UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                         -------------------------------

                                    FORM 10-K
                         -------------------------------

 ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
                                      1934

    For the fiscal year ended January 30, 2003 Commission file number 1-6187
                                                                      ------

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

            Delaware                                       82-0184434
---------------------------------               --------------------------------
  (State of Incorporation)                      (Employer Identification Number)

            250 Parkcenter Boulevard, P.O. Box 20, Boise, Idaho 83726
                                 (208) 395-6200

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

         Title of each class           Name of each exchange on which registered
-----------------------------------    -----------------------------------------
Common Stock, $1.00 par value          New York Stock Exchange
                                       Pacific Stock Exchange

    SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:  NONE

    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
                                              -----    -----

    Indicate  by  check  mark if disclosure  of  delinquent  filers  pursuant to
Item 405 of  Regulation S-K  (17 CFR section 405) is  not contained  herein, and
will  not  be  contained, to  the  best of Registrant's knowledge, in definitive
proxy or information  statements  incorporated by  reference in Part III of this
Form 10-K or any amendment to this Form 10-K. (x)

    Indicate by check mark whether  the Registrant is an  accelerated  filer (as
defined in Exchange Act  Rule 12b-2).  Yes   x     No
                                           -----      -----

    State the aggregate market value of the voting and non-voting  common equity
held by  non-affiliates  computed by  reference to the price at which the common
equity was last sold, or the average bid and asked price of such common  equity,
as of the last business day of the registrant's  most recently  completed second
fiscal  quarter.  The  aggregate  market  value  of the  voting  stock  held  by
non-affiliates  of the Registrant as of August 1, 2002 was  approximately  $10.5
billion.

    The  number of shares of the  registrant's  common  stock,  $1.00 par value,
outstanding as of April 18, 2003 was 366.8 million.

                       Documents Incorporated by Reference

    Listed  hereunder are the documents,  any portions of which are incorporated
by  reference,  and the Parts of this Form 10-K into  which  such  portions  are
incorporated:

1.    The Registrant's definitive proxy statement for use in connection with the
      Annual  Meeting  of  Shareholders  to be held on June 6, 2003, (the "Proxy
      Statement") to be filed  within 120 days after the Registrant's year ended
      January 30, 2003,  portions of which  are incorporated  by reference  into
      Part III of this Form 10-K.

                                       1
<PAGE>



                                ALBERTSON'S, INC.
                                    FORM 10-K
                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
Item                                                                                              Page
<S>                                                                                              <C>

                                     PART I
-------------------------------------------------------------------------------------------------------------
     Cautionary Statement                                                                         3

 1.  Business                                                                                     3

 2.  Properties                                                                                   6

 3.  Legal Proceedings                                                                            8

 4.  Submission of Matters to a Vote of Security Holders                                          9

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


                                     PART II
-------------------------------------------------------------------------------------------------------------
 5.  Market for the Registrant's Common Equity and Related Stockholder Matters                    9

 6.  Selected Financial Data                                                                     10

 7.  Management's Discussion and Analysis of Financial Condition and Results of                  10
     Operations

 7A. Quantitative and Qualitative Disclosures about Market Risk                                  23

 8.  Consolidated Financial Statements and Supplementary Data                                    24

 9.  Changes in and Disagreements with Accountants on Accounting and
     Financial Disclosure                                                                        52

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


                                    PART III
-------------------------------------------------------------------------------------------------------------
10.  Directors and Executive Officers of the Registrant                                          53

11.  Executive Compensation                                                                      55

12.  Security Ownership of Certain Beneficial Owners and Management and Related                  55
     Stockholders Matters

13.  Certain Relationships and Related Transactions                                              55

14.  Controls and Procedures                                                                     55


                                     PART IV
-------------------------------------------------------------------------------------------------------------
15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K                             55
</TABLE>


SIGNATURES

CERTIFICATIONS

                                       2
<PAGE>


                                     PART I


Cautionary  Statement  for  Purposes  of "Safe Harbor Provisions" of the Private
Securities Litigation Reform Act of 1995

    All statements  other than  statements of historical  fact contained in this
and other documents disseminated by the Company,  including statements regarding
the Company's expected financial performance, are forward-looking information as
defined in the Private  Securities  Litigation  Reform Act of 1995. In reviewing
such information about the future performance of the Company,  it should be kept
in mind that  actual  results  may differ  materially  from those  projected  or
suggested in such forward-looking information since predictions regarding future
results  of  operations   and  other  future  events  are  subject  to  inherent
uncertainties.

    These  statements  may relate to, among other things:  investing to increase
sales;  changes in cash flow; increases in insurance and employee benefit costs;
attainment of cost reduction  goals;  achieving sales increases and increases in
identical sales; opening and remodeling stores; and the Company's five strategic
imperatives;  and are indicated by words or phrases such as "expects,"  "plans,"
"believes,"  "estimate,"  and "goal." In reviewing  such  information  about the
future performance of the Company, it should be kept in mind that actual results
may differ materially from those projected or suggested in such  forward-looking
information.

    Important  assumptions and other  important  factors that could cause actual
results  to  differ  materially  from  those  set  forth in the  forward-looking
information  include changes in the general economy;  changes in interest rates;
changes in  consumer  spending;  actions  taken by new or  existing  competitors
(including nontraditional  competitors),  particularly those intended to improve
their  market  share (such as pricing  and  promotional  activities);  and other
factors  affecting  the Company's  business in or beyond the Company's  control.
These  factors  include  changes in the rate of  inflation;  changes in state or
federal  legislation  or  regulation;  adverse  determinations  with  respect to
litigation   or  other   claims   (including   environmental   matters);   labor
negotiations; the cost and stability of energy sources; the Company's ability to
recruit,  retain and develop  employees;  the  Company's  ability to develop new
stores or  complete  remodels as rapidly as planned;  the  Company's  ability to
implement new technology successfully; stability of product costs; the Company's
ability to  integrate  the  operations  of  acquired  or merged  companies;  the
Company's ability to execute its restructuring  plans; 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  projected or suggested 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  predictions,  assumptions,  estimates  or changes in other
factors affecting such forward-looking information.


Item 1.  Business

General
    Albertson's,  Inc. ("Albertsons" or 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.  The  Company's  general  offices  are  located  at
250  Parkcenter  Boulevard,  Boise,  Idaho  83726,  and its telephone  number is
(208) 395-6200.  Information  about  the  Company  is  available on the internet
at www.albertsons.com.

    Based on sales,  the  Company  is one of the  largest  retail  food and drug
chains in the world.  As of January 30, 2003, the Company  operated 2,287 retail
stores in 31 states. These retail stores consist of 1,313 combination  food-drug
stores, 708 stand-alone  drugstores,  and 266 conventional and warehouse stores.
Retail operations are supported by 17 major Company distribution centers.  These
distribution centers provide product exclusively to the Company's retail stores.

    The Company's  operations are within a single operating segment,  the retail
sale of food and drug merchandise.  All the Company's  operations are within the
United States.  As of January 30, 2003, the Company's  stores operated under the
banners Albertsons, Albertsons-Osco, Albertsons-Sav-on, Jewel-Osco, Acme, Sav-on
Drugs, Osco Drug, Max Foods, and Super Saver Foods.

    The Company's  fiscal year ends on the Thursday  nearest to January 31. As a
result,  the  Company's  fiscal  year  includes  a 53rd week every 5 to 6 years.
Fiscal  years 2002,  2001,  and  2000 each  contained  52  weeks  and  ended  on
January 30, 2003, January 31, 2002, and February 1, 2001.

    The Company  continues to be focused on its five strategic  imperatives that
serve as a guide and a filter for the Company's  initiatives and actions.  These
five imperatives are: 1) Aggressive cost and process control, 2) Maximize return
on invested  capital,  3)  Customer-focused  approach to growth, 4) Company-wide
focus on technology and 5) Energized associates. With these imperatives in mind,
the  Company  announced  on July 18,  2001  the  initial  restructuring  plan of
divesting 165 underperforming retail stores and consolidation and elimination of

                                       3
<PAGE>


four division offices.  The Company announced on March 13, 2002 the second phase
of restructuring which included exiting four underperforming markets:   Memphis,
Tennessee;  Nashville,  Tennessee; Houston, Texas; and San Antonio, Texas, which
involved  divesting  95  stores,  two  distribution  centers  and  included  the
reduction of division offices from 15 to 11.

    All dollar amounts in this report are in millions, except per share data.

Retail Formats
    As of January 30, 2003, the Company's retail  operations were organized into
11 divisions,  based primarily on geographic  boundaries.  The division staff is
responsible   for  day-to-day   operations  and  for  executing   marketing  and
merchandising programs. This structure allows the division level employees,  who
are closest to the  customer,  to implement  strategies  tailored to each of the
unique neighborhoods that the Company serves.

    The Company's combination food-drug stores are super grocery and drug stores
under one roof and range in size from  35,000 to 107,000  square  feet.  Most of
these stores offer  prescription  drugs and an expanded section of cosmetics and
general merchandise in addition to specialty departments such as service seafood
and meat, bakery,  lobby/video,  service  delicatessen,  liquor and floral. Many
also offer meal centers, party supply centers,  coffee bars, in-store banks, dry
cleaning, photo processing and destination categories for beverages, snacks, pet
care products, paper products and baby care merchandise.  All shopping areas are
served by a common set of checkstands.

    Albertsons'  strategic  advantage  in  today's  marketplace  comes  from the
Company's  unique  heritage in two market formats - food stores and  drugstores.
Albertsons  has  decades of  experience  in  serving  customers  in both  market
formats.  This  unique  position in the  marketplace  has enabled the Company to
bring  together  separate  retail  brands,  creating the dual brand  combination
stores that leverage the Company's  separate food and drug  experience and brand
equity.  The Company  began  expanding  the dual brand combo  concept in 2001 by
rolling  out   Albertsons-Sav-on   stores  in  the  Reno,   Nevada   market  and
Albertsons-Osco  stores in the  Tucson,  Arizona  market.  In 2002,  the Company
rolled out the dual brand combo  concept in the Phoenix,  Arizona and the Omaha,
Nebraska markets.  The Company is studying consumer preferences related to these
programs and will develop future roll-out plans based on this research.

    The Company's  stand-alone  drugstores  average  18,600  square feet.  These
stores  offer  convenient  shopping  and  prescription  pickup as well as a wide
assortment   of  general   merchandise,   health  and  beauty   care   products,
over-the-counter medication,  greeting cards and photo processing. The Company's
new  drugstores  are  typically  located on corners and many offer a  drive-thru
pharmacy.

    The Company's  other store formats  include  conventional  supermarkets  and
warehouse  stores.  These stores offer a full selection in the basic departments
of grocery, meat, produce, dairy and limited general merchandise. Many locations
have a pharmacy, in-store bakery and service delicatessen.

    As of January 30, 2003, the Company  operated 199 fuel centers in 20 states,
which are generally located in the parking lots of the Company's  stores.  These
centers  feature three to six fuel pumps and a small  building,  ranging in size
from a pay-only  kiosk to a convenience  store,  featuring  such items as candy,
soft drinks and snack foods.

    In November 1999  Albertsons  introduced  its own grocery  delivery Web site
when Albertsons.com entered the Seattle, Washington market. The Company expanded
the  service to the San Diego  area in October  2001,  the Los  Angeles  area in
February 2002, the San Francisco area and Oregon in March 2002 and the Las Vegas
area in November  2002. By using its  brick-and-mortar  stores,  Albertsons  has
evolved its online  model to take  advantage  of its retail  grocery  expertise,
brand  recognition  and existing  infrastructure.  With more than three years of
experience,  Albertsons.com  offers a reliable and proven online grocery service
customers trust to deliver high-quality, fresh products direct from the store to
their home.

    Savon.com,  Albertsons  online  drugstore,  serves the  Company's  customers
nationwide.  On December 7, 2000,  Savon.com  opened the "doors" to a nationwide
online pharmacy  service.  The site offers a full range of sundry items, new and
refill  prescriptions  and  consumer  health  information.  The Web site  allows
customers  across the country the freedom to have new or refilled  prescriptions
ready for  pickup at any local  Albertsons  food or drug  store,  or have  their
prescriptions mailed to their doorsteps.

    All of the Company's stores carry a broad range of national brands and offer
private  label brand  products in many  merchandise  categories.  The  Company's
stores provide consumer information such as: nutritional signing in the meat and
produce  departments,  freshness code dating, unit pricing,  meal ideas and food
information  pamphlets.  The Company also offers a choice of recyclable paper or
plastic bags and collection bins for plastic bag recycling.

                                       4
<PAGE>


Merchandising
    The Company  supplies its stores with  merchandise  through its distribution
centers and outside suppliers,  or directly from manufacturers,  in an effort to
obtain  merchandise at the lowest possible cost. The Company believes that it is
not  dependent  on any one  supplier,  and  considers  its  relations  with  its
suppliers to be satisfactory.

    Management  believes that retail  stores  offering a broad array of products
and  time-saving  services  are  perceived by customers as part of a solution to
today's lifestyle demands.  Accordingly,  a principal component of the Company's
merchandising  strategy is to design stores that offer these  solutions.  In the
Company's prototype stores, in-store bakeries and delicatessens,  prepared foods
sections,  and gourmet  coffee  service are  available.  A selection of prepared
foods and home meal replacements are featured  throughout the store. In the meat
department,  customers  are provided easy meal  alternatives.  Many stores offer
daily selections of home meal  replacement  items,  such as rotisserie  chicken,
chicken cordon blue,  tamales,  meat loaf and other dinner entrees,  sandwiches,
pre-packaged salads and prepared fresh vegetables. The bakery offers an expanded
selection of baked goods and self-service  selections.  Albertsons  offers bread
baked daily, cakes made to order in various sizes, donuts, and other pastries.

Employees
    As of January 30, 2003, the Company employed  approximately  202,000 people,
many of whom are  covered  by  collective  bargaining  agreements.  The  Company
considers its present  relations  with  employees to be good. The Company values
its employees and believes that employee loyalty and enthusiasm are key elements
of its operating performance.

Environmental
    The  Company  has  identified  environmental   contamination  sites  related
primarily to underground  petroleum storage tanks and groundwater  contamination
at various store,  warehouse,  office and manufacturing  facilities  (related to
current  operations as well as previously  disposed of properties).  The Company
conducts an ongoing  program for the  inspection and evaluation of potential new
sites 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  believed  to be remote.
Although  the  ultimate  outcome and  expense of  environmental  remediation  is
uncertain,  the  Company  believes  that the costs of required  remediation  and
continuing  compliance with  environmental  laws, in excess of current reserves,
will not have a material adverse effect on the financial  condition,  results of
operations  or  cash  flows  of  the  Company.   Charges  against  earnings  for
environmental remediation were not material in 2002, 2001 or 2000.

Government Regulation
    The Company is subject to regulation by a variety of governmental  agencies,
including,  but not limited to, the U.S. Food and Drug Administration,  the U.S.
Department of Agriculture, the Occupational Health and Safety Administration and
other federal,  state and local agencies.  The Company's stores are also subject
to local laws regarding  zoning,  land use and the sale of alcoholic  beverages.
The Company  believes that its locations  are in material  compliance  with such
laws and regulations.

Competition
    Food, drug and general  merchandise  retailing involves intense  competition
with numerous  competitors.  Competition  is based  primarily on price,  product
quality and variety,  service and location. The Company faces direct competition
from many local,  regional and national supermarket chains,  supercenters,  club
stores, specialty retailers (such as pet centers and toy stores) and large-scale
drug and  pharmaceutical  retailers.  Increasing  competition  also  exists from
convenience  stores,  prepared food  retailers,  liquor and video  stores,  film
developing outlets, and Internet and mail-order retailers.

    The Company is subject to effects of  seasonality.  Sales have  historically
been higher in the  Company's  fourth  quarter  than other  quarters  due to the
holiday season and the increase in cold and flu occurrences.

Available Information
    The Company will make available its annual  reports on Form 10-K,  quarterly
reports  on Form  10-Q,  current  reports  on Form 8-K and  amendments  to those
reports  filed or furnished  pursuant to Section  13(a) or 15(d) of the Exchange
Act   free   of   charge   through   the   Company's    internet    website   at
http://www.albertsons.com  as soon as reasonably  practicable  after the Company
electronically  files such material with, or furnishes it to, the Securities and
Exchange Commission.

                                       5
<PAGE>


Item 2.  Properties
    The Company has actively  pursued an expansion  program of adding new retail
stores,  enlarging and remodeling  existing stores and replacing smaller stores.
During the past ten years,  the Company has built or acquired  1,871  stores and
approximately 84% of the Company's current retail square footage has been opened
or remodeled during this period.  The Company  continues to follow the policy of
closing stores that are obsolete or fail to provide  adequate return on invested
capital.

    Albertsons  stores are located in 31 Northeastern,  Western,  Midwestern and
Southern areas of the United States.  The table below is a summary of the stores
by state and classification as of January 30, 2003:


<TABLE>
<CAPTION>
                          Combination
                            Food-Drug      Stand-Alone           Other                            Fuel
                               Stores       Drugstores          Stores          TOTAL          Centers (a)
--------------------- ---------------- ---------------- --------------- -------------- ----------------
<S>                               <C>              <C>             <C>            <C>              <C>
    Arizona                        50               82              -             132               13
    Arkansas                        1               -               -               1               -
    California                    309              310             141            760                7
    Colorado                       49               -               10             59                8
    Delaware                        9               -                3             12                1
    Florida                       120               -               -             120               15
    Idaho                          30               -                7             37               15
    Illinois                      163               93              14            270               16
    Indiana                         6               46              -              52                1
    Iowa                            1               13              -              14               -
    Kansas                         -                22              -              22               -
    Louisiana                      31               -               -              31               11
    Maryland                        2               -                6              8               -
    Michigan                       -                 1              -               1               -
    Minnesota                      -                 1              -               1               -
    Missouri                       -                34              -              34               -
    Montana                        18                8              14             40                4
    Nebraska                       12               13              -              25                3
    Nevada                         48               46               3             97               11
    New Jersey                     34               -               27             61               -
    New Mexico                     22                4               1             27                3
    North Dakota                    2                6              -               8               -
    Oklahoma                       28               -               -              28               13
    Oregon                         44               -               10             54               13
    Pennsylvania                   39               -               16             55               -
    South Dakota                    1                2              -               3               -
    Texas                         152               -               -             152               42
    Utah                           44               -                2             46                6
    Washington                     73               -               11             84               14
    Wisconsin                      16               27              -              43                1
    Wyoming                         9               -                1             10                2
                      ---------------- ---------------- --------------- -------------- ----------------
       Total                    1,313              708             266          2,287              199
                      ================ ================ =============== ============== ================

    Retail Square
    Footage by Store
    Type (000's)           71,277,950       13,196,146       7,658,121     92,132,217               (a)
                      ================ ================ =============== ============== ================
</TABLE>

    (a) All fuel centers  are located  adjacent to retail stores,  therefore the
        Company  does  not count  fuel centers as  separate stores.  The  square
        footage of  fuel centers is included with the square footage of adjacent
        stores.


                                       6
<PAGE>


    The Company has  expanded  and improved  its  distribution  facilities  when
opportunities  exist to improve  service to the retail  stores and  generate  an
adequate return on investment.  During 2002 approximately 77% of the merchandise
purchased  for  resale in  Company  retail  stores  was  received  from  Company
distribution centers.

    Albertsons  distribution system consists of 17 major distribution facilities
located  strategically  throughout the Company's  operating  markets.  The table
below is a summary of the  Company's  distribution  facilities as of January 30,
2003:

<TABLE>
<CAPTION>
                                                                                            High
                                                                           Ice            Volume
                                            Frozen                Meat & Cream   Health   Health General                   Square
  Major Distribution Facilities     Grocery   Food Liquor Produce   Deli Plant & Beauty & Beauty  Merch. Pharmaceuticals  Footage
  -----------------------------     ------- ------ ------ ------- ------ ----- -------- -------- ------- --------------- ----------
<S>                                    <C>     <C>    <C>    <C>     <C>   <C>      <C>     <C>      <C>       <C>       <C>
  Melrose Park, Illinois               X       X             X       X                                                   1,467,000
  Lancaster, Pennsylvania              X                     X       X              X                X                   1,412,700
  Brea, California                     X       X                     X                                                   1,295,000
  La Habra, California                 X              X                             X                X         X         1,203,100
  Fort Worth, Texas                    X       X             X       X                                                   1,130,500
  Plant City, Florida                  X       X      X      X       X                      X                            1,010,900
  Irvine, California                   X                     X                                                             996,900
  Elk Grove, Illinois                  X                                            X                X         X           933,000
  Vacaville, California                X                                                                                   854,000
  Portland, Oregon                     X       X             X       X                                                     834,300
  Phoenix, Arizona                     X       X      X      X       X                                                     734,300
  Salt Lake City, Utah                 X       X             X       X                                                     659,600
  San Leandro, California                      X             X       X                                                     475,200
  Sacramento, California               X       X      X      X       X                                                     441,600
  Ponca City, Oklahoma                                                              X                X         X           420,000
  Denver, Colorado                     X       X             X       X                                                     388,400
  Boise, Idaho                                                                      X                X                     302,300

  Other Distribution Facilities
  -----------------------------
  Las Vegas, Nevada                                   X                                                                     30,000
  Indianapolis, Indiana                               X                                                                     22,000
  Boise, Idaho                                                             X                                                11,000
                                                                                                                   ---------------
  TOTAL SQUARE FOOTAGE -
  All Distribution Facilities                                                                                           14,621,800
                                                                                                                   ===============
</TABLE>

                                       7
<PAGE>

    The  Company  currently  prefers  to  finance  most  new  retail  store  and
distribution  facilities  internally,  thus retaining  ownership of its land and
buildings.  The Company's  internal  expansion plans are expected to be financed
primarily from cash provided by operating  activities.  The Company has and will
continue to finance a portion of its new stores through lease  transactions when
it does not have the opportunity to own the property.

    As of  January  30,  2003,  the  Company  held  title  to both  the land and
buildings  of 41% of the  Company's  stores and held title to the  buildings  on
leased land of an additional 10% of the Company's stores. The Company also holds
title  to the land  and  buildings  of most of its  administrative  offices  and
distribution facilities.

Item 3.  Legal Proceedings
    The Company is subject to various  lawsuits,  claims and other legal matters
that arise in the ordinary course of conducting business.

    In March 2000 a class action complaint was filed against  Albertsons 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  (Gardner,  et al. v.
Albertson's,  Inc.,  et al.) by  bonus-eligible  managers  seeking  recovery  of
additional  bonus  compensation  based  upon  plaintiffs'  allegation  that  the
calculation  of profits on which their  bonuses were based  improperly  included
expenses for workers' compensation costs, cash shortages, premises liability and
"shrink"  losses in  violation  of  California  law.  In October  2001 the court
granted summary  judgment  against Sav-on Drug Stores,  finding one of its bonus
plans unlawful under plaintiffs' liability theory. In August 2001 a class action
complaint with very similar claims, also involving  bonus-eligible managers, was
filed against Albertson's, Inc., Lucky Stores, Inc. and American Stores Company,
wholly-owned  subsidiaries of the Company,  in the Superior Court for the County
of Los Angeles,  California (Petersen, et al. v. Lucky Stores, Inc., et al.). In
June 2002 the cases were  consolidated  and in August  2002 a class  action with
respect to the  consolidated  case was  certified by the court.  The Company has
strong defenses against this lawsuit,  and is vigorously  defending it. Although
this lawsuit is subject to the uncertainties inherent in the litigation process,
based on the information presently available to the Company, management does not
expect that the ultimate  resolution of this action will have a material adverse
effect on the  Company's  financial  condition,  results of  operations  or cash
flows.

    In April 2000 a class action complaint was filed against  Albertsons 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  (Gardner,  et al. v.
American  Stores  Company,  et al.) by assistant  managers  seeking  recovery of
overtime  pay based  upon  plaintiffs'  allegation  that  they  were  improperly
classified  as exempt  under  California  law.  In May 2001 a class  action with
respect to Sav-on Drug Stores  assistant  managers was certified by the court. A
case with very  similar  claims,  involving  the Sav-on  Drug  Stores  assistant
managers  and  operating  managers,  was also  filed in April 2000  against  the
Company's  subsidiary  Sav-on Drug Stores,  Inc. in the  Superior  Court for the
County of Los Angeles, California (Rocher, Dahlin, et al. v. Sav-on Drug Stores,
Inc.)  and was also  certified  as a class  action.  In April  2002 the Court of
Appeal of the State of California Second Appellate  District reversed the Rocher
class certification,  leaving only two plaintiffs.  The California Supreme Court
has accepted plaintiffs' request for review of this class  decertification.  The
Gardner case is on hold pending the review by the California  Supreme Court. The
Company has strong defenses against these lawsuits,  and is vigorously defending
them.  Although these lawsuits are subject to the uncertainties  inherent in the
litigation process, based on the information presently available to the Company,
management  does not expect that the ultimate  resolution of these lawsuits will
have a material adverse effect on the Company's financial condition,  results of
operations or cash flows.

    In August 2000 a class action complaint was filed against Jewel Food Stores,
Inc., a  wholly-owned  subsidiary  of the Company,  in the Circuit Court of Cook
County,  Illinois  (Maureen  Baker,  et al.,  v. Jewel  Food  Stores,  Inc.  and
Dominick's  Supermarkets,  Inc., Case No. 00L 009664) alleging milk price fixing
and seeking compensatory,  punitive, and injunctive relief. In July 2002 a class
was certified,  consisting of all people  residing in the  Chicagoland  area who
bought milk at retail from either or both of the  defendants  between August 23,
1996 and August 23, 2000. On February 25, 2003, the trial judge granted  Jewel's
and Dominick's motion to dismiss after presentation of plaintiffs' case, and the
case was dismissed with prejudice.  The plaintiffs have filed a notice of intent
to appeal the decision issued in favor of the defendants.

    An agreement has been reached,  and court approval granted,  to settle eight
purported class and/or collective  actions which were consolidated in the United
States District Court in Boise, Idaho, and which raised various issues including
"off-the-clock"  work  allegations and allegations  regarding  certain  salaried
grocery  managers' exempt status.  Under the settlement  agreement,  current and
former employees who met eligibility criteria have been allowed to present their
off-the-clock work claims to a settlement administrator.  Additionally,  current
and  former  grocery  managers  employed  in the State of  California  have been
allowed to present their exempt status claims to a settlement administrator. The


                                       8
<PAGE>

Company  mailed  notices of the  settlement  and claims  forms to  approximately
80,000 associates and former  associates.  Approximately  6,000 claim forms were
returned,   of  which   approximately   5,000  were  deemed  by  the  settlement
administrator  to be incapable of valuation,  presumed  untimely,  or both.  The
court will  consider the status and handling of these 5,000  claims.  The claims
administrator  was able to assign a value to approximately  1,000 claims,  which
amount to a total of  approximately  $13.5,  although the value of many of those
claims is still  subject to challenge  by the Company.  The Company is presently
unable to determine the number of individuals  who may  ultimately  submit valid
claims or the amounts that it may  ultimately be required to pay with respect to
such claims. Based on the information presently available to it, management does
not expect  that the  satisfaction  of valid  claims  submitted  pursuant to the
settlement  will  have a  material  adverse  effect on the  Company's  financial
condition, results of operations or cash flows.

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

    The statements above reflect  management's current expectations based on the
information presently available to the Company. However, predicting the outcomes
of claims and  litigation  and  estimating  related costs and exposures  involve
substantial  uncertainties that could cause actual outcomes, costs and exposures
to vary materially from current expectations. In addition, the Company regularly
monitors its exposure to the loss  contingencies  associated  with these matters
and may from time to time change its  predictions  with  respect to outcomes and
its estimates with respect to related costs and  exposures.  It is possible that
material differences in actual outcomes, costs and exposures relative to current
predictions and estimates, or material changes in such predictions or estimates,
could have a  material  adverse  effect on the  Company's  financial  condition,
results of operations or cash flows.

Item 4.  Submission of Matters to a Vote of Security Holders
    No matters  were  submitted  during the fourth  quarter of 2002 to a vote of
security holders through the solicitation of proxies or otherwise.

                                     PART II

Item 5.  Market for the Registrant's Common Equity and Related Stockholder
Matters
    The Company's common stock is traded on both the New York Stock Exchange and
the Pacific  Stock  Exchange  under the symbol ABS. As of March 28, 2003,  there
were approximately  31,241 holders of record. The following table sets forth the
reported high and low stock prices by quarter:

<TABLE>
<CAPTION>
                                         Common Stock Market Price
                                         -------------------------
                                                                                Dividends
     2002                                    High               Low              Declared
     -----------------------                 ----               ---              --------

<S>                                        <C>               <C>                    <C>
            Fourth Quarter                 $24.60            $18.85                 $0.19
            Third Quarter                   28.66             22.14                  0.19
            Second Quarter                  35.49             26.51                  0.19
            First Quarter                   35.49             26.88                  0.19

     2001
     -----------------------

            Fourth Quarter                  35.59             28.26                  0.19
            Third Quarter                   36.99             29.25                  0.19
            Second Quarter                  33.72             27.30                  0.19
            First Quarter                   34.05             27.00                  0.19
</TABLE>

Dividends
    The  Company  has paid  cash  dividends  on its  Common  Stock  for the past
forty-three  fiscal years. The Company pays these dividends at the discretion of
the Board of Directors.  The continuation of these payments,  the amount of such
dividends,  and the form in which the  dividends are paid (cash or stock) depend
upon many  factors,  including  the  results  of  operations  and the  financial
condition of the Company.

                                       9
<PAGE>


Item 6.  Selected Financial Data
    The  following  data  have  been  derived  from the  consolidated  financial
statements  of the  Company  and  should  be  read  in  conjunction  with  those
statements, which are included in this report.

<TABLE>
<CAPTION>
                                          52 WEEKS       52 WEEKS        52 WEEKS        53 WEEKS     52 WEEKS
(DOLLARS IN MILLIONS,                  JANUARY 30,    JANUARY 31,     FEBRUARY 1,     FEBRUARY 3,  JANUARY 28,
EXCEPT PER SHARE DATA)                        2003           2002            2001            2000         1999
---------------------------------- ---------------- -------------- --------------- -------------- -------------
<S>                                       <C>            <C>             <C>             <C>          <C>
Operating Results:
Sales                                     $ 35,626       $ 36,605        $ 35,501        $ 36,326     $ 34,915
Earnings from continuing operations            865            496             746             395          779
Net earnings                                   485            501             765             404          801
Net earnings as a percent to                 1.38%          1.38%           2.15%           1.12%        2.28%
sales

Common Stock Data:
Earnings from continuing operations:
  Basic                                     $ 2.18         $ 1.22          $ 1.78          $ 0.93       $ 1.86
  Diluted                                     2.17           1.22            1.78            0.92         1.85

Net earnings per share:
  Basic                                       1.22           1.23            1.83            0.96         1.91
  Diluted                                     1.22           1.23            1.83            0.95         1.90

Cash dividends per share:
Albertsons                                    0.76           0.76            0.76            0.72         0.68
American Stores Company
  equivalent                                    -              -               -             0.14         0.57

Financial Position:
Total assets                              $ 15,211       $ 15,981        $ 16,094        $ 15,719     $ 15,131
Long-term debt and capitalized
  lease obligations                          5,257          5,336           5,942           4,990        5,108

Other Year End Statistics:
Number of stores                             2,287          2,421           2,512           2,492        2,564
</TABLE>

    The operating results include two significant restructuring initiatives that
were  implemented  in 2001  and 2002  (refer  to  "Note F -  Restructuring"  and
"Note E - Discontinued Operations/Market Exits" in the notes to the accompanying
consolidated financial  statements).  Although these decisions were similar, the
adoption  of  Statement  of  Financial   Accounting   Standard  (SFAS)  No.  144
"Accounting for the Impairment or Disposal of Long-Lived  Assets" on February 1,
2002  caused  the  financial  statement  presentation  of  these  actions  to be
dissimilar  (SFAS No. 144 does not allow for the retroactive  application of its
provisions).  The Company's financial  statements have been restated to classify
the results of operations for the 95 stores,  two  distribution  centers and the
reduction of division offices from 15 to 11, as discontinued  operations for all
periods.  The  operating  results of the 165 stores are  included in  continuing
operations of the Company's financial  statements for the periods prior to their
sale or closure.

    The Company  adopted SFAS 142 in 2002 (refer to "Note M - Goodwill and Other
Intangible  Assets"  in the  notes to the  accompanying  consolidated  financial
statements).

    On June 23, 1999,  Albertsons  and American  Stores  Company  consummated  a
merger, which has been accounted for as a pooling of interests.


Item 7.  Management's Discussion and Analysis of Financial Condition and Results
of Operations
The New Albertsons
    The Company's  leadership team has identified many actions and programs with
which to drive the Company's future competitiveness, profitability and return on
invested  capital.  The Company  continues  to be focused on its five  strategic
imperatives  that  serve  as  a  guide  and  a  filter  for  all  the  Company's
initiatives.  These five  imperatives,  together with the major actions taken to
date, follow:

1)   Aggressive  Cost and  Process  Control.  Each  main  category  of  expense,
     including  labor,  is  rigorously   monitored  by  a  member  of  executive
     management.  By the end of 2002,  the Company had achieved $446 of the $500


                                       10
<PAGE>

     mid-2003  annual cost  reduction  goal. The Company is committed to achieve
     cost  reductions  of $750 by the end of 2004. In the third quarter of 2002,
     the Company  expanded its existing  strategic  sourcing  program to realize
     additional  cost  reductions  by engaging  A.T.  Kearney to leverage  their
     sourcing expertise to assist with this program.

2)   Maximize Return on Invested  Capital.  The Company has implemented a formal
     process to review and  measure all  significant  investments  in  corporate
     assets.  The goal of the Company is to hold a number 1 or 2 market share in
     an area, or have a plan of action which  provides a reasonable  expectation
     of achieving  this goal in order to continue to maintain an  investment  in
     that area.  This process  involves  thorough  review at both the individual
     asset or store level and at the market area level.

     As a result of the review initiated in 2001, the Company closed or disposed
     of 162 underperforming stores  in 2001 and 2002.   In addition, the Company
     formulated plans to accelerate the disposal of surplus property  through an
     auction  process for  owned  properties  and  aggressive  lease termination
     negotiations  for  leased   properties.    As  a  result  of  this  initial
     restructuring, the Company reduced its divisions from 19 to 15.

     o   During  the  fourth  quarter of 2001,  the Company sold 80 non-core New
         England Osco drugstores.

     o   In the first quarter of 2002, the Company announced the second phase of
         its   asset   rationalization   process.   The   Company   exited  four
         underperforming  markets:   Memphis, Tennessee;   Nashville, Tennessee;
         Houston, Texas;  and San Antonio, Texas.   These market exits  occurred
         through a combination of store closures and  store sales and involved a
         total of 95 stores. In connection with this action, the Company reduced
         its divisions from 15 to 11  and the Tulsa, Oklahoma and Houston, Texas
         distribution facilities were sold.

3)   Customer-focused  Approach to Growth. The Company intends to invest many of
     the savings  from the expense and process  control  programs  back into the
     marketplace  in order to drive sales and  earnings  growth.  The  Company's
     focus is on the  following  programs  that are  intended to drive  customer
     loyalty and profitable sales growth. A company-wide  "Service First, Second
     to None"  program  is  reinvigorating  the  employees'  focus  on  customer
     service. The "Focus on Fresh" initiative is improving the delivery of fresh
     foods throughout the Company's fresh departments.  The Company's Jewel-Osco
     stores in Chicago,  Illinois have a decade of experience operating a unique
     dual brand food and drugstore format.  This unique format was rolled out to
     the Tucson, Arizona and Reno, Nevada markets during 2001 and was rolled out
     to the Phoenix, Arizona and Omaha, Nebraska markets during 2002. During the
     fourth  quarter of 2001,  the Company  expanded its loyalty card program to
     the Dallas/Fort Worth, Texas area. During 2002 the loyalty card program was
     rolled  out  to  the  following  areas:  Northern  California,   Northwest,
     Intermountain,  and the Florida  divisions.  The loyalty  card  program was
     introduced in the Rocky  Mountain  division in March 2003,  and the Company
     continues to evaluate  additional  markets for  expansion of the  preferred
     savings card program.

4)   Company-wide Focus on Technology.  Albertsons use of technology is designed
     to better  serve  customers  and improve  operating  efficiencies.  In 2002
     Albertsons  established an information technology plan, which calls for the
     replacement  or upgrade of over  three-quarters  of the  Company's  current
     systems  within the next five years.  The Company  initiated a project that
     will  standardize  all front-end  point-of-sale  systems;  built a new data
     center  resulting in the  consolidation  of two previous data centers;  and
     started the process of  implementing  a new financial  applications  system
     that  will  lay  the  foundation  for  significant   future   improvements.
     Technology has been deployed in approximately 60 stores in  "self-checkout"
     lanes, providing customers with the option to complete their shopping trips
     electronically.

5)   Energized  Associates.  The  Albertsons  leadership  team is  charged  with
     creating an uplifting  atmosphere for associates  everyday,  and to inspire
     positive   attitudes   throughout   the   Company.   To  ensure   that  our
     202,000 associates  are  energized  and  motivated  to  do  their best work
     everyday, the Company realigned  processes  and  programs  to  provide  new
     opportunities  for  associates  to achieve their professional career goals.
     The  Company  changed  compensation  programs  to  reward  performance that
     delivers  results,    improved  communications  so  associates  are  better
     informed, streamlined education programs to meet the needs of the business,
     and revised  benefits plans to reduce costs.  We are convinced  that a team
     of  energized  associates  who  share  a  positive  attitude  will  achieve
     Albertsons goal of becoming the best food and drug retailer in the world.


                                       11
<PAGE>

Critical Accounting Policies
    The Company's discussion and analysis of its financial condition and results
of operations are based upon the Company's  consolidated  financial  statements,
which have been  prepared in accordance  with  accounting  principles  generally
accepted in the United States.  The  preparation of these  financial  statements
requires the Company to make  estimates and  judgments  that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of
contingent  assets and liabilities.  On an ongoing basis, the Company  evaluates
its estimates, including those related to bad debts, inventories,  vendor funds,
intangible assets,  income taxes, assets held for sale, impairment of long-lived
assets, self-insurance,  restructuring, benefit costs, contingencies, litigation
and unearned  income.  The Company bases its estimates on historical  experience
and on various other  assumptions and factors that are believed to be reasonable
under  the  circumstances,  the  results  of which  form the  basis  for  making
judgments  about the  carrying  values of assets  and  liabilities  that are not
readily apparent from other sources.  The Company,  based on its ongoing review,
will  make   adjustments  to  its  judgments  and  estimates   where  facts  and
circumstances  dictate.  Historically,  actual  results  have not  significantly
deviated from those determined using the estimates described above.

    The  Company  believes  the  following  critical   accounting  policies  are
important to the portrayal of the Company's  financial condition and results and
require management's most difficult, subjective or complex judgments, often as a
result of the need to make  estimates  about  the  effect  of  matters  that are
inherently uncertain.

VENDOR FUNDS   The Company receives funds  from the many vendors  whose products
the Company buys for resale in its stores.  These vendor funds are  provided  to
increase the  sell-through of the related  products.  The Company receives funds
for a variety of merchandising activities: placement of the vendor's products in
the  Company's  advertising;  placement  of the  vendor's  products in prominent
locations  in the  Company's  stores;  introduction  of new  products  into  the
Company's  distribution system and retail stores;  exclusivity rights in certain
categories that have  slower-turning  products;  and to compensate for temporary
price  reductions  offered  to  customers  on  products  held for sale at retail
stores.  The Company also receives vendor funds for buying  activities,  such as
volume commitment rebates and forward buy credits.

    Accounting  for vendor  funds is  discussed  in  Emerging  Issues Task Force
"EITF" Issue 02-16:  Accounting by a Customer (Including a Reseller) for Certain
Consideration  Received  from a Vendor (EITF  02-16),  in which the EITF reached
consensus on two issues in November 2002 and provided  transition rules on those
issues in January  2003 and March 2003.  As a result of this new  guidance,  the
Company adopted a new method for recognizing the vendor funds for  merchandising
activities. As of the beginning of 2002, the Company recognizes vendor funds for
merchandising  activities when the related products are sold. Under the previous
accounting method for merchandising  vendor funds, these credits were recognized
as an offset to cost of sales when the  merchandising  activity was performed in
accordance with the underlying agreements. In connection with the implementation
of this new accounting method, the Company recorded a charge in 2002 of $94, net
of tax benefit of $60.

    The vendor fund inventory  offset  recorded as of January 30, 2003 was $152,
which is a $6  decrease  from  the  balance  as of the  beginning  of 2002.  The
inventory  offset was  determined by estimating the average  inventory  turnover
rates by product  category for the Company's  grocery,  general  merchandise and
lobby  departments  (these  departments  received  over  three-quarters  of  the
Company's  vendor  funds in 2002) and by  average  inventory  turnover  rates by
department for the Company's remaining inventory.

LONG-LIVED ASSET IMPAIRMENTS   The Company assesses the impairment of long-lived
assets when events or changes in circumstances  indicate that the carrying value
of the assets or the asset group may not be  recoverable.  The asset  impairment
review  assesses the fair value of the assets based on the future cash flows the
assets are expected to generate. An impairment loss is recognized when estimated
undiscounted future cash flows expected to result from the use of the asset plus
net proceeds  expected from the  disposition of the asset (if any) are less than
the related  asset's  carrying  amount.  Impairment  losses are  measured as the
amount by which the carrying amounts of the assets exceed their fair values. The
net  proceeds  expected  from the  disposition  of the asset are  determined  by
independent  quotes or expected sales prices developed by internal  specialists.
Estimates of future cash flows and expected sales prices are judgments  based on
the Company's experience and knowledge of local operations.  These estimates can
be  significantly  impacted by changes in real  estate  market  conditions,  the
economic environment, capital spending decisions and inflation.

    For properties to be closed that are under long-term lease  agreements,  the
present  value of any  remaining  liability  under the lease,  discounted  using
risk-free  rates and net of  expected  sublease  recovery,  is  recognized  as a
liability  and  expensed.  (Beginning  on January 1,  2003,  "expected  sublease
recovery"  has been  replaced  by  "estimated  sublease  rentals  that  could be


                                       12
<PAGE>

reasonably obtained for the property.") The value of any equipment and leasehold
improvements  related to a closed  store is reduced to reflect  net  recoverable
values.  Internal specialists  estimate the subtenant income,  future cash flows
and asset recovery values based on their historical  experience and knowledge of
(1) the market in which the store to be closed is  located,  (2) the  results of
its previous  efforts to dispose of similar assets and (3) the current  economic
conditions.  The actual cost of disposition  for these leases and related assets
is affected by  specific  real estate  markets,  the  economic  environment  and
inflation.

SELF-INSURANCE  The Company is primarily self-insured for workers' compensation,
automobile and general  liability costs. The Company records its  self-insurance
liability,  determined  actuarially,  based on claims  filed and an  estimate of
claims  incurred but not yet  reported.  Any  actuarial  projection  of ultimate
losses is subject to a high degree of variability.  Sources of this  variability
are numerous and include,  but are not limited to, future  economic  conditions,
court decisions and legislative  actions.  The Company's  workers'  compensation
future  funding  estimates  anticipate  no  change  in  the  benefit  structure.
Statutory changes could have a significant impact on future claim costs.

    The Company's workers' compensation liabilities are from claims occurring in
various states. Individual state workers' compensation regulations have received
a tremendous amount of attention from state politicians, insurers, employers and
providers,  as  well  as the  public  in  general.  Recent  years  have  seen an
escalation in the number of  legislative  reforms,  judicial  rulings and social
phenomena  affecting  this  business.  The  changes in a state's  political  and
economic environment increase the variability in the unpaid claim liabilities.

LEGAL CONTINGENCIES   The Company records reserves for legal contingencies  when
the  information  available to the Company  indicates that it is probable that a
liability  has been  incurred  and the  amount  of the  loss  can be  reasonably
estimated.  Predicting  the  outcomes of claims and  litigation  and  estimating
related costs and exposures involve  substantial  uncertainties that could cause
actual  costs to vary  materially  from  estimates.  In  addition,  the  Company
regularly monitors its exposure to the loss contingencies  associated with these
matters  and may from  time to time  change  its  predictions  with  respect  to
outcomes and its estimates  with respect to related costs and  exposures.  It is
possible  that  material  differences  in actual  outcomes,  costs and exposures
relative to current  predictions  and  estimates,  or  material  changes in such
predictions or estimates,  could have a material adverse effect on the Company's
financial condition, results of operations or cash flows.

PENSION COSTS  Pension benefit obligations and the related effects on operations
are dependent on the Company's selection of actuarial assumptions, including the
discount rate and the expected  long-term rate of return on plan assets.  Actual
returns on plan assets  exceeded return  assumptions  over an extended period in
the past,  which kept  pension  expense and cash  contributions  to the plans at
modest  levels.  Recent weaker market  performance  may  significantly  increase
pension expense and cash  contributions in the future unless asset returns again
exceed the assumptions used. Changes in the interest rates used to determine the
discount  rate  may  also  cause   volatility   in  pension   expense  and  cash
contributions.  Actual  results that differ from the Company's  assumptions  are
accumulated and amortized over future periods and,  therefore,  generally affect
the Company's recognized expense and recorded obligation in such future periods.

Recently Adopted Accounting Standards
    The  Company  adopted  Statement of Financial  Accounting Standard  ("SFAS")
No. 142,  "Goodwill and Other Intangible  Assets"  effective  February 1,  2002.
Under  this  new  statement,  goodwill and certain other intangible assets  with
indefinite lives are no longer  amortized, but are subject  to  annual  testing,
or more frequently if impairment indicators arise, using fair value methodology.
Intangible  assets with finite,  measurable  lives continue to be amortized over
their respective useful lives until they reach their estimated  residual values,
and are reviewed for impairment in accordance with SFAS 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets."

    When SFAS No. 142 was adopted,  the  aggregate of the goodwill  allocated to
the stores in each reporting unit became the reporting units' goodwill  balance.
In order to determine if a reporting unit's goodwill was impaired, a combination
of internal analysis, focusing on each reporting unit's implied EBITDA multiple,
and estimates of fair value from valuation specialists were used. Based on these
analyses,   there  was  no  impairment   of  goodwill  at  the  adoption   date.
Subsequently,  during the fourth  quarter of 2002,  the  Company  completed  its
annual  impairment review based on November 1, 2002 balances and determined that
there was no impairment as of that date. The fair value  estimates  could change
in the future depending on internal and external factors.

    The Company adopted SFAS No. 144, "Accounting for the Impairment or Disposal
of Long-Lived  Assets," effective February 1, 2002. This statement replaces SFAS
No. 121 regarding  impairment losses on long-lived assets to be held and used or
to be disposed of. The adoption of this statement did not have a material impact
on  the  company's  impairment  policy.  However,  the  statement  broadens  the
definition of what constitutes a discontinued operation and how the results of a


                                       13
<PAGE>

discontinued  operation are to be measured and  presented.  As a result,  stores
associated  with the company's  exit from a particular  market are classified as
discontinued  operations  in the  Company's  Consolidated  Earnings  Statements.
Therefore,  activity  associated with the Company's market exit plan approved by
the Company's Board of Directors in March 2002, involving the sale or closure of
95 stores,  two distribution  centers and the reduction of division offices from
15 to 11, has been presented as discontinued operations.

Results of Operations
    Sales for 2002 were $35,626 compared to $36,605 in 2001 and $35,501 in 2000.
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>
                                                                                   PERCENTAGE CHANGE
                                                      PERCENT TO SALES             OF DOLLAR AMOUNTS
----------------------------------------- -------------------------------- ------------------------------
                                               2002       2001       2000   2002 VS. 2001  2001 VS. 2000
----------------------------------------- ---------- ---------- ---------- --------------- --------------
<S>                                          <C>        <C>        <C>               <C>             <C>
Sales                                        100.00     100.00     100.00            (2.7)           3.1
Gross profit                                  29.15      28.48      28.43            (0.4)           3.3
Selling, general and administrative
   expenses                                   24.15      23.85      23.79            (1.4)           3.4
Restructuring (credits) charges and                       1.28         -             n.m.           n.m.
other                                         (0.10)
Gain on sale of New England Osco
   drugstores                                    -       (0.15)        -             n.m.           n.m.
Interest expense, net                          1.11       1.16       1.06            (6.8)          12.4
Earnings from continuing operations
   before income taxes                         3.95       2.36       3.50            62.8          (30.6)
Net earnings from continuing operations        2.44       1.36       2.10            74.4          (33.5)
Net (loss) gain from discontinued
   operations                                 (0.80)      0.02       0.05            n.m.          (73.7)
Cumulative effect of change in
   accounting principle (net)                 (0.26)        -          -             n.m.           n.m.
Net earnings                                   1.38       1.38       2.15             3.2          (34.5)

    n.m. - not meaningful
</TABLE>

    Sales for 2001 and 2000 have been restated from previously  reported amounts
to exclude sales associated with  discontinued  operations which represent sales
of the 95 stores included in the second phase of the Company's market exit plan.
The  decrease in  reported  sales is  primarily  attributable  to the  Company's
restructuring plan initiated in July 2001, which included the sale or closure of
165 stores, and the sale of 80 New England Osco drugstores in the fourth quarter
of 2001.  (These  stores' sales are included in the 2000,  2001 and 2002 periods
until their  closure.)  The sales  decrease was offset in part by the  Company's
capital  expansion  program.  Sales were also  impacted  by  declining  consumer
confidence (as measured by The Conference Board Index:  78.8 in January 2003 vs.
97.8 in January  2002) and  escalating  competitive  activity.  Identical  store
sales,  stores that have been in operation for two full fiscal years,  decreased
0.9% in 2002 and  increased  0.8% in 2001 and  0.3% in  2000.  Comparable  store
sales,  which uses the same store base as the Identical store sales  computation
except it includes replacement stores, decreased 0.4% in 2002 and increased 1.3%
in 2001 and 0.6% in 2000.  During 2002 the Company  opened 92 stores,  remodeled
207 stores and closed or sold 226 stores, 177 of which are part of the Company's
restructuring  plans.   Net  retail  square footage at continuing operations was
92.1 million  square  feet at the end of 2002 and 92.8  million  square feet and
92.9 million square feet at the end of 2001 and 2000,  respectively.  Management
estimates that overall deflation in products the Company sells was 0.1% in 2002,
0.3% in 2001 and 0.4% in 2000.

    Gross profit, as a percent to sales,  increased in 2002 vs. 2001 as a result
of  improved   Company-wide   procurement   practices  and   increased   generic
substitution in the pharmacy  department.  Gross profit,  as a percent to sales,
remained relatively flat between 2001 and 2000. The pre-tax LIFO adjustment, (as
a percent to sales),  increased  gross  profit by $2 (0.01%) in 2002,  decreased
gross profit by $5 (0.01%) in 2001, and increased gross profit by $23 (0.06%) in
2000.  The net pre-tax LIFO charge for 2001 was $5,  comprised of $10 of charges
recorded  in  cost  of  sales,  $3  of  credits  recorded  with  gain on sale of
New England Osco drugstores  and  $2 of credits  recorded with restructuring and
other.

    Cost  of  sales   includes   merchandise,   advertising,   warehousing   and
transportation  costs, offset by vendor funds and advertising expense related to
the  Company's  buying  and  merchandising   activities.   Advertising   expense
(excluding advertising  allowances) totaled $527 in 2002, $537 in 2001, and $550
in 2000.


                                       14
<PAGE>

    Selling,  general and  administrative  (SG&A) expenses as a percent to sales
increased in 2002,  primarily due to the reduction in the Company's  sales base,
increase in employee  benefits  and rising  insurance  costs.  The impact of the
elimination of goodwill amortization in 2002 due to the adoption of SFAS 142 and
a ten basis point  reduction in labor costs as a percentage  of sales was offset
by increased depreciation and rent expense associated with the Company's capital
expenditure  programs.  The  increase  in 2001  over 2000 was  primarily  due to
workers' compensation costs and benefit expenses caused by sharply higher health
care  costs.  The  2001  increase  in SG&A  expenses  was  partially  offset  by
reductions in direct labor costs.

    Other income,  for the year ended January 31, 2002,  includes $16 of charges
for a decrease in company-owned  life insurance assets,  offset by $8 of credits
for stock received from the demutualization of two insurance companies.

    The Company's effective income tax rate from continuing  operations for 2002
was  38.4%,  as  compared  to 42.6% for 2001 and 40.0%  for 2000.  The  decrease
resulted from the elimination of goodwill  amortization and updated estimates of
federal and state taxes which were lower than amounts previously estimated.  The
increase  for 2001  over 2000 was due to lower  earnings  before  income  taxes,
non-deductible restructuring expenses and increased non-deductible company-owned
life insurance costs.

Restructuring and Other Non-Routine Items
    The financial statement presentation includes the results of two significant
restructuring  initiatives  that were  implemented in 2001 and 2002. On July 18,
2001,  the  Company's  Board of  Directors  approved a  restructuring  plan that
included  the  closure  of  165  underperforming  retail  stores,  reduction  of
administrative  and corporate overhead and consolidation and elimination of four
division  offices  (refer  to  "Note  F -  Restructuring"  in the  notes  to the
accompanying  consolidated  financial  statements).   On  March  13,  2002,  the
Company's Board of Directors approved the second phase of the restructuring plan
which included the complete exit of four  underperforming  markets  resulting in
the sale or closure of 95 stores,  two  distribution  centers,  and reduction of
division   offices   from  15  to  11   (refer   to   "Note  E  -   Discontinued
Operations/Market Exits" in the notes to the accompanying consolidated financial
statements). Although these decisions were similar, the adoption of SFAS No. 144
"Accounting for the Impairment or Disposal of Long-Lived  Assets" on February 1,
2002  caused  the  financial  statement  presentation  of  these  actions  to be
dissimilar  (SFAS No. 144 does not allow for the retroactive  application of its
provisions). The Company's 2001 and 2000 financial statements have been restated
to classify  the results of  operations  for the 95 stores and two  distribution
centers as discontinued operations.  The operating results of the 165 stores are
included in continuing  operations of the Company's financial statements for the
periods prior to their sale or closure.

Discontinued Operations/Market Exits
    On March 13, 2002,  the  Company's  Board of  Directors  approved the second
phase of the Company's  restructuring  plan designed to improve future financial
results and to drive future competitiveness. This phase of the plan included the
complete exit of four underperforming markets:  Memphis,  Tennessee;  Nashville,
Tennessee;  Houston,  Texas; and San Antonio,  Texas.  This involved the sale or
closure of 95 stores and two  distribution  centers,  and  reduction of division
offices  from 15 to 11.  These  sales  and  closures  were  evaluated  for lease
liability  or asset  impairment,  including  goodwill,  in  accordance  with the
Company's  policy.  The operating  results and gains and losses related to these
market exits have been  included in  discontinued  operations  in the  Company's
Consolidated  Earnings  Statements.  The prior years'  operating  activities for
these 95 stores,  two  distribution  centers,  and reduction of division offices
from 15 to 11 have been  reclassified  to  discontinued  operations:  "Operating
(loss) income" in the accompanying earnings statement.


                                       15
<PAGE>


    The discontinued  operations  generated sales of $290, $1,326, and $1,261 in
2002,  2001 and  2000,  respectively,  an  operating  loss of $429 in 2002,  and
operating profit of $10 and $31 in 2001 and 2000, respectively. The discontinued
operations operating loss of $429 consisted of a loss from operations of $50 and
asset impairments, lease settlements and other costs of $379 as described in the
following table:

<TABLE>
<CAPTION>
                                                         NONCASH                                TOTAL CHARGES
                                                         CHARGES               ACCRUALS             (CREDITS)
                                               ------------------    -------------------    ------------------

<S>                                                        <C>                 <C>                    <C>
   Asset impairments                                       $ 401               $     -                $   401
   Lease settlements                                          -                      26                    26
   Severance and outplacement                                 -                      23                    23
   Other                                                      -                       2                     2
   Gain on asset sales                                       (63)                    -                    (63)
   Favorable lease settlements                                -                     (10)                  (10)
                                                                                            ------------------
     Loss on disposal                                                                                 $   379
                                                                                            ==================
   Cash payments during 2002                                                        (30)
                                                                     -------------------
     Reserve balance at January 30, 2003                                       $     11
                                                                     ===================
</TABLE>

    The  reserve  balance of $11 as of January  30,  2003 is  included  with the
restructuring  reserves in the "other current liabilities" line on the Company's
Consolidated Balance Sheet.

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

    Assets related to  discontinued  operations are recorded at their  estimated
net  realizable  value of $25 as of January 30, 2003, and are reported as Assets
held for sale in the Company's  Consolidated Balance Sheet. These assets include
land,  buildings,  equipment and leasehold  improvements  and are being actively
marketed.  As of January 30, 2003, all 95 stores and both  distribution  centers
were closed.  In addition,  the Company had either sold or terminated the leases
related to 82 of the 95 stores and both  distribution  centers as of January 30,
2003.

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

Restructuring
    In the first half of 2001, the Company  initiated a profitability  review of
all of its retail  stores,  utilizing a methodology  based on return on invested
capital.  The Company also evaluated its division  management  structure and the
efficiency of its transaction processing departments. Based on these reviews, in
July 2001  the  Company  committed  to the following  restructuring  activities:
1) close and dispose of  165 underperforming  stores in  25 states; 2) eliminate
four of the  existing 19 division offices; 3) sell a store fixture manufacturing
operation;  4) centralize  certain  transaction  processing  functions in Boise,
Idaho; and 5) reduce general office head count.

    These    restructuring    activities   called   for   the    elimination  of
1,341   managerial   and   administrative   positions   (excluding  store  level
terminations). The restructuring charge recorded in 2001 included the following:
employee severance  and  outplacement  costs of $44,  asset impairments of $361;
lease termination costs of $57; and other costs of $6.

    In  2001  and  2002,  80  and  82  stores  were  closed  or sold and 995 and
297 managerial and administrative employees were  terminated,  respectively.  In
2002, management revised the planned  restructuring  activities as follows:  the
store  fixture  manufacturing  operation's  performance  was  re-evaluated   and
determined to be more cost-effective than purchasing like-fixtures from external
sources  in  the  future,  so it will be held and used;  one  store's  operating
performance improved due to local market conditions,  so it too will be held and
used; and one  part  of the  transaction  processing  consolidation  was  halted
due to a decision to replace the Company's  human  resource  information systems
(HRIS) over the next  two to three years,  which resulted in the reversal of the
elimination  of  50 positions.  The remaining  two stores in this  restructuring
plan will be closed in 2003.


                                       16
<PAGE>


    The following table presents the pre-tax  restructuring  credits and charges
and the related  restructuring  reserves included in the Company's  Consolidated
Balance Sheets:

<TABLE>
<CAPTION>
                                                        NONCASH                                TOTAL CHARGES
                                                        CHARGES               ACCRUALS             (CREDITS)
                                              ------------------    -------------------    ------------------
<S>                                                       <C>                 <C>                    <C>
2001 Activity
   Asset impairments                                      $ 361               $     -                $   361
   Lease settlements                                         -                      57                    57
   Severance and outplacement                                -                      44                    44
   Other                                                     -                       6                     6
                                                                                           ------------------
     Restructuring (credits) charges                                                                 $   468
                                                                                           ==================
   Cash payments during 2001                                                       (46)
                                                                    -------------------
     Reserve balance at January 31, 2002                                            61

2002 Activity
   Retain store fixtures operation                           (3)                    (2)              $    (5)
   Halt part of consolidation - HRIS                         -                      (2)                   (2)
   Gain on asset sales                                      (17)                    -                    (17)
   Favorable lease settlements                               -                     (14)                  (14)
   Severance and outplacement                                -                       2                     2
   Other                                                     -                      (1)                   (1)
                                                                                           ------------------
     Restructuring (credits) charges                                                                 $   (37)
                                                                                           ==================
   Cash payments during 2002                                                       (16)
                                                                    -------------------
     Reserve balance at January 30, 2003                                      $     28
                                                                    ===================
</TABLE>

    The reserve  balances of $28 at January 30, 2003 and $61 at January 31, 2002
are  included  in  the  "Other  Current   Liabilities"  line  on  the  Company's
Consolidated Balance Sheets.

Merger-Related Charges (Credits)
    On June 23, 1999,  the Company and American  Stores  Company  consummated  a
merger (the "Merger"), which has been accounted for as a pooling-of-interests.

    Merger-related  (credits)  charges  for  2001  represents  a  credit  of $15
associated  with the sale of an  asset  for an  amount  that  was  greater  than
originally estimated.

    Merger-related (credits) charges for 2000 represents $24 related to one-time
asset impairment and severance charges.

    In the future any  restructuring  activity  will be accounted  for under the
guidance  of  SFAS  No.  146,  which  will   primarily   effect  the  timing  of
restructuring reserves.


Other Non-Routine Items
    The Company  recorded a $54 pre-tax  gain during the fourth  quarter of 2001
resulting from the sale of 80 New England Osco drugstores.

    The Company recorded, in selling, general and administrative expenses, a $36
pre-tax gain during the fourth  quarter of 2001  resulting  from an amendment to
the  Company's  long-term  disability  plan.  The  amendment  changed the salary
continuation  feature from a cumulative benefit based on years of service,  to a
set percentage of salary benefit.

    The Company  recorded a $20 pre-tax charge during the first quarter of 2000,
which is  included in selling,  general and  administrative  expenses to reflect
liabilities  related to certain  previously  assigned  leases and  subleases  to
tenants who were in bankruptcy.


                                       17
<PAGE>


Summary of Other Non-Routine Items
    In the past three years, the Company's  earnings from continuing  operations
have  included  certain  non-routine  items,  including  costs  associated  with
restructuring  activities and the 1999 merger of Albertsons and American  Stores
Company,  and the cessation of goodwill  amortization  following the adoption of
SFAS 142. The following table  summarizes the non-routine  items that management
excludes  when it analyzes the  Company's  operating  trends over the past three
years.  Management also considers the restructuring (credits) charges and other,
merger-related  credits,  gain on  sale  of New  England  Osco  drugstores,  and
discontinued operations to be non-routine items.

<TABLE>
<CAPTION>
                             52 WEEKS ENDED               52 WEEKS ENDED                52 WEEKS ENDED
                            JANUARY 30, 2003             JANUARY 31, 2002              FEBRUARY 1, 2001
                        ------------------------    -------------------------    -------------------------
                                As                           As                           As
                          Reported  Adjustments        Reported  Adjustments        Reported  Adjustments
                        ----------- ------------    ------------ ------------    ------------ ------------
<S>                        <C>       <C>                <C>        <C>                <C>       <C>
Sales                      $35,626   $ -                $36,605    $ -                $35,501   $ -

Cost of sales               25,242     (1) (a)           26,179     (35) (c)           25,409    (37) (f)

Selling, general and
 administrative expenses     8,604     (8) (b)            8,731     (40) (d)            8,444   (110) (g)
                                                                    (56) (e)                     (57) (e)

Income tax expense             540    (11) (h)              367     181  (h)              497     66  (h)
</TABLE>

(a)  In connection with the market exits  classified as discontinued  operations
     in 2002, the Company's  distribution  center in Fort Worth,  Texas recorded
     inventory  write-down costs and incremental labor and transportation  costs
     of $1.

(b)  The Company incurred  professional  fees of $4, asset impairments of $2 and
     other costs of $2 in connection with the 2002 market exits.

(c)  In the 2001  restructuring  activities,  inventory  losses due primarily to
     closeout  price  reductions  and damage or  spoilage  at stores  slated for
     closure were incurred. The estimated losses incurred were $35.

(d)  In 2001, the Company recorded asset impairments of $52 with respect to land
     and  buildings  held for sale,  amended its  long-term  disability  program
     resulting in a gain of $36,  recorded merger and integration  costs of $12,
     incurred  sign-on bonus charges of $8, and paid for legal and  professional
     services of $4 associated with the 2001 restructuring activities.

(e)  The Company recorded $56 and $57 of goodwill amortization in 2001 and 2000,
     respectively.  With the  adoption of SFAS 142 as of the  beginning of 2002,
     the  Company no longer  recognizes  a charge  for  goodwill  (See  Critical
     Accounting Policies above).

(f)  Following  the June 1999 merger  between  Albertsons  and  American  Stores
     Company, the Company incurred $37 of incremental  advertising costs related
     to the  conversion  of the Lucky  banner in  California  to the  Albertsons
     banner.

(g)  The  Company  incurred  significant  costs in 2000 in  connection  with the
     integration  of  Albertsons  and  American  Stores  Company.  Direct  costs
     incurred included salaries of $27, legal and professional  services of $10,
     travel and moving  expenses of $10,  facilities and equipment costs of $12,
     asset  impairment costs of $9 associated with stores divested in connection
     with  the  1999  merger  and  information  technology  equipment  that  was
     abandoned by the Company and other costs of $22. In  addition,  the Company
     recorded a charge of $20 due to the bankruptcy of a retailer that subleased
     certain of the Company's former retail stores.

(h)  Represents,  for each of the years presented,  the income tax effect of the
     other adjustments presented for such year.



                                       18
<PAGE>


Liquidity and Capital Resources
    Cash provided by operating  activities  during 2002 was $2,063,  compared to
$2,009 in 2001 and $1,771 in 2000. Cash provided by operating activities in 2002
was primarily  impacted by increased earnings before change in cumulative effect
of  accounting  principle.  Cash  provided by operating  activities  in 2001 was
primarily impacted by noncash restructuring charges when compared to 2000.

    The Company's  financing  activities for 2002 included payments on long-term
borrowings of $143,  stock purchased and retired of $862, and dividend  payments
of $306.  The Board of  Directors,  at its March 2003  meeting,  maintained  the
regular quarterly cash dividend of $0.19 per share, for an effective annual rate
of $0.76 per share.

    The Company utilizes its commercial  paper and bank line programs  primarily
to supplement cash requirements for seasonal fluctuations in working capital and
to fund its capital expenditure program. Accordingly,  commercial paper and bank
line borrowings will fluctuate  between  reporting  periods.  The Company had no
commercial  paper or bank line  borrowings  outstanding  at January  30, 2003 or
January 31, 2002.

    The Company had three credit  facilities  totaling  $1,400 during 2002.  The
first  agreement  for $100  expired  in  February  2003 and was  renewed  for an
additional  year to expire in  February  2004.  The  second  agreement  for $350
expired in March 2003 and was renewed for an additional  year to expire in March
2004.  The third  agreement  for $950  expires in March 2005.  All of the credit
agreements contain an option which would allow the Company,  upon due notice, to
convert any  outstanding  amounts at the  expiration  dates to term  loans.  The
agreements  in  place  at year  end also  contain  certain  covenants,  the most
restrictive of which requires the Company to maintain  consolidated tangible net
worth, as defined,  of at least $3,000 and a fixed charge coverage,  as defined,
of no less than 2.7 times. As of January 30, 2003, the Company was in compliance
with  these  requirements.   No borrowings  were outstanding  under  the  credit
facilities as of January 30, 2003 or January 31, 2002.

    Albertsons  filed a shelf  registration  statement  with the  Securities and
Exchange Commission ("SEC"),  which became effective on February 13, 2001 ("2001
Shelf  Registration")  to  authorize  the  issuance  of up  to  $3,000  in  debt
securities.  In May 2001 the  Company  issued  $600 of term Notes under the 2001
Shelf Registration. The Notes are composed of $200 of principal bearing interest
at  7.25%  due  May 1, 2013  and $400 of principal  bearing interest at 8.0% due
May 1, 2031.  Proceeds  were  used  primarily  to  repay  borrowings  under  the
Company's commercial paper program.

    During  2002,  no  securities  were  issued  under  the  2001   Registration
Statement.  As of January 30, 2003,  $2,400 of debt securities  remain available
for issuance under the 2001 Registration Statement.

    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
enabled the Company to purchase  stock from April 25, 2000  through  December 6,
2001.  During 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.  No shares  were
purchased  during 2001. The Board of Directors  adopted a program on December 3,
2001,  authorizing,  at  management's  discretion,  the Company to purchase  and
retire up to $500 of the  Company's  common  stock  beginning  December  6, 2001
through  December  31,  2002.  On  September  5,  2002,  the Board of  Directors
authorized  an  increase  of $500 to this  program  for a total of $1,000 of the
Company's  common  stock  that could be  purchased  and  retired by the  Company
through  December  31,  2002.  The Board of  Directors  adopted a stock  buyback
program on  December  9, 2002,  authorizing,  at  management's  discretion,  the
Company  to  purchase  and  retire  up to $500  of the  Company's  common  stock
beginning January 1, 2003 and ending December 31, 2003. During 2002, the Company
purchased and retired 35.1 million shares for $862 at an average price of $24.54
per share under these  programs.  The Company may continue or, from time to time
suspend,  purchasing  shares under its stock purchase  program  without  notice,
depending on prevailing market  conditions,  alternate uses of capital and other
factors.

    The Company's  operating results continue to enhance its financial  position
and  ability  to  continue  its  internal  expansion  program.  Cash  flows from
operations and available  borrowings are adequate to support  currently  planned
business operations,  stock repurchases,  acquisitions and capital expenditures.
The Company has short-term financing capacity in the form of commercial paper or
bank  line  borrowings  up to  $1,400  and  long-term  capacity  under  the 2001
Registration Statement of $2,400.


                                       19
<PAGE>


    As of January 30, 2003, the Company's credit ratings were as follows:

<TABLE>
<CAPTION>
                                             S & P             MOODY'S           FITCH
     ----------------------------------- ----------------- ----------------- -----------------
<S>                                          <C>               <C>               <C>
         Long-term debt                      BBB+              Baa1              BBB+
         Short-term debt                     A2                P2                F2
</TABLE>

    There are no payment  acceleration  provisions in the  Company's  fixed-term
debt  portfolio  related  to  a  downgrade  in  the  Company's  credit  ratings.
Similarly,  a downgrade in the  Company's  credit  ratings  would not affect the
Company's  ability to borrow  amounts  under the  revolving  credit  facilities.
However,  any adverse  changes to the Company's  credit  ratings could limit the
Company's access to the commercial paper market and increase the cost of debt.

Contractual Obligations and Commercial Commitments
    Albertsons has assumed various financial  obligations and commitments in the
normal course of its operations and financing activities.  Financial obligations
are  considered  to  represent  known future cash  payments  that the Company is
required to make under existing contractual arrangements, such as debt and lease
agreements.  The following  table  represents  the  scheduled  maturities of the
Company's long-term contractual obligations as of January 30, 2003:

<TABLE>
<CAPTION>
                                                                                           AFTER
                                                   YEAR 1    YEARS 2-3    YEARS 4-5      5 YEARS      TOTAL
--------------------------------------- ------------------ ------------ ------------ ------------ ----------
<S>                                                 <C>      <C>              <C>       <C>        <C>
Long-term debt                                      $ 105    $   704          $ 14      $ 4,232    $ 5,055
Capital lease obligations (1)                          47         88            79          531        745
Operating leases (1)                                  330        637           545        2,275      3,787
Contracts  for  purchase  of  property
   and construction of buildings                      176         -             -            -         176
Other (2)                                              96        136             6           -         238
--------------------------------------- ------------------ ---------- ------------- ------------ ----------
Total contractual cash obligations                  $ 754     $1,565         $ 644      $ 7,038    $10,001
======================================= ================== ========== ============= ============ ==========
</TABLE>

     (1)  Represents  the minimum rents payable and includes  leases  associated
          with closed stores accrued for under the Company's  restructuring  and
          closed  store  reserves.  Amounts are not offset by expected  sublease
          income.
     (2)  Includes  transportation  contracts  with  third  parties.  Also,  the
          Company has entered  into energy  supply  agreements  which have terms
          through 2006. These agreements  include certain  provisions that could
          potentially  require  the  Company  to pay  additional  amounts if the
          actual usage is less than the minimum usage per the contract documents
          or if the  contracts  were  terminated.  This number is  difficult  to
          estimate due to the  uncertainty  of future energy usage and change in
          the market value of energy,  therefore  no amounts have been  included
          above.

    The Company is  contingently  liable as a guarantor  of certain  leases that
were  assigned to third parties in  connection  with various store  closures and
dispositions.  The Company  believes the  likelihood of a significant  loss from
these  agreements is remote because of the wide  dispersion  among third parties
and remedies available to the Company should the primary parties fail to perform
under the agreements.

    Albertsons  commercial  commitments  as of January  30,  2003,  representing
possible commitments triggered by potential future events, are as follows:

<TABLE>
<CAPTION>
                                                                                      AFTER
                                           YEAR 1     YEARS 2-3       YEARS 4-5     5 YEARS       TOTAL
--------------------------------------- ---------- ------------- --------------- ----------- -----------
<S>                                          <C>           <C>          <C>         <C>          <C>
Available lines of credit                    $450          $950         $    -      $    -       $1,400
Letters of credit - standby                    95            -               -           -           95
Letters of credit - commercial                 13            -               -           -           13
--------------------------------------- ---------- ------------- --------------- ----------- -----------
Potential commercial commitments             $558          $950         $    -      $    -       $1,508
======================================= ========== ============= =============== =========== ===========
</TABLE>

Letters of Credit
    The  Company  had  outstanding  Letters of Credit of $108 as of January  30,
2003, all of which were issued under separate bilateral agreements with multiple
financial  institutions.  Of the $108  outstanding at year end, $95 were standby
letters  of credit  covering  primarily  workers'  compensation  or  performance
obligations.  The remaining $13 were commercial letters of credit supporting the
Company's  merchandise  import  program.  The Company  paid  issuance  fees that
varied,  depending on type, up to 0.70% of the outstanding balance of the letter
of credit.

                                       20
<PAGE>

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

Capital Expenditures
    The Company  continues to retain ownership of real estate when possible.  As
of January 30, 2003,  the Company held title to the land and buildings of 41% of
the  Company's  stores  and held  title to the  buildings  on leased  land of an
additional 10% of the Company's stores. The Company also holds title to the land
and buildings of most of its administrative offices and distribution facilities.

    The Company is committed to keeping its stores up to date. In the last three
years,  the Company has opened or remodeled 527 stores  representing  25% of the
Company's retail square footage as of January 30, 2003. The following summary of
historical  capital  expenditures  includes  capital leases,  stores acquired in
business  and asset  acquisitions,  assets  acquired  with  related debt and the
estimated fair value of property financed by operating leases:

<TABLE>
<CAPTION>
                                                                        2002         2001        2000
---------------------------------------------------------------- ------------ ------------ -----------
<S>                                                                    <C>          <C>       <C>
New and acquired stores                                              $   688      $   875     $ 1,066
Remodels                                                                 455          348         423
Retail replacement equipment, technology and other                       221          247         170
Distribution facilities and equipment                                     70           64         174
---------------------------------------------------------------- ------------ ------------ -----------
Total capital expenditures                                             1,434        1,534       1,833
Estimated fair value of property financed by operating leases            150          153          99
---------------------------------------------------------------- ------------ ------------ -----------
                                                                     $ 1,584      $ 1,687     $ 1,932
================================================================ ============ ============ ===========
</TABLE>

    Total capital expenditures include capitalized lease obligations incurred of
$75 in 2002, $79 in 2001 and $62 in 2000.

    The Company's  strong  financial  position  provides the flexibility for the
Company to grow through its store development  program and future  acquisitions.
The Company's capital  expenditure  budget for 2003 is approximately  $1,400 and
approximately $100 in new lease obligations.

Related Party Transactions
    Transactions  with  related  parties  were  not  considered  material.   See
"Note U - Related Party Transactions" in the  Notes  to  Consolidated  Financial
Statements.

Recent Accounting Standards
    In July 2001 the Financial  Accounting  Standard Board ("FASB")  issued SFAS
No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 will become
effective for Albertsons on January 31, 2003. This statement addresses financial
accounting  and  reporting for  obligations  associated  with the  retirement of
tangible  long-lived  assets and the  associated  asset  retirement  costs.  The
Company is currently  analyzing  the impact that this  standard will have on its
financial  statements,  but  believes it will not have a material  impact on the
Company's consolidated financial statements.

    In April 2002 the FASB issued SFAS No. 145,  "Rescission of FASB  Statements
No.  4,  44  and  64,   Amendment  of  FASB  Statement  No.  13,  and  Technical
Corrections."  The statement  rescinds SFAS No. 4,  "Reporting  Gains and Losses
from  Extinguishment of Debt," and an amendment of that statement,  SFAS No. 64,
"Extinguishments  of  Debt  Made to  Satisfy  Sinking-Fund  Requirements."  As a
result,  gains  and  losses  from  extinguishment  of  debt  will no  longer  be
aggregated  and classified as an  extraordinary  item, net of related income tax
effect, on the statement of earnings. SFAS No. 145 is effective for fiscal years
beginning  after  May  15,  2002,  with  earlier  application  encouraged.   The
provisions  of  SFAS  No.  145  will  be  effective  for  fiscal year  beginning
January 31, 2003.  The  adoption of SFAS No. 145 will not have a material impact
on the Company's consolidated financial statements.

    In June 2002 the SFAS No. 146, "Accounting for Costs Associated with Exit or
Disposal  Activities" was issued.  This statement  nullifies  existing  guidance
related  to the  accounting  and  reporting  for costs  associated  with exit or
disposal  activities and requires that the fair value of a liability  associated
with an exit or disposal  activity be recognized when the liability is incurred.
Under  previous  guidance,  certain exit costs were permitted to be accrued upon
management's  commitment  to an exit plan,  which is generally  before an actual
liability has been incurred. The provisions of this statement are required to be
adopted for all exit or disposal  activities  initiated after December 31, 2002.

                                       21
<PAGE>

This statement will not impact any  liabilities  recorded prior to adoption.  As
required the Company will adopt SFAS No. 146 effective in 2003. The Company does
not expect that the adoption of this  statement  will have a material  impact on
the Company's consolidated financial statements.

    In December 2002 the FASB issued SFAS No. 148,  "Accounting  for Stock-Based
Compensation,  Transition  and  Disclosure."  SFAS No. 148 provides  alternative
methods of transition  for a voluntary  change to the fair value based method of
accounting for stock-based  employee  compensation.  The  accompanying  Note Q -
Stock Options and Stock Awards - satisfies the disclosure  requirements  of SFAS
No. 148.

    In  November  2002 the FASB issued  FASB  Interpretation  No. 45 ("FIN 45"),
"Guarantor's  Accounting and Disclosure  Requirements for Guarantees,  Including
Indirect  Guarantees  of  Indebtedness  of Others."  FIN 45  requires  that upon
issuance of a guarantee,  a guarantor  must  recognize a liability  for the fair
value  of an  obligation  assumed  under  a  guarantee.  FIN  45  also  requires
additional  disclosures  by a  guarantor  in its  interim  and annual  financial
statements  about  the  obligations   associated  with  guarantees  issued.  The
recognition  provisions  of FIN 45 are  effective  for  guarantees  issued after
December  31,  2002,  while  the  disclosure  requirements  were  effective  for
financial  statements for periods ending after December 15, 2002. At January 30,
2003,  the Company had not entered into any material  arrangement  that would be
subject to the disclosure  requirements of FIN 45. In addition, the Company does
not  believe  that the  adoption  of FIN 45 will have a  material  impact on the
Company's consolidated financial statements.

    In  January  2003  the  FASB  issued   Interpretation  No.  46  ("FIN  46"),
"Consolidation of Variable Interest Entities,  an Interpretation of ARB No. 51."
FIN 46 requires  certain  variable  interest  entities to be consolidated by the
primary  beneficiary of the entity if the equity  investors in the entity do not
have the  characteristics  of a  controlling  financial  interest or do not have
sufficient  equity at risk for the  entity to  finance  its  activities  without
additional  subordinated  financial  support  from  other  parties.  FIN  46  is
effective  for all new  variable  interest  entities  created or acquired  after
January 31, 2003. For variable  interest  entities  created or acquired prior to
February 1, 2003, the provisions of FIN 46 must be applied for the first interim
or annual  period  beginning  after June 15,  2003.  The  Company  is  currently
evaluating  the impact that the  adoption  of FIN 46 will have on the  Company's
consolidated financial statements.

Environmental
    The  Company  has  identified  environmental   contamination  sites  related
primarily to underground  petroleum storage tanks and groundwater  contamination
at various store,  warehouse,  office and manufacturing  facilities  (related to
current  operations as well as previously  disposed of properties).  The Company
conducts an ongoing  program for the  inspection and evaluation of potential new
sites 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  believed  to be remote.
Although  the  ultimate  outcome and  expense of  environmental  remediation  is
uncertain,  the  Company  believes  that the costs of required  remediation  and
continuing  compliance with  environmental  laws, in excess of current reserves,
will not have a material adverse effect on the financial  condition,  results of
operations  or  cash  flows  of  the  Company.   Charges  against  earnings  for
environmental remediation were not material in 2002, 2001 or 2000.


                                       22
<PAGE>

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk
    The  Company is exposed to certain  market  risks that are  inherent  in the
Company's financial  instruments,  which arise from transactions entered into in
the normal  course of  business.  From time to time,  the  Company  enters  into
certain derivative transactions allowed by the Company's risk management policy.
The Company does not enter into  derivative  financial  instruments  for trading
purposes.  The Company  uses  derivatives  primarily  as cash flow hedges to set
interest rates for forecasted debt issuances, such as interest rate locks.

    The Company is subject to interest rate risk on its fixed interest rate debt
obligations.  Commercial  paper  borrowings  do not  give  rise  to  significant
interest rate risk because these  borrowings  generally have  maturities of less
than three months.  Generally, the fair value of debt with a fixed interest rate
will  increase  as  interest  rates  fall,  and the fair value will  decrease as
interest rates rise.  The Company  manages its exposure to interest rate risk by
utilizing  a  combination  of  fixed  rate   borrowings  and  commercial   paper
borrowings.

    As of January 30, 2003, the Company had no foreign exchange  exposure and no
outstanding derivative transactions.  There have been no material changes in the
primary risk  exposures  or  management  of the risks since the prior year.  The
Company  expects to  continue  to manage  risks in  accordance  with the current
policy.

    The table below provides  information  about the Company's debt  obligations
that are sensitive to changes in interest rates. For debt obligations, the table
presents  principal cash flows and related  weighted  average  interest rates by
expected maturity dates:

<TABLE>
<CAPTION>
                                                                     THERE-                    FAIR
                        2003     2004     2005     2006     2007      AFTER       TOTAL       VALUE
--------------------- -------- -------- -------- -------- -------- ---------- ----------- -----------
<S>                    <C>      <C>      <C>        <C>     <C>     <C>         <C>         <C>
Fixed rate debt
  obligations          $ 105    $ 502    $ 202      $ 2     $ 12    $ 4,232     $ 5,055     $ 5,675
Weighted average
  interest rate          7.1%     6.6%     7.4%     8.1%     6.9%       7.5%        7.4%         -
</TABLE>


                                       23
<PAGE>



Item 8.  Consolidated Financial Statements and Supplementary Data

Albertsons
Index to Consolidated Financial Statements

<TABLE>
<CAPTION>
                                                                                                Page
                                                                                               Number
<S>                                                                                              <C>
Independent Auditors' Report                                                                     25
Consolidated Earnings for the fiscal years ended January 30, 2003, January 31, 2002 and
   February 1, 2001                                                                              26
Consolidated Balance Sheets at January 30, 2003 and January 31, 2002                             27
Consolidated Cash Flows for the fiscal years ended January 30, 2003, January 31, 2002 and
   February 1, 2001                                                                              28
Consolidated Stockholders' Equity for the fiscal years ended January 30, 2003,
   January 31, 2002 and February 1, 2001                                                         29
Notes to Consolidated Financial Statements                                                       30
</TABLE>


                                       24
<PAGE>


INDEPENDENT
AUDITORS' REPORT




    To the Board of Directors and Stockholders of Albertson's, Inc.:

    We have audited the accompanying consolidated balance sheets of Albertson's,
Inc.,  and  subsidiaries  as of January 30, 2003 and January 31,  2002,  and the
related  consolidated  statements of earnings,  stockholders'  equity,  and cash
flows for each of the three years in the period ended  January 30,  2003.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

    We conducted our audits in  accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

    In our opinion,  such consolidated  financial  statements present fairly, in
all  material  respects,  the  financial  position  of  Albertson's,  Inc.,  and
subsidiaries  at January 30, 2003 and January 31, 2002, and the results of their
operations  and their cash flows for each of the three years in the period ended
January 30, 2003, in conformity with accounting principles generally accepted in
the United States of America.

    As discussed in the notes to the consolidated  financial statements,  during
the year ended January 30, 2003,  the Company  changed its methods of accounting
for  goodwill  (Notes B and M) and for  closed  stores  (Note E) to  conform  to
Statements  of Financial  Accounting  Standards No. 142 and 144. Also during the
year ended January 30, 2003,  the Company  changed its method of accounting  for
vendor  funds  (Notes B and C)  to conform  to Emerging  Issues Task Force Issue
No. 02-16.



\S\  Deloitte & Touche LLP

Deloitte & Touche LLP
Boise, Idaho
March 20, 2003


                                       25
<PAGE>


ALBERTSON'S, INC.
CONSOLIDATED EARNINGS

<TABLE>
<CAPTION>
FOR THE 52 WEEKS ENDED                                          JANUARY 30,        JANUARY 31,        FEBRUARY 1,
(IN MILLIONS, EXCEPT PER SHARE DATA)                                   2003               2002               2001
---------------------------------------------------------- ----------------- ------------------ ------------------

<S>                                                                <C>                <C>                <C>
Sales                                                              $ 35,626           $ 36,605           $ 35,501
Cost of sales                                                        25,242             26,179             25,409
---------------------------------------------------------- ----------------- ------------------ ------------------
Gross profit                                                         10,384             10,426             10,092
Selling, general and administrative expenses                          8,604              8,731              8,444
Restructuring (credits) charges and other                               (37)               468                 -
Gain on sale of New England Osco drugstores                              -                 (54)                -
Merger-related (credits) charges                                         -                 (15)                24
---------------------------------------------------------- ----------------- ------------------ ------------------
Operating profit                                                      1,817              1,296              1,624
Other expenses:
  Interest, net                                                        (396)              (425)              (378)
  Other, net                                                            (16)                (8)                (3)
---------------------------------------------------------- ----------------- ------------------ ------------------
Earnings from continuing operations before taxes                      1,405                863              1,243
Income tax expense                                                      540                367                497
---------------------------------------------------------- ----------------- ------------------ ------------------
Earnings from continuing operations                                     865                496                746
Discontinued operations:
  Operating (loss) income                                               (50)                10                 31
  Loss on disposition                                                  (379)                -                  -
  Tax (benefit) expense                                                (143)                 5                 12
---------------------------------------------------------- ----------------- ------------------ ------------------
Net (loss) earnings from discontinued operations                       (286)                 5                 19
Earnings before cumulative effect of change in
  accounting principle                                                  579                501                765
---------------------------------------------------------- ----------------- ------------------ ------------------
Cumulative effect of change in accounting  principle (net
  of tax of $60)                                                        (94)                -                  -
---------------------------------------------------------- ----------------- ------------------ ------------------
Net Earnings                                                       $    485           $    501           $    765
========================================================== ================= ================== ==================

Basic Earnings Per Share:
  Continuing operations                                              $ 2.18             $ 1.22             $ 1.78
  Discontinued operations                                             (0.72)              0.01               0.05
  Cumulative effect of change in accounting principle
   (net of tax of $0.15)                                              (0.24)                -                  -
---------------------------------------------------------- ----------------- ------------------ ------------------
  Net Earnings                                                       $ 1.22             $ 1.23             $ 1.83
========================================================== ================= ================== ==================

Diluted Earnings Per Share:
  Continuing operations                                              $ 2.17             $ 1.22             $ 1.78
  Discontinued operations                                             (0.72)              0.01               0.05
  Cumulative effect of change in accounting principle
   (net of tax of $0.15)                                              (0.23)                -                  -
---------------------------------------------------------- ----------------- ------------------ ------------------
  Net Earnings                                                       $ 1.22             $ 1.23             $ 1.83
========================================================== ================= ================== ==================

Weighted Average Common Shares Outstanding:
  Basic                                                                 397                406                418
  Diluted                                                               399                408                418
</TABLE>

See Notes to Consolidated Financial Statements

                                       26
<PAGE>


ALBERTSON'S, INC.
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                  JANUARY 30,        JANUARY 31,
(IN MILLIONS, EXCEPT PAR VALUE DATA)                                                     2003               2002
-------------------------------------------------------------------------- ------------------- ------------------

<S>                                                                                  <C>                <C>
ASSETS
Current Assets:
  Cash and cash equivalents                                                          $    162           $     61
  Accounts and notes receivable, net                                                      647                696
  Inventories                                                                           2,973              3,196
  Assets held for sale                                                                    120                326
  Prepaid and other                                                                       366                344
-------------------------------------------------------------------------- ------------------- ------------------
    Total Current Assets                                                                4,268              4,623
Land, Buildings and Equipment, net                                                      9,029              9,282
Goodwill, net                                                                           1,399              1,468
Intangibles, net                                                                          214                210
Other Assets                                                                              301                398
-------------------------------------------------------------------------- ------------------- ------------------
Total Assets                                                                         $ 15,211           $ 15,981
========================================================================== =================== ==================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Accounts payable                                                                   $  2,009           $  2,107
  Salaries and related liabilities                                                        599                584
  Self-insurance                                                                          244                198
  Current maturities of long-term debt and capital lease obligations                      119                137
  Other current liabilities                                                               477                570
-------------------------------------------------------------------------- ------------------- ------------------
    Total Current Liabilities                                                           3,448              3,596
Long-Term Debt                                                                          4,950              5,060
Capitalized Lease Obligations                                                             307                276
Self-Insurance                                                                            367                307
Other Long-Term Liabilities and Deferred Credits                                          942                827
Commitments and Contingencies                                                              -                  -
Stockholders' Equity:
  Preferred stock - $1.00 par value; authorized - 10 shares; designated -
    3 shares of Series A Junior Participating; issued - none
  Common stock - $1.00 par value; authorized - 1,200 shares; issued -
    372 shares and 407 shares, respectively                                               372                407
  Capital in excess of par                                                                128                 94
  Accumulated other comprehensive loss                                                    (96)               (19)
  Retained earnings                                                                     4,793              5,433
-------------------------------------------------------------------------- ------------------- ------------------
Total Stockholders' Equity                                                              5,197              5,915
-------------------------------------------------------------------------- ------------------- ------------------
Total Liabilities and Stockholders' Equity                                           $ 15,211           $ 15,981
========================================================================== =================== ==================
</TABLE>

    See Notes to Consolidated Financial Statements

                                       27
<PAGE>


ALBERTSON'S, INC.
CONSOLIDATED CASH FLOWS

<TABLE>
<CAPTION>
FOR THE 52 WEEKS ENDED                                           JANUARY 30,        JANUARY 31,        FEBRUARY 1,
(IN MILLIONS)                                                           2003               2002               2001
----------------------------------------------------------- ----------------- ------------------ ------------------

<S>                                                                  <C>                <C>                <C>
Cash Flows From Operating Activities:
  Net earnings                                                       $   485            $   501            $   765
  Adjustments to reconcile net earnings to net cash
  provided by operating activities:
    Depreciation and amortization                                        966                970                944
    Goodwill amortization                                                 -                  56                 57
    Discontinued operations noncash charges                              338                 -                  -
    Restructuring and other noncash (credits) charges                    (10)               442                 -
    Gain on sale of New England Osco drugstores                           -                 (54)                -
    Cumulative effect of change in accounting principle                   94                 -                  -
    Net deferred income taxes and other                                  124               (106)                14
    Changes in operating assets and liabilities:
      Receivables and prepaid expenses                                    21               (110)               (29)
      Inventories                                                        111                 40                118
      Accounts payable                                                   (99)               (68)                -
      Other current liabilities                                          (89)               287               (175)
    Self-insurance                                                       106                 71                 24
    Unearned income                                                       32                  3                 19
    Other long-term liabilities                                          (16)               (23)                34
----------------------------------------------------------- ----------------- ------------------ ------------------
      Net cash provided by operating activities                        2,063              2,009              1,771
----------------------------------------------------------- ----------------- ------------------ ------------------

Cash Flows From Investing Activities:
  Capital expenditures                                                (1,359)            (1,455)            (1,771)
  Proceeds from disposal of land, buildings and
   equipment                                                             101                288                189
  Proceeds from disposal of assets held for sale                         578                118                 -
  Decrease (increase) in other assets                                     15                (31)                33
----------------------------------------------------------- ----------------- ------------------ ------------------
    Net cash used in investing activities                               (665)            (1,080)            (1,549)
----------------------------------------------------------- ----------------- ------------------ ------------------

Cash Flows From Financing Activities:
  Stock purchases and retirements                                       (862)                -                (451)
  Cash dividends paid                                                   (306)              (309)              (315)
  Payments on long-term borrowings                                      (143)               (89)              (417)
  Proceeds from stock options exercised                                   14                 23                  6
  Net commercial paper activity and bank borrowings                       -              (1,153)              (475)
  Proceeds from long-term borrowings                                      -                 623              1,222
----------------------------------------------------------- ----------------- ------------------ ------------------
    Net cash used in financing activities                             (1,297)              (905)              (430)
----------------------------------------------------------- ----------------- ------------------ ------------------
Net Increase (Decrease) in Cash and Cash Equivalents                     101                 24               (208)
----------------------------------------------------------- ----------------- ------------------ ------------------
Cash and Cash Equivalents at Beginning of Year                            61                 37                245
----------------------------------------------------------- ----------------- ------------------ ------------------
Cash and Cash Equivalents at End of Year                             $   162            $    61            $    37
=========================================================== ================= ================== ==================
</TABLE>

See Notes to Consolidated Financial Statements





                                       28
<PAGE>


ALBERTSON'S, INC.
CONSOLIDATED STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                   COMMON    CAPITAL      ACCUMULATED
                                    STOCK  IN EXCESS            OTHER                      TOTAL
                                $1.00 PAR     OF PAR    COMPREHENSIVE   RETAINED   STOCKHOLDERS'   COMPREHENSIVE
 (DOLLARS IN MILLIONS)              VALUE      VALUE    (LOSS) INCOME   EARNINGS          EQUITY          INCOME
-----------------------------------------------------------------------------------------------------------------
<S>                                  <C>        <C>              <C>     <C>             <C>                <C>
 Balance at February 3, 2000         $424       $145               -     $ 5,133         $ 5,702            $404
                                                                                                            ====
 Net earnings                          -          -                -         765             765            $765
 Deferred tax adjustment
   related to stock options            -         (12)              -          -              (12)             -
 Exercise of stock options             -           6               -          -                6              -
 Stock purchases and
   retirements -
   18,659,200 shares                  (19)       (92)              -        (340)           (451)             -
 Deferred stock unit plan              -           1               -          -                1              -
 Dividends                             -          -                -        (317)           (317)             -
-----------------------------------------------------------------------------------------------------------------
 Balance at February 1, 2001          405         48               -       5,241           5,694            $765
                                                                                                            ====
 Net earnings                          -          -                -         501             501            $501
 Exercise of stock options,
   including tax benefits               2         26               -          -               28              -
 Deferred stock unit plan              -          19               -          -               19              -
 Directors' stock plan                 -           1               -          -                1              -
 Dividends                             -          -                -        (309)           (309)             -
 Minimum pension liability
   adjustment (net of tax of
   $16)                                -          -              $(23)        -              (23)            (23)
 Interest rate locks:
   Cumulative effect of
   adoption of new accounting
   principle (net of tax of $3)        -          -                 5         -                5               5
   Loss on settled contracts
   (net of tax of $1)                  -          -                (1)        -               (1)             (1)
-----------------------------------------------------------------------------------------------------------------
 Balance at January 31, 2002          407         94              (19)     5,433           5,915            $482
                                                                                                            ====
 Net earnings                          -          -                -         485             485            $485
 Exercise of stock options,
   including tax benefits              -          15               -          -               15              -
 Stock purchases and
   retirements - 35,129,397
   shares                             (35)        -                -        (827)           (862)             -
 Deferred stock unit plan              -          18               -          -               18              -
 Directors' stock plan                 -           1               -          -                1              -
 Dividends                             -          -                -        (298)           (298)             -
 Minimum pension liability
   adjustment (net of tax of
   $49)                                -          -               (77)        -              (77)            (77)
-----------------------------------------------------------------------------------------------------------------
 Balance at January 30, 2003         $372       $128             $(96)   $ 4,793         $ 5,197            $408
=================================================================================================================
</TABLE>

    See Notes to Consolidated Financial Statements


                                       29
<PAGE>


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

Note A - Business Description and Basis of Presentation
    Albertson's,  Inc. ("Albertsons" or 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.  On June 23, 1999,  Albertsons  and American  Stores  Company
("ASC")   consummated   a   merger,   which   has  been   accounted   for  as  a
pooling-of-interests.  Based on sales,  the Company is one of the largest retail
food and drug chains in the world.  As of January 30, 2003 the Company  operated
2,287 stores in 31 states.  Retail  operations are supported by 17 major Company
distribution  operations,  strategically  located  in  the  Company's  operating
markets.

    The consolidated  financial statements have been prepared in accordance with
accounting  principles  generally  accepted in the United States and include all
entities  in  which  the  Company  has  control,  including  its  majority-owned
subsidiaries.  All material  intercompany  transactions  and balances  have been
eliminated.

Note B - Summary of Significant Accounting Policies
Fiscal  Year End:  The  Company's  fiscal year ends on the  Thursday  nearest to
January 31. As a result,  the Company's fiscal year includes a 53rd week every 5
to 6 years.  Fiscal years 2002, 2001, and 2000 each contained 52 weeks and ended
on January 30, 2003, January 31, 2002, and February 1, 2001.

Use Of  Estimates:  The  preparation  of the  Company's  consolidated  financial
statements,  in conformity with accounting  principles generally accepted in the
United States,  requires  management to make estimates and assumptions.  Some of
these estimates require difficult, subjective or complex judgments about matters
that are  inherently  uncertain.  As a result,  actual results could differ from
these estimates.  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.

Segment  Information:  The Company  operates retail food and drug stores.  These
operations are within a single  operating  segment and all are within the United
States.

Derivatives:  From time to time,  the  Company  enters into  certain  derivative
transactions  allowed by the Company's risk management  policy. The Company does
not enter into  derivative  financial  instruments  for  trading  purposes.  The
Company uses derivatives primarily as cash flow hedges to set interest rates for
forecasted debt issuances, such as interest rate locks. These contracts are with
major financial institutions and are very short-term in nature. The gain or loss
on interest rate locks is deferred in other comprehensive  income and recognized
over the life of the  related  debt  instrument  as an  adjustment  to  interest
expense.

Cash and Cash Equivalents:  The Company considers all highly liquid  investments
with a  maturity  of three  months  or less at the time of  purchase  to be cash
equivalents.

Inventories: The Company values inventories at the lower of cost or market. Cost
of  substantially  all inventories is determined on a last-in,  first-out (LIFO)
basis.

Vendor Funds: The Company receives funds from many of the vendors whose products
the Company  buys for resale in its stores.  These  vendor funds are provided to
increase the  sell-through of the related  products.  The Company receives funds
for a variety of merchandising activities: placement of the vendor's products in
the  Company's  advertising;  placement  of the  vendor's  products in prominent
locations  in the  Company's  stores;  introduction  of new  products  into  the
Company's  distribution system and retail stores;  exclusivity rights in certain
categories that have  slower-turning  products;  and to compensate for temporary
price  reductions  offered  to  customers  on  products  held for sale at retail
stores.  The Company also receives vendor funds for buying  activities,  such as
volume commitment rebates and forward buy credits.

    Accounting  for vendor  funds is  discussed  in  Emerging  Issues Task Force
"EITF" Issue 02-16:  Accounting by a Customer (Including a Reseller) for Certain
Consideration  Received  from a Vendor (EITF  02-16),  in which the EITF reached
consensus on two issues in November 2002 and provided  transition rules on those
issues in January  2003 and March 2003.  As a result of this new  guidance,  the
Company adopted a new method for recognizing the vendor funds for  merchandising
activities. As of the beginning of 2002, the Company recognizes vendor funds for
merchandising  activities when the related products are sold. Under the previous
accounting method for merchandising  vendor funds, these credits were recognized
as an offset to cost of sales when the  merchandising  activity was performed in
accordance with the underlying agreements. In connection with the implementation
of this new accounting method, the Company recorded a charge in 2002 of $94, net
of tax benefit of $60.

                                       30
<PAGE>

    The vendor fund inventory  offset  recorded as of January 30, 2003 was $152,
which is a $6  decrease  from  the  balance  as of the  beginning  of 2002.  The
inventory  offset was  determined by estimating the average  inventory  turnover
rates by product  category for the Company's  grocery,  general  merchandise and
lobby departments, and by average inventory turnover rates by department for the
Company's remaining inventory.

Capitalization, Depreciation and Amortization: Land, buildings and equipment are
recorded at cost.  Depreciation is provided on the straight-line method over the
estimated  useful life of the asset.  Estimated  useful  lives are  generally as
follows:  buildings and improvements-10 to 35 years; fixtures and equipment-3 to
8  years;  software-3  to  5  years;  leasehold  improvements-10  to  25  years;
intangibles-3  to 10 years;  and assets held under  capitalized  leases-20 to 30
years.

    The  costs of  major  remodeling  and  improvements  on  leased  stores  are
capitalized as leasehold  improvements.  Leasehold improvements are amortized on
the straight-line method over the shorter of the life of the applicable lease or
the useful life of the asset.  Assets under  capital  leases are recorded at the
lower of the fair  market  value of the  asset or the  present  value of  future
minimum lease payments,  and they are amortized on the straight-line method over
their primary term.

    Beneficial  lease  rights and lease  liabilities  are  recorded on purchased
leases based on differences between contractual rents under the respective lease
agreements  and  prevailing  market rents at the date of the  acquisition of the
lease.  Beneficial  lease rights and lease  liabilities  are amortized  over the
lease term using the straight-line method.

Goodwill: Goodwill resulting from business acquisitions represents the excess of
cost over fair value of net assets acquired. Beginning in 2002 with the adoption
of Statement of Financial  Accounting  Standards  ("SFAS") No. 142, Goodwill and
Other Intangible Assets, goodwill is no longer amortized, but instead tested for
impairment  at least  annually,  or more  frequently if  circumstances  indicate
potential impairment, through a comparison of fair value to its carrying amount.
Prior to 2002,  goodwill was amortized using the  straight-line  method over its
estimated period of benefit, 40 years.

Company Owned Life Insurance:  The Company has purchased life insurance policies
to fund its obligations under certain deferred  compensation plans for officers,
key  employees  and  directors.  Cash  surrender  values of these  policies  are
adjusted for  fluctuations  in the market value of underlying  investments.  The
cash surrender  value is adjusted each reporting  period and any gain or loss is
included  with  other,  net  (expense)  income  in  the  Company's  Consolidated
Earnings.

Impairment of Long Lived Assets and Closed Store Reserves:  The Company assesses
the  impairment  of  long-lived  assets when events or changes in  circumstances
indicate  that the  carrying  value of the assets or the asset  group may not be
recoverable.  The asset impairment  review assesses the fair value of the assets
based on the  future  cash  flows  the  assets  are  expected  to  generate.  An
impairment  loss is recognized  when  estimated  undiscounted  future cash flows
expected to result from the use of the asset plus net proceeds expected from the
disposition  of the asset (if any) are less than the  related  asset's  carrying
amount.  Impairment  losses are  measured  as the  amount by which the  carrying
amounts of the assets exceed their fair values.  The net proceeds  expected from
the  disposition of the asset are  determined by independent  quotes or expected
sales prices developed by internal  specialists.  Estimates of future cash flows
and expected  sales prices are judgments  based on the Company's  experience and
knowledge of local operations.  These estimates can be significantly impacted by
changes in real estate  market  conditions,  the economic  environment,  capital
spending decisions and inflation.

    For properties to be closed that are under long-term lease  agreements,  the
present  value of any  remaining  liability  under the lease,  discounted  using
risk-free  rates and net of  expected  sublease  recovery,  is  recognized  as a
liability  and  expensed.  (Beginning  on January 1,  2003,  "expected  sublease
recovery"  has been  replaced  by  "estimated  sublease  rentals  that  could be
reasonably obtained for the property.") The value of any equipment and leasehold
improvements  related to a closed  store is reduced to reflect  net  recoverable
values.  Internal specialists  estimate the subtenant income,  future cash flows
and asset recovery values based on their historical  experience and knowledge of
(1) the market in which the store to be closed is  located,  (2) the  results of
its previous  efforts to dispose of similar assets and (3) the current  economic
conditions.  The actual cost of disposition  for these leases and related assets
is affected by  specific  real estate  markets,  the  economic  environment  and
inflation.

Self-Insurance:   The  Company is  primarily  self-insured  for  property  loss,
workers'  compensation,  automobile and general liability costs.  Self-insurance
liabilities are determined  actuarially  based on claims filed and estimates for
claims  incurred but not  reported.  The majority of these  liabilities  are not
discounted.


                                       31
<PAGE>

Deferred Rent: The Company  recognizes  rent holidays and rent  escalations on a
straight-line  basis over the term of the lease.  The  deferred  rent  amount is
included in other long-term  liabilities  and deferred  credits on the Company's
Consolidated Balance Sheets.

Revenue  Recognition:  Revenue  is  recognized  at the point of sale for  retail
sales. The discount earned by customers by using their preferred loyalty card is
recorded  by the  Company  as a  reduction  to  sales  price.  The  only  income
recognized  from any in-store  rental  arrangement is the lease amount  received
based on space occupied.

Store Opening Costs:  Noncapital  expenditures incurred in opening new stores or
remodeling existing stores are expensed in the year in which they are incurred.

Advertising:  Advertising  costs incurred to produce media advertising for major
new  campaigns  are  expensed in the year in which the  advertising  first takes
place.  Other  advertising  costs are expensed when incurred.  In 2001 and 2000,
cooperative advertising funds from vendors were recorded in the period which the
related expense was incurred.  In 2002 vendor funds were considered as described
above. Gross advertising expenses of $527, $537 and $550, excluding  cooperative
advertising money received from vendors, were included with cost of sales in the
Company's Consolidated Earnings for 2002, 2001 and 2000, respectively.

Stock  Based   Compensation:   SFAS  No.  123,   "Accounting   for   Stock-Based
Compensation,"   encourages,   but  does  not   require,   companies  to  record
compensation cost for stock-based employee compensation plans at fair value. The
Company has chosen to continue to account for stock-based compensation using the
intrinsic value method prescribed in Accounting Principles Board Opinion ("APB")
No. 25, "Accounting for Stock Issued to Employees," and related Interpretations.
Accordingly,  compensation  cost of stock-based  compensation is measured as the
excess, if any, of the quoted market price of the Company's stock at the date of
the grant over the option  exercise price and is charged to operations  over the
vesting period.  Income tax benefits attributable to stock options exercised are
credited to capital in excess of par value.

    If the fair  value-based  accounting  method was  utilized  for  stock-based
compensation,  the Company's pro forma net earnings and earnings per share would
have been as follows:

<TABLE>
<CAPTION>
                                                                        2002         2001        2000
       ------------------------------------------------------- -------------- ------------ -----------
<S>                                                                    <C>           <C>        <C>
       Net Earnings as reported                                        $ 485        $ 501       $ 765

       Add:  Stock based compensation expense included in
         reported net earnings, net of related tax effects                12           11           1
       --------------------------------------------------------- ------------ ------------ -----------

       Deduct:  Total stock-based compensation expense
         determined under fair value based method for all
         awards, net of related tax effects                              (44)         (41)        (27)
       --------------------------------------------------------- ------------ ------------ -----------
       Pro Forma Net Earnings                                          $ 453        $ 471       $ 739
       ========================================================= ============ ============ ===========

       Basic Earnings Per Share:
         As Reported                                                  $ 1.22       $ 1.23      $ 1.83
         Pro Forma                                                      1.14         1.16        1.77
       ========================================================= ============ ============ ===========

       Diluted Earnings Per Share:
         As Reported                                                  $ 1.22       $ 1.23      $ 1.83
         Pro Forma                                                      1.14         1.15        1.77
       ========================================================= ============ ============ ===========
</TABLE>

    The 2002,  2001 and 2000 pro forma net earnings  resulted  from reported net
earnings less pro forma after-tax  compensation expense. The pro forma effect on
net  earnings is not  representative  of the pro forma effect on net earnings in
future years.

Income  Taxes:  Income  taxes are  accounted  for under the asset and  liability
method.  Deferred income taxes represent  future net tax effects  resulting from
temporary  differences  between the financial  statement and tax basis of assets
and  liabilities  using  enacted  tax rates in effect  for the year in which the
differences  are  expected  to be  settled  or  realized.  The  major  temporary
differences  and their net effect are shown in the  "Income  Taxes"  Note to the
Consolidated Financial Statements.

Earnings Per Share  (EPS):  Basic EPS is computed by dividing  consolidated  net
earnings by the weighted  average number of common shares  outstanding.  Diluted
EPS is computed by dividing consolidated net earnings by the sum of the weighted
average number of common shares  outstanding and the weighted  average number of


                                       32
<PAGE>

potential common shares  outstanding.  Potential common shares consist primarily
of outstanding in-the-money options under the Company's stock option plans.

Comprehensive  Income:  The Company reports  comprehensive  income in accordance
with SFAS No. 130, "Reporting Comprehensive Income." Comprehensive income refers
to  revenues,  expenses,  gains and losses that are not included in net earnings
but rather are recorded directly in stockholders' equity. Items of comprehensive
income  other than net  earnings  were  primarily  related  to  minimum  pension
liability  of $126  ($77 net of tax) and $39 ($23 net of tax) for 2002 and 2001,
respectively.

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


Note C - Cumulative Effect of Change in Accounting Principle

    As  discussed in Note B - Summary of  Significant  Accounting  Policies,  in
2002, the Company adopted a new method for  recognizing  vendor funds related to
merchandising  activities.  The  pro  forma  amounts  shown  below  reflect  the
retroactive  application of the new method as if it had been in effect for 2002,
2001 and 2000.

<TABLE>
<CAPTION>
                                                                               2002          2001           2000
---------------------------------------------------------------------- ------------- ------------- --------------
<S>                                                                           <C>           <C>            <C>
Net earnings                                                                  $ 579         $ 497          $ 770

   Earnings per share - basic                                                 $1.46         $1.22          $1.84
   Earnings per share - diluted                                               $1.45         $1.22          $1.84
</TABLE>

Note D - New Accounting Standards

    In July 2001 the Financial  Accounting  Standard Board ("FASB")  issued SFAS
No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 will become
effective for Albertsons on January 31, 2003. This statement addresses financial
accounting  and  reporting for  obligations  associated  with the  retirement of
tangible  long-lived  assets and the  associated  asset  retirement  costs.  The
Company is currently  analyzing  the impact that this  standard will have on its
consolidated  financial  statements,  but  believes  it will not have a material
impact on the Company's consolidated financial statements.

    In April 2002 the FASB issued SFAS No. 145,  "Rescission of FASB  Statements
No.  4,  44  and  64,   Amendment  of  FASB  Statement  No.  13,  and  Technical
Corrections."  The statement  rescinds SFAS No. 4,  "Reporting  Gains and Losses
from  Extinguishment of Debt," and an amendment of that statement,  SFAS No. 64,
"Extinguishments  of  Debt  Made to  Satisfy  Sinking-Fund  Requirements."  As a
result,  gains  and  losses  from  extinguishment  of  debt  will no  longer  be
aggregated  and classified as an  extraordinary  item, net of related income tax
effect, on the statement of earnings. SFAS No. 145 is effective for fiscal years
beginning  after  May  15,  2002,  with  earlier  application  encouraged.   The
provisions  of  SFAS  No.  145  will  be  effective  for  fiscal year  beginning
January 31, 2003.  The  adoption of SFAS No. 145 will not have a material impact
on the Company's consolidated financial statements.

    In June 2002 the SFAS No. 146, "Accounting for Costs Associated with Exit or
Disposal  Activities" was issued.  This statement  nullifies  existing  guidance
related  to the  accounting  and  reporting  for costs  associated  with exit or
disposal  activities and requires that the fair value of a liability  associated
with an exit or disposal  activity be recognized when the liability is incurred.
Under  previous  guidance,  certain exit costs were permitted to be accrued upon
management's  commitment  to an exit plan,  which is generally  before an actual
liability has been incurred. The provisions of this statement are required to be
adopted for all exit or disposal  activities  initiated after December 31, 2002.
This statement will not impact any  liabilities  recorded prior to adoption.  As
required the Company will adopt SFAS No. 146 effective in 2003. The Company does
not expect that the adoption of this  statement  will have a material  impact on
the Company's consolidated financial statements.

    In December 2002 the FASB issued SFAS No. 148,  "Accounting  for Stock-Based
Compensation,  Transition  and  Disclosure."  SFAS No. 148 provides  alternative
methods of transition  for a voluntary  change to the fair value based method of
accounting for stock-based  employee  compensation.  The  accompanying  Note Q -
Stock Options and Stock Awards - satisfies the disclosure  requirements  of SFAS
No. 148.

    In  November  2002 the FASB issued  FASB  Interpretation  No. 45 ("FIN 45"),
"Guarantor's  Accounting and Disclosure  Requirements for Guarantees,  Including
Indirect  Guarantees  of  Indebtedness  of Others."  FIN 45  requires  that upon
issuance of a guarantee,  a guarantor  must  recognize a liability  for the fair
value  of an  obligation  assumed  under  a  guarantee.  FIN  45  also  requires


                                       33
<PAGE>

additional  disclosures  by a  guarantor  in its  interim  and annual  financial
statements  about  the  obligations   associated  with  guarantees  issued.  The
recognition  provisions  of FIN 45 are  effective  for  guarantees  issued after
December  31,  2002,  while  the  disclosure  requirements  were  effective  for
financial  statements for periods ending after December 15, 2002. At January 30,
2003,  the Company had not entered into any material  arrangement  that would be
subject to the disclosure  requirements of FIN 45. In addition, the Company does
not  believe  that the  adoption  of FIN 45 will have a  material  impact on the
Company's consolidated financial statements.

    In  January  2003  the  FASB  issued   Interpretation  No.  46  ("FIN  46"),
"Consolidation of Variable Interest Entities,  an Interpretation of ARB No. 51."
FIN 46 requires  certain  variable  interest  entities to be consolidated by the
primary  beneficiary of the entity if the equity  investors in the entity do not
have the  characteristics  of a  controlling  financial  interest or do not have
sufficient  equity at risk for the  entity to  finance  its  activities  without
additional  subordinated  financial  support  from  other  parties.  FIN  46  is
effective  for all new  variable  interest  entities  created or acquired  after
January 31, 2003. For variable  interest  entities  created or acquired prior to
February 1, 2003, the provisions of FIN 46 must be applied for the first interim
or annual  period  beginning  after June 15,  2003.  The  Company  is  currently
evaluating  the effect that the  adoption  of FIN 46 will have on the  Company's
consolidated financial statements.

Note E - Discontinued Operations/Market Exits
    On March 13, 2002,  the  Company's  Board of  Directors  approved the second
phase of the Company's  restructuring  plan designed to improve future financial
results and to drive future competitiveness. This phase of the plan included the
complete exit of four underperforming markets:  Memphis,  Tennessee;  Nashville,
Tennessee;  Houston,  Texas; and San Antonio,  Texas.  This involved the sale or
closure of 95 stores and two  distribution  centers,  and  reduction of division
offices  from 15 to 11.  These  sales  and  closures  were  evaluated  for lease
liability  or asset  impairment,  including  goodwill,  in  accordance  with the
Company's policy. The prior years' operating  activities for these 95 stores and
two distribution  centers,  and reduction of division offices from 15 to 11 have
been reclassified to discontinued  operations:  "Operating (loss) income" in the
accompanying earnings statement.

    The discontinued  operations generated sales of $290, $1,326, and $1,261, in
2002,  2001, and 2000,  respectively,  and an operating loss of $429,  operating
profit  of $10 and  operating  profit  of $31,  respectively.  The  discontinued
operations operating loss of $429 in 2002 consisted of a loss from operations of
$50  and  asset  impairments,  lease  settlements  and  other  costs  of $379 as
described in the following table:

<TABLE>
<CAPTION>
                                                       NONCASH                                TOTAL CHARGES
                                                       CHARGES               ACCRUALS             (CREDITS)
                                            -------------------    -------------------    ------------------

<S>                                                      <C>                 <C>                    <C>
   Asset impairments                                     $ 401               $     -                $   401
   Lease settlements                                        -                      26                    26
   Severance and outplacement                               -                      23                    23
   Other                                                    -                       2                     2
   Gain on asset sales                                     (63)                    -                    (63)
   Favorable lease settlements                              -                     (10)                  (10)
                                                                                          ------------------
     Loss on disposal                                                                               $   379
                                                                                          ==================
   Cash payments during 2002                                                      (30)
                                                                   -------------------
     Reserve balance at January 30, 2003                                     $     11
                                                                   ===================
</TABLE>

    The reserve  balance of $11 as of January  30, 2003 is included  with "Other
current liabilities" in the Company's Consolidated Balance Sheet.

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

    Assets related to  discontinued  operations are recorded at their  estimated
net  realizable  value of $25 as of January 30, 2003 and are  reported as Assets
held for sale in the Company's  Consolidated Balance Sheet. These assets include
land,  buildings,  equipment and leasehold  improvements  and are being actively
marketed.  As of January 30, 2003, all 95 stores and both  distribution  centers
were closed.  In addition,  the Company had either sold or terminated the leases
related to 82 of the 95 stores and both  distribution  centers as of January 30,
2003.


                                       34
<PAGE>

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

Note F - Restructuring
    In the first half of 2001, the Company  initiated a profitability  review of
all of its retail  stores,  utilizing a methodology  based on return on invested
capital.  The Company also evaluated its division  management  structure and the
efficiency of its transaction processing departments. Based on these reviews, in
July  2001  the  Company  committed to the following  restructuring  activities:
1) close and dispose of  165 underperforming  stores in 25 states;  2) eliminate
four   of   the   existing   19   division  offices;  3) sell  a  store  fixture
manufacturing operation; 4) centralize certain transaction  processing functions
in Boise, Idaho; and 5) reduce general office head count.

    These   restructuring   activities  called  for  the  elimination  of  1,341
managerial and administrative  positions  (excluding store level  terminations).
The  restructuring  charge  recorded in 2001  included the  following:  employee
severance  and  outplacement  costs of $44,  asset  impairments  of $361;  lease
termination costs of $57; and other costs of $6.

    In 2001 and  2002,  80 and 82  stores  were  closed  or sold and 995 and 297
managerial and administrative employees were terminated,  respectively. In 2002,
management revised the planned  restructuring  activities as follows:  the store
fixture manufacturing operation's performance was re-evaluated and determined to
be more  cost-effective  than purchasing  like-fixtures from external sources in
the  future,  so it will be held and used;  one  store's  operating  performance
improved due to local market  conditions,  so it too will be held and used;  and
one  part  of the  transaction  processing  consolidation  was  halted  due to a
decision to replace the Company's human resource information systems (HRIS) over
the next two to three years. The remaining two stores in this restructuring plan
will be closed in 2003.

    The following table presents the pre-tax  restructuring  credits and charges
and the related  restructuring  reserves included in the Company's  Consolidated
Balance Sheets:

<TABLE>
<CAPTION>
                                                       NONCASH                                TOTAL CHARGES
                                                       CHARGES               ACCRUALS             (CREDITS)
                                            -------------------    -------------------    ------------------
<S>                                                      <C>                 <C>                    <C>
2001 Activity
   Asset impairments                                     $ 361               $     -               $    361
   Lease settlements                                        -                      57                    57
   Severance and outplacement                               -                      44                    44
   Other                                                    -                       6                     6
                                                                                          ------------------
     Restructuring (credits) charges                                                               $    468
                                                                                          ==================
   Cash payments during 2001                                                      (46)
                                                                   -------------------
     Reserve balance at January 31, 2002                                           61

2002 Activity
   Retain store fixtures operation                          (3)                    (2)             $     (5)
   Halt part of consolidation - HRIS                        -                      (2)                   (2)
   Gains on asset sales                                    (17)                    -                    (17)
   Favorable lease settlements                              -                     (14)                  (14)
   Severance and outplacement                               -                       2                     2
   Other                                                    -                      (1)                   (1)
                                                                                          ------------------
     Restructuring (credits) charges                                                               $    (37)
                                                                                          ==================
   Cash payments during 2002                                                      (16)
                                                                   -------------------
     Reserve balance at January 30, 2003                                     $     28
                                                                   ===================
</TABLE>

    The reserve  balances of $28 at January 30, 2003 and $61 at January 31, 2002
are  included  in  the  "Other  current   liabilities"  line  on  the  Company's
Consolidated Balance Sheets.


                                       35
<PAGE>


Note G - Closed Store Reserves
    The following table shows the pre-tax  expense,  and related  reserves,  for
closed stores and other surplus property:

<TABLE>
<CAPTION>
                                                         NONCASH                                TOTAL CHARGES
                                                         CHARGES               ACCRUALS             (CREDITS)
                                               ------------------    -------------------    ------------------
<S>                                                       <C>                    <C>                   <C>
Reserve balance at February 3, 2000                                              $   25
2000 Activity
   Asset impairments                                      $   40                     -                 $   40
   Lease terminations                                         -                       7                     7
   Favorable lease termination                                -                      (2)                   (2)
                                                                                            ------------------
     Closed store (credits) charges                                                                    $   45
                                                                                            ==================
   Cash payments during 2000                                                         (8)
                                                                     -------------------
     Reserve balance at February 1, 2001                                             22

2001 Activity
   Asset impairments                                          44                     -                 $   44
   Lease terminations                                         -                      27                    27
   Favorable lease termination                                -                      (2)                   (2)
   Gains on disposition                                       (2)                    -                     (2)
                                                                                            ------------------
     Closed store (credits) charges                                                                    $   67
                                                                                            ==================
   Cash payments during 2001                                                         (8)
                                                                     -------------------
     Reserve balance at January 31, 2002                                             39

2002 Activity
   Asset impairments                                          23                     -                 $   23
   Lease terminations                                         -                       8                     8
   Favorable lease termination                                -                      (1)                   (1)
   Loss on disposition                                        5                      -                      5
                                                                                            ------------------
     Closed store (credits) charges                                                                    $   35
                                                                                            ==================
   Cash payments during 2002                                                        (16)
                                                                     -------------------
     Reserve balance at January 30, 2003                                         $   30
                                                                     ===================
</TABLE>

-
    As of January  30,  2003,  $25 of the  reserve  balance  was  included  with
accounts  payable  and  the  remaining  $5 was  included  with  other  long-term
liabilities and deferred  credits in the Company's  Consolidated  Balance Sheet.
During  fiscal  2001,   the   restructuring   plan   (discussed  in  "Note  F  -
Restructuring")  included actions to accelerate the disposal of surplus property
that included  terminating  leases through  negotiated buyouts and selling owned
properties through auctions.  The $51 pre-tax restructuring  adjustments are the
additional  charges expected to be incurred as a result of these actions.  These
charges  are  included in selling,  general and  administrative  expenses in the
Company's  Consolidated  Earnings.  $30 of the reserve balance as of January 31,
2002 is included  with  accounts  payable and the  remaining $9 is included with
other  liabilities and deferred  credits in the Company's  Consolidated  Balance
Sheets.  For the period ended  February 1, 2001,  $5 of the reserve  balance was
included  with  accounts  payable with the  remaining  $17  included  with other
liabilities  and  deferred  credits.  The related  assets are  recorded at their
estimated  fair value of $35 as of January 30,  2003,  less selling  costs,  and
reported as assets held for sale in the Company's Consolidated Balance Sheets.

    In January  2002 the Company  sold a total of 80 Osco  drugstores  in Maine,
Massachusetts and New Hampshire for $235 which resulted in a $54 pre-tax gain.

Note H - Merger, Divestitures and Related Costs
    Merger-related  (credits)  charges  for  2001  represent  a  credit  of  $15
associated  with the sale of an  asset  for an  amount  that  was  greater  than
originally estimated.


                                       36
<PAGE>

    Merger-related  (credits) charges for 2000 represent $24 related to one-time
asset impairment and severance charges.

    In the future any  restructuring  activity  will be accounted  for under the
guidance  of  SFAS  No.  146,  which  will   primarily   effect  the  timing  of
restructuring reserve.

Note I - Supplemental Cash Flow Information

    Selected cash payments and noncash activities were as follows:

<TABLE>
<CAPTION>
                                                                               2002          2001           2000
---------------------------------------------------------------------- ------------- ------------- --------------
<S>                                                                           <C>           <C>            <C>
Cash payments for income taxes                                                $ 376         $ 403          $ 549
Cash payments for interest, net of amounts capitalized                          390           299            375
Noncash investing and financing activities:
  Capitalized lease obligations incurred                                         75            79             62
  Capitalized lease obligations terminated                                       46            19              6
  Deferred stock units                                                           19            19              1
  Tax benefits related to stock options                                           2             4              1
  Deferred tax adjustment - related to stock options                              2             3             12
</TABLE>

Note J - Accounts and Notes Receivable
    Accounts and notes receivable, net, consisted of the following:
<TABLE>
<CAPTION>
                                                                          JANUARY 30,        JANUARY 31,
                                                                                 2003               2002
-------------------------------------------------------------------- ----------------- ------------------
<S>                                                                              <C>                <C>
Trade and other accounts receivable                                             $ 664              $ 696
Current portion of notes receivable                                                 6                 40
Allowance for doubtful accounts                                                   (23)               (40)
-------------------------------------------------------------------- ----------------- ------------------
                                                                                $ 647              $ 696
==================================================================== ================= ==================
</TABLE>

Note K - Inventories
    Approximately 97% of the Company's inventories are valued using the last-in,
first-out (LIFO) method. If the first-in, first-out (FIFO) method had been used,
inventories  would  have been $589 and $597  higher at the end of 2002 and 2001,
respectively.  Net  earnings  (basic and diluted  earnings per share) would have
been lower by $2 ($0.01) in 2002, higher by $3 ($0.01) in 2001, and lower by $14
($0.03) in 2000. The replacement cost of inventories valued at LIFO approximates
FIFO cost.

    During 2002 and 2001,  inventory  quantities were reduced.  These reductions
resulted in a liquidation  of LIFO inventory  quantities  carried at lower costs
prevailing in prior years as compared with the cost of 2002 and 2001  purchases.
As a result,  cost of sales was decreased by $4 in 2002, $10 in 2001, and $26 in
2000. This increased net earnings  (basic and diluted  earnings per share) by $2
($0.01) in 2002, by $6 ($0.01) in 2001 and by $15 ($0.04) in 2000.

Note L - Land, Buildings and Equipment
    Land, buildings and equipment, net, consisted of the following:
<TABLE>
<CAPTION>
                                                                    JANUARY 30,           JANUARY 31,
                                                                           2003                  2002
---------------------------------------------------------- --------------------- ---------------------
<S>                                                                     <C>                   <C>
Land                                                                    $ 1,939               $ 2,105
Buildings                                                                 5,713                 5,598
Fixtures and equipment                                                    5,561                 5,471
Leasehold improvements                                                    1,619                 1,535
Capitalized leases                                                          355                   326
---------------------------------------------------------- --------------------- ---------------------
                                                                         15,187                15,035
Accumulated depreciation                                                 (6,060)               (5,641)
Accumulated amortization on capital leases                                  (98)                 (112)
---------------------------------------------------------- --------------------- ---------------------
                                                                        $ 9,029               $ 9,282
========================================================== ===================== =====================
</TABLE>

    Depreciation  expense  was  $924,  $926 and $904 for  2002,  2001 and  2000.
Amortization  expense of capital leases was $18, $19 and $17 for 2002,  2001 and
2000.

Note M - Goodwill and Other Intangible Assets
    The Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets," on
February 1, 2002. Under these new rules,  goodwill and certain other intangibles
with  indefinite  lives  are no  longer  amortized,  but are  subject  to annual
testing,  or more frequently if impairment  indicators  arise,  using fair value
methodology.  Intangible  assets with finite,  measurable  lives  continue to be


                                       37
<PAGE>

amortized over their  respective  useful lives until they reach their  estimated
residual  values,  and are reviewed for  impairment in accordance  with SFAS No.
144,  "Accounting  for the  Impairment or Disposal of  Long-Lived  Assets." As a
result,  the Company did not incur any expense for the  amortization of goodwill
in 2002.  The pretax  expense  for the  amortization  of  goodwill,  included in
continuing operations, was $56 and $57 in 2001 and 2000, respectively.

    The Company completed its transitional  impairment review of its goodwill as
of February 1, 2002. The review was performed  based on the Company's  reporting
units which have been defined as the Company's 11 current  operating  divisions.
When this statement was adopted,  the aggregate of the goodwill allocated to the
stores in each reporting unit became the reporting unit's goodwill  balance.  In
order to determine if a reporting unit's goodwill was impaired, a combination of
internal  analysis,  focusing on each reporting  unit's implied EBITDA multiple,
and estimates of fair value from  independent  valuation  specialists were used.
Based on these  analyses,  there was no  impairment  of goodwill at the adoption
date. Subsequently, during the fourth quarter of 2002, the Company completed its
annual  impairment review based on November 1, 2002 balances and determined that
there was no impairment  as of that date.  However,  changes in the  assumptions
used in the analysis could have changed the resulting outcome.  For example,  to
estimate  the fair  value of the  Company's  reporting  units,  management  made
estimates  and  judgments  about future cash flows based on the  Company's  2003
forecast  and  current  long-range  plans  used to manage  the  business.  These
long-range  estimates  could  change in the future  depending  on  internal  and
external factors. Future changes in estimates could possibly result in a noncash
goodwill  impairment that could have a material  adverse impact on the Company's
financial condition and results of operations.

    The following table reflects the impact of the adoption of SFAS No. 142:

<TABLE>
<CAPTION>
                                                                JANUARY 30,      JANUARY 31,      FEBRUARY 1,
                                                                       2003             2002             2001
                                                            ---------------- ---------------- ----------------
<S>                                                                    <C>             <C>              <C>
    Net earnings, as reported                                         $ 485            $ 501            $ 765
      Add back goodwill amortization, net of tax                         -                56               56
                                                            ---------------- ---------------- ----------------
    Adjusted net earnings                                             $ 485            $ 557            $ 821
                                                            ================ ================ ================

    Basic EPS                                                         $1.22            $1.23            $1.83
      Add back goodwill amortization, net of tax                         -              0.14             0.13
                                                            ---------------- ---------------- ----------------
      Adjusted Basic EPS                                              $1.22            $1.37            $1.96
                                                            ================ ================ ================
    Diluted EPS                                                       $1.22            $1.23            $1.83
      Add back goodwill amortization, net of tax                         -              0.14             0.13
                                                            ---------------- ---------------- ----------------
      Adjusted Diluted EPS                                            $1.22            $1.37            $1.96
                                                            ================ ================ ================
</TABLE>

    Changes in the net carrying amount of goodwill were as follows:

<TABLE>
<S>                                                        <C>
    Goodwill as of January 31, 2002                        $1,467
    Write-off due to market exits                             (68)
                                                  ----------------
    Goodwill as of January 30, 2003                        $1,399
                                                  ================
</TABLE>

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

    The carrying amount of intangible assets was as follows:

<TABLE>
<CAPTION>
                                                                    JANUARY 30,    JANUARY 31,
                                                                           2003           2002
---------------------------------------------------------------- --------------- --------------
<S>                                                                        <C>            <C>
    Amortizing:
       FMV of operating leases                                            $ 231          $ 256
       Customer lists and other contracts                                    53             55
---------------------------------------------------------------- --------------- --------------
                                                                            284            311
    Accumulated amortization                                               (173)          (169)
---------------------------------------------------------------- --------------- --------------
                                                                            111            142
    Non-Amortizing:
       Liquor licenses                                                       39             39
       Pension related intangible assets                                     64             29
---------------------------------------------------------------- --------------- --------------
                                                                            103             68
---------------------------------------------------------------- --------------- --------------
                                                                          $ 214          $ 210
================================================================ =============== ==============
</TABLE>


                                       38
<PAGE>

    Straight line  amortization  expense for intangibles was $24, $25 and $23 in
2002, 2001 and 2000,  respectively.  Amortizing intangible assets have remaining
useful  lives from 2 to 38 years.  Projected  amortization  expense for existing
intangible  assets is: $21, $18, $12, $7 and $6, for 2003,  2004, 2005, 2006 and
2007, respectively.

Note N - Indebtedness
    Long-term debt consisted of the following  (borrowings are unsecured  unless
indicated):

<TABLE>
<CAPTION>
                                                                                 JANUARY 30,    JANUARY 31,
                                                                                        2003           2002
----------------------------------------------------------------------------- --------------- --------------
<S>                                                                                   <C>            <C>
2001 Shelf Registration:
   8.0% Debentures due May 1, 2031                                                    $  400         $  400
   7.25% Notes due May 1, 2013                                                           200            200
7.5% Notes due February 15, 2011                                                         700            700
8.35% Notes due May 1, 2010                                                              275            275
8.7% Debentures due May 1, 2030                                                          225            225
7.45% Debentures due August 1, 2029                                                      650            650
6.95% Notes due August 1, 2009                                                           350            350
6.55% Notes due August 1, 2004                                                           300            300
Medium-term Notes, due 2013 through 2028, average interest rate of 6.5%                  317            317
Medium-term Notes, due 2007 through 2027, average interest rate of 6.8%                  200            200
7.75% Debentures due June 15, 2026                                                       200            200
7.5% Debentures due May 1, 2037                                                          200            200
8.0% Debentures due June 1, 2026                                                         272            272
7.9% Debentures due May 1, 2017                                                           95             95
7.4% Notes due May 15, 2005                                                              200            200
Medium-term Notes, due 2003 through 2028, average interest rate of 7.0%                  245            245
9.125% Notes due April 1, 2002                                                            -              80
Notes due July 3, 2004, average interest rate of 6.7%                                   200            200
Industrial revenue bonds, average interest rate of 5.9% and 6.1%,
   respectively due February 1, 2003 through December 15, 2011                             8             11
Secured mortgage notes and other notes payable, average interest rates of
   9.1%  and 10.9%, respectively due 2003 through 2019                                    18             63
----------------------------------------------------------------------------- --------------- --------------
                                                                                       5,055          5,183
Current maturities                                                                      (105)          (123)
----------------------------------------------------------------------------- --------------- --------------
                                                                                      $4,950         $5,060
============================================================================= =============== ==============
</TABLE>

    The Company had three credit  facilities  totaling  $1,400 during 2002.  The
first  agreement  for $100  expired  in  February  2003 and was  renewed  for an
additional  year to expire in  February  2004.  The  second  agreement  for $350
expired in March 2003 and was renewed for an additional  year to expire in March
2004.  The third  agreement  for $950  expires in March 2005.  All of the credit
agreements contain an option which would allow the Company,  upon due notice, to
convert any  outstanding  amounts at the  expiration  dates to term  loans.  The
agreements  in  place  at year  end also  contain  certain  covenants,  the most
restrictive of which requires the Company to maintain  consolidated tangible net
worth, as defined,  of at least $3,000 and a fixed charge coverage,  as defined,
of no less than 2.7 times. As of January 30, 2003, the Company was in compliance
with  these  requirements.   No  borrowings  were  outstanding  under the credit
facilities as of January 30, 2003 or January 31, 2002.

    The Company filed a shelf  registration  statement  with the  Securities and
Exchange  Commission  (SEC),  which became effective on February 13, 2001 ("2001
Shelf  Registration")  to  authorize  the  issuance  of up  to  $3,000  in  debt
securities.  In May 2001 the  Company  issued  $600 of term notes under the 2001
Shelf Registration. The notes are composed of $200 of principal bearing interest
at  7.25%  due  May 1, 2013 and  $400 of principal  bearing interest at 8.0% due
May 1, 2031.  Proceeds  were  used  primarily  to  repay  borrowings  under  the
Company's commercial paper program.

    The $200 term loan  agreement due July 3, 2004  involves a pricing  schedule
(which  averages  6.7%) that is  dependent  upon the  Company's  long-term  debt
rating.

    The  Company has pledged  real estate with a cost of $40 as  collateral  for
mortgage  notes which are payable on various  schedules,  including  interest at
rates ranging from 6.8% to 10.7%. The notes mature from 2003 to 2014.



                                       39
<PAGE>

    Medium-term  notes of $30 due July 2027  contain a put  option  which  would
require the Company to repay the notes in July 2007 if the holder of the note so
elects by giving the Company a 60-day notice. Medium-term notes of $50 due April
2028 contain a put option which would  require the Company to repay the notes in
April 2008 if the  holder of the note so elects by giving  the  Company a 60-day
notice.

    The $200 of 7.5% debentures due 2037 contain a put option which will require
the  Company  to repay the note in 2009 if the  holder of the notes so elects by
giving the Company a 60-day notice.

    Net interest expense was as follows:

<TABLE>
<CAPTION>
                                                                      2002         2001          2000
   ----------------------------------------------------------- ------------ ------------ -------------
<S>                                                                   <C>          <C>           <C>
   Long-term debt                                                    $ 378        $ 401         $ 366
   Capitalized leases                                                   35           30            27
   Capitalized interest                                                (27)         (23)          (21)
   ----------------------------------------------------------- ------------ ------------ -------------
   Interest expense                                                    386          408           372
   Bank service charges, net of interest income                         11           17            13
   ----------------------------------------------------------- ------------ ------------ -------------
                                                                     $ 397        $ 425         $ 385
   =========================================================== ============ ============ =============
</TABLE>

    The  scheduled  aggregate  maturities   of  long-term  debt  outstanding  at
January 30, 2003, are summarized as follows:  $105 in 2003,  $502 in 2004,  $202
in 2005,  $2 in 2006,  $12 in 2007  and $4,232 thereafter.  These figures do not
include the accelerations due to put options.

Note O - Capital Stock
    On December 2, 1996,  the Board of Directors  adopted a  stockholder  rights
plan,  which was amended on August 2, 1998, and March 16, 1999,  under which all
stockholders  receive one right for each share of common stock held.  Each right
will  entitle  the  holder  to  purchase,   under  certain  circumstances,   one
one-thousandth of a share of Series A Junior Participating  Preferred Stock, par
value $1.00 per share,  of the  Company  (the  "preferred  stock") at a price of
160 dollars.  Subject to certain exceptions,  the rights will become exercisable
for shares of  preferred  stock 10  business  days (or such later date as may be
determined by the Board of Directors)  following  the  commencement  of a tender
offer or  exchange  offer  that would  result in a person or group  beneficially
owning 15% or more of the outstanding shares of common stock.

    Under the plan,  subject  to certain  exceptions,  if any person or group as
defined  by the  plan  becomes  the  beneficial  owner  of 15%  or  more  of the
outstanding  common stock or takes certain other  actions,  each right will then
entitle its holder as defined by the plan, other than such person or group, upon
payment of the 160 dollars  exercise  price,  to purchase  common  stock (or, in
certain circumstances, cash, property or other securities of the Company) with a
value equal to twice the exercise price. The rights may be redeemed by the Board
of Directors  at a price of $0.001 per right under  certain  circumstances.  The
rights, which do not vote and are not entitled to dividends,  will expire at the
close of business on March 21, 2007,  unless earlier redeemed or extended by the
Board of Directors of the Company.

    During 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.  No shares were purchased
during 2001.  During 2002, the Company purchased and retired 35.1 million shares
for $862,  at an  average  price of $24.54  per  share.  The Board of  Directors
adopted  a  stock  buyback  program  on  December  9,  2002,   authorizing,   at
management's  discretion,  the Company to purchase  and retire up to $500 of the
Company's  common stock beginning  January 1, 2003 and ending December 31, 2003.
As of January 30, 2003, $78 of this authorization had been utilized.


                                       40
<PAGE>


Note P - Income Taxes
    Deferred tax assets and liabilities consist of the following:

<TABLE>
<CAPTION>
                                                                           JANUARY 30,      JANUARY 31,
                                                                                  2003             2002
----------------------------------------------------------------------- --------------- ----------------
Deferred tax assets (no valuation allowance considered necessary):
<S>                                                                               <C>              <C>
Compensation and benefits                                                        $ 317            $ 264
Self-insurance                                                                     216              188
Basis in fixed assets                                                              184              264
Unearned income                                                                     17               18
Other, net                                                                          69               91
----------------------------------------------------------------------- --------------- ----------------
Total deferred tax assets                                                          803              825
----------------------------------------------------------------------- --------------- ----------------
Deferred tax liabilities:
Basis in fixed assets and capitalized leases                                      (537)            (515)
Inventories                                                                        (82)            (126)
Compensation and benefits                                                          (51)             (59)
Other, net                                                                         (25)             (24)
----------------------------------------------------------------------- --------------- ----------------
Total deferred tax liabilities                                                    (695)            (724)
----------------------------------------------------------------------- --------------- ----------------
Net deferred tax assets                                                          $ 108            $ 101
======================================================================= =============== ================
</TABLE>

    The change in net deferred tax assets includes total  adjustments of $47 for
the year ended  January  30,  2003  related  to stock  options of $(2) and other
comprehensive income of $49.

    The Company has federal and state net operating loss carryforwards of $4 and
$75,  respectively,  that  will  expire in years  2005  through  2021.  Based on
management's assessment, it is more likely than not that all of the deferred tax
assets associated with the net operating loss carryforwards will be realized.

    Annual  tax  provisions  include  amounts   considered   sufficient  to  pay
assessments that may result from examination of prior year tax returns; however,
the  amount  ultimately  paid  upon  resolution  of  issues  raised  may  differ
materially from the amount accrued.

    Income  tax  expense  related  to  continuing  operations  consists  of  the
following:

<TABLE>
<CAPTION>
                                                                        2002          2001        2000
---------------------------------------------------------------- ------------ ------------- -----------
<S>                                                                     <C>           <C>         <C>
Current:
Federal                                                                $ 448         $ 454       $ 434
State                                                                     52            50          52
---------------------------------------------------------------- ------------ ------------- -----------
                                                                         500           504         486
Deferred:
Federal                                                                   36          (124)         10
State                                                                      4           (13)          1
---------------------------------------------------------------- ------------ ------------- -----------
                                                                          40          (137)         11
---------------------------------------------------------------- ------------ ------------- -----------
                                                                       $ 540         $ 367       $ 497
================================================================ ============ ============= ===========
</TABLE>

    The reconciliations between the federal statutory tax rate and the Company's
effective tax rates are as follows:

<TABLE>
<CAPTION>
                                          2002       PERCENT       2001       PERCENT       2000       PERCENT
----------------------------------- ----------- ------------- ---------- ------------- ---------- -------------
<S>                                       <C>           <C>        <C>           <C>        <C>           <C>
Taxes computed at statutory rate         $ 492          35.0      $ 302          35.0      $ 435          35.0
State income taxes net of federal
  income tax benefit                        56           4.0         37           4.2         53           4.3
Goodwill amortization                       -             -          27           3.1         21           1.7
Merger-related charges                      -             -          -             -           2           0.2
Other                                       (8)         (0.6)         1           0.3        (14)         (1.2)
----------------------------------- ----------- ------------- ---------- ------------- ---------- -------------
                                         $ 540          38.4      $ 367          42.6      $ 497          40.0
=================================== =========== ============= ========== ============= ========== =============
</TABLE>

Note Q - Stock Options and Stock Awards
    The  Company's  stock option and stock award plan  (Albertson's,  Inc.  1995
Amended and Restated  Stock-Based  Incentive Plan) (the "1995 Plan") provide for
the grant of options to purchase  shares of common  stock and stock  awards.  At
January 31, 2002,  Albertsons had one stock-based incentive plan in effect under
which grants could be made with  respect to 50 million  shares of the  Company's
common stock.  Under this plan,  approved by the  stockholders  most recently in
2001,  options and stock awards may be granted to officers,  key  employees  and
non-employee  members of the Board of Directors to purchase the Company's common


                                       41
<PAGE>

stock.  During 2001,  the Company's  stock-based  incentive plan was amended to,
among  other  things,  increase  the  number of shares  allowed by the plan from
30 million to 50 million.  Generally, options are granted with an exercise price
at not less than 100% of the closing market price on the date of the grant.  The
Company's options  generally become  exercisable in installments of 20% per year
on each of the first through fifth  anniversaries of the grant date or vest 100%
on the  third  anniversary  of the  grant date  and have a maximum  term of 7 to
10 years.

DEFERRABLE OR DEFERRED STOCK UNITS   From time to time,  deferrable  or deferred
stock units with dividend  equivalents  paid in cash quarterly are awarded under
the 1995 Plan to key  officers  of the  Company.  Deferred  stock units are also
awarded to non-employee members of the Board of Directors.

    Grants  of  1,080,441  units  were  made  during  2002 to key  officers  and
non-employee  directors of the Company,  of which  392,841  units will vest at a
rate of 20% per year for the first  five  years and be  distributed  in a manner
elected  by the  participant  on a date  after the  participant  ceases to be an
officer of the  Company,  678,540  units will vest at a rate of 20% per year for
the first five years and be  distributed  in stock at each  vesting  date unless
otherwise deferred, and 9,060 units were fully vested at their grant date.

    Grants of  1,089,104  units  were  made  during  2001  to key  officers  and
non-employee directors of the Company of which 788,670 units will vest over time
and be distributed  in a manner  elected by the  participant on a date after the
participant ceases to be an officer of the Company, 186,217 units will vest at a
rate of 20% per year for the first  five  years and be  distributed  in stock at
each vesting  date unless  otherwise  deferred,  and 14,217 were fully vested at
their  grant  date.  100,000  of the  units  will be  distributed  in  stock  on
December 5, 2003, unless otherwise deferred.

    Grants of  738,705   units  were  made  during  2000  to  key  officers  and
non-employee directors of the Company of which 730,100 units will be distributed
in stock on December 5, 2003, if the  applicable  officers are still employed as
an officer  of the  Company on that date,  unless  otherwise  deferred  by those
officers,  and 8,605 were  fully  vested at their  grant  date.  The  Company is
recognizing this expense over the three-year service period.

    Compensation  expense  for  deferred  stock  units  of  $19,  $19 and $2 was
recorded in selling, general and administrative expenses in 2002, 2001 and 2000,
respectively.

STOCK OPTIONS   A summary of shares  reserved for  outstanding options as of the
fiscal year end,  changes during the year  and related weighted average exercise
price is presented below (shares in thousands):

<TABLE>
<CAPTION>
                                        JANUARY 30, 2003        JANUARY 31, 2002        FEBRUARY 1, 2001
                                   ----------------------- ----------------------- -----------------------
                                       SHARES       PRICE      SHARES       PRICE      SHARES       PRICE
---------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
<S>                                    <C>         <C>         <C>         <C>         <C>         <C>
Outstanding at beginning of year       28,045     $ 33.06      25,290     $ 32.79      18,015     $ 38.34
Granted                                 5,312       23.06       6,406       32.64       8,683       21.78
Exercised                                (722)      23.99      (1,303)      22.71        (287)      21.54
Forfeited                              (2,390)      34.43      (2,348)      34.70      (1,121)      39.58
---------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Outstanding at end of year             30,245     $ 31.41      28,045     $ 33.06      25,290     $ 32.79
================================== =========== =========== =========== =========== =========== ===========
Options exercisable at end of year     13,523     $ 35.04      11,414     $ 35.67       7,251     $ 37.14
================================== =========== =========== =========== =========== =========== ===========
</TABLE>

    As of January 30, 2003, 16 million shares of the Company's common stock were
reserved for future grants of stock options and stock awards.

    The following table summarizes options  outstanding and options  exercisable
as of January 30, 2003, and the related weighted average  remaining  contractual
life (years) and weighted average exercise price (shares in thousands):


<TABLE>
<CAPTION>
                                              OPTIONS OUTSTANDING               OPTIONS EXERCISABLE
                                     --------------------------------------- ---------------------------
                                             SHARES     REMAINING                     SHARES
       OPTION PRICE PER SHARE           OUTSTANDING          LIFE     PRICE      EXERCISABLE      PRICE
       ----------------------------- --------------- ------------- --------- ---------------- ----------
<S>     <C>         <C>                      <C>              <C>   <C>                <C>      <C>
        $ 20.23  -  $ 22.52                  10,757           8.7   $ 21.82            2,565    $ 21.69
          23.52  -    34.87                  13,105           7.6     31.50            5,864      30.93
          35.00  -    45.94                   2,140           3.9     40.01            2,124      40.03
          47.00  -    51.19                   4,243           6.4     51.14            2,969      51.12
       ----------------------------- --------------- ------------- --------- ---------------- ----------
        $ 20.23  -  $ 51.19                  30,245           7.6   $ 31.41           13,522    $ 35.04
       ============================= =============== ============= ========= ================ ==========
</TABLE>


                                       42
<PAGE>


    The  weighted  average fair value at date of grant for  Albertsons'  options
granted  during 2002,  2001,  and 2000 was $6.80, $10.16,  and $6.34 per option,
respectively. The fair value of options at date of grant was estimated using the
Black-Scholes model with the following weighted average assumptions:

<TABLE>
<CAPTION>
                                                                     2002             2001          2000
    ------------------------------------------------------- --------------- ---------------- -------------
<S>                                                                  <C>              <C>           <C>
    Expected life (years)                                             5.7              5.8           6.0
    Risk-free interest rate                                          3.15%            3.62%         5.46%
    Volatility                                                       38.0%            34.8%         32.5%
    Dividend yield                                                   3.38%            2.33%         3.49%
</TABLE>


Note R - Employee Benefit Plans
    Substantially all  employees  working  over 20 hours per week are covered by
retirement plans. Union employees participate in multi-employer retirement plans
under  collective   bargaining   agreements  unless  the  collective  bargaining
agreement  provides for  participation in  Company-sponsored  plans. The Company
sponsors both defined benefit and defined contribution plans.

    The Albertson's Salaried  Employees  Pension Plan and Albertson's  Employees
Corporate Pension Plan are funded, qualified,  defined benefit,  noncontributory
plans for  eligible  Albertson's  employees  who are 21 years of age with one or
more  years  of  service  and  (with  certain  exceptions)  are not  covered  by
collective bargaining  agreements.  Benefits paid to retirees are based upon age
at retirement, years of credited service and average compensation. The Company's
funding policy for these plans is to contribute the amount necessary to meet the
funding requirements, as defined by the Internal Revenue Code.

    Net  periodic   benefit  expense  (income)  for  defined  benefit  plans  is
determined  using  assumptions  as of the beginning of each year.  The projected
benefit obligation and related funded status are determined using assumptions as
of the end of each  year.  Assumptions  used  at the  end of each  year  for the
company-sponsored defined benefit pension plans were as follows:

<TABLE>
<CAPTION>
                                                                    2002             2001             2000
-------------------------------------------------------- ----------------- ---------------- ----------------
<S>                                                            <C>              <C>              <C>
Weighted-average discount rate                                      6.15%            6.75%            7.15%
Annual salary increases                                        3.40-4.50%       3.70-4.50%       3.70-4.50%
Expected long-term rate of return on assets                         8.50%            9.00%            9.50%
</TABLE>

    Net periodic benefit expense (income) for company-sponsored  defined benefit
pension plans was as follows:

<TABLE>
<CAPTION>
                                                                     2002              2001          2000
--------------------------------------------------------- ---------------- ----------------- -------------
<S>                                                                  <C>               <C>           <C>
Service cost - benefits earned during the period                     $ 12              $ 11          $ 14
Interest cost on projected benefit obligations                         37                35            32
Expected return on assets                                             (39)              (48)          (55)
Amortization of prior service cost                                     (7)               (7)            5
Recognized net actuarial loss (gain)                                    9                -             (4)
--------------------------------------------------------- ---------------- ----------------- -------------
Net periodic expense (income)                                        $ 12              $ (9)         $ (8)
========================================================= ================ ================= =============
</TABLE>

    The Company also sponsors the  Albertson's  Savings and  Retirement  Estates
("ASRE") Plan (formerly the American Stores Retirement  Estates Plan) which is a
defined contribution  retirement plan. ASRE was originally authorized by the ASC
Board  of  Directors  for the  purpose  of  providing  retirement  benefits  for
employees of ASC and its  subsidiaries.  During  1999,  ASRE was  authorized  by
Albertson's Board of Directors to provide retirement  benefits for all qualified
employees  of  the  Company  and  its  subsidiaries.  In  conjunction  with  the
authorization of ASRE, the company-sponsored  defined benefit plans were amended
to close the plans to future new entrants.  Future accruals for  participants in
the  defined  benefit  plans are offset by the value of Company  profit  sharing
contributions to the new defined contribution plan.

    The Company sponsors a tax-deferred  savings plan which is a salary deferral
plan pursuant to Section  401(k) of the Internal  Revenue Code.  The plan covers
employees  meeting  age  and  service  eligibility  requirements,  except  those
represented  by a  labor  union,  unless  the  collective  bargaining  agreement
provides  for  participation.  In  addition,  the  Company  provides  a matching
contribution  based on the amount of eligible  compensation  contributed  by the
employee.

    All Company contributions to ASRE and the company-sponsored  401(k) plan are
made at the discretion of the Board of Directors.  The total amount  contributed
by the Company is included with the ASRE defined contribution plan expense.


                                       43
<PAGE>

    The Company also sponsors an unfunded  Executive  Pension Makeup Plan and an
Executive ASRE Makeup Plan. These plans are nonqualified and provide certain key
employees  retirement  benefits which supplement those provided by the Company's
other retirement plans.

    The following  table sets forth the funded  status of the  company-sponsored
defined benefit pension plans:

<TABLE>
<CAPTION>
                                                                          JANUARY 30,        JANUARY 31,
                                                                                 2003               2002
-------------------------------------------------------------------- ----------------- ------------------
<S>                                                                             <C>                <C>
Change in projected benefit obligation:
   Beginning of year benefit obligation                                         $ 567              $ 495
   Service cost                                                                    12                 11
   Interest cost                                                                   37                 35
   Actuarial loss                                                                  59                 41
   Benefits paid                                                                  (19)               (15)
-------------------------------------------------------------------- ----------------- ------------------
End of year benefit obligation                                                    656                567
-------------------------------------------------------------------- ----------------- ------------------
Change in plan assets:
   Plan assets at fair value at beginning of year                                 466                537
   Actual return on plan assets                                                   (51)               (57)
   Employer contributions                                                           2                  1
   Benefit payments                                                               (19)               (15)
-------------------------------------------------------------------- ----------------- ------------------
Plan assets at fair value at end of year                                          398                466
-------------------------------------------------------------------- ----------------- ------------------
Funded status                                                                    (258)              (101)
Unrecognized net loss                                                             304                165
Unrecognized prior service cost                                                   (64)               (71)
Additional minimum liability                                                     (228)               (67)
-------------------------------------------------------------------- ----------------- ------------------
Net accrued pension cost                                                        $(246)             $ (74)
-------------------------------------------------------------------- ----------------- ------------------
Accrued prepaid pension cost included with other assets                            -                  25
Accrued pension cost included with other long-term liabilities                   (246)               (99)
-------------------------------------------------------------------- ----------------- ------------------
Net accrued pension cost                                                        $(246)             $ (74)
==================================================================== ================= ==================
</TABLE>

    At January 30, 2003, the accumulated  benefit  obligation  exceeded the fair
value of the plans' assets in the Albertson's  Employees Corporate Pension Plan,
Albertson's  Salaried  Employees  Pension Plan, and the Executive Pension Makeup
Plan.  The  provisions of SFAS No. 87,  "Employers'  Accounting  for  Pensions,"
require  recognition in the balance sheet of an additional minimum liability and
related  intangible asset for pension plans with accumulated  benefits in excess
of plan assets;  any portion of such additional  liability which is in excess of
the plan's prior service cost is a component of other  comprehensive  income and
is reflected in stockholders'  equity, net of related tax benefit.  Accordingly,
at January  30,  2003:  a  liability  of $137 was  included  in other  long-term
liabilities;  an  intangible  asset equal to the prior  service  cost of $36 was
included in other assets;  and a charge of $77 net of taxes of $49 was reflected
as a minimum pension liability adjustment in other comprehensive income.

    At January 31,  2002:  a liability  of $67 was  included in other  long-term
liabilities; an intangible asset equal to prior service cost of $28 was included
in other  assets;  and a charge  of $23 net of taxes of $16 was  reflected  as a
minimum pension liability adjustment in other comprehensive income.


                                       44
<PAGE>


    The following table summarizes the projected benefit obligation, accumulated
benefit  obligation,  and  plan  assets  of the  individual  plans  that  have a
projected benefit obligation in excess of plan assets:

<TABLE>
<CAPTION>
                                                                         JANUARY 30,        JANUARY 31,
                                                                                2003               2002
-------------------------------------------------------------------- ---------------- ------------------
<S>                                                                             <C>                <C>
Projected benefit obligation:
   Albertson's Employees Corporate Pension Plan                                $ 383              $ 331
   Albertson's Salaried Employees Pension Plan                                   253                216
   Executive Pension Makeup Plan                                                  20                 20
Accumulated benefit obligation:
   Albertson's Employees Corporate Pension Plan                                  381                330
   Albertson's Salaried Employees Pension Plan                                   243                209
   Executive Pension Makeup Plan                                                  19                 20
Plan assets (fair market value):
   Albertson's Employees Corporate Pension Plan                                  216                250
   Albertson's Salaried Employees Pension Plan                                   181                216
</TABLE>

    Assets of the two funded Company  defined benefit pension plans are invested
in directed trusts.  Assets in the directed trusts are invested in common stocks
(including  $38 and $52 of the  Company's  common  stock at January 30, 2003 and
January 31, 2002, respectively),  U.S. government obligations,  corporate bonds,
international equity funds, real estate and money market funds.

    The Company also contributes to various plans under industrywide  collective
bargaining  agreements,  primarily  for defined  benefit  pension  plans.  Total
contributions to these plans were $80 for 2002, $49 for 2001, and $58 for 2000.

    Retirement plans expense was as follows:
<TABLE>
<CAPTION>
                                                                        2002          2001         2000
   ------------------------------------------------------------- ------------ ------------- ------------
<S>                                                                    <C>          <C>           <C>
   Defined benefit pension plans                                       $  12         $  (9)       $  (8)
   ASRE defined contribution plan                                        152           154          155
   Multi-employer plans                                                   80            49           58
   ------------------------------------------------------------- ------------ ------------- ------------
                                                                       $ 244         $ 194        $ 205
   ============================================================= ============ ============= ============
</TABLE>

    Most  retired  employees of the Company are eligible to remain in its health
and   life   insurance   plans.   Retirees   who   elect   to   remain   in  the
Albertson's-sponsored  plans  are  charged  a  premium  which  is  equal  to the
difference between the estimated costs of the benefits for the retiree group and
a fixed  contribution  amount made by the  Company.  The Company  also  provides
certain  health  care  benefits  to eligible  ASC  retirees  of certain  defined
employee  groups under two unfunded  plans, a defined dollar and a full coverage
plan. The net periodic postretirement benefit cost was as follows:

<TABLE>
<CAPTION>
                                                                          2002        2001         2000
   --------------------------------------------------------------- ------------ ----------- ------------
<S>                                                                        <C>         <C>          <C>
   Service cost                                                            $ 3         $ 3          $ 3
   Interest cost                                                             4           4            4
   Amortization of unrecognized gain                                        (1)         (1)          (1)
   --------------------------------------------------------------- ------------ ----------- ------------
                                                                           $ 6         $ 6          $ 6
   =============================================================== ============ =========== ============
</TABLE>


                                       45
<PAGE>


    The following  table sets forth the funded  status of the  company-sponsored
postretirement health and life insurance benefit plans:
<TABLE>
<CAPTION>
                                                                            JANUARY 30,       JANUARY 31,
                                                                                   2003              2002
   -------------------------------------------------------------------- ---------------- -----------------
<S>                                                                                <C>               <C>
   Change in accumulated benefit obligation:
   Beginning of year benefit obligation                                            $ 71              $ 66
   Service cost                                                                       3                 3
   Interest cost                                                                      4                 4
   Curtailment gain                                                                  (6)               -
   Plan participants' contributions                                                  12                12
   Actuarial (gain) loss                                                             (1)                2
   Benefits paid                                                                    (14)              (16)
   -------------------------------------------------------------------- ---------------- -----------------
   End of year benefit obligation                                                    69                71
   -------------------------------------------------------------------- ---------------- -----------------
   Plan assets activity:
   Employer contributions                                                             2                 5
   Plan participants' contributions                                                  12                12
   Benefit payments                                                                 (14)              (17)
   -------------------------------------------------------------------- ---------------- -----------------
   Funded status                                                                    (69)              (71)
   Unrecognized net gain                                                            (13)              (10)
   -------------------------------------------------------------------- ---------------- -----------------
   Accrued postretirement benefit obligations included with other
      long-term liabilities                                                        $(82)             $(81)
   ==================================================================== ================ =================
   Discount rates as of end of year                                               6.10%             6.75%
   -------------------------------------------------------------------- ---------------- -----------------
</TABLE>

    For  measurement  purposes,  a 6% annual  rate of increase in the per capita
cost of covered health care benefits was assumed for plans covering ASC retirees
for 2002 and 2001 and is  expected to remain at that level  thereafter.  For the
ASC defined dollar plan, no future  increases in the subsidy level were assumed.
Annual  rates of  increases  in  health  care  costs are not  applicable  in the
calculation  of  the  Albertson's   benefit   obligation   because   Albertson's
contribution is a fixed amount per participant.

    With the exception of the plans  covering ASC  grandfathered  retirees,  all
postretirement plans are contributory, with participants' contributions adjusted
annually.  The accounting for the health care plans anticipates that the Company
will  not   increase   its   contribution   for   health   care   benefits   for
non-grandfathered retirees in future years.

    Since the subsidy  levels for the  Albertson's  and the ASC  defined  dollar
plans are fixed and the  proportion of  grandfathered  ASC retirees is small,  a
health  care cost trend  increase  or  decrease  has no  material  impact on the
accumulated  postretirement  benefit  obligation or the  postretirement  benefit
expense.

    SFAS No. 112, "Employers'  Accounting for Postemployment  Benefits" requires
employers to recognize an obligation for benefits provided to former or inactive
employees after  employment but before  retirement.  The Company is self-insured
for certain of its employees'  short-term and long-term  disability  plans which
are the primary benefits paid to inactive employees prior to retirement.

    During 2001, a plan  amendment  made to the Company's  long-term  disability
plan changed the salary continuation  feature from a cumulative benefit based on
years of service to a set percentage of salary benefit.  This amendment resulted
in a reduction of the  obligation by $36,  which was  recognized  immediately in
accordance with the Company's policy for plan amendments. Following is a summary
of  the  obligation  for  postemployment  benefits  included  in  the  Company's
Consolidated Balance Sheets:

<TABLE>
<CAPTION>
                                                                              JANUARY 30,       JANUARY 31,
                                                                                     2003              2002
   -------------------------------------------------------------------- ------------------ -----------------
<S>                                                                                  <C>               <C>
   Included with salaries and related liabilities                                    $ 25              $ 12
   Included with other long-term liabilities                                           67                54
   -------------------------------------------------------------------- ------------------ -----------------
                                                                                     $ 92              $ 66
   ==================================================================== ================== =================
</TABLE>

    The Company also contributes to various plans under industrywide  collective
bargaining  agreements  which  provide for health  care  benefits to both active
employees and retirees.  Total  contributions to these plans were $408 for 2002,
$362 for 2001, and $286 for 2000.


                                       46
<PAGE>


Note S - Employment Contracts and Change in Control Agreements
    The Company has entered into  employment  contracts with certain  executives
for periods up to three  years (and ten years for the  Chairman of the Board and
Chief Executive  Officer).  The agreements include specified amounts for signing
bonus, base salary, annual bonus payments, stock option awards and deferrable or
deferred stock unit awards.  In the event of  termination of employment  without
cause,  the executive would be entitled to certain  guaranteed  payments and the
vesting of stock awards.

    The Company has  entered  into  change-in-control  ("CIC")  agreements  with
certain  executives to provide them with stated  severance  compensation  should
their   employment  with  the  Company  be  terminated   under  certain  defined
circumstances  following  a CIC.  The CIC  agreements  have  varying  terms  and
provisions  depending upon the  executive's  level within the  organization  and
other  considerations,  including  up to three  times  current  base  salary and
current  target bonus,  payable in lump sum, and, for senior  executives,  a tax
gross-up  payment to make the executive  whole for any excise taxes incurred due
to Section 280G of the Internal Revenue Code.

    The CIC  agreements  have a term of  approximately  three  years  and  three
months, with each agreement expiring on December 31, 2005. However, beginning on
January 1, 2004 and each January 1st thereafter,  the term of the agreement will
automatically  be  extended  for an  additional  year  unless the Company or the
executive  gives notice by September 30 of the  preceding  year that it does not
wish to extend the agreement.  In the event that a CIC occurs during the term of
the agreement, the agreement provides for a two-year protection period (referred
to as the  severance  period)  during which the  executive is protected  from an
involuntary termination (other than for cause) or termination for Good Reason as
defined in the agreements.

    The agreements are considered to be "double  trigger"  arrangements  wherein
the payment of severance  compensation  is predicated upon the occurrence of two
triggering events: (1) the occurrence of a CIC as defined in the agreements; and
(2) the involuntary  termination of the executive  (other than for cause) or the
executive's  termination  of  employment  with the  Company  for Good  Reason as
defined in the agreements.

    In consideration for the severance  protection  afforded by such agreements,
the senior executives have agreed to non-compete  provisions for the term of the
agreements  and for one year following the date of  termination,  and all of the
executives   covered  by  the  CIC  program   described  above  have  agreed  to
non-solicitation  provisions  for the  term of the  agreements  and for one year
following the date of termination.

Note T - Leases
    The Company leases a portion of its real estate. The typical lease period is
20 to 30 years and most leases contain renewal options. Exercise of such options
is dependent on the level of business  conducted at the  location.  In addition,
the Company leases certain  equipment.  Some leases  contain  contingent  rental
provisions  based on sales volume at retail stores or miles traveled for trucks.
Capitalized  leases are  calculated  using  interest  rates  appropriate  at the
inception of each lease.  Following is a summary of the  Company's  assets under
capitalized  leases,  $2 of real estate and equipment is included in assets held
for sale at January 30, 2003:

<TABLE>
<CAPTION>
                                                                        JANUARY 30,         JANUARY 31,
                                                                               2003                2002
   -------------------------------------------------------------- ------------------ -------------------
<S>                                                                            <C>                 <C>
   Real estate and equipment                                                  $ 355               $ 338
   Accumulated amortization                                                     (98)               (112)
   -------------------------------------------------------------- ------------------ -------------------
                                                                              $ 257               $ 226
   ============================================================== ================== ===================
</TABLE>


                                       47
<PAGE>


    Future  minimum lease  payments for  noncancelable  operating  leases (which
exclude the amortization of acquisition-related fair value adjustments), related
subleases and capital leases at January 30, 2003, are as follows:

<TABLE>
<CAPTION>
                                                              OPERATING                           CAPITAL
                                                                 LEASES       SUBLEASES            LEASES
   --------------------------------------------------- ----------------- --------------- -----------------
<S>                                                             <C>            <C>                 <C>
   2003                                                         $   330        $    (27)           $   47
   2004                                                             330             (27)               46
   2005                                                             307             (22)               42
   2006                                                             282             (19)               40
   2007                                                             263             (16)               39
   Thereafter                                                     2,275             (58)              531
    -------------------------------------------------- ----------------- --------------- -----------------
   Total minimum obligations (receivables)                      $ 3,787        $   (169)              745
   =================================================== ================= ===============
   Interest                                                                                          (424)
   --------------------------------------------------- ----------------- --------------- -----------------
   Present value of net minimum obligations                                                           321
   Current portion                                                                                    (14)
   --------------------------------------------------- ----------------- --------------- -----------------
   Long-term obligations at January 30, 2003                                                       $  307
   =================================================== ================= =============== =================
</TABLE>

    The Company is  contingently  liable as a guarantor  of certain  leases that
were  assigned to third parties in  connection  with various store  closures and
dispositions.  If any of the purchasers  were to become  insolvent,  the Company
could be required to assume the lease  obligation.  As of January 30, 2003,  the
Company  had  guarantees  remaining  on  approximately  103 stores  with  leases
extending  through  2026.   Assuming  that  each  respective   purchaser  became
insolvent, an event the Company believes to be highly remote because of the wide
dispersion  among  third  parties and  remedies  available,  the minimum  future
undiscounted payments are $188.

    Rent  expense  under  operating   leases,   excluding  the  amortization  of
acquisition-related  fair value adjustments of $13 in 2002, $13 in 2001, and $14
in 2000, was as follows:

<TABLE>
<CAPTION>
                                                                     2002               2001           2000
   ---------------------------------------------------- ------------------ ------------------ --------------
<S>                                                                 <C>                <C>            <C>
   Minimum rent                                                     $ 389              $ 375          $ 369
   Contingent rent                                                     26                 28             30
   ---------------------------------------------------- ------------------ ------------------ --------------
                                                                      415                403            399
   Sublease rent                                                      (92)               (94)           (97)
   ---------------------------------------------------- ------------------ ------------------ --------------
                                                                    $ 323              $ 309          $ 302
   ==================================================== ================== ================== ==============
</TABLE>

Note U - Related Party Transactions
    In the last three  years,  the  Company  has leased  between  seven and nine
stores and two office  locations  ($3, $3 and $3 of rent paid during 2002,  2001
and  2000,  respectively),  purchased  a piece of land  ($2  during  2001),  and
obtained  consulting  services   (insignificant)   from  entities  that  have  a
relationship with certain members of the Company's Board of Directors.

Note V - Financial Instruments
    Financial instruments which potentially subject the Company to concentration
of credit risk consist  principally of cash  equivalents  and  receivables.  The
Company  limits  the  amount of credit  exposure  to each  individual  financial
institution  and places  its  temporary  cash into  investments  of high  credit
quality.  Concentrations  of credit risk with respect to receivables are limited
due to their dispersion across various companies and geographies.

    The estimated fair values of cash and cash equivalents, accounts receivable,
accounts  payable,  short-term debt and bank line borrowings  approximate  their
carrying  amounts.  Substantially  all of the fair values were  estimated  using
quoted  market  prices.  The  estimated  fair  values  and  carrying  amounts of
outstanding debt (excluding bank line borrowings) were as follows:

<TABLE>
<CAPTION>
                                                                         JANUARY 30,        JANUARY 31,
                                                                                2003               2002
    ---------------------------------------------------------------- ---------------- ------------------
<S>                                                                          <C>                <C>
    Fair value                                                               $ 5,675            $ 5,516
    Carrying amount                                                            5,055              5,183
</TABLE>


                                       48
<PAGE>


Note W - Environmental
    The  Company  has  identified  environmental   contamination  sites  related
primarily to underground  petroleum storage tanks and groundwater  contamination
at various store,  warehouse,  office and manufacturing  facilities  (related to
current  operations as well as previously  disposed of properties).  The Company
conducts an ongoing  program for the  inspection and evaluation of potential new
sites 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  believed  to be remote.
Although  the  ultimate  outcome and  expense of  environmental  remediation  is
uncertain,  the  Company  believes  that the costs of required  remediation  and
continuing  compliance with  environmental  laws, in excess of current reserves,
will not have a material adverse effect on the financial  condition,  results of
operations  or  cash  flows  of  the  Company.   Charges  against  earnings  for
environmental remediation were not material in 2002, 2001 or 2000.

Note X - Legal Proceedings
    The Company is subject to various  lawsuits,  claims and other legal matters
that arise in the ordinary course of conducting business.

    In March 2000 a class action complaint was filed against  Albertsons 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  (Gardner,  et al. v.
Albertson's,  Inc.,  et al.) by  bonus-eligible  managers  seeking  recovery  of
additional  bonus  compensation  based  upon  plaintiffs'  allegation  that  the
calculation  of profits on which their  bonuses were based  improperly  included
expenses for workers' compensation costs, cash shortages, premises liability and
"shrink"  losses in  violation  of  California  law.  In October  2001 the court
granted summary  judgment  against Sav-on Drug Stores,  finding one of its bonus
plans unlawful under plaintiffs' liability theory. In August 2001 a class action
complaint with very similar claims, also involving  bonus-eligible managers, was
filed against Albertson's, Inc., Lucky Stores, Inc. and American Stores Company,
wholly-owned  subsidiaries of the Company,  in the Superior Court for the County
of Los Angeles,  California (Petersen, et al. v. Lucky Stores, Inc., et al.). In
June 2002 the cases were  consolidated  and in August  2002 a class  action with
respect to the  consolidated  case was  certified by the court.  The Company has
strong defenses against this lawsuit,  and is vigorously  defending it. Although
this lawsuit is subject to the uncertainties inherent in the litigation process,
based on the information presently available to the Company, management does not
expect that the ultimate  resolution of this action will have a material adverse
effect on the  Company's  financial  condition,  results of  operations  or cash
flows.

    In April 2000 a class action complaint was filed against  Albertsons 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  (Gardner,  et al. v.
American  Stores  Company,  et al.) by assistant  managers  seeking  recovery of
overtime  pay based  upon  plaintiffs'  allegation  that  they  were  improperly
classified  as exempt  under  California  law.  In May 2001 a class  action with
respect to Sav-on Drug Stores  assistant  managers was certified by the court. A
case with very  similar  claims,  involving  the Sav-on  Drug  Stores  assistant
managers  and  operating  managers,  was also  filed in April 2000  against  the
Company's  subsidiary  Sav-on Drug Stores,  Inc. in the  Superior  Court for the
County of Los Angeles, California (Rocher, Dahlin, et al. v. Sav-on Drug Stores,
Inc.)  and was also  certified  as a class  action.  In April  2002 the Court of
Appeal of the State of California Second Appellate  District reversed the Rocher
class certification,  leaving only two plaintiffs.  The California Supreme Court
has accepted plaintiffs' request for review of this class  decertification.  The
Gardner case is on hold pending the result in the California  Supreme Court. The
Company has strong defenses against these lawsuits,  and is vigorously defending
them.  Although these lawsuits are subject to the uncertainties  inherent in the
litigation process, based on the information presently available to the Company,
management  does not expect that the ultimate  resolution of these lawsuits will
have a material adverse effect on the Company's financial condition,  results of
operations or cash flows.

    In August 2000 a class action complaint was filed against Jewel Food Stores,
Inc., a  wholly-owned  subsidiary  of the Company,  in the Circuit Court of Cook
County,  Illinois  (Maureen  Baker,  et al.,  v. Jewel  Food  Stores,  Inc.  and
Dominick's Supermarkets,  Inc., Case No. 00L 009664) alleging milk price fixing.
In July 2002 a class was  certified,  consisting  of all people  residing in the
Chicagoland area who bought milk at retail from either or both of the defendants
between  August 23, 1996 and August 23, 2000.  On February  25, 2003,  the trial
judge granted  Jewel's and Dominick's  motion to dismiss after  presentation  of
plaintiffs' case, and the case was dismissed with prejudice. The plaintiffs have
filed a  notice  of  intent  to  appeal  the  decision  issued  in  favor of the
defendants.

    An agreement has been reached,  and court approval granted,  to settle eight
purported class and/or collective  actions which were consolidated in the United
States District Court in Boise, Idaho, and which raised various issues including
"off-the-clock"  work  allegations and allegations  regarding  certain  salaried
grocery  managers' exempt status.  Under the settlement  agreement,  current and
former employees who met eligibility criteria have been allowed to present their
off-the-clock work claims to a settlement administrator.  Additionally,  current


                                       49
<PAGE>

and  former  grocery  managers  employed  in the State of  California  have been
allowed to present their exempt status claims to a settlement administrator. The
Company  mailed  notices of the  settlement  and claims  forms to  approximately
80,000 associates and former  associates.  Approximately  6,000 claim forms were
returned,   of  which   approximately   5,000  were  deemed  by  the  settlement
administrator  to be incapable of valuation,  presumed  untimely,  or both.  The
court will  consider the status and handling of these 5,000  claims.  The claims
administrator  was able to assign a value to approximately  1,000 claims,  which
amount to a total of  approximately  $13.5,  although the value of many of those
claims is still  subject to challenge  by the Company.  The Company is presently
unable to determine the number of individuals  who may  ultimately  submit valid
claims or the amounts that it may  ultimately be required to pay with respect to
such claims. Based on the information presently available to it, management does
not expect  that the  satisfaction  of valid  claims  submitted  pursuant to the
settlement  will  have a  material  adverse  effect on the  Company's  financial
condition, results of operations or cash flows.

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

    The statements above reflect  management's current expectations based on the
information presently available to the Company. However, predicting the outcomes
of claims and  litigation  and  estimating  related costs and exposures  involve
substantial  uncertainties that could cause actual outcomes, costs and exposures
to vary materially from current expectations. In addition, the Company regularly
monitors its exposure to the loss  contingencies  associated  with these matters
and may from time to time change its  predictions  with  respect to outcomes and
its estimates with respect to related costs and  exposures.  It is possible that
material differences in actual outcomes, costs and exposures relative to current
predictions and estimates, or material changes in such predictions or estimates,
could have a  material  adverse  effect on the  Company's  financial  condition,
results of operations or cash flows.

Note Y - Contractual Obligations and Commitments
    Albertsons has assumed various financial  obligations and commitments in the
normal course of its operations and financing activities.  Financial obligations
are  considered  to  represent  known future cash  payments  that the Company is
required to make under existing contractual arrangements, such as debt and lease
agreements.  The following  table  represents  the  scheduled  maturities of the
Company's long-term contractual obligations as of January 30, 2003:

<TABLE>
<CAPTION>
                                                                                        AFTER
                                                YEAR 1    YEARS 2-3    YEARS 4-5      5 YEARS      TOTAL
--------------------------------------- --------------- ------------ ------------ ------------ ----------
<S>                                              <C>         <C>           <C>        <C>        <C>
Long-term debt                                   $ 105       $  704        $  14      $ 4,232    $ 5,055
Capital lease obligations (1)                       47           88           79          531        745
Operating leases (1)                               330          637          545        2,275      3,787
Contracts  for  purchase  of  property
   and construction of buildings                   176           -            -            -         176
Other (2)                                           96          136            6           -         238
--------------------------------------- --------------- ------------ ------------ ------------ ----------
Total contractual cash obligations               $ 754       $1,565        $ 644      $ 7,038    $10,001
======================================= =============== ============ ============ ============ ==========
</TABLE>

    (1)  Represents  the minimum  rents payable  and includes  leases associated
         with closed stores  accrued for under  the Company's  restructuring and
         closed  store reserves.   Amounts are not  offset by  expected sublease
         income.
    (2)  Other includes transportation contracts with third parties. The Company
         has  entered into  energy supply  agreements which  have terms  through
         2006.    These  agreements   include  certain  provisions   that  could
         potentially require the Company to pay additional amounts if the actual
         usage is less than the  minimum usage per the  contract documents or if
         the contracts were terminated. This number is difficult to estimate due
         to the  uncertainty of  future energy usage  and  change  in the market
         value of energy, therefore no amounts have been included above.


                                       50
<PAGE>


    The Company is  contingently  liable as a guarantor  of certain  leases that
were  assigned to third parties in  connection  with various store  closures and
dispositions.  The Company  believes the  likelihood of a significant  loss from
these  agreements is remote because of the wide  dispersion  among third parties
and remedies  available to the Company  should the primary party fail to perform
under the agreements.

    Albertsons  commercial  commitments  as of January  30,  2003,  representing
possible commitments triggered by potential future events, are as follows:

<TABLE>
<CAPTION>
                                                                                      AFTER
                                           YEAR 1     YEARS 2-3       YEARS 4-5     5 YEARS       TOTAL
--------------------------------------- ---------- ------------- --------------- ----------- -----------
<S>                                          <C>           <C>          <C>         <C>          <C>
Available lines of credit                   $ 450         $ 950         $    -      $    -      $ 1,400
Letters of credit - standby                    95            -               -           -           95
Letters of credit - commercial                 13            -               -           -           13
--------------------------------------- ---------- ------------- --------------- ----------- -----------
Potential commercial commitments            $ 558         $ 950         $    -      $    -      $ 1,508
======================================= ========== ============= =============== =========== ===========
</TABLE>

    The  Company  had  outstanding  Letters of Credit of $108 as of January  30,
2003, all of which were issued under separate bilateral agreements with multiple
financial  institutions.  Of the $108  outstanding at year end, $95 were standby
letters  of credit  covering  primarily  workers'  compensation  or  performance
obligations.  The remaining $13 were commercial letters of credit supporting the
Company's  merchandise  import  program.  The Company  paid  issuance  fees that
varied,  depending on type, up to 0.70% of the outstanding balance of the letter
of credit.

Note Z - Computation of Earnings Per Share

<TABLE>
<CAPTION>
                                                         2002                    2001                   2000
---------------------------------------------- ---------------------- ----------------------- ---------------------
                                                  DILUTED     BASIC       DILUTED     BASIC      DILUTED    BASIC
                                               ------------ --------- ----------- ----------- ----------- ---------
<S>                                                  <C>       <C>         <C>         <C>         <C>       <C>
Net earnings                                        $ 485     $ 485       $ 501       $ 501       $ 765     $ 765
                                                    =====     =====       =====       =====       =====     =====

Weighted average common shares outstanding            397       397         406         406         418       418
                                                              =====                   =====                 =====
Common share equivalents                                2                     2                      -
                                                    -----                 -----                   -----

Weighted average shares outstanding                   399                   408                     418
                                                    =====                 =====                   =====
Earnings per common share and common share
  equivalent:                                       $1.22      $1.22      $1.23       $1.23       $1.83     $1.83
                                                    =====      =====      =====       =====       =====     =====

Calculation Of Common Share Equivalents:
  Options and awards to purchase common
   shares                                              10                    17                       2
  Common shares assumed purchased with
    potential proceeds                                 (8)                  (15)                     (2)
                                                    -----                 -----                   -----
  Common share equivalents                              2                     2                      -
                                                    =====                 =====                   =====

Calculation Of Common Shares Assumed
Purchased With Potential Proceeds:
  Potential proceeds from exercise of options
    and awards to purchase common shares            $ 227                 $ 455                   $  52
  Common stock price used under the treasury
    stock method                                   $27.77                $31.12                  $27.99
  Common shares assumed purchased with
    potential proceeds                                  8                    15                       2
</TABLE>

    Outstanding  options excluded in 2002, 2001, and 2000 (option price exceeded
the  average  market price  during the period)  amounted to 20.2 million shares,
9.4 million shares, and 16.6 million shares, respectively.


                                       51
<PAGE>


QUARTERLY FINANCIAL DATA

<TABLE>
<CAPTION>
(Dollars in Millions, Except Per Share Data - Unaudited)     FIRST      SECOND       THIRD       FOURTH        YEAR
-------------------------------------------------------- ---------- ----------- ----------- ------------ -----------
<S>                                                        <C>         <C>         <C>          <C>        <C>
2002
Sales                                                      $ 8,921     $ 8,941     $ 8,657      $ 9,107    $ 35,626
Gross profit                                                 2,623       2,631       2,530        2,600      10,384
Operating profit                                               487         520         385          425       1,817
(Loss) earnings from discontinued operations                  (303)         13          (2)           6        (286)
(Loss) earnings before cumulative effect of
   accounting change                                           (71)        257         188          205         579
Cumulative effect of accounting change                         (94)          -           -            -         (94)
Net (loss) earnings                                           (165)        257         188          205         485
 (Loss) earnings per share:
   Basic                                                     (0.41)       0.63        0.47         0.54        1.22
   Diluted                                                   (0.40)       0.63        0.47         0.54        1.22
-------------------------------------------------------- ---------- ----------- ----------- ------------ -----------
2001
Sales                                                      $ 8,994     $ 9,235     $ 9,036      $ 9,340    $ 36,605
Gross profit                                                 2,571       2,587       2,570        2,698      10,426
Operating profit (loss)                                        431        (143)        417          591       1,296
Earnings (loss) from discontinued operations                     2           3          (1)           1           5
Net earnings (loss)                                            186        (151)        176          290         501
Earnings (loss) per share:
   Basic                                                      0.46       (0.37)       0.43         0.71        1.23
   Diluted                                                    0.46       (0.37)       0.43         0.71        1.23
-------------------------------------------------------- ---------- ----------- ----------- ------------ -----------
</TABLE>

    The 2002 quarterly financial information presented above includes the impact
of the change in the Company's  method of accounting for vendor funds;  this new
accounting method was adopted in the fourth quarter of 2002,  retroactive to the
first  quarter of 2002 (see "Note C - Cumulative  Effect of Change in Accounting
Principle" in the accompanying notes to the Consolidated  Financial Statements).
The  Company's  operating  results  presented  above differ from the  previously
reported  results  due to the  accounting  method  change.  As  compared  to the
operating results previously reported, gross profit increased by $16 and $7, for
the first and second  quarters  and  decreased by $7 in the third  quarter;  net
earnings  increased by $10 ($0.02 per diluted share),  and $4 ($0.01 per diluted
share) in the first and second  quarters and  decreased by $4 ($0.01 per diluted
share) in the third quarter.  Earnings per share on earnings  before  cumulative
effect of accounting change was ($0.23) per diluted share for the first quarter.


Item 9.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

    None.



                                       52
<PAGE>


                                    PART III


Item 10.  Directors and Executive Officers of the Registrant

Directors

    The  information  regarding  directors  and  nominees  for  directors of the
Company is presented under the heading  "Election of Directors" in the Company's
definitive proxy statement for use in connection with the 2003 Annual Meeting of
Shareholders  (the  "Proxy  Statement")  to be filed  within  120 days after the
Company's fiscal year ended January 30, 2003, and is incorporated herein by this
reference thereto.

Executive and Reporting Officers
<TABLE>
<CAPTION>
                                                                                         Date First Appointed
                                 Age as of                                                as an Executive or
           Name                   3/28/03                  Position                       Reporting Officer
           ----                   -------                  --------                      --------------------

<S>                                  <C>   <C>                                                 <C>
Lawrence R. Johnston                 54    Chairman of the Board and Chief Executive           04/23/01
                                           Officer

Peter L. Lynch                       51    President and Chief Operating Officer               06/23/99

Robert K. Banks                      53    Executive Vice President, Development               06/20/00

Robert C. Butler                     54    Executive Vice President, Operations                03/21/00

Romeo R. Cefalo                      53    Executive Vice President, Operations                03/21/00

Robert J. Dunst, Jr.                 42    Executive Vice President and Chief                  11/19/01
                                           Technology Officer

Clarence J. Gabriel                  49    Executive Vice President, Supply Chain              01/13/03

Kathy J. Herbert                     49    Executive Vice President, Human Resources           09/17/01

John R. Sims                         53    Executive Vice President and                        03/25/02
                                           General Counsel

Lawrence A. Stablein                 45    Executive Vice President, Marketing and             10/30/00
                                           Merchandising

Felicia D. Thornton                  39    Executive Vice President and Chief                  08/22/01
                                           Financial Officer

Kevin H. Tripp                       48    Executive Vice President, Operations and            12/11/00
                                           Pharmacy

Ertharin Cousin                      45    Senior Vice President, Public Affairs               03/15/02

Eric J. Cremers                      39    Senior Vice President, Corporate Strategy           07/15/02
                                           and Business Development

Peter F. Collins                     38    Group Vice President and Controller                 01/15/03
</TABLE>


    Lawrence R. Johnston has served as Chairman of the Board and Chief Executive
Officer  since  April 23,  2001.  Previously  he served as  President  and Chief
Executive  Officer,  General  Electric  Appliances  Division from November 1999;
President and Chief Executive Officer,  General Electric Medical Systems-Europe,
Middle  East and  Africa  from 1997;  Chairman  of  General  Electric  Company's
European Corporate Executive Council from 1998 to 1999 and Vice President, Sales
and Distribution of GE Appliances Division from 1989 to 1997.

    Peter L. Lynch became  President  and Chief  Operating  Officer on March 21,
2000 and was  appointed to the Board of Directors  in July 2001.  Previously  he
served as Executive Vice  President,  Operations  from June 23, 1999;  Executive
Vice  President  and General  Manager of the Acme  Division  of American  Stores


                                       53
<PAGE>

Company from 1998 and Senior Vice President,  Store Operations of the Jewel-Osco
Division of American Stores Company from December 1995.

    Robert K. Banks was promoted to Executive  Vice  President,  Development  on
June 20, 2000.  Previously he served as Senior Vice President,  Real Estate from
January 31, 1999;  Group Vice  President,  Real Estate from December 2, 1996 and
Vice President, Real Estate from December 24, 1990.

    Robert C. Butler was promoted to Executive  Vice  President,  Operations  on
March 21, 2000.  Previously  he served as Senior Vice  President,  Merchandising
from June 23, 1999 and Vice President, Southern California Division from 1996.

    Romeo R. Cefalo was  promoted to Executive  Vice  President,  Operations  on
March 21, 2000.  Previously he served as President,  Southern  California Region
from June 23, 1999;  Executive Vice  President and General  Manager of the Lucky
South  Division of American  Stores  Company from 1997 and Senior Vice President
and General Manager of the same division from 1995.

    Robert J. Dunst,  Jr. became  Executive Vice President and Chief  Technology
Officer  on  November  19,  2001.   Previously  he  served  as  Vice  President,
Applications Development,  Safeway, Inc. and Director,  Systems Architecture and
Infrastructure, Safeway, Inc. from 1995.

    Clarence  J.  Gabriel  became  Executive  Vice  President,  Supply  Chain on
January 13, 2003. Previously he served as President, Chief Executive Officer and
Chairman of the Board,  Newgistics,  Inc. from June 2000 and Division President,
Corporate Express from November 1997.

    Kathy J.  Herbert  became  Executive  Vice  President,  Human  Resources  on
September 17, 2001.  Previously she served as Vice President,  Human  Resources,
Jewel-Osco Division,  American Stores Company and subsequently  Albertson's Inc.
from April 1998 and  Director,  Personnel  Training,  for  Jewel-Osco  Division,
American Stores Company from 1996 to 1998.

    John R.  Sims  became  Executive  Vice  President  and  General  Counsel  on
March 25, 2002.  Previously,  he was  Vice President  and Deputy General Counsel
with Federated Department Stores, Inc. from 1990.

    Lawrence A. Stablein was promoted to Executive Vice President, Marketing and
Merchandising  on  October  30,  2000.  Previously  he  served  as  Senior  Vice
President,  Marketing  for  Jewel-Osco  from 1997 and Senior Vice  President  of
Marketing and Formats in American  Stores  Properties,  Inc.  group in Salt Lake
City from October 1995.

    Felicia D. Thornton  became  Executive  Vice  President and Chief  Financial
Officer on August 22, 2001.  Previously  she was a business  consultant for HASC
from January 2001; Group Vice President, Kroger Co. from February 1999 and Group
Vice  President,  Corporate  Planning and  Accounting,  Kroger Co. from February
1996.

    Kevin H. Tripp became  Executive Vice President,  Operations and Pharmacy on
May 19, 2002. Previously he served as Executive Vice President, Drug and General
Merchandise from December 2000; President, Drug Region from June 1999; Executive
Vice President and General Manager,  American Drug Stores from November 1997 and
Senior Vice President, Pharmacy Sales and Operations from January 1995.

    Ertharin  Cousin  became an  Executive  Officer on March 15,  2002.  She was
promoted to Senior Vice  President,  Public Affairs on June 1, 2001.  Previously
she served as Group Vice President, Public Affairs from 2000 and Vice President,
Government and Community  Affairs of the Jewel-Osco  Division of American Stores
Company and subsequently Albertson's Inc., from 1997.

    Eric Cremers became Senior Vice President,  Corporate  Strategy and Business
Development  on July 15,  2002.  Previously  he  served  as  Managing  Director,
Investment  Banking,  U.S.  Bancorp Piper Jaffrey from 1999 and Vice  President,
Strategy and Corporate Development, Pillsbury Co. from 1996.

    Peter F.  Collins was promoted to Group Vice  President  and  Controller  on
January  15,  2003.  Previously  he served as Group  Vice  President,  Corporate
Accounting  and  Reporting  from July 2002;  Partner,  Arthur  Andersen LLP from
September 1998; and Senior Manager, Arthur Andersen LLP from September 1995.


                                       54
<PAGE>


Item 11.  Executive Compensation

    Information   concerning  executive  compensation  is  presented  under  the
headings  "Summary  Compensation  Table,"  "Aggregated  Option Exercises in Last
Fiscal Year and Fiscal Year-End  Option  Values,"  "Option Grants In Last Fiscal
Year," and "Retirement  Benefits" in the Proxy  Statement.  This  information is
incorporated herein by this reference thereto.


Item 12.  Security  Ownership  of Certain  Beneficial  Owners and Management and
Related Stockholder Matters

    Information with respect to security  ownership of certain beneficial owners
and management is set forth under the heading  "Voting  Securities and Principal
Holders  Thereof" in the Proxy  Statement.  Information  with  respect to equity
compensation  plans is set forth under the  heading  "Equity  Compensation  Plan
Information" in the Proxy Statement.  This information is incorporated herein by
this reference thereto.


Item 13.  Certain Relationships and Related Transactions

    Information  concerning related  transactions is presented under the heading
"Certain Transactions" in the Proxy Statement.  This information is incorporated
herein by this reference thereto.


Item 14.  Controls & Procedures

    Albertson's  management,  including  the Chief  Executive  Officer and Chief
Financial Officer,  have evaluated the effectiveness of the Company's disclosure
controls and  procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) as
of a date  within  90 days  prior to the  filing of this  report.  Based on this
evaluation,  the Chief Executive  Officer and Chief Financial  Officer concluded
that the Company's  disclosure  controls and procedures are effective to provide
reasonable assurance that information required to be disclosed by the Company in
the  reports  that it files or  submits  under  the  Exchange  Act is  recorded,
processed,  summarized  and reported  within the time  periods  specified by the
Securities and Exchange Commission's rules and forms.  Subsequent to the date of
this  evaluation,  there have not been any significant  changes in the Company's
internal  controls or, to  management's  knowledge,  in other factors that could
significantly affect the Company's internal controls.


                                     PART IV


Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K


    (a)  The following documents are filed as part of this report:

         1)    Consolidated  Financial  Statements:   See Index to  Consolidated
               Financial Statements at Item 8 on page 24 of this report.

         2)    Financial Statement Schedules: No schedules are required.

         3)    Exhibits are incorporated herein by reference  or are  filed with
               this report as set forth  in the  Index to Exhibits  on  pages 61
               through 68 hereof.


    (b)  On February 25, 2003, the Company filed a current report on Form 8-K in
         connection with the  announcement  regarding the dismissal of the class
         action lawsuit  Maureen Baker,  et al., v. Jewel Food Stores,  Inc. and
         Dominick's Supermarkets, Inc.

         On March 20, 2003,  the Company  filed a current  report on Form 8-K in
         connection with the announcement of fourth quarter earnings.


    For the purposes of complying  with the  amendments  to the rules  governing
Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the Company
hereby  undertakes  as  follows,  which  undertaking  shall be  incorporated  by
reference into the Company's  Registration  Statements on Form S-8 Nos. 2-80776,
33-2139, 33-7901, 33-15062, 33-43635, 33-62799, 33-59803, 333-82157,  333-82161,
333-87773, and 333-73194.


                                       55
<PAGE>


    Insofar as indemnification  for liabilities arising under the Securities Act
of 1933  (the Act) may be  permitted  to  directors,  officers  and  controlling
persons of the Company,  the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is,  therefore,  unenforceable.  In the event that a
claim for  indemnification  against such liabilities  (other than the payment by
the Company of expenses  incurred or paid by a director,  officer or controlling
person  of the  Company  in  the  successful  defense  of any  action,  suit  or
proceeding)  is  asserted by such  director,  officer or  controlling  person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel  the matter has been  settled by  controlling  precedent,
submit  to a  court  of  appropriate  jurisdiction  the  question  whether  such
indemnification  by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.



                                       56
<PAGE>




                                   Signatures

    Pursuant  to the  requirements  of  Section  13 or 15(d)  of the  Securities
Exchange Act of 1934, Albertson's, Inc. has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                            ALBERTSON'S, INC.


                                            By:  \S\ Lawrence R. Johnston
                                        ----------------------------------------
                                                 Lawrence R. Johnston
                                                 (Chairman of the Board and
                                                 Chief Executive Officer)


    Date:  April 23, 2003



                                       57
<PAGE>


    Pursuant to the  requirements  of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities indicated as of April 23, 2003.


<TABLE>
<S>                                         <C>
      \S\ Lawrence R. Johnston                      \S\ Peter L. Lynch
--------------------------------------      ------------------------------------
        Lawrence R. Johnston                          Peter L. Lynch
     (Chairman of the Board and               (President and Chief Operating
    Chief Executive Officer and                    Officer and Director)
             Director)


      \S\ Felicia D. Thornton                      \S\ Peter F. Collins
--------------------------------------      ------------------------------------
           Felicia D. Thornton                       Peter F. Collins
       (Executive Vice President                  (Group Vice President
      and Chief Financial Officer)                   and Controller)


          \S\ A. Gary Ames                         \S\ Cecil D. Andrus
--------------------------------------      ------------------------------------
            A. Gary Ames                             Cecil D. Andrus
             (Director)                                 (Director)


        \S\ Pamela G. Bailey                         \S\ Teresa Beck
--------------------------------------      ------------------------------------
          Pamela G. Bailey                             Teresa Beck
             (Director)                                 (Director)


        \S\ Henry I. Bryant                        \S\ Paul I. Corddry
--------------------------------------      ------------------------------------
          Henry I. Bryant                            Paul I. Corddry
             (Director)                                 (Director)


         \S\ Bonnie G. Hill                         \S\ Jon C. Madonna
--------------------------------------      ------------------------------------
           Bonnie G. Hill                             Jon C. Madonna
             (Director)                                 (Director)


         \S\ Beatriz Rivera                          \S\ J. B. Scott
--------------------------------------      ------------------------------------
           Beatriz Rivera                              J. B. Scott
             (Director)                                 (Director)


         \S\ Will M. Storey
--------------------------------------
           Will M. Storey
             (Director)
</TABLE>




                                       58
<PAGE>


                                ALBERTSON'S, INC.
                    CERTIFICATIONS PURSUANT TO SECTION 302 OF
                         THE SARBANES-OXLEY ACT OF 2002


CERTIFICATION

I, Lawrence R. Johnston, certify that:

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

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

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

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
    establishing and maintaining  disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

    a)  Designed such disclosure controls and procedures to ensure that material
        information  relating  to the  registrant,  including  its  consolidated
        subsidiaries,  is made  known to us by  others  within  those  entities,
        particularly  during  the period in which  this  annual  report is being
        prepared;
    b)  Evaluated the effectiveness of the registrant's  disclosure controls and
        procedures  as of a date within 90 days prior to the filing date of this
        annual report (the "Evaluation Date"); and
    c)  Presented in this annual report our conclusions  about the effectiveness
        of the disclosure  controls and procedures based on our evaluation as of
        the Evaluation Date;

5.  The registrant's  other certifying  officers and I have disclosed,  based on
    our most  recent  evaluation,  to the  registrant's  auditors  and the audit
    committee of  registrant's  board of directors  (or persons  performing  the
    equivalent functions):

    a)  All  significant  deficiencies  in the design or  operation  of internal
        controls  which  could  adversely  affect  the  registrant's  ability to
        record, process, summarize and report financial data and have identified
        for the  registrant's  auditors  any  material  weaknesses  in  internal
        controls; and
    b)  Any fraud,  whether or not material,  that involves  management or other
        employees  who  have a  significant  role in the  registrant's  internal
        controls; and

6.  The  registrant's  other  certifying  officers and I have  indicated in this
    annual  report  whether or not there were  significant  changes in  internal
    controls  or in other  factors  that  could  significantly  affect  internal
    controls subsequent to the date of our most recent evaluation, including any
    corrective  actions  with regard to  significant  deficiencies  and material
    weaknesses.



    Date: April 23, 2003                 \S\ Lawrence R. Johnston

                                       -----------------------------------------
                                           Lawrence R. Johnston
                                           Chairman of the Board and
                                             Chief Executive Officer




                                       59
<PAGE>


                                ALBERTSON'S, INC.
                    CERTIFICATIONS PURSUANT TO SECTION 302 OF
                         THE SARBANES-OXLEY ACT OF 2002


    CERTIFICATION


    I, Felicia D. Thornton, certify that:

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

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

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

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
    establishing and maintaining  disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

    a)  Designed such disclosure controls and procedures to ensure that material
        information  relating  to the  registrant,  including  its  consolidated
        subsidiaries,  is made  known to us by  others  within  those  entities,
        particularly  during  the period in which  this  annual  report is being
        prepared;
    b)  Evaluated the effectiveness of the registrant's  disclosure controls and
        procedures  as of a date within 90 days prior to the filing date of this
        annual report (the "Evaluation Date"); and
    c)  Presented in this annual report our conclusions  about the effectiveness
        of the disclosure  controls and procedures based on our evaluation as of
        the Evaluation Date;

5.  The registrant's  other certifying  officers and I have disclosed,  based on
    our most  recent  evaluation,  to the  registrant's  auditors  and the audit
    committee of  registrant's  board of directors  (or persons  performing  the
    equivalent functions):

    a)  All  significant  deficiencies  in the design or  operation  of internal
        controls  which  could  adversely  affect  the  registrant's  ability to
        record, process, summarize and report financial data and have identified
        for the  registrant's  auditors  any  material  weaknesses  in  internal
        controls; and
    b)  Any fraud,  whether or not material,  that involves  management or other
        employees  who  have a  significant  role in the  registrant's  internal
        controls; and

6.  The  registrant's  other  certifying  officers and I have  indicated in this
    annual  report  whether or not there were  significant  changes in  internal
    controls  or in other  factors  that  could  significantly  affect  internal
    controls subsequent to the date of our most recent evaluation, including any
    corrective  actions  with regard to  significant  deficiencies  and material
    weaknesses.


    Date: April 23, 2003                 \S\ Felicia D. Thornton

                                       -----------------------------------------
                                           Felicia D. Thornton
                                           Executive Vice President
                                             and Chief Financial Officer





                                       60
<PAGE>


                                Index to Exhibits
                          Filed with the Annual Report
                              on Form 10-K for the
                           Year Ended January 30, 2003

Number    Description

3.1       Restated  Certificate of  Incorporation  (as amended) is  incorporated
          herein by reference to Exhibit 3.1 of Form 10-Q for the quarter  ended
          April 30, 1998.

3.1.1     Certificate of Designation,  Preferences and Rights of Series A Junior
          Participating  Preferred Stock is incorporated  herein by reference to
          Exhibit 3.1.1 of Form 10-K for the year ended January 30, 1997.

3.1.2     Amendment to Certificate  of  Designation,  Preferences  and Rights of
          Series A Junior  Participating  Preferred Stock is incorporated herein
          by  reference  to  Exhibit  3.1.2  of Form  10-K  for the  year  ended
          January 28, 1999.

3.2       By-Laws dated March 15, 2001 are  incorporated  herein by reference to
          Exhibit 3.2 of Form 10-K for the year ended February 1, 2001.

4.1       Stockholder Rights Plan Agreement is incorporated  herein by reference
          to  Exhibit  1 of Form  8-A  Registration  Statement  filed  with  the
          Commission on March 4, 1997.

4.1.1     Amendment  No.  One  to  Stockholder   Rights  Plan  Agreement  (dated
          August 2, 1998) is incorporated  herein by  reference  to Exhibit 1 of
          Amendment to Form 8-A Registration Statement filed with the Commission
          on August 6, 1998.

4.1.2     Amendment  No.  Two  to  Stockholder   Rights  Plan  Agreement  (dated
          March 16, 1999) is incorporated  herein by  reference  to Exhibit 1 of
          Amendment to Form 8-A Registration Statement filed with the Commission
          on March 25, 1999.

4.2       Indenture,  dated as of May 1, 1992,  between  Albertson's,  Inc.  and
          Morgan  Guaranty Trust Company of New York as Trustee is  incorporated
          herein by reference to Exhibit 4.1 of Form S-3 Registration  Statement
          333-41793 filed with the Commission on December 9, 1997.(1)

4.3       Senior  Indenture dated May 1, 1995,  between  American Stores Company
          and the First National Bank of Chicago,  as Trustee,  is  incorporated
          herein by  reference  to Exhibit  4.1 of Form 10-Q  filed by  American
          Stores Company (Commission File Number 1-5392) on June 12, 1995.(1)

10.1      J. A. and Kathryn  Albertson  Foundation Inc. Stock  Agreement  (dated
          May 21, 1997) is  incorporated  herein by reference to Exhibit 10.1 of
          Form 10-Q for the quarter ended May 1, 1997.*

10.1.1    Waiver regarding Alscott Limited Partnership #1 Stock Agreement (dated
          May 21, 1997) is incorporated herein by reference to Exhibit 10.1.1 of
          Form 10-Q for the quarter ended May 1, 1997.*

10.1.2    Waiver  regarding  Kathryn  Albertson Stock  Agreement  (dated May 21,
          1997) is  incorporated  herein  by  reference  to  Exhibit  10.1.2  of
          Form 10-Q for the quarter ended May 1, 1997.*

10.2      Agreement  between the Company and Gary G. Michael dated  December 22,
          2000 is incorporated  herein by reference to Exhibit 10.2 of Form 10-K
          for the year ended February 1, 2001.*


                                       61

<PAGE>

Number    Description

10.3      Form of Award  of  Deferred  Stock  Units is  incorporated  herein  by
          reference to Exhibit 10.3 of Form 10-K for the year ended  February 1,
          2001.*

10.4      Employment  Agreement  between the Company  and  Lawrence R.  Johnston
          dated  April  23,  2001  is   incorporated   herein  by  reference  to
          Exhibit 10.4 of Form 8-K filed on April 26, 2001.*

10.4.1    Amendment to Employment  Agreement between the Company and Lawrence R.
          Johnston  dated July 19, 2001 is  incorporated  herein by reference to
          Exhibit 10.4.1 of Form 10-K for the year ended January 31, 2002.*

10.5      Form of  Beneficiary  Agreement  for Key Executive  Life  Insurance is
          incorporated  herein by reference  to Exhibit  10.5.1 of Form 10-K for
          the year ended January 30, 1986.*

10.6      Executive Deferred Compensation Plan (amended and restated February 1,
          1989) is incorporated herein by reference to Exhibit 10.6 of Form 10-K
          for the year ended February 2, 1989.*

10.6.1    Amendment to Executive  Deferred  Compensation Plan (dated December 4,
          1989) is  incorporated  herein  by  reference  to  Exhibit  10.6.1  of
          Form 10-Q for the quarter ended November 2, 1989.*

10.6.2    Amendment to Executive Deferred  Compensation Plan (dated December 15,
          1998) is  incorporated  herein  by  reference  to  Exhibit  10.6.2  of
          Form 10-K for the year ended February 3, 2000.*

10.6.3    Amendment to  Executive  Deferred  Compensation  Plan (dated March 15,
          2001) is  incorporated  herein  by  reference  to  Exhibit  10.6.3  of
          Form 10-K for the year ended February 1, 2001.*

10.6.4    Amendment  to  Executive  Deferred  Compensation  Plan  (dated  May 1,
          2001).*

10.7      Senior Operations  Executive Officer Bonus Plan is incorporated herein
          by  reference  to  Exhibit  10.7  of Form  10-K  for  the  year  ended
          January 30, 1997.*

10.8      Form of  Consulting  Agreement  with Special  Advisors to the Board of
          Directors  dated  as of  March  15,  2001 is  incorporated  herein  by
          reference to Exhibit 10.8 of Form 10-K for the year ended  February 1,
          2001.*

10.9      Albertson's,  Inc. Executive  Officers' Annual Incentive  Compensation
          Plan is incorporated herein by reference to Exhibit 10.42 of Form 10-Q
          for the quarter ended May 2, 2002.*

10.10     2000   Deferred   Compensation   Plan  (dated   January  1,  2000)  is
          incorporated  by reference to Exhibit  10.10 of Form 10-K for the year
          ended February 3, 2000.*

10.10.1   First Amendment to the 2000 Deferred  Compensation Plan (dated May 25,
          2001).*

10.10.2   Second  Amendment  to  the  2000  Deferred  Compensation  Plan  (dated
          July 18, 2001).*

10.10.3   Third  Amendment  to  the  2000  Deferred   Compensation  Plan  (dated
          December 31, 2001).*

10.11     Employment  Agreement  between the Company and John R. Sims  effective
          April  3,  2002 is  incorporated  by  reference  to  Exhibit  10.11 of
          Form 10-K for the year ended January 31, 2002.*



                                       62
<PAGE>



Number    Description

10.12     Employment  Agreement  between the  Company  and Robert J. Dunst,  Jr.
          dated  November  16,  2001 is  incorporated  herein  by  reference  to
          Exhibit 10.42 to Form 10-Q for the quarter ended November 1, 2001.*

10.13     Executive  Pension Makeup Plan (amended and restated February 1, 1989)
          is incorporated  herein by reference to Exhibit 10.13 of Form 10-K for
          the year ended February 2, 1989.*

10.13.1   First Amendment to Executive  Pension Makeup Plan (dated June 8, 1989)
          is  incorporated  herein by reference to Exhibit  10.13.1 of Form 10-Q
          for the quarter ended May 4, 1989.*

10.13.2   Second  Amendment to Executive  Pension Makeup Plan (dated January 12,
          1990) is  incorporated  herein by  reference  to  Exhibit  10.13.2  of
          Form 10-K for the year ended February 1, 1990.*

10.13.3   Third  Amendment to Executive  Pension  Makeup Plan (dated January 31,
          1990) is  incorporated  herein by  reference  to  Exhibit  10.13.3  of
          Form 10-Q for the quarter ended August 2, 1990.*

10.13.4   Fourth   Amendment  to  Executive   Pension  Makeup  Plan   (effective
          January   1,   1995)   is   incorporated   herein   by   reference  to
          Exhibit 10.13.4 of Form 10-K for the year ended February 2, 1995.*

10.13.5   Amendment to Executive  Pension Makeup Plan (retroactive to January 1,
          1990) is  incorporated  herein by  reference  to  Exhibit  10.13.5  of
          Form 10-K for the year ended February 1, 1996.*

10.13.6   Amendment to Executive  Pension Makeup Plan (retroactive to October 1,
          1999) is  incorporated  herein by  reference  to  Exhibit  10.13.6  of
          Form 10-K for the year ended February 3, 2000.*

10.13.7   Amendment to Executive Pension Makeup Plan (dated June 1, 2001).*

10.14     Executive ASRE Makeup Plan (dated  September 26, 1999) is incorporated
          herein by reference  to Exhibit  10.14 of Form 10-K for the year ended
          February 3, 2000.*

10.14.1   First  Amendment  to the  Executive  ASRE  Makeup  Plan (dated May 25,
          2001).*

10.14.2   Second Amendment to the Executive ASRE Makeup Plan (dated December 31,
          2001).*

10.15     Senior  Executive  Deferred  Compensation  Plan  (amended and restated
          February 1, 1989) is incorporated herein by reference to Exhibit 10.15
          of Form 10-K for the year ended February 2, 1989.*

10.15.1   Amendment  to  Senior  Executive  Deferred  Compensation  Plan  (dated
          December   4,   1989)  is   incorporated   herein  by   reference   to
          Exhibit 10.15.1 of Form 10-Q for quarter ended November 2, 1989.*

10.15.2   Amendment  to  Senior  Executive  Deferred  Compensation  Plan  (dated
          December   15,   1998)  is   incorporated   herein  by   reference  to
          Exhibit 10.7.1 of Form 10-K for the year ended February 3, 2000.*

10.15.3   Amendment to Senior Executive Deferred Compensation Plan (dated May 1,
          2001).*

10.16     1986  Nonqualified  Stock  Option  Plan  (amended  March  4,  1991) is
          incorporated herein by reference to Exhibit 10.16 of Form 10-K for the
          year ended  January 31, 1991.  Exhibit  10.16  expired by its terms in
          1996.  Notwithstanding  such  expiration,  certain  agreements for the
          options granted under these option plans remain outstanding.*


                                       63
<PAGE>

Number    Description

10.17     Form of 1986  Nonqualified  Stock Option Plan Stock  Option  Agreement
          (amended  November  30, 1987) is  incorporated  herein by reference to
          Exhibit 10.17 of Form 10-Q for the quarter ended October 29, 1987.*

10.18     Executive   Pension   Makeup  Trust   (dated   February  1,  1989)  is
          incorporated herein by reference to Exhibit 10.18 of Form 10-K for the
          year ended February 2, 1989.*

10.18.1   Amendment to Executive  Pension  Makeup Trust (dated July 24, 1998) is
          incorporated  herein by reference to Exhibit  10.18.1 of Form 10-K for
          the year ended February 3, 2000.*

10.18.2   Amendment to Executive  Pension Makeup Trust (dated  December 1, 1998)
          is  incorporated  herein by reference to Exhibit  10.18.1 of Form 10-Q
          for quarter ended October 29, 1998.*

10.18.3   Amendment to Executive  Pension Makeup Trust (dated  December 1, 1999)
          is  incorporated  herein by reference to Exhibit  10.18.3 of Form 10-K
          for year ended February 3, 2000.*

10.18.4   Amendment to Executive  Pension Makeup Trust (dated March 31, 2000) is
          incorporated  herein by reference to Exhibit  10.18.4 of Form 10-K for
          year ended February 1, 2001.*

10.19     Executive  Deferred  Compensation  Trust  (dated  February 1, 1989) is
          incorporated  herein by  reference  to Exhibit  10.19 of Form 10-K for
          year ended February 2, 1989.*

10.19.1   Amendment to  Executive  Deferred  Compensation  Trust (dated July 24,
          1998) is  incorporated  herein by  reference  to  Exhibit  10.19.1  of
          Form 10-K for year ended February 3, 2000.*

10.19.2   Amendment to Executive Deferred  Compensation Trust (dated December 1,
          1998) is  incorporated  herein by  reference  to  Exhibit  10.19.1  of
          Form 10-Q for quarter ended October 29, 1998.*

10.19.3   Amendment to Executive Deferred  Compensation Trust (dated December 1,
          1999) is  incorporated  herein by  reference  to  Exhibit  10.19.3  of
          Form 10-K for year ended February 3, 2000.*

10.19.4   Amendment to Executive  Deferred  Compensation  Trust (dated March 31,
          2000) is  incorporated  herein by  reference  to  Exhibit  10.19.4  of
          Form 10-K for year ended February 1, 2001.*

10.20     1990 Deferred Compensation Plan is incorporated herein by reference to
          Exhibit 10.20 of Form 10-K for year ended January 31, 1991.*

10.20.1   Amendment to 1990 Deferred Compensation Plan (dated April 12, 1994) is
          incorporated  herein by reference to Exhibit  10.20.1 of Form 10-Q for
          the quarter ended August 4, 1994.*

10.20.2   Amendment to 1990 Deferred  Compensation Plan (dated November 5, 1997)
          is  incorporated  herein by reference to Exhibit  10.20.2 of Form 10-K
          for the year ended January 29, 1998.*

10.20.3   Amendment to 1990 Deferred  Compensation Plan (dated November 1, 1998)
          is  incorporated  herein by reference to Exhibit  10.20.3 of Form 10-Q
          for the quarter ended October 29, 1998.*

10.20.4   Termination  of 1990 Deferred  Compensation  Plan (dated  December 31,
          1999).*

10.20.5   Amendment to 1990 Deferred Compensation Plan (dated May 1, 2001).*


                                       64
<PAGE>



Number    Description

10.20.6   Amendment to 1990 Deferred  Compensation Plan (dated December 31, 2001
          to be effective May 1, 2001).*

10.21     Non-Employee  Directors'  Deferred  Compensation  Plan is incorporated
          herein by reference  to Exhibit  10.21 of Form 10-K for the year ended
          January 31, 1991.*

10.21.1   Amendment to Non-Employee Directors' Deferred Compensation Plan (dated
          December   15,   1998)  is   incorporated   herein  by   reference  to
          Exhibit 10.21.1 of Form 10-K for year ended February 3, 2000.*

10.21.2   Amendment to Non-Employee Directors' Deferred Compensation Plan (dated
          March 15, 2001) is incorporated herein by reference to Exhibit 10.21.2
          of Form 10-K for the year ended February 1, 2001.*

10.21.3   Amendment to Non-Employee Directors' Deferred Compensation Plan (dated
          May 1, 2001).*

10.22     1990  Deferred   Compensation  Trust  (dated  November  20,  1990)  is
          incorporated  herein by  reference  to Exhibit  10.22 of Form 10-K for
          year ended January 31, 1991.*

10.22.1   Amendment to 1990 Deferred Compensation Trust (dated July 24, 1998) is
          incorporated  herein by reference to Exhibit  10.22.1 of Form 10-K for
          year ended February 3, 2000.*

10.22.2   Amendment to 1990 Deferred Compensation Trust (dated December 1, 1998)
          is  incorporated  herein by reference to Exhibit  10.22.1 of Form 10-Q
          for quarter ended October 29, 1998.*

10.22.3   Amendment to 1990 Deferred Compensation Trust (dated December 1, 1999)
          is  incorporated  herein by reference to Exhibit  10.22.3 of Form 10-K
          for year ended February 3, 2000.*

10.22.4   Amendment to 1990 Deferred  Compensation  Trust (dated March 31, 2000)
          is  incorporated  herein by reference to Exhibit  10.22.4 of Form 10-K
          for year ended February 1, 2001.*

10.23     2000  Deferred   Compensation   Trust  (dated   January  1,  2000)  is
          incorporated  herein by  reference  to Exhibit  10.23 of Form 10-K for
          year ended February 3, 2000.*

10.23.1   Amendment  to the 2000  Deferred  Compensation  Trust (dated March 31,
          2000) is  incorporated  herein by  reference  to  Exhibit  10.23.1  of
          Form 10-K for year ended February 1, 2001.*

10.24     1995  Stock-Based  Incentive Plan (dated May 26, 1995) is incorporated
          herein by  reference  to  Exhibit  10.24 of Form 10-Q for the  quarter
          ended May 4, 1995.*

10.24.1   Form of 1995 Stock-Based  Incentive Plan Stock Option Agreement (dated
          December   4,   1995)  is   incorporated   herein  by   reference   to
          Exhibit 10.24.1 of Form 10-K for the year ended February 1, 1996.*

10.25     1995 Stock Option Plan for Non-Employee Directors (dated May 26, 1995)
          is incorporated  herein by reference to Exhibit 10.25 of Form 10-Q for
          the quarter ended May 4, 1995.*

10.25.1   Form of 1995 Stock Option Plan for  Non-Employee  Directors  Agreement
          (dated  May  30,  1995)  is   incorporated   herein  by  reference  to
          Exhibit 10.25.1 of Form 10-Q for the quarter ended May 4, 1995.*


                                       65
<PAGE>



Number    Description

10.25.2   Amendment to 1995 Stock Option Plan for Non-Employee  Directors (dated
          March 15, 2001) is incorporated herein by reference to Exhibit 10.25.2
          of Form 10-K for the year ended February 1, 2001.*

10.26.1   Amendment  to Amended and Restated  1995  Stock-Based  Incentive  Plan
          (dated  March  15,  2001)  is  incorporated  herein  by  reference  to
          Exhibit 10.26.1 of Form 10-K for the year ended February 1, 2001.*

10.27     Termination  and  Consulting  Agreement by and among  American  Stores
          Company,  Albertson's,  Inc. and Victor L. Lund is incorporated herein
          by  reference  to  Exhibit  10.27  of Form  10-K  for the  year  ended
          January 28, 1999.*

10.28     Credit  Agreement  (5-year)  (dated  March 22,  2000) is  incorporated
          herein by reference  to Exhibit  10.28 of Form 10-K for the year ended
          February 3, 2000.

10.28.1   Amendment  to Credit  Agreement  (5-year)  (dated  March 15,  2001) is
          incorporated by reference to Exhibit 10.28.1 of Form 10-K for the year
          ended February 1, 2001.

10.29     Amended and  Restated  Credit  Agreement  (364-day)  (dated  March 13,
          2002).

10.30     American Stores Company  Supplemental  Executive  Retirement Plan 1998
          Restatement  is  incorporated  herein by  reference  to Exhibit 4.1 of
          Form S-8  filed by American  Stores  Company  (Commission  File Number
          1-5392) on July 13, 1998.*

10.30.1   Amendment to American Stores Company Supplemental Executive Retirement
          Plan 1998 Restatement, dated as of September 15, 1998, is incorporated
          herein by  reference  to Exhibit  10.4 of Form 10-Q filed by  American
          Stores Company (Commission File Number 1-5392) on December 11, 1998.*

10.31     American  Stores  Company  1997 Stock  Option and Stock  Award Plan is
          incorporated  herein  by  reference  to  Exhibit  B of the 1997  Proxy
          Statement   filed  by  American   Stores  Company   (Commission   File
          Number 1-5392) on May 2, 1997.*

10.31.1   Amendment to American Stores Company 1997 Stock Option and Stock Award
          Plan, dated as of October 8, 1998, is incorporated herein by reference
          to  Exhibit  10.1  of Form  10-Q  filed  by  American  Stores  Company
          (Commission File Number 1-5392) on December 11, 1998.*

10.31.2   Amendment to American Stores Company 1997 Stock Plan for  Non-Employee
          Directors  (dated  March 15,  2001) is  incorporated  by  reference to
          Exhibit 10.31.2 of Form 10-K for the year ended February 1, 2001.*

10.32     American Stores Company 1997A Stock Option and Stock Award Plan, dated
          as  of  March  27,  1997,  is  incorporated  herein  by  reference  to
          Exhibit  4.11   of  the   S-8  Registration  Statement   (Registration
          No. 333-82157) filed by Albertson's, Inc. on July 2, 1999.*

10.33     American Stores Company 1997 Stock Plan for Non-Employee  Directors is
          incorporated  herein  by  reference  to  Exhibit  C of the 1997  Proxy
          Statement   filed  by  American   Stores  Company   (Commission   File
          Number 1-5392) on May 2, 1997.*

10.34     American  Stores  Company  Amended and Restated  1989 Stock Option and
          Stock Award Plan is  incorporated  herein by reference to Exhibit 4.13
          of the S-8 Registration  Statement  (Registration No. 333-82157) filed
          by Albertson's, Inc. on July 2, 1999.*

10.35     American  Stores  Company  Amended and Restated  1985 Stock Option and
          Stock Award Plan is  incorporated  herein by reference to Exhibit 4.14
          of the S-8 Registration  Statement  (Registration No. 333-82157) filed
          by Albertson's, Inc. on July 2, 1999.*


                                       66
<PAGE>



Number    Description

10.36     Employment  Agreement  between  the  Company  and Peter L. Lynch dated
          January 26, 2001 is incorporated  herein by reference to Exhibit 10.36
          to Form 10-Q for the quarter ended August 2, 2001.*

10.36.1   Amendment  to  Employment  Agreement  between the Company and Peter L.
          Lynch dated  April 23, 2001 is  incorporated  herein by  reference  to
          Exhibit 10.36.1 to Form 10-Q for the quarter ended August 2, 2001.*

10.37     Agreement  between  the Company and Peter L. Lynch dated June 18, 1999
          is incorporated  herein by reference to Exhibit 10.37 to Form 10-Q for
          the quarter ended August 2, 2001.*

10.38     Albertson's  Voluntary Separation Plan for officers effective July 18,
          2001 is incorporated herein by reference to Exhibit 10.38 to Form 10-Q
          for the quarter ended August 2, 2001.*

10.39     Albertson's  Severance  Plan for Officers  effective  July 18, 2001 is
          incorporated herein by reference to Exhibit 10.39 to Form 10-Q for the
          quarter ended August 2, 2001.*

10.40     Employment Agreement between the Company and Felicia D. Thornton dated
          August 6, 2001 is incorporated herein by reference to Exhibit 10.40 to
          Form 10-Q for the quarter ended August 2, 2001.*

10.41     Albertson's  Amended and Restated 1995  Stock-Based  Incentive Plan is
          incorporated herein by reference to Exhibit 10.41 to Form 10-Q for the
          quarter ended November 1, 2001.*

10.41.1   Form of 1995 Amended and  Restated  Stock-Based  Incentive  Plan Stock
          Option   Agreement   is   incorporated    herein   by   reference   to
          Exhibit 10.41.1 to Form 10-Q for the quarter ended November 1, 2001.*

10.42     Albertsons  Severance Plan for Officers  effective  October 1, 2002 is
          incorporated  by  reference  to  Exhibit  10.42  of Form  10-Q for the
          quarter ended October 31, 2002.*

10.43     Albertsons Change of Control  Severance  Agreement for Chief Operating
          Officer and Executive  Vice  President  effective  November 1, 2002 is
          incorporated  by  reference  to  Exhibit  10.43  of Form  10-Q for the
          quarter ended October 31, 2002.*

10.44     Albertsons  Change of Control  Severance  Agreement  for  Senior  Vice
          Presidents  and Group Vice  Presidents  effective  November 1, 2002 is
          incorporated  by  reference  to  Exhibit  10.44  of Form  10-Q for the
          quarter ended October 31, 2002.*

10.45     Albertsons Change of Control  Severance  Agreement for Vice Presidents
          effective   November  1,  2002  is   incorporated   by   reference  to
          Exhibit 10.45 of Form 10-Q for the quarter ended October 31, 2002.*

10.46     Albertsons  Amended and Restated 1995  Stock-Based  Incentive  Plan as
          amended  effective  December 9, 2002 is  incorporated  by reference to
          Exhibit 10.46 of Form 10-Q for the quarter ended October 31, 2002.*

10.46.1   Form of  Award  of  Stock  Option  is  incorporated  by  reference  to
          Exhibit 10.46.1 of Form 10-Q for the quarter ended October 31, 2002.*

10.46.2   Form of Award of Deferred Stock Units is  incorporated by reference to
          Exhibit 10.46.2 of Form 10-Q for the quarter ended October 31, 2002.*



                                       67
<PAGE>



Number    Description

21        Subsidiaries of the Registrant

23        Independent Auditors' Consent - Deloitte & Touche LLP

99.1      Certification  pursuant to 18 U.S.C. Section 1350, as adopted pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002.

99.2      Certification  pursuant to 18 U.S.C. Section 1350, as adopted pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002.




*     Identifies management contracts  or  compensatory  plans  or  arrangements
      required to be filed as an exhibit hereto.


(1)   In reliance upon Item  601(b)(4)(iii)(A)  of Regulation S-K, various other
      instruments  defining  the  rights of  holders  of  long-term  debt of the
      Registrant and its subsidiaries are not being filed herewith,  because the
      total amount of securities  authorized under each such instrument does not
      exceed 10% of the total assets of the Registrant and its subsidiaries on a
      consolidated  basis. The Registrant hereby agrees to furnish a copy of any
      such instrument to the Commission upon request.


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