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 26 Weeks Ended: August 2, 2001            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 5, 2001: 406,074,539





                                        1
<PAGE>
                                                                       FORM 10-Q


                          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 2,         August 3,             August 2,           August 3,
                                                             2001              2000                  2001                2000
                                                   ---------------- -----------------    ------------------ -------------------
<S>                                                <C>              <C>                  <C>                <C>

Sales                                                      $9,577            $9,214               $18,908             $18,227
Cost of sales                                               6,862             6,572                13,535              13,069
                                                   ---------------- -----------------    ------------------ -------------------
Gross profit                                                2,715             2,642                 5,373               5,158

Selling, general and administrative expenses                2,341             2,222                 4,578               4,360
Restructuring charges and other                               510                                     510
Merger-related (credits) charges                               (1)               (1)                  (15)                  1
                                                   ---------------- -----------------    ------------------ -------------------
Operating (loss) profit                                      (135)              421                   300                 797

Other (expense) income:
  Interest, net                                              (111)              (99)                 (219)               (182)
  Other, net                                                   (1)                3                   (12)                  4
                                                   ---------------- -----------------    ------------------ -------------------
(Loss) earnings before income taxes                          (247)              325                    69                 619
Income tax (benefit)expense                                   (96)              131                    34                 246
                                                   ---------------- -----------------    ------------------ -------------------

NET (LOSS) EARNINGS                                        $ (151)           $  194               $    35             $   373
                                                   ================ =================    ================== ===================

(LOSS) EARNINGS PER SHARE:
  Basic                                                    $(0.37)           $ 0.46                $ 0.09              $ 0.88
  Diluted                                                   (0.37)             0.46                  0.09                0.88

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING:
  Basic                                                       406               423                   406                 423
  Diluted                                                     406               423                   408                 423
</TABLE>






















See Notes to Consolidated Financial Statements.

                                       2

<PAGE>
                                                                       FORM 10-Q


                                ALBERTSON'S, INC.
                           CONSOLIDATED BALANCE SHEETS
                                  (in millions)

<TABLE>
<CAPTION>
                                                                                    August 2, 2001             February 1,
                                                                                       (unaudited)                    2001
                                                                              ---------------------     -------------------
<S>                                                                           <C>                       <C>
                   ASSETS

CURRENT ASSETS:
   Cash and cash equivalents                                                               $   140                 $    57
   Accounts and notes receivable                                                               540                     547
   Inventories                                                                               3,236                   3,364
   Prepaid expenses                                                                             94                     155
   Property held for sale                                                                      257                      71
   Deferred income taxes                                                                       256                      70
   Refundable income taxes                                                                      70                      36
                                                                              ----------------------     -------------------
                TOTAL CURRENT ASSETS                                                         4,593                   4,300

LAND, BUILDINGS AND EQUIPMENT (net of accumulated depreciation and
  amortization of $5,496 and $5,626, respectively)                                           9,212                   9,622

GOODWILL AND INTANGIBLES, net                                                                1,628                   1,705

OTHER ASSETS                                                                                   444                     451
                                                                              ----------------------     -------------------
                                                                                           $15,877                 $16,078
                                                                              ======================     ===================

     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable                                                                        $ 2,132                 $ 2,163
   Salaries and related liabilities                                                            515                     561
   Taxes other than income taxes                                                               189                     141
   Self-insurance                                                                              232                     218
   Unearned income                                                                              89                     112
   Merger related reserves                                                                       4                      13
   Restructuring reserves                                                                       83
   Current portion of capitalized lease obligations                                             19                      20
   Current maturities of long-term debt                                                        120                      62
   Other current liabilities                                                                   170                     105
                                                                              ----------------------     -------------------
                TOTAL CURRENT LIABILITIES                                                    3,553                   3,395

LONG-TERM DEBT                                                                               5,492                   5,715

CAPITALIZED LEASE OBLIGATIONS                                                                  244                     227

SELF-INSURANCE                                                                                 232                     216

DEFERRED INCOME TAXES                                                                           92                     116

OTHER LIABILITIES AND DEFERRED CREDITS                                                         661                     715

STOCKHOLDERS' EQUITY:
   Preferred stock - $1.00 par value; authorized - 10 shares; issued - none
   Common stock - $1.00 par value; authorized - 1,200 shares; issued -
     406 shares and 405 shares, respectively                                                   406                     405
   Capital in excess of par value                                                               75                      48
   Retained earnings                                                                         5,122                   5,241
                                                                              ----------------------     -------------------
                                                                                             5,603                   5,694
                                                                              ----------------------     -------------------
                                                                                           $15,877                 $16,078
                                                                              ======================     ===================
</TABLE>



See Notes to Consolidated Financial Statements.

                                       3
<PAGE>
                                                                       FORM 10-Q


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

                                                                                              26 WEEKS ENDED
                                                                              -----------------------------------------------
                                                                                       August 2,                  August 3,
                                                                                            2001                       2000
                                                                              --------------------       --------------------
<S>                                                                           <C>                        <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net earnings                                                                          $    35                    $   373
     Adjustments to reconcile net earnings to net cash provided by
     operating activities:
       Depreciation and amortization                                                         495                        458
       Goodwill amortization                                                                  28                         28
       Noncash merger-related (credits) charges                                              (13)                         3
       Noncash restructuring charges and other                                               454
       Net loss on asset sales                                                                12                          8
       Net deferred income taxes and other                                                  (199)                        37
       Decrease (increase) in cash surrender value of Company-owned life
         insurance                                                                            13                         (4)
       Changes in operating assets and liabilities:
         Receivables and prepaid expenses                                                     93                        108
         Inventories                                                                          80                        359
         Accounts payable                                                                    (31)                        58
         Other current liabilities                                                            85                       (130)
         Self-insurance                                                                       30                        (11)
         Unearned income                                                                     (26)                       (20)
         Other long-term liabilities                                                         (49)                       (24)
                                                                              --------------------       --------------------
   Net cash provided by operating activities                                               1,007                      1,243

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures, net of proceeds from disposals                                     (708)                      (708)
   Decrease in other assets                                                                   80                         17
                                                                              --------------------       --------------------
   Net cash used in investing activities                                                    (628)                      (691)

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from long-term borrowings                                                        613                        515
   Payments on long-term borrowings                                                          (27)                      (345)
   Net commercial paper and bank line activity                                              (743)                      (601)
   Proceeds from stock options exercised                                                      15                          5
   Cash dividends paid                                                                      (154)                      (156)
   Stock purchased and retired                                                                                          (95)
                                                                              --------------------       --------------------
   Net cash used in financing activities                                                    (296)                      (677)
                                                                              --------------------       --------------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                          83                       (125)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                              57                        245
                                                                              --------------------       --------------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                               $   140                    $   120
                                                                              ====================       ====================
</TABLE>








See Notes to Consolidated Financial Statements.

                                       4
<PAGE>
                                                                       FORM 10-Q


                                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 2,  2001,  the  Company  operated  2,540  stores in 36  Western,
Midwestern,  Eastern  and  Southern  states.  Retail operations are supported by
19 major Company distribution operations, strategically located in the Company's
operating markets.

Basis of  Presentation
   The accompanying  unaudited  consolidated  financial  statements  include the
results of  operations,  account  balances 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 of America 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  2000 Annual  Report.  The results of operations
for the 26 weeks ended August 2, 2001, are not necessarily indicative of results
for a full year.

   The  balance  sheet at  February  1, 2001,  has been  taken from the  audited
consolidated financial statements at that date.

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

Inventory
   Net  income  reflects  application  of the LIFO  method  of  valuing  certain
inventories, based upon estimated annual inflation ("LIFO Indices"). Albertson's
recorded  pretax LIFO  expense of $15 and $12 for the 26 weeks  ended  August 2,
2001,  and August 3, 2000,  respectively.  Actual LIFO  Indices  are  calculated
during the fourth  quarter of the year  based  upon a  statistical  sampling  of
inventories.


                                       5
<PAGE>
                                                                       FORM 10-Q


Earnings Per Share ("EPS")
   Basic EPS is based on the weighted average outstanding common shares. Diluted
EPS is based on the weighted average  outstanding shares reduced by the dilutive
effect of stock  options.  As a result of the net loss,  2 million  shares  were
antidilutive  and  accordingly  were not included in the diluted EPS calculation
for the 13 weeks ended August 2, 2001. Incremental shares of 2 million were used
in the calculation of diluted EPS for the 26 week period ended August 2, 2001.

   Stock options to purchase 15.4 million and 8.9 million shares of common stock
for the 13 week periods and 15.4 million and 9.7 million  shares of common stock
for the 26 week periods  ended August 2, 2001 and August 3, 2000,  respectively,
were  outstanding but not included in the computation of diluted EPS because the
option  exercise  price was greater than the average  market price of the common
shares.

Comprehensive Income
   Comprehensive  income is net income adjusted for certain other items that are
recorded directly to stockholders'  equity.  Comprehensive income consisted only
of  reported  net (loss)  earnings for  the  periods  ended  August 2, 2001, and
August 3, 2000,  as  there  were  no  significant  items  of other comprehensive
income.

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 fiscal year ends on the  Thursday
nearest to January 31 each year.

Goodwill
   Under the Company's  current  accounting  policies,  goodwill is allocated to
certain markets based on prior acquisitions.  As part of normal, on-going review
of performance of markets,  the Company  reviews  long-lived  assets  (including
goodwill) for impairment  whenever  events and  circumstances  indicate that the
carrying amount of the assets may not be recoverable.  For example,  significant
assets  removed  from a market would  trigger a review for  possible  impairment
based on the future expected cash flows of the remaining  assets.  If the sum of
the undiscounted  expected future cash flows is less than the carrying amount of
the assets,  the Company  recognizes an impairment  loss.  Impairments and costs
incurred to close stores or markets,  including  lease  termination  costs,  are
recorded at the time  executive  management  approves  and commits to closing or
relocating such assets.







                                       6
<PAGE>
                                                                       FORM 10-Q


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 includes certain exit costs and employee  termination
benefits,  as described below,  that will be incurred within  approximately  one
year of the board approval date.

<TABLE>
<CAPTION>
     Action                                                        Status

<S>  <C>                                                           <C>
     Reduction in administrative and corporate overhead            In Progress

     Closing of 165 underperforming retail stores                  In Progress

     Consolidation and elimination of four division offices        Completed

     Process streamlining                                          In Progress
</TABLE>


   As a result of the restructuring  plan, the Company recorded a pre-tax charge
of $510  ($307  after tax or $0.75  per  diluted  share).  The  following  table
presents  the pre-tax  charge  incurred by category of  expenditure  and related
restructuring  reserve accruals included in the Company's  Consolidated  Balance
Sheets:

<TABLE>
<CAPTION>
                               --------------- ------------------ ------------------- ---------- ----------
                                     Employee                                  Lease
                                    Severance              Asset         Termination
                                        Costs        Impairments               Costs      Other      Total
                               --------------- ------------------ ------------------- ---------- ----------
<S>                            <C>             <C>                <C>                 <C>        <C>
Additions                                $ 44               $425                $ 36        $ 5       $510
Utilization                                 1                425                   1                   427
                               --------------- ------------------ ------------------- ---------- ----------
Balance at August 2, 2001                $ 43               $                   $ 35        $ 5       $ 83
                               =============== ================== =================== ========== ==========
</TABLE>

   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
accordance with the restructuring plan, 1,341 managerial and administrative jobs
above store level have been identified for termination in future periods.

   As part  of the  Company's  restructuring  plan,  all  stores  were  reviewed
utilizing  a  methodology  based on return on  invested  capital.  Based on this
review,   the   Company   identified   and   committed  to   close  and  dispose
165  underperforming  stores in  25 states.  All stores  identified  for closure
were evaluated  for asset  impairment by comparing the fair value,  less selling
cost, to the recorded book value.  Fair value used in the impairment calculation
was based on third party offers or market value for comparable  properties.  For
stores under  operating  lease  agreements,  the present values of any remaining
liability  under the lease,  net of sublease  recoveries,  or lease  termination
costs were expensed.

   Assets to be disposed of include land,  buildings,  equipment,  and leasehold
improvements  for  stores  and  division  offices  that  were  included  in  the
restructuring discussed above. These assets are recorded at their estimated fair
value,  less  selling  costs,  and  reported  as  property  held for sale in the
Company's Consolidated Balance Sheets.

   Other costs include  various  expenses  related to the Company's  decision to
exit certain  insignificant  businesses  and the  consolidation  of the division
offices.


                                       7
<PAGE>
                                                                       FORM 10-Q


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 fair market
value,  less selling costs,  is expensed.  For properties  under operating lease
agreements, the present value of any remaining liability under the lease, net of
expected sublease  recovery,  is expensed.  The following table shows the pretax
expense, and related reserves, for closed stores and other surplus property:

<TABLE>
<CAPTION>
                                       --------------------- ---------------------- --------------------
                                                    Lease                  Asset
                                              Liabilities            Impairments                Total
                                       --------------------- ---------------------- --------------------
<S>                                    <C>                   <C>                    <C>
Balance at February 1, 2001                           $22                   $                    $ 22

    Additions                                           3                      8                   11
    Adjustments - first quarter                         3                     (4)                  (1)
    Adjustments - second quarter                       22                     26                   48
    Utilization                                        (4)                   (30)                 (34)
                                       --------------------- ---------------------- --------------------
Balance at August 2, 2001                             $46                   $                    $ 46
                                       ===================== ====================== ====================
</TABLE>

   The restructuring plan included actions to accelerate the disposal of surplus
property.  This  involves  terminating  leases  through  negotiated  buyouts and
selling owned properties through auctions.  The $48 pre-tax adjustments recorded
during the second quarter are the additional  charges expected to be incurred as
a result of these  actions.  This charge is  included  in  selling,  general and
administrative  expenses  in the  Company's  Consolidated  Earnings.  $39 of the
reserve balance as of August 2, 2001, is included with accounts  payable and the
remaining $7 is included  with other  liabilities  and  deferred  credits in the
Company's  Consolidated Balance Sheets. The related assets are recorded at their
estimated fair value, less selling costs, and reported as property held for sale
in the Company's Consolidated Balance Sheets.

Merger Related and Exit Costs
   As a result of the Company's merger with American Stores Company,  results of
operations  for the 26 weeks  ended  August  2,  2001,  include  a net of $10 of
merger-related  credits ($6 after tax). The following table presents the pre-tax
(credits)  charges  incurred  by  category  of  expenditure  and  merger-related
accruals included in the Company's Consolidated Balance Sheets:

<TABLE>
<CAPTION>
                                              ------------------ ---------------- ------------------- -----------
                                                         Asset                         Integration
                                                   Impairments        Severance          And Other        Total
                                              ------------------ ---------------- ------------------- -----------
<S>                                           <C>                <C>              <C>                 <C>
Balance at February 1, 2001                              $                $ 11                $ 2         $ 13

Additions                                                                    2                  3            5
Adjustments                                               (15)                                             (15)
Utilization                                                15               (9)                (5)           1
                                              ------------------ ---------------- ------------------- -----------
Balance at August 2, 2001                                $                $  4                $           $  4
                                              ================== ================ =================== ===========
</TABLE>

   Asset  impairments  include the loss on disposal of duplicate  and  abandoned
facilities,   including  administrative  offices,  intangibles  and  information
technology  equipment  which were  abandoned by the Company.  Operations for the
26 weeks  ended  August 2, 2001,  included  $15 of credits  associated  with the
reversal  of previous  impairment  charges  related to  the sale of the American
Stores' Tower in Salt Lake City,  Utah.  The Company closed  on the sale of this
property on May 15, 2001,  thus completing the asset dispositions resulting from
the merger.

                                       8
<PAGE>
                                                                       FORM 10-Q

   Severance consists of retention costs for certain individuals and termination
benefit liabilities for individuals who have already been terminated.

   Integration and other costs consist  primarily of incremental  transition and
integration  costs associated with integrating the operations of Albertson's and
American  Stores Company and are being expensed as incurred.  These include such
costs as labor  associated  with system  conversions and training and relocation
costs.

Indebtedness
   The Company has two revolving credit  agreements which provide for borrowings
up to  $1,650  and a  committed  bank line for $100.  These  agreements  contain
certain  covenants,  the most  restrictive  of which  requires  the  Company  to
maintain  consolidated tangible net worth, as defined, of at least $2,100. As of
August 2, 2001, no amounts were outstanding under these agreements.

   On May 1, 2001, the Company issued $600 of term notes and debentures  under a
shelf registration  statement filed with the Securities and Exchange  Commission
in February 2001 (the "2001 Registration Statement"). The notes are comprised of
$200 of principal  bearing interest at 7.25% due May 2013 and the debentures are
comprised of $400 of principal bearing interest at 8.00% due May 2031.  Proceeds
were used to repay  amounts  outstanding  under the Company's  commercial  paper
program and other general corporate purposes. Additional securities up to $2,400
of principal remain available for issuance under the Company's 2001 Registration
Statement.

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

<TABLE>
<CAPTION>
                                                                       26 Weeks Ended             26 Weeks Ended
                                                                       August 2, 2001             August 3, 2000
                                                                ------------------------    ------------------------
<S>                                                                              <C>                        <C>
   Cash payments for:
      Income taxes                                                               $278                       $266
      Interest, net of amounts capitalized                                        140                        182
   Noncash transactions:
      Capitalized leases incurred                                                  25                         28
      Decrease (increase) in cash surrender value of
         Company-owned life insurance                                              13                         (4)
</TABLE>

Capital Stock
   The Board of Directors adopted a program on April 25, 2000, authorizing,  but
not  requiring,  the Company to purchase and retire up to $500 of the  Company's
common stock. This program was increased by an additional $1,000 by the Board of
Directors  on  December  6, 2000,  for a total of $1,500.  The  revised  program
enables the Company to purchase  stock through  December 6, 2001.  During fiscal
2000,  the Company  purchased and retired 18.7 million shares at a total cost of
$451,  or an average  price of $24.15 per share,  under this  authorization.  No
purchases were made during the 26 weeks ended August 2, 2001.


                                       9
<PAGE>
                                                                       FORM 10-Q


Certain Accounting Matters
   In  June  2001,  the  Financial  Accounting  Standard  Board  issued  two new
pronouncements:  Statement of Financial  Accounting  Standards ("SFAS") No. 141,
"Business  Combinations"  and SFAS  No.  142,  "Goodwill  and  Other  Intangible
Assets." SFAS No. 141, which is effective for acquisitions  initiated after June
30,  2001,  prohibits  the use of the  pooling-of-interest  method for  business
combinations and establishes the accounting and financial reporting requirements
for business  combinations  accounted for by the purchase  method.  SFAS No. 142
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.  Existing  goodwill  will  continue to be
amortized  through the remainder of fiscal 2001 at which time  amortization will
cease and the Company will perform a transitional goodwill impairment test. SFAS
No. 142 is effective for fiscal periods  beginning  after December 15, 2001. The
Company is currently  evaluating the impact of the new  accounting  standards on
existing goodwill and other intangible assets.  While the ultimate impact of the
new accounting standards has yet to be determined, goodwill amortization expense
for the 26 weeks ended August 2, 2001, was $28, or $0.07 per diluted share.

   On February 2, 2001, the Company  adopted  Statement of Financial  Accounting
Standards No. 133 ("SFAS  133"),  "Accounting  for  Derivative  Instruments  and
Hedging  Activities,"  as amended.  This new standard,  as amended,  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.  The  adoption  of this  statement  resulted  in no  transition
adjustment or significant impact on financial results.

   The Company utilizes derivative  contracts,  such as treasury rate locks, for
hedging interest rate risk associated with issuances of debt. During the quarter
ended  August 2, 2001,  there were no  transactions.  There were no  outstanding
derivative contracts as of August 2, 2001.

Legal Proceedings
   On April 5, 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.) 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  assistant
managers was  certified  by the court.  A case with very  similar  claims,  also
involving the assistant drug managers and operating managers,  was filed against
the Company's  subsidiary Sav-on Drug Stores, Inc. in Los Angeles Superior Court
(Rocher,  Dahlein et. al. v. Sav-on Drug Stores, Inc.) and was also certified as
a class action.  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 the ultimate
resolution of these actions to have a material  adverse  effect on the Company's
financial condition.

                                       10
<PAGE>
                                                                       FORM 10-Q

   On August 23, 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  Finer Foods,  Inc., Case No. 00L 009664) alleging milk price fixing.
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 the ultimate  resolution of this action to
have a material adverse effect on the Company's financial condition.

   An agreement has been reached,  and court approval  granted,  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.  Under the settlement  agreement,  current and former employees who
meet  eligibility  criteria are in the process of  presenting  their claims to a
settlement  administrator.  While the Company cannot specify the exact amount of
their claims,  the $37 pre-tax ($22 after-tax) charge recorded by the Company in
1999  is the  Company's  current  estimate  of  the  total  monetary  liability,
including  attorney fees, for all eight cases.  During the first quarter of 2001
this liability was reduced by an $18 cash payment for legal expenses.

   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.













                                       11
<PAGE>
                                                                       FORM 10-Q


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


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               Percentage
                                                              13 weeks ended                 Increase
                                                         8-2-01            8-3-00           (Decrease)
                                                  ---------------- -----------------    ------------------
<S>                                                      <C>               <C>                    <C>

    Sales                                                100.00%           100.00%                 3.9%
    Gross profit                                          28.36             28.67                 (2.8)
    Selling, general and administrative expenses          24.45             24.11                  5.4
    Restructuring charges and other                        5.33                                    n.m.
    Operating (loss) profit                               (1.41)             4.57                  n.m.
    Interest expense, net                                 (1.16)            (1.07)                12.9
    (Loss) earnings before income taxes                   (2.58)             3.53                  n.m.
    Net (loss) earnings                                   (1.58)             2.11                  n.m.

    n.m. - not meaningful
</TABLE>

   Sales for the quarter  ended August 2, 2001,  increased by 3.9% over the same
quarter of the prior year. Increases in sales are primarily  attributable to the
continued  development  of new stores and identical and  comparable  store sales
increases.  Identical  store sales  increased 1.5% and  comparable  store sales,
which include replacement stores, increased 1.9%. During the quarter the Company
opened 14 combination food and drug stores and 13 stand alone drugstores,  while
closing 5 combination food and drug stores,  5 conventional  stores, 3 warehouse
stores and 9 drugstores.  Net retail square  footage  increased by 3.0% from the
prior year.  Management  estimates that there was overall  inflation in products
the Company sells of  approximately  1.0%  (annualized).  This increase is being
primarily driven by pharmacy products.

   During fiscal year 2000,  the Company  changed the alignment of the marketing
organizational  structure.  Benefits continue to be realized from this change as
the promotion  and  merchandising  is tailored to fit  individual  markets.  The
Company-wide  "Focus on Fresh", has become a principal marketing target for this
year and has  created a new level of  satisfaction  for  shoppers  who enter our
supermarkets.

   The Company  announced a new customer  service  program in March and finished
the last rollout meeting in May. This program,  "Service First, Second to None,"
puts best  practices  from across the Company  into a brand new package and into
tools the stores can use to achieve the highest standards of customer service.

   Albertson's  has also  increased  focus on loyalty  programs  such as the new
Associate  Advantage Loyalty Card Program,  and has entered a national agreement
with Catalina  Marketing  Corporation to extend their program to all Albertson's
combination food and drug stores.

                                       12
<PAGE>
                                                                       FORM 10-Q

   Gross profit,  as a percent to sales,  decreased as a result of the Company's
initiative  to drive sales  through more  aggressive  promotional  pricing.  The
continued  utilization of Company  distribution  facilities and increased buying
efficiencies  partially  offset this  decrease.  The pre-tax LIFO charge reduced
gross  profit by $7 (0.08% to sales) for the 13 weeks ended  August 2, 2001,  as
compared to $6 (0.07% to sales) for the 13 weeks ended August 3, 2000.

   Selling,  general and administrative  (SG&A) expenses, as a percent to sales,
increased  in  2001  as  compared  to the  prior  year  primarily  due to  costs
associated  with  asset  impairments  and  lease  terminations  related  to  the
acceleration of the disposal of surplus property (refer to "Restructuring  Plan"
below).   SG&A  for  the  13  weeks  ended  August  2,  2001,   included  $1  of
merger-related  costs as compared to $26 for the 13 weeks ended  August 3, 2000.
Increases in other components of SG&A, such as energy costs,  health and welfare
benefits,  and  depreciation  expense  associated  with the Company's  expansion
program, were offset by lower labor, maintenance, supplies and travel costs.

   The increase in net  interest  expense for the 13 weeks ended August 2, 2001,
resulted  primarily  from higher  average  outstanding  debt during the 13 weeks
ended August 2, 2001, as compared to the 13 weeks ended August 3, 2000.

Restructuring Plan
   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.   Major   components  of  the  plan   include  the  closure  of
165 underperforming retail stores, the reduction in administrative and corporate
overhead,   consolidating   and  eliminating   four  division  offices  and  the
acceleration of the disposal of surplus  property.  In accordance with the plan,
the Company  recorded a pre-tax  restructuring  charge of $510 to cover employee
severance costs,  asset impairments and lease  terminations.  In addition to the
restructuring  charge,  the  Company  also  recorded  (in  selling,  general and
administrative  expenses)  pre-tax costs of $48 for asset  impairments and lease
terminations associated with the accelerated disposal of surplus property. These
combined actions reduced operating profit for the 13 weeks ended August 2, 2001,
by $558 and net earnings by $335.

   The Company expects to incur additional  pre-tax charges of approximately $35
in future periods for certain  actions  related to the  restructuring  plan that
have not yet been implemented.

                                       13
<PAGE>
                                                                       FORM 10-Q


   Due to the significance of the costs associated with the  restructuring  plan
and merger-related  costs and their effect on operating  results,  the following
table is presented to assist in the  comparison of income  statement  components
without these costs:

<TABLE>
<CAPTION>
                                --------------------------------------------- ---------------------------------------------
                                         13 Weeks Ended August 2, 2001                13 Weeks Ended August 3, 2000
                                --------------------------------------------- ---------------------------------------------
                                                           Without    Percent                          Without      Percent
                                         As     Adjust-    adjust-         To         As    Adjust-    adjust-           To
                                   Reported       ments      Ments      Sales   Reported      Ments      Ments        Sales
                                ----------- ----------- ---------- ---------- ---------- ---------- ---------- ------------
<S>                             <C>         <C>         <C>        <C>        <C>        <C>        <C>        <C>
Sales                                $9,577       $         $9,577     100.00%    $9,214       $       $ 9,214       100.00%
Cost of sales                         6,862                  6,862      71.64      6,572         (1)     6,571        71.32
                                ----------- ----------- ---------- ---------- ---------- ---------- ---------- ------------
Gross profit                          2,715                  2,715      28.36      2,642          1      2,643        28.68
Selling, general and
 administrative expenses              2,341         (50)     2,291      23.93      2,222        (26)     2,196        23.84
Restructuring charges and
 other                                  510        (510)
Merger-related (credits)
 charges                                 (1)          1                               (1)         1
                                ----------- ----------- ---------- ---------- ---------- ---------- ---------- ------------
Operating (loss) profit                (135)        559        424       4.43        421         26        447         4.84
Interest, net                          (111)                  (111)     (1.16)       (99)                  (99)       (1.07)
Other (expense) income, net              (1)                    (1)     (0.01)         3                     3          .03
                                ----------- ----------- ---------- ---------- ---------- ---------- ---------- ------------
(Loss) earnings before income
 taxes                                 (247)        559        312       3.26        325         26        351         3.81
Income tax (benefit) expense            (96)        224        128       1.34        131          9        140         1.52
                                ----------- ----------- ---------- ---------- ---------- ---------- ---------- ------------
Net (loss) earnings                  $ (151)      $ 335     $  184       1.92%    $  194       $ 17       $211         2.29%
                                =========== =========== ========== ========== ========== ========== ========== ============

(Loss) earnings per share:
   Basic                             $(0.37)      $0.82      $0.45                 $0.46      $0.04      $0.50
   Diluted                            (0.37)       0.82       0.45                  0.46       0.04       0.50
</TABLE>















                                       14
<PAGE>
                                                                       FORM 10-Q


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                Percentage
                                                      26 weeks ended                  Increase
                                                  8-2-01           8-3-00            (Decrease)
                                             ---------------- -----------------   ------------------

<S>                                               <C>              <C>                   <C>
   Sales                                          100.00%          100.00%                 3.7%
   Gross profit                                    28.42            28.30                  4.2
   Selling, general and administrative
      expenses                                     24.21            23.92                  5.0
   Restructuring charges and other                  2.70                                   n.m.
   Merger-related (credits) charges                (0.08)            0.01                  n.m.
   Operating profit                                 1.59             4.37                (62.3)
   Interest expense, net                           (1.16)           (1.00)                20.7
   Earnings before income taxes                     0.36             3.40                (88.9)
   Net earnings                                     0.18             2.05                (90.7)

   n.m. - not meaningful
</TABLE>

   Sales for the 26 weeks ended August 2, 2001,  increased by 3.7% over the same
period of the prior year.  Identical  store sales  increased 1.2% and comparable
store sales,  which  include  replacement  stores,  increased  1.6%.  During the
26 weeks ended August 2, 2001, the Company opened 39  combination  food and drug
stores,  1  conventional  store and  30  stand alone  drugstores,  while closing
12 combination food and drug stores,  10 conventional stores, 4 warehouse stores
and 16 drugstores.  The new stores include 7 stores that were acquired  in three
separate  transactions.  Net retail  square  footage  increased by 3.0% from the
prior year.  Management  estimates that there was overall  inflation in products
the Company sells of approximately 1.0% (annualized).

   Sales  results  for the 26 weeks  ended  August 2, 2001,  were the results of
trends  and  programs  similar  to  those  experienced  for  the  13 weeks ended
August 2, 2001, which are discussed in Results of Operations - Second Quarter.

   Gross profit,  as a percent to sales,  increased as a result of the continued
utilization of Company distribution  facilities,  increased buying efficiencies,
and lower  advertising  costs due to the elimination of incremental  advertising
costs incurred in the prior year associated with the Lucky banner change.  Gross
margin  increases  were  partially  offset by the Company's  initiative to drive
sales  through  more  aggressive  promotional  pricing.  The pre-tax LIFO charge
reduced  gross  profit by $15 (0.08% to sales) for the 26 weeks ended  August 2,
2001, as compared to $12 (0.07% to sales) for the 26 weeks ended August 3, 2000.


                                       15
<PAGE>
                                                                       FORM 10-Q


   Selling,  general and administrative  (SG&A) expenses, as a percent to sales,
increased  in  2001  as  compared  to the  prior  year  primarily  due to  costs
associated  with  asset  impairments  and  lease  terminations  related  to  the
acceleration of the disposal of surplus property (refer to "Restructuring  Plan"
below).  Increases in other components of SG&A, such as energy costs, health and
welfare  benefits,  and  depreciation  expense  associated  with  the  Company's
expansion program, were offset by lower labor, maintenance,  supplies and travel
costs. In addition,  the increase was partially  offset by a $20 charge recorded
during first quarter 2000 for certain  previously  assigned leases and subleases
to tenants who were in bankruptcy.

   The increase in net  interest  expense for the 26 weeks ended August 2, 2001,
resulted  primarily  from higher  average  outstanding  debt during the 26 weeks
ended  August 2, 2001,  as compared to the 26 weeks ended  August 3, 2000.  This
comparison  also  is  impacted  by a $16  interest  expense  reversal  due  to a
favorable income tax settlement recorded in the first quarter of 2000.

Restructuring Plan
   Refer to  "Restructuring  Plan"  included with Results of Operations - Second
Quarter.

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 ($6 after tax).

   The merger-related costs of integrating Albertson's, Inc. and American Stores
Company  have  resulted in  significant  non-recurring  charges and  incremental
expenses.  These  costs  have had a  significant  effect on the prior two years'
results of  operations  of the  Company.  Non-recurring  charges and expenses of
implementing  integration actions were originally  estimated to total $700 after
income tax benefits.  On an after-tax basis, and subsequent to the first quarter
of 1999,  the  Company  has  incurred  $633 of  merger-related  costs.  With the
exception of some system conversions,  the integration is substantially complete
and the Company does not expect to incur significant  additional charges related
to the merger.

Unusual Items
   During the quarter  ended May 3, 2001,  the  Company  recorded  (in  selling,
general and  administrative  expenses) $9 of compensation  related costs for the
executive management changes.

   During the quarter  ended May 4, 2000, a $20 charge was incurred and included
in selling,  general and  administrative  expenses  for  liabilities  related to
certain  previously  assigned  leases  and  subleases  to  tenants  who  are  in
bankruptcy.


                                       16
<PAGE>
                                                                       FORM 10-Q


   Due to the significance of the costs associated with the  restructuring  plan
and  merger-related  costs and other unusual items and their effect on operating
results,  the following table is presented to assist in the comparison of income
statement components without these costs:

<TABLE>
<CAPTION>
                                --------------------------------------------- ---------------------------------------------
                                         26 Weeks Ended August 2, 2001                26 Weeks Ended August 3, 2000
                                --------------------------------------------- ---------------------------------------------
                                                           Without    Percent                          Without      Percent
                                         As     Adjust-    adjust-         To         As    Adjust-    adjust-           To
                                   Reported       ments      Ments      Sales   Reported      Ments      Ments        Sales
                                ----------- ----------- ---------- ---------- ---------- ---------- ---------- ------------
<S>                                 <C>                    <C>         <C>       <C>                   <C>           <C>
Sales                               $18,908                $18,908     100.00%   $18,227               $18,227       100.00%
Cost of sales                        13,535                 13,535      71.58     13,069      $ (23)    13,046        71.57
                                ----------- ----------- ---------- ---------- ---------- ---------- ---------- ------------
Gross profit                          5,373                  5,373      28.42      5,158         23      5,181        28.43
Selling, general and
 administrative expenses              4,578        $(63)     4,515      23.88      4,360        (79)     4,281        23.49
Restructuring charges and
 other                                  510        (510)
Merger-related (credits)
 charges                                (15)         15                                1         (1)
                                ----------- ----------- ---------- ---------- ---------- ---------- ---------- ------------
Operating profit                        300         558        858       4.54        797        103        900         4.94
Interest, net                          (219)                  (219)     (1.16)      (182)                 (182)       (1.00)
Other (expense) income, net             (12)                   (12)     (0.06)         4                     4          .02
                                ----------- ----------- ---------- ---------- ---------- ---------- ---------- ------------
Earnings before income taxes             69         558        627       3.31        619        103        722         3.96
Income taxes                             34         223        257       1.36        246         39        285         1.56
                                ----------- ----------- ---------- ---------- ---------- ---------- ---------- ------------
Net Earnings                        $    35        $335    $   370       1.96%   $   373      $  64    $   437         2.40%
                                =========== =========== ========== ========== ========== ========== ========== ============

Earnings per share:
   Basic                              $0.09       $0.82      $0.91                 $0.88      $0.15      $1.03
   Diluted                             0.09        0.82       0.91                  0.88       0.15       1.03
</TABLE>


                                       17
<PAGE>
                                                                       FORM 10-Q


Liquidity and Capital Resources
   Cash  provided by  operating  activities  during the 26 weeks ended August 2,
2001 was $1,007 as compared to $1,243 in the prior year.  Net loss  adjusted for
noncash  charges,  changes in deferred  income taxes and changes in income taxes
payable for the 26 weeks ended  August 2, 2001,  was $243 as compared to $348 in
the prior year.  In  addition,  less cash was  generated  from the  reduction of
inventory levels in the current year as compared to the prior year.

   The implementation of the strategic imperative to maximize return on invested
capital (see operational  initiatives) is expected to enhance working capital by
eliminating  unproductive  assets,  reducing  inventory and accounts  receivable
levels and increasing accounts payable leverage. These improvements are expected
to reduce the cash requirements of the business.  The future sale(s) of property
held for sale over the next several quarters is expected to provide  significant
positive cash flow for the Company.

   The Company's cash flow from financing  activities  during the 26 weeks ended
August 2, 2001, include net cash used for debt repayment of $157 and the payment
of dividends of $154.

   The Board of Directors adopted a program on April 25, 2000, authorizing,  but
not  requiring,  the Company to purchase and retire up to $500 of the  Company's
common stock. This program was increased by an additional $1,000 by the Board of
Directors  on  December  6, 2000,  for a total of $1,500.  The  revised  program
enables the Company to purchase  stock  through  December 6, 2001.  No purchases
were made during the 26 weeks ended  August 2, 2001.  As of August 2, 2001,  the
Company has purchased and retired 18.7 million shares at a total cost of $451 or
an average price of $24.15 per share under this authorization.

   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 $410
of commercial  paper  borrowings  outstanding as of August 2, 2001,  compared to
$1,153 as of February 1, 2001, and $1,028 as of August 3, 2000.

   The Company has two revolving credit  agreements which provide for borrowings
up to $1,650 and a committed bank line of $100. These agreements contain certain
covenants,  the most  restrictive  of which  requires  the  Company to  maintain
consolidated  tangible net worth (CTNW), as defined,  of at least $2,100. At the
end of second quarter 2001, CTNW, as defined,  was  approximately  $4,000. As of
August 2, 2001, no amounts were outstanding  under the credit agreements or bank
line.

   On May 1, 2001, the Company issued $600 of term notes and debentures  under a
shelf registration  statement filed with the Securities and Exchange  Commission
in February 2001 (the "2001 Registration Statement"). The notes are comprised of
$200 of principal  bearing interest at 7.25% due May 2013 and the debentures are
comprised of $400 of principal bearing interest at 8.00% due May 2031.  Proceeds
were used to repay  amounts  outstanding  under the Company's  commercial  paper
program and other general corporate purposes. Additional securities up to $2,400
of principal remain available for issuance under the Company's 2001 Registration
Statement.


                                       18
<PAGE>
                                                                       FORM 10-Q


Certain Accounting Matters
   In  June  2001,  the  Financial  Accounting  Standard  Board  issued  two new
pronouncements:  Statement of Financial  Accounting  Standards ("SFAS") No. 141,
"Business  Combinations"  and SFAS  No.  142,  "Goodwill  and  Other  Intangible
Assets." SFAS No. 141,  which  is  effective  for  acquisitions  initiated after
June 30, 2001, prohibits the use of the pooling-of-interest method for  business
combinations and establishes the accounting and financial reporting requirements
for business  combinations  accounted for by the purchase  method.  SFAS No. 142
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.  Existing  goodwill  will  continue to be
amortized  through the remainder of fiscal 2001 at which time  amortization will
cease and the Company will perform a transitional goodwill impairment test. SFAS
No. 142 is effective for fiscal periods  beginning  after December 15, 2001. The
Company is currently  evaluating the impact of the new  accounting  standards on
existing goodwill and other intangible assets.  While the ultimate impact of the
new accounting standards has yet to be determined, goodwill amortization expense
for the 26 weeks ended August 2, 2001, was $28, $0.07 per diluted share.

   On February 2, 2001, the Company  adopted  Statement of Financial  Accounting
Standards No. 133 ("SFAS  133"),  "Accounting  for  Derivative  Instruments  and
Hedging  Activities,"  as amended.  This new standard,  as amended,  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.  The  adoption  of this  statement  resulted  in no  transition
adjustment or significant impact on financial results.

   The Company utilizes derivative  contracts,  such as treasury rate locks, for
hedging interest rate risk associated with issuances of debt. During the quarter
ended  August 2, 2001,  there were no  transactions.  There were no  outstanding
derivative contracts as of August 2, 2001.

Operational Initiatives
   The  Company  is  focused  on five  strategic  imperatives  with  the goal of
achieving the Company's full potential.

1) Aggressive cost and process control has been implemented.  Each main category
   of expense,  including  labor, is being  rigorously  monitored by a member of
   executive  management.  As a result of these actions, the Company will reduce
   administrative  and corporate  overhead through the Board approved  Voluntary
   Separation Plan and Involuntary Severance Plan.

2) A formal process to review and measure investments, starting with a review of
   significant  assets in the  Company  and using a return on  invested  capital
   approach, has been implemented. This review resulted in the identification of
   165  underperforming  stores  which the  Company has  committed  to close and
   dispose of. In addition,  the Company has formulated  plans to accelerate the
   disposal of surplus property.

                                       19
<PAGE>
                                                                       FORM 10-Q

3) A  customer-focused  approach  to growth is being  implemented  by  examining
   elements  of  the  customer  proposition.  The  Company  plans  to  re-direct
   non-value added dollars saved from the expense and process  control  programs
   back into the marketplace in order to impact customers and drive growth.

4) The Company  plans to commit a greater share of its capital  expenditures  to
   information and process technology over the next three to five years with the
   goal of becoming an industry leader in technology.

5) The Company will strive to make  Albertson's  an employer of choice with less
   bureaucracy,  fewer  layers of  management,  stronger  communication,  better
   training programs and exciting new reward programs.

Environmental
   The  Company  has  identified   environmental   contamination  sites  related
primarily to underground  petroleum storage tanks and ground water contamination
at various store,  warehouse,  office and manufacturing  facilities  (related to
current  operations as well as previously  disposed of businesses).  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 environmental contamination site unless an unfavorable
outcome is remote.  Although the ultimate  outcome and expense of  environmental
remediation 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  of the
Company.  Charges  against  earnings  for  environmental  remediation  were  not
material for the 26 weeks ended August 2, 2001,  or the 26 weeks ended August 3,
2000.

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  numerous
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  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,  the cost and stability of energy
sources, 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

                                       20
<PAGE>
                                                                       FORM 10-Q

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.

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 pages 27 and 28 of the Company's
2000 Annual Report to Stockholders.

                           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 10 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  $1,650  revolving  credit  agreement,  the
Company's  consolidated  tangible net worth, as defined,  shall not be less than
$2,100.

Item 3.  Defaults upon Senior Securities
   Not applicable.

Item 4.  Submission of Matters to a Vote of Security Holders
   The Company held its Annual  Meeting of  Stockholders  on June 14, 2001,  and
transacted the following business:

    (a)  Election of Class III Directors:

<TABLE>
<CAPTION>
                    Nominee                   Votes For        Votes Withheld
         --------------------------- ------------------- ---------------------
<S>      <C>                                <C>                    <C>
         Cecil D. Andrus                    338,939,933             6,804,282
         Pamela G. Bailey                   338,855,549             6,888,666
         J.B. Scott                         334,670,663            11,073,552
         Will M. Storey                     339,289,404             6,454,811
</TABLE>

         Election of Class II Directors:
<TABLE>
<CAPTION>

                    Nominee                   Votes For        Votes Withheld
         --------------------------- ------------------- ---------------------
<S>      <C>                                <C>                     <C>
         Henry I. Bryant                    338,885,920             6,858,295
</TABLE>

         Continuing Class I Directors (Term expiring in 2002):

<TABLE>
<S>      <C>                                             <C>
         Teresa Beck                                     Clark A. Johnson
         Lawrence R. Johnston                            Victor L. Lund
</TABLE>


                                       21
<PAGE>
                                                                       FORM 10-Q


         Continuing Class II Directors (Term expiring in 2003):

<TABLE>
<S>      <C>                                             <C>
         Gary Ames                                       Paul I. Corddry
         Beatriz Rivera
</TABLE>

         Director Emeritus:

         Kathryn Albertson

    (b)  Ratification of Appointment of Independent Auditors:

<TABLE>
<CAPTION>
                                              Votes                                     Broker
                    Votes For               Against          Abstentions              Nonvotes
         -------------------- --------------------- -------------------- ---------------------
<S>               <C>                     <C>                  <C>                           <C>
                  342,059,310             2,213,962            1,470,943                     0
</TABLE>

    (c)  To recommend the Albertson's Inc. Amended and Restated 1995 Stock-Based
         Incentive Plan:

<TABLE>
<CAPTION>
                                              Votes                                     Broker
                    Votes For               Against          Abstentions              Nonvotes
         -------------------- --------------------- -------------------- ---------------------
<S>               <C>                    <C>                   <C>                           <C>
                  314,131,279            29,310,568            2,302,368                     0
</TABLE>

    (d)  To recommend declassification of the Board of Directors:

<TABLE>
<CAPTION>
                                              Votes                                     Broker
                    Votes For               Against          Abstentions              Nonvotes
         -------------------- --------------------- -------------------- ---------------------
<S>               <C>                   <C>                    <C>                  <C>
                  178,080,117           119,681,046            2,884,539            45,098,513
</TABLE>

    (e)  Stockholder  proposal  to  identify  and  label  genetically engineered
         foods:

<TABLE>
<CAPTION>
                                              Votes                                     Broker
                    Votes For               Against          Abstentions              Nonvotes
         -------------------- --------------------- -------------------- ---------------------
<S>                <C>                  <C>                   <C>                   <C>
                   17,462,273           270,614,110           12,569,319            45,098,513
</TABLE>

    (f)  Stockholder   proposal  to  adopt  a   policy  that  executive  officer
         severance pay  over  $3 million  must be approved  by the  shareholders
         as a separate issue for vote:

<TABLE>
<CAPTION>
                                              Votes                                     Broker
                    Votes For               Against          Abstentions              Nonvotes
         -------------------- --------------------- -------------------- ---------------------
<S>               <C>                   <C>                    <C>                  <C>
                  104,080,952           191,041,109            5,523,641            45,098,513
</TABLE>

    (g)  Stockholder  proposal to  adopt the  CERES Principles for environmental
         accountability:

<TABLE>
<CAPTION>
                                              Votes                                     Broker
                    Votes For               Against          Abstentions              Nonvotes
         -------------------- --------------------- -------------------- ---------------------
<S>                <C>                  <C>                   <C>                   <C>
                   20,364,455           268,159,512           12,121,735            45,098,513
</TABLE>


Item 5.  Other Information
   On July  17,  2001,  the size of the  Board of  Directors  was  increased  to
thirteen and Peter L. Lynch was  appointed to the Board as a Class I Director to
serve a term expiring on the date of the Annual Meeting of Stockholders in 2002.

   On August 22, 2001,  Felicia D. Thornton was named  Executive  Vice President
and Chief Financial Officer.


                                       22
<PAGE>
                                                                       FORM 10-Q


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

         10.36     Employment Agreement between Peter L. Lynch and  Albertson's,
                   Inc. dated January 26, 2001.

         10.36.1   Amendment to Employment Agreement  between Peter L. Lynch and
                   Albertson's, Inc. dated April 23, 2001.

         10.37     Agreement between Peter L. Lynch and  Albertson's, Inc. dated
                   June 18, 1999.

         10.38     Albertson's Voluntary Separation Plan for  Officers effective
                   July 18, 2001.

         10.39     Albertson's  Severance  Plan for Officers effective  July 18,
                   2001.

         10.40     Employment  Agreement  between  the  Company  and  Felicia D.
                   Thornton dated August 6, 2001.


   b.    There  were  no  reports on  Form 8-K  filed during  the  quarter ended
         August 2, 2001.



                                    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 12, 2001          /S/ Felicia D. Thornton
                                     -------------------------------------------
                                     Felicia D. Thornton
                                     Executive Vice President
                                       and Chief Financial Officer













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