n.m.
    Net earnings from continuing operations                            2.59                 0.16               n.m.
    Net (loss) earnings from discontinued operations                  (1.62)                0.03               n.m.
    Net earnings                                                       0.97                 0.19               n.m.
</TABLE>

   Sales  for the 26  weeks  ended  August  2,  2001  have  been  restated  from
previously  reported  amounts  to exclude  sales  associated  with  discontinued
operations  which  represent  sales of the 95 stores  included in the  Company's
market exit plan.  The decrease in reported sales is primarily  attributable  to
the Company's restructuring plan initiated in July 2001, which included the sale
or closure of 165 stores,  and the sale of 80 New England Osco drugstores in the
fourth  quarter of 2001.  (These stores' sales are included in the 2001 and 2002
periods until their closure.)  Sales were also impacted  by  continued  softness
in the economy.  The sales  decrease  was offset in part,  by  comparable  sales
increases and by the Company's capital expansion program.  Identical store sales
were  flat  and  comparable  store  sales,  which  include  replacement  stores,
increased 0.6%.   During the  26 weeks  ended August 1, 2002, the Company opened
27 combination food and drug stores and 19 stand alone drugstores, while closing
134 combination food and drug stores, 18 conventional stores, 3 warehouse stores
and 45 drugstores. Of the total 200 store closings, 171 related to the Company's
restructuring  plans. Net retail square footage decreased by 9.1% from the prior
year.  Management  estimates that during the current period overall deflation in
products the Company  sells was  approximately  0.5% as compared to inflation of
1.0% in the same period of the prior year.

   Sales  results  for the 26 weeks  ended  August 1, 2002,  were the results of
trends  and  programs  similar  to  those  experienced  for  the  13 weeks ended
August 1, 2002, which are discussed in Results of Operations - Second Quarter.

   Gross  profit,  as a  percent  to  sales,  increased  as a result  of  strong
performance in the fresh  departments,  improvements in the pharmacy  department
and  improved  shrink  and  inventory  control  processes.  Improvements  in the
pharmacy  department  resulted  from  the  increased  generic  substitution  and
improved procurement practices.  The pre-tax LIFO charge reduced gross profit by
$10 (0.06% to sales) for the 26 weeks  ended  August 1, 2002,  and $15 (0.08% to
sales) for the 26 weeks ended August 2, 2001.

                                       18
<PAGE>

   Total selling,  general and administrative  (SG&A) expenses,  as a percent to
sales, decreased as a result of the following:  the Company's restructuring plan
adopted  in the  second  quarter  of  2001  included  a plan to  accelerate  the
disposition of surplus  property  through  negotiated  lease buyouts and selling
properties  through  auctions  which  resulted  in pre-tax  charges of $48 being
recorded  in SG&A  during  the 26 weeks  ended  August 2,  2001;  the  Company's
continued  emphasis on cost control and  implementing  best practices across the
Company through its SWIFT programs  resulted in reduced labor costs as a percent
to sales;  and,  discontinuation  of goodwill  amortization in the current year.
These  decreases  were offset by increased  benefits  and workers'  compensation
costs.

   Other expenses,  as a percent to sales,  increased due to charges  associated
with  decreases in the cash  surrender  value of  Company-owned  life  insurance
policies.  Cash surrender values of these policies are adjusted for fluctuations
in the market value of  underlying  investments.  Since the middle of July 2002,
the underlying  investments have been converted to fixed income  securities from
equities in order to mitigate the market volatility.

Discontinued Operations, Restructuring and Other Non-Routine Items
   Discontinued  Operations / Market exits - In connection  with the market exit
plan, the Company recorded pre-tax charges from discontinued  operations of $434
during the 26 weeks ended August 1, 2002.  The pre-tax  charges are comprised of
$356 of charges on the write-down of assets to estimated net  realizable  value,
$15 of charges on lease  liabilities  in excess of  related  estimated  sublease
income and $63 of operating  losses and other  costs.  During the 26 weeks ended
August 2, 2001, the Company  recorded pre-tax earnings of $9 associated with the
discontinued operations.

   Restructuring  - In  connection  with the  restructuring  plan,  the  Company
recorded  net  pre-tax  credits  of $13 for the 26 weeks  ended  August 2, 2002.
Pre-tax credits of $7 were recognized for asset impairment adjustments resulting
from the  Company  realizing  sales  proceeds  in excess of  amounts  originally
estimated on stores  disposed of and increases to the net realizable  values for
stores under contract for sale. Pre-tax credits of $11 were recognized for lease
liability  adjustments  where more favorable  negotiated  settlements  have been
reached  than  had  been  originally  estimated.  Pre-tax  charges  of  $5  were
recognized  for  severance and other costs.  In the second  quarter of the prior
year  the  Company  recorded  pre-tax  charges  of  $558  consisting  of $35 for
inventory write-downs, $416 of charges for the write-down of assets to estimated
net realizable  value, $63 of charges for lease liabilities in excess of related
sublease income and $44 of severance and other costs.

   Merger-Related  and Exit Costs - Results of operations for the 26 weeks ended
August 2, 2001, include a net of $10 of merger related credits consisting of $15
of credits associated with the reversal of previous impairment charges and $5 of
additional severance and integration costs.

   Other  Non-Routine  Items - During the quarter ended May 3, 2001, the Company
recorded $9 of compensation related costs for the executive management changes.


                                       19
<PAGE>


   Summary of Discontinued Operations, Restructuring and Other Non-Routine Items
- Due to the  significance of discontinued  operations,  restructuring  charges,
merger-related charges (credits), other non-routine items and the discontinuance
of goodwill  amortization and their effect on operating  results,  the following
table is presented to assist in the  comparison of selected  earnings  statement
components as reported and as provided  supplementally to reflect adjustments to
exclude the effects of these charges and credits:

<TABLE>
<CAPTION>
                                                         26 Weeks Ended                                26 Weeks Ended
                                                         August 1, 2002                                August 2, 2001
                                         -------------------------------------------    ------------------------------------------
                                          As Reported             Adj.   As Adjusted     As Reported           Adj.    As Adjusted
                                         ------------  ---------------  ------------    ------------  --------------  ------------
<S>                                           <C>            <C>             <C>             <C>             <C>           <C>
Sales                                         $17,862                        $17,862         $18,229                       $18,229

Cost of sales                                  12,631                         12,631          13,071         $(35)(a)       13,036

Selling, general and administrative
 expenses                                       4,269        $ (8) (a)         4,261           4,410          (48)(a)        4,319
                                                                                                              (28)(b)
                                                                                                              (15)(c)

Restructuring (credits) charges and other         (22)         21  (a)             -             475         (475)(a)            -
                                                                1  (c)
Merger-related credits                                                                           (15)          15 (c)            -

Other expenses:
 Interest, net                                   (208)                          (208)           (216)                         (216)
 Other, net                                       (17)                           (17)            (12)                          (12)

Income tax expense                                297          (5) (d)           292              30          224 (d)          254


Discontinued operations:
 Operating (loss)income                         (434)         434  (e)             -               9           (9)(e)            -
 Tax (benefit) expense                          (144)         144  (e)                             4           (4)(e)
</TABLE>


   (a) Relates to the Company's restructuring plan adopted on July 17, 2001
   (b) Adjustment to exclude goodwill amortization
   (c) Other costs and adjustments related to the merger and executive
       management changes
   (d) Tax effect of the various adjustments
   (e) Relates to the Company's market exit plan adopted on March 13, 2002

   Note:  The net earnings per share impact of the supplemental items was to
          increase reported EPS by $0.69 and $0.88 for the 26 weeks ended
          August 1, 2002 and August 2, 2001, respectively.

   The costs of the Company's  restructuring  plan have resulted in  significant
   charges and incremental expenses.  These costs had significant effects on the
   results of operations of the Company. Through August 1, 2002, the Company has
   recognized total pre-tax charges of $982 ($627 after tax) associated with the
   Company's restructuring plan and related discontinued  operations.  The total
   noncash portion of these charges  amounted to $773 and the Company expects to
   generate net cash proceeds of approximately $605 (before tax) when all of the
   related assets are sold.

                                       20
<PAGE>



Liquidity and Capital Resources
   Cash  provided by  operating  activities  during the 26 weeks ended August 1,
2002, was $1,211 compared to $1,032 in the prior year.  Free cash flow,  defined
as cash  provided by operating  activities  plus proceeds from disposal of land,
buildings  and  equipment,  and proceeds  from disposal of assets held for sale,
less net capital  expenditures,  dividends  paid, and common stock purchases was
$806 for the 26 weeks ended August 1, 2002,  compared to $255 in the prior year.
The increase in free cash flows resulted primarily from the Company's initiative
to dispose of surplus property,  underperforming stores and other assets related
to market exits.

   The implementation of the Company's  strategic  imperative to maximize return
on invested capital (see Operational Initiatives) is expected to further enhance
working capital by eliminating  unproductive  assets and reducing  inventory and
accounts  receivable levels.  Future sales of assets held for sale over the next
two quarters is expected to continue to provide  significant  positive cash flow
for the Company.

   The Company utilizes its commercial paper and bank line programs primarily to
supplement cash requirements for seasonal fluctuations in working capital and to
fund its capital  expenditure  program.  Accordingly,  commercial paper and bank
line borrowings will fluctuate  between  reporting  periods.  The Company had no
commercial  paper or bank line  borrowings  outstanding  at August 1,  2002,  or
January 31, 2002.

   In support of the Company's  commercial paper program,  the Company has three
credit  facilities  totaling  $1,400.  These  agreements  also  contain  certain
covenants,  the most  restrictive  of which  requires  the  Company to  maintain
consolidated  tangible  net worth,  as defined,  of at least  $3,000 and a fixed
charge  coverage  of at least 2.7  times.  As of August 1, 2002,  the  Company's
consolidated  tangible net worth, as defined, was approximately  $4,268, and the
fixed charge coverage was 4.3 times. No borrowings were outstanding  under these
credit facilities as of August 1, 2002.

   The Company filed a shelf  registration  statement  with the  Securities  and
Exchange  Commission,  which  became  effective  in  February  2001  (the  "2001
Registration  Statement"),  to  authorize  the  issuance of up to $3,000 in debt
securities.  The Company  intends to use the net proceeds of any securities sold
pursuant to the 2001  Registration  Statement for retirement of debt and general
corporate  purposes,  including the potential  purchase of outstanding shares of
Albertson's  common  stock.  As of August 1,  2002,  securities  up to $2,400 of
principal  remain  available for issuance under the Company's 2001  Registration
Statement.

   The Board of Directors adopted a program on December 3, 2001, authorizing, at
management's  discretion,  the Company to purchase  and retire up to $500 of the
Company's  common stock beginning  December 6, 2001,  through December 31, 2002.
The Board of Directors on  September 5, 2002  authorized  an increase of $500 to
this  program for a total of $1,000 of the  Company's  common  stock that may be
purchased  and retired by the Company  through  December  31,  2002.  During the
quarter,  the Company  purchased  and  retired 2.7 million  shares of its common
stock at a total cost of $76, or an average price of $27.77 per share under this
program. Subsequent to August 1, 2002 and through September 6, 2002, the Company
had  purchased  and retired an  additional  5.6 million  shares for $154,  or an
average price of $27.35 under this program.

Contractual Obligations and Commercial Commitments
   There have been no  material  changes  regarding  the  Company's  contractual
obligations and commercial  commitments from the information  provided under the
caption "Contractual  Obligations and Commercial  Commitments" on page 58 and 59
of the Company's 2001 Annual Report to Stockholders.

Letters of Credit
   The Company had  outstanding  Letters of Credit of $124 as of August 1, 2002,
all of which were issued  under  separate  bilateral  agreements  with  multiple
financial  institutions.  Of the $124  outstanding at August 1, 2002,  $105 were
standby  letters  of  credit  covering   primarily   workers'   compensation  or

                                       21
<PAGE>

performance  obligations.  The remaining $19 were  commercial  letters of credit
supporting the Company's  merchandise import program.  The Company pays issuance
fees that vary, depending on type, which average 0.6% of the outstanding balance
of the letters of credit.

Off Balance Sheet Arrangements
   Albertson's, Inc. has no significant investments that are accounted for under
the equity method in accordance with accounting principles generally accepted in
the United  States.  Investments  that are accounted for under the equity method
have no liabilities  associated  with them that would be considered  material to
Albertson's.

Quantitative and Qualitative Disclosures about Market Risk
   There have been no  material  changes  regarding  the  Company's  market risk
position  from the  information  provided  under the caption  "Quantitative  and
Qualitative  Disclosures  About  Market Risk" on page 60 of the  Company's  2001
Annual Report to Stockholders.

Controls and Procedures
   Subsequent to  management's  most recent  evaluation,  which was completed on
September  4, 2002,  there  have been no  significant  changes in the  Company's
internal  controls or, to the Company's  knowledge,  in other factors that could
significantly affect these controls.

Related Party Transactions
   There have been no material  related party  transactions  during the 26 weeks
ended August 1, 2002, or August 2, 2001.

Recent Accounting Standards
   In July 2001, the FASB issued SFAS No. 143,  "Accounting for Asset Retirement
Obligations."  SFAS No. 143 will become effective for Albertson's on January 31,
2003. The Company is currently analyzing the effect that this standard will have
on its financial statements.

   In June 2002, the FASB issued SFAS No. 146,  "Accounting for Costs Associated
with Exit or Disposal  Activities." SFAS No. 146 addresses financial  accounting
and  reporting  for  costs  associated  with  exit or  disposal  activities  and
nullifies  EITF Issue No.  94-3,  "Liability  Recognition  for Certain  Employee
Termination  Benefits  and Other  Costs to Exit an Activity  (including  Certain
Costs  Incurred in a  Restructuring)."  SFAS No. 146 requires  recognition  of a
liability for the costs  associated  with an exit or disposal  activity when the
liability is incurred,  as opposed to when the entity commits to an exit plan as
required  under  EITF  Issue  No.  94-3.   The  Company  is  required  to  adopt
SFAS  No.  146  for  exit  or  disposal  activities  that  are  initiated  after
December 31,  2002.  Statement 146  will  primarily  impact  the  timing  of the
recognition of costs associated with any future exit or disposal activities.

Environmental
   The Company has various identified environmental liabilities, the majority of
which  are  related  to soil  and  groundwater  contamination  from  underground
petroleum  storage tanks and former dry cleaning  operations  at certain  store,
warehouse,  office and manufacturing facilities. Such liabilities affect current
operations as well as previously  divested  properties.  The Company conducts an
ongoing  program for the  inspection  and evaluation of new sites proposed to be
acquired by the  Company  and the  remediation/monitoring  of  contamination  at
existing and previously owned sites. Undiscounted reserves have been established
for each identified  environmental  liability  unless an unfavorable  outcome is
remote.  Although  the  ultimate  outcome  and  expense  of these  environmental
liabilities is uncertain,  the Company  believes that required  remediation  and
continuing  compliance with  environmental  laws, in excess of current reserves,
will not have a material adverse effect on the financial  condition,  results of
operations  or  cash  flows  of  the  Company.   Charges  against  earnings  for
environmental  remediation  were not  material  for the 26 weeks ended August 1,
2002, or August 2, 2001.

                                       22
<PAGE>

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.
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  integration  of the
operations  of  acquired  or  merged  companies,  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  using  various
assumptions. Many of these factors have previously been identified in filings or
statements made by or on behalf of the Company.

   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 interest rates,
changes in consumer spending,  actions taken by competitors,  particularly those
intended  to  improve  their  market  share,  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, the cost and stability of
energy sources, the Company's ability to recruit,  retain and develop employees,
its ability to develop  new stores or  complete  remodels as rapidly as planned,
its ability to  implement  new  technology  successfully,  stability  of product
costs,  the Company's  ability to integrate the operations of acquired or merged
companies,  the Company's  ability to execute its  restructuring  plan,  and the
Company's ability to achieve its five strategic imperatives.

   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
   The  information  required  under  this  item is  included  in the  Notes  to
Consolidated  Financial Statements under the caption "Legal Proceedings" on page
11 of  Part  I,  Financial  Information  of  this  Report  on  Form  10-Q.  This
information is incorporated herein by this reference thereto.

Item 2.  Changes in Securities
   In accordance with the Company's  $1,400  revolving  credit  agreements,  the
Company's  consolidated  tangible net worth, as defined,  shall not be less than
$3,000.

Item 3.  Defaults upon Senior Securities
   Not applicable

Item 4.  Submission of Matters to a Vote of Security Holders
   Information  regarding the Company's  Annual meeting of Stockholders  held on
June 6,  2002,  was  included  under Item 4 of the  Company's  Form 10-Q for the
quarter ended May 2, 2002.

Item 5.  Other Information
   None


                                       23
<PAGE>


Item 6.  Exhibits and Reports on Form 8-K

a.       Exhibits
           99.1      Certification  of CEO and CFO Pursuant to 18 U.S.C.
                     Section 1350,  as Adopted  Pursuant to Section 906
                     of the Sarbanes-Oxley Act of 2002.

b.       The following reports on Form 8-K were filed  during the  quarter ended
         August 2, 2002:

           Current Report on Form 8-K dated May 21, 2002,  summarizing the press
           release  issued  on May 21, 2002  which  raised  first  quarter  2002
           earnings  per share guidance  and reported  preliminary sales for the
           first quarter of 2002.



                                    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: September 13, 2002                /S/ Felicia D. Thornton
                                        ----------------------------------------
                                        Felicia D. Thornton
                                        Executive Vice President
                                          and Chief Financial Officer




                                       24
<PAGE>


CERTIFICATIONS

I, Lawrence R. Johnston, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Albertson's, Inc.;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
   statement of a material  fact or omit to state a material  fact  necessary to
   make the  statements  made,  in light of the  circumstances  under which such
   statements  were made, not  misleading  with respect to the period covered by
   this quarterly report;

3. Based  on  my  knowledge,  the  financial  statements,  and  other  financial
   information included in this quarterly report, fairly present in all material
   respects the financial condition, results of operations and cash flows of the
   registrant as of, and for, the periods presented in this quarterly report.



Date: September 13, 2002                /S/ Lawrence R. Johnston
                                        ----------------------------------------
                                        Lawrence R. Johnston
                                        Chairman of the Board and
                                          and Chief Executive Officer



I, Felicia D. Thornton, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Albertson's, Inc.;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
   statement of a material  fact or omit to state a material  fact  necessary to
   make the  statements  made,  in light of the  circumstances  under which such
   statements  were made, not  misleading  with respect to the period covered by
   this quarterly report;

3. Based  on  my  knowledge,  the  financial  statements,  and  other  financial
   information included in this quarterly report, fairly present in all material
   respects the financial condition, results of operations and cash flows of the
   registrant as of, and for, the periods presented in this quarterly report.



Date: September 13, 2002                /S/ Felicia D. Thornton
                                        ----------------------------------------
                                        Felicia D. Thornton
                                        Executive Vice President
                                          and Chief Financial Officer







                                       25