##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 For the 13 Weeks Ended: May 4, 2006
 Registrant, State of Incorporation,Commission File No.
    
    Address and Telephone Number
    
    I.R.S. Employer Identification No.1-6187
    
    Albertsons, Inc.
    
    82-0184434Delaware250 Parkcenter Blvd.PO Box 20Boise, Idaho 83726(208) 395-6200333-132397-01
    
    New Albertsons, Inc.
    
    20-4057706Delaware250 Parkcenter Blvd.PO Box 20Boise, Idaho 83726(208) 395-6200
  Albertsons, Inc.
    
    Yes þ No oNew Albertsons, Inc.
    
    Yes þ No o
  Large
    
    Accelerated
    
    Non-AcceleratedAccelerated Filer
    
    Filer
    
    FilerAlbertsons, Inc
    
    þNew Albertsons, Inc
    
    
    
    
    
    þ
  Albertsons, Inc.
    
    Yes o No þNew Albertsons, Inc.
    
    Yes
o No þ
  New Albertsons, Inc. meets the conditions set forth in General Instruction (H)(1)(a) and (b)
of Form 10-Q and is therefore filing this Form with the reduced disclosure format permitted by such
instruction.




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##### 



ALBERTSONS INC.
INDEX
 PART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements  Albertsons, Inc. (Unaudited)Condensed Consolidated Earnings Statements for the 13 weeks ended May 4, 2006
and May 5, 2005
    
    
    3Condensed Consolidated Balance Sheets as of May 4, 2006 and February 2, 2006
    
    
    4Condensed Consolidated Cash Flow Statements for the 13 weeks ended May 4, 2006
and May 5, 2005
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Report of Independent Registered Public Accounting Firm
    
    
    19Financial Statements  New Albertsons, Inc. (Unaudited)Consolidated Earnings Statement for the 13 weeks ended May 4, 2006
    
    
    20Consolidated Balance Sheets as of May 4, 2006 and February 2, 2006
    
    
    21Consolidated Cash Flow Statement for the 13 weeks ended May 4, 2006
    
    
    22Notes to Consolidated Financial Statements
    
    
    23Report of Independent Registered Public Accounting Firm
    
    
    25Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    26Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    31Item 4.
    
    Controls and Procedures
    
    
    31PART II
    
    OTHER INFORMATIONCautionary Statement
    
    
    32Item 1.
    
    Legal Proceedings
    
    
    32Item 1A.
    
    Risk Factors
    
    
    33Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    34Item 3.
    
    Defaults Upon Senior Securities
    
    
    34Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    34Item 5.
    
    Other Information
    
    
    34Item 6.
    
    Exhibits
    
    
    35EXHIBIT 10.4.2EXHIBIT 10.6.5EXHIBIT 10.10.5EXHIBIT 10.13.8EXHIBIT 10.13.9EXHIBIT 10.14.3EXHIBIT 10.15.4EXHIBIT 10.20.7EXHIBIT 10.21.5EXHIBIT 10.30.2EXHIBIT 10.43.1EXHIBIT 10.44.1EXHIBIT 10.45.1EXHIBIT 10.47.1EXHIBIT 10.48.1EXHIBIT 10.49EXHIBIT 10.62.1EXHIBIT 10.64EXHIBIT 10.65EXHIBIT 15.01EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 31.3EXHIBIT 31.4EXHIBIT 32.1EXHIBIT 32.2
  2




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PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 ALBERTSONS, INC.
 
 CONDENSED CONSOLIDATED EARNINGS STATEMENTS
(Unaudited)
 13 Weeks EndedMay 4,
    
    
    May 5,(In millions, except per share data)
    
    2006
    
    
    2005Sales
    
    $
    9,940
    
    
    $
    9,993Cost of sales
    
    
    7,097
    
    
    
    7,183Gross profit
    
    
    2,843
    
    
    
    2,810Selling, general and administrative expenses
    
    
    2,462
    
    
    
    2,517Operating profit
    
    
    381
    
    
    
    293Other expenses (income):Interest, net
    
    
    119
    
    
    
    132Other, net
    
    
    (1
    )
    
    
    (1
    )Earnings from continuing operations before income taxes
    
    
    263
    
    
    
    162Income tax expense
    
    
    97
    
    
    
    55Earnings from continuing operations
    
    
    166
    
    
    
    107Income (loss) from discontinued operations, net of tax
expense of $1 and tax benefit of $5
    
    
    1
    
    
    
    (7
    )Net earnings
    
    $
    167
    
    
    $
    100Earnings (loss) per share*:BasicContinuing operations
    
    $
    0.45
    
    
    $
    0.29Discontinued operations
    
    
    
    
    
    
    (0.02
    )Net earnings
    
    
    0.45
    
    
    
    0.27DilutedContinuing operations
    
    $
    0.44
    
    
    $
    0.29Discontinued operations
    
    
    
    
    
    
    (0.02
    )Net earnings
    
    
    0.45
    
    
    
    0.27Weighted average common shares outstanding:Basic
    
    
    372
    
    
    
    370Diluted
    
    
    375
    
    
    
    371
 
 *
    
    May not sum due to rounding  3




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ALBERTSONS, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 May 4,
    
    
    February 2,(In millions, except par value data)
    
    2006
    
    
    2006ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    580
    
    
    $
    406Accounts and notes receivable (net of allowance for doubtful
accounts of $15 and $18, respectively)
    
    
    718
    
    
    
    723Inventories, net
    
    
    3,069
    
    
    
    3,036Assets held for sale
    
    
    15
    
    
    
    22Prepaid and other
    
    
    185
    
    
    
    168Total Current Assets
    
    
    4,567
    
    
    
    4,355Land, buildings and equipment (net of accumulated depreciation and
amortization of $8,207 and $8,110, respectively)
    
    
    9,724
    
    
    
    9,903Goodwill
    
    
    2,269
    
    
    
    2,269Intangibles, net
    
    
    834
    
    
    
    844Other assets
    
    
    501
    
    
    
    500Total Assets
    
    $
    17,895
    
    
    $
    17,871LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable and accrued liabilities
    
    $
    2,314
    
    
    $
    2,203Salaries and related liabilities
    
    
    586
    
    
    
    743Self-insurance liabilities
    
    
    273
    
    
    
    276Current maturities of long-term debt and capital lease obligations
    
    
    50
    
    
    
    51Other current liabilities
    
    
    658
    
    
    
    607Total Current Liabilities
    
    
    3,881
    
    
    
    3,880Long-term debt
    
    
    5,401
    
    
    
    5,422Capital lease obligations
    
    
    853
    
    
    
    856Self-insurance liabilities
    
    
    721
    
    
    
    691Other long-term liabilities and deferred credits
    
    
    1,155
    
    
    
    1,315Commitments and contingenciesStockholders Equity:Preferred stock - $1.00 par value; authorized - 10 shares;
designated  3 shares of Series A Junior Participating; issued 
none
    
    
    
    
    
    
    Common stock - $1.00 par value; authorized - 1,200 shares; issued
 371 shares and 370 shares, respectively
    
    
    371
    
    
    
    370Capital in excess of par
    
    
    159
    
    
    
    122Accumulated other comprehensive loss
    
    
    (40
    )
    
    
    (83
    )Retained earnings
    
    
    5,394
    
    
    
    5,298Total Stockholders Equity
    
    
    5,884
    
    
    
    5,707Total Liabilities and Stockholders Equity
    
    $
    17,895
    
    
    $
    17,871
  4




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ALBERTSONS, INC.
 
 CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited)
 13 Weeks EndedMay 4,
    
    
    May 5,(In millions)
    
    2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net earnings
    
    $
    167
    
    
    $
    100Adjustments to reconcile net earnings to net cash
provided by operating activities:Depreciation and amortization
    
    
    288
    
    
    
    291Net deferred income taxes
    
    
    (26
    )
    
    
    (12
    )Other noncash charges
    
    
    6
    
    
    
    5Stock-based compensation
    
    
    13
    
    
    
    5Gain on curtailment of pension plans
    
    
    (47
    )
    
    
    Net gain on asset sales
    
    
    (24
    )
    
    
    (15
    )Discontinued operations noncash charges
    
    
    
    
    
    
    13Changes in operating assets and liabilities:Receivables and prepaid expenses
    
    
    (15
    )
    
    
    (29
    )Inventories
    
    
    (32
    )
    
    
    (46
    )Accounts payable and accrued liabilities
    
    
    127
    
    
    
    175Other current liabilities
    
    
    (104
    )
    
    
    (179
    )Self-insurance liabilities
    
    
    26
    
    
    
    22Unearned income
    
    
    (24
    )
    
    
    (36
    )Other long-term liabilities
    
    
    (17
    )
    
    
    15Net cash provided by operating activities
    
    
    338
    
    
    
    309CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (175
    )
    
    
    (212
    )Proceeds from disposal of land, buildings and equipment
    
    
    51
    
    
    
    82Proceeds from disposal of assets held for sale
    
    
    7
    
    
    
    8Other
    
    
    1
    
    
    
    (1
    )Net cash used in investing activities
    
    
    (116
    )
    
    
    (123
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net commercial paper activity
    
    
    
    
    
    
    (135
    )Payments on long-term borrowings
    
    
    (9
    )
    
    
    (9
    )Dividends paid
    
    
    (70
    )
    
    
    (70
    )Proceeds from stock options exercised
    
    
    31
    
    
    
    1Net cash used in financing activities
    
    
    (48
    )
    
    
    (213
    )Net increase (decrease) in cash and cash equivalents
    
    
    174
    
    
    
    (27
    )Cash and cash equivalents at beginning of period
    
    
    406
    
    
    
    273Cash and cash equivalents at end of period
    
    $
    580
    
    
    $
    246Supplemental Cash Flow Information:Debt assumed by counterparty upon disposal of property
    
    $
    18
    
    
    $
    
  5




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ALBERTSONS, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
(Dollars in millions, except per share data)
 NOTE 1  THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES
 Business Description and Basis of Presentation
      Definitive Agreement to Sell the Company
   Use of Estimates
  6




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Cash and Cash Equivalents
   Inventories
   Comprehensive
Income
  Reclassifications
   NOTE 2  NEW AND RECENTLY ADOPTED ACCOUNTING STANDARDS
   7




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NOTE 3 DISCONTINUED OPERATIONS, RESTRUCTURING ACTIVITIES AND CLOSED STORES
  Discontinued Operations
      13 Weeks EndedMay 4,
    
    
    May 5,2006
    
    
    2005Sales
    
    $
    
    
    
    $
    20Loss from operations
    
    $
    (1
    )
    
    $
    (1
    )Gain (loss) on disposal
    
    
    3
    
    
    
    (11
    )Income tax (expense) benefit
    
    
    (1
    )
    
    
    5Income (loss) from discontinued operations
    
    $
    1
    
    
    $
    (7
    )
 8




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##### Table of Contents



Restructuring Activities
   Balance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    BalanceFebruary 2,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    May 4,2006
    
    
    Additions
    
    
    Payments
    
    
    Adjustments
    
    
    20062004 Discontinued Operations
    
    $
    2
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    22002 Discontinued Operations
    
    
    10
    
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    72001 Restructuring Activities
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8Closed Stores
    
    
    15
    
    
    
    1
    
    
    
    (2
    )
    
    
    1
    
    
    
    15$
    35
    
    
    $
    1
    
    
    $
    (5
    )
    
    $
    1
    
    
    $
    32
  NOTE 4  INTANGIBLES
  May 4,
    
    
    February 2,2006
    
    

2006Amortizing:Favorable acquired operating leases
    
    $
    454
    
    
    $
    464Customer lists and other contracts
    
    
    34
    
    
    
    35Loyalty card and other
    
    
    37
    
    
    
    37525
    
    
    
    536Accumulated amortization
    
    
    (151
    )
    
    
    (152
    )374
    
    
    
    384Non-Amortizing:Trade names
    
    
    422
    
    
    
    422Liquor licenses
    
    
    38
    
    
    
    38460
    
    
    
    460Intangibles, net
    
    $
    834
    
    
    $
    844
  9




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NOTE 5  EMPLOYEE BENEFIT PLANS
  13 Weeks EndedMay 4,
    
    
    May 5,2006
    
    
    2005Service cost  benefits earned during the period
    
    $
    10
    
    
    $
    9Interest cost on projected benefit obligations
    
    
    18
    
    
    
    16Expected return on assets
    
    
    (20
    )
    
    
    (16
    )Amortization of prior service credit
    
    
    (2
    )
    
    
    (2
    )Recognized net actuarial loss
    
    
    3
    
    
    
    4Curtailment gain
    
    
    (47
    )
    
    
    Net periodic benefit (gain) expense
    
    $
    (38
    )
    
    $
    11
    May 4,2006Change in projected benefit obligation:Projected benefit obligation at February 2, 2006
    
    $
    1,267Service cost
    
    
    10Interest cost
    
    
    18Actuarial gain
    
    
    (104
    )Curtailment effect
    
    
    (36
    )Benefits paid
    
    
    (9
    )Projected benefit obligation at May 4, 2006
    
    
    1,146Change in plan assets:Fair value of plan assets at February 2, 2006
    
    
    999Actual return on plan assets
    
    
    41Employer contributions
    
    
    1Benefits paid
    
    
    (9
    )Fair value of plan assets at May 4, 2006
    
    
    1,032Funded status
    
    
    (114
    )Unrecognized net actuarial loss
    
    
    55Net amount recognized
    
    $
    (59
    )
 10




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May 4,2006Accrued benefit liability
    
    $
    (128
    )Accumulated other comprehensive loss, net of taxes
    
    
    42Deferred income taxes
    
    
    27Net amount recognized
    
    $
    (59
    )
   May 4,
    
    
    February 2,2006
    
    
    2006Weighted average assumptions used to determine benefit obligation:Discount rate
    
    
    6.35
    %
    
    
    5.75
    %Rate of compensation increase
    
    
    2.98-3.75
    
    
    
    2.98-3.75Weighted average assumptions used to determine net periodic benefit cost:Discount rate
    
    
    5.75
    
    
    
    5.40-5.45Rate of compensation increase
    
    
    2.98-3.75
    
    
    
    2.98-3.75Expected long-term return on plan assets (1)
    
    
    8.00
    
    
    
    8.00
 
 (1)
    
    Expected long-term return on plan assets is estimated by asset class and is generally based
on historical returns, volatilities and risk premiums. Based upon an individual plans asset
allocation, composite return percentiles are developed upon which the plans expected
long-term return is based. NOTE 6  INDEBTEDNESS
 Revolving Credit Facilities
  Mandatory Convertible Security Offering
  11




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12




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Shelf Registration
  NOTE 7  CONTINGENCIES
     13




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14




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NOTE 8  INCOME TAXES
  NOTE 9  COMPUTATION OF EARNINGS PER SHARE
 13 Weeks EndedMay 4, 2006
    
    
    May 5, 2005Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedEarnings (loss) from:Continuing operations
    
    $
    166
    
    
    $
    166
    
    
    $
    107
    
    
    $
    107Discontinued operations
    
    
    1
    
    
    
    1
    
    
    
    (7
    )
    
    
    (7
    )Net earnings
    
    $
    167
    
    
    $
    167
    
    
    $
    100
    
    
    $
    100Weighted average common shares outstanding
    
    
    372
    
    
    
    372
    
    
    
    370
    
    
    
    370Potential common share equivalents
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    1Weighted average shares outstanding
    
    
    
    
    
    
    375
    
    
    
    
    
    
    
    371Earnings (loss) per common share and common
share equivalents *:Continuing operations
    
    $
    0.45
    
    
    $
    0.44
    
    
    $
    0.29
    
    
    $
    0.29Discontinued operations
    
    
    
    
    
    
    
    
    
    
    (0.02
    )
    
    
    (0.02
    )Net earnings
    
    
    0.45
    
    
    
    0.45
    
    
    
    0.27
    
    
    
    0.27Calculation of potential common share equivalents:Potential common shares assumed issued from
exercise of the Corporate Units
    
    
    
    
    
    
    45
    
    
    
    
    
    
    
    Options to purchase potential common shares
    
    
    
    
    
    
    24
    
    
    
    
    
    
    
    9Potential common shares assumed purchased
with potential proceeds
    
    
    
    
    
    
    (66
    )
    
    
    
    
    
    
    (8
    )Potential common share equivalents
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    1Calculation of potential common shares
assumed purchased with potential proceeds:Potential proceeds from assumed exercise of
the Corporate Units
    
    
    
    
    
    $
    1,150
    
    
    
    
    
    
    $
    Potential proceeds from exercise of options
to purchase common shares
    
    
    
    
    
    
    534
    
    
    
    
    
    
    
    177Total assumed proceeds from exercise
    
    
    
    
    
    $
    1,684
    
    
    
    
    
    
    $
    177Common stock price used under treasury
stock method
    
    
    
    
    
    $
    25.45
    
    
    
    
    
    
    $
    20.97Potential common shares assumed
purchased with potential proceeds
    
    
    
    
    
    
    66
    
    
    
    
    
    
    
    8
 
 *
    
    May not sum due to rounding  15




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NOTE 10  STOCK OPTIONS AND STOCK UNIT AWARDS
   Adoption of New Standard:
  Stock Options:
  WeightedWeighted
    
    AverageShares under
    
    Average
    
    Remaining
    
    AggregateOption
    
    Exercise
    
    Contractual
    
    Intrinsic(thousands)
    
    Price
    
    Term
    
    ValueOutstanding at February 2, 2006
    
    
    34,395
    
    
    $
    28.30
    
    
    
    5.8
    
    
    $
    65Granted
    
    
    459
    
    
    
    25.34Exercised
    
    
    (1,345
    )
    
    
    21.75Forfeited / Expired
    
    
    (1,421
    )
    
    
    32.79Outstanding at May 4, 2006
    
    
    32,088
    
    
    $
    28.33
    
    
    
    6.0
    
    
    $
    62Vested and expected to vest in the future at May 4, 2006
    
    
    30,805
    
    
    $
    28.33
    
    
    
    6.0
    
    
    $
    59Exercisable at May 4, 2006
    
    
    20,451
    
    
    $
    31.43
    
    
    
    4.9
    
    
    $
    28
  16




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13 Weeks EndedMay 4, 2006
    
    
    May 5, 2005Dividend yield
    
    
    2.26
    %
    
    
    3.39
    %Volatility rate
    
    
    30.50
    %
    
    
    37.60
    %Risk-free interest rate
    
    
    4.92
    %
    
    
    4.00
    %Expected option life (years)
    
    
    4 - 8
    
    
    
    4 - 8
 Stock Units:
  Weighted AverageStock Units
    
    Grant Date Fair(thousands)
    
    ValueOutstanding and nonvested at February 2, 2006
    
    
    5,279
    
    
    $
    23.09Granted
    
    
    140
    
    
    
    25.34Vested
    
    
    (75
    )
    
    
    23.26Forfeited
    
    
    (178
    )
    
    
    21.50Outstanding and nonvested at May 4, 2006
    
    
    5,166
    
    
    $
    23.12
  Compensation Expense:
 13 Weeks EndedMay 4,
    
    
    May 5,2006
    
    
    2005Stock options
    
    $
    6
    
    
    $
    Stock units
    
    
    7
    
    
    
    5Tax benefits
    
    
    (5
    )
    
    
    (2
    )$
    8
    
    
    $
    3
  Unrecognized Compensation Expense:
 17




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Pro Forma Compensation Expense:
 13 Weeks EndedMay 5, 2005Net earnings as reported
    
    $
    100Add: Share-based compensation expense included in reported
Net earnings, net of related tax effects
    
    
    3Deduct: Total share-based compensation expense determined
under fair value based method for all awards, net of
related tax effects
    
    
    (9
    )Pro forma net earnings
    
    $
    94Basic earnings per share:As reported
    
    $
    0.27Pro forma
    
    
    0.25Diluted earnings per share:As reported
    
    $
    0.27Pro forma
    
    
    0.25
 NOTE 11  SUBSEQUENT EVENT
   18




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     /s/ DELOITTE & TOUCHE LLP
 
 19




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NEW ALBERTSONS, INC.
(a wholly owned subsidiary of Albertsons, Inc.)
 
 CONSOLIDATED EARNINGS STATEMENT
(Unaudited)
 13 Weeks Ended(In dollars)
    
    May 4, 2006Sales
    
    $
    Cost of sales
    
    
    Gross profit
    
    
    Selling, general and administrative expenses
    
    
    1,281,747Operating loss
    
    
    (1,281,747
    )Interest, net
    
    
    Loss from operations before income taxes
    
    
    (1,281,747
    )Income tax expense
    
    
    Net loss
    
    $
    (1,281,747
    )
  20




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NEW ALBERTSONS, INC.
(a wholly owned subsidiary of Albertsons, Inc.)
 
 CONSOLIDATED BALANCE SHEETS
(Unaudited)
 May 4,
    
    
    February 2,(In dollars)
    
    2006
    
    
    2006ASSETSTotal Assets
    
    $
    
    
    
    $
    LIABILITIES AND STOCKHOLDERS EQUITYTotal Liabilities
    
    $
    
    
    
    $
    Stockholders Equity:Common stock
 $.01 par value; authorized  1,000 shares; issued  100 shares
    
    
    1
    
    
    
    1Subscription receivable
    
    
    (1
    )
    
    
    (1
    )Capital in excess of par
    
    
    1,281,747
    
    
    
    Retained deficit
    
    
    (1,281,747
    )
    
    
    Total Stockholders Equity
    
    
    
    
    
    
    Total Liabilities and Stockholders Equity
    
    $
    
    
    
    $
    
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NEW ALBERTSONS, INC.
(a wholly owned subsidiary of Albertsons, Inc.)
 
 CONSOLIDATED CASH FLOW STATEMENT
(Unaudited)
 13 Weeks Ended(In dollars)
    
    May 4, 2006CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (1,281,747
    )Net cash used in operating activities
    
    
    (1,281,747
    )CASH FLOWS FROM FINANCING ACTIVITIES:Capital contribution from parent
    
    
    1,281,747Net cash provided by financing activities
    
    
    1,281,747Net change in cash and cash equivalents
    
    
    Cash and cash equivalents at beginning of period
    
    
    Cash and cash equivalents at end of period
    
    $
    
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NEW ALBERTSONS, INC.
(a wholly owned subsidiary of Albertsons, Inc.)
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In dollars)
 NOTE 1
 THE COMPANY AND BASIS OF PRESENTATION
 Business Description and Basis of Presentation
   Fiscal Year End
  NOTE 2  DEFINITIVE AGREEMENT TO SELL ALBERTSONS
    
    
    First, Albertsons will become a subsidiary of New Albertsons. This will be effected by
a merger of New Diamond Sub into Albertsons. In this transaction (the Reorganization
Merger), stockholders of Albertsons will receive one share of New Albertsons common stock
in exchange for each share of Albertsons common stock that they hold.
    
    After the Reorganization Merger, Albertsons will be converted to a limited liability
company (Albertsons LLC), and a series of reorganization transactions will occur. The
result of these transactions (the Albertsons Reorganization) will be that Albertsons LLC
and its subsidiaries will hold substantially all of the assets of Albertsons historical
stand-alone drug store and non-core supermarket businesses, and certain liabilities of
Albertsons historical business, while New Albertsons and its other subsidiaries will hold
substantially all of the assets and liabilities of Albertsons core supermarket business
(the Core Business).
    
    After the Albertsons Reorganization, CVS will purchase substantially all of the assets
and assume specified liabilities of the stand-alone drug store business from New
Albertsons, Albertsons LLC and certain of their subsidiaries (the Stand-alone Drug
Sale).
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##### Table of Contents




    
    Concurrently with the Stand-alone Drug Sale, the Cerberus Group, via AB Acquisition
LLC, a newly formed entity owned by the Cerberus Group, will purchase substantially all of
Albertsons non-core supermarket business (the Non-Core Business), including the equity
interests in Albertsons LLC, and will assume certain liabilities related to the Non-Core
Business.
    
    Finally, Emerald Acquisition Sub, Inc., a wholly owned subsidiary of Supervalu, will
merge into New Albertsons. In this merger, New Albertsons will become a wholly owned
subsidiary of Supervalu, and each outstanding share of New Albertsons common stock will be
converted into the right to receive $20.35 in cash and 0.182 shares of Supervalu common
stock.
  NOTE 3
 SUBSEQUENT EVENT
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    /s/ DELOITTE & TOUCHE LLP
 
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MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in millions, except per share data)
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
 Definitive Agreement to Sell the Company
    
    
    First, Albertsons will become a subsidiary of New Albertsons, Inc. (New Albertsons
and formerly, New Aloha Corporation). This will be effected by the merger of a wholly
owned subsidiary of New Albertsons (New Diamond Sub) into Albertsons. In this
transaction (the Reorganization Merger), stockholders of Albertsons will receive one
share of New Albertsons common stock in exchange for each share of Albertsons common stock
that they hold. New Albertsons was incorporated on December 20, 2005 under the laws of the
State of Delaware and is a wholly owned subsidiary of Albertsons. New Albertsons was
formed to facilitate the series of transactions described herein, whereby Albertsons will
become a wholly owned subsidiary of New Albertsons and upon completion of the
transactions, New Albertsons will become a wholly owned subsidiary of Supervalu.
    
    After the Reorganization Merger, Albertsons will be converted to a limited liability
company (Albertsons LLC), and a series of reorganization transactions will occur. The
result of these transactions (the Albertsons Reorganization) will be that Albertsons LLC
and its subsidiaries will hold substantially all of the assets of Albertsons historical
stand-alone drug store and non-core supermarket businesses, and certain liabilities of
Albertsons historical business, while New Albertsons and its other subsidiaries will hold
substantially all of the assets and liabilities of Albertsons core supermarket business
(the Core Business).
    
    After the Albertsons Reorganization, CVS will purchase substantially all of the assets
and assume specified liabilities of the stand-alone drug store business from New
Albertsons, Albertsons LLC and certain of their subsidiaries (the Stand-alone Drug
Sale).
    
    Concurrently with the Stand-alone Drug Sale, the Cerberus Group, via AB Acquisition
LLC, a newly formed entity owned by the Cerberus Group, will purchase substantially all of
Albertsons non-core supermarket business (the Non-Core Business), including the equity
interests in Albertsons LLC, and will assume certain liabilities related to the Non-Core
Business.
    
    Finally, Emerald Acquisition Sub, Inc., a wholly owned subsidiary of Supervalu, will
merge into New Albertsons. In this merger, New Albertsons will become a wholly owned
subsidiary of Supervalu, and each outstanding share of New Albertsons common stock will be
converted into the right to receive $20.35 in cash and 0.182 shares of Supervalu common
stock.
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Pension Plan Curtailment
  Subsequent Event
   Results of Operations of Albertsons, Inc.
 13-Week Period Ended May 4, 2006
        27




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Results of Operations of New Albertsons, Inc.
  Critical Accounting Policies
  Liquidity and Capital Resources
      28




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29




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Insurance Contingencies
  Pension Plan / Health and Welfare Plan Contingencies
   Contractual Obligations and Guarantees
  Commercial Commitments
  Off-Balance Sheet Arrangements
  Related Party Transactions
  30




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Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
 Albertsons, Inc.
    New Albertsons, Inc.
    31




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PART II. OTHER INFORMATION
 
 Cautionary Statement for Purposes of Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995
    
 Item 1. Legal Proceedings
    32




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Item 1A. Risk Factors
  33




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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Issuer Purchases of Equity Securities
 Total Number Of
    
    Maximum NumberShares (Or
    
    (Or ApproximateUnits) Purchased
    
    Dollar Value) OfAs Part Of
    
    Shares (Or Units)Total Number
    
    
    
    
    
    Publicly
    
    That May Yet Beof Shares (Or
    
    Average Price
    
    Announced
    
    Purchased UnderUnits)
    
    Paid Per Share
    
    Plans Or
    
    The Plans OrPeriod
    
    Purchased
    
    (Or Unit)
    
    Programs
    
    ProgramsFebruary 3  February 28, 2006
    
    
    2,740
    (1)
    
    $
    25.74
    
    
    
    
    
    
    
    March 1  March 31, 2006
    
    
    14,419
    (1)
    
    
    25.37
    
    
    
    
    
    
    
    April 1  May 4, 2006
    
    
    18,587
    (1)
    
    
    25.33
    
    
    
    
    
    
    
    
 
 (1)
    
    Represents shares surrendered or deemed surrendered to the Company to satisfy tax
withholding obligations in connection with the vesting of stock units under employee stock
based compensation plans. 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
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Item 6. Exhibits
 3.01
    
    Certificate of Incorporation of New Albertsons, Inc. (f/k/a New Aloha Corporation) is
incorporated herein by reference to Exhibit 3.01 of Form S-4 (Registration No.
333-132397) filed with the SEC on April 18, 2006.3.02
    
    By-Laws of New Albertsons, Inc. (f/k/a New Aloha Corporation) is incorporated herein by
reference to Exhibit 3.02 of Form S-4 (Registration No. 333-132397) filed with the SEC
on April 18, 2006.10.4.2
    
    Amendment No. 2 to Employment Agreement between the Company and Lawrence R. Johnston*10.6.5
    
    Amendment to Executive Deferred Compensation Plan*10.10.5
    
    Amendment to 2000 Deferred Compensation Plan*10.13.8
    
    Second Amendment to Executive Pension Makeup Plan*10.13.9
    
    Third Amendment to Executive Pension Makeup Plan*10.14.3
    
    Amendment to Executive ASRE Makeup Plan*10.15.4
    
    Amendment to Senior Executive Deferred Compensation Plan*10.20.7
    
    Amendment to 1990 Deferred Compensation Plan*10.21.5
    
    Amendment to Non-Employee Directors Deferred Compensation Plan*10.30.2
    
    Amendment to American Stores Company Supplemental Executive Retirement Plan*10.43.1
    
    Form of Amendment to Change of Control Severance Agreement for Executive Vice Presidents*10.44.1
    
    Form of Amendment to Change of Control Severance Agreement for Senior Vice Presidents
and Group Vice Presidents*10.45.1
    
    Form of Amendment to Change of Control Severance Agreement for Vice Presidents*10.47.1
    
    Amendment No. 1 to Long-Term Incentive Plan*10.48.1
    
    Form of Director and Officer Indemnification Agreement*10.49
    
    Form of Officer Indemnification Agreement*10.62.1
    
    Amendment No. 1 to Change in Control Severance Benefit Trust*10.64
    
    RSU Trust*10.65
    
    Amendment to Albertsons, Inc. 2005 Deferred Compensation Plan*15.01
    
    Letter re: Unaudited Interim Financial Statements of Albertsons, Inc.31.1
    
    Certification of CEO Regarding Albertsons, Inc. Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    Certification of CFO Regarding Albertsons, Inc. Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.3
    
    Certification of CEO Regarding New Albertsons, Inc. Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
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31.4
    
    Certification of CFO Regarding New Albertsons, Inc. Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 Regarding Albertsons, Inc.32.2
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 Regarding New Albertsons, Inc.
 
 *
    
    Identifies management contracts or compensatory plans or arrangements required to be filed as an
exhibit hereto. 36




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ALBERTSONS, INC.(Registrant)Date: May 31, 2006
    
    /s/ Felicia D. Thornton

Felicia D. ThorntonExecutive Vice Presidentand Chief Financial Officer
 37