SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q

(Mark One)
   X          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
---------     EXCHANGE ACT OF 1934
For the quarterly period ended     May 1, 1999

OR

                 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
_________        SECURITIES EXCHANGE ACT OF 1934
For the transition period from________to__________

Commission file number               1-5392

                             AMERICAN STORES COMPANY
             (Exact name of registrant as specified in its charter)

Delaware                                            87-0207226
(State or other jurisdiction of                  (I.R.S. Employer
incorporation or organization)                Identification No.)

299 South Main Street
Salt Lake City, Utah                                   84111
(Address of principal executive offices)            (Zip Code)

                                  801-539-0112
             (Registrant's telephone number, including area code)

                                     None
(Former name, former address and former fiscal year, if changed since last
                                  report)

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

                       APPLICABLE ONLY TO ISSUERS INVOLVED
                        IN BANKRUPTCY PROCEEDINGS DURING
                            THE PRECEDING FIVE YEARS:

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be filed by  Sections  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court. Yes____ No____

                      APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock,  as of May 26, 1999:  Common Stock,  Par Value $1.00 - 277,027,615
shares.

<PAGE>



Part I - Financial Information

Item 1. Financial Statements


                             AMERICAN STORES COMPANY
                  Consolidated Condensed Statements of Earnings
                                   (unaudited)
                      (In thousands, except per share data)
<TABLE>

                                                                 Thirteen Weeks Ended
                                                                 --------------------
<S>                                                     <C>                       <C>
                                                           May 1,                   May 2,
                                                            1999                     1998
                                                        ----------                ----------
Sales                                                   $5,047,723                $4,872,686

Cost of merchandise sold, including
     warehousing and transportation expenses            (3,706,679)               (3,606,144)
                                                        ----------                ----------

Gross profit                                             1,341,044                 1,266,542

Operating and administrative expenses                   (1,142,614)               (1,092,027)
Merger related stock option income                          28,864
                                                        ----------                ----------

Operating profit                                           227,294                   174,515

Other (expense) income:
     Interest income                                         2,432                       964
     Interest expense                                      (55,220)                  (60,132)
                                                        ----------                ----------
Net other (expense) income                                 (52,788)                  (59,168)
                                                        ----------                ----------

Earnings before income taxes                               174,506                   115,347

Federal and state income taxes                             (73,086)                  (49,486)
                                                        ----------                ----------

Net earnings                                            $  101,420                $   65,861
                                                        ==========                ==========

Basic earnings per share                                $     0.37                $     0.24
                                                        ==========                ==========
Diluted earnings per share                              $     0.36                $     0.24
                                                        ==========                ==========

Average number of common shares outstanding
   used for basic earnings per share                       276,997                   273,942
Dilutive common stock options                                3,103                     1,658
                                                        ----------                ----------
Average number of common shares outstanding
   used for dilutive earnings per share                    280,100                   275,600

Dividends per share                                          $0.09                     $0.09

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

See accompanying notes to consolidated condensed financial statements.
</TABLE>


<PAGE>



                             AMERICAN STORES COMPANY
                      Consolidated Condensed Balance Sheets
                                   (unaudited)
                                 (In thousands)
<TABLE>
<S>                                                        <C>                         <C>

                                                              May 1,                   January 30,
                                                               1999                        1999
                                                           ----------                  ----------
Assets
Current Assets:
  Cash and cash equivalents                                $   41,160                  $   35,493
  Inventories                                               1,734,785                   1,726,015
  Other current assets                                        538,890                     578,895
                                                           ----------                  ----------

    Total current assets                                    2,314,835                   2,340,403

Property, plant and equipment and property
  under capital leases, less accumulated
  depreciation and amortization of $2,771,375
  on May 1, 1999 and $2,683,628 on
  January 30, 1999                                          4,706,782                   4,624,075

Goodwill                                                    1,577,305                   1,589,614
Other assets                                                  331,857                     331,207
                                                           ----------                  ----------
    Assets                                                 $8,930,779                  $8,885,299
                                                           ==========                  ==========

Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable                                           $1,119,584                  $1,147,510
Other current liabilities                                     736,889                     787,794
Current maturities of long-term debt and
  capital lease obligations                                    51,730                      49,651
                                                           ----------                  ----------
    Total current liabilities                               1,908,203                   1,984,955

Other liabilities                                             740,241                     778,119
Long-term debt and obligations under capital
  leases, less current maturities                           3,531,023                   3,423,029

Shareholders' Equity - shares issued and
  outstanding of 277,030 on May 1, 1999
  and 276,676 on January 30, 1999                           2,751,312                   2,699,196
                                                           ----------                  ----------
    Liabilities and Shareholders' Equity                   $8,930,779                  $8,885,299
                                                           ==========                  ==========

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

See accompanying notes to consolidated condensed financial statements.
</TABLE>

<PAGE>



                             AMERICAN STORES COMPANY
                 Consolidated Condensed Statements of Cash Flows
                                   (unaudited)
                                 (In thousands)
<TABLE>


                                                                            Thirteen Weeks Ended
                                                                            --------------------
<S>                                                                   <C>                     <C>

                                                                       May 1,                   May 2,
                                                                        1999                     1998
                                                                      --------                --------
Cash Flows from Operating Activities:
Net earnings                                                          $101,420                 $65,861
Adjustments to reconcile net earnings to net
  cash provided by operating activities:
    Depreciation and amortization                                      125,898                 122,090
    Merger related stock option income                                 (28,864)
    Net gain on asset sales                                             (1,440)                   (474)
    Changes in operating assets and liabilities                        (81,387)               (142,790)
                                                                      --------                --------
Total adjustments                                                       14,207                 (21,174)
                                                                      --------                --------
Net cash provided by operating activities                              115,627                  44,687
                                                                      --------                --------

Cash Flows from Investing Activities:
Expended for property, plant and equipment                            (199,304)               (192,828)
Proceeds from sale of other assets                                       5,441                  58,763
Increase in other assets                                                (6,880)                 (9,117)
                                                                      --------                --------
Net cash used in investing activities                                 (200,743)               (143,182)
                                                                      --------                --------

Cash Flows from Financing Activities:
Issuance of new debt                                                                           145,000
Net increase (decrease)in borrowings                                   111,223                 (44,985)
Other changes in equity                                                  4,492                   9,684
Cash dividends                                                         (24,932)                (24,631)
                                                                      --------                --------
Net cash provided by financing activities                               90,783                  85,068
                                                                      --------                --------

Net increase (decrease) in cash and
  cash equivalents                                                       5,667                 (13,427)
Cash and cash equivalents:
  Beginning of year                                                     35,493                  47,794
                                                                      --------                --------
  End of quarter                                                      $ 41,160                $ 34,367
                                                                      ========                ========

Supplementary information - Statement of Cash Flows:

Cash paid during the year for:
Interest (net of amounts capitalized)                                 $ 51,109                $ 69,056
Income taxes, net of refunds                                          $ 23,133                $ 20,672

</TABLE>


<PAGE>



                             AMERICAN STORES COMPANY
              Notes to Consolidated Condensed Financial Statements
                                   (unaudited)
                                   May 1, 1999


Basis of Presentation

In the opinion of management,  the accompanying unaudited consolidated condensed
financial  statements  contain all normal  recurring  adjustments  necessary  to
present  fairly the  financial  position  of  American  Stores  Company  and its
subsidiaries  as of May 1, 1999 and  January  30,  1999 and the  results  of its
operations  and cash flows for the  thirteen  weeks ended May 1, 1999 and May 2,
1998.  The  operating  results  for the  interim  periods  are  not  necessarily
indicative of results for a full year. For a further discussion of the Company's
accounting policies, please refer to the Company's Form 10-K for the fiscal year
ended January 30, 1999.

Merger Agreement

On August 2, 1998 the Company  entered into an Agreement and Plan Of Merger (the
Merger Agreement) among the Company,  Albertson's, Inc. (Albertson's) and Abacus
Holdings,  Inc., a wholly-owned subsidiary of Albertson's (Merger Sub), pursuant
to which  Merger Sub would be merged with and into the Company  with the Company
surviving the merger as a wholly-owned subsidiary of Albertson's.  Each share of
the  Company's  Common Stock would be  converted  into the right to receive 0.63
shares of  Albertson's  Common Stock,  with cash paid in lieu of any  fractional
shares.  The  transaction  is intended to qualify as a pooling of interests  for
accounting purposes and as a tax-free reorganization for U.S. federal income tax
purposes.  On November 12, 1998, the stockholders of the Company and Albertson's
approved the Merger  Agreement.  The Company  currently  expects to complete the
merger by June 30, 1999, subject to certain conditions, including, among others,
regulatory approvals and other customary closing conditions.

In connection with the Merger  Agreement,  the Company and  Albertson's  entered
into  reciprocal  stock  option  agreements  pursuant  to which (a) the  Company
granted  Albertson's  an option to purchase up to 54.5 million shares of Company
Common  Stock  (but in no event  more than  19.9% of the  outstanding  shares of
Company Common Stock at the time of exercise)  under certain  circumstances  and
upon the terms and  conditions  set forth in the stock option  agreement,  at an
exercise  price of $30.24 per share and (b)  Albertson's  granted the Company an
option to purchase up to 48.8 million shares of Albertson's Common Stock (but in
no event more than 19.9% of the outstanding  shares of Albertson's  Common Stock
at the time of  exercise)  under  certain  circumstances  and upon the terms and
conditions  set forth in the stock  option  agreement  at an  exercise  price of
$48.00 per share.

Stock options and certain shares of restricted stock granted under the Company's
stock option and stock award plans  automatically vest upon a change of control,
which is  defined  in plans  adopted  prior to June  1997  (Pre-1997  Plans)  as
stockholder  approval of the Merger or, for options  granted under the Company's
1997 Stock Option and Stock Award Plan and the 1997 Stock Plan for  Non-Employee
Directors  (1997 Plans),  upon the later of  stockholder  approval or regulatory
approval  of the Merger.  All options  outstanding  on the  consummation  of the
merger will be converted into options to acquire  shares of  Albertson's  Common
Stock.  In addition,  option holders have the right (limited stock  appreciation
right or LSAR),  during an exercise period of up to 60 days after the occurrence
of a change of control (but prior to  consummation  of the Merger),  to elect to
surrender  at consummation  all or part of their options in exchange  for shares


<PAGE>



Part I -  Financial Information (continued)
Notes to Consolidated Condensed Financial Statements (continued)

of Albertson's  Common Stock having a value equal to the excess of the change of
control price over the exercise price (which shares will be deliverable upon the
Merger). The change of control price is defined as the higher of (i) the highest
reported sales price during the 60-day period prior to the  respective  dates of
the "change of control",  or (ii) the price paid to  stockholders in the Merger,
subject to adjustment in both cases if the exercise period is less than 60 days.

Approval  of the  Merger  Agreement  on  November  12,  1998  by  the  Company's
stockholders accelerated the vesting of 10.2 million stock options granted under
Pre-1997 Plans(approximately 60% of the outstanding stock options) and permitted
the  holders of these  options to exercise  LSARs.  The  exercisability  of 10.2
million  LSARs  resulted  in the Company  recognizing  a $195.3  million  merger
related  stock option  charge  during the fourth  fiscal  quarter of 1998.  This
charge was recorded based on the difference  between the average option exercise
price of $19.15 and the average market price at the measurement dates of $38.29.
Of the 10.2 million options,  6.3 million were exercised using the LSAR feature,
1.7 million  were  exercised  without  using the LSAR,  and 2.2  million  shares
reverted  back to  fixed  price  options  due to the  expiration  of the LSAR on
January 10, 1999.

In the first  quarter  of 1999 a market  price  adjustment  of $28.9  million of
income was recorded to reflect a decline in the relevant  stock price at the end
of the first fiscal quarter.  The actual change of control price used to measure
the value of the 6.3 million LSARs will not be  determinable  until the date the
Merger is consummated or the Merger Agreement is terminated.  Additional charges
or income will be recognized in each quarter until the Merger is  consummated or
the Merger Agreement is terminated. If the Merger is consummated,  the foregoing
net charges will be non-cash.

LSARs relating to the  approximately  6.5 million remaining stock options issued
under the 1997 Plans will become  exercisable  upon  regulatory  approval of the
Merger,  which would result in recognition of an additional  charge estimated at
$85.3 million based on an average exercise price of $23.72 and assuming a change
of control  price of $36.93.  The actual change of control price used to measure
the value of the LSARs  will not be  determinable  until the date the  Merger is
consummated.  If the  Merger  is  consummated,  the  foregoing  charges  will be
non-cash.

Legal Proceedings

On September  13, 1996, a class action  lawsuit  captioned  McCampbell et al. v.
Ralphs Grocery Company,  et al. was filed in the San Diego Superior Court of the
State of California  against the Company and two other grocery chains  operating
in southern  California.  The complaint  alleges,  among other things,  that the
Company  and  others  conspired  to fix the  retail  price  of eggs in  southern
California.  The Company  believes it has  meritorious  defenses to  plaintiffs'
claims and plans to vigorously defend the lawsuit.

The Company is also involved in various other claims, administrative proceedings
and other legal proceedings which arise from time to time in connection with the
conduct  of  the  Company's  business.  In  the  opinion  of  management,   such
proceedings will not have a material  adverse effect on the Company's  financial
condition or results of operations.


<PAGE>



Part I -  Financial Information (continued)
Notes to Consolidated Condensed Financial Statements (concluded)

Subsequent Event

On May 14, 1999 the Company  terminated  its $300 million LIBOR basket swap at a
cost of $.8 million.  The five-year swap agreement had been entered into in 1997
and  diversified the indices used to determine the interest rate on a portion of
the  Company's  variable  rate debt by providing  for payments  based on foreign
LIBOR  indices  which  were  reset  every  three  months.  The fair value of the
agreement based on market quotes at year-end 1998 was a loss of $5.3 million.




<PAGE>



Item 2. Management's Discussion and  Analysis of Financial Condition and Results
        of Operations

Results of Operations

Total sales  increased  to $5.0  billion in the first  quarter of 1999 from $4.9
billion  in the  first  quarter  of 1998  for a total  sales  increase  of 3.6%.
Comparable store sales (sales from stores that have been open at least one year,
including  replacement  stores)  increased in the first quarter of 1999 by 2.4%.
The  improvement in total and  comparable  sales in the first quarter of 1999 is
primarily  due to the  increase  in net  square  footage  since the prior  year,
stronger  pharmacy  department  sales and successful  marketing and  advertising
promotions.  Retail square  footage  increased 2.3% over the last twelve months.
The  increased  pharmacy  sales are the result of an  increase  in the number of
prescriptions  filled due to new drug  introductions and the continued growth in
managed  care  prescription  plans in which  the  Company  is a  provider.  Drug
inflation is also a  significant  component  of the increase in pharmacy  sales.
Pharmacy  department  comparable  store  sales  in the  first  quarter  of  1999
increased 20.2% over the prior year first quarter.

Gross  profit as a percent  of sales  was  26.6% in the  first  quarter  of 1999
compared to 26.0% in the prior year first quarter. Gross profit in 1999 improved
primarily due to improved  procurement  practices,  less aggressive  promotional
spending, favorable trends in product mix and lower warehouse and transportation
costs. Gross margins in the pharmacy department declined in the first quarter of
1999.  However,  pharmacy  gross profit  dollars  increased over the prior year.
Pharmacy margin percentages continue to be pressured by the increased mix of new
branded  drugs with lower margin rates and the continued  growth of  third-party
contracts.  The LIFO  charge to earnings  amounted to $4.0  million in the first
quarter of 1999 and $5.0 million in the first quarter of 1998.

Operating and administrative expenses as a percent of sales were 22.6% and 22.4%
in  the  first   quarter  of  1999  and  1998,   respectively.   Operating   and
administrative  expense  increased in the first quarter of 1999 primarily due to
higher rents and  depreciation,  resulting  from the Company's  three-year  $3.0
billion capital expenditure program combined with higher employee benefit costs.

Stock options and certain shares of restricted stock granted under the Company's
stock option and stock award plans  automatically vest upon a change of control,
which is  defined  in plans  adopted  prior to June  1997  (Pre-1997  Plans)  as
stockholder  approval of the Merger or, for options  granted under the Company's
1997 Stock Option and Stock Award Plan and the 1997 Stock Plan for  Non-Employee
Directors  (1997 Plans),  upon the later of  stockholder  approval or regulatory
approval  of the Merger.  All options  outstanding  on the  consummation  of the
merger will be converted into options to acquire  shares of  Albertson's  Common
Stock.  In addition,  option holders have the right (limited stock  appreciation
right or LSAR),  during an exercise period of up to 60 days after the occurrence
of a change of control (but prior to  consummation  of the Merger),  to elect to
surrender  all or part of their  options in exchange  for shares of  Albertson's
Common Stock  having a value equal to the excess of the change of control  price
over the exercise price (which shares will be deliverable upon the Merger).  The
change of control  price is defined  as the higher of (i) the  highest  reported
sales  price  during  the 60-day  period  prior to the  respective  dates of the
"change of  control",  or (ii) the price  paid to  stockholders  in the  merger,
subject to adjustment in both cases if the exercise period is less than 60 days.



<PAGE>



Item 2. Management's Discussion and  Analysis of Financial Condition and Results
        of Operations (continued)

Approval  of the  Merger  Agreement  on  November  12,  1998  by  the  Company's
stockholders accelerated the vesting of 10.2 million stock options granted under
the Pre-1997  Plans  (approximately  60% of the  outstanding  stock options) and
permitted the holders of these options to exercise LSARs. The  exercisability of
10.2 million LSARs  resulted in the Company  recognizing a $195.3 million merger
related  stock option  charge  during the fourth  fiscal  quarter of 1998.  This
charge was recorded based on the difference  between the average option exercise
price of $19.15 and the average market price at the measurement dates of $38.29.
Of the 10.2 million options,  6.3 million were exercised using the LSAR feature,
1.7 million  were  exercised  without  using the LSAR,  and 2.2  million  shares
reverted  back to  fixed  price  options  due to the  expiration  of the LSAR on
January 10, 1999.

In the first  quarter  of 1999 a market  price  adjustment  of $28.9  million of
income was recorded to reflect a decline in the relevant  stock price at the end
of the first fiscal quarter.  The actual change of control price used to measure
the value of the 6.3 million LSARs will not be  determinable  until the date the
Merger is consummated or the Merger Agreement is terminated.  Additional charges
or income will be recognized in each quarter until the Merger is  consummated or
the Merger Agreement is terminated. If the Merger is consummated,  the foregoing
net charges will be non-cash.

LSARs relating to the  approximately  6.5 million remaining stock options issued
under the 1997 Plans will become  exercisable  upon  regulatory  approval of the
Merger,  which would result in recognition of an additional  charge estimated at
$85.3 million based on an average exercise price of $23.72 and assuming a change
of control  price of $36.93.  The actual change of control price used to measure
the value of the LSARs  will not be  determinable  until the date the  Merger is
consummated.  If the  Merger  is  consummated,  the  foregoing  charges  will be
non-cash.

Operating  profit increased 30.2% in the first quarter of 1999 compared to 1998.
Total  operating  profit  was  4.5% of  sales in 1999 and 3.6% of sales in 1998.
Operating profit excluding the unusual item (merger related stock option income)
increased 13.7% compared to 1998 and was 3.9% of sales in 1999.

Interest expense amounted to $55.2 million in the first quarter of 1999 compared
to $60.1 million in the first  quarter of 1998.  Interest  expense  decreased in
1999 due primarily to lower rates on variable rate debt.

The Company's  effective  income tax rates were 41.9% in 1999 and 42.9% in 1998.
The  effective  income tax rates for 1999 were lower due to the impact  that the
higher  earnings  (including  the merger  related  stock  option  income) in the
current year have on the fixed component of non-deductible goodwill.

The Company's  basic  earnings per share were $.37 and $.24 in the first quarter
of 1999 and 1998, respectively.  Diluted earnings per share amounted to $.36 and
$.24 in the first  quarter of 1999 and 1998,  respectively.  The merger  related
stock option income in 1999 resulted in income of $.06 per diluted share.

Liquidity and Capital Resources

Cash provided by operating  activities of $115.6 million in the first quarter of
1999 compares to $44.7  million in the same period of 1998.  The increase is due
in part to cash  flow benefits as  a  result of  stronger  net  earnings and the

<PAGE>



Item 2. Management's Discussion and  Analysis of Financial Condition and Results
        of Operations (continued)

timing of estimated tax payments. The balance of the change is due to changes in
the other  components of working capital and is not believed to be indicative of
long-term trends.

Cash capital  expenditures  in the first  quarters of 1999 and 1998  amounted to
$199.3 million and $192.8  million,  respectively.  Total capital  expenditures,
including the net present value of leases,  amounted to $216.0  million in 1999,
compared to $233.8  million in 1998.  For the first  quarter of 1999,  15 stores
were opened or  acquired,  10 stores  were closed and 23 stores were  remodeled.
Capital  expenditures  for fiscal  1999 are  expected to be  approximately  $1.0
billion.  The Company  currently plans to open a total of  approximately  80 new
stores and remodel approximately 88 stores in 1999.

The net increase in debt of $111.2  million in the first  thirteen weeks of 1999
is compared to a net increase of $100.0 million in the same period of 1998.

The Company  believes that its cash flow from  operations,  supplemented  by its
revolving credit  facilities,  uncommitted  credit  facilities,  other long-term
borrowings, availability under a universal shelf registration statement, as well
as its  ability  to  refinance  debt,  will be  adequate  to meet its  presently
identifiable cash requirements.

Year 2000

In 1996 the Company  formed the Year 2000  Steering  Committee  to identify  the
areas in which the Year 2000  issue  could  adversely  affect  the  Company  and
develop and implement a comprehensive program to avoid or minimize such effects.
The Committee consists of a member of senior management and representatives from
the  information  technology,  legal  and  internal  auditing  departments.  The
Committee  reports  directly  to senior  management  and  regularly  advises the
Company's Board of Directors on its progress.

The  Committee  divided  the  universe  of  potential  Year 2000 issues into two
categories,  (i) internal exposure issues, consisting of potential problems with
the computer  systems and equipment used and supported by the Company,  and (ii)
external exposure issues, consisting of potential problems with the software and
hardware not supported by the Company's Information Technology  Department,  the
systems and  equipment of third  parties with whom the Company  interfaces or on
whom the Company relies for the provision of critical products or services,  and
equipment with embedded chips.

With respect to the internal exposure category, the Company identified potential
Year 2000 issues in each of the key areas of its business which utilize computer
software  programs and operating  systems.  The Company and outside  contractors
developed  solutions for each component which was identified as  "non-compliant"
and  implemented  the steps  believed  necessary  to make such systems Year 2000
compliant. The Company has completed the implementation of substantially all the
new systems/fixes in the internal  exposure  category.  The Company  anticipates
that the implementation of the remaining  systems/fixes will be completed by the
end of the second  quarter  of 1999,  except  fixes to a small  number of legacy
systems the Company had originally  planned to  discontinue  and the roll out of
in-store hardware and software that are targeted for completion during the third
quarter of 1999.

With  respect  to issues in the  external  exposure  category,  the  Company  is
continuing   to  follow-up   with  third   parties   that  have  not   responded
satisfactorily  or at  all  to  the  Company's  initial  mailing  of  Year  2000
questionnaires/certification  forms. While  the  initial  response  rate  to the


<PAGE>



Item 2. Management's Discussion and  Analysis of Financial Condition and Results
        of Operations (continued)

Company's  requests  for  information  appeared  favorable,  there  are  still a
significant number of third parties that have not responded satisfactorily or at
all to the Company's requests. The Company's focus during the first two quarters
of 1999 will be to  communicate  with those  third  parties  providing  critical
products or services  to the Company to  determine  the extent to which they are
addressing  their own Year 2000 issues and to take  additional  actions based on
the information received.

Additionally  the Company is attempting to identify all critical  equipment with
embedded  chips and is developing  plans to test  identified  equipment for Year
2000 compatibility. These items include equipment not supported by the Company's
Information  Technology Department such as heating units, alarm systems,  vaults
and similar items that are widely used in the Company's operations.  The Company
has attempted, when necessary, to contact the manufacturers of such equipment to
obtain their assistance in further testing, upgrading or repairing such items.

The Company  estimates that its total cost to resolve  internal  exposure issues
will be approximately $25 million,  substantially all of which has been spent to
date. The Company estimates that total direct costs to resolve external exposure
issues will be approximately $4.1 million,  of which  approximately $3.8 million
has been spent to date and  approximately  $.3 million  will be spent during the
second  quarter of 1999.  All of the Year 2000 expenses are being funded through
operating cash flows.

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

Management  of the  Company  believes  it has an  effective  program in place to
resolve  internal  Year 2000 issues in a timely manner and is continuing to take
steps to  communicate  with third  parties  with  respect to their own Year 2000
issues.  However,  since it is not possible to anticipate  all future  outcomes,
especially  when third parties are  involved,  there could be  circumstances  in
which the  Company's  operations  would be  disrupted  and it would be unable to
service  customers or maintain  adequate  inventory  levels.  The amount of lost
revenue and potential liability associated with claims related to the disruption
of the  Company's  business  and its  inability  to deliver  products  cannot be
estimated at this time.

The Company has a contingency plan with respect to internal  exposure issues and
plans to develop  contingency plans with respect to external exposure issues and
equipment  containing embedded chips.  Contingency plans are expected to involve
manual  work  arounds,  increased  inventories  of certain  products or types of
products, and extra staffing.



<PAGE>



Item 2. Management's Discussion and  Analysis of Financial Condition and Results
        of Operations (concluded)

Environmental

The Company has identified environmental  contamination at certain of its store,
warehouse, office and manufacturing facilities (related to current operations as
well as  previously  disposed  of  businesses)  which are  primarily  related to
underground  petroleum storage tanks (USTs) and ground water contamination.  The
Company  conducts an on-going  program for the  inspection and evaluation of new
sites proposed to be acquired by the Company and the  remediation/monitoring  of
contamination  at existing and  previously  owned  sites.  Although the ultimate
outcome and  expense of  environmental  remediation  is  uncertain,  the Company
believes that the required  costs of  remediation,  UST upgrades and  continuing
compliance with  environmental  laws will not have a material  adverse effect on
the financial condition or operating results of the Company.

Cautionary Note

This  report  contains  certain  forward-looking  statements  about  the  future
performance  of the Company and about its pending merger  transaction  which are
based on  management's  assumptions  and  beliefs  in  light of the  information
currently  available  to it. The  Company  assumes no  obligation  to update the
information  contained herein. These  forward-looking  statements are subject to
uncertainties  and other  factors  that  could  cause  actual  results to differ
materially  from such  statements  including,  but not limited  to:  competitive
practices and pricing in the food and drug industry  generally and  particularly
in  the  Company's  principal  markets;  the  implementation  of  the  Company's
re-engineering   initiatives  in  accordance  with  the  currently  contemplated
schedule and budget;  the  Company's  relationships  with its  employees and the
terms of future collective bargaining agreements; the costs and other effects of
legal and  administrative  cases  and  proceedings;  the  nature  and  extent of
continued consolidation in the food and drug industry;  changes in the financial
markets  which may affect the  Company's  cost of capital and the ability of the
Company to access the public debt and equity  markets to refinance  indebtedness
and fund the Company's capital expenditure program on satisfactory terms; supply
or quality control problems with the Company's  vendors;  changes in the rate of
inflation;  changes in economic  conditions  which affect the buying patterns of
the Company's customers;  the ability of the Company and its vendors,  financial
institutions  and  others to  resolve  Year 2000  processing  issues in a timely
manner;  changes in state or federal  legislation  or  regulation;  diversion of
management's  attention from other business  concerns to the assimilation of the
merged   operations  as   contemplated   by  the  pending  merger   transaction;
uncertainties  and  difficulties  relating  to the  integration  of  the  merged
companies  including the assimilation and retention of employees,  challenges in
retaining  customers  and  potential  adverse  short-term  effects on  operating
results;  and delays or  obstacles in obtaining  required  regulatory  approvals
and/or other  conditions  necessary to  satisfactorily  close the pending merger
transaction.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

On May 14, 1999 the Company  terminated  its $300 million LIBOR basket swap at a
cost of $.8 million.  The five-year swap agreement had been entered into in 1997
and  diversified the indices used to determine the interest rate on a portion of
the  Company's  variable  rate debt by providing  for payments  based on foreign
LIBOR  indices  which  were  reset  every  three  months.  The fair value of the
agreement  based on market  quotes at year-end  1998 was a loss of $5.3 million.
Please refer to Item 7A contained in the Company's Form 10-K for the fiscal year
ended January 30, 1999 for additional information.

<PAGE>



Part II - Other Information


Item 1.       Legal  Proceedings -- For  a  description  of  legal  proceedings,
              please  refer  to  Item 3  "Legal  Proceedings"  contained  in the
              Company's Form 10-K for the fiscal year ended January 30, 1999.

              The  Company  is  involved  in  various   claims,   administrative
              proceedings and other legal  proceedings  which arise from time to
              time in connection with the conduct of the Company's business.  In
              the  opinion  of  management,  such  proceedings  will  not have a
              material  adverse effect on the Company's  financial  condition or
              results of operations.

Item 2.       Changes in Securities -- None

Item 3.       Defaults Upon Senior Securities -- None

Item 4.       Submission of Matters to a Vote of Security Holders -- None

Item 5.       Other Information -- None

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

              (a)    Exhibits --

                     27.1  Financial Data Schedule.

              (b) Reports on Form 8-K filed during the quarter -- None





<PAGE>




                                   SIGNATURES


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





                                                American Stores Company
                                     -------------------------------------------
                                                    (Registrant)





Dated June 3, 1999                                /s/ Neal J. Rider
      ------------                   -------------------------------------------
                                                     Neal J. Rider
                                                Chief Financial Officer
                                             (Principal Financial Officer)




Dated June 3, 1999                           /s/ Kathleen E. McDermott
      ------------                  --------------------------------------------
                                                Kathleen E. McDermott
                                     Chief Legal Officer and Assistant Secretary





Dated June 3, 1999                            /s/ Bradley M. Vierig
      ------------                  --------------------------------------------
                                                  Bradley M. Vierig
                                          Senior Vice President and Controller
                                               (Chief Accounting Officer)