FORM 10-Q



                       SECURITIES AND EXCHANGE COMMISSION


                             Washington, D.C. 20549





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


                                    FORM 10-Q



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


       For 39 Weeks Ended: October 28, 1999 Commission File Number: 1-6187



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


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


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


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


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

     Number of Registrant's $1.00 par value
     common shares outstanding at December 1, 1999:  423,628,359



                                        1
<PAGE>



                          PART I. FINANCIAL INFORMATION

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

<TABLE>
<CAPTION>

                                                              13 WEEKS ENDED                          39 WEEKS ENDED
                                                   ------------------------------------    -------------------------------------
                                                       October 28,        October 29,           October 28,        October 29,
                                                              1999               1998                  1999               1998
                                                   ------------------ -----------------    ------------------ ------------------
<S>                                                    <C>                <C>                   <C>                <C>

Sales                                                   $8,982,555         $8,838,215           $27,579,183        $26,504,222
Cost of sales                                            6,517,213          6,426,580            20,055,827         19,399,807
                                                   ------------------ -----------------    ------------------ ------------------
Gross profit                                             2,465,342          2,411,635             7,523,356          7,104,415

Selling, general and
  administrative expenses                                2,147,861          1,963,910             6,378,350          5,818,568
Merger related and exit    costs                           (20,388)                                 408,516
Litigation settlement                                       37,000                                   37,000
Impairment - store closures                                                                                             29,423
                                                   ------------------ -----------------    ------------------ ------------------
Operating profit                                           300,869            447,725               699,490          1,256,424

Other (expenses) income:
  Interest, net                                            (84,175)           (83,324)             (244,035)          (251,704)
  Other, net                                                  (179)            (2,597)                4,634              9,254
                                                   ------------------ -----------------    ------------------ ------------------
Earnings before
 income taxes and extra-
 ordinary item                                             216,515            361,804               460,089          1,013,974
Income taxes                                                86,606            143,313               296,532            402,442
                                                   ------------------ -----------------    ------------------ ------------------
Earnings before
  extraordinary item                                       129,909            218,491               163,557            611,532
Extraordinary loss on
  extinguishment of debt, net
  of tax benefit of $7,388                                                                         (23,272)
                                                   ------------------ -----------------    ------------------ ------------------

NET EARNINGS                                             $ 129,909         $  218,491           $   140,285        $   611,532
                                                   ================== =================    ================== ==================

BASIC EARNINGS PER SHARE:
  Earnings before
    extraordinary item                                       $0.31              $0.52                 $0.39              $1.46
  Extraordinary item                                                                                  (0.06)
                                                   ------------------ -----------------    ------------------ ------------------
  Net earnings                                               $0.31              $0.52                 $0.33              $1.46
                                                   ================== =================    ================== ==================

DILUTED EARNINGS PER SHARE:
  Earnings before
    extraordinary item                                       $0.31              $0.52                 $0.39              $1.45
  Extraordinary item                                                                                  (0.06)
                                                   ================== =================    ================== ==================
  Net earnings                                               $0.31              $0.52                 $0.33              $1.45
                                                   ================== =================    ================== ==================

WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING:
     Basic                                                 423,595            418,679               421,834            418,517
     Diluted                                               424,382            421,850               423,065            421,071

</TABLE>
See Notes to Consolidated Financial Statements.

                                       2
<PAGE>


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


                                                                                 October 28, 1999           January 28, 1999
                                                                                       (unaudited)
                                                                          -------------------------    -----------------------
<S>                                                                              <C>                        <C>

                  ASSETS

CURRENT ASSETS:
   Cash and cash equivalents                                                            $ 219,177                  $ 116,139
   Accounts and notes receivable                                                          531,289                    581,625
   Inventories                                                                          3,524,131                  3,249,179
   Prepaid expenses                                                                       153,801                    106,800
   Refundable income taxes                                                                 37,060
   Assets held for sale                                                                   110,748
   Deferred income taxes                                                                   88,968                    132,565
                                                                          -------------------------       --------------------
                TOTAL CURRENT ASSETS                                                    4,665,174                  4,186,308

OTHER ASSETS                                                                              676,671                    653,690

GOODWILL (net of accumulated amortization of
   $587,784 and $582,729, respectively)                                                 1,595,945                  1,746,641

LAND, BUILDINGS AND EQUIPMENT (net of
   accumulated depreciation and amortization
   of $4,877,385 and $4,775,586, respectively)                                          8,640,976                  8,544,628
                                                                          -------------------------       --------------------
                                                                          =========================       ====================
                                                                                      $15,578,766                $15,131,267
                                                                          =========================       ====================

     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable                                                                   $ 2,391,970                $ 2,185,330
   Salaries and related liabilities                                                       487,072                    512,166
   Taxes other than income taxes                                                          200,382                    168,920
   Income taxes                                                                                                       49,944
   Self-insurance                                                                         158,014                    172,709
   Unearned income                                                                         73,791                    101,251
   Other current liabilities                                                              226,485                     92,577
   Merger related accruals                                                                 51,874
   Current maturities of long-term debt                                                   554,725                     49,871
   Current capitalized lease obligations                                                   19,160                     18,118
                                                                          -------------------------       --------------------
                TOTAL CURRENT LIABILITIES                                               4,163,473                  3,350,886

LONG-TERM DEBT                                                                          4,781,948                  4,905,392
CAPITALIZED LEASE OBLIGATIONS                                                             178,787                    202,171
SELF-INSURANCE                                                                            308,117                    315,180
DEFERRED INCOME TAXES                                                                     142,633                    207,833
OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS                                          493,078                    628,155
STOCKHOLDERS' EQUITY:
   Preferred stock - $1.00 par value; authorized
     - 10,000,000 shares; issued - none
   Common stock - $1.00 par value; authorized
     - 1,200,000,000 shares; issued 423,641,655
     shares and 434,557,800 shares, respectively                                          423,642                    434,557
   Capital in excess of par value                                                         141,704                    579,403
   Treasury stock - 0 and 14,554,669 shares,
     respectively                                                                                                  (519,051)
   Retained earnings                                                                    4,945,384                  5,026,741
                                                                          -------------------------       --------------------
                                                                                        5,510,730                  5,521,650
                                                                          =========================       ====================
                                                                                      $15,578,766                $15,131,267
                                                                          =========================       ====================
</TABLE>

See Notes to Consolidated Financial Statements.

                                       3
<PAGE>



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

<TABLE>
<CAPTION>

                                                                                              39 WEEKS ENDED
                                                                              -----------------------------------------------
                                                                                     October 28,                October 29,
                                                                                            1999                       1998
                                                                              --------------------       --------------------
<S>                                                                                  <C>                        <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net earnings                                                                       $  140,285                 $  611,532
     Adjustments to reconcile net earnings to
     net cash provided by operating activities:
       Depreciation and amortization                                                     633,869                    599,459
       Goodwill amortization                                                              44,140                     42,379
       Merger related noncash charges                                                    282,910
       Impairment - store closures                                                                                   29,423
       Net loss (gain) on asset sales                                                      5,705                    (16,784)
       Net deferred income taxes                                                         (21,603)                    11,995
       Increase in cash surrender value of
         Company-owned life insurance                                                     (4,634)                    (8,685)
       Changes in operating assets and
       liabilities:
         Receivables and prepaid expenses                                                109,747                    (20,331)
         Inventories                                                                    (276,602)                  (129,794)
         Accounts payable                                                                206,640                    158,580
         Other current liabilities                                                        78,238                    (61,298)
         Self-insurance                                                                  (21,758)                   (92,049)
         Unearned income                                                                 (33,971)                    (7,910)
         Other long-term liabilities                                                    (126,598)                    15,170
                                                                              --------------------       --------------------
  Net cash provided by operating activities                                            1,016,368                  1,131,687

CASH FLOWS FROM INVESTING ACTIVITIES:
  Net capital expenditures                                                            (1,272,818)                (1,058,585)
  Proceeds from divestitures                                                             358,506
  Increase in other assets                                                              (181,429)                   (88,486)
  Business acquisitions, net of cash acquired                                                                      (262,098)
                                                                              --------------------       --------------------
  Net cash used in investing activities                                               (1,095,741)                (1,409,169)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from long-term borrowings                                                   1,800,000                    462,000
  Payments on long-term borrowings                                                      (947,005)                  (207,138)
  Net commercial paper and bank line activity                                           (498,330)                   149,691
  Proceeds from stock options exercised                                                   30,396                     12,028
  Cash dividends                                                                        (188,334)                  (196,862)
  Tax payments for options exercised                                                     (14,316)
                                                                              --------------------       --------------------
  Net cash provided by financing activities                                              182,411                    219,719
                                                                              --------------------       --------------------

NET INCREASE (DECREASE) IN CASH AND CASH                                                 103,038                    (57,763)
  EQUIVALENTS

CASH AND CASH EQUIVALENTS AT BEGINNING
  OF PERIOD                                                                              116,139                    155,877
                                                                              --------------------       --------------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                           $   219,177                 $   98,114
                                                                              ====================       ====================

</TABLE>

See Notes to Consolidated Financial Statements.

                                       4
<PAGE>


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

Business Combination
On June 23, 1999, Albertsons, Inc. ("Albertson's" or the "Company") and American
Stores Company ("ASC")  consummated a merger with the issuance of  approximately
177  million  shares of  Albertson's  common  stock (the  "Merger").  The Merger
constituted a tax-free reorganization and has been accounted for as a pooling of
interests  for  accounting  and  financial  reporting  purposes.  The pooling of
interests method of accounting is intended to present as a single interest,  two
or  more  common  stockholders'  interests  that  were  previously  independent;
accordingly,  these  consolidated  financial  statements  restate the historical
financial  statements  as though the  companies  had always been  combined.  The
restated  financial  statements are adjusted to conform the accounting  policies
and financial statement presentations.

Basis of Presentation
In the opinion of management,  the accompanying unaudited consolidated financial
statements include all adjustments  necessary to present fairly, in all material
respects,  the results of operations  of the Company for the periods  presented.
Such adjustments  consisted only of normal recurring items except for the merger
related charges  discussed  under "Merger Related and Exit Costs",  the one time
charge for the litigation settlement discussed under "Litigation Settlement" and
the 1998 impairment  charge discussed under  "Impairment - Store Closures".  The
statements  have  been  prepared  by  the  Company  pursuant  to the  rules  and
regulations of the Securities and Exchange  Commission.  Certain information and
footnote  disclosures  normally  included in  financial  statements  prepared in
accordance with generally accepted accounting  principles have been condensed or
omitted  pursuant  to such rules and  regulations.  It is  suggested  that these
consolidated  financial  statements be read in conjunction with the consolidated
financial statements for each of the three years in the period ended January 28,
1999,  as  included  in the  Company's  Form 8-K filed with the  Securities  and
Exchange Commission on September 22, 1999 ("September 1999 8-K").

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

Historical operating results are not necessarily indicative of future results.

Reclassifications and Conformity Adjustments
Certain  reclassifications  and adjustments  have been made to the  consolidated
financial statements for conformity purposes.

Reporting Periods
The  Company's   quarterly   reporting   periods  are  generally  13  weeks  and
periodically  consist of 14 weeks  because the fiscal year ends on the  Thursday
nearest to January  31 each year (the  Saturday  nearest to January 31 for ASC).
The consolidated  financial information includes the results of operations for a
full 13 week and 39 week period with Albertson's period ending October 28, 1999,
and ASC's period ending October 30, 1999.

                                       5
<PAGE>


Merger Related and Exit Costs
Results of  operations  for the 39 weeks ended  October 28,  1999,  include $607
million of merger related and exit costs ($482 million after tax). The following
table presents the pre-tax costs incurred by category of expenditure  and merger
related  accruals  included  in  the  Company's  Consolidated  Balance  Sheet(in
millions):

<TABLE>
<CAPTION>

                                               Exit       Merger          Extraordinary       Period
                                              Costs       Charge                   Loss        Costs        Total
                                       ------------- ------------ ---------------------- ------------ ------------
<S>                                           <C>         <C>             <C>                 <C>           <C>

Severance costs                                 $91          $ 8                                  $7        $ 106
Write-down of assets
  to net realizable
  value and other                               255                                                4          259
Transaction and
  financing costs                                                          $ 31                   73          104
Integration costs                                             11                                  80           91
Stock option charge                                           47                                               47
                                       ------------- ------------ ---------------------- ------------ ------------
  Total costs                                   346           66             31                  164          607
Cash expenditures                               (70)          (9)           (31)                (159)        (269)
Write-down of assets
  to net realizable
  value                                        (239)                                                         (239)
Stock option charge                                          (47)                                             (47)
                                       ============= ============ ====================== ============ ============
Merger related accruals
  at October 28, 1999                           $37          $10             $0                   $5          $52
                                       ============= ============ ====================== ============ ============
</TABLE>

Employee severance costs consist of obligations to employees who were terminated
or were notified of termination  under a plan  authorized by senior  management.
Approximately  635 employees  will be severed as a result of the Merger of which
471 were terminated as of October 28, 1999.

The write-down of assets to net  realizable  value includes the expected loss on
disposal of stores required to be divested  (discussed  below) and duplicate and
abandoned  facilities,   including   administrative  offices,   intangibles  and
information  technology  equipment  which were  abandoned  by the Company or are
being held for sale.  The estimated  fair value of assets held for sale has been
determined using negotiated sales prices or independent appraisals.

Transaction and financing costs consist  primarily of professional fees paid for
investment  banking,  legal,  accounting,  printing and regulatory  filing fees.
Financing costs also include the extraordinary loss on extinguishment of debt.

Integration  costs consist  primarily of incremental  transition and integration
costs  associated with integrating the operations of Albertson's and ASC and are
being expensed as incurred.

As disclosed in the previous  filings the Company  recorded a charge through the
first two quarters of 1999 of $47 million related to limited stock  appreciation
rights (LSARS).  The actual change of control price used to measure the value of
these exercised LSARS became  determinable at the date the Merger was consumated
and resulted in no further adjustments.

In connection  with the Merger,  the Company  entered into  agreements  with the
Attorneys  General of  California,  Nevada and New Mexico and the Federal  Trade
Commission  to  enable  the  Merger  to  proceed  under  applicable   antitrust,
competition  and trade  regulation  law. The agreements  required the Company to
divest a total of 117 stores in California,  19 stores in Nevada and 9 stores in
New  Mexico.  Of the  stores  required  to be  divested,  40 were ASC  locations
operated  primarily  under  the  Lucky  name,  and 105 were  Albertson's  stores
operated primarily under the Albertson's name. In addition, the Company divested
four  supermarket  real estate sites as required by the  agreements.  The stores
identified for disposition had sales of $2.3 billion in fiscal 1998. The Company

                                       6
<PAGE>

has divested 142 of the required 145 stores as of October 28, 1999.

Litigation Settlement
The Company  recorded a $37.0 million  pretax ($22.2 million after tax) one time
charge to earnings  (litigation  settlement) in the third quarter resulting from
an agreement in principle  reached to settle eight purported  multi-state  cases
combined  in the United  States  District  Court in Boise,  Idaho  which  raised
various  issues  including   "off-the-clock"  work  allegations.   The  proposed
settlement  is  subject  to  court  approval.   Under  the  proposed  settlement
agreement,  current  and former  employees  who meet  eligibility  criteria  may
present  their claims to a settlement  administrator.  While the Company  cannot
specify the exact number of individuals  who are likely to submit claims and the
exact  amount of their  claims,  the one time  charge is the  Company's  current
estimate of the total monetary liability, including attorney fees, for all eight
cases.

Impairment - Store Closures
The Company  recorded a charge to earnings in the first  quarter of 1998 related
to management's  decision to close 16  underperforming  stores in 8 states.  The
charge included impaired real estate and equipment, as well as the present value
of remaining liabilities under leases, net of expected sublease recoveries. With
the exception of one store, all stores have been closed and management  believes
the 1998 charge and remaining reserves are adequate.

Income Taxes
The  effective  income tax rate for 1999  increased as a result of the effect of
certain merger related and exit costs for which there were not corresponding tax
benefits.

Indebtedness
On March 30, 1999, the Company entered into a revolving  credit agreement with a
syndicate of commercial banks whereby the Company may borrow  principal  amounts
up to $1.5  billion  at  varying  interest  rates at any time prior to March 28,
2000.  The  agreement has a one-year term out option which allows the Company to
convert any loans  outstanding  on the  expiration  date of the  agreement  into
one-year  term  loans.  The  agreement  contains  certain  covenants,  the  most
restrictive of which requires the Company to maintain  consolidated tangible net
worth,  as defined,  of at least $2.1 billion.  In addition to the new revolving
credit  agreement,  the Company has an existing  $600 million  revolving  credit
agreement,  whereby the Company may borrow principal amounts at varying interest
rates any time prior to December 17, 2001. The  combination of the two revolving
credit  agreements  allows the  Company to borrow  principal  amounts up to $2.1
billion  and  serves as backup  financing  for the  Company's  commercial  paper
borrowings.  There were no amounts  outstanding  under either  revolving  credit
agreement as of October 28, 1999.

Subsequent to the Merger the Company has consolidated  several of the commercial
paper,  bank lines and other financing  arrangements.  The consolidation of debt
included the  repayment of  outstanding  amounts  under ASC's  revolving  credit
facilities and other debt containing change of control provisions and the tender
for, or open market  purchases of, certain higher coupon debt. As a result,  the
following debt was extinguished (in millions):

<TABLE>
<CAPTION>
                                                                                                   Amount
Debt Description                                    Reason for Repayment                           Extinguished
--------------------------------------------------- --------------------------------- --------------------------
<S>                                                 <C>                                            <C>
Revolving Credit Facility                           Change of control                                   $ 500.0
Bank borrowing due 2000                             Change of control                                      75.0
10.6% Note due in 2004                              Change of control                                      93.4
9.125% Notes due 2002                               Tender offer                                          170.1
8.0% Debentures due 2026                            Open market purchases                                  78.3
7.9% Debentures due 2017                            Open market purchases                                   4.5

</TABLE>

In July 1999 the Company  issued $500 million of floating rate notes.  The notes
are due July 2000 and bear interest based on LIBOR  commercial  paper rates that

                                       7
<PAGE>

reset  monthly.  As of October  28,  1999,  the  interest  rate was 5.39% on the
outstanding notes. These notes were issued under the Company's  commercial paper
program.

In July  1999 the  Company  issued  $1.3  billion  of term  notes  under a shelf
registration  statement  filed with the  Securities  and Exchange  Commission in
February  1999.  The notes are comprised  of: $300 million of principal  bearing
interest at 6.55% due August 1, 2004; $350 million of principal bearing interest
at 6.95% due August 1, 2009; and $650 million of principal  bearing  interest at
7.45% due August 1, 2029.  Interest  is paid  semiannually.  Proceeds  were used
primarily to repay  borrowings  under the Company's  commercial  paper  program.
Additional securities up to $1.2 billion remain available for issuance under the
Company's 1999 registration statement.

In July 1999 the Company  negotiated  an  amendment  to a $200 million term loan
agreement  between ASC and a group of commercial  banks. The original  agreement
contained  a change of control  provision.  The  amended  agreement  has revised
representations,   warranties  and  covenants  which  substantially  mirror  the
Company's  $1.5  billion  revolving  credit  agreement as well as a guarantee by
Albertson's,  Inc.  The  amended  fixed rate loans carry  interest  based upon a
pricing schedule (which averages 6.45%)  dependent upon the Company's  long-term
debt rating, and mature July 3, 2004.

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

<TABLE>
<CAPTION>


                                                                          39 Weeks Ended                39 Weeks Ended
                                                                        October 28, 1999              October 29, 1998

                                                                  -----------------------       -----------------------
<S>                                                                     <C>                           <C>
Cash payments for:
   Income taxes                                                                $ 377,007                     $ 423,848
   Interest, net of amounts
     capitalized                                                                 222,585                       225,014
Noncash activities:
   Capitalized leases incurred                                                    11,344                        18,819
   Capitalized leases terminated                                                  13,917                         5,509
   Tax benefits related to stock
     options                                                                       7,875                         2,173
   Liabilities assumed in connection
     with asset acquisition                                                        6,976                         1,340
   Increase in cash surrender value
     of Company-owned life insurance                                               4,634                         8,685
   Fair market value of stock
     exchanged for option price and
     tax withholdings                                                              2,632                         1,753
   Noncash merger charges:
   Write-down of assets to net realizable
     value                                                                       235,313
   Stock option charge                                                            47,597
   Impairment loss - store closures                                                                             29,423
   Note payable related to
     business acquisition                                                                                        8,000

</TABLE>

Recent Accounting Standards
In June 1998 the  Financial  Accounting  Standards  Board  issued  Statement  of
Financial  Accounting  Standards  ("SFAS")No.  133,  "Accounting  for Derivative
Instruments and Hedging  Activities." This new standard  establishes  accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It requires
that an entity  recognize all derivatives as either assets or liabilities in the
statement of financial  position and measure  those  instruments  at fair value.

                                       8
<PAGE>

This  standard,  as amended by SFAS No. 137, is effective for the Company's 2001
fiscal year.  The Company has not yet completed its  evaluation of this standard
or its impact, if any, on the Company's reporting requirements.

                                       9
<PAGE>


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

Business Combination
On June 23, 1999, Albertsons, Inc. ("Albertson's" or the "Company") and American
Stores Company ("ASC")  consummated a merger with the issuance of  approximately
177  million  shares of  Albertson's  common  stock (the  "Merger").  The Merger
constituted a tax-free reorganization and has been accounted for as a pooling of
interests  for  accounting  and  financial  reporting  purposes.  The pooling of
interests method of accounting is intended to present as a single interest,  two
or  more  common  stockholders'  interests  that  were  previously  independent;
accordingly,  these  consolidated  financial  statements  restate the historical
financial  statements  as though the  companies  had always been  combined.  The
restated  financial  statements are adjusted to conform the accounting  policies
and financial statement presentations.

Results of Operations - Third Quarter
Sales for the 13 weeks ended October 28, 1999,  increased 1.6%.  Sales increased
despite the sale of 142 stores  required to be divested.  Sales were  positively
impacted by the sharing of best practices  across the Company and as a result of
new and remodeled  stores.  Identical  store sales increased 1.9% and comparable
store sales  (which  include  replacement  stores)  increased  2.2%.  Management
estimates that there was deflation in the price of products the Company sells of
approximately 0.3% (annualized).  During the third quarter the Company opened 20
combination  food and drug  stores,  13 drug  stores  and 15 fuel  centers.  The
Company closed 149  conventional  and combination  food and drug stores,  139 of
which were required divestitures and one of which was replaced with a new store.
The Company also closed 7 drug stores, 3 of which were replaced with new stores.
Twenty nine stores were remodeled  during the third quarter.  Construction  of a
new  distribution  center in Tulsa,  Oklahoma was completed  August 1, 1999, and
shipments to the Company's  stores in the Midwest began on August 16, 1999.  The
new  Lancaster,  Pennsylvania  distribution  center began  receiving  product on
September  2, 1999,  and grocery  shipments to stores began on October 18, 1999.
Retail square  footage  decreased to 93.8 million square feet, a net decrease of
2.3% from October 29, 1998. The required  divestitures reduced square footage by
6.0 million square feet or 6.2% from the prior year.

In addition to store  development,  the Company plans to increase  sales through
its  investment  in programs  initiated  in recent  years which are  designed to
provide  solutions  to  customer  needs.  These  programs  include the Front End
Manager program; the home meal solutions process called "Quick Fixin' Ideas(R)";
special destination categories;  pharmacy and health initiatives;  and increased
emphasis on training  programs  utilizing  Computer Guided Training.  To provide
additional   solutions   to   customer   needs,   the   Company  has  added  new
gourmet-quality  bakery  products and organic  grocery and produce items.  Other
solutions include neighborhood  marketing and targeted advertising.  In over 400
stores in  California,  Nevada  and New Mexico  markets  where the  Company  now
operates under the Albertson's  banner the Company has increased service levels,
spruced  up stores,  and  enhanced  product  promotions,  advertising  and price
markdowns  to promote  sales  growth.  Future  growth  will be  affected  by the
required  divestiture of 145 stores in connection  with the Merger.  The Company
has divested 142 of the 145 stores as of October 28, 1999.

                                       10
<PAGE>


For the 13 weeks ended  October 28,  1999,  the Company  reported  net income of
$130.0  million,  or $0.31 per basic and diluted share as compared to net income
of $218  million  or $0.52 per basic and  diluted  share for the 13 weeks  ended
October 29, 1998.

This quarter's earnings were adversely impacted by the litigation settlement and
the costs of integration.  The Company is merging two large organizations into a
single rapidly growing food and drug store chain, and also has taken significant
steps to bring the  Albertson's  brand to new  regions  and new  markets and new
channels of distribution. During the quarter a significant number of stores were
divested  and the  Company  substantially  converted  over 400  stores to common
systems and the  Albertson's  banner in California,  Nevada and New Mexico.  The
conversion was more complicated and costly than expected.

Results of  operations  for the 13 weeks  ended  October 28,  1999,  include $56
million of merger  related and exit costs ($33 million after tax). The following
table  presents the pre-tax costs  (income)  incurred by category of expenditure
(in millions):

<TABLE>
<CAPTION>

                                                 Exit           Merger         Period
                                                Costs           Charge          Costs    Total
                                      ---------------- ---------------- -------------- ---------------
<S>                                             <C>            <C>             <C>       <C>
Severance costs                                  $(2)           $ 0                $5     $  3
Write-down of assets
  to net realizable
  value and other                                (17)                               3      (14)
Integration costs                                                    2             65       67

                                      ================ ================ ============== ===============
  Total costs                                  $ (19)              $ 2           $ 73     $ 56
                                      ================ ================ ============== ===============
</TABLE>

Employee severance costs consist of obligations to employees who were terminated
or  were  notified  of  termination  under  a  plan  authorized  by  management.
Approximately  635 employees  will be severed as a result of the Merger of which
471 were terminated as of October 28, 1999.

The write-down of assets to net  realizable  value includes the expected loss on
disposal of stores required to be divested (discussed under  "Divestitures") and
duplicate   and  abandoned   facilities,   including   administrative   offices,
intangibles  and  information  technology  equipment which were abandoned by the
Company or are being held for sale. The estimated fair values of assets held for
sale were determined using  negotiated  sales prices or independent  appraisals.
During the  quarter a revision  to the  estimate,  of the amount  expected to be
incurred  for the sale of  assets,  reversed  approximately  $20  million of the
charge taken in the second quarter.

Integration costs consist  primarily of incremental  transition costs associated
with  integrating  the  operations of  Albertson's  and ASC and were expensed as
incurred.

The Company expects to incur additional  after-tax merger related and exit costs
of approximately $200 million over the next two years which consist primarily of
expected  integration  costs  and  costs  associated  with  other  consolidation
activities for which plans have not yet been finalized.

                                       11
<PAGE>


Due to the  significance  of the  litigation  settlement  charge  and the merger
related and exit costs and their  effect on  operating  results,  the  following
table and discussion is presented to aid in the  comparison of income  statement
components without the effects of one time charges,  and merger related and exit
costs (in thousands).

<TABLE>
<CAPTION>

                                                 13 Weeks Ended October 28, 1999                        13 Weeks Ended
                                                                                                       October 29, 1998
                                   ------------------------------------------------------------
                                     As Reported     Adjustments       Adjusted
                                   ---------------- --------------- ---------------- ----------    -------------------------
<S>                                  <C>             <C>               <C>             <C>           <C>            <C>
Sales                                $8,982,555                        $8,982,555      100.00%       $8,838,215     100.00%
Cost of sales                         6,517,213          $(17,022)      6,500,191       72.36         6,426,580      72.71
                                   ---------------- --------------- ---------------- ----------    -------------- ----------
Gross profit                          2,465,342            17,022       2,482,364       27.64         2,411,635      27.29
Selling, general and
  administrative expenses             2,147,861           (58,963)      2,088,898       23.26         1,963,910      22.22
Merger related and exit
  costs                                 (20,388)           20,388
Litigation settlement                    37,000           (37,000)
                                   ---------------- --------------- ---------------- ----------    -------------- ----------
Operating profit                        300,869            92,597         393,466        4.38           447,725       5.07
Interest expense, net                   (84,175)                          (84,175)      (0.94)          (83,324)     (0.94)
Other income, net                          (179)                             (179)                       (2,597)     (0.03)
                                   ---------------- --------------- ---------------- ----------    -------------- ----------

Earnings before
  income taxes                          216,515            92,597         309,112        3.44           361,804       4.09
Income taxes                             86,606            37,039         123,645        1.38           143,313       1.62
                                   ---------------- --------------- ---------------- ----------    -------------- ----------

NET EARNINGS                          $ 129,909          $ 55,558      $  185,467        2.06%       $  218,491       2.47%
                                   ================ =============== ================ ==========    ============== ==========
</TABLE>

Gross  profit,  as a  percent  to  sales,  increased  primarily  as a result  of
continued  improvements made in retail stores,  including the improved sales mix
of partially prepared, value-added products. Gross profit improvements were also
realized  through  the  continued  utilization  of  Company-owned   distribution
facilities  and increased  buying  efficiencies.  The Merger has created  buying
synergies  and  margin  improvements  from the  implementation  of  common  best
practices  across the Company.  The pre-tax LIFO charge  reduced gross profit by
$9.0 million  (0.10% to sales) in the third quarter of 1999 as compared to $10.2
million (0.10% to sales) in the third quarter of 1998.

Selling,  general and administrative  expenses excluding merger related and exit
costs, as a percent to sales,  increased  primarily due to increased  salary and
related  benefit  costs  resulting  from the Company's  initiatives  to increase
sales,  activities  associated with the banner change in California,  Nevada and
New Mexico and  increased  depreciation  expense  associated  with the Company's
expansion program.

The Company  recorded a $37.0 million  pretax ($22.2 million after tax) one time
charge to earnings  (litigation  settlement) in the third quarter resulting from
an agreement in principle  reached to settle eight purported  multi-state  cases
combined  in the United  States  District  Court in Boise,  Idaho  which  raised
various  issues  including   "off-the-clock"  work  allegations.   The  proposed
settlement  is  subject  to  court  approval.   Under  the  proposed  settlement
agreement,  current  and former  employees  who meet  eligibility  criteria  may
present  their claims to a settlement  administrator.  While the Company  cannot
specify the exact number of individuals  who are likely to submit claims and the
exact  amount of their  claims,  the one time  charge is the  Company's  current
estimate of the total monetary liability, including attorney fees, for all eight
cases.

                                       12
<PAGE>


Results of Operations - Year-To-Date
Sales for the 39 weeks ended October 28, 1999, increased 4.1%.
Sales increased  despite the sale of 142 stores  required to be divested.  Sales
are being  positively  impacted  by the  sharing  of best  practices  across the
Company  and as a result of new and  remodeled  stores.  Identical  store  sales
increased 1.6% and comparable  store sales (which  include  replacement  stores)
increased  2.0%.  Management  estimates that there was deflation in the price of
products the Company sells of  approximately  0.3%  (annualized).  During the 39
weeks ended October 28, 1999, the Company  opened 53  combination  food and drug
stores, 41 drug stores and 31 fuel centers.  The Company closed 175 conventional
and combination  food and drug stores,  142 of which were required  divestitures
and 13 of which were replaced  with new stores.  The Company also closed 20 drug
stores,  8 of which were  replaced  with new  stores.  Fifty-seven  stores  were
remodeled  during the 39 weeks.  Construction  of a new  distribution  center in
Tulsa,  Oklahoma was  completed  August 1, 1999,  and shipments to the Company's
stores in the Midwest began on August 16, 1999. The new Lancaster,  Pennsylvania
distribution  center  began  receiving  product on  September  2, 1999 and began
grocery shipments to stores on October 18, 1999. Retail square footage decreased
to 93.8 million  square feet, a net decrease of 2.3% from October 28, 1998.  The
required  divestitures reduced square footage by 6.0 million square feet or 6.2%
from the prior year.

In addition to store  development,  the Company plans to increase  sales through
its  investment  in programs  initiated  in recent  years which are  designed to
provide  solutions  to  customer  needs.  These  programs  include the Front End
Manager program; the home meal solutions process called "Quick Fixin' Ideas(R)";
special destination categories;  pharmacy and health initiatives;  and increased
emphasis on training  programs  utilizing  Computer Guided Training.  To provide
additional   solutions   to   customer   needs,   the   Company  has  added  new
gourmet-quality  bakery  products and organic  grocery and produce items.  Other
solutions  include  neighborhood  marketing,  and targeted  advertising.  In the
California,  Nevada and New Mexico  markets where the Company now operates under
the Albertson's  banner,  the Company has increased  service levels,  spruced up
stores,  and enhanced  product  promotions,  advertising  and price markdowns to
promote  sales   growth.   Future  growth  will  be  affected  by  the  required
divestitures  of 145 stores in  connection  with the  Merger.  The  Company  has
divested 142 of the 145 stores as of October 28, 1999

For the 39 weeks ended  October 28,  1999,  the Company  reported  net income of
$140.3 million, or $0.33 per basic and diluted share as compared to $611 million
or $1.46 per basic and $1.45 per diluted  share for the 39 weeks  ended  October
29, 1998. The decrease from the prior year is primarily attributable to one time
costs,  merger  related  costs  and exit  costs  associated  with the  Merger as
discussed below.

                                       13
<PAGE>


Results of  operations  for the 39 weeks ended  October 28,  1999,  include $607
million of merger related and exit costs ($483 million after tax). The following
table presents the pre-tax costs incurred by category of expenditure
(in millions):

<TABLE>
<CAPTION>
                                               Exit       Merger          Extraordinary       Period
                                              Costs       Charge                   Loss        Costs        Total
                                       ------------- ------------ ---------------------- ------------ ------------
<S>                                           <C>         <C>                <C>              <C>           <C>
Severance costs                                 $91        $  8                                $   7         $106
Write-down of assets
  to net realizable
  value and other                               255                                                4          259
Transaction and
  financing costs                                                             $ 31                73          104
Integration costs                                            11                                   80           91
Stock option charge                                          47                                                47
                                       ------------- ------------ ---------------------- ------------ ------------
                                       ============= ============ ====================== ============ ============
  Total costs                                 $ 346        $ 66               $ 31             $ 164         $607
                                       ============= ============ ====================== ============ ============
</TABLE>

Employee severance costs consist of obligations to employees who were terminated
or were notified of termination  under a plan  authorized by senior  management.
Approximately  635 employees  will be severed as a result of the Merger of which
471 were terminated as of October 28, 1999.

The write-down of assets to net  realizable  value includes the expected loss on
disposal of stores required to be divested (discussed under  "Divestitures") and
duplicate   and  abandoned   facilities,   including   administrative   offices,
intangibles  and  information  technology  equipment which were abandoned by the
Company or are being held for sale. The estimated fair values of assets held for
sale  has  been  determined   using   negotiated  sales  prices  or  independent
appraisals.

Transaction and financing costs consist  primarily of professional fees paid for
investment  banking,  legal,  accounting,  printing and regulatory  filing fees.
Financing costs also include the extraordinary loss on extinguishment of debt.

Integration costs consist  primarily of incremental  transition costs associated
with  integrating  the  operations of  Albertson's  and ASC and were expensed as
incurred.

As a result  of the  Merger,  stock  option  compensation  cost  was  recognized
pursuant to limited stock  appreciation  rights  discussed under "Merger Related
and Exit Costs" in the Notes to Consolidated Financial Statements.

The Company expects to incur additional  after-tax merger related and exit costs
of approximately $200 million over the next two years which consist primarily of
expected  integration  costs  and  costs  associated  with  other  consolidation
activities for which plans have not yet been finalized.

                                       14
<PAGE>


Due to the  significance  of the litigation  settlement  charge,  and the merger
related and exit costs and their  effect on  operating  results,  the  following
table and  discussion  that  follows is presented  to aid in the  comparison  of
income  statement  components  without the effects of one time  charges,  merger
related and exit costs (in thousands).

<TABLE>
<CAPTION>

                                                 39 Weeks Ended October 28, 1999                        39 Weeks Ended
                                                                                                       October 29, 1998
                                   ------------------------------------------------------------
                                     As Reported     Adjustments       Adjusted
                                   ---------------- --------------- ---------------- ----------    -------------------------
<S>                                 <C>              <C>              <C>              <C>          <C>             <C>
Sales                               $27,579,183                       $27,579,183      100.00%      $26,504,222     100.00%
Cost of sales                        20,055,827        $  (20,816)     20,035,011       72.65        19,399,807      73.20
                                   ---------------- --------------- ---------------- ----------    -------------- ----------
Gross profit                          7,523,356            20,816       7,544,172       27.35         7,104,415      26.80
Selling, general and
  administrative expenses             6,378,350          (146,114)      6,232,236       22.60         5,818,568      21.95
Merger related and exit
  costs                                 408,516          (408,516)
Litigation settlement                    37,000           (37,000)
Impairment - store
  closures                                                                                               29,423       0.11
                                   ---------------- --------------- ---------------- ----------    -------------- ----------

Operating profit                        699,490           612,446       1,311,936        4.76         1,256,424       4.74
Interest expense, net                  (244,035)              850        (243,185)      (0.88)         (251,704)     (0.95)
Other income, net                         4,634                             4,634        0.02             9,254       0.03
                                   ---------------- --------------- ---------------- ----------    -------------- ----------

Earnings before income
  taxes and extraordinary
  item                                  460,089           613,296       1,073,385        3.89         1,013,974       3.83
Income taxes                            296,532           131,598         428,130        1.55           402,442       1.52
                                   ---------------- --------------- ---------------- ----------    -------------- ----------

Earnings before
  extraordinary item                    163,557           481,698         645,255        2.34           611,532       2.31

Extraordinary loss on
  extinguishment of debt,
  net  of tax benefit of
  $7,388                                (23,272)           23,272
                                   ---------------- --------------- ---------------- ----------    -------------- ----------

NET EARNINGS                        $   140,285        $  504,970     $   645,255        2.34%      $   611,532       2.31%
                                   ================ =============== ================ ==========    ============== ==========
</TABLE>

Gross  profit,  as a  percent  to  sales,  increased  primarily  as a result  of
continued  improvements made in retail stores,  including  improved sales mix of
partially prepared,  value-added  products.  Gross profit improvements were also
realized  through  the  continued  utilization  of  Company-owned   distribution
facilities  and increased  buying  efficiencies.  The merger has created  buying
synergies  and  margin  improvements  from the  implementation  of  common  best
practices  across the Company.  The pre-tax LIFO charge  reduced gross profit by
$27.0  million  (0.10% to sales) in the 39 weeks  ended  October  28,  1999,  as
compared to $31.4  million  (0.12% to sales) for the 39 weeks ended  October 29,
1998.

Selling,  general and administrative  expenses excluding merger related and exit
costs, as a percent to sales,  increased  primarily due to increased  salary and
related  benefit  costs  resulting  from the Company's  initiatives  to increase
sales,  activities  associated with the banner charge in California,  Nevada and
New Mexico,  and increased  depreciation  expense  associated with the Company's
expansion program.

The Company recorded a $29.4 million pre-tax ($18.4 million after tax) charge to
earnings  (Impairment - Store  Closures) in the first quarter of 1998 related to
management's decision to close 16 underperforming  stores in 8 states during the
fiscal year. The charge includes impaired real estate and equipment,  as well as
the  present  value of  remaining  liabilities  under  leases,  net of  expected
sublease recoveries. Substantially all of these stores have been closed.

Other income for the 39 weeks ended October 28, 1999, included noncash income of
$4.6  million for the increase in cash  surrender  value of  Company-owned  life

                                       15
<PAGE>

insurance as compared to income of $8.7  million for the 39 weeks ended  October
29, 1998.

Liquidity and Capital Resources
The Company's  operating results continue to enhance its financial  position and
ability to continue its planned  expansion  program.  Cash flows from operations
and available  borrowings are sufficient for the future  operating  needs of the
Company.

Cash provided by operating activities during the 39 weeks ended October 28, 1999
was $1.0  billion as  compared to $1.1  billion  during the same period of 1998.
During the 39 weeks ended  October 28, 1999,  the Company  invested $1.3 billion
for net capital  expenditures.  The Company's financing activities during the 39
weeks ended  October 28, 1999,  included net new  borrowings of $355 million and
the payment of dividends of $188 million.

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 quarterly  reporting  periods.  Following
the Merger the Company has consolidated  several of the commercial  paper,  bank
lines and other financing  arrangements.  The consolidation of debt included the
repayment of ASC debt  containing  change of control  provisions  and the tender
for, or open market purchases of, certain higher coupon debt.

On March 30, 1999, the Company entered into a revolving  credit agreement with a
syndicate of commercial banks whereby the Company may borrow  principal  amounts
up to $1.5  billion  at  varying  interest  rates at any time prior to March 28,
2000.  The  agreement has a one-year term out option which allows the Company to
convert any loans  outstanding  on the  expiration  date of the  agreement  into
one-year  term  loans.  The  agreement  contains  certain  covenants,  the  most
restrictive of which requires the Company to maintain  consolidated tangible net
worth,  as defined,  of at least $2.1 billion.  In addition to the new revolving
credit  agreement,  the Company has an existing  $600 million  revolving  credit
agreement,  whereby the Company may borrow principal amounts at varying interest
rates any time prior to December 17, 2001. The  combination of the two revolving
credit  agreements  allows the  Company to borrow  principal  amounts up to $2.1
billion and serves as backup  financing for the Company's  commercial  paper and
borrowings.  There were no amounts  outstanding  under either  revolving  credit
agreement as of October 28, 1999.

In July 1999 the Company  issued $500 million of floating rate notes.  The notes
are due July 2000 and bear interest based on LIBOR  commercial  paper rates that
reset  monthly.  As of October  28,  1999,  the  interest  rate was 5.39% on the
outstanding notes. These notes were issued under the Company's  commercial paper
program.

In July  1999 the  Company  issued  $1.3  billion  of term  notes  under a shelf
registration  statement  filed with the  Securities  and Exchange  Commission in
February  1999.  The notes are comprised  of: $300 million of principal  bearing
interest at 6.55% due August 1, 2004; $350 million of principal bearing interest
at 6.95% due August 1, 2009; and $650 million of principal  bearing  interest at
7.45% due August 1, 2029.  Interest  is paid  semiannually.  Proceeds  were used
primarily to repay  borrowings  under the Company's  commercial  paper  program.
Additional securities up to $1.2 billion remain available for issuance under the
Company's 1999 registration statement.

                                       16

<PAGE>


Divestitures
In connection  with the Merger,  the Company  entered into  agreements  with the
Attorneys  General of  California,  Nevada and New Mexico and the Federal  Trade
Commission  to  enable  the  Merger  to  proceed  under  applicable   antitrust,
competition  and trade  regulation  law. The agreements  required the Company to
divest a total of 117 stores in California,  19 stores in Nevada and 9 stores in
New  Mexico.  Of the  stores  required  to be  divested,  40 were ASC  locations
operated  primarily  under  the  Lucky  name,  and 105 were  Albertson's  stores
operated primarily under the Albertson's name. In addition, the Company divested
four  supermarket  real estate sites as required by the  agreements.  The stores
identified for disposition had sales of $2.3 billion in fiscal 1998. The Company
has divested 142 of the required 145 stores as of October 28, 1999.

Recent Accounting Standards
In June 1998 the  Financial  Accounting  Standards  Board  issued  Statement  of
Financial  Accounting  Standards  ("SFAS")No.  133,  "Accounting  for Derivative
Instruments and Hedging  Activities." This new standard  establishes  accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It requires
that an entity  recognize all derivatives as either assets or liabilities in the
statement of financial  position and measure  those  instruments  at fair value.
This  standard,  as amended by SFAS No. 137, is effective for the Company's 2001
fiscal year.  The Company has not yet completed its  evaluation of this standard
or its impact, if any, on the Company's reporting requirements.

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

Beginning in 1995 the Company  formed  project teams to assess the impact of the
Year 2000 issue on the software and hardware utilized in the Company's  internal
operations.  The project teams are staffed primarily with representatives of the
Company's Information Systems and Technology departments and report on a regular
basis to senior management and the Company's Board of Directors.

The initial phase of the Year 2000 project was  assessment  and  planning.  This
phase  included an assessment of all computer  hardware,  software,  systems and
processes  ("IT  Systems")  and  non-information   technology  systems  such  as
telephones,  clocks,  scales,  refrigeration  controllers  and  other  equipment
containing embedded microprocessor  technology ("Non-IT Systems"). The upgrades,
validation  and forward  date  testing  for all  systems has been  substantially
completed.

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

                                       17
<PAGE>


The total costs to address the  Company's  Year 2000 issues are  estimated to be
approximately $43 million,  of which approximately $28 million has been expensed
and  approximately  $15  million  has  been  capitalized.  These  costs  include
expenditures  accelerated for Year 2000 compliance.  As of October 28, 1999, the
Company has spent substantially all of these costs. These costs have been funded
through  operating  cash flow and  represent a small portion of the Company's IT
budget.

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

The  Company  has  developed  its  contingency  plans  with  respect to its most
critical applications.  Contingency plans include manual workarounds,  increased
inventories and extra staffing.

Environmental
The Company has identified environmental contamination at certain of its stores,
distribution  centers,  office and manufacturing  facilities (related to current
operations as well as  previously  disposed of  businesses)  which are primarily
related  to  underground   petroleum  storage  tanks  (USTs)  and  ground  water
contamination.  The Company  conducts an on-going 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.
Although  the  ultimate  outcome and  expense of  environmental  remediation  is
uncertain,  the Company  believes that the required  costs of  remediation,  UST
upgrades  and  continuing  compliance  with  environmental  laws will not have a
material adverse effect on the financial condition of the Company.

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

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<PAGE>


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

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

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<PAGE>



                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings
An agreement in principle has been reached to settle eight purported multi-state
cases combined in the United States  District Court in Boise,  Idaho which raise
various  issues  including  "off  the  clock"  work  allegations.  The  proposed
settlement  is  subject  to  court  approval.   Under  the  proposed  settlement
agreement,  current  and former  employees  who meet  eligibility  criteria  may
present  their claims to a settlement  administrator.  While the Company  cannot
specify the exact number of individuals  who are likely to submit claims and the
exact amount of their claims, the $37 million pretax ($22 million after tax) one
time  charge  recorded  by the  Company in the third  quarter  is the  Company's
current estimate of the total monetary  liability,  including attorney fees, for
all eight cases.

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

Item 2.  Changes in Securities
In accordance with the Company's $1.5 billion revolving credit agreement and the
amended $200 million term loan  agreement  between ASC and a group of commercial
banks, the Company's  consolidated tangible net worth, as defined,  shall not be
less than $2.1 billion.

Item 3.  Defaults upon Senior Securities
Not applicable.

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

      Number    Description
      27        Financial data schedule for the 39 weeks ended October 28, 1999.


b.  The  following  reports on Form 8-K were  filed  during  the  quarter  ended
    October 28, 1999:

         Current report on Form 8-K dated September 22, 1999, regarding the June
         23,  1999,  consummation  of the merger  between  Albertson's,  Inc and
         American Stores Company.


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<PAGE>


                                    SIGNATURE


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



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



Date:    December 9, 1999              /S/ A. Craig Olson
       ---------------------           ---------------------------------
                                        A. Craig Olson
                                        Executive Vice President
                                        and Chief Financial Officer


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